Banks v Valuer-General[2017] QLC 52

LAND COURT OF QUEENSLAND

Background

1. [1]
   The appellant owns Lot 15 on SP 251406. It has an area of 7.949 hectares and its street address is 296A Savages Road, Brookfield.

2. [2]
   The respondent, in a routine process, valued it on 1 October 2015 in the amount of $330,000. It was valued on the unimproved basis.

3. [3]
   The appellant has appealed to this Court, contending that the land should be valued at $66,000 as at the 1 October 2015 date of valuation.

The appellant’s case

4. [4]
   The appellant gave evidence and presented his case, which followed his outline.^[1]  He described the land as frost-free and with good, productive soil.  The main crop on the land is custard apples.  There is also a mango orchard and hoop pines for timber. 

5. [5]
   The principal thrust of the appellant’s case is that there are no comparable sales to be found and that the respondent has erroneously compared his land to non-farming land, resulting in a valuation which is too high.

The appellant’s evidence

6. [6]
   The appellant described himself as an expert in all aspects of agriculture,^[2] and made clear that he was not claiming any expertise as a valuer.^[3]  He accepted that he had a conflict of interest as he was personally financially interested in the case.^[4]

Challenge to the appellant as an expert

7. [7]
   The respondent challenged the appellant’s ability to be considered an expert witness. There is no doubt that he had an interest in the case such that he should properly be considered to be partisan. The result is that his evidence was not thereby rendered inadmissible but rather that it needed to be very closely scrutinised.^[5]

The result of this challenge

8. [8]
   The evidence led in this case was in dispute in relation to matters of valuation, an area where the appellant did not claim any expertise. His evidence in relation to matters of agriculture was not evidence, the acceptance or otherwise of which would have influenced the outcome of the case. There was no aspect of this evidence which is required to be the subject of a choice between it and the evidence produced for the appellant, so it is unnecessary to resolve the challenge to the appellant’s claim of expertise in agriculture.

Appellant’s valuation method

9. [9]
   The appellant clearly described his aim. To him, the case was about getting his costs of production of his farm down. He described how he arrived at his figure of $66,000 for unimproved value. He selected the closest custard apple farm, at 1110 Upper Brookfield Road, Upper Brookfield, and divided the unimproved value of it (as set by the respondent) into its area.^[6] This provides a figure of $8,234 per hectare.  He multiplies that by the area of the subject property and arrived at the $66,000 figure.  It was stressed by the appellant that in order to compare like with like it was necessary to compare his custard apple farm with another custard apple farm.

10. [10]
    The appellant conceded that there should be some adjustment of the rate he arrived at so that a slight increase in the rate would be applicable to his land as it is considerably smaller than the property he used to determine the rate per hectare. He did not make any adjustment for that.^[7]

11. [11]
    The appellant did not use evidence of any sales of comparable land around the date of valuation as, in his view, only custard apple farm sales sold for continued farming would be applicable. There were no such sales.

12. [12]
    The method chosen by the appellant was relativity.^[8]  It has already been described how he applied it to arrive at the rate per hectare.  The appellant applied this method to some other properties for comparison.

13. [13]
    The property at 56 to 124 Vernon Road, Mt Cotton, which he assessed from an agricultural perspective as superior, showed a rate of $6,421.19 per hectare, using the respondent’s unimproved valuation as at 1 October 2015. It is suitable for orchard and forest.

14. [14]
    The property at 123 Red Road, Beerburrum, in the same way, showed a rate of $11,039.12 per hectare. It is suitable for tropical orchard crops.

15. [15]
    The property at 2295 Old Gympie Road, Glasshouse Mountains is a very productive custard apple orchard. Its unimproved valuation shows a rate of $9,457.11 per hectare.

The appellant’s other witness

16. [16]
    Mr Alan Adrian Warren Webb gave evidence by telephone. Mr Webb is qualified in agricultural science and is experienced in resource management.^[9]

Mr Webb as an expert witness

17. [17]
    Mr Webb was challenged in relation to his ability to be considered an expert witness in this case.^[10]  As was the situation with the appellant, he made no claim to be an expert in valuation.^[11]  Mr Webb knows about land use suitability and agreed that the best use of the subject land was its present farming use with a farm house on it.  There is no farm house as such on it at present, though this does not represent any conflict with the evidence called by the respondent.   

18. [18]
    Mr Webb was asked about the properties the sales of which were relied on by the respondent. They will be referred to, for convenience, with the sale numbers which appear in the evidence called by the respondent.

19. [19]
    Sale 1 is located at 42 Pacey Road, Upper Brookfield. Mr Webb said that this had not been farmed for a while and was at least 50 percent remnant forest.

20. [20]
    Sale 2 is located at 607E Upper Brookfield Road, Upper Brookfield. Mr Webb said that this was over half remnant forest and unlikely to be suitable as a farm. The slopes have very high potential for landslip.

21. [21]
    Sale 3 is located at 195 Priors Pocket Road, Moggill. Mr Webb said that his had been farmed in the past and had a lot of woodland.

22. [22]
    Sale 4 is located at 80 Oxford Street, North Booval. Mr Webb said that this is not land with a comparable use to the subject land.

23. [23]
    Mr Webb’s appreciation of the land which was the subject of the sales relied upon by the respondent is the appreciation of that land by an agriculturalist. Mr Webb is not a valuer and he has not inspected and investigated the sales. He said in cross-examination that it would have been pointless if he had investigated the sale at 42 Pacey Road.^[12] It would have been pointless to him as an agriculturalist.

24. [24]
    As is the case with the appellant, none of Mr Webb’s evidence conflicts with the respondent’s case such that a choice would need to be made for the purpose of deciding this case.

The appellant’s case in summary

25. [25]
    Believing that there are no sales of comparable properties, the appellant has looked at the relativity of the valuation of his land with the unimproved values made by the respondent of properties which the appellant sees, as an agriculturalist, as comparable. From his point of view, and that of Mr Webb, the sales relied upon by the respondent are not comparable.

The respondent’s case

26. [26]
    The respondent called one witness, Mr Denis Wall. Mr Wall is a registered valuer and a certified practising valuer. He has around 30 years’ experience as a valuer, primarily in south-east Queensland.^[13]  Mr Wall prepared a valuation report, which became Exhibit 3, and was in Court while the appellant’s case was presented.  Mr Wall said that nothing in the appellant’s case required him to change his report.^[14]  He did need to make two minor corrections in regard to the location of the land where he had used “west” instead of “east”.

27. [27]
    Mr Wall was of the opinion that the highest and best use of the land was its present use with the addition of a house, which he said was inherently part of its potential.^[15]  He used sales as the primary means of comparison,^[16] the percentage increase from the previous valuation he saw as not being a factor which would invalidate the use of sales for comparison.^[17]  He agreed that relativity of valuations was a consideration but not one which would displace sales as the primary means of comparison.^[18]

28. [28]
    When cross-examined about his sale 1, 42 Pacey Road, he accepted that it did not qualify as a farm within section 48 of the Land Valuation Act 2010 (“the Act”) although he had valued it as a farm.^[19]  He said that this aspect would make very little, if any, difference in relation to its value^[20] and that it was a useful sale^[21] where the purchaser intended to use it for farming.^[22]  That intention has not yet been carried into action.

29. [29]
    Mr Wall accepted that his sales 2 and 3 were not currently farms. Sale 4 is a farm. He said that he would prefer to use sales of farms for farming if they were available^[23] but that sales are fundamental to valuation and he would use the most comparable sales.^[24]

30. [30]
    Mr Wall was of the opinion that there is only one market in the area of the subject land, so that there is no separate market for farming land on one hand and rural residential land on the other, even though the zoning is rural and not rural residential.^[25]

31. [31]
    Mr Wall said that a rate per hectare as deduced by the appellant is not market indicative.^[26]  When shown Appendix 1 from the appellant’s material, a table of the change in land values in south-east Queensland, he said that it did not allow a valuer to draw any conclusions about the value of the subject land.^[27]  This table was extracted from the Queensland Agricultural Land Audit and refers to land types, such as arable land in, for instance, Brisbane city.

32. [32]
    Mr Wall said that it was not normal to inspect all of the 330,000 to 340,000 parcels of land in Brisbane prior to a yearly valuation being issued.^[28]

Mr Wall’s valuation report

33. [33]
    Mr Wall has inspected the subject land and confirms the unimproved valuation as $330,000 as at 1 October 2015. He reports that he conducted a joint on-site inspection of the land on 10 March 2017. The value increased from $275,000 which was applicable on 1 October 2014 and the two previous years.

34. [34]
    The land has an area of 7.949 hectares and is classified, i.e. zoned, as “rural”. It is valued as a farm. The country is predominantly hoop pine scrub with around 3.5 hectares developed for custard apples and mangoes. There is a large dam. The land is located about 13.5 kilometres radially westwards from the Brisbane central business district. It has access to convenience shopping at Brookfield and to Kenmore for most shopping needs. Access from the bitumen sealed Savages Road is difficult, and becomes particularly so in wet weather. This places some restriction on transporting produce and materials. Power and telecommunications mains are around 520 metres away on Savages Road, and it is around another 110 metres to the preferred site for a dwelling. Reticulated water and sewerage are not available.

35. [35]
    Mr Wall has set out the Brisbane City Council and State Government restrictions on the land, which is in a hilly locality. He has taken these factors into account in reaching his valuation.

36. [36]
    Mr Wall has set out the provisions of the Act which he has applied and the valuation methodology which he has used. There is no dispute that the land is required to be valued as unimproved land. He refers to the Act’s provision in section 26 which includes the concept of unimproved value being the expected realisation under a bona fide sale if the improvements are notionally removed.

37. [37]
    With this in mind, Mr Wall has arrived at the unimproved value of the land by means of direct comparison with bona fide sales of land. He states that the subject land is in an area where farmers and lifestyle purchasers are competing in the same market. In accordance with section 46 of the Act he has not had regard to enhancements in value due to potential for a higher use.

38. [38]
    Mr Wall has provided a sales analysis summary of each of the 4 sales to which he had regard. He was not challenged in relation to those analyses.

39. [39]
    Sale 1, 42 Pacey Road, Upper Brookfield, was sold for $765,000 on 9 September 2014, with possession on 16 October 2015. It has an area of 4.655 hectares. It is zoned as “environmental management”. Mr Wall has applied a notional unimproved value of $495,000 as at 1 October 2015. There was no challenge to his analysis or the figure applied. The purchaser stated that she intends to develop the property for horticultural purposes. It is two kilometres west of the subject radially. It has superior access to the subject and power and telephone is connected. The land type, topography and vegetation management aspects are considered by Mr Wall.

40. [40]
    Sale 2, 607E Upper Brookfield Road, Upper Brookfield, was sold for $555,000 on 29 October 2015 with possession on 29 January 2016. It is zoned “environmental management” and “conservation” and “rural”. The notional unimproved value at 1 October 2015 was $460,000. Mr Wall describes the shape and contour of this 7.671 hectare block and that the purchaser intended to build a dwelling on it. A change in personal circumstances led to it being put on the market again. Mr Wall has set out a detailed comparison with the subject and considers it superior overall to the subject due to its superior access and services.

41. [41]
    Sale 3, 195 Priors Pocket Road, Moggill, was sold on 20 March 2015 with possession on 30 April 2015. It has an area of 4.001 hectares and is zoned “rural”. The sale price was $550,000. Mr Wall’s unchallenged analysis shows the unimproved value as $400,017. He applied $400,000 as at 1 October 2015. Mr Wall has described the land, its location and comparison with the subject. It is gently sloping forest country with frontage to the Brisbane Road. He takes the vegetation status of the land into account and sees it as having superior access with bitumen to the frontage. It has power and telephone connections. Somewhat smaller than the subject, it is considered to be slightly superior due to its superior access.

42. [42]
    Sale 4, 80 Oxford Street, North Booval, was sold on 6 October 2015 with possession on 17 October 2015. It has an area of 21.853 hectares, is zoned recreation and special opportunity and it sold for $365,000. Mr Wall has analysed the sale to show an unimproved value of $260,000 as at 1 October 2015. The land is farmed and was inundated in the 2011 floods. There are easements over it for two large power transmission lines. This land is about 15.5 kilometres radially south-west of the subject land and is in the Ipswich City Council area. It is superior in access, does not have any vegetation restrictions, floods severely from the Bremer River which it fronts and has services available to it. Mr Wall sees it as inferior due mostly to its location and flooding susceptibility.

43. [43]
    Mr Wall has provided a sales reconciliation in which he explains that he has relied on sales which are in a merged market. In accordance with section 46 of the Act, he has not relied on sales that reflect on enhancement in value for a higher use. All of the sales, and the subject, have potential for a house although sale 4 has severe limitations in that regard.

44. [44]
    Mr Wall explains in his report the similarities of the sales to the subject land. In his expert opinion as a valuer, the sales support a value of $330,000 on an unimproved value basis, as at 1 October 2015. He specifically rejected the appellant’s value. The method by which it was derived, relativity, was not, in his view, to be preferred to the use of evidence of comparable sales.

Observations on the evidence

45. [45]
    The appellant does not accept that there is a merged market and disagrees with the valuer in relation to that. However, there was no evidence led to demonstrate that this was not so. While an expert in a field is permitted to give evidence of their expert opinion, as Mr Wall did in relation to this, neither witness for the appellant was qualified as a valuer such that they would be able to give a contrary opinion and no evidence was led to demonstrate that as a fact there is not a merged market. The Court must therefore accept Mr Wall’s evidence on the point.

46. [46]
    In order to consider the remaining aspects of the case, it will be necessary to refer to some authorities which guide the Court in similar cases such as this. The written submissions for the respondent set out the relevant parts of the Act and refer to a number of authorities which will assist, and in some cases which bind the Court, and must be followed where they are applicable.

The applicable law

47. [47]
    This Court is not an investigative tribunal. It is a Court which must consider the evidence put before it by the parties.^[29]  The appellant must prove his case, a task which is not an easy one without the assistance of a registered valuer.^[30]

48. [48]
    The Court is bound by the decisions of the Land Appeal Court. That Court said in NR and PG Tow v Valuer-General that:

“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.

…

It follows that a large increase over and above previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.”^[31]

49. [49]
    This Court has said:

“A valuation deduced from relativities with other valuations made by the Valuer-General and that were not themselves tested in the present proceedings by reference to sales evidence cannot safely be relied upon.  Where, as in the present case, the subject valuation is said to be incorrect, it would not be safe to rely on other valuations and to assume that they are correct so as to draw a conclusion about the valuation of the subject land.”^[32] (citations omitted)

50. [50]
    In Hans and Else Grahn v Valuer-General, the Land Appeal Court considered the previous Act. The Court’s comments are equally applicable to the current Act. The Court said:

“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:

1. (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).

2. (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).

…

5. (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).

6. (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).”^[33]

51. [51]
    In relation to the appellant’s use of relativities, this Court has recently considered this method in Heatham Pty Ltd as Trustee v Valuer-General^[34] where the Court said:

“… The limitations of this method of valuation have been considered by this Court in cases such as Dr Yvonne Collen Pty Ltd v Valuer-General where no sales were put forward by the appellant but comparisons were made with the respondent’s valuations of some nearby land. The Court said:

“The appellant’s case was based on how the value of its land compared to the values which the Valuer-General had placed on two nearby parcels of land.  The present question before the Court however, is not how the value of the subject land compares to valuations placed on surrounding blocks, but rather what is the correct valuation of the subject land itself.  Land Court Member Scott considered this issue in Thomson v Department of Natural Resources and Mines.  The learned Member said that:

“This issue has come up on more than one occasion in the past, one example being found in Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at 6:

‘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.  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.’

A similar opinion is expressed by the Land Appeal Court in Bignell v Chief Executive, Department of lands (AV92-65 unreported Land Appeal Court 4 March 1996) at 11:

What has to be decided in this case is the proper value of the subject land by reference to sales evidence about comparable unimproved properties …  If a proper valuation of the subject land makes it inconsistent with the relative values of neighbouring blocks then so be it.  The question before this Court is ‘the correct valuation of the subject land, not the correct valuation of the area’.”

In Steinback v Valuer-General [2012] QLC 8, Member Smith considered this use of relativity of values.  At [16] the learned Member 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]

The learned Member made this 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.”

52. [52]
    Although relativity comparisons are most commonly made with nearby blocks, the principle expressed in the decisions which have been referred to does not depend on the proximity of the block used for comparison but is one of general application, as those authorities show.

53. [53]
    The superiority of sales evidence when valuing land is illustrated by the words of then President Trickett in this Court in Fairfax v Department of Natural Resources and Mines:^[35]

“The principles for determination of the “market value” of land were established by the High Court in Spencer v The Commonwelath (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 the property. (See Griffith CJ at 432 and Isaacs J at 411).

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.””

54. [54]
    There is only one body of expert valuation evidence before the Court in this appeal. It has not been shown that the expert’s opinion was invalidated by, for example, factual error. The expert has explained the basis of the valuation opinion provided and used the methodology which the Land Appeal Court has decided will provide the best test of value. This Court is unable to place reliance upon the methodology adopted by the appellant instead of that used by the respondent. To do so would be contrary to the precedents which govern the conduct of this Court.

Conclusion

55. [55]
    The Court accepts the valuation methodology applied by Mr Wall and the conclusions which he arrived at. The valuation figure of $330,000 is justified by the material to which he had regard. The choice of the figure is a matter within his expertise, and has been arrived at in accordance with the provisions of the Act and by a method which the Courts have consistently approved.

56. [56]
    The Court is not satisfied that the method applied by the appellant is one capable of being used in order to arrive at a reliable conclusion, and is not satisfied that the valuation of $66,000 has been shown to be correct.

57. [57]
    The valuation provided by Mr Wall correctly addresses the grounds of appeal. He has taken proper account of the highest and best use of the subject land and explained that the percentage increase in value from the last valuation is the result of an application of the sales evidence. It accords with the authority which has been referred to that the best indicator of value is sales evidence. The sales evidence must be comparable; it need not be perfectly so. Mr Wall has explained that the sales which he has used are sufficiently comparable for a qualified and experienced valuer, such as himself, to use. The differences which appeared to horticulturalists did not prevent the valuer performing his task. Mr Wall explained the superior usefulness of sales evidence as compared to relativity and he acted in accordance with the legal precedents which have been referred to. He considered the topographical constraints on and the disabilities associated with the subject land, referring to them in his report. Mr Wall also took into account the local and state government restrictions applying to the land. He referred to such matters, which include vegetation management, and it was clear that he had properly researched these aspects. Mr Wall inspected the land. It is not important that he did so after the valuation was issued, as he did so in connection with preparing his own detailed report. Mr Wall explained the impracticality of inspecting all 330,000 to 340,000 properties in the relevant valuation area in advance of any particular case existing where there is a dispute to be dealt with.

58. [58]
    The expert valuation evidence is that there is a truly merged market.^[36] While the appellant believes that the concept of the market is much more narrow, this is an aspect upon which the expert opinion of the valuer is not contradicted by another opinion of an expert in that relevant field, so must be accepted.

59. [59]
    For the reasons given, the appeal must be dismissed and the valuation appealed against must be confirmed.

Orders

1. Judgment is given to the plaintiff on the claim in the sum of $77,000 together with interest at the rate of 10 percent per annum from the 22 February 2005 to judgment
2. The counterclaim is dismissed

WA ISDALE

MEMBER OF THE LAND COURT