Victorian Civil and Administrative Tribunal|2007-07-23

The application of these provisions in the present case was however very much in dispute.
The Valuer-General's valuer, Mr Collins, had stated in his report, for this scenario:

In this circumstance, the power lines would not add to the value of the land and, being detrimental to the highest and best use, must be considered in determining the site value

However, he considered it was sufficient under this scenario and in the absence of a formal easement, to simply value the land at is highest and best (residential) use, and take the power lines and poles into account by simply making an allowance for the cost of their removal. The allowance made by Mr Collins was $30,000 for both the subject land and Lot 15 (or $17,000 for the subject land alone). Under questioning, Mr Collins conceded that there was no expert basis for the quantum of this allowance, and he had no expertise in ascertaining the cost of removal. He had recommended in his report that the Valuer-General obtain the expert opinion of a suitably qualified electrical engineer to advice on the removal costs, but Valuer-General provided no evidence from such an expert. Arguably, Scenario 1 fails on this preliminary basis - i.e. for want of evidence to support the valuation finding.

Consideration of Scenario 3 and United Energy approach

This leaves Scenario 3. As indicated earlier, we believe Scenario 3 (or, more particularly, the United Energy approach to it) stands on its own merits rather than being a scenario supported only 'by default' through our dismissal of the other scenarios.
Scenario 3 also assumes that the power lines and poles are not 'improvements' within the meaning of the VLA. Under the Valuer-General approach to Scenario 3, an 'easement' protecting the power lines is assumed. The United Energy approach reaches the same valuation outcome under Scenario 3 without necessarily needing to assume the easement.
At present and at the relevant date, there is no easement over the land that reserves and protects the power lines and poles. United Energy owns the land. Its sole purpose for owning the land is to protect its power assets, and it is therefore unnecessary for it to reserve an easement in favour of itself. In a strict legal sense, United Energy probably could not have such an easement as it would then hold both the dominant and servient tenements, unlike the circumstance where it retains an easement over land it does not own. To us, it would be a nonsense if the land was valued on an artificially different basis (as the Valuer-General seems to contend) just because United Energy holds a higher interest in fee simple rather than an easement as its relevant interest in the land to protect its power asset. The outcome should be the same unless it can be maintained that United Energy derives some other 'benefit' from its ownership of the land.
If the power lines are not regarded as improvements, as we have found, then the value of the land must still be determined as land affected by the presence of the power lines. In this regard:
- it is relevant that no habitable building can be constructed below the power lines, that as at the date of valuation the power lines are not likely to be removed (nor in the foreseeable future), and that the Electricity Safety (Network Assets) Regulations 1999 prevent interference and damage to these assets;
- s 13DC(5) and 13DF(2) of the VLA combine to require that the land be valued having regard to any physical changes of a permanent nature. Given the pole and power lines have been in existence since the 1960's and, again, in the absence of any evidence that the power lines are likely to be removed in the foreseeable future, a valuer must have regard to the impact of the power lines on the potential value of the land for its highest and best use;
In our view, in all the circumstances, we believe an informed hypothetical purchaser would take into account the full impact of the power lines in assessing the value it would hypothetically pay for the land, and assume those power lines are likely to stay indefinitely and cannot be forcibly removed without United Energy's consent or acquiescence. We agree with United Energy that an informed hypothetical purchaser would be concerned to establish what limitation might reasonably be expected to be imposed on the use of the land by reason of the presence of the power lines. This limitation is obvious and significant - i.e. the inability to construct a dwelling despite the highest and best use of the land otherwise being residential.
Thus, whether or not a formal easement exists or is 'assumed' in this case, the effect on the valuation will be the same[22]. The limitation on use and development in such a circumstance is substantial, and we accept the combined view of both valuers as to an appropriate value under such a scenario - being the adjusted value confirmed by our order.

[1] contained in the Council's valuation and rate notice dated 6 August 2004.

[2] by 'Notice of Objection' dated 4 October 2004, a copy of which was forwarded to the Valuer-General.

[3] by 'Recommendation Notice to the Valuer-General' dated 10 June 2005.

[4] ultimately, by 'Disallowance Notice' dated 20 April 2006, although the replacement notice and grounds were not received by United Energy until 23 August 2006. A preliminary issue relating to this process is considered below.

[5] by letter dated 21 September 2006. Technically, the matter comes before the Tribunal as an appeal under the former s 22(1) of the Valuation of Land Act 1960 (VLA) as in force on 30 June 2006, as the objection was lodged before 1 July 2006 when the new review provisions of the Act took effect.

[6] Volume 8184 Folio 045, comprising Lots 15 & 16 on LP 41271 (the latter Lot 16 being the subject land, known at 17 Friendship Square). A preliminary issue relating to Lot 15 is considered below.

[7] There is a pole on Lot 15 about 0.90 m from the boundary with the subject land, and another pole on the nature strip outside the land.

[8] Affidavit of Glenn Ferguson, the applicant's project engineer. This evidence was uncontested.

[9] Affidavit of Glenn Ferguson. The calculation allows for matters such as the type of line, span, sag, swing, temperature of conductor, clearances and safety distances, and takes into account relevant regulations and guidelines used to calculate easement widths. This evidence was ultimately uncontested.

[10] Under s 13DF(2)(a) of the VLA.

[11] Nonetheless, Mr Collins was cross-examined on his views, as a valuer, on these three scenarios - discussed further below.

[12] based on area and the length of the power lines, the subject land represents approx. 56% of the combined parcel valued by Mr Collins. The adjustment also removes a 'contiguous land' valuation discount which had been applied to the combined parcel.

[13] these are detailed in Mr Brown's valuation report and are not separately analysed in this decision

[14] including the shape of the subject land, the extent of the encumbrance on residential development potential, the use for public open space, and the potential for sale of the unencumbered strip to adjoining owners and/or the Council

[15] [2006] NSWLEC 400, [37] - [77] and particularly at [42], per Biscoe J.

[16] (1996) 16 QLCR 435 (Queensland Land Appeal Court per Fryberg J and Neate M)

[17] s 2(2) of the VLA is also discussed further, below, in the context of a seller's reasonable terms and conditions.

[18] This included the Valuer-General's valuer, Mr Collins, in response to cross-examination

[19] Applying Perpetual Trustee Co v Valuer-General for SA [2006] SASC 216 at [25]- [39] and CSR Limited v Valuer-General for SA (1977) 17 SASR 446 at 450

[20] i.e.. the reference in s 5A(3)(b) that express regard only be had to limitations in Acts and formal instruments etc

[21] Following the dicta of Batt J. in Shell Company v City of Melbourne (1995) 88 LGERA 326, 380-387.

[22] As we have also indicated, there is insufficient evidence to form any view on the notional cost of re-routing the power lines as an alternative valuation scenario, although anecdotal comments from United Energy suggest this might be an even higher amount than the assumed easement.

United Energy Ltd v Kingston CC (Land Valuation) [2007] VCAT 1306 (23 July 2007)

United Energy Ltd v Kingston CC

At a glance

Court

Decision date

Source

Judgment (27 paragraphs)

Parties

Cases Cited (3)

United Energy Ltd v Kingston CC (Land Valuation) [2007] VCAT 1306 (23 July 2007)