Couper v Valuer-General
[2013] QLC 49
•31 July 2013
LAND COURT OF QUEENSLAND
CITATION: Couper & Anor v Valuer-General [2013] QLC 49 PARTIES: Dennis John Couper and Anita Claire Couper
(appellants)v.
Valuer-General
(respondent)FILE NOs: LVA703-11
LVA893-12DIVISION: Land Court of Queensland PROCEEDING: Appeals against valuations under the Land Valuation Act 2010 DELIVERED ON: 31 July 2013 DELIVERED AT: Brisbane HEARD ON:
HEARD AT:
19 March 2013
Gympie
MEMBER: Mr PA Smith ORDERS: 1. The appeal in LVA703-11 is dismissed.
2. The appeal in LVA893-12 is dismissed.
CATCHWORDS: Practice and Procedure – onus of proof
Valuation – valuation methodology – use of relevant sales best evidence – relativity of valuations of other blocks only relevant if those valuations are shown to be correct – “top down” or “bottom up” valuation approach – assessment of disabilities
Land Valuation Act 2010
Fairfax v Department of Natural Resources and Mines [2005] QLC 11
Donald Neil Meiers and Florence Myrtle Meiers v Valuer General [2012] QLC 0019
Spencer v The Commonwealth (1907) 5 CLR 418
Steers v Valuer-General [2012] QLC 12
Tow v The Valuer-General (1978) 5 QLCR 378APPEARANCES: Mrs Anita Couper for herself and her husband
Mrs Thea Johnson, Senior Lawyer for the Department of Natural Resources and Mines
Background
This decision relates to two appeals by Mr and Mrs Couper (the appellants) against valuations by the respondent, the Valuer-General, pursuant to the Land Valuation Act2010, (the LVA), which valued the appellants’ property situated at 49 Collard Road, Mooloo via Gympie (the subject land), in the sum of $400,000 as at 1 October 2010 and 1 October 2011. The appellants contend for valuations of $150,000 and $200,000 respectively. It should be noted that the valuations of $400,000 arise as a consequence of a decision on objection relating to the 2011 valuation on 10 October 2012.
The subject land has been valued and zoned as rural. The land is valued as unimproved land pursuant to the provisions of the LVA, which separates land valued as site value land and land valued as unimproved land.
The Subject Land
The subject land is described as Lot 35 on LX 304, Parish of Amamoor, County of Lennox. It is located in Mooloo, approximately 16.5 kilometres south-west of Gympie.
Access to the subject land is via Collard Road, which is a formed gravel rural road approximately 600 metres in length, then via various bitumen roads to Gympie. Access is subject to creek flooding during rain events which can make the access impassable.
The subject land is severed on the western side by Miles Road, which has a gravel surface.
Telephone, electricity, mail and refuse collection services are available to the subject land. Good amenities are available at Gympie which is the district’s urban centre.
The subject land has an area of 73.769 hectares. It is of an irregular topography, ranging from creek flat fronting Pie Creek, to easy, then moderate and steep sloping country with ridge spurs. The property is mostly cleared and is used for grazing cattle. A residence is also located on the subject land.
Vegetation mapping impacts 0.94 ha of the property, which is classified as “endangered dominant” or “of least concern”.
The Hearing
Mrs Couper represented herself and her husband and gave evidence at the hearing. Mrs Couper has no legal or valuation qualifications. The respondent was represented by Mrs Johnson and relied on the evidence of a registered valuer, Mr Anthony Clift.
An inspection of the subject land, in the presence of both parties was undertaken and the hearing was held at Gympie on 19 March 2013.
The Valuation Process
It is the responsibility of the respondent to undertake a valuation of not only the subject property, but all properties throughout Queensland. Those valuations are the basis for rating and land tax and related purposes.
I note with approval what his Honour Isdale said in Steers v Valuer-General:[1]
“[8]The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381:
‘Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.’
[9]This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”
[1] [2012] QLC 12.
Market value is also a relevant feature to consider under the LVA. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines:[2]
“[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 a 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] [2005] QLC 11.
In essence, the Spencer test[3] has been codified in s.18 of the LVA, which provides as follows:
[3] Spencer v The Commonwealth (1907) 5 CLR 418.
“18 What is a bona fide sale
(1) A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)—
(a)a willing, but not anxious, buyer and seller;
(b)a reasonable period within which to negotiate the sale;
(c)that the property was reasonably exposed to the market.
(2) For subsection (1), in considering whether terms and conditions are reasonable, regard must be had to—
(a)the land’s location and nature; and
(b)the state of the market for land of the same type.
(3) To remove any doubt, it is declared that if—
(a)there is a sale of the land in question; and
(b)the bona fide sale tests are complied with;
the sale is a bona fide sale.
(4) In this section—
land in question means land whose value is being decided.”
Importantly, the LVA casts the following duty on the appellant at the hearing in s.169(3):
“However, the appellant has the onus of proof for each of the grounds of appeal.”
It should also be noted that appeals under the LVA are to be determined on what is essentially the balance of probabilities[4].
[4] See Donald Neil Meiers and Florence Myrtle Meiers v Valuer General [2012] QLC 19 at [27].
Issues in the Appeal
The appellants provided quite lengthy grounds in their notice of appeal for both the 2010 and the 2011 valuations. The lengthy grounds of appeal for both valuation years can basically be summarised into five main areas of concern:
· Market values in the district have fallen substantially as a consequence of the failed Traveston Dam
· The Valuer-General has kept valuations artificially high to assist the income base of the Local Authority through higher rates
· All of the value of the subject property is in its improvements
· The sales relied upon by the Valuer-General are not comparable to the subject
· Disabilities of the subject land have not been adequately taken into account
In support of their contentions, the appellants provided statements to the Court with respect to both valuation appeals. These statements became Exhibits 3 and 4.
When giving evidence before the Court, Mrs Couper did little more than have her two statements tendered as evidence. She did not add to those statements in any way during her evidence, and was not subject to cross-examination by Mrs Johnson.
During the short time that Mrs Couper was in the witness box, she impressed me as a truthful albeit somewhat nervous witness unfamiliar with Court proceedings. As the hearing progressed, she became more at ease with the Courtroom situation and conducted herself very well during her cross-examination of the respondent’s valuer.
I have taken into account all of the points raised by the appellants in Exhibits 3 and 4 in these proceedings. Mrs Couper also well summarised her position with respect to these appeals during her closing submissions as follows:[5]
“… The Valuer General's lawyer says that I haven't brought up - we haven't brought up the valuations that we thought should have been applied. Well, the first one was because when you apply all the improvement costs, then unimproved isn't really worth anything. It's the improvements that make the value of the property as far as we can see, just about.
The second one, I just put a guess because I'm in no position to be applying a valuation; in reality, just I know it's too high. The sale property used in the first instance, of being at the high end property sales, I don't think they give a realistic figure of what should be applied.
In the second instance, they're all different types of properties from real low to higher. Questions on some. I don't know how they can relate that - those figures back to, you know, not changing our valuation at all, leaving it the same. People in the market locally, you know, the agents and people trying to sell their property and have sold them all say the same thing, that prices have gone down, I'd say 30 per cent and they agree and some say more but I've put in my submission that I could get none of them to put anything in writing because they don't want to be discriminated against in the matter of trying to sell all these government-owned properties.
We feel that everything we've put in our submissions has been accurate and you know, the only actual quote I got on improvements that anyone would give me was the fencer and it states that you know, all the improvements are current prices. I don't feel that the Valuer General's taken all those costs into account properly. I know they devalue some of them, but clearing doesn't, clearing's done and you know, we've got to go out all the time you know, cleaning up. Regrowth and that sort of stuff, that's just an ongoing thing.
I just - we just feel that you know, the way they value just isn't right. It's not just our property, right across the board and I expect the Valuer General to fight it wholeheartedly because if they found us to be right they're going to have to do so for the whole shire. And we do feel that the Traveston Dam had a huge impact on property prices across the board, not just in the imprint area. And we don't see how you can claim that you know, well, down the road they're prices went up too because different factors drive property prices in different areas and we don't see how you can compare those sort of things, you know, with what happened in Gympie.”
[5] See Transcript 19 March 2013, page 40, line 8 to line 56.
The respondent relied upon the evidence of a senior valuer, Mr Clift. Mr Clift has been employed by the respondent since 1976, commencing work in this area. After some years working in other parts of the State, Mr Clift returned to this district in 1988 and, as I understand it, has continued working in this area for the respondent since that time.
Mr Clift impressed me as an open, honest, reliable expert witness. He freely acknowledged limitations with sales evidence where appropriate, and was forthcoming with clear comparisons as between his sales and the subject property.
As regards the 1 October 2010 valuation, Mr Clift relied upon three sales which are fully detailed in his valuation report for that year.[6] His sales evidence can be summaries in this way:
[6] See Exhibit 5.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 1 458 Traveston Rd, Traveston 64.01 ha 17 April 2009 $550,000 ($8,592/ha) $412,441
$6,443/ha)$305,000
($4,764/ha)Comments:Mortgagee in possession sale bought by a nearby owner for expansion. Structurally improved with 2 sheds. Inferior overall to subject due mainly inferior country (all forest vs. scrub) and no natural water. Slightly superior access but further from Gympie. 24.5% vegetation mapped country on the sale and 1.3% on the subject.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 2 421 Cavanagh Rd, Greens Creek 48.45 ha 27 July 2009 $1,000,000
($20,640/ha)$652,340
($13,464/ha)$420,000
($8,670/ha)Comments:Bare sale. Structural improvements are a large and a small shed, no house (burnt down) and yards. Adjoining owner purchasers.
Superior overall to subject due to generally easier country and better location. It has similar access and has inferior water. There is no vegetation mapping impact on the sale and 1.3% on the subject. Valuation is now amalgamated with other lands.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 3 694 Kin Kin Rd,
Wolvi97.69 ha 21 June 2010 $995,000
($10,185/ha)$769,745
($7,936/ha)$375,000
($3,839/ha)Comments:Structural improved with set of cattle yards only. Mt Isa purchasers with lease back grazing rights to the vendors. Internal access is poor due to terrain.
Slightly inferior overall due to having slightly inferior country and no natural water. Has similar access and equal location from Gympie. About 24 ha larger than the subject but this is balanced by having 17.83 ha remnant vegetation mapped.
As regards the 1 October 2011 valuation, Mr Clift has relied upon four sales in his valuation report,[7] which I have summarised as follows:
[7] See Exhibit 6.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 1 Traveston Road, Traveston 39.6 ha 15 August 2011 $475,000
($11,995/ha)$360,551
($9,105/ha)$305,000
($7,702/ha)Comments:Pomona purchasers. No structures. Inferior overall to subject due mainly inferior country (all forest vs. scrub), much smaller and no natural water. Slightly superior access but further from Gympie. 15.8% vegetation mapped country on the sale and 1.3% on the subject.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 2 1 Tunnel Rd, Imbil 51.6 ha 18 April 2011 $330,000
($6,395/ha)$216,012
($4,186/ha)$187,500
($3,633/ha)Comments:Structural improved with a 3 bay shed and skillion, a basic ablution building and tanks. Mortgagee in possession sale with purchaser from Yandina.
Inferior overall to subject due to poor country, smaller size and inferior location. It has roughly similar access and inferior water. The sale has 53.9% vegetation mapped and 1.3% on the subject.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 3 1361 Sexton Road, Sexton 143.7 ha 30 March 2011 $338,000
($2,352/ha)$141,099
($982/ha)$96,000
($668/ha)Comments:Mary Valley purchaser using it for grazing cattle. No structural improvements at the time of the sale. Much inferior to the subject due mainly inferior country (all forest vs. scrub) and location. Inferior access and much further from Gympie. 65% vegetation mapped country on the sale and 1.3% on the subject.
Sale No Location Area Date of Sale Sale Price Analysed U/Value Applied U/Value 4 1970 Kandanga Creek Rd,
Kandanga112.907 ha 17 February 2011 $650,000
($5,756/ha)$447,447 ($3,963/ha) $305,000 ($2,701/ha) Comments:Sunshine Coast purchaser. No structural improvements. No mains power on to the property and it is understood that there is a high connection cost. The purchaser will have to construct a creek crossing to get vehicular access to the property and there are issues with internal vehicular access due to topography. There are some Giant Rats Tail Grass infestations on the land and it adjoins a large State Forest area.
Inferior overall to subject due to overall poorer country and inferior access, services and location plus having a weed problem. Although larger it has a roughly similar area of useable country and has a similar water supply. The sale has 25.9% vegetation mapped and 1.3% on the subject.
Analysis of the relevant evidence
As regards Mr Clift’s sale no. 1 for the 2010 valuation, the appellants’ evidence is that there is a close relationship between the parties involved with this sale such that it cannot properly be viewed as an arms length transaction. In short, it is the position of the appellants that this sale fails the Spencer test. Mr Clift advised that it was not apparent to him on any of the research work that he had done that there were related parties in the sale, but nevertheless thought that the sale reflected market value at the time.
I am inclined to give the appellants the benefit of the doubt as to their evidence regarding this sale. I accept Mr Clift’s evidence that the sale is generally representative of the market at the time, but my reliance upon the sale is low in light of the questions surrounding the arms length transactions that occurred.
As regards Mr Clift’s sale no. 2 for the 2010 valuation, the appellants have pointed out that the sale property is in a superior location, with “magnificent outlook”[8] and superior rainfall. The appellants also point out that the sale property is closer to the coast than the subject. Whilst I accept the evidence of the appellants in this regard, it is noteworthy that Mr Clift himself has assessed sale no. 2 as being superior to the subject property, which is of course consistent with the appellants’ evidence.
[8] Exhibit 3, page 3.
As regards sale no. 3, the appellants argue that it is a larger property, about half as big again as the subject, and is again better situated, being closer to the coastal communities of Tin Can Bay and Rainbow Beach. Significantly, in their statement the appellants argue that sale no. 3 is improved with two houses.
As regards the issue of the two houses on sale no. 3, I accept the evidence of Mr Clift that those houses are in fact removal houses basically parked on the subject land and not attached to the subject land in any way. The houses are in poor condition, and according to Mr Clift’s evidence there are disputes as to the ownership of those houses.
I note that Mr Clift’s evidence regarding the removal houses being on sale no. 3 is consistent with the evidence he tendered, being the sales brochure for the property.[9]
[9] Exhibit 7.
I am otherwise satisfied that Mr Clift’s description of the property makes a fair comparison between the subject property and the sale property, particularly taking into account the fact that 17.83 ha of the sale property is mapped remnant vegetation.
I now turn to consider the 1 October 2011 valuation sales. As regards sale no. 1, the appellants argue that the sale block is actually large for the area in which it is located and has “Class A good quality agricultural land”.[10] However, as Mr Clift points out, the sale property does not enjoy any access to natural water and, whilst the access is superior to the subject, the sale is overall inferior due to its size and the fact that it is forest country as opposed to scrub. Mr Clift also points out that 15.8% of the sale property is vegetation mapped.
[10] See Exhibit 4, page 1.
As regards sale no. 2 the appellants point out that this property sold in 2006 for $350,000, thus representing a 6% reduction in price in the five years to the April 2011 sale. Unfortunately, they were not aware whether or not an orchard and other structural improvements pre or post dated the 2006 sale. As Mr Clift points out, 53.9% of the sale property is subject to vegetation mapping.
For sale no. 3, although the relative descriptions of the property by the appellants and Mr Clift appear quite different, when they are closely viewed, similarities are apparent. Mr Clift points out that 65% of the sale property is vegetation mapped. The appellants say that these areas are open forest grazing, which is consistent with Mr Clift’s assessment of the land as being all forest country as opposed to scrub.
Regarding sale no. 4, the appellants point out in Exhibit 4 that the sale was not “done through an agent”. However, the appellants do not go on to explain how the property was marketed and how such marketing may fall short of the statutory requirements and the relevant tests as set out in Spencer. The appellants also point out that the sale property has extensive frontage to a reliable source of water, being Kandanga Creek. What is particularly noteworthy is the appellants’ closing comments regarding this sale in Exhibit 4[11] which is that “the sale price is very difficult to understand”.
[11] At page 1.
At this juncture, it is appropriate that I make some comments as to the evidence of the appellants regarding other concerns they have regarding the valuation process. Firstly, as indicated earlier, the appellants are concerned that the valuations in the district have been kept artificially high to maintain the rate base of the Local Authority. I can find nothing in the evidence in this case to support this allegation. As the Land Appeal Court said in Tow v The Valuer-General:[12]
“The Valuer-General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result.”
[12] (1978) 5 QLCR 378 at 381.
This ground of appeal by the appellants has not been made out.
The appellants are also very concerned as to the impact that the failed Traveston Dam project has had on the market in their locality. Their concerns in this regard are certainly justified. However, it is not surprising that Mr Clift, as such a senior valuer, is also well aware and concerned by the impact that the failed Traveston Dam project may have on the market. During his evidence, he explained the way in which he undertook the valuation task in light of the Traveston Dam impact on the market, as well as other market factors:[13]
“…Lastly, on page 5 of the appellants' information, there's reference there to the appellant raises concerns regarding the Traveston Dam and its impact that the decisions of the previous government would have had on valuations. Can you comment on the Traveston Dam and whether it's had any impact on your-----?-- Okay.
----- 2010 valuation?-- Firstly, none of the sales we've look at have been in the dam footprint area or of purchases that have been displaced by those purchases that may have been cashed up and - and bought properties elsewhere in the - in the - in the district. Traveston Dam certainly impacted on a lot of places. There was nearly 500 places that were resumed by that particular action. However, I would comment that irrespective of the local market with that, similar sort of strong market growths were occurring in other areas that weren't influenced by the Traveston Dam. The - the sales that we have used - may be noted in the report, if you look at the - what they analysed to versus what we applied, we took a very conservative approach to those actual applications because of a number of things. One, I suppose, was by the time we started looking at this, there was a strong opinion that the market had slowed and was possibly falling. So, bearing in mind, the effects of the goods and - sorry, the GFC and the tightening on rural lending post-GFC that certainly there were, you know, a lack of buyers at that particular time and we didn't have a lot of evidence to look at that would be considered appropriate once you weed it out, you know - other sales. So, Traveston was there but we didn't have any specific reference to it or purchases from it.”
[13] See Transcript 19 March 2013, page 14 line 45 to page 15 line 16.
The appellants are concerned that, in their view, all of the value in the subject property lies in the improvements and not in the unimproved value of the land. This concern of course highlights one of the difficulties of the valuation process. To use a hypothetical example, if a property was purchased for say $500,000, and included in that purchase price were improvements which had cost the previous owner $300,000 to establish, does this mean that the purchaser only paid $200,000 for the land component of the sale and the full $300,000 for the improvements? This can be referred to as the ‘top down’ approach where you start with the sale price and take off the value of improvements and what you are left with must, according to the arguments of some, be the value of the land. However, when this approach is taken, it can have the farcical outcome of the land component being valued at essentially nothing in some circumstances. The other approach of course is the ‘bottom up” approach where you start with the value of vacant land and remove that from the sale price to ascertain what price the purchaser has paid for the improvements. For instance, using the same hypothetical example, if a neighbouring block had been in exactly the same condition, size and relative land types as the hypothetical sale block except with no improvements, and that block had sold say six months earlier for $400,000, then the bottom up approach would suggest that the new purchasers of the hypothetical sale had been fortunate enough to obtain the $300,000 worth of improvements for the expenditure of only $100,000. This example shows the great fluctuation in vacant or unimproved values of land which can apply when sales which involve significant improvements are relied upon as a basis for establishing value.
In my view, Mr Clift has done the best that he can with the available sales evidence to rely upon sales which are only lightly improved as the best means of comparison with the subject.
The final aspect of complaint of the appellants is that the disabilities on the subject property have not been adequately taken into account. In this regard, I note that the valuations were reduced by the amount of $15,000 to more properly take into account the disabilities of the subject property.
Determining the appropriate amount that a valuation should change in light of present disabilities is often a difficult task. Having viewed the property, and taking into account all of the comments by both the appellants and the respondent as to the comparability of the sale properties, and noting the per hectare value of each of the sale properties, my conclusion is that the disabilities of the subject property have been adequately taken into account by the respondent.
Conclusion
Mrs Couper did an admirable job in presenting documented statements to the Court in support of her arguments. Exhibits 3 and 4 were well reasoned and carefully thought out. However, as has been pointed out in many cases, without the assistance of the evidence of a registered valuer, it is often a difficult, although not impossible, task for an appellant to disturb the valuation undertaken by an expert valuer for the respondent. Particularly in circumstances where appellants do not rely upon valuation evidence in support of their own case, it is necessary for them to show real error on the part of the respondent’s valuer. To a limited extent, the appellants have successfully brought into question one of the sales for the 2010 valuation, as I am in some doubt as to whether or not it was an arms length transaction. However, there remains sufficient sales put forward by Mr Clift, undisturbed by cross-examination, to support his valuations for both the 2010 and 2011 valuation periods.
In all the circumstances, the appellants have failed to establish on the balance of probabilities that the Valuer-General’s valuations are incorrect and accordingly both appeals must be dismissed.
Order
1. The appeal in LVA 703-11 is dismissed.
2. The appeal in LVA893-12 is dismissed.
P A SMITH
MEMBER OF THE LAND COURT
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