Mills v Chief Executive, Department of Natural Resources

[1996] QLC 131

[1996] QLC 131

 

LAND COURT BRISBANE

27 SEPTEMBER 1996

Re:Appeal against Annual Valuation Valuation of Land Act 1944 Shire of Wondai (AV95-467)

John James Mills v.

Chief Executive, Department of Natural Resources

(Hearing at Kingaroy) D E C I S I O N

Mr Mills is the owner of land described as Lot 1 on Registered Plan 214033, Parish of Mondure, County of Fitzroy, containing an area of 45.3 ha. Under the provisions of the Valuation of Land Act 1944 as at 30 June 1993, the respondent determined the unimproved value of that land at $35,000. An objection by Mr Mills was disallowed and he appealed to the Land Court against the respondent’s decision upon his objection, advising that his estimate of the unimproved value was $28,000.

The grounds of this appeal, as far as they are relevant, are that:

·the property was purchased for $25,000 in April 1993;

·the unimproved valuations of residential allotments in the town of Hivesville were reduced by 24%, while the valuation of the subject land increased by 95%;

·the subject land was valued by reference to sales of properties supplied by the Proston Rural Water Supply Scheme.

At the hearing of the appeal Mr Mills appeared and gave evidence, while the respondent was represented by Senior Valuer, Mr M Hoare, and evidence for the respondent was given by Mr PG Mariner, a registered valuer employed by the Department of Natural Resources.

The subject land is situated just to the south of the township of Hivesville, with access by means of a formed gravel road off the bitumen sealed Wondai-Proston road. It emerged during the course of the hearing that the subject land comprises a mixture of vine scrub country, part of which has been cleared, and partly sloping broken forest country which is unsuitable for development. Part of the standing vine scrub has been left undeveloped as it is the habitat of an endangered species of wildlife.

Mr Mills gave evidence that prior to his purchase of the property in April 1993 for

$25,000, it had sold in October 1990 for $22,000. When account was taken of the improvements on the property at time of his purchase (comprising boundary fencing, dam and approximately 30 acres of improved pasture, which he estimated had a total value of $6,000), he contended that the unimproved value of the property only two months after the sale could

not be $35,000.

Mr Mills also gave evidence that in about the same period of time the neighbouring Lot 2, with an area of about 44.5 ha, had sold twice, first for $40,000 and then on 31 January 1992 for

$45,000, with improvements which Mr Mills estimated to have a value of at least $15,000. Mr Mills contended that Lot 2 was a more valuable property because of the area that could be cleared for cultivation. He tendered photographs which demonstrated, amongst other things, that Lot 2 had less inferior ridge country than the subject land.

Since the issue of the valuation made as at 30 June 1993 which is the subject of this appeal, the respondent carried out a further valuation of the area, increasing the unimproved value of the subject land as at 1 January 1995 to $38,500. This created some confusion with regard to the percentage adjustments to various lands in the area and to the unimproved values applied to those lands as at 30 June 1993.

However, be this as it may, Mr Mills contended that, while the unimproved value of the subject land had increased by 80% as at June 1993 and 95% as at January 1995, residential allotments in the township of Hivesville had been reduced by 24%. It would seem from the rate notices tendered by Mr Mills that the reduction in valuations in the town of Hivesville were made between 30 June 1993 and 1 January 1995.

In addition to this evidence, Mr Mills said that it was the consensus of opinion of real estate agents that he had spoken to that the market value of properties in the area had fallen between 15% to 20% in the last two years. He produced details of the asking prices of several properties, some of which he had inspected personally.

One of Mr Mills’ grounds of appeal is that the subject land was valued on prices obtained for blocks on the Proston Rural Water Supply Scheme which, according to Mr Mariner, was constructed in the 1960s, to supply water from the Proston Weir to properties in the area for domestic and stock purposes. He explained that to gain access to the water, a landowner made application in writing and an assessment was made as to whether or not the additional connection would adversely affect existing users.

Because he considered the supply to be unreliable, Mr Mariner had not applied any additional loading to the unimproved value of those lands supplied by the scheme. Mr Mills said that soon after purchasing the property he applied to gain water from the Scheme, but apparently has not been able to do for various reasons, including the prolonged drought in the area. However, other properties, including the neighbouring Lot 2, gain access to water from the Scheme. He considered that access to scheme water was a considerable advantage. I accept his opinion and find that unreliable as the supply may be during periods of drought, it is still an advantage which should be recognised.

Mr Mills seemed to be unsure of the basis for the respondent’s valuation. He thought that the unimproved value may have been based on sales in the Wheatlands area, which he considered to be a better agricultural area and closer to the major centres of Wondai and Murgon than the subject land.

However, Mr Mariner explained that he had valued the subject property as rural residential land and had increased its unimproved value by some 80% between 1992 and 1993, because its existing unimproved value (and that of the neighbouring Lot 2), were low compared with the unimproved values applied to similar properties in the area. He said that there were no sales of comparable lands in the Hivesville vicinity. He rejected the sale of the subject land as he considered it to be a forced sale. From inquiries he had made, he had ascertained that the circumstances of the vendor had necessitated that the land was placed in the hands of a representative, who had, he thought, disposed of the property with some haste.

Because of the lack of sales in the Hivesville area, Mr Mariner said that he relied upon sales of rural residential land in the Melrose area, somewhat to the south of the subject land, which was, in his opinion, an area that experienced market movements similar to that of the Hivesville area.

Mr Mariner produced details of three of those sales, which varied in area from 16.01 ha to

21.64ha and which sold between April 1992 and May 1993 for prices which varied from

$12,000 to $23,000 and to which the respondent had applied unimproved values of between

$12,000 and $13,400. These properties are all smaller than the subject land and Mr Mariner regarded them as inferior because of the lack of services and the distance from facilities. It is also clear that he thought the country in that area was inferior to that of the subject land.

Mr Mariner thought that the valuations of allotments in the town of Hivesville had not been altered by the respondent between 1992 and 1993. If that is so, the decrease referred to by Mr Mills may have occurred as at 1 January 1995, and not at the date of the present valuation. In any case, those town allotments are so different to the subject land that comparisons of their unimproved values are not helpful.

It emerged during the course of his evidence that at the relevant date Mr Mariner had valued the neighbouring Lot 2 at $35,000, the same value as was applied to the subject land. He admitted that Lot 2 had a greater percentage of cleared country and very little ridge. However, he said it was difficult to say that it was a superior rural homesite. He thought that the rural homesite market was “pretty volatile” and as he put it, “a pretty hard market to pick because they can fluctuate so greatly”. He thought that different features of these lands attracted different people. However, as Lot 2 has access to the Rural Water Supply Scheme and is on a bitumen road, in addition to being better country, I find that Lot 2 is superior to the subject land.

When Mr Mariner was questioned about the basis for his opinion that the unimproved value of the subject land had been low compared with the unimproved values that had been previously applied to other rural residential sites, it emerged that there were only a few rural residential sites in the area. As at 30 June 1993, Lot 2 on RP 165044, to the north-east of the subject land, was valued at $30,000, Lot 123, of 76.637 ha, to the south of the subject land, was valued at $35,000, while Lot 1 on Plan FY 1729, of 47.426 ha, to the north-west of the subject land, was valued at $15,200. It was on the basis of the valuations applied to those properties, in

addition to the sales, which influenced Mr Mariner to increase the unimproved value of the subject land by 80%. He thought that the unimproved values of those other rural residential properties had been increased by 10% to 15% between 1992 and 1993.

The essence of this appeal is that Mr Mills contends that the sales of the subject land and of the adjoining Lot 2 are the best evidence of unimproved value. On the other hand, Mr Mariner relied upon the relativity of values applied to other rural residential properties, supported by the three sales in the Melrose area.

The legal principles that must be applied have been summarised by the Land Appeal Court in Grahn v. The Valuer-General (1992) 14 QLCR 327, where the Court relied upon the decision of the High Court of Australia in Brisbane City Council v. The Valuer-General (1978) 140 CLR 41 and the decisions of the Land Appeal Court in Fischer v. The Valuer-General (1983) 9 QLCR 44 and Barnwell v. The Valuer-General (1989) 13 QLCR 13, as authority for the following propositions:

·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 (Barnwell v. The Valuer-General and cases cited therein).

·The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (Fischer v. The Valuer-General and Barnwell v. The Valuer-General).

·Section 33 of the Valuation of Land Act 1944 (formerly s.13(7)) creates a presumption that the value in money terms shown by the Chief Executive in his notice of valuation is correct (Brisbane City Council v. The Valuer- General).

·Once it is shown:

(i)in making the valuation the Chief Executive acted upon a wrong principle, or made a serious error of fact; or

(ii)the valuation was made by a method fundamentally erroneous, the presumption created by s.33 is rebutted (Brisbane City Council v. The Valuer-General).

·While 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. (Fischer v. The Valuer-General).

·If possible, the Chief Executive 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. (Barnwell v. The Valuer-General).

In the present case, Mr Mariner purported to rely upon sales some distance from the subject land and not directly comparable to it, to correct what he saw as an error in the relativity of the valuation of the subject land with that of other rural residential lands in the vicinity. In doing so, he disregarded the sale of the subject land only two months prior to the date of valuation. He did so on the basis that he considered it to be a forced sale and not indicative of the land’s true market value.

On the evidence before me, I cannot accept that the vendor’s representative   sold the subject land at substantially less than its market value.   Mr Mills said that an independent valuation was obtained prior to the sale.  Even if the sale of the subject land in April 1993 was low, for whatever reason, the suggestion that it was ridiculously low is not supported by the previous sale of that land for $22,000.   It is also not supported by the sale of Lot 2 in the previous year for $45,000, with improvements which Mr Mills estimated would have had a value of at least $15,000.   Allowing for some increase in value between January 1992 and March 1993, that sale would seem to support the unimproved value of $35,000 applied to Lot 2.

However, I have found that the subject land is inferior to Lot 2 and should be valued accordingly. In addition, I am not convinced from the unimproved values that were applied to the other rural residential lands in the area that Mr Mariner could reasonably have drawn the conclusion that the subject land should be valued at $35,000 as at 30 June 1993. While I am not prepared to make any finding with regard to the circumstances of the sale of the subject land in April 1993, it could reasonably be open to argument that the sale price was somewhat low, compared with that obtained for Lot 2 in January 1992.

Therefore, having regard to the whole of the evidence in this case, I have come to the conclusion that the appeal should be allowed. It does not seem unreasonable on that evidence that the unimproved value be determined at the amount of $28,000 shown in the appellant’s Notice of Appeal.

Accordingly, the appeal is allowed, the valuation of the respondent is set aside and the unimproved value of the subject land as at 30 June 1993 is determined at Twenty-eight Thousand Dollars ($28,000).

JJ TRICKETT PRESIDENT OF THE LAND COURT