Timothy Edward O'Brien v Chief Executive, Department of Natural Resources and Water

[2007] QLC 5

LAND COURT OF QUEENSLAND

CITATION:	Timothy Edward O'Brien v Chief Executive, Department of Natural Resources and Water [2007] QLC 0005
PARTIES:	Timothy Edward O'Brien (appellant)
v.
Chief Executive, Department of Natural Resources and Water (respondent)
FILE NOS.:	AV2005/1247
DIVISION:	Land Court of Queensland
PROCEEDING:	Appeal against Unimproved Valuation
DELIVERED ON:	6 February 2007
DELIVERED AT:	Brisbane
HEARD AT:	Roma
JUDICIAL REGISTRAR:	Mr BR O'Connor
ORDER:	The appeal is dismissed.
CATCHWORDS:	Valuation of land – sales analysis – appropriate deductions – relativity – presumptions of correctness.
APPEARANCES:	Mr T. O'Brien for appellant. Mr K. Fisher Principal Lawyer (Crown Law) for respondent.

1. This is an appeal against a valuation by the Chief Executive under the Valuation of Land Act 1944 (the Act) of a property known as "Tyronne" of some 517.694 hectares in area, located 33 kilometres south of Injune and situated in the shire of Bungil.  The relevant date for the valuation in dispute is 1 October 2004.  The current registered owner of the subject property is Timothy Edward O'Brien, Mr O'Brien having purchased the property in May 2003.  The property is worked in conjunction with another property owned by Mr O'Brien. 

2. The Chief Executive contends for a valuation of $220,000 while the appellant led evidence at the hearing to an amended figure of $160,000.

3. Evidence to the appellant was given by Mr O'Brien supplemented by a valuation of Mr Robert Brown of Watkins & Co Valuers based in Roma.  Mr Brown was not called at the hearing to speak to his valuation.  Evidence for the Chief Executive was given by Mr Anthony Dunk, acting co-ordinating valuer for the southwestern Queensland area.  Mr Dunk was a senior valuer based in Roma at the time of the valuation. 

Grounds of appeal

1. Mr O'Brien lists three grounds of appeal in his notice of appeal form.  These are:

   ·market evidence does not support the applied value,

   ·value is inappropriate compared to properties in the immediate vicinity,

   ·improvements have been undervalued.

2. At a hearing it should be noted that the appellant is limited to his nominated grounds of appeal.  Section 45(4) of the Act provides:

   "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."

The appellant's case

1. Mr O'Brien produced written material on which he elaborated in his oral evidence before the Court.  In broad terms, his approach was to take the sale of the subject property on 23 May 2003 at $357,500 and from that figure deduct the cost of improvements (dams, fences, timber clearing) as well as other "miscellaneous costs" and "intangible assets" to arrive at an unimproved figure of $160,990.  In summary, his deductions were:

   ·dams   $19,105

   ·fencing including roadside fencing   $42,894

   ·clearing including an area of 162 hectares for cultivation  $86,320

   ·miscellaneous costs to maintain and upgrade

   existing improvements overtime (15% of costs)  $22,247

   ·intangible assets paid for in purchase price including freeholding                   $26,812

   Total (rounded)  $197,380

2. Mr O'Brien also tendered the valuation of the subject property of Mr Robert Brown.  This valuation was done for stamp duty purposes and valued "Tyronne" on a treated, fenced and watered basis at $460,000 as at 19 January 2005.  The valuation states that the $460,000 represents a 29% increase in value since the date of sale in 2003 (however Mr O'Brien indicates that some of this increase is a result of improvement work he has done since the date of sale).

3. In his valuation report Mr Brown states under the heading "Brief Market Comment" as follows:  "Rural prices have shown a marked increase in value in the last two years; a high cattle market underpins this increase in demand; cattlemen are looking to expand their holdings during this time while interest rates remain at attractive levels." 

Respondent's evidence

1. Mr Dunk states he was not the original valuer in this matter but has carried out an inspection of the subject block before the Court hearing and adopts the figure of the original valuer.  His basic approach has been to review some 23 sales in the relevant shire (Bungil) leading up to the relevant date of valuation October 2004.  He has then selected three sales which he deems to be most relevant.  One of these is the subject sale of "Tyronne"; however Mr Dunk states that this some 18 months before the relevant date in a time of fairly rapidly escalating market values.  His analysis of "Tyronne" is as follows:

   ·Water (including interest)   $16,478

   ·Fencing (including interest)   $38,348

   ·Timber treatment (including interest)   $56,617

   ·Interest on land  $17,977

   Total  $129,420

   ·Analysed unimproved value   $228,081

   (resulting in a figure of $440.57/hectare)

2. Mr Dunk adjusted an earlier estimate of water costs after a detailed inspection of the waters on "Tyronne".  Mr Dunk applied this subject sale at 94% of sale price equating to $220,000 or $424.96 per hectare. 

3. Mr Dunk's other two main sales were:

   1.Springdale: date of sale 01/03/04; analysed unimproved to $589/ hectare (and applied at $515/hectare) comparing it to the subject at $424/hectare.  Mr Dunk considers this sale to be superior to the subject in key aspects of situation, access, country types, artificial water size, and to have similar rainfall.

   2.Bindeyego: date of sale 24/08/04; analysed to $367/hectare and applied at $345/hectare; it is considered by Mr Dunk superior in country type and artificial waters and size but inferior in situation (located in the Booringa shire) access and rainfall.  On a rate per hectare it is seen as inferior to "Tyronne". 

   3.Glen Alva: date of sale 22/09/03 analysing at $577/hectare.  It was only used as a supplementary sale and considered slightly superior to the subject land on Mr Dunk's comparison.  He sees it as a high sale and not of the same weight as the other three comparisons.

4. Mr Dunk also tendered a map of the surrounding area to show the relativity in valuations between blocks.  This was used as supporting evidence to supplement his primary method of direct comparison with sales evidence.

Consideration of Valuation Evidence

1. There was no real dispute between the parties as to the description of their country, access, rainfall, waters, location etc.  It is convenient then to deal with the two analyses of the subject.  I do not propose to precisely reconcile the two lots of figures but only to make certain specific comments.  In view of my findings later in this decision it is not critical for me to come up with an exact analysis of "Tyronne". 

2. Mr Dunk is a valuer with extensive experience in Roma and Charleville districts over some eight years.  He conducted a detailed inspection of "Tyronne", relied on his extensive office records in application of costs and followed accepted valuation practice and principles in the application of interest allowance for improvements and on land (development period allowance).  Included were appropriate allowances for depreciation on improvements.  In his evidence Mr Dunk outlined his standard approach to valuing improvements:

   "We obtain costs of improvements through a cost book, by getting contractors and talking to people, local businesses etc as Mr O'Brien has done but at the time of inspection of any sale – the property's aren't sold with everything new so as a process of valuation we do a cost less depreciation and we rely on our professional judgment for the depreciation figure as a result of all properties and we inspect over time.  Obviously they weren't purchased new so we value them accordingly."  (Transcript p. 21)

3. Mr O'Brien, who is an experienced grazier, sought evidence of water, fencing and clearing costs in the area to support his estimate of improvements.  There is only a minor difference in his water and fencing costs compared to Mr Dunk.  There is a more substantial difference on the timber treatment costs.  However, in applying his timber treatment costs Mr O'Brien may have made greater allowance for treatment of cultivated areas than would be appropriate given the state and use of that area of the time of sale. 

4. Also he does not appear to be aware of the proper valuation approach in depreciating improvements for age and obsolescence.  Further, two of his heads of "miscellaneous items" and "intangibles" cannot be deducted (as such) in proper valuation methodology.  The "interest" in intangibles has been allowed for in Mr Dunk's approach.  No allowance can be made for costs of freeholding or maintenance of improvements over the many years the property has been operating.

5. It is not disputed that payment may have been made for freeholding but under the Valuation of Land Act 1944 (s.14(1)) the property must be valued as freehold for current purposes. 

6. Even if some alteration was made in Mr Dunk's allowances (say further allowance for timber treatment) to bring his analysis below $220,000 unimproved, this of course does not mean that the valuation as at 1 October 2004 would be reduced to this figure. 

7. There is the other two basic sales plus the support sale.  These analyses and comparisons to the subject land were not seriously contested.

8. Mr Dunk refers to the rising market between May 2003 (sale date of Tyronne) and October 2004.  This is also confirmed by the report of valuation of Mr Brown tendered by Mr O'Brien.  The inference is that an unimproved figure for the subject at the relevant date (October 2004) would be considerably higher than the unimproved figure – derived from the sales analysis of the subject – as at May 2003.

9. To address in summary Mr O'Brien's grounds of appeal:

   ·I consider there is sufficient market evidence to support the value, applied to the  subject, based primarily on the four sales tendered by Mr Dunk.

   ·There is no evidence to suggest a lack of proper relativity with the valuations of surrounding properties.

   ·Even if the improvements on "Tyronne" (say timber treatment) have been undervalued by Mr Dunk (and I do accept that they have), there is sufficient evidence otherwise to justify the applied figure.  The improvements here refer to those improvements on "Tyronne" at the date of sale as valued in the sales analysis.  It is not necessary to consider the value of improvements at the date of valuation in October 2004.

10. A final factor should be mentioned is the presumption of correctness. Section 33 of the Valuation of Land Act 1944 states:

    "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."

    There is no evidence from the appellant which has overcome this presumption of correctness.

11. After careful consideration of all the evidence my view is that the figure of $220,000 placed on the subject by the chief executive should not be disturbed.  The appeal is dismissed.

BR O'CONNOR

JUDICIAL REGISTRAR