RJ and SC Kleeman v Department of Natural Resources and Water
[2009] QLC 48
•6 April 2009
LAND COURT OF QUEENSLAND
CITATION: RJ and SC Kleeman v Department of Natural Resources and Water [2009] QLC 0048 PARTIES: Richard J and Susan C Kleeman
(applicants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2008/0174 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation of land under the Valuation of Land Act 1944 – General Division DELIVERED ON: 6 April 2009 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDER: The appeal is dismissed. CATCHWORDS: Valuation of Land Act 1944 – presumption of correctness of statutory valuation – onus of proof – reliability of sales evidence relied on by respondent – relevance and prohibitive value of evidence concerning relativity APPEARANCES: Mr R Kleeman in person for the appellants
Ms T Johnson, Principal Lawyer, Department of Natural Resources and Water
Background
Richard and Susan Kleeman, the applicants, have appealed against the assessment of unimproved value assigned to their land by the respondent, the Chief Executive, Department of Natural Resources and Water. The applicants are the registered proprietor of a parcel of land located at 9 Eagle Street, Alderley, more properly described as Lots 11 and 12 on Registered Plan 20308, Parish of Enoggera.
The unimproved value of the subject land was originally determined in the amount of $800,000. However, pursuant to s.68 of the Valuation of Land Act 1944 (VLA) the respondent altered the valuation to $750,000. It is that valuation that is now appealed against. The relevant date of valuation is 1 October 2007. The appellants estimate of the unimproved value of their land is $580,000.
The land comprises a total area of 809 m² and enjoys all the usual urban amenity and services. Under the town planning scheme for the city of Brisbane the land is designated “residential low density”. Consistent with that designation, as at the date of valuation, the land was being used for single unit dwelling purposes. Notwithstanding that the land comprises of two individual lots, pursuant to s.17 of the VLA the whole of the land has been valued as a single unit dwelling site.
At the hearing of this appeal the appellants were represented by Mr Kleeman. The respondent was legally represented by Ms T Johnson, a principal lawyer employed by the respondent and relied on the evidence of Mr A Horne, a registered real estate valuer also employed by the respondent.
Issues in the appeal
Pursuant to s.33 of the VLA the valuation appealed against is deemed to be correct until proven otherwise. In Brisbane City Council v The Valuer-General,[1] the High Court considered that the statutory presumption in favour of the correctness of the valuation appealed against may be rebutted where it can be shown that it was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method. Pursuant to s.45(4) of the VLA the appellants are also limited to the grounds stated in their notice of appeal.
[1] (1977-78) 140 CLR at 56-57.
In the attachment to their notice of appeal, the appellants identified a number of issues upon which they relied to say that the valuation appealed against was wrong. This annexure combines a mixture of fact, assertions and argument. The appellants also relied on an undated statement of Mr Kleeman.[2] A reading of these documents together with the oral testimony of Mr Kleeman identified the real issues in the appeal to be:
(i)The unimproved value assigned to the subject land is clearly out of line and/or otherwise inconsistent with the unimproved values attributed to other parcels of land in the area and, therefore, must be wrong (the relativity argument).
(ii)The increase in the unimproved value of the subject land of the order of 50% is unjustified and any justifiable increase could not exceed 15%. (The level of increase argument)
(iii)In applying the sales evidence relied on by the respondent to the subject land the respondent failed to sufficiently take into account the value of the improvements thereon and/or the respondent failed to have regard to and apply relevant sales evidence.
[2] Exhibit 1.
The relativity argument
I accept that there are a number of anomalies in the comparison of the unimproved value assigned to other land with that assigned to the subject. However, such anomalies can arise for various reasons including, by way of example, errors and/or omissions that occur as a result of the application of the mass appraisal valuation system adopted by the respondent. In this regard Mr Horne readily conceded that anomalies in the general area of the subject did exist and were in the process of being rectified.
The Land Appeal Court has observed that it is untenable to adopt a value for one parcel of land based on relativity where no sound basis for doing so exists[3] and, that usually, the best evidence for the assessment of the unimproved value of land is that of sales of vacant or lightly improved comparable lands which have occurred at or about the relevant date of valuation.[4] In Bignell v Department of Lands[5] the Land Appeal Court said:
“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 an area’.”
[3] Barnwell v The Valuer-General [1990] 13 QLCR 13 at 16.
[4] Fischer v Valuer-General [1983] 9 QLCR 44 at 46 (LAC) and Grahn v Valuer-General [1992-93] 14 QLCR 327 at 328-239 (LAC).
[5] Unreported decision of the Land Appeal Court AV92-65-4 March 1996 (at 10).
The evidence about the unimproved values assigned to other lands in the area, while clearly identifying a problem in the respondent’s maintenance of correct relativities, does not, on its own or in conjunction with the other evidence led on behalf of the appellants, convince me that the valuation appealed against is wrong.
The level of increase
As is the case with anomalies in the relativity of unimproved values in an area, there could be various explanations for an apparently sudden and significant increase in the unimproved value attributed to land in a particular area. For example, the operation of market forces and/or the rectification of past valuations carried out by the respondent now considered to be too low. Mr Horne gave evidence, which was largely uncontradicted, to the effect that land prices in the area of the subject had undergone material increases up to and including the relevant date of valuation and, further, that as at the relevant date of valuation the prices being paid for elevated parcels of land (which the subject is) had otherwise increased significantly and the previous unimproved values materially understated the true value of such land. I accept Mr Horne’s evidence on these matters.
As is the case for the “relativity” argument mounted by the appellants, I find that the evidence concerning the significant increase in the unimproved value assigned to the subject land when compared to its previous valuation does not show that the valuation appealed against is wrong.
In this context I respectfully agree with what was said by the Land Appeal Court in Tow v Valuer-General:[6]
“… a large increase over and above the previous valuation is of in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation … ”
[6] [1978] 5 QLCR 378 at 381.
The Sales Evidence
Mr Kleeman relied on a number of sales which, in his opinion, demonstrated that the unimproved value assigned to the appellants’ land was manifestly excessive. The difficulty is that the sales relied on by the appellants were improved sales and there was no meaningful analysis of those sales and Mr Kleeman otherwise failed to adequately show how, when they were compared to the subject land, they revealed any error in the valuation of the respondent. There was no meaningful application of that sales evidence to the subject land. These comments are not intended as a criticism of Mr Kleeman but as recognition of the difficulties that a lay person often faces in cases such as this.
Mr Horne is a qualified valuer with some 30 years experience. Mr Horne relied on three sales which he described as being relatively lightly improved. I accept his evidence about this for his sales 1 and 3. However, I have some real concerns about the accuracy of this description for his sale 2. This sale involved the subject land and Mr Kleeman gave evidence that when the property was purchased by the appellants they intended to renovate the existing house on the land, including adding an additional storey. I accept Mr Kleeman’s evidence that the house located on the land when purchased was a substantial one. It only became apparent to the appellants some time after they purchased the land that it was impractical for them to add an additional storey and it was only then that they decided to demolish the existing structure and build a new house. In these circumstances I find it difficult to accept with any conviction Ms Johnson’s submission that, consistent with the reasoning of the High Court in Valuer-General v Fenton Nominees Pty Ltd,[7] it could be said with any degree of confidence that insofar as the appellants were concerned the improvements on the land had no value to them and would have played no part in the purchase price paid for the land.
[7] [1982] 150 CLR 160 at 166.
Notwithstanding my reservations concerning Mr Horne’s sale 2, his evidence was not seriously shaken in cross-examination. On balance I accept that he has had sufficient regard to and properly applied relevant sales evidence in determining the unimproved value of the subject land. The appellants have failed to show that in carrying out his valuation Mr Horne proceeded on a wrong principle and/or adopted a fundamentally erroneous valuation method and/or that his valuation otherwise involved significant errors of fact.
For the reasons expressed above, the appellants have failed to show that the valuation appealed against is wrong and that the statutory presumption of correctness prescribed pursuant to s.33 of the VLA has been rebutted. Accordingly, the appeal must fail.
Before making the final orders disposing of this appeal I would observe that this case is an unfortunate one in that the respondent’s assessment of its unimproved value, up until 1 October 2007, had materially fallen behind market reality. The consequential adjustment which occurred as at 1 October 2007 therefore resulted in an increase of such proportions as to no doubt cause a sense of dismay if not outrage on the part of the appellants. I was left with the distinct impression that the sheer magnitude of the adjustment in the unimproved value of the land played a significant role in motivating the appellants to prosecute this appeal.
Order
The appeal is dismissed.
RS JONES
MEMBER OF THE LAND COURT
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