Rettke v Chief Executive, Department of Natural Resources
[1999] QLC 24
•9 April 1999
|
BRISBANE
9 April 1999
Re: Appeals against Annual Valuations
Valuation of Land Act 1944
Shire of Esk.
(AV97-291, AV98-86 and AV98-600).
Rodney N Rettke
v.
Chief Executive, Department of Natural Resources
(Hearing at Toogoolawah)
D E C I S I O N
These are three appeals against the Chief Executive’s valuation of the same parcel of land under the provisions of the Valuation of Land Act 1944 (the Act).
Mr Rettke is the owner of land described as Lot 358 on Registered Plan 214851 and Lot 3 on Registered Plan 217800, Parish of Walloon, County of Churchill, containing an area of 51.2 hectares. As at 1 October 1996 the Chief Executive determined the unimproved value of that land at $110,000. Mr Rettke objected against that valuation and following advice that his objection had been disallowed, he appealed to the Land Court against that decision upon his objection (Appeal AV97-291).
However, it seems that soon afterwards the Chief Executive issued another valuation for that property as at the same date of valuation for $120,000. Mr Rettke also objected against that valuation and following advice that his objection had been reduced to $92,000, he appealed to the Land Court against that decision on his objection (Appeal AV98-86).
However, the date of the Chief Executive’s decision on objection was 19 February 1998, which meant that the closing date for the receipt of valid appeals was 2 April 1998. The appeal was received in the Land Court Registry on 8 April 1998, some six days out of time.
As required by the Valuation of Land Act, the Registrar wrote to Mr Rettke on 20 April 1998, notifying him that the notice of appeal appeared to have been filed out of time and advising him that the appeal did not lie unless he could prove to the Court that the failure to institute the appeal within the time prescribed was caused by undue delay in the transmission of mail in the ordinary course of post. He was also advised that he must notify the Registrar within 21 days of his intention. However, it seems that no reply was received in the Land Court registry.
Meanwhile, the Chief Executive carried out another valuation of the area and issued another valuation for that land as at 1 October 1997, in the sum of $92,000. Mr Rettke again objected against that valuation and appealed to the Land Court against the Chief Executive’s decision to disallow his objection. (Appeal AV98-600).
At the hearing of the appeal, Mr Rettke appeared and gave evidence, while the Chief Executive was represented by Mr J O’Rourke and valuation evidence was given on behalf of the Chief Executive by Mr EG Ridley, a registered valuer employed by the Department of Natural Resources.
At the commencement of the hearing, Mr O’Rourke explained the circumstances which led to the issuing of the three valuations. It seems that the original valuation as at 1 October 1996, was made on the basis that the property qualified for a concessional valuation under section 17 of the Act as land used for purposes of farming. The valuation issued for an amount of $110,000. Following the objection by Mr Rettke, the Chief Executive came to the conclusion that the property no longer qualified for the section 17 concession and issued an interim valuation for $120,000. Following an objection by Mr Rettke, the section 17 concession was reinstated and the valuation reduced to $92,000. However, the appeal was lodged out of time.
Subsequently, the Chief Executive revalued the property as at 1 October 1997, but the unimproved value remained unchanged at $92,000. Following an unsuccessful objection, Mr Rettke lodged an appeal to the Land Court against that valuation.
Mr O’Rourke advised the Court that the Chief Executive accepted that the initial valuation of $110,000 (Appeal AV97-291) should be reduced to $92,000 and would lead evidence to that figure.
Mr Rettke agreed that the practical effect is that there are two valuations under challenge, one made as at 1 October 1996, and the other made as at 1 October 1997, both for the amount of $92,000. Mr Rettke agreed that there was no point in pursuing the appeal against the interim valuation as it had no practical effect. That means that in respect of that interim valuation, AV98-86, there is no challenge to the fact that the appeal was lodged out of time. Therefore the appeal does not lie and the Land Court has no jurisdiction to deal with that matter.
However, that still leaves valid appeals AV97-291 which the Chief Executive now concedes the valuation should be $92,000 and AV98-600, the appeal against the valuation made as at 1 October 1997, also for the amount of $92,000.
There was little between the parties in relation to the physical description of the land. It fronts the gravel surfaced Voss Road, approximately 10 kms north of Marburg. Electricity, telephone and reticulated water from the Glamorganvale Water Supply Scheme are connected. It is zoned “Rural A” under the Shire of Esk Town Planning Scheme and is used for grazing stud horses.
Mr Ridley stated that the land is in an area known as “The Marburg Scrub”. He described it as comprising easy to moderate slopes cleared of the original brigalow softwood vegetation. Mr Rettke generally agreed with that description, but thought that some of the slopes should be described as steep.
In this case there is no argument that the property qualifies for valuation under the concessional provisions of section 17 of the Act, as land used for purposes of “farming”. That section of the Act requires that when land is used for purposes of “farming” as defined, then any enhancement in the value of that land because it has a potential for some other purpose, must be disregarded when making the valuation. Sub-section (2) of section 17 defines “farming” to mean:“(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 significant and substantial commercial purpose or character; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis.”
Despite some doubts as to whether the property qualified for the valuation concession in the process explained above, the respondent agreed that the use of the use of the property for stud quarterhorse purposes qualifies it for valuation under section 17. The principal argument in this case is in relation to the appropriateness of the sales used by the respondent as a basis for the valuations in determining the “farming” value of the property.
As a basis for his valuations in both these cases, Mr Ridley referred to the same five sales, the sales of three properties and resales of two of them.
Mr Ridley’s Sale No 1 is of a 48.3ha property, zoned “Rural A”, fronting a bitumen sealed road and situated just south of Marburg. That property sold in November 1995 for $195,000 and Mr Ridley analysed that sale to show $85,994. In the valuation of the Shire made as at 1 October 1996, the respondent applied an unimproved value of $85,000, or $1,760 per hectare.
That property has electric power, telephone and school bus services. Mr Ridley described it as easy to moderate slopes originally timbered with brigalow and softwood scrub. He considered the sale property to be inferior to the subject land, both in class of country and situation and the fact that it did not have access to a reticulated rural water supply scheme.
Mr Ridley’s Sale No 2 is of a 40.47ha property, zoned “Rural A”, situated immediately to the east of Sale No 1, but fronting a gravel surfaced road. That property has electricity and telephone, but does not have access to a reticulated rural water supply scheme. Mr Ridley described that land as comprising easy to moderate slopes, originally timbered with brigalow and softwood scrub.
That property sold in June 1995 for $250,000, but on interest-free terms which Mr Ridley calculated to be worth $43,389. The sale analysed to show an unimproved value of $86,004 and in the revaluation of the Shire as at 1 October 1996, the respondent applied an unimproved value of $80,000, or $1,977 per hectare.
Mr Ridley considered the sale property to be inferior to the subject land on a rate per hectare basis, as he considered the class of country inferior and also its situation and access. It also lacked access to a reticulated rural water supply scheme.
That property resold in May 1997 for $225,000, this time not on interest-free terms. Mr Ridley analysed that sale to show $96,410 and in the revaluation of the local authority as at 1 October 1997, the respondent applied an unimproved value of $85,000, or $2,100 per hectare.
Mr Ridley’s other two sales are the sale (Sale 4) and resale (Sale 5) of a 133.1 hectare property, zoned “Rural A”, situated to the south-east of Boonah, fronting a bitumen sealed road. Electricity and telephone are connected to the property, but it does not have access to a reticulated rural water supply scheme. It depends upon a bore and dams and natural water in the gullies is salt affected.
That property sold (Sale 4) in May 1996 for $450,000 and the sale was analysed to show an unimproved value of $209,890. In the revaluation of that local authority as at 1 October 1996, the respondent applied an unimproved value of $185,000, or $1,390 per hectare.
Mr Ridley described that land as comprising moderate to steep slopes where soils are derived from sandstone, the country being originally timbered with brigalow and softwood scrub, with a small area of forest in the south-east corner. He regarded that property as being inferior to the subject land on a rate per hectare basis.
That property resold (Sale No 5) in May 1997 for $490,000. That sale was analysed to show an unimproved value of $231,480 and upon the revaluation of that local authority as at 1 October 1997, the respondent did not alter the unimproved value of $185,000, or $1,390 per hectare.
Mr Rettke attacked those sales as being totally inappropriate as a basis of valuation for a property used for purposes of farming. He claimed that the sales in the Marburg area particularly, did not reflect the value of “farming”, land as they included a rural residential component. The sale prices were not a true reflection of the value of farming land. He contended that Mr Ridley had not attempted to separate that rural residential element from the sales and by not doing so he was contravening the provisions of section 17 of the Act. In his opinion, the values derived from those sales were excessive on a beast area basis. He rejected Sales 4 and 5 as providing any basis for the valuation, as they were too far away.
However, Mr Rettke had not investigated any sales of properties in the area. He had estimated that the unimproved value in each case should be $65,000 because that was the previous valuation of the property. His opinion on beast areas was derived from what he had read.
Mr Ridley was confident that the sales were appropriate as a basis of valuation for “farming” land. He had investigated the circumstances of each sale and had satisfied himself that the purchasers in each case had bought the properties for farming purposes. In the case of Sale No 1, the purchasers had informed him that they bought the property to run Red Angus and Brahman cattle and that they were involved in embryo transfer. The property suited them admirably, as it was well situated and close to services, and particularly veterinary facilities.
The purchaser of Sale No 2 had informed Mr Ridley that he was involved in the business of butchering and had property elsewhere. He needed a property to run some cattle as well as stock horses. The purchasers of Sale No 3 told Mr Ridley that they purchased it for the purpose of running cattle, while he felt that there was no doubt that the property the subject of Sales 4 and 5, was purchased for the purpose of farming.
I will return to that principal issue later.
In addition, Mr Rettke was critical of the valuations that had been applied by the respondent in the Esk Shire. He contended that properties in the Glamorganvale area had been increased by 60%, greater than any other area of the Shire. He was concerned that his property had been valued higher than similar scrub country to the west of the Marburg Range. He contended that there had been a change in the relativity of values between his property and other properties valued under the provisions of section 17. In particular he referred to the valuations of neighbouring properties owned by Freese, Willey, Abraham and Jenkins. The relativity of the valuations of those properties which had been established for many years, had been altered as a result of the last revaluation of the area, for no apparent reason.
Mr Ridley conceded that there had been some alteration to the relativity of valuations, but said that had been brought about as the result of reductions following objections by landowners where each case had been treated on its own merits. However, it emerged later that Mr Rettke had been supplied with the wrong figures and that the alterations were not as dramatic as first appeared.
In any case, there is no reason why even long established relativity should not be altered provided that the Chief Executive has sound reasons for doing so. However, the matter was not pursued in depth. Mr Rettke’s principal argument was that section 17 of the Act required that a property which was used for purposes of “farming” must be valued as such and that any element of enhancement in value for other purposes must be excluded. That, he argued, was not what Mr Ridley had done, as his sales contained components of value for rural residential purposes. He argued that such high values could not be sustained having regard to the productivity of those lands. Therefore, Mr Ridley was wrong in using those properties as a basis to value “farming” properties.
On the other hand, Mr Ridley claimed that his investigation of the sales had convinced him that they were purchased for the purposes of farming. He contended that in his view, the value of rural residential land and the value of handily situated farming lands are merging. He said there were certain attributes which attracted purchasers of rural residential land, such as elevation, views, all-weather access and proximity of services. However, in his opinion, some of these attributes also attracted purchasers of farming land, but they would be influenced by the productivity of the land, rather than its elevation and views. However, he argued, that did not mean that purchasers of farming land would not pay more for such land situated on a bitumen or all weather gravel road and handily located to services.
This whole matter has been the subject of extensive litigation ever since the provisions of section 17 and its predecessor, section 11(1)(vii), were introduced into the Valuation of Land Act. In APM Forests Pty Ltd v. The Valuer-General (1975) 2 QLCR 30, the then President of the Land Court, Mr WF Smith, discussed the difficulty of establishing that sales used as a basis for the valuation of primary production land were free of any element of enhancement for other purposes. He suggested that valuers may have to seek such sales somewhat more distant than would previously have been regarded as acceptable, to obtain sales in a “purely” primary producing locality. It was also made clear in that case that the Act required that any enhancement in value for any purpose other than primary production must be excluded. However, that did not mean that land which was used for a particular primary production purpose, but which had a potential for a higher primary production purpose, was required to be valued only for the purpose for which it was used. For example, land which was used for grazing, but which had potential for cultivation, should be valued in accordance with its cultivation potential, rather than grazing value. (See also Dellit v. The Valuer-General (1978) 5 QLCR 231.)
It seems to me that Mr Ridley has investigated the sales and was satisfied that although they are situated in an area where there are rural residential lands, Sales 1, 2 and 3 were purchased for purposes of farming. He then went some distance away to an area where he felt there was no potential for any purpose higher than farming and compared the sales in that area. He came to the conclusion that the farming values in the Marburg area were in line with the farming values in the Boonah area, after making allowance for their better situation and proximity to services.
Section 56(2) of the Valuation of Land Act places the burden of proving his appeal squarely upon the appellant. In the absence of proof to the contrary, the respondent’s valuation is deemed to be correct (s.33). In Brisbane City Council v. The Valuer-General (1978) 140 CLR 41, the High Court considered provisions of the predecessor to s.33 of the Act and concluded that the presumption of correctness could be rebutted if it was shown that in making the valuation the Valuer-General had:
· acted upon a wrong principle; or
· made a serious error of fact; or
· made the valuation by a fundamentally erroneous method.
In these cases, I am not persuaded that the respondent acted upon a wrong principle of valuation. It is well settled that the most appropriate basis for a valuation is to compare the subject land with sales of comparable properties (see Grahn v. The Valuer-General (1992-93) 14 QLCR 327. That was the principle of valuation which had been adopted by Mr Ridley. Nor am I persuaded that the respondent made a serious error of fact. Mr Ridley was well aware of the requirements of section 17 of the Act and has endeavoured to apply them.
That means that the appellant must demonstrate that the respondent made the valuation by an erroneous method. Mr Rettke has contended that this error occurred in the choice of sales to value the subject land. They are, he argued, inappropriate because they contain an element of enhancement because of potential for another purpose. However, despite forcefully arguing his case, Mr Rettke has not produced any evidence to support his contention. In order to demonstrate that the respondent had adopted a wrong method, I would expect an appellant to produce sales of farming properties to demonstrate that the level applied by the respondent was excessive. In the absence of such evidence, I can only conclude that Mr Rettke has not satisfied the test laid down by the High Court in the Brisbane City Council case. In those circumstances, Mr Rettke has not rebutted the statutory presumption of correctness contained in s.33 of the Valuation of Land Act.
In these cases, the appellant has failed to discharge the onus of proof. Therefore, the appeals must fail, except to the extent conceded by the respondent.
Accordingly, in the case of Appeal AV98-600, the appeal is dismissed and the unimproved value of $92,000, determined by the respondent as at 1 October 1997 is affirmed.
In the case of Appeal AV97-291, the appeal is allowed, the valuation of the respondent is set aside and the unimproved value as at 1 October 1996 is determined at $92,000.
In the case of Appeal AV98-86, the appeal is struck out for want of jurisdiction.
(JJ Trickett)
President of the Land Court
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