AJ & JA O'Brien v Department of Natural Resources and Mines
[2003] QLC 47
•9 July 2003
LAND COURT OF QUEENSLAND
CITATION: AJ & JA O'Brien v Department of Natural Resources and Mines [2003] QLC 0047 PARTIES: Andrew James and Jennifer Ann O'Brien
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: RV2002/0315; RV2002/0316 and AV2002/0317 DIVISION: Land Court of Queensland PROCEEDING: Appeals against unimproved valuations, Shire of Paroo - Valuation of Land Act 1944 DELIVERED ON: 9 July 2003 DELIVERED AT: Brisbane HEARD AT: Cunnamulla MEMBER Mr RE Wenck ORDERS: 1. As the lands described as Lot 4NO29 and Lot 8NO37, Parish of Munquin, have been amalgamated with other lands as from the relevant date on which the unimproved valuation for rating purposes came into effect, the valuation appealed against has no force and as a consequence Appeal AV2002/0317 is struck out for want of jurisdiction.
2. The Appeal RV2002/0315 against the unimproved valuation of Lot 4 NO29 GHPL15/1642, Parish of Munquin, for rental purposes as at 1 October 2001 is allowed and the unimproved value determined in the amount of Fifty-four Thousand Dollars ($54,000).
3. The Appeal RV 2002/0316, against the unimproved valuation of Lot 8 NO37 GHPL 15/1619, Parish of Munquin, for rental purposes as at 1 October 2001 is allowed and the unimproved value determined in the amount of One Hundred and Thirty-four Thousand Dollars ($134,000).
CATCHWORDS: Statutory valuation - Unimproved value - Valuation of Land Act 1944 - Alteration of valuation - Objection against valuation
Valuation - Sales Evidence - Where plant and livestock reserved from sale under contract
Sales evidence - Weight to be placed on evidence when facts disputed
APPEARANCES: Mr AJ O'Brien for the applicants
Mr K Fisher (Crown Law) for the respondent
Mr and Mrs O'Brien purchased the property known as "Yerinan", by contract dated 12 June 2001. The contract price was in the amount of $700,000.
Property reserved from the sale was set out in the Second Schedule of the contract and included "all livestock" and "all plant". In the Third Schedule of the contract, the items included in the apportionment totalled $700,000. Clause 11 of the contract required the vendor to remove all property reserved from the sale prior to the date of delivery.
The real property description of the land comprising "Yerinan" is Lot 4 NO29: GHPL 15/1642 containing 4,735 ha and Lot 8 NO37: GHPL 15/1619, containing 7,862 ha, both in the Parish of Munquin.
As at 1 October 2001 the chief executive made unimproved valuations of the two separate leasehold lots for rental purposes and an amalgamated valuation of the two lots for rating purposes, as follows:
Lot 4- $57,000 - rental valuation
Lot 8- $140,000 - rental valuation
Lots 4 and 8- $200,000 - rating valuation
Objections against each of those valuations were lodged and disallowed following which appeals were filed in the Land Court. The single ground of appeal in each case was "The market evidence supports no increased value."
Mr O'Brien is an experienced grazier, sheep buyer and wool classer and his employment history includes a period when he served as a stock and station agent. He conducted the appellants' case and gave evidence in support of the appeals. The unimproved valuations contended for were:
Lot 4- $45,600 - rental valuation
Lot 8- $112,000 - rental valuation
Lots 4 and 8- $159,000 - rating valuation
The evidence was that the valuations contended for by Mr and Mrs O'Brien were those which had been applied by the chief executive at the previous date of valuation, 1 October 1998. It was Mr O'Brien's opinion that the market had not increased in the period between the two dates of valuation and if there had been any increase from the earlier date it had not occurred until subsequent to 1 October 2001.
Mr O'Brien found support for his opinion through comparing their purchase of the subject property at $55.57/ha improved and a sale of a property "Willacora/Coona" (in 1996) at $48.19/ha improved. He had visited "Willacora" prior to its sale and was of the opinion that comparisons between the two properties particularly with regard to the nature of the land and the proximity to Cunnamulla, were "pretty close". The 1998 unimproved valuation of "Yerinan" equated $12.62/ha and he thought the unimproved valuation of "Willacora" had been $11.43/ha. (The "Willacora/Coona" sale analysis and its unimproved valuation, had been the subject of a Court determination delivered on 30 March 2001 relative to the 1998 valuation. The sale analysis adopted by the Court had reflected $12.24/ha, excluding a Permit to Occupy over an area of 810 ha, and the unimproved value had been determined at the equivalent of $10.92/ha (including the Permit to Occupy), based on relativity issues).
Mr O'Brien was confident that the improvements on "Yerinan" were significantly superior to those on "Willacora" at the relevant dates of sale. It followed, in his opinion, that the relative sale prices on an improved basis, confirmed that no increase in value was capable of being identified in the period between the sales. Furthermore there had been a particular advantage to the O'Briens in acquiring "Yerinan" as it was relatively close to their existing property "Mayvale", about 20 km distant via a conveniently connecting stock route, and provided a quality of country that "Mayvale" did not possess but which was needed for sustainability of a viable grazing enterprise. The two properties were now run in conjunction.
Evidence for the chief executive was given by Mr GG Naish, registered valuer. He stated that he had been responsible for the valuations appealed against.
Some confusion was caused at the outset, when it was revealed that the valuation for rating purposes, as contained in Mr Naish's report, was in the amount of $310,000 but for a total area of 29,280 ha. It emerged that after consideration of the objections in relation to the valuations of "Yerinan", the decision had been taken to amalgamate the rating valuations of "Mayvale" (against which there had been no objection) and "Yerinan" as it had been established that as a result of the purchase of "Yerinan", the properties were in common ownership and run in conjunction. An altered valuation, pursuant to s.28(1)(k) and s.29 of the Act was then issued on 30 July 2002. It was stated in Mr Naish's written report that an allowance of 5% had been "given for severance". In his oral evidence Mr Naish suggested that the allowance also recognised the effect of the larger aggregated size. No objection had been lodged against that altered valuation. However the evidence as to the altered valuation having been issued seemed to take Mr O'Brien by surprise. There was a veiled suggestion that the altered valuation notice had not been received by the appellants.
The end result is that the rating valuation for "Yerinan" no longer exists as a separate entity and has no effect. The appeal against the originally issued valuation has no force. Technically the appeal must be struck out for want of jurisdiction.
However, it is observed that in certain circumstances provision is made for late objection, in s.44 of the Act as follows:
"(1) This section applies if -
(a)a person was entitled to make a timely objection about a valuation of the person's land but failed to do so; and
(b)the person objects in writing to the valuation within 1 year after -
(i)if the person alleges that the person did not receive an annual valuation notice - the first advertisement about the valuation under section 41(1), or
(ii)in any other case - the date the annual valuation notice was given to the person; and
(c)the person is, at the time of the late objection, the owner of the land.
(2)If the chief executive is satisfied that the person's failure to make a timely objection happened through no fault of the person, the chief executive must accept the late objection.
(3)A late objection accepted by the chief executive is to be dealt with under this part as if it were a timely objection.
(4)In this section -
'late objection' means an objection mentioned in subsection (1)(b).
'timely objection' means an objection under section 42 within the time stated in that section."
It appears to me that if the owners allege that the notice was not received, an opportunity exists for a period of one year from the date of issue of the altered valuation notice, for a late objection to be lodged. As it happens, sufficient time will remain for that action to be taken if, after considering the reasons in this decision, the owners are dissatisfied with the altered amalgamated valuation.
The separate rental valuations and the appeals against them remain in place.
Mr Naish's description of the two separate lots was not challenged except to the extent that Mr O'Brien felt there was "a bit more degraded country" than was mentioned and he saw some of the areas described as differing types of "plain" were really one and the same. He was not in a position to prove the classifications of country or the areas of those classifications wrong. He did not disagree with the carrying capacity estimates included in Mr Naish's report, but pointed out that there was no allowance "for the huge pressure that kangaroos are putting on the country" particularly the merge country, after temporary rainfall relief from the long drought.
Mr Naish had described the overall access to the property which included approximately 20 k of formed earth road as being "at a good standard". Mr O'Brien pointed out however that access is "very suspect" through a short section of Council road being impassable after "any decent rain" when water can sit for long periods. During those periods, the assistance of a neighbour is relied upon for mail delivery and stock transport requirements. While the description of access may have been misleading, the disability is not one which has recently emerged.
Mr Naish's report contained the following classifications of country and carrying capacities:
Lot 4- " 1,010 ha (21%) of open brown soil Mitchell Grass plain
35ha (1%) of alluvial plains, parts flooded, Coolibah, Gidgee, brown/grey clays
1,245ha (26%) of Flat Gidgee plains, red brown clays
6,880ha (23%) Thick and broken Gidgee
80ha (2%) of claypans and depressions, scalded areas, grey clays
1,984ha (42% Sandridges with Cypress Pine
380ha (8%) Hard stoney Mulga."
After reviewing each of Mr Naish's reports it seems clear that the 6,880 ha classification above has been included erroneously in this report and instead belongs to the "Mayvale" aggregation.
The carrying capacity of Lot 4 was assessed as 1DSE to 2.4 ha (sheep).
Lot 8- " 4,406 ha (56%) of open brown soil Mitchell Grass plain
495ha (6%) of alluvial plains, parts flooded, Coolibah, Gidgee, brown/grey clays
870ha (11%) of Flat Gidgee plains, red brown clays
1,325ha (17%) Sandridges, Cypress Pine interspersed with flat Gidgee plains to open Mitchell grass plains
765ha (10) Sandridges with Cypress Pine."
The carrying capacity of Lot 8 was assessed as 1DSE to 2.2 ha.
It was Mr Naish's oral evidence that the subject lands are located within a "sub-market area" (SMA) identified by the department as the Warrego Floodplain, within which area "a number of sales" after examination, indicated an increase in unimproved value of 25% in the period between 1 October 1998, the date of the previous valuation, and 1 October 2001. As I understood it that increase had been applied consistently to the unimproved values of all lands within that SMA. In support of that mass valuation methodology, the subject valuations were said to rely on the evidence of four sales. One of those sales was of the subject "Yerinan", which Mr Naish had analysed to show an unimproved value of $206,504 or $16.39/ha overall. When "Yerinan" had originally been valued separately for rating purposes, a valuation of $200,000 equating $15.88/ha had been applied. The other sales on which reliance was placed were of the properties "Warambah", "Cleland" and "Randwick Downs".
"Warambah" contains 32, 827 ha, is situated 147 km south-east of Cunnamulla and was sold in August 2000 for $1,404,000 to show an unimproved value on the analysis indicated in Mr Naish's report, of $11.75/ha. A valuation of $11.73/ha had been applied. In summary "Warambah" was described as "Merge property with a mixture of open black soil plain and mulga. Located on the fringe of the eastern section of the Warrego Floodplain, merging into mulga lands. Woody weed problem in red sandy country." Its carrying capacity was estimated as 1DSE to 2.5 ha. The overall comparison of "Warambah" to both of the subject lots was as follows:
"This property comprises inferior access and location to a service centre. It comprises of inferior country. It is a significantly larger block ... . Overall on a per hectare basis it is inferior to the subject."
Mr O'Brien had no in-depth knowledge of the "Warambah" property and could not comment on the sale or its analysis.
"Cleland" contains 32,590 ha, is situated adjacent to "Yerinan" on the eastern side (fronting the Balonne Highway) and was sold in June 2001 for $1,090,611, to show an unimproved value on the analysis indicated in Mr Naish's report of $9.48/ha. A valuation of $8.62/ha was said to have been applied. However in my calculations that should be $9.20/ha based on the total valuation said to have been applied. "Cleland" was described as "Merge property with a mixture of open black soil plain and mulga. Located on the fringe of the northern section of the Warrego Floodplain, merging into mulga lands. Woody weed problem in red sandy country. Adjoins 'Yerinan' along the eastern boundary." Its carrying capacity was estimated as 1DSE to 2.8 ha. The overall comparison of "Cleland" to each of the subject blocks was as follows:
"This property comprises of similar location and access, with inferior country type. The sale is larger in area to the subject. Overall, on a per hectare basis, the sale is inferior to the subject."
Mr O'Brien agreed that "Cleland" comprised inferior country to the "Yerinan" blocks.
"Randwick Downs" contains 19,560 ha, is situated by road about 140 km south-east of Cunnamulla and was sold in June 2000 for $800,000 to show an unimproved value on the analysis indicated in Mr Naish's report, of $12.12/ha. A valuation of $11.89/ha had been applied. The carrying capacity of "Randwick Downs" was estimated as 1DSE to 2.6 ha. There was no summarised description of "Randwick Downs" but the overall comparison to the subject blocks was described as follows:
"This property comprises of inferior location and access with inferior country type. The sale is larger in area than the subject. Overall on a per hectare basis, the sale is inferior to the subject."
Mr O'Brien had made no comment about this sale property.
"Yerinan", as one of the basic sales used by Mr Naish is clearly important evidence of value not only in the subject matter, if reliance may be placed on the analysis of the sale. All livestock was formally reserved from the sale but Mr O'Brien's evidence was that despite the wording of the contract, there was a number of clean-skin cattle together with some plant and machinery included in the sale. Due to the vendor's ill-health he had been unable to muster the cattle. Mr O'Brien's oral evidence was as follows:
"Old Jim was pretty crook. These cattle were unbranded and the owner estimated to be 100 in numbers. I have a statutory declaration from the local stock inspector who spent a long time out at 'Yerinan'. He considers there to be 60 head of cattle out there and I'm happy with that."
Mr O'Brien was asked:
"Was it something that you considered when you were buying the place?"
and answered:
"Most definitely." .....
"So you knew there were cattle there?" .... "Within the first hour of negotiations Jim mentioned them and we drove out there to look at them, yes."Mr O'Brien had sought an opinion from a local stock and station agent as to the value of the 60 head of this type of mixed stock at the date of sale. A valuation of $36,800 had been provided in the absence of any inspection but based on cattle prices being achieved at the time of sale. Although his personal opinion was that a higher value would have applied, Mr O'Brien accepted the agent's advice for the purpose of considering an analysis of the sale. There had been, at the request of the vendor, a separate contract for the sale of about 4,000 sheep.
Mr O'Brien believed that although the cattle had not been mentioned in the contract, the values which had been apportioned within the contract to the land and clearing ($170,000) and the various improvements were reasonable and should have been adopted in the analysis of the sale.
Mr Naish's evidence was somewhat confusing as to the history of his analysis of the sale. He first indicated that having been told about the cattle and from discussions generally with Mr O'Brien, he had decided to make an allowance of $15,000 for unbranded cattle. It was put to him that he may have misunderstood the advice given him by Mr O'Brien regarding plant and machinery on the property. He then referred to some notes relevant to his analysis and found that he had allowed $15,000 total under the headings of sundries, plant and stock. He had some doubt as to whether he should have allowed any amount for items which were technically excluded from the contract. The notes to which he had referred suggested that the unimproved value analysis had been $225,400. However it was pointed out to him that his report showed an unimproved value analysis of $206,504. It was then that he recalled having reviewed the original analysis when the added values attributed to fencing and waters had been increased. However he did not have with him the analysis on which he now relied.
It could be argued that the contract of sale for "Yerinan" speaks for itself and items of sundries, plant, machinery and stock were excluded from the purchase price. However the evidence is clear that the purchasers came into, and expected to come into, possession at the date of settlement of various items including livestock as part of the verbal agreement between the parties to the transaction. The clean-skin cattle, in particular, together with the proximity of the property to their existing holding were important considerations to the purchasers and I find, in those circumstances, that neither the unimproved value as analysed by Mr Naish or the apportioned values shown in the contract, provide a sound basis for valuation of either the subject property or other properties within the relevant SMA.
No evidence was provided by Mr Naish as to the previous valuations of the remaining sale properties "Warambah", "Cleland" and "Randwick Downs". It is assumed that the analyses as shown in his report were supportive of the overall 25% increase to which reference was made by Mr Naish. Clearly each of those sale properties are regarded by him to be inferior on an overall comparison to either of the subject lots or indeed the two lots in amalgamation. Furthermore the sale properties are much larger in size and direct comparison is seen as a difficult exercise. In the individual matters direct comparison with that sales evidence was said to have been the basis of valuation.
That evidence has to be accepted given the lack of challenge as to Mr Naish's analyses of the remaining sales as showing that there has been an increase in the level of unimproved value within this SMA as compared to that applied after the Court's intervention, as at 1 October 1998. No real assistance is gained by Mr O'Brien's comparison of the 1996 sale of "Willacora/Coona" and the 2001 sale of "Yerinan". It is observed that a higher unimproved value could have been applied to "Willacora/Coona" as at 1 October 1998 had that sale been relied upon then to the exclusion of the other sales evidence accepted by the Court as having been relevant at that date.
In these matters the onus is on the appellants to show that the chief executive's valuation is wrong. The appellants have shown that the circumstances surrounding the sale of the subject property were such that any unimproved value analysis would be sufficiently clouded as to be an unreliable basis for valuation purposes. While that finding weakens the respondent's case it does not prove the appellants' case that there had been no increase in value since the previous date of valuation.
After hearing Mr Naish's evidence as to the review which had taken place to the original analysis of the "Yerinan" sale and bearing in mind that valuation is not an exact science, it would be optimistic for the respondent to expect that a close examination of each component of the analysis of any highly improved sale would not reveal some areas where review could be argued as warranted. It is for that reason that some caution needs to be exercised in the application of sales evidence. It is observed that in the sales of "Warambah", "Cleland" and "Randwick Downs" the analysed unimproved values were near fully applied (99.8%, 97.4% and 98.1%) when the added value applied to the improvements were assessed at $1,018,431 (72.53% of the sale price), $781,745 (71.67%) and $562,993 (70.37%) respectively. Those figures suggest that little margin was allowed for any possible review of the sales analyses.
In the subject matters I have formed the view that a small reduction in the individual lot valuations is warranted. The basis for a 25% increase is not only weakened by the removal of the sale of the subject property from consideration, but allows no meaningful benefit of doubt when the purpose of the valuations is for revenue gathering.
The valuation of Lot 4 is reduced from $12.04/ha to $11.50/ha and rounded to $54,000.
The valuation of Lot 8 is reduced from $17.80/ha to $17/ha and rounded to $134,000.
Orders
1.As the lands described as Lot 4NO29 and Lot 8NO37, Parish of Munquin, have been amalgamated with other lands as from the relevant date on which the unimproved valuation for rating purposes came into effect, the valuation appealed against has no force and as a consequence Appeal AV2002/0317 is struck out for want of jurisdiction.
2.The Appeal RV2002/0315 against the unimproved valuation of Lot 4 NO29 GHPL15/1642, Parish of Munquin, for rental purposes as at 1 October 2001 is allowed and the unimproved value determined in the amount of Fifty-four Thousand Dollars ($54,000).
3.The Appeal RV2002/0316, against the unimproved valuation of Lot 8 NO37 GHPL 15/1619, Parish of Munquin, for rental purposes as at 1 October 2001 is allowed and the unimproved value determined in the amount of One Hundred and Thirty-four Thousand Dollars ($134,000).
RE WENCK
MEMBER OF THE LAND COURT
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