Dagg v Department of Natural Resources and Mines
[2005] QLC 6
•31 January 2005
LAND COURT OF QUEENSLAND
CITATION: Dagg & Ors v Department of Natural Resources and Mines [2005] QLC 0006 PARTIES: Laurence S Dagg and Others
(appellants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NOS: AV2003/0608, 0604, 0605, 0606, 0609, 0611, 0612, 0613, 0620, 0621, 0622, 0624, 0625, 0626, 0627, 0636, 0637 and 0638 DIVISION: Land Court of Queensland PROCEEDING: Appeals against unimproved valuations - Valuation of Land Act 1944 - Shire of Warwick DELIVERED ON: 31 January 2005 DELIVERED AT: Brisbane HEARD AT: Warwick MEMBER: Mr RE Wenck ORDERS: Appeal AV2003/0608 - Laurence S Dagg
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of Ninety-eight Thousand Dollars ($98,000).
(Refer p.30 )Appeal AV2003/0604 - Peter J & Cheryl Wickham
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of One Hundred and Four Thousand Dollars ($104,000).
(Refer p.33)Appeal AV2003/0605 - Darren J Eather, Peter J & Cheryl Wickham
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of Ninety-two Thousand Dollars ($92,000).
(Refer p.36)Appeal AV2003/0606 - PJ & C Wickham and PR & PJ Wickham
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of One Hundred and Ninety-five Thousand Five Hundred Dollars ($195,000).
(Refer p.39)Appeal AV2003/0609 - James R Watts
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of Seventy-five Thousand Dollars ($75,000).
(Refer p.42)Appeal AV2003/0611 - Deane E, Donald B & Wayne Watts
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of One Hundred Thousand Dollars ($100,000).
(Refer p.44)Appeal AV2003/0612 - Kenneth H Watts
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of One Hundred and fifty-six Thousand Dollars ($156,000).
(Refer p.46)Appeal AV2003/0613 - Eric G Watts
The appeal is allowed. The valuation of the chief executive appealed against in the amount of Two Hundred and Five Thousand Dollars ($205,000) is set aside and the unimproved value as at 1 October 2002 determined in the amount of One Hundred and Ninety-five Thousand Dollars ($195,000).
(Refer p.49)Appeal AV2003/0620 - John B & Shirley M Smith
The appeal is allowed. The valuation of the chief executive as at 1 October 2002 is set aside and the unimproved value determined in the amount of Seventy Thousand Dollars ($70,000).
(Refer p.52)Appeal AV2003/0621 - John B Smith
The appeal is dismissed and the valuation of the chief executive affirmed.
(Refer p.54)
Appeal AV2003/0622 - Samuel S Smith
The appeal is allowed. The chief executive's valuation is set aside and the unimproved value as at 1 October 2002 determined in the amount of One Hundred and Two Thousand Dollars ($102,000).
(Refer p.56)Appeal AV2003/0624 - Norman J Young
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of Ninety-four Thousand Dollars ($94,000).
(Refer p.59)Appeal AV2003/0625 - Fraser J, Sharon L & Eric L Young
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of One Hundred and Eight Thousand Dollars ($108,000).
(Refer p.62)Appeal AV2003/0626 - Simon J & Dorothy E Bolitho
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of Fifty-six Thousand Dollars ($56,000).
(Refer p.64)Appeal AV2003/0627 - Ellen Bowley
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of Sixty-two Thousand Dollars ($62,000).
(Refer p.66)Appeal AV2003/0636 - Inez L Rosser
The appeal is allowed. The chief executive's valuation is set aside and the unimproved value as at 1 October 2002, pursuant to s.17 of the Valuation of Land Act 1944, is determined in the amount of Twenty Thousand Dollars ($20,000).
(Refer p.70)Appeal AV2003/0637 - Mervyn E Hancock
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of Forty Thousand Dollars ($40,000).
(Refer p.72)Appeal AV2003/0638 - Margaret R Hancock
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of One Hundred and Thirty-eight Thousand Dollars ($138,000).
(Refer p.74)CATCHWORDS: Statutory Valuation - Unimproved valuation - Valuation of Land Act 1944
Evidence of Value - Sales Evidence - Relativity between valuations
Sales Evidence - "Spencer" test - Sales to adjoining owners - Sales of rainforest land - Sales of forest land - Analysis of sale including standing timber
Classification methodology - Useful as a check against primary "direct comparison" methodology - Subjectivity issues where absence of sales evidence for specific classifications
Relativity - Productivity of rural land not sufficient test - Correct relativity important - Relativity not preferred to sales evidence as valuation basis
Vegetation Management Act 1999 - Mapped Vegetation Management Areas - Effect on unimproved value
APPEARANCES: Mr KG Flehr, Solicitor, for the appellants
Mr K Fisher, Barrister, Crown Law, for the respondent
Background
The respondent chief executive ("the Department") conducted an annual valuation of all lands in the Shire of Warwick as at 1 October 2002. The date of the previous valuation had been 1 October 2000. Valuations of land used for "purposes of farming" throughout the Shire increased, in most cases, by about 20% above their previous level. However in a relatively small farming district in the Condamine River headwaters easterly of Killarney to the Queensland-New South Wales border and north-easterly along Spring Creek Road to Boonah Shire at "The Head", the valuations as first issued were increased by, in some instances, up to 300%.
The dominant feature of the Spring Creek Road locality is that the original vegetation included areas of rainforest with varying quality soil types, merging into red and black soil forest country. There is no other rainforest country within the Shire. Much of the original vegetation had been felled for milling and subsequently cleared and developed for grazing and farming purposes. Those pockets of original or regrowth vegetation which had remained at the time of the enactment of the Vegetation Management Act 1999 ("the VMA") are included within Mapped Vegetation Management Areas, with varying restrictions on further development.
The evidence in these appeals indicates that properties within this locality are "tightly held" with the limited sales activity influenced largely, but not completely, by inter-family and adjoining owner purchasers. There is no dispute that the better quality rainforest country is the most desirable farming land in this locality.
On 6 February 1999, prior to the date of the previous valuation, a property comprising two parcels was offered for sale at auction by the vendor, a Mr Rimes. The smaller parcel of 39.6805 ha sold for $205,000 ($5,166/ha improved). The purchaser was the Watts Bros Family Trust, a family with local connections. The second parcel of 83.268 ha sold for $444,000 ($5,332/ha improved), to Eather, Keogh and Wickham, members of a family which owned adjoining land.
Both parcels had been recorded in the Department's files as containing rainforest country. The sales evidence, on the Department's analyses, indicated unimproved land values much higher than the then existing levels of applied values to the sale lands. However, the Department was cautious not to apply those increased levels of value to the rainforest lands until further supporting market evidence became available. As a consequence, the Rimes' sales had been disregarded as a basis for the 1 October 2000 valuation.
Then, on 25 January 2002, a parcel of rainforest land at The Head, containing 63.7099 ha sold at auction from Adams and Simmich to Endean for $370,000 ($5,808/ha improved). This sale had initially been interpreted by the Department as having reached an even higher level of analysed unimproved value than had been indicated by the 1999 Rimes' sales.
The Department's opinion had been that the Endean sale, by itself, was again insufficient evidence to warrant application of the level of unimproved value which the sale had been believed to indicate. However it was seen as confirming the trend of increasing levels of value for rainforest lands as had been shown by the earlier Rimes' sales. That confirmation led the Department to decide that, for the 1 October 2002 date of valuation it could no longer ignore the evidence of value shown by those Rimes' sales.
Although there had been some departmental concern that the VMA would have some effect on the unimproved value of undeveloped lands in the area, the 2002 valuations were issued on the basis that insufficient human resources were available to inspect individual properties for the purpose of identifying any areas of undeveloped land. The reasoning was that if there were VMA implications in relation to individual properties, they would be established through the relevant objection process.
The owners of land in this locality were alarmed by the level of value at which the 2002 valuations had been assessed and the increases above the previously existing valuations, particularly when other farming lands throughout the Shire had received, in comparison, relatively nominal increases in valuations. The rating burden implications were of real concern to the farmers involved.
A group of owners - "The Condamine Headwaters Landholders Group" set about challenging the new valuations. As a result of the objection then the preliminary appeal processes, significant but widely varying reductions in valuations were achieved. However, remaining dissatisfied with the overall results, many of the owners decided to have the matters in dispute determined by the Court.
It had been accepted by the Department that each of these appeal properties is "exclusively used for purposes of farming" and fell to be valued pursuant to s.17 of the Valuation of Land Act 1944 ("the Act").
Mr Allan J Matson, a registered valuer who conducts a general valuation practice in the locality and who has had long and extensive professional experience both with the State Government in matters including statutory valuations and later in private practice, was engaged to investigate the appellants' case and to give professional evidence accordingly.
Mr Danny B Redgen, registered valuer, employed by the Department and with 15 years' experience in the Warwick district, took responsibility for the valuations appealed against and gave evidence in support of those valuations, although leading evidence to lower amounts in some instances.
As there were issues involved which related to the classification of land types on individual properties it had been considered inappropriate, given the history of disputed facts, to have the parties attempt to apply decisions in representative cases to the individual properties. However as the evidential basis for the individual valuation disputes was generally common, it was agreed that the substantive evidence of value could be limited to the hearing of one appeal in relation to a property of mixed land types, with much briefer evidence then relating to the individual characteristics of the remaining appeal properties.
The Issues
The appellants' challenge was directed to four primary issues which were identified by Mr Flehr as:
(1)the valuation having been made by the Department on "flawed" sales;
(2)the classification of country types by the Department had been inaccurate and there had not been appreciation of the inferiority of country which had originally carried a species of rainforest tree colloquially known as "squeaker" timber;
(3)the valuations of the subject properties were out of relativity with the valuations of other farming lands throughout the Shire;
(4)the Department's interpretation of market forces associated with the size factor in relation to land used for farming purposes, and particularly the rainforest land.
The Valuation and Objection History
An extraordinary situation developed after the valuations first issued and the Department began to consider objections to the valuations.
Based on its sale from Rimes to Watts, the valuation of that 39.6805 ha parcel of land had first been increased from $24,500 in 2000 to $98,000 ($2,470/ha) in 2002. As a result of objection to that valuation it was reduced to $13,800 ($348/ha). The reason for the reduction (to less than the 2000 valuation) was said to have been based on an argument that the Department's "rainforest" classification of part of the land had been historically wrong. It had been accepted by Mr Redgen that an area of cleared red soil country had been originally timbered with "forest" species and not "rainforest". It was further accepted that, as "pure" forest country, the sale once analysed, showed an unacceptably high unimproved land content, compared with levels of value shown by forest sales in other localities.
Consequently, subsequent to the objection stage in the process the Department was then left with the remaining 1999 sale of the 83.268 ha parcel from Rimes to Wickham & Others. The original analysis of the sale by the Department was not disclosed, but it is assumed that the analysis supported the valuation which is said to have first issued, in the amount of $136,000. There was evidence to the effect that the original analysis had been amended after a review of the allowance for clearing and development. The analysis before the Court was in the amount of $122,340, and the valuation was eventually reduced to $109,000. The appeal against the original valuation was withdrawn, it seems based on preliminary valuation advice or misinterpretation of that advice. The sale analysis is not now challenged by the appellants. However for reasons which will be discussed later, the sale has been challenged by the appellants on the allegation that it does not provide an appropriate evidentiary basis for a statutory unimproved valuation.
Based on the Rimes' sales, the 63.7099 ha Endean land had initially been valued as at 1 October 2002 in the amount of $113,000 increased from the 2000 valuation of $28,000. However, as a result of the objection process, the 2002 valuation of this land was reduced to $42,000. It had been revealed that, when the land had been purchased by Endean, as a consequence of the VMA, 38.537 ha (61% of the total area) was subject to a "Mapped Vegetation Management Area - Regional Ecosystem 12.8.5 (Rainforest)". This area of virgin or regrowth rainforest was unable to be cleared for grazing or arable purposes. However, "sustainable logging" of any mill timber was permitted. Information had been obtained by Mr Redgen which led him to accept that included in the sale to Endean was standing timber with in situ value of $188,000 (in a total sale price of $370,000). Once the standing timber was excluded from the sale price but consideration given to the VMA implications on the usage potential of the vegetated area, Mr Redgen formed the opinion that the sale did in fact provide basic sales evidence.
It happened that through the objection process, while the Rimes to Watts sale had been "lost" as a basic sale, the Adams and Simmich to Endean sale had been "gained", according to Mr Redgen.
It can be seen that having been faced first with massive increases in their valuations, then complete reversal of those increases in some instances, lesser reductions in other instances and further amendments prior to the hearing, the appellants are entitled to be less than impressed with the Department's ability to "get it right".
While of no comfort to the affected landowners, the reasons for the valuation debacle are seen to be a mixture of human error and the shortcomings in this instance, of the mass valuation, computer-orientated methodology necessitated by legislative requirements for "annual" valuations, as defined in the Act. Apart from a well-exposed lack of appropriate human resources, it would be impossible for each and every property required to be valued by the Department on an annual basis, to be inspected by the valuers responsible.
Instead, the valuers inspect only those properties involved in relevant sales, analyse the sales and compare the resultant unimproved values with the unimproved valuations of those sale properties at the date of the previous valuation. Where a consistent trend of movement is identified within sub-market areas of property with particular characteristics, the previous valuations are altered accordingly, and consistently throughout the specific sub-market area. Critical to the methodology is the Department's acceptance that after a long valuation history which once involved inspections of each property, then the fine-tuning of valuations through the objection and appeal processes, reasonable relativity has been established between valuations within the specific sub-market areas. Where anomalies are exposed, individual valuation considerations are adopted.
In the subject matters where properties suffered deleterious effect from VMA implications, there was an obvious need for individual consideration to be given to the valuations of those properties. However, the lack of human resources did not allow identification of the specific problems before the valuations were issued. That was not necessarily a human error, but one resulting from a departmental orientated policy decision. Once corrected, the established relativities between valuations altered and in some cases, such as the Endean property, quite significantly.
The human error relates to mistakes apparently made by inspecting officers at least 20 years previously when the last general valuation involving the inspection of each individual property had been conducted. It seems that the classification of soil types by those earlier inspecting officers had not, in some cases, reflected the original vegetation cover. For example, the land sold by Rimes to Watts had been recorded in the relevant departmental files as having a component of red soil rainforest. Mr Redgen had conducted what appears to have been a fairly cursory inspection of the land for the purposes of analysing the unimproved value content in the sale. He had relied on the historical file description and accepted that the red soil component had been rainforest country, or at least an original merging vegetation cover from rainforest to forest. The red forest soils are accepted by all parties as being of inferior fertility and productive capacity to red rainforest soils.
It should be said that once the original vegetation has been cleared and the land developed for farming purposes, subtle differences in soil quality are not always immediately discernible to those who are not actively engaged in working the land. Indeed, while Mr Redgen admitted to having failed to recognise the differences in the Watts' case until it had been pointed out to him through the objection process, Mr Matson's evidence with regard to that property, which will be discussed later, exposed the difficulties facing a valuer. Furthermore, it appears from the evidence that even experienced farmers in the locality cannot be certain as to the actual "break-line" between differing original vegetation, and sometimes even on their own farms.
In the end result, where Mr Redgen was prepared to admit that past errors had been identified, amendments to valuations resulted. Whether the extent of amendment, from rainforest values to forest values was warranted, is another matter. However it is clear that Mr Redgen applied the benefit of doubt on his interpretation of the evidence, or lack of it, in his valuations of the forest country in this locality.
Highest and Best Farming use
A number of farmers cultivate the geographically and topographically suitable rainforest soils, including the inferior quality soils with squeaker influence, and the red soil forest country soils, for the growing of potatoes.
The soils with this arable potential are not regarded as being capable of annual cropping and rotational farming is generally practised, at intervals related to varying farm management practices, including the use of fertilisers and trace elements. It seems to be generally accepted that "opportunity" cropping once in each four to five years' cycle is standard local practice. After cropping, advantage is taken of the residual fertiliser benefits and the arable lands are maintained by the planting to oats and improved pasture for intensive cattle grazing.
It did not appear to be in dispute that the highest and best use of the farming lands is for cattle grazing with rotational opportunity cropping of the suitable lands. The highest and best use of the Mapped Vegetation Management Area lands is related to the uses permitted by the legislation.
Mr Malcolm Smith, a local farmer and one of the group of appellants, has taken a particular interest in recommended practices required to effectively grow potatoes "and at the same time looking after fertility of soil for the long term". For the purposes of the hearing he had prepared a schedule of costings comparing the practices he follows in comparison with district standards, in ground preparation from the grassed state, fertiliser and trace elements, potato seed, maintenance treatments, harvesting and then regrassing for the next cycle. His costs, related mainly to heavier application of fertiliser were estimated at $1,588 per acre to the harvesting stage, compared to the variable district standard of $1,323 per acre. Mr Smith's direct mechanical harvesting costs, based on an average 10 tonnes per acre (within a range of 4 tonnes to 25 tonnes) were estimated as $94 per tonne compared with handpicking at up to $132 per tonne. The cost of regrassing was estimated at $55 per acre. It was Mr Smith's experience that the production from squeaker country was about 50% of that of the best arable rainforest and from the better red soil forest country about 75% of the better rainforest. The costs of production and harvesting were no less than for the rainforest country. In his opinion the improved pasture grazing potentialities of the various soil types were within a similar range.
The Department's Valuation Basis
Mr Redgen's valuations were based on comparisons, on an overall value per ha, with a number of sales, additional to those two "rainforest" sales already briefly discussed. He conducted a "check valuation" in each case, based on values which he would apportion to the various land classifications, again based on the sales evidence presented.
Rainforest Sale 1
Adams and Simmich to Endean - 63.7099 ha - sold by auction 25 January 2002, for $370,000 ($5,808/ha) - analysed unimproved value $45,145.70 ($710/ha) - applied unimproved value $42,500 ($670/ha).
Nature of Land - By Mr Redgen
25 ha (39%) easy sloping rainforest with small areas of steeper slopes and swampy lands.
38.5379 ha (61%) Mapped Vegetation Management Area - Regional Ecosystem 12.8.5 (rainforest).
As mentioned earlier, in Mr Redgen's analysis an amount of $188,000 had been assessed as the value of standing timber. His evidence was that he had discussed the question of the value of the timber with a member of the family of the auction sale under bidder. He had accepted that experienced under bidder's estimate of $200,000 less "logging and snigging" costs of $12,000.
Mr Matson's evidence was that his investigations had indicated that both the purchaser and the under bidder had estimated the value of the standing timber to be between $150,000 and $200,000. However, although he had initially accepted Mr Redgen's overall sale analysis, he had later become doubtful about Mr Redgen's assessment of the value of the standing timber.
In his oral evidence Mr Redgen said that he had also spoken to a Mr Ashley Sewell, a person "who knew the site" and who had apparently been the author of a report on general commercial timber values. Mr Matson had interpreted that report to suggest that there would need to have been up to 1,400 trees capable of being "cut down and milled for there to be $150,000 to $200,000 worth of commercial timber on there ..." However, from his general knowledge of the past logging history of the Endean site, Mr Sewell had according to Mr Redgen, assumed there would have been 100 stems each capable of producing a gross 4 m³ with a recovery rate of 2 m³ or a total of 200 m³ grossing $1,000 per m³ "green off-sawn ... Now what that means is sawn into boards by a sawmill on site ... To achieve that would cost about $60 per m³ ... to cut snig and haul". Mr Redgen then said (Transcript p.51) -
"That's how we arrived at our valuation of the timber - by working out what Mr Sewell thought it was and also by Mr Brett's estimate and they both seemed to line up quite well."
Leave was granted during the course of the hearing for the Court to hear evidence from a Mr RJ Baartz, a contract logger who had carried out a broad inspection of the vegetated area prior to the auction. This had been done at the request of Mr Brett, the auction under bidder. It had been Mr Baartz's opinion that the in situ value of the timber at the time of the auction sale had been about $20,000.
Mr Brett was too ill to be called to give evidence. There was no dispute that he was experienced in the timber industry. Telephone contact was made with him by various people including Mr Redgen, subsequent to Mr Baartz giving his evidence. Mr Redgen said that Mr Brett had suggested that Mr Baartz's estimate would have been based on a "royalty value" while Mr Brett himself maintained that had he bought the land he could have "obtained a return" of $200,000 from the available timber.
Mr Baartz impressed as a forthright witness but as a logging contractor rather than as a timber valuer. His inspection had not been precise and his estimate had been given to Mr Brett on that basis. He said that the actual payment which an owner would receive from a sawmiller would have been calculated on the actual logging obtained.
It is not possible to reconcile the significant differences between the estimations of Mr Baartz and the opinion given to Mr Redgen by Mr Brett and Mr Sewell. In his written report Mr Redgen's valuation of the timber is understood to have excluded the value adding process of the cutting and snigging of the logs by the owner. However it seems first on Mr Redgen's oral evidence then the further contact with the under bidder, that Mr Brett had also envisaged the sale of timber at least sawn into boards by a sawmiller on site. That would involve more "value adding" to the "royalty value" of the timber to a sawmiller. Royalty value would normally be regarded as the value of the standing timber to an owner not experienced in the timber industry.
According to Mr Matson, Dr Endean's estimate had been based on some advice as to the value of the standing timber given her by the vendor when the property had been on the market years earlier and then some verbal agreement between her and the vendor as to the increase in value which would have been expected to the date of the auction sale. However, tendered through Mr Redgen was a written statement by Mr Richard Simmich who had "cared for and arranged the sale of the property" owned by his late wife. He stated that the property had never been on the market or listed for sale prior to the auction arrangement; they had never requested a valuation or estimate of the timber and had no idea of the value of the timber; and the property had not been milled for at least 25 years.
Regardless of the value of the standing timber and his initial acceptance of Mr Redgen's unimproved analysis of the sale, Mr Matson was of the opinion that special circumstances surrounded the sale and it failed the "Spencer" test.
The female purchaser of the land is a medical practitioner. Mr Matson had interviewed the purchaser's husband. The special circumstances surrounding the sale as he saw them were that the purchaser:
"● Was from outside the district and purchased the land not only for primary production purposes.
● Was pushed by an adjoining landholder under bidder who owned land on both sides of the sale parcel and whose family once owned the sale parcel.
● Was imprudently advised concerning the added value of commercial timber in the standing rainforest area."
In his oral evidence Mr Matson inferred that Dr Endean had been over-anxious to obtain a "foothold" in the locality and was more interested in the lifestyle and taxation benefit potentialities of the land than its use for farming purposes. In his opinion the land, with no arable potential, and a large area restricted to forestry use pursuant to the Mapped Vegetation Management Area was different to "the district average management standard" and "not an appropriate property to use as a basic sale". He agreed that another rainforest block had been purchased by Dr Endean or her husband, subsequent to the relevant date of valuation and at a further increased improved price level. He saw that purchase as confirmation of the desire of Dr Endean to obtain a foothold in the locality and the increased price level as irrelevant in these matters because the market had improved since the relevant date of valuation.
Rainforest Sale 2
Rimes to Eather, Keogh and Wickham - 83.268 ha - sold 6 February 1999 for $444,000 ($5,332/ha) - analysed unimproved value $122,339.93 ($1,469/ha) - applied unimproved value $109,000 ($1,315/ha).
Nature of Land - By Mr Redgen
70 ha (84%) rolling rainforest with areas of steeper slopes, 3 ha of swampy lands and areas of eucalypt forest influences
13.2681 ha (16%) Mapped Vegetation Management Area - Regional Ecosystem 12.8.5 (rainforest).
Mr Matson did not challenge Mr Redgen's analysis of the sale. In his opinion Mr Redgen's description of the nature of the country could be read to infer that the 70 ha was all rainforest when it was not. However he did not accept that this sale either, could be adopted as a reliable basis for statutory valuation purposes.
Mr Matson was of the opinion that the Wickham sale also failed the "Spencer" test. He said that the purchaser:
"● Was an adjoining owner.
● Was pushed by an under bidder who had purchased adjoining land minutes before and who was abnormally cashed up having won a significant sum in a lottery.
● Had his most significant local area of arable rainforest land adjoining and was compelled to purchase rather than take the risk of a dwelling being constructed in a position which would restrict his use of chemical sprays.
● Was influenced by a trend which at that time indicated that red soil potatoes commanded a premium. This is not now the case."
No oral evidence was given regarding the potato trend, but at transcript p.9 and p.10 Mr Matson enlarged on Mr Wickham's circumstances as follows:
"Wickham was an adjoining owner ... but more than that he was a driven purchaser of this particular parcel because his very best piece of rainforest arable land adjoins a small severed area on the northern side of Spring Creek Road which adjoins his arable rainforest country. His concern he told me was that if someone used that area to build a house and it's not a bad spot to put a house he would then be restricted from using chemicals in the control of insects and so on in his potato, oats and various other crops on that country. He told me that he would have bought it regardless. He couldn't afford to have someone buy that piece of country and wreck the rest of his operations. He was driven by an under bidder in that case who had just purchased the Watts property that we spoke of. That under bidder was a cashed up person having sold a property fairly recently before that and having had a big win in lotto, so you know you had two hard heads belting each other along at a public auction and I think that no-one else in that district being prudent, knowledgeable, experienced owners and graziers and operators of property in that area would have gone anywhere near those levels of values. I think it's a high sale. It just doesn't make a lot of sense particularly in comparison with what was going on in the rest of the Shire. I'd reject it as a basis of valuation. I've got no argument with Mr Redgen's analysis of it because I came in at a slightly higher figure than his as it's finally turned out but it's just not an appropriate sale to use."
The Softwood Scrub Sales
There is no dispute that the arable softwood scrub country in the Killarney locality is inferior, in terms of market value, to the better quality arable rainforest country on the appeal blocks, but superior to the best of the forest country. In Mr Redgen's opinion, the rainforest country overall was capable of development to provide markedly superior grazing potential. He agreed that had there been no sales of rainforest country he would have sought some valuation guidance from the sales of the softwood country near Killarney.
There were two sales of this type of country included in Mr Redgen's basic sales evidence. No dispute ensued as to Mr Redgen's description of the sale properties or his analyses of the sales. Brief details of the sales are as follows:
·Mr Redgen's Sale 6 - Wilson to Laing - 114.395 ha - sold 8 January 2002 for $375,150 ($3,279/ha) - analysed unimproved value $90,476 ($791/ha) - applied unimproved value $79,000 ($690/ha) - described as 34% arable softwood scrub, 10% inferior arable softwood scrub with shallow soils, 56% hilly to steep softwood scrub grazing.
·Mr Redgen's Sale 7 - Ure to Ellis - 64.547 ha - sold 8 November 2001 for $240,000 ($3,718/ha) - analysed unimproved value $74,970 ($1,161/ha) - applied unimproved value $73,000 ($1,130/ha) - described as 18% creek flats, 53% arable softwood scrub, 29% hilly to steep softwood scrub grazing.
The Forest Country Sales
The sale from Rimes to Watts does not now form part of the Department's evidential basis. However it is seen as appropriate to make some comments. Criticism was levelled at Mr Redgen for inability to identify the difference between red soil forest and red soil rainforest on this sale property. It seems that not only those in the Department who went before Mr Redgen and possibly the under bidder and the purchaser had similar difficulties. Indeed, even after it had been well exposed and Mr Matson was aware that Mr Redgen had accepted through the objection process that the red soil component must have been originally timbered with dominant forest species, Mr Matson described the land as follows (Transcript p.10):
It's primarily what they call up there a black forest block as I guess a way of differentiating it from forest country with red soil but there is a piece of country in it that's got red soil. I think it's merge country. It's cleared now so you can't really tell but I think it's merge country between some lower rainforest type scrub and eucalypt country with a bit of a scrubby understorey and straight eucalypt country. It wouldn't be of a similar quality to rainforest country. It's more aligned with standard eucalypt forest country."
The circumstances surrounding the Rimes to Watts sale such as the purchasers' knowledge of the quality of the land and the identity of the under bidder may have provided evidence which was relevant to the potential of the land and matters related to demand for forest country in this location, if indeed it had been accepted in the marketplace as being land with no rainforest influence. However it appears that no such inquiry was made by either valuer. Both now accept that the unimproved value shown by an analysis of the sale is out of line with the level of value shown by sales of, or applied to, forest grazing land in other localities within the Shire.
Brief details of the forest sales to which Mr Redgen made reference are as follows:
·Forest Sale 3 - Ittensohn to McConnell - 505.048 ha - sold 29 June 2002 for $190,000 ($376/ha) - analysed unimproved value $86,554 ($171/ha) - applied unimproved value $83,000 ($165/ha) - described as easy sloping light forest grazing.
·Forest Sale 4 - Makim to Ramm Investments - 617.2254 ha - sold 18 April 2002 for $1,400,000 ($2,268/ha) - analysed unimproved value $295,982 ($480/ha) - applied unimproved value $290,000 ($470/ha) - described as 5% fiver flats irrigation; 6% arable river flats; 6% arable creek flats; 4% arable mixed forest and softwood scrub rises; 7% riverbank grazing; 72% sandy forest grazing.
·Forest Sale 5 - Sullivan to Crawford and Smithers - 96.821 ha - sold 11 May 2001 for $100,000 ($1,033/ha) - analysed unimproved value $23,549 ($243/ha) - applied unimproved value $23,000 ($237.50/ha) - described as easy to moderately sloping light forest grazing.
There is insufficient detail provided in Mr Matson's description of the Watts' sale land to make comparison between the forest sales and that land. However, based on some of the general evidence as to the nature of land contained in the Watt's block, a valuation of $348/ha overall appears to be most conservative in comparison with the sales evidence. Not surprisingly Mr Matson adopted Mr Redgen's valuation of the Watts' land as the benchmark for his assessment of the forest components within the various appeal blocks. He did not challenge Mr Redgen's analyses of the forest country sales only the comparisons made by Mr Redgen in some instances where he alleged that there was a lack of correct relativity with the benchmark Watts' valuation. Mr Matson has relied on the fact that, pursuant to s.33 of the Act, the Department's valuation of the Watts' block "shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."
Mr Matson's Valuation Basis
Having rejected the evidence provided by the Endean and Wickham sales, for the reasons earlier discussed, Mr Matson had no sales evidence of land with rainforest influence. He was of the opinion, and Mr Redgen did not disagree, that in the absence of sales evidence for that class of land it would be necessary to consider the best alternative sales evidence available. It seems that there had been no shortage of sales evidence for arable and grazing lands in other localities within Warwick Shire.
Mr Matson held the view that the intent of the Act was directed to the achievement of correct relativity between valuations for rating and taxing purposes. He had no argument with the level of value applied by the Department to land used for farming purposes in other parts of the Shire, accepting that, other than in the subject locality, farming lands had been valued on the basis of appropriate sales evidence. Rather than rely on specific sales evidence in other localities his approach was to value the rainforest lands on the basis of what he saw as correct relativity with valuations of two properties of which he had close knowledge.
The first was a property on Glengallan Creek, owned by one of the Wickham family, if not the purchaser in the Rimes to Wickham sale. The property contained 111.1 ha and was described by Mr Matson as "a near level to gently sloping clay loam parcel ... intersected by the Cunningham Highway, irrigated by three high capacity bores and used for potato and small crop production. It was his opinion that "on a per hectare basis it is significantly more productive and valuable than any area in the subject location." The Department's unimproved valuation of this Glengallan Creek land at the relevant date equated $1,485/ha. He had not been aware that in its unimproved state this property had comprised some open plain country, with no timber treatment costs involved in its development. He had not been aware that the added value of the irrigation licences had been excluded from the Department's unimproved valuation. He had discussed with Mr Wickham, the relative productive capacity of the Glengallan Creek lands in comparison with that of the arable rainforest lands. In Mr Wickham's opinion, the Glengallan Creek lands were of sufficient quality and "strong enough" to grow potatoes and other crops on an annual basis, while the arable rainforest lands comprised "fragile soils" and were suited to potato growing only on a rotational basis once in every four or five years and then with higher production costs. In Mr Wickham's opinion, according to Mr Matson, the rainforest arable land would be worth no more than half the Glengallan Creek land.
The second relativity example was of a softwood scrub block containing an area of 132.2 ha described by Mr Matson as "a prime iron wood scrub block in close proximity to Killarney, mostly arable and as productive and valuable as any area in the subject location". It was his evidence that while the sale land received less rainfall than the locality of the appeal blocks it retained moisture longer and was not as badly affected as the rainforest country during periods of less than average rainfall. The softwood scrub country was described as more versatile and capable of growing winter oats and summer cereal crops. Mr Matson was of the opinion that the softwood scrub country was more comparable to the rainforest/squeaker country than the forest country on Mr Dagg's property. However, he would prefer the iron wood scrub country to the inferior squeaker type rainforest "any day".
Mr Matson's evidence was that when his investigations of the appeal matters had commenced and the rainforest sales analysed, his first impression had been that the Department "had got it right". However when he gave consideration to the Watts' sale of forest land and rejected that sale as evidence of value and "had time to consider the Crown application of values on this block and other forest blocks" he was prepared to generally accept the Department's valuation of the forest country. He concluded that if it was necessary for the Department to look outside the local area for forest country sales, and as a consequence, correct relativity was achieved for valuations of that class of country throughout the Shire, the same should have been done with the better quality farming lands. When he compared valuations of the better quality subject lands with those outside the area he concluded that those relativities were "out of whack".
Mr Matson held the opinion that unless some specific check methodology is utilised in considering the various land classifications on individual properties, it is virtually impossible to make cogent relativity comparisons.
In the end result Mr Matson concluded that proper relativity would be achieved between all classifications throughout the Shire if the lands in the local area were valued with application of "the following maximum values, in a general way and subject to various adjustments ...":
·Good quality easy slope rainforest arable $1,000 per ha
·Sloping rainforest arable $750 per ha
·Rainforest grazing $600 per ha
·Squeaker arable/grazing $500 per ha
·Forest grazing $350 per ha
·Vegetation Management Areas $200 per ha.
Findings - Bases of Valuation
Mr Matson's relativity approach is, in his opinion, a reflection of the intent of the Act as contained in the preamble. The preamble in fact states that the Valuation of Land Act 1944 is:
"an Act to make better provision for determining the valuation of land for rating and taxing purposes and for matters incidental thereto or consequent thereon."
In making better provision for determining the valuation of land for those purposes, it follows that if valuations are made in accordance with correct principles and pursuant to the provisions of the Act, the intent of the Act will be achieved and correct relativity should result.
In Appeals by Landholders against the determination of the Valuer-General - Shire of Monto (1984-85) 10 QLCR 32 at p.38 the Land Appeal Court made the following observations:
"Relativity between properties or parts of shires may vary from valuation period to valuation period. It is not a matter of mere mathematical calculation or progression. The revaluation of a shire does not involve the application of a more or less uniform increase (or decrease) in the various types of land comprising the shire. What has to be determined is the unimproved value of each parcel of land within the shire at the relevant date. The task set the Valuer-General and the Court is to determine the capital sum which the fee-simple of the land, assuming it were in an unimproved state, might realise if offered for sale on the open market ... The best method of basis for making such determinations is the use of properly analysed comparable sales conforming to the test of the Spencer case." (Spencer v Commonwealth (1907) 5 CLR 418).
In that matter the Land Appeal Court then continued at p.38:
"In A.C.F.& Shirleys Limited v The Valuer-General (1978) 5 QLCR 370 at p.375 this Court said:-
'We agree with counsel for the appellant Company that relativity between valuations is a desirable principle which should be observed to ensure an equitable distribution of the rating burden. However, in our opinion, it is difficult, if not impossible, to extend the principle beyond relativity as between lands with a similar highest and best use or land types with some common nexus. For example in the valuation of a shire, lands with a highest and best use for producing sugar-cane, lands with a highest and best use for grazing, or lands with a highest and best use for orchard production should, within their respective land use categories, bear reasonable valuation relativity each to each. Obviously the sales of lands within each individual category or purchased for a similar use provide the appropriate guide and basis. We do not think that relativity can be established with any degree of confidence as between various land categories with different highest and best uses.'
It is bona fide sales conforming to the test for the Spencer case that set the level of values for respective land categories and types. Relativity is established in the marketplace not by previously established relativities which, in their turn, would reflect the sale market of an earlier relevant date. As already discussed, relativity between individual parcels within the various land categories or types, is important. If it cannot be established by sales of properties similar or comparable in all relevant aspects, a previous relativity may provide a guide."
The reasons for Mr Matson not accepting that the rainforest sales to Endean and Wickham met the Spencer test, were discussed earlier. In rejecting those sales he does not accept then that the values applied by the Department to the Endean and Wickham properties are correct despite s.33 of the Act and the fact that there are no appeals against those valuations now before the Court.
The Spencer test relates to open market value. As Griffiths CJ said in that case at p.432:
"In my judgment the test of value is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, that is, whether there was in fact on that day a willing buyer, but by inquiring 'what would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural, the necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."
Then at p.441 in Spencer, Isaacs J described the considerations involved in arriving at the value of land as follows:
"... we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
Apart from Mr Matson's perceptions with regard to the over-anxiousness of both purchasers, and the influence of adjoining owner circumstances, the evidence suggests that both Endean and Wickham were well acquainted with the land they purchased and would have passed the remaining "tests" envisaged by Isaacs J.
The question arises as to whether the adjoining owner influences as described by Mr Matson are such as to disqualify the sales from consideration. It is accepted that sales transacted in circumstances where adjoining owner influence exists need to be treated with caution. However, as Hardie J said in Hurdis v The Minister (1957) 2 LGRA 132 at pp.140, 141:
"Where, as here, there are no other sales available to support a party's contention that the sale to an adjoining owner refects something more than market value it is incumbent on that party to point to some circumstances associated with the sale or with the property itself or the position, needs and desires of the purchaser to justify the inference that the selling price was an excessive one."
In Barber v Valuer-General (1969) 17 LGRA 409 Else-Mitchell J, in considering the admissibility of sales to adjoining owners as evidence of value said at p.421:
"I question the propriety of excluding from consideration entirely a sale made to a neighbouring owner, at any rate in the absence of evidence showing that such an owner bought under some sort of strong economic pressure."
The overall evidence in these matters leads me to conclude that the available sales evidence in the subject locality indicates a market trend for rainforest land which cannot be related to the levels of value in other localities within the Shire. That is a trend which no prudent, knowledgeable and experienced vendor or purchaser would ignore. It appears that the "tightly-held" nature of ownership creates an open market environment in which not only adjoining owners or local family members, but also informed outsiders, compete. As an example Mr Malcolm Smith who gave the evidence to which reference was made earlier and who clearly is a prudent, knowledgeable and experienced local farmer, well aware of the productive potential of the various soil types, when asked if he had ever bought a local property on the open market responded (Transcript p.47):
"It was a property of my wife's grandmother's. I had to buy it on open auction. I paid too much for it, but anyway."
I accept on both Mr Matson's and Mr Redgen's oral evidence, that Mr Wickham also believed he had paid a premium for that sale land. However I have not been persuaded that as a prudent, knowledgeable experienced local farmer he would allow himself to be "driven" to act irrationally at a public auction through fear of potential complaints about his farm management practices by some potential new neighbour, who might choose to use a particular site for the construction of a new dwelling. The price paid, on an improved basis by Wickham was only a little higher than that paid by Watts earlier for an inferior parcel. The Wickham improved purchase price was later overtaken by the price paid by Endean, a purchaser who had shown interest in acquiring land in the area over a period of time, according to Mr Matson, and who had continued to operate in that market environment subsequently.
The state of the evidence in relation to the value of the millable timber standing on the land purchased by Dr Endean is such that the evidentiary weight provided by an unimproved value analysis of the sale, is significantly weakened. However if Mr Redgen's assessment of the value of that timber is wrong, the unimproved value component could not be less than that adopted by him. I accept the Department's stance that the sale price paid by Dr Endean, supports the trend shown by the level of value shown by the earlier Wickham purchase. I am persuaded that the price paid by Dr Endean is a factor which would not or should not be ignored in market considerations relative to the value of land in this geographical environment, at the relevant date of valuation.
Another issue of concern to Mr Matson was that a "lifestyle" influence now exists in the market for land in the subject locality and that influence was reflected in the Endean sale. He interprets the Act as requiring any resulting enhancement in value to be disregarded in the assessment of the value of land exclusively used for farming purposes. Mr Redgen said that the properties in the area were valued as rural holdings and that any potential for sale of separate titles or any potential for rural homesite or lifestyle property purchasers had been disregarded. Clearly he did not accept that the Endean purchase included any lifestyle element.
The perception that the market in the subject locality is influenced by the "lifestyle" potentiality could well be a reality. The question is however, if it were possible to identify the monetary effect of that influence, should it be disregarded in the assessment of the value of land exclusively used for farming purposes. That question needs to be considered in the context of the legislation and the definition of "purposes of farming" in s.17 of the Act. In each of the rainforest sales, the land has been used, subsequent to the dates of sale, for the "purposes of farming" and has been valued accordingly. While productive capacity of land is relevant to its use and market value for farming purposes, "prudent, knowledgeable and experienced farmers" would give consideration to matters other than productive capacity which affect value, "either advantageously or prejudicially", (some of which matters were identified by Isaac J in Spencer), when deciding to participate in open market transactions of farming lands.
I accept that it was a reasonable argument to suggest that the sales evidence for rainforest land is clouded by the circumstances surrounding the sales, as described by Mr Matson. However I do not accept that the sales should have been excluded from consideration in favour of a subjective relativity argument based on valuations of land in different locations with distinctly different soils and productive capacities.
In Grahn v Valuer-General (1992-1993) 14 QLCR 327 the Land Appeal Court cited WM & TJ Fischer v The Valuer-General (1983) 9 QLCR 44 as authority for the proposition:
"Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence."
I am not persuaded to disregard the rainforest sales evidence in favour of Mr Matson's relativity approach.
The basis for Mr Redgen's application of value to the Wickham property, ie an amount representing about 89% of the analysed sale price is not explained. On the overall evidence it may be assumed that the unimproved value component which would be apportioned to the Mapped Vegetation Management Areas on that sale property would be relatively nominal. The impact of the area described as swampy lands and of eucalypt forest influences is not transparent through any exposed apportionment. There are no significant issues between the valuers with regard to the values to be applied to the Mapped Vegetation Management Areas (Mr Redgen demonstrating a generally more conservative approach than did Mr Matson) or to the forest lands. However while I would not interfere with the levels of value applied by Mr Redgen to the forest lands through his disregard for the level of value shown by the Watts' sale, it would follow that if he has been too cautious in valuing the forest classifications or the Vegetation Management Areas, in the absence of any, or any better evidence, he may have become too optimistic in his opinion as to the values which would be apportioned then to the "pure" unrestricted rainforest components in the two sale properties.
In recognition of an evidential situation which is less than perfect, and a perception that the apportioned relativity between, in particular, the valuations of the better quality red forest soils and the better quality rainforest soils has become skewed in favour of the former to the disadvantage of the latter, I have decided to determine the individual valuations on the basis of comparison with a slightly more conservative application of the Wickham sale, at a rounded $102,000, or about 85% of the analysed sale price. I would not interfere with the application of value to the Endean property.
I have concluded that, on the evidence, Mr Redgen has taken too optimistic an approach to the relative value of the squeaker timber components of the rainforest classifications. He appears to have been overly influenced by the use of that type of country by some farmers for opportunity potato growing when it seems clear that such use is economically marginal except for the benefits derived through the residual fertilisers and soil improvement additives for grazing purposes. Even so, there is compelling evidence to the effect that the squeaker timber country remains a significantly inferior class of country.
Finally it was Mr Redgen's opinion that as the size of a particular classification of country, and particularly the rainforest country, decreased or increased there would be expected to be an inverse effect on market value. He had observed that in the rainforest country many of the properties had available about 20% of that component which was physically suited to arable use. That was his observation with the Wickham sale. However, as I understood his evidence, there were climatic conditions which restricted the available Endean property to grazing use. Mr Matson did not accept that it was the size of a particular classification of country, but the size of the property overall which was relevant in the marketplace. However, it seems to me that, with some reservations when areas of particular classification components become too small to warrant individual consideration, the size factor can be a relevant consideration in the check classification approach, as well as the overall direct comparison approach. The difficulty which faced Mr Redgen was the proof of his opinions. Consideration will be given to the facts in relevant individual cases.
Findings - The Issues
(1) It is not accepted that the rainforest sales although not ideal, should be disregarded.
(2)Where, through the appeal process, historical land classifications have been accepted by Mr Redgen as inaccurate, a valuation review has resulted. It is seen as an area where market expectations would relate to broadly accurate land classifications rather than scientifically tested soil mapping. However, there has been persuasive argument to support the allegation that too high a relative value has been ascribed by the Department to country with a squeaker timber influence.
Both valuers used a classification approach in checking the result of their overall valuation of each individual appeal property. There has been some judicial criticism of the "classification method of valuing" ie the application of values to the various classifications of country contained within a property, for reasons such as those expressed by the Land Appeal Court in Scougall v The Valuer-General (1980-81) 7 QLCR 51. The Court suggested in that case, at p.57, that "the method may provide supporting evidence of valuation but direct block to block comparison is generally to be preferred as a primary method".
The reality is, as Mr Matson observed, that "direct block to block comparison" in the valuation of rural properties of mixed land classifications could, in many cases, be so subjective a task that the veracity of the result would be near impossible to support unless "checked" by consideration of the classification method. He believes and I have no doubt that while often denied and not disclosed by departmental valuers, classification methodology or some similar weighting processes are, and need to be considered in maintaining reasonable relativity of valuations particularly across a shire, "from block to block". A check methodology should be of real assistance to a court when disputes about relativity require consideration and determination. In these matters a check methodology which concentrates on the broader classifications rather than any methodology which attempts to isolate and apply unproved levels of value to "sub-classifications" is seen to be more market orientated. In other words, rainforest country which contains components of squeaker country, as an example, will be regarded as inferior to rainforest country which does not. To apply some subjective opinion of value to a precise area of squeaker country when the precise area itself is difficult to prove conclusively and when there is no specific evidence as to the value of "pure" squeaker country is, in my view, interpreting a standard of theoretical precision which is not able to be demonstrated to exist in the marketplace itself.
(3)It has not been proved on an evidential basis that proper relativity between valuations of the subject appeal properties and valuations of properties in other shire localities can be based on productive capacity alone.
(4)The subjective opinion of Mr Redgen as to the influence of size on the valuation of, in particular, the rainforest country needs to be considered on an individual case basis.
Finding
I will adopt a rounded valuation of $20,000 which could be apportioned as:
6 ha rainforest @ $1,350/ha $8,100
12.5 ha forest @ $350/ha $4,375
45.432 ha Vegetation Management Area @ $135/ha $6,133
65 ha Nature Conservation Agreement Area - nominal $1,000
$19,608
Adopt$20,000
It should be noted by the appellant that should this property not continue to be used exclusively for the purposes of farming, no reliance could be placed on this determination, which recognises that the highest and best use of the land is not for the purposes of farming, as defined in the Act.
Order
The appeal is allowed. The chief executive's valuation is set aside and the unimproved value as at 1 October 2002, pursuant to s.17 of the Valuation of Land Act 1944, is determined in the amount of Twenty Thousand Dollars ($20,000).
Appeal AV2003/0637
Registered Proprietor: Mervyn E Hancock
Real Property Description: Lot 1974 ML1442, Parish of Killarney
Area:29.15 ha
Nature of Land:
Agreement was reached between the valuers in arriving at the following classification of country:
23 ha rainforest
3 ha forest
3.15 ha Vegetation Management Area
Valuation Appealed Against - Notice of Appeal - $54,000.
Mr Redgen led evidence to an amended valuation of $50,000 rounded from $1,715/ha overall.
His check classification approach was as follows:
23 ha rainforest (includes 2 ha quarry affected, 21 ha rolling
easy to moderate hills and ledges with some areas of rock)
@ $2,100/ha $48,300
3 ha forest (moderate to steep, rocky merging red to brown
soil) @ $410/ha $1,230
3.15 ha Vegetation Management Area (includes regional
ecosystem 12.8.5 which Mr Redgen pointed out was
incorrectly identified as rainforest when the country was
vegetated with stringy bark and messmate forest) @ $370/ha $1,166
$50,696
Less working allowance for split by bitumen road 1% $507
Adopt$50,000
Owner's Estimate of Value - Notice of Appeal - $17,000
Mr Matson's valuation was amended to $18,000 rounded from $610/ha overall, apportioned as:
23 ha rainforest grazing, stone and squeaker influence in
places @ $700/ha $16,100
3 ha forest grazing @ $350/ha $1,050
3.15 ha Vegetation Management Area @ $200/ha $630
$17,780
Adopt$18,000
The main difference between the valuers was again the level of value applicable to the rainforest classification. Mr Redgen was consistent in arguing that the value of an area of this size would be expected to increase "sharply" from the standard $1,500/ha applied by him to the 70 ha of rainforest on the Wickham sale property. No reference was made in his oral evidence to the Endean sale property to which he had applied $1,375/ha to 25 ha of rainforest grazing. In his written report sale schedule, the Endean rainforest was described as "easy sloping with small areas of steeper ridges" but "inferior in quality of its rainforest". The Endean land was also described as having inferior location but superior natural water.
I am not persuaded that, apart from the Vegetation Management Area, the 25 ha of Endean land even if conservatively valued, is as inferior to the subject land as Mr Redgen's valuations would suggest. Furthermore, although I would reduce the application on the Wickham sale property to $1,400/ha for country described as superior, I am not persuaded that the sales evidence of the Endean and Wickham properties supports the assertion made by Mr Redgen that a "sharp increase" in value necessarily results when the size of a particular classification reduces from 70 ha to 25 ha.
With such a small component of forest on a predominantly rainforest block I will adopt $1,500/ha for the area of 26 ha of both classifications overall, including the effect of the road severance and quarried area, but exclusive of the Vegetation Management Area for which land I would adopt Mr Redgen's assessment.
Finding
On the above basis the unimproved value will be determined in the amount of $40,000 rounded from $1,375/ha overall, apportioned as follows:
26 ha predominantly rainforest @ $1,500/ha $39,000
3.15 ha Vegetation Management Area $1,166
$40,166
Adopt$40,000
Order
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of Forty Thousand Dollars ($40,000).
Appeal AV2003/0638
Registered Proprietor: Margaret R Hancock
Real Property Description: Lot 115 ML1598, Parish of Killarney
Area:123.1 ha
Nature of Land:
The valuers have agreed on the following classification of country:
114 ha rainforest
9.1 ha forest
Valuation Appealed Against - Notice of Appeal - $150,000.
Mr Redgen led evidence to an amended valuation of $146,000 rounded from $1,190/ha overall.
His check classification approach was as follows:
114 ha rainforest (includes 81 ha easy to moderate rolling
hills with steeper pinches and areas of rocky outcrops,
33 ha easy to moderate rolling hills with steeper
pinches with squeaker wood influence) @ $1,250/ha $142,500
9.1 ha forest (moderate to steep, rocky merging red to brown
soil) @ $335/ha $3,049
Adopt$146,000
Owner's Estimate of Value - Notice of Appeal - $52,000
Mr Matson's amended valuation was $77,500 rounded from $630/ha overall, apportioned as:
114 ha rainforest grazing, easy sloping to steep and stony,
with lighter squeaker type patches @ $650/ha $74,100
9.1 ha cleared forest grazing @ $350/ha $3,185
$77,285
Adopt$77,500
Mr Matson had not attempted to calculate the area of squeaker influence due to the mixed nature of the country. Although his valuation was closer to the level he had adopted as a basis for "squeaker arable/grazing" country, it was higher than the level he had adopted generally for "rainforest grazing". In his oral evidence, he said that some areas of the easier quality rainforest would have arable potential. It is observed that he would have valued 63 ha of the adjoining Wickham sale land at $700/ha or the 70 ha on that property including the forest influence at $665/ha. Those figures compare with his valuation of $650/ha for 114 ha of the subject rainforest or $630/ha for the overall property including the forest component.
Mr Redgen had valued 70 ha of the Wickham rainforest with some forest influence at $1,500/ha and the subject rainforest at $1,250/ha. His evidence was that "some discount" had been made for size and also for the squeaker influence which he estimated affected about one-third of the total area of rainforest. In his opinion there would have been about 20% of the area of rainforest which would have arable potential and that compared favourably with the Wickham sale land. I can accept that some decrease in value below the Wickham sale component would reflect market expectations, if the land was strictly comparable and then further discounting in recognition of the squeaker influence.
Finding
In light of my findings with regard to an application of $1,400/ha to the Wickham rainforest component and findings relevant to the effect of squeaker influence on, for example the Dagg property (Appeal AV2003/0608), I will in this case adopt an unimproved value of $138,000 rounded from $1,125/ha overall for this relatively large area of rainforest including the squeaker influence but also including a small component of forest country.
Order
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value as at 1 October 2002 determined in the amount of One Hundred and Thirty-eight Thousand Dollars ($138,000).
RE WENCK
MEMBER OF THE LAND COURT
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