Dore v Chief Executive, Department of Natural Resources and Mines

[2001] QLC 101

LAND COURT

BRISBANE

28 SEPTEMBER 2001

Re: AV00-613

An Appeal against an Unimproved Valuation
Valuation of Land Act 1944
Local Government: Dalrymple

Michael Joseph Dore
v.

Chief Executive, Department of Natural Resources and Mines

J U D G M E N T

The appellant owns a property known as "Cuba Plains" which the Chief Executive valued in accordance with the provisions of the Valuation of Land Act1944 at $425,000 as at a relevant date of 1 October 1999. The appellant contends for a valuation of $290,000 on the property.
Michael Joseph Dore, the owner of "Cuba Plains" appeared and gave evidence in support of his appeal, whilst Stephen Brooks Gilbert, a registered valuer, provided valuation evidence in support of the Chief Executive's valuation.
"Cuba Plains" is situated about 167 km north-west of Charters Towers and is accessed by 57 km of bitumen strip Lynd Highway, then 110 km formed earth and gravel road which is impassable during most wet seasons. In his valuation Mr Gilbert described the nature of the land on the subject property as follows:
"About 425 hectares (3%) comprises open black soil plain, 1690 hectares (11%) comprises chocolate basalt timbered with mountain coolibah, about 100 hectares (1%) of sandy ironbark forest, and the balance some 12689 (85%) comprises flat to undulating red to brown basalt soil forest timbered with narrow leaf ironbark, bloodwood and gum with basalt rock patches/walls interspersed with small areas of mountain coolibah and bloodwood."
Having regard to that description of country Mr Gilbert estimated a carrying capacity for the subject land at one beast to 10 ha, an estimate disputed by Mr Dore. The property is used for the breeding and fattening of cattle. It has an area of 14944.3 ha therefore would support a herd size of 1494 head, in Mr Gilbert's view. Mr Gilbert was not the original valuer for the relevant valuation. When he inspected the property he assessed a smaller area of black soil country than the original valuer, but assessed a larger area of coolibah. In Mr Gilbert's view this adjustment, which is reflected in the above description, had no impact on the Chief Executive's overall carrying capacity estimate of "Cuba Plains".
Natural water on the subject land comprises two permanent holes in the Basalt River with numerous other holes dependent upon seasons. Unfortunately, the river access is steep and dangerous to cattle. There is permanent water in Turtle Hole in Cuba Creek and Buhot Spring is semi-permanent. There are several other springs/soaks which can become boggy and claim weak cattle and, therefore, are fenced off.
Weeds/pests - grader grass is found along all public road frontages and in scattered patches through paddocks. There is also scattered parthenium mostly along the boundary with "The Brook", which is to the east, and rubbervine is found along the Basalt River and other waterways. There is also scattered isolated thorn apple.
"Cuba Plains" is generally between 640 metres and 740 metres above sea level and is subjected to frosts commonly during winter. Supplementary feeding is usually carried out, as is the case commonly through the district, given the impact of frosts on the quality of pastures. Mr Gilbert said that "Cuba Plains" is generally thought to be one of the colder properties in the area during winter because of its high elevation. He said that that aspect may be offset by a slightly higher rainfall, however, Mr Dore was not in agreement with this.
One of the major concerns in this case and in others that I have heard in the sittings related to the matter of the percentage of increase in value. The sales relied upon by Mr Gilbert had been available for the 1998 revaluation, however, he said that it was the view of his department that there was not a sufficient body of evidence to conclude that there was a rise in values of the order indicated by the available sales. There had been few sales in the early 1990's, however, the volume of sales did increase in the late 1990's leading to a conclusion that there was a clear market trend and that his three sales were representative of that trend.
I think it is an unfortunate fact of life particularly in tightly held grazing areas that there will often be an insufficient volume of sales to provide a valuer with the material upon which he could confidently carry out a valuation leading to a change in statutory values. Unfortunately one effect of that circumstance is that landowners can confront large valuation increases rather than a series of incremental valuation increases over shorter timeframes. The effect of such large valuation increases is undoubtedly a matter of concern in managing the business and cash-flow requirements of a grazing property, notwithstanding the obvious argument that property owners might have had the advantage of lower levels of rent or local authority rates during the intervening years. Nevertheless the quantum of valuation increase is not a matter which falls for consideration under the Valuation of Land Act. The Court is concerned in such cases only with the question as to whether the appellant has shown the valuation of the Chief Executive to be wrong.
Mr Dore said that he had been on "Cuba Plains" since 1973 and prior to that had been on grazing properties in the Tully area. His appreciation of the increase in value is that the consequent increase in rent and local authority rates will put pressure on him to carry more stock and therefore risk degrading the "Cuba Plains" country. "Cuba Plains" is not a living area. Now the level of rents and rates are not matters that I can properly have regard to. The Land Appeal Court said in Tow v. Valuer General (1978) QLCR 378 at 381:
"The Valuer-General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result. Rates are fixed by Local Authorities and may be varied annually according to the fiscal requirements of the Local Authority concerned. Any such variation may be made at any time during a valuation period and may be entirely independent of a new and increased valuation."
Mr Gilbert employed the method of comparison with sales as his valuation technique and said as an introduction to these sales that the market for grazing properties in the Dalrymple Shire was strong, driven by good seasons and firm cattle prices at the date of valuation.
His first sale was that of "Amelia Downs", which sold for an analysed unimproved price of $667,184 ($32.40 per ha) on 14 January 1998. The Chief Executive applied an unimproved value to that property as at 1 October 1999 of $650,000 or $31.56 per ha. This sale property has an area of 20,595 ha and is located 120 km north-west of Charters Towers via 77 km of bitumen road with the balance formed earth and gravel.
"Amelia Downs" comprises approximately 2,500 ha (12%) open black soil plain with the balance 18,095 ha (88%) good red basalt forest country intersected by areas of gorge along the Basalt River and W Creek. Mr Gilbert estimated the carrying capacity of the sale property at one beast to 10 ha. The property is used for the breeding and fattening of beef cattle.
Mr Gilbert said that "Amelia Downs" has superior situation and access to "Cuba Plains", a point with which Mr Dore agreed. Mr Gilbert said that the sale property is appreciably larger in area, however, has a similar percentage of fragmented black soil/coolibah and red basalt country and, given his view that the water situation on both properties is similar, he saw the carrying capacity on a per ha basis to also be similar to "Cuba Plains".
Mr Gilbert said that both the sale property and the subject suffer from frosts, however "Cuba Plains" is higher in elevation and therefore would endure colder winters. In his view, "Cuba Plains" has a greater weed problem than "Amelia Downs". Overall, Mr Gilbert assessed the subject land as being slightly inferior to "Amelia Downs" on a per ha basis.
Sale 2 in Mr Gilbert's valuation was "Junction Creek", which sold for an analysed unimproved price of $753,681 ($31.40 per ha) on 1 July 1996. The applied unimproved value is $640,000 or $26.67 per ha. "Junction Creek" is located approximately 203 km north-west of Charters Towers via a 57 km bitumen road with the balance of the road access being formed earth and gravel. The latter access road would be impassable during most wet seasons.
The Sale 2 property comprises approximately 1,547 ha (6.5%) open to lightly timbered black soil; 17,862 ha (74%) good open red basalt forest; 2,296 ha (9%) good to fair ironbark and box forest; with the balance 2,295 ha (9.5%) generally fair to poor forest ridges of box and ironbark on gravelly forest soils. Mr Gilbert estimated the carrying capacity of "Junction Creek" at one beast to 10.5 ha.
Mr Gilbert said that "Junction Creek" has slightly inferior access and location to "Cuba Plains". He said that "Junction Creek" is larger in area but has a slightly lighter per ha carrying capacity because of the smaller percentage of black soil on it and a component of poorer forest along the western boundary. Mr Dore said that the carrying capacity on "Junction Creek" seems high considering the carrying capacity that Mr Gilbert placed on "Cuba Plains".
Mr Gilbert said that both the quantity and distribution of natural water on "Junction Creek" is considered to be inferior to the subject property. He noted that both the Sale 2 property and the subject suffer from frosts necessitating the feeding of supplements. He said that the sale property does not have a major weed problem, although observed that the encroachment of black ti-tree onto the black soil areas is an issue as this can make mustering difficult. On an overall basis Mr Gilbert said that the subject land is considered superior to "Junction Creek" on a per ha basis.
Mr Dore said that both the sale of "Amelia Downs" and "Junction Creek" were to "outsiders". In the case of "Amelia Downs" the purchaser has bought and sold a number of properties, suggesting to Mr Dore that in the purchase of that property there is probably an element of speculation. Mr Gilbert agreed that speculation is part of the market and noted, for example, that "Spy Glass" sold on 27 July 1998 for $59 per ha, then again on 18 November 2000 for $73.70 per ha; and "Lava Plains" sold on 19 June 1996 for $34 per ha, then resold on 25 May 2000 at $50 per ha.
I accept the proposition that speculation is part of the market and the suggestion that the fact of a sale being to a speculator does not, of itself, raise a sustainable objection against reference to such a sale in the process of valuation. Apart from that I observe that speculators usually attempt to purchase a property at a low price and sell at a higher price, therefore even if in the case of the "Amelia Downs" sale the purchaser is a speculator, such an argument would be in favour of the appellant.
In the case of "Junction Creek" the purchase was by Mr Dore's sister and his brother-in-law. They had previously run a Gulf property with a tourist venture on it and found that lifestyle to be stressful. They therefore sold so they could purchase back in Charters Towers where each had family. They were clearly not "outsiders". Mr Dore was advised by the purchasers of "Junction Creek" that they had paid a high price. He was also told that "Junction Creek" was well grassed at the time of sale, whereas other properties were droughted. Purchasers seeking to relocate their herds were therefore interested in purchasing "Junction Creek" for the feed there, thus raising competition for the purchase and leading, on his understanding, to a higher price in the end. Lorin Philip Bishop, an employee of Primac Elders Stock and Station Agents had been involved in the "Junction Creek" sale and gave evidence with regard to this matter. Mr Bishop also gave evidence in the appeal with respect to "Junction Creek" itself which was heard by me at the same hearings in Charters Towers as the "Cuba Plains" appeal. In the "Junction Creek" appeal I had the benefit of hearing first hand from one of the co-purchasers. I will not set out that evidence and my consideration of it in detail here, but will refer the parties to my judgment in that matter - GF & EA Lyons v. Chief Executive, Department of Natural Resources and Mines (AV00-615) handed down today. I concluded in that matter that for the purpose of carrying out a statutory valuation as at 1 October 1999 the sale of "Junction Creek" and the statutory value applied to that property could be relied on.
Mr Bishop expressed the view that smaller properties would attract a premium in price if located only 50-70 km out of town. This is not an issue that appears to arise in Mr Gilbert's valuation.
Mr Gilbert's third sale property was "Lava Plains" which sold on 19 September 1996 for a price that Mr Gilbert analysed to an unimproved figure of $587,278 ($14.32 per ha). The Chief Executive's valuation for statutory purposes was $570,000 or $13.90 per ha. It is the least comparable of the three sales included in Mr Gilbert's valuation. Mr Gilbert saw that property as being markedly superior to the subject property, however Mr Dore felt that he did not know "Lava Plains" well enough to provide a comparison. I see no benefit in discussing this sale property further.
Mr Dore said that in his view the prices paid for a number of properties are too high to allow for economically sustainable grazing. That issue was raised in another appeal at these sittings (Adam J Allingham(AV00-478) and Adam J, Robert J & Sarah B Allingham (AV00-579) v. Chief Executive, Department of Natural Resources and Mines). In my judgment in that matter handed down today I said:
" In addition to the broad submission which I have already discussed, Mr Allingham submitted that the sales employed by Mr Gilbert ought not be relied on. He said in evidence-in-chief that properties in the Charters Towers basalt area which change hands are, with the exception of a property named 'Wandovale', not being purchased by experienced landholders in the area. Under cross-examination, however, he said that he was aware that in the case of the 'Junction Creek' sale the purchasers previously had property in the area and had family there. He agreed that there would be other sales to locals but said that some properties tend to continually change hands following short periods of ownership by outsiders. This indicates in his view, both that experienced landholders in the locality consider the prices of these properties to be unrealistic, and that those 'outsiders' who purchase these properties soon find that the production possible does not live up to their expectations, so they move on. Mr Allingham did not submit that the sales relied upon by Mr Gilbert are not proper market transactions. Indeed he agreed that if he were selling one of his own properties he would seek to achieve the best price that he could, notwithstanding the prospect that such a price may in due course lead to overstocking and degradation of that property.
It may be that by the provision of detailed and comprehensive evidence a case can be made out that a number of purchases do not meet the Spencer test, however, in the absence of such cogent evidence, I must accept the prima facie evidence that a sale is a market transaction. Commonly, a consistency in the level of price paid will show that sales are 'at market'. A sale will either be a 'high' or 'low' sale if its price is not consistent with the market. There is no evidence that the sales relied upon by Mr Gilbert are other than consistent in price and therefore are 'at market'. The unpreparedness of many people in the basalt area to pay asking prices for properties is not evidence of value or lack of value, for that matter, for it is not the case that there is a reverse test of the Spencer test provided by Griffith CJ to that effect."
…
"It seems to me to be quite clear that the applicable law requires the Chief Executive to find the market value of lands to be valued (subject to statutory requirements concerning the notional removal of improvements) and that a value based on sales that are comparable and which reflect the test of value supplied by Spencer would be appropriate. To go beyond those sales and to introduce an element based on sustainability and rational economics is to, in effect, reject the best evidence of market value. There is no warrant in the law that I can find or to which I was referred by the appellants which requires or endorses this."
Mr Dore said that the carrying capacity of "Cuba Plains" had been previously assessed by the "Department of Lands at 1 beast to 12 ha; an assessment that he wanted retained. Court records indicate that the rental of the subject property was contested before Mr Barry on 1 December 1977. The Crown estimated a carrying capacity of 1:12 ha on that occasion - the lessee did not contest that estimate which appears to have been retained historically.
The question of the appropriate carrying capacity for the basalt country was discussed in some detail in the case of Allingham (supra). The combination of sales evidence and scientific work at "Hillgrove" is discussed in that judgment with the result being that I accept a benchmark carrying capacity of 1 beast to 10 ha on red basalt country. Mr Gilbert's estimated carrying capacity for the subject property is based on that benchmark and on the classification of the "Cuba Plains" country. That is an acceptable method. For what it is worth, Mr Dore said that the subject property is presently carrying 2,000 head of mixed cattle which he equates with an adult equivalent of 1,700.
Whilst an estimated carrying capacity needs to take account of the actual numbers of head that can be safely carried on a property, it largely becomes an expression of a classification of country. As such it is necessary that sales evidence used for valuation purposes have their carrying capacities assessed on the same basis. Mr Gilbert did this. Were he to adopt a different benchmark for red basalt country on the subject property then he would similarly have to adjust the carrying capacity estimates on the sale properties. The result would not change because the real comparison is between the properties, with the classification of country being one part, albeit an important part, of the comparison process.
Mr Dore provided some evidence with respect to other valuations of the Chief Executive as at 1 October 1999: "Grenfell Downs", "The Brook", "Ellenvale" and "Felspar". The cogency of such evidence is often limited, given that the task of the Chief Executive and therefore, of the Court, is to determine unimproved value, not relativity of values; however, given that "Ellenvale" and "Felspar" values were also contested before me at these sittings in Charters Towers and as their values were based by Mr Gilbert on the same three sales he included in his "Cuba Plains" valuation, their evidential weight is enhanced. Before coming to these two properties, however, I will comment on the other relativity properties mentioned by Mr Dore.
"Grenfell Downs" was valued by the Chief Executive at $28 per ha. The property is located closer to Charters Towers than is "Cuba Plains" and therefore, in that respect, would be superior to the subject property. Mr Dore had not been on "Grenfell Downs", but understands that it has a larger area of black soil than does "Cuba Plains". "The Brook" was valued by the Chief Executive at $27.13 per ha. Mr Dore has seen this property from the air and did help muster it some years ago. In his view it is better naturally watered than "Cuba Plains" and its springs/soaks are not as boggy as on the subject property. It adjoins "Cuba Plains" on the south-east and is therefore a little closer to Charters Towers.

"Ellenvale" was valued by the Chief Executive at $23.37 per ha. It is located 8 to 12 km further up the road from "Cuba Plains", according to Mr Dore, who has been on part of that property. He described that part as being similar country to "Cuba Plains". He noted that "Ellenvale" has some sandy country, but also has some good black and red basalt country and the Basalt River banks are not as steep there as on "Cuba Plains", in his view. He thought "Ellenvale" to be better naturally watered than the subject. Mr Gilbert agreed.
"Felspar" was valued by the Chief Executive at $27.69 per ha. It is closer to Charters Towers than "Cuba Plains". Mr Dore had mustered on "Felspar" some years ago and observed that it has some rough country including basalt ridges, but has some good black soil plains. He said that it produces good bullocks.
Mr Dore said that "Cuba Plains" has historically had a lower per ha value than each of "Ellenvale", "The Brook", "Grenfell Downs" and "Felspar". The following table summarises this evidence:

Property	1996 and 1998	1999	Percentage Increase
"Ellenvale"	$16.88 per ha	$23.37 per ha	38%
"The Brook"	$18.33 per ha	$27.13 per ha	48%
"Grenfell Downs"	$25.74 per ha	$28 per ha	8.8%
"Felspar"	$18.38 per ha	$26.69 per ha	45%
"Cuba Plains"	$16.73 per ha	$28.43 per ha	70%

Mr Dore said that both the movement of "Cuba Plains" from the lowest valued property to the highest on this list and the percentage increase in value of the subject property point to the Chief Executive's value of "Cuba Plains" as at 1 October 1999 as being wrong. Whilst the task of the Court is to do with the issue of establishing unimproved value and, in that context, percentage changes in value and adjustments in relativity cannot by themselves point to the value that ought to be applied, I think that it is unquestionably the case that changes of the order of those set out in the above table reasonably raise a question as to whether the Chief Executive's valuation at the current relevant date is correct. That question is not properly answered, however, by considering percentage increases in value but by looking at the evidence of value; that is, the sales evidence. The relativity between statutory values is not irrelevant but is a secondary issue. The properties "Ellenvale", "Felspar" and "Cuba Plains" were all the subject of appeals heard at these sittings at Charters Towers. Mr Dore has not produced evidence which convinces me that the valuation of the subject property is not a correct relativity to the other statutory valuations.
Mr Dore introduced the sale of "Wandovale", a property purchased by a syndicate of local graziers in May 1998. "Wandovale" has an area of 220,00 ha and was purchased for $5,155,000, including stamp duty, bare of cattle but with a substantial amount of plant and some horses. The 1999 unimproved value placed on "Wandovale" by the Chief Executive was $1,200,000, whereas it had been $1,400,000 in the previous 1998 valuation. Mr Gilbert said that "Wandovale" with a price in excess of $5,000,000 and an area many times that of "Cuba Plains" is not an appropriate sale to consider for the purpose of valuation. The "Wandovale" transaction is in a quite different market from "Cuba Plains", in his view. I accept that evidence.
Mr Dore suggested that the sale of "Glencoe" provided a suitable basis of valuation - one not subject to the criticism that he has levelled at the sales of "Junction Creek" and "Amelia Downs". He acknowledged that the vendor of "Glencoe" was under some financial pressure but said that substantial plant and machinery were on the property and could have been sold to alleviate the debt position. Lower offers had apparently been rejected by the vendor of "Glencoe", according to Mr Dore. "Glencoe" sold for $3,000,000 on 23 November 1997. Mr Dore did not provide an analysis of that sale to show an unimproved price.
Mr Gilbert said that "Glencoe" was not included as a suitable sale for valuation purposes as the analysis of the sale to an unimproved price revealed a much lower price per ha than other sales in the area. In addition to that factor, the sale included 3,000 head of cattle and substantial plant and improvements, therefore its analysis to an unimproved figure posed greater difficulties for the valuer than did more lightly improved sales. The matter of the "Glencoe" sale was raised as a cental issue in the appeal Knuth v. Chief Executive, Department of Natural Resources and Mines which was heard at these sittings in Charters Towers. In that appeal I had the advantage of hearing evidence from the purchaser and in my judgment in that matter handed down today concluded that the sales relied upon by Mr Gilbert were better bases for establishing unimproved values.
I should mention that Mr Dore's introduction of the "Glencoe" and "Wandovale" sales was not done in order that these transactions might be compared with the subject property. What he did was to simply point to their statutory valuation changes of +33% and -14%, respectively, to suggest that a percentage increase for "Cuba Plains" of 20% would be acceptable to the appellant. Unfortunately, that is not an acceptable method of proving that the valuations of the respondent in the subject case are wrong. What is needed is comparison with sales which have been analysed to an unimproved state.
In this case and in other cases at these sittings in Charters Towers the landholders preferred to conduct their own cases individually and not to group together to fund a case assisted by the expertise of a registered valuer. Of course, it is the right of individuals to argue their own cases, however, in the context of the Valuation of Land Act where the appellant carries the burden of proof (s.45(3) and (4)) and where, unless proven wrong, the valuation of the Chief Executive is deemed to be correct (s.33), the conduct of cases by lay persons places them at a distinct disadvantage as against the Chief Executive, who relies on the services of an experienced registered valuer and whose cases are conducted by a lawyer. This was an issue considered in the case of Qualischefski v. The Valuer-General (1979) 6 QLCR 167 at 172:-
"However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradistinction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties."

In the present appeal the appellant has not discharged the "statutory onus of proof". Accordingly, the appeal is dismissed and the valuation of the Chief Executive is affirmed.

RP SCOTT
MEMBER OF THE LAND COURT

[2001] QLC 101

28 September 2001