Elliott v Department of Natural Resources and Water
[2008] QLC 9
•22 January 2008
LAND COURT OF QUEENSLAND
CITATION: Elliott v Department of Natural Resources and Water [2008] QLC 0009 PARTIES: Terrence N Elliott and Heather M Elliott
(appellants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2006/0161 DIVISION: Land Court of Queensland – General Division PROCEEDING: An appeal against annual valuation. DELIVERED ON: 22 January 2008 DELIVERED AT: Brisbane HEARD AT: Longreach MEMBER: Mr JJ Trickett, President ORDER: The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of "Glenample" as at 1 October 2005 is determined at One Million, Eight Hundred and Thirty-Seven Thousand Dollars ($1,837,000). CATCHWORDS: Unimproved value – grazing property in Aramac Shire – possible conflict of interest – valuer's possible financial benefit in outcome - classification of country – direct comparison with analyses of improved sales – method of analysis – added value of sheep improvements – choice of appropriate sales – relativity of values - Valuation of Land Act 1944. APPEARANCES: Mr P Whip, Valuer, for the appellants.
Mr W Isdale, Executive Legal Consultant, Crown Law, for the respondent.
This is an appeal by landowners in the Shire of Aramac against the unimproved value applied to their land by the Chief Executive, Department of Natural Resources and Water (the Department) under the provisions of the Valuation of Land Act 1944 (the Act).
Background
TN & HM Elliott (the appellants) are the owners of a grazing property known as "Glenample", situated in the Shire of Aramac, containing an area of 16,406 ha. As at 1 October 2005, the Department applied an unimproved value of $2,100,000 to that land under the provisions of the Act. The owners appealed to the Land Court against that valuation. The grounds of appeal are quite general in nature, but contend that the valuation is excessive because of failures by the Department to understand the facts or to apply the correct principles of valuation. The owners' estimate of the unimproved value is stated to be $820,000.
However, at the hearing of this appeal, the owners relied upon the evidence of registered valuer, Mr C V Dyer, who assessed the unimproved value of "Glenample" at $1,150,000, or $70/ha. The Department relied on the evidence of registered valuer, Mr P D Schefe, who gave evidence in support of the Department's valuation of $2,150,000, or $128/ha.
The parties agreed that any relevant evidence from other cases heard at this sittings in Blackall and Longreach and at subsequent sittings in the central west, should be treated as evidence in this case.
Preliminary Point – Possible Conflict of Interest by Valuer
While not objecting to the admissibility of Mr Dyer's evidence, counsel for the Department, Mr Isdale, raised the issue of his possible conflict of interest. Mr Isdale contended that this arose because Mr Dyer had a financial interest in the outcome of this appeal. Mr Dyer's principal basis of valuation is the sale of a property known as "Stainburn Downs", of which Mr Dyer is a part owner and which he manages on behalf of his family. Mr Dyer and the other owners of "Stainburn Downs" appealed against the Department's valuation of their property, which appeal is yet to be dealt with and which could depend on the outcome of this case.
Mr Dyer, in his defence, responded that he had been a registered valuer for many years both in the public and private sectors and was well aware of the professional obligations of a valuer as an expert witness. He acknowledged that he was in a somewhat unusual situation but considered that he acted professionally and objectively and that he guarded against what could be perceived as partiality.
During the course of his evidence I was alert for any signs of partiality on his part. However, in my view, Mr Dyer acted professionally throughout and gave his evidence in an objective manner, readily conceding points against him and was not argumentative, or in any other way demonstrating any overt bias. As far as I was able to ascertain, Mr Dyer presented his evidence in a professional manner, as required by the valuers' code of professional conduct and his duty as an expert witness.
Aside from any possible conflict of interest, Mr Dyer had the advantage of intimate knowledge of the sale property and the subject land and the Aramac and central western area generally, which enhanced his credibility as an expert witness.
Therefore, although the issue was correctly raised by Mr Isdale, I find that in this case no such conflict of interest manifested itself in the quality of Mr Dyer's evidence. I found him to be a credible and honest witness.
The Subject Land
"Glenample" is situated above 11.5 kms (according to Mr Schefe) west of the town of Aramac. Access is by means of 5 to 6 kms of the bitumen sealed Aramac to Muttaburra Road, then about 10 kms of the formed earth and gravel "Glenample" Road. However, that access is frequently cut by Corinda (Bullock) Creek. Alternative but longer access is available by about 30 kms of the bitumen sealed Muttaburra to Aramac Road. However, even that access is cut by creeks and is not all weather.
"Glenample" has the usual rural services, power, automatic telephone, twice weekly mail service and satellite TV. It is adequately watered by a flowing bore, bore drains and dams. It is used for the grazing of both sheep and cattle.
Land Classification and Carrying Capacity
According to Mr Dyer "Glenample" comprises:
approximately 13,700 ha (84%) open to lightly shaded Mitchell grass downs, with a carrying capacity of 1 sheep to 1.4 ha;
approximately 2,194 ha (13%) pulled stony gidyea scrub growing mostly herbage, with a carrying capacity of 1 sheep to 2.4 ha;
approximately 512 ha (3%) flooded channels and flats associated with Bullock Creek, with a carrying capacity of 1 sheep to 2 ha;
Overall carrying capacity 1 sheep to 1.5 ha, or 10,937 dry sheep equivalents.
Mr Schefe saw "Glenample" somewhat differently. His classification of the country is as follows:
approximately 12,351 ha (75%) Mitchell grass downs with black/brown soils, with some areas of shaded red brown pebbly downs, timbered with boree gidyea and false sandalwood, about 250 ha of the heavier timbered boree gidyea downs has been cleared;
approximately 1,650 ha (10%) alluvial open downs, situated west of Corinda Creek, with a reasonable coverage of Mitchell grass;approximately 1,700 ha (10%) developed gidyea scrub, with red to brown soil, parts pebbly, with the logs still on the ground (unburnt), with scattered regrowth between 0.5 m to 1 m in height, some areas 1.5 m to 2 m high, with little or no evidence of introduced perennial grasses over the whole of the cleared area;
approximately 650 ha (4%) Corinda (Bullock) Creek channels, timbered with coolibah, some gidyea and dogwood;
approximately 55 ha (1%) virgin gidyea scrub in one single patch;
Overall carrying capacity 1 sheep to 1.45 ha, or 11,314 dry sheep equivalents.
There is little difference between the valuers in the classification of the country. Mr Schefe has classified in somewhat more detail than Mr Dyer. If the area of 1,650 ha of alluvial downs is included with the other downs country, there is little between them on the area of downs country. Furthermore, if the area of 250 ha of boree/gidyea downs which has been developed, is included with the developed gidyea country, and the area of virgin gidyea country is added, there is little between them as to the total area of gidyea scrub.
In summary, therefore, "Glenample" comprises predominantly open to lightly shaded Mitchell grass downs country, with an area of flooded channels associated with Corinda Creek and an area of approximately 2,000 ha of gidyea scrub, most of which has been developed, but which is pebbly to stony, growing mostly herbage and with regrowth in parts.
The valuers are also reasonably close in their assessment of carrying capacity. However, they take a somewhat different view of the developed gidyea scrub. Mr Schefe concedes that the developed area shows little evidence of buffel grass but he seemed to consider that with proper management the area could be as productive as the developed gidyea country in the Blackall Shire. However, he relies for that assessment on his conversations with a departmental expert who had never inspected the development on "Glenample". I accept Mr Dyer's assessment that it is a different type of gidyea country to the Blackall area, is inferior to most of the gidyea country on "Stainburn Downs" and generally is not suitable to the establishment of buffel grass. Except for a small area (probably the 250 ha of boree/gidyea development), which Mr Dyer concedes was well established, there was little buffel grass on the balance of the developed area, which is only herbage country and subject to regrowth.
In the circumstances, I find that Mr Dyer's evidence is more persuasive and I accept his assessment of carrying capacity at 1 sheep to 1.5 ha, or 10,937 sheep.
The Issues
The principal issues between the two valuers lies in the sales upon which they rely for their respective assessments. Mr Dyer relied on two sales, the sale of "Stainburn Downs" already mentioned and the sale of "Auteuil".
"Stainburn Downs", with an area of 15,925 ha, sold in April 2004 for $2,300,000, and was analysed by Mr Dyer to an unimproved value of $50/ha. "Stainburn Downs" comprises mixed downs and gidyea country. Mr Dyer classified the property as follows:
approximately 4,735 ha (30%) open undulating Mitchell grass downs, with a carrying capacity of 1 sheep to 1.4 ha;
approximately 7,305 ha (46%) gidyea scrub with areas of broken Mitchell grass plains onto boree forest/scrub, mostly pulled, with a carrying capacity of 1 sheep to 2 ha;
approximately 1,133 ha (7%) flooded coolibah and gidyea creek channels and flats associated with Bullock, Sandy and Corinda Creeks, with a carrying capacity of 1 sheep to 2 ha;
approximately 1,862 ha (12%) mixed black gidyea forest, being mostly stony with lighter herbage only rising to some rougher stony hills, with a carrying capacity of 1 sheep to 4 ha;
Approximately 890 ha (5%) inferior sandy iron bark forest, with areas of stony outcrop, with a carrying capacity of 1 sheep to 4 ha;
Overall carrying capacity 1 sheep to 1.9 ha, or 8,382 sheep.
"Auteuil", with an area of 8,381 ha, sold in November 2006 for either $1,636,680 (Mr Dyer as informed by purchaser and agent), or $1,703,130 (contract), or $1,489,630 (Titles Office transfer document). The sale included a number of stock about which there was disagreement between vendor and purchaser. Mr Dyer is of the opinion that the adjustment between the parties resulted in the ambiguity as to the actual sale price. However, using the sale price advised to him by the purchaser and the agent, Mr Dyer analysed the sale of "Auteuil" to an unimproved value of $81/ha. According to Mr Dyer, "Auteuil" comprises open to lightly shaded undulating Mitchell grass downs, falling to coolibah creek flats and hollows, lightly timbered with whitewood and vinetree. It has areas of prickly acacia infestation. Mr Dyer assessed the overall carrying capacity at 1 sheep to 1.4 ha, or 5,987 sheep.
On the other hand, Mr Schefe relied on four quite different sales. He rejected Mr Dyer's sales because he considered that they were too old and that "Auteuil" was complicated by the disagreement about the stock. The sales upon which Mr Schefe relied are as follows:
1."Brendallan", with an area of 7,351 ha, sold in September 2004 for $1,503,500 and was analysed by Mr Schefe to an unimproved value of $129/ha. As at 1 October 2005, he applied an unimproved value of $126.50/ha. According to Mr Schefe, "Brendallan" comprises:
§about 6,501 ha (88%) good open sparsely shaded downs with some stony ridges and claypan, mostly with scattered mimosa,
§about 850 ha (12%) of developed gidyea in the southern portion.
He assessed its carrying capacity at 1 sheep to 1.41 ha.
2."Illabunda", with an area of 6,013 ha, sold in August 2005 for $1,188,774, which was analysed by Mr Schefe to an unimproved value of $156.57/ha and to which he applied $133/ha. According to Mr Schefe, "Illabunda" comprises firm and well shaded downs, with patches of boree, gidyea, whitewood and vinetree. He assessed its carrying capacity at 1 sheep to 1.4 ha.
3."Newstead", with an area of 12,251 ha, sold in July 2004 for $2,754,889, which Mr Schefe analysed to an unimproved value of $158.50/ha and to which he applied $151/ha. According to Mr Schefe, "Newstead" comprises sparsely shaded to open loose brown soil downs, part scalded, with a small area of shaded pebbly downs in the south west corner. He assessed the carrying capacity at 1 sheep to 1.45 ha.
4."Ascot Downs", with an area 6,303 ha, sold in May 2005 for $1,300,600, which Mr Schefe analysed to an unimproved value of $168.67/ha and to which he applied $149/ha. According to Mr Schefe, "Ascot Downs" comprises open Mitchell grass downs with some gidyea and boree country on the northern boundary, with areas of ashy downs on the western boundary. He assessed its carrying capacity at 1 sheep to 1.4 ha.
Before considering the issues between the valuers, I turn briefly to the relevant legal principles governing the assessment of unimproved value.
The Relevant Legal Principles
For a more detailed discussion of the law and valuation principles see Walker & Fairfax v Department of Natural Resources and Water [2008] QLC 0008.
The Act requires that the Department assess the unimproved market value of each parcel of land, on the assumption that the improvements did not exist, but also assuming the existence of all present facilities and amenities external to the land.
Market value is the price that a willing but not an over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in value of the property: Spencer v The Commonwealth (1907) 5 CLR 418.
It is well established that the unimproved value of land is ascertained by reference to the prices that have been paid for similar parcels of land: Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137. However, where there are no sales of unimproved land which can be used as a basis for the assessment of unimproved value, it is necessary to analyse sales of improved land for the purpose of ascertaining, as far as is possible, what part of the purchase price of the sale property relates to improvements and what part is attributable to the land itself: The Valuer-General v Marano (1978) 5 QLCR 194.
That process of arriving at the unimproved value by comparison with the analyses of sales of improved land was adopted by the valuers in arriving at their assessments of unimproved value for "Glenample".
Under the provisions of the Act, the Department's unimproved value is deemed to be correct until proved otherwise and the onus and burden of proof is upon the appellants.
The Added Value of Sheep Improvements
From evidence in this and other cases, it is clear that throughout the whole of the central west, an area traditionally devoted to sheep-breeding and wool-growing, there has been a change of dominant use from sheep to cattle. There is evidence that many properties which were formally devoted to sheep-breeding and wool-growing have been sold to purchasers who intend to run only cattle. However, each of those properties was developed with all the infrastructure required for running sheep. On the other hand, there is evidence that many properties throughout the area still run sheep, or both sheep and cattle. It became an issue in this and other cases as to what value the sheep improvements add to land which has been purchased by a person intending to run cattle.
The valuers in this case adopted quite different approaches to the valuation of sheep improvements. Mr Schefe was of the opinion that the market in the area was a cattle market, not a sheep market. All but one of the sales that he had investigated had been purchased by people who intended to run cattle rather than sheep. He concluded that the sheep improvements on the sales were obsolete and added no value to a cattle property. Therefore, in analysing the sales he wrote off the value of shearing sheds, shearers quarters and other improvements which had been devoted to the running of sheep rather than cattle. He applied some limited value to those improvements which could be used for cattle purposes. For example, he attributed a machinery shed value to a shearing shed which could be converted to use as such, but significantly less than its cost less depreciation as a shearing shed.
On the other hand, Mr Dyer attributed full value to the sheep improvements. He gave evidence that as one of the purchasers of "Stainburn Downs", although it had been purchased to run cattle, he was aware of the sheep improvements and intended to maintain them so that there was the option of running sheep at a later stage, or perhaps selling out eventually to a purchaser who intended to run sheep. Although he did not consciously attribute a value to each of the sheep improvements, nor did he attribute a separate value to any of the other improvements. However, he was aware that the sheep improvements were there and would not have to be replaced if there was to be a change of use. He considered that part of the purchase price had been for them.
There was some support for Mr Dyer's approach in this and other cases. There was evidence of maintenance of sheep improvements by owners who had purchased properties to run cattle. In other cases, the sheep improvements had been allowed to remain and not sold off or demolished. There was also evidence of confidence of the future of the wool industry and in one case the replacement of a shearing shed destroyed by a wind storm.
Mr Schefe contends that he was adopting the added value principles discussed by the Land Appeal Court in O'Brien Nominee Pty Ltd v The Valuer-General (1979) 6 QLCR 280. In that case the unimproved value of sheep-breeding and wool-growing land had to be ascertained in a period when the wool industry was suffering depressed economic conditions. The sale prices of such lands were considerably below those which had formerly prevailed. In considering the approach to be adopted to the analyses of the improved sales in such circumstances, the Land Appeal Court referred to the added value provisions of the Act before concluding at pp. 285 - 286:
"'Added value' in these circumstances continues to be a matter of ascertaining what value the improvements add to the land in question at the relevant date irrespective of their cost, but owing to the special circumstances prevailing, there is a change of emphasis and it is a matter of ascertaining the amount which the hypothetical prudent purchaser, fully appreciative of the depressed economic conditions, would give for the actual improvements, irrespective of the cost of making them. In short it is the value the market is prepared to pay for the specific improvements on the property."
The market in the present case was not one of depressed sale prices. The evidence is of an increasing market for grazing properties. However, there has clearly been a change of emphasis from wool-growing and sheep-breeding to cattle grazing. The majority of purchasers obviously consider it is more profitable to raise cattle than to grow wool. However, this is traditional wool-growing country and, in my view, it would be short-sighted for a purchaser to abandon the sheep improvements. It is not possible to predict what future market trends will be and a prudent purchaser would regard the sheep improvements as adding value to the land, allowing for the flexibility for using the property for either sheep or cattle or both, in the future.
Therefore, I am of the view that in analysing the sales the sheep improvements should not be written off. However, on the evidence in this and other cases, I do not think that a person purchasing land for cattle grazing would pay the same value for the sheep improvements that would be paid for improvements essential to a cattle enterprise. While it would be prudent to maintain those improvements to allow a degree of flexibility, in my view, a prudent purchaser would not pay the full cost less depreciation value of those improvements. In other words, they do not add full value to the land at the date of purchase.
In O'Brien Nominee, the Land Appeal Court emphasised that it is the actual improvement on the land which must be considered, not some hypothetical standard of improvement. The Court went on to say at p. 287:
"The nature, type, effectiveness and efficiency of the actual improvement, its age and condition are all relevant matters for consideration in ascertaining what amount the prudent purchaser would pay for the improvement in question on the basis of the value it adds to the land at a relevant date which is in a period of adversity or depressed economic conditions."
Similar principles apply in the present case, in my view, even though the economic conditions are quite different. Although any assessment of added value of sheep improvements in these circumstances is necessarily arbitrary, it would seem reasonable that a prudent purchaser who intended to use the property for the running of cattle, would have discounted the sheep improvements to a somewhat greater extent than the value calculated by the traditional cost less depreciation method.
The Appropriate Sales
It was common ground that there had been a considerable increase in the improved prices of properties in the area between early 2004 and the date of valuation in October 2005. Mr Dyer relied on earlier sales, while Mr Schefe's sales are somewhat later.
The improved sale prices per ha for the properties relied on by Mr Dyer are:
"Stainburn Downs", April 2004, sold for $144.42/ha (mixed downs and gidyea);
"Auteuil", June 2004, sold for $173/ha (Mr Dyer's figure ex stock and plant) (all downs).
The improved selling prices for the sale properties relied on by Mr Schefe are:
"Brendallan", September 2004, sold for $204.53/ha (mainly downs);
"Illabunda", August 2005, sold for $197.70/ha (all downs);
"Newstead", July 2004, sold for $224.87/ha (all downs);
"Ascot Downs", May 2005, sold for $206.35/ha (all downs).It is to be noted that while Mr Schefe rejected the sales relied on by Mr Dyer because he thought that they were too old, he had included the sale of "Newstead" in July 2004 and "Brendallan" in September 2004, which sold only one month and three months respectively after the sale of "Auteuil". When questioned on whether the market had increased between June and July 2004, Mr Schefe said that "there has to be a start somewhere" (Transcript page 106). However, elsewhere Mr Schefe said that he had included "Newstead" because it showed the higher level of value.
While Mr Dyer conceded that there had been an increase in the market between the sale of "Stainburn Downs" in April 2004 and the date of valuation, particularly in the latter part of that period, he contended that it was by no means as dramatic as shown by Mr Schefe's analyses of his chosen sales.
It is unfortunate that the valuers had not analysed at least one common sale. It would then be possible to compare their approaches to the analysis of the sale. As it is, I am left with the evidence of each of them without being able to compare their analyses.
In the present circumstances, I am of the view that I cannot reject any of the sales simply because of the date of the transaction. It will therefore be necessary to examine each of them in order to determine what evidentiary value they have.
The Sale of "Stainburn Downs"
Although Mr Schefe did not analyse the sale, he gave evidence that two other departmental valuers, Mr Kelsey and Mr Taylor, had analysed the sale of "Stainburn Downs", attributing full value to the sheep improvements, to arrive a per ha value very similar to that arrived at by Mr Dyer. While I did not have the benefit of hearing from either Mr Kelsey or Mr Taylor, the analysis of the sale was called for by Mr Whip and was produced and tendered.
This Court has held on several occasions that where a valuation is tendered but the author of that valuation does not give evidence, little weight can be placed upon it, because it is little better than hearsay. Although hearsay evidence is admissible in this Court, it does not have the same weight as direct evidence. However, in this case, the analysis by Mr Kelsey and Mr Taylor does lend support to Mr Dyer's analysis of "Stainburn Downs". But both analyses have allowed full added value to the sheep improvements, which I have found not to be appropriate. Although there was not sufficient evidence for me to undertake a re-analysis of the sale, it is reasonable to assume that such a re-analysis would result in an unimproved value somewhat higher than $50/ha.
In addition, the sale of "Stainburn Downs" took place in April 2004. The date of valuation is 1 October 2005. Mr Dyer concedes that there was an increase in the market value of properties between those dates, particularly in the latter part of that period. The Department applied an unimproved value of $1,300,000, or $81.63/ha, to "Stainburn Downs". In the absence of any better evidence, that valuation must be deemed to be correct. Although that valuation is subject to appeal, it does indicate a significant increase in the unimproved value as analysed by the Department at the date of sale and the unimproved value applied at the date of valuation.
The Sale of "Auteuil"
The second sale relied on by Mr Dyer, "Auteuil", has an area of 8,381 ha, comprises open downs country and has an infestation of prickly acacia. It is situated approximately 29 kms south of Aramac. It sold in June 2004, but there is confusion about the sale price, possibly because of a disagreement between the vendor and purchaser about the number of stock that passed with the transaction and the adjustments that were made.
Mr Dyer could not account for the difference, but he speculated that the sale price shown on the transfer document might have excluded the value of stock and plant. His analysis of the sale price of $1,636,680 indicates a value ex-stock and plant of $1,449,630. After deducting the value of improvements from that figure, Mr Dyer's analysed unimproved value for "Auteuil" was $80.97/ha.
The Sale of "Brendallan"
"Brendallan" is Mr Schefe's best sale. It is physically closest to "Glenample" and comprises a reasonably similar mixture of downs and gidyea country. However, Mr Schefe saw the country on "Brendallan" as slightly ahead of "Glenample", at carrying capacities of 1 sheep to 1.41/ha and 1 sheep to 1.45/ha respectively. Although the sale was in September 2004, over twelve months prior to the date of valuation on what was agreed to be a rising market, Mr Schefe applied $126.50/ha to "Brendallan", less than his analysed unimproved value of $129/ha.
In comparing the sale with the subject land, Mr Schefe concluded that it was inferior to "Glenample" to which he applied $128/ha.
In my view, this cannot be correct. "Brendallan" adjoins the town of Aramac therefore is better located and has no access problems. On Mr Schefe's assessment, "Glenample" has inferior country and carrying capacity and it is more than twice the area of the sale property. Mr Schefe's reasoning for the relative merits of the properties is that "Brendallan" is dissected by two bitumen sealed roads and severed by an 800 m wide stock route. It is also affected by flooding in the creek channels. However, Mr Dyer gave evidence of flooding on "Glenample" where stock losses had occurred.
In my view, the situation, all weather access and better quality of country, would more than compensate for any problems caused by the roads. The stock route is likely to be a positive attribute. Mr Dyer contends that the unimproved value of "Glenample" should be considerably less per ha than that applied to "Brendallan". Having regard to the qualities of "Brendallan", I tend to agree with Mr Dyer.
The Sale of "Newstead"
Mr Schefe's third sale, "Newstead", sold in July 2004, was analysed by Mr Schefe to show $158.50/ha and he applied $151/ha. It is well to the south of the subject land, virtually adjoining "Illafracombe", with access by the bitumen sealed Landsborough Highway and only 31 kms from Longreach. It is all open downs country. Although he has assessed carrying capacity as similar to "Glenample", that carrying capacity was achieved without the necessity to clear 2,000 ha of gidyea scrub. Therefore the country on "Newstead" is somewhat superior to "Glenample". It is closest in size of all Mr Schefe's sales.
Mr Dyer contends that the sale of "Newstead" is not comparable with the subject land, because of its situation and superior country. In addition, he considers that the sale price was affected by the purchaser's requirement for proximity to school facilities. It is, he contends, also in a different locality, with a different rainfall. However, he could not challenge Mr Schefe's analysis of the sale as he had not inspected nor analysed it.
The sale of "Newstead" was relied on by the Department in the appeal against the valuation of the property known as "Tara", (AB Walker v Department of Natural Resources and Water [2008] 0005). I rejected the sale in that case because the Department's valuer had not inspected it but had relied upon Mr Schefe's analysis and comparisons. Mr Schefe did not give evidence in that case. There is no such difficulty here. However, in that case Mr Dyer had relied upon the sale of a property known as "Ashgrove", situated in close proximity to "Tara". The Department had not relied on the sale of "Ashgrove", but had analysed it. In the event, I found the sale of "Ashgrove" to be the appropriate basis for the valuation of "Tara".
It is therefore somewhat surprising that Mr Schefe relies on the early sale of "Newstead", but excludes the sale of "Ashgrove". This no doubt stems from their respective prices per ha.
Because Mr Dyer has not carried out an analysis of the sale of "Newstead", he was not able to challenge Mr Schefe's analysis. However, it is clear that the value of "Glenample" must be considerably less per ha than the value applied by the Department to "Newstead", notwithstanding the early date of the sale.
The Sales of "Illabunda" and "Ascot Downs"
Mr Schefe's second and fourth sales are the sales of "Illabunda" and "Ascot Downs". Both those sales, Mr Dyer contends, are "paddock sales" with little or no structural improvements and both of which were purchased by over-anxious purchasers who were desperate for grass. Both are open Mitchell grass downs properties, much smaller than "Glenample". It is common ground that they are superior in value per ha.
Mr Schefe analysed "Illabunda" to show $156.57/ha, but applied only $133/ha to that property. He analysed "Ascot Downs" to show $168.67/ha, but applied only $149/ha.
"Illabunda" sold for $197.70/ha improved, while "Ascot Downs" sold for $206.35/ha improved. Those are similar to the prices paid for fully improved properties with existing sheep infrastructure, such as "Brendallan" at $204.53/ha. For whatever reason, it seems that the purchasers of those lightly improved properties had to pay the same price per ha as for fully improved properties. That could indicate that there were special circumstances to those sales and that Mr Dyer was correct in contending that they were purchased by over-anxious purchasers.
However, it seems to me that there may be another explanation. Both valuers agree that such lightly improved or "paddock" sales are quite scarce. It may be that since they are so scarce, those sales attract a premium in the market place.
There is authority for the proposition that the best evidence of unimproved value of land will usually be from sales of vacant or lightly improved comparable land: see for example, Fischer v The Valuer-General (1983) 9 QLCR 44 at 46 (LAC); Barnwell v The Valuer-General (1989) 13 QLCR 13 at 17 (LAC); Grahn v The Valuer-General (1992) 14 QLCR 327 at 328 (LAC). However, that may not be so when lightly improved sales are scarce. See Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111.
It was also common ground that each of those sales is less than a living area, "Illabunda" is just over 6,000 ha, while "Ascot Downs" is just over 6,300 ha. The valuers agree that they are the type of properties that nearby landowners would buy as additional areas. This could give the few lightly improved small properties a scarcity premium. Mr Schefe gave evidence that the purchaser of "Illabunda" held the property for just two months before selling it for $1,600,000, over $400,000 more than he paid for it. Mr Schefe obviously recognised that there was something wrong with those sales by applying significantly less than the analysed unimproved values for both "Illabunda" and "Ascot Downs". In my view, those lightly improved or "paddock" sales are not a reasonably representative group of sales.
Conclusion
I conclude that Mr Schefe was not so much concerned with the date of the sale, but with the level of the sale price and to a lesser extent, the analysed unimproved value. On the other hand, Mr Dyer generally rejected the higher sales as being special circumstances sales and relied on his analysed unimproved values of "Stainburn Downs" and "Auteuil", without any adjustment for the date of those sales.
The state of the evidence is therefore quite unsatisfactory. There is no sale upon which I can rely with any confidence. I can merely conclude that Mr Schefe's sale of "Brendallan" is the least worst of the sales but is still deficient. Mr Dyer's analysis of "Stainburn Downs" is supported by the Department's analysis, but it should be adjusted to reflect my finding of the value of the sheep infrastructure and for the increased market value by the date of valuation. However, on the state of the evidence I am not in any position to do this. I must accept that the unimproved value applied to "Stainburn Downs" by the Department of $81.63/ha is correct.
As stated earlier, "Brendallan" consists of roughly the same proportion of downs and gidyea country as "Glenample". However, it seems to be common ground that it has better carrying capacity. In my view, significant adjustments must be made in comparing the sale with the subject land for their respective locations and areas. "Brendallan" is adjacent to the town of Aramac, with all weather bitumen sealed access and is only 7,351 ha. On the other hand, "Glenample" is further removed from the town and does not enjoy all weather access. It is also more than twice the size.
On the other hand, "Stainburn Downs" has much the same location and access and is reasonably similar in size. However, it is considerably inferior in country having a greater proportion of gidyea scrub and lighter carrying country. Therefore, "Glenample" must have a higher unimproved value per ha than "Stainburn Downs".
The Department applied $81.63/ha to "Stainburn Downs". Utilising Mr Dyer's carrying capacity of 1 sheep to 1.9 ha, that is a sheep area value of $155. Having regard to the much smaller proportion of gidyea scrub and the generally superior nature of the country on "Glenample", in my view, an unimproved value of $112/ha, or a sheep area value of $168, would not be unreasonable. Having regard to the before-mentioned differences between "Brendallan" and "Glenample", an unimproved value of $112/ha for "Glenample", seems to me to be in reasonable relativity with the $126.50/ha, or a sheep area value of $177, applied to "Brendallan".
In the circumstances, I intend to determine the unimproved value of "Glenample" at $112/ha. That amounts, when rounded, to an unimproved value of $1,837,000.
Order
The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of "Glenample" as at 1 October 2005 is determined at One Million, Eight Hundred and Thirty-Seven Thousand Dollars ($1,837,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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