Farr v Valuer-General
[2012] QLC 64
•20 November 2012
LAND COURT OF QUEENSLAND
CITATION: Farr v Valuer-General [2012] QLC 0064
PARTIES:Christopher Michael Farr and Shelley Dianne Farr
(appellants)
v.
Valuer-General
(respondent)
FILE NO:LVA450-11
LVA493-12
DIVISION:General Division
PROCEEDING: Appeals against annual valuations under the Land Valuation Act 2010
DELIVERED ON: 20 November 2012
DELIVERED AT: Brisbane
HEARD ON: 17 October 2012
HEARD AT:Stanthorpe
MEMBER:Mr WA Isdale
ORDERS:1. The appeals are dismissed.
2.The valuations appealed against are confirmed.
CATCHWORDS: Land Valuation Act 2010, s.169(1) and (3)
Uniform Civil Procedure Rules, rule 426(1) and (2)
Valuation of Land Act 1944, s.13(7)
The Law Affecting Valuation of Land in Australia, 4th ed. Alan A Hyam. The Federation Press, 2009
SALES EVIDENCE OF VALUE — COMPARABLE SALES — RELATIVITY — EXPERT EVIDENCE
R and MM Barnwell v The Valuer-General (1990-91) 13 QLCR 13
Bignell v Chief Executive, Department of Lands (AV92-65 unreported Land Appeal Court 4 March 1996)
Brisbane City Council v The Valuer-General (1978) 140 CLR 41, 5 QLCR 283
Burnett v Department of Natural Resources and Water [2010] QLC 0057
Cattanach v Water Conservation and Irrigation Commission (1962) 9 LGRA 352
G.E. Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-1997) 16 QLCR 311Crompton v Commissioner of Highways (1973) 32 LGRA 8
Enright Hendy and Partners Investments Pty Ltd as trustee v Valuer-General [2012] QLC 0038
WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44
Franklin & Ors v Valuer-General (1978) 5 QLCR 181
Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995)
Grahn v Valuer-General (1992-93) 14 QLCR 327
Lawson v Valuer-General [2012] QLC 0027
Perpetual Trustee Company Limited v Department of Natural Resources, Mines and Water [2006] 27 QLCR 64
J.L. and I. Qualischefski v Valuer-General (1979) 6 QLCR 167Thomson v Department of Natural Resources and Mines [2007] QLC 0092
N.R. and P.G. Tow v Valuer-General (1978) 5 QLCR 378
APPEARANCES: Mr Christopher Farr represented himself and Ms Shelley Farr
Ms RH Kirk, lawyer, appeared for the Valuer-General
Background
The appellants are the owners of 4.003 ha of land at 831 Thorndale Road, Glen Aplin. It is described as Lot 21 on Survey Plan 166807 Parish of Marsh.
As required by the Land Valuation Act 2010 (the Act), the Valuer-General valued the land in its unimproved state. As at 1 October 2010 it was valued at $123,000 and $135,000 on 1 October 2011. Valuations were issued in those amounts and the appellants have brought appeals to this Court in respect of both valuations. They contend that the valuations should be $100,000 at both of the valuation dates.
Both appeals were heard together at Stanthorpe on 17 October 2012.
The appellants’ concerns
The appellants contended that the valuation of their land was excessive due to two main issues:
1. The traffic on the road near their northern boundary. Its speed, intensity and the resultant dust from the unsealed surface.
2. The relativity of the valuations of their property with the valuations of similar properties nearby shows, it was contended, inconsistency and inequity.
When the appellants commenced the process of purchasing this land there was no road near its northern boundary. During the purchase, they were provided with a new plan showing the proposed access to nearby land. They made a judgment of its potential impact on them and proceeded with the purchase.
They have been dismayed to find that rather than the access in connection with the land it serves being used for a home with some small agricultural activity or a farmlet it has been used for what has become a large farming enterprise.
The heaviest traffic on the access road was in the eight months from October to May. Every day it was usual for 24 vehicles associated with the farm workers to use the road. There would also be 12 trucks including semi-trailers and 16 service vehicles including those of managers. The resulting dust settles onto the appellants’ roofing. The gutters require more frequent cleaning to protect the quality of their domestic water supply, the only source of which is the collection of rain water.
The appellants seek a 19% reduction in the unimproved value of the land because of the impact of this recent development, which affects only their land. This is the amount that they expect would be the impact on the value of their property should they attempt to sell it.
The appellants have prepared a spreadsheet containing valuation data for similar properties in the locality. They have calculated the average percentage changes in valuation for the properties and compared them to their own property.
The appellants directed attention to the use of animal manure as fertiliser on the farm and the significant periods when it causes offensive odour sufficient to interfere with the enjoyment of their property.
The appellants are of the view that the availability of access to the electricity supply grid is not an advantage which will enhance the value of their land as, on their analysis, supply from the grid compares unfavourably with the cost of contemporary solar power. The only advantage of a connection to the power grid is the opportunity to use it to sell electricity generated by solar power to the electricity supply authority.
The appellants had the benefit of access to the valuation report prepared on behalf of the Valuer-General and they provided a detailed critical response to it. In this, the appellants took issue with the valuation report in detail, for instance where the report states that the land is approximately 9 km from the post office they contend that it is actually 11.5 km. The evidence indicates that this difference may be due to a radial measurement being used by the respondent and distance by road being used by the appellants explaining the longer distance.
The valuation report relied on by the Valuer-General was prepared in the case of each appeal by registered valuer Mr Nathan Hoffman. The appellants were of the view that the valuer had misreported that their house was located at the highest point on the land and that the available views were less than he stated were available. In evidence, this was clarified when Mr Hoffman explained that since he was valuing the land in its unimproved condition he was basing his assessment on where a house could be built. The practicability of this assessment was disputed by the appellants who drew attention to the presence of large granite boulders, some easily of the size of an average car, just in the parts visible above ground.
The appellants disputed the quality of the views available from the land and strongly disagreed with the notion that the presence of the commercial farming operation would not adversely impact on the value of their land.
The access to the land was said to be substandard because of the closeness of the drainage culvert, made necessary by the presence of rock limiting the design of the roadway. The valuer’s understanding of the land’s zoning was challenged as was his understanding of the factual details of the sale properties upon which he had relied in arriving at his valuation.
In their detailed rebuttal of the valuer’s report, the appellants expressed disagreement with the valuer’s assessments of such things as the amount allowed for improvements in Sale 1 of his report. They estimated that the actual cost of the improvements would be in the vicinity of $25,000 whereas the valuer allowed only $8,000 for them. In his evidence, Mr Hoffman made clear that he was allowing for the added value which the improvements gave to the land, which could be different to the cost of the improvements.
The appellants also expressed disagreement with whether the shape of a sale block was inferior to that of the subject land, whether a dam would leak more than any other dam and whether timber cattle yards in the valuer’s sale 2 were mis-described as “old” so as to be misleading.
The appellants argued that none of the sale properties considered by Mr Hoffman had a busy farm access close to their boundary. This was a strong recurring theme in their case.
Features of the appellants’ case
The appellants contended that the 1 October 2010 valuation of $123,000 should be reduced by 19% to $100,000 and that the 1 October 2011 valuation of $135,000 should also be $100,000. While making detailed criticisms of the sale properties used by Mr Hoffman they did not point to any other sales evidence which would support a conclusion that the value of the property would be $100,000 on either of the valuation dates.
The respondent’s case
The Valuer-General relied upon two valuation reports prepared by registered valuer Mr Nathan Hoffman. One report was prepared in relation to each appeal. Four sales were considered in relation to the 2010 valuation and the same four sales, plus another two, were examined in considering the 2011 valuation.
Mr Hoffman gave sworn evidence and was cross-examined by Mr Farr. Mr Hoffman was present in Court during the whole of the appellants’ case and had the benefit of hearing the detailed criticisms made of his valuation reports.
Mr Hoffman gave evidence that the matters raised by the appellants did not require him to change the views he had expressed in his reports.
The valuer, as an expert in a recognised field, is permitted to give evidence, not just of fact, but of his opinion. He has a duty to the Court greater than the duty to his employer and is required to give the Court his properly arrived at opinion, even where it may contradict that of his supervisors.[1]
[1] Uniform Civil Procedure Rules, rule 426(1) and (2). See also G.E. Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-1997) 16 QLCR 311 at 336-339. The principle was applied by Member Jones, as he then was, in Perpetual Trustee Company Limited v Department of Natural Resources, Mines and Water [2006] 27 QLCR 64 at [26].
I closely observed Mr Hoffman’s demeanour in the witness box and noted his responses when cross-examined. It was argued on behalf of the appellants that Mr Hoffman was in effect tailoring his evidence so as to support the valuations being contended for by the Valuer-General. I formed the view that there were instances where there were gaps in understanding between the witness and the questioner during cross-examination and when pursued to obtain clarification it was able to be seen that the gap was due to the use of terminology being different between the expert valuer and the questioner rather than any attempt by the witness to mislead; which intent was nevertheless sought to be attributed to him. An illustration of this was the difference, to which I have previously alluded, between the cost of improvements as opposed to their added value. While the appellants were clearly of the view that allowing less than the cost of certain improvements was an attempt at sleight of hand, what emerged from clarification of the evidence was that the added value was, properly, what was being considered.
The Court is greatly dependant on the integrity of expert witnesses and conscious of the onerous duty which the law imposes on such a witness. In the present case I am not satisfied that it has been shown that Mr Hoffman fell below the high standard of probity required of him. I am satisfied that he gave the Court his honest opinion which was different to the opinions of the appellants on many points. He is not disentitled to his opinions, be they different to those of the appellants, and is required to give the Court the benefit of his training and experience. He was the only source of expert valuation evidence in these appeals.
Mr Hoffman’s opinion of the comparability of sales was challenged on the basis, inter alia, that the distance from the subject land was excessive. It is not necessary that sales considered by a valuer be within a particular distance from the subject property in order to be considered to be comparable. Land some distance away may still be comparable.[2]
[2] Crompton v Commissioner of Highways (1973) 32 LGRA 8 at 23-24: “… the valuer should, in the first instance, look at the sales of land over a wide geographical and temporal range, and from these select those that appear potentially useful as a basis for comparison.”
The Law Affecting Valuation of Land in Australia, 4th ed. Alan A Hyam. The Federation Press, 2009 p.199: “Special consideration should not be given to sales within a specified area over and above sales outside of that area, provided that the lands are truly comparable: Cattanach v Water Conservation and Irrigation Commission (1962) 9 LGRA 352 at 361”.
The legal framework
The legal representative of the Valuer-General addressed the Court on the provisions of the Act and the legal authorities which, it was submitted, governed this Court’s approach to the present appeals. The submissions made on behalf of the appellants did not refer to any authorities supporting contrary propositions but suggested that the Court should not follow the authorities to which its attention had been directed. The authorities to which the Court was referred are decisions of the Land Appeal Court. As such they are binding on this Court which has to follow them where they apply.
The relativity approach
The spreadsheet analysis shows how the valuations of the subject land compare, over time, with the values placed on nearby properties. The present question before the Court however, is not how the value of the subject land compares to valuations placed on surrounding blocks, but rather what is the correct valuation of the subject land itself. Land Court Member Mr Scott considered this in Thomson v Department of Natural Resources and Mines.[3] The learned Member said that:
“[7] This issue has come up on more than one occasion in the past, one example being found in Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at 6:
‘We reiterate what has been said often before – and what is Mr Tighe's chief concern – the importance of correct relativity in the equitable distribution of the rating burden cannot be overstated. However the question before this Court is the correct valuation of the subject land, not the correct valuation of an area. It would not advance the appellant's case to satisfy us that her neighbour's land was undervalued: … The appellant must show that the valuation of her land was incorrect.’
[8] A similar opinion is expressed by the Land Appeal Court in Bignell v Chief Executive, Department of Lands (AV92-65 unreported Land Appeal Court 4 March 1996) at 11:
‘What has to be decided in this case is the proper value of the subject land by reference to sales evidence about comparable unimproved properties. … If a proper valuation of the subject land makes it inconsistent with the relative values of neighbouring blocks then so be it. The question before this Court is 'the correct valuation of the subject land, not the correct valuation of the area'.’ ”
[3] [2007] QLC 0092 at [6] to [8].
The values of the properties considered in the spreadsheet were not tested by market evidence in the present proceeding and where, as here, the value of the subject property is said to be wrong a conclusion of its value based on relativities to other valuations cannot safely be made unless it is shown that those valuations are correct on the basis of supporting market evidence, not just that those valuations exist. On the face of it they may be no more reliable than the valuation being impugned.[4]
[4] The inadequacy of this approach was discussed by Member Smith in Burnett v Department of Natural Resources and Water [2010] QLC 0057 at [18] and again in Lawson v Valuer-General [2012] QLC 0027 at [29]. These authorities were applied in Enright Hendy and Partners Investments Pty Ltd as trustee v Valuer-General [2012] QLC 0038.
The Court’s jurisdiction and the importance of sales evidence
This Court is not an investigating tribunal and must rely on the evidence put before it by the parties. In J.L. and I. Qualischefski v Valuer-General (1979) 6 QLCR 167, the Land Appeal Court in its judgment said, at page 172:
“Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradistinction to jurisdiction conferred under the Land Act.
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.”
In N.R. and P.G. 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.”
The approach taken by Mr Hoffman in applying sales evidence is consistent with the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327. The relevant principles are set out in the joint judgment of Lee J, Mr Barry and Mr Neate at pages 328-329 where the Court said:
“The decision of the High Court of Australia in Brisbane City Council v The Valuer-General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v The Valuer-General ((1989) 13 QLCR 13) are authority for the following propositions:
(a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 16 and cases cited in it).
(b) The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).
(c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56).
(d) Once it is shown that:
(1) in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or
(2) the valuation was made by a method fundamentally erroneous,
the presumption created by section 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7).
(e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46).
(f) If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it).”
The presumption in s.13(7) of the Valuation of Land Act 1944 does not form part of the current Act so the principles expressed in (c) and (d) in the passage quoted no longer apply.
The appellants remain limited to their grounds of appeal as set out in the Notices of Appeal.[5] In the present case, this does not present them with any difficulty. The appellants have the onus of proof for each of the grounds of appeal.[6]
[5] Franklin & Ors v Valuer-General (1978) 5 QLCR 181 at 184. See also Land Valuation Act 2010, s.169(1).
[6] Land Valuation Act 2010, s.169(3).
The sales evidence
In respect of the 2010 valuation, Mr Hoffman considered four sales. It will be useful to review them individually. All are in the same rural zoning as the subject land.
Sale 1
Located at Thorndale Road, Glen Aplin, with an area of 4.23 ha it sold on 31 May 2010 for $135,000. Unimproved value was assessed at $127,000 after allowing for the added value of the small dam that leaks, clearing and boundary fencing. Electricity was not available and the vendor had a quote of $25,000 to obtain access to mains power. The value applied was $123,000, the same as was applied to the subject land, which it directly adjoins on its southern and eastern boundaries. With the same rural zoning, it was assessed as comparable in size but with an inferior shape and inferior elevation being 15 metres lower. Whereas the subject land has power available this land was sold and valued as having no power available. Although the effect of the shape of the land and its available views were the subject of dispute, the valuer maintained his opinion of the value of this sale property and of its usefulness in valuing the subject land which it adjoins. Its access is by dual lane sealed bitumen road.
Sale 2
At 164 Stabiles Road, Glen Aplin, with an area of 4.22 ha it sold for $150,000 on 18 January 2010. Allowing for the timber cattle yards which Mr Hoffman described as old, an old concrete block shed and a small dam, the analysed unimproved value was $136,000 and $135,000 was applied. Access is by dual lane bitumen sealed road. The subject property also has access by a dual lane bitumen sealed road with gravel and grass table drains. The appellants pointed out that in the case of the subject the presence of rock resulted in reduced effective access width, a factor which Mr Hoffman was of the view did not require him to revise his valuation. This sale was assessed as having superior shape and slightly inferior views and elevation when compared to the subject land.
Sale 3
Located at Cavallaro Lane, Glen Aplin, with an area of 4.616 ha, it sold for $138,500 on 4 May 2010. With access by dual lane bitumen road it was lightly improved by a small amount of clearing and boundary fencing. Allowing for that, the analysed unimproved value was $132,500 and $130,000 was applied. Mr Hoffman assessed it as having a superior shape and inferior views and elevation, being 60 metres lower than the subject land. With comparable access and services he viewed it as slightly inferior to the subject. He nevertheless valued it at $130,000 some $7,000 higher than the subject. This demonstrates a properly conservative approach to valuing the subject land and makes quite clear that contrary to what was suggested in cross-examination, Mr Hoffman has not made an effort to make the subject land appear to be more valuable than the sales evidence would support. Here it is unambiguous that he has valued the subject land at less than would be supported by this sale. This example of his actual conduct in this valuation process reinforces the opinion which I formed based on his presentation in the witness box.
Sale 4
At 22 Cavallaro Lane, Glen Aplin, this 4.047 ha block sold for $160,000 on 5 October 2009. With electricity and telephone available, and gravel road access, it was assessed as having superior shape and slightly inferior views. It is 10 m lower than the subject land. The improvements were fencing on two sides, mostly cleared and with old cultivation at the time of the sale, it has since reverted to grass. With a large farming enterprise surrounding it, it was assessed as superior in shape with slightly inferior views. With an elevation 10 metres less than the subject and inferior access and aesthetics, Mr Hoffman regarded it as slightly superior to the subject land. An allowance of $9,000 was made for the improvements and the unimproved value of $150,000 was applied. The appellants regard the farm around this land as much less of a detriment than that affecting their land but Mr Hoffman remained of the view that there was not such an effect as to require him to revise his opinion.
The additional sales evidence in support of the 2011 valuation
The 2011 valuation of $135,000 was supported by the same four sales which have been referred to and two additional sales. The additional sales are also in the same rural zone as the subject land.
Sale 5
Located at Stabiles Road, Glen Aplin, this 3.886 ha block sold on 1 July 2011 for $140,000. Lightly improved with fencing, mostly cleared and with old cultivation, it has a small to medium sized dam that leaks. No deduction was made for the improvements, Mr Hoffman pointing out in his evidence that in this market, clearing may not be attractive where the land may be used for residential purposes. The value applied was $135,000. He was of the view that with its gravel road access, superior shape, slightly inferior views, 10 metres lower elevation and lack of power it was comparable to the subject land.
Sale 6
At Border Road, Applethorpe, this 4.047 ha block sold on 26 March 2011 for $130,000. Access is by a bitumen road and it is very lightly improved with fencing on one side, the block being otherwise unimproved. The analysed unimproved value was $130,000 and the applied unimproved value $128,000. Electricity and phone are available and the block is assessed as having an inferior shape, slightly inferior views, far superior elevation, comparable services, similar access and inferior natural aesthetics. Mr Hoffman regards it as slightly inferior to the subject land overall. A large farming enterprise surrounds it on all sides and it is located 500 m from the Stanthorpe airstrip.
The appellants point out that this land is within walking distance to the TAFE College and suspect that the farming enterprise is actually part of the training operations of the TAFE. The appellants did not however provide any evidence of this and their suspicion is not a basis upon which the Court could reject the valuer’s evidence. The appellants, in their description of this land, return to their frequently emphasised reference to the busy farm access road which affects their land and is not present in the case of the land that is Sale 6.
Conclusion on the appellants’ case
The appellants’ case was not assisted by the submissions made in relation to relativity, for the reasons which have been given. The authorities which bind this Court make clear that the correct valuation of the subject land is more likely to be found by the analysis of sales evidence.
The appellants did not produce any evidence of sales of land which could have been relied upon to support a conclusion that the unimproved value of the land was $100,000 on either of the valuation dates. There was no sales evidence provided by them on which any valuation figure could have been based. Their approach was to attack the basis used by the one expert who did give evidence. I have considered the attacks made on his credibility and am not satisfied that any proper basis has been established for the Court to decline to accept his evidence. I note that Mr Hoffman was of the view that the criticisms made by the appellants did not require him to alter his valuations and I am firmly satisfied that in giving that evidence he was acting in conformity with his duty to the Court and not simply attempting to bolster his opinion. The evidence of his treatment of Sale 3 is an unequivocal demonstration of Mr Hoffman’s applying a conservative valuation in the interests of the appellants. In view of that actual conduct, suggestions that he was in any way improperly motivated are impossible to accept and I cannot, on the evidence, do other than reject them.
Conclusions on the Valuer-General’s case
The Valuer-General’s approach to valuing this land has been in accordance with the Act and the authorities to which I have referred and which the Valuer-General’s legal representative referred to. There is only one body of expert evidence in these appeals and I have found no basis to properly reject it. As there is no evidence of any competing level of value and as the attacks made on the valuer’s credibility and the facts upon which he has based his opinion have not proved to be successful, the Court can only find that the appellants have failed to prove the cases which they have brought. In addition, the Court is firmly satisfied that the valuations made by the Valuer-General in these two cases are properly supported by sufficient evidence and are correct.
Orders
1.The appeals are dismissed.
2.The valuations appealed against are confirmed.
WA ISDALE
MEMBER OF THE LAND COURT
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