Thomas Winch Company (Qld) Pty Ltd v Department of Natural Resources, Mines and Water
[2006] QLC 50
•1 September 2006
LAND COURT OF QUEENSLAND
CITATION: Thomas Winch Company (Qld) Pty Ltd v Department of Natural Resources, Mines and Water [2006] QLC 50 PARTIES: Thomas Winch Company (Qld) Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NO.: AV2005/1322 DIVISION: Land Court of Queensland PROCEEDING: Appeal against an annual valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 1 September 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RS Jones ORDERS: 1. The appeal is allowed.
2. The unimproved value of Lot 17 on Registered Plan 897272, Parish of Mackenzie as at 1 October 2004 is determined at $224,000.
CATCHWORDS: Appeal against unimproved value of land pursuant to Valuation of Land Act 1944 – statutory presumption of correctness – onus of proof – comparable sales. APPEARANCES: Mr I Thomas for the appellant
Ms C Liu for the respondentBackground:
These proceedings concern an appeal pursuant to the Valuation of Land Act 1944 (VLA) against the unimproved value attributed to land located at Logan Reserve Road, Logan Reserve, more properly described as Lot 17 on Registered Plan 897272, Parish of Mackenzie containing an area of 34.48 ha. Most town services are available to the land.
The relevant date of valuation is 1 October 2004 (effective 30 June 2005). The unimproved value of the land was originally assessed by the respondent in the amount of $385,000. The appellant's estimate, as identified in its Notice of Appeal, was $250,000. On 18 January 2006 the respondent wrote to the appellant advising that the unimproved value of the land had been reviewed and that, pursuant to s.68 of the VLA, had been revised downwards to $275,000. At the hearing of the appeal, based primarily on the unimproved value attributed to land known as the "Deer" property, the appellant contended for a lower value of $131,368.
The evidence in this appeal was heard at the same time as the evidence in the appeal concerning adjoining land owned by Mr William McKirdy.[1] Both parcels of land are extensively affected by flooding and, at the relevant date, were being used for cattle breeding and fattening purposes. In both appeals the respective appellants grounds of appeal are identical and Mr Lochel, the respondent's valuer, relied on the same sales evidence in reaching his opinion about the unimproved value. In such circumstances there are a significant number of matters and considerations common to the determination of both appeals.
[1] McKirdy v Department of Natural Resources, Mines and Water [2006] QLC0051.
At the hearing of this appeal, the appellant was represented by Mr I Thomas. The respondent was legally represented by Ms C Liu, a senior Legal Officer employed by the respondent and relied on the evidence of Mr John Lochel, a registered real estate valuer of some 30 years experience. Mr Lochel was not the valuer who originally assessed the unimproved value attributed to the land. However, for the purposes of this appeal he carried out an independent analysis and inspection of the subject property and sales evidence to form the view that the unimproved value of $275,000 now contended for by the respondent was a reasonable one.
Issues in the appeal
While the property does not have a frontage to the Logan River, it is subject to flooding to the extent that only about 15 to 20 percent of the total land area is flood free. This land is located near the rear northwestern corner of the block.
At the relevant date the land was being used for cattle breeding and fattening purposes. Improvements on the land include a dwelling and other structures consistent with its use. Under the relevant Logan City Council Town Plan, the land was designated or zoned as an area for "Investigation". Cattle grazing and fattening are uses allowed under that zoning. Having regard to the nature of the use of the land, according to the respondent, it has been valued in accordance with s.17 of the VLA.
The Notice of Appeal contains 11 grounds. A number of these are generic in character, for example, alleging that the valuation is "excessive" or "unreasonable". However there were a number of substantive grounds raised and relied on including:
i.That the valuation had not been carried out in accordance with the provisions of s.17 of the VLA;
ii.That, in arriving at the unimproved value the respondent:
(a) relied on the sale of improved properties and in so doing failed to adequately take into account the value of the improvements on those sales;
(b)had taken into account inappropriate sales;
(c)had failed to take into account or properly take into account the physical characteristics of the land, and
(d)in particular had failed to properly take into account the flood prone nature of the land.
As the subject land is "improved" land for the purposes of the VLA, s.3(1)(b) relevantly provides:
"3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(a) …
(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."
Pursuant to s.33 of the VLA the valuation appealed against is deemed to be correct and therefore the appellant bears the burden of proving that it is wrong. Further, pursuant to s.45(4) the burden of proving every ground of the appeal relied on also lies with the appellant. In Brisbane City Council v The Valuer-General[2], Gibbs J as he then was, in delivering the leading judgment of the High Court considered that the presumption in favour of the correctness of the statutory valuation may be rebutted where it can be shown that the valuation was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method.
[2](1977-78) 140 CLR 41 at 56-57; see also G Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331-332 LAC.
In carrying out his valuation Mr Lochel expressly responded to each of the grounds of appeal raised by the appellant and arrived at his assessment of the unimproved value of the land in the following way:
34.48 ha at $8,000 per ha = $275,840
The figure of $275,840 was then rounded down to $275,000.
The rate of $8,000 per ha was arrived at by Mr Lochel after analysing three sales none of which were located in the immediate vicinity of the subject. This was so because there were no sales of a primary production character recorded in the Logan area at a time sufficiently proximate to the valuation date. To overcome this difficulty, Mr Lochel investigated sales from the Shire of Beaudesert which adjoins the Logan City Council area to the south. Each of the sales were being used for rural pursuits at the time of being analysed by Mr Lochel.
At the end of the day, at the heart of the case for the appellant were two issues. First the perceived lack of relativity with the unimproved value attributed to the Deer land said to be superior and located on the opposite bank of the Logan River. The second issue was the alleged superiority of the sales relied on by Mr Lochel when compared to the subject land.
The Section 17 Argument
The evidence led of Mr Lochel makes it quite clear to me that, in determining the unimproved value of the land, he had proper regard to the application and intent of s.17 of the VLA.
The Relativity Argument
The evidence of Mr Thomas and Mr Lochel made two things tolerably clear. First, the Deer land was generally superior to the subject and second its unimproved value as at 1 October 2004 was $195,000. It was the appellant's contention that if that superior land had an unimproved value as at 1 October 2004 of $195,000 the unimproved value of the subject should not exceed $131,368.
Given the statutory presumption of correctness afforded to the unimproved value attributed to the Deer land[3] and the evidence concerning the respective comparability of that land when compared to the subject this argument has some attraction, particularly at a superficial level.
[3] s.33 VLA.
However, when the facts surrounding the value attributed to the Deer land are looked at more critically, any comparison between it and the unimproved value attributed to the subject land is not a valid one. In my opinion, it is reasonably certain that the unimproved value attributed to the Deer land involves a significant undervaluation.
The reasons for reaching this conclusion are first; the best evidence is that the unimproved value of the land has remained unchanged since about 2001. Second, it was Mr Lochel's professional opinion that the unimproved value attributed to the land was too low. I should point out here that Mr Lochel was not the valuer responsible for valuing this land. The third reason is that, in my opinion, the unimproved value attributed to the land appears to be manifestly too low when regard is had to the reliable sales evidence relied on by Mr Lochel in this appeal.
For the reasons expressed above, I conclude that the unimproved value attributed to the Deer land is not reliable evidence of the unimproved value of the land the subject of this appeal.
The Sales Evidence
In appeals such as this the primary method for the assessment of unimproved value of land ought to be, as far as is reasonably practicable, by a comparison of the subject land with reliable sales evidence.[4] Even large increases over previous valuations may be justified where supported by reliable sales evidence.[5]
[4]Fischer v Valuer General (1983) 9 QLCR 44 (LAC); Grahn v Valuer General (unreported decision of the LAC – 20 November 1992 – AV90/472, AV 90/473).
[5] Tow v Valuer General (1978) 5 QLCR 378 at 381 (LAC).
In this context I accept that, subject to the matters addressed below, the first two sales relied on by Mr Lochel provide the best evidence of the unimproved value which ought to be attributed to the subject land.
I do not consider Mr Lochel's Sale 3 to be of much value. This transaction involved a sale of superior grazing land to an adjoining owner. However, more importantly this sale is not only remote from the subject, about 45 kilometres as best as I can tell, but is also quite remote from the nearest town of significance being Beaudesert. It is too difficult in my opinion, to try and adjust this sale to take account of this relative remoteness and then sensibly compare it to the subject.
I accept the evidence that Mr Lochel's Sale 2 is comparable country to the subject (second-class grazing) and superior in the sense that it is flood free. However, I also accept the evidence of Mr Lochel to the effect that, in respect of grazing and/or agricultural blocks about the size of the subject land here, a significant premium is usually associated with proximity to a town centre offering a wide range of services and amenities. Accordingly, in my opinion the subject land, when compared to this sale, is materially superior.
In respect of Mr Lochel's Sale 1, it lies on the very outskirts of the large rural town of Beaudesert. I accept Mr Lochel's evidence that the proximity of the subject to Beenleigh and Springwood offers easier access to the services and amenities usually associated with larger shopping centres than is available to this sale. However, in this context, I also accept the evidence that the town of Beaudesert offers a level of goods and services important to rural industries superior to that offered at Beenleigh. For example, cattle sale facilities and more widely stocked produce stores.
On balance, I am of the opinion that the pros and cons of proximity to Beenleigh and Springwood versus proximity to Beaudesert largely cancel each other out in the circumstances of this appeal. There is however, in my opinion, probably still some advantage in favour of the subject in this regard.
I am also of the opinion and so find that this sale is superior to the subject in respect of its flood immunity. Sale 1 is flood free while 80% to 85% of the subject land is inundated to varying degrees from time to time. However, in respect of this issue, I accept Mr Lochel's evidence that when regard is had to the frequency of serious flooding and the benefits of periodic flooding to the productivity of the land, the negative impact on value of such flooding would tend to be small.
As to the actual quality of the land there is no doubt that the soils and potential grazing capacity for this sale are materially superior to that of the subject.
On balance I consider and so find that the subject land is slightly inferior to Sale 1. In this context I am of the opinion that, on the facts relevant to this appeal, Mr Lochel placed too much emphasis on the proximity of the land to Beenleigh and Springwood.
Doing the best I can with the evidence before me I intend to adopt an applied rate of $6,500 per hectare for the subject. This represents about 90% of the rate per hectare applied to Sale 1. This rate, in my opinion, also sits reasonably comfortably with the rate per hectare of $4,530 applied to Mr Lochel's Sale 2. Sale 2 is a slightly larger property of similar quality grazing country (but flood free) which is materially more remote from Beenleigh than the subject land and from Beaudesert than Sale 1.
Accordingly I assess the unimproved value of the subject land as at 1 October 2004 at $224,000 calculated as follows:
34.48 ha x $6,500/ha = $224,120
rounded to $224,000.
Orders:
1. The appeal is allowed.
2. The unimproved value of Lot 17 on Registered Plan 897272, Parish of Mackenzie as at 1 October 2004 is determined at $224,000.
RS JONES
MEMBER OF THE LAND COURT
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