Lawson v Valuer-General

[2012] QLC 27

LAND COURT OF QUEENSLAND

CITATION:

Lawson v Valuer-General [2012] QLC 0027

PARTIES:

Alan Stuart John Lawson
(appellant)

v.

Valuer General
(respondent)

FILE NOs:

LVA307-11

DIVISION:

Land Court of Queensland

PROCEEDING:

Appeal against valuation under the Land Valuation Act 2010.

DELIVERED ON:

15 June 2012

DELIVERED AT:

Brisbane

HEARD AT:

Nambour

MEMBER:

Mr PA Smith

ORDERS:

1.     The appeal is dismissed.

CATCHWORDS:

Practice and Procedure – onus of proof – presumption of correctness not carried over to Land Valuation Act 2010 – test is now ‘balance of probabilities’

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.

Evidence – photographic evidence – use with caution –reproduced images caused features in a distance to be brought closer by way of magnification of the image.

Valuation – unimproved land – views – must have regard to attributes of the site achievable if a building is placed on site.

APPEARANCES:

Mr Alan Lawson, self represented.

Mrs Thea Johnson, Counsel for the respondent

Background

1. This decision relates to an appeal by the appellant, Mr Lawson, against a valuation by the respondent, the Valuer-General, pursuant to the Land Valuation Act2010, (the LVA), which valued the appellants' property situated at 120 Tunba Court, Cooroy Mountain, (the subject land), in the sum of $760,000 as at 1 October 2010. The appellant contends for a valuation of $500,000.

2. The subject land has been valued as a rural homesite.[1]  It should be noted that the land is valued as unimproved land pursuant to the provisions of the LVA, which now separates land valued as site value land and land valued as unimproved land. The land in question has a rural zoning.

   [1]     See Exhibit 8, page 4  of Mr Modini’s report, valuer for the respondent.

The Subject Land

1. The subject land is described as Lot 8 on Registered Plan 193447, parish of Tewantin.  It is located in the Noosa Hinterland, approximately 15 kilometres south west of Noosa Heads and approximately 5 kilometres east of the township of Cooroy. 

2. Access to the subject land is off Cooroy Mountain Road, which is a formed gravel rural road and via Tunba Court, which is a private formed gravel service road, servicing a number of properties along its length.  Although all weather access is available along Cooroy Mountain Road, Tunba Court is low lying and subject to flooding inundation during rain events which makes that area of the access impassable.

3. Telephone and electricity services are available to the subject land.  Good amenities are available at both Cooroy and Noosa. 

4. The subject land has an area of 16.28 hectares. It is an irregularly shaped, four sided block.  The southern boundary of the subject land abuts a dedicated, but unmade, road reserve.  The northern section of the subject land adjacent to Tunba Court is gently sloping, usable land.  A residence was previously located in this part of the land.  As the land progresses in a southerly direction, the slope of the land becomes very steep until it levels out on a high, gently sloping ridge section at the rear.  Although it is somewhat difficult to access the rear of the block, the rear part of the block provides a house site with the potential for good coastal and hinterland views. 

5. The appellant has constructed an extensive home on the ridge at the southern end of the property.  The extent of the views available from the appellant’s residence was the subject of dispute as to the available views from the site in its unimproved state. 

The Hearing

1. The appellant is self-represented, and Mr Lawson gave evidence at the hearing. Mr Lawson has no legal or valuation qualifications.  The respondent was represented by Mrs T Johnson of Counsel, and relied on the evidence of a registered valuer, Mr H Modini.

2. An inspection of the subject land was undertaken on Monday, 14 May 2012 in the presence of both parties, and the hearing was held at Nambour on Tuesday, 15 May 2012.

The Valuation Process

1. This case is one of the first decisions handed down under the relatively new LVA. The LVA makes significant amendments to the valuation processes, as they had been known and understood under the Valuation of Land Act (VLA), since 1944. However, some basic elements remain the same. Firstly, it is clearly 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.

2. The respondent has a statutory duty to clearly comply with the provisions of the LVA when undertaking such valuations. The valuations made under the LVA are different to those under the VLA, in that whilst the valuations made under the VLA were of unimproved value, under the LVA valuations are broken into two categories, being site value for what could generally be described as residential, commercial, industrial blocks and the like, and unimproved value, which generally applies to rural properties.

3. The valuation in this matter is considered to be an unimproved valuation under the LVA.

4. I note with approval what his Honour Isdale said in Steers v Valuer-General:[2]

   “[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.”

   [2] [2012] QLC 12.

5. I consider it remains a relevant feature under the LVA, to consider market value. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines[3].

   “[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.”

   [3] [2005] QLC 11, at paragraphs 11 and 12.

6. Despite the legislative change, it is refreshing that the views expressed by the High Court in Spencer, now well over a century ago, remain just as current and relevant today as they did when they were first uttered. It is certainly my view, at least at this stage until other authorities may prove me wrong,[4] to continue to apply the Spencer test under the LVA.

   [4]     Noting, of course, the provisions of s.18 of the LVA.

The Presumption of Correctness

1. I now turn to make specific reference to what used to be an important element, in my view, of the respondent's case in valuation matters. In that regard, I refer to the old s.33 of the VLA, which deemed the valuation made by the Valuer-General to be correct until proved otherwise, upon objection or appeal.

2. It is noteworthy, in my view, that that provision has not been replicated in the current LVA. Specifically 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.”

3. The consequence of the dropping of the concept of the valuation being statutorily deemed correct, is that there is now a more even playing field as between appellants and the respondent when appeals are heard under the LVA in this Court.

4. In my view, appeals under the LVA are to be determined on what is essentially the balance of probabilities[5].

   [5] See Meiers v Valuer General [2012] QLC 0019 at [27]

Issues in the Appeal

1. The appellant, in his notice of appeal, set out his grounds of appeal as follows:

   “The basis on which the Queensland government determines land values is quoted in their 2011 leaflet as the property market and sales information.

   When I queried the basis of the new valuation with the local DERM office I was quoted two sales examples.  It is my contention that these examples are empirically spurious because they were so geographically distant as to have no relevance whatsoever to the value of this property.

   This property had a quoted valuation of $108,000 in June 2005!  A 700% increase in 6 years is unconscionsable.  Clearly these increased valuations have a direct financial impact and burden on my family as the council uses these values to increase rates which is why I have to appeal this erroneous valuation.

   The physical reality of this property is it is a 40 acre property that covers both side of a ridge so is predominantly on a slope.  40% is covered with scrub trees.  The soil contains numerous rocks.  It is at the end of a 1½km private dirt road that has multiple ownership and is, as a consequence of that multiple ownership, in continuous poor condition.

   Obviously a component the ‘market’ value of the property is based on its commercial or potential commercial value or appeal i.e. who is in the market and what might they pay for it.

   I am advised by experts that the property has no agricultural value whatsoever beyond grazing a few animals.  I am further advised that is only of value as a hobby rather than any revenue generating business due to the physical number of animals one could graze on a property of this size.  The poor soil and topology prevent any crop cultivation even if the size of the property could support that, which I am advised it doesn’t.

   Therefore its only value is purely a home site.  Due to planning restrictions the property is unable to be sub divided so it can only be valued as a single home site with no development potential.  Due to its poor vehicular accessibility and relatively remote location it has limited value because there are a very limited number of potential purchasers.

   However the key point of this appeal is that the reality of the ‘marketplace’ is that property values have fallen between 30 and 50% over the last two years in this area.  Any real estate agent in the general area will confirm this, National press has identified this area with the appellation of the ‘Noosa disease’ to further compound the collapse of prices.

   The reality of this specific property is that the nearest properties that have sold in the last year are:

   36 Tunba Court – sold this year for $1.65m from a value 2 years ago $2.2m

   111 Lukes Road – sold this year for $1.8m from $2.4m 2 years ago

   55 Ball Rod sold in 2011 - $1.25; sold in 2008 - $1.85m

   355 Duke Road – sold 2011 $1.6m; sold in 2008 $2.4

   Clearly these are improved values but the land value is also pro rata less.  Building costs and building material costs have definitely not reduced during this time.

   In summary my estimation of its current value is based on empirical data, rather than the somewhat spurious comparisons of DERM and, even taking into account the previous 600% increase my ‘market’ valuation is generous.  ALL properties in this area have fallen at least 30% since 2008 and there is empirical proof to substantiate this.  Clearly DERM have made the wrong judgement in this case and I would ask you to overrule them in this instance.”

2. I commend Mr Lawson for the manner in which he conducted his appeal even though he has no legal or valuation qualifications.  He provided a significant amount of well researched, relevant material to the Court.  He also put forward credible evidence to show that the photographic evidence provided by the respondent’s valuer gave a somewhat misleading impression as to the extent of views currently existing from the improved home site.  Although at first it appeared that Mr Lawson was alleging that there had been a deliberate fabrication of the evidence, it became clear at the hearing that what Mr Lawson was actually alleging was that photography had been taken using a camera which reproduced images at a ratio greater than 1:1 that is, features in the distance were brought closer by way of magnification of the image.  I am completely satisfied that there was nothing at all sinister in the actions of the respondent’s valuer in this regard, but rather that he was doing nothing more than using his departmental supplied camera in the usual way.  The appellant’s evidence in this regard, which I accept, highlights the caution with which one must use photographic evidence.

3. Taking all of Mr Lawson’s evidence into account, in my view he has well established that there was a significant increase in the value of both the subject land and like properties in the surrounding vicinity in the years leading up to the Global Financial Crisis (GFC), and that following the GFC there has been a marked reduction of property values, although those property values remain significantly higher post GFC than they were at the commencement of the decade preceding the GFC.  The trends are presented, albeit in a highly simplified manner, in Mr Lawson’s Exhibit 3. 

4. Mr Lawson argues that the value of the subject property at the time he purchased it in June 2005 was $108,000[6], and that the current valuation of $760,000, even given the market increases pre-GFC, do not justify the current valuation of $760,000.

   [6]     See Exhibit 2, page 6.

5. It should be immediately observed that in 2005, the subject property prior to Mr Lawson obtaining ownership was assessed using the rural concession allowed by the then s.17 of the VLA.  Accordingly, it is inappropriate to compare, on a relativity basis, valuations which have a special statutory provision applicable such as the old s.17 or the new equivalent contained in s.45 and following in the LVA, with those properties that do not have any such concession.

6. The respondent’s case as put by Mr Modini, a registered valuer employed by the respondent, in both his valuation report[7] and his oral evidence.  Importantly, Mr Modini relies upon four sales as follows:

   [7]     Exhibit 8.

SALE NO	Street, Road or Parish	Parties	RPD/Area	Area/Zoning	Date of Sale	Sale Price	Analysed U/Value	Application
Sale No 1	300 Sunrise Rd, Doonan	Graham and Williams to Koeknken	L6 RP900812 Parish of Tewantin	12.05 HA Water Resource Catchment Area	22/01/2010 Possession 08/03/2010	$770,000	$760,000	$660,000

“Access/situation:   Situated in the Doonan locality within the Noosa Hinterland, approximately 15 kilometres south-west of Noosa Heads.  Access is from Sunrise Road, which is a bitumen sealed road with gravel shoulders.

Nature of Land:      An irregular shaped parcel of easy sloping coastal forest country with limited rural views available.

Improvements:       Vacant land with approximately 1 hectare cleared for homesite.

Comparison to Subject:

The sale property has easier access and is more gently sloping, however the subject property is considered overall significantly superior due to the extensive coastal and hinterland views available from the elevated homesite.”

SALE NO	Street, Road or Parish	Parties	RPD/Area	Area/Zoning	Date of Sale	Sale Price	Analysed U/Value	Application
Sale No 2	214 Sunrise Rd, Doonan	Insley to Frenesi P/L to Kirkman	L8 SP170719 Parish of Tewantin	11.82 HA Water  Resource Catchment Area	19/03/2009 Possession 30/04/2009 03/11/2006 Possession 09/03/2007	$1,600,000 $1,860,000	$1,500,000 $1,760,000	$1,300,000

“Access/situation:   Situated in the Doonan locality within the Noosa Hinterland, approximately 15 kilometres south-west of Noosa Heads.  Access is from Sunrise Road, which is a bitumen sealed road with gravel shoulders.

Nature of Land:      An irregular shaped, moderate to steep sloping allotment with a gently sloping elevated homesite at the rear, offering extensive coastal and hinterland views.

Improvements:       Vacant land with levelled homesite and approximately 730 metres of shared bitumen driveway.  Approximately 4 hectares had been cleared.

Comparison to Subject:

The sale property is very comparable to the subject in that it has a similar slope and difficult access to a similar elevated homesite at the rear with extensive coastal and hinterland views.  The sale property has the disadvantage of less privacy due to the close proximity of the neighbouring dwelling, however as the views and road access are considered superior, the sale property is considered overall superior.

Comments:This sale demonstrates the fall in the market from the peak in 2007 to post Global Financial Crisis.”

SALE NO	Street, Road or Parish	Parties	RPD/Area	Area/ Zoning	Date of Sale	Sale Price	Analysed U/Value	Application
Sale No 3	61 Tinbeerwah Rd, Tinbeerwah	Ingleton to Nettleton to Hazlett	L15 RP210862 Parish of Tewantin	4 HA Rural	09/10/2009 Possession 30/10/2009 16/01/2011 Possession 31/03/2011	$710,000 $705,000	$690,000 $685,000	$560,000

“Access/situation:   Situated in the Tinbeerwah locality within the Noosa Hinterland, approximately 12 kilometres west of Noosa Heads.  Bitumen sealed local road access is available from Tinbeerwah Road.

Nature of Land:      An elevated, gently sloping parcel of coastal forest country with a northern aspect and views of Mt. Tinbeerwah available.

Improvements:       Vacant land with approximately 1.8 hectares cleared for homesite.

Comparison to Subject:

The sale property has easier access and is more gently sloping, however the subject property is considered overall significantly superior due to size and the extensive coastal and hinterland views available form the elevated homesite.

Comments:This sale demonstrates the fall in the market between 2009 and 2011”

Sale of subject

SALE NO	Street, Road or Parish	Parties	RPD/Area	Area/ Zoning	Date of Sale	Sale Price	Analysed U/Value	Application
Sale No 4	120 Tunba Ct, Cooroy Mountain	Payne to Lawson	L8 RP193447 Parish of Tewantin	16.28 HA Rural Catchment	23/11/2005 Possession 08/02/2006	$1,300,000	$1,000,000	$760,000

“Access/situation:   Situated in the Cooroy Mountain locality within the Noosa Hinterland, approximately 15 kilometres south-west of Noosa Heads.  Access to the land is off Cooroy Mountain Road, which is a formed gravel rural road and via Tunba Court, which is a formed gravel private service road.

Nature of Land:      The property comprises an easy sloping northern section of usable land adjacent to Tunba Court, then the land rises steeply to an elevated gently sloping ridge section at the rear, providing a homesite with extensive coastal and hinterland views available.

Improvements:       Improvements at the date of sale comprised an old single level brick dwelling, 2 dams and approximately 10 hectares of clearing.

Comparison to Subject: Sale of Subject.”

1. As Mr Modini has produced the only expert valuation evidence to the Court, I accept his sales evidence.  There are, however, some comments that it is appropriate for me to make.  Firstly, as indicated earlier in this decision, there is dispute as to the nature of the views from the southern ridge of the subject in an unimproved state.  I accept the proposition of the appellant that, from a standing position on the ridge in an unimproved state pre-development, it was not possible to see the coast line or, indeed, much of the surrounding hinterland views.  That however, is not the end of the matter.  In taking account of the suitability of an unimproved block as a homesite, one must have regard to the attributes of the site that are achievable if a building is placed on the site.  Other purchasers may not have chosen to expend the money that Mr Lawson did to build up the height of the ridge substantially prior to constructing his home.  However, other purchasers may have chosen to build double storey or like structures to achieve similar views as Mr Lawson has achieved.  Accordingly, I am satisfied that, subject to appropriate building structures, the southern ridge does potentially contain significant hinterland and coastal views which may be utilised upon a properly designed and constructed home on the ridge. 

2. It is also appropriate to make reference to Mr Modini’s sale 4, which is the subject property.  Even though this is a greatly dated sale, having occurred on 23 November 2005, it remains relevant as the sale price was $1.3M, which Mr Modini analysed to an unimproved value of $1M.  When that value is applied to the general evidence produced by Mr Lawson as to increases in the market pre-GFC and the fall post-GFC, in my view the current unimproved value of $760,000 is warranted. 

3. I note that there was evidence provided of the unimproved value of the property in previous valuation years.  None of those previous valuations were subject to appeal that I am aware of.  I do share Mr Lawson’s concerns that the fall in the market post-GFC has not necessarily been reflected in the fall in his unimproved value from previous valuations to the 1 October 2010 valuation.  However, unfortunately for Mr Lawson, this is not the point.  All that his evidence tends to show is that the previous unimproved valuations of his property should have been considerably higher than they in fact were. 

4. As I pointed out in the case of Burnett v Department of Natural Resources & Water[8]

   “This is a difficulty often faced by appellants in VLA matters who rely on relativity as one of their grounds of appeal. It is not enough for an appellant to simply demonstrate that the value of the appeal block is out of kilter with other, nearby blocks. They need to go further to demonstrate that the values of those other blocks are correct, and that the value of the appeal block is incorrect. This is because it is the primary function of the Court to determine the unimproved value of the land subject to appeal. Changing an issued valuation simply because other valuations may be wrong would only tend to exacerbate the error. Of course, this is a generalised statement, and each case must be determined on its own facts.”

   [8] [2010] QLC 0057 at [18].

Determination

1. In light of my findings with respect to the evidence set out above, it is my view that the appellant has failed to demonstrate that the unimproved value of the subject land is not correct.  Accordingly, I am left with no option but to dismiss the appeal.

2. In closing, I should mention that, during the course of the hearing, some evidence was given as to the state of the market post 1 October 2010, with the sales referred to indicating a continued slide in the value of properties in the vicinity of the subject land.  That continued slide however is not evidence capable of disturbing the unimproved value of the subject land as at 1 October 2010, but will of course be relevant to a consideration of the unimproved value of the subject land in subsequent valuations.

Order

1.        The appeal is dismissed.

PA SMITH

MEMBER OF THE LAND COURT