Carter v Department of Natural Resources and Mines
[2005] QLC 23
•21 April 2005
LAND COURT OF QUEENSLAND
CITATION: Carter v Department of Natural Resources and Mines [2005] QLC 0023 PARTIES: Phyllis Edith Carter
(appellant)
v.
Chief Executive, Department of Natural Resources and Mines
(respondent) (AV2002/0400)Helen Mann Carter
v.
Chief Executive, Department of Natural Resources and Mines
(respondent) (AV2002/0401)FILE NOS: AV2002/0400 and AV2002/0401 DIVISION: Land Court of Queensland PROCEEDING: Appeals against Annual Valuations DELIVERED ON: 21 April 2005 DELIVERED AT: Brisbane HEARD AT: Townsville MEMBER: Mr JJ Trickett, President ORDERS: 1. In the case of AV2002/0400 ("Old Station"), the appeal is dismissed and the valuation of the respondent as at 1 October 2001 of Three Hundred and Ninety Thousand Dollars ($390,000) is affirmed.
2. In the case of AV2002/0401 ("Felspar"), the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Six Hundred and Fifty-five Thousand Dollars ($655,000).
CATCHWORDS: Unimproved Value - Factors affecting valuations - Disabilities - Characteristics of individual properties - Factors which may affect valuations in the future - Valuation of Land Act 1944 APPEARANCES: Mr HG Carter for the appellants
Mr P Rabaa (Crown Law) for the respondent
These are two appeals by landowners against the unimproved values applied to their cattle grazing properties in the Shire of Dalrymple by the Chief Executive, Department of Natural Resources and Mines (the respondent) as at 1 October 2001, under the provisions of the Valuation of Land Act 1944.
Background
Mrs PE Carter is the owner of a property known as "Old Station", described as Lot 8 on Plan DP49, Parish of Allingham, containing an area of 10,999.734 ha. As at 1 October 2001, the respondent applied an unimproved value to that land of $390,000, or $35.45 per ha.
Mrs HM Carter is the owner of a property known as "Felspar", described as Lot 1 on Plan OC16, Parish of Felspar, containing an area of 22,853 ha. As at 1 October 2001, the respondent applied an unimproved value to that land of $710,000, but at the hearing of the appeal, led evidence to $655,000, or $28.66 per ha. Both properties are worked in conjunction.
The landowners (who will be referred to as "the appellants") objected against those valuations and subsequently appealed to the Land Court, advising that their estimates of unimproved value were, for "Old Station" $325,000, and for "Felspar" $548,000.
The grounds of appeal in each case expressed disagreement with the Department's valuation, referring to the geographical features and rough terrain, the inaccessibility of the permanent water in the creeks and river, and to noxious weeds. In addition, in the case of "Old Station" the grounds included reference to there being no road access, while in the case of "Felspar" there was reference to unfavourable comparisons with the properties "Junction Creek" and "Amelia Downs". In both cases the grounds referred to "worsement with fence hazards". That ground of appeal related to a finding in a previous Land Court case and will be discussed in some detail later.
The Subject Lands
According to the report of Mr SB Gilbert, the valuer for the respondent, both properties are situated about 143 km north-west of Charters Towers, with access by means of 57 km of bitumen sealed Lynd Highway and then 82 km of formed earth and gravel road, small sections of which have been bitumen sealed. Access from that road to "Old Station" is by about 4 km of station tracks through other properties, as there is no constructed access road.
There was no issue about the nature of the land. As described by Mr Gilbert, "Old Station" comprises about 80 ha of very rough unavailable country between Lion Creek and the Basalt Wall; about 280 ha of black soil with patches of thick black ti tree; about 550 ha of open black soil plain and creek lines; and about 10,089 ha (91.8%) of flat to gently sloping red basalt forest, timbered with narrowleaf ironbark, bloodwood and gum.
Mr Gilbert described "Felspar" as comprising about 1,540 ha of generally steep and unavailable gorges and severed country along the Basalt River; about 1,460 ha of black soil with thick black ti tree patches; about 450 ha of rocky granite hill with silverleaf ironbark, wire grass and white spear grass; about 670 ha of open black soil plain and creek lines; and about 18,733 ha (82%) of undulating red basalt forest, timbered with narrowleaf ironbark, bloodwood and gum. There are generally low rocky basalt ridges and walls throughout and some areas of gum hollows.
Both properties have natural water. On "Old Station", Rocky Spring Creek, Talavera Creek and Lion Creek are spring fed, while a waterhole in Allingham Creek lasts for most years, with waterholes along the edge of the Basalt Wall being seasonal.
On "Felspar", there is permanent water in the Basalt River, however due to the steep banks/gorge, the water is practically inaccessible. There are several other spring/soaks dependent on season, but all the spring/soaks can become boggy and claim weak cattle.
Mr Gilbert comments that while "Old Station" has significant natural water, there is a problem because of the bog risk to breeder cattle, so that the property is used for fattening only. On the other hand, while "Felspar" is used for breeding and fattening, it is also subject to bog risk.
The Relevant Legislation
These two properties were valued under the provisions of the Valuation of Land Act 1944 (the Act). In accordance with the Act, the respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. The valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean in relation to improved land, the capital sum which the fee simple of that land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming the improvements on that land did not exist: s.3(1).
The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that there were no improvements on the land, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power, access and the like.
The test for the determination of "market value" of land was 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 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 441).
It has been well established that the unimproved value of land is ascertained by reference to prices which have been paid for similar parcels of land. For example, in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J expressed it in this way:
"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."
However, there are many areas where there is essentially no unimproved land, as all land has been improved to a greater or lesser extent. Therefore, there are no sales of unimproved land which can be used as a basis for unimproved value. In such cases, it is necessary to have regard to improved sales. The use of improved sales in establishing unimproved value was considered by the Land Appeal Court in The Valuer-General v Marano (1978) 5 QLCR 194. In that case, the Land Appeal Court explained the process at pp.200-201:
"It is well established that the best way to ascertain the unimproved value of land is by applying to it sales of unimproved, comparable, lands which took place reasonably close to the date at which the valuation is to be made. But in many districts it is impossible to obtain sufficient unimproved sales to form a sound foundation, and it therefore becomes necessary to analyse sales of improved lands for the purpose of ascertaining, as far as is possible, what part of the purchase price of the sale property relates to improvements and what part is attributable to the land itself."
The Respondent's Valuations
Mr Gilbert explained that the two properties had been valued by direct comparison with the analyses of improved sales of comparable lands. He explained further that at the date of valuation, the market for grazing properties in the Dalrymple Shire was strong, driven by good seasons and firm cattle prices. The value of such properties has continued to appreciate since the date of valuation and the outlook continues to remain firm. The sales relied on by Mr Gilbert in these cases were as follows:
Sale 1, "Amelia Downs", a 20,595 ha property located 120 km north-west of Charters Towers in the same vicinity of the subject lands, which sold in June 2000 and analysed to show an unimproved value of $37.37 per ha. That property comprises about 88% of good red basalt forest country, intersected by areas of deep stony gorge along the Basalt River and W Creek. The balance of the property consists of open black soil plain and some thick ti tree patches. It is used for breeding and fattening beef cattle, with an estimated carrying capacity of one beast to 10 ha. Mr Gilbert considered the sale property to be superior to both of the subject properties on a per ha basis.
Sale 2, "Zig Zag", a 21,560 ha property, situated about 135 km north-west of Townsville, sold in February 2000 and analysed to show an unimproved value of $9.48 per ha. That property comprises predominantly rolling to steep ironbark ridges and hills with approximately 44% of inaccessible rough unavailable and heartleaf poison country. That property is used for breeding beef cattle and its carrying capacity was estimated at one beast to 35 ha. In Mr Gilbert's opinion, the sale property is considerably inferior to both subject properties.
Sale 3 "Carmichael", a 21,500 ha property, located about 267 km south of Charters Towers, which sold in April 2001 and analysed to show an unimproved value of $7.59 per ha. That property comprises approximately 70% of desert country, timbered with silverleaf ironbark, narrowleaf ironbark, bloodwood, broadleaf box, wattle, ti tree, lapunyah and yellowjack, rising to poor bendee and lancewood ridges. About 30% of the property comprises good forest country and creek flat with silverleaf ironbark, gum, box, gidyea and brigalow scrub. About 30% of the property is affected by heartleaf poison. That property is used for breeding beef cattle, with an estimate carrying capacity of one beast to 18 ha. In Mr Gilbert's view, this sale property is also considerably inferior to both subject properties.
Sale 4 "Taemus", a 17,800 ha property, located about 120 km south of Charters Towers, which sold in July 1999 and analysed to show an unimproved value of $26.67 per ha. That property comprises about 38% of mainly open silverleaf ironbark and bloodwood, with some spinifex patches, about 44% of blackwood scrubs with box and gidyea, with some good narrowleaf ironbark and box country. That property is used for breeding and fattening beef cattle, with an estimated carrying capacity of one beast to 13 ha. In Mr Gilbert's opinion, the sale property is also considerably inferior to both subject properties.
After having regard to that sales evidence, Mr Gilbert came to the conclusion that "Old Station" should be valued at $35.45 per ha and that "Felspar" should be valued at $28.66 per ha.
The Previous Appeals
Before considering the case for the appellants, it is useful to have regard to the decisions of the Land Court and the Land Appeal Court in previous appeals against the valuations of each of the subject properties. In the area valuation carried out as at 1 October 1999, "Old Station" was valued at $330,000, while "Felspar" was valued at $610,000. As in the present cases, the appellants were represented by Mr HG Carter and the valuations were challenged on a number of grounds.
In a judgment dated 28 September 2001, the Land Court essentially accepted the evidence and arguments advanced by the respondent. However, although preferring the approach adopted by the respondent's valuer, the Court concluded that the considerable amount of disused fencing material which was left lying on the ground on both properties constituted a "worsement" and that allowance should be made in each valuation for that disability. Evidence was given by Mr Carter that he estimated that there was between 13 to 15 km of abandoned fences on "Felspar" and between 8 to 9 km on "Old Station". In its conclusions at paragraph 52, the Land Court said:
"In both cases I will adjust Mr Gilbert's valuations down to take account of the 'worsement' resulting from the presence of the old fencing material on each property. I have no opinion from the parties of the quantum of such an adjustment, so will do the best I can on the evidence. In addition to the adjustment, I will, in the case of 'Felspar' make a small allowance for the fact that in comparison with 'Amelia Downs' [by coincidence, an earlier sale of that property being one of the principal sales in those cases] the subject is the colder property."
In the event, the Land Court determined the unimproved value of "Old Station" at $325,000 and the unimproved value of "Felspar" at $595,000. Mrs HM Carter appealed to the Land Appeal Court against the Land Court's determination of the unimproved value of "Felspar". In the appeal, a number of matters were argued, but there seems to have been no issue in relation to the abandoned fencing material.
In a judgment delivered on 28 June 2002, the Land Appeal Court was not persuaded by the arguments advanced by Mr Carter in relation to most issues. However, the Court found that further adjustment should be made to more widely separate the valuation of "Felspar" from the valuation applied to "Junction Creek" based on its sale. The Land Appeal Court determined the unimproved value of "Felspar" as at 1 October 1999 at $548,000, or $24 per ha.
The Case for the Appellants
In the present cases, much of the evidence given by Mr Gilbert was not challenged by Mr Carter. There seemed to be general acceptance of his description and classification of the country and the fact that the sales evidence indicated that there had been a substantial increase in the valuations since the date of the last valuation. There was no challenge to the analyses of the sales or to the comparisons with the sale properties.
The principal argument advanced by Mr Carter was in relation to "worsement". He gave evidence that he had more accurately measured the extent of abandoned fencing on both properties. He was now of the opinion that there was about 22 km of unrepairable fencing on "Old Station" and about 23 km of such fencing on "Felspar". Most of it was internal fencing, but he said that in places some of the old boundary fencing had been replaced with a new boundary fence put up on the neighbour's side, leaving the old abandoned fence in "Old Station" and "Felspar".
Mr Carter gave evidence that the two properties were originally part of "Bluff Downs", which had been originally settled in about the 1870's and some of the fencing could date from that time. He thought it was more likely that the fences dated from the resumptions from "Bluff Downs" in the 1960's. Some of them appeared to be attempts to fence off the boggy streams, while others were laneways constructed to assist mustering cattle. Where possible, some of the old fences had been repaired, but in most cases they were not repairable.
In Mr Carter's opinion, it was quite impracticable to roll up the old fencing wire as it had been dragged out and stretched, some burnt and rusty, some of it a considerable distance from the original fence line. In his opinion, the old fencing material was very dangerous for the operators of motor bikes and for horses and could easily result in injury.
When questioned as to the extent of the problem on other properties, Mr Carter said that he had inspected a lot of properties in the last 20 years, but had seen very little evidence that old fencing material was causing the same problem as on these properties.
Mr Gilbert did not doubt that the old abandoned fencing material posed a problem on the two properties. However, he said that on his inspections he had not noticed them, but he conceded that he was looking at the country, rather than for old fencing. However, he said that Mr Carter had not pointed them out to him.
In these cases, Mr Carter raised another aspect of "worsement" on each property, because of the chemical hazard in the presence of old cattle dips on each of them. He contends that those dips were originally charged with arsenic or other chemicals, which would have resulted in contamination of the soil particularly on the downhill side of dips and yards.
Although no soil tests had been conducted to establish the presence of contamination, Mr Carter said he was concerned that the Meat and Livestock Authority had a system for the accreditation of cattle properties, a quality assurance system called LPA, Livestock Production Assurance, which had become a compulsory part of cattle management on 30 June 2004. He said that in order to get new weigh bills and vendor declaration forms, each producer would have to introduce an auditable system relating to chemicals on the property. As I understood his evidence, it was not possible to get new weigh bills to transport cattle without entering the system. Mr Carter understands that the new system will involve declarations of current and past chemicals, their location and existence, verifiable by soil tests or by other appropriate means. He said that this Australia-wide system is in the process of being implemented.
In short, Mr Carter contends that the presence of arsenic dips and the contamination of soil around them is "worsement" which is significant, particularly in the light of the new standards and the new system. At present, however, he could only speculate about the degree of contamination and how widespread it might be on the two properties. He thought that the contamination may have spread downhill from the cattle yards and may even contaminate water supplies.
In addition, Mr Carter contended that the drums and tins which had contained chemicals are spread all over the place and are another potential source of contamination, but the degree of that contamination is yet to be established. Old rubbish dumps were another potential source of chemical hazard and there were two on "Felspar".
Mr Carter also contended that the lack of an access road to "Old Station" detracts from its value. He said it can be presently accessed by a four-wheel drive vehicle, or by horse, either through "Felspar", "Grenfell", "The Brook" or "Talavera". Access from "Felspar" is either by four-wheel drive vehicle or motorbike only. Mr Carter argued that in practical terms there were really only four possible buyers because of the doubt about whether the Council would provide access should an outsider buy the property.
Mr Carter referred to what he considered to be another major change that was taking place in the beef industry. He contends that studies have shown that the farming and grazing industries are contributing to the destruction of the Barrier Reef because of the amount of sediment and organic material which is polluting the Reef. As a result, a campaign is under way to exclude stock from watercourses. According to Mr Carter, in the Greater Burdekin Catchment, hundreds of kilometres of fencing has already been undertaken.
He suspects that public opinion is levelling the blame at the grazing industry. He contends that this has become of great concern to landowners and the DPI and others are actively encouraging landowners to fence off watercourses in the Charters Towers area. Much of the Cape River system south of Charters Towers has been fenced off and landowners are being actively encouraged to fence off the Basalt River. He said that the DPI had approached him about fencing 28 km on the "Felspar" side of the Basalt River, but he was not prepared to do so, even though other landowners had. In time, he thought, all landowners will be pressured to fence off creeks and streams.
Mr Carter's concern stems from the fact that the Basalt River forms the northern boundary of "Felspar". In addition to the Basalt River, "Felspar" has two creeks, together with their tributaries and gullies, while "Old Station" is cut by four creeks. Mr Carter contended that the extent of watercourses affected the value of properties. He fears that these streams will be the focus of attention of waterways management because of the supposed impact on the Barrier Reef.
The Issues
These are unusual cases in that the appellants have not challenged much of the evidence of the respondent. There is no attack on the extent of the increase in the valuations, nor on the analyses of the sales, nor the appropriateness of the sales. Instead, they have argued that not sufficient allowance has been made for a number of matters which affect, or may in the future affect, the value of the properties.
The lack of formally constructed access to "Old Station" was raised, as it was in the previous appeal to the Land Court. Similar evidence was given by Mr Gilbert, that his inquiries of the Council had revealed that if a homestead was constructed on "Old Station", the Council would "probably" provide access to it, but each case would be dealt with on its merits. The Land Court saw no reason to make any allowance at that time. Neither do I on this occasion.
Worsement - The Abandoned Fencing Material
As discussed, the appellants were previously successful in having an allowance made by the Land Court for the substantial amount of abandoned fencing material, principally barbed wire, which is on both properties. At the time of those last appeals, Mr Carter had estimated that there was approximately 10 km of abandoned fencing on "Old Station" and about 15 km on "Felspar". Before this Court, he has given evidence that he has more accurately measured the old fencing and he now estimates that there are about 22 km on "Old Station" and about 23 km on "Felspar". Mr Carter reasoned that if the Land Court made an allowance for "worsement" based on his previous estimate of old fencing, then a greater allowance should now be made.
Mr Gilbert accepted Mr Carter's evidence regarding the length of abandoned fences. He was in no position to disagree as it was not something that he looked for or took note of. He had never had it raised as an issue affecting the value of a property. While he agreed that it was a substantial amount of abandoned fencing, he did not think it would have a major impact on a property's saleability or value.
The issue here is to what extent does the presence of such fencing material have on the market value of a property. There is, of course, no evidence in this regard. Mr Gilbert said that he did not think there would be a grazing property that did not have at least some old fencing material lying around.
As mentioned earlier, the test of market value was established by the High Court in Spencer v The Commonwealth. Applying that test to the situation of the abandoned fencing material, the question is, would an informed prudent purchaser pay less for a property because of the presence of old fencing material? On a previous occasion, the Land Court found that a small allowance should be made in the valuations of both "Old Station" and "Felspar". Since that time Mr Carter has found there is even more of that material. He contends that the values should be further adjusted.
I do not accept that contention. I have no doubt that the presence of the old wire is a nuisance and a potential danger. However, among all the matters that would be considered by a potential purchaser, I do not think that the presence of old wire would be such as to influence an informed prudent purchaser to pay less.
I was told that the relativity of valuations established by the Land Court and the Land Appeal Court has been maintained, including the allowance that was made by the Land Court for the presence of abandoned fencing material on the two properties. Since the relativity of valuations has been maintained, the allowances for this disability would be reflected in the valuations under appeal. Therefore, no further allowances.
The Other Worsement Issue - Possible Contamination
Mr Carter argued that the presence of old arsenic dips on both "Old Station" and "Felspar", together with the presence of old containers, drums and tins in rubbish dumps and scattered about the properties, constitute a potential source of contamination. This, he contends, would have implications for what seems to be a quality assurance scheme implemented by the Meat and Livestock Authority. Although the details of this scheme were not articulated, it seems that the issue of future weigh bills depends upon being part of this scheme of livestock production assurance. Although no soil tests have been conducted, Mr Carter feels that the presence of the dips and other material on each of the properties constitutes potential sources of contamination which should be taken account of in the valuation.
Mr Gilbert had no knowledge of such a scheme. However, he said that the majority of properties in the Dalrymple Shire have old arsenic based dips on them. There was no evidence that the market was being affected or that it was something that purchasers considered. He had no knowledge of any compulsory rehabilitation schemes.
Despite Mr Carter's concerns, there is no evidence that the potential contamination issue has affected the market value of properties. Indeed, Mr Gilbert's evidence shows that the market for cattle properties has continued to improve since the date of valuation as demonstrated by the resales of all the sale properties. Furthermore, Mr Gilbert said that there are two dips on "Amelia Downs", his Sale 1. That property was not only resold, but sold again.
This may be a matter which affects market value in the future. However, until such time as there is evidence of the effect on the market value of properties, I am not prepared to make any adjustment for possible contamination.
The Watercourse Management Issue
Mr Carter raised this issue because of the growing community pressure for action to be taken to prevent pollution of the Barrier Reef from silt and nutrients carried out to sea by major watercourses. There was evidence that Landcare and other organisations were encouraging landowners to fence off watercourses from stock. Because of the presence of a substantial number of major watercourses on the two properties, Mr Carter felt that they would be more affected than many other properties in the area.
Mr Gilbert was aware of this initiative. He gave evidence that in the Cape River area south of Pentland, landowners were encouraged by substantial contributions of fencing material, to exclude stock from watercourses. However, he said that it was voluntary, with no compulsion and there was no evidence that it affected the prices that purchasers paid for properties. Indeed, no-one had mentioned it to him as an issue.
Mr Carter did not deny that it was a voluntary matter. However, he thought that with growing community pressure it was only a short step to having such measures become compulsory. He contended that an allowance should be made in the valuations because of this potential requirement, which in the case of the two subject lands, would be very costly, to say nothing of its effect on management and production. However, in my view, since there is no evidence that such a possibility has an effect on the market value of such properties, no allowance can be made in this valuation. If, in the future, it becomes an issue which affects the market value of properties, that can be taken into account at that time.
Conclusion
In these two cases, Mr Carter on behalf of the appellants, raised a number of issues which he contends should result in the valuations being reduced. On the other hand, the respondent contends that there is no evidence that any of those issues has any effect on the value of the land.
In appeals under the Act, it is not sufficient for an appellant to raise matters which might affect the valuation, the respondent then being required to prove that the applied valuation is correct. Quite the reverse, the onus is always upon the appellant. Under s.33 of the Act, the respondent's valuation is deemed to be correct until proved otherwise upon objection or appeal. Therefore, to succeed an appellant must rebut that statutory presumption of correctness.
In Brisbane City Council v The Valuer-General for the State of Queensland (1978) 140 CLR 41, the High Court considered the provisions of the predecessor of s.33 (s.13(7) of the Act). Gibbs J (as he then was), with whom the other members of the High Court agreed, said at pp.56-57:
"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by section 13(7) is rebutted … In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted."
After considering all of the evidence in this matter, I have come to the conclusion that the appellants have not established that the respondent acted upon a wrong principle, or that the respondent made a serious error of fact, or that the valuation was made by a method fundamentally erroneous. Therefore, in my view, the appellants have not rebutted the statutory presumption of correctness. The appeal against the valuation of "Old Station" will be dismissed and the appeal against the valuation of "Felspar" will be reduced to the extent of the figure of $655,000 led in evidence by the respondent.
Orders
1.In the case of AV2002/0400 ("Old Station"), the appeal is dismissed and the valuation of the respondent as at 1 October 2001 of Three Hundred and Ninety Thousand Dollars ($390,000) is affirmed.
2.In the case of AV2002/0401 ("Felspar"), the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Six Hundred and Fifty-five Thousand Dollars ($655,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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