Burnett v Department of Natural Resources and Water [2010] QLC 57

LAND COURT OF QUEENSLAND CITATION: Burnett v Department of Natural Resources and Water [2010] QLC 57 PARTIES: Michael and Denise Burnett (appellants) v. Chief Executive, Department of Natural Resources and Water (respondent) FILE NOS: AV2008/0821 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 31 March 2010 DELIVERED AT: Brisbane HEARD AT: Mareeba MEMBER: Mr PA Smith ORDERS: 1. The appeal is allowed. 2. The valuation for the subject land is determined as at 1 October 2007 in the sum of Eighty-Four Thousand Dollars ($84,000). CATCHWORDS: Valuation – Factors in valuation –presumption in favour of correctness of valuation – reliance on highly improved sale – issues of relativity – Valuation of Land Act 1944 – Vegetation Management Act 1999 APPEARANCES: Mr M Burnett, self representing, for the appellants Mr G Smith, Principal Lawyer, Department of Environment and Resource Management, for the respondent Background: [1] This decision relates to an appeal by the appellants Mr and Mrs Burnett against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (the VLA) which valued the appellant’s property situated at 138 Pine Close, Biboohra (Bilwon) (“the subject land”) in the sum of $87,000 as at 1 October 2007. The appellants contend for a valuation of $60,000. -- 1 of 7 -- 2 The Subject Land [2] The subject land is situated in an established rural residential estate known as “Cypress Downs” and has the usual services provided; those being overhead power; telephone and refuse collection. The area of the land is 6.803 hectares. The property is located about 6 kilometres North-north-east of the village of Biboohra, and 15 kilometres North-north- west of Mareeba. [3] The property is a regular shaped rural parcel. The land falls in an easy to gentle slope from the road. A gully, with intermittent water flow, traverses the land. The Cairns to Mareeba railway, which remains in operation, passes along the eastern boundary of the land. The land is zoned “Rural Residential” under the former Mareeba Shire Town Plan. The land is used as a single dwelling house and has been valued pursuant to s17(1) of the VLA. . [4] Approximately 2 hectares of the property is classed as remnant vegetation under the Vegetation Management Act 1999 (“the VMA”). [5] The Real Property Description of the property is Lot 29 on RP733270, Parish of Formartine, County of Nares. The Hearing [6] The appellants are self represented and Mr Burnett gave evidence at the hearing. Mr Burnett has no legal or valuation qualifications. The respondent was represented by Mr G Smith, a Principal Lawyer employed by the respondent, and relied on evidence of a registered valuer, Mr I Quirk-Anderson. Relevant legislative provisions [7] Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land. [8] Section 3(1) of the VLA says as follows: “3.(1) For the purposes of this Act – ‘unimproved value’ of land means – (a) in relation to unimproved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and (b) in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.” [9] I note that the subject land is improved. Accordingly, put simply, the task is to find the market value of the land on the assumption that none of the improvements are on the subject land. An assessment is then undertaken as to the highest and best use of that land. -- 2 of 7 -- 3 [10] As the then President Trickett said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs 11 and 12: “The principles for determination of the 'market value' of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property. (See Griffith CJ at 432 and Isaacs J at 441). It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land. In Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that: 'Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but – as with other commodities – the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date – and that is evidenced by sales."” I respectfully agree with these observations. Presumption of correctness of valuation [11] I now turn to section 33 of the VLA, which states as follows: "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. [12] This section was considered by the High Court in the case of Brisbane City Council v The Valuer-General for the State of Queensland 1977-78 140 CLR 41 where Justice Gibbs (as he then was) made the following observation at page 56: “In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s. 13(7) is rebutted.” It should be noted that s. 33 of the VLA is in essentially the same terms as what was then s. 13(7) of the Act. The issues in the Appeal [13] The appellants appeal sets out two grounds, which are: 1. Compare market values and sales of similar properties surrounding the subject land etc; and 2. Details and descriptions etc of lands of similar values. [14] During the hearing, Mr Burnett focussed on the sale of a property located at 114 Pine Close, Bilwon, described as lot 31. It is in very close proximity to the subject and shares the same issues involving the gully. The property sold on 23 October 2006 for $165,000. The sale was improved, consisting of a 3 bedroom dwelling; shed; bore pump; orchard; tanks; irrigation; pole and distribution board; dam and fully fenced paddocks. -- 3 of 7 -- 4 [15] Mr Burnett also referred to the unimproved values of nearby properties, and contended that there was a lack of relativity between the subject block and those blocks. Mr Burnett also gave evidence as to the specific disabilities suffered by his property, including remnant vegetation and the existence of the gully in an awkward location, as well as the bordering railway. It should be noted that such issues are not specific grounds of appeal.1 The evidence [16] I accept Mr Burnett’s evidence with respect to each of the disabilities referred to. However, generally speaking, I also accept that the appellants’ objections and other disabilities have been taken into account by Mr Quirk-Anderson in both his oral evidence and his report. [17] Mr Quirk-Anderson conceded during cross examination that the relativities of various properties in Cypress Downs had not been specifically looked at for some decades, and he agreed that the valuation of the subject looked out of kilter with other lots to the south on Pine Close, and in particular lots 10, 32 and 33. He contended though that the situation was that those blocks may be undervalued. He remained unshaken in his view that the subject was properly valued. [18] This is a difficulty often faced by appellants in VLA matters who rely on relativity as one of their grounds of appeal. It is not enough for an appellant to simply demonstrate that the value of the appeal block is out of kilter with other, nearby blocks. They need to go further to demonstrate that the values of those other blocks are correct, and that the value of the appeal block is incorrect. This is because it is the primary function of the Court to determine the unimproved value of the land subject to appeal. Changing an issued valuation simply because other valuations may be wrong would only tend to exacerbate the error. Of course, this is a generalised statement, and each case must be determined on its own facts. [19] On the facts of this case, save for one exception which I will deal with below relating to the sale of lot 31, I am of the general opinion, based on the evidence in this case, but without the benefit of hearing detailed evidence relating specifically to lots 10, 32 and 33, that there is a probability that the valuations of lots 10, 32 and 33 are too low, relative to other valuations in Cypress Downs. I should also stress that I have not viewed any of the properties in question. [20] I now turn to consider the evidence relating to the sale of lot 31, situated two blocks to the south of the subject. Mr Quirk-Anderson says that this is a low sale, and agrees with the appellants that, if the value of improvements was deducted from the sale price, then 1 See s.25(4) of the VLA. -- 4 of 7 -- 5 the land would come up, in essence, with a nil value, as the improvements certainly add over $165,000 to the value of the land. Whilst such evidence would appear to be in complete support of the appellant’s case, Mr Quirk-Anderson was rather putting that the outcome when the sale was analysed demonstrated that the sale failed the Spencer test. Whilst I am in general agreement with Mr Quirk-Anderson on this point, I do accept the evidence of Mr Burnett, both from his discussions with the vendor of lot 31, and from his experiences with his own property, that the disruptions caused by the flow of water through the gully has a profound impact on both lot 31 and the subject property, making them more difficult to sell than other blocks. [21] There is no doubt as to the genuineness of the appellants in proceeding with their appeal. They have, in my view, successfully demonstrated shortcomings in the relativity of valuations of properties nearby when compared to their own property. Their conclusions as to the appropriate value of the subject, based on the sale of lot 31, do not however strictly follow. [22] It is the role of this Court to determine appeals such as this strictly on the basis of the VLA and decided precedents. A direct comparison approach has been adopted by the respondent’s valuer to determine the unimproved value of the subject. As is so often the case in matters such as this, the issues basically all come down to market evidence. This is reflected in the sales evidence set out in Mr Quirk-Anderson’s report, summarised as follows: Sales Area Ha Date of Sale Sale Price Analysed Value Comparison 1 Orchard Close, BIBOOHRA 4.051 21/04/2006 $145,000 $105,000 Marginally inferior to subject 2 Bilwon Road, BIBOOHRA 3.907 01/05/2008 $230,000 $205,000 Marginally inferior to subject 3 Pine Close BIBOOHRA 2.004 13/05/2009 $210,000 $174,000 Inferior to subject 4 Bilwon Road BIBOOHRA 30.22 14/09/2006 $265,000 $253,000 Superior to subject 5 Bilwon Road BIBOOHRA 8.096 20/10/2007 $165,000 $135,000 Inferior to subject 6 Peninsula Development Road BIBOOHRA 6.07 17/01/2008 $215,000 $192,000 Superior to subject -- 5 of 7 -- 6 [23] There are a number of observations to be made about Mr Quirk-Anderson’s sales. To begin with, sales 2 and 3 are substantially after the valuation date. Sale 4 is of significantly larger size than the subject. The appellant was also successful in showing an inconsistency regarding comparison with the subject with respect to details provided to the appellants under freedom of information document release. I also have some doubt as to the benefits that Mr Quirk-Anderson sees as associated with the existence of the gully given the specific attributes of the subject. [24] Mr Quirk-Anderson provided the only expert valuation evidence to the Court. Save for the points already made and one further exception, I accept the valuation evidence of Mr Quirk-Anderson. I am satisfied that Mr Quirk-Anderson is well acquainted with the properties and has taken most relevant points referred to in the appeal into account. [25] The one remaining point where I accept Mr Burnett’s evidence over that of Mr Quirk- Anderson relates to comparisons with the sale property, lot 31. Exhibit 7 is an aerial photograph of relevant parts of Cypress Downs, overlain with lot boundaries. Clearly visible is the remnant vegetation on the subject and lot 31, and the linked gully. Exhibit 7, in my view, strongly supports the evidence of Mr Burnett, particularly as to the virtual severance of his property by the remnant vegetation, and the availability of building areas on the subject being predominately to the rear of the block, necessitating passage through the gully and remnant vegetation. Although lot 31 has significantly more remnant vegetation than the subject, the cleared area of lot 31 is adjacent to the road, thus supplying ready access for building and other rural residential pursuits as compared to the subject. [26] On the basis of the evidence in its entirety, the appellants have produced, albeit in only one aspect, evidence that the valuation of the subject involves an error of fact sufficient to disturb the presumption of correctness.2 Relative to the valuation for lot 31 of $81,000 as at the relevant date, in my view an appropriate valuation for the subject is $84,000. Conclusion [27] For the reasons set out above, I have reached the conclusion that the appellants have succeeded in establishing that the respondent’s assessment of the unimproved value should be reduced from $87,000 to $84,000. It follows that the appeal is allowed, and the valuation for the subject land as at 1 October 2007 is determined in the sum of Eighty- four Thousand Dollars ($84,000). 2 See paragraphs 15 and 16 above. -- 6 of 7 -- 7 Orders 1. The appeal is allowed. 2. The valuation for the subject land as at 1 October 2007 is determined in the sum of Eighty-four Thousand Dollars ($84,000). PA SMITH MEMBER OF THE LAND COURT -- 7 of 7 --