Phillipes v Valuer-General[2015] QLC 5

LAND COURT OF QUEENSLAND

Background

1. [1]
   This decision relates to an appeal by Mr Phillipes (the appellant) against a valuation by the respondent, the Valuer-General, pursuant to the Land Valuation Act 2010, (the LVA), which valued the appellant’s property situated at 17 Banksia Avene, Andergrove, Mackay (the subject land), in the sum of $210,000 as at 1 October 2012. The appellant contends for a valuation of $180,000.
2. [2]
   The subject land has received a site valuation pursuant to the provisions of the LVA, which separates land valued as site value land and land valued as unimproved land.

The Subject Land

3. [3]
   The subject land is described as Lot 1 on RP 741896, Parish of Bassett. It is a residential block situated in a suburb of the city of Mackay.
4. [4]
   Telephone, electricity, water, sewerage, mail and refuse collection services are available to the subject land.
5. [5]
   The subject land has an area of 1,610 m². It has a long rectangular shape. There is a gentle slope up from the street then a general levelling out over the balance of the property.
6. [6]
   The subject land has been cleared and developed for residential purposes.

The Hearing

7. [7]
   The appellant represented himself and gave evidence at the hearing. He has no legal or valuation qualifications. The respondent was represented by Mr Prasad and relied on the evidence of a registered valuer, Mr Eisenmenger.
8. [8]
   An inspection of the subject land, in the presence of both parties, was undertaken and the hearing was held at Mackay on 22 August 2014.

The Valuation Process

9. [9]
   It is the responsibility of the respondent to undertake a valuation of not only the subject property, but all properties throughout Queensland. Those valuations are the basis for rating and land tax and related purposes.
10. [10]
    I note with approval what his Honour Isdale said in Steers v Valuer-General:^[1]

“[8] The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, 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.’

[9] This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”

11. [11]
    Market value is also a relevant feature to consider under the LVA. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines:^[2]

“[11] The principles for determination of the ‘market value’ of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffith CJ at 432 and Isaacs J at 441).

[12] It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:

‘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 the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date-and that is evidenced by sales.”

12. [12]
    In essence, the Spencer test^[3] has been codified in s. 18 of the LVA, which provides as follows:

“18 What is a bona fide sale

3. (1)
   A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)—

1. (a)
   a willing, but not anxious, buyer and seller;

2. (b)
   a reasonable period within which to negotiate the sale;

3. (c)
   that the property was reasonably exposed to the market.

3. (2)
   For subsection (1), in considering whether terms and conditions are reasonable, regard must be had to—

1. (a)
   the land’s location and nature; and

2. (b)
   the state of the market for land of the same type.

3. (3)
   To remove any doubt, it is declared that if—

1. (a)
   there is a sale of the land in question; and

2. (b)
   the bona fide sale tests are complied with;

the sale is a bona fide sale.

3. (4)
   In this section—

land in question means land whose value is being decided.”

13. [13]
    Importantly, the LVA casts the following duty on the appellant at the hearing in s. 169(3):

“However, the appellant has the onus of proof for each of the grounds of appeal.”

14. [14]
    It should also be noted that appeals under the LVA are to be determined on what is essentially the balance of probabilities.^[4]
15. [15]
    As previously indicated, the subject land has received a site valuation under the LVA. Section 19 of the LVA relevantly provides as follows:

“19 What is the site value of improved land

3. (1)
   If land is improved, its site value is its expected realisation under a bona fide sale assuming all non-site improvements for the land had not been made.

3. (2)
   However, the land’s site value is affected by any other relevant provisions of this chapter.”

16. [16]
    The LVA then goes on in s.23 to reveal what site improvements are:

“23 What are site improvements

3. (1)
   Site improvements, to land, means any of the following done to the land -

1. (a)
   clearing vegetation on the land;

2. (b)
   picking up and removing stones;

3. (c)
   improving soil fertility or soil structure;

4. (d)
   if the land was contaminated land as defined under the Environmental Protection Act 1994 -works to manage or remedy the contamination;

5. (e)
   restoring, rehabilitating or improving its surface by filling, grading or levelling, not being irrigation or conservation works;

6. (f)
   reclamation by draining or filling, including retaining walls and other works for the reclamation;

7. (g)
   underground drainage;

8. (h)
   any other works done to the land necessary to improve or prepare it for development.

3. (2)
   However, a thing done as mentioned in subsection (1) -

1. (a)
   is a site improvement only to the extent it increases the land’s value; and

2. (b)
   ceases to be a site improvement if the benefit was exhausted on the valuation day.

3. (3)
   Also, excavating the land for any of the following is not a site improvement -

1. (a)
   footings or foundations;

2. (b)
   underground building levels.

Example of an underground building level -

an underground car park

3. (4)
   In this section -

clearing vegetation on land -

1. (a)
   means removing, cutting down, ringbarking, pushing over, poisoning or destroying in any way, including by burning, flooding or draining; but

2. (b)
   does not include destroying standing vegetation by stock or lopping a tree.”

The appellant’s evidence

17. [17]
    The appellant gave both oral and statement evidence to the Court. His written evidence is set out in Ex 2 and Ex 3.
18. [18]
    Exhibit 1 details the appellant’s grounds of appeal as follows:

“As per the attached bar graph clearly showing a sharp decline in property sales it would be very difficult to imagine that land value would increase in a declining market.

Falling sales historically dictate falling market value.”

19. [19]
    The appellant did a commendable job, both through his oral and documentary evidence, to establish that there has been a rather severe decline in the Mackay real estate market.
20. [20]
    Although his evidence was not specific enough to point to actual sales of vacant residential land, he certainly produced convincing evidence of a market downturn. He also presented good evidence to show that, as at the valuation date of 1 October 2012, he was astute enough to be concerned about the state of the mining boom and the resultant impact on Mackay by a slowing of that boom.
21. [21]
    Unfortunately for the appellant, his own material shows that the rest of the market was not so astute, with the market remaining strong in 2012 and only beginning the decline in 2013. This does not assist the appellant as it is beyond the valuation date.
22. [22]
    The appellant also expressed concerns about the rates being levied by the local council based on the respondent’s valuation.
23. [23]
    Further, the appellant expressed concern that valuations were now conducted yearly by the respondent, or at least could be conducted yearly.

The respondent’s evidence

24. [24]
    The respondent relied on the evidence of a highly experienced registered valuer, Mr Eisenmenger. Mr Eisenmenger has over 30 years valuation experience in the Mackay area.
25. [25]
    Mr Eisenmenger relied upon the direct comparison valuation approach, where sales for a comparable use are analysed and directly compared to a property to determine its value.
26. [26]
    Mr Eisenmenger relied on three sales for his direct comparison valuation. Helpfully, he provided a table and summary of his sales as follows:^[5]

“

Sales 1, 2 and 3 are sales of residential properties situated in Andergrove and all sales have transacted within nine months of the valuation date. They have been bought for residential purposes and since sale all have had a dwelling built on site.

Rationale: The above sales evidence analysed shows a range of $192,000 - $200,000. The applied site values of sales ranged from $175,000 - $187,500 and it has been established that the subject property is superior to these sales due to the size being significantly larger.”

27. [27]
    To further assist the court, Mr Eisenmenger provided a written response^[6] to the material contained in the appellant’s Ex 2 and Ex 3. Mr Eisenmenger’s oral evidence was consistent with his report and appendix.
28. [28]
    In short, Mr Eisenmenger agreed with the bulk of the evidence of the appellant, but concluded that the evidence showed that the decline in the market did not commence until 2013. His evidence clearly was that his comparable sales supported the respondent’s valuation of the subject land.

Key Findings

29. [29]
    The appellant did not really contest the sales evidence put forward by Mr Eisenmenger. He also did not challenge the analysed value adopted by Mr Eisenmenger for each sale.
30. [30]
    In my view, Mr Eisenmenger has made appropriate comparisons between the sale properties and the subject land.
31. [31]
    Although the appellant made the point that the subject land currently has an asbestos filled old dwelling on it, and that it would cost a considerable sum to remove it, it is of course the site value of the subject land which is being valued, with the dwelling notionally removed.
32. [32]
    As regards the issue of local government rates, that is not something which this Court can take into account.
33. [33]
    As I said in Boysen v Department of Natural Resources, Mines and Water:^[7]

“[11] I have no doubt that the appellants, as pensioners, honestly believe everything they have put into evidence in this matter, and are genuinely concerned about increasing values impacting on them through higher rates. However, it is not the role of this court to determine appeals such as this on any basis outside that of the VLA and decided precedents. Specifically on the point of large increases in valuations and council rates increases, the Land Appeal Court had this to say in Two v Valuer-General [1978 5 QLCR 378] at page 381:

‘It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation. The Valuer-General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result.’”

34. [34]
    With respect to the appellant’s point about valuations being conducted yearly, that is a matter which is set out in the LVA and is not a matter for the consideration of this Court.

Conclusion

35. [35]
    The appellant did an admirable job in presenting his arguments. He is clearly an astute investor; perhaps more astute than purchasers of property in Mackay in 2012. However, as has been pointed out in many cases, without the assistance of the evidence of a registered valuer, it is often a difficult, although not impossible, task for an appellant to disturb the valuation undertaken by an expert valuer for the respondent. Particularly in circumstances where the appellant does not rely upon valuation evidence in support of his own case, it is necessary to show real error on the part of the respondent’s valuer.
36. [36]
    The appellant has failed to show error on the part of Mr Eisenmenger.
37. [37]
    In all the circumstances, the appellant has failed to establish on the balance of probabilities that the Valuer-General’s valuation is incorrect and accordingly the appeal must be dismissed.

Order

The appeal is dismissed.

PA SMITH

MEMBER OF THE LAND COURT