Rea v Valuer-General
[2013] QLC 17
•3 May 2013
LAND COURT OF QUEENSLAND
CITATION: Rea v Valuer-General [2013] QLC 17 PARTIES: Keith Joseph Rea
(appellant)v.
Valuer General
(respondent)FILE NO: LVA775-11 DIVISION: Land Court of Queensland PROCEEDING: Appeal against valuation under the Land Valuation Act 2010 DELIVERED ON: 3 May 2013 DELIVERED AT: Brisbane HEARD ON:
30 April, 1, 2 May 2012
Submissions closed 16 July 2012HEARD AT: Rockhampton A/PRESIDENT: PA Smith ORDERS: 1. The appeal is allowed.
2. The unimproved value of the aggregation property known as “Woodstock” is fixed in the sum of Six Hundred and Sixty Thousand Dollars ($660,000) as at 1 October 2010.
CATCHWORDS: Practice and Procedure – onus of proof – “presumption of correctness” replaced in Land Valuation Act 2010 by “balance of probabilities”
Appeal against annual valuation – evidence as to comparison of various properties – lack of sales evidence
Land Valuation Act 2010
Valuation of Land Act 1944APPEARANCES: Mr KJ Rea, in person
Ms L Pham, legal officer, Advocacy Team, In-house-legal, Department of Natural Resources and Mines, for the respondent
Background
This is an appeal by Keith Joseph Rea (the appellant), against a determination by the Valuer-General (the respondent) of the unimproved value of Mr Rea’s property known as “Woodstock” as at 1 October 2010. Pursuant to the provisions of the Land Valuation Act 2010 (LVA), the respondent has valued the appellant’s land at $700,000. The appellant contends for a valuation as at 1 October 2010 of $80,000. Pursuant to the provisions of the LVA applicable to “Woodstock”, “Woodstock” has been valued as unimproved land.
The Subject Land
“Woodstock” is situated on the Marlborough-Sarina Road about 11 kms south-west of Marlborough which is approximately 100 kms north-west of Rockhampton. “Woodstock” is severed into two parts by the Marlborough-Sarina Road. It is used by the appellant for grazing and breeding beef cattle. “Woodstock” has a total area of 6,937.6765 ha and consists of a number of lots of land which, for the purposes of the valuation, one valuation has issued.
The hearing
The hearing was conducted in Rockhampton over a three day period, with the first day used for the purposes of an inspection of “Woodstock” and various sale properties. Although Mr Rea represented himself, he has previous experience in conducting Land Court proceedings on his own behalf regarding the valuation of his land.[1] The appellant called evidence from an expert in Applied Genetics, Mr Alfred Collins, and also gave evidence on his own behalf. The appellant also relied upon a statutory declaration of David Atkinson.[2]
[1] See Rea v Valuer-General [2011] QLC 71 and Rea v Valuer-General [2011] QLC 72.
[2] See Exhibit 7.
The respondent was represented by a legal officer, Ms Pham, and relied upon valuation evidence by a registered valuer, Mr David W Drew, who is employed by the respondent.
Preliminary issue - grounds of appeal
In the early stages of the hearing, the appellant sought to give evidence as to access to “Woodstock”. Ms Pham objected to the receipt of this evidence on the basis that there was no ground of appeal made by the appellant relating to issues of access. After hearing initial submissions from the parties and asking some questions particularly of Ms Pham, I allowed the parties additional time at the end of the hearing to make written submissions as to the scope of the grounds of appeal. Only very limited submissions in this regard were received from the parties, and unfortunately no legal authorities were referred to by any of the submissions.
Section 169 of the LVA provides that the hearing of the appeal must be “limited to the grounds stated in the valuation appeal notice”.[3] Section 169 goes on to state, in sub-section (3) that the appellant “has the onus of proof for each of the grounds of appeal”.
[3] See s.169(1) LVA.
By his notice of appeal filed 8 November 2011,[4] the appellant set out the following grounds of appeal:
“1. Insufficient weight given for grounds for objection from previous objections.
2.No consideration given to incorrect veg mapping and flow on effects.
3.The valuer failed to properly evaluate all the facts concerning the property.
4.The valuer failed in a proper comparison with a sale block.
5.The valuer presented false and misleading information to the court.”
[4] See Exhibit 1.
It will be immediately observed that there is something rather strange regarding the wording of the grounds of appeal. As written, they appear to be relevant not only to what one would expect to see on a notice of appeal to an appeal under the LVA, but in some respects referrable to an appeal to the Land Appeal Court against a decision of this Court. It became clear during cross-examination of the appellant by Ms Pham that the appellant had intended to both appeal against the previous decision of President MacDonald of this Court with respect to a valuation of 1 October 2009, and make a fresh appeal to this Court with respect to the valuation of 1 October 2010.[5] Read in this context, the grounds of appeal make much more sense.
[5] See Transcript 1-38 to 41.
Although Ms Pham did not refer me to any authorities in either her oral or written submissions, there are of course numerous authorities from this Court relating to appellants being confined strictly to their grounds of appeal. Although such authorities relate to the previous Valuation of Land Act 1944 (VLA), the provisions of the VLA and s.169(1) of the LVA are consistent with the view that the grounds of appeal must be identified in such a way as to allow the respondent to reasonably understand the contentions raised by the appellant in his grounds of appeal. Although Ms Pham contended that the grounds of appeal were vague overall, she only objected to the appellant leading evidence as to access to the land. No objection was raised on behalf of the respondent to any of the other evidence raised by the appellant as to the attributes of the land and errors in that regard that the appellant claims the respondent’s valuer has made in his valuation.
It is unfortunate that the appellant was confused in thinking that he was appealing against President MacDonald’s decision. Whilst he has adequately explained the reasons for his confusion, that does not give me any reason to depart from the very clear statutory constraints that I am under in hearing this appeal.
Issues relating to access stand, in my view, as quite a distinct query of complaint in the land valuation process. Had the appellant sought to contest issues of access in his appeal as regards the 1 October 2010 valuation, it was his duty to ensure that he set those grounds out clearly in his notice of appeal. Neither this Court nor the respondent should be left in a position where it is necessary to guess what is meant by an appellant by his grounds of appeal.
Accordingly, I am in agreement with Ms Pham that the evidence given by the appellant as regards issues of access fall outside of his grounds of appeal and such evidence is accordingly excluded.
For completeness, I should add that had I taken all such evidence into account, given the nature of such evidence, at the end of the day that evidence would have had little, if any, affect on the overall decision in this matter.
Issues in the appeal
As indicated above, due to misunderstandings by the appellant, it is somewhat difficult to glean precise issues relevant to the appeal from the grounds of appeal. However, throughout the course of the evidence presented by the appellant and his cross-examination of the respondent’s valuer, a number of areas of dispute became clear.
A significant area of complaint made by the appellant was that the vegetation mapping on his property was incorrect. This was a subject that received detailed attention by President MacDonald in her 2011 decision relating to “Woodstock”. In her decision, President MacDonald stated as follows[6] at paragraphs [12], [13], [14] and [24]:
“[12] Mr Rea submitted that the vegetation mapping of his property was wrong and he produced aerial photographs and a vegetation map in support of this submission. Mr Rea said that these documents demonstrated that the current regional ecosystem mapping was incorrect because it showed tordoned areas of his property marked as green (that is remnant regional ecosystem) rather than white (cleared) land. The property adjoining Mr Rea's property on his western boundary was shown as white, yet the aerial photographs showed that the neighbour's property was similar to Mr Rea's. Mr Rea said that part of the white area on Lot 821 in the south-western corner is land that was cleared pursuant to a ballot under which he was allocated an additional 290 ha which he was able to clear. However because of the inaccuracy in the mapping, he had been obliged to use that allocation to clear an area of his land that he had previously cleared. Mr Rea has gone to great lengths to have the mapping corrected but without success.
[13] The evidence that was presented to me does seem to indicate that the mapping is incorrect, but this Court has no jurisdiction to correct that error. The issue that is relevant to the Court is whether the apparent errors in the mapping have affected the accuracy or validity of the valuation under appeal. This is discussed further below.
[14] Under the provisions of the Vegetation Management Act 1992 (VMA), the clearing and development of remnant ecosystems is restricted. Mr Rea estimated that about a third of his total land area was affected by the legislation and said that no allowance had been made for the restrictions on his ability to develop the land subject to the VMA nor for the vermin that live in there. The part of Mr Rea's property significantly affected by the vegetation management legislation is Lot 821. Mr Rea only uses the area subject to the VMA in winter when he is short of feed. He runs approximately 120 to 180 cattle there for about 3 months depending on the feed available.
…
[24] Mr Rea adduced evidence that, as discussed above, appears to indicate that the vegetation mapping that has been applied to Lot 821 is incorrect. It is relevant to ask what the consequences are, for the purposes of the valuation, if Mr Rea is correct and the vegetation mapping is inaccurate. The effect of the error would be that more of Mr Rea's land has been designated as remnant country than should be the case and, therefore, he is over-restricted in his capacity to develop that country. While that is of great importance to him, it is difficult to see that any inaccuracy has adversely affected the valuation in the sense that the amount is higher than it would otherwise be. The valuation has been carried out on the basis that the regional ecosystem mapping is correct and, therefore, Mr Rea's property has been valued on the basis that the designated remnant country is not capable of being developed. Mr Drew gave evidence that he has adjusted the allowances for the development restrictions and the harbouring of native animals. These allowances recognize the loss of productivity on the subject land.”
[6] Rea v Valuer-General [2011] QLC 71.
From my own considerations of the evidence in this matter, and having had the opportunity to view the property and the neighbouring area central to the appellant’s dispute as to incorrect vegetation mapping, I agree with the comments of President MacDonald that the mapping of vegetation management areas on the appellant’s property appears to be in error. However, as indicated by President MacDonald in the passage quoted above, this Court has no jurisdiction to correct that error. What is relevant for this Court is to consider the impact any errors in the mapping have on the valuation under the LVA.
It is the respondent’s case that the respondent, through its valuer, has made an allowance in the valuation for restrictions on the use of “Woodstock” in light of vegetation management requirements and that, if anything, such allowances would only decrease if the area of restricted land on “Woodstock” was reduced.
Another issue raised by the appellant relates to what he refers to as an unacceptable number of wallabies on his property; as a result, the wallabies breed up in the vegetation management areas of the property and then feed in the cleared areas of the property, thus depriving the property of feed which would otherwise be available for stock.
This issue was also addressed by President MacDonald in her decision. I accept the appellant’s evidence that he has attempted to control the problem by the construction of wallaby fencing but that this has proven ineffective. I also accept the uncontested evidence of Mr David Atkinson in his statutory declaration which is Exhibit 7, to the effect that he considers the use of wire netting to control wallabies impractical, and that he has provided this advice to Mr Drew, the respondent’s valuer. However, I also accept the evidence of Mr Drew that he has made an allowance for the wallaby issue of a little over $20,000, which on my calculations equates to an allowance of 3%. I consider this allowance acceptable.
The other issues raised in the appeal relate to either the comparability of “Woodstock” to the sale properties used by Mr Drew, or to questions as to the reliability of certain sales. I will leave a detailed discussion of these issues to my analysis of the sales evidence. However, one aspect that is relevant for further consideration here is the evidence of Mr Alfred Collins who is an expert in Applied Genetics.
I found Mr Collins to be a well credentialed, skilful witness who gave compelling evidence. It was clear that he had a working knowledge of not only “Woodstock” but many of the sales properties going back many decades. I was highly impressed by him as a witness.
In this regard, I note what Ms Pham had to say regarding Mr Collins’ evidence in her written submissions where she made the following observations:
“[14] The appellant called Mr Collins as an expert witness in Applied Genetics, for the appellant’s case. Mr Collins stated that he had experience in buying and developing land as well as giving advice in relation to carrying capacity in various countries.
[15] Despite the fact the Mr Collins was called as an expert witness in Applied Genetics, he did not dispute the nature of land or carrying capacity provided in Mr Drew’s report.
[16] Mr Collins made comments in relation to the Sales relied on by Mr Drew. Particularly, Mr Collins made a comparison between Sale 1 and the subject and commented that it was ‘chalk and cheese’. In this regard, the Valuer has stated in his report that Sale 1 is superior to the subject and has applied the appropriate rate to account for its superiority. Additionally, the evidence of Mr Collins in relation to the comparability of the other sales relied on by the respondent to the subject are consistent with the expert Valuer’s assessment of the sales. Therefore Mr Drew’s evidence has not been contradicted and no reason has been demonstrated that would justify the rejection of Mr Drew’s evidence.”
In my view, the submissions by Ms Pham do not accurately represent the evidence given. For instance, as regards the comparison between “Bar H Corona” and “Woodstock”, Mr Collins gave the following evidence:[7]
“… Okay. The comparison of Bar H Corona to Woodstock to me was nothing short of bizarre, I’ve got to say that. Because I had personal knowledge of the production on Corona for probably, oh goodness, 20 odd years. And I had a personal knowledge of the development and production of Bar H during the last 30 years as well, while Rackemann’s owned it which I think was at least 25 years, probably 30. And I had a very personal knowledge of those properties because the genetics on Bar H are all my genetics. And the management template that the Rackemann brothers use there was my management template based on speed and timing. So I had a - I also have a knowledge of the production of Woodstock because that also is my genetics. All based on my genetics. All came out of the same pool. And I’m very aware of the productivity potential on Bar H and Corona. Not just because of genetics but because of the soil types and the nutrition that comes naturally out of the grass and the species there are just completely different. And, yes, I’m very aware of the difference. I find it quite bizarre, the comparison.”
[7] See Transcript 1-30 L50 to 1-31 L11.
Mr Collins’ evidence was also strongly expressed as to his views of proper comparisons between “Woodstock” and “Belbroughton”, “Cleethorps” and “The Glen”.[8] I find it quite telling that the respondent chose not to test any of Mr Collins’ evidence under cross-examination, despite having ample opportunity to do so.
[8] See Transcript 1-31.
I accept Mr Collins’ evidence in its entirety.
Valuation evidence
As already indicated, valuation evidence was provided to the Court by Mr David William Drew, a registered valuer employed by the respondent. Mr Drew is a highly experienced, senior valuer with many years of experience in the Rockhampton area. Mr Drew provided a report to the Court which is Exhibit 12. Mr Drew’s report sets out the various attributes of “Woodstock” and arrives at a valuation of $700,000 or $100.90/ha. In support of his valuation Mr Drew refers to three sales which I have summarised from his report as follows:
| Sale No. | Property Name | Area | Date of Sale | Sale Price | Analysed Price | Applied Unimproved Capital Value |
| 1 | Bar H and Corona | 5759.12 ha | 17-05-2010 | $8,500,000 ($1,466/ha) | $2,967,391 ($512/ha) | $2,800,000 ($483/ha) |
Comparison
Sale 1 has been assessed as having a present and potential carrying capacity of 1 beast to 3.726 ha on a mixed herd basis. This sale property has better location and access, superior in quality of country, and water, and overall carrying capacity. Overall the sale is superior.
| Sale No. | Property Name | Area | Date of Sale | Sale Price | Analysed Price | Applied Unimproved Capital Value |
| 2 | The Glen | 493.312 ha | 07-05-2010 | $150,000 ($220/ha) | $108,547 ($159/ha) | $65,000 ($131/ha) |
Comparison
Sale 2 has been assessed as having a present and potential carrying capacity of 1 beast to 12 ha on a mixed herd basis. This sale property has better location and access, however is inferior in quality of country, and water, and overall carrying capacity. Overall the sale is inferior.
| Sale No. | Property Name | Area | Date of Sale | Sale Price | Analysed Price | Applied Unimproved Capital Value |
| 3 | Terry Lea | 1040 ha | 26-07-2010 | $1,500,000 ($1,442/ha) | $400,382 ($384/ha) | $365,000 ($350/ha) |
Comparison
Sale 3 has been assessed as having a present and potential carrying capacity of 1 beast to 5.525 ha on a mixed herd basis. This sale property is about 70 km west of Rockhampton, therefore, slightly better located, with better access, superior in quality of country, and water, but smaller in area. Overall the sale is inferior.
There are a number of other important points contained within Mr Drew’s report to which reference should be made. Firstly, Mr Drew has assessed “Woodstock” as having the present and potential carrying capacity of 1 beast to 12 ha on a mixed herd basis. Under the heading Valuation Basis, Mr Drew’s report states as follows:
“Since the last revaluation in 1/10/2009, there has been only limited demand for rural properties in this locality. It has been concluded from analysing sales in Rockhampton Regional Council, that the rural market values in this locality were showing only a minor increase in values since the last revaluation of 1/10/2009. Therefore values were only increased by 10% in 1/10/2010 from the valuation made of 1/10/2009.”
Mr Drew gave consistent evidence regarding the minor increase in values during his evidence-in-chief where he had this to say:[9]
“There was very little movement in the market, a limited number of sales were available to me within that - that period. The market at that time was, you know, certainly came off the boil from, you know, earlier times, hence there is the - only a minor increase in the level of values that we could ascertain from the sales.”
[9] Transcript 1-47 L30-L36.
It is therefore hardly surprising, given the limited market movement and the limited number of sales, that there is some difficulty in comparing the three sale properties to “Woodstock”. Firstly, I note that sales 1 and 2 are within relatively close proximity to “Woodstock”, however sale 3 is in an area more distantly removed from “Woodstock”. Additionally, only sale 1 approaches the overall area of “Woodstock”; “Woodstock” has an area of 6,937.6765 ha, while sale 1 is approximately 15% smaller, having a total area of 5,759.12 ha. As regards sale 2, it has a total area of 493.312 ha or, in other words, only 1/14th of the size of “Woodstock”. Sale 3 has an area of 1,040 ha or, a little under 1/7th of the area of “Woodstock”.
I have already accepted the evidence of Mr Collins that in his view Mr Drew’s comparison of “Woodstock” and sale 1 is “quite bizarre”. As regards a comparison between “Woodstock” and sale 2, it was Mr Collins’ evidence that The Glen was “just a wall of rosewood and grey ironbark. Its got virtually no use for making money out of cattle. In fact, I’ve driven cattle through all that country over the years and there’s nothing to eat there for cattle”.[10]
[10] Transcript 1-31 lines 52-55.
Further, as regards sale 1, it is clear from the evidence that the purchaser of the property is both a developer and a cattleman. It also appears without doubt that it is a matter of common knowledge within the local community, and has been for a number of years, that there is a coal resource beneath sale 1, although I have no evidence of the size and nature of that coal resource before me. Unfortunately, there is no hard evidence from either the appellant or the respondent as to what impact, if any, the existence of coal under sale 1 had on the purchase price, in the specific mind of the purchaser.
The Presumption of Correctness
I now turn to make specific reference to what used to be an important element, in my view, of the respondent's case in valuation matters. In that regard, I refer to the old s.33 of the Valuation of Land Act 1944, which deemed the valuation made by the Valuer-General to be correct until proved otherwise, upon objection or appeal.
It is noteworthy, in my view, that that provision has not been replicated in the current LVA. Specifically the LVA casts the following duty on the appellant at the hearing in s.169(3):
“However, the appellant has the onus of proof for each of the grounds of appeal.”
The consequence of dropping the concept of the valuation being statutorily deemed correct, is that there is now a more even playing field as between appellants and the respondent when appeals are heard under the LVA in this Court.
In my view, appeals under the LVA are to be determined on what is essentially the balance of probabilities[11]. Given my findings on the evidence in this matter, this is clearly a case where the appellant has met the “balance of probabilities” requirement for at least some of his arguments.
[11] See Meiers v Valuer General [2012] QLC 19 at [27].
Conclusions
I acknowledge that is always a difficult task for a valuer to arrive at an appropriate value for any property when there is an absence of comparable sales. In my view, Mr Drew should not be criticised for selecting the three sales that he has relied upon in the absence of more comparable sales. However, that does not mean that it should automatically follow that the Court accepts those sales. I have difficulty, for different reasons, in accepting the comparability of all three sales. Turning first to sale 1, as indicated I have already accepted the evidence of Mr Collins. In effect, Mr Collins’ evidence is that there is simply no comparison between “Woodstock” and sale 1. Indeed, the sale price of $8.5M or $1,466/ha is perfectly consistent with the evidence of Mr Collins. I am surprised, given the raw data comparisons between “Woodstock” and sale 1, that Mr Drew referred to the sale 1 as “superior”. From my years of experience in hearing expert evidence in matters such as this, I would have expected the reference to have been more akin to “vastly superior” or something of that nature. It is also regrettable that neither party was able to provide any direct evidence as to the impact, if any, that the existence of coal beneath sale 1 may have had on the purchase price that the purchaser paid for sale 1.
Sale 2 is only a fraction of the size of “Woodstock”. Again, applying Mr Collins’ evidence, together with the major size difference between the two, I am surprised that Mr Drew has referred to sale 2 as inferior. This reference appears somewhat strange given that Mr Drew has assessed the overall carrying capacity on a mixed herd basis to be 1 beast to 12 ha for sale 2, which is the same as his assessment of the carrying capacity of “Woodstock”. I have seen nothing in Mr Drew’s analysis to take into account the very small size of sale 2 as compared to “Woodstock”.
I should also point out that Mr Drew’s assessment of the carrying capacities of “Woodstock” and sale 2 as being identical is at odds with his comparison statement wherein he states that sale 2 is inferior in quality of country, and water, and overall carrying capacity to “Woodstock”.[12]
[12] See Exhibit 12 page 9.
I am not satisfied that sale 2 is appropriate to compare to “Woodstock”, given its small size and the severe questions that exist as to its actual carrying capacity.
I also have difficulties with respect to sale 3. To begin with, sale 3 is located in a very different locality to that of the subject “Woodstock”, sale 1 or sale 2. While “Woodstock” and sales 1 and 2 are located in the Marlborough area about 100 km north of Rockhampton on the Bruce Highway heading towards Mackay, sale 3 is located about 70 km west of Rockhampton on the Capricorn Highway heading towards Emerald. It is also curious that Mr Drew has determined sale 3 to be overall inferior to “Woodstock” although stating that the sale property is “slightly better located, with better access, superior in quality of country, and water, but smaller in area”.[13] It is further difficult to assess the property as inferior to “Woodstock” when one considers the carrying capacity as assessed by Mr Drew for “Woodstock” at 1 beast to 12 ha on a mixed herd basis, whilst he has assessed sale 3 as having a present and potential carrying capacity of 1 beast to 5.525 ha on a mixed herd basis; in other words, the carrying capacity of sale 3, which is supposedly inferior, is over double that of “Woodstock” on a beast per hectare basis.
[13] See Exhibit 12 page 11.
In view of my analysis of the evidence with respect to each of the sales properties, I find it most difficult to rely upon any of those sales in arriving at the correct unimproved valuation of “Woodstock” as at 1 October 2010.
I also find it difficult to reconcile a valuation increase of 10% in one year as consistent with Mr Drew’s evidence that there was very little movement in the market during that period.
It is of course true that the only valuation evidence that I have is that of Mr Drew, and that Mr Rea conceded during cross-examination that he could not “agree or disagree” with a minor 10% increase in the market around the valuation date.[14]
[14] See Transcript 1-44 Lines 52-7.
I have found the final determination in this matter, in light of the evidence, somewhat perplexing. On one hand, I have a valuation for 1 October 2009 confirmed by a decision of Present MacDonald in the sum of $640,000 for the “Woodstock” property. I have sales evidence which, for various reasons, I have treated as not properly comparable. I have evidence from the valuer of a slight increase overall in the market, but then an application of a 10% increase which, in ordinary language, is certainly above the scope of a “slight increase”.
It is of course incumbent upon the Court to reach a determination in this matter. Doing the best that I can in the circumstances, and accepting that there was a slight increase within the region, but finding that there are no comparable sales with which to properly compare to “Woodstock”, I have decided that it is appropriate to fix the unimproved value of the subject land as at 1 October 2010 in the sum of $660,000, which in my view represents the slight increase in the market as referred to by Mr Drew more appropriately and in line with the evidence as a whole in this case.
Orders
1.The appeal is allowed.
2.The unimproved value of the aggregation property known as “Woodstock” is fixed in the sum of Six Hundred and Sixty Thousand Dollars ($660,000) as at 1 October 2010.
PA SMITH
A/PRESIDENT OF THE LAND COURT
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