Sexton v Department of Natural Resources and Mines
[2003] QLC 33
•22 May 2003
LAND COURT OF QUEENSLAND
CITATION: Sexton v Department of Natural Resources and Mines [2003] QLC 0033 PARTIES: Margot and Patrick Sexton
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0825 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 22 May 2003 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER DR NG DIVETT ORDER: The appeal is dismissed, and the unimproved value of Lot 28 on RP 46006 as determined by the Chief Executive in the sum of Six Hundred and Forty-Five Thousand Dollars ($645,000) is affirmed. CATCHWORDS: Valuation of land – Statutory valuation for unimproved value – Valuation process – Use of computerised mass appraisal – Correction of error – Valuation of Land Act 1944 SOLICITORS: Mrs M Sexton for the appellants
Ms R Trigge for the respondent
Background:
This matter relates to land at 15 Glenfield Street, West End, and described as Lot 28 on RP 46006, Parish of South Brisbane. The subject land has an area of 774 m² and is located about 3.5 kilometres south-west of the Brisbane Central Business District. Access is available from Glenfield Street which is bitumen sealed with concrete kerbing and channelling. All normal utility services are available, and the subject land is zoned Low Medium Density Residential under the Brisbane City Plan 2000, effective at the date of valuation of 1 October 2001. The key matters are the issue of the valuation, changes in the valuation, nature of the land and comparison of sales.
On 25 February 2002 the Chief Executive issued a valuation of the subject land at $500,000. Following investigations the Chief Executive reissued a second valuation of the subject land at $645,000 on 25 June 2002. Following objections the Chief Executive confirmed the unimproved value of the subject land at $645,000 on 17 September 2002. The appellants have now appealed to this Court claiming the unimproved value should more properly be $500,000.
Mrs Margot Sexton appeared and gave evidence for the appellants. Ms R Trigge, Senior Legal Officer appeared for the respondent, calling evidence from Arend Boudewyn Van Hees, the departmental registered valuer responsible for determining the valuation.
History of the Appeal –
Ms Trigge provides a letter of explanation of the circumstances surrounding the issuing of the two valuation notices for the subject land for the relevant date of 1 October 2001. (Exhibit 3). The facts are explained that at the time of issue of the original valuation at $500,000 on 25 February 2002, there had been a failure in the electronic computer system (QVAS) which is used to determine and distribute the new valuations throughout the State. As a result of certain manual adjustments not being uploaded by the computer system, various valuations in the West End area were incorrectly determined, and processed by QVAS. The subject land has been one of those properties where an inaccurate valuation had been promulgated.
Ms Trigge further advises that once the error had been found to occur, the Chief Executive exercised his responsibility to issue an alteration of the previous notice of valuation under s.28(1)(h) of the Valuation of Land Act 1944. Unfortunately the standard letter of 17 September 2002 advising of the new valuation at $645,000, provided no details of the reason why the new valuation needed to occur. Because of that lack of explanation the appellants believe that an error has occurred, and the original valuation at $500,000 as issued on 25 February 2002 should stand. The appellants argue that at the relevant date of 1 October 2001 the unimproved value of $500,000 reflects a fair value of the subject land. Mrs Sexton advises that the value of $500,000 also reflected the unimproved value of the subject land at 1 October 2000.
Mrs Sexton further explains that when the second valuation was issued in June 2002, she was placed in the unfortunate position of lacking access to the wider information of the valuation rolls, normally made freely available to the public at the time of the general issue of new valuations. As a consequence of that lack of supporting information, which apparently occurred through an error by the Chief Executive, she had then been restricted in her capacity to fully research the true valuation of the subject land. However subsequently she has come to the conclusion that, as often occurs when new valuations are issued retaining the previous unimproved value, then the true unimproved value of the subject land should have remained at its previous value of $500,000. Mrs Sexton explains that through her working experience she has a good general knowledge of valuation matters, although she agrees she is not trained in that expertise.
Mr Van Hees confirms that the unimproved value of the subject land was determined by him at $645,000 for the issuing to occur on 25 February 2002. However because of the failure by the computerised process to update the previous figure at 1 October 2000, that lower figure was carried through and issued incorrectly. Mr Van Hees confirms that the second valuation was not a matter of a re-estimate of the valuation subsequent to its original issue, but it was entirely as a result of the error of computation by the QVAS system. Mr Van Hees notes that at the relevant valuation date of 1 October 2001 the property market in West End was rising at a rapid rate, and continues to do so until the present time. He advises that the market is currently rising at about 40% annually.
In explaining the history of the inaccurate original valuation, Ms Trigge advises that the Chief Executive has moved to outsource the processing of advices to owners in respect of the valuation process. Apparently that outsourcing arrangement provides no mechanism for copies of those advices to be retained, and Ms Trigge was unable to confirm the wording of the standard letter that was sent to the appellants in June 2002.
Mrs Sexton provides a copy of that advice to the appellants on the amended valuation (Exhibit 4), which confirms that lack of any specificity as to why the second valuation was necessary. Ms Trigge advises that she intends to make representations to management to seek to rectify those inadequacies. Mrs Sexton notes that if that lack of care was evident in the administration processes, it was also likely to be present in the second valuation of $645,000, as she also notes a typographical error in the quantum of the valuation in Mr Van Hees’ report (Exhibit 2, page 2).
Nature of the Land –
The subject land is below street level, falling moderately towards the Brisbane River at its rear boundary. There are good views to the south across the river towards St Lucia. The site is presently occupied by a high set dwelling of pre-1946 construction, which is classified as a “character dwelling” under the current planning legislation. Mr Van Hees has allowed for that classification in his valuation, although he notes that all lands are to be valued as if they were vacant at the date of valuation.
It is agreed that such dwellings are most unlikely to be able to be removed or demolished, depending upon the local streetscape. However Mr Van Hees advises that many such buildings are often gutted and fully reconstructed to maintain the character nature of the locality. He argues that because of the high demand for sites in West End, purchasers are paying a premium for any property in the area.
Comparison of Sales –
The appellants provide no specific sales evidence to support their estimate of the unimproved value. Mr Van Hees provides the following sales to support his valuation:
· Sale 1 – (Ryan Street, West End – Lot 109 on RP 11261). This is a 582 m² Low Medium Density Residential vacant site located about 150 metres west of the subject land. The sale is a riverfront parcel, with views across the river to St Lucia. The sale is seen as comparable to the subject land, but slightly inferior due to its smaller size. Overall the sale is inferior to the subject land. The sale sold in July 2001 for $620,000, was analysed at $620,000, and applied at $590,000.
· Sale 2 – (18A Derby Street, Highgate Hill – Lot 8 on SP 108113). This a 649 m² vacant parcel zoned Low Medium Density Residential, and located about 750 metres east of the subject land. The sale is a riverfront parcel with views across the river to the University of Queensland. The sale has a small building platform, and then falls very steeply to the river. There is noise and glare from lights on the University grounds. The sale overall is seen as inferior to the subject land. The sale sold in June 2001 for $440,000, was analysed at $440,000, and applied at $415,000.
· Sale 3 – (11 Rosecliffe Street, Highgate Hill – Lots 71 and 72 on RP 12107). This is a 1,315 m² parcel located about 900 metres east of the subject land. The sale is a riverfront parcel with views across the river to the University of Queensland. The sale is zoned as Low Medium Density Residential, and falls slightly from the road for a third of its depth, and then falls steeply to the river. The sale is in an inferior location and inferior access to the subject land, and is seen as overall inferior to the subject land. The sale sold in May 2001 for $605,000, was analysed at $610,000 after allowing for demolition of an old dwelling, and was applied at $545,000.
Mr Van Hees sees his Sale 1 (Ryan Street) as his most comparable sale, because of its closer proximity and nature to the subject land. However he notes that Sale 1 is much narrower in width than the subject land. Mr Van Hees notes that recent sales of multi-million dollar homes in Ryan Street support the high demand for sites in that location. Mr Van Hees also confirms that his Sale 1 is closer to the CityCat Public Ferry Terminal than the subject land. However he notes that both Sale 1 and the subject land have good convenient access to CityCat services to the University and to the City centre.
Decision:
I turn first to the legislation and note that under s.13 of the Valuation of Land Act 1944 the Chief Executive must decide the unimproved value of land which is to be rated by local authorities. Unless the Chief Executive makes a decision not to make an annual valuation, then under s.37(1) of the Act, he must make such an annual valuation. The date of the valuation fixed by the Chief Executive under s.20(1) of the Act was 1 October 2001.
I note also that s.28(1) relevantly directs:
“28.(1) No alteration shall be made in the valuation of any parcel of land during the period during which any annual valuation relating to the area in question is in force or, in the case of an annual valuation which has not come into force, during the period between the issuing of an annual valuation notice under part 4, and the date of the valuation coming into force –
(h) Unless the valuation is affected by error or omission which the chief executive considers it necessary to correct, other than an error of law or a mistake of fact that may be corrected under section 28(A);”
I note also that s.28(A) relates to an alteration of a valuation made after appeal or objection to an earlier valuation. In the current matter s.28(1)(h) provides for the error made by the QVAS system in not uploading the manual adjustment as explained in paragraph [4]. Clearly there is legislative power for the Chief Executive to issue the subsequent valuation on 25 June 2002.
Whether he did so was at the discretion of the Chief Executive, and it is not for this Court to question that discretion, unless he acted unreasonably or capriciously. The matter of whether the Chief Executive’s discretion can be challenged, was addressed in AH Raynbird v Valuer-General (1980-81) 7 QLCR 99, where the Land Appeal Court noted at p.103:
“If the Valuer-General acted capriciously or unreasonably in creating any parcel we are inclined to the opinion that this Court and the Land Court have jurisdiction to find the resulting valuation ultra vires the Valuation of the Land Act – vide Reinke v. Banana Shire Council (Full Court Queensland) 1968 Qd. R. 453 and Kilcoy Shire Council v. Brisbane City Council (1970-71) 124 C.L.R. 60. There is no suggestion that such considerations arise in the subject cases. We are satisfied that the Valuer-General acted correctly and in conformity with section 15 of the Act in creating the subject parcels.”
That was also followed by the Land Appeal Court in RT and J Tobin v Valuer-General (1986-87) 11 QCLR 29 at 33.
In the matter of Kilcoy Shire Council v. Brisbane City Council (above), the question determined by the High Court revolved around a similar issue as in the current matter. In that matter the Valuer-General (as he then was) decided that an error had occurred in the original valuation, when it was found that some parcels of land had not been included in that valuation. The Valuer-General then issued a subsequent valuation to correct that error under s.13(2)(h) as it then was, which is now s.28(1)(h). The High Court found that it was not open to the land owner affected to challenge that exercise of discretion to issue the subsequent valuation in order to correct the original error.
In the current matter there is no evidence to suggest that the Chief Executive acted in a capricious or unreasonable manner in exercising his discretion under s.29(1), to implement the alterations of the valuations made under s.28(1)(h). There is therefore no point of law which would support the appellants’ claim that the Chief Executive acted incorrectly in issuing the second valuation in this matter.
In respect of the apparent omission by the Chief Executive to explain the reason why the second valuation was necessary, I observe that is really a matter for the discretion of the Chief Executive. However it would appear that as a public relations exercise the second letter of 25 June 2002 lacks some credibility.
Now the above comments should not be taken to be any criticism of the actual mass appraisal computerised process currently used by the Chief Executive in determining the annual valuations. Indeed such process has been favourably received by the courts. The Chief Executive now uses a computerised mass appraisal technique to generate likely unimproved values within each sub-market area (SMA) and then within the wider administrative areas, or districts of the City area. However, the computer process is merely a highly sophisticated tool for each valuer to undertake the increasingly demanding task of assessing the ever-growing number of parcels in this State.
In regard to the actual processes adopted by the valuers, the use of extrinsic material such as working maps or charts, which are used to manually adjust local relativities between properties, was examined by the Land Appeal Court in BG and AK Wilson v Chief Executive, Department of Lands (1994-95) 15 QLCR 63. In that matter the Land Appeal Court said at p.70:
“It has been said on many occasions that valuation is not an exact science. It rests upon the opinion of those in the market place who will prefer one aspect to another, one suburb to another and so forth. It is the duty of the valuer to interpret and apply that market on principles which require comparisons to be made of “like with like” wherever possible. The process of annual valuations which was introduced by legislation in 1985 was designed to avoid the penalty of an owner being cemented to a value for rating purposes for up to five years and possibly eight years. The scheme of annual valuation enables values to follow the market on an annual basis. The scheme would not work without the aid of computers.”
The Land Appeal Court went on to say at p.71:
“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 is our opinion does not offend the statute.”
However, while the computerised process is seen as adequately reflecting the intentions of the Valuation of Land Act 1944, its execution does demand a lack of any errors of input into the system. Hence the need for s.28(1)(h) as in the current matter.
Comparison of Sales –
I turn then to the actual comparison of sales of vacant or lightly improved lands as supplied by Mr Van Hees. I note that such an approach has long been preferred by the courts when determining the unimproved value of land. That principle was followed by the Land Appeal Court in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where it said at p.381:
“The whole of the valuation process must be based on this hypothesis. Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not overanxious parties.”
That was later followed in PH Clough v Valuer-General (1981-82) 8 QLCR 70 at p.76; and again in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at p.46:
“It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels.”
Those precedents have been more recently followed in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at p.18: and later in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 328.
If I look then at the comparable sales I find the following comparisons:
Sale Area Applied Value Comparison 1 (Ryan Street) 582 m² $590,000 Inferior 2 (Derby Street) 649 m² $415,000 Inferior 3 (Rosecliffe Street) 1,315 m $545,000 Inferior Subject land 774 m² $645,000 - Mr Van Hees sees his key sale as Sale 1 (Ryan Street) which has similar location and features, but is considerably smaller and narrower than the subject land. On that basis there is nothing to indicate that Mr Van Hees has made an error of fact. He has certainly followed a correct principle in his valuation.
Summary:
In summarizing this matter I am reminded that unless it has been proved that the unimproved value is wrong, then s.33 of the Act directs:
“33. 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.”
I am also reminded that in respect of a Notice of Appeal s.45(4) states:
“45.(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.
That burden of proof has not been expunged in this matter.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 28 on RP 46006 as determined by the Chief Executive in the sum of Six Hundred and Forty-Five Thousand Dollars ($645,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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