Cox v Chief Executive, Department of Natural Resources
[2000] QLC 41
•12 October 2000
|
BRISBANE
12 October 2000
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 2275
Local Government: Burdekin
(AV99-38).
Vivian Henry Cox
v.
Chief Executive, Department of Natural Resources
(Hearing at Townsville)
D E C I S I O N
Background:
This matter relates to land at Brown Road, Mona Park, Ayr, and described as Lot 690 on GL12446, Parish of Northcote. The subject land has an area of 63.13ha and is located about 22km south-west of the town of Ayr, and about 200 metres from the Burdekin River. There is ready access to Browns Road which is a dual lane bitumen sealed carriageway. The subject land is zoned "Rural B" under the Town Plan of the Burdekin Shire Council effective at the date of valuation of 1 October 1997. The key issues are the use of the land, the comparison of sales and the method of valuation.
On 30 March 1998, the Chief Executive issued a valuation of the subject land at $94,500. After an objection the Chief Executive confirmed that unimproved value on 16 December 1998. The appellant has appealed that figure claiming the unimproved value should more properly be $40,000.
Mr B Baxter, solicitor, appeared for the appellant, calling evidence from Geoffrey Alexander Cox, and Geoffrey William Eales, a registered valuer. Mr J O'Rourke, Principal Legal Officer appeared for the respondent, calling evidence from John Robert Hoult, the Departmental registered valuer now accepting responsibility for the valuation.
The Notice of Appeal -
At the hearing the appellant sought leave to amend his estimate of the unimproved value, arguing for a value of $25,000. That figure had been signalled by counsel for the appellant at an interlocutory directions hearing in September 1999. The basis of the appellant's argument was that the subject land was used as part of an aggregation of other lands for the purpose of grazing. The respondent resisted the application, arguing that the land fell to be valued separately as directed by the Valuation of Land Act (the Act).
Mr Baxter concedes that it was not appropriate to seek to amend the notice of appeal, but that it was appropriate for the appellant to lead evidence which could invite the Court to determine an unimproved value at something less than the figure in the notice of appeal. Mr Baxter sought comfort to that end in the findings of the High Court in Brisbane City Council v. Valuer-General (1978) 140 CLR 41, at p.57. The hearing proceeded on the figures noted in the notice of appeal.
The Nature of the Land -
The subject land is near rectangular in shape, and is predominantly cleared coastal forest, originally timbered with poplar gum, moreton bay ash and ironbark. The topography is intersected by minor gullies and rises slightly towards the rear. There are no services connected, however electricity and telephone are available. The land has been cleared to grass and supports Pangola, Verano and Phasey Bean.
A tramline abuts the southern boundary, and a water channel abuts the eastern boundary; both of which are on easements encumbering the subject land. Ground water supplies are adequate for domestic and stocking purposes. Mr Hoult sees the availability of water supplies, other than groundwater as a stand alone parcel, as dependant upon a suitable arrangement to draw water from the water channel of the appellant, and from an adjoining state waters project channel, or from the river. Because of the limited size of the subject land as a stand alone parcel, Mr Hoult has valued the land as only having groundwater supplies.
The Use of the Land -
It is agreed that the subject land is used for the purpose of grazing, and that it is improved with cattle yards, a homestead and two other ancillary buildings used as residences for staff or family. Part of the yards straddle the boundary with the road, and part are on the adjoining Davco country. Mr Hoult agrees that he has valued the subject land under s.17 of the Act as lands used for the business of the grazing of cattle, which is the dominant use, and which is carried out continuously for the purpose of profit. The business of grazing is seen as a viable significant commercial operation in accordance with directions in s.17(2). Mr Eales notes that grazing has continued upon the subject land probably since about 1900, and certainly for the last 40 years.
Mr Hoult agrees that the existing use for grazing is the current highest and best use of the subject land, noting that any use for primary production is somewhat distant, due to obstacles to be overcome with respect to overcoming environmental matters in getting access to water, other than groundwater. Mr Holt also agrees that the subject land is used for grazing purposes as an aggregation, in conjunction with other lands owned by the appellant, the general Cox family, and neighbours.
However, while it is agreed that the land is used in conjunction with those lands, there is no suggestion that the subject land should be valued as part of that aggregation, and that it is to be valued as a separate parcel, and not as an amalgamation. The appellant explains the history of the subject land, noting that it is really part of the remnants of a much larger land holding by the Cox family, all of which had been formerly used for grazing purposes. Most of those lands have been resumed by the Government for water irrigation development purposes, and were the subject of a major decision of this Court, and the Land Appeal Court (see VH Cox v. Water Resources Commission (1996-97) 16 QLCR 123 to 310.)
Subsequent to those resumptions the appellant has sought to aggregate adjoining lands of the appellant's brother, Mr Wall and Mr Res in particular, to the extent that he now grazes as a single enterprise an area of about 1800ha. Those aggregated lands are used in conjunction with another fattening property at Taroom, as part of the single grazing business. The 1800ha of owned or leased lands includes some lands not immediately adjoining the subject land (850ha), as well as the adjoining lands (950ha).
Mr Baxter argues that the issue of importance in considering the use of the land, is the highest and best use of the land, and how the land is actually used. In the current matter Mr Eales argues that the land is currently used as grazing as part of the aggregation. Mr Eales concedes that a current use for grazing does not necessarily mean that its only use is for that purpose. However he argues the provisions of s.17 are a protection for graziers from a valuation for a higher use, until the land is actually put to that higher use. Where a higher use was unlikely to occur for say 10 years, then any additional premium for a higher use would be minimal. He argues that criteria is reflected in the market place. Mr Hoult agrees with those views, and he has sought comparable sales evidence where any higher use is seen as being distant.
Comparison of Sales -
To support his valuation Mr Eales provides the following sales of small and large grazing lands:
(A) SMALL GRAZING -· Sale 1 - (Bruce Highway, Shirbourne - Lot 495 on E12496 and Lot 1 on EP 2135).
This is a 633.8ha parcel of timbered gently undulating coastal forest grazing land, located on the Bruce Highway closer to Townsville. The sale was used in the earlier VH Cox matters in 1996-97, and was seen by the Court as a good grazing lot with no potential use for cane purposes. The sale has subsequently been selectively cleared and grassed for grazing, with improved pastures and structures and fencing improvements. The sale had limited potential for dry arable rain fed cultivation.
The sale sold in May 1991 for $540,000 ($852 per ha), and has an unimproved value at the relevant date of 1 October 1997 of $301,000 ($475 per ha).
(B) LARGE GRAZING -
· Sale 1 - (Taemas, Scartwater Road, Charters Towers - Lot 3 on CG17, PH11/5391, Taemas Holding).
This is a 17,800ha grazing property located about 100km south of Charters Towers with frontage to Cape River. The property is generally box forest with areas of blacksoil flats, tending to lancewood and spinifex ridges.
The sale sold in October 1997 for $1,750,000, which was analysed at $1,600,000 ($90 per ha) improved; and $1,400,000 ($78.65 per ha) treated, fenced and watered.
· Sale 2 - (Old Victoria Downs Holding - via Charters Towers - Lot 59 on DV738; PH11/4966).
This is a 19,291ha grazing property located 70km south of Charters Towers, with double frontage to Campaspe River with patches of open blacksoil plains, box ironbark forest and Spinifex ridges.
The sale was transferred by Ministerial approval in July 1998 for $1,600,000, which was analysed at $83 per hectare improved; and $70 per hectare treated, fenced and watered.
· Sale 3 - (Caerphilly via Charters Towers - Lot 3450 PH2118 Caerphilly Holding).
This is a 24,604.9ha grazing parcel located 130km south of Charters Towers, comprising river frontage and flooded creek flats, to red sandy forest, gravel ridges and blacksoil patches. There is approximately 12,000ha of blackwood, box cleared country, seeded to buffel and eurochloa.
The sale sold for $1,720,000, with reported $700,000 in plant and stock, and was analysed at $41.45 per ha improved; and $33.45 per ha treated, fenced and watered. The date of sale was not shown.
· Sale 4 - (Lion Town via Charters Towers - Lot 2 on DV621; GHPL 11/751).
This is a 14,900ha grazing parcel located about 40km south-west of Charters Towers. The land comprises box and ironbark country with scattered belts of brigalow and blackbutt on heavier soils. About 7,000ha has been cleared, with 700ha blade ploughed.
The sale sold in September 1998 for $1,700,000 (bare), and was analysed at $114 per ha improved, or $100 per ha treated, fenced and watered.
· Sale 5 - (Fanning Downs and Patricia Holdings via Charters Towers).
This is a 22,960.9ha grazing parcel plus a further 327.7ha of defence leased land, located about 25km from Charters Towers on the banks of the Burdekin River at Macrossan. The property is generally red loamy bloodwood, ironbark country with some scattered box and poplar gum.
The sale sold in April 1998 for $2.18 million and was analysed at $76.85 per ha treated, fenced and watered.
Mr Eales argues that it is difficult to find small grazing properties in the Burdekin Basin which are not influenced by higher uses such as subdivision, or for rural residential lifestyle purposes. For that reason, Mr Eales relies upon his Sale 1, although he concedes that it is now an old sale.
Mr Eales draws support from his Sale 1 in the findings of this Court, which saw Sale 1 as superior to the subject land ($850 per ha to $400 per ha). Mr Eales also notes that at the relevant date of 1 October 1997 the unimproved value of his Sale 1 as grazing land was $475 per hectare. Mr Eales argues that former relativity established by the Court more than supports his assessment of $400 per ha for the subject land in the current matter (see VH Cox p.248). While he did not attribute a value to grazing lands in the Cox matter, Mr Eales adopted a value of $1,000 per hectare for Class 5 soils, those soils unsuitable for agriculture (p.248).
Mr Eales also concedes that his large grazing properties 1 to 5 are all well removed from the subject land. However he provided those sales to demonstrate the level of value that purchasers pay for grazing properties. He argues those sales demonstrate viable rates per hectare and beast area values of working grazing operations. Mr Eales concedes that the Burdekin area is a superior locality, but notes that the Charters Towers sales have been used for comparisons with other large Cox properties in the Burdekin area. Mr Hoult rejects the use of the Charters Towers sales.
To support his valuation Mr Hoult provides the following sales:
· Sale 1 - (Bruce Highway, Ayr - Lot 1 on RL3719; Lot 2 on RP812297; Lot 5 on RP838712; and Lot 22 on RP907993).
This is a 230.1ha property located about 35km west of Ayr, and is zoned "Rural B". The sale is gently undulating fair coastal grazing land, cleared to grass, but with significant elevated areas of Giant Ratstail Grass pest infestation, and Para Grass, Paspalum and Cumbungi pest weed in the lower drainage areas. There is a permanent lagoon and adequate groundwater supplies. The sale is seen as inferior on a per hectare basis, and is used for grazing.
The sale sold in November 1996 for $400,000, which after allowing for improvements was analysed at $308,589 ($1,341 per ha) and applied at $299,000 ($1,000 per ha).
· Sale 2 - (Woodstock Road, Ayr - Lot 6 on RP 804425).
This is a 230.8ha parcel located about 40km west of Ayr, and is zoned "Rural B". The land is fair coastal grazing, and is cleared with Callide Rhodes, Seca and Verano Stylo. About 180ha is gently to moderately undulating coastal forest of poplar gum and moreton bay ash. The remainder is steep coastal forest with narrowleaf ironbark and bloodwood. Adequate stockwater exists from seasonal creeks and groundwater supplies. The sale is seen as inferior on a per hectare basis.
The sale sold in March 1997 for $425,000, which after allowing for improvements was analysed at $259,100 ($1122 per ha), and applied at $231,000 ($1,000 per ha).
Mr Eales challenges the description of Mr Hoult's Sale 1 as grazing lands. Mr Eales argues that he has hearsay knowledge from the purchaser of that parcel, that the purchaser (Fraser) saw a higher potential in the land. Mr Eales concedes that the land is currently being grazed by Mr Fraser, but argues that the purchaser bought the land for its potential agricultural use. Mr Eales concedes that such potential was likely to be delayed for perhaps 3 to 5 years but, in his opinion, it will eventually be turned to agriculture.
Mr Hoult challenges the reliability of Mr Eales' advice, noting that as at July 2000 (nearly four years after the sale) the land continues to be used for grazing. Mr Hoult also notes that Mr Fraser has recently undertaken eradication of the Giant Ratstail Grass infestation along the highway, suggesting Mr Fraser continues to see the land for grazing purposes.
However Mr Baxter notes that the downward spiral in the sugar industry since 1998, and the current restriction on new Cane Production Areas (CPA) in the Invicta Mill area, may also be reasons why Mr Fraser has so far not sought to develop Sale 1 for agricultural purposes. Mr Hoult also argues that the vendors of his Sales 1 and 2 advised him that they had purchased the lands for grazing purposes, and both were experienced graziers and were assumed to be prudent buyers. It is also noted that Giant Ratstail Grass is a "declared weed", and as such Mr Fraser had a legal responsibility to eradicate it from Sale 1. Mr Hoult argues that such a scenario is correct, but very often owners ignore that responsibility, unless it is in their commercial interest to do so. On that basis, he feels the eradication is a sign of continued interest in grazing of Sale 1.
In respect of Mr Hoult's Sale 2, Mr Cox provides further hearsay discussions with the purchaser of that sale, who is his relative. Mr Cox believes that the purchaser (Mr Cox) purchased that land for lifestyle reasons, and as an investment for his future retirement. That parcel is used as a homestead lot as part of the appellant's relatives' other grazing operations. Mr Eales argues a similar strategy, and notes that there is a lot of parcels in that area which are used for lifestyle (rural residential) purposes, such as running horses or cattle, and the spelling of racehorses. He also notes that those lands provide extensive views from the foothills of Mt Elliot.
Mr Eales also challenges the concept of varying size of a parcel for grazing land in the Burdekin area. Mr Eales argues that the economics of operation for grazing purposes mitigates against adoption of increased rates merely because of the smaller size of the subject land compared to Mr Hoult's Sales 1 and 2. While Mr Eales agrees that higher potential yields that can be obtained dependant upon size of grazing enterprises in Charters Towers, he argues that principle does not hold on the smaller areas in the Burdekin.
Mr Hoult concedes that a residence was subsequently being established upon his Sale 2. However Mr Hoult notes that the purchaser of his Sales 1 and 2 are graziers of larger properties in the area, which he argues supports his conclusion that both parcels are to be used for grazing purposes. To further support that conclusion Mr Hoult notes Departmental records of hearsay discussions with Mr Fraser (Sale 1). Those discussions indicated that Mr Fraser saw no arable potential in the sale, and that it was purchased for grazing purposes, and that there were soil salinity problems.
Mr Hoult also notes that, while there was open water upon Sale 1, the owner needs the approval of State water projects to pump from that lagoon, as the sale is in the Giru benefited area. Mr Hoult argues that without an adequate source, lands in the Burdekin area cannot be used for agriculture.
Relativity -
While he places little reliance upon it, Mr Hoult notes relativity between the subject land and two parcels to the north and north-east:
Parcel Area Rate per haLot 4 76.47ha $1,200
Lots 105 & 110 110.75ha $1,200
Mr Hoult notes that both of those parcels are used for grazing purposes. Mr Hoult argues that Lot 4 on CP859479 has a water channel along the northern boundary, has quite difficult access problems, and is similar country to the subject land. While he is not fully aware of the nature of Lot 105 on RP881665, and Lot 110 on RP905004, Mr Hoult feels that parcel is on an eastern slope and comparable to the subject land.
Mr Cox provides evidence in respect of Lots 105 and 110, noting that parcel adjoins his other lands to the east. Mr Cox advises that Lots 105 and 110 have a quarry located upon that parcel, which is used for soil extraction. Mr Cox leases the balance of that parcel for grazing purposes as part of his 1,800ha aggregation. The owner of that parcel retains the right to extract soil for his road base materials as part of his quarrying operations. Mr Hoult was unaware of the quarry, but argues many grazing lands have similar nuisance problems.
Mr Cox further advises that he is the owner of Lot 4, having negotiated the return of that parcel from the Burdekin Irrigation Area at the date of the valuation. Mr Cox argues that Lot 4 was found by this Court to have no agricultural potential in the VH Cox matter, and is used for grazing purposes as part of his aggregation. Mr Hoult advises that the valuation for Lot 4 had only recently issued, a matter of which Mr Cox appeared unaware. Mr Cox argues a similar appeal should be considered for Lot 4 as for the subject land, however that is not a matter for consideration in the current matter.
In view of the evidence of Mr Cox about the nature of the two parcels, I get little assistance from those two relativity comparisons.
The Method of Valuation -
Fundamental to the difference between the parties is their different interpretations of the sales adopted. Both valuers have sought comparisons with sales of vacant lands, but each has compared those sales with a different understanding of the purpose for which the sales were acquired. Mr Eales and Mr Cox seek support in the general application of grazing land on a "beast area" basis. Mr Cox argues that as an experienced grazier he seeks an economic return at an annual rate of about $200 per beast. Allowing the carrying capacity for the subject land, Mr Cox estimates a beast area rate of between $600 and $800 for grazing purposes. Mr Cox compares that with first-rate fattening country that he owns in Taroom ($1000 to $1500 per beast area), and breeder country near Greenvale ($300 to $400 per beast area).
Mr Cox argues that if lands are purchased at higher rates per beast area, then in his opinion, the purchaser must have had another purpose for the land other than for grazing. Mr Cox bases his $200 per beast area annual guide on the basis of four years to breed a three year old beast, that will return about $800 gross at sale. Mr Eales argues that the estimated carrying capacity of the subject land is 1 beast to 3 hectares for fattening and breeding purposes, and accepts Mr Cox rule of thumb beast area basis as a general guide in the grazing industry.
Mr Eales has assessed the subject land on its use in conjunction with adjoining grazing land, and not as a separate stand alone parcel. However he agrees it must be valued separately for the purpose of the Act. Mr Eales provides examples of unimproved values of large grazing properties in the Brandon and Barrattas areas, showing rates from $330 per ha (1,182ha) to $60 per ha (7,402ha). He also provides examples of unimproved values for small grazing properties in the area of varying sizes between 1,276ha ($145 per ha) and 80.9ha ($450 per ha). The purpose of those comparisons is to demonstrate a general level of grazing land values in the area.
Mr Eales concludes a rate for grazing purposes for the subject land at $400 per ha, giving a basis of $1200 per beast area, which he argues would be economically viable. Mr Eales values the subject land at $400 per ha or $25,000. Mr Eales discounts the assessed rate of $1500 per ha determined by the respondent, arguing that must be for another higher purpose, other than for grazing.
Mr Hoult has assessed the subject land as a small parcel for primary industry purposes, and sees no relevance in its aggregation with other lands for grazing purposes. Mr Hoult accepts the beast area basis as a means of assessing a viable commercial operation for grazing purposes, but relies upon sales as the best evidence of value of small parcels used for grazing.
In that regard Mr Hoult seeks guidance in the findings of the Land Appeal Court in WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44; and also in LR and MM Bignell v. Chief Executive, Department of Lands (V92-65), 4 March 1996, unreported at page 11. In those matters he argues that the preferred approach to determining the unimproved value is by comparisons with vacant or lightly improved sales, rather than seeking to rely upon maintaining relativity with adjoining lands.
Adopting that principle Mr Hoult values the subject land at a rate of $1500 per ha or $94,500. In explaining the large increase in unimproved values for the subject land from its former value of $5,800 to $94,500, Mr Hoult notes the reason for the increase was the availability of the sales evidence disclosed in his Sales 1 and 2. Mr Cox notes that other grazing lands in the shire on average only increased by 40% in the relevant period. Mr Hoult however concedes that the subject land was likely to be only viable as grazing land in conjunction with other lands. Mr Hoult also notes that his Sales 1 and 2 were similarly used in conjunction with other lands for the purposes of s.17 of the Act.
Mr Baxter seeks support in the decision of Chief Executive, Department of Lands v. JW and K Higbie (1994-95) 15 QLCR 277, where a parcel of land was used for grazing purposes in conjunction with lands owned by others. However in that matter there was no evidence that the Higbie land was valued at the same rate as the Dennehy land; only that it was used for grazing purposes in conjunction with those lands, and was therefore valued at a concessional rate for that purpose.
Decision:
(i) The Notice of Appeal -
If I consider whether this Court has the power to accept the figure beyond the original unimproved value applied by the appellant, I note guidance is to be found in TKW Muir v. Valuer-General (1977) 4 QLCR 81. In that matter the Land Appeal Court found at p.84:"We have given considered and serious thought to the powers of this Court on the hearing of an appeal pursuant to the Valuation of Land Act. We are of the opinion that the provisions of section 21(7)(b) in that it refers to 'the amount' of a valuation, are sufficiently wide to require this Court to reduce or increase the amount of any valuation made by the Valuer-General and under appeal to the extent necessary to determine the same correctly under, subject to and in accordance with the Valuation of Land Act."
The matter of whether this Court is bound to accept the values led by either party was also addressed by the High Court in Brisbane City Council v. The Valuer-General (supra). In that matter Gibbs J noted at p.56:
"The question then is whether a court on appeal is bound to accept the Valuer-General's figure as correct unless it is positively established that the true value is lower, or whether it is enough to show that the value was reached as a result of an error in principle. 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 s.13(7) is rebutted."
The High Court then went on to say at p.57:
"The effect of these provisions is that an owner on appeal to the Land Appeal Court has the burden of proving the grounds of his appeal, but not the burden of proving that the amount which in his opinion should be the valuation is correct. Obviously the Court, if it allows an appeal, may determine the valuation at an amount different from that for which the owner contends."
I am also reminded that was followed in PA and LS Herbert and Others v. Chief Executive, Department of Natural Resources (AV98-891), 24 September 1999, unreported, where the learned Member noted that s.21(7)(b) of the now repealed Valuation of Land Act is identical with that used in s.66 of the current Act (page 25).
In that regard I take direction from s.66 of the Act which states:
"Order of court
66. Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Appeal Court may -
(a) affirm the valuation appealed against; or
(b)reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act."
The Use of the Land -
There is no argument that the subject land is used for grazing purposes under s.17(2) of the Act, in conjunction with other lands in the area. Mr Hoult also agrees that any higher use for agricultural purposes is too distant removed to be considered in this valuation. Indeed if I look to the provisions of the Act in respect of its agreed use for grazing purposes, I note s.17 specifically excludes consideration of any higher use for the land at this time:
"17.(1) In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.
(2) In subsection (1) -
"farming" means -(a)the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or
(b)any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock;
if the business or industry represents the dominant use of the land,
and -
(c)has a significant and substantial commercial purpose or character; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis. "
However in considering the use of the land for "farming" purposes under s.17(2), Mr Hoult sees the land to be valued as a single separate valuation of grazing land of area 63.13ha; while Mr Eales sees the land as part of an aggregation of 1,800ha, all of which is used for grazing purposes. Both parties agree however that the land falls to be valued under s.34 as a separate parcel, and not as an amalgamation. That is clarified in s.34(2) which states:
"34.(2) However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships."
In support of Mr Eales' conclusion, I note that, as the use of the subject land is agreed to satisfy s.17(2) for grazing purposes, it has also been taken to be a business, the dominant use of which has a significant and substantial commercial purpose, and which is engaged in for profit on a continuous or repetitive basis. In concluding such use for the subject land it must therefore have been accepted that the scale of operation of the grazing business was of such proportion as to satisfy the criteria of the Act.
The matter of scale of operations was considered by the Land Appeal Court in K Crawford v. Valuer-General (1990-91) 13 QLCR 138, at pp.142 onward. In that matter the Land Appeal Court cautioned about adopting "scale or size" as the general decisive factor in determining whether land satisfied the requirements for a grant of a valuation for farming purposes (p.149).
However, while the use of the grazing business must be determined in the broader sense of its overall operation, it is the use of the land for its "relevant purpose", either on its own or in conjunction with other lands, which is important.
That was further explored by the Land Appeal Court in AR Thomason v. Chief Executive, Department of Lands (1994-95) 15 QLCR 286. In that matter the appellant argued that the use of the land for the purpose of grazing had been carried out in conjunction with other lands, owned by another, who agisted cattle upon the subject land. The Land Appeal Court found at p.308:
"We have concluded that the use of the subject land for the purposes of grazing, considered in isolation from any other land, does not have a significant and substantial commercial purpose or character. Considered as part of the dairying enterprise of Leslie Sellin & Co, the subject land is being used as part of a business which has a significant and substantial commercial purpose or character. "
There is an analogy with the current matter. It is conceded that on its own the subject land was unlikely to have satisfied s.17(2); but it did so when considered as part of the wider aggregation. Both Mr Hoult and Mr Eales acknowledge that the use of the land for grazing is in conjunction with other lands.
If I then consider the agreed relevant purpose of the subject land, I find that it is to be for the purpose of grazing, and only then in conjunction with other lands. On that basis, in my opinion, a fair comparison on a like with like basis should only be with sales of grazing lands either of large areas; or with sales of grazing lands which are themselves used in conjunction with other areas. Mr Hoult has sought to achieve the latter comparison with his Sales 1 and 2.
The use of land for grazing purposes in conjunction with lands of different owners, was also supported in Higbie (supra) at p.281. That decision of the Land Appeal Court upheld the decision by the learned Member in the Court below. In that matter the learned Member had concluded that the subject land had an unimproved value of $30,000 (the appellant's estimate) for grazing purposes. The Land Appeal Court supported the adopted "use", but preferred the value of the respondent ($48,000) as an assessment of the unimproved value; in spite of the Departmental valuer (Mr Ridley) agreeing that the figure of $30,000 proposed by the appellant, was appropriate for that purpose.
Comparison of Sales -
Fundamental to the difference between Mr Hoult and Mr Eales, is the relevance of Mr Hoult's Sales 1 and 2; and also the relativity between Mr Eales' Sale 1 and the subject land.
While Sale 1 (Hazeldeen) is an old sale, Mr Eales appears to get some comfort from the relative comparison between Sale 1 and the subject land in the VH Cox matter. In that matter the valuer for the respondent Department (Mr Maloney) attributed to the grazing lands, values evolved from those applied in two former decisions of this Court in 1991 and 1992. (VH Cox p.213.) Those decisions in turn relied upon sales extending from 1985 to 1993.
I can accept Mr Eales' professional opinion that Sale 1 is superior to the subject land (transcript p.14), which in turn supports his concluded rate of $400 per ha for the subject land. However I have no evidence of how the Chief Executive determined the current unimproved value of Sale 1 at $475 per ha. A direct comparison between the unimproved value of Sale 1 in 1991 ($852 per ha), and the current unimproved value ($475 per ha), would indicate a decline in the market of 44%. However there was no evidence of such a large decline in the market, while other lands in the area are now subject to development for cane purposes. The paucity of evidence leaves me with some discomfort in relying upon Mr Eales' Sale 1.
If I turn then to Mr Hoult's Sales 1 and 2, I note that he concludes that the lands were purchased by both experienced farmers for the stated intentions of grazing. I note also that four years after the sales both parcels continue to be used for that purpose. However I also note that a new residence is being completed upon Sale 2, which tends to provide weight to Mr Cox's hearsay evidence that the land was purchased with a higher purpose in mind in the future.
Mr Eales argues that other parcels in proximity to Sale 2 have been developed for lifestyle purposes. If such uses reflect a higher value per hectare than normal grazing lands in the area, then it is most likely that the vendor will seek to recover the higher value for the land. On that basis then, Mr Cox was likely to have to pay an additional premium in order to acquire the site, beyond what he would have preferred to pay for grazing lands only. I understand that Mr Cox has apparently decided to relocate his homestead site to Sale 2, and continue to graze that land in conjunction with the remaining "Gainsford" property, which in turn is to be managed by his son.
If it is correct that the purchaser of Sale 1 (Mr Fraser) did acquire that land for future use for agriculture, but continue to graze cattle upon it, then the current moves to eradicate pest weeds, in my opinion, are not inconsistent with those intentions. As noted by Mr Baxter, the then state of uncertainty for new cane lands in the Invicta Mill area, was likely to result in delays in gaining approval to develop Sale 1 for agriculture. If Mr Fraser was to minimise his holding costs while those uncertainties persisted, he was likely to maximise his return from the interim grazing of Sale 1.
While the evidence of Mr Eales and Mr Cox is only hearsay in respect of Mr Hoult's Sales 1 and 2, the weight that I apply to that evidence depends upon its consistency with known facts. On the weight of evidence I believe that there are features or Mr Hoult's Sales 1 and 2 which distinguish them from sales of normal grazing lands in the Burdekin Shire. The relativities of small grazing lands in that area, which were supplied by Mr Eales, support that conclusion. The general level of values for such parcels varied with the type of land and its size, but were included within the range of $145 per ha to $500 per ha, and not in excess of $1,000 per ha. Those figures, in my opinion, would tend to support that Mr Hoult's Sales 1 and 2 were purchased in a market, where the highest and best use of the land was seen to be other than just for grazing purposes.
The Method of Valuation -
In seeking the value of the subject land I note that it has been valued under s.17(2) as lands used for the purpose of "farming" (grazing), and that any potential higher use of the land is to be ignored.
I accept Mr Hoult's opinion that the preferred method of determining unimproved value is by comparison with sales of vacant or lightly improved lands. Indeed precedence of all courts support that method. That was also followed in Fischer v. Valuer-General (supra), where the Land Appeal Court said at p.46:"It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principal of relativity to the exclusion of the sales evidence. "
However if I consider the sales evidence in this matter, I find that Mr Eales' large grazing sales (Sales 1 to 5) are in an entirely different type of country, and are well removed from the Burdekin area. They are also much larger than the subject land, and I agree with Mr Hoult that I get little assistance from those sales. For the reasons noted I find that Mr Hoult's Sales 1 and 2 can be distinguished, as they are likely to reflect a higher potential value, which must be excluded under s.17(2) of the Act.
That then leaves some comparison with Mr Eales' Sale 1 (small grazing), which is the old sale used in the VH Cox matter. While I have some concern with the lack of current evidence on the comparisons with that sale, I can accept that previously the general grazing lands in the VH Cox matter were seen to have a value at $400 per hectare for the 1,390 hectares then valued.
In seeking to apply that rate to the current matter, I note Mr O'Rourke argues that there is normally some variation allowed in the price paid per hectare for lands of varying size. As Mr Hoult has valued the subject land "as a small parcel, primary production purposes" (transcript 22), he has allowed for its smaller size of 63.13ha, compared to the large grazing lands in the VH Cox matter of 1,390 hectares.
Seeking guidance on the impact of size upon rates per hectare, I note that Mr Eales rejects size as a factor for consideration in grazing land. He argues that as part of a viable grazing operation it is inappropriate to then allow increased rates per hectare for grazing lands merely because it is smaller than other grazing lands. He argues that approach is inconsistent with the economics of the operation.
However while the general principle adopted for valuing grazing land is to apply a consistent rate per hectare when comparing such lands, the texts do acknowledge that production costs of grazing can vary with size. (See Land Valuation and Compensation in Australia 3rd Edition, Rost & Collins, p.281). It is also noted that small holdings are often handicapped because of excessive costs per hectare or per unit of production, and therefore do not yield a net income in keeping with their value in the market.
The inference from that last statement is that smaller parcels tend to be less efficient as a grazing operation. Rost & Collins goes on to say at page 317:"Net returns from a property of uneconomic size, after allowing for the owner's labour and management, would be very small or non-existent. Nevertheless, the property would have a positive market value which capitalisation would not reveal."
The inference from that statement is that the value of grazing lands is not totally dependant upon its productive capability, and therefore not restricted entirely to any assessment on a beast area basis. Accordingly the market value of grazing land is likely to follow other market forces which tend to impact upon the values attributed to land of all types.
In the marketplace the size of a parcel generally has an impact upon the price paid, even if only as a result of the larger potential market for the smaller land, and consequently cheaper costs of those lands, all else being equal. Simple economic theory would support a conclusion that the smaller the price of an item there is generally a larger share of the community who can afford to buy it. While there is clearly a difference between the market for say grazing lands, and that for say rural residential lands, there remains certain basic economic factors which influence both of those two different types of markets.
The rural homesites tend to be purchased on a site basis, and not on a per hectare basis. (DF and MW Ward v. Valuer-General (1983) 9 QLCR 48, at 50). While the grazing lands tend to be purchased on a per hectare basis. (Conversion of Grazing Homestead Perpetual Lease - CH Rolfe and Others (1986-87) 11 QLCR 85).
However in Rolfe the learned Member (later President) found at p.89:"I come now to one of the more contentious issues in the lessees' case and that is that a classification cannot be applied directly to the subject land without taking into account among other factors the size of the respective parcels. It is submitted that the smaller of two comparable blocks would fetch a higher unit value on sale because it would fall within the financial scope of a greater number of buyers thereby generating greater competition and hence a higher unit value. ---- The answer I think is obvious and one need only to follow the method of selling large aggregations as a whole or in the alternative by portions to realise that there is something in the argument apart from proof in sales themselves. "
The Member went on to say at p.90:
"I do not think that can be taken as a statement that size is not relevant. Indeed the selection of 'good sized blocks' ", as the mean and isolation of smaller areas close to the centres for special attention would seem to indicate the contrary. I will have regard to size in the subject case."
The logic of those conclusions, in my opinion, also have meaning in the current matter, and I believe Mr Eales should have allowed something for the smaller size of the subject land (63.13ha), compared to 1,390ha of the general grazing lands in the VH Cox matter.
In seeking guidance on what premium to allow for that smaller area of the subject land, I note that grazing parcels in that area range up to $500 per hectare for both a 350.9ha site (Lot 133) and a 870.1ha site (Lot 80). However I have no evidence of the differing types of country involved in either of those parcels. What I do know about the subject land is that it was the old homestead site of a former large grazing operation by the Cox family since about 1900. As such it is likely to be some of the better grazing lands in the area, and comparisons with parcels of area up to 870ha might still be an acceptable basis in order to allow some premium for size of the subject land.
However, based upon the relativities supplied by Mr Eales for the smaller grazing lands in that area, any premium for size alone is likely to be relatively small. Acknowledging former relativities, the rate for the subject land could vary between $400/ha and $500/ha.
On that basis I will allow a rate of $450 per hectare for the subject land as grazing lands in that area, as a single parcel. That concludes a value for the subject land at 63.13ha @ $450/ha or say $28,500.
Conclusion:
After considering the whole of the evidence I am persuaded that the appellant has partly proved his case. The valuation as determined by the Chief Executive is set aside, and the unimproved value of Lot 690 on GL12446 is determined at Twenty-eight thousand, five hundred dollars ($28,500).
(NG Divett)
Member of the Land Court
0