Chief Executive, Department of Natural Resources v Radlett Enterprises Pty Ltd [1998] QLAC 10 (1997-1998) 18 QLCR 397

IN THE LAND APPEAL COURT HELD AT BRISBANE Re: Appeal against a decision of the Land Court - Determination of Unimproved Value - Shire of Pine Rivers. (AV94-206). B E T W E E N Chief Executive, Department of Natural Resources Appellant AND Radlett Enterprises Pty Ltd Respondent J U D G M E N T Delivered at Brisbane, this Eleventh day of February 1998. This appeal relates to a determination of the unimproved value of land situated at Lawnton Pocket and Walker Roads, Lawnton. It has an area of 6.07 hectares and is described as Lot 3 on Registered Plan 36052, in the Parish of Warner, County of Stanley. The land is zoned "Rural" under the Pine Rivers Shire Council's town plan and is exclusively used for the purpose of a single dwelling house. If it had the potential for higher and better use, such potential must be disregarded as the valuation of the unimproved value falls to be made pursuant to section 17(1) of the Valuation of Land Act 1944 (the Act), which relevantly provides: "In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house .... any enhancement in that value for that the land .... has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made. " As at the date of valuation, 31 March 1992, the chief executive's unimproved valuation of the land was $157,000. An objection against that valuation was disallowed and the owner appealed to the Land Court against that decision, asserting the unimproved value to be $121,000. The Land Court allowed the appeal and determined the unimproved value in the amount of $135,000. The chief executive has appealed to this Court from that decision. The grounds of appeal are: (a)That the decision of the Land Court was wrong in law and contrary to law; [1998] QLAC 10 -- 1 of 7 -- 2 (b)That the decision of the Land Court was based on incorrect principles and failed to take account of correct principles; (c)That the decision of the Land Court was against the evidence and the weight of evidence; (d)That the learned Member was wrong in law in finding that the valuation of the subject land as at 31 March 1992 should be $135,000; (e)That the determination of the Land Court was less than the unimproved value required to be found pursuant to the Valuation of Land Act 1944. Lawnton is an urban locality well served with residential amenities which are within easy reach of the subject land. No new development has occurred within the immediate vicinity of the subject land for many years. There is however an extended quarrying operation conducted on land opposite the subject land on the northern side of Lawnton Pocket Road, adjacent to the North Pine River. There is no, or no significant, visual impact from that operation on the subject land, the primary deleterious effect being the noise from associated heavy vehicles which travel along Lawnton Pocket Road past the subject land. There is a developed industrial estate within close proximity to the west. Details of the environment in which the property is located and the physical characteristics of the land, including its susceptibility to flooding, are described in detail in the Land Court decision, and not challenged before us. It has become clear that the valuation of the unimproved value of the land was not a simple task because of the lack of directly comparable sales evidence, particularly as that evidence needed to relate to the limitations of use considerations imposed by section 17(1) of the Act. The valuer who was given the task of defending the chief executive's valuation before the Land Court had not been the valuer who had initially carried out the valuation. He was however, a senior valuer with long experience in the district, and, after his specific investigations, had satisfied himself as to the correctness of the valuation under appeal. He tendered before the Land Court the evidence of the sales of five sites, including a 615 square metre serviced "Residential A" zoned lot in Lawnton, and four hectarage sites with various zonings, all of which were restricted to a highest and best use for a single dwelling. The sales had taken place in a period from November 1990 through to April 1992 and had been analysed to show unimproved values ranging from $45,750 (for the small residential lot) up to $137,500 for one of the hectarage lots. It was submitted by the chief executive that the sales evidence which had been put before the Land Court by the owner in support of the grounds in the notice of appeal was insufficient to discharge the onus of proof upon the owner provided for in section 45(4) of the Act which is as follows: -- 2 of 7 -- 3 "Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner. " The learned Member of the Land Court decided, correctly in our view, that in assessing whether the owner had discharged the burden of proof, regard might be had, not just to the evidence which the owner had led, but to the whole of the evidence in the case. If it was found that the burden of proof had not been discharged then the status of the chief executive's valuation was not disturbed, as section 33 of the Act provides: "Any and every valuation, or alteration of the valuation, of any land made, or purported 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. " The Member had not been assisted by the evidence of value indicated by the one sale relied upon by the owner. Instead the Member concentrated on the sales evidence provided by the chief executive's valuer and, in particular, one of those sales which she found on the whole of the evidence to be the most comparable. The evidence before the Land Court was that it had been the value "applied" to the sale lands rather than the specific unimproved value analysed from the individual sales which had been adopted as the basis of comparison for the valuation of the subject land. The Member found that approach to be incorrect. As we interpret the reasoning behind that conclusion, the chief executive's approach had been seen completely to discard the specific sales evidence in favour of a relativity approach based on "applied" values. If that has been the case, then there would have been merit in that reasoning. This Court in Barnwell v. The Valuer-General (1989) 13 Q.L.C.R. 13 said at p.17: "In re Appeal by P.H. Clough against the determination by the Valuer-General - Shire of Caboolture - (1981/2) 8 Q.L.C.R. 70 at p.76, this Court said:- '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 an unimproved value. The reason is obvious. In applying such sales there is no room for error in analysing the value of the improvements. ' The Valuer-General in this case has used the sales of unimproved or lightly improved properties as a valuation basis and it is clear he has not erred in principle in valuing the subject land on the basis of such sales analyses. Nor has it been shown that the Valuer-General made any serious error of fact." Earlier, in Fischer v. The Valuer-General (1983) 9 Q.L.C.R. 44 at p.46, this Court had said: -- 3 of 7 -- 4 "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. 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." Of course, it has also been recognised by this Court, as a matter of logic, that it is desirable that valuations made for the purposes of the Act of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based: Scougall v. Chief Executive, Department of Natural Resources (AV93-119, AV94-364, unreported, 13 September 1996). We are not at all persuaded that the methodology adopted by the chief executive breached correct valuation principles as they apply to valuations under the Act. The first step in the chief executive's methodology was correct, in our opinion, in identifying the sales which were considered to provide evidence capable of comparison with the subject land. The sales as selected could hardly have been described as being of land directly comparable with the subject land. Apparently, however, the sales had been seen to afford the best evidence available relative to land which was limited by the same restrictions as the legislation placed on the subject land, for valuation purposes. It was not until after the chief executive had analysed and considered the specific sales evidence seen to be comparable, that the question of the values "applied" by him to those lands was focussed upon. The evidence was that other sales, the details of which had not been disclosed to the Land Court, had formed part of the considerations of the chief executive before those valuations had been applied to the sale lands. The actual sales of those lands did not suggest that the applied values, although conservative, were wrong. We are therefore unable to agree that the analysed values shown by those sales had, on the evidence, been disregarded by the chief executive, or that the market evidence has been discarded in favour of unsupported valuation opinion. As Mason J. said in Federal Commissioner of Taxation v. St. Helen's Farm (ACT) Pty Ltd (1980-81) 146 CLR 336 at p.381: "Valuation is a matter of estimation, not of precise mathematical calculation." Valuation is intended to be an interpretation of a market, which in itself is imprecise, even when it is created by vendors and purchasers who satisfy the often quoted qualifications necessary to meet the test explained in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418. Counsel for the respondent suggested that the evidence by the chief executive's valuer in the Land Court indicated that correct valuation principles had not been followed through the averaging of sales. On the contrary, we interpret the relevant evidence to suggest that the totality of vacant or lightly improved sales evidence in the local government area had been considered in deciding the range of values which was indicated for the various classes of land in that area. Then, "out of line" sales could be identified and discarded, narrowing the range suggested by the market for those various classes of land. A conservative approach was then taken to the application of values to individual lands. Such an approach is not seen to be in -- 4 of 7 -- 5 conflict with valuation principles but desirable when all land within a particular local government area is to be valued. It would be a different matter if the overall sales evidence had been disregarded and supplanted by unsupported valuation opinion. Clearly there must be a limit to the degree of variance between the analysed value of a particular sale property and the value applied to that property, beyond which it could be fairly said that the sale had been disregarded. There can be no arbitrary limit to such variance: each case must be decided on its merits. We see it as a reasonable and acceptable policy that the chief executive should take a conservative approach to the application of sales evidence in making valuations for revenue-gathering purposes: see Commissioner of Succession Duties (S.A.) V. Executor Trustee and Agency Co. Of South Australia Ltd (1947) 74 C.L.R. 358 at pp.373-374 per Dixon J. That is what the chief executive submitted had been done in this matter and we think that the evidence before the Member supports that conclusion. It follows that we do not agree that the presumption of correctness of the valuation appealed against was rebutted because the chief executive has been shown to have acted upon a wrong principle. In Brisbane City Council v. The Valuer-General (1978) 140 CLR 41 at p.56, the High Court found that "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." (s.13(7) is now s.33.) It remains to be decided whether the chief executive made a serious error of fact. The only expert valuation evidence before the Land Court came from the chief executive. The grounds of appeal against the valuation had concentrated on the fact that the valuation reflected a significant increase over the previous valuation when the owner had perceived a market recession - that perception supported, it was alleged, by unsuccessful attempts to market the subject property and a neighbouring property. The grounds of appeal highlighted the various disabilities of the site. Although the chief executive did not see the land blighted by its disabilities to the same degree as did the owner, we accept that the exposed disabilities as referred to in the Land Court decision had been recognised by the chief executive. The appellant in the Land Court had been aware of some of the sales on which the chief executive sought to rely. As it happened, an opportunity was given to the owner to investigate all of the sales on which the chief executive relied. The chief executive's opinion as to the inferiority of the sale lands in comparison with the subject land was seriously challenged. In Qualischefski and Ors v. The Valuer-General (1979) 6 QLCR 167, this Court commented at p.172: "In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties." -- 5 of 7 -- 6 Those comments were made with particular reference to the state of the evidence before the Court in that matter. It is clear that an appellant's task is not an easy one in the circumstances as there described, but it cannot be assumed that it is an impossible task. In the Land Court, the Member considered the evidence of both parties as to the comparability of the lands sold with the subject land and came to the conclusion that one of the sale lots in particular - a 4.049 hectare lot in Buranda Road, Clear Mountain - was better able to be compared with proper weighting of the obvious differences, than any of the other sale lots. In fact, the learned Member's decision was made on the basis that, had a direct comparison been made on the "analysed" unimproved value as indicated by that particular sale, a similar value in the amount of $135,000, should have been attributed to the subject land. It would seem to follow that had the "applied" value been adopted by the Member as the strict basis for comparison, then a valuation of $120,000 - (marginally less than the owner's estimate) - would have resulted. As we have already observed, the sales evidence is less than ideal. We can only assume that there were no sales of sites restricted in usage potential to a single dwelling, which showed analysed unimproved values or to which the applied valuations were $157,000 or greater. That evidence would otherwise surely have been put before the Land Court, for comparison purposes. As was observed in Secretary of State for Foreign Affairs v. Charlesworth, Pilling & Co. [1901] A.C. 373 at p.391: "It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity." This is a case where the evidence was such as to leave room for considerable doubt as to the fair and reasonable unimproved value of the subject land as it is to be found pursuant to section 17(1) of the Act. We are inclined to give weight to the experience of the chief executive's valuer in making comparisons of like with like and to accept that the subject land should be valued at an amount higher than the $120,000 the chief executive "applied" to the sale land in Buranda Road, Clear Mountain. We think, however, on the basis of the evidence tendered, that it is probable that the chief executive did not give sufficient weight to the disabilities of the subject land when weighing the advantages of its location. This, we conclude, led to an error of fact which has the effect of rebutting the presumption of the correctness of the valuation. In Brisbane City Council v. The Valuer-General Gibbs J, speaking of the provisions of the Act, said at p.57: "The effect of these provisions is that an owner on appeal to the Land Appeal Court has the burden of proving the grounds of his appeal, but not the burden of proving that the amount which in his opinion should be the valuation is correct. -- 6 of 7 -- 7 Obviously the Court, if it allows an appeal, may determine the valuation at an amount different from that for which the owner contends." In this case we conclude that the determination of the unimproved value by the Member is consistent with the sales evidence and we see no reason to depart from it. The appeal is therefore dismissed and the Land Court determination of unimproved value in the amount of $135,000 is affirmed. HELMAN J JUDGE OF THE SUPREME COURT RE WENCK MEMBER OF THE LAND COURT NG DIVETT MEMBER OF THE LAND COURT -- 7 of 7 --