Westerman v Valuer-General
[2013] QLC 65
•11 December 2013
LAND COURT OF QUEENSLAND
CITATION:Westerman v Valuer-General [2013] QLC 65
PARTIES:Sybrand Johannes Westerman
(appellant)
v.
Valuer-General
(respondent)
FILE NO:LVA362-12
DIVISION:General Division
PROCEEDING: Appeal against annual valuation under the Land Valuation Act 2010
DELIVERED ON: 11 December 2013
DELIVERED AT: Brisbane
HEARD ON: 7 November 2013
HEARD AT:Brisbane
MEMBER:WA Isdale
ORDERS:1. The appeal is dismissed.
2. The valuation appealed against is confirmed.
CATCHWORDS: Land Valuation Act 2010, ss 163, 169
Property Agents and Motor Dealers Act 2000, s 574A and 574C
Valuation of Land Act 1944, s 13(7)
Sales evidence of value ― comparable sales ― relativity ― expert evidence
Arkinstall v Valuer-General [2013] QLC 30
R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13
Body Corporate for “147-153 Mary Street Gympie” CTS v Valuer-General [2013] QLC 51
BrisbaneCity Council v The Valuer-General (1978) 140 CLR 41, 5 QLCR 283
Burnett v Department of Natural Resources and Water [2010] QLC 57
Dr Yvonne Collen Pty Ltd v Valuer-General [2013] QLC 60
Enright Hendy and Partners Investments Pty Ltd as Trustee v Valuer-General [2012] QLC 38
WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44
Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995)
Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327
Lawson v Valuer-General [2012] QLC 27
JL & I Qualischefski v Valuer-General (1979) 6 QLCR 167
Steinback v Valuer-General [2012] QLC 8
Thomson v Department of Natural Resources and Mines [2007] QLC 92
NR and PG Tow v Valuer-General (1978) 5 QLCR 378
BG and AK Wilson v Chief Executive, Department of Lands (1994-1995) 15 QLCR 63
APPEARANCES: Mr SJ Westerman, the appellant
Mr P Prasad, Senior Lawyer for the respondent
Background
The appellant is the owner of land described as Lot 171 on SP 157454 County of Stanley, Parish of Redcliffe. It has an area of 794 m² and is a corner allotment in a residential estate known as Petrie on Pine. It is some 23 km radially from the Brisbane GPO.
Pursuant to the Land Valuation Act 2010 (the Act) the Valuer-General (respondent) routinely valued the land on 1 October 2011. The site valuation of $270,000 was subsequently reduced to $260,000 in accordance with s 163 of the Act. The respondent’s letter dated 16 October 2013, which became exhibit 5, recorded this. The reduced figure of $260,000 became the figure appealed against.
The appellant, dissatisfied with the original valuation and the reduced figure, contended that the site value of the land at the date of valuation should be $230,000. The grounds of the appeal were that the valuation did not reflect the physical characteristics of the land or the constraints on its use. Additionally, it was not in line with the valuations that had been made of comparable lands.
The appellant presented his case and also gave evidence which included written material.
The case for the appellant
The notice of appeal became exhibit 1 and in his evidence the appellant referred to his research material, which was admitted as exhibit 2. Referring to the subject land, the appellant gave evidence that the building regulations do not allow any building or structure over 2 m high to be built within a 9 m by 9 m truncation of the roadway boundaries of this corner block. He also drew attention to the drainage easements on the land and the presence of an access point for the drainage. The effect of these disabilities, he stated, was that he was not able to locate a carport where he wished to and was unable to have a swimming pool.
The evidence of values of other land
The appellant referred to valuations of other lands which he said were comparable to the subject. I will consider them individually. All have the same Residential A zoning as the subject.
38 Affleck Avenue, Petrie
With an area of 903 m², it was valued on 1 October 2011 at a site value of $210,000. It is an irregular shaped corner lot located in the same Petrie on Pine residential development as the subject. The site has been cut and filled to create a building pad. There are views through 180° to the south and east. It is located about 1 km south of the subject land.
9 Hopkins Street, Petrie
This 814 m² land was valued on 1 October 2011 at $235,000. It is a regular shaped corner allotment in Petrie on Pine. It has been cut and filled to obtain a level area. It has some views to the north-west and is located less than 1 km south-west of the subject land.
5 Webster Court, Petrie
With an area of 800 m², this land was valued at $230,000 on 1 October 2011. This is described in exhibit 2 as a slightly irregular shaped corner lot that has been slightly filled. It is in Petrie on Pine and is about 500 m south of the subject land. It has unrestricted views to the east.
25 D’Aguilar Street, Petrie
This 902 m² block, slightly irregular in shape, is located on a corner in Petrie on Pine. It has uninterrupted views of more than 180° and is less than 1 km south-east of the subject land. The northern boundary is retained with a 3 m high wall above the adjoining block. The south corner has a small retaining wall, approximately 2 m high, below street level. It was valued at $260,000 on 1 October 2011.
Cross-examination of the appellant
In cross-examination the appellant readily agreed that he does not have a background in law or valuation. He forthrightly admitted that he was not aware whether any of the valuations to which he referred were being challenged or had been changed since he viewed them on the internet where it appears they have been placed by, in effect, the respondent.
Additional material
After leaving the witness box the appellant sought to tender further material which included photographs purporting to show the views from the subject land, the 820 mm height of a retaining wall on it, drawings of typical retaining wall sections and plans showing the land and for a house on it. Additionally, there is a one page extract from the Queensland Development Code published on 25 October 2005. Although this tender was made after the appellant had left the witness box, the respondent did not object and it became exhibit 3. This material was relied on to contradict the assertion in the valuation report relied on by the respondent which states that there is a small retaining wall on the south eastern corner of the subject land, approximately half a metre high and constructed of stone boulders with a concrete footing. The “typical section” of the wall diagram in exhibit 3 does not show a concrete footing, nor does the photograph.
The case for the Valuer-General
The respondent called one witness, registered valuer Elizabeth Kearins. The valuer prepared a report, which became exhibit 4. Ms Kearins was present in Court during the whole of the appellant’s case. The land was valued by adopting the method of direct comparison with sales of other land. In this case, vacant land for single residential use. The land is burdened with two easements for underground drainage. The area affected is 13 m². As has been noted, the land is zoned Residential A. The highest and best use of the land is for a single dwelling house. It has water, sewerage, stormwater, electrical and telecommunications services. There is a bus service and the Petrie train station is approximately 2 km away. It is surrounded by single dwelling houses dating from the development of the area about 10 years ago. There are schools and a Woolworths supermarket within Petrie and the regional shopping centres at Strathpine, about 6 km to the south and North lakes, around 8 km to the north east.
The valuer reports that the site has been cut and filled with a 2 m high wall above the adjoining block and the wall, already referred to, on the south east boundary. It is stated to be “approximately half a metre high”. Both retaining walls are said to have concrete footings. It is stated that there is a small 13 m² easement in the south western corner and a “manhole cover” in the north-west corner which restricts the land’s utility somewhat.
The land is described as a slightly irregular shaped rectangular corner allotment with a northern boundary length of 34 metres and a western boundary of 26 m. It is not affected by flooding. The valuer has compared the subject with six sales of vacant land. I will consider them individually. All are zoned Residential A, the same as the subject.
Sale 1
19 Valmadre Court, Petrie, was sold on 17 December 2010 for $245,000. Its site value is assessed at $240,000. It has an area of 1,069 m² and is in the Petrie on Pine estate. It is quite steep and significant site works are required to construct a house. The access is a concrete driveway over the road reserve and there is a retaining wall on the road frontage. The access and steep topography restrict the utility of the land and there is a 108 m² easement along the eastern boundary. The valuer considers it inferior to the subject land. Concerning the amount of time between the sale and the valuation date, the valuer’s evidence was that the market was stable at the time.
Sale 2
9 Hugh Crescent, Murrumba Downs, was sold for $305,000 on 7 October 2011. This sale was of a 804 m² irregular shaped corner block in a new estate. It has been cut and filled. Its southern boundary has a retaining wall and is about one metre below the adjoining block. The western boundary is retained and is about 2 m above the adjoining block. It is similar in size and topography to the subject and, due to its locality, slightly superior. Its site value was assessed at $285,000.
Sale 3
1 Tiara Place, Lawnton, was sold for $235,000 on 15 December 2011. It has an area of 593 m² and a site value of $197,500. It is a regular shaped corner allotment in a new estate. It has a low risk of flooding. It is assessed by the valuer as in an inferior location. It has similar topography to the subject but no views. It is considered far inferior.
Sale 4
27 Pontiac Circuit, Warner, has an area of 800 m² and sold for $305,000 on 3 September 2010. Its site value is $265,000. It is a regular shaped inside lot which is near level. Access is by a shared driveway and it adjoins parkland which gives it a pleasant outlook. It is assessed as comparable to the subject which has more distant views. The valuer noted its similar locality, size and topography. The appellant drew attention to the pleasant parkland location as compared to the subject’s location on a roadway relatively near a busy road.
Sale 5
9 Muir Court, Warner, has an area of 605 m² and sold for $280,000 on 12 April 2011. The site value was assessed as $242,500. The date of possession was the same as the date of sale. The valuer was not aware of why this was so. It is a regularly shaped rectangular block about 1 m above the roadway and has some local views, not as good as those available from the subject. A retaining wall is required at the front of the land. The valuer considered it to be inferior compared to the subject.
Sale 6
59 Kirri Avenue, Petrie. This 700 m² lot sold on 19 August 2010 and was assessed as having a site value of $200,000. The sale price was $212,500. It is a slightly irregular shaped lot which falls to the rear so that site works will be needed to create a level building site. Young’s Crossing Road adjoins it to the rear and carries moderately heavy volumes of traffic. It is subject to flooding and a small part of the land at the rear is below the Q100 flood level. There are bush views to the west. This land is in the Petrie on Pine estate. The valuer considered it far inferior to the subject land.
The market
The valuer considered the residential market within Petrie and surrounding suburbs to be very subdued during the 2010 - 2012 period.[1]
[1] Exhibit 4 page 18.
The reliability of the sales evidence
The valuer was cross-examined in relation to her experience. She explained that she had been a registered valuer for about six years and, at present, had worked in this area for 3.5 years. Questioned about how long the sales to which she referred had been on the market she replied that this was not within her knowledge but was a factor that was part of the sale itself. Questioned about whether the sales were reliable arms-length transactions, for example with sale 5 having the same date for the agreement and for possession, she stated that while the sale parties had not been interviewed care had been taken to avoid sales to related parties and mortgagee in possession sales. Additionally, local purchasers had been favoured.
The valuer has used the direct comparison method of comparing the subject land to actual sales, rather than to other values. The valuer readily acknowledged that Dayboro road near the subject was very busy and accepted that the land’s elevated position does expose it to the sun’s heat, to wind and to storms. She stated that she had read the material put forward by the appellant and had heard all of the evidence led. Her professional opinion was that there was not any reason to change the valuation of this land. In relation to the building restriction within 9 m of the corner, the valuer pointed out that this applied generally, not just to the subject. The corner sales would be likewise affected. When the valuer had become aware of the presence of the “manhole”, the valuation had been reduced by $10,000 to $260,000 to allow for the reduced utility of the site. In relation to the sale of 25 D’Aguilar Street, Petrie to which the appellant referred, the valuer pointed out that there is an easement of around 100 m² on the north west boundary.
The submissions
Both parties’ submissions were supplemented by written material. The respondent submitted that appeals under the Act are to be determined on the balance of probabilities with s 169(3) placing the onus of proof on the appellant.[2] Both parties referred to the decision of the Land Appeal Court in JL & I Qualischefski v Valuer-General (1979) 6 QLCR 167 where the Court said, at page 172:
[2] Body Corporate for “147-153 Mary Street Gympie” CTS v Valuer-General [2013] QLC 51 [18], [19].
“Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This role is in contradistinction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.”
The appellant placed emphasis on the concluding words of the passage quoted as the case presented by the appellant was based on comparisons with other valuations made by the Valuer-General. Both parties also referred to the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327 where the Court said, at pages 328-329:
“The decision of the High Court of Australia in Brisbane City Council v The Valuer-General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v The Valuer-General ((1989) 13 QLCR 13) are authority for the following propositions:
(a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p.16 and cases cited in it).
(b) The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).
(c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56).
(d) Once it is shown that:
(1)in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or
(2)the valuation was made by a method fundamentally erroneous,
the presumption created by section 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7).
(e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46).
(f) If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it).”
The presumption in s 13(7) of the Valuation of Land Act 1944 does not form part of the current Act so the principles in (c) and (d) in the passage quoted above no longer apply. The appellant particularly referred to the proposition contained in paragraph (f) in the passage quoted and went on to quote from Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at page 6, where the Court said:
“We reiterate what has been said often before – and what is Mr Tighe’s chief concern – the importance of correct relativity in the equitable distribution of the rating burden cannot be overstated.”
It is useful to consider this passage in its context. In the next sentence the Court went on to say:
“However the question before this Court is the correct valuation of the subject land, not the correct valuation of an area. It would not advance the appellant’s case to satisfy us that her neighbour’s land was undervalued: … The appellant must show that the valuation of her land was incorrect.”
The appellant referred to the published document “Statutory Valuation Procedures and Practices under the Land Valuation Act 2010” made, effectively, by the respondent. The appellant points to section 8.1 which is headed “Best evidence of value” and to the part of that section which is in the following terms:
“… sales relied on to form the basis of a valuation must be investigated sufficiently to ensure the robustness of the valuation issued. This includes full inspection of the evidence; obtaining a copy of the contract if possible; interview of the purchaser and/or vendor to ensure the sale conforms to the ‘bona fide’ test for market value. The valuer must ascertain if there are any special conditions attaching to the sale; and what value, if any, the purchaser placed on the improvements …”
In the cases of the sales relied on by the valuer, the appellant’s case was that the sales had not been sufficiently investigated.
The appellant also drew attention to the same part, 8.1, of the same document where it is stated that “sales evidence, as close as possible to the day of valuation, should be used”. This was in connection with criticism of the dates of the sales in relation to the date of valuation.
The provisions of section 574A and 574C of the Property Agents and Motor Dealers Act 2000 were referred to as requiring the use of three similar properties which have sold within 5 km of the subject property within the past six months for the purposes of those provisions. The appellant used this for illustration purposes, noting that in Arkinstall v Valuer-General [2013] QLC 30 the Court considered only two sales were comparable. The appellant quoted from the decision of the Land Appeal Court in BG and AK Wilson v Chief Executive, Department of Lands (1994-1995) 15 QLCR 63 at 70 where the Court said:
“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.”
In order to properly understand this passage, it is helpful to read the sentence which immediately precedes it, where the Court said:
“We see no merit in the inferences sought to be drawn by Mr Wilson that if an error is found in relativity the whole of the valuation process is put in doubt.”
The appellant also referred to the June 2010 Part A review document prepared by Price Waterhouse Coopers where it is said that the then current legislation had been misinterpreted.
The appellant referred to a passage in Steinback v Valuer-General [2012] QLC 8 where, at [16] Member Smith said:
“As I pointed out in the case of Burnett v Department of Natural Resources and Water:
‘This is a difficulty often faced by appellants in VLA matters who rely on relativity as one of their grounds of appeal. It is not enough for an appellant to simply demonstrate that the value of the appeal block is out of kilter with other, nearby blocks. They need to go further to demonstrate that the values of those other blocks are correct, and that the value of the appeal block is incorrect. This is because it is the primary function of the Court to determine the unimproved value of the land subject to appeal. Changing an issued valuation simply because other valuations may be wrong would only tend to exacerbate the error. Of course, this is a generalised statement, and each case must be determined on its own facts.’”
[references omitted]Again, the understanding of this passage is assisted by reading it in context. Immediately preceding the part quoted, Member Smith said:
“Specifically as regards relativity, on the material presented by the appellants there does appear to be some disparity between the subject land and the blocks that they referred to. However, the suggestion of a disparity can never be enough to overturn a valuation under the VLA.”
In Steinback v Valuer-General [2012] QLC 8, Member Smith considered the use of relativity of values and said what is quoted at [31] and [32] above. The learned Member made the point again in Lawson v Valuer-General [2012] QLC 27 at [29]. The authorities of Burnett and Lawson were applied in Enright Hendy and Partners Investments Pty Ltd as Trustee v Valuer-General [2012] QLC 38 and in Dr Yvonne Collen Pty Ltd v Valuer-General [2013] QLC 60. Relativity was also considered by the Court in Thomson v Department of Natural Resources and Mines [2007] QLC 92 at [6] to [8].
The appellant made clear on the last page of his written submissions that he did not have evidence of sales of comparable properties. He based his evaluation on the respondent’s listings of annual valuations. While pointing to the one year and five months experience of the valuer in this area at the date of valuation he did establish in evidence that she also performed the valuations upon which the appellant’s case relied and she had confidence in those valuations.
The respondent’s legal counsel referred to NR and PG Tow v Valuer-General (1978) 5 QLCR 378 where the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said, at page 381:
“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 over-anxious parties.”
Conclusion
There is only one body of expert valuation evidence before the Court in this case. The expert has explained how her valuation opinion was arrived at and used the method which Courts, whose decisions are binding on this Court, have decided will provide the best test of value. This Court is not able to prefer the method urged on behalf of the appellant as its shortcomings have been highlighted by this Court and the Land Appeal Court in previous cases. The respondent’s own procedures for the investigation of sales do not appear to have been fully complied with. The respondent’s valuer did not interview parties to the sales used to ensure that they were suitable sales to be relied upon as bona fide sales. While this is a deficiency in the respondent’s case, it is not of such a nature that the method applied by the appellant could be utilised as a reliable test of value, when compared to the method imperfectly applied by the respondent.
For the reasons which I have given, the appeal must be dismissed.
Orders
1. The appeal is dismissed.
2. The valuation appealed against is confirmed.
W A ISDALE
MEMBER OF THE LAND COURT
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