Brook v Valuer-General [2011] QLC 76

LAND COURT OF QUEENSLAND CITATION: Brook v Valuer-General [2011] QLC 76 PARTIES: Brook Investments Pty Ltd & Ors (Appellants) v. Valuer-General (Respondent) FILE NO: VLA215-10 PARTIES: PNH Brook & Anor (Appellants) v. Valuer-General (Respondent) FILE NO: VLA217-10 PARTIES: PNH Brook & Anor (Appellants) v. Valuer-General (Respondent) FILE NO: VLA218-10 PARTIES: PNH Brook & Anor as Trustee (Appellants) v. Valuer-General (Respondent) FILE NO: VLA219-10 DIVISION: General Division PROCEEDING: Appeals against valuations under the Valuation of Land Act 1944 DELIVERED ON: 13 December 2011 DELIVERED AT: Brisbane HEARD AT: Toowoomba on 22 and 23 March 2011 and Brisbane on 24 and 25 October 2011 MEMBER: His Honour Mr WA Isdale -- 1 of 17 -- 2 ORDER/S: 1. Appeal VLA215-10 is dismissed. 2. Appeal VLA217-10 is dismissed. 3. Appeal VLA218-10 is dismissed. 4. Appeal VLA219-10 is dismissed. CATCHWORDS: STATUS OF VALUATION - VALUATION DEEMED TO BE CORRECT UNTIL PROVED OTHERWISE Land Valuation Act 2010, ss 269, 271 Valuation of Land Act 1944, ss 33, 44(8), 63A(2) and (3) Cattanach v Water Conservation and Irrigation Commission (1962) 9 LGRA 352 at 361 Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd [2009] QCA 399 at [171] Crompton v Commissioner of Highways (1973) 32 LGRA 8 at 23-24 Grahn v Valuer-General (1992-1993) 14 QLCR 327 at 328-329 ISPT Pty Ltd v Melbourne City Council & Anor [2008] VR 447 at 474 Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 743-744 The Law Affecting Valuation of Land in Australia 4th Edn. Alan A Hyam, The Federation Press 2009, p.199 APPEARANCES: Mr ANS Skoien of Counsel, instructed by Wonderley & Hall, solicitors for the appellants Mr SP Fynes-Clinton of Counsel, instructed by Legal Services, Department of Environment and Resource Management, for the respondent Background [1] Withcott, a town of about 1,000 people, lies in the Lockyer Valley, some 120 km west of Brisbane and 10 km east of Toowoomba. Close to the steep eastern escarpment of the Great Dividing Range, it is connected to its larger neighbours by the Warrego Highway. [2] The respondent, the Valuer-General, has routinely valued the land in this locality and on 22 March 2010 issued valuations as at 1 October 2009, to take effect on 30 June 2010. These valuations were made in accordance with the Valuation of Land Act 1944 (the Act). Some of the valuations were of land owned by the appellants who, after unsuccessfully objecting to the valuations, appealed to this court. -- 2 of 17 -- 3 [3] The land, the subject of these appeals, is described as follows: Court File No. Real Property Description Location and Area Property Use and Zoning VLA215-10 Lot 1 on SP159529 Roches Road Withcott 47,720 m² Industrial use Industrial zoning VLA217-10 Lot 2 on SP159529 Roches Road Withcott 58,300 m² Vacant Industrial zoning VLA218-10 Lot 3 on SP159529 Warrego Highway Withcott 24,388 m² Nursery use Industrial zoning VLA219-10 Lots 59 and 60 on SP192321 1-3 Stewart Street Withcott 4,073 m² each Display Home use Commercial zoning [4] The following table shows the Valuer-General’s valuations as at 1 October 2009 and the valuations contended for by the appellants: Lot No. Valuer-General’s valuation as at 01.10.09 Valuations contended for by the appellant 1 $1,600,000 $33.52/m² $715,000 $14.98/m² 2 $1,300,000 $22.29/m² $190,000 $3.25/m² 3 $610,000 $25.01/m² $245,000 $10.04/m² 59 and 60 $570,000 $139.95/m² $375,000 $92.06/m² [5] For efficiency, all of the appeals were heard together. [6] The appellants pointed out that the Valuer-General’s values had increased substantially from the last valuation, as at 1 October 2006, when the following values were set: Lot No. 1 $310,000 2 $410,000 3 $255,000 59 and 60 $255,000 The Land [7] Lot 1 is on the north-western edge of Withcott. It fronts on to Roches Road which is bitumen surfaced and provides a direct and short access to the Warrego Highway. Access from Roches Road to the land is good along the approximately 220 m frontage. Gatton Creek forms the southern boundary which accordingly has an irregular shape. About 1 ha is creek flat which is subject to flooding and the culvert under Roches Road can easily be cut after a storm brings three to four inches of rainfall in a short period. -- 3 of 17 -- 4 This will cut Roches Road briefly between the land and the highway and in practice work in the industrial business on the land has to be abandoned for the day so that the employees can get across the culvert and go home before the road is cut by flooding. The land has been cut, filled and levelled and is used for a large industrial building where the windmill, tank and pump business of Tyco/Southern Cross is carried on. [8] Lot 2 is located immediately to the north, which is uphill, of Lot 1. Like Lot 1 it is dry sclerophyll forest country and has been mostly cleared except for along Gatton Creek on the eastern side of the land. The land has about 230 m of frontage to Roches Road and is vacant. It has the same benefits, and disabilities, of access to Roches Road as Lot 1. Like Lot 1, electricity, town water and telephone are available. [9] Lot 3 adjoins Lot 1 to the east and south and is partly developed by levelling and fill. A nursery business has been operated on the land. It has an irregular shape, as do Lots 1 and 2, and is mainly Gatton Creek flats. It has access to the highway via a slip lane and the lower parts of the land closest to the highway are at risk of flooding from Gatton Creek. [10] Lots 59 and 60 are regular shaped adjoining blocks on the corner of Stewart Street and the Warrego Highway, which is a limited access road. Stewart Street joins the west- bound portion of the highway on its southern side and the intersection also allows access to the east-bound part of the highway. This intersection is in the township of Withcott at a point where the highway speed limit is 60 km/h. Access to the land is good and it is fairly level land with town water, electricity and telephone service available. The legal framework [11] The appeals must be determined under the Valuation of Land Act 1944 (the Act).1 The grounds of appeal are in substance the same in each case, that the valuations are not supported by sales evidence. The Act provides that the hearing must be limited to the grounds stated in the notice of appeal and that the burden of proof is on the appellant.2 [12] The respondent also has the benefit of s.33 of the Act, which provides that: 33 Status of valuation Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered. 1 By virtue of sections 269 and 271 of the Land Valuation Act 2010, the now-repealed 1944 Act will continue to apply to valuations which take effect before 30 June 2011. 2 Valuation of Land Act 1944 s. 45(8) and s.63A(2) and (3). -- 4 of 17 -- 5 The dispute [13] As disclosed by the grounds of appeal, the case for the appellants is that there is no support in evidence from sales of comparable land for the values which were set by the respondent. The appellants relied on the evidence of a registered valuer, Mr John Olive, who prepared a report and gave oral evidence. The respondent produced a report in relation to each parcel of land and the author of the reports, registered valuer Mr Daniel O’Connor, also gave evidence. The evidence of Mr Roy John Brook [14] Mr Brook, one of the owners, prepared a statement and gave oral evidence. He explained that he and his wife purchased Lots 1, 2 and 3 as part of a larger parcel in about 1983 or 1984 when they owned the Withcott Hotel. That parcel was 160 acres and was zoned rural at the time; it lay along the northern boundary of the hotel. He sold part of it to a developer who subdivided it. [15] In the mid 1990s he and his wife had a sandstone building constructed on Lot 3 on the site of the old Cobb & Co staging post. Their daughter and son-in-law operated a nursery business from the building for some time. The building has been vacant for at least the last 10 years. The flood event of 10 January 2011 saw Lot 3 inundated and floodwater reached a depth of at least 900 mm in the sandstone building. [16] Lot 1 is leased to Tyco, the pump, tank and windmill business. Mr Brook is confident that the only reason Tyco became a tenant of Lot 1 was that it was a tenant of property he and his wife owned in Toowoomba and was looking to move from its old premises in Toowoomba to a new foundry specifically built to meet its needs. The land at Withcott was valued at a low level and a low rent was able to be offered. Tyco’s buildings were flooded in the 10 January 2011 flood event. Roches Road is closed whenever there is heavy rain. There is no sewerage in Withcott. [17] The southern area of Lot 2 was flooded in January 2011. Its higher part is quite steep and it is foreseen that any future development would require dedication of some of it as road reserve. Mr Brook has been unable to find a tenant. He pointed out that he and his wife owned land bordered by Lots 2 and 3 which has been sold, with difficulty and delay. [18] Lots 59 and 60 were purchased for more than their market value as at the time, Mr and Mrs Brook were attempting to acquire adjoining land, which ultimately proved unsuccessful. A tenant now has a removable dwelling on the land as part of its business. The land returns a rental of $36,000 per annum and is subject to a listing regarding unexploded ordnance. -- 5 of 17 -- 6 The valuation evidence [19] Mr Olive considered the journey down the Range to be a physical and emotional barrier to people living in Toowoomba and that Withcott was an isolated and forgotten backwater. He was of the view that the proposed Toowoomba Bypass, which will also bypass Withcott, would have an adverse impact on the value of commercial and industrial land in Withcott. Additionally, the future development of the Charlton Wellcamp Enterprise Area, 13 km west of Toowoomba, would reduce the appeal of land at Withcott to potential industrial tenants. [20] The evidence was that the bypass has not received funding yet and is not likely to become a reality any time soon. The Charlton Wellcamp area, developed as part of the planning for the bypass, is only at an early stage and its effect can only be considered as at the date of valuation. Neither valuer suggested that the January 2011 flood event would have been foreseen by a purchaser in the market for the subject land on 1 October 2009. Accordingly, it cannot be considered in assessing value in these appeals. [21] Both valuers agree that evidence of comparable sales is the correct method to value the land.3 [22] The valuers have conferred and produced a joint report.4 Amongst their many disagreements are those relating to the possibility of military explosives left after World War II and the January 2011 flooding. The flooding which occurred well after the valuation date is not relevant to the value as at 1 October 2009. Mr Olive’s reference to “Climate Change policy”5 was not supported by any evidence that could lead to his conclusion that the January 2011 flood event “could have been predicted by any prudent purchaser” and he gave no examples of such an allowance being found in any sales. He has not made any identifiable allowance for this in his valuation and I find his reference to it to be unhelpful. In relation to the possibility of munitions being found on Lots 59 and 60 of the subject land, there is no evidence of actual presence and the possibility appears to exist in the general area. Again, no identifiable allowance has been made in his valuation for this, so reference to it is completely unhelpful. Mr Olive’s valuation of Lot 1 [23] Mr Olive valued Lot 1 by reference to his sales 1, 3, 7 to 7J, 9, 10 and 11 which he saw as supporting a rate of $15/m². His sale 1, of vacant land at Lawlers Road, Helidon, sold on 23 January 2008 for $2,294,000, with an area of 22.94 ha, that is $10/m². It was 3 Exh.13 p.6. 4 Exh.13. 5 Exh.13 p.11. -- 6 of 17 -- 7 zoned future industrial, inferior zoning to the subject land. He saw the location as superior and made allowance for the larger size. [24] Sale 3, 6 Beavan Street, Gatton was an old sawmill site near the centre of town. With an area of 2.28 ha and on 18 titles it was zoned industrial and had an obvious potential for higher use. In fact 66 retirement units are planned there. This is a superior flood-free location and the sale shows $60.75/m². He applied $39.91/m² unimproved value to this sale. [25] Sales 7 to 7J are sales of industrial land at Helidon Spa from December 2006 to March 2009. The area is 160 metres from the Warrego Highway. The latest sale, on 17 March 2009, sale 7, was to an adjoining owner and at $79.60/m² compared with the other sales from December 2006 to September 2007 which sold for between $67.80/m², in December 2006 to $77.46/m², in June 2007. This was relied on to show no significant increase in the prices paid for industrial land in this area and period. Mr Olive describes them as “the closest sales evidence of industrial properties and are in a similar location to the subject sites”.6 [26] Sale 9 is in the Charlton Wellcamp Enterprise area, as are sales 10 and 11. They are zoned future industrial. Sale 9, of 9.16 ha sold for $1,600,000 on 9 May 2008 which equates to a rate of $17.47/m². [27] Sale 10, 37.44 ha, sold on 27 October 2009 for $2,200,000, which equates to a rate of $5.88/m². [28] Sale 11, 10.5 ha, sold on 8 December 2009 for $1,585,000, which equates to a rate of $15.10/m². [29] From those sales, Mr Olive arrived at a rate of $15/m² for industrial land which, when applied to Lot 1 resulted in a value of $715,000. Mr O’Connor’s valuation of Lot 1 [30] Mr O’Connor’s sale 1, which was also Mr Olive’s sale 1, was analysed a little differently. Mr O’Connor allowed $10,000 for the selective clearing and fencing which led to an analysed unimproved value of $2,284,000 ($9.96/m²). He took into account that the sale occurred on 28 January 2008 and applied $2,000,000 ($8.75/m²) as at 1 October 2009. He also took into account the apprehension in the market for future development. The purchaser is a paper tissue manufacturer and the land is a future industrial site without a development approval. Mr O’Connor noted that there was nothing built as at December 2010. 6 Exh.1 p.27. -- 7 of 17 -- 8 [31] Mr Olive saw this location as superior to the subject and Mr O’Connor assessed it as “a very inferior location compared to the subject”.7 [32] Sale 2, is located at Crowleyvale near the Big Orange shop. It has power and telephone but no town water. The land was purchased by an adjoining owner without the involvement of a real estate agent. It is 37 km east of the subject land, is zoned industrial and has an area of 4,932 m². It sold on 23 January 2009 for $425,000. Allowing $50,000 for clearing, fill and fencing showed an analysed unimproved value of $375,000 ($76/m²) which was applied at $345,000 ($70/m²) as at the 1 October 2009 valuation date. It was assessed as in an inferior location with inferior exposure to the highway and is currently being used to store railway sleepers and other Queensland Rail contractor material. [33] Mr Olive declined to use this sale, seeing it as in a substantially superior location with superior access to the Warrego Highway and not subject to influence from the proposed Toowoomba bypass. [34] It has already begun to appear from the evidence that the valuers have, in the two instances so far considered, looked at the same things and drawn very different conclusions. Sale 1 is either in a “superior” (Olive) or “very inferior” (O’Connor) location to Lot 1 and Mr O’Connor’s sale 2 is either comparable and in an “inferior” location to Lot 1 (O’Connor) or not comparable and in a “substantially superior” location to Lot 1 (Olive). [35] Sale 3, Nans Road, Helidon Spa, a 2,010 m² industrial zoned block sold on 17 March 2009 for $160,000. With $4,000 allowed for clearing and fencing the analysed unimproved value was $156,000 ($77.60/m²). Adjusted to reflect its value on 1 October 2009, $140,000 ($70/m²) was applied. This was a resale of land which had sold for $147,500 in September 2007. The sale in 2007 is Mr Olive’s sale 7C and the 2009 resale his sale 7. Mr Olive states that these Nans Road industrial sales are the closest sales of industrial land, are in a similar location and refute Mr O’Connor’s view of significant increases in the value of industrial properties. [36] Mr O’Connor says that his sale 3 is in an inferior development with inferior access to the highway and, allowing for its size, shows “a significant increase in the market price since the last valuation took place as at October 2006”.8 7 Exh.2 8 Exh.2 p.6. -- 8 of 17 -- 9 [37] Again, the valuers have looked at the same thing and viewed it differently. It is either land in a similar location, the re-sale of which does not show a significant increase (Olive) or it is in an inferior location and shows a significant increase (O’Connor). [38] Sale 4 is of 21,380 m² commercial zoned land just east of Lot 1. It was owned by Mr and Mrs Brook.9 It has town water, power and telephone. On 18 June 2008 the Australian Executor Trustee Limited as trustee for the C & P Gold Coast Property Fund entered into a call option which gave C & P Gold Coast Property Fund the right to buy this land on agreed terms.10 [39] Mr O’Connor used the sale on 13 May 2009 which resulted from the exercise of the option and from the sale price of $2,500,000 allowed $10,000 for clearing and fencing to find an analysed unimproved value of $2,490,000 ($116.50/m²). He applied $1,924,000 ($90/m²) after an apportionment as part of a 2.7602 ha site. When likewise considered as at the last valuation on 1 October 2006 it was assessed as worth $30/m². The superior zoning, smaller size, need for significant earthworks, drainage and road access works were considered in this comparison. This sale was seen as illustrating a significant increase in the market since the October 2006 valuation. Mr O’Connor saw this sale as superior to Lot 1 because of its higher “commercial” zoning.11 [40] Mr Olive12 disregarded the sale as he considered the purchase an imprudent one. He was of the view that the town was not big enough to support a supermarket such as a “Super IGA” and transiting shoppers would continue to Toowoomba or Plainland rather that stop at Withcott. The sale was unconditional but the subsequent development approval contains what he regards as onerous conditions for road works, car parking and building above flood levels. He notes that the project is now for sale, with no tenant pre- commitments. [41] Mr Mark Christian Walsh gave evidence. He is the manager for property of EA Securities Pty Ltd, part of the Australian Executor Trust Limited corporate group. His statement13 makes clear that the option was entered into to protect their existing commercial buildings in the area14 and to provide time to negotiate a favourable development approval. The purchase was concluded without one under pressure from the seller. His written statement includes the following: 9 Exh.6 p.7 para 31. 10 Exh.22. 11 Exh.2 p.7. 12 Exh.1 p.30-40. 13 Exh.22. 14 Transcript Day 3 p.4 lines 34-35. This land adjoins their existing Withcott Central Shopping Centre. -- 9 of 17 -- 10 “8. C & P Gold Coast Property Fund exercised the call option in or about May 2009. Whilst at this time we had not yet obtained the development approval we were confident that it would be forthcoming. 9. The reason we proceeded with exercising the call option without having secured a development approval was because there was pressure coming from the seller to commit. 10. We made a commercial decision to complete the sale to: a. protect our existing commercial centre in the area; and b. ensure that we had the opportunity to establish the first major supermarket in the area. We had heard that another property owner at Withcott was looking into developing a large supermarket on the other side of the road. We did not want to let the property go and loose (sic) our foothold in the market. 11. If we pulled out of the sale we were at risk of loosing (sic) money on our existing commercial centre in the area. We had already invested approximately $2.5 million in the existing centre and were not prepared to have this compromised. 12. If we did not have an invested interest in the area we would have walked away from the purchase and come back to it (in) three to four years time.”15 [42] Mr Olive says this sale is unusable. Mr O’Connor uses it to illustrate a significant increase in the market and Mr Walsh explained the reasons behind the “commercial decision” to complete the sale. I note that it is zoned commercial and Lot 1 is industrial land. Once again, the valuers’ opinions are polar opposites. [43] Sale 5 is the sale of 9.16 ha of industrial land at Wirth Road, Charlton on 9 May 2008 for $1,600,000. Allowing $20,000 for clearing and fencing produces an analysed value of $1,580,000 ($17.25/m²). Adjusting for the 1 October 2009 valuation date gave an applied value of $1,450,000 ($15.80/m²). [44] Mr O’Connor notes that the construction of the Toowoomba bypass road and the Border Railway line from Moree are expected to cause rapid expansion in this area. This could be further than 10 years away as at 2010. This area of 2,000 ha is 13 km west of Toowoomba and is inferior to Lot 1 at present due to the remoteness of time of its potential. As at 1 October 2007 it was valued at $3.30/m² so this sale is seen as evidence of an increase in the market to May 2008. The land has power and telephone available. [45] This sale is Mr Olive’s sale 9. He divided the area into the sale price, making no allowance for clearing and fencing, and derived a value of $17.47/m². After making the allowance for these items, which are there and need to be allowed for, Mr O’Connor found that the sale showed $17.25/m² which he adjusted to allow for market movement over time to produce his applied value of $15.80/m². Lot 1 being in an established area was seen as superior and he valued Lot 1 at $33.50/m². [46] Bearing in mind that Mr Olive has valued Lot 1 at $715,000 ($15/m²) and that he and Mr O’Connor have valued this land at Charlton very similarly, Mr Olive then applies this $15/m² to Lot 1 while Mr O’Connor applies $33.50/m² to it, nearly twice as much. 15 Exh.22. -- 10 of 17 -- 11 [47] Sale 6 is the sale of 37.44 ha of industrial land at Witmack Road, Charlton for $2,200,000 on 27 October 2009. Allowing $50,000 for clearing and fencing produced an analysed unimproved value of $2,150,000 ($5.75/m²). The applied value was $1,900,000 ($5.07/m²). This was Mr Olive’s sale 10. Again, he made no adjustment for clearing and fencing or for the difference in dates between the sale and valuation date. In this case that time interval was minor. Mr O’Connor has been conservative and adjusted the applied figure down. He notes that the property also sold in March 2007 for $800,000 and saw that as supporting a significant increase in the value of industrial land in that period. It has power and telephone services available. There is no town water in this area. [48] Mr O’Connor sees this land as inferior to Lot 1 due to its larger size, remoteness in time of development potential and lack of local infrastructure. Mr Olive sees it as indicating the value of larger areas of land designated for future industrial use. It is certainly much larger than Lot 1 at 4.772 ha which makes it difficult to see how it assists in valuing Lot 1 at either $15 or $33.50/m². [49] Sale 7 is the sale of 10.449 ha of industrial land at Steger Road, Charlton for $1,585,000 on 8 December 2009. Allowing $20,000 for clearing and fencing produced an analysed unimproved value of $1,565,000 ($15.02/m²) and an applied value of $1,400,000 ($13.40/m²). As at 1 October 2007 it was valued at $3.40/m². Mr O’Connor sees it as inferior to Lot 1 for the same reasons as his sale 6, in the same area. [50] It is Mr Olive’s sale 11. He values it at $15.10/m² by dividing the area of 10.5 ha into the sale price. Mr O’Connor uses the precise area and, correctly, allowed for clearing and fencing as well as adjusting the applied value to take into account the sale date. Mr O’Connor sees this land as inferior to Lot 1 for the same reasons he used in relation to the other sales in this area. Mr Olive again uses it as showing the value of “larger areas of land designated for future industrial use”.16 Resolving the valuation evidence for Lot 1 [51] The valuers have looked at the same land and perceived it quite differently: see [34], [37], [43]. In the case of the Charlton Wellcamp land, they see it, on a per m² basis, as equal in value to (Olive) or half as valuable as (O’Connor) Lot 1 at Withcott: see [47]. I have had the benefit of viewing the subject land and the sales. The parties agree that the best test of value will be direct comparison of sales and that the percentage increase over the last valuation is not determinative of anything but, if large, would draw the valuer’s attention. 16 Exh.1 p.29. -- 11 of 17 -- 12 [52] Some relevant principles are set out in the decision of the Land Appeal Court in Grahn v Valuer-General17 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). (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).” Section 33 is the equivalent of s.13(7). [53] Mr Olive has analysed the sales he has used with less precision than has been applied by Mr O’Connor, not allowing for clearing and fencing and not making adjustments to take into account the time between the sale and the valuation date. The differences which are attributable to that are not major but do not display a superior analysis such as would cause me to prefer it to Mr O’Connor’s or which would displace the presumption of correctness. [54] The valuers have assessed features of the sales very differently. The Court has had the benefit of a view which assists in understanding the sworn evidence of the experts. However, where, as here, the experts have seen the same thing and assessed it differently, the view does not entitle the Court to apply what has been seen as if it was evidence and to effectively become a third valuer, supplying its own opinion which might be favourably considered. This could effectively deny procedural fairness to the 17 (1992-1993) 14 QLCR 327 at 328-329. -- 12 of 17 -- 13 parties. Although a specialised judicial tribunal18 not bound by the rules of evidence19 it will employ its expertise to evaluate the evidence before it rather than to substitute its opinion for that of an expert or to effectively construct an opinion incorporating its own outlook. [55] In ISPT Pty Ltd v Melbourne City Council and Another20 the Court of Appeal Victoria said: “Both the evaluation of the theoretical intellectual basis of an expert’s evidence, and the probative force of the evidence founding the expert’s opinion, are proper inquiries, directed to the foundations of opinion evidence.”21 and later: “In turn, the identification and consideration of these factors by the Tribunal was responsive to the evidence and constituted a legitimate forensic assessment. It did not demonstrate the piecing together of a new valuation. It demonstrated an analysis of the evidence supporting the opinions of Mr Karutz and Mr Kensley.”22 [56] ISPT was considered by the Queensland Court of Appeal in Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd.23 At [171] His Honour P Lyons J. with whose reasons McMurdo P and Keane JA, as he then was, agreed, said: “[171] The allegation that there was no evidentiary basis for the application of this rate makes it necessary to focus attention on the Land Appeal Court. The composition of that Court includes two members of the Land Court.156 The Land Court is a specialist tribunal,157 whose members have historically been persons with valuation expertise, or lawyers, usually with considerable experience in dealing with matters of valuation, and whose work in that Court justifies recognition of their specialist expertise.158 In fact, one of the members who constituted the Land Appeal Court has specialist valuation expertise, as well as legal qualifications. It seems to me that the Land Appeal Court is itself a specialist court, with the capacity to form its own views about matters related to value, and employ its own expertise in coming to its conclusions.159 That this is its intended function is apparent from s 66 of the VLA, which requires the Land Appeal Court, when an appeal is successful, to adjust the valuation “to the extent necessary in its opinion” to determine the value correctly in accordance with the VLA. Accordingly, once satisfied that an appeal should be allowed, the Land Appeal Court was entitled to form a judgment about the relativity of the Pacific Fair site to the Chermside site; or to adopt, as it did, the relativity which the Land Court member had applied. [emphasis added] ________________________________________________ 156 Land Court Act 2000 (Qld), s 58. 157 See Land Court Act 2000 (Qld), s 4(1). 158 See ISPT Pty Ltd v Melbourne City Council (2008) 20 VLR 447 at [23]. 159 Cf ISPT Pty Ltd v Melbourne City Council (2008) 20 VLR 447 at [17]-[18]; Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1 at 11. ” 18 Land Court Act 2000, s.4(1). 19 Land Court Act 2000, s.7. 20 [2008] 20 VR 447. 21 [2008] VR 447 [26] citing Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at 743-744 [85]. 22 [2008] VR 447 at 474 [124]. 23 [2009] QCA 399. McMurdo P and Keane JA agreeing with the reasons of P Lyons J. -- 13 of 17 -- 14 [57] Although the Court of Appeal was there considering the Land Appeal Court, s.66 of the Act is equally applicable to the Land Court due to the operation of s.45(8) of the Act. [58] The words which I have emphasised indicate that the Court may apply its expertise to make an adjustment to a valuation once an appeal is successful and that the position otherwise is as described in ISPT Pty Ltd v Melbourne City Council and Another. Reliability of the valuation evidence [59] While both valuers applied the direct comparison method I have noted that Mr Olive’s analysis was less detailed in that he failed to make allowances for clearing and fencing in analysing sales and in one case was less precise in relation to the area involved. In addition, he took into account the January 2011 flood event but made no identified allowance in respect of it. In the presence of these deficiencies in his valuation he has also reported that some parcels of land have very different characteristics, such as quality of location and access, to those characteristics as reported by Mr O’Connor. [60] Mr O’Connor’s evidence was not assisted by the introduction of exhibit 18 during the hearing. A graph he prepared showing the industrial lands plotting area against rate/m², it was described by him as a tool to assimilate information.24 It is illustrative of the market supporting a higher rate/m² for smaller blocks. He did not use this tool to value Lot 1 but manually valued it using the sales.25 Although not of assistance, it does not detract from the valuation as it was not used to prepare it. Resolving the appeal concerning Lot 1 [61] In view of the deficiencies to which I have referred in Mr Olive’s valuation, it is not sufficiently rigorous as to be capable of showing that the respondent acted on a wrong principle or made a serious error of fact or made the valuation by a method which was fundamentally erroneous. The respondent’s valuation has not been proved to be incorrect and retains its status of being deemed to be correct as provided by s.33 of the Act. This appeal, number VLA215-10, is therefore dismissed. The valuations of Lot 2 [62] The valuers have used the same sales to value Lot 2 so identical considerations apply to those elaborated in relation to Lot 1. [63] For the reasons given in relation to Lot 1, the appeal concerning Lot 2, appeal number VLA217-10, is dismissed. The valuations of Lot 3 [64] Again, the valuers have used the same sales and identical considerations apply. 24 Transcript Day 2 p.80 line 50 to p.81 line 10. 25 Transcript Day 2 p.79 line 52. -- 14 of 17 -- 15 [65] For the reasons given in relation to Lot 1, the appeal concerning Lot 3, appeal number VLA218-10 is dismissed. Lots 59 and 60 [66] Mr Olive has valued those lots by use of his sales 5, 12 and 13.26 In his oral evidence he abandoned reliance on his sale 5, said to be a highly improved former service station site on the entry road to Gatton.27 [67] Sale 12 is the sale of Lots 59 and 60 to the appellants on 19 March 2007 for $412,500. The area is 4,073 m² and Mr Olive divides area into the price to derive a rate/m² of $102.28. It is cleared and fenced, has electricity, town water and telephone services connected and is zoned Commercial. He has applied $92/m² to the land based on the sale. Mr Olive is of the view that this land has not increased in value between 19 March 2007 and 1 October 2009 and his application of less than the sale rate would seem to reflect Mr Brook’s evidence28 that he paid above the market value for this land. It is not explained how the amount of this allowance has been arrived at. No allowance is made for clearing and fencing. [68] Sale 13 of 2,613 m² on 3 August 2007 for $100,000 is land zoned residential at the time of sale and which was purchased by the company that now has a medical centre on the site. Mr Olive has divided the area into the sale price to derive a rate/m² of $38.27. No allowance was made for any clearing or fencing. The price, area and location of this sale compares favourably with sales of other residential allotments in Withcott and demonstrates that a residential land value was paid for this land.29 This sale cannot be relied upon to show the value of commercial land at Withcott. [69] Regarding sale 12, of the adjoining Lots 59 and 60; Lot 59 is categorised as having a “slight” potential to be affected by unexploded ordnance.30 The Australian Government Department of Defence states that there is a “possibility”31 that unexploded ordnance may be on the site. No documentary evidence was provided in relation to Lot 60 but Mr Brook’s statement includes it.32 Objection was made to this part of the statement on the ground that the notice of appeal refers only to the valuation not being supported by sales but I do allow this material to be admitted as it amounts to a description of the subject land’s qualities. Mr Olive, in the joint report of the valuers, states that this 26 Exh.1 p.44. 27 Exh.1 p.35. See Transcript Day 2 p.21 line 53 where he stated that “It’s of no real assistance”. 28 Exh.6 p.9. 29 See Exh.17 “Withcott residential sales”. 30 Exh.7. 31 Exh.8. 32 Exh.6 p.10 para 41 refers to Lots 59 and 60. -- 15 of 17 -- 16 disability cannot be ignored33 but has not made any specific allowance for it. The existence of this sale on 19 March 2007 is not evidence that the market had not moved by 1 October 2009. In his report34 Mr Olive states that: “The commercial property can only be compared to sales within the village of Withcott, this village has been experiencing severe economic stress for the past few years, and it has a relatively low population base and is under threat of a bypass road that will impact upon the commercial market. Towns such as Gatton are not subject to these population or locational limitations. The previous sale of this site is the best evidence of value and I consider that no evidence exists to overturn that evidence. The Gatton sale 5 provides some comfort in this regard.” [70] Having abandoned sale 5, Mr Olive’s valuation relied heavily on the appellant’s purchase of the subject allotments in March 2007 due to his view that the only comparison could be with sales in Withcott. Sale 13 is unhelpful as it was of residential land and the purchaser of sale 12, the appellant, states that the purchase price was above market value. Mr Olive has not stated how he arrived at the discount he put on the 2007 sale to reach the applied figure of $92/m² and has no sale closer to the valuation date. [71] In taking the view that the subject land “can only be compared to sales within the village of Withcott” Mr Olive has unnecessarily limited the information available to him, and limited it most severely. It is common for comparable sales to be at some distance from the land to be valued. Land some distance away may nonetheless be in a comparable location.35 The location of a sale either within or without a small community such as Withcott would not be likely to be a factor so overwhelming that all other aspects of comparability are irrelevant.36 [72] In view of the valuation being based on an unhelpful sale of residential land, and the purchase of the subject land in 2007, which the purchaser claims to be at above market price, and the analysis which does not allow for the clearing or fencing and makes an allowance, the justification for the size of which is not explained and which must include elements for the purchase being above market value, and for the possibility of unexploded munitions, I am unable to find this valuation capable of displacing the presumption of correctness of the respondent’s valuation. It does not demonstrate that the Valuer-General acted on a wrong principle, made a serious error of fact or that the valuation was made by a method that was fundamentally erroneous. In the case of these Lots it has not been necessary to have recourse to Mr O’Connor’s report. 33 Exh.13 p.11. 34 Exh.1 p.45. 35 Crompton v Commissioner of Highways (1973) 32 LGRA 8 at 23-24. “… the valuer should, in the first instance, look at the sales of land over a wide geographical and temporal range, and from these select those that appear potentially useful as a basis for comparison.” 36 The Law Affecting Valuation of Land in Australia, 4th edn. Alan A Hyam. The Federation Press, 2009 p.199. “Special consideration should not be given to sales within a specified area over and above sales outside of that area, provided that the lands are truly comparable: Cattanach v Water Conservation and Irrigation Commission (1962) 9 LGRA 352 at 361.” -- 16 of 17 -- 17 [73] For the reasons I have given, appeal VLA219-10 is dismissed. Orders 1. Appeal VLA 215-10 is dismissed. 2. Appeal VLA217-10 is dismissed. 3. Appeal VLA218-10 is dismissed. 4. Appeal VLA219-10 is dismissed. HIS HONOUR WA ISDALE MEMBER OF THE LAND COURT -- 17 of 17 --