Arkinstall v Valuer-General [2013] QLC 30

LAND COURT OF QUEENSLAND CITATION: Arkinstall v Valuer-General [2013] QLC 30 PARTIES: Corine Margretta Arkinstall (appellant) v. Valuer-General (respondent) FILE NO: LVA592-11 DIVISION: General Division PROCEEDING: Appeal against annual valuations under the Land Valuation Act 2010 DELIVERED ON: 28 May 2013 DELIVERED AT: Brisbane HEARD ON: 30 April 2013 HEARD AT: Beaudesert MEMBER: Mr WA Isdale ORDERS: 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. CATCHWORDS: Land Valuation Act 2010, ss 169(1) and (3) and 170 Valuers Registration Act 1992 Sales Evidence of Value ― Comparable Sales ― Expert Evidence Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327 J.L. and I. Qualischefski v Valuer-General (1979) 6 QLCR 167 Spencer v The Commonwealth (1907) 5 CLR 418 N.R. and P.G. Tow v Valuer-General (1978) 5 QLCR 378 APPEARANCES: Mr M Arkinstall for the appellant Mr P Prasad, senior lawyer, appeared for the respondent -- 1 of 9 -- 2 Background [1] The appellant is the owner of 165.579 ha of rural land (the subject) situated at 479 Running Creek Road, about 4 km south-east of Rathdowney, which in turn is approximately 28 km radially south-west of Beaudesert. The land in this area is predominantly used for cattle grazing and for mixed farming. [2] As required by the Land Valuation Act 2010 the respondent has routinely valued this land as at 1 October 2010. Consequent upon that, the respondent has issued a valuation of $630,000 in its unimproved state. The appellant is dissatisfied with this valuation and has appealed to this Court. The appeal [3] The appellant was represented by her son, Mr Matthew Arkinstall, who appeared as advocate and also gave evidence. In the notice of appeal the appellant contended for an unimproved value of $350,000 on the relevant date of 1 October 2010. In his final address, however, Mr Arkinstall submitted that the Court should find that the valuation was $500,000. The appellant’s case [4] Mr Arkinstall has lived on the land since it was bought by his parents in 1979, when he was five years old. His business as a hay contractor has seen him acquire a detailed knowledge of the grasses in the area and their usefulness for grazing cattle. Mr Arkinstall is not qualified as a land valuer, he is a computer programmer and holds a bachelors degree in Information Technology from the University of Queensland. [5] Written material was presented on behalf of the appellant. It became Exhibits 2, 3, 4 and 5. The notice of appeal was Exhibit 1. Exhibits 2 to 5 contained a description of the subject, comments on two sales used by the Valuer-General to value the land, information concerning some alternative sales, maps and photographs. Also referred to was what was described as “non-sales”, where properties have not yet been able to be sold despite efforts to do so. It was urged that these provided indications of market value. Mr Arkinstall, by his evidence, was also able to correct factual matters such as that the land’s irrigation licence was for 65 ha rather than the 16 ha figure reported by the Valuer-General in his report prepared for the Court. In addition, Mr Arkinstall’s evidence was that a total of 35% to 40% of the subject land was covered with African lovegrass, which was, in its mature condition, not suitable for grazing cattle. Control of this vegetation is only possible with a herbicide that requires cattle to be withheld from market for 12 months or with “Roundup” which will kill all grasses. -- 2 of 9 -- 3 [6] Mr Arkinstall made clear at an early stage that he was not sure of the accuracy of the $350,000 figure for unimproved value which had been claimed in the notice of appeal. This had been reached by estimating the potential sale price of the developed subject property and deducting an estimate of the value of the improvements. He directed attention to two sales used by the Valuer-General to value the subject and stated that Sale 1 was a forced sale so was not suitable as an indicator of market value and in the case of Sale 2 the purchaser had paid too much for it, having received generous compensation for land resumed for the Wyaralong Dam and therefore possessing excess funds able to be applied to Sale 2. [7] The appellant directed attention to a number of alternative sales which were contended to show a lesser level of value to that arrived at by the respondent. I will refer to these sales, as the appellant did, for convenience, by reference to the property name or the owner’s name. Comprehensive details were provided by the appellant in a Table in Exhibit 2. [8] The Bright sale, six months prior to the valuation date, was of improved land with an area of 94.94 ha. It showed, the appellant said, an unimproved value of approximately $2,317 per ha. [9] The Stewart sale, a month prior to the valuation date, with an area of 138.12 ha, a house, cattle yards, sheds and irrigation licence, is steeper but with more favourable soils and grass. It showed an unimproved value of $3,185 per ha. [10] Greenacres, a 455 ha property, sold in 2009 for an unimproved value, per ha, which the appellant contended to be $2,308. [11] Ward Road sold in September 2010 for $1.6 million. It is 512 ha and its unimproved value was contended to be $1,758 per ha. It had been for sale for years for $3 million but its sale for $1.6 million showed, it was urged, a reduction in values. [12] Cahill, 143.16 ha, sold on 30 September 2011 for just above its unimproved valuation. This sale showed a land value of $2,794 per ha. [13] Bignell, 461.61 ha, sold on 26 July 2011 for $2.86 million. It had sold in 2006 for $3.6 million, indicating a decline in values. [14] The property described as Philp Mountain Road, of 167.91 ha, sold for $400,000 on 13 October 2011. It was described as steeper and with more inaccessible country than the subject and the appellant assessed it as having an unimproved value of $2,650 per ha. -- 3 of 9 -- 4 [15] The appellant also referred to Philp Mountain Road, Brights and 505 Tartar Creek Road as examples of properties selling at or below their unimproved values, demonstrating a reduction in value. Non-sales [16] The appellant argued that examples of “non-sales”, where properties had failed to attract a buyer, could be indicative of market values. Examples were given of Court Hill Lodge, listed from around January 2012 for $895,000 and still for sale and the Downes family property which is now listed for $1.4 million, negotiable. The respondent’s case [17] The respondent relied on the expert evidence of Mr Denis R Wall, who holds the degree of Bachelor of Business (Real Property Valuation and Administration). Mr Wall is a registered valuer under the Valuers Registration Act 1992. He prepared a report, which became Exhibit 6, and gave oral evidence. Mr Wall was not the original valuer who was responsible for the present valuation but has considered the subject property and prepared his valuation report of it for the present proceedings. He supports the value of $630,000 as at 1 October 2010. [18] Mr Wall was present in Court throughout the appellant’s case. He corrected his error in the area of the irrigation licence, substituting 65 for 16 ha and stated that his unimproved valuation of the subject land was not affected by that error. His evidence was that he was aware that the licence area was actually 65 ha. Valuation method [19] Mr Wall valued the subject land by the method of direct comparison with sales. The sales which he chose for comparability are all, like the subject, zoned Rural and are largely basalt forest country. He pointed out that the subject has good flats and good access to water. He did not consider that the material produced in the appellant’s case required him to change his valuation of $630,000. The sales evidence [20] Sale 1 on 6 February 2010 was of 103.73 ha which sold for $680,000. With clearing, fencing and water improvements, its analysed unimproved value was $563,414. The respondent’s applied unimproved value was $350,000, which yields $3,374/ha. This application rate, of the order of 62%, was the subject of a question from the Court about the rate used. Mr Wall clarified that he had not himself used this application but had used $500,000 as a conservative use of the $563,414 analysed figure. Applying the $500,000 to the area of 103.73 ha allows the rate per hectare to be derived as follows: -- 4 of 9 -- 5 $500,000 = $4,820.21 per hectare 103.73 ha This figure was not specifically extracted by Mr Wall. [21] Mr Wall considered this sale to be superior to the subject on a rate per ha basis due to its smaller size but inferior overall given the size and quality of the flats and inferior water availability. Is Sale 1 a sale properly representing the market? [22] The appellant says this was a forced sale due to business pressures on the vendors. Mr Wall gave evidence that he spoke to the purchasers, not the vendors, and was satisfied that the sale was properly able to be used for present purposes. The test to be applied has been stated by Isaacs J in the High Court’s decision in Spencer v The Commonwealth.1 Considering the value of the land in a resumption case, his Honour said: “To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration.” [23] The valuer’s evidence is that he spoke to the purchaser soon after the sale and decided that the transaction was a proper market transaction. The appellant’s Exhibit 2 on page 5, contains the following: “I contacted his son Lincoln (who lives on the family property over the road), who said they didn’t really want to sell this property, but they own a large trucking business and one client owed them in excess of $100,000. They needed cash to keep going themselves so they made the decision to sell to stay afloat.” [24] The vendor postulated is a vendor willing to sell for a fair price but not anxiously desirous to sell. The evidence provided in Exhibit 2 in relation to the circumstances of this sale is material not known to Mr Wall when he selected this sale for the present purpose. It is different to the information he had from the purchaser. However it would not be unexpected that it would be known to the vendor but not shared with a prospective purchaser. It was not contradicted by any evidence on that point and was not challenged, unsurprisingly, as there was no conflicting evidence. I accept the evidence that the respondent’s Sale 1 was not of such a nature that it would pass the Spencer test and am satisfied that it should not be relied upon for present purposes. [25] Sale 2 used by Mr Wall was of 126.431 ha of land on 18 October 2010 for $685,000. Improved with clearing, fencing and water improvements, its analysed unimproved value was $499,439 which yields $3,950 per ha compared to the subject’s $3,805. It is 1 (1907) 5 CLR 418. -- 5 of 9 -- 6 smaller than the subject and Mr Wall considered it to be inferior overall. The flats were inferior in size and quality and there was inferior water availability and access. It was considered to be similar to the subject in general location and services. It was assessed as slightly superior to the subject on a rate per ha basis due to its smaller size. [26] The appellant had criticised Sale 2 on the basis that the purchaser, having received compensation for land taken for Wyaralong dam, was in the market with overly generous compensation and this distorted the market by freeing the purchaser to, in effect, pay above the market price for the land. As distinct from the evidence affecting Sale 1, this is a contention unsupported by evidence and I am not satisfied that it provides a proper basis to exclude this sale from consideration. [27] Sale 3 considered by Mr Wall was of 152.129 ha which sold on 12 November 2010 for $1,025,000. Improved with a dwelling, cattle yards, sheds, fencing and clearing, Mr Wall, as a valuer, analysed the unimproved value to be $600,000 which is $3,944 per ha. He considered this sale slightly inferior to the subject as it has a greater component of steep forest country and inferior water availability, which is still good. Size, access and general proximity to Beaudesert he regarded as similar. Mr Wall assessed this sale as similar overall on a rate per ha basis and inferior overall. [28] Mr Wall, having heard the appellant’s case, gave evidence that it did not cause him to feel the need to revise his valuation. In relation to the African lovegrass, his information was that it was palatable to stock when it is young and that control of it is a management matter, there being no market evidence that its presence had an adverse impact on prices paid in the property market. [29] Mr Wall considered the Bright sale out of line with the market so not of assistance. The Stewart sale not helpful as it is scrub country which was in a run-down state. The Greenacres and Ward Road sales were of much larger blocks and were not used as he had better sales to consider. In relation to the “non-sales”, Mr Wall was of the opinion that a listing for sale was not of assistance in assessing value in the market but an actual sale was. When cross-examined as to whether he was in error in describing Running Creek Road, on which the subject is located, as dual-width, as he reported in Exhibit 6, Mr Wall stated that this would not affect the value of the subject if he was incorrect about it, which he did not concede. [30] Mr Wall was cross-examined about the challenges for a valuer in analysing the unimproved value of land where, particularly in the case of Sale 3, there were significant improvements. Mr Wall was of the opinion that he had used the sales which were the most comparable with the subject. -- 6 of 9 -- 7 The appellant’s final position [31] In his final address, Mr Arkinstall argued that the respondent’s Sales 1 and 2 were slightly superior to the subject which, being larger, ought to have a reduced rate per ha. He contended for $3,000 per ha. This, when applied to the area of 165.579 ha produces an overall total figure of $496,737. The applicable law [32] This Court is not an investigating tribunal and must rely on the evidence put before it by the parties. In J.L. 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.” The Land Court’s place in the judicial system is below the Land Appeal Court, the decisions of which are binding on it. That Court has considered the method of valuation most likely to provide the best indicator of land value. In N.R. and P.G. Tow v Valuer- General (1978) 5 QLCR 378, 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.” [33] Much of the relevant law was summarised by 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 judgement 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: (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). … -- 7 of 9 -- 8 (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).” [34] The appellant, by s.169(3) of the Land Valuation Act 2010 (the Act), bears the onus of proof and, by s.169(1) is limited to its grounds of appeal. Applying the law [35] In view of the nature of Sale 1 as a sale not passing the Spencer test, the Court will not place any reliance upon it. The contest between the parties is further clarified by the expert evidence provided by Mr Wall, who was the only source of relevantly qualified expert evidence in this case. Mr Wall’s opinion, uncontradicted by any evidence from another expert valuer, was that the material relied upon by the appellant did not require him to revise his valuation, which now rests on a reduced basis, deprived of support from Sale 1. The Court has declined to place reliance on Sale 1 but does not otherwise have any cause to reject the rest of Mr Wall’s opinion. His error in reporting the area of the irrigation licence and the dispute as to the characteristics of Running Creek Road are not matters which, in his view, would affect his valuation. The Court has no basis to form an adverse conclusion as to Mr Wall’s credit and the appellant did not urge it to do so. In essence, the respondent’s case rests upon Sales 2 and 3. The submissions on behalf of the appellant that the Court could conclude that Sales 1, 2 and 3 or any of them support a rate per hectare of $3,000 for the subject are not evidence from a qualified expert. That evidence came from Mr Wall only and was that those sales support a rate of $3,805 per ha. Although the basis for this conclusion must now be regarded as reduced, rejecting Sale 1 does not assist the Court in being persuaded by the appellant that any of the remaining material supports an overall rate per ha of $3,000 or any other figure. [36] The expert analysis of Sale 2 shows that its supports $3,950 per ha and is considered slightly inferior to the subject. Its higher per ha rate is due to its smaller size. Sale 3, although more challenging to analyse due to its improvements, was analysed by the only witness qualified to do so. It was considered to be slightly inferior to the subject and similar on a rate per ha basis. The rate per ha derived from analysis of the sale is $3,944. In view of that, I am satisfied that the rate of $3,805 overall applied to the -- 8 of 9 -- 9 subject, and its valuation of $630,000, is supported by Sales 2 and 3 used by Mr Wall and is a properly conservative valuation in view of those sales. [37] The evidence adduced on behalf of the appellant is not sufficient to establish that the unimproved valuation of the subject land at 1 October 2010 was $3,000 per ha, which would be $496,737. The appellant has not established that the appeal should succeed and the Court must therefore act as required by s.170 of the Act and confirm the valuation appealed against. Orders 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. WA ISDALE MEMBER OF THE LAND COURT -- 9 of 9 --