Lal v Valuer-General
[2011] QLC 6
•1 March 2011
LAND COURT OF QUEENSLAND
CITATION: Lal v Valuer-General [2011] QLC 0006
PARTIES:Yashwant Lal
(Appellant)
v.
Valuer-General
(Respondent)
FILE NO:VLA168-10
VLA169-10
DIVISION:General Division
PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 which applies due to s.269 of the Land Valuation Act 2010
DELIVERED ON: 1 March 2011
DELIVERED AT: Brisbane
HEARD ON: 11 February 2011
HEARD AT:Caboolture
MEMBER:His Honour Mr WA Isdale
ORDER/S:1. The appeals are dismissed.
2.The valuations appealed against are affirmed.
CATCHWORDS: Valuation of Land Act 1944, ss 33, 45(4)
Valuers Registration Act 1992
Presumption of correctness of valuations – sales evidence – expert evidence
R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13
Brisbane City Council v Valuer-General (1978) 140 CLR 41
WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44
G. Franklin & Ors v Valuer-General (1978) 5 QLCR 181
Grahn v Valuer-General (1992-93) 14 QLCR 327
J.L. and I. Qualischefski v Valuer–General (1979) 6 QLCR 167
N.R. and P.G. Tow v Valuer-General (1978) 5 QLCR 378
APPEARANCES: Mr Yashwant Lal represented himself
Ms L Hawkings-Guy, Solicitor and Senior Legal Officer, Department of Environment and Resource Management, for the Respondent
The appeals
The parties requested that both appeals be heard together. They are adjoining residential allotments in Michael Avenue, Caboolture. Appeal VLA168-10 concerns number 63 Michael Avenue, which has an area of 601 m² and Appeal VLA169-10 relates to number 65, the area of which is 615 m².
As at the date of the valuations, on 1 October 2009, they were valued at $165,000 and $160,000 unimproved value respectively. Each property has a fairly recently constructed family residence on it. Mr Lal rents them out to tenants.
In both cases, Mr Lal would be prepared to accept that the unimproved value should be $155,000.
The Appellant’s case
The appeals focused on the grounds that a new neighbourhood shopping centre close by had made the properties less appealing to families due to the increased traffic flow. Additionally, approval of a 19 unit high density living complex nearby worsened the situation. This end of the street is becoming more influenced by commercial properties with a consequent reduction in its appeal, and therefore its value, as residential land.
Mr Lal acted as advocate and gave evidence. He gave his qualifications as a Fellow of the Australian Institute of Chartered Accountants and a Fellow of the Australian Institute of Internal Auditors. He gave his occupation as audit manager for Tarong Energy.
Mr Lal pointed out that there had been a 41% increase since the previous valuations in 2004. He bought the properties, with the existing houses, one at a time in 2008.
Mr Lal described how he had valued the properties. He is not a registered land valuer under the Valuers Registration Act 1992.
Mr Lal took the sale price of an 820 m² block of land that is located nearby and which sold in 2010 and applied the sale price pro-rata to calculate from that the value of a 600 m² block as $131,700.
He then took the insurance value of the improvements on the subject properties, reduced that by 20% and then deducted that from the purchase price. This yielded a value of $125,760 for number 63 and $122,760 for number 65.
Thirdly, he deducted the cost of building the house on the land from the purchase price. This gave $143,172 for number 63 and $107,172 for number 65.
Averaging his three methods led Mr Lal to a value of $133,544 for each block of land.
Mr Lal also noted that comparing his purchase price of the house and land units to their previous sales as land only, in 2004, showed a reduction in land value of 6% for number 63 and 26% for number 65.
From his deduced valuations of $133,544, Mr Lal allowed 10% for error so that his calculated value was around $147,000.
He stressed the changed characteristics of the area with commercial development nearby. Additionally none of the sales relied upon by the Valuer-General, in the report which had been provided to him, had a shopping centre opposite them. A fitness business started operating next to number 65 about two years ago.
Cross-examination of Mr Lal
Cross-examined by Ms Hawkings-Guy, Mr Lal readily conceded that he was not a registered valuer nor a quantity surveyor. He stated that he has considerable experience valuing businesses as an accountant.
Mr Lal explained that he had used the builder’s claimed construction costs for his calculations. He had not introduced those into evidence but having observed Mr Lal in the witness box I am satisfied that he was a truthful and forthright witness whose unfamiliarity with the court process probably explained his failure to do so.
Asked about the proposed dwelling complex with 19 units, Mr Lal said that 30 units were originally planned. At the date of valuation the application had been made for 19 and this was approved after the date of valuation.
When questioned about the Valuer-General’s sale 4, Mr Lal pointed out that it backs on to a shopping centre whereas his land faces one so there is much more traffic in the street. He disagreed that sale 5 used by the valuer was similarly affected by traffic.
Mr Lal emphasised that his case was based around the growing commercial influence at the end of the street on which his land is located.
The Valuer-General’s case
The Valuer-General’s legal representative called evidence from registered valuer Mr Scott Thomas Larking who produced the valuation report which he had prepared in relation to each appeal parcel. He has valued the land by direct comparison with five sales, the same ones in each case.
Mr Larking explained that the value ascribed to number 65 had been reduced from $165,000 to $160,000 to take into account the fact that it adjoins the local shopping centre.
Mr Larking stated that the market for this sort of land had jumped enormously in 2005 and 2006, levelled out in 2007 and had been flat since.
His best evidence of value was, he said, to be found in sale 5, a 600 m² vacant allotment which sold on 3 February 2010. Located on the corner of Hackett Court and Grant Road which he stated to be a much busier road than the part of Michael Avenue where the subject lands are, he applied a figure of $170,000 as its value.
It is about 750 m from the subject lands and does not have a commercial area close to it.
Mr Larking’s sales 1, 2 and 3 were relied upon as evidence of the value of residential blocks in quieter locations and he values them at $185,000, $170,000 and $165,000 respectively. They are about 1 km from the subject lands.
Sale 4, 150 metres away, is an 819 m² block used for a duplex. The ability to construct a duplex on it has not, Mr Larking stated, affected the value as there is no premium for this in Caboolture.
Sales 3, 4 and 5 are the most comparable sales, with 5 being, as already referred to, the most comparable.
Asked to comment on the methodologies used by the appellant, Mr Larking was critical of using insured value, seeing it as inferior in reliability to analysing improved sales. He distinguished an insured value from an added value.
In relation to the approved high density dwellings, he noted that the approval was for 18 units and so far work had not commenced.
Cross-examination of the valuer
When tested by cross-examination, Mr Larking confirmed that the best indicator of the value of the subject land is sale 5, of 600 m² sold on 3 February 2010.
Re-examination
In re-examination, Mr Larking stated that sale 4 was sold as a vacant block and that the purchaser obtained approval for a duplex later.
Importantly, he stated that residential land is not valued on a square metre basis.
The law
Section 45(4) of the Valuation of Land Act 1944 limits the appellants to their grounds of appeal and they have the burden of proof.[1]
[1] G. Franklin & Ors v Valuer-General 1978 5 QLCR 181 at 184-185.
Section 33 of the Act deems valuations to be correct until proved otherwise.
The 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:
“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 contradistinction of 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 Larking 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 judgement 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 page 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 is 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 the cases cited in it).”
Concerning Mr Lal’s methodology, referred to in [8], of using the sale price of an 820 m² block pro-rata to arrive at the value of his smaller blocks, Mr Larking’s rejection of that as a valid methodology, at [32] is in accordance with the decision of the Land Appeal Court in Grahn’s case, supra. At 330 the Land Appeal Court said:
“… the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes.”
In the present appeals, the presumption of correctness is applicable. There is only one body of expert evidence to guide this court, that given by Mr Larking. Mr Larking took into account all relevant considerations concerning the characteristics of the land in question. Also, he has not made a serious error of fact or acted upon an incorrect principle.
Mr Lal’s methods of valuation do not accord with the best basis of assessment of value, which is the method used by Mr Larking. In addition, Mr Larking, as an expert, rejected Mr Lal’s approach to valuation of this land. I accept the evidence of Mr Larking as being his professional opinion arrived at on the basis of the preferred method of valuation, which is accepted by this Court.
In the absence of there having been demonstrated an error by the valuer sufficient to displace the presumption of correctness of the valuation I dismiss the appeals and affirm the valuations appealed against.
WA ISDALE
MEMBER OF THE LAND COURT
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