Dunning v Valuer-General [2012] QLC 66

LAND COURT OF QUEENSLAND CITATION: Dunning v Valuer-General [2012] QLC 66 PARTIES: Barrie John Dunning (appellant) v. Valuer-General (respondent) FILE NO: LVA491-11 DIVISION: General Division PROCEEDING: Appeal against annual valuation under the Land Valuation Act 2010 DELIVERED ON: 3 December 2012 DELIVERED AT: Brisbane HEARD ON: 8 November 2012 HEARD AT: Toogoolawah MEMBER: Mr WA Isdale ORDERS: 1. The appeal is dismissed. 2. The valuation appealed against, that is of $355,000 on 1 October 2010, is confirmed. CATCHWORDS: VALUATION OF LAND ― ANNUAL VALUATION Land Valuation Act 2010 Valuation of Land Act 1944 Clough v Valuer-General (1981-82) 8 QLCR 70 WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44 Mayne Property Development Pty Ltd v Chief Executive, Department of Natural Resources (1996-97) 16 QLCR 709 NR and PG Tow v Valuer-General (1978) 5 QLCR 378 -- 1 of 7 -- 2 APPEARANCES: The appellant represented himself Mr P Prasad, senior lawyer, for the Valuer-General Background [1] In accordance with the requirements of the Land Valuation Act 2010 (the Act), the Valuer-General valued the land the subject of this appeal as at 1 October 2010. The land was valued as part of a routine process of annual valuations for rating purposes. The valuation arrived at was $355,000 for the 139.5173 ha of rural land being considered. The appellant, dissatisfied with the Valuer-General’s valuation, lodged an appeal to this Court, contending that the correct valuation was $200,000. The land is to be valued in its notionally unimproved state and in accordance with the Act is valued as a single parcel with the concession applicable since it is used for farming. It is composed of two lots, numbered 54 and 87. Valuation [2] The value of this land was assessed at $380,000 on 1 October 2009. That valuation took effect on 30 June 2010. The next valuation, assessed as at 1 October 2010, is $355,000, which valuation took effect on 30 June 2011.1 It became clear in the evidence that the valuation had been reduced to take into account the effect of major flooding which took place in early 2011. [3] This appeal concerns the valuation made as at 1 October 20102 and the grounds of appeal centre on damage to the land by erosion, with a focus on nearby gravel extraction in this context.3 The case for the appellant [4] The appellant’s case consisted of the evidence of one witness, Mr Lindsay H Horswood, a registered valuer and certified practising valuer. Mr Horswood prepared a report which, with its annexures, became Exhibit 2. Mr Horswood gave evidence and was cross-examined. Mr Horswood’s valuation [5] Mr Horswood’s report makes very clear, on its cover, in bold across the top of each of the 11 numbered pages and in the text at page 4 that he has valued the land at 1 October 2011, fully a year after the date of the valuation which is the subject of this appeal. Mr Horswood values the land at $185,000 as at 1 October 2011. He pointed out that 7.27 ha of land was lost from Lot 54 in the January 2011 flood event, leaving 1 Exhibit 4. 2 Exhibit 1. 3 Exhibit 1. -- 2 of 7 -- 3 undulating, washed away and unproductive land that does nothing for the value of Lot 54. Mr Horswood’s evidence [6] Mr Horswood was not asked, in his evidence-in-chief, any questions about the valuation report prepared on behalf of the Valuer-General. When asked a question in re- examination about the sales evidence used by the Valuer-General his response was directed to his own sales instead and the matter was not pursued. The result was that the valuer called by the appellant did not challenge the sales evidence relied upon by the Valuer-General in any way at all in a case where his own valuation was as at the wrong year. Cross-examination of Mr Horswood [7] Cross-examination of Mr Horswood revealed that he had not seen the Notice of Appeal, Exhibit 1, before being shown it in the cross-examination. He had considered three sales in preparing his valuation: Sale 1, of 107.5 ha of rural land at Spring Creek Road, Harlin which sold for $500,000 in July 2011. Sale 2, being two adjoining lots totalling 244.25 ha of rural land at Harlin which sold for $690,000 in March 2011. Sale 3, 56.79 ha of rural land and improvements which sold for $725,000 in July 2010. Mr Horswood allowed $250,000 for building improvements and sheds and with allowances for clearing, fencing and water, as well as development interest, came to an assessed unimproved value of $242,000. In his calculations he allowed $43,054 for what he described in his report, at page 10, as “Interest on unimproved Value Development Period 2 Years”. The rationale for this was not explained [8] In cross-examination, Mr Horswood asserted that sale 3 was relevant for a valuation as at 1 October 2010. No such assertion was made concerning his sales 1 and 2. Mr Horswood’s method [9] Mr Horswood’s report contains no opinion about the value of the land on 1 October 2010 although he is of the view that his Sale 3 is relevant to the value at that date. He allowed $250,000, in a sale for $725,000, for “building improvements and sheds” and $135,000 in total for the clearing of 54 of the 56.79 ha of land sold. This land was sold in a significantly improved state, requiring large allowances for those improvements. This provides a challenge in finding the correct allowances for the added value of the -- 3 of 7 -- 4 improvements. In appeal by N.R. and P.G. Tow v Valuer-General4 the Land Appeal Court said: “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.” The same Court said in Clough v Valuer-General:5 “It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements. Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement. In Tooheys’ case and Jowett’s case the method of ascertaining the improved value of the subject property and deducting the value of the improvements therefrom was adversely criticized. Whilst in some cases it may be appropriate to adopt the method, it seems to us that in the majority of cases it introduces additional items to value each of which can be the subject of a difference of opinion and thus increase not only the work load of the valuer and the Courts but also the difficulties and uncertainties of arriving at a reasonably correct unimproved value.” The Land Appeal Court also said in Fischer v Valuer-General:6 “It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels.” [10] This Court will necessarily prefer the guidance obtained from sales of unimproved or lightly improved parcels of land where such sales are available. Mr Horswood’s approach [11] Mr Horswood pointed out7 under the heading “Assumption” that although s.57 of the Act requires that these adjoining lots be included in the one valuation, lots 54 and 87 could be sold separately. He concluded from that fact that the unimproved value of each should be separately assessed and added together. Lot 54 is land locked and he expressed the view that “its liability to contribute to Local Authority rating is taken away.” [12] Mr Horswood proceeded8 to value the 114.57 ha of Lot 87 at $185,000 and the 24.944 ha of Lot 54 at $0, concluding that the subject land was valued, at 1 October 2011, at $185,000. He then9 provided an alternative calculation “as if lots 87 and 54 were one 4 (1978) 5 QLCR 378 at 381. 5 (1981-82) 8 QLCR 70 at 76. 6 (1983) 9 QLCR 44 at 46. 7 Exhibit 2 page 2. 8 Exhibit 2 page 10. 9 Exhibit 2 page 11. -- 4 of 7 -- 5 parcel of land”. In this calculation, he valued Lot 87 at the same $185,000 and Lot 54 at $43,000, being $228,000 in all. As has already been discussed, Mr Horswood has not contended that either of these figures is the value at 1 October 2010. He has said that his sale 3 would be relevant in arriving at the value of the subject land as at 1 October 2010 but not what that value would be or how it ought to be arrived at. The authorities to which I have referred and which are binding on this Court make clear the caution which needs to attend the use of a sale with the amount of improvements that are on Mr Horswood’s Sale 3. Conclusion on Mr Horswood’s evidence [13] The Court does not have the benefit of Mr Horswood’s opinion of the value of the subject land at the relevant date and is without any opinion from him on what conclusion could be reached from using his Sale 3 to deduce that value. Sale 3 is, unfortunately, an improved sale so if suitable unimproved or lightly improved sales are available, they must be preferred. The appellant’s case does not include evidence from which it could be concluded that the subject land ought to be valued at $200,000, or indeed any other amount, on 1 October 2010. The case for the Valuer-General [14] The Valuer-General’s case was the evidence given by and the report10 prepared by registered valuer Mr Colin Clark. Mr Clark was present in Court during the whole of the appellant’s case. He valued the land at $355,000 and stated that he had read Mr Horswood’s report and heard his evidence. This had not provided him with any reason to alter the opinions expressed in his report or the valuation arrived at. Mr Clark was of the view that Mr Horswood’s response to the “assumption” stated on page 2 of Exhibit 2 concerning s.57 of the Act was not correct and that the two lots must be valued as one. Mr Clark gave evidence that Mr Horswood’s Sale 3 was highly improved, with two houses and a piggery and he had not used this sale as there was better evidence available. In relation to Mr Horswood’s Sale 1, Mr Clark noted that it occurred in July 2011, after the date of issue of the valuation. Sale 2, in March 2011, was not accepted as useful by Mr Clark as it was of two lots which could be sold separately and, as in the case of Sales 1 and 3, better evidence was available. Mr Clark was critical of Mr Horswood’s method, on page 10 of Exhibit 2, where he starts with a postulated value of $527,022 for the land and then makes deductions from that to get down to $185,000 when it is not clear to Mr Clark why the $527,022, being 114.57 ha at $4,600 per ha, should be a correct starting point. 10 Exhibit 3. -- 5 of 7 -- 6 [15] Mr Clark made it clear that the flooding in January 2011 had been taken into account in arriving at the unimproved value at 1 October 2010 as it had occurred before the valuation was issued on 30 June 2011. Mr Clark’s valuation report [16] There is no useful and probative evidence contrary to Exhibit 3. Mr Clark’s description of the land does not differ in substance from the description provided by Mr Horswood. Mr Clark’s understanding of the qualities and situation of the land was not shown to be incorrect when he was cross-examined. Mr Clark valued the subject land by the method of direct comparison with four sales. As I have noted, the choice of those sales was not criticised by the appellant or the appellant’s valuer. The sales [17] Sale 1, on 15 November 2010 for $400,000 was of 71.66 ha of lightly improved rural zoned land, including cultivatable land, at Spring Creek Road Harlin. The improvements allowed for were fencing and clearing. An allowance was also made for development interest. The analysed unimproved value after those deductions was $308,793 and the amount of $300,000 was applied. It is 56 ha smaller than the effective area of the subject land after allowing for the reduction in useable area of the subject due to flooding and erosion. This sale is assessed as inferior to the subject land. [18] Sale 2, on 31 August 2010 for $1,800,000 was of 283.1 ha of improved rural land on the Kilcoy to Murgon Road. It has slightly more cultivatable land than the subject property, inferior irrigation water entitlement but a superior location. It was assessed as superior overall to the subject land. With a five bedroom dwelling, sheds, cattle yards, dams, 1,500 olive trees and other improvements its analysed value was $794,591. The applied value was $780,000. This sale is relatively heavily improved and I treat it as of quite significantly reduced assistance compared to Sale 1. [19] Sale 3, on 4 December 2009 for $1,130,000 was of 193.3 ha freehold and 29.2 ha leasehold of improved rural land at Cooeimbardi. The improvements consisted of a house, cottage, hut, sheds, well, bore, yards, pumps, mill, fencing and clearing. The analysed unimproved value was $707,510 and $590,000 was applied to the freehold and $59,000 to the leasehold component. The land has frontage to the Brisbane River and a greater proportion of alluvial flats than the subject but no irrigation entitlement. It was considered superior to the subject land overall. Again, this sale is of reduced usefulness compared to sales of unimproved or lightly improved land. [20] Sale 4, on 3 November 2011 for $625,000 was of 184.2 ha of rural land at Gregors Creek. It was lightly improved with fencing and clearing. An allowance was made for -- 6 of 7 -- 7 development interest. The analysed unimproved value was $497,340 and the amount of $490,000 was applied. With a superior location, inferior access and lack of a Brisbane River frontage it was considered superior overall. It is a run down property with a high proportion of vegetation regrowth and lantana. [21] Treating the sales in the way required by the Land Appeal Court, sales 1 and 4 are the more comparable. Although the sales were not criticised at all by the appellant’s valuer the sales do nevertheless have different levels of usefulness. Even though Mr Clark’s report was not attacked by the appellant in respect of the sales used, the Court has carefully considered it and is satisfied that there is a sufficient basis for the conclusions drawn. The current Act does not include a provision equivalent to s.33 of the now- repealed Valuation of Land Act 1944 which deemed valuations made under that Act to be correct until proved otherwise. Conclusion of Mr Clark’s valuation [22] I am satisfied that even if the sales numbered 2 and 3, the weakness of which I have considered, are wholly disregarded, sales 1 and 4 are so comparable as to provide a sufficient basis for Mr Clark’s conclusions on the value of the subject land. Where the valuer must draw the line between sales that are comparable and those that are not is a subtle matter of degree dependant on professional skill.11 [23] The appellant’s case does not provide evidence of a level of value of this land as at 1 October 2010 at all and certainly not the $200,000 contended for. I conclude that the appeal is not made out. In addition, I conclude that there is sufficient evidence to support the Valuer-General’s valuation of $355,000 as at 1 October 2010. Orders 1. The appeal is dismissed. 2. The valuation appealed against, that is of $355,000 on 1 October 2010, is confirmed. WA ISDALE MEMBER OF THE LAND COURT 11 Mayne Property Development Pty Ltd v Chief Executive, Department of Natural Resources (1996-97) 16 QLCR 709 at 720-721. -- 7 of 7 --