Galwey v Department of Natural Resources and Water
[2010] QLC 47
•26 March 2010
LAND COURT OF QUEENSLAND
CITATION: Galwey & Ors v Department of Natural Resources and Water [2010] QLC 0047 PARTIES: John Standish Galwey
(applicant)v. Chief Executive, Department of Natural Resources and Water
(respondent)Jane B Maclean and Susan B Galwey
(applicants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NOS: VLA278-08 andVLA280-08 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 26 March 2010 DELIVERED AT: Brisbane HEARD AT: Roma PRESIDENT Mrs CAC MacDonald ORDER: 1. Appeal VLA278-08 is dismissed.
2. The unimproved value of the subject land is affirmed at Two Million, Six Hundred Thousand Dollars ($2,600,000) as at 1 October 2007.
3. Appeal VLA280-08 is dismissed.
4. The unimproved value of Lot 46 on Crown Plan WV1526 in the County of Waldegrave, Parish of Bindango is affirmed at One Million and Fifty Thousand Dollars ($1,050,000) as at 1 October 2007.
CATCHWORDS: Unimproved value – grazing property – use of comparable sales – size of sales – use of potential carrying capacity in estimate of prudent purchaser – severance – relativity – sales evidence preferred. APPEARANCES: Mr A Boyd, Agent, for the appellant
Mr WA Isdale, Crown Law, for the respondent
These proceedings concern two appeals under the provisions of Valuation of Land Act 1944 (the Act) against the determination by the respondent, the Chief Executive, Department of Natural Resources and Water, of the unimproved value of two properties as at 1 October 2007.
The first appeal, VLA278-08, concerns land owned by John S Galwey (the appellant). The respondent determined the unimproved value of Mr Galwey's land at $2,600,000 or $417/ha as at the relevant date. The appellant estimated the value of the property as at that date at $1,989,000 ($319/ha).
The other appeal, VLA280-08, concerns land owned by Jane C Maclean and Susan B Galwey. The respondent determined the unimproved value of that land as at $1,050,000 ($643/ha) as at the relevant date. The appellants estimated the value of their land at that date to be $786,500 ($482/ha).
At the hearing, the appellants were represented by their agent, Mr A Boyd, and Mr JS Galwey gave evidence in both appeals. The respondent was represented by Mr W Isdale of Crown Law and evidence in support of the valuations was given by Mr MC Farrington, a registered valuer employed by the respondent Department.
VLA278-08
This appeal concerns a non-contiguous aggregation of two grazing properties situated approximately 50 kms north-west of the town of Roma. The total area of the two properties is 6,236.034ha. The homestead property known as "Stuarts Creek" has an area of 2,977.126 ha. The other property, "Koala" has an area of 3,258.872 ha.
Mr Farrington said that the subject property comprised a predominance of easy undulating open poplar box woodland with intrusions of superior quality brigalow belah scrub and areas of lesser quality ironbark and cypress pine forest. Approximately 360 ha of the aggregation is permanently cultivated for forage crop production. The balance is fully developed for grazing with improved buffel grass pastures established throughout the better classes of country.
Mr Farrington attributed a carrying capacity of 1AE (adult equivalent) to 6.7 ha to the subject, which equates to 930 AE.
Mr Farrington assessed the value of the subject by direct comparison with unimproved values analysed from recent property sales in the locality that contain similar land type to the subject. He relied on the sales of three properties in the area of the subject.
Sale 1 is a 2,029.944 ha property, "Quebec", which sold on 2 April 2007 for $3,200,000 ($1,576/ha). Mr Farrington analysed the sale to $1,479,390 ($729/ha) and applied an unimproved value of $1,250,000 or $616/ha. Mr Farrington attributed a carrying capacity to the sale of 1 beast to 5.9 ha which he said was slightly superior to the carrying capacity of the subject. Mr Farrington's opinion was that overall, the sale was superior to the subject on a per hectare basis.
Sale 2 is a 2,301.346 ha property, "Fresh Fields", which sold on 20 April 2007 for $3,200,000 ($1,390/ha). Mr Farrington analysed the sale to $1,433,366 ($623/ha). He applied a value of $1,300,000 or $565/ha). Mr Farrington attributed a carrying capacity of 1:6.3 ha to the sale which he said was overall, slightly superior to the carrying capacity of the subject. Overall, Mr Farrington considered the sale to be superior to the subject on a per hectare basis.
Sale 3 is a 944.637 ha property, "Warenda", which sold on 12 June 2007 for $1,458,906 ($1,544/ha). Mr Farrington analysed the sale to $694,874 ($736/ha). He applied an unimproved value of $680,000 or $720/ha.
Mr Farrington attributed a carrying capacity to the sale of 1:5.25 ha which he said was, overall, superior to the carrying capacity of the subject. Overall, Mr Farrington said, he considered the sale to be superior to the subject on a per hectare basis.
Mr Boyd pointed out that the sales properties are considerably smaller than the subject and, also, that there were areas under cultivation in each of the sales properties. Mr Farrington acknowledged the difference in size between the sales properties and the subject but said that nevertheless the sales were, in his opinion, sufficiently comparable with the subject to support the valuation. The areas under cultivation on the sales were less than 10% and were no greater, proportionally, than the cultivated area on the subject.
I do not accept that Sale 3 is comparable with the subject, given the difference in size between the subject and the sale. Otherwise I have accepted the validity of Mr Farrington's sales evidence and his response concerning the comparability of the cultivated areas on the sales and the subject.
Carrying capacity
The appellant challenged the issued valuation on the basis that the carrying capacity attributed to the subject property by Mr Farrington of 1 AE (adult equivalent) to 6.7 ha was too high. That carrying capacity was attributed on the basis that the subject property was improved to district standard. Mr Farrington said that his carrying capacity was based on what he thought the property would carry. Because carrying capacities are not used for any official purpose, the department did not hold historical carrying capacities in the Bungil Shire.
The appellant's estimated carrying capacity is 1 beast to 9.8 ha or say 1:10 ha. In his written statement, the appellant referred to a decision of the Land Court concerning the subject and other properties, Galwey v Department of Natural Resources and Mines[1] where the departmental valuer at the time had given evidence that the estimated carrying capacity of the "Koala" property was 1:4.5 ha, the estimate for the "Stuart Creek" portion was 1:10 ha and a conservative overall estimate of 1:7 ha had been adopted.
[1] [2002] QLC 73.
Mr Galwey's opinion was that the carrying capacity of 1:4.5 ha estimated for the "Koala" portion of the property in the earlier decision, was too high. That figure put it on a par with the carrying capacity of two properties, "Glen Alva" which has an attributed carrying capacity of 1:4.5 ha where the country is 100% first class scrub country with large areas of cultivation, and "Bindyego" which has quality black soil downs and 59% of cultivation and an attributed carrying capacity of 1:5 ha. As compared with the "Koala" portion of the subject, which is essentially a forest block, Mr Galwey considered that the attributed rates to "Glen Alva" and "Bindyego" were clearly out of line with the 1:4.5 ha attributed to "Koala".
Similarly, Mr Galwey said, in recent decisions of the Land Court concerning valuation appeals in central western Queensland in 2007 and 2008, the best lands, comprising 100% downs country were determined at 1:8.4 ha whereas the subject lands were predominantly forest and inferior forest country and had been rated at 1:7 ha or 1:6.7 ha.
The Valuation of Land Act requires the Land Court to determine the unimproved value of the subject land as at the relevant date. Section 3(1)(b) of the Act provides that in relation to improved land, unimproved value means the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that at the time as at which the value is required to be ascertained, the improvements did not exist. It is well recognized that this definition of unimproved value requires the Court to determine the market value of the subject land as at the relevant date on the basis that the improvements did not exist.
As described by Isaacs J in Spencer v The Commonwealth[2] the concept of market value assumes the existence of a reasonable and informed vendor and purchaser:
"To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
[2] (1907) 5 CLR 418 at 441.
It is accepted that the potential carrying capacity of the subject land is a matter that would be taken into account by the prudent purchaser in determining the amount to be paid to acquire the property as at the relevant date. However that carrying capacity is not necessarily the same as the carrying capacity actually adopted by the owner from time to time. What is relevant is the prudent purchaser's estimate of the potential carrying capacity of the subject property assuming that the advantages and disadvantages of the property are known to that purchaser.
The subject properties are part of a larger aggregation which includes another property which is also the subject of an appeal to this Court. The total aggregation is, it seems, worked as one property and cattle are moved around from time to time within various parts of the property.
The appellant had estimated the carrying capacity of the combined properties subject to appeal at 1:10 ha in his written report. His oral evidence was not easy to follow in terms of his estimated overall long-term carrying capacity for the subject land. Mr Galwey's earlier evidence in relation to Appeal No. VLA278-08 was that he was running 400 to 500 cows on his property, approximately 450 weaners until they are about 12 months of age and 70 to 80 bulls. Mr Galwey's evidence was given on the basis that a cow is a 600 kg breeder.
Mr Farrington's evidence about carrying capacity used as a measure a 450 kg non-lactating beast which he described as one adult equivalent. Mr Farrington undertook the exercise of converting Mr Galwey's evidence into the same measure that he (Mr Farrington) was using. That is, he converted the 600 kg cows and, proportionately, the other animals to adult equivalents ie 450 kg non-lactating beasts. Mr Farrington's calculations were that, using a conversion rate for the cows of 1.3, the 500 cows referred to by Mr Galwey equated to 650 adult equivalent, the 450 weaners were converted by a factor of .8 into an adult equivalent of 360, and the 60 bulls were converted by a factor of 1.5 into 90. Mr Farrington also included 100 replacement heifers in this exercise but my understanding of Mr Galwey's evidence was that the heifers were run on his daughter's property and should not be included in the count on the subject property. Excluding the heifers, the total adult equivalent on Mr Galwey's subject property is 1,100 AE. As Mr Farrington said, his estimate of the carrying capacity of the subject at 930 AE appeared to be quite conservative.
Mr Galwey restated his evidence, with leave, at the end of the hearing. His final evidence was that there are approximately 760 grown cattle on his block and 225 on the children's block, that is to say the property which is the subject of appeal VLA280-08 which is dealt with later in this decision. These figures referred to "grown cattle". There is no evidence that he was using the adult equivalent on which Mr Farrington had based his estimate.
It was clear from the evidence that the parties were using different bases for counting the numbers of cattle. While there is no obligation on an appellant to use the same measure as the respondent, it is necessary for the Court to convert the parties' figures into a common measure for the purpose of making a proper comparison. As the only evidence given in this regard was that given by Mr Farrington and that evidence was not effectively challenged, I have accepted his evidence as to conversion rates. Applying a factor of 1.3, the 760 grown cattle referred to by Mr Galwey converts to 988 adult equivalent. On the basis of that evidence, I find that Mr Farrington's estimate of the carrying capacity of the subject land at 930 AE is not unrealistic and indeed, if anything, appears to be conservative.
Severance
As indicated above the subject aggregation consists of two separate properties "Stuart Creek" and "Koala". The appellant submitted that the difficulties in management caused by the severance of the property had not been recognized in the valuation under appeal.
Mr Farrington's evidence was that he had allowed 5% for the disadvantages caused by the severance. His evidence was that the gross valuation for the subject was $437.30/ha which totals $2,727,000. Deducting 5% for severance, equated to an allowance of $136,352 leaving a nett result of $2,590,604 which was rounded to $2,600,000.
It appears that an allowance has been made for the severance and no further challenge to this aspect of the valuation was pursued by the appellant.
Relativity
The appellant submitted that, based on the original valuations applied to the four properties in the total aggregation, the valuation of lands in the former Bungil Shire had increased by about 70%. Subsequently, the appellant had become aware that the valuations of various properties in the Roma area had not been uniformly increased by 70%. Further, the valuations of some of those properties had been reduced on objection. The appellant referred specifically to three properties, "Benalla", "Coolibah" and "Richmond Downs".
Mr Farrington's evidence was that the bulk of the grazing lands in the shire had been subjected to a uniform increase of 70%. However there was an area of open downs country, traditionally used for agriculture, where market demand was lower. A percentage increase of 30% was applied to that part of the shire.
The reduction in the value of "Coolibah" was given, Mr Farrington said, because the application of the 30% increase to some downs country in the vicinity of "Coolibah" as compared with the 70% increase applied to some creek country had resulted in a higher value being applied to creek country than to downs country. The relativity was adjusted which lead to a reduction in the valuation. Details of the valuations of "Benalla" and "Richmond Downs" were not explored with Mr Farrington in cross-examination.
Mr Farrington's explanation appears to provide a satisfactory answer to the relativity issues raised by the appellant. In any event, as I have concluded above, the evidence concerning Sales 1 and 2 supports the issued valuation. The authorities are clear that the use of sales evidence is the best method of establishing the market value of land and relativity evidence is not to be used in preference to sales evidence even where the sales evidence may not be ideal.[3]
[3] Barnwell v The Valuer-General (1990-91) 13 QLCR 13 at 16, 17.
Conclusion
My conclusion is that there has been no error proven in respect of the issued valuation. Accordingly, the appellant has not rebutted the presumption flowing from s.33 of the Valuation of Land Act that the valuation is deemed to be correct. The appeal therefore must be dismissed.
VLA280-08
This appeal relates to a property known as "Four Mile" located approximately 53 kms north-west of Roma. The property has an area of approximately 1,631.703 ha. The unimproved value of the property as at 1 October 2007 was assessed by Mr Farrington at $1,050,000 or $643/ha. The appellants' estimate of value was $786,500.
The major issues raised by the appellants in this appeal are the same as those raised in the previous matter, that is the appellants challenged the carrying capacity attributed by the respondent to the subject land, and the relativity of the subject valuation as compared with the valuations of other properties in the area.
Sales Evidence
Mr Farrington relied on the same sales in support of this valuation as he had used in relation to the valuation in appeal VLA278-08. However his conclusions as to the comparisons between the sales and the subject differ, because of the different country in the subject property as compared with the property dealt with in VLA278-08.
Sale 1 Quebec: Mr Farrington concluded that the sale was overall inferior to the subject in quality of country, and inferior on a rate per hectare basis.
Sale 2 Fresh Fields: Mr Farrington concluded that the sale was overall inferior to the subject in nature of land, carrying capacity and inferior on a rate per hectare basis.
Sale 3 Warenda: Mr Farrington concluded that the sale is overall slightly inferior to the subject in quality of country and carrying capacity and slightly superior to the subject on a per hectare basis due to its smaller size.
I find that the issued valuation is supported by the sales evidence.
Carrying Capacity
Mr Farrington assessed the long-term carrying capacity of the subject property improved to district standard at 325 AE cattle. This equates to 1 AE to approximately 5 hectares. Mr Galwey assessed the carrying capacity of the subject land at 1 beast to 7 ha.
The same difficulties permeated the evidence in relation to this appeal as occurred in relation to the previous appeal – that is that Mr Galwey was using a different measure in estimating the number of head on the subject property from that used by Mr Farrington.
There were some inconsistencies in Mr Galwey's evidence, for example, at one point he said there were no cows on the subject block but there are steers. Mr Galwey's final evidence was there were 225 to 250 grown cattle on the subject land at the time of the hearing. It appears that, in referring to grown cattle, Mr Galwey was referring to a 600 kg cow, not the 450 kg non-lactating beast which Mr Farrington used as the measure in estimating carrying capacity.
Mr Farrington did not convert that final figure into the adult equivalent measure. However, if I use the same conversion rate as he applied in the earlier appeal, that is a factor of 1.3, 225 - 250 cows converts to 292 to 325 adult equivalents. On that basis, Mr Farrington's carrying capacity of 325 adult equivalents is not excessive.
Relativity
For the same reasons as those given in Appeal VLA278-08, I do not consider that the appellants' arguments based on relativity have been established in relation to this appeal.
Conclusion
As no error has been established by the appellants in the issued valuation, the appeal must be dismissed.
ORDERS
1. Appeal VLA278-08 is dismissed.
2.The unimproved value of the subject land is affirmed at Two Million, Six Hundred Thousand Dollars ($2,600,000) as at 1 October 2007.
3.Appeal VLA280-08 is dismissed.
4.The unimproved value of Lot 46 on Crown Plan WV1526 in the County of Waldegrave, Parish of Bindango is affirmed at One Million and Fifty Thousand Dollars ($1,050,000) as at 1 October 2007.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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