Cowley & Anor v Valuer-General [2011] QLC 3

LAND COURT OF QUEENSLAND CITATION: Cowley & Anor v Valuer-General [2011] QLC 3 PARTIES: Ian G Cowley and Terrence W Cowley (Appellants) v. Valuer-General (Respondent) FILE NO: VLA255-10 DIVISION: General Division PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 which applies due to s.269 of the Land Valuation Act 2010 DELIVERED ON: 1 March 2011 DELIVERED AT: Brisbane HEARD AT: Toogoolawah HEARD ON: 8 February 2011 MEMBER: His Honour Mr WA Isdale ORDER/S: 1. The appeal is dismissed. 2. The valuation appealed against is affirmed. CATCHWORDS: Valuation of Land Act 1944, ss 33, 45(4) Calculation of areas – “MapInfo” – presumption of correctness of valuation – sales evidence R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13 Brisbane City Council v Valuer-General (1978) 140 CLR 41 WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44 G. Franklin & Ors v Valuer-General (1978) 5 QLCR 181 Grahn v Valuer-General (1992-93) 14 QLCR 327 J.L. and I. Qualischefski v Valuer-General (1979) 6 QLCR 167 N.R. and P.G. Tow v Valuer-General (1978) 5 QLCR 378 -- 1 of 8 -- 2 “Confidence and Tradition: a history of the Esk Shire”. Esk Shire Council 1988 Dr Ruth Kerr APPEARANCES: Mr TW Cowley for the Appellants Mr J O’Rourke, Solicitor and Principal Legal Officer, Department of Environment and Resource Management, for the Respondent Background [1] This appeal concerns the unimproved value of farmland in the Brisbane Valley, near Toogoolawah, where the case was heard. [2] Located about 76 km north-west of the centre of Brisbane, it is about 120 km by road. [3] By the 1880s dairying and mixed farming were well established in the area and the McConnel family, major local landholders, saw that the area produced more milk than could be readily transported to market. They took the opportunity to finance a condensed milk factory at Cressbrook, close to the creek of the same name, in 1898. [4] The Toogoolawah factory, as it was known, became so successful that Nestle acquired it in 1907. [5] Once the railway line from Ipswich reached the area in 1904 the township was surveyed around the line. [6] By the 1920s, Nestle had a monopoly on condensed milk processing in the Brisbane Valley, having bought the factories at Lowood and Colinton and expanded production at Toogoolawah. [7] German settlers cleared the land in the 1880s and began farming potatoes and corn in the fertile alluvial soil. [8] Mr Cowley showed the Court a photograph, taken in the 1920s, which showed Cressbrook Creek, the condensed milk factory and a herd of Hereford cattle crossing the creek, then flowing in its sandy bed between fairly steep banks. [9] The factory closed at the end of 1929 when production was centralised in Victoria and dairying declined in the 1960s. Slowly, the beef industry became larger and the population, in decline since the Depression, returned to the level last seen in the 1920s.1 [10] The appellants have strong bonds to this land. Mr Cowley referred to the family having farmed it since 1950 and produced a newspaper clipping from 1 September 1 Noted historian Dr Ruth Kerr examines this area in her 1988 book “Confidence and Tradition: a history of the Esk Shire”. Esk Shire Council. See p.76. -- 2 of 8 -- 3 1954 with a photograph of erosion on what was then Mr H Cowley’s farm “Bell Tree”.2 I understand Mr H Cowley to be the appellants’ father. The present appeal [11] The Grounds of Appeal3 refer to the farm on Cressbrook Creek having been devalued due to the loss of water formerly available from Cressbrook Creek due to the construction of Cressbrook Dam and its operation. Also, major floods in 1956 and 1974 are stated to have caused severe erosion and the loss of 8 to 12 hectares of valuable alluvial cultivation land. This has caused a large loss of productivity. [12] Cressbrook Dam, the largest of Toowoomba’s three water supply dams, was completed in 1983 and stores about 80,000 ML. It is a matter of public record that its lowest storage volume was 7.5% in February 2010. The land and the competing valuations [13] With a total area of 174.49 ha, the land, actually four lots in 2 groups 2.5 km apart, is valued as one unit, and there is no dispute about the Valuer-General’s ability under the Valuation of Land Act 1944 to do that. The Valuer-General has valued the land at $640,000 on an unimproved basis. The appellants contend for a valuation of $526,000. The case of the Appellants [14] Mr Terrence William Cowley gave evidence. He was both the advocate and the sole witness for the appellants. From my observation of his manner in the witness box, where he was cross-examined by the experienced lawyer representing the Valuer- General, I am satisfied that Mr Cowley was a witness of truth doing his best to be helpful to the Court. [15] Mr Cowley told the Court that the land is farmed with corn, pumpkins and, water availability permitting, peanuts. Beef cattle are put on as steers about 12 months old and sold off for meat at three years. [16] I observe that the operations on this land represent the area very well and are consistent with the typical use of the land historically. The two lots near the creek are severed by the Toogoolawah to Biarra Road with the creek flats most suitable for cropping. The other two lots, some 2.5 km away, lend themselves best to grazing cattle. [17] Mr Cowley referred in his evidence to two other properties. One is owned by his neighbour, SJ Hobart and has an area of 335 acres. It is valued at $550,000. The 2 Exhibit 2. 3 Exhibit 1. -- 3 of 8 -- 4 other, owned by D and J Golinski, he described as a 500 acre dairy farm valued at $570,000. These properties, and the subject property, were all irrigation farms before the Cressbrook Dam was built. [18] Mr Cowley showed the Court a colour photo, taken about 2005, of a group of children on a school excursion observing the weeds in the bed of Cressbrook Creek. It is shown choked with the Chinese Elm tree, which spreads by seed along watercourses, and no water is in the channel. Mr Cowley said that there have been no releases from the dam since 2005. This photo can be seen to have been taken near to the location of the 1920s photo referred to previously and such changes that are visible in it have not been for the better. Evidence given on behalf of the Valuer- General, unchallenged on this point, was that the area shown in the photo is 2 to 5 km downstream of the subject land. [19] Mr Cowley’s evidence was that prime agricultural land had been lost by erosion to the extent of about 4 acres in 1956 and close to another 10 acres in 1974. The cross-examination of Mr Cowley [20] When cross-examined, Mr Cowley was shown four aerial photos, exhibits 3A to 3D, which show the subject property on which contour lines are printed. Exhibit 3B shows the area of prime agricultural land which has now been lost from production and become creek bed. Mr Cowley agreed that the photo showed what had occurred. The area is marked on the photo as being “abt 4 ha”. [21] Asked about the sales described in the valuer’s report prepared for the Valuer- General’s case, Mr Cowley did not know the three sales referred to in it and agreed that the two which front Cressbrook Creek would be likely to have similar problems to the subject land. He had no doubt that they would have been genuine sales. [22] It became clear that the two properties referred to on behalf of the appellants are dairy farms and Mr Cowley said that in the last five years as Mr Golinski did not have enough water Mr Cowley grew corn for silage for the Golinski dairy herd. [23] It also emerged that the Valuer-General had made a 5% allowance, a reduction, in the value of the subject land on account of the severance of its parts. The Valuer-General’s case [24] The legal representative for the Valuer-General called evidence from a registered valuer, Mr Colin Peter Clark, whose report had been provided to the appellants and which became exhibit 5. Aerial photos of the three sales considered by Mr Clark had been shown to Mr Cowley in cross-examination and became exhibits 4A, B and C. -- 4 of 8 -- 5 [25] Mr Clark valued the property by directly comparing it to three sale properties. Sale 1, of 136.05 ha on 17 June 2009 is located about 11 km south of the subject property. A value of $450,000 was applied to it, being $3,308 per hectare. Sale 2, a 34.7 ha block, sold on 8 January 2008. Located some 8 km north-east of the subject, a value of $340,000, $9,798/ha, was applied. Sale 3, 222.5 ha, of which 29.2 ha was leasehold, sold on 4 December 2009. A value of $590,000, $3.052/ha, was applied to the freehold and $59,000, being $2,020/ha, to the leasehold. He regarded his sale 1 as most comparable. He used sale 2, a purely agricultural block, to find the value of alluvial land and sale 3 is a larger, steeper and more heavily timbered block which is on the Brisbane River rather than Cresswell Creek. Sales 1 and 3 are both severed by a road, like part of the subject land. [26] Mr Clark explained that the area of eroded land has been calculated by the “MapInfo” computer program which his Department uses. He considers it to be accurate. [27] In relation to the Golinski property, Mr Clark pointed out that it adjoins a feedlot, which is not seen as desirable, and has a higher proportion of steep forest country than the subject. [28] The date of Sale 2, being 8 January 2008 is well before the valuation date of 1 October 2009 but was relevant because the market did not change for agricultural properties in the period between then and the valuation date. It did however increase for grazing properties. The legal framework [29] This appeal is to be decided within the rules set by the Valuation of Land Act 1944. Section 45(4) of that Act limits the appellants to their grounds of appeal and they have the burden of proof.4 [30] Section 33 of the Act deems the valuation to be correct until the contrary is shown. [31] The 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:- “The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this Court nor the Land Court in the subject jurisdiction may assume 4 See also G. Franklin & Ors v The Valuer-General (1978) 5 QLCR 181 at 184-185. -- 5 of 8 -- 6 the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This 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.” 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.” The approach taken by this Court must be 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 in 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 as 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 page 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 serous error of fact; or (2) the valuation as 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). -- 6 of 8 -- 7 (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 the cases cited in it).” [32] In the present appeals, the presumption of correctness is applicable. There is only one body of expert evidence to guide this Court, that given by Mr Clark. Testing the Valuer-General’s case [33] Mr Cowley cross-examined Mr Clark who stated that he had compared the subject property to properties with similar problems. In relation to the property owned by SJ Hobart, Mr Clark said that is has an area of 135 ha and is valued at $550,000. He described it as slightly better than the subject with a higher rate per hectare overall and in a more affordable price range. [34] In re-examination, Mr Clark stated that he had allowed for the loss of 4 ha of alluvial farmland at $7,000 per ha. In cross-examination, he had said that it would have been worth $8,000 to $10,000 per ha with water. The result of the evidence [35] This is a case where there is only one body of expert evidence and a statutory presumption in favour of the correctness of the valuation. The valuer’s evidence in relation to the nature of the land was not challenged so I accept that he has correctly appreciated its qualities. He has been aware of the extent of access to water and has allowed for the separation of the two parts of the land and for the severance by a roadway. [36] While no-one would know this land better than the appellants, the valuer had the benefit of measurements made by “MapInfo” from an aerial photograph when he calculated the area lost by erosion. Mr Cowley saw the photo and agreed that the eroded area was correctly shown when he was cross-examined about it. In the circumstances, I accept that the area lost by erosion is about 4 ha and that Mr Clark has made proper allowance for that. [37] In relation to the loss of access to the supply of water available before the Cressbrook Dam was built, I note that sales 1 and 2 relied upon by Mr Clark are also on Cressbrook Creek and I am satisfied that by considering them he was comparing like with like. -- 7 of 8 -- 8 [38] It was not able to be shown on the evidence that the valuation was flawed by any fundamental error of principle or fact or that the sales relied upon were not of comparable properties. [39] Without any competing body of sales evidence or contrary expert opinion, the inability of the appellants to demonstrate a fatal error by the valuer leaves the Valuer-General with the protection of the presumption of correctness contained in s.33 of the Valuation of Land Act 1944. The valuation is deemed to be correct until proved otherwise. In this case it was not able to be so proved. [40] The appeal is dismissed and the valuation appealed against is affirmed. WA ISDALE MEMBER OF THE LAND COURT -- 8 of 8 --