Meiers & Anor v Valuer-General [2012] QLC 19

Practice and Procedure - no power of Court to change valuations of lands not before Court even if proven incorrect - recommendation to Valuer-General only alternative.

[1] This decision relates to an appeal by the appellants, Mr and Mrs Meiers, against a valuation by the respondent, the Valuer-General, pursuant to the Land Valuation Act 2010, (the LVA), which valued the appellants' property situated at Careys Road, Meadowvale, (the subject land), in the sum of $165,000, as at 1 October 2010. The appellants contend for a valuation of $65,000.

1. The subject land has been valued as a rural residential site.[1] It should be noted that the land is valued as unimproved land pursuant to the provisions of the LVA, which now separates land valued as site value land and land valued as unimproved land. The land in question has a rural zoning.

[3] The subject land is described as Lot 1 on Registered Plan 50819, parish of Tantitha, with an area of 15.09 hectares. The property is located approximately 16 kilometres by road, or about 10 kilometres radially north east of Bundaberg.

[4] Access is bitumen surface to within approximately 800 metres of the subject land, with the balance being formed gravel via Careys Road. Careys Road forms the southern boundary of the property, while Arroes Road, is a dedicated road along the southern most 500 metres of the eastern boundary of the subject. Arroes Road is not a formed road.

[5] Power is available to the subject property. The property is of a largely elongated, rectangular shape, which can be referred to as irregular to the western side, in that the boundary has a significant kink in it. It has a frontage of approximately 180 metres and a depth of approximately 940 metres.

[6] The property is intersected by a tributary of Splitters Creek, which runs through the northern part of the property from the north western corner to a point near the middle of the eastern boundary. The creek and associated Riparian area is moderately to heavily timbered, with coastal species, including Bloodwood, Stringybark, Melaleuca, with an understorey including Banksia, Grevillea and Bracken Fern.

[7] The land comprises about four hectares of elevated gently sloping grey to red brown coastal forest soils, considered suitable for cropping. The land north of the creek in the north east corner of the property comprises about two hectares of light sandy grey soils, suitable for limited cropping.

[8] Pursuant to the Vegetation Management Act 1999, it appears that 5.52 hectares of the subject land is mapped as remnant vegetation, with a further 3.28 hectares mapped as regrowth, and the remainder of the subject mapped as non-remnant. The land is zoned, as indicated earlier, under the Bundaberg Regional Council planning scheme as rural. The minimum subdivision allowed by the council for such a zoning, is 100 hectares, so accordingly, there is no prospect of the subject land being able to be subdivided.[2]

[9] The current use of the land is vacant rural residential home site. The property is currently not used for farming practices, although it is capable of being farmed to some extent as indicated. Apart from a large shed and some fencing and other relatively minor improvements, the land is essentially what one would expect to see on a site which has once been used for farming and has had that practice cease. There is no home or other form of dwelling constructed on the subject property.

[10] The appellants are self-represented, and Mr Meiers gave evidence at the hearing. Mr Meiers has no legal qualifications. The respondent was represented by Mrs T Johnson, Counsel for the respondent, and relied on evidence of a registered valuer, Mr A Hutchinson.

[11] It is at this point that the hearing becomes somewhat unusual. As indicated by Mrs Johnson at the commencement of the hearing, Mr Meiers is, in fact, employed in a senior role as a valuer with the respondent, although Mr Meiers is currently on long service leave and, as he indicated in his evidence, he is taking that long service leave leading into retirement.

[12] Nonetheless, Mr Meiers is himself a registered valuer employed by the respondent, and as I understand it, was the supervisor of Mr Hutchinson before undertaking his leave.

[13] Mrs Johnson indicated that the respondent had no difficulty with Mr Hutchinson giving evidence, even in these unusual circumstances. However, Mrs Johnson raised an important point regarding the manner in which Mr Meiers sought to give evidence before this Court.

[14] Mrs Johnson made reference to the important Court decision of P and R Cupo v Department of Natural Resources and Water.[3] This was a decision in the Land Court by his Honour, Member Jones of 26 February 2009. In that case the valuer for the appellant also conducted the role of advocate on behalf of the appellant. In considering the consequences of this, his Honour, Member Jones, had this to say.

"[41] The second matter is that Mr Hyne not only appeared as advocate for the applicants but also as their expert witness. This is, in my view, a situation that ought be avoided in all but exceptional circumstances. Generally speaking, subject to his/her duties to the Court, opponent, client and professional governing body, an advocate's role is to persuade the Court to adopt his clients' case and reject the case for the opposition. On the other hand the role of an expert witness is to assist the Court by giving honest and objective evidence. The failure of any expert to act otherwise would place him/her in breach of the expert witness' overriding duty to the Court.24 The real potential for tension arising when a person attempts to act as an advocate and expert witness is obvious.

[42] In this case no objection was taken to Mr Hyne acting in both roles. In circumstances where such an objection was taken the then President of this Court identified the difficulties confronting both the Court and the individual involved. In Pratt v The Department of Natural Resources and Water the then President said:25

'[12] However, although as agent and advocate Mr Whip had identified with his clients' case, he felt that he could give his valuation evidence in an objective and impartial manner. I have no doubt that he tried. However, that placed a great deal of stress upon him throughout these hearings. In an attempt to separate the two roles, when acting as advocate he went so far as to refer to himself as the valuer in the third person. Although he consciously attempted to separate the conflicting duties when acting as a valuer, he was unable to completely divorce himself from his partisan interest in the outcome of the case. That may well have been subconscious rather than deliberate.

[13] There is a continuing debate about the independence of any expert witness retained by a party. The argument goes that a paid expert will usually adopt his client's case and skew evidence to present it in the most favourable light in order to secure a favourable outcome for the person who pays him. Such bias may not be designed to deliberately mislead, it may be more a matter of emphasis.

[14] In the present case, there is no doubt that Mr Whip was more sympathetic to his clients' case, even though he tried to remain impartial in giving his valuation evidence. Therefore, I have no alternative than to find that his evidence is tainted to that extent. However, there is some authority for the proposition that an interest or a perceived interest in the outcome of litigation does not constitute a justification for the exclusion of expert evidence. It is simply a matter which goes to the weight of that evidence. Therefore, even though Mr Whip's evidence was tainted, it was admitted. However, any argumentative or adversarial statements were excluded from consideration. Furthermore, where there was a conflict between Mr Whip's evidence and that of the Department's valuer, little or no weight was attributed to Mr Whip's evidence unless it was corroborated from another source, or unless the Department's valuer was demonstrably wrong.

[15] Before leaving this topic, it must be pointed out that throughout these proceedings it cannot said that Departmental valuers were entirely independent and unbiased. They are employed by the Department and clearly have an interest in the outcome of the litigation. However, their evidence was afforded a higher degree of weight than that of Mr Whip, because generally there was not a blurring of the duties they owed to the Court. However, from time to time a bias was apparent, in failing to make concessions where appropriate and in advancing or endeavouring to support propositions which were clearly wrong." (Emphasis added).'

[43] While in this case I was not asked to find that Mr Hyne's evidence was tainted because of his dual roles, and, in any event, did not consider it to be so, the importance of the observations made by the President cannot be overstated.

[44] The person who attempts to be both advocate and expert witness runs the grave risk of having the weight which might otherwise be accorded to his/her evidence significantly eroded and, in more extreme cases, even rejected entirely. It is a situation that should be avoided.

1. See Rules 426(1) and (2) of the Uniform Civil Procedure Rules and Barns v Director-General, Department of Transport (1996-97) 16 QLCR 22 at 28-29.
2. [2008] QLC 0063 at paras [12] to [15]."

[15] In addition to the above, the Australian Property Institute (API) rules of conduct also ought to be taken into account. In this regard, Mrs Johnson handed to the Court an extract from rules 1 to 7 of the API rules of conduct. Put simply, these rules make it clear that a valuer who seeks to appear as an expert witness in proceedings, has an important obligation to the Court to ensure that he or she maintains the "strictest independence and impartiality in undertaking their professional duties. To this end, no Member shall ... act as an advocate and as an expert in the same matter."[4]

[16] Upon being made aware of these case authorities and provisions, Mr Meiers agreed that he would not attempt to give evidence as an expert witness in this matter.

[17] For completeness I should point out that the position of Mr Meiers is somewhat different to that found in the Cupo decision, in that in Cupo the independent valuer was not the appellant, where, of course, in this matter, Mr Meiers is one of the appellants in the appeal, and he can hardly be expected to separate himself and leave his expertise at the door when he comes to represent himself. To that end, Mr Meiers' evidence was received by this Court in the full knowledge that he is a registered valuer and that he has expertise in this field, but such evidence could not be received by the Court, in my view, as independent expert valuation evidence, as such evidence is classically understood.

[18] This case is one of the first decisions handed down under the relatively new LVA. The LVA makes significant amendments to the valuation processes, as they had been known and understood under the Valuation of Land Act (VLA), since 1944. However, some basic elements remain the same. Firstly, it is clearly 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.

[19] The respondent has a statutory duty to clearly comply with the provisions of the LVA when undertaking such valuations. The valuations made under the LVA are different to those under the VLA, in that whilst the valuations made under the VLA were of unimproved value, under the LVA valuations are broken into two categories, being site value for what could generally be described as residential, commercial, industrial blocks and the like, and unimproved value, which generally applies to rural properties.

[20] I have had it confirmed by Mrs Johnson that despite some confusion that can be found in the material in this matter, the valuation in this matter is considered to be an unimproved valuation under the LVA.

[21] As I am providing this decision Ex tempore, I will not go into all of the provisions of the LVA relating to the manner in which a valuation occurs. However, I note with approval what his Honour Isdale said in Steers v Valuer-General:[5]

"[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."

[22] I consider it remains a relevant feature under the LVA, to consider market value. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines[6].

"[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.'

[23] Despite the legislative change, it is refreshing that the views expressed by the High Court in Spencer, now well over a century ago, remain just as current and relevant today as they did when they were first uttered. It is certainly my view, at least at this stage until other authorities may prove me wrong, to continue to apply the Spencer test under the LVA.

[24] I now turn to make specific reference to what used to be an important element, in my view, of the respondent's case in valuation matters. In that regard, I refer to the old s.33 of the VLA, which deemed the valuation made by the Valuer-General to be correct until proved otherwise, upon objection or appeal.

[25] It is noteworthy, in my view, that that provision has not been replicated in the current LVA. Specifically 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."

[26] I accept the submission as expressed by Mrs Johnson, that the consequence of the dropping of the concept of the valuation being statutorily deemed correct, is that there is now a more even playing field as between appellants and the respondent when appeals are heard under the LVA in this Court.

[27] In my view, which is consistent with that expressed by Mrs Johnson, appeals under the LVA are to be determined on what is essentially the balance of probabilities.

[28] The appellants, in their notice of appeal, set out their grounds of appeal as follows:

"Compared to most other properties in the locality, the Valuer General has failed to observe a reasonable standard of valuation relativity. Eg. Lot 5 SP205521, owner Rehbein, 40.01 ha, UCV @ 1/10/10 $117,000, this property adjoins the subject and is predominantly red soil, it is greatly superior to the subject yet has a lower valuation. There are many other similar examples.

There is no legitimate explanation why the Valuer General has not observed valuation relativity."

[29] It became clear in this case that the only real matter of contention was that of the relativity of the valuation of the subject, compared to the valuations applied by the respondent to what can be referred to as farming land, in close proximity to the subject land.

[30] In his statement and submissions, as set out in Exhibits 2 and 3, Mr Meiers has made specific reference to the provisions of section 46 of the LVA, which is the provision that, in effect, causes what is colloquially referred to as the discount for farming or single dwelling housing. It is important to consider the precise wording of subdivision 2 of division 5 of part 2 of chapter 2 of the LVA, from sections 45 and following.

[31] When the actual wording of sections 45 and 46 are considered, it is clear that what has to occur when the respondent values farming or single dwelling house land, is that:[7]

"... any enhancement in its value because of any of the following for the land must be disregarded―

(b) a potential use for industrial, subdivisional or any other purposes."

[32] Mr Meiers strongly contends that this provision has been misconstrued by the respondent in valuing his neighbouring properties, and other properties in close proximity, such that a relativity conflict has occurred as between various landholders. He stresses that this is an unfair situation and one which should not arise if a proper appreciation is had of all of the provisions of the LVA and the intent of the farming and dwelling house removal of enhancement provisions.

[33] Mr Meiers supports his claims by reference to the market in this area for rural residential home sites, which he concedes is the appropriate highest and best use of the subject land, and farming land, as being in the one market with the same pool of purchasers. From the evidence given by both Mr Meiers and Mr Hutchinson, I accept that there is one market in the locality of the subject land, and that generally speaking, a purchaser of farming property or a rural home site property, could be just as likely to purchase either the Meiers' property, surrounding properties, or indeed, any of the properties which are all of relatively comparable size, within the vicinity.

[34] When this conclusion is taken to its extremity, it would appear to support the contention that to make the valuations relative, would necessarily mean that those rural residential valuations and the farming valuations, should be on a par, or at least supported by similar, if not identical, sales evidence.

[35] Mr Meiers relied upon the decision of the Land Appeal Court in Cavanagh, Woolcott, Giles-Duffy, Giles-Duffy and Wenck of 14 December 1983, and in this regard, in particular the following paragraphs:

"The appellants below and again before us submit that the value of the subject parcels as deduced from the sales analysed by the Valuer-General has been enhanced by a rural homesite value which is inherent in each site and patently identifiable. To the extent that the determined values are so enhanced, they are claimed to be in breach of Section 11(1)(vii) because they represent a primary production value enhanced by an 'other purpose' namely a rural homesite. There is not suggestion in the evidence of any other factor of enhancement such as subdivision.

The appellants' submission may be illustrated comparatively by reference to Mr. Fairweather's estimates of the respective values of Cavanagh's parcel for primary production and rural homesite purposes. On a primary production basis he estimates the parcel to have an unimproved value of $53,000 whilst he estimates, on a rural homesite basis, an unimproved value of the order of $45,000 to $48,000. It is the contention of the appellants and indeed the principal thrust of their case before us, that the rural homesite value inherent in the parcel enhances its value and must be disregarded. The method of disregarding the enhancement and arriving at a 'pure' primary production value in conformity with Section 11(1)(vii) is to deduct from the enhanced value (the Valuer-General's farming value) the value of the inherent rural homesite. Accordingly, on the basis of Mr. Fairweather's estimates, a 'pure' farming value of the order of $5,000 to $8,000 results."

[36] A somewhat different view as to the state of valuation evidence was provided by Mr Hutchinson. Mr Hutchinson provided the Court with a valuation report which was set out in Exhibit 4. He relied upon comparative sales to reach his valuation and those sales are summarised as follows:

Lot 52 SP 154326 2.002 ha

Rural residential home site located approximately 22.5km radially north-west of Bundaberg and about 14.6km radially north of the subject. The sale comprises a near regular shaped level corner coastal forest block with bitumen access, reticulated water and power available. Improvements at the date of sale included fencing and selective clearing. The sale is superior in access, services and proximity to beach environs however is located twice the distance from Bundaberg and is significantly inferior in area. Overall the Subject is considered superior due to area. (Note: The sale has a Property Valuation Method (PVM) of non rural and is therefore valued on a site basis. To compare like with like with the subject property, a notional Unimproved Capital Value of $150,000 has been applied)."

Lot 51 SP 110256 2.003 ha

Rural residential home site located approximately 22.5km radially north-west of Bundaberg and about 14km radially north of the subject. The sale comprises a near rectangular shaped low lying coastal forest block with bitumen access and power available. The block was partly fenced at the date of sale. Sale is superior in access, and proximity to beach environs however comprises a low lying block located twice the distance from Bundaberg and is significantly inferior in area. Overall the Subject is considered superior due to area and topography. (Note: The sale has a Property Valuation Method (PVM) of non rural and is therefore valued on a site basis. To compare like with like with the subject property, a notional Unimproved Capital Value of $133,000 has been applied)."

Rural residential home site located approximately 20km radially north-west of Bundaberg and about 10km radially north-west of the subject. The sale comprises a near rectangular shaped block with river frontage, gravel access and power available. The lot is elevated along the road frontage providing a good homesite with views over the lower terrace towards the river. Improvements at the date of sale included a timber hut, clearing and fencing. Overall the Subject is considered to be inferior to the sale due to the sales river frontage location and superior house site."

[37] During the evidence and the submissions, it was conceded by Mr Meiers that the appropriate rural residential valuation of his property is $165,000, in accordance with the sales evidence. However, that did not detract from his view that those same sales should be applied to the farming properties which are detailed in his statements of evidence in Exhibits 2 and 3.

[38] Mr Meiers contended that either his valuation should be reduced to be in line with the valuations of the farming properties, or the valuations of the farming properties should be increased to be consistent with his valuation. I will deal with that aspect of the case further, after I finish with Mr Hutchinson's evidence.

[39] Both Mr Hutchinson and Mr Meiers impressed me as honest witnesses. They certainly did not seek to colour their evidence in any way, but in my view, gave open, frank and honest evidence. The evidence of Mr Hutchinson is accepted by this Court as independent expert evidence of an expert valuer. The evidence of Mr Meiers is accepted by the Court as evidence of an appellant, well experienced and knowledgeable in matters relating to valuation, although his evidence must, because of the authorities and the duties and obligations that I've referred to earlier, be accepted to a lesser extent than that of independent expert valuation evidence.

[40] Turning now to the crux of the matter. Has there been an error in making of valuations, with respect to the neighbouring properties to Mr Meiers, as set out in his evidence? In short, are those valuations too low and is the relativity as between tax payers upset because of these valuations? The simple answer, on the basis of the evidence before me, is that I do not know. I will explain that in this way. Mr Meiers sought to obtain evidence from Mr Hutchinson as to the valuation methodology used for finding the valuations of the farming land in the vicinity of the subject. I use that term generically to refer to rural land to which sections 45 and following of the LVA apply.

[41] Mr Hutchinson was either unprepared, or unwilling, or unable, (and I make no adverse findings in this regard), to give that evidence. This is not necessarily surprising, given that the primary function of Mr Hutchinson was to provide the Court with expert evidence as to the value of the subject property pursuant to the LVA.

[42] Mr Hutchinson's evidence did not clarify whether or not the valuations of the farm land is correct. Indeed, he made specific reference to the mass appraisal system and stated that he was not aware of precisely which sales were used in support of any of those farms. I also could not be pointed to any appeals or decisions of the Court which have tested those valuations.

[43] Why this is of crucial importance, now becomes, hopefully, clear. Certainly on the material placed before me by Mr Meiers, there is good reason to question the value applied to the farming properties the subject of the relativity argument of this appeal. However, the Court does not have before it evidence by way of independent expert evidence to show the manner in which the values of those farming properties were arrived at to establish whether or not those values are correct or not, and thus, if there is a relativity issue between the farming land and the appellant's land.

[44] What the respondent relies upon is a legal conclusion that the relativity as between the appellant's land and other rural residential home site land in the vicinity, is correct. In my view, this only half answers the complaint of Mr Meiers, because it does not, of itself, show that, given that there is a single market for both rural land and rural residential home site land; and given the operation of section 45 and following of the LVA; and given the restrictions applicable to the subject land, such that the enhancement value of the subject land is at least somewhat limited, the removal of enhancements from rural land, may indeed, given the particular locality of these blocks, mean that there is very little difference, if any, between the market, and therefore, the value, even with the application of the enhancement provisions relating to farming land, with respect to the appellant's property as rural home site and those to which the appellant seeks to have relativity tested of properties which receive the farming enhancement removal.

[45] It follows, and I expect to the great disappointment of the appellant, that on the basis of the evidence presented; on the provisions of the LVA; and on the expert valuation evidence of the respondent, that I have, at the end of the day, no option but to confirm that the valuation of the subject land is correct as at the valuation date, and that the relativity of the subject land is correct, as regards other rural residential home sites within the locality. I am unable, on the evidence before me, to determine whether the relativity of the subject land to rural homestead land is correct or not.

[46] I'll conclude by repeating what I said in the case of Burnett v. Department of Natural Resources and Water.[8]

"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."

[47] I reinforce my comments from the Burnett decision, noting, of course, the various like authorities provided to me by Mrs Johnson. I remain of the view that each case must be determined, in a relativity sense, on its own facts and there are circumstances where, because of issues of relativity matters which are clearly out of kilter, relativity can and does remain a relevant feature for the Court to consider. However, to do so, the Court must have detailed valuation evidence which establishes that the valuations of the relativity blocks is before any consideration can occur, which would see the reduction or changed valuation of land such as the subject land in this case.

[48] In closing I make the following observation. Even if in this case it had been established that the surrounding lands which are treated as farming land for the purposes of section 46 of the LVA, had been found to have inappropriate valuations, nevertheless, in the circumstances of this case, I would not have considered it appropriate to reduce the valuation of the subject land due to the number of rural residential home site blocks which have been valued using the same methodology as the subject land.

[49] The argument would go like this: Why should the subject block be put in a comparable position with the farming blocks, but then be out of kilter with all other rural residential blocks?

[50] It should also be noted that I have no power to alter any of the relativity farming blocks' valuations, given the manner in which the legislation, (both the Land Court Act 2000 and the LVA) has been written. It would, however, had I so found, have been open to me to draw to the Valuer-General's attention my findings as to an incorrect valuation, and to make recommendations to the Valuer-General that that matter be attended to. The powers and responsibilities of this Court, however, could not extend beyond that point.

1. [1] See Exhibit 4, page 3, point 19, which is the valuer's report.

[3] [2009] QLC 33.

[4] See Rule 1.3(b)(1).

[5] [2012] QLC 12.

[6] [2005] QLC 11, at paragraphs 11 and 12.

[7] See s.46(1) of LVA.

[8] [2010] QLC 57 at paragraph 18.