Solon Theo Family Trust v Chief Executive, Department of Natural Resources and Water
[2007] QLC 60
•5 September 2007
LAND COURT OF QUEENSLAND
CITATION: Solon Theo Family Trust v Chief Executive, Department of Natural Resources and Water [2007] QLC 0060 PARTIES: S Theo Family Trust
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NOS.: AV2005/0361 AV2005/0500, AV2006/0366, AV2005/1280, AV2006/0365, AV2007/0009, AV2007/0010, AV2005/0502 and AV2006/0364 DIVISION: Land Court of Queensland PROCEEDING: Appeals against Unimproved Valuations DELIVERED ON: 5 September 2007 DELIVERED AT: Brisbane HEARD AT: Gympie and Brisbane JUDICIAL REGISTRAR: Mr BR O'Connor ORDER: 1. The appeals numbered AV2005/0361, AV2005/0500, AV2006/0366, AV2005/1280, AV2006/0365, AV2007/0009, AV2007/0010, AV2005/0502 and AV2006/0364 be dismissed.
2. Appeal number AV2005/0501 be partly allowed and the value of $51,000.00 be substituted.
3. Appeal number AV2006/0367 be partly allowed and the value of $66,000.00 be substituted.
CATCHWORDS: Valuation – presumption of correctness – how rebutted – proper methodology – need for sales evidence – effect of Vegetation Management Act – allowance for electricity easement.
Costs – application by both parties – one not legally represented – limitation – general principle – special circumstances necessary – no costs awarded.
APPEARANCES: Mr S. Theo for the appellant.
Mr D. Keane (Counsel), and
Ms C. Liu (Senior lawyer), Department of Natural Resources and Water, for the respondent.
The present hearing concerns eleven appeals against unimproved land valuations under the Valuation of Land Act 1944 (the Act) made by the Chief Executive, Department of Natural Resources and Water (the Chief Executive) in relation to six properties presently owned by the appellant. They are situated in the Cooloola and Tiaro Shires. The appeals can be conveniently grouped into five separate groupings (listed below), along with the respondent's and appellant's valuation figures.
Appeal Reference Respondent Valuation Appellant's Valuation Group 1 – Sandy Creek Rd, Downsfield AV2005/0361 $100,000 $50,000 Group 2 – Redbank Road, Tiaro AV2005/0500
AV2006/0366$95,000
$114,000$55,000
$50,000Group 3 – Bruce Highway, Bauple AV2005/0501
AV2006/0367$54,000
$70,000$35,000
$30,000Group 4 – Main Street, Gundiah AV2005/0502
AV2006/0364$12,600
$17,000$6,000
$5,000Group 5 – Patterson Road AV2007/0009
AV2007/0010
AV2005/1280
AV2006/0365$67,000
$67,000
$55,000
$77,000$30,000
$30,000
$48,000
$30,000
Progression of Case
While the issues in the cases are relatively straightforward, the hearing progressed in a less than conventional manner. Brief mention needs to be made of the case chronology. The case commenced in Gympie on 22 March 2007 and resumed in Brisbane on 29 March 2007. At the start of proceedings on 30 March 2007, the respondent's counsel asked that the matter be adjourned pending an application. Reasons for such request were outlined. They included:
"it has become a serious concern of the respondent as to the way Mr Theo has been running the appeal. He has shown disrespect towards this Court, he has badgered the witness on numerous times and the respondent is seriously concerned with the progress of these appeals. So far Mr Theo has not presented any evidence to the Court. As the Court has reminded him as to the onus under the Act, Mr Theo so far has not been able to provide any evidence to support his appeal. He has been in reality conducting a fishing expedition in respect of all of these appeals." (T.166)
The adjournment sought was granted and the application foreshadowed by the respondent was heard on 4th May 2007. Such application sought to have uncompleted cases dealt with by written submission and final addresses also to be in written form. Mr Theo opposed the first part of this proposal.
The compromise solution ordered by the Court was that the remaining evidence was to be concluded in one further day's hearing. Anything not completed in that time was to be in written form only. Both parties ultimately indicated that such order was acceptable to them.
The hearing of evidence was then completed on 25 July 2007 with the respondent engaging private counsel to complete the matter and leading valuation evidence from a new witness, Mr Peter Mariner. Medical evidence was led stating Mr Clift (who had given evidence on certain cases on the first two days of the hearing) was medically unfit to attend the hearing at this stage. As much of the wider evidence led in the earlier cases also related to cases heard on the final day, only specific matters relating to these cases required separate attention. The cases were completed quite comfortably within the final day, without prejudice to the appellant from a timing perspective.
As previously agreed, the parties were subsequently given time to submit their final written submissions. Both parties complied with this requirement.
I consider the conduct of the respondent in having Mr Mariner give evidence in lieu of Mr Clift the appropriate course to take in all circumstances. Medical evidence could not suggest when Mr Clift may be available to complete evidence and Mr Mariner, a senior valuer from the same district as Mr Clift and with several years experience in the area, was a proper substitute. Mr Theo could not claim any prejudice by this change of expert witness.
Burden of Proof
Mention should be made at this introductory stage of the provisions governing the burden of proof and the presumption of correctness of the Chief Executive's valuation.
The onus of proof is covered by a s.45(4) of the Act which states that the burden of proving any and every appeal ground shall be on the owner. The presumption of correctness is dealt with in s.33 which states:
"33. Status of Valuation
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."
Guidance as to how this presumption might be rebutted is provided by the decision of Brisbane City Council v The Valuer General (1977-78) 140 CLR 41 (Brisbane City Council v The Valuer General) where Gibbs J said at pages 56 – 57:
"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle or made a serious error of fact, the presumption created by section 13(7) is rebutted.
…
In my opinion once it is shown that a valuation was made by a method fundamentally erroneous, the presumption is rebutted."
Mr Theo, for the appellant, frequently referred to this decision throughout the proceedings when he claimed wrong methodology was employed by the respondent .
The reasoning of the Brisbane City Council v Valuer General was further refined in Hillberg v Department of Natural Resources and Mines (2006) QLC 0024 where the learned Member stated at paragraph 12:
"It is now well recognised that in appeals such as this, in ascertaining the unimproved value of land, usually the best evidence is that of sales of vacant or lightly improved comparable parcels of land. (e.g. Clough v Valuer General (1981-82) QLCR 70 at page 76). In the circumstances of this appeal, where the appellants have not had regard to sales evidence, it is my opinion that they can only succeed if it is shown that the sales relied on by the Mr Lanchester are in fact not sufficiently comparable or that they have been incorrectly analysed and/or have been incorrectly applied to the subject, having regard to the matters raised by the appellants in their grounds of appeal."
It is noted that the appellant in these cases has not produced any sales evidence. To succeed on any of the appeals it must show that the sales relied on by the Chief Executive were not sufficiently comparable or were incorrectly analysed. The Chief Executive has submitted that the appellant has failed to do this.
Common general issues
From the appellant's written grounds of appeal and subsequent elaboration in evidence, several issues can be identified which allegedly relate to each of the properties. It is convenient to list and consider these first; further specific issues which relate to individual properties will then be addressed.
The common issues are:
a. Was the valuation methodology adopted by the respondent valid.
b. Was the increase in valuation of the subject properties excessive, given the average increase in south east Queensland.
c. Did the proposed Traveston Dam affect valuation of the properties.
d. Did the Vegetation Management Act1999 impact on the valuation of properties.
e. Was the sales evidence used by the respondent properly comparable to the subjects.
f. Was the Maurici principle relevant in current circumstances.
g. Was proper allowance made for lack of improvements and availability of services.
h. Can land gazetted as "Rural" but not used for rural residential purposes be valued as rural residential.
Consideration of Issues
(a) Valuation Methodology
The appellant made frequent claims throughout the hearing that the respondent's valuers had not adopted the correct valuation methodology. In similar vein, he claimed the valuers' approach was contrary to certain provisions of the Act – although he was not specific as to what provisions were offended. The respondent correctly submits that it is well established that the unimproved value of land is ascertained by reference to prices paid for and subsequent analyses of similar parcels of land. This proposition is supported by Waterhouse v Valuer General (1927) 8 LGR (NSW) 137 at 139 per Pike J:
"Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but as with other commodities the best way to ascertain market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date – that is evidenced by sales."
The principle established in the Waterhouse decision is reflected in s.3 of the Act:
"‘unimproved value’ of land means –
(a)in relation to unimproved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and
(b)in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist."
Each of the valuation reports tendered refers to sales of lightly or unimproved comparable parcels of land in the locality of the subject properties. The approach used by the respondent's valuers in all cases conforms to the standard accepted approach. In my view, there has been no error in the Chief Executive's methodology.
The mere fact that the appellant was able to point to some factual errors (generally minor) in the valuation reports does not, of course, mean that a wrong methodology was adopted. Even where the respondent valuer conceded a factual error warranted a reduction (e.g. the omission of an allowance for power lines), the methodology remained intact.
(b) The Relative Increase and Previous Valuations
The appellant tendered some evidence of the general increase of valuation for other areas in south east Queensland and also stressed the percentage increase in values of the subject properties compared to the earlier valuation periods. However, despite these claims, I agree with the respondent's submission that:
" … No error has been demonstrated by the increases in value being different or greater than experienced in the rest of South East Queensland. Indeed it is the correct methodology for the valuation to refer to the specific locality. The appellant's submissions are internally inconsistent given that he would have the comparative sales similar in all respects, then objects to an increase greater than that experienced in other parts of the State. The percentage increase relative to property not in the subject locality is irrelevant to the valuation methodology. …
The Chief Executive did not consider older sales or valuations but relied on evidence closest to the relevant dates of valuations. … The Chief Executives valuations are required as at a particular date namely in the present appeals 1 October 2004 and 1 October 2005. … the amount or percentage of the increase relative to previous years is irrelevant." (See Tow v Valuer General (1978) 5 QLCR 378).
(c) Traveston Dam
The appellant claims the affect of the Traveston Dam was not properly considered in the respondent's valuation exercise.
The Traveston Dam was announced on 27 April 2006 whereas the appeals in this valuation have relevant dates of 1 October 2004 and 1 October 2005. The valuations could not have been affected by an announcement that had not been made. It seems clear that the affect of Traveston Dam did not have any affects on the subject valuations.
However, even if there was some local concern about selection of Traveston Dam as a possible site in the lead up to formal announcement, such concern would have been reflected in the market (and the sales referred to by the respondent). A further interesting observation made by the respondent was that the dam may well have had the affect of increasing values in the surrounding area not resumed – as "dispossessed" owners wishing to stay in the area may be competing for limited unresumed properties.
In paragraph 13 of the appellant's submissions in reply, the scenario is raised of where subject lands were, subsequent to valuation, affected by, say, a tsunami. This type of situation is covered by s.28 of the Act – alteration of valuation in force. Section 28(1)(c) and (d) refer to the case where, say, a public undertaking or adverse natural cause has, in the opinion of the Chief Executive, had the affect of altering the existing valuation. Change to valuation is then required to be made. In the present case, there is no evidence that any of these factors subsequently affected the existing valuations.
(d) Vegetation Management Act
The appellant claims that the affect of the Vegetation Management Act 1999 (VMA) has not been properly allowed for by the respondent. The key consideration on this aspect is that most of the subject properties have been valued as having a highest and best use as "rural residential". The appellant may well have a valid claim if the highest and best use was "primary production" – and clearing for such was seriously restricted by the Act.
I agree with the respondent's contention that there are a number of sales also affected by the VMA but there is no evidence to say that the legislation has impacted on their value. Such properties can still be developed for rural residential purposes with the clearing of curtilage, fire breaks, fence lines, dam sites and that is how they have been valued.
(e) Sales should be comparable in all respects
The appellant claims certain of the sales used by the respondent are not valid bases for comparison against the subjects due to differences in such matters as access to services, topography and the like. However, the appellant was unable to show how the comparable sales of the Chief Executive were not comparable to the subject properties. It is clear on the face of the reports the sales were reasonably comparable and sufficiently similar to the subject properties; by the very nature of land the sale and subject properties cannot be exactly the same as each parcel is different. In Qualischefski v Valuer General (1979) 6 QLCR 167 the Court stated at page 171:
"It is not always possible for valuers to obtain properties for basic purposes which are comparable in all respects. In the valuation process, valuers must as best they may make reasonable allowances for differentiating factors. Depending on the circumstances of each case the appropriate rate of allowance may have to be of way of depreciation or appreciation."
The succinct observation of Mason J in the High Court in Federal Commissioner of Taxation v St Helens Farm ACT Pty Ltd 146 CLR 336 at 381 is apposite:
"valuation is a matter of observation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as well as the literal sense."
I agree with the respondent's contention on this point that the valuation reports show allowances have been made for material differences between the subject and sales properties. No error has been shown in the Chief Executive's methodology under this particular head.
(f) The Maurici Principle
The appellant made reference to the Maurici principle and its non-application by the respondent, but perhaps did not understand the nature of the principle itself. The limits of Maurici were concisely summarised by the New South Wales Court of Appeal in AMP Henderson Global Investors v The Valuer General 134 LGERA 426 at 439.
"Maurici stands for the following propositions only:
(a)Section 6A(1) of the Act does not require when utilising the comparable sales method of valuation, that only sales of vacant land should be considered;
(b)Confining one's consideration to only sales of scarce vacant land and disregarding sales of improved land which would otherwise be as comparable as the vacant land sales in terms of timing, location, outlook and other relevant features, offends the principle that a reasonably representative group of comparable sales should be considered when applying that methodology.
In my opinion, Maurici does not stand for the proposition that if the only comparable sales are those of albeit scarce vacant land, they must be rejected because they are too few in number to constitute a 'representative group of comparable sales'."
I agree with the respondent's submission that in the present case there was no scarcity of comparable vacant in the locality of the subject properties. The Maurici principle has no present application. This is supported by the evidence of Mr Haydon, valuer (at see T.7).
(g) Allowances for Improvements and Services
In my view, the Chief Executive has taken proper account of the lack of improvements and availability of services by having regards to sales in the general location that are similarly affected.
(h) Rural zoning; rural residential assessment
The appellant stresses an apparent inconsistency between the land being zoned "Rural" and it being assessed for valuation purposes as rural residential by the respondent. In my view there is no inconsistency here. I agree generally with the respondent's submission that "Rural" is a Town Planning designation and does not mean that the properties are to be used or are used for primary production purposes. Subject to local building codes, they can be used for a site for a dwelling and this is the predominant market and locality and supported by similarly zoned sales evidence. It is clear that the subject properties have been valued as rural residential and not as farming under s.17 of the Valuation of Land Act.
Consideration of Specific Appeal Groups
Group 1 Appeal – Sandy Creek Road.
I accept the respondent's submission that the valuation report does not disclose any error in its calculation. The sale has noted similarities and is overall what appears to be a similar property. As against this, there is no reasonable basis for the appellant's estimated value. Mr Haydon, the Chief Executive's valuer, has made an appropriate allowance for the substantial Ergon easement across the property; no further allowance for this disability is warranted.
Group 2 Appeals – Redbank Road, Tiaro
On this group I agree with the respondent's observations that the valuation reports show the comparative sales reflect comparable properties to the subject and there was no errors in valuation methodology.
As regards the road "wedge" in the boundary of the property, a small area has been retained as additional road area bordering the subject boundary. Attempts by the appellant to have this closed as road and added to his property have been unsuccessful – the authorities claim that the area may be needed for some future road material and also to have some ecological value. The merits of these reasons are not for consideration here.
I accept the respondent's evidence that the effect of such retained road area would have minimal effect on the valuation of the much larger subject. Also, the subject land has another road frontage. Any future impediment if the "wedge" is eventually used could be considered in a future valuation. I do not consider any allowance should be made for something which is akin to a "blot on title" but would not have any practical impediment.
Group 3 Appeals - Bruce Highway, Bauple
In the present appeals, the Chief Executive has conceded some overhead power lines have not been sufficiently reflected in the unimproved value of the property. In fairness to Mr Theo, it should be noted that this aspect was adduced by him in cross-examination. However, the Chief Executive subsequently investigated Mr Theo's claim with the appropriate authorities and made what I consider an appropriate allowance – 5% of the total value of the property, not merely of the "easement area". There is no evidence that the presence of powerlines would have any detrimental aesthetic affect on the views obtainable from the appropriate house-site on the property. The appellant did not give any substantial evidence to contradict this aspect.
Group 4 Appeals - Main Street, Gundiah
In these cases the Chief Executive made a "no case" submission in relation to these appeals. It was thus left to the Court to decide whether the appeal should stand, based on whether the appellant had discharged the onus of rebutting the presumption of correctness in proving his appeal. The appellant did not point to any sales evidence, had no valuation evidence and did not say in any way why the subject sales were not comparable to his property.
The appellant's submission in relation to the Vegetation Management Act could not apply to this property as it had been cleared and thus not subject to the legislation.
The appellant did claim in relation to the property that he was an over anxious purchaser when he procured the property. However, under cross-examination, he could not remember why he was so anxious nor any details of the purchase. These are matters which one would reasonably expect to be within the knowledge of a purchaser. I cannot place any weight on the appellant's contention that he was an over anxious purchaser without any evidence for such claim. The valuations of the Chief Executive should stand in these cases.
Group 5 Appeals - Patterson Road
In these cases I consider there is sufficient sales evidence to support the figures sought by the respondent. The appellant stressed the fact that lots 9 and 10 separately were now valued close to the combined figure of these two lots in an amalgated form. However, Mr Mariner provided sufficient evidence as to why the separate lots individually had a similar value to the amalgamated lots at the same date – a purchaser is unlikely to consider the difference in size sufficiently material, given the potential use of the blocks.
The appellants claim that there was historical errors in the valuation of this property – that they were valued separately for many years when, due to ownership restrictions noted on the title, they should have been valued as one combined lot (presumably with a lower value). This historical error was not disputed by the Chief Executive but has since been corrected and is now not an issue presently before this Court.
Costs
Both sides have sought an award of costs in these proceedings. The Chief Executive seeks a set amount of $1,500 which is stated to be substantially less than costs incurred by him on a standard basis. The appellant seeks an amount of $4,000, basically to cover costs incurred by it as a result of "adjournments".
The Chief Executive submits the following circumstances warrant an award of costs in the present case:
a. The Group Four appeals failed to disclose any prima facie case that had any prospects of success. Even if successful, the potential reduction in assessed value for the Group Four appeals were such as not to warrant an appeal.
b. Due to the conduct of the appellant during the course of the hearing, the latter was substantially and unnecessarily protracted. In this regard, the appellant was repetitive, presented submissions in the course of evidence and was discourteous to both the Court and witnesses and representatives of the Chief Executive.
c. The appellant has bought unsuccessful appeals on similar grounds previously: Solon Theo Family Trust v Department of Natural Resources and Mines (2005) QLC 0065 and Solon Theo Family Trust v Department of Natural Resources and Mines (2005) QLC 0020.
d. The appellant's submissions were without merit; for example, the submission regarding the Traveston Dam.
e. Given the appellants previous appeals, baseless submissions and discourteous conduct, the claim is bordering on vexatious.
The Land Court has a general power to award costs in proceedings as it considers appropriate. (Land Court Act2000 s.34). However, in Valuation of Land Act cases, as the present is, this power is constrained by s.70 of the Act which states:
"70 Costs of appeal against valuation
(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."
Given the outcome, this provision thus limits any possible award of costs in the present proceedings to the Chief Executive only. The Chief Executive also makes the valid point that, even if the appellant otherwise qualified for an award of costs under these provisions, the Court is prevented from making an award of costs in his favour due to the status of its representative (Mr Theo) This flows from the High Court authority of Cachia v Hanes & Anor (1993-94) 170 CLR 403 where it was held that a litigant in person, unless that litigant is a solicitor in practice on his behalf, is not entitled to an award of costs, as costs are legal costs. Accordingly, the appellant in this case would not be entitled to costs on any basis.
The general principle governing the award of costs in Valuation of Land Act appeals was stated by the Land Appeal Court in Bowden v The Valuer General (1980) 7 QLCR 138 where the Court said at p. 147:
"Easy access to the Land Court to air grievances and to have valuations reviewed is, as we have already stressed, most desirable in revenue cases, and such access should be available without fear of costs being awarded to either party except in special cases." (Emphasis added)
Bowden and other relevant authorities were recently extensively reviewed and endorsed by the Land Court in the major shopping centre appeal cases PT Limited & Ors v Department of Natural Resources and Mines [2007] QLC 0046. While the decisions in these shopping centres cases are under appeal, the separate decision on costs is not part of any appeal process.
Given all the circumstances of the present case, my view is that no award of costs should be made. The appellant did have some success in two of the appeals. However, the appellant should carefully note the grounds on which the Chief Executive has sought costs in these appeals that were dismissed. In particular, the ultimate absence of any substantial grounds to support the appeals, the absence of any real basis for the appellant's submitted valuations and the prolonged time that the overall hearing occupied.
In saying this, I acknowledge the fact that the appellant's agent, Mr Theo, is a lay person and not a trained lawyer or valuer. I also acknowledge the traditional leniency given to lay persons appearing in the Land Court under the general equity and good conscience provisions of the Land Court Act 2000.
The appellant should not be inhibited from making future appeals to the Land Court or to the conduct of such by Mr Theo. However, unless there are more substantial grounds raised (putting aside the reduced "easement" cases in current proceedings) and, given the requests for costs by the Chief Executive in this matter, a future Court may well consider "special circumstances" have been made out for a costs award in an unsuccessful appeal.
Conclusion
I accept the respondent's submission that in all appeals, apart from the two Bauple matters, the appellant has failed to rebut the presumption of correctness or to prove his case. These nine appeals are then dismissed. The respondent concedes that an appropriate allowance should be made for the Bauple matters and the appeal on these matters is allowed to the extent conceded by the Chief Executive.
Order
1.The appeals numbered AV2005/0500, AV2005/0361, AV2006/0366, AV2005/1280, AV2006/0365, AV2007/0009, AV2007/0010, AV2005/0502 and AV2006/0364 be dismissed.
2.Appeal number AV2005/0501 be partly allowed and the value of $51,000.00 be substituted.
3.Appeal number AV2006/0367 be partly allowed and the value of $66,000.00 be substituted.
BR O'CONNOR
JUDICIAL REGISTRAR
0
1
0