Scougall v Chief Executive, Department of Lands
[1995] QLC 52
•10 July 1995
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LAND COURT
BRISBANE
10 JULY 1995
Re: Appeals against Valuations
Valuation of Land Act 1944
(AV93-119 and AV94-364)Raymond J Scougall
v.
Chief Executive, Department of Lands(Hearing at Brisbane)
D E C I S I O N
These appeals are against the determination of the Chief Executive, Department of Lands, with respect to the annual valuation in each case of land located at 32 Leeson Street, Boondall. By agreement between the parties, both matters were heard together.
Appeal AV93-119 relates to the determination of the Chief Executive, as at 31 March 1992, whilst Appeal AV94-364 is with respect to the determination as at 30 June 1993. In each matter the determination of the Chief Executive was in the amount of $48,000, whilst the appellant contends for an amount of $45,000 at each relevant date.
The grounds of appeal in each matter are expressed in broad terms and I will not recite them in full. It will be useful, however, to set out two of the grounds of appeal:"5.Relativity in regard to other properties in the area is lacking.
8.The Valuer General has acted capriciously in disregarding the decision handed down by the Office of the Land Court on 18 August 1992 in respect of this property."
It is convenient to mention at this stage that the subject land had been valued by the Valuer-General at $38,500 as at a relevant date of 31 March 1990. Following objection the land holder appealed to this Court and, on 18 August 1992, a consent decision was entered in the amount of $36,500. This determination is referred to as "the 1990 valuation" in this decision and its significance will become apparent in what I have written in the following pages.
The subject land has an area of 560m2, is slightly irregular in shape and has a moderate elevation rising slightly from the front of the block to the north-eastern corner. Access is from Leeson Street which is sealed, kerbed and channelled. A single-unit dwelling is constructed on the land. Abutting the land to the south is a pedestrian pathway. On a line directly west from the subject land lies Lot 8 on RP 161200 which separates the subject from Sandgate Road and a service road which commences at about the point the pathway emerges into the road area. On a line north-westerly from the subject land lies the intersection of Sandgate Road, Stanworth Road and Beams Road. This intersection is controlled by traffic lights. Between the subject land and this intersection lie Lot 8 on RP 161200, referred to previously, and Lot 7 on RP 161200.
The evidence showed that Sandgate Road is a busy road and has in the area near the subject land a maximum speed limit of 70 kilometres per hour. Mr Scougall gave evidence on his own behalf and in referring to Sandgate Road explained that noise from that road and, to a lesser extent, Stanworth Road did travel to the subject land being "channelled" as it were between houses built on Lots 7 and 8. This was not seriously disputed by the respondent. Mr Scougall gave evidence that in addition to traffic noise, traffic lights were clearly visible from the subject land when traffic travelling along Beams Road turned right into Sandgate Road. The significance of these matters emerges later in this decision.
Evidence was given on behalf of the Chief Executive by Denis Reed Wall, registered valuer. Mr Wall's evidence included (together with sales) unimproved values struck by the Chief Executive for a number of properties adjoining and in the neighbourhood of the subject property. These are referred to hereinafter as "the relativity properties".
Mr Scougall is a registered valuer and he tendered his written valuation in the amount of $45,500. I note that the figure contended for in the appeal document is $45,000, however, nothing turns on the difference between this figure and that contained in the valuation. The valuation document includes a heading entitled "Valuation Approach and General Comments" and under that heading Mr Scougall sets out a short history leading up to the 1990 valuation referred to above. He draws attention to the fact that the valuations of the Chief Executive in the amount of $48,000, the subject of these appeals, represents an increase by a factor of 1.3 over the 1990 valuation of $36,500, whereas sales properties, and values applied to those, indicated an increase by a factor of about 1.25 only. Mr Scougall said in evidence that he had also gleaned the 1.25 factor from perusing valuation rolls on display. Under the heading "Basis of Valuation" Mr Scougall included these words in his written valuation:"Valuation is based on the application of a general market increase for the area of 25% as supported by the sales evidence shown at ANNEXURE H."
Before dealing with this method of assessing unimproved value, I should note that it relies firstly on the 1990 valuation having been correct. Counsel for the Chief Executive submitted that on the evidence there was nothing on which the soundness of that valuation could be safely judged though he proffered the view that evidence showed it to be suspect. Mr Scougall included in his valuation an annexure indicating sales which he said would support the figure of $36,500, however, there was no evidence to show that these sales were used in settling the 1990 valuation. In any event, the matter before me is not an appeal with respect to the 1990 valuation which I would be bound to presume to be correct. This follows, I think, from a reading of sections 33 and 66 of the Valuation of Land Act and of section 40(2) of the Land Act. This is not a matter that I will dwell on, given my findings with respect to the use of the factorisation method.
I find no support in the authorities for the factorisation approach outlined in Mr Scougall's valuation. The method places reliance on the use of a multiplier factor, although Mr. Scougall said that it was a more a matter of applying the market increase for the general area than applying a factor. However one expresses it, it amounts to the same thing. This issue was touched on in Barnwell v Valuer-General (1990-91) 13 QLCR 13 at 17 from which this quotation is taken:"It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation. If there was no justification for a change in relativity, the valuer's task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula. This, of course, is undesirable."
Another comment I would include on this approach is expressed by the Land Appeal Court in Appeals against the determination of the Valuer-General - Shire of Monto (1984-85) 10 QLCR 32 at 38:
"It is not a matter of mere mathematical calculation or progression. The revaluation of a shire does not involve the application of a more or less uniform increase (or decrease) in the various types of land comprising the shire. What has to be determined is the unimproved value of each parcel of land within the shire at the relevant date. The task set the Valuer-General and the Court is to determine the capital sum which the fee-simple of the land, assuming it were in an unimproved state, might realise if offered for sale on the open market (section 12). The best method or basis for making such determinations is the use of properly analysed comparable sales conforming to the test of the Spencer case."
In the instant case I have valuations tendered by Mr Scougall and by Mr Wall which contain sales and other evidence, therefore it is this evidence to which I will refer in clear preference to the method thus far described by Mr Scougall. These remarks are not intended to convey any criticism of the methodology now generally employed by the Department of Lands in carrying out annual valuations. This methodology was described and commented upon in BG and AK Wilson v Chief Executive, Department of Lands (Land Appeal Court unreported 16 April 1994). At page 11 the Court said:
"In the context of an annual valuation, the process involves the activity described previously including the `charts' and the collation of that material from the charts by the computer processors through to the public display of the printouts containing the respective valuations and relevant dates. The process in our opinion does not offend the statute."
Mr Scougall strenuously argued that the Chief Executive had not paid sufficient regard to the 1990 valuation. A substantial amount of written and oral evidence and cross-examination was directed towards this particular matter which was a ground of appeal in each case. Given what I have said about the use of a percentage increase or factorisation in a matter to be determined by this Court, it follows that, on that basis, reference to the 1990 valuation would be irrelevant.
The following quotation is taken from McMurray v The Valuer-General (1983) 9 QLCR 35 at 37:"The evidence as to the amount of any reduction allowed on the hearing of a prior appeal is of no assistance in this case. Every revaluation requires consideration of the evidence as it exists at a particular date ..."
I would make a similar finding with respect to the matter now before me. There is no evidence to show how the earlier valuation was arrived at between the parties, nor does it appear that there was any evidence put before the Court. There may be instances where evidence put before a previous Court or findings of that Court may be relevant in a later assessment of valuation under the Valuation of Land Act, however, this case is not one of those.
A further matter raised by Mr Scougall with respect to the application of the 1990 valuation was that given that the valuation of the subject land was reduced for the 1990 valuation, it would have then have been out of correct relativity with surrounding lands (encompassing the relativity properties but not necessarily confined to them) and therefore the Chief Executive ought to have relied upon section 28(1)(g) of the Valuation of Land Act to reduce the values of the surrounding lands. Presumably, any adjustments so made to the 1990 valuations for these lands would have then been increased by a factor of 25% to strike the 1992 and 1993 valuations, bringing the values placed on these properties to a level commensurate with Mr Scougall's expressed views on the unimproved value which ought to be placed on the subject land. It appears that no such adjustments were made. I take this submission as an invitation to me to find the applied valuations to the relativity properties, at least, to be too high; or unsafe as bases in the appeals on the subject land.
Section 33 of the Valuation of Land 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."
It was held in Brisbane City Council v The Valuer-General (1978) 140 CLR 41 that this section (then section 12(7)) creates a presumption that a value struck by the Valuer-General (now the Chief Executive) is correct. Clearly this applies to the valuation placed on a parcel of land which is the subject of an appeal, however, the presumption also applies to applied valuations such as those referred to in the relativity properties included in Mr Wall's valuation. Whilst an appellant in Mr Scougall's position may not cause these applied valuations to actually alter, as he is not in a position to lodge an objection or appeal (vide Kilcoy Shire Council v Brisbane City Council (1970-71) 124 CLR 60), it would be open to him to adduce expert evidence to attempt to show them to be unsuitable as a basis for valuation. In such an exercise the appellant must discharge the burden of proving that which he asserts to be the case. Mr Scougall did not do this. He made passing reference, only, to the sales evidence included in his valuation document, and did not make any comprehensive, direct comparison between these sales and any of the relativity properties. I therefore treat the values placed on these properties as being correct.
Mr Scougall further argued, in reliance upon the correctness of the 1990 valuation, that given that that valuation put in place a certain relativity between the subject land at that time and neighbouring properties, it is now incumbent on the Chief Executive to point to specific evidence which would justify any change to such relativity. Apart from observing that this submission would appear to be in conflict with the submission I have just dealt with, I find that this submission offends the requirements of section 56(2) of the Valuation of Land Act:"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."
There can be no primary burden of proof placed upon the Chief Executive if I properly understand the intent of section 56(2). The most that can be said about this is that any contemplated change in relativity must be carried out with due care. The evidence in this case was that Mr Wall was acutely aware that in applying an unimproved value of $48,000 to the subject property he was changing the relativity which had existed in 1990 following the consent decision of the Court. The question which I must ask myself is not "Has he shown that there should be a change in relativity?"; but rather, "Does his valuation support the figure contended for?" Whilst the Courts have frequently expressed the view that preservation of relativity as at a particular relevant date is important in so far as the distribution of the rating burden and other tax is concerned, I find the following quotation to be most useful in explaining the significance of relativity in the context of carrying out a valuation:
"I agree wholeheartedly that relativity is important, but there is danger that it can be allowed to assume such an appearance of importance that the first and most vital principle is overlooked, that is that each parcel or property valued should be independently and correctly assessed so that its correct valuation according to the statute is obtained. If this is precisely done in each case, then correct relativity follows as the night the day. In other words it is not relativity that confers correctness on the value, but correct value should produce correct relativity." (Appeals against determinations of Valuer-General, Shire of Cloncurry (1971) 38 CLLR 1 at 4).
Having now dealt with all of the submissions concerning the possible application of the 1990 valuation to the matter before the Court, I now turn to the other aspects of the valuations which were put into evidence.
During cross-examination Mr Scougall said that he had not arrived at his valuation of $45,500 simply on the basis of the use of a multiplier factor, but he had also had regard to sales referred to in his written valuation for direct comparison purposes. In making such comparisons, particular regard was had to the effect on the subject property of noise and fumes emanating from the nearby Sandgate Road, shining from vehicle headlights making right-hand turns from Beams Road into Sandgate Road and the use of the pedestrian pathway abutting the subject property. This pathway is used frequently by students from the nearby Nudgee College and by others wishing to gain access for a shopping area at "Sue's Corner". Rubbish is sometimes left in the laneway, which is also used as a loitering point.
All of the basic sales referred to by Mr Scougall in his valuation are described as being superior to the subject land. Mr Scougall did not proffer any refined reasoning in reference to this sales evidence to indicate how a value of $45,500 for the subject land may be deduced, but indicated that he had relied on his skills as a valuer. I should mention that it is not required by section 56(2) of the Valuation of Land Act that the appellant prove his valuation is correct, but rather it is a matter of the appellant proving his grounds of appeal.
As mentioned earlier, evidence was given on behalf of the Chief Executive by Denis Reed Wall, registered valuer. He did not complete the 1992 valuation initially, however, did prepare the 1993 valuation and arrived at the same figure as the original 1992 figure. He included a total of six sales (three in each matter) ranging from an analysed unimproved value of $37,000 ($31,500 applied unimproved value) at the lower end of the scale to an analysed unimproved value of $67,000 ($61,000 applied unimproved value) at the upper end. A "relativity map" was included in his valuation and this was described in Mr Wall's evidence-in-chief as showing the unimproved values struck by the Chief Executive for a number of properties referred to earlier as the relativity properties. These either adjoin or are in the immediate neighbourhood of the subject property and so far as Mr Wall is aware, none are subject to an objection to the Chief Executive or an appeal to this Court.
Mr Wall's evidence was that he had used the sales evidence to indicate a "ballpark" figure for the subject land and had then used the information on the relativity map to finetune the valuation and to thereby arrive at his final figure of $48,000. In the case of H & E Grahn v The Valuer-General (Land Appeal Court, 20 November 1992, unreported on this point), these words appear at page 10:"Bearing those propositions in mind, it is best to approach this case by considering first the position regarding sales evidence then considering the relativity of the valuations of the subject blocks with the valuations of comparable blocks of land."
Whilst this case does not expressly refer to the concept of "finetuning" described by Mr Wall, I understand it to authorise that approach to a valuation.
It is unfortunate that the valuers did not use any common sales. The sales evidence relied on suffered in that sales were either located on Sandgate Road and therefore impacted by the effect of the heavy traffic on that road, or so far distant from that road that the effect of traffic is largely irrelevant. No sales were referred to which were located, as the subject land was, close to but not actually fronting Sandgate Road. The relativity properties are, however, a different matter. Three of these properties: Lots 7, 8 and 44 front onto Sandgate Road or the service road and have applied unimproved values of $48,000, $51,000 and $51,000 respectively. Lots 8 and 44 also adjoin the pedestrian pathway which bounds the subject land. It is not contended by Mr Scougall that the subject land fares any worse than these relativity properties with respect to the effect of traffic, nor that the subject is worse affected by the pathway than the other blocks adjoining it.
There is little to be gained in my taking a journey through the sales evidence and how each compares with the subject. Each valuer seems to agree with the other as to which property is superior and which inferior and very largely on the points of comparison or discomparison, though there was some disagreement as to whether a sale block was located in a less, or more, desirable area. Home quality was a feature of this distinction. I must say, however, that without anything more than an application of the sales evidence, it would be a Solomonic task to decide between a value of $48,000 and $45,500. Not only are those figures so close as to be difficult to select between (or some proximate figure), but each valuer was penurious in communicating his expert reasoning, relying excessively on claimed expertise or experience.
The key issue which separated the two valuers is whether Mr Wall has made sufficient allowance for the impact of traffic noise and headlights and to some extent the pathway on the subject land. Mr Scougall suggests that, as Mr Wall had inspected the subject land from the front only and did not venture onto the rear of the block where a full appreciation of the traffic noise would have been experienced, this is a relevant consideration in answering the question as to whether Mr Wall made sufficient allowance for the traffic factor. It is in this context that a question asked of Mr Scougall in cross-examination is significant:-"Question:If it were the case that Lot 7 was correctly valued at $48,000, how could the subject land have an unimproved value of $45,500?
Answer:I'd have to agree that there is a comparison between the two properties, but I should contend that the valuation applied to Lot 7 is incorrect."
I take this to mean that in Mr Scougall's view the subject land and Lot 7 could be valued at similar figures and that if this were done the disabilities, in particular that of noise from the road, would be taken into account. As I have written above, I find no reason to treat the unimproved value placed on Lot 7 by the Chief Executive as being anything but correct.
Quite independently of Mr Scougall's acceptance of the relationship between the valuation that ought to be placed upon the subject land being similar to that on Lot 7, I have formed the view that any adjustment downward from $48,000 of the subject's value would result in its value being out of line with the surrounding determinations of what I have called the relativity properties. In concluding this, I have considered the evidence regarding access, block size, topography and road noise factor in particular, as well as the effect of the pedestrian laneway on some of the relativity properties. It is very clear to me that an unimproved value of $45,500 on the subject land would be glaringly inconsistent with the values placed on the adjoining and neighbouring properties.
One final point needs to be disposed of. Mr Scougall referred to determinations of the Chief Executive outside the group of relativity properties relied on by Mr Wall. In so doing, Mr Scougall wished to make the point that the unimproved values of such properties are out of relationship with the sales evidence or with the values applied to the relativity properties. A similar point arose in the Land Appeal Court in Wilson v The Chief Executive, Department of Lands (unreported) 17 February 1994) where that Court said that any error found in relativity was not sufficient to put the valuation process in doubt.
In the result I find that the appellant has failed to demonstrate that the valuation of the Chief Executive was carried out based on a wrong principle or on a serious error of fact. Accordingly, the appeals are dismissed and the determinations of the Chief Executive are affirmed.
RP SCOTT
MEMBER OF THE LAND COURT
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