Roberts v Department of Natural Resources and Mines

[2003] QLC 75

LAND COURT OF QUEENSLAND

CITATION:	Roberts v Department of Natural Resources and Mines  [2003] QLC 0075
PARTIES:	Mary N, William L and Narda M Roberts (applicants)
v.
Chief Executive, Department of Natural Resources and Mines (respondent)
FILE NO:	AV2002/0534
DIVISION:	Land Court of Queensland
PROCEEDING:	An Appeal against an Unimproved Valuation - Shire of Murweh - Valuation of Land Act 1944
DELIVERED ON:	31 October 2003
DELIVERED AT:	Brisbane
HEARD AT:	Charleville
MEMBER	Mr RE Wenck
ORDER:	The appeal is dismissed and the valuation of the chief executive in the amount of Four Hundred and Sixty Thousand Dollars ($460,000) as at 1 October 2001 affirmed.
CATCHWORDS:	Statutory Valuations - Unimproved value - Valuation of Land Act 1944 Valuation - Sub market areas - Sales evidence - Direct comparison - Difficulties associated with direct comparison on an improved basis Sub Market Areas - Mass valuation methodology - Responsibility for correctness of valuation Previous Valuation - Relativity between valuations
APPEARANCES:	Mr WL Roberts for the applicants Mr K Fisher, Crown Law, for the respondent

Background

1. This appeal was heard in Charleville on 2 April 2003.  There were numerous objections by landowners against the chief executive's valuations within Murweh Shire and other western local government areas, as at 1 October 2001.  In Murweh Shire, a large group of landowners, including the appellants in this matter had been represented by Mr Dominic Devine, the principal of Devine Agribusiness, in the initial objection process.  Subsequent to decisions made by the chief executive on the individual objections, many of the original group had then retained Mr Devine to represent them in appeals to the land Court.

2. The appellants in this matter had decided to run their own case but it was known to the Court that a number of the Devine group of appeals, representative of land within the various Sub Market Areas (SMAs) were to be heard as "test cases" at a future date.  The parties in this matter agreed that the subject decision should not precede the decisions in the Devine group representative cases.  Those latter decisions were handed down on 16 September 2003 (Bauer & Ors v Department of Natural Resources and Mines [2003] QLC 64).

3. The land subject of the valuation appealed against comprises property known as "Victoria Downs", situated about 5 km west of Morven and 73 km south-east of Augathella, severed by the Landsborough Highway.  The real property description is Lot 1 RL5909:RL10/5909 and Lot 3 RS52:SH10/4817 Victoria Downs Holding and Lot 1 OR11 and Lot 26 OR4 all in the Parish of Cashalton, containing a total area of 13,001.21 ha.

Valuation Appealed Against

1. The chief executive's decision on objection had been to reduce the initial valuation of $580,000 (which had represented an increase rounded from 100% above the previous valuation as at 1 October 1998) to $460,000 (a 60% increase).

2. This appeal is against the valuation of $460,000.  In the notice of appeal the owners' estimate of unimproved value was $370,500.

Ground of Appeal

1. The single ground of appeal in the notice was -

   "Investigations and sales research indicates only a 30% increase justified."

The Evidence

1. Mr William L Roberts represented the appellants and gave oral evidence in support of the ground of appeal as contained in a written statement.

2. The ground of appeal was based on the allegation that the data "supplied by the Department" was unreliable, then further based on relativity issues.

3. It was Mr Roberts' submission that the Department clearly did not have support for the initial valuation as evidenced by the significant reduction on objection.  In his opinion there was still no support for the reduced valuation now appealed against.  The basis for the appellants' estimate was primarily obtained from the sale of the property "Gundare" and Mr Devine's advice to them and his arguments which had been put forth at the objection stage.

4. Mr Roberts was aware that the Department was placing reliance on the sale of the property "Allandale".  However, his investigations had indicated that the Department had "made numerous visits" to that property and reviewed the analysis of the sale twice before adopting the final application of unimproved value.

5. His investigations had also revealed that sales of "some of the best downs country in the Augathella region, eg 'Wicklow' and 'Southampton' showed increases of 37%".  He questioned the justification for the eventual 60% increase above the 1998 valuation.

6. In Mr Roberts' opinion, in view of the admission by the Department that the initial valuation that issued was wrong and unjustified, the costs outlaid by the appellants ($1,232 to the date of the hearing) in fighting the initial valuation increase should be at least partially reimbursed, to make the Department more accountable for its actions. 

7. Mr Roberts provided some history as to the development of "Victoria Downs" and its operation as a stud.  As opposed to some neighbouring properties it had been ringbarked during the depression in the early 1930's then sucker-bashed.  Management as a stud had necessitated lower stocking rates than normal, to provide generally more grass cover than surrounding properties.  It was his opinion that the true unimproved nature of the land and existence of original vegetation had never been fully appreciated by valuers in the valuation process since the inception of unimproved valuations under the Valuation of Land Act 1944 (the Act).  As a consequence "Victoria Downs" had been "unfairly treated from an UCV situation and not enough allowance has been made for the development done and the level of management".

8. It was Mr Roberts' belief that, from a local relativity aspect, similar country types carried varying levels of value based on past management practices.  He cited one example where a valuation had been discounted due to erosion resulting from poor management practices.  He held the opinion that all country in the Morven area is affected by the same market forces yet it had been his observation that some properties which adjoined or were in close proximity had their valuations increased by 15% in some cases and 40% in others.

9. Mr Roberts attempted to show what he believed was incorrect relativities between unimproved values by calculating the relationship between the unimproved values applied by the Department to those sale properties and their improved sale prices.  For example "Allandale", on his information, had sold for $116/ha ($136/ha including stock, according to the Department's evidence) and had an applied unimproved value of $40/ha.  "Victoria Downs" in comparison had an applied unimproved value of $35/ha.  If they were hypothetically similarly improved, he assumed that the improved value of "Victoria Downs" would then be $101.50 ($35 ÷ 40 x $116/ha).  However, using a similar analysis of the sales of "Gundare" at a sale price of $57.25/ha - applied unimproved value of $27/ha, "Bundoo" ($35.42/ha - $9.94/ha), "Caledonia" ($50.10/ha - $7.29/ha), "Halton" ($29.75/ha - $4.63/ha) and "Wyoming" ($28.72 - $4.17/ha), he calculated that the equivalent assumed price which might have been achieved for "Victoria Downs" could be $73.47/ha or $124.71/ha or $240.53/ha or $224.89/ha or $241.05/ha respectively.  As I understood his theory, the unimproved valuations applied to at least the properties "Caledonia", "Halton" and "Wyoming" were either too low in comparison with that applied to "Victoria Downs" or more likely that the valuation of "Victoria Downs" was too high in comparison and then carrying too high a share of the local government rating burden.

10. Furthermore from his investigations and calculations there were differences in the Department's valuations of similar land classifications, from downs to brigalow to the red country with "vast differences" in the latter two country types.

11. He submitted that the development potential of country such as the brigalow and red timbered country in the Morven district had changed the perceptions of purchasers "yet the Department has proved very reluctant to implement the necessary changes to the UCV of this country and I refer again to the total revaluation that the Department had to do to the cattle country in Murweh Shire to get the relativity right.  I believe that this can also be said of all soils in the Morven area that can be developed."

12. It was his evidence that the box/sandalwood soils on "Victoria Downs" were harder setting and not as easy to develop as the sandy pine red soils "and yet carry an UCV significantly higher."

13. Mr GG Naish was the departmental valuer who took responsibility for the valuation appealed against.  Apparently he had become involved in the valuation process of various parts of Murweh Shire after other valuers had decided the initial valuation basis. 

14. He had conducted an inspection of "Victoria Downs" and classified its country as follows:

    4,860 ha(37%)        -          open red soil downs

    1,344 ha(10%)        -          broken sloping Myall downs

    865 ha (7%)        -          brigalow, box (brown soils)

    3,145 ha(24%)        -          box, sandalwood red soil

    2,920 ha(22%)        -          harder stony to rough mulga, Yapunyah ridges to 

    red mulga

    (It is observed that there is a minor difference between the area of classified country and the actual area of the property).

1. Mr Naish described the usage of the property as being for sheep breeding and wool growing while the highest and best use was considered to be sheep breeding and wool growing or cattle breeding.  He estimated the carrying capacity to be 1 DSE to 1.8 ha or 1 BE to 12.6 ha.

2. It was Mr Naish's evidence that "Victoria Downs" was located in an area identified by the Department as the Morven Downs SMA.  SMAs were originally identified by the Department in consultation with landowners and other interested parties.  Their identification was based on criteria associated with various country types, or mixtures of country types, which could be expected to attract individual interest from differing sectors of the market. 

3. It was Mr Naish's evidence that the initial increase of 100% above the previous valuation of lands in the Morven Downs SMA had resulted from application of sales evidence from properties with a relatively high proportion of downs country but, as it happened mainly in the Tambo Downs SMA to the north of Augathella.  However, after consideration of the arguments put forward in the objections to the original valuations, the decision was taken to review the weight which could be placed on the analyses of the sales of "Gundare" in the Augathella Merge SMA and with some downs country, and "Allandale", in the Augathella Downs SMA and comprising about 44% open to shaded undulating downs.  At the time when the initial valuation basis for Murweh Shire was being established, each of those sales had, for one reason or another, been considered by the departmental valuers to be at a market level lower than would have been expected as at the valuation date.  The livestock component in the "Allandale" sale had been reviewed "in conjunction with the vendor and purchaser" and reassessed.  The result was that the new analysis showed a 60% increase above the 1998 valuation.  Mr Naish said that the initial analysis had shown an increase "lower than 60%".

4. The decision was then taken to adopt the evidence provided by the analyses of those sales with an increase of 40% and 60% above the 1998 valuations applied to "Gundare" and "Allandale" respectively, and by direct comparison, to similar quality lands.  Mr Naish held the opinion that the Augathella Downs country was capable of direct comparison with the Morven Downs country.  However, on a direct comparison the larger "Allandale" property with similar situation, natural water and rainfall, inferior access, but superior country "due to the darker brown soils ... as opposed to the red soil downs on 'Victoria Downs'" was overall superior to "Victoria Downs".

5. "Gundare" was also a property of larger size and whilst considered to have similar situation, access, natural water and rainfall, had inferior country type. 

6. By direct comparison with those two sales, with applications of $40.08/ha for "Allandale" and $26.89/ha for "Gundare" the subject "Victoria Downs" was then valued at $35.38/ha and Mr Naish was confident that correct relativity between the valuations of those three properties had been established.

7. Mr Naish did not accept that the sales of "Bundoo", "Caledonia", "Halton" or "Wyoming" to which reference had been made by Mr Roberts, were of country types comparable to "Victoria Downs".  However, with the exception of "Bundoo" which had been considered by departmental valuers to be a "high" sale, those sales were seen as indicative of the changing trends in value for the different country types in the period since the previous valuation.

8. Mr Naish did not accept that any meaningful or like-with-like comparisons could be made, as Mr Roberts had attempted to do, between the levels of unimproved value applied to the sale properties and "Victoria Downs" and the improved values shown by the sales, when the nature of country and value of improvements on the various properties varied significantly.  He also rejected the suggestion that purchasers of properties with areas of varying country type arrive at sale price decisions based on specific assessment of the value of each component of country type rather than on an overall assessment of the mix of country involved.  He agreed however that the productive potential of each component of an individual property would be a logical consideration.

9. In Mr Naish's opinion, the Department's valuations did not necessarily fall behind market trends as Mr Roberts had suggested, because care was taken through the investigation of all sales considered relevant to a date of valuation, to interpret market trends which may have emerged in the period between dates of valuation.  Where market evidence indicated that changes in market perceptions had occurred or were indicated to be occurring and were affecting past relativities between valuations of the various classes of country then those influences were reflected in the valuations at the relevant date.  Although Mr Naish had not been directly involved he agreed that in 1998 a specific project had been conducted by the Department in the SMA known as the Eastern Scrub/Cattle SMA for the purpose of improving relativities between valuations as a result of changing development and usage trends.  He did not see that as necessarily a "catch-up" but more demonstrative of the Department's recognition of the need to monitor and interpret market trends.

10. It was as a result of the Department's interpretation of the market evidence that in Murweh Shire the 2001 valuation as eventually applied resulted in some significant changes to the relativities which had previously existed between different country types and the various Sub Market Areas. 

Overview

1. Some success was achieved by appellants in the representative cases to the extent that in some SMAs where reductions had not been achieved through the objection process, the increase above the 1998 level of applied value was found not to have been fully supported by a review of the analyses of some sales and then the adoption of others as basic evidence of value.  However, no success was achieved in the argument put forward on behalf of the appellants that the alterations to the previously existing relativities between valuations of district grazing lands had not been warranted.  The overall sales evidence was accepted as showing otherwise.  Indeed adoption of some sales, one of them being the sale of "Gundare" was seen to have reflected a conservative approach by the Department.

2. The Department's analysis of the sale of "Allandale" was not accepted as sufficiently reliable to be adopted as basic evidence of value primarily due to the evidence of Mr Naish in relation to the livestock component.  Nevertheless, the valuation applied to the "Allandale" land had not been found to be proved wrong.

3. With regard to the sale of "Gundare", Mr Naish's evidence was, in the representative cases, as it was in this appeal, that initially the sales of both "Gundare" and "Allandale" when considered in light of the overall evidence and past relativities between the valuations in SMAs, were seen to be "low" and not reasonably reflective of the true market for those properties as at the later date of valuation.  The strength of argument at the objection conference level influenced the departmental valuers to accept that it would be difficult for initial valuations in parts of the Augathella Merge SMA and the Augathella and as a consequence Morven Downs SMAs to be upheld if the "Gundare" and "Allandale" sales were ignored.  As a consequence the sales were reviewed and the decision taken to reduce significantly those valuations of country capable of direct comparison with the "Gundare" and "Allandale" lands.

4. "Victoria Downs" was one of the properties to which the benefit of that decision had been applied, although the maximum decrease was achieved in the valuations of country more directly comparable with "Gundare", with its lesser component of downs country.

5. In deciding that the varied levels of reduction had not been proved wrong in the representative cases, the Court was obliged to accept that the sale of "Gundare" could not be ignored because it had been eventually accepted by all parties in those cases.  However the following comments were made in the reasons in those decisions:

   "[278]       The relativity comparisons produced by Mr Devine do nothing more again in my opinion, than support the factual situation that relativity has been consciously altered by the Department but that information does not prove that the changed relativity is wrong.  However if in hindsight, it is proved to be wrong, the overall evidence suggests that it is not because the valuations in this SMA are too high but probably that the adoption of a 40% increase for 'Gundare' and some other lands in the Augathella Merge SMA based on the 'Gundare' sale was too conservative.

   [279]         It would be my expectation that despite the loss of support for the Department's valuations from the 'Allandale' sale, those valuations throughout this SMA would also be found to be suitably conservative."

Findings

1. There has been no evidence from Mr Roberts in this appeal which would have influenced a different general finding.  The representative cases which involved country with a downs component on which reductions in valuations had been made at the objection level based on the sales of "Gundare" and "Allandale", were not found to have been proved wrong and those appeals were dismissed, as a consequence.

2. Mr Roberts is also of the opinion that incorrect relativities exist between the valuation of "Victoria Downs" in its true unimproved state and the unimproved valuations applied to adjoining and nearby lands.  It was his submission that "all downs country in the Morven area is the same and yet we see up to an 8% difference in the UCV of country on different properties".  Similarly he said that all brigalow soil types and the softer red soils in the Morven area are similar yet "vast differences" are observed in UCV.  He nominated various properties as examples of what he saw as those vast differences, but provided no cogent evidence as proof of the allegation.  Mr Naish had some knowledge of some of the properties mentioned but as might have been expected, was comfortable with the relativities between local valuations and the valuation applied to "Victoria Downs" and the sale properties generally.

3. Mr Roberts agreed with the classification of the "Victoria Downs" country as contained in Mr Naish's report and did not dispute that various adjustments had been made to past valuations consequent upon objections.  It would therefore surprise if the Department gave no consideration to values of individual country classifications in the overall "direct comparison" methodology said to be adopted, when adjustments were being made.

1. Mr Naish is of the opinion that buyers of grazing property are concerned with the value of the overall mix of country more so than the specific value of individual classifications of country on any individual property.  While that is accepted as factual, it is logical that weighting considerations relevant to the components associated with the overall mix would form part of the decision-making deliberations of a prudent purchaser.  It would indeed be rare for two grazing properties with mixed country types to be identical and general allegations of incorrect relativity from one property to another in the absence of precise classifications of country types as is the case with Mr Roberts' submission, are not persuasive.

2. It was Mr Roberts' submission that "similar soils, similar rainfall, able to be developed equates to similar production = similar value".  There is nothing controversial about that criteria leading to such a conclusion, with the proviso that it is essential for valuation purposes, that demonstrably "similar" or "like-with-like" overall comparisons are being made. 

3. I have not been provided with evidence to show why local relativities between valuations are incorrect as alleged.  The mathematical analyses of the sales evidence by Mr Roberts indicates first that interpretation of market evidence and valuation of land is not an exact science and second that comparisons were not being made between "similar" country types, on a "like-with-like" improved basis, as was Mr Naish's opinion.

4. While this which follows will be of no comfort to Mr Roberts, after outlaying a significant sum in having the initial valuation reduced, s.33 of the Act provides as follows:

   "Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."

5. The right to object to a valuation as provided by the Act does not bring with it the right also to be reimbursed for any expenses outlaid in that initial objection process, if indeed the objection is successful.  The economics involved in objecting to a valuation and the manner in which such an objection will be presented forms part of the owners' individual considerations.

6. However there are other considerations when the decision is taken to appeal to this Court against the decision on objection.  Section 45 of the Act deals with appeals to the Land Court against the valuation upon which the chief executive has made a decision on objection.  Sub-sections (3) and (4) provide as follows:

   "(3)   An appeal shall be instituted by filing a notice of appeal in the Land Court registry.

   (4)    Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner."

   Then s.70 of the Act provides:

   "(1)   Where the value of land as finally determined upon an appeal against the valuation is the value stated by the owner in the owner’s notice of appeal against the valuation, or is nearer to that value than to the valuation appealed against, costs shall not be awarded against the owner.

   (2)    Otherwise costs shall not be awarded against the chief executive."

1. Apart from the "half-way" fetter, an award of costs against either the chief executive or the owner is in the discretion of the Court.  Nevertheless, "ease of access to the Land Court to air grievances and have valuations reviewed is ... most desirable in revenue cases, and such access should be available without fear of costs being awarded to either party except in special cases."  (See Bowden v Valuer-General (1980) 7 QLCR 138 at 147 - Land Appeal Court).

2. In the end result I maintain the opinion that in reducing valuations initially issued for land in the Augathella Downs and Morven Downs SMAs, the relevant landowners, including the appellants in this matter, were given the benefit of doubt, due to the inconclusive state of the market evidence.  There is no evidence before me in this appeal which has proved the valuation now appealed against to be wrong or unreasonable. 

Order

The appeal is dismissed and the valuation of the chief executive in the amount of Four Hundred and Sixty Thousand Dollars ($460,000) as at 1 October 2001 affirmed.

RE WE NCK

MEMBER OF THE LAND COURT