Burgess & Hansen v Chief Executive, Department of Natural Resources and Mines [2001] QLC 80

LAND COURT BRISBANE 19 JULY 2001 Re: AV99-1493 An Appeal against an Unimproved Valuation - Valuation of Land Act 1944 Local Government: Herberton GH Burgess and JS Hansen v. Chief Executive, Department of Natural Resources and Mines D E C I S I O N The appellants own land described as Lot 5 RP 748424, County of Cardwell, Parish of Ravenshoe, containing an area of 16.65 ha, located fronting the bitumen sealed Wooroora Road, approximately 6.3 km by road south of the Ravenshoe PO. As at 1 October 1998, the unimproved value of the land was first assessed by the chief executive in the amount of $80,000. That valuation was subsequently reduced after consideration of an objection to it, to the amount of $70,000. It is against that reduced valuation which the appeal to this Court has been made. The appellants' estimate of value as stated in the Notice of Appeal dated 22 October 1999 was $58,000. The grounds of appeal referred to the then recent sale of Lot 6 RP 748424, immediately adjoining the subject land and about twice its area, for $70,000; the unsuccessful auction of Lot 4 RP 739951 of 53.17 ha when a top bid of $80,000 had been received; the glut of land for sale in the area with resultant depressed prices. The appellants also relied on matters raised in their original objection and relevant correspondence with the Department. Mr Burgess had carried out a residual land value exercise in which he had estimated that the improvements on the land were worth $155,000 while the improved market value even at $200,000, which he had believed to be an optimistic price, would suggest a land value of only $45,000. Mr Burgess attended the hearing and tendered a statement incorporating the history of the appellants' objection to the original valuation and the grounds which had been relied upon. He was strongly of the opinion that the sale of the adjoining Lot 6 which he considered to be significantly superior to the subject land showed the inaccuracy of the valuations applied by the chief executive. The valuation of that sale land had originally been $95,000 as at 1 October 1988 then reduced to $85,000, still [2001] QLC 80 -- 1 of 5 -- 2 well in excess of the actual sale price. The sale had taken place while the objections to the valuations were still being considered. Lot 6 was sold unimproved except for some fencing. It is twice the size of the subject site. Both lots have frontage to the Millstream, but the sale land has, on Mr Burgess' evidence "its northern boundary immediately adjacent to a section of the Millstream that provides direct access to a 90 metre swimming hole. A second waterway, the Stoney Batter, with 3 waterfalls, forms the western boundary of this adjacent block. …" In comparison the Millstream frontage of the subject land was so steep that walking access was obtained through the adjoining property. It was Mr Burgess' submission that the only realistic way to assess the relative worth of the subject land in comparison with the sale land Lot 6, was "on the basis of acreage" which would have indicated a market value of $35,000 for the subject land. Mr DF Paton was the registered valuer responsible for making the valuation appealed against. His evidence was that the primary basis adopted for the original valuation had come from two sales. The first sale was of a 11.62 ha block in Kookaburra Drive, also with frontage to the Millstream, the sale price having been $80,000 as at 11 May 1998, showing an analysed unimproved value of $60,000, which was the valuation applied at the relevant date of valuation, 1 October 1998. The sale land was described as a thin L- shaped block the frontage section of which was encumbered by a powerline easement. It had the advantage of reticulated water but was otherwise inferior in nature to the subject land, in Mr Paton's considered opinion. The second sale was of a 12.46 ha site with access strip frontage to Dalrymple Drive. That land does not have water frontage and apart from being serviced with reticulated water, was of a nature considered by Mr Paton to be far inferior to the subject land. That block sold for $55,000 in April 1998 with an analysed unimproved value of $51,000 with an applied valuation at the relevant date of $48,000. Mr Paton described the subject land as being a slightly irregular shaped block with a very gentle fall from the road to the rim of an escarpment which then falls moderately-steeply to the Millstream. He estimated that about 13.65 ha of the land was of very easy contour and about 3 ha comprised the moderate to steep escarpment face. He said the escarpment face was steeper at the northern end becoming more moderate to the south-west "allowing a walking track down to the river". (That description of the walking track was criticised by Mr Burgess who said that it actually entered the adjoining property before access to the river could be obtained.) In the -- 2 of 5 -- 3 past water had been pumped from the Millstream for the residential usage but is now obtained from a bore. Mr Paton's research had indicated to him that during 1998 there had been an oversupply of smaller rural residential sites, of less than 4 ha, on the market in the immediate locality and the level of values for that type of site had been decreasing. However, he had interpreted the market for the larger sites (in the 4 ha to 100 ha size range) to have been in "a better state of equilibrium with few blocks available for sale and a relatively low turnover". The two basic sales (Kookaburra Drive and Dalrymple Drive) were considered to have reflected fair market value and had supported the original valuation applied to the subject land. However, when considering the objection against that original valuation, he had become aware of the sale of the adjoining Lot 6 which, on analysis, showed a significantly lower unimproved value than had been applied to that land. There had also been an "after date sale", in May 1999, of a 15.59 ha, significantly superior block, in Grey's Lane in the same general locality, with frontage to the perennial watercourse Vine Creek, for $135,000, which on his analysis showed an unimproved value of $125,000. On the evidence of those two after date sales he had accepted that there had been a fall in value for these larger blocks at least subsequent to the relevant date of valuation. He thought the sale of Lot 6 was still at a price lower than fair market value and after an interview with the marketing agent had formed the opinion that some potential purchasers might have inadequately inspected the block and failed to fully appreciate some features, and in particular, those relating to the Millstream frontage. Nevertheless, he had decided that although the subsequent downward trend in market value for the larger blocks had not been evident at the relevant date of sale he would reduce the valuation of the subject land and the adjoining Lot 6 by $10000 each. Mr Burgess was critical of the implied suggestion by Mr Paton that a competent marketing agent might not have promoted fully the positive features of Lot 6. That criticism seems well founded. He was also critical of Mr Paton's analysis of the Grey's Lane block, especially with regard to the added value found by Mr Paton for a pecan nut plantation; the superiority of that land over the subject land; its rainforest environment and the existence of rainforest timbers with, on Mr Burgess' inquiries, millable value. -- 3 of 5 -- 4 Mr Burgess' investigations had been concentrated on the after date sales evidence. Unfortunately he had little knowledge of the primary sales evidence on which Mr Paton had relied. Mr Burgess was clearly of the belief that the after date sales provided the more reliable evidence because they had occurred not long after the time when the original valuation had issued and during the period when the objection to that valuation was being considered. He did agree however that the market had fallen since 1998. I am persuaded that the sales prior to the date of valuation would have, on Mr Paton's evidence, supported the original valuation. Although not obvious to Mr Burgess, it seems clear that Mr Paton had attempted to provide the benefit of doubt to the appellants, and others similarly affected, by accepting that despite the lack of actual evidence available, the market for the larger blocks may have commenced to decline by the relevant valuation date. His approach is seen to be in accordance with long-established principle. For example, Williams J said in Daandine Pastoral Company Limited v. Commissioner of Land Tax ("The Valuer", October 1943, Volume 7, Folio 299 - High Court of Australia, 26 August 1943): "Values must be calculated in the light of circumstances which existed on the material date … but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless." (emphasis added). Mr Burgess' revised estimate of value ($35,000), based on the hectarage value indicated by the adjoining sale is defective on two bases. First the valuation is to be made as at October 1998 and not as at mid to late 1999 and there is sales evidence within that earlier relevant period to support the higher level of value now applied by Mr Paton. Second there is no evidence to suggest that these larger blocks are marketed other than on a site basis when differing areas may be one consideration affecting value, but not on a strict pro rata area basis. It is unnecessary to decide if Mr Paton's analysis of the after date Grey's Lane sale requires review at this time, based on Mr Burgess' criticism. That sale may be of relevance however to a subsequent revaluation of the Shire. -- 4 of 5 -- 5 Finding Although the evidence from both parties supports the appellants' contention that the unimproved value of the subject land may have fallen during 1999, the appellants have not been able to show that the valuation appealed against was wrong as at 1 October 1998. The appeal is therefore dismissed and the unimproved valuation of the chief executive affirmed. RE WENCK MEMBER OF THE LAND COURT -- 5 of 5 --