McKirdy v Department of Natural Resources, Mines and Water
[2006] QLC 51
•1 September 2006
LAND COURT OF QUEENSLAND
CITATION: McKirdy v Department of Natural Resources, Mines and Water [2006] QLC 51 PARTIES: William J McKirdy
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NO.: AV2005/1341 DIVISION: Land Court of Queensland PROCEEDING: Appeal against an annual valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 1 September 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RS Jones ORDERS: 1. The appeal is allowed.
2. The unimproved value of the land the subject of this appeal is determined as at 1 October 2004 at $382,000.
CATCHWORDS: Appeal against unimproved value of land pursuant to Valuation of Land Act 1944 – statutory presumption of correctness – onus of proof – comparable sales. APPEARANCES: Mr W McKirdy for the appellant.
Ms C Liu for the respondent.
Background:
These proceedings concern an appeal against the unimproved value attributed to land located at 252 Logan Reserve Road, Logan Reserve. The subject land is more properly described as Lot 41 on Plan MAR 618, Lot 3 on Registered Plan 210941, Lot 1 on Registered Plan 25886 and Lots 2 and 3 on Registered Plan 25887, Parish of Mackenzie, County of Stanley. The land comprises a total area of 48.97 ha and fronts the western bank of the Logan River.
By way of Notice of Appeal dated 6 October 2005 the appellant appealed the respondent's assessment of the unimproved value of his land determined as at 1 October 2004 (effective as at 30 June 2005) in the amount of $630,000. The appellant's original estimate of the unimproved value was $250,000. Following the appellant's objection to the unimproved value attributed to his land, the respondent, pursuant to s.68 of the Valuation of Land Act 1944 (VLA) reduced it from $630,000 to $490,000. The appellant contends that the reduced unimproved value is still too high and, at the hearing of this appeal, contended for a value of $215,523. The figure of $215,523 is based primarily on the unimproved value attributed to land on the eastern bank of the Logan River. This land was commonly referred to as the "Deer" property.
Mr W McKirdy appeared in person. The respondent was legally represented by Ms Liu, a senior Legal Officer employed by the respondent and relied on the evidence of Mr J Lochel, a registered real estate valuer of some 30 years experience who is also employed by the respondent. Mr Lochel was not the valuer originally responsible for determining the unimproved value. However, after an independent analysis and investigation of the subject land and comparable sales evidence, it was his professional opinion that the unimproved value now contended for by the respondent was fair and reasonable.
The evidence in this appeal was heard at the same time as the evidence in the appeal concerning the adjoining land owned by Thomas Winch Company (Qld) Pty Ltd.[1] Both are extensively affected by flooding and, at the relevant date, were being used for cattle breeding and fattening purposes. In both appeals the respective appellants grounds of appeal are identical and Mr Lochel, the respondent's valuer, relied on the same sales evidence in reaching his opinion about value. In such circumstances there are a large number of matters and considerations common to the determination of both appeals.
[1] Thomas Winch Company (Qld) Pty Ltd v Department of Natural Resources, Mines and Water [2006] QLC0050.
Issues in the appeal
As I understood the evidence on this topic, as at the relevant date the land was identified within the Logan City Council Town Plan as an area zoned or designated for "Investigation". Also, at the relevant date the land was being used for cattle breeding and fattening purposes, such a use being allowed or permitted within its zoning. Having regard to the use to which the subject land was being put at the relevant date, notwithstanding the fact that it is made up of several separate parcels of land, it was required to be valued in accordance with s.17 of the VLA. Improvements on the land consist of a dwelling and other structures consistent with its use for grazing.
Further, as the subject land is "improved" land for the purposes of the VLA, s.3(1)(b ) relevantly provides:
"3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(a) …
(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."
In his Notice of Appeal the appellant identified 11 separate grounds. Each of these grounds was independently considered by Mr Lochel in his valuation report. In my opinion, some of the grounds of appeal as pleaded are generic and/or general in character, for example, that the "valuation is excessive" and that the "valuation is unreasonable". Notwithstanding this, a number of more substantive grounds were raised and relied on. These included:
(i)That the valuation had not been carried out in accordance with the provisions of s.17 of the VLA;
(ii)That, in arriving at the unimproved value the respondent:
(a) relied on the sale of improved properties and in so doing failed to adequately take into account the value of the improvements on those sales;
(b)had taken into account inappropriate sales;
(c)had failed to take into account or properly take into account the physical characteristics of the land, and
(d)in particular had failed to properly take into account the flood prone nature of the land.
In appeals such as this, pursuant to s.33 of the VLA, the valuation appealed against is deemed to be correct and therefore the appellant bears the burden of proving that it is wrong. Further, pursuant to s.45(4), the appellant is bound by the grounds of his appeal as pleaded and the burden of proving each and every ground of the appeal relied on also lies with him. It is now well accepted that the presumption in favour of the correctness of the statutory valuation may be rebutted where it can be shown that the valuation was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method.[2]
[2]Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41 at 56-57, per Gibbs J; see also Cominos and Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331-332 (LAC).
The Section 17 Argument
The evidence led of Mr Lochel makes it quite clear to me that, in determining the unimproved value of the land, he had proper regard to the application and purpose of s.17 of the VLA.
The Relativity Argument
The evidence made two things reasonably clear. First, the Deer land was generally superior to the subject and, second, its unimproved value as at 1 October 2004 was $195,000. It was the appellant's contention that if the Deer land had an unimproved value as at 1 October 2004 of $195,000 the unimproved value of the subject should not exceed $215,523.
Given the statutory presumption of correctness afforded to the unimproved value attributed to the Deer land[3] and the evidence concerning the respective comparability of that land when compared to the subject this argument has some superficial attraction.
[3] s.33 VLA.
However, when the facts surrounding the value attributed to the Deer land are looked at more critically, any comparison between it and the unimproved value attributed to the subject land is not a valid one. In my opinion, it is reasonably certain that the unimproved value attributed to the Deer land involves a significant undervaluation.
The reasons for reaching this conclusion are first; the best evidence is that the unimproved value of the land has remained unchanged since about 2001. Second, it was Mr Lochel's professional opinion that the unimproved value attributed to that land was too low. I should point out here that Mr Lochel was not the valuer responsible for valuing the land. The third reason is that, in my opinion, the unimproved value attributed to the land appears to be manifestly too low when regard is had to the reliable sales evidence relied on by Mr Lochel in this appeal.
For the reasons expressed above, I conclude that the unimproved value attributed to the Deer land is not reliable evidence of the unimproved value of the land the subject of this appeal.
The Sales Evidence
In carrying out his valuation, Mr Lochel had regard to three sales all of which lay within the Shire of Beaudesert. The reason for this was that no sales involving any form of primary production or rural use were recorded within the Logan City Council area at a date reasonably proximate to the date relevant to this appeal. The Beaudesert Shire is the shire which adjoins the City of Logan to the south. Each of the sales relied on by Mr Lochel were, as at the relevant date, being used for rural purposes. Relying on these sales Mr Lochel adopted a rate of $10,000 per ha over the entire area of the land resulting in a figure of $489,700. That figure was then rounded up to $490,000. An overall dollar rate per hectare was used by Mr Lochel notwithstanding the fact that about 80% of the land is subject to periodic flooding.
In appeals such as this the primary method for the assessment of unimproved value of land ought to be, as far as is reasonably practicable, by a comparison of the subject land with reliable sales evidence.[4] Even large increases over previous valuations may be justified where supported by reliable sales evidence.[5]
[4]Fischer v Valuer General (1983) 9 QLCR 44 (LAC); Grahn v Valuer General (unreported decision of the LAC – 20 November 1992 – AV90/472, AV 90/473).
[5] Tow v Valuer General (1978) 5 QLCR 378 at 381 (LAC).
In this context I accept that, subject to the matters addressed below, the first two sales relied on by Mr Lochel provide the best evidence of the unimproved value of the subject land.
I do not consider Mr Lochel's Sale 3 to be of much value. This transaction involved a sale of superior grazing land to an adjoining owner. However, more importantly, this sale is not only remote from the subject, about 45 kilometres as best as I can tell, but is also quite remote from the nearest town of significance being Beaudesert. It is too difficult in my opinion, to try and adjust this sale to take account of this relative remoteness and then sensibly compare it to the subject.
I accept the evidence that Mr Lochel's Sale 2 is comparable country to the subject (second-class grazing) and superior in the sense that it is flood free. However, I also accept the evidence of Mr Lochel to the effect that, in respect of grazing and/or agricultural blocks of the size of the subject land here, a significant premium is usually associated with proximity to a town centre offering a wide range of services and amenities. Accordingly, in my opinion the subject land, when compared to this sale, is materially superior.
In respect of Mr Lochel's Sale 1, it lies on the very outskirts of the large rural town of Beaudesert. I accept Mr Lochel's evidence that the proximity of the subject to Beenleigh and Springwood offers easier access to the services and amenities usually associated with larger shopping centres than is available to this sale and, as such, would attract a premium over the price paid for more remote blocks. However, in this context, I also accept the evidence of Mr McKirdy to the effect that the town of Beaudesert offers a level of goods and services important to rural industries superior to that offered at Beenleigh. For example, cattle sale facilities and more widely stocked produce stores. Overall I am of the opinion that Mr Lochel has tended to place too much emphasis on the proximity of the subject to Beenleigh and Springwood when comparing it to his Sale 1.
On balance, I am of the opinion that the pros and cons of proximity to Beenleigh and Springwood versus proximity to Beaudesert largely cancel each other out in the circumstances of this appeal. There is however probably still some advantage in favour of the subject in this regard.
I am also of the opinion and so find that this sale is superior to the subject in respect of its flood immunity. Sale 1 is flood free while 80% of the subject land is inundated to varying degrees from time to time. However, in respect of this issue, I accept Mr Lochel's evidence that when regard is had to the frequency of serious flooding and the benefits of periodic flooding to the productivity of the land, the negative impact on value of such flooding would tend to be small. In this context I also accept Mr Lochel's evidence that land, even relatively small grazing blocks with river frontage, as is the case here, will generally attract a premium over and above the price paid for non frontage blocks.
As to the actual quality of the land there is no doubt that Sale 1 is superior grazing and agricultural land. However, on balance, I consider the subject land to be superior overall to Sale 1, primarily because of its river frontage.
In all the circumstances I propose to adopt an applied rate of $7,800 per hectare to the subject land. This rate is slightly higher than that for Sale 1 and represents an increase of about 20% over and above what I consider to be the value of non-river frontage land in the immediate vicinity of the subject.[6] The premium of 20% is consistent with the evidence of Mr Lochel on this topic which I accept. It is also my opinion that when evidence is viewed as a whole, the rate of $7,800 sits reasonably comfortably with the applied rate of $4,530 per hectare for Mr Lochel's Sale 2. Sale 2 is a dry block of about the same area and land quality as the subject but which is materially more remote from Beenleigh than the subject and from Beaudesert than Sale 1.
[6]In Thomas Winch Co (Qld) Pty Ltd v Department of Natural Resources, Mines and Water (2006) QLC 0050 an overall applied rate of $6,500 per hectare was adopted.
Accordingly, I determine the unimproved value of the subject land as at 1 October 2004 to be:
48.97 hectares x $7,800 hectare = $381,966
adopt $382,000.00
Orders:
1.The appeal is allowed.
2.The unimproved value of the land the subject of this appeal is determined as at 1 October 2004 at $382,000.00
R S JONES
MEMBER OF THE LAND COURT
0
0
0