Bischoff v Department of Natural Resources and Water [2007] QLC 29

LAND COURT OF QUEENSLAND CITATION: Bischoff v Department of Natural Resources and Water [2007] QLC 29 PARTIES: Lance C and Terry N Bischoff (appellants) v. Chief Executive, Department of Natural Resources and Water (respondent) FILE NO: AV2005/0986 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an Annual Valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 20April 2007 DELIVERED AT: Brisbane HEARD AT: Toogoolawah MEMBER: Mr PA Smith ORDERS: 1. The appeal is dismissed. 2. Pursuant to s.66 of the Valuation of Land Act 1944 the unimproved value of the subject land is determined in the amount of Five Hundred and Seventy Thousand Dollars ($570,000). CATCHWORDS: Valuation - Factors in valuation - presumption in favour of correctness of valuation - evidence led to a higher figure - Valuation of Land Act 1944 APPEARANCES: Mr L Bischoff, in person, for the appellants Mr M Heather (Senior Legal Officer, Department of Natural Resources and Water) for the respondent -- 1 of 7 -- 2 Background [1] This is an appeal by the appellants against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (VLA) which valued the appellants' property situated at 972 Atkinsons Dam Road, Coominya, in the sum of $490,000 as at 1 October 2004. The appellants contend for a valuation of $245,000. By notice in writing provided to the appellants by the respondent in letter form dated 21 June 2006, the respondent notified the appellants that at the hearing of this matter the respondent would lead evidence to a higher figure, namely $570,000. [2] The subject land is an irregular shaped property containing six lots with a total area of 476.375 ha. There are three formed access routes available to the property, namely: Atkinsons Dam Road, a dual-width bitumen sealed road which passes the southern boundary; a Council-maintained gravel road which passes through adjoining private land for approximately 3 km and connects to the eastern boundary to Rocky Gully Road and provides ready access to Coominya; and Bischoffs Road, a single-width gravel and earth road which connects the northern boundary of the property to Gatton-Esk Road. The property has a mail service and telephone and electricity services available and connected. The subject land is also serviced by a daily school bus. [3] The land is zoned "Rural" under the Esk Shire Council Shire Planning Scheme. The land is currently used for grazing and fodder cropping and has two residences, as well as an assortment of farm sheds and related farm improvements. The current use of the property complies with the Council Planning Scheme. [4] The appellants were represented by Mr Lance Bischoff, who gave evidence at the hearing. Mr Bischoff has no legal or valuation qualifications. The appellants did not rely upon any other evidence. The respondent was represented by Mr M Heather, Senior Legal Officer employed by the respondent, and relied on the evidence of a registered valuer, Mr Colin Clark. Relevant Legislative Provisions [5] Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land. Relevantly, s.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 -- 2 of 7 -- 3 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." [6] I note that the subject land in this matter 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. [7] As the President said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs [11] and [12]: "[11] 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). [12] 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 [8] I now turn to s.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." [9] 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. -- 3 of 7 -- 4 The Issues in the Appeal [10] Put simply, there are two key issues in this appeal. The first issue is the key basis of the appellants' objection, that being the issues that flow from the existence of a substantial quarry on the south-western side of Buaraba Creek adjoining the appellants' property. The second issue in the appeal relates to the respondent seeking to lead evidence to a higher valuation figure. I turn first to the grounds of appeal by the appellants. Appellants' Grounds of Appeal [11] As indicated, the appellants' grounds of appeal relate to the impact that a quarrying operation next door to their property has on their property. The appellants contend that the quarry has caused significant erosion and other water problems with Buaraba Creek and that it also creates a significant noise and dust problem. Further, the appellants contend that the quarry has greatly diminished the visual amenity of the subject land. [12] Mr Bischoff gave considerable evidence regarding the impact of the quarry on the subject land. I also had the benefit of a site inspection of the subject land. The site inspection confirmed many of the issues complained of by Mr Bischoff. It should be noted that the inspection occurred late in the day as operations appeared to be coming to a halt on the quarry and as such the issues of noise and dust were observed at which may be considered a less intrusive time. [13] I find Mr Bischoff to be a truthful witness and I accept his evidence with respect to the impact that the quarry has on the subject property, save for any evidence that is given which can be classified as valuation evidence and related valuation material. Even though I accept Mr Bischoff's evidence, that does not mean that I agree with the value that the appellants contend for for the subject land. That is because, in my view, the respondent has properly taken all of the disabilities that flow as a result of the existence of the quarry into account in making the valuation of this property. In this regard, I refer specifically to the report and oral evidence provided to the Court by Mr Clark for the respondent. [14] The appellants challenged much of Mr Clark's evidence, however insofar as such challenges related to his method of valuation and expertise, those challenges were, in my view, not successful. The appellants did raise some doubt regarding Mr Clark's evidence as to certain soil types on some parts of the subject land and also established an inaccuracy in Mr Clark's reference to the location of a photograph taken on the subject land. Apart from these relatively minor issues, I accept the evidence of Mr Clark and his valuation expertise. [15] Mr Clark relied upon four sales for his valuation as set out in the table below: -- 4 of 7 -- 5 Sales Area Ha Date of Sale Analysed U/Value Applied U/Value 1/10/2004 Comparison 1 Buaraba Creek Road, Buaraba 454.6 26/03/2004 $331,000 $282,000 Inferior 2 Kavanaghs Rd Buaraba 1131 6/02/2004 $599,000 $530,000 Inferior 3 Esk-Hampton Road, Redbank Creek 106.280 27/09/2004 $240,750 $195,000 Superior 4 Atkinsons Dam Road, Buaraba 131 02/12/2004 $320,000 $180,000 Superior [16] In my view, the sales referred to by Mr Clark are appropriate sales and, in particular, a relevant aspect of Sale 4 is fatal to the appellants' case. Sale 4 is located adjacent to a 5,000 head cattle feedlot. I accept Mr Clark's evidence regarding the impact of such a feedlot on the Sale 4 property. It is noteworthy that, even given the existence of the feedlot, Mr Clark considers Sale 4 to be superior to the subject. On the evidence provided, I agree with his assessment. [17] The appellants particularly complain that the location of the quarry has a marked impact on the primary residence on the subject land. In this regard, I should repeat that it is the obligation of this Court to consider the unimproved value of the subject land. In that regard, I note that there are a number of suitable house sites on the subject land and that the impact of the quarrying activities on any residence would diminish greatly, were a residence located on other sites further removed from the quarry. [18] I now turn to the issue raised by the respondent as a consequence of the respondent contending for a higher value of the subject land. [19] This matter is similar in many respects to that encountered by Member Jones in the case of Pfeffer v Department of Natural Resources and Mines1. Like Pfeffer, the original valuation in this matter arises out of what was referred to in Pfeffer as "the product of a mass appraisal exercise"2. Member Jones went on to say: "I understood this approach to involve a broad brush value determination method not involving an individual assessment of the unimproved value of a particular lot having regard to comparable sales evidence. It was also Mr Olive's evidence that when he undertook a more detailed valuation of the land it was apparent that the original figure involved an underestimation of value." 1 [2005] QLC 59 2 At para [20] -- 5 of 7 -- 6 [20] Likewise, in this case Mr Clark's expert valuation evidence is that the mass appraisal exercise has resulted in the original valuation being an underestimation of value. Consistent with the approach taken by Member Jones, in my view the presumption in favour of the correctness of the valuation appealed against as described in s.33 of the VLA is rebutted. To use Member Jones's words3 "the valuation appealed against … involved either a significant error of fact or was arrived at by a fundamentally flawed method. In any event, on the evidence it was clearly wrong." [21] The result is that in my view, the best evidence supports an unimproved value of the subject land in the sum of $570,000. [22] It would be remiss of me not to also comment on the outcome of this appeal as a consequence of the respondent leading evidence to a higher value. As Member Jones said in Pfeffer4: "[22] One outcome of an appeal such as this is that the amount of the statutory valuation appealed against may be increased, this is expressly provided for in s.66 of the VLA which states: 'Order of court Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Court may – (a) affirm the valuation appealed against; or (b) reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act; and, subject to section 70, make such order as it deems fit with respect to the payment of costs.' [23] In the circumstances of this appeal, the evidence and the conclusions I have reached based on that evidence, lead me to having to determine the unimproved value of the subject land as at 1 October 2004 to be $125,000. [24] Before making the consequential orders and without intending to imply any criticism of the conduct of the respondent in this appeal, I feel I should indicate that I consider the result to be a most unfortunate outcome for the appellants. In circumstances such as this it would not be unreasonable, at least up until receipt of the valuation report intended to be relied on by the respondent at trial, for an appellant to expect that the contest would be against the actual valuation figure appealed against. Even upon receipt of the report, unless accompanied by clearly worded correspondence, an appellant might still be confused about which figure he or she has to deal with at the hearing of the appeal and the ramifications of continuing with the appeal in the face of a valuation higher than that appealed against. Such confusion would be in my view a highly undesirable result. I would also take this opportunity to endorse the concerns expressed by Mr Scott in the AMP5 case where the learned Member identified some undesirable dilemmas an appellant might be confronted with in such circumstances." 3 At para [21] 4 At paras [22], [23], [24] 5 at para [53]. -- 6 of 7 -- 7 [23] I agree with all of Member Jones's comments set out above. I also specifically adopt, so far as it is relevant, the comments made by Member Scott in AMP Life Limited6. At the hearing of this matter, it was apparent to me that the Bischoffs were concerned by the stance taken by the respondent in seeking to lead evidence to a higher value. Their cause for concern was heightened by the fact, properly advised to them on the record by Mr Heather for the respondent, that if the appellants chose to withdraw their appeal then the proceedings would be at an end and the respondent would be unable to lead evidence to a higher figure, the consequence being that the unimproved value of the subject land would remain at $490,000. It is of concern to this Court that the respondent, seeking to lead evidence to higher figures in this and other cases, may cause an understandable reluctance on the part of appellants who genuinely believe that their unimproved valuations are too high to either commence or maintain appeals against the valuations. If this consequence should arise, it would appear to be somewhat unsatisfactory as Member Scott said in AMP, "Indeed, circumstances such as the present would be very likely to create a dilemma for an appellant and elevate the Chief Executive to a position of dominance."7 I share Member Scott's concern that any attempt by the Chief Executive or his employees to take advantage of a position of dominance over appellants be treated by any Court with considerable concern. For his part, Mr Heather acknowledged the dilemma that the respondent finds itself in and in my view, in the circumstances of this particular case, Mr Heather acted properly in advising both the Court and the appellants of the consequences should they have chosen to withdraw their appeal. Conclusion [24] For the reasons set out above, I have reached the conclusion that the appellants have failed to establish that the respondent's assessment of the unimproved value should be reduced. I am also satisfied that, on the basis of the valuation evidence provided by Mr Clark, the value of the subject land should be determined in the amount of $570,000. Orders 1. The appeal is dismissed. 2. Pursuant to s.66 of the Valuation of Land Act 1944 the unimproved value of the subject land is determined in the amount of Five Hundred and Seventy Thousand Dollars ($570,000). PA SMITH MEMBER OF THE LAND COURT 6 [2002] QLC 99 7 AMP para [53] -- 7 of 7 --