Davison v Chief Executive, Department of Natural Resources
[1998] QLC 4
•30 January 1998
|
BRISBANE
30 January 1998
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Shire of Flinders.
(AV96-645)
Myles R Davison and Barbara K Davison
v.
Chief Executive, Department of Natural Resources
(Hearing at Hughenden)
D E C I S I O N
Mr and Mrs Davison are the owners of a property known as "Moondah", situated about 30 kilometres south of Prairie. "Moondah" consists of Grazing Homestead Perpetual Lease No 23/16195 (Lot 4 on Plan WOU 23, Parish of Mortimer) and Grazing Homestead Perpetual Lease No 23/16194 (Lot 2 on Plan WOU 15, Parish of Wogadoona), containing an area of 20,953 hectares.
Under the provisions of the Valuation of Land Act 1944, the respondent Chief Executive determined the unimproved value of that land as at 1 January 1996 at $169,000, or $8.06 per hectare. Mr and Mrs Davison objected against that valuation and following advice from the respondent that their objection had been disallowed, they appealed to the Land Court advising that their estimate of the unimproved value was $109,141.
At the hearing of the appeal Mr MR Davison appeared and gave evidence on behalf of the appellants, while the respondent was represented by Mr R Vize, of counsel. Valuation evidence for the respondent was given by Mr LR Croton, a registered valuer employed by the Department of Natural Resources.
Although there was some disagreement about distances, it was eventually generally accepted that "Moondah" is situated about 74 kilometres south-east of Hughenden, with access by means of the bitumen-sealed Flinders Highway for about 44 kilometres to Prairie, then south on the Prairie-Muttaburra Road, which has about 6 kilometres of bitumen and 12 kilometres of formed earth road, with access then by 12 kilometres of earth and gravel formed track.
Mr Croton described the nature of the land on "Moondah" as follows:"Comprises about 49.92% (10460 hectares) of red & grey sandy forest with patches of gidyea & some open broken plains, about 15.19% (3182 hectares) in the north eastern section of the property comprises low gravelly & stony ridges, red & grey sandy forest with several swamps & thickly timbered, about 31.02% (6500 hectares) in the south western section of the property comprises open to dense gidyea, open plains, red & grey sandy forest, about 3.87% (811 hectares) along Bullock Creek comprises gravelly & rocky country. Grasses include spear, wire, feathertop, spinifex, buffel, some flinders & mitchell, & other annual species.
Trees on the property include ironbark, gum, wattle, sandalbox, gidyea, bloodwood, box, bauhinia, leopardwood and whitewood. "
Mr Croton went on to say that he estimated the carrying capacity of "Moondah" at 1 beast to 18 hectares (1164 head). The water comprises three bores and holes in Prairie, Emu and Bullock Creeks, which last up to 2/3 months after average rainfall.
Mr Davison did not disagree with that description or with Mr Croton's estimated carrying capacity. Indeed, he considered the actual carrying capacity of the property to be about 1800 head of cattle, but that was only after the development of about 23,000 acres of timbered country and the sowing of buffel grass. Mr Davison estimated that in its natural state the timbered country would carry cattle for only about 4 months of the year. In their notice of appeal the appellants emphasised the very limited value of "Moondah" in its unimproved state, the density of the timbered country, with little or no grass, the ironbark country having mainly feathertop and wire grasses. They estimated that the property in its unimproved state would have a carrying capacity of less than 1 beast to 20 hectares.
Included in their grounds of appeal, the appellants explained how they arrived at an unimproved value of $109,141, or $5.20 per hectare, by estimating the treated, fenced and watered value of the property at $40 per hectare, or $828,120 and adding the values of structures and yards of $271,600, to arrive at an improved value of $1,109,720. From this figure they deducted the value of all improvements, using an interest calculation of 9.5% per annum. After allowing development interest at 9.5% for one year, their resulting unimproved value was $109,141.
In the course of his evidence, Mr Davison produced a detailed statement showing a revised value of all improvements, calculated at their replacement cost less depreciation. This showed the total value of improvements at $1,012,999. When deducted from the appellants' estimate of improved value of $1,109,720, this left a residual unimproved value of only $96,721.
Mr Davison explained that he arrived at the treated, fenced and watered value of $40 per hectare by reference to sales of properties in the area over the last few years. However, he referred only to the sale of "Wogadoona", an adjoining property which he said sold about five years ago for $10 per acre, or $25 per hectare. Mr Davison did not produce any details of that sale, but thought that it had an area of about 30,000 acres and at the time of sale had few improvements other than boundary fencing, and two bores, plus a shared water facility with "Moondah". What structures were on the property were, in Mr Davison's opinion, of little value.
Mr Davison said that "Wogadoona" was similar country to the undeveloped part of "Moondah", which he thought would have the same value of $25 per hectare. However, he realised that the 23,000 acres of developed country would be worth more, so on the basis of the "Wogadoona" sale, he came to the conclusion that the treated, fenced and watered value of "Moondah" would be $40 per hectare overall, or $838,120. To that figure he added what he considered to be the value of structures and yards of $271,600, arriving at the improved value of "Moondah" of $1,109,720.
Mr Davison's revised value of improvements were as follows:Water improvements (dams and bores) $200,445
Fencing - boundary $ 48,615
- internal $101,880 $150,495
Timber treatment $304,192
Airstrip, grids, roads, etc. $ 8,575
Structures and yards $271,600
Mr Davison explained that the values for individual improvements were extracted and adjusted from a report by a valuer, who had valued "Moondah" for another purpose. However, the valuer's report was not tendered or further explained.
Mr Croton supported his unimproved valuation of $8.06 per hectare for "Moondah" by relying on the analyses of sales of three improved properties. "Kentle Downs" is situated approximately 100 kilometres south of Hughenden, has an area of 12,594 hectares and sold in January 1995, for $1,087,000. That sale was analysed to show an unimproved value of $20.25 per hectare. As at 1 January 1996 the respondent had applied an unimproved value of $19.50 per hectare to that property.
"Kentle Downs" comprises about 70% of undulating black soil downs and about 30% of gidyea/boree scrub and desert tableland. It has a carrying capacity of 1 beast to 13 hectares, or 968 head of cattle. It is watered by six dams, one share bore, one bore and two earth tanks.
Mr Croton considered that "Moondah" is inferior to "Kentle Downs", because of the quality of its country.
"Lerida", situated approximately 189 kilometres north of Longreach, via Muttaburra, has an area of 12,375.3 hectares and sold in April 1995, for $850,000. That sale was analysed to show an unimproved value of $18.04 per hectare and as at 1 January 1996, the respondent had applied an unimproved value of $16.16 per hectare.
"Lerida" comprises mitchell grass downs country, open to nicely shaded with areas of vine tree and whitewood ridges, with light pebble in places, mimosa in patches and coolibah on the creeks. It has a carrying capacity of 1 beast to 12 hectares, or 1031 head of cattle. It is watered by one equipped non-flowing artesian bore with a reticulation scheme of bore drains and bore drain tanks, two sub-artesian bores and water from a stock route water facility.
Mr Croton considered "Lerida" to be considerably superior to "Moondah" because of the quality of its country.
"Mt Sturgeon" is situated approximately 100 kilometres north of Hughenden, has an area of 140,000 hectares and sold in June 1995, for $4,250,000. That sale was analysed to show an unimproved value of $735,000, or $5.25 per hectare. As at 1 January 1996, the respondent applied an unimproved value equal to the analysed figure.
"Mt Sturgeon", according to Mr Croton, comprises about 11% of black basalt forest and plain, about 11% of red basalt forest timbered with ironbark, bloodwood and ghost gum, about 55% red sandy tableland timbered with ironbark and bloodwood, with a wattle and silver myrtle understorey, interspersed with white sandy patches of pine, about 9% broken granite ridges and about 14% unavailable gorges. It has some heartleaf infestation. Mr Croton estimated its carrying capacity to be about 1 beast to 20 hectares, or 7,000 head of cattle.
Mr Croton considered "Mt Sturgeon" to be inferior to the subject land on a per hectare basis, but conceded that it was difficult to compare, as it was so much larger. However, he considered it to be useful as it showed what he considered to be the bottom of the market.
On the other hand, the other two sales, "Kentle Downs" and "Lerida", while being considerably superior to the subject land, set the upper limit in terms of value per hectare. Mr Croton said that he had not taken into account the development potential of "Moondah" because he regarded the development carried out by the appellants to be of a pioneering nature, as not many land owners had developed to that standard in the Prairie district.
Mr Davison did not regard those sales to be an appropriate basis to value "Moondah". "Kentle Downs" was considerably superior to the subject land as it had a large proportion of downs country and furthermore its gidyea/boree scrub was superior and easier to develop than his timbered country. The desert tableland country comprised open spinifex country, whereas the spinifex country on "Moondah" was sand.
Mr Davison did not know "Lerida", but because it was downs country, he thought that it was not a fair comparison. Although he had driven through "Mt Sturgeon", he conceded that he did not know the property in detail, but he thought that it would be very hard to compare a property with a carrying capacity of 7,000 cattle with the subject land. He thought that his comparison with "Wogadoona" was much more appropriate than any of the sales relied upon by Mr Croton.
I turn now to consider the methods of valuation used by the parties. The Valuation of Land Act 1944 defines "unimproved value" as the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that at the date of valuation, the improvements did not exist. The authorities clearly indicate that in the absence of sales of unimproved land, the most appropriate method of valuation is by reference to the analyses of sales of improved properties. (See for example the judgment of the Land Appeal Court in McGuigan v. The Valuer-General (1984) 10 Q.L.C.R. 32). That is the method that has been used by Mr Croton.
The method used by Mr Davison was to estimate the improved value of the property and deduct from that the present value of the improvements. In Dunlop Rubber Aust. Ltd v. Valuer-General (1958) 3 L.G.R.A. 125, it was held that while that method of valuation was provided for in the proviso to the then s.12(1) of the Valuation of Land Act, it was necessary to have proper evidence of the improved value of the property and the value of improvements. While Mr Croton did not challenge Mr Davison's estimate of the value of improvements, he did take issue with the improved value of $40 per hectare.
That valuation was based largely on the sale of "Wogadoona", of which I was given only the barest of details. Mr Croton did not analyse that sale or even refer to it. In the circumstances, therefore, even if I accept Mr Davison's value of improvements, I cannot accept that the improved value of "Moondah" was correct. In any case, such a method of valuation, even when based on proper evidence, only establishes the minimum unimproved value. The method adopted by Mr Croton is much to be preferred.
Certainly the sales relied upon by Mr Croton are far from ideal, as each of them is quite different to "Moondah". However, they are the only cogent evidence of unimproved value that I have before me in this case and Mr Croton has adopted the correct principles.
Under the provisions of the Valuation of Land Act the onus of proof is upon the appellants to prove their grounds of appeal. In this case the appellants have not discharged that onus and therefore the appeal must fail.
Accordingly, the appeal is dismissed and the unimproved value of the subject land determined by the respondent at $169,000 as at 1 January 1996 is affirmed.
(JJ Trickett)
President of the Land Court
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