Toohey v Department of Natural Resources and Mines - [2003] QLC 8

LAND COURT OF QUEENSLAND

CITATION:Toohey v Department of Natural Resources and Mines [2003] QLC 8

PARTIES:Edwina E and Lyn J Toohey
(applicants)
v.
Chief Executive, Department of Natural Resources and Mines

(respondent)

FILE NO: AV2002/0110

DIVISION: Land Court of Queensland

PROCEEDING: An Appeal against an Unimproved Valuation – Valuation of Land Act 1944 – Herberton Shire

DELIVERED ON: 6 February 2003

DELIVERED AT: Brisbane

HEARD AT: Atherton

MEMBER: Mr RE Wenck

ORDER:The appeal is allowed. The chief executive's valuation is set aside and the unimproved value of the land contained in Property ID 40017187, is determined in the amount of Three Hundred and Sixty Thousand Dollars ($360,000).

CATCHWORDS: Statutory Valuation – Unimproved value – Valuation of Land Act 1944 – Appeal limited to grounds stated in Notice – Burden of proving any and every ground is upon the owner.

Unimproved Value – Mass valuation methodology – Should be applied consistently once adopted – Specific allowances for disabilities – Perceived risk of a clearing permit not being granted.

APPEARANCES: The appellants in person together with their son Mark Toohey
Mr R Paterson for the respondent

Mr and Mrs Toohey are the registered proprietors of an aggregation of farming land north-west of Ravenshoe at Toohey Road, Tumoulin, severed by the main road and railway. The aggregation contains an area of 1,314.9 ha, comprising a multiplicity of real property descriptions within the Parishes of Ravenshoe and Woodleigh, sufficiently identified for the purpose of this matter as Property ID 40017187, in the records of the respondent.
As at 1 October 2001 the chief executive's unimproved valuation of the land was in the amount of $375,000. An objection against that valuation was unsuccessful and the owners filed a Notice of Appeal in the Land Court. Their estimate of the unimproved value was $317,500.
The grounds of appeal are repeated here in full:
"The department has a history of dodging our questions. They have done so again, as per the reasons given in the latest 'decision on objection'.
This valuation consists of several land types and uses. The valuer has created numerous anomalies in our valuation. These need to be corrected. The way so many changes can be made within a valuation without affecting the overall value makes a farce of the valuer's valuation process.
Further, to mention several factors that must be considered. Part of our properties are now subject to clearing on freehold land in Qld legislation. Flood mitigation work has also been done. Our main irrigation source is dry due to the failed wet season.
In our objection to the valuation we requested further and better particulars as to where the changes in valuations took place. As the owners of this land we should know how our valuation is derived.
It should also be noted that the letter 'decision on objection' we received on 28th May 2002 was not signed."
The reasons for the objection being disallowed as provided in the unsigned notice of the decision on objection were as follows:
"▪     An appropriate allowance has been incorporated in the valuation for the disabilities identified in your grounds for objection.
▪     The value is considered appropriate compared to other similar properties.
▪     The market evidence supports the applied value."
Although the owners saw it as an annoying oversight, nothing turns on the fact that the notice of objection decision was unsigned.
The owners believe that their objections to the valuation "were dismissed in a broad and sweeping statement that addressed nothing" and that "none of the issues that were raised in our objection were mentioned in 'decision on objection'." For those reasons they have concluded that the chief executive's "assessment of this valuation is flawed."
At the date of the previous valuation (1 October 1998) the department had issued separate valuations for parts of the overall aggregation. The owners had objected to those valuations and lodged appeals against the decisions on those objections. However, the chief executive then issued a fresh notice including the whole of the lands in one valuation, cancelling the separate valuations. Through a misunderstanding the owners omitted to object to that single valuation and the previous appeals had been invalidated. Nevertheless, through negotiation, the valuation of the amalgamated parcel was altered from $425,000 to $415,000. However the owners maintain that the total valuation, prior to 1 October 1998, which apparently was $317,500, should never have been increased. It was their evidence, through Mr Toohey, that the 1998 valuation of the subject and some other lands in the Shire had resulted first from a 50% increase then after "intervention by the Minister" the valuations were altered to show an increase of 35%. Mr Toohey was very critical of valuations being created in such an arbitrary manner. He was unaware of the "breakdown" which resulted in the 1 October 1998 valuation becoming $415,000. He believed that it was necessary to have that breakdown so that a comparison could be made with the breakdown of the valuation now before the Court.
The owners are frustrated by the valuation and objection history of the subject lands. They have convinced themselves that each time they have pointed out an "error", the valuation methodology has been altered, calculations altered and values "shifted without affecting the overall value".
One example given was that at a previous valuation date they had been informed that the basis of valuation of part of the aggregation, an area of 504 ha over which a stock grazing permit was held, had been $350 per beast for the 32 head permitted by the Department of Primary Industries (DPI), ie a valuation of $11,200. However, when the permitted carrying capacity was reduced by DPI to 27 head, the subsequent valuation was said to have been then based on a rate of $22 per ha and the quantum of the valuation remained unchanged in the amount of $11,200. Then, in the valuation now appealed against the valuation rate had increased to $25 per ha. They suspect the increase in the grazing land values was made to offset the disability allowances as shown in the valuation now before the Court. They query whether other stock grazing permits are valued on a carrying capacity or area basis.
They say that when their valuation, including the grazing component, increased by 35% in 1998, the valuation of grazing lands in other parts of the Shire had remained unaltered. However they believe that now that grazing values in those other areas have risen, the unimproved value of the subject grazing land component has been increased a second time. Their reasoning that a second increase was applied was based on the valuation report of Mr DF Paton, the chief executive's valuer, in which the classified values show a total amount of $443,285, before specific disability allowances totalling 15.5%. They seem to have assumed that the $415,000 previous valuation had been increased to $443,285 and then it was the disability allowances which brought about the net 9.6% decrease from $415,000 to $375,000. Other land in the locality had received a 10% reduction in unimproved value. In the absence of the breakdown of the $415,000 they say they are unable to compare like with like. This is the first time they have seen the specific disability allowances.
The owners allege that when disability issues have been raised in the past, the department adopted a different method of classifying the land with values shifted from arable to grazing land but with no reduction in the overall valuation. They see that approach as providing a contrived result.
Although there had been mention in Mr Paton's valuation report of his recognition of the probability that a tree-clearing permit might not be granted on an area (of Lot 46) of otherwise potential arable land, Mr Toohey could see no proof that this disability had been taken into account at the date when the objection decision had been made.
Other issues raised by the owners included their continuing expenditure on flood mitigation, the unreliability of a 4 ha irrigation licence on Diddleluma Creek and the apportionment of that licensed area as being available to red volcanic soil while the actual area capable of being irrigated was of poor quality; then the severity of irrigation restrictions on the 25 ha Millstream licence due to the drought which was current at the date of hearing, in comparison with the full allocations available to other upstream properties including sale properties; a previous misunderstanding by the valuer as to the actual licensed irrigation area since corrected but with no corresponding correction to the valuation; the disability of the need for double pumping, first from Millstream to a dam and then from that dam to the points of delivery.
Mr Toohey questioned the reliability of the valuer's land classification when all original survey maps had not been made available to the owners.
Mr Toohey's written statement concluded as follows:
"From now on when our valuation is done we want details of how it is valued and precisely how it is made up. We want our valuation to be clear and accountable so we don't have to go through this again."
It is clear that Mr and Mrs Toohey, with assistance from their son, have placed the valuation process and history of valuations under close scrutiny and believe there has been a lack of consistency and transparency in approach, which has permitted the alleged disability allowances to be disguised.
Their main difficulty in prosecuting the appeal is that while critical of the manner in which they perceive the respondent has dealt with their complaints, as to the disabilities of the property and the valuations appealed against, no articulated basis of valuation has been put forward on their behalf. They are prepared to rely on a previous level of value which in itself has no exposed basis relevant to the date of valuation in this matter. Mr Toohey was not prepared to agree with the classification of land types adopted by Mr Paton, but despite their intimate knowledge of the land involved, the appellants offered no cogent alternative classification or estimates of area, primarily because they say there had been insufficient time allowed them after receipt of the respondent's valuation report.
It is expected that no real comfort will be obtained by the owners from reference being made to the legislation pursuant to which the valuation was made. However it is necessary for consideration to be given to at least the following sections of the Valuation of Land Act 1944:
· Section 3(1)(b)
"unimproved value" of land means –
(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."
This provision was explained by Carter J in the Full Court of Queensland judgment in Stubberfield v The Valuer General (1988-89) 12 QLCR 328 at pp.330, 331:

"In Spencer v The Commonwealth [1907] 5 C.L.R. the High Court propounded the proper test for the assessment of land value. It is the price which a willing purchaser would at the date in question have had to pay to a vendor not unwilling, but not anxious to sell. It seems to me that that test finds statutory expression in the Valuation of Lands Act. In defining 'unimproved value' for the purposes of the Act, it recites that that value is 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. In simple terms it is synonymous with the market value of the land."

· Section 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."

· Section 45(3)
"An appeal shall be instituted by filing a notice of appeal in the Land Court registry."

(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."

It has been held that to rebut the presumption as contained in s.33 of the Act, that the valuation of the chief executive is correct, it is necessary for an appellant to show:
(1)In making the valuation, the chief executive acted upon a wrong principle, or made a serious error of fact; or
(2)The valuation was made by a method fundamentally erroneous.

(See the judgment of the High Court of Australia in Brisbane City Council v The Valuer-General [1978] 140 CLR 41, 5 QLCR 283).

Mr Paton's valuation report became Exhibit 3. The appellants had been provided with a copy of the report several days prior to the hearing. The report contained a description of the nature of the land comprised in the various lots as surveyed. The land was then further classified and valued as follows:
Flat to easy irrigable arable red volcanic soil
(inclusive of WL from Millstream)  25.0 ha   @ $1,650               41,250
Flat to easy irrigable arable red volcanic soil
(inclusive of WL from Diddleluma Ck)  4.0 ha   @   $1,375                 5,500
Flat to easy dry arable red volcanic soil                 143.3 ha   @   $1,300             186,290
Flat to easy grazing  223.2 ha   @     $500             111,600
Easy to steep grazing  296.7 ha   @     $250               74,175
Hard hill grazing  118.7 ha   @     $100               11,870
Stock Grazing Permit  504.0 ha   @       $25               12,600
1314.9 ha$443,285
Less allowances for:
Severance and Shape  -   10%
Size-     3%
Working difficulties  - 2.5%
- 15.5%  -68,709
374,576
Round to$375,000

Under the heading "Basis of Valuation" Mr Paton made reference to the "restrictions on use affecting the classifications". Certain parts of the property such as the Stock Grazing Permit, areas of stony influence, wetness and white soil, a watercourse area, and an area of otherwise arable quality land considered to be unavailable for clearing due to the existence of endangered vegetation, had been valued on the basis that potential use was limited to grazing. In the case of the Stock Grazing Permit it was Mr Paton's oral evidence that the beast area value which had once been the basis of its valuation had been considered conservative in comparison with other leases, due to the then permitted carrying capacity of 32 head being considered high. The DPI reduction in permitted carrying capacity to 27 head was seen as confirmation of that opinion and it had then been considered that a valuation on an area basis was the more practical approach. Rather than it being a reason for reducing the valuation, the reduced carrying capacity was seen as confirmation of the level of value which had been previously applied.
The further specific allowances for the road severance; the elongated shape of the aggregation; its larger-than-average size and working difficulties relative to part of the arable area were identified, and the quantification of allowances discussed in the report.
It was explained that the applied valuation had been based on a direct comparison with evidence derived from the analysis of four sales of local properties. Each of those sales had been identified and the comparability of the land classifications discussed.
Although the owners clearly have difficulty in accepting that the valuation appealed against was other than a contrived result, there is no evidence from them which could support an argument that the chief executive, through Mr Paton, acted on a wrong principle or that the valuation methodology was erroneous.
Although there has been some judicial criticism of the classification method of valuation, that methodology has not been overruled in principle, as was observed by the Land Appeal Court in Cooper and Strickland v The Crown (1984-85) 10 QLCR 23 at p.25. The Court commented:
"Its application, in the circumstances of the individual cases has been condemned and disallowed. It has, however, not been overruled in principle as a method of valuation."
The classification methodology has in this matter provided the transparency which the owners felt they had the right to demand. That transparency is not in fact a right to which they are entitled in the valuation process, but it has been helpful in this matter, in identifying the basis of valuation, the comparisons which have been made with the sales evidence and the manner in which physical or potential legal restrictions on the use of various classes of land have, in fact, been addressed.
The final consideration, in terms of rebuttal of the presumption of correctness, is whether Mr Paton made a serious error of fact. I am persuaded on Mr Toohey's evidence that the 4 ha Diddleluma Creek irrigation licence would not, in practice, be made economically available to an area of "flat to easy arable red volcanic soil". A premium of $75 per ha had been applied over "dry arable red volcanic soil" for the irrigable potential of the 4 ha involved. Regardless of the nature of the land which might benefit from that irrigation hence, a total premium of $300 is not seen as excessive.
Mr Toohey was generally critical of the comparability and relevance of the sales evidence used by Mr Paton. No alternative evidence of value was provided however in support of the appellants' estimate of value. I am satisfied on the evidence that where the sale lands were of a superior nature and/or enjoyed superior attributes including access to irrigation supplies, Mr Paton had taken those matters into account in the comparison process.
In his oral evidence, Mr Paton said that the area of otherwise potential arable land which he accepted would probably be denied a tree-clearing permit on application, and which he had instead valued as having highest and best use as grazing land was estimated to contain 14.9 ha. The difference in value between the arable potential and grazing land was $800 per ha, the effective allowance being a rounded $12,000. However, as I understood his evidence, although a 10% reduction in unimproved values had been seen as warranted in comparison with the previous valuation of lands within the particular Sub Market Area (SMA) in which the subject property was located, based on the mass appraisal valuation system, it had been his opinion that, before consideration of the endangered vegetation issue, a reduction of only 6% was warranted to establish the unimproved value of the subject property. His reasoning was that values for grazing lands to the west of the subject SMA had "held up" and received no reduction in value. The subject land, being located towards the western end of its SMA with a large proportion of its area being grazing land would not have, in his opinion, been entitled to receive the full 10% SMA reduction had its valuation been considered on an individual basis. On my calculations the applied 6% reduction would have resulted in a valuation of about $390,000. Again, as I understood his evidence, the reduction to $375,000 (or 9.6% below the previous valuation) could be accepted as including the deleterious effect of the existence of endangered vegetation on the 14.9 ha.
Although it occurred in a convoluted manner, I have been persuaded that the owners have exposed a serious error of fact in Mr Paton's approach. I am satisfied, on my understanding of the evidence, that adjustments have been made which have effectively denied the true benefit of Mr Paton's cogent reasoning as to the effect of the risk that a clearing permit could be denied for the 14.9 ha of endangered vegetation. The evidence of past adjustments under the mass appraisal system was not denied by the respondent. That evidence was that the original $425,000 valuation of the aggregated area was for all intents and purposes the result of both the aggregation of the property into one valuation and then a 35% blanket increase over and above the previous valuations in the subject SMA. That occurred despite the location of the subject property within the SMA, its proportion of grazing country, and the lack of a similar increase in the pure grazing SMA's. It seems to me that if the mass valuation methodology is to be adopted in the first place, it needs to be applied consistently and not adjusted for an individual property when a disability not previously recognised has been exposed.

I accept Mr Paton's evidence that, except for the endangered vegetation issue, previous valuations of the subject lands had recognised the effect of the disabilities for which the specific allowances totalling 15.5% were made in his valuation. I also accept that those allowances were made based on his professional considerations and should not be disturbed on the evidence before the Court.
It seems to me that, had there been no specific consideration given to the endangered vegetation issue, the valuation of the subject land should reasonably have been reduced by the blanket 10% applied within the relevant SMA. That should have effectively resulted in a valuation figure of $373,500. Mr Toohey argued that the effect of the inability to clear trees on 14.9 ha, was not restricted to that specific area but extended to effectively reduce the utility of adjoining arable land. However, I think the approach taken by Mr Paton, ie reducing the value of the 14.9 ha from the arable classification to the grazing classification, is sufficient recognition of the perceived deleterious effect on unimproved value.
I do not wish to disturb the transparency of the classification approach adopted by Mr Paton. However, the evidence indicates to me that to maintain the previously existing relativity within the relevant SMA the land value, before the specific disability allowances as found by Mr Paton , (ie $443,285), should be reduced by a further 4%. This would result in an amount of $425,555 less the allowances of 15.5% made by Mr Paton, leaving a net valuation of $359,592 which I will round to $360,000.

Order
The appeal is allowed. The chief executive's valuation is set aside and the unimproved value of the land contained in Property ID 40017187, is determined in the amount of Three Hundred and Sixty Thousand Dollars ($360,000).

RE WENCK
MEMBER OF THE LAND COURT