Goodwin v Valuer-General

[2011] QLC 27

LAND COURT OF QUEENSLAND

CITATION:  Goodwin v Valuer-General [2011] QLC 0027

PARTIES:Thomas Goodwin and Sylvia Enid Goodwin

(Appellants)

v.

Valuer-General

(Respondent)

FILE NO:VLA192-10

DIVISION:General Division

PROCEEDING:  Appeal against annual valuation under the Valuation of Land Act 1944 which applies due to s.269 of the Land Valuation Act 2010

DELIVERED ON:                  19 April 2011

DELIVERED AT:                   Brisbane

HEARD ON:  24 March 2011

HEARD AT:Toowoomba

MEMBER:His Honour Mr WA Isdale

ORDER/S:1.      The appeal is dismissed.

2.The valuation appealed against is affirmed.

CATCHWORDS:                  Valuation of Land Act 1944, s.33

Land Court Act 2000, s.7

Presumption of correctness of valuation – sales evidence – comparable sales – relativity – expert evidence

Goodwin v Department of Natural Resources and Water [2009] QLC 0171
JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167
NR and PG Tow v Valuer-General (1978) 5 QLCR 378
Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327
Brisbane City Council v The Valuer-General (1978) 140 CLR 41, 5 QLCR 283
WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44
R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13
Thomson v Department of Natural Resources and Mines [2007] QLC 92

APPEARANCES:                  Mr Thomas Goodwin represented himself and Sylvia Goodwin

Mr J O’Rourke, solicitor and principal legal officer, Department of Environment and Resource Management, for the Respondent

The appeal

1. The appellants own Lot 1 on Survey Plan 192320, Parish of Laidley. It is a freehold tenure over an area of 10,990 m². As required by the Valuation of Land Act 1944, the Valuer-General valued it, as at 1 October 2009 as having an unimproved value of $105,000.

2. The appellants have appealed to this Court, contending that the valuation should be less. In the Notice of Appeal, exhibit 1, a figure of $84,000 is stated as the correct value and in the written material submitted by the appellants for the purposes of the hearing a value of $72,000 is contended for. This material became exhibit 2.

3. The bases of the appeal are the appellants’ contention that the land has not been compared to similar properties; that there was not a proper reduction allowed for the land’s disabilities due to seasonal flooding and the consequent effects of damage to fencing and the intrusions of wandering stock, which churn up wet ground.

The evidence of the appellants

1. The legal representative of the Valuer-General objected to exhibit 2 being admitted into evidence as it contains some hearsay material of Mr Goodwin’s consultation with neighbours and was provided after the date upon which it was due to be filed and served.

2. The Court is conscious of the need to resolve the real dispute between the parties and that in many, if not most cases, this will be assisted by allowing material to be brought before the Court for consideration rather than excluding it. In addition, since the Court is not bound by the rules of evidence[1] hearsay material may be admitted, though of course the weight accorded it, if challenged, must be determined.

   [1]     Land Court Act 2000, s.7.

3. The objections were not successful. The Court is better able in this case to decide the appeal on its merits with the benefit of exhibit 2.

4. Exhibit 2 included three photos taken on 11 January 2011. They are time stamped as having been taken at 7.24 and 7.25 am and at 15.56, that is 3.56 pm respectively. They show higher water levels in the morning at a time of flooding.

5. The photos were taken well after the valuation date of 1 October 2009 but were said to be illustrative of the subject land’s vulnerability to seasonal flooding, a vulnerability that existed at the date of valuation. The extent of flooding at a particular date being, of course, variable.

6. Exhibit 2 made reference to the decision of this Court in Goodwin v Department of Natural Resources and Water.[2] In that decision, given by the learned Member Mr P Smith on 17 September 2009 (ex tempore), the Court considered the 2006 valuation of the subject land. His Honour dismissed the appeal and the valuation of $68,000 was found to be supported. However, His Honour pointed out that on the evidence before him, relativities with other lands in the area pointed towards a value of $65,000.

   [2] [2009] QLC 0171.

7. The appellants contend that if followed, this guidance should have led the Valuer-General to a value of approximately $72,000 in 2009.

8. Mr Goodwin gave evidence and explained the susceptibility of his land to flooding. Exhibit 2 referred to the eight 1 metre diameter pipes under the road which are there to allow drainage at the location shown in his photos. Conspicuously, this drainage was not sufficient on the day the photos were taken.

9. Mr Goodwin’s evidence was that very little of the subject land is useable and he was of the view that the sales relied upon in the valuation report provided to him on behalf of the respondent were not comparable to the subject land.

10. Cross-examined, Mr Goodwin agreed with the description of the subject property in the report of Mr Shaw, the registered valuer who provided the respondent’s report.

11. In re-examination, it became clear that Mr Goodwin had looked at sale 2 of Mr Shaw’s report as the worst sale and sees the subject land as worse than that. Mr Shaw applied $90,000 as the value of Sale 2 and Mr Goodwin took 80% of that to arrive at $72,000, his proposed value of the subject land.

12. This approach, like the approach taken in exhibit 2, is reactive to the Valuer-General’s valuation report. Indeed, exhibit 2 starts with the words “In response to your valuation report by Matthew (sic) Shaw”. There was no evidence of competing sales provided on behalf of the appellants. The appellants’ case was focused on an attack on the comparability of the sales used by the valuer and a highlighting of the disabilities of the land.

The evidence of the respondent

1. The respondent relied on the report of the registered land valuer Mr Shaw. As at 1 October 2009 he valued the land at $105,000. He arrived at this valuation by a direct comparison with sales. His report, which became exhibit 3, described the property and gives its location as approximately 3 radial kilometres north west of Laidley. The description of the land was not in dispute between the parties.

2. Sale 1, on 24 April 2009 of 6,000 m² of Rural Residential land, the same zoning as the subject land, had a sale price of $135,000. After allowing $5,000 for clearing and fencing the value of $122,000 was applied to it. Located 2.7 radial kilometres north west of Laidley, this land was seen as superior. Although smaller than the subject, it is a more useable parcel with better drainage and access to its building site.

3. Sale 2, on 16 July 2009 of 5,028 m² of Rural Residential land for $93,000 was applied at $90,000 after an allowance of $2,000 for selective clearing and fencing. Again, the valuer has seen fit to apply less than the analysed unimproved value, which in this case was $91,000. This is a matter within his expertise as a valuer and indicates a conservative approach to estimating value. This land is 3 radial kilometres north west of Laidley. It is smaller than the subject land. It falls moderately away from the road and has a restricted building envelope due to the potential for flooding. It is said to be inferior to the subject land.

4. Sale 3, on 23 November 2009 of 8,043 m² zoned Rural Landscape for $130,000 was applied at $115,000 after allowing $6,000 for selective clearing and fencing. It is located 1.9 km radially north west of Laidley. It has superior access but an inferior shape compared to the subject land. It is seen by the valuer as superior overall to the subject land.

5. Mr Shaw gave evidence that he had been upon the subject land and had viewed the sales from the road. He stated that he had selected the most comparable sales evidence and that the sales were as close as possible to the valuation date.

6. Mr Shaw was asked about the hearsay evidence in exhibit 2 which had been the subject of an objection. It relates to the extent and nature of flooding on what is his sale 2. Mr Shaw agreed with what was stated in relation to this in exhibit 2, which fortifies me in my decision to admit it. Mr Shaw accepted that the flooding on sale 2 was slow moving as compared to the fast flowing flooding on the subject land.

7. Mr Shaw agreed with Mr Goodwin’s evidence as to the damage caused to his fences by flooding. He stated that it was one of the reasons for a 20% reduction in value applied to the land in 2004.

8. Mr Goodwin was of the view that this allowance had not been maintained and was anxious to ensure that it not be permitted to be eroded over time.

9. The submissions made on behalf of the respondent were to the effect that, as required by law, the valuer had arrived at a value by reference to sales. This provides better evidence of value as set in the marketplace than relativity to other valuations does. It was pointed out that there was no sales evidence provided by the appellant which could indicate different values to those arrived at by the respondent. In addition, it was submitted that the only evidence from a qualified expert valuer was Mr Shaw’s evidence.

10. In conclusion, s.33 of the Valuation of Land Act 1944 was pointed to. It provides that valuations made under the Act are deemed to be correct until the contrary is proved.

The law

1. As the appellant pointed out, this Court made comments in 2009[3] concerning relativities of valuations. The respondent’s case did not have as an element any assertion that relativities have been corrected in accordance with the indication given by the Court.

   [3] See footnote 2 - [2009] QLC 0171 at [18].

2. The nature of this Court’s jurisdiction makes it impossible for it to pursue an investigation of the matter of relativity but must decide the appeal before it on the basis of the evidence which the parties provide.

3. In JL and I Qualischefski v Valuer-General (1979) 6 QLCR 167, the Land Appeal Court in its judgment said, at page 172:

   “The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. 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 contradiction 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.”

1. The Valuer-General’s approach was to focus on value as indicated by sales. The registered valuer called on behalf of the Valuer-General gave evidence as an expert that the sales to which he referred were, for the purposes of his activity, sufficiently comparable. There was no evidence from a suitability qualified expert to the contrary so the appellants faced a difficult task in demonstrating that an expert in the relevant field could not compare the sales to the subject property when his evidence was that he could do so. The appellants were unable to, for instance, show that the valuer had made a serious error of fact or law which would invalidate his comparisons.

2. The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where 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.”

1. The approach taken by Mr Shaw 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).’ ”

1. The Land Appeal Court, in Grahn’s case[4] reiterated that considerations of relativity, while important, should not be preferred to sales evidence.[5]

   [4]     Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327 at 328-329.

   [5]     See also Thomson v Department of Natural Resources and Mines [2007] QLC 92.

2. Although there is no response from the respondent to the matters raised by this Court in 2009 concerning relativity, the Court’s jurisdiction limits it to deciding the present appeal on the evidence provided in it. The respondent has focused his case on sales and the Court is bound to decide on the basis of the sales whether the appeal succeeds or not. This will doubtless be unsatisfying to the appellants but is a matter that the Court must accept.

3. What is now s.33 of the Valuation of Land Act 1944 was previously s.13(7). The presumption of correctness of valuations made under the Act was considered in Brisbane City Council v The Valuer-General for the State of Queensland.[6] Justice Gibbs, as he then was, in the High Court of Australia, said, at p.56:

   “In my opinion 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.”

   [6] [1977-1978] 140 CLR 41.

Conclusions

1. In this case there was only one expert witness, qualified and practising in the field of valuation. His evidence was, contrary to the suggestions of the appellants, that he was indeed able to make valid comparisons between the subject and sale properties. The sale transactions themselves were not shown to be of a nature as not to represent market transactions and there was no body of alternative sales put before the Court from which different conclusions as to value could be drawn. Additionally, it was not shown that the expert’s opinion was invalidated by being based on an error of law or significant factual error.

2. The respondent chose to base the case presented on sales, which the authorities, binding on this Court, state are a better guide to value than relativity with other values. The drift in relativity referred to in 2009 was not sufficient then for the Court to allow the appeal but correcting any inconsistencies in relativities was recommended by the Court. It is now recommended once again.

3. On the basis of the evidence to which I have referred, it was not shown that the presumption of correctness of the valuation had been displaced so accordingly the Court must dismiss the present appeal and affirm the valuation appealed against.

Orders

1.      The appeal is dismissed.

2.      The valuation appealed against is affirmed.

WA ISDALE

MEMBER OF THE LAND COURT