Rea v Valuer-General

[2011] QLC 71

LAND COURT OF QUEENSLAND

CITATION:

Rea v Valuer-General  [2011] QLC 71

PARTIES:

Keith Joseph Rea
(appellant)

v.

Valuer-General
(respondent)

FILE NO:

VLA319-10

DIVISION:

General Division

PROCEEDING:

Land Court of Queensland

DELIVERED ON:

18 November 2011

DELIVERED AT:

Brisbane

HEARD AT:

Rockhampton

PRESIDENT:

CAC MacDonald

ORDERS:

1.     The appeal is dismissed.

2.     The unimproved value of the aggregation known as "Woodstock" comprising Lot 821 on SP 185341, Lots 1 and 2 on SP 232628 and Lot 1668 on SP 185342, in the Parish of Marlborough is affirmed at Six Hundred and Forty Thousand Dollars ($640,000), as at 1 October 2009.

CATCHWORDS:

Appeal against annual valuation - impact of Vegetation Management Act 1992 - allowances - onus of proof.

APPEARANCES:

Mr KJ Rea in person
Ms L Hawkings-Guy, Principal Lawyer, Legal Services, Department of Environment & Resource Management, for the respondent

1. The appellant, Keith Joseph Rea, has appealed, under the provisions of the Valuation of Land Act 1944 (the Act), against the determination by the respondent Valuer-General of the unimproved value of Mr Rea's property "Woodstock" as at 1 October 2009.  The respondent determined the value of the property as at that date as $640,000.  The appellant estimated the unimproved value of the land to be $576,000. 

2. The property is situated on Marlborough-Sarina Road about 11 kms south-west of Marlborough and is severed into two parts by that road.  It has an area of 6,937.6765 ha and is used by the appellant for grazing - breeding and fattening beef cattle.  The property consists of several parcels of land which were amalgamated for the purposes of the valuation and one valuation issued. 

3. Mr Rea conducted the appeal and gave evidence in support of his grounds of appeal.  Valuation evidence was given on behalf of the respondent by Mr DW Drew, who is a registered valuer employed by the Department of Environment and Resource Management.

Valuation evidence

1. Mr Drew's valuation was carried out by comparison with sales.  He valued the property at $92.42/ha or $640,000 (rounded) unimproved.  That valuation reflects a value of $1,100 per beast area unimproved. 

2. Mr Drew's evidence was that since the previous valuation at 1 October 2006, there had been strong demand and increased prices for properties in the area of the subject in 2007/2008.  However, from late 2008 through 2009 the gains that had been made were all but lost due to the global financial crisis (GFC) and the continuing drought.  The volume of sales of rural properties decreased greatly in 2009.  Mr Drew concluded from an analysis of sales in the area of the Rockhampton Regional Council that rural market values in that locality had shown no increase in value since the previous valuation on 1 October 2006.  Therefore values were rewritten on 1 October 2009 from the valuation made as at 1 October 2006.  Accordingly, the valuation of $640,000 under appeal in this matter is the same as the issued valuation for the subject land as at 1 October 2006.

3. Mr Drew relied on two sales to support the valuation. 

4. Sale 1, a property known as Cleethorpes, is a 2,820.85 ha property which sold on 1 July 2009 for $3,000,000.  Mr Drew analyzed the sale to $470/ha or $2,017/beast area.  He applied $1,747/beast area.  In comparison with the subject property, Mr Drew said that the services were similar, the access was similar but the sale was slightly better located, the sale land was superior to the subject and water availability was similar.  Overall, he considered that the subject was inferior to the sale on a per hectare basis. 

5. Mr Drew provided no details of the improvements on the sale property as at the date of sale.  The evidence also indicated that the sale included a number of cattle.  Under cross-examination Mr Drew said that he had allowed $200,000 for the value of the cattle included in the sale.  That information was not included in his written report.  Mr Rea estimated the value of the cattle to be $300,000. 

6. Sale 2, Belbroughton, has an area of 5,793.648 ha and sold for $6,000,000 on 9 November 2009.  Mr Drew analyzed the property to an unimproved value of $483/ha or $1,524/beast area.  He provided no information as to the improvements included in the sale nor as to the value that he had applied to this property.  Overall, Mr Drew said, the subject was inferior to the sale as the subject has superior land quality and water, and was better located.  That statement is self-contradictory and, it is assumed, Mr Drew intended to say that the sale had superior land quality and water, and was better located, because Mr Drew applied a value of $92.42 and a beast area value of $1,100 to the subject. 

Mr Rea's Case

1. Mr Rea's grounds of appeal were -

   1.The subject land is deteriorating year by year because of the restrictions placed on it by vegetation management.  These restrictions are not applied fairly and as the subject land is deteriorating, its value should be reduced year by year.

   2.It is completely unfair for the subject land to have had a capital loss and a productive loss and still have the same unimproved value.  It defies logic. 

2. Mr Rea supplemented his grounds of appeal with five objection points and the hearing focussed on those issues -  

   ·    Vegetation mapping wrong

   ·    No significant change in local area valuations

·    No account made for increase in density of timber and loss of production

·    No account taken for increase in vermin and depreciation of adjoining land

·    No allowance made for ongoing loss of productivity

1. 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. 

2. 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.

3. 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.

4. Mr Rea's evidence was that because he is unable to clear that part of his property, vermin such as wallabies are living in the uncleared area and feeding off his cleared areas causing them to degrade.  The vegetation on the uncleared areas is thickening all the time so the problem continues to get worse.  Although other landowners in the district shoot and poison wallabies, he is not prepared to do that.  He did not accept that it was viable to make an application under the vegetation management guidelines to thin his remnant vegetation because of the cost of doing that as compared with the benefit received.  Mr Drew said that he was not aware of any person who had made a successful application for thinning, but nevertheless that was a process that was available under the Vegetation Management Act.  Mr Rea has received payments from the Queensland Rural Adjustment Authority for the purpose of improving his enterprise, because part of his land is subject to the VMA.  He has spent some of that money in netting for wallabies but there were practical restrictions on how much netting could be installed.

5. The VMA has also interfered with Mr Rea's plans to clear and develop the better areas on Lot 821, the creek flats and some of the hollows.  He intended to leave the timber on the ridges because parts of the VMA area were too steep to clear. 

6. Mr Rea considered that Mr Drew's evidence that there had been no significant change in local area valuation, was irrelevant because the subject property was deteriorating.  He estimated he was losing about 5% productivity as a result of the controls on clearing the land.   No allowance had been made for that ongoing loss of productivity.  

7. Mr Rea said that Cleethorpes (Sale 1) did not have the regrowth or vermin problems that he has and it has far better water and better access than the subject property. 

8. Comparison between his property and Belbroughton, Mr Rea said, was inappropriate.  The country on Belbroughton is black soil, the property runs up a big valley and has no water problems, there is underground water everywhere and the soil is far superior to his. 

Mr Drew's response

1. Mr Drew said that Mr Rea had raised the issues concerning the VMA in his objection lodged in 2004.  As a result, the country classification had been altered.  The area of land unavailable for development had been increased and a greater allowance made for poorer forest country due to the vegetation management restrictions. 

2. For the current appeal, Mr Drew did two things -

   ·    Following the preliminary conference held in relation to this appeal in November 2010, Mr Drew had reviewed the classification again.  He has now made an allowance by classifying 22% (1,483 ha) as undulating harder forest, not developed with a carrying capacity of 1:20 ha.  In addition, a further 20% (1,388 ha) has been classified as unavailable harder forests and hills timbered with broadleaved iron bark, rosewood, lancewood and serpentine iron bark. 

   ·    Mr Drew had allowed an additional $15,000 reduction to make allowance for the netting necessary to control the native animals.

1. Neither the change in classification nor the further allowance for pests affected the overall valuation of the property because, following an inspection of the property which Mr Drew conducted for the purposes of this appeal, he had mapped the area in more detail and slightly increased the percentage of cleared country.  The result was that the valuation still came out at $640,000.

Conclusions

1. Section 33 of the Valuation of Land Act provides that a valuation made by the Chief Executive under the Act is deemed to be correct until proved otherwise upon appeal.  The effect of the section is that the onus is upon the appellant to establish that the valuation under appeal is incorrect.

2. 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. 

3. There are, undoubtedly, unsatisfactory aspects of Mr Drew's valuation report.  There are two errors.  Mr Drew identified the distance of the subject property from Marlborough as 5 kms instead of 11 kms.  He also made the self contradictory statement referred to in [9] above that the subject was inferior to the sale as the subject has superior land quality, water and location.  However I am satisfied that these errors have not materially affected the valuation. 

4. More importantly, Mr Drew's sales evidence is incomplete.  There is no information as to the type and value of the improvements on the sales properties so that there is no way in which the appellant or the Court can verify the accuracy of Mr Drew's analysis.  In addition, Mr Drew did not indicate until cross-examination that Sale 1 included cattle.  Moreover, Mr Drew did not provide any information as to the applied value of Sale 2 which again leaves the Court in a position where it cannot compare the values applied to the subject and that sale. 

5. Similarly, although Mr Drew gave oral evidence that he had increased the allowances for the adverse impact of the VMA on the subject property by altering the country classification and giving a reduction of $15,000, those calculations are not in his report nor is there any mention of them.  Likewise there is no reference to his changes to the mapping, following the inspection of the property.  The result is that there is a lack of transparency in the report.  Three separate adjustments were made and, coincidentally, the final valuation amount is the same as the figure reached before the adjustments.

6. This Court has said previously that it is desirable that valuers provide "speaking valuations" in their reports.[1]  A speaking valuation is one which, on its face, discloses the method of valuation used, or gives reasons or calculations, or explains the basis on which the valuation was made.[2]  There is an obligation on expert witnesses in this Court to explain their reasons and substantiate the factual basis on which the valuation is founded.[3]

   [1]WM George Pty Ltd v Chief Executive, Department of Natural Resources, Land Court, unreported, 20 September 2000 at [11].

   [2]Down v Chief Executive, Department of Natural Resources and Mines, Land Court, unreported 30 May 2002 at [30] citing Mayne Nickless Limited v Solomon (1980) Qd R 171 at 178;  Campbell v Edmonds [1976] 1 All ER 785 at 788; Arenson v Arenson [1973] 1 Ch 346 at 363.

   [3]WM George Pty Ltd v Chief Executive, Department of Natural Resources, Land Court, unreported, 20 September 2000. 

7. However, despite the inadequacies of Mr Drew's report, no evidence has been adduced by the appellant which persuades me that an error has been made in the valuation. Although Mr Rea was critical of Mr Drew's sales evidence, he (Mr Rea) adduced no alternative sales evidence. In those circumstances I have accepted Mr Drew's evidence as a registered valuer as to the comparability of the sales. Additional allowances have been made for the impact of the VMA on the subject property. Section 33 of the Valuation of Land Act therefore applies and the valuation is deemed to be correct.

ORDERS:

1.The appeal is dismissed.

2.The unimproved value of the aggregation known as "Woodstock" comprising Lot 821 on SP 185341, Lots 1 and 2 on SP 232628 and Lot 1668 on SP 185342 in the Parish of Marlborough is affirmed at Six Hundred and Forty Thousand Dollars ($640,000), as at 1 October 2009.

CAC MacDONALD

PRESIDENT OF THE LAND COURT