Fairfax v Department of Natural Resources and Mines
[2005] QLC 11
•23 February 2005
LAND COURT OF QUEENSLAND
CITATION: Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 PARTIES: Timothy Vincent Fairfax
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2003/0225 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation DELIVERED ON: 23 February 2005 DELIVERED AT: Brisbane HEARD AT: Blackwater MEMBER: JJ Trickett, President ORDER: The appeal is dismissed and the valuation of the Chief Executive as at 1 October 2002 of Two Million One Hundred Thousand Dollars ($2,100,000) is affirmed. CATCHWORDS: Unimproved Value - Factors affecting valuation - Method of valuation - Direct comparison with sales - Relevance of evidence - Evidentiary value of agent's report - Valuation of Land Act 1944 APPEARANCES: Mr AFM Boyd (Agent) for the appellant
Mr K Fisher, Crown Law, for the respondent
This is an appeal by a landowner against the unimproved value applied to his land in the Shire of Duaringa by the Chief Executive, Department of Natural Resources and Mines (the respondent) as at 1 October 2002.
Background
Mr Fairfax is the owner of two properties known as "Thalmera", described as L1BH289:GHFL 35/9527B and L20BH289:GHFL 35/9527A, Parish of Rhydding, and "Spottswood Park", described as L10BH163, Parish of Spottswood, containing a combined area of 10,421.06 ha. As at 1 October 2002, the respondent applied an unimproved value to the land comprised in those two properties of $2,100,000, or $201.52 per ha, under the provisions of s.37(1) of the Valuation of Land Act 1944 (the Act). Mr Fairfax objected against that valuation and subsequently appealed to the Land Court, advising that his estimate of the unimproved value was $1,470,470, or $141 per ha.
The Notice of Appeal was drafted and lodged by the authorised agent for Mr Fairfax, Mr AFM Boyd. It contained 12 grounds of appeal which, although comprehensive, were general rather than particular. However, in a written statement supplemented by oral evidence, Mr Boyd challenged the valuation, focusing upon particular aspects of both fact and law. I will deal with those matters in some detail in discussing the case for the appellant.
The Subject Lands
According to the report of the respondent's valuer, Mr MS Craig, "Thalmera" is situated on the bitumen sealed Dawson Highway, approximately 34 km south-west of the town of Moura, while "Spottswood Park" is situated approximately 68 km south-west of Moura, with access via the Dawson Highway for 55 km and then 13 km of formed gravel road. Electricity and mail services are available to both properties.
Section 34(1)(b) of the Act requires the respondent (unless he otherwise directs) to include in one valuation several parcels of land in the same area which are owned by the same person, although they do not adjoin, provided they are worked as one holding and are used exclusively for the purposes of farming (which includes beef cattle grazing, the use to which these lands are put). Accordingly, the valuations of "Thalmera" and "Spottswood Park" have been included in one valuation (amalgamated) at some time prior to the present valuation.
Mr Craig's report contains a description of what he describes as "the amalgamated property", which he states comprises approximately 79% brigalow and associated scrub country with the remaining 21% being a mixture of box, blackbutt, mountain coolibah, broadleaf ironbark and bloodwood forest.
Mr Boyd was critical of that generalised description for both properties. He contended that it failed to take into account the individual differences between the two properties. However, for practical purposes, although the scrub and forest on "Thalmera" and "Spottswood Park" are undoubtedly different, provided that these differences are taken into account in the overall valuation, in my view, it does not matter that Mr Craig has described the amalgamated property in this way. Despite his criticism of the adequacy of the description, Mr Boyd did not challenge the generalised description of the amalgamated property.
There was no dispute that the property is used for beef cattle grazing and, although it seems that at one time there was an area of cultivation on "Thalmera", both Mr Boyd and Mr Craig agreed that the property should be valued as if its highest and best use was for grazing only.
The Relevant Legislation
The responsibilities of the respondent in valuing the subject lands are set out in the provisions of the Act. The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land (and the amalgamated property is regarded as a "parcel"), is to be the "unimproved value" of that land, which is defined to mean in relation to improved land, 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 the improvements on that land did not exist: s.3(1).
The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that there were no improvements on the land, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power, access and the like.
The principles for determination of the "market value" of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not 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 the value of the property. (See Griffith CJ at 432 and Isaacs J at 441).
It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land. In Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
"Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but - as with other commodities - the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales."
However, there are many areas of the State, such as the area in which the subject lands are situated, where there is essentially no unimproved land, as all land has been improved to a greater or lesser extent. Therefore, there are no sales of unimproved land which can be used as a basis for unimproved value. In such cases, it is necessary to have regard to improved sales. The use of improved sales in establishing unimproved value was considered by the Land Appeal Court in The Valuer-General v Marano (1978) 5 QLCR 194 and at pages 200-201 the Land Appeal Court said:
"It is well established the best way to ascertain the unimproved value of land is by applying to its sales of unimproved, comparable, lands which took place reasonably close to the date at which the valuation is to be made. But in many districts it is impossible to obtain sufficient unimproved sales to form a sound foundation, and it therefore becomes necessary to analyse sales of improved lands 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."
That was the process adopted by the respondent in valuing the subject lands. However, Mr Boyd challenged both the applicability of the sales relied upon by Mr Craig and his analysis of a sale which Mr Boyd considered to be more comparable. These matters will be discussed later.
The Respondent's Valuation
Mr Craig gave evidence that since the date of effect of the previous valuation, there were approximately 12 sales in the general vicinity which were investigated and analysed by departmental valuers. Most of the sales, such as the four to which Mr Craig referred in this case, were of smaller areas of land which took place prior to the date of valuation. However, Mr Craig contended that sales of larger properties and other sales indicated that the market was rising sharply. At the date of valuation there was no slackening in demand, despite drought conditions in the area. Although few details were given, Mr Craig asserted that those sales analysed to show considerably greater unimproved values than did the sales upon which he relied in this case.
He explained that at the date of valuation, he had no means of knowing whether the greater increase would be maintained, or whether the levels of value shown by the smaller sales would be proven to be the true market. He said that he adopted a conservative approach in applying the level of values indicated by those smaller sales. However, subsequent sales have indicated that the market continued to rise.
The difficulty in this case is that all four sales referred to by Mr Craig are considerably smaller than the combined area of "Thalmera" and "Spottswood Park".
Mr Craig's Sale 1 is of a property known as "Karemba", containing an area of 1,974 ha, which sold in May 2001 for $1,130,000. That sale was analysed to show an unimproved value of $579,864 and as at 1 October 2002, the respondent applied an unimproved value of $600,000, or $304 per ha, to that property.
According to Mr Craig, "Karemba" comprises 46% good scrub, 36% fair scrub, 13% downs and 5% good forest. The property is used for cattle grazing purposes and Mr Craig assessed the carrying capacity at one beast to 3.18 ha. The map attached to Mr Craig's report shows that, "Karemba" is situated about two properties to the north-west of "Spottswood Park". According to Mr Craig, "Karemba" has similar services to the subject lands, but the subject lands have slightly superior access and location. While both sale and subject properties have adequate water, Mr Craig considers the country on the sale property to be superior to that on the subject lands.
Mr Craig's Sale 2 is of an unnamed property containing an area of 1,156 ha, situated just to the south-west of the town of Duaringa. That property sold in July 2001 for $415,000 and was analysed to show an unimproved value of $251,145. As at 1 October 2002, the respondent applied an unimproved value to that land of $232,500, or approximately $201 per ha.
According to Mr Craig, the sale property comprises 9% downs, 22% good scrub, 47% good forest, 17% fair forest and 6% poorer forest. Mr Craig considers the subject lands to be superior to the sale property. Notwithstanding the location of the sale property and the fact that both properties have similar services and adequate water, the country on the subject properties is superior to that on the sale property.
Mr Craig's Sale 3 is a property known as "Meekathara", situated to the north of the town of Dingo, approximately 180 km north of the subject lands. That property sold in March 2002 for $1,550,000 and was analysed to show an unimproved value of $443,977. As at 1 October 2002, the respondent applied an unimproved value to that land of $430,000, or approximately $215 per ha.
According to Mr Craig, "Meekathara" comprises 20% good scrub, 65% fair scrub and 15% good forest. In Mr Craig's opinion, the subject lands are superior to the sale property because of the quality of the country.
Mr Craig's Sale 4 is a property known as "Culbara", containing an area of 3,701 ha and situated approximately four properties removed to the north of "Thalmera". That property sold in May 2002 for $2,750,000 and was analysed to show an unimproved value of $1,247,353. As at 1 October 2002, the respondent applied an unimproved value to that property of $680,000, or approximately $183.75 per ha
According to Mr Craig, "Culbara" comprises 63% good scrub, 26% good forest and 11% poor forest. In his opinion, the subject lands are superior to the sale property because of the superior quality of the country.
Mr Boyd did not attack the analyses or the values applied to any of the sale properties. However, he strongly contended that each of the sales was considerably smaller than the combined subject property and therefore they were an inappropriate basis for the valuation.
In defending the use of the sales, Mr Craig explained that in the general area there were few properties the size of the combined subject lands, much less sales of that size. He said that he had placed little reliance on the sale of "Culbara", but had included it to indicate what the larger properties were bringing in the market. As explained earlier, he stated that other sales had indicated a much higher level of value than that indicated by Sales 1, 2 and 3. Although those sale properties are much smaller than the subject lands, Mr Craig was of the view that since they were used for grazing purposes, they could be used as a basis for the valuation of the subject lands, provided that appropriate adjustments were made for the differences in size.
The Case for the Appellant
In Mr Boyd's written statement, Exhibit 2, which contained some evidence but which was largely submissions, he summarised the issues at paragraph 24:
"The issues in this case are so numerous, they will all have to be considered by the Court, and ruled upon by the Court. For the assistance of the Court, I list them hereunder:
(i) the use of 'pocket handkerchief' sales to value a much larger property;
(ii)the reference to grain growing by the valuer, which may have influenced the quantum of his valuation;
(iii)the huge water costs and the disabilities attaching to the artificial facilities;
(iv)the trends in the market from the small sales versus the larger sales;
(v)the use of the closest sale with an application of 101%;
(vi)the non-use by the valuer of the sale of 'Deepwater' for what I consider are 'dubious reasons';
(vii)the inadequacy of the allowance for the massive severance;
(viii)the previous classified values of the forest components;
(ix)the question I have raised - was this valuation created by a classification method, a percentage increase, or a direct comparison with the small sales?"
Although some of the arguments in respect of these nine issues overlap, for convenience I will address each of the issues raised by Mr Boyd separately.
(i)The use of small sales to value a larger property
Mr Boyd argued that it was inappropriate for Mr Craig to rely on such small sales to support the valuation of the combined "Thalmera" and "Spottswood Park" totalling 10,421.06 ha. Sale 1, "Karemba", has an area of 1,974 ha, Sale 2, the unnamed property, has an area of 1,156 ha and Sale 3, "Meekathara", has an area of 2,002 ha. It is common ground that Sale 4, "Culbara", was of little assistance in valuing the subject lands. Mr Boyd points out that the sale cannot have been used as a basis for the valuation because it analysed to show an unimproved value of $337 per ha, but as at the relevant date, a valuation equivalent to only $183.75 had been applied by the respondent.
Mr Craig agreed that "Culbara" had not been relied upon as a directly comparable sale. He said that he had included it on his schedule of sales as an illustration of what some of the other sales in the area were showing by way of unimproved value, compared with the unimproved values disclosed by the other three sales.
He went on to explain in his oral evidence that the sales near the date of valuation of 1 October 2002 were "the start of unprecedented rises in grazing values in the area". However, the valuers had no means of knowing whether these high sale prices would be sustained, or whether they were start of a trend to even higher values. At the time of writing the valuation, it had been decided to take a conservative approach, applying the lower levels of increase which were shown by such sales as those relied upon to support this valuation. Subsequent events have indicated that the higher sales were part of an upward trend and that sale prices continued to increase in the years following the date of valuation.
As for the relative size of the sales and the subject lands, Mr Craig was of the opinion that they can be compared, rather than contrasted, as suggested by Mr Boyd, provided that appropriate adjustments were made for size. He was of the opinion that he had made appropriate adjustments and had taken into account all the other variables between the three sales and the subject lands.
I will deal with this issue later.
(ii)The reference in the valuer's report to grain growing on the subject land
In his report which became Exhibit 4, Mr Craig referred to the use of the property as beef cattle grazing and grain growing. It emerged in evidence that part of "Thalmera" had been used for farming purposes. However, along with much of the land in the area which had been used for cultivation purposes in the past, at the date of valuation "Thalmera" was used as a grazing property.
Although Mr Boyd conceded that areas on "Thalmera" had been used for grain growing, it was the intention of the present owners to allow that area to revert to pastures as it was considered to be uneconomical to farm it.
Mr Craig made the appropriate amendment to his report, conceding that for the purposes of this valuation, the use of the property was for beef cattle grazing and that no enhancement to that value had been added because of the possibility of growing grain. That effectively disposed of that issue.
(iii)The cost of providing water to the subject lands
There is no permanent natural water on the subject lands. "Thalmera" is artificially watered by two bores and 17 dams, while "Spottswood Park" is watered by 11 dams and two bores. However, according to Mr Boyd, the bores were of little use as one is brackish and unreliable and the other provides a supply sufficient only to water the horses. He added that the dams range in size from 4,000 to 25,000 cubic yards and it had been necessary to build a large dam of 45,000 cubic yards to drought proof the property. He contended that the cost of providing 28 dams and four bores on the subject land is considerably above the district standard for watering stock and that an allowance should have been made for this by the valuer.
Mr Craig readily conceded that the expenditure by the owners on water on the subject land had been in excess of district standards. However, he had not felt obliged to make any allowance in the valuation.
In my view, there was no necessity for Mr Craig to make an allowance for water. He adopted the method of direct comparison with sales to arrive at an appropriate unimproved value for the subject land. If sales and subject land are to be considered in their unimproved state, provided that the sales and the property to be compared have similar potential for obtaining water, be it by bores or by dams, then no adjustment need be made. However, if for example, the sales had natural water supplies, whereas the subject land was artificially watered, then it would be appropriate for the valuer to make an allowance in its valuation for the additional costs of providing artificial water.
In the present case, however, there is no evidence of any reason why the valuer should have made an adjustment for water, simply because either the present owners or their predecessors in title had made provision for water improvements well above district standard.
(iv)The trends in the market demonstrated by small sales as distinct from larger sales
This matter has been largely addressed in the discussion of Issue (i). However, Mr Boyd went on to argue that if sales of small properties indicate a trend in values, that trend can only be related to lands of similar size. The authorities indicate that in this process, like must be compared with like and, he contended, size is one of the critically important factors of comparison. He argued that the sale prices for the smaller properties show that the outlay of capital to acquire such properties is significantly less than the money required to purchase a property the size of the subject lands. He drew a comparison between the sale price of "Karemba" at $1,130,000 and the unimproved value applied to the subject land of $2,100,000.
Mr Boyd went on to argue the generally accepted proposition that sales of smaller properties reflect higher prices per ha than sales of larger properties. As an illustration he referred to the aggregation known as "Maneroo Station" at Longreach, which comprised four properties ranging in area from 66,668 ha down to 4,000 ha. Those properties recently sold at auction for prices which escalated from $135 per ha for the larger property, to $250 per ha for the smaller property.
However, while I accept this as an indication of what would generally occur in most instances, it was pointed out to Mr Boyd that proximity to the town of Longreach also had a considerable impact on the price of the smaller properties.
Certainly the general propositions put forward by Mr Boyd are important principles of valuation. It is well established that in the direct comparison process, like should be compared with like. Provided that there are sufficient sales, sales of similar size should be compared. However, in practice, a valuer seldom has the luxury of having sufficient directly comparable sales. Either the country type differs, the locality differs, the carrying capacity is different, etc. In this case, the sales relied on are much smaller than the subject lands.
The evidence shows that Mr Craig has made a significant adjustment for size. For example, Sale 1, "Karemba", had an unimproved value of $600,000 applied to its 1,974 ha. This represents $304 per ha. Its carrying capacity is approximately one beast to 3.2 ha. On the other hand, to the combined "Thalmera" and "Spottswood Park", a valuation of $201.50 per ha has been applied to its 10,421.06 ha. Its carrying capacity is approximately one beast to 3.4 ha.
Therefore, while the carrying capacities of sale and subject are reasonably similar and, all other things being equal, one would expect the values per ha to be not dissimilar, there is a difference of over $100 per ha between the values applied. Much of this difference must relate to their relative areas.
Mr Boyd had inspected the sale of "Karemba". He agreed with Mr Craig regarding the classification of country and that it was superior overall. It is also the closest of the sales to the subject lands.
In my view, while one should always have reservations about comparing a small sale with a property which is much larger, the fact remains that Mr Craig has applied an unimproved value per ha to the subject lands which is two-thirds the value applied to "Karemba". In the absence of any evidence to the contrary, this does not seem to me to be inappropriate.
Furthermore, the evidence from Mr Craig is that the three small sales indicate a trend in values. Later and larger sales indicate much higher unimproved values. This was illustrated by Mr Craig's Sale 4, "Culbara". Rather than apply the higher unimproved values which time may have proved to be not sustainable, Mr Craig adopted a conservative approach and applied the level of values shown by the smaller sales.
"Culbara", a slightly larger sale of 3,701 ha, sold in May 2002 and was analysed to show an unimproved value of $1,247,353, or $337 per ha. However, in applying the level of values disclosed by the earlier smaller sales, Mr Craig applied an unimproved value of $680,000, or $183.75 per ha, to "Culbara".
Whatever criticism can be levelled at the comparability of Mr Craig's small sales, the approach that he adopted resulted in a more conservative application of values than would have been applied if he had used other sales, such as "Culbara". Mr Craig gave evidence that some of the other grazing sales showed increases of between 200% to over 300%.
(vi)The Sale of "Deepwater"
Mr Boyd contended that a more appropriate basis was the sale of a property known as "Deepwater" containing an area of 3,989 ha, which sold on 31 July 2001 for $3,050,000.
Mr Boyd described "Deepwater" as the largest of all the scrub sales in the Duaringa Shire and although it is smaller than the subject lands, it is much larger than the sales relied on by Mr Craig. It is situated close to "Thalmera" and comprises 3,180 ha of scrub and 809 ha of forest.
Mr Boyd had inspected "Deepwater" and had observed that much of it was under cultivation. He described it as being virtually 100% arable, with rich fertile soils, far superior to the subject lands.
Mr Craig had analysed the sale of "Deepwater". He agreed that "Deepwater" is largely used for farming purposes. Mr Craig went on to explain that in the late 1980s there was a lot of farming undertaken in the area and a number of properties, including "Deepwater", had large grain elevators. However, since then grain growing has largely ceased and most of the properties have been returned to pastures, but "the occasional property" is still farmed.
Because of this transition, Mr Craig formed the opinion from the sales that had taken place that the market for grazing properties is catching up to the market for farming properties.
For example, Mr Craig referred to the improved sale price of $743 per ha for "Culbara", which was mainly grazing country, compared with the sale of "Deepwater", most of which was farmed, where the sale price was $765 per ha. However, "Deepwater" was much more substantially improved than "Culbara". The improvements on "Deepwater" included the grain elevator, motorised silos, big machinery sheds, two houses and four sets of quarters, which Mr Craig described as all high cost improvements. In addition, the land had been cleared to a cultivation standard.
Mr Craig went on to say that analysed on a traditional cost less depreciation basis, the sale showed an unimproved value of $891,754, or $223.55 per ha. In Mr Craig's view, this was absurdly low for the quality of the country on "Deepwater", compared with the low end of the grazing sales. Mr Craig concluded that such an approach to the analysis of the sale was wrong, so he analysed the sale on an added value basis, rather than the traditional cost less depreciation basis. He arrived at an unimproved value of $1,982,781, or $497 per ha. However, he did not apply that level of value for the reasons explained earlier.
According to Mr Craig, notwithstanding that "Deepwater" was largely farmed, at the relevant date, the respondent had valued it mostly as a grazing property, with only 280 ha valued as arable. Although he did not specifically say so, I drew the inference that he had adopted such an approach because of the trend in the area away from cultivation land towards grazing and the convergence in values. However, at the date of valuation it is clear that Mr Craig considered that although the gap had narrowed, there was a small margin in favour of farming land.
Mr Boyd attacked Mr Craig's approach to the added value analysis of "Deepwater". In particular, he challenged whether Mr Craig was correct to substantially discount the value of the accommodation buildings and the farming facilities.
The concept of the added value approach to the analysis of sales is not new. It was 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 for such lands were considerably below those which had formerly prevailed. In considering the approach to be adopted to the analysis of improved sales in such circumstances, the Court had regard to the added value provisions in the Valuation of Land Act 1944 and made the following pronouncement at p.285:
"It seems to us that the concept of 'added value of improvements' involves at least two methods of valuation, the appropriateness of which depends to a substantial degree on the economic conditions prevailing at the relevant time.
In times of normal, and above normal, prosperity the added value which improvements give to land generally exceeds their value deduced by the traditional method of replacement cost less depreciation. …
In the subject circumstances, when economic conditions are depressed, the traditional method ceases to be appropriate because its application results in an entire or substantial absorption of the total sale consideration and, as already discussed, leads to an absurd situation. '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 costs, 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."
In that case the Court was dealing with the analyses of sales in a period of depressed sale prices. In my view, the same principle can be applied in the present circumstances. The respondent, through his valuers, came to the conclusion that the emphasis was changing from grain growing to grazing. There was little difference in the improved price for grain growing and grazing properties. There is a substantial difference between the intensity of improvements on a grain growing property and the improvements on a grazing property. It is this "change of emphasis" of highest and best use which has rendered the extensive improvements existing on a grain growing property of less value to an incoming purchaser than would have prevailed in an economic climate where grain growing was clearly the highest and best use of the land.
Although it seems that the purchasers of "Deepwater" have continued to farm the land, there is evidence that there is little enhancement in the value of that land in an improved state over and above that for land purchased for purposes of cattle grazing. In such circumstances, to attribute the full cost less depreciation value to the very extensive farming improvements would result in an absurd situation. As demonstrated by Mr Craig's analysis, such an approach to the analysis of the "Deepwater" sale results in an unimproved value which is less than shown by sales of lesser quality properties.
In my view, Mr Craig was correct to analyse "Deepwater" on an added value basis. However, the analysis showed an increase in unimproved value in the order of 200%, far exceeding the percentage increase shown by the three sales which he relied upon in this case. As explained earlier, he was not prepared to accept that such levels of value were sustainable. He therefore adopted the level of values shown by the smaller sales.
In any case, the difficulty in making any accurate analysis of a highly improved sale such as "Deepwater" would cause any prudent valuer to avoid placing reliance upon such a sale if any alternative was available. Mr Craig considered that he had an alternative and in my view he correctly rejected the "Deepwater" sale.
(v)The application of 101% of the closest sale
This issue concerns the value applied by the respondent to Mr Craig's Sale 1 "Karemba". Both Mr Craig and Mr Boyd agreed that this property is the closest both in location and type of country to the subject land. In raising this issue, Mr Boyd was referring to the fact that Mr Craig's analysis of the sale of "Karemba" resulted in an unimproved value of $579,864 but, as at the relevant date, the respondent applied an unimproved value of $600,000. That is higher than the analysed value and, in Mr Boyd's terms, an application of 101% of the sale. He contended that as a matter of general practice, Departmental valuers did not apply more than 90% of the analysed unimproved value.
In my view, Mr Craig offered a complete answer to this contention. The sale of "Karemba" took place in May 2001. The date of valuation was some 17 months later and there is no issue that the market was rising during that period. With that evidence, there is little doubt that if "Karemba" had sold closer to the date of valuation the sale price would have been higher and so would the analysed unimproved value. Therefore, it is not surprising that Mr Craig has applied a value higher than his analysed value at that time.
In my opinion, there is no issue for the valuer to answer.
(vii)The inadequate allowance for severance
Mr Boyd contends that "Thalmera" and "Spottswood Park" are 40 miles apart by road. He expressed the view that this would be a vital issue which would exercise the mind of a prospective purchaser and that an allowance for this "severance" should be made in the unimproved value. In Mr Boyd's opinion, a prudent purchaser would substantially discount the price that he or she would pay for the subject lands.
It emerged in evidence that in making a check valuation, Mr Craig had allowed 5% to the combined value of "Thalmera" and "Spottswood Park" because of the severance. Mr Boyd contends that based on what had been allowed by the respondent's valuers in Paroo Shire for properties situated only one property removed from one another, an allowance of 8% should be made to the valuation in this case.
Not surprisingly, there was no sales evidence to indicate how much less a prudent purchaser would pay for properties situated some distance apart, compared with what such a purchaser would pay for a single property with a similar area to the combined properties. In his check valuation, Mr Craig considered that 5% is sufficient allowance for that particular disability. In the absence of any evidence to the contrary, I accept Mr Craig's opinion.
(vii)The previous classified values of the forest components
Mr Boyd described "Thalmera" as principally a level block, with the forest country confined to the south-east corner. He went on to say that all that country has been blade ploughed, as has the adjoining scrub lands. He described "Spottswood Park", on the other hand, as having a ridge running through the block, from which there are steep slopes, flattening out into undulating scrub on either side. The forest country on "Thalmera" comprises red clay and red grey clay, with some rock in certain places, and with parts with severe moisture holding problems. The forest ridge country on "Spottswood Park" has extensive stony and stony basalt areas. Mr Boyd contends that this subject has not been addressed by the valuer.
Mr Boyd is concerned that while the forest component on "Thalmera" is level and the forest component on "Spottswood Park" is a steep stony ridge, in the combined valuation the valuer has not made that distinction, describing the forest area as "being a mixture of box, blackbutt, mountain coolibah, broadleaf ironbark, and bloodwood forest". Mr Boyd contends that the two different classes of forest should have been valued at different classified values as was the forest component in the Sale 2, the unnamed property.
Mr Craig was aware of the differences between the two properties and he said that he took this into account in making the valuation. In my view, there is no issue to be answered in respect of this matter.
(ix)Was the valuation made by a classification method, a percentage increase, or by direct comparison with the small sales?
This is not an issue, but rather Mr Boyd questioning how the valuation was made. Although it does not require an answer, it is useful to consider how Mr Craig approached the valuation.
Mr Craig defended the valuation by direct comparison with sales. The three sales in his report were, in his opinion, the most comparable in the circumstances. The comparability of those sales has already been discussed. However, Mr Craig conceded that there were difficulties in making direct comparisons between the small sales and the large property. He said that he checked his primary method of valuation by other methods, including what seems to have been a classification method. He also checked by allowing for various disabilities, some of which have already been discussed. When questioned if he used a beast area method to check the valuation, he said that such a method was not really applicable when considering properties which were part grazing and part farming. In those circumstances, such a method distorted carrying capacities and did not provide for good comparisons.
Conclusion
Having considered each of the issues which were raised by Mr Boyd, I have come to the conclusion that none of them has been proved. Despite the difficulties involved in making a direct comparison between the smaller sales and the larger area of the combined subject lands, no better sales evidence has been advanced.
For the reasons given earlier, I do not consider that the sale of "Deepwater" to be of any assistance. The evidence clearly indicates that Mr Craig was conscious of and in his check valuation made allowances for the difference in size between the sales and the subject lands. In the absence of any evidence to the contrary, I am prepared to accept his comparisons.
There are shortcomings in the method of valuation which he adopted. However, having come to the conclusion that the lower level of values disclosed by the sales evidence should be adopted, while the higher level shown by the other sales should be rejected, it seems to me that he had little choice but to do the best he could with the smaller sales.
In his written statement and in his oral evidence, Mr Boyd raised a number of issues which related to important principles of valuation. However, although he had inspected the subject lands and some of the sales, his evidence did not have the same weight as the evidence of a valuer such as Mr Craig. In that respect, his case was hampered and, at best, he was forced to rely on challenging Mr Craig's evidence. Under the provisions of the Act he (as agent for the appellant) has the onus of proof and in the absence of such proof, the respondent's valuation is deemed to be correct: s.33.
In my opinion, despite his best efforts, Mr Boyd has not been able to prove that Mr Craig's valuation is wrong. Therefore, I am of the opinion that the appeal should be dismissed.
Order
The appeal is dismissed and the valuation of the Chief Executive as at 1 October 2002 of Two Million One Hundred Thousand Dollars ($2,100,000) is affirmed.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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