Dill v Chief Executive, Department of Natural Resources and Mines

[2001] QLC 121

[2001] QLC 121

 

LAND COURT

BRISBANE

14 NOVEMBER 2001

Re:     AV99-1401

An Appeal against an Unimproved Valuation -
  Valuation of Land Act1944
  Shire of Paroo

JH Dill

v.

Chief Executive, Department of Natural Resources and Mines

(Hearing at Cunnamulla)

D E C I S I O N

As at 1 October 1998 the chief executive has, after two reviews, made an unimproved valuation of the property known as "Warranella", in the amount of $46,500, rounded from $5.15 per ha.  The area of the property is 9,021.829 ha.  The valuation now appealed against represented an increase of about 17.7% over the previously existing valuation which was made as at 1 January 1996 in the amount of $39,500.
           The real property description of "Warranella" is:

Lot 3 on Plan KU9 being GHPL 15/1683, Parish of Mowellan, County of Kungie.

"Warranella" is situated about 69 km south, south-west of Cunnamulla via about 35 km of bitumen roads and 34 km of formed earth. 
           Rural power, telephone and a twice-weekly mail service are available.
           Mr Dill appealed against the valuation on widely drawn grounds, but in a written submission concentrated on six topics, identified as (1) Carrying Capacity, (2) Property Size and Flood Plain Classification, (3) Water Comparisons, (4) Increase in Valuations, (5) Natural Hazards, (6) Limited Variety of Grasses.  It was Mr Dill's contention that there should have been no increase above the previously existing valuation.
           Mr MTJ McManus, a senior valuer employed by the chief executive was responsible for the valuation appealed against.  In his tendered report he classified the "Warranella" land as follows:

"3160 hectares (35%) comprises frontage country (Cuttaburra and Moon Creeks", 270 hectares (3%) sandhills and cypress pine, 3,067 hectares (34%) red to gravelly mulga/box, 2,525 hectares (28%) stony ironstone ridges and tableland."

At the date of valuation the property was being used for sheep breeding, woolgrowing and cattle breeding and the departmental records were said by Mr McManus to indicate a carrying capacity equivalent to 1 DSE to 2.8 ha (3,222 sheep). 
           Mr McManus had inspected the property prior to the hearing and had interviewed Mr Dill who had suggested that the true carrying capacity converted to sheep would average 2,500 to 2,800 sheep or about 2,000 sheep plus cattle.  In his written submission Mr Dill challenged the original departmental estimate of carrying capacity and suggested 1 DSE to 4 ha, including cattle breeders and progeny would be an accurate assessment.  Mr McManus had no disagreement with Mr Dill in that regard but had not used carrying capacity as a criterion for valuation, or for comparison with the basic sales evidence.
           That sales evidence was of the flood plain properties "Claverton", "Northam"/"Airlie", "Robina Downs", "Huntley"/"Glen Oxford" and "Willacora", then the "non-typical flood plain" property "Weona".  Each of those sales had been adopted as basic evidence for the valuation of properties in the sub-market area (SMA) identified by the chief executive's valuers as the Warrego Flood Plain SMA.  Four representative appeals had been heard by the Land Court after a larger number of owners of property within that SMA had contested the application of an increase, after the first review, of about 30% over the previously existing valuations.  As a result of the decisions by the Court in those appeals, a further reduction of 5% had been applied by the chief executive to all valuations within that SMA.  That effectively represented an increase of 23.5% over the previously existing valuations.  Several owners of property within that SMA had remained dissatisfied and their appeals were heard at the same sittings as was this matter. 
           In his oral evidence, Mr McManus advised that "Warranella" was not included in the Warrego Flood Plain SMA but instead in the "Western Merge SMA", where the flood plain west of the Warrego River merged into the mulga country.  The available sales evidence had been interpreted to indicate that no increase in value had occurred for the mulga country but, based on the sales of the flood plain properties, that flood plain component of the western merge properties had been increased at the same level as had the recognised flood plain properties.  As I understood the situation the increase of 23.5% above the previously existing level for the 3,160 ha of "frontage country" resulted in the overall increase of about 17.7% as reflected in the $46,500 valuation now appealed against.
           However, as he did in all the appeals heard at this sittings, Mr McManus maintained that the basis of valuation had been direct comparison, on an overall value per ha, with the sales evidence.  I have commented in the decisions in other appeals as to the lack of assistance afforded to the Court if there are no, or no disclosed, checks and balances or weightings in the comparison process.  In these "merge" properties where an increase is said to have been applied only to the flood plain component, it is obvious that a piecemeal valuation of that component must have been carried out by Mr McManus at some stage in his overall rate per ha deliberations.  Nevertheless, there was no formal disclosure as to the actual valuation which would have been applied to the subject flood plain component.
           That left Mr McManus in a difficult position when it came to a comparison of "Warranella" with the non-typical flood plain sale property "Weona".  In comparison with the subject property, "Weona" was described as having inferior situation, inferior access, inferior country, similar natural water, similar rainfall and as being significantly smaller in size (6,756 ha).  The "Weona" country was classified as "730 hectares (11%) Widgee Creek channels - seasonally flooded coolibah, 4,706 hectares (70%) brown-red soil gidyea/brigalow, 330 hectares (5%) sandy cypress pine, ironwood, 990 hectares (14%) red mulga country with areas of spinifex and turkey bush" with a departmental recorded estimate of carrying capacity of 1 DSE to 2.74 ha.  Mr McManus' overall comparison of "Weona" with "Warranella" was as follows:

."… this property comprises inferior location, access and country, (sale property is generally a timbered block with no significant areas of frontage country, the mix of country is considered inferior overall) similar natural water and experiences similar average annual rainfall.

Overall the sale is considered inferior to the subject."

Mr McManus maintained the somewhat illogical stance that despite the Court decision on "Weona" (which was one of the representative appeal properties) reflecting a valuation overall of $5.50/ha (reduced from the chief executive's initially applied valuation of $6.14/ha), and his valuation of $5.15/ha for "Warranella", the sale property was still considered to be inferior to the subject. 
           Mr Dill had some limited knowledge of "Weona" and was confident that on an overall basis it should have been seen to be superior to "Warranella" because of the latter's much larger component of poor mulga country.  In his opinion some guide could be taken from the improved sale price per ha for "Weona" ($36.99/ha) and the other flood plain properties east of the Warrego (in the range from $34.80/ha to $48.18/ha).  He said that in comparison he would consider $22.50/ha ($9/acre) a "pretty good" sale price for "Warranella" if he wanted to sell it. 
           In Mr Dill's opinion, although the "frontage country" on "Warranella" enjoyed beneficial flooding from time to time, it was not true flood plain country but largely heavy soiled channel country with some swampy areas and fairly thick timber cover.  The nature of the frontage country with its intersection by watercourses and location relative to the high country caused stock management problems during periods of flooding.  He distinguished the frontage country on "Warranella" from that on "Tinnenburra" to the south, which on his description, had a much higher proportion of lighter open plain frontage country which responded much more quickly after flooding and which also provided safer refuge for stock.  The chief executive's valuation of the 17,349 ha "Tinnenburra", at $5.48/ha overall was put to Mr Dill amongst other valuations on district properties as an example of correct relativity of valuations having been maintained by the chief executive.  "Tinnenburra" was classified as having 31% of river and creek frontages, gidyea, yapunyah and broken plain, 16% sand ridge cypress pine, ironwood, hopbush, turkey bush, 53% stony mulga ridges with box hollows, hopbush, turkey bush.  However, in the absence of information as to the break-up of values for the various classifications of land, Mr Dill was unable to either agree or disagree with the suggestion that correct relativity had been maintained.  Mr Dill was able to give the opinion that the 13,470 ha of the balance of the "Warranella" aggregation to the west of the appeal block, with an unchanged valuation of $1.71 per ha was similar in quality overall to the non-frontage 5,862 ha of the appeal block.  If the chief executive shared that opinion, and it is not known if that is the case, then that would indicate that the frontage country carried an apportioned  valuation of about $11.50 per ha. 
           However, just as Mr Dill was unable to make cogent comparisons with frontage land classifications on other properties, the overall rate/ha valuation methodology does not assist the Court in its considerations of the veracity of Mr McManus' opinions as to correct relativity.  While it is seen as logical that, for example, the frontage country on "Warranella" is superior to most if not all of the country on "Weona", I am unable to accept that, on an overall comparison, even after consideration of its inferior factors, "Weona" is overall inferior to "Warranella" as Mr McManus has suggested.
           The overall rate per ha values applied on the other sale properties, subsequent to the representative appeals, were $15.45 ("Claverton") $7.18 ("Northam"/"Airlie"); $9.28 ("Robina Downs"); $10.16 ("Huntley"/"Glen Oxford") and $10.92 ("Willacora").  It is clear that on an overall basis, those sale properties are significantly superior to "Warranella".
           One of the grounds on which Mr Dill relied was the inferiority of natural grasses on the frontage country when compared with natural pastures on the flood plains easterly of the Warrego.  Mr McManus' inspection, on his evidence, confirmed Mr Dill's opinion that several of the better quality natural grasses were not now in existence on "Warranella" but he said that the departmental records had indicated that had not been the case at least back in 1958.  Mr McManus suggested that the deterioration in the quality of pastures may have resulted from the frontage country having been too heavily grazed by both commercial and pest animals, in preference to the poor country to the west.
           Mr McManus did not dispute Mr Dill's contention that the artificial water supply infrastructure on "Warranella" may be inadequate, but explained that his written comments regarding water comparability on the sale properties had related only to natural surface water.
Conclusion
           Mr McManus is an experienced valuer and had inspected the property prior to the hearing.  He was aware or Mr Dill's opinions regarding the sale properties and the negative features of "Warranella".  He remained confident that the valuation now appealed against was fair and reasonable and bore proper relativity with the sales evidence and valuations of other nearby properties. 
           It seems clear that his valuation represents a factorised increase which had been applied to an undisclosed level of value previously attributed to the frontage country.  While there is no evidence to show that previous valuations have recognised such matters as the specific nature of the flood plain country and the increasing intrusion of woody weeds into the mulga country, Mr McManus has clearly given consideration to the negative features of the property.
           Mr Dill has questioned whether in fact sales evidence from the recognised superior flood plain country should be applied directly to the country merging from the flood plain into the well-recognised inferior mulga lands west of the Warrego.  That seems to me to be a question which may only be cogently answered by an analysis of the market for such properties.  There is no evidence before the Court as to sales of property within the Western Merge SMA.  The closest example which has been presented of a non-typical flood plain block is that of "Weona".  In the representative appeals the evidence adopted by the Court was that the general level of increase indicated for flood plain properties had not carried through in its entirety for "Weona".  Indeed, where a general decrease of 5% below the final reviewed levels of value applied by the chief executive was found to have been reasonable for the flood plain SMA, a decrease of about 10% was determined below the valuation appealed against on "Weona".
           I do not accept Mr Dill's opinion that there would have been no market value increase for the flood plain country west of the Warrego in this locality.  However, I think it was reasonable for him to suggest that the evidence derived from the sale of "Weona" did not support a finding that the sales evidence of properties within the Warrego Flood Plain SMA should be applied directly, in the absence of supporting evidence, to a flood plain classification in another recognised SMA. 
           I made the following comment in the decisions relative to the representative appeals (AV99-1413 etc 30 March 2001) at p.11:

"       I have further concern that the property 'Weona' is not a fair representative case for these appeals.  It appears that 'Weona' may be more representative of one of the properties which could be regarded as merging out of the particular SMA influence."

In this matter, the lack of evidence from within the specific SMA as identified by the chief executive's valuers and within which "Warranella" is located, leaves some doubt as to the support afforded by the sales evidence from the superior Warrego Flood Plain SMA, when applied on an overall rate per ha "direct comparison" basis.  In terms of an overall value per ha, "Weona" is clearly the closest comparison to "Warranella" but there is then conflicting opinion as to the relative comparison of those two properties.  His own applications of overall values per ha, do not support Mr McManus' opinion, both written and oral, as to the overall comparability of those two properties.
           In the absence of the disclosed comparison weightings which might have influenced Mr McManus' opinion, it is seen as fair for the benefit of doubt which has been created to be exercised in favour of the appellant.  I have decided to adopt the same differential which previously existed between the overall value applied to "Weona" after the first review by the chief executive ($6.14/ha) and "Warranella" after the first review ($5.38/ha).  The overall value decided for "Weona" on appeal was $5.50/ha and preserving that previous differential will result in the unimproved value of "Warranella" being determined at $4.82/ha.  The application of that overall value per ha will be rounded to a total amount of $43,500.
Order
           The appeal is allowed.  The valuation of the chief executive is set aside and the unimproved value determined in the amount of Forty-three Thousand Five Hundred Dollars ($43,500) as at 1 October 1998.

RE WENCK
MEMBER OF THE LAND COURT