Boyce v Chief Executive, Department of Natural Resources [1998] QLC 36

LAND COURT BRISBANE 13 MARCH 1998 Re: Appeal against annual valuation - Valuation of Land Act 1944 - Valuation Roll No.: 4157 Local Government: Stanthorpe Shire (AV96-210) Edward P Boyce v. Chief Executive, Department of Natural Resources (Hearing at Stanthorpe) D E C I S I O N Background: This matter relates to a property located at Nundubbermere Road, about 10.5 km south-west of the Stanthorpe Post Office, and described as Lot 2 on RP 228686, Parish of Nundubbermere. The subject has an area of 299.9 ha, and is zoned as "Rural C" under the Stanthorpe Shire Town Planning Scheme of 11 June 1983, and effective at the date of valuation of 1 January 1996. The key issues are relativity, the nature of the land, comparison of sales and percentage changes in the valuation. Access to the property is via Nundubbermere Road, which is a single lane bitumen sealed all-weather road. Telephone, electricity, mail delivery and a school bus service are all available. The property comprises something less than 50% of gently sloping sandy granite forest country with rock outcrops, and the balance is much steeper with major granite boulder country. There are several watercourses which could provide sites for dam storage, although the water storage capacity of the area was challenged by the appellant. The subject was valued under s.17 of the Valuation of Land Act as used for farming purposes. On 19 February 1996 the Chief Executive, Department of Natural Resources, issued a valuation at $18,000. Following an objection, the Chief Executive confirmed that valuation on 5 June 1996. The appellant has now appealed that value, claiming the valuation should more properly be $14,400. Mr EP Boyce appeared and gave evidence for the appellant, calling also Mrs LM Boyce. Mr D Coe appeared for the respondent, calling evidence from Mr DB Redgen, the registered departmental valuer responsible for determining the valuation. The Evidence: [1998] QLC 36 -- 1 of 10 -- 2 (1) The Nature of the Land - While there was eventually general agreement about the overall nature of the land, the appellant argues that the extent and impact of the rock outcrops has been underestimated by Mr Redgen. Mr Boyce and Mr Redgen inspected the property jointly following the objection, and Mr Redgen prepared his maps showing the extent and nature of the overall land following that inspection. During the inspection, there was agreement between the parties of the extent of the different country types, which was noted on a copy of an aerial photograph of the area. Mr Redgen subsequently prepared a map by charting those areas and, by the use of a planimeter, determined the percentage areas of useful and unsuitable country. There was some minor alteration to the map showing country types during evidence, but overall agreement was finally reached on the percentages of each type, with something slightly less than 50% being seen as usable type country. What was further argued, however, was that the severity of the slopes within the unsuitable land was in fact steeper than indicated in Mr Redgen's statement, a matter conceded later by Mr Redgen. Certainly, the very steep nature of the land near the southern boundary, adjoining Arnold's land (Lot 2 on RP 162655), was accepted by Mr Redgen. Mr Boyce felt that, in determining relativity with other parcels, it was important to establish the nature of the land correctly. Photographs were also supplied by Mrs Boyce of the very rocky ridge to the south of the house site, shown clearly about the middle of the property on the aerial photograph supplied to the Court. There was agreement that the very large extrusions of rock boulders prevented any possible use of those area. The nature of the usable areas was also seen as something steeper than "slightly sloping country". A matter of concern to Mr Boyce was also the perceived lack of capacity of the subject to sustain water in dams for stock-watering purposes. Mr Boyce gave evidence of perhaps some 30 or 40 small dams in the catchment areas above the subject. He also noted that, because of the porosity of the granite soils, his dam to the east of the house had been pumped dry some six months previously, and has not yet been replenished. He claims that surrounding properties appear to have a clay underlay which assists in retaining water in their dams, and some of these are also spring fed. Mr Boyce agrees that there are two major gullies passing from south to north across the subject, joining into Blackswamp Creek in the northern portion of the property. The -- 2 of 10 -- 3 catchment area of Blackswamp Creek extends for some 3 km to the east, while the catchment area to the south extends for about 2 km to a point in the Arnold's property (Lot 2), when the land then falls to the south towards Ballandean, and also to the west. Until recent years, Blackswamp Creek had been a permanent water supply, but this had dried up with the construction of the upstream dams. A matter of concern for Mr Boyce was also the assessment by Mr Redgen, that the subject had some suitability for horticulture, in conjunction with grazing. While the appellant conceded that he had tried to grow vegetables for a few years on a small area in the northern part (less than 0.5 ha), his major use of the land is for the grazing of fat lambs. Mr Redgen confirmed that, while he had seen some capacity for parts of the land to be ploughable for horticultural purposes, although subject to heavy surface wash, he had, nevertheless, valued the subject only as grazing land. Any potential dam sites mentioned by Mr Redgen referred only to storage for stock-watering purposes. (2) Changes in the Valuation - A major concern to the appellant was the apparent large percentage increase in the valuation of the subject (42%), compared to surrounding properties (10%), and an overall increase in the Stanthorpe Shire (3%). Mr Boyce drew comparison with the value of his neighbour's property (Casey - Lot 219) which was originally valued at 1 January 1996 at $18,500. He has subsequently learned that, following his own objection, the Casey property has been reassessed, and is now determined at $27,500. Mr Boyce believes that the higher value for the Casey property had used his unimproved value at $18,000 as a lever to raise the Casey property, a strategy which he believes was inappropriate, bearing in mind the large percentage increase that had occurred in the subject land. The history of the various changes to the valuation of the subject, provided from departmental and the appellant's records, disclose the following: Valuation Date Unimproved Area Comments Value 31.03.1988 $20,200 Unknown Objected as valued as rural residential 31.03.1988 $19,700 Unknown Amended to grazing 31.03.1990 $19,700 Unknown - 03.08.1990 - Reduced to 656.8 ha - 19.11.1990 - Reduced to 299.9 ha - 31.03.1990 $15,000 299.9 ha Following objection 31.03.1990 $10,500 299.9 ha Following reduced area 31.03.1992 $10,500 299.9 ha Maintained relativity 30.06.1993 $10,500 299.9 ha Maintained relativity -- 3 of 10 -- 4 01.01.1995 $12,600 299.9 ha Following a general 20% rise in granite lands 01.01.1996 $18,000 299.9 ha Determined using a base of $15,000 instead of $10,500. Mr Coe confirmed that the valuation of 1 January 1996 ($18,000) was determined inadvertently using the calculation record ($15,000), rather than the record of the objection ($10,500), from the last entry on the file for 31.03.1990. Since that date all determinations had been made by the computer-assisted valuation process (IVAS), with no manual notings listed on each individual file. It is important to note that the entire revaluation of the State is now undertaken annually using a computerised process. As a consequence of that incorrect calculation for 1 January 1996 ($18,000), the appellant objected, arguing relativity with the Casey property. This focussed a complete review of relativities in the general area which, after a thorough examination, disclosed errors in the values of several properties, including the Casey land. Having become aware of certain inconsistencies, the Chief Executive had a responsibility to correct the record. As a consequence of that review, the current value of the subject ($18,000) was subsequently confirmed, and the Casey land was increased to $27,500. Affected owners were advised of the amendments to the valuations on 25 September 1996, under s.28(1)(h) of the Act. While the reasons were explained during evidence, clearly Mr Boyce still feels that the very high percentage increases in the valuation of the subject (71% from 1991 to 1997), does not reflect the general level of land sales in the area. (3) Comparison of Sales - In support of his valuation, Mr Redgen provided the following sales:  Sale 1 - (Sugarloaf Road, Sugarloaf - Lots 138 and 139 on Plan B34228; Lot 2 on RP 210503; Lots 2 and 3 on RP 88696 and Lot 168 on Plan B34239). This is a 252.421 ha property located 12 km south-east of Stanthorpe and 19 km east of the subject. It has a similar location from Stanthorpe as the subject. The sale fronts a dual-lane bitumen road, which is all weather and superior to the subject. Telephone and electricity are available and the sale has similar proximity to schools and shops. The sale is zoned as "Rural" and has a permanent creek and dam storage. Approximately 90% of the sale is easy sloping granite forest with some minor rock outcrops. The balance (10%) is rough granite boulder and sheet rock ridges. The sale is seen as superior overall and also on a per ha basis. The sale sold in November 1995 for $450,000 ($1,785 per ha) which, after allowing for improvements, was analysed at $44,994 ($180 per ha), and applied at $39,500 ($156 per ha). -- 4 of 10 -- 5  Sale 2 - (Luna Road, Oman-ama - Lot 10 on Plan BNT128). This is a 1,417.61 ha property located 26 km east of Inglewood, 60 km north-west of Stanthorpe and 53 km north-west of the subject. The sale is also west of the rabbit fence. It has an inferior location, access, and proximity to schools and shops. Telephone and electricity are available and the sale is zoned as "Rural". The sale has a superior access to water as it fronts McIntyre Brook. The sale is seen as suitable only for the grazing of sheep because of its undulating to moderately sloping stony traprock ridges with many gullies. While larger in area, the sale is seen as overall superior, however, it is seen as inferior on a rate per ha basis. The sale sold in June 1995 for $230,000 ($162 per ha) which, after allowing for improvements, was analysed at $41,000 ($29 per ha) and applied at $39,000 ($28 per ha).  Sale 3 - (Carbean Road, Karara - Lots 1 and 2 on RP 813912). This is a 3,841 ha parcel, located 32 km south-west of Warwick, 38 km north-west of Stanthorpe and 36 km north of the subject. The sale is zoned as "Rural" and is also west of the rabbit fence. It has an inferior location, access, and proximity to schools and shops, and telephone and electricity are available. There is superior access to water with the sale fronting Burrabaranga Creek. The sale is seen as suitable only for sheep, consisting of undulating inferior stony traprock country with many gullies. While considerably larger than the subject, overall the sale is superior, but is inferior on a rate per ha basis. The sale sold in December 1994 for $623,820 ($162 per ha) which, after allowing for improvements, was analysed at $72,500 ($18.90 per ha), and applied at $65,000 ($17 per ha).  Sale 4 - (Old Wallangarra Road, Ballandean - Lot 2 on RP 97930). This is a 40.72 ha property located 20 km north of Tenterfield, 24 km south of Stanthorpe, and 19 km south of the subject. The sale fronts a dual-lane bitumen road, which is all weather and therefore has superior access. The sale is inferior in proximity to schools and shops. It consists of 60% of gentle to easy sloping granite forest country with minor rock outcrops, and is suitable for vineyards. The balance (40%) is steep rough granite boulder and sheet rock ridges. There is only dam storage available for water. Overall the sale is seen as inferior due to its smaller size, but superior on a rate per ha basis. The sale sold in December 1994 for $261,500 ($6,422 per ha) which, after allowing for improvements, was analysed at $8,800 ($215 per ha), and applied at $7,900 ($195 per ha).  Sale 5 - (Strathgarve Road, Dalveen - Lots 687 and 678 on Plan M34341 and Lot 1153 on Plan M34565). This is a 787.6 ha property located 21 km south of Warwick, 29 km north of Stanthorpe and 34 km north of the subject. The sale is also north of the rabbit fence and has an inferior location. The sale is seen as inferior in access and proximity to schools and shops. Telephone and electricity are available and the sale is zoned as "Rural". There is only dam storage available for water and the land consists of undulating to moderately sloping granite and basalt country, with rocky -- 5 of 10 -- 6 ridges and gullies, and is inferior type country. Overall the sale is superior due to size, but inferior on a rate per ha basis. The sale sold in March 1994 for $200,000 ($254 per ha) which, after allowing for improvements, was analysed at $43,000 ($54.50 per ha) and applied at $41,500 ($52.50 per ha).  Sale 6 - (Inglewood Road, Pikedale - Lot 2 on RP 196067; Lot 2 on RP 168733; and Lot 7 on Plan BNT1593). This is a 2,252 ha property located 34 km west of Stanthorpe, 54 km east of Inglewood, and 25 km north-west of the subject. The sale is zoned as "Rural C" and is also west of the rabbit fence. It has an inferior location and proximity to schools and shops, but a superior access to the dual-lane Texas-Stanthorpe bitumen sealed road, and a water frontage to Pikes Creek. The sale consists of easy to undulating better traprock slopes crossed by many gullies and is generally seen as sheep country only and is inferior in country type. Overall the sale is superior due to its size, but inferior on a rate per ha basis. The sale sold in December 1993 for $570,000 ($255 per ha) which, after allowing for improvements, was analysed at $87,000 ($38.60 per ha), and applied at $81,000 ($36 per ha). The appellant provided no sales evidence, relying upon relativity with an adjoining parcel. He argues that some other sales in the area reflect persons who do not make a living off the land, and are therefore not fair comparisons for "farming purposes". In comparing his sales, Mr Redgen noted that Sale 4 was provided merely to demonstrate that good horticultural land (for vineyards) can bring prices between $250 per ha and $1,100 per ha, depending upon size in the northern part of the area; while similar land near Sale 4 in the southern part brings prices about $200 per ha, even allowing for only 60% of usable area. In the valuation Mr Redgen did not use any horticultural land as evidenced by Sale 4. In comparing Sale 1, both parties agree that the sale has a higher rainfall and is predominantly good granite country with only minor rock outcrops, compared to the subject. Both agree Sale 1 is superior in rate per ha ($180). Sale 2 ($29 per ha) and Sale 3 ($18.90 per ha) are also seen to represent the traprock country at the lower end of the rate per ha scale, although both are much larger than the subject and large areas tend to reflect a lower unit rate per ha. Sale 5 ($54.50 per ha for a 787.6 ha site) and Sale 6 ($38.60 per ha for a 2,252 ha site) both reflect inferior rates per ha. Mr Redgen noted that Sale 3, at the time of sale, had about 50% of its area without grass for stock, due to heavy infestation of five-year-old suckers. In arriving at a unit rate per ha of $60, Mr Redgen balanced his estimate upon the premise that about 50% of the subject was impacted by rock outcrop to some extent. The -- 6 of 10 -- 7 appellant's claim that that figure is slightly on the low side would not, in my opinion, greatly affect the estimated unit rate per ha, and the $60 would appear fair and reasonable. In arriving at that figure, Mr Redgen has estimated that the subject could be ploughed and pasture sown for sheep. In comparing traprock country, it was agreed that it was inferior to granite country, although granite country needs fertiliser to improve pastures. The impact of large areas of very rough boulder outcrops was also discussed and its impact upon grazing practices. (4) Relativity - In arguing relativity between the subject and Casey's land (Lot 219), Mr Boyce agrees that the Casey land is superior to the subject; and that values for the subject ($18,000 - $60 per ha) and Casey's ($27,500 - $75 per ha), suggest the relativity is correct. The decision to reject the objection of the appellant was issued by the Chief Executive on 5 June 1996. The appeal was lodged on 2 July 1996 on the presumption of Casey ($15,800) and the subject ($18,000). By notice of 25 September 1996 Casey's land was reassessed under s.28(1)(h) of the Act at $27,500. The background to the changes was explained earlier in this decision. In undertaking the full review of valuations and their relativity, between 5 June 1996 and 25 September 1996, Mr Redgen personally inspected and separately valued about 30 properties in the area. Prior to these inspections, the properties had not been personally inspected for some years, a matter necessitated by the current annual computerised process for valuations. Decision: (1) The Nature of the Land - I turn first to the matter of the nature of the land and note that there is general agreement. Approximately slightly less than 50% is usable, and the remainder is useless for grazing purposes. I note also that the valuation has been made for the purpose of grazing only. The land has been assessed as "ploughable" but there is an agreed problem with adequate water storage on the southern half of the property. It was agreed that any relief from possible springs would be restricted to the northern part, if at all. There is also agreement that the previous regular flow in Blackswamp Creek has been impacted by the presence of various dams in the upper catchment. Any water storage potential on the subject is for stock-watering purposes only. -- 7 of 10 -- 8 (2) Relativity In the matter of relativity between the subject and Casey's land (Lot 219), both parties now agree that the current relativity is appropriate and reflects the difference in the value of the country. That the current appeal was lodged on 2 July 1996 and the valuation of the Casey land was subsequently amended on 25 September 1996, explains the relationship between the grounds of appeal and the current valuations. I find, therefore, that the current relativity between Lot 219 (Casey) and the subject is appropriate. (3) The Valuation - In reviewing the comparison of sales adopted by Mr Redgen, I note that he has adopted the well-established precedent, established by many Courts, that when determining unimproved values, the most appropriate method is to compare sales of comparable unimproved properties in the area. In this regard, I note the decision in WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at p.46: "It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels.: That principle was also followed in PH Clough v. The Valuer-General (1981-82) (LAC) 8 QLCR 70, where the Land Appeal Court said at p.76: "It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements." While Mr Boyce has relied upon a comparison of relativity with adjoining Lot 219, it was also found in WM & TJ Fischer v. The Valuer-General (supra) at p.46: "Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence." In the end, I seek guidance from the sales supplied by Mr Redgen. I note that Sale 4 has no direct bearing on the valuation, other than to indicate that grazing land in that area is worth considerably less than any horticultural land, either near the subject or further to the northern part of the shire. -- 8 of 10 -- 9 I note also that Sales 2 and 3 are of traprock country which is agreed is inferior to the subject on a per ha basis; and that Sale 1 is considerably superior at $180 per ha. The key to the comparison is therefore Sales 5 and 6 which, are agreed, are inferior on a per ha basis at $54.50 (Sale 5) and $38.60 (Sale 6). However, both are considerably larger than the subject, a factor which would influence the agreed per ha basis. Both Sales 5 and 6 do not appear to have the same large proportion of rock as the subject. In balancing the difference in areas and the percentage of rock outcrop, I note that, while valuation is an inexact science and depends considerably upon the practical skills and experience of the practitioner, any conclusion should also, in hindsight, be seen as reasonable. It could be appropriate to consider the relevant unit rates for each class of land, when valuing an in globo parcel such as the subject. For instance, in "Land Valuation and Compensation", Third Edition, by Rost & Collins, at p. 341 it says: "When valuing a property which has two or more distinct classes of land, each having different levels of productivity, the valuer should seek to apply to each of such class an appropriate unit value derived from sales consisting solely or mainly of one class of land." It is also suggested that the effect of the combined classes on overall productivity and net income should be considered. In the current matter, the unusable rock outcrop land is likely to have a deleterious impact upon farm management and productivity. However, I am also aware of the decision of Luton v. The Valuer-General (1971) 23 LGRA 180, where, when considering a valuation of a property with different soil types, Else-Mitchell J said at p.187: "... I am disposed, as I have already indicated, to regard it as imputing too high a degree of sophistication to the hypothetical purchaser of unimproved land in the situation of most of the areas which fall to be valued in these appeals. Rather I think should the several sales be applied on an in globo basis at a round figure per acre wherever that course is reasonably possible." On balance, I believe the unit rate per ha is greater than $54.50 (Sale 5) and I accept Mr Redgen's experienced opinion of $60 per ha. (4) The Impact of Changes to the Valuation - While Mr Boyce has serious concerns about the correctness of the approach taken by the respondent in reviewing the valuations of surrounding parcels, including Casey (Lot 219), I accept Mr Redgen's explanation of the history of the changes, and how they occurred. While this Court in no way condones that any miscalculation of a valuation has occurred, -- 9 of 10 -- 10 nevertheless, the Act is quite specific in respect of the legal correctness of a valuation. Section 33 of the Act says: "33. 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." Once the Chief Executive becomes aware of an error in a valuation, he has the power under s.28(1)(h) to amend that valuation: "28.(1) No alteration shall be made in the valuation of any parcel of land during the period during which any general valuation or annual valuation relating to the area in question is in force or, in the case of a general valuation or an annual valuation which has not come into force, during the period between the issuing of an annual valuation notice under part 4, or a notice of valuation under part 6, and the date of the valuation coming into force - (h) unless the valuation is affected by error or omission which the chief executive considers it necessary to correct;" Clearly, there is a discretion whether the Chief Executive considers it necessary to amend the valuation, but, bearing in mind the direction of s.13 of the Act in respect of establishing an equitable rating and taxing base for local government and for land tax purposes, the Chief Executive has an obligation to seek to correct an area where many valuations are found to be in error. Evidence was given that a review of the entire granite country was undertaken, with the consent of the local shire council (referred to in another matter before this Court recently). In respect of the information supplied by both parties about the past history of changes to the valuation, that is not really a matter for consideration in this case. However, its documentation in this decision should assist in clarifying the background to the appeal. Conclusion: Having considered the whole of the evidence, I am not persuaded that the appellant has proved his case, and I believe the current valuation of the subject is fair and reasonable. The appeal is dismissed, and the unimproved value as determined by the Chief Executive, Department of Natural Resources, at Eighteen Thousand Dollars ($18,000) is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 10 of 10 --