Grams v Department of Natural Resources and Water

[2007] QLC 27

LAND COURT OF QUEENSLAND

CITATION:

Grams v Department of Natural Resources and Water [2007] QLC   0027

PARTIES:

Raymond and Marcia Grams
(appellants)

v.

Chief Executive, Department of Natural Resources and Water
(respondent)

FILE NO.:

AV2005/0980

DIVISION:

Land Court of Queensland

PROCEEDING:

An appeal against an Annual Valuation of land under the Valuation of Land Act 1944

DELIVERED ON:

20 April 2007

DELIVERED AT:

Brisbane

HEARD AT:

Gatton

MEMBER

Mr PA Smith

ORDERS:

1.    The appeal is dismissed.

2. Pursuant to s.66 of the Valuation of Land Act 1944 the unimproved value of the subject land is determined in the amount of One Hundred and Thirty Thousand Dollars ($130,000).

CATCHWORDS:

Valuation – factors in valuation – presumption in favour of correctness of valuation – evidence led to a higher figure – Valuation of Land Act 1944

APPEARANCES:

Mr R Grams, in person, for the appellants
Mr W Isdale, Crown Law Office, for the respondent

Background

1. This is an appeal by the appellants against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (VLA) which valued the appellants' property situated just west of Helidon on the Warrego Highway, in the sum of $108,000 as at 1 October 2004.  The appellants contend for a valuation of $28,500.  By notice in writing provided to the appellants by the respondent in letter form dated 19 January 2006, the respondent notified the appellants by the respondent in letter form dated 19 January 2006, the respondent notified the appellants that at the hearing of this matter the respondent would lead evidence to a higher figure, namely $130,000. 

2. Telephone, electricity and a daily mail service are available to the property.  In addition, a wide range of town facilities including a primary school are available at nearby Helidon.

3. The land is designated under the Gatton Shire Council's Town Plan as "Rural Residential".  Situated on the subject land is a shop which sells fruit and vegetables and fuel, as well as a residence and a small vineyard.  The dominant use of the land is a fruit stall and retail fuel outlet which is a fettered non-conforming use based on continued use rights.  The subject land is roughly in the shape of a right angled triangle, bordered by the Warrego Highway and Lockyer Creek.  The area of the land is 3.86 ha. 

4. The appellants were represented by Mr R Grams, who gave evidence at the hearing.  Mr Grams has no legal or valuation qualifications.  The respondent was represented by Mr W Isdale, Crown Law Office, and relied on the evidence of a registered valuer, Mr Daniel O'Connor.

Relevant Legislative Provisions

1. Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land.  Relevantly, s.3(1) of the VLA says as follows: 

   "3.(1)  For the purposes of this Act—

   'unimproved value' of land means - 

   (a)   in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and

   (b)   in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist."

2. I note that the subject land in this matter is improved.  Accordingly, put simply, the task is to find the market value of the land on the assumption that none of the improvements are on the subject land.  An assessment is then undertaken as to the highest and best use of that land.

3. As the President said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs [11] and [12]:

   [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 the 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."

   I respectfully agree with these observations.

4. In light of the current use of the land, predominantly, as a shop and fuel outlet, the provisions of s.3(4) of the VLA are also relevant.  Section 3(4) is in the following terms:

   (4)  Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that –

   (a)   the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates;  and

   (b)   such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used;

   but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made.

Presumption of correctness of valuation

1. I now turn to s.33 of the VLA, which states as follows:

   "33.  Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."

2. This section was considered by the High Court in the case of Brisbane City Council v The Valuer-General for the State of Queensland (1977-78) 140 CLR 41 where Justice Gibbs (as he then was) made the following observation 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 section 13(7) is rebutted."

The Issues in the Appeal

1. In considering this matter, I have had close regard to the decision of the President of the Land Court dated 25 June 1996 regarding the same appellants and the same subject land.  Of importance, I note that Mr O'Connor was the same valuer relied on by the respondent.  As regards the relevant facts which relate to the subject land and the issues of law pertinent to the valuation in this matter, I can do no better than rely upon all of the comments made by the President in his decision of 25 June 1996. 

2. Unfortunately, a particular point of contention dealt with by the President in 1996 and raised again by the appellants in this appeal relate to the suitability of the land for farming and comparisons with the value of other farming land to the subject.  Unfortunately, the appellants appear to have ignored or forgotten much of what the President said in his decision, particularly relating to the valuation being undertaken pursuant to s.3(4) of the VLA on the basis of the enhanced commercial use of the subject land for a shop and fuel outlet. 

3. The appellants have also raised the issue of the odour of horse urine from a nearby DPI facility impacting on their property.  Mr O'Connor's evidence is that he has fully taken the impacts of such odour into account in making his valuation.  His evidence is that he has been aware of the odour issues for many years. 

4. Mr O'Connor relied upon three sales for his valuation as set out in the table below:

Sales	Area Ha	Date of Sale	Analysed U/Value	Applied U/Value 1/10/2004	Comparison
1 Helendale Drive, Helidon	1.005	29/03/2004	$66,500	$49,000	Inferior
2 Cnr Kellys/ Lavender Road, Helidon Spa	9,192	8/09/2004	$74,500	$50,000	Inferior
3 Warrego Highway/Stewart Street, Withcott	4,143	18/08/2004	$245,000	$197,500	Superior

1. In my view, the sales referred to by Mr O'Connor are appropriate sales and, on the evidence provided, I agree with his assessment of the sales, and his application of that assessment to the subject land, taking proper account of all of the disabilities of the subject land, which has been well known to him since at least 1996. 

2. I consider it also appropriate to note that, in 1996, the appellants contended for a value of $30,000 and that the President dismissed the appeal and confirmed the value of $57,000.  It is unfortunate that the appellants, in contending for a value of $28,500 in this appeal, have had such scant regard to the President's 1996 decision. 

3. I now turn to the issue raised by the respondent as a consequence of the respondent contending for a higher value of the subject land.

4. This matter is similar in many respects to that encountered by Member Jones in the case of Pfeffer v Department of Natural Resources and Mines[1].  Like Pfeffer, the original valuation in this matter arises out of what was referred to in Pfeffer as "the product of a mass appraisal exercise"[2].  Member Jones went on to say:

   "I understood this approach to involve a broad brush value determination method not involving an individual assessment of the unimproved value of a particular lot having regard to comparable sales evidence.  It was also Mr Olive's evidence that when he undertook a more detailed valuation of the land it was apparent that the original figure involved an underestimation of value."

   [1] [2005] QLC 59

   [2]        At para [20]

5. In this case Mr O'Connor's expert valuation evidence is that the use of contract valuers has resulted in the original valuation being an underestimation of value.  I note that, not only does Mr O'Connor have substantial knowledge of the general area, but he also has a high degree of knowledge of this particular parcel of land.  His valuation is clearly preferable to the "mass appraisal" valuation of contract valuers.  Consistent with the approach taken by Member Jones, in my view the presumption in favour of the correctness of the valuation appealed against as described in s.33 of the VLA is rebutted.  To use Member Jones's words[3] "the valuation appealed against … involved either a significant error of fact or was arrived at by a fundamentally flawed method.  In any event, on the evidence it was clearly wrong."

   [3]        At para [21]

6. The result is that in my view, the best evidence supports an unimproved value of the subject land in the sum of $130,000.

7. It would be remiss of me not to also comment on the outcome of this appeal as a consequence of the respondent leading evidence to a higher value.  As Member Jones said in Pfeffer[4]:

   [4]        At paras [22], [23], [24]

   "[22]One outcome of an appeal such as this is that the amount of the statutory valuation appealed against may be increased, this is expressly provided for in s.66 of the VLA which states:

   'Order of court

   Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Court may –

   (a)     affirm the valuation appealed against; or

   (b)     reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act;

   and, subject to section 70, make such order as it deems fit with respect to the payment of costs.'

   [23]In the circumstances of this appeal, the evidence and the conclusions I have reached based on that evidence, lead me to having to determine the unimproved value of the subject land as at 1 October 2004 to be $125,000.

   [24]Before making the consequential orders and without intending to imply any criticism of the conduct of the respondent in this appeal, I feel I should indicate that I consider the result to be a most unfortunate outcome for the appellants.  In circumstances such as this it would not be unreasonable, at least up until receipt of the valuation report intended to be relied on by the respondent at trial, for an appellant to expect that the contest would be against the actual valuation figure appealed against.  Even upon receipt of the report, unless accompanied by clearly worded correspondence, an appellant might still be confused about which figure he or she has to deal with at the hearing of the appeal and the ramifications of continuing with the appeal in the face of a valuation higher than that appealed against.  Such confusion would be in my view a highly undesirable result.  I would also take this opportunity to endorse the concerns expressed by Mr Scott in the AMP (at para [53]) case where the learned Member identified some undesirable dilemmas an appellant might be confronted with in such circumstances."

8. I agree with all of Member Jones's comments set out above.  I also specifically adopt, so far as it is relevant, the comments made by Member Scott in AMP Life Limited[5].  It is of concern to this Court that the respondent, seeking to lead evidence to higher figures in this and other cases, may cause an understandable reluctance on the part of appellants who genuinely believe that their unimproved valuations are too high to either commence or maintain appeals against the valuations.  If this consequence should arise, it would appear to be somewhat unsatisfactory as Member Scott said in AMP, "Indeed, circumstances such as the present would be very likely to create a dilemma for an appellant and elevate the Chief Executive to a position of dominance."[6]  I share Member Scott's view that any attempt by the Chief Executive or his employees to take advantage of a position of dominance over appellants be treated by the Court with considerable concern. 

   [5] [2002] QLC 99

   [6]            AMP para [53]

Conclusion

1. For the reasons set out above, I have reached the conclusion that the appellants have failed to establish that the respondent's assessment of the unimproved value should be reduced.  I am also satisfied that, on the basis of the valuation evidence provided by Mr O'Connor, the value of the subject land should be determined in the amount of $130,000.

Orders

1.The appeal is dismissed.

2.Pursuant to s.66 of the Valuation of Land Act 1944 the unimproved value of the subject land is determined in the amount of One Hundred and Thirty Thousand Dollars ($130,000).

PA SMITH

MEMBER OF THE LAND COURT