Olm v Department of Natural Resources and Water
[2008] QLC 4
•11 January 2008
LAND COURT OF QUEENSLAND
CITATION: Olm v Department of Natural Resources and Water [2008] QLC 0004 PARTIES: Kristine Ann Olm
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NOS: AV2005/0897
AV2006/0038
AV2006/0039PARTIES:
CR, NW, HM and CJ Olm
(appellants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2005/0894 PARTIES: Neville William Olm
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2005/0895 PARTIES: Charles Raymond Olm
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2005/0893 PARTIES: CR, NW, HJ and KA Olm
(appellants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2005/0892 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuations under the Valuation of Land Act 1944 DELIVERED ON: 11 January 2008 DELIVERED AT: Brisbane HEARD AT: Gatton MEMBER: Mr PA Smith ORDERS: 1. In AV2005/0895 the appeal is dismissed. The valuation as at 1 October 2004 is $160,000.
2. In AV2005/0893 the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
3. In AV2005/0892:
(a) the appeal is allowed.
(b) The appellants and the respondent shall file and serve their evidence and submissions as to the appropriate valuation of the amalgamation by 4:00pm Friday 29 February 2008.
(c) The parties are to file and serve evidence and submissions in response by 4:00pm Friday 14 March 2008.
(d) Should either party wish to be heard or lead oral evidence with respect to the question of the amalgamated valuation, such party is to advise the other party and the Court in writing by 4:00pm Friday 7 March 2008, and the other party is to respond to the first party and to the Court by 4:00pm Friday 14 March 2008.
(e) I grant liberty to apply to vary orders 3(b) to 3(d) on the giving of 3 days’ notice by either party.
4. In AV2005/0894 the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
5. In AV2005/0897, the appellants’ appeal is dismissed and the respondent’s application to increase the valuation to $134,000 is also dismissed. The valuation as at 1 October 2004 is affirmed at $97,000.
6. In AV2006/0038, the appeal is dismissed. The valuation as at 1 October 2004 is $134,000.
7. With respect to matter AV2006/0039, the appeal is dismissed. The valuation as at 1 October 2004 is $135,000.
CATCHWORDS: Valuation – unimproved value – factors in valuation –relativity – amalgamation of valuations – leading evidence to a higher value – inconsistent relativity – unfair valuation system – concessional primary production rate – disabilities – impact of South-East Queensland Regional Plan – impact of drought – dominant use of the land – overturning the exercise of discretion – close proximity by district standards – errors made in the valuation process – task of the Land Court in hearing appeals under the VLA to determine the proper valuation of a block of land as at the relevant date – relativity between taxpayers – respondent fully aware of the problems in valuations that have arisen as a result of the actions of its contractors – piecemeal approach of only penalising those landholders who choose to exercise their right of appeal should not be accepted by this Court
Valuation of Land Act 1944
Judicial Review Act 1991APPEARANCES: Mrs KA Olm appeared in person for herself and the other appellants
Mr W Isdale, Crown Law Office for the respondent in each matter
Background
These matters involve seven appeals by the appellants against valuations by the respondent, pursuant to the Valuation of Land Act 1944 (VLA).
When the matters first came on for hearing, there were in fact eleven separate appeals by the appellants. However, during the course of the hearing, the parties reached consensus on four of the matters, leaving the remaining seven matters requiring determination by the Court.
Although there are separate parcels of land involved in these matters under differing ownership, the appeals were all heard together and evidence in one appeal was taken as evidence in each other appeal. This course was adopted by both the appellants and the respondent.
Although the ownership of each property varies, all properties fall collectively under ownership of what I will loosely refer to as the Olm family group. Apart from an issue relating to amalgamation of properties which is relevant for matter AV2005/0892, the question of differing ownership is of no consequence.
Throughout the hearing and in the written material provided to the Court, the appellants have referred to various properties by names used within their family group, such as “Gramps”, “Nats” and “Fathers”. The respondent’s valuer, Mr O’Connor, has grouped the seven appeals under three separate valuation reports. Mr O’Connor’s groupings are as follows:
Valuation Report – Exhibit 31 Appeal Nos. AV2005/0893 and AV2005/0895
Real property descriptions Lot 215 on CH311758 and Lots 1 and 2 on RP32722
Valuation Report – Exhibit 32 Appeal No. AV2005/0892
Real property descriptions Lot 313 on CC1720 and Lots 254 – 256 on CH312133
Valuation Report – Exhibit 33 Appeal Nos. AV2005/0894, AV2005/0897, AV2006/0038 and AV2006/0039
Real property descriptions Lot 157 on CC1831, Lot 2 on RP846018, Lot A on AP13497: PO230020 (a Permit to Occupy for a bore located on the Upper Tent Hill School Lane to the west) and Lot 2 on RP846018, and Lot 2 on RP846018I am content to adopt Mr O’Connor’s groupings for the purpose of my decision in each of these matters. For ease of reference, I will refer to the two appeals as set out in the Valuation Report - Exhibit 31 as the “Kleidons Road appeals”, the appeal set out in the Valuation Report - Exhibit 32 as the “Grantham appeal” and the four appeals set out in the Valuation Report - Exhibit 33 as the “Ropeley appeals”.
Background – Kleidons Road appeals
The Kleidons Road appeals relate to two parcels of land (real property descriptions set out above) containing areas of 74.75ha and 64.63ha respectively. The properties were valued as at 1 October 2004 in the sums of $155,000 and $160,000 respectively, and the appellants contend for values of $109,103 and 108,901.
The respondent’s valuer has described the two Kleidons Road properties, respectively, in the following way:
“(a) The property is situated about 18 kilometres south of Gatton on the bitumen sealed and formed gravel Kleidons Road. Access is considered good and it adjoins (b) on its western side.
(b) The property is situated about 18 kilometres south of Gatton fronted by the formed gravel Steinmullers Road on the north and west sides and formed gravel Kleidons Road along the southern boundary. Access is considered good and it adjoins (a) on its eastern side.
…
The subject is set within a rural district, where in the past; because of the natural fertility of the scrub soils and adequate rainfall, much of the land was used for dairying. The dairying industry has since declined, therefore a limited number of viable farms remain and great deal of the land in the area is used for rural residential and smaller grazing and mixed farming operations.
(a) The subject land comprises mainly easy to moderate and some steeper sloping sandstone scrub grazing with a forest ridge and flat intrusion extending from the central eastern section to the north western corner. The land has been extensively cleared for grazing purposes and the property has no ‘Endangered’ remnant vegetation in terms of the Vegetation Management Act.
(b) The subject land comprises mainly easy to moderate and some steeper sloping sandstone scrub grazing with a forest ridge and flat intrusion extending from the central eastern section to the north eastern corner. There is less forest intrusion in (b) than (a). The land has been extensively cleared for grazing purposes and the property has no ‘Endangered’ remnant vegetation in terms of the Vegetation Management Act.…
Dwindling underground and surface water supplies have been apparent for a number of years prior to and since the valuation date. Sales have been affected by this phenomenon as well.
…
(a), (b), … Power, phone and a mail service are available to the property. Primary school facilities are available at Ropeley and a bus service is provided for secondary school students to Gatton.
(a), (b), … The land is designated under the Gatton Shire Council’s Town Plan, originally gazetted in 2000, as ‘Rural’. Properties (a), (b) … are also designated as ‘Rural General’ on the new proposed Town Plan … . The dominant use of the land is mixed farming and/or grazing and rural living.
There is no further potential for subdivision under both the old and new designations.”
As a general guide, I accept the description of the land set out above as provided by the respondent.
Background – Grantham land
The respondent’s valuation report, Exhibit 32, describes the Grantham land in the following way:
“The property is situated about 5 kilometres east of Grantham just off the bitumen sealed Wells Road or from the south via the formed earth McLucas road. A private arrangement between the appellant and the adjoining owner to the east allows access off Wells Road over about 30 metres of farming land. Access is considered reasonable.
The subject is set within a mainly agricultural rural district where, in past times, much of the surrounding marginal land was suitable for dairying and mixed farming. The dairying industry has since declined, and so agricultural farms remain and a great deal of the fringe land in the area is used for rural residential and smaller grazing and mixed farming operations.
The subject land comprises about 14 hectares of good to medium quality mainly level alluvial arable lands originally comprising mainly heavy blue gum. The alluvial flat is intersected by Ma Ma Creek and joins Lockyer Creek which forms the northern boundary of the property. The Ma Ma and Lockyer Creek formations comprise about 6 hectares of ‘Endangered Sub Dominant’ creek bank and bed. The western severed arable area (about 8 hectares) is of lighter quality than the eastern side (about 6 hectares) which is good quality arable irrigable land. The balance area comprises a small wet swampy flat in the centre surrounded by an easy sloping mostly cleared light forest ridge. The ridge comprises light sandstone base soils timbered with spotted gum, wattle, ironbark, Moreton Bay Ash and oak. A vegetable packing shed is located at the northern end of the parcel adjacent to the bitumened Wells Road.
Dwindling underground and surface water supplies have been apparent for a number of years prior to and since the valuation date. Sales have been affected by this phenomenon as well.
Aerial photo images attached depict the land.
Power, phone and a mail service are available to the property. Primary school facilities are available at Grantham and a bus service is provided for secondary school students to Gatton.
The land is designated under the Gatton Shire Council’s Town Plan, originally gazetted in 2000, as ‘Rural’. … The dominant use of the land is irrigated agriculture of small crops and limited grazing. There is no further potential for subdivision.”
Again, as a general guide, I accept the description of the land set out above as provided by the respondent.
Background – Ropeley properties
As indicated above, there are four distinct appeals relating to the land that I have referred to as Ropeley lands. The real property descriptions of each property under appeal are set out earlier in this decision. The respondent’s valuer, in his report, Exhibit 33, describes each parcel of land at Ropeley, respectively, as follows:
“(a) … The properties are situated about 15 kilometres south of Gatton on the bitumen sealed Ropeley-Rockside Road adjoining Ropeley Primary School. Access is considered good.
(c), (d) and (e) The property is situated about 15 kilometres south of Gatton on the corner of the bitumen sealed Ingoldsby Road and Upper Tenthill School Lane. Access is considered good.
The subject is set within a rural district, where in the past; because of the natural fertility of the scrub soils and adequate rainfall, much of the land was used for dairying. The dairying industry has since declined, therefore a limited number of viable farms remain and great deal of the land in the area is used for rural residential and smaller grazing and mixed farming operations.
(a) The subject land comprises about 12 hectares of medium quality to heavy mainly level colluvial arable lands originally comprising mainly scrub timbers, with the balance area comprising easy sloping mainly cleared scrub grazing with forest influence. A house is located at the northern end of the parcel fronting the bitumen road.
…
(c), (d) and (e) The land comprises about 8 hectares of easy sloping and flat arable mainly colluvial scrub soils fronting Tenthill Creek and the balance land comprising some Tenthill Creek bank and a steeper section on the western Ingoldsby Road side influenced by breakaway gullies. A farm machinery shed is located along the Tenthill School Lane side.
All of these properties have varying degrees of natural moderately fertile soils suitable for production of quality improved and native pastures.
Dwindling underground and surface water supplies have been apparent for a number of years prior to and since the valuation date. Sales have been affected by this phenomenon as well.
…
(a), … (c), (d) and (e) Power, phone and a mail service are available to the property. Primary school facilities are available at Ropeley and a bus service is provided for secondary school students to Gatton.
(a), … (c), (d) and (e) The land is designated under the Gatton Shire Council’s Town Plan, originally gazetted in 2000, as ‘Rural’. … The dominant use of the land is mixed farming and/or grazing and rural living. There is n further potential for subdivision.”
As a general guide, I accept the description of the land set out above as provided by the respondent.
Grounds of Appeal
A complication in determining these appeals arises from the fact that the appellants have used common grounds of appeal for the two Kleidons Road appeals, the Grantham appeal and two of the Ropeley appeals, whilst for the remaining two Ropeley appeals, the appellants have used different grounds of appeal (although both of the remaining Ropeley grounds of appeal are identical). Given the nature of the appeals in these matters and, in particular, issues of impropriety which have been made against the respondent and its officers both in the grounds of appeal, at the hearing and in subsequent submissions, I consider it appropriate to detail the grounds of appeal in full. The grounds of appeal with respect to Kleidons Road, Grantham and two of the Ropeley appeals (AV2005/0894 and AV2005/0897) are as follows:
“Grounds of Appeal
1. We believe that the relativity of the value of our properties is inconsistent with the values of properties in the vicinity (same land area) which are used for the same purpose as our properties.
2. The values do not reflect a true unimproved value.
3. We believe the system used to value our property does not allow for a true and correct unimproved value to be established.
4. We believe the value the Department has arrived at has been based on a residential real estate value and not on its present use which is primary production agriculture.
5. We believe that there should be a concessional primary production rate applied to the unimproved values of our land used for genuine primary production purposes.
6. We believe that there has not been sufficient allowance made for the detrimental features and disabilities attaching to the land:
i) The impact on our farming lives of the South East Queensland Regional Plan.
ii) The impact on our farming lives of the Water Act 2000 and the Moreton Moratorium
iii) The impact on our farming lives of the worst drought in Queensland history:
(a) Loss of water
(b) Erosion
(c) Woody weed infestation
iv) The impact of having close residential neighbours – this situation limits our ability to carry out genuine farming agricultural activities:
(a) Complaints from people who move in to live residential lifestyles
(b) Use of chemicals and sprays
(c) Transport of farm equipment on roads
(d) Herding of animals on roads
(e) Hours of use of farm machinery and other farming activities
(f) Impediments to use of intensive animal production units”
The grounds of appeal with respect to the remaining Ropeley appeals, namely AV2006/0038 and AV2006/0039, are as follows:
“Grounds of Appeal
1. We believe that the relativity of the value of our properties is inconsistent with the values of properties in the vicinity (same land area) which are used for the same purpose as our properties.
2. The values do not reflect a true unimproved value.
3. The valuing system is discriminatory, lacks accountability to land owners, lacks freedom of information without great expense, and does not give land owners enough information to be able to understand and see why unimproved values have been established.
4. Preliminary conferences with Department of Natural Resources and Mines conducted on a “Without Prejudice” basis allow public servants to bully and insult land owners without fear of repercussions.
5. Unfair land comparisons have been used to establish land values.
6. Inconsistencies and irregularities exists which have resulted in inconsistent, unjust values being applied to land.
7. We believe the system used to value our property does not allow for a true unimproved value to be established.
8. We believe values have been based on a residential real estate value and not on its present use which is primary production agriculture.
9. We believe there should be a concessional primary production rate applied to the unimproved value of the land in South East Queensland which is used for genuine primary production purposes.
10. We believe that there has not been sufficient allowance made for the detrimental features and disabilities attaching to the land:
i. The impact on our farming land of the South East Queensland Regional Plan.
ii. The impact on our farming land of the Water Act 2000 and the Moreton Moratorium.
iii. The impact on our farming land of the worst drought in Queensland history such as loss of water, erosion and woody week and noxious weed infestation.
iv. The impact of having close residential neighbours which limits our ability to carry out agricultural activities.”
The hearing
The hearing was conducted in Gatton over two days, with the Court receiving considerable assistance from the parties by way of the provision of significant material both prior to and at the hearing, as well as a number of sets of submissions from each party following the hearing.
The appellants were all represented by Mrs Kristine Ann Olm at the hearing. Mrs Olm has no legal or valuation expertise. Mrs Olm gave evidence on behalf of all of the appellants at the hearing. The appellants also relied on the evidence of Mr Charles Raymond Olm.
The respondent was represented by Mr Isdale, an Executive Legal Consultant at Crown Law. The respondent called one witness, Mr Dan O’Connor, a registered valuer employed by the respondent.
Relevant legislative provisions
Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land. Relevantly, s.3(1) of the VLA says as follows:
“3.(1) For the purposes of this Act –
‘unimproved value’ of land means –(a)in relation to unimproved 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; and
(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.”
I note that the subject lands in these matters are improved. Accordingly, put simply, the task is to find the market value of the land on the assumption that none of the improvements are on the subject land. An assessment is then undertaken as to the highest and best use of that land.
As the President said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs [11] and [12]:
“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 the property. (See Griffith CJ at 432 and Isaacs J at 441).
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.’ ”
I respectfully agree with these observations.
Presumption of correctness of valuation
I now turn to section 33 of the VLA, which states as follows:
“33 Status of valuation
Any and every valuation, or alteration of the valuation, of any land made, or purporting to be 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.”This section was considered by the High Court in the case of Brisbane City Council v The Valuer-General for the State of Queensland 1977-78 140 CLR 41 where Justice Gibbs (as he then was) made the following observation at page 56:
“In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s. 13(7) is rebutted.”
It should be noted that s. 33 of the VLA is in essentially the same terms as what was then s. 13(7) of the Act.
Key Issues
When the grounds of appeal are distilled down, a number of key issues stand out. Save for one exception, the key issues are the same irrespective of which ground of appeal applies. The key issues are as follows:
· Inconsistent relativity
· Unfair valuation system which does not allow a true unimproved value to be arrived at
· Concessional primary production rate not applied
· Insufficient allowance made for disabilities attaching to the land.
As regards the last bullet point above, there are four main areas of complaint by the appellants relating to disabilities attaching to the land, namely:
·Impact of South-East Queensland Regional Plan
·Impact of the Water Act 2000 and the Moreton Moratorium
·Impact of drought
·Impact of close residential neighbours limiting the carrying out of genuine farming activities.
In addition to the grounds of appeal listed above, the Ropeley matters AV2006/0038 and AV2006/0039 also make out a ground of appeal that, in effect, the respondent and its officers have acted unfairly and improperly in its dealings with the appellants, including allegations of bullying and insulting landowners.
It should also be noted that, with respect to the appeal in AV2005/0892, the appellants have contended in their evidence relating to their grounds of appeal of improper valuation processes and application. The appellants particularly contend that the property the subject of that appeal should be subject to an amalgamated valuation with other properties, in common ownership, which the appellants say are used as part of the one farming activity.
In addition to the key issues of the appellants’ case with respect to each of the appeals, there is a further key issue which flows from the case of the respondent with respect to one of the Ropeley valuations. The issue is that the respondent in AV2005/0897 has led evidence to a higher value.
Valuation evidence
Respondent’s sales evidence
As already indicated, the only expert valuation evidence in this matter was provided by Mr O’Connor, a registered valuer with the respondent. Mr O’Connor’s valuation reports for these appeals are Exhibits 31, 32 and 33. Mr O’Connor’s sales evidence with respect to the appeals can be conveniently reduced to tabular form.
Kleidons Road appeals
Sales Area
HaDate of Sale Sale Price Zoning Analysed U/Value Applied U/Value
1/10/2004Comparison 1
Left hand Branch Road, Mt Sylvia144
22/6/2004
$350,000
Rural
$176,990
$165,000
Significantly larger and inferior to the subjects
2
Weiers Road, Ropeley109.106
26/11/2004
$440,000
Rural
$212,050
$212,500
Overall superior to the subject properties
3
Kleidons Road, Ropeley64.58
19/1/2005
$300,000
Rural
$200,240
$152,500
Slightly inferior
4
1611 Mt Sylvia Road, Mt Syliva32.85
12/11/2004
$500,000
Rural
$205,700
$182,500
Superior
Grantham appeal
Sales Area
HaDate of Sale Sale Price Zoning Analysed U/Value Applied U/Value
1/10/2004Comparison 1
476 Mt Sylvia Rd, Upper Tenthill24.46
2/6/2004
$500,000
Rural
$179,580
$167,500
Superior
2
Cnr Carpendale & Mahons Roads, Carpendale12.545
5/7/2004
$163,000
Rural
$133,900
$100,000
on issue, reviewed to $120,000Superior
3
Flagstone Creek Road, Lilydale16.923
18/3/2004
$330,000
Rural
$161,990
$167,500
Considerably superior
4
Gatton-Helidon Road, Grantham34.205
23/4/2005
$500,000
Rural
$224,990
$222,500
Superior
5
Gatton-Helidon Road, Grantham59
22/4/2005
$1,250,000
Rural
$467,740
Notional
$300,000Superior
Ropeley appeals
Sales Area
HaDate of Sale Sale Price Zoning Analysed U/Value Applied U/Value
1/10/2004Comparison 1
476 Mt Sylvia Road, Upper Tenthill24.46
2/6/2004
$500,000
Rural
$179,580
$167,500
Superior to each of the subject properties
2
Cnr Carpendale & Mahons Roads, Carpendale12.545
5/7/2004
$163,000
Rural
$133,900
$100,000 on issue, reviewed to $120,000
Superior to AV2005/0894
Inferior to remaining Ropeley properties under appeal3
246 Ropeley-Rockside Road, Ropeley4.002
10/7/2004
$100,000
Rural
$83,000
$78,000
Inferior to each appeal property
4
1611 Mt Sylvia Road, Mt Sylvia32.85
12/11/2004
$500,000
Rural
$205,700
$182,500
Superior
5
Hogers Road, Ropeley16.42
8/3/2006
$195,000
Rural
$164,890
$110,000
Superior to AV2005/0894
Inferior to remaining Ropeley appeal properties
Mr O’Connor presented his evidence in a clear, coherent manner. It is apparent that he has a high level of expertise as a valuer. I also note that his valuation evidence included property sold by the appellants.
Appellants’ sales evidence
The appellants’ evidence in each of the appeals as to relevant sales is to be found principally in Exhibits 25 and 26, which are property data solutions sales search reports. I have carefully considered the material provided by the appellants in Exhibits 25 and 26 and I have also carefully considered all of the evidence produced by the appellants in support of their contentions regarding the appropriate value of the properties based on sale evidence.
Analysing sales evidence and applying such evidence to subject properties
Faced with a consideration of extensive valuation evidence by the respondent which was subject to lengthy and rigorous cross-examination, in circumstances where the appellants, although neither legally qualified nor expert valuers, have themselves provided evidence of comparative sales, I draw upon the comments made by Land Court Member Dr Divett in the case of Blair v Department of Natural Resources, Mines and Energy[1] where he said, at paragraph [49]:
[1] [2004] QLC 0046.
“[49]In seeking to understand the process of valuation itself, I am reminded that it is not merely a mathematical process. That was clarified in the matter of Chief Executive, Department of Natural Resources v Radlett Enterprises Pty Ltd (1997-98) 18 QLCR 397, where the Land Appeal Court said at 404:
‘As Mason J said in ‘Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd’ (1980-81) 146 CLR 336 at page 381:
‘Valuation is a matter of estimation, not a precise mathematical calculation.’
Valuation is intended to be an interpretation of a market, which in itself is imprecise, even when it is created by vendors and purchasers who satisfy the often quoted qualifications necessary to meet the text explained in Spencer v The Commonwealth of Australia (1907) 5 CLR 418’
[50]In the matter of In Spencer v The Commonwealth of Australia (supra) the criteria for establishing market value land was clarified by the High Court, where Isaacs J (later CJ) said at 441:
‘To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property’ ”
Dr Divett also made the following observations in Blair:[2]
“In adopting comparisons with sales of vacant or lightly improved lands, Mr Horne has followed precedent long held by courts at all levels. That was directed in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, at 46; R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and also in PH Clough v Valuer-General (1981-82) 8 QLCR 70, where the Land Appeal Court said clearly at 76:
‘It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analysing the value of improvements.’ ”
[2] At paragraph [45].
I also note and rely upon the comments of Justice Dixon (as he then was), in the High Court case of Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Ltd[3] where he said, at pages 373 – 374:
“ … there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”
[3] [1947] 74 CLR 358.
In viewing the totality of the sales evidence, and noting in particular the expertise of Mr O’Connor and the extent of cross-examination which he underwent, I accept the sales evidence of Mr O’Connor over that presented by the appellants.
The conclusions I have reached in the preceding paragraph are consistent with the written submissions made by Mr Isdale for the respondent. I particularly note and follow the authorities referred to by Mr Isdale in his written submissions as follows:
“ … In Appeals (4) by J.L. and I. Qualischefski and Others against determination by Valuer-General – Shire of Laidley, the Court of Appeal, 31 July 1979, 6 QLCR 167 in its judgement 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 to 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 valuation made by the Valuer-General in respect of comparable properties.’
The only expert evidence was that of Mr Dan O’Connor. Mr O’Connor relied on sales evidence to ascertain values.
In an Appeal by N.R. and P.G. Tow against determination of Valuer-General – Redland Shire, 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 Dan O’Connor in applying sales evidence was consistent with the decision of the Land Appeal Court in Appeals against Annual Valuation – Hans and Else Grahn v. Valuer-General – City of Redcliffe (AV90-472, 473) 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 as 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).’ ”
Impact of findings on sales evidence on grounds of appeal
In normal circumstances, an acceptance of the valuation evidence by one party over that of another would be conclusive of the appeal or appeals. However, that is not necessarily the case in this matter. Firstly, there are grounds of appeal additional to those simply of valuation evidence. Some of those grounds of appeal may be easily and quickly dealt with, whilst others require more detailed analysis. Additionally, there is the issue for the Grantham appeal of the question as to whether or not that property should be amalgamated with other properties.
A further complication arises with respect to the Ropeley appeal in which the respondent has led evidence to a higher figure. It follows, therefore, as contended by Mr Isdale, that the presumption of correctness is not applicable with respect to that Ropeley valuation, and other evidence particular to this case must be taken into account by the Court in determining the proper value to be applied as at the valuation date for AV2005/0892. In this regard, there are key issues flowing from the appellants’ relativity argument which must be taken into account.
The concessional primary production issue
As already pointed out, the appellants object to the process of valuation applied by the respondent in each of the appeals partly on the basis that the respondent has arrived at a value based on a residential real estate value for the subject properties and not on their present use which in each case is primary production agriculture. Further, the appellants contend that a concessional primary production rate should be applied to the unimproved value of their land used for genuine primary production purposes.
When one takes a close look at the valuation reports provided by Mr O’Connor for this appeal, it is immediately apparent that Mr O’Connor has assessed the unimproved value of the subject lands in each case using the provisions of s.17 of the VLA. The effect of this is that Mr O’Connor has accepted that each of the subject properties should be valued under s.17 as rural land used for farming purposes with an as of right place to live inherent in that value. Of course, amalgamated properties provide even greater assistance to landholders. Save for the one question of amalgamation under appeal, Mr O’Connor has no option than to follow the legislative provisions of s.17 of the VLA.
I had the occasion to carefully consider the provisions of s.17 of the VLA in the case of Mreef Project Company No. 15 Pty Ltd v Department of Natural Resources and Water.[4] In the Mreef case, I said, at paragraphs [26] and [27]:
[4] [2007] QLC 0013.
“[26]As already indicated the key question to be determined in this appeal is whether or not the concession allowed by s.17 of the VLA applies. Section 17 is in the following terms:
‘17 Exclusive use for single dwelling house or farming
(1)In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in value because the land has been subdivided by survey or 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.
(2)In subsection (1)-
farm improvements includes appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business but does not include a dwelling or car accommodation.
farming means-
(a)the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, 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 substantial commercial purpose or character by –
(i)having an average gross annual return, calculated over a 3 year period, of at least $5000; or
(ii)if the business is the establishment and harvesting of native or non-native forests–having an average anticipated gross annual return, calculated over the period from establishment to harvesting, that is usual for the particular species of tree, of at least $5000; or
(iii)if the business is the maintenance and harvesting of native forests-having an average anticipated gross annual return, calculated over the period from the start of maintenance to harvesting of the particular species of tree, of at least $5000; or
(iv)having -
(A)a minimum value of farm improvements or plantings of forest or orchard trees of $50000; and
(B)the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard trees; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis.
(3)For subsection (1), land is not exclusively used for purposes of a single dwelling house or farming if-
(a)the land is divided into individual lots; and
(b)there is evidence, including advertising or actual sales, of intention to sell the individual lots.
[27]In the case of Wild v Department of Natural Resources & Mines[5] Land Court Member Dr Divett provided a useful summary of the legislative context of s.17 at paragraphs 50 – 53 as follows:
[5] [2004] QLC 104.
‘[50] Now the history over recent years in respect of the application of s.17 of the Act is a matter worth reporting in the interests of the appellant. Before 1971 there was no protection of land used for a primary production purpose. In 1971 the Valuation of Land Act 1944 was amended to include the provision under s.11(1)(vii) as it then was, to include concessions for "farming" purposes. The purpose of those amendments was expressed by the then Minister in the Parliament on 1 December 1971, when introducing the Bill he said "the provision regarding primary production has been inserted to ensure that a primary producer caught up in urban development is not valued on the potential until he ceases using the land for primary production. This will enable a primary producer to carry on economically for as long as possible,". That history was set out by the Land Appeal Court in its decision in Chief Executive, Department of Lands v KW Whackett (1994-95) 15 QLCR 311, at 318.
[51] In the Whackett decision the Land Appeal Court went on to detail the history of subsequent decisions of the Courts in respect of s.17, until further amendments of the Act under the Lands Legislation Amendment Act 1991, which recasts the terms of the exceptions now included in s.17(1) and (2) of the Act at that time. Those amendments in 1991 included, among others, the requirements of the use of the land to be a "significant and substantial purpose or character". As noted in GT and BT Taylor v Chief Executive, Department of Lands (1992-93) 14 QLCR 477, the Land Appeal Court found at 489:
‘The purpose of this amendment would seem to be to avoid the effect of the decision of the Land Appeal Court in Crawford's case by making more stringent the requirements for land to qualify for valuation under the protected provisions as being used for purposes of farming.’
That was later examined in GR and M McGuire v Department of Natural Resources (1997-98) 17 QLCR 123, at 138.
[52] Following those 1991 amendments, the judicial interpretation of the new conditions of s.17(2) resulted in many "genuine" farmers failing to satisfy the higher test then required. To overcome what was seen by the Government as an unanticipated outcome of their 1991 amendments, the Valuation of Land Amendment Act of 2000, Act 31, clause 5, introduced a further amendment of s.17(2), as now described in paragraph [40]. Those amendments were designed to provide some measurable criteria for eligibility, and to enable "the genuine attempt by an owner to establish a farm business including a plantation and native timber forestry or an orchard may also qualify. This type of venture is often excluded under the current eligibility criteria as no actual profit is being realized at the time of the valuation." (Queensland Acts (2000), Volume 2. Explanatory Notes, p.1212).
[53] Since those more recent amendments, the criteria now required for s.17(2) status has resulted in a greater variety of "farmers" now receiving concessional valuations….’ ”
It is abundantly clear from the above that the appellants in each case have received the benefit of the concession provided by s.17 of the VLA. In my view, Mr O’Connor has quite properly applied the concession in each of these matters and, in effect, in this regard the appellants have already received the benefit that they complain of having not received, save for the one property for which they seek amalgamation.
Impact of disabilities on the subject blocks
The appellants’ grounds of appeal relating to disabilities with respect to each of the blocks of land can also be concisely dealt with. As indicated previously, the evidence of Mr O’Connor was subject to extensive cross-examination. I am satisfied by the answers that Mr O’Connor gave in cross-examination that he was aware of each of the disabilities referred to by the appellants and specifically took them into account in reaching his valuation in each matter as set out in his various valuation reports.
One point should be clearly made here. The appellants may feel that in finding that Mr O’Connor has taken account of the disabilities of each block, the Court is in effect rejecting their grounds of appeal that the disabilities that they complain of are real and have an impact on the respective values of the properties. Nothing could be further from the truth. For instance, it is beyond doubt that each of the properties has been subject to severe drought conditions and a significant loss of access to water. Furthermore, each of the properties has been impacted by the South-East Queensland Regional Plan. That said however I also fully accept that Mr O’Connor has also been cognisant of all of the disabilities referred to by the appellants and has taken them fully into account in reaching his determination of value. Moreover, it is also my view that the sales referred to by Mr O’Connor are open market sales and that those sales also reflect the value that the open market is prepared to put on land comparable to the subject land even given the drought and other disabilities generally referred to by the appellants.
Specific reference needs to be made of one disability referred to by the appellants on one of the properties, that being the question of restricted access.
The appellants have made the good point with respect to AV2005/0892, being the Grantham land, that access to the land is by way of private arrangement between the appellants and the adjoining owner to the east which allows access off Wells Road over about 30 metres of the neighbour’s adjoining farmland.
Mr Isdale has referred me to the case of Logform Industries Pty Ltd v Chief Executive, Department of Lands.[6] In Logform, Mr Trickett made valuable observations regarding s.3(4) of the VLA, which was previously known as s.12(1A) of the VLA. In Logform, Mr Trickett said:[7]
[6] 15 QLCR 141.
[7] At 147-148.
“ ‘The legislative and judicial history of these provisions were explained by Carter J in Stubberfield v The Valuer-General (1988-89) 12 QLCR 328. At page 335 he said:-
‘Section 12(1A) should be construed to mean that in assessing unimproved value the assumption may be made that the land may be lawfully used and continue to be lawfully used for the purpose for which it was in fact being used at the valuation date and the improvements thereon may continue to be used or may be made as required to enable the land to be continued to be so used.’
In that case Carter J pointed out that section 12(1A) relates to the continued use of land and the continued use of improvements on land for the purpose of non-conforming users under a town planning scheme. It is usually in that context that this Court and the Land Appeal Court have applied this subsection. (For example, see Estate Leahy v The Valuer-General (1977) 4 QLCR 445 and Muir v The Valuer-General (1977) 4 QLCR 81). However, it has not been confined to such non-conforming uses and has been extended to analogous situations when land was controlled by the Beach Protection Authority (Ellis v The Valuer-General V80-13, 11 July 1980), flood prone land (Edwards v The Valuer-General V79-703, 31 July 1980) and undersized allotments (R.G.S. Properties v The Valuer-General V81-108, 10 March 1982). In each of those cases improved land could continue to be used for purposes which would be prohibited if the land was unimproved.’ ”
I agree with the submissions by Mr Isdale that the access issue for the Grantham land falls within the category of “analogous situations” referred to by Mr Trickett in Logform. Accordingly, it is appropriate to value the Grantham land with the present access being used. Of course, should circumstances change in the future and the current access no longer be available, then that would be an appropriate fact to take into account at a future date. However, it is not appropriate for the Court to take into account the mere possibility that that situation may occur. The Court must deal with the situation with respect to the land as it existed at the date of valuation, that being 1 October 2004, and as at that date appropriate access to the Grantham land was in existence.
Amalgamation
The appellants assert that the Grantham property should be amalgamated for valuation purposes with three other properties which are already amalgamated, those properties being Mantervilles (80 acres), ODeas (60 acres) and The 20 Acres. The amalgamated properties and the Grantham proper ty are all in the ownership of CR, HJ, KA and NW Olm.
The question of amalgamation of various parcels of land into one valuation is set out in s.34 of the VLA. Section 34(1)(b) is particularly relevant and provides as follows:
“34 Lands to be included in 1 valuation
(1) Unless the chief executive otherwise directs, there shall be included in 1 valuation—
…
(b) several parcels of land in the same area which do not adjoin but are worked as 1 holding and used exclusively for the purposes of farming, and are owned by the same person and which, if let, are all let to 1 person.”
Importantly, the definition section of the VLA, s.2, defines “area” as meaning the area of a local government (other than an Aboriginal or Torres Strait Islander local government).
To assist its officers with determining whether or not properties should be amalgamated, the respondent has produced a document titled “Amalgamation of Non-Adjoining Parcels Owned by the Same Person”. Exhibit 20 in these proceedings is version 3 of the respondent’s document.
Page 4 of Exhibit 20 sets out the procedure to be followed by officers of the respondent when considering whether or not properties should be amalgamated. Relevantly, the procedure sets out as follows:
“Generally parcels of land which do not adjoin but which are owned by the same person, are worked as one holding used exclusively for the purpose of farming and are situated in the same Local Government area are to be included in the one valuation. The Chief Executive or his delegate may however, direct that lands not be amalgamated under those situations set out later in this procedure.
…
The following are broad guidelines to be followed by the VSP in determining which of those non-adjoining parcels used for the purpose of farming should be amalgamated.
Lands must be in the same vicinity. Strictly this means they must be in close proximity by district standards. It is not intended that valuations remote from one another be amalgamated.
The term ‘worked as 1 holding’ means used as one property. A parcel used for dairying and another used for cane growing would not normally be amalgamated as one valuation unless there is real nexus between the two enterprises. However, land used for grazing and land used predominantly for grain growing but with some grazing, could be amalgamated. Other matters which may be considered are, is one set of books used for the combined holding, or is there any facility or feature on one property which makes the others dependent on it?
The business must be a single one but this could well include more than one industry. Each case must be dealt with on its individual merits; and one test would be ‘Are the parcels capable of being worked with one set of plant without under hardship or travel’ ”
As regards the Grantham land, the respondent has directed, pursuant to s.34(1) of the VLA, that such block not be amalgamated with Mantervilles, ODeas and The 20 Acres as requested by the appellants. Mr O’Connor has provided a very useful summary of the respondent’s position in this regard in his response document to the appellants’ statement,[8] where he states as follows:
“The issue of amalgamation in terms of Section 34 of the Valuation of Land Act 1944 (VOLA)
Response: The respondent valuer and Chief Executive’s delegate have confirmed the decision at objection not to amalgamate land at Grantham and Ropeley held in common ownership. The Grantham land is not in close proximity by district standards. The dominant use is agricultural purposes, while grazing with some crop assistance is the dominant use of the land at Ropeley.”
[8] Exhibit 34.
Mr O’Connor clarified his position further during questioning by Mr Isdale at the hearing as follows:[9]
“Specifically, what are the reasons why that was not amalgamated with any other property but was subject to a separate valuation?-- It’s not in the same vicinity and it’s not in close proximity. One’s at Grantham, one’s at Laidley and that’s not close proximity by district standards.
About how far apart are they?-- By road I’m not sure – 10 kilometres? 9, 11 kilometres?
You’ve read the material from the appellant and you’ve probably seen, have you, a letter from the solicitor and the bank manager?-- Yes, I’ve seen those. They are urging that they conform with certain guidelines such as work as one holding. I don’t dispute that. I did point to the fact that the Grantham property was more so used for cropping than for grazing, but there is a combined – the appellants have shifted to a combined grazing and cropping use, but it’s my main submission that paragraph 5, they’re still not in close proximity by district standards.
Your response was in Exhibit 34 and you referred to what you say is lack of close proximity by district standards?-- That’s correct.
And the dominant use is agricultural purposes while grazing with some crop assistance is the dominant use of the land at Ropeley. What’s crop assistance? Do you mean crop assistance for grazing purposes?-- For grazing purposes.
So as far as you’re aware, were any other crops grown at the relevant time on the Ropeley property?-- I’m not sure how they used it. It may be Mr Olm’s intention to use it for small cropping at some stage, but, as I understood it, the water situation was difficult there. The actual small cropping mainly occurred at Grantham.”
[9] Transcript p.104.
The appellants have provided detailed evidence of the facts which in their opinion support an amalgamation of Grantham with Mantervilles, ODeas and The 20 Acres. In her statement,[10] Mrs Olm says as follows:
[10] Exhibit 12.
“I believe that our lands owned by the same people fulfil the amalgamation criteria as outlined in the NR&M Document on Amalgamation of Lands, (1 document) and I have prepared a list of how we fulfil the criteria.
Our land is:
ØIn the same vicinity – lands are not remote from one another
ØProperties are all in Gatton Shire
ØWe work as one primary production holding i.e. one property – beef cattle and vegetable production
ØOne set of books. We are one business entity trading as H M OLM & SONS.
ØOne lot of machinery is used for all properties and is driven between properties on regular basis
ØPartners and employee travel between properties on a daily basis
ØNo undue hardship or travel is experienced to work these properties as one enterprise
ØFeed is grown on the Grantham and Tenthill property for the cattle on the Ropeley properties
ØThere is one DPI Property ID for all properties
ØCattle born on Ropeley properties are fed out at Grantham and Tenthill properties
ØCattle are walked or road transport with no undue hardship between properties
ØHay is stored on Grantham, Tenthill and Ropeley properties for cattle feed
ØLand is all mortgaged for the business entity
ØOne cattle brand is used for all animals on the properties
I have also obtained letters from our Solicitor (Mr Davidson) and banking organisation (NAB) who have acted as our legal and financial advisors for years. Certified copies of the letters (2) are attached. Certified copies of Property Identification Code issued by DPI and certified copies of Rate Notices are attached. (4 documents)
Mant, ODeas, 20 acres have been amalgamated a long time ago but we ask that x creek and Grantham properties be included in the amalgamation as they meet the criteria as listed above.
Mant, 60 acres, 20 acres is 65.74 ha, plus x creek 16.42 ha, plus Grantham 61.26 ha. This would then involve a land parcel of 143.42 ha.”
The appellants also tendered letters in support of their contention from Davidson and Sullivan, Solicitors[11] and from the National Bank, Gatton.[12] Those letters repeat and confirm each of the bullet points as set out by Mrs Olm in her statement. I note in particular that the letter from Davidson and Sullivan, Solicitors, confirms that that firm has acted as the solicitor for H.M. Olm and Sons since prior to 1975 and that, during that time, all the land owned by the partners has been worked as one business entity, with transfer of machinery, plant and equipment and personnel on a daily basis between all the land parcels. Likewise, the letter from the branch manager of the National Bank, Gatton, confirms that the partnership of H.M. Olm and Sons has been a valued customer of the bank since approximately 1940. The letter also confirms that during that time all the land owned by the partners has been worked as one business entity. The National Bank letter then continues in like terms to the Davidson and Sullivan, Solicitors, letter.
[11] Exhibit 21.
[12] Exhibit 22.
The appellants also rely on oral testimony from Mr Olm at the hearing. During examination-in-chief, Mr Olm had this to say:
“We’ve spoken about wanting our lands that are in the same name to be amalgamated and we’ve outlined a list of reasons why we feel we have fulfilled criteria for that. I was wondering if you would like to enlarge on that as far as your experience goes in support of this?-- Our family came to the Lockyer Valley in 1884. We purchased some land. My great grandfather and my grandfather purchased some land and started farming in that area. As the time went on, the enterprise had expanded. In the year 1942, to my knowledge the property at Grantham was purchased and Mum and Dad used to ride the horses over there almost on a daily basis working the land. The dry stock from the dairying was taken over there and was put there to breed and when they were ready to calve were taken back. These cattle were driven either by walking behind them or with horses and the farming enterprise continued on. From there up until this day, we’ve been working that piece of land for 64 years. It’s been an integral part of our whole farming set-up. We use it over there for – it has been used and still being used for cattle and vegetable production. We, over the years, found that while it may have been difficult for my Mum and Dad and my grandfather to go from Ropeley to Grantham aggregation, I believe in the year 2006 when we can fly to the moon and cross the world in a matter of hours, we find as the years go by it’s becoming more easier and workable. The distance is certainly no hardship. One business complements the other. I do have to state here that HM Olm & Sons is the partnership that we run. We’re not two separate companies running cattle on one side and vegetable production on the other. One interchanges with the other and while it’s been suggested that we’ve got mainly agriculture at Grantham and a few cattle and a lot of cattle at Ropeley and a bit of agriculture, this imbalance has happened because of the drought. We certainly introduced crops and it was a big part of our crop production at Ropeley and, of course, we know with the drought that we can’t run as many cattle over at Grantham as we would have. We used to strip-graze with electric fences and we grew crops on the ground there as well, so it’s been an integral part of our whole set-up and I believe if a working relationship or a practice has been carried on for 64 years and we actually haven’t gone backwards and haven’t been deterred from travelling from farm to farm, I think it’s the working relationship that can really hold. It’s been held in good stead. I believe we’ve fulfilled all the criteria for amalgamation with the Grantham and the Ropeley deeds. This amalgamation would greatly assist us in the ability to continue farming.
Would you say – I’m going to read out a statement to you, if I can. It says, ‘The Grantham land is not in close proximity by district standards.’ Would you agree or disagree with this statement? Do you want me to say it again? Mr Isdale, in his response to us, just to make you familiar with where I’m quoting from, said, ‘The Grantham land is not in close proximity by district standards.’ Do you agree with this or disagree? -- I disagree.
I’m going to read out another statement that Mr Isdale gave us in his response: ‘The dominant use is agricultural use.’ I think he’s saying the dominant use of Grantham is agricultural purposes while grazing with some crop assistance is the dominant use of the land at Ropeley. Would you agree or disagree?-- At the moment, because of the drought, I think that assessment would be probably right, but in normal times that imbalance is not there.
So you are saying, then, that when normal seasons return, you will return to an interchangeable use of these lands as you have in the past, which has been using all the properties as I have stated in the statement where we have cattle at Ropeley, cattle on the Tenthill properties, cattle at Grantham property and crops at Ropeley properties as well as crops at Grantham in an interchangeable, sustainable level to support the business?-- Yes.
You would. And you’re saying that the appearance of what it is now is because of the drought?-- Exactly.
Has the drought affected you in such a way that there’s a water compromise situation? What is occurring over in the Ropeley area which is stopping you from cropping?-- The irrigation side of Ropeley area is mainly surface water out of a big dam and, if it doesn’t rain, we can’t plant crops there.
And has that dam got water in it?-- No.
So you’re saying that when you crop at Ropeley you get your water from that big dam which is now empty?-- Yes.
Have you got cattle on Grantham at the moment?-- Yes.
Have you got any other evidence on Grantham that shows that cattle are there such as yards or loading ramps or anything like that?-- We’ve got a loading ramp there for watering stock. Because everything was dry, we had to pump water for them.
Pumping water for the cattle?-- Yes. We’ve had portable yards over there for which we had access from the Gatton Shire Council.
For loading and unloading?-- Yes; which we take away and bring back as we need them.
And at Grantham have you got fences such as electric fencing or anything to show that you have cattle there and sustain cattle there in any way?-- We’ve got cattle there in a fenced area and we’ve got electric fences that are moved from time to time as we grow crops. At the moment I’ve got it around an area that I haven’t got permanently fenced in. I’ve got an electric fence around that area, around that swamp.”
The leading authority with respect to the interpretation of s.34(1)(b) is that of Beanland v The Valuer-General.[13] Although lengthy, I can do no better than repeat and rely upon the decision of the majority of the Land Appeal Court in Beanland in their evaluation of the relevant law as follows:
[13] 1991/13 QLCR 113.
“The tests stated in the Land Appeal Court in Beanland (1986) 11 Q.L.C.R. 131, were expressed to be in reliance upon House v. The King (1936) 55 C.L.R. 499. With respect it would not seem that House v. The King is the appropriate point of reference, and we are unable to accept the suggestion that there is a legal requirement that the discretion ‘not be exercised … reasonably’. That states too widely the ambit of review available to this Court. We think it more pertinent to refer to the tests stated by the High Court in Avon Downs Pty Ld v. F.C.T. (1949) 78 C.L.R. 353, 360 and Minister for Aboriginal Affairs v. Peko-Wallsend Ltd (1985-1986) 162 C.L.R. 24, 39-42. These tests concern review by the Courts of exercises of power by statutory officials. House v. The King was of course a statement of principles upon which an Appeal Court reviews the exercise of a discretion by another tribunal within the judicial process. We are here concerned with a ‘direction’ given by the Valuer-General, under s.14, and are subject to the principles of administrative law rather than those of appellate review.
The statement of the principles upon which factual questions such as whether a statutory official is ‘satisfied’ as to a state of affairs was considered in F.C.T. v Brian Hatch Timber Co. (Sales) Pty Ltd (1971-1972) 128 C.L.R. 28, 57, 59:—
‘The onus lay upon (the appellant) to establish that, on the material before the Commissioner, he had failed to address himself to the question which the sub-section formulates or had made some mistake of law, or taken some extraneous reason into consideration or had excluded from consideration some factor which should have affected his determination’. (p. 59 per Owen J. with whom Windeyer J. agreed).
The classical statement which has been many times applied in this context is that of Dixon J. in Avon Downs Pty Ltd v. F.C.T. (above) at p. 360 —
‘His decision, it is true, is not unexaminable. If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review.’
What then does s.14 of the Valuation of Land Act require? It is abundantly clear that all the criteria that are stated in s.14(b) are satisfied by these appellants. There are two parcels in the same Area; they do not adjoin but are worked as one holding; they are used exclusively for the purposes of a single business of primary production; and they are owned by the same person. They satisfy everything that the section spells out. The Act directs therefore that the two Beanland farms be included in the one valuation ‘unless the Valuer-General otherwise directs’.
On what basis may it be thought that the Valuer-General may exercise his power to direct otherwise? No countervailing criteria are set out in the Act, and his discretion is of the kind now referred to as ‘unstructured’ (Allars Introduction to Australian Administrative Law paras 5.41, 5.45). The appeal to the Land Court (and in turn to this Court) is conferred by s.21 of the Valuation of Land Act which states that an owner may ‘if dissatisfied with the decision of the Valuer-General upon the objection, appeal to the Land Court’. It is the decision upon the objection which is subject to an appeal on the merits. It is true that the valuation in question is founded upon the direction to value as two parcels, but such a direction is not itself a matter as to which an appeal lies on the merits. It is in this respect it would seem that some of the observations in Beanland v. Valuer-General (above) as to the degree of review available in relation to such a direction may have been stated too widely. In particular the statement that the discretion may be exercised subject to a requirement that it not be exercised unreasonably implies a wider basis of review than the authorities permit (Minister for Aboriginal Affairs v. Peko-Wallsend Ltd above pp.39-42). By the same token we agree in general with the observation of Mr Dodds in relation to the predecessor of s. 14 in Colonial Sugar Refining Co Ltd v. Valuer-General (Shire of Hinchinbrook) (1970) 37 C.L.L.R. 176, 187 that the section —
‘…give(s) him such power only after he has directed himself, as it were, on the facts applicable to any piece of land. The duties conferred on the Valuer-General by the Acts are essentially practical ones involving examination of all the facts relating to an area of land before deciding how it should be valued for the purposes of the Acts. If these facts satisfy him that part of such an area should be valued as a separate piece of land then he may so direct and that result follows. But if the facts do not support such a direction and the Valuer-General still values any part of an area of land as a separate piece of land, then, in my view, his direction can be subjected to review and may be set aside.’
These comments were made under earlier legislation, but we think they are pertinent to s.14 to the extent that they draw attention to the need that some positive basis exist before the Valuer-General ‘otherwise directs’. Section 14(b) sets out prescribed criteria, and if they are met an owner is entitled to the benefit of a single valuation, and may be deprived of it only by a specific and proper exercise of power entrusted to the Valuer-General.
In the present case the alleged basis of exercise of the power has been laid out before the Court. In the absence of evidence it would have been unreviewable, (see s.21(3)), but once there is evidence of the manner in which the determination has been reached, such a direction cannot be regarded as valid simply upon the fact that there has been an arbitrary declaration equivalent to ‘I say so’.
Does the basis relied on demonstrate reliance upon some irrelevant consideration? In answering that question the decision may be regarded as invalid only if it was a consideration that he was bound to leave out of account.
‘In a case such as the present, where relevant considerations are not specified, it is largely for the decision-maker, in the light of matters placed before him by the parties, to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards. The ground of failure to take into account a relevant consideration will only be made good if it is shown that the decision-maker has failed to take into account a consideration which he was, in the circumstances, bound to take into account for there to be a valid exercise of the power to decide’ — (per Deane J. in Sean Investments v. Mackellar (1981) 38 A.L.R. 363, 375; cf. Minister for Aboriginal Affairs v. Peko-Wallsend Ltd (above) per Mason J. at p. 39.
The relevant factors for exercise of the discretion are ‘unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard’ (per Mason J. in Minister for Aboriginal Affairs v. Peko-Wallsend Ltd above p. 40). As its preamble indicates, the purpose of the present legislation is to provide a machinery for determining the valuation of land for rating and taxing purposes. One may also discern within s. 14 an intention to protect bona fide farmers who run a single farm business upon properties that are not adjacent, and who would otherwise face a double rating. Prima facie it seems to have been thought that such persons ought not to be under any greater disadvantage than a farmer who runs his business on the one property or upon adjacent properties. No criteria were spelt out to indicate the type of case in which the benefit might be withdrawn, but a discretion was entrusted to the Valuer-General to direct otherwise.
In the present statutory framework we think it would plainly be an abuse of the power if the Valuer-General decided, for example, that he would ‘direct otherwise’ in all cases, and that nobody would get the benefit. Such a policy would be entirely inconsistent, but would plainly be an arbitrary and invalid exercise of the power. There must be an aversion to the particular case, and some positive rational basis that relates to the subject matter of the Act (and in particular s.14) before the discretion is validly exercised. In the present case there was considerable vacillation in relation to the factors upon which the decision was said to have been taken. It was conceded that dairy farmers were given the benefit within the same Area although their properties were considerably further apart than the present properties; the existence of any ‘policy to define a maximum number of kilometres’ was denied almost in the same breath as the allegation that distances was in the present case ‘the premier factor’, along with the earlier statement that the distance between the two properties was ‘too great to really consider it’. We cannot say that the distance between properties within the same local authority Area is not something that the Valuer-General is entitled to look at in reaching a decision, but it is clear that standing alone it is insufficient to afford a positive basis for making such a direction. Again it is difficult to see how the circumstance that each parcel was capable of being ‘self-sufficient’ could be a relevant factor, because the true requirement of the section in this context is whether the properties are used exclusively for the purposes of a single business. The size of the single business would seem to be immaterial.
In the last resort reliance was placed upon the alleged factor that there was ‘no real circumstance to say we should put them together’. Again, that seems an inadequate basis in the context of a statutory provision that requires a single valuation ‘unless the Valuer-General otherwise directs’. As observed above, for the Valuer-General validly so to direct there must be something more than ‘I say so’, or a jumble of disorganised facts, or (purely hypothetically) ‘too many people seem to be getting this rating benefit’. There is no basis afforded by the final statement that the valuer could not see any additional positive case (over and above satisfaction of the statutory requirements) to say why the Valuer-General should put them together. This seems to show a reversal of the statutory benefit without any actual basis.
For those reasons we think that the Valuer-General’s direction in this instance is reviewable. It was founded on considerations that the proper application of the Act shows to be irrelevant, and there is no positive rational basis upon which it can be justified. Accordingly it ought to be treated as invalid.”
For completeness, it is appropriate to point out that the decision in Beanland came about prior to the enactment of the Judicial Review Act 1991. However, given the reasoning in Beanland, it is clear that this Court retains jurisdiction to hear and determine the appellants’ case regarding an amalgamation under s.34 of the VLA in light of the provisions of s.10(1) of the Judicial Review Act which states as follows:
“Rights conferred by Act additional to other review rights
(1) The rights conferred by this Act on a person to make an application to the court in relation to a reviewable matter are in addition to any other rights that the person has to seek a review of the matter (whether by the court, another court or a tribunal, authority or person).”
After this lengthy examination of the facts and law applicable to the Grantham amalgamation question, in my view the matter boils down to two factual issues. Is the respondent correct in contending that the Grantham land is not in close proximity, by district standards, to Mantervilles, ODeas and The 20 Acres; and that the dominant use of the Grantham land is agricultural purposes while the other properties have the dominant use for grazing with some crop assistance.
Both of the questions set out in the preceding paragraph are clearly questions of fact. I will deal first with the evidence regarding dominant use of the land. I note that s.34(1)(b) of the VLA requires that the several parcels of land are “worked as one holding”. I further note the procedure set out by the respondent in Exhibit 20, specifically where it states that “land used for grazing and land used predominantly for grain growing but with some grazing, could be amalgamated. Other matters which may be considered are, is one set of books used for the combined holding, or is there any facility or feature on one property which makes the others dependent on it? The business must be single one but this could well include more than one industry.”
In my view, the evidence produced by the appellants with respect to the dominant use of the Grantham land as part of their business operations is compelling and entirely meets all of the requirements of both s.34 of the VLA and the departmental procedure. As conceded by Mr Olm, there may be an appearance, due to the long lasting drought conditions, that the properties are subject to different primary industries. However, he strongly points out that they are all part of the one business entity and have been worked by his family as such over many decades and generations. His evidence is independently supported by Exhibits 21 and 22, being letters from his solicitor and bank manager. Even given the different workings currently being undertaken as part of the one primary production business as a consequence of the drought conditions, I am in no doubt that the business operations still fall within the procedure set out in Exhibit 20.
I now turn to consideration of whether or not the Grantham land is in close proximity to the other blocks to which it is proposed to be amalgamated by district standards. As the Land Appeal Court found in Beanland, on this point the appellants also clearly comply with the provisions of s.34 in that the several parcels of land are in the same area, being the same local government area as defined in the legislation. However, as also pointed out in Beanland, the question of overturning the exercise of the discretion by the respondent requires more than that simple analysis. Accordingly, can it be said that, using the terminology of the respondent’s own procedure, the Grantham land is, as a question of fact, in close proximity by district standards to the other blocks to which it is to be amalgamated. Quite clearly, Mr O’Connor is of the opinion that they are not. In effect, his evidence boils down to his view that the properties, being 9 to 11 km apart approximately, are too far removed from each other and are within different district localities and therefore not viewed, by district standards, as being within the same district.
As pointed out in Beanland, determinations such as this must always turn on the facts of a particular case. In my view, the most compelling evidence in support of the appellants’ assertion that the properties are within close proximity by district standards is the evidence of Mr Olm, set out above, detailing his family workings of the Grantham property dating back to the 1940s and their constant use of the different parcels of land within the one business enterprise. On the evidence, since at least the 1940s the Grantham property has been used on a day to day operative basis as part of the primary production activities undertaken by the Olm family. Such integrated use by the Olm family continues to this day. There is nothing in any of the evidence to suggest that these long running primary productions practices by the appellants are unusual or out of the ordinary for the district in which they are located, and such practices within the district by the Olms as primary producers must of themselves go some way to establishing what “close proximity by district standards” means for properties in the Grantham area.
I acknowledge that the respondent faces a difficult task in determining from one case to another whether or not properties should be properly amalgamated. Furthermore, the wording of s.34 of the VLA makes it impossible to apply any form of arbitrary distance separating individual properties, because, just as the size of local authorities throughout Queensland vary greatly by area, so to do the primary production activities vary greatly across the State. For instance, a neighbouring or nearby property in far west Queensland may be some hours’ drive removed from another block of land but, so long as the requirements of s.34 were otherwise met, it is not difficult to conceive that such properties would be perceived as being in close proximity by district standards. On the other hand, land in more densely populated areas may be relatively close, but of such great divergence as to be clearly not in close proximity by district standards.
In my view, the respondent has placed too great a weight on the physical kilometres involved in the distance from Grantham to the other properties to which it is proposed to be amalgamated and has not considered in sufficient detail the actual district standards and the particular generational working of the separate parcels as one primary production business enterprise. I am of the clear view that the Grantham property should be amalgamated with Mantervilles, ODeas and The 20 Acres.
Relativity
One of the central aspects of this appeal relates to a relativity argument as between the subject land and surrounding or nearby blocks of a similar size. The question of relativity was addressed by Member Scott in the Land Court case of Thomson v Department of Natural Resources and Mines[14] where he said, at paragraphs [7] and [8]:
“This issue has come up on more than one occasion in the past, one example being found in Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at 6:
‘We reiterate what has been said often before – and what is Mr Tighe’s chief concern – the importance of correct relativity in the equitable distribution of the rating burden cannot be overstated. However the question before this Court is the correct valuation of the subject land, not the correct valuation of an area. It would not advance the appellant’s case to satisfy us that her neighbour’s land was undervalued: … The appellant must show that the valuation of her land was incorrect.’
A similar opinion is expressed by the Land Appeal Court in Bignell v Chief Executive, Department of Lands (AV92-65 unreported Land Appeal Court 4 March 1996) at 11:
‘What has to be decided in this case is the proper value of the subject land by reference to sales evidence about comparable unimproved properties. … If a proper valuation of the subject land makes it inconsistent with the relative values of neighbouring blocks then so be it. The question before this Court is ‘the correct valuation of the subject land, not the correct valuation of the area”.’
[14] [2007] QLC 92.
I respectively agree entirely with Member Scott and with the passages he has quoted from Gibson and Bignell. As I pointed out in the case of Patterson v Department of Natural Resources and Water:[15]
[15] [2007] QLC 0123 @ paras 23-24.
“ … The appellants claim that each of these blocks is far superior to the subject block. Unfortunately for the appellants, the fact that blocks on Curve Avenue and Cameron Parade are valued at amounts in some cases lower than the subject in circumstances where the appellants claim those blocks to be superior does not necessarily assist their case. If the blocks on Curve Avenue and Cameron Parade are undervalued, using those blocks as a reason, on relativity grounds, to reduce the value of the subject block would only compound the error further and not result in an accurate valuation being determined by this Court for the subject land.
I am reminded of the comments made by Member Scott in the Land Court case of Dutton v Department of Natural Resources and Mines[16] where at paragraph [12] of his decision he said:
[16] [2007] QLC 0091.
‘It is difficult for a lay person such as Mr Dutton to produce evidence and argue a case such that it will upset a case presented by the Chief Executive with the aid of an expert witness such as Mr Moroney. Indeed that has been recognised by the Land Appeal Court in JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, where the Land Appeal Court said at 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 contradiction to 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.” ’
For reasons which will become obvious as I discuss the particular relativity facts relevant to the appeals in question in this matter below, the comments of Mr Trickett in the Land Court case of Rich and Others v Chief Executive, Department of Lands[17] are particularly pertinent. In that case, Mr Trickett said:[18]
“Some comment must be made about the obvious relativity problems which exist in Blackall Shire and possibly other shires in the Central West. The valuer who was originally responsible for the valuations had left the Department and was not called to give evidence. It emerged during the hearing of these cases that only he could explain his reasoning for the valuations that he applied to the various types of land.
Mr Kelsey was given the task of defending the valuations in these appeals. That task was made more difficult and demanding by also acting as advocate for the respondent. However, the defence of these valuations was impossible and doomed to failure, even for a valuer of Mr Kelsey’s experience and ability.
Mr Kelsey had not been involved in the 1992 valuation of the Central Western Shires. He had to start from the beginning by inspecting the subject lands and the two sales which he considered to be relevant. However, he did not have time to investigate the relativity of values in the Shire. His defence of the valuations was based solely on direct comparison with the sales, arguing on the basis of the Land Appeal Court’s findings in Grahns’ case.
I commend Mr Kelsey for the competent manner in which he carried out his duties. That the appeals have succeeded is no reflection upon him. The evidence produced by the appellants all too clearly showed that there were major relativity problems. It is also evident that despite my decisions in the subject appeal, these problems will still exist. The decisions are based on the evidence produced at the hearings and on my appreciation of that evidence. I am well aware that they are no substitute for inspections and comparisons of all properties in the area. Until the respondent can find the resources to carry out a comprehensive revaluation of the area, the relativity problems will not be resolved.”
[17] [1994-95] 15 QLCR 450.
[18] At 468.
In the appeals at hand, Mr O’Connor has been given a task not entirely dissimilar to the task given Mr Kelsey in Rich. The original valuations in each of the matters currently under appeal were conducted by contractors who also undertook the objection process. As Mr O’Connor’s evidence shows,[19] the contractors arrived at a formula for determining the valuations over the subject districts in which the appeal properties are located which was as follows. Starting with the valuations from the previous valuation period, properties which were previously valued at less than $50,000 were trebled in value. Those properties originally valued at between $50,000 and $100,000 had $100,000 added to their valuation, and those properties valued at over $100,000 doubled. As Mr O’Connor conceded, that form of increase resulted in there being “certain classes of property that only doubled and that’s where anomalies arose”.[20]
[19] Transcript pages 102-103.
[20] Transcript page 103.
Mr O’Connor gave further important evidence regarding the relativity issues in these appeals during examination-in-chief by Mr Isdale as follows:[21]
“ … The values are said to have inconsistent relativity with other properties in the area. What can you say about that?-- There certainly are some inconsistencies, as I’ve pointed out. Contractors undertook the valuations and applied factors and formulas. They also handled the grievances associated with the issuing of those valuations and since taking control of the appeal process, I’ve been made aware of many relativity concerns that now appear and I have a major task ahead of me in assessing this new October 2006 valuation. Without fully reviewing relative values, I can’t, I suppose, confirm that the applied values surrounding parcels are correct. There needs to be a review. I don’t want to alarm anyone that everything is wrong. That’s far from the case. There are certain properties that were increased more than the others based on whatever formulae were applied. There was no ground truthing, to my knowledge, that confirmed correct relativities. That’s a task that I have to undertake with this new valuation. The appellants have expressed concern about that and I share that concern to some degree. I certainly don’t say that all values are wrong, but I’d certainly like to have some sort of check before I affirm whether surrounding values are correct or not.”
[21] Transcript page 68.
Mr O’Connor was cross-examined by Mrs Olm on this issue as follows:[22]
“I’ve listened to your comments where Mr Isdale questioned you on the inconsistencies and irregularities and the relativity of our problem of our values and how you talked about the contractors doing the original valuations and noted some of your comments there and I just want to clarify a couple of things. Do I understand, then, that you do agree that the valuation process was not good enough?-- Well there certainly has been some concerns expressed by objectors, appellants, and I’ve noted some areas of concern myself. I’ve tried to document those as best I can. I suppose the answer is ‘Yes’ to that question, that there was not enough ground truthing when various formulas and factors were put through the area. That makes my job a bit more difficult for the next time.
Do you agree, then, that some of these apparent mistakes or inconsistencies and irregularities could still be in existence and some of the values that have been accepted by people and not objected against ---?-- That could be the case; could well be the case. Like I say, similar types of property seemed to have fairly divergent values in some areas.
So would you agree, then, that in the cases that we’ve got before us now that this process which you have acknowledged there has been some irregularities and inconsistencies could be in these values that are in these appeals?-- Well, I’ve checked these appeals. I’ve reconfirmed the values according to the sales, I’ve physically inspected the sales, I’ve analysed the sales, I’ve inspected the subjects and I’ve made my deductions and reports supporting those applied figures.”
[22] Transcript page 32-3.
To paraphrase Mr O’Connor’s evidence, in my view it is beyond doubt that errors have been made in the valuation process in the districts surrounding where the land the subject of these appeals is located such that relativities as between various properties are in some circumstances out of kilter and incorrect. However, as I have previously indicated when discussing the sales evidence in each of these appeals, Mr O’Connor has also confirmed that he has undertaken a careful analysis of the actual unimproved values of each of the appeal properties and he affirms the valuations which he has arrived at with respect to each of the properties, save for the valuation for which he leads evidence to a higher value.
The question then arises, what impact should the incorrect relativities of surrounding properties have on the assessment of the unimproved values of the appeal properties in this matter? This question is further complicated by the fact that the respondent has led evidence to a higher value as regards one of the Ropeley properties. It is appropriate that I now address the issues that arise as a result of the respondent seeking a higher value for a Ropeley property.
Leading evidence to a higher value
The Land Court has on a number of occasions considered the impact of the respondent leading evidence to a higher value for land subject to an appeal. I considered this issue in some detail in the case of Bischoff v Department of Natural Resources and Water[23] where I said:[24]
[23] [2007] QLC 0029.
[24] At paras [18] to [23].
“[18]I now turn to the issue raised by the respondent as a consequence of the respondent contending for a higher value of the subject land.
[19]This matter is similar in many respects to that encountered by Member Jones in the case of Pfeffer v Department of Natural Resources and Mines. Like Pfeffer, the original valuation in this matter arises out of what was referred to in Pfeffer as ‘the product of a mass appraisal exercise’. Member Jones went on to say:
‘I understood this approach to involve a broad brush value determination method not involving an individual assessment of the unimproved value of a particular lot having regard to comparable sales evidence. It was also Mr Olive's evidence that when he undertook a more detailed valuation of the land it was apparent that the original figure involved an underestimation of value.’
[20]Likewise, in this case Mr Clark’s expert valuation evidence is that the mass appraisal exercise has resulted in the original valuation being an underestimation of value. Consistent with the approach taken by Member Jones, in my view the presumption in favour of the correctness of the valuation appealed against as described in s.33 of the VLA is rebutted. To use Member Jones’s words ‘the valuation appealed against … involved either a significant error of fact or was arrived at by a fundamentally flawed method. In any event, on the evidence it was clearly wrong.’
[21]The result is that in my view, the best evidence supports an unimproved value of the subject land in the sum of $570,000.
[22]It would be remiss of me not to also comment on the outcome of this appeal as a consequence of the respondent leading evidence to a higher value. As Member Jones said in Pfeffer:
‘[22] One outcome of an appeal such as this is that the amount of the statutory valuation appealed against may be increased, this is expressly provided for in s.66 of the VLA which states:
“Order of court
Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Court may –
(a)affirm the valuation appealed against; or
(b) reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act;
and, subject to section 70, make such order as it deems fit with respect to the payment of costs.”
[23] In the circumstances of this appeal, the evidence and the conclusions I have reached based on that evidence, lead me to having to determine the unimproved value of the subject land as at 1 October 2004 to be $125,000.
[24]Before making the consequential orders and without intending to imply any criticism of the conduct of the respondent in this appeal, I feel I should indicate that I consider the result to be a most unfortunate outcome for the appellants. In circumstances such as this it would not be unreasonable, at least up until receipt of the valuation report intended to be relied on by the respondent at trial, for an appellant to expect that the contest would be against the actual valuation figure appealed against. Even upon receipt of the report, unless accompanied by clearly worded correspondence, an appellant might still be confused about which figure he or she has to deal with at the hearing of the appeal and the ramifications of continuing with the appeal in the face of a valuation higher than that appealed against. Such confusion would be in my view a highly undesirable result. I would also take this opportunity to endorse the concerns expressed by Mr Scott in the AMP case where the learned Member identified some undesirable dilemmas an appellant might be confronted with in such circumstances.’
[23]I agree with all of Member Jones’ comments set out above. I also specifically adopt, so far as it is relevant, the comments made by Member Scott in AMP Life Limited. At the hearing of this matter, it was apparent to me that the Bischoffs were concerned by the stance taken by the respondent in seeking to lead evidence to a higher value. Their cause for concern was heightened by the fact, properly advised to them on the record by Mr Heather for the respondent, that if the appellants chose to withdraw their appeal then the proceedings would be at an end and the respondent would be unable to lead evidence to a higher figure, the consequence being that the unimproved value of the subject land would remain at $490,000. It is of concern to this Court that the respondent, seeking to lead evidence to higher figures in this and other cases, may cause an understandable reluctance on the part of appellants who genuinely believe that their unimproved valuations are too high to either commence or maintain appeals against the valuations. If this consequence should arise, it would appear to be somewhat unsatisfactory as Member Scott said in AMP, ‘Indeed, circumstances such as the present would be very likely to create a dilemma for an appellant and elevate the Chief Executive to a position of dominance.’ I share Member Scott's concern that any attempt by the Chief Executive or his employees to take advantage of a position of dominance over appellants be treated by any Court with considerable concern. For his part, Mr Heather acknowledged the dilemma that the respondent finds itself in and in my view, in the circumstances of this particular case, Mr Heather acted properly in advising both the Court and the appellants of the consequences should they have chosen to withdraw their appeal. [footnotes omitted]”
As is clear from the appellants’ grounds of appeal in the matters at hand, the fact that the respondent has sought to lead evidence to a higher figure has created a high level of angst as between the appellants and the respondent. This situation has also placed Mr O’Connor in a most unenviable position. Clearly acting in a manner consistent with previous cases as discussed in Bischoff, the appellants in this matter were also made aware by the respondent that, if they chose to abandon their appeals, then the appeals would be over and the respondent would not then be leading evidence to a higher figure. Particularly given the acknowledged difficulties with irregularities on a relativity basis due to the valuations undertaken by the contractors, such a stance by the respondent has placed the appellants in this matter into the horns of a dilemma. By continuing with their appeals they have put themselves at the very real risk of having their valuation increase for one of the Ropeley properties. However, accepting Mr O’Connor’s evidence, there is no doubt that the cause of the increase being sought by the respondent is the very error which has been made by the respondent’s contractors which has created the difficulties with relativity in the district and thus is the source of the appellants’ complaints.
The circumstances of this matter also place the Court in somewhat of a dilemma in determining whether or not it is appropriate to determine the valuation of the Ropeley property at the higher figure contended for by the respondent.
Applying the principles as set out above, an initial response is that the value of the Ropeley property (AV2005/0897) should be increased as such increased value is supported by the evidence of Mr O’Connor and the sales he has referred to. It is, after all, the task of the Land Court in hearing appeals under the VLA to determine the proper valuation of a block of land as at the relevant date. However, as also discussed under the heading “Relativity” above, issues of relativity between taxpayers is also of importance. On the basis of the evidence before me, principally supplied by the respondent’s valuer Mr O’Connor, I am concerned that to allow the increases in value sought by the respondent for the Ropeley property would in real terms amount to an injustice as against the appellants in this case. The reason for this is that the value would increase out of kilter and not be subject to the formula used by the contractors in valuing other properties so that like for like comparisons cannot be made.
In my view, whilst relativity is not the most important of features to be considered in appeals under the VLA, the issue of proper relativity as between properties in any given area must still have some real meaning. In the circumstances of this case, were I to agree to the increase sought by the respondent for the Ropeley property, in my view the consequence would be that the question of relativity as a basis of assessing value under the VLA would in effect become irrelevant.
The circumstances in this case must be distinguished from that in cases such as Patterson referred to above. An appellant cannot simply look at the value ascribed to another property which is in all respects similar to his or her property but has a lower value and argue that the value of his or her property should therefore be reduced in line with the other property. This is because the valuation of the other property may indeed be too low. However, circumstances such as these are in effect random assessments of relativity between different properties. It is certainly not surprising that, given the huge number of properties which are valued by the respondent in any given year, relativity issues will exist from time to time between different properties. However, the case at hand is quite different. The respondent is fully aware of the problems in valuations in this area that have arisen as a result of the actions of its contractors. In my view, the appropriate course for the respondent to take, instead of seeking higher values with respect to those properties where appellants appealed their valuations, would be to either review all of the valuations within the affected area and increase all valuations that are in error uniformly, or to leave the uniform errors consistent across the entire area and await the next valuation period to correct those errors. The piecemeal approach of only penalising those landholders who choose to exercise their right of appeal, in my view, should not be accepted by this Court.
Conclusions
In light of my rulings with respect to each aspect of each appeal as set out above, it is appropriate that I now summarise the position with respect to each appeal.
As regards AV2005/0895, one of the Kleidons Road properties, the appeal is dismissed. Accordingly, the valuation as at 1 October 2004 of the subject property is $160,000.
As regards AV2005/0893, the other Kleidons Road property, the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
As regards AV2005/0892, the appeal is allowed on the basis that the subject property should be amalgamated with the already amalgamated properties known as Mantervilles 80 acres, ODeas 60 acres and The 20 Acres. This eventuality had been anticipated by the parties. In written submissions,[25] Mr Isdale for the respondent had this to say:
“2. If the Court accepts the appellants’ submissions and concludes that ‘Grantham’ could and should be amalgamated in one valuation then there is no evidence of what the valuation of such an amalgamation should be.
3. In such a situation the best course would be to allow the appellants and the respondent to present such further evidence as may be relevant to that point so that the Court could decide it.”
[25] Paragraphs 2 and 3 of submissions dated 18 May 2007.
I agree with Mr Isdale’s submissions. The appellants and the respondent shall file and serve their evidence and submissions as to the appropriate valuation of the amalgamation by 4:00pm Friday 29 February 2008. The parties are to file and serve evidence and submissions in response by 4:00pm Friday 14 March 2008. Should either party wish to be heard or lead oral evidence with respect to the question of the amalgamated valuation, such party is to advise the other party and the Court in writing by 4:00pm Friday 7 March 2008. The other party is to respond to the first party and to the Court by 4:00pm Friday 14 March 2008. I also grant liberty to apply to vary these orders on the giving of 3 days’ notice by either party.
As regards AV2005/0894, Ropeley, the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
As regards AV2005/0897, the appellants’ appeal is dismissed and the respondent’s application to increase the valuation to $134,000 is also dismissed. The valuation as at 1 October 2004 is affirmed at $97,000.
As regards AV2006/0038, the appeal is dismissed. The valuation as at 1 October 2004 is $134,000.
With respect to matter AV2006/0039, the appeal is dismissed. The valuation as at 1 October 2004 is $135,000.
Postscript
It is unfortunate that the delivery of this decision has taken longer than anticipated. At the time that I heard the matter, I only held a part-time appointment to the Land Court, my full-time appointment being as Deputy President of the Land and Resources Tribunal. Requirements of the Land and Resources Tribunal, beyond my control, necessitated all Land and Resources Tribunal work taking precedence over this matter. For the record, I should indicate that I undertook major work on these appeals on no less than five separate occasions, only to have to put the determination of these matters to one side on each occasion for a considerable period of time so that I could undertake Land and Resources Tribunal work. Due to the complexities of the number of matters under appeal, this proved both a time consuming and frustrating waste of time and resources, and resulted in the most unfortunate delay in delivery of this decision. Fortunately, that situation has been resolved by the amalgamation of the bulk of the jurisdiction of the Land and Resources Tribunal into the Land Court, and my corresponding appointment as a full-time Member of the Land Court.
Orders
1. In AV2005/0895 the appeal is dismissed. The valuation as at 1 October 2004 is $160,000.
2. In AV2005/0893 the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
3. In AV2005/0892:
(a)The appeal is allowed.
(b)The appellants and the respondent shall file and serve their evidence and submissions as to the appropriate valuation of the amalgamation by 4:00pm Friday 29 February 2008.
(c)The parties are to file and serve evidence and submissions in response by 4:00pm Friday 14 March 2008.
(d)Should either party wish to be heard or lead oral evidence with respect to the question of the amalgamated valuation, such party is to advise the other party and the Court in writing by 4:00pm Friday 7 March 2008, and the other party is to respond to the first party and to the Court by 4:00pm Friday 14 March 2008.
(e)I grant liberty to apply to vary orders 3(b) to 3(d) on the giving of 3 days’ notice by either party.
4. In AV2005/0894 the appeal is dismissed. The valuation as at 1 October 2004 is $155,000.
5. In AV2005/0897, the appellants’ appeal is dismissed and the respondent’s application to increase the valuation to $134,000 is also dismissed. The valuation as at 1 October 2004 is affirmed at $97,000.
6. In AV2006/0038, the appeal is dismissed. The valuation as at 1 October 2004 is $134,000.
7. With respect to matter AV2006/0039, the appeal is dismissed. The valuation as at 1 October 2004 is $135,000.
P A SMITH
MEMBER OF THE LAND COURT
4
2