Eadie v Department of Natural Resources, Mines and Water [2006] QLC 52

LAND COURT OF QUEENSLAND CITATION: Eadie v Department of Natural Resources, Mines and Water [2006] QLC 52 PARTIES: Laurence and Andrea Eadie (appellants) v. Chief Executive, Department of Natural Resources, Mines and Water (respondent) FILE NOS: AV2005/1142 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 6 September 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr PA Smith ORDER: The appeal is dismissed. CATCHWORDS: Valuation – Factors in valuation – Presumption in favour of correctness of valuation – Valuation of Land Act 1944 APPEARANCES: Mr L Eadie on behalf of the appellants Ms C Liu (Legal Officer, Department of Natural Resources, Mines and Water) appeared for the respondent Background: [1] This is an appeal by the appellants against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (the VLA) which valued the appellants property situated at 26 Goat Track, Highvale in the sum of $350,000 as at 1 October 2004 (reduced from $360,000 following the appellants objection). The appellants contend for a valuation of $250,000. [2] The land is located on dual road frontages, namely Samford, Mount Glorious Road and Goat Track. The land has power and telephone connected. The area of the land is 24.51 hectares and has an irregular shape. Approximately 90% (22 hectares) of the land is on the lower slopes of Mt Nebo, is heavily timbered, and is steep and undulating. The balance area, of approximately 2.5 hectares is of gentler incline, and the appellants -- 1 of 6 -- 2 dwelling is located in this area. The land is zoned "Rural" under the Pine Rivers Shire Town Plan, and is designated Rural Protection and Open Space and Rural Living under the South East Queensland Regional Plan. Its highest use is as a single dwelling allotment, and no further subdivision is possible. [3] The appellants were represented by Mr Eadie, who gave evidence at the hearing. Mr Eadie has no legal or valuation qualifications. The respondent was represented by Ms C Liu, a legal officer employed by the respondent, and relied on evidence of a registered valuer, Mr S Larking. Relevant legislative provisions [4] 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 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." [5] 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. [6] 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.'" -- 2 of 6 -- 3 I respectfully agree with these observations. Presumption of correctness of valuation [7] 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." [8] 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 [9] The appellants lodged their notice of appeal1 in this matter on 20 September 2005 following the respondent’s decision on objection dated 16 August 2005. The appellants' grounds of appeal essentially are that the valuation is not consistent with their "fair market value" evidence for the property; that the property has steep forest ridges not suitable for residential or farming purposes; that a large amount of sub-surface rocks, and labour intensive weed control, adversely affect the property; the property cannot be sub- divided; and the property does not have access to town water or permanent ground water. [10] I accept Mr Eadie’s evidence, apart from his valuation evidence and material, with respect to each of the disabilities referred to in the grounds of appeal. However, that said, I also accept that such disabilities have been properly taken into account by Mr Larking in both his oral evidence and his report. [11] The appellants complain that the large size of their property is misleading as it is actually more of a burden than an asset, and that the value should be less than smaller properties with more useable land. The respondent rightly points out that this issue basically all comes down to market evidence. This is reflected in the sales evidence set out in Mr Larking’s report. Mr Larking’s evidence relates to four sales as follows: 1 Exhibit 1 -- 3 of 6 -- 4 Sales Area Ha Date of Sale Analysed U/Value Applied U/Value 1/10/2004 Comparison 1 1003 Mount Glorious Road HIGHVALE 16.45 20/04/2005 $311,000 $300,000 Inferior 2 Oatlands Ct WIGHTS MOUNTAIN 2.00 23/03/2005 $320,000 $290,000 Inferior 3 127 Smiths Rd WIGHTS MOUNTAIN 2.00 23/12/2004 $327,000 $315,000 Inferior 4 44 Davidson Rd CAMP MOUNTAIN 2.00 15/02/2004 $355,000 $325,000 Inferior [12] An important feature when considering Sales 1, 2 and 3 is that they all occurred after the date of valuation. In Fairfax the President said at page 13: “The date of valuation was some 17 months later and there is no issue that the market was rising during that period. With that evidence, there is little doubt that if 'Karemba' had sold closer to the date of valuation the sale price would have been higher and so would the analysed unimproved value. Therefore, it is not surprising that Mr. Craig has applied a value higher than his analysed value at that time.” [13] It should be noted that in Fairfax the President was considering a sale that occurred a considerable period of time prior to the valuation date, whereas in this matter Mr Larking is relying on sales after the date of valuation. I accept the methodology adopted by the President that an allowance can be made to appropriate sales, taking into account whether or not such sales occurred in a rising or falling market, to ascertain a likely value of such sales at the valuation date when those sales are at a time considerably removed from the valuation date. Indeed, in the recent case of Micallef v Department of Natural Resources and Mines [2006] QLC 0048, I rejected the applied unimproved value given to a sale which occurred over six months after the valuation date.2 However, in the case at hand, I accept the evidence given by both Mr Eadie and Mr Larking of the upward movement in the market, and consider that appropriate applied values have been arrived at consistently with respect to Sales 1, 2 and 3. [14] Sales 2, 3, and 4 are all hatchet blocks of 2 hectares. Whilst the blocks are all suitable for building a residence on, the restricted access, and the effective loss of land area in the 2 See Micallef, para 23 -- 4 of 6 -- 5 “handle” of the hatchets, certainly makes them inferior to the subject land, even if the subject land only included the 2.5 hectares near the residence. [15] I now turn to Sale 1, which demonstrates how the market views a larger block, like the subject, with the majority of the land on steep, unusable, slopes. Although the subject block is of an irregular shape, I agree with Mr Larking that its shape and other attributes are far superior to Sale 1. Mr Larking describes Sale 1 as "a very undesirable property".3 It has only a limited access point, via an easement, with the only practicable building site being a small part of the land located near Mount Glorious Road but accessed via the easement. The remainder of the property is simply too steep. Sale 1 has the same services provided to it as the subject and the same restrictions on development. Like the subject, it cannot be subdivided. However, even with these disadvantages, Sale 1 sold for an analysed value of $311,000, applied at $300,000 as at 1 October 2004. [16] The market, through Sale 1, has demonstrated its willingness to pay $300,000 for the benefit of obtaining a building site on a large area of otherwise very steep, heavily wooded, land. Further, in Sales 2, 3 and 4, the market has also demonstrated its willingness to pay in the order of $300,000 + for 2-hectare blocks where the bulk of the land is relatively level and usable. The subject block enjoys the positive features which the market sees in all of the comparable sales. That is, the subject has a large, steep, wooded area, virtually unusable except for visual amenity, plus a house site with a good amount of easier sloped land.4 Further, the subject land does not suffer from the access disabilities of any of the four sale properties. [17] I now turn to the valuation evidence provided by the appellants.5 The report of MJ Gardiner and Associates is dated 6 July 2003 and the letter of Hollingworth and Spencer is dated 20 March 2003. It is evident from those documents that they related to a subdivision which occurred not at arms length. Further, as both parties agree, there has been a significant increase in the market since that time. I agree with Ms Liu’s submission that such documents are of no assistance. [18] Having considered all of the evidence before me, and applying the relevant authorities, I am not satisfied that the valuation of $350,000 involves a significant error of fact or was arrived at by a fundamentally flawed method. 3 see transcript, page 12 4 I accept that part of the 2.5ha near the house site, whilst certainly "easier" than the balance land, requires a 4 wheel drive vehicle to safely traverse 5 Exhibits 2, 3 and 4 -- 5 of 6 -- 6 Conclusion [19] 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 to $250,000, or in any amount at all. It follows that the appeal must be dismissed. The valuation of the subject land is accordingly affirmed in the sum of $350,000. Order The appeal is dismissed. P A SMITH MEMBER OF THE LAND COURT -- 6 of 6 --