Mitchell v Chief Executive, Department of Natural Resources
[1997] QLC 52
•24 April 1997
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LAND COURT
BRISBANE
24 April 1997
Re: Appeal against Annual Valuation
Roll No . 14243 Local Government of Cooloola
(AV95-645)
Donald A Mitchell
v.
Chief Executive, Department of Natural Resources
(formerly Department of Lands)
(Heard in Gympie)
Introduction
The appellant, Mr Mitchell, owns 22.21 hectares of rural land near Gympie (the “subject land”). In the annual valuation of the area as at 1 January 1995 the respondent (then titled the Chief Executive, Department of Lands, now titled the Chief Executive, Department of Natural Resources) assessed the unimproved value of the subject land to be $68,000. The appellant objected. His objection was disallowed. He appealed to the Land Court, estimating that the unimproved value of the subject land was $42,000.
His ground of appeal was essentially that the valuation of the subject land is greatly in excess of the values determined for neighbouring properties by the respondent in 1993. The lack of relativity in the values was, he submitted, demonstrated by an analysis of the values of neighbouring properties on a rate per hectare basis. The subject land should be valued in proper relativity to adjacent properties.
Section 45 of the Valuation of Land Act 1944 provides that an appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.
The respondent produced sales evidence in support of the disputed valuation. Mr Mitchell gave evidence about the subject land and neighbouring properties.
Relevant legal principles
Before turning to the evidence, it is appropriate to summarise the legal principles relevant to this case. The law was usefully summarised by the Land Appeal Court in Grahn v Valuer-General ((1992-93) 14 QLCR 327 at 328-9). In essence the Court there stated the following propositions, drawing on decisions of the Land Appeal Court and the High Court of Australia.(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.
(b)The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land.
(c)Section 33 of the Valuation of Land Act 1944 states:
“Any and every valuation, or alteration of the valuation, of any land 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.”
That section creates a presumption that the value in money terms shown by the respondent in his notice of valuation is correct.
(d) Once it is shown that:
(1)in making the valuation the respondent acted upon a wrong principle, or made a serious error of fact; or
(2)the valuation was made by a method fundamentally erroneous,
the presumption created by section 33 is rebutted.
(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.
(f)If possible, the respondent should obtain uniformity between different blocks in the same 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.
The subject land
The subject land is Lot 2 on RP226625 in the County of Lennox, Parish of Amamoor. It is situated on Burgess Road, about 12.8 kilometres by road south-west from the Gympie Post Office. Burgess Road is of formed earth and gravel construction. Access from Gympie is by way of about 12 kilometres of bitumen surface and 800 metres of formed earth and gravel. Good access is available to the site from Burgess Road. Telephone and power services are connected to the land.
The natural features comprise easy to moderately undulating mixed scrub and forest country with low ridges and easy slopes. The land is broken by a small creek running across the northern section of the block.
The land is zoned “Rural A” and is too small to have subdivisional potential. A house site offering good views is situated along the northern boundary of the land. A dwelling has been constructed.
Sales evidence
As noted earlier, the best basis for assessing the unimproved value of land is the use of sales of vacant or lightly improved parcels of land. The respondent relied on three sales, and placed primary reliance on the sale of the subject land to the appellant in March 1994 for $84,000. Mr Mitchell gave evidence that he purchased the land after looking for some years for a suitable property. He had looked along the Queensland coast as far north as Townsville. Having found that the Gympie area had land he could afford, Mr Mitchell looked intensively at seven properties and inspected the subject land three times. The land was unimproved in the sense that it had no structures on it apart from a front fence. It had been a dairy farm some years earlier but had not been used for that purpose for three years. Beef cattle had grazed there and there was grass on the land. Mr Mitchell said that he had paid a fair market price for the land. There is no reason to think that he was not a prudent, informed purchaser of the type described by the High Court in Spencer v Commonwealth (1907) 5 CLR 417.
The respondent’s valuer, Mr BP Fuller, noted that the land was purchased as a vacant rural site. He allowed $5,000 for clearing (although regrowth had occurred) which led to an analysed unimproved value of $79,000. Rather than apply that value to the land as at 1 January 1995, he applied $68,000 (or 86% of the analysed value) because that lower figure was in relativity to other rural residential sites based on other sales.
It is rare in annual valuation cases that an arm’s length sale of the subject land in an unimproved state near to the date of valuation will be available to the respondent and to the Court. Although the sale of the subject land will not always be accepted as determining the unimproved value of the land for rating purposes, such a sale is prima facie evidence of its value. The weight which will be given to the sale is dependent on a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land (see Chief Executive, Department of Lands v Lorenzen, (AV93-22) unreported decision of the Land Appeal Court dated 1 June 1994).
The respondent relied, to a lesser extent, on the sale of two other properties. The first was a parcel of 4 hectares (Lot 16 on RP865578) of land in Burgess Road adjoining the subject land. It comprises easy to moderately sloping forest country and, like the subject, a housesite offering good views is available near the northern boundary of the land. Because the block is much smaller than the subject (being 18% of the area of the subject land) it was considered inferior. It was sold in December 1994, just before the relevant date of valuation, for $47,000. Mr Fuller analysed the value of the land to be $46,000 (after allowing $1,500 for clearing) and applied an unimproved value of $44,500 to the land as a rural residential site. Mr Mitchell suggested that the purchaser paid too much for the land. Even if that be so (and I make no such finding), the sale shows what the market will pay for rural homesites that are much smaller than the subject land.
The third sale was a parcel comprising 22.65 hectares of Rural A land on Red Gully Road about 13 kilometres south of the subject. Although the land is similar to the subject in terms of area, services and views, Mr Fuller considered the subject land to be slightly inferior in terms of topography. The land sold in January 1994 for $86,000. After making allowances for clearing, a dam and fencing, the analysed value was $75,000 and the applied value was $70,000.
The sale of the subject land (when considered with the other sales evidence) provides cogent, indeed compelling, evidence of its unimproved value as at 1 January 1995. The sales evidence clearly supports the valuation of the subject land at $68,000. If anything, the respondent’s valuation might be thought to be conservative.
That finding is sufficient to resolve the present appeal. It is appropriate, however, to make a finding in respect of the appellant’s relativity argument.
Relative values of subject land and neighbouring parcels
Mr Mitchell attached to his notice of appeal a table and graph showing the 1993 unimproved values of properties adjoining or near to the subject land and comparing the valuations on a rate per hectare basis with the subject land. The listed properties range in size from 12.11 hectares to 75.52 hectares, as compared with the 22.4 hectares of the subject land. On his calculations, those other properties were valued in a range from $675/ha (for the largest block) to $3,055/ha (for the smallest block). The subject land’s valuation in 1993 was, as I understand it, $21,000, which averaged at $945 ha, well within the range of values of properties of that size.
In the valuation as at 1 January 1995, the subject land was valued at $68,000 an increase of $47,000 or 224% of the former value. As Mr Mitchell submitted, the later value is 324% that of the former value. By comparison, a neighbouring property (the Richardson’s land) has increased 154%.
Mr Mitchell’s argument is, in summary, that the subject land has been valued out of relativity with nearby and comparable land and that the increase in valuation from 1993 to 1995 is out of relativity to the proportionate increase in the values ascribed to the other parcels of land.
Mr Fuller provided convincing responses to Mr Mitchell’s contentions. First, he noted that the subject land and other nearby blocks were not valued on the same basis. The subject land was valued as a rural homesite. Most of the neighbouring parcels, including Lot 1 on RP226625, Lot 3 on RP865578 and Lot 3 on RP70865 (the three large adjoining blocks on the western, southern and eastern boundaries of the subject land) were valued in accordance with section 17(1) of the Valuation of Land Act 1944 which relevantly (albeit inelegantly) states:
“In making a valuation of the unimproved value of land exclusively used for purposes ... of farming, any enhancement in that value for that the land ... has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.”
As Mr Fuller put it, he had applied the concession under section 17(1) to the other blocks but not to the subject land. Consequently, the appellant’s argument based on relativity must fail as the comparison between the value of the subject land and those other blocks is not a comparison (in this valuation sense) of like with like, irrespective of the features of the respective parcels of land.
Second, the subject land had previously been part of an aggregation of parcels which were used for grazing beef cattle. Consequently, the land had been valued under section 17(1). When the subject was separated from the aggregation and was sold to the appellant it was not exclusively used for purposes of farming and so was valued as a rural homesite. Consequently its unimproved value, determined on that basis, increased substantially from its value as determined under section 17(1).
Third, by comparison with the neighbouring blocks immediately to the north (including the Richardson land), which were not valued under section 17(1), the subject land is superior as a site having better views, larger area and a superior homesite.
Fourth, it was not appropriate to compare properties on a rate per hectare basis. Properties of this type are purchased on a value per site rather than a rate per hectare. In other words, purchasers look at all the features of a parcel in determining what they are willing to pay. Area is one feature. Although larger properties may attract higher prices, the value of the land will not be in direct proportion to the relative sizes of those parcels. I note that the Land Appeal Court has rejected submissions that valuations of residential land should be made on a value per unit area basis and has stated “It again is well established that when valuing homesites, then the best method of comparison is on a site to site basis” (Barnwell v Valuer-General (1989) 13 QLCR 13 at 18).
For those reasons also, the appeal should be dismissed.
Finally, I note that Mr Mitchell expressly sought a “farm” valuation for the subject land. He said that he purchased the land to be developed for farming land that this end is being achieved slowly. Mr Mitchell resides on the land, runs 10 head of cattle and is growing trees, including 7 mango trees. I did not understand him to be submitting that, as at 1 January 1995, the subject land satisfied the statutory criteria of section 17.
As mentioned earlier, land can be valued differently where it is “exclusively used for purposes of ... farming”. For this purpose, “farming” is defined to mean:“(a)the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, agriculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or
(b)any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock;
if the business or industry represents the dominant use of the land, and -
(c) has a significant and substantial commercial purpose or character; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis.”
The meaning of that definition and the operation of section 17 have been considered by the Land Court and the Land Appeal Court (see, for example, Whackett v Chief Executive, AV93-163, AV93-164, unreported decision dated 3 March 1995). There was no real suggestion that section 17 applied to the subject land at the relevant date. Whether it will ever apply is a matter to be decided from time to time having regard to the use of the subject land.
Order
The appeal is dismissed and the valuation of the Chief Executive in the amount of $68,000 is affirmed.
GJ NEATE
MEMBER
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