Dr Yvonne Collen Pty Ltd v Valuer-General [2013] QLC 60

LAND COURT OF QUEENSLAND CITATION: Dr Yvonne Collen Pty Ltd v Valuer-General [2013] QLC 60 PARTIES: Dr Yvonne Collen Pty Ltd (appellant) v. Valuer-General (respondent) FILE NO: LVA24-12 DIVISION: General Division PROCEEDING: Appeal against annual valuations under the Land Valuation Act 2010 DELIVERED ON: 17 October 2013 DELIVERED AT: Brisbane HEARD ON: 12 September 2013 HEARD AT: Brisbane MEMBER: WA Isdale ORDERS: 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. CATCHWORDS: Land Valuation Act 2010, ss 163, 169 Valuation of Land Act 1944, s 13(7) Sales evidence of value ― comparable sales ― relativity ― expert evidence R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13 Bignell v Chief Executive, Department of Lands (AV92- 65, unreported, Land Appeal Court, 4 March 1996) Brisbane City Council v The Valuer-General (1978) 140 CLR 41; 5 QLCR 283 Burnett v Department of Natural Resources and Water [2010] QLC 57 Enright Hendy and Partners Investments Pty Ltd as Trustee v Valuer-General [2012] QLC 38 Franklin & Ors v Valuer-General (1978) 5 QLCR 181 -- 1 of 7 -- 2 WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44 Gibson v Chief Executive, Department of Lands (V92-64, unreported, Land Appeal Court, 9 June 1995) Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327 Lawson v Valuer-General [2012] QLC 27 JL and I Qualischefski v Valuer-General (1979) 6 QLCR 167 Steinback v Valuer-General [2012] QLC 8 Thomson v Department of Natural Resources and Mines [2007] QLC 92 NR and PG Tow v Valuer-General (1978) 5 QLCR 378 APPEARANCES: Mr TJ Scott, for the appellant Ms T Johnson, senior lawyer, for the respondent Background [1] The appellant owns 8.006 ha of land at 238 River Road, Beaudesert. It is rural land and is required by the Land Valuation Act 2010 (the Act) to be valued on the basis that it is unimproved. It was valued by the Valuer-General as part of a routine process at the valuation date of 1 October 2010. Originally valued at $430,000, the respondent has acted under s 163 of the Act to issue a revised valuation at the reduced figure of $400,000. It is against that figure of $400,000 which the appellant has appealed to this Court. [2] The notice of appeal, exhibit 1, states that the value for which the appellant contends is $200,000, which was confirmed at the beginning of the hearing. In his address, Mr Scott, Dr Collen’s husband and the advocate and sole witness for the appellant, suggested that a fair value for the land would be $30,000 to $35,000 per hectare. This calculates to a valuation of between $240,180 and $280,210 for the land. The case for the appellant [3] Mr Scott gave sworn evidence. He told the Court that the land had been purchased by the appellant in January 2008 for $900,000. At the time its unimproved value was $345,000. Mr Scott is general manager of a small development company on the Gold Coast and is licensed as a real estate agent although he does not practice as one. He did not put forward any sales of comparable land in order to support the valuation for which he contended but applied the method of comparing the subject land to the Valuer- General’s valuations of some nearby land. He did this on a rate per hectare basis. He referred to 241 River Road, which is across the road from the subject. That land has an area of 42 ha and was valued at $395,000 at 1 October 2010. He stated that this -- 2 of 7 -- 3 indicated a value of $9,335 per hectare. Mr Scott also referred to 138 Kargorum Road, which adjoins the subject. He stated that its 24 hectares were valued at $345,000 which he said equates to a rate of $13,877 per hectare. The subject land was, he said, being valued at $53,000 per hectare. I note that by using this method the actual calculation, based on the valuation under appeal, is $49,962 per hectare. [4] Mr Scott described the land as river-front, but with steep 6 to 7 metre banks which do not allow for practical access to and use of the river. The land does not have any water rights in relation to the river and there have been three serious floods since the appellant has owned it. An area of 1.5 ha is subject to flooding and the water has risen to 2.5 m below the house. Serious flooding in 2011 and 2013 washed away fences and dumped debris, including large trees, on the land. Additional insurance costs are incurred due to the flooding and months of cleaning up follow a flood. There is 300 m of dirt road which must be travelled to access the land. Access is restricted during heavy rain. The respondent’s evidence [5] Evidence for the respondent was given by Ms Candice Ashley, a registered valuer, who also provided a report, which became exhibit 2. I noted that Ms Ashley was present in Court during the evidence of Mr Scott and appeared to be attentive to it. Her evidence was that nothing in the evidence led for the appellant required her to change her report. Ms Ashley valued the land by direct comparison to sales in order to determine its unimproved value. There was no dispute as to the nature of the land or the area subject to flooding. [6] Ms Ashley described the land as zoned Rural within the “Equestrian Activities” precinct. Its highest and best use is for rural living and livestock grazing. The sales which the valuer considered comparable to the subject were as follows: Sale 1 of 2.806 ha zoned Rural-Rural Residential on 15 September 2010 for $265,000. It had an analysed value of $257,198 and $225,000 was applied. It was considered inferior overall to the subject. It is located at Lot 18 Beaudesert- Beenleigh Road, Birnam. Sale 2 of 3.587 ha zoned Rural-Rural Residential on 20 January 2010 for $383,000. Its analysed value was $380,000 and $410,000 was applied. It was considered to be inferior overall to the subject. It is located at 55 Durrant Court, Tamborine. Sale 3 of 41.015 ha zoned Countryside-Rural on 2 March 2010 for $720,000. It had an analysed value of $691,500 and $780,000 was applied. It was considered to be superior to the subject. It is located on the Beaudesert-Beenleigh Road, Mundoolun. -- 3 of 7 -- 4 Sale 4 of 57.4 ha zoned Countryside-Rural on 5 February 2010 for $607,500. It had an analysed value of $545,026 and $490,000 was applied. It was considered superior to the subject. This land is on the Mount Lindesay Highway at Innisplain. [7] Ms Ashley stated that she had inspected the subject land and all of the sales which she had used in her valuation report. She has allowed for the seasonal flooding and was not cross-examined in relation to the particulars of the sales. Her evidence, when cross- examined, was that the land was appropriately valued on a whole value basis rather than on a rate per hectare basis. She did not agree that the land should be valued on a rate per hectare basis, the appellant’s chosen method. Ms Ashley’s evidence, as a professional valuer, was not contradicted by any other evidence, which is a circumstance quite distinct from Mr Scott disagreeing with her professional opinion. The Court accepts this professional opinion of the only expert valuer who gave evidence. This is in accord with the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327 where the Court, constituted by Lee J, Mr Barry and Mr Neate said at page 330: “Second, the appellants note that, when the valuations of the subject blocks are considered on a pro rata basis there is a disparity and that there is a disparity between the valuations of those blocks and the valuations of neighbouring blocks. On the basis of the relativity maps the valuations on a per square metre basis of the three blocks to which the appellants referred are: (a) 56 Whytecliffe Parade, valued at $161.84 per square metre; (b) 18 Whytecliffe Parade, valued at $151.00 per square metre; and (c) 16 Whytecliffe Parade, valued at $137.17 per square metre. In the appellants’ submission there is no reason why two blocks with the same position and outlook should be valued at such apparently disparate rates. Blocks should be valued at the same rate per square metre. Applying the rate calculated for 16 Whytecliffe Parade to 56 Whytecliffe Parade would give the latter block a value of approximately $80,500, substantially more than the $45,000 for which the appellants contend. The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its decision on the appellants’ previous appeal (H and E Grahn v The Valuer-General, AV89-246 and 247, 13 December 1990): ‘for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of and access to the lots, the shape and topography of the lots etc and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features.’” -- 4 of 7 -- 5 The submissions on behalf of the appellant [8] Mr Scott stressed in his concluding submissions that the issue was what amounted to a comparable sale. He advocated comparing land values on a per hectare basis, arguing that there should not be a three or four times difference in the per hectare rates of adjoining lands. He referred to the repeated serious floods, three in the last five years, and the 1.5 ha of the land below flood level. The single lane dirt access road was referred to and the sales relied upon by the Valuer-General were criticised, on the basis that two were of different zoning and two were far away. These criticisms were somewhat blunted when they had not been put to the valuer in cross-examination in order to afford the witness a fair opportunity to respond. The submissions for the respondent and the legal framework [9] Legal counsel for the Valuer-General supplemented her submissions with a written outline. It was pointed out that there was no competing body of sales evidence and that the Court must rely on the evidence put before it by the parties. In JL and I Qualischefski v Valuer-General (1979) 6 QLCR 167, the Land Appeal Court in its judgment said, at page 172: “Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This role is in contradistinction to jurisdiction conferred under the Land Act. In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.” [10] The respondent’s legal counsel also referred to NR and PG Tow v Valuer-General (1978) 5 QLCR 378 where the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said, at page 381: “Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over- anxious parties.” [11] The approach taken by Ms Ashley in applying sales evidence is consistent with the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327. The relevant principles are set out in the joint judgment of Lee J, Mr Barry and Mr Neate at pages 328-329 where the Court said: “The decision of the High Court of Australia in Brisbane City Council v The Valuer- General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v The Valuer-General ((1989) 13 QLCR 13) are authority for the following propositions: -- 5 of 7 -- 6 (a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 16 and cases cited in it). (b) The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17). (c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56). (d) Once it is shown that: (1) in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or (2) the valuation was made by a method fundamentally erroneous, the presumption created by section 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7). (e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p.46). (f) If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer- General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it).” [12] The presumption in s 13(7) of the Valuation of Land Act 1944 does not form part of the current Act so the principles in (c) and (d) in the passage quoted above no longer apply. The appellants remain limited to their grounds of appeal as set out in the Notice of Appeal.1 In the present case, this does not present it with any difficulty. The appellant has the onus of proof for each of the grounds of appeal.2 The appellant’s method in arriving at a valuation [13] The appellant’s case was based on how the value of its land compared to the values which the Valuer-General had placed on two nearby parcels of land. The present question before the Court however, is not how the value of the subject land compares to valuations placed on surrounding blocks, but rather what is the correct valuation of the subject land itself. Land Court Member Scott considered this issue in Thomson v Department of Natural Resources and Mines.3 The learned Member said that: “[7] This issue has come up on more than one occasion in the past, one example being found in Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at 6: ‘We reiterate what has been said often before – and what is Mr Tighe’s chief concern – the importance of correct relativity in the equitable distribution of the rating burden cannot be overstated. However the question before this Court is the correct valuation of the subject land, not the correct valuation of an area. It would not advance the appellant’s case to satisfy us that her neighbour’s land was 1 Franklin & Ors v Valuer-General (1978) 5 QLCR 181 at 184. See also Land Valuation Act 2010, s 169(1). 2 Land Valuation Act 2010, s 169(3). 3 [2007] QLC 92 at [6] to [8]. -- 6 of 7 -- 7 undervalued: … The appellant must show that the valuation of her land was incorrect.’ [8] A similar opinion is expressed by the Land Appeal Court in Bignell v Chief Executive, Department of Lands (AV92-65 unreported Land Appeal Court 4 March 1996) at 11: ‘What has to be decided in this case is the proper value of the subject land by reference to sales evidence about comparable unimproved properties. … If a proper valuation of the subject land makes it inconsistent with the relative values of neighbouring blocks then so be it. The question before this Court is ‘the correct valuation of the subject land, not the correct valuation of the area’.” [14] In Steinback v Valuer-General [2012] QLC 8, Member Smith considered this use of relativity of values. At [16] the learned Member said: “As I pointed out in the case of Burnett v Department of Natural Resources and Water: ‘This is a difficulty often faced by appellants in VLA matters who rely on relativity as one of their grounds of appeal. It is not enough for an appellant to simply demonstrate that the value of the appeal block is out of kilter with other nearby blocks. They need to go further to demonstrate that the values of those other blocks are correct, and that the value of the appeal block is incorrect. This is because it is the primary function of the Court to determine the unimproved value of the land subject to appeal. Changing an issued valuation simply because other valuations may be wrong would only tend to exacerbate the error. Of course, this is a generalised statement, and each case must be determined on its own facts.’” [references omitted] [15] The learned Member made this point again in Lawson v Valuer-General [2012] QLC 27 at [29]. The authorities of Burnett and Lawson were applied in Enright Hendy and Partners Investments Pty Ltd as Trustee v Valuer-General [2012] QLC 38. Conclusion [16] There is only one body of expert valuation evidence before the Court in this case. The expert has explained how her valuation opinion was arrived at and used the method which Courts, whose decisions are binding on this Court, have decided will provide the best test of value. This Court is not able to place reliance on the method urged on behalf of the appellant as its shortcomings have been highlighted by this Court and the Land Appeal Court in previous cases. To prefer that method to the one used by the valuer would be contrary to the precedents which govern the workings of this Court and provide certainty in the law. [17] I accept the evidence led on behalf of the respondent and must dismiss the appeal. Orders 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. WA ISDALE MEMBER OF THE LAND COURT -- 7 of 7 --