Parr v Chief Executive, Department of Natural Resources

[1999] QLC 87

[1999] QLC 87

 

LAND COURT,

BRISBANE

17 August 1999

Re:     Appeal against Annual Valuation

Valuation of Land Act 1944
  Shire of Livingstone.
  (AV98-328).

Rodney C Parr, Christopher K Parr and Alan J Parr

v.

Chief Executive, Department of Natural Resources

(Hearing at Rockhampton)

D E C I S I O N

This is an appeal by Messrs RC, CK and AJ Parr against the unimproved value applied to their land by the Chief Executive under the provisions of the Valuation of Land Act 1944 (“the Act”).

Introduction:

The appellants are three brothers who own land described as Lot 20 on Plan PS91, Parish of Maryvale, containing an area of 223.5 hectares.  As at 1 October 1997 the respondent applied an unimproved value to that land of $200,000.  The owners objected against that valuation and following advice that their objection had been disallowed, they appealed to the Land Court advising that their estimate of unimproved value was $110,000.

The grounds of appeal were twofold:

·    General lack of relativity with other valuations; and

·    Poor comparison with sample sales.

At the hearing of the appeal the appellants were represented by Mr AJ Parr, who also gave evidence.  The respondent was represented by Senior Valuer, Mr JA Thomas, and valuation evidence was given by Mr BT Coe, a registered valuer employed by the Department of Natural Resources.

The Subject Land:

The following details are taken from the report of Mr Coe:

The subject land is situated on the formed earth Corbetts Landing Road, about 33 kms north of Yeppoon.  There are no services available to the land, which is zoned “Rural A” under the Shire of Livingstone Town Planning Scheme.  It is used by the owners as a rural retreat.

Mr Coe described the land as comprising sandy messmate and oak forest away from Waterpark Creek, with narrowleaf ironbark, messmate and zamia gravelly ridges along the creek frontages.  It has a long frontage to Waterpark Creek which is tidal.  Corbetts Landing Road bisects the property and provides public access to the creek.

Mr Parr did not disagree with those details, but he added the following:

The closest mail service/school bus service is at the Yeppoon-Byfield Road, a distance of about 5 kms.  From there the access road to the property is poorly formed, does not have a gravel surface and is poorly maintained by the Council and washes out in heavy rain.

Although it is about 10 kms south-east of the Byfield School, it is separated from the general Byfield area by a significant range of hills.  It is located adjacent to the saltwater environs of Waterpark Creek and consequently has a considerable topographical difference from the general Byfield area, being rocky coastal ridges with vegetation affected by the salt environment.  It has variability in soil types, most of which are unsuitable for cropping or grazing. 

In his oral evidence, Mr Parr explained that the property had been owned by his family for several generations and had been used for fruit growing until about 10 years ago when it became unviable.  Since then he and his brothers have used it as a weekend or holiday retreat.

The Case for the Appellants:

In support of the appellants’ first ground of appeal, Mr Parr referred to the unimproved values applied by the respondent to various other properties.  First, he referred to the valuations of two properties of about 90 hectares in area, with similar topography, situated about 10 kms to the south on Kellys Landing Road, the valuations of which had been decreased from $53,000 to $46,000 and from $47,000 to $37,000.  Those valuations represented $484 per hectare and $415 per hectare, compared with $895 per hectare applied to the subject land.  He realised that those valuations were “concessional farming” valuations. 

Mr Parr also referred to the valuations of two nearby properties each of 183 hectares, situated on Byfield Road, which were each valued at $52,000 ($284 per hectare).  In addition, he had ascertained the unimproved values of a number of larger properties by searching the valuation roll:

·    A property of 3,395ha on Byfield Road had decreased from $55,000 to $47,500, or $14 per ha;

·    The Byfield State Forest of 23,400ha had been decreased from $620,000 to $445,000, or $19 per ha;

·    A property of 129ha at Byfield valued at $64,000, or $496 per ha;

·    The Capricorn International Resort of 8,003ha valued at $5,400,000, or $674 per ha.

Further, Mr Parr contended that in a previous appeal (V85-93), Parr v. The Valuer-General (not reported), the Departmental valuer had used sales in the Mt Hedlow/Rossmoya area as a basis for the valuation of the subject land.  He submitted that this was a precedent for the use of sales in that area to be used in the present case.  In this regard, he referred to the sale of a 120.786ha property in the Parish of Rosslyn, some distance to the south-west of the subject land, which sold for $115,000 at public auction.  His statement continued:

“This was achieved at public auction which is a very good indication of values.  This property has an unimproved value of $30,500 which represents $254 per hectare (compare this to $895 per hectare).  ”

However, an agent’s brochure advertising the sale indicates that there were improvements on that property, including 150 acres of contoured cultivation, a bore, two dams, boundary fencing and a steel shed.  There was no indication of what would have been the unimproved value that could have been derived from that sale.  It seems that Mr Parr was simply comparing the respondent’s unimproved value applied to that property at the time of sale, with that applied to the subject land.
           Continuing with that line of reasoning, Mr Parr then compared the unimproved values applied to seven other properties situated in the Rossmoya/Millman area with that applied to the subject land.  The seven properties ranged in area from 213 hectares to 320 hectares, with unimproved values from $30,000 to $111,000.  He concluded that “these blocks average out at $286 per hectare which in turn would value my property at $64,000”.
           In summary, Mr Parr submitted:

“In view of the evidence that I have supplied I contend that the sale of property by public auction as described in 3 above would be a true indicator of value.  I consider that the topography, access and services of this block to be superior to my property.  In light of this I would value my property at $70,000.

I further consider properties described in 1 above.  I consider these blocks on Kellys Landing Road to be topographically similar with slightly better services than my property.  (My property has no power, town water, phone, or garbage collection.)  In relation to these properties and the fact that the properties have decreased 15-20% then I would consider that my valuation should definitely be no more than $110,000.”

The Case for the Respondent:

Mr Coe was not responsible for making the valuation which is the subject of this appeal, but he had made a detailed inspection of the sales and subject property and agreed with the amount of the valuation. 

Mr Coe explained that the valuation had been based on the sale of Lot 2215, with an area of 157.018ha, from Hardencroft Pty Ltd to Livingstone Shire Council in December 1995 for $225,000 (Sale No 1).  That sale analysed to show an unimproved value of $205,000 and as at the relevant date of valuation the respondent had applied an unimproved value of $200,000.

According to Mr Coe, there is no legal access to that property, its practical access being by means of unsurveyed forestry roads through State Forest.  He regarded it as being similar to the subject land.  Although it is smaller, it has access to both Waterpark Creek and Sandy Creek, the latter providing abundant supplies of fresh water.

Mr Parr challenged the use of the sale as a basis of valuation.  He said that it was not a sale on the open market.  His investigations revealed that the Council had purchased the land for access to the excellent supply of fresh water in Sandy Creek, which forms the eastern boundary of that property.  He had also ascertained that Hardencroft Pty Ltd is associated with Iwasaki/Sangyo Limited, the owner of the Capricorn International Resort, and that Hardencroft had purchased the land in 1985 to gain access to the water as an extra supply for the resort.  Although he had been unable to ascertain the details, he understood that there had been some deal between Hardencroft and the Council whereby properties exchanged hands, giving the Council the right to water from Sandy Creek.

Because it was not an open market sale, Mr Parr did not consider it to be a true reflection of the value of the property and therefore not an appropriate basis for the valuation of the subject land.  However, he agreed that they were similar in topography.

Mr Coe agreed substantially with what Mr Parr said.  The sale was privately negotiated on the basis of a valuation made by a Mr McDonald, a valuer in practice at Yeppoon.  Although the Council purchased the land for future water purposes to augment existing supplies in Waterpark Creek, Mr Coe had ascertained that Mr McDonald had valued the land as rural residential, without regard to its potential as a water storage area.

Mr Coe indicated that he had some concern about the correctness of using that sale as a basis for the valuation, as it had not been tested on the open market.  Then in September 1998, Lot 2 on RP 608456, with an area of 104.265ha, the land immediately to the north of Lot 2215, sold for $186,000 (Sale No 2).  That sale analysed to show an unimproved value of $143,813 and as at the relevant date of valuation, 1 October 1997, the respondent had applied an unimproved value of $140,000 to that land.

Although that sale had occurred some 11 months after the date of valuation, Mr Coe was of the opinion that it supported the earlier sale as there had been no real change in the market in that time.  His one reservation was that again, this property had not been exposed to market forces for the vendor’s personal reasons, but had been sold privately to facilitate a quick sale.  He thought that the vendor may have been able to achieve a better price  if it had been placed on the open market.

Mr Coe considered that property to be similar in most respects to the earlier sale, except that it was smaller.  It had no legal access, being accessed by means of roads through State Forest, with similar frontages to Waterpark Creek and Sandy Creek.

Mr Coe also referred to the sale of a 10-hectare property near Byfield (Sale No 3), which sold in May 1997 for $85,000, analysed to show $71,000 and to which the respondent had applied $62,000 at the relevant date of valuation.  That property has gravel road access and comprises poor coastal forest.  He considered it to be vastly inferior to the subject land, because it was so much smaller and had no access to a creek.

Mr Coe explained that he had included that sale to demonstrate what 10- hectare blocks in the area were selling for.  He readily conceded that they were not comparable to the subject land.  I assume that he included that sale to demonstrate a minimum level of value for rural residential land without the attributes of size, waterfrontage, etc., enjoyed by the subject land, but with better access.

Mr Parr and Mr Coe agreed that the highest and best use of the subject land was as a rural residential retreat.  Although zoned “Rural A” which would allow minimum subdivision of 40 hectares, Mr Coe was of the opinion that the cost of upgrading access to the required standard to the subject land and to Sales 1 and 2, precluded any foreseeable potential for subdivision.

The Issues:

The issues between the parties in this case emerged as

·    Relativity with the valuations applied to other lands; and

·    The comparability of the sales used by the respondent as a basis for the valuation.

Relativity:

Mr Parr has gone to considerable trouble to search the details of valuations applied to other lands in the general area.  In some cases he knew the lands, in others he had simply ascertained details from the Valuation Roll.  In all cases he had compared the rates per hectare with that of the subject land.  In other words, he had relied on a per hectare comparison of relativity of valuations.

As a basis for challenging the valuation of the subject land, there are a number of things to be said.  First, the parties agree that the highest and best use of the subject land is as a rural residential property.  It is well established that such properties do not sell at a rate per hectare but on a site basis, having regard to the various attributes.  Second, it is also well settled that the most appropriate basis of valuation is by comparison with sales of similar lands.  While it is desirable that valuations are relative one to the other, any comparison of relativity should not be preferred to the exclusion of relevant sales evidence, even if those sales are not ideal.  (See Grahn v. The Valuer-General (1992-93) 14 QLCR 327 and the cases cited therein). Third, it is a basic principle of valuation that like be compared with like. Many of Mr Parr’s comparison properties were not similar to the subject land. Many (90% according to Mr Coe) have been valued under the concessional provisions of section 17 of the Act. Others are used for entirely different purposes, such as State Forests, international resorts, etc.

Without more cogent evidence, the appellants could not establish that the valuation of the subject land is out of relativity with the valuations applied to other lands.  In any case, even if the appellants had succeeded in proving that the relativity was incorrect, that alone would not prove that the valuation of the subject land was incorrect.  (Grahn v. The Valuer-General).

Comparability of the Sales:

The primary basis relied on by the respondent to support the valuation was the sale from Hardencroft Pty Ltd to Livingstone Shire Council.  There are several features about that sale which make it vulnerable to criticism.  It was common ground that it was a special purpose transaction, purchased by the Council for water purposes.  There were suggestions that other deals may have been done, and that the negotiated price was assisted by a valuation made by a valuer on a rural residential basis.  Although much of this information was no more than hearsay, there was sufficient objective evidence to justify treating the sale with some caution, as the circumstances might suggest that the price was higher than market value.  However, the adjoining property sold some 11 months after the date of valuation for a price which Mr Coe considered to support the Hardencroft sale.  As there had been virtually no movement in the market between the date of valuation and the date of the sale, he felt that the sale not only supported the earlier sale of the neighbouring land, but also the unimproved value applied to the subject land.

The only criticism of that sale was that it was not offered on the open market and might have sold for more if it had been.  It was not suggested that the price was too high.  In the circumstances, I accept that the sale is appropriate to prove that the Hardencroft sale was not excessive.  Both sales support the valuation applied to the subject land.

I gain no assistance from the sale of the 10-hectare allotment at Byfield.  It is simply too small and not comparable to the subject land.

Similarly, I gain no assistance from the property referred to by Mr Parr, which sold at auction for $115,000. The agent’s brochure shows it is quite different to the subject land and in a different market environment. Mr Parr made no attempt to analyse the sale. Instead, he relied upon the unimproved value applied by the respondent and compared that per hectare with the valuation applied to the subject land. That is not the proper use of the sale. In any case, it could well be that the applied valuation of $30,500 was a concessional valuation made under the provisions of section 17 of the Act as land used for purposes of “farming”.

Conclusion:

In my opinion the appellants did not discharge the onus of proving either of their grounds of appeal.  They have not shown that in making the valuation the respondent acted upon a wrong principle.  In my view, as outlined above, the respondent has made the valuation in accordance with the accepted principles of valuation.  Nor have they shown that the respondent made a serious error of fact.  Indeed, there was largely agreement between the parties about the facts in this case.  Finally, they have not shown that the valuation was made by a fundamentally erroneous method.  The method of direct comparison with comparable sales was appropriate in the circumstances, and, in my view, Mr Coe was correct in comparing properties the highest and best use of which was for rural residential purposes.  On the evidence of Sales Nos 1 and 2, I am satisfied that the unimproved value applied to the subject land is not excessive.

Therefore, the statutory presumption of correctness provided for in section 33 of the Act has not been rebutted (Brisbane City Council v. The Valuer-General for the State of Queensland (1978) 140 CLR 41, at pp.56-57).

Order:

Accordingly, the appeal is dismissed and the unimproved value of the subject land as at 1 October 1997 is affirmed at $200,000.

(JJ Trickett)

President of the Land Court