Gibson v Department of Natural Resources and Mines
[2005] QLC 13
•4 March 2005
LAND COURT OF QUEENSLAND
CITATION: Gibson v Department of Natural Resources and Mines [2005] QLC 0013 PARTIES: Murray GA and Wendy A Gibson
(appellants)v. Chief Executive. Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0357 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation DELIVERED ON: 4 March 2005 DELIVERED AT: Brisbane HEARD AT: Blackwater MEMBER: Mr JJ Trickett, President ORDER: The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Six Hundred and Ninety-one Thousand Seven Hundred Dollars ($691,700). CATCHWORDS: Unimproved Value - Grounds of appeal - Classification of country - Measurement of areas - Effect of Vegetation Management legislation - Factors affecting valuation - Comparison with sales - Relativity - Valuation of Land Act 1944 APPEARANCES: Mr MGA Gibson for the appellants
Mr K Fisher (Crown Law) for the respondent
This is an appeal by landowners against the unimproved value applied to their land in the Shire of Bauhinia by the Chief Executive, Department of Natural Resources and Mines (the respondent) as at 1 October 2001.
Background
Mr and Mrs Gibson are the owners of a property known as "Coonabah", described as Lot 1 on Crown Plan 911742 and Lot 3 on Plan WNA34, being Grazing Homestead Perpetual Lease 37/3505, Parishes of Boolbung and Lowesby, containing an area of 6,781.144 ha. As at 1 October 2001, the respondent applied an unimproved value to that land of $730,000, or approximately $108 per ha, under the provisions of s.37(1) of the Valuation of Land Act 1944 (the Act). The landowners objected against that valuation and subsequently appealed to the Land Court advising that their estimate of unimproved value was $600,000, or $88.50 per ha.
The grounds of appeal are to the effect that the landowners consider that the unimproved value is excessive (i) because of the restrictions imposed by the tree clearing legislation and (ii) because the valuation is out of relativity with the valuations applied to other properties. In a written statement and in oral evidence, Mr Gibson elaborated on those grounds of appeal. However, his written statement went beyond the grounds of appeal and raised other issues. Following an objection by Mr Fisher, I ruled that Mr Gibson could not be heard on those issues as he was bound by the grounds of appeal: s.45(4) of the Act.
The Subject Land
According to the report of the respondent's valuer, Mr PD Schefe, "Coonabah" is situated about 14 km north-east of the town of Rolleston, with access by means of about 4 km of bitumen road and then 10 km of gravel road. Electricity, telephone and school bus services are available.
According to Mr Schefe, "Coonabah" comprises about 2,850 ha (42%) of brigalow, blackbutt and box scrub, about 350 ha (5%) of sandy creek flats, timbered with Moreton Bay ash, box and gum and about 3,581.144 ha (53%) of red sandy forest, timbered with box broadleaf ironbark, wattle and patches of scrub.
Mr Schefe's report went on to state that a total area of about 5,468 ha of scrub and mixed forest has been developed. At least that was the area stated in a tree clearing permit, current until 24 February 2005, which permitted the clearing of certain types of regrowth over the whole of the cleared area of 5,468 ha.
"Coonabah" is used for the purposes of grazing beef cattle, which Mr Schefe considered to be its highest and best use. He assessed the carrying capacity at one beast to 7 ha, or about 970 head, on a mixed herd basis. It is artificially watered by bores and dams, with water reticulated to small paddocks for cell grazing.
The Relevant Legislation
The responsibilities of the respondent in valuing the subject land 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 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 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 test for the determination of "market value" of land was 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 138, Pike J said:
"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 land is 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 that 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 pp.200-201, the Land Appeal Court said:
"It is well established that the best way to ascertain the unimproved value of land is by applying to it 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 process was adopted by the respondent in valuing the subject land.
The Respondent's Valuation
Mr Schefe explained that in undertaking the annual valuation for the Shire of Bauhinia, all the property sales which had taken place since the date of the previous valuation (1 October 1998), were investigated, inspected and analysed to establish a basis of valuation for the lands in the shire. He went on to say that in assessing the valuation of the subject land, particular regard was had to three sales, with a direct comparison being made between the sales and the subject land, to arrive at the valuation of $730,000.
Mr Schefe's Sale 1 is a property known as "Mt Sunlight", with an area of 8,308 ha, which sold in November 2001 for $1,000,000. That sale was analysed to show an unimproved value of $418,700 and as at 1 October 2001, the respondent applied an unimproved value of $395,000, or $47.54 per ha.
"Mt Sunlight" is situated 45 km north-east of Rolleston with access by 4 km of bitumen road, 26 km of gravel road and the remaining 6 km earth and gravel road. It is in close proximity to the subject land, being only one property removed to the north-east.
According to Mr Schefe, "Mt Sunlight" comprises about 500 ha of brigalow/bottle tree scrub at the base of the ranges, about 1,500 ha of scrubby forest, timbered with box, broadleaf ironbark, blackbutt and brigalow, about 3,200 ha of sandy forest, timbered with narrowleaf ironbark and wattle, about 2,200 ha of rough lancewood gorges and jump-ups and about 908 ha unavailable rough ranges.
Mr Schefe states that a total area of 2,770 ha had been developed at the date of sale, while a total of 4,362 ha can be developed. Water is provided through six earth dams. Mr Schefe assessed the carrying capacity of "Mt Sunlight" at one beast to 13.2 ha, or 629 head, on a mixed herd basis.
In comparing the sale property and the subject property, Mr Schefe considered the sale to be inferior to the subject on a per ha basis, because of its inferior quality country and overall carrying capacity. In addition, he considered it to be inferior in terms of location and access, the area able to be developed (53% as opposed to 80%), and water (dams as opposed to bores).
Mr Schefe's Sale 2 is a property known as "Eumara Farm", containing an area of 4,192.97 ha, which sold in August 2000 for $2,550,000. That sale was analysed to show an unimproved value of $730,800 and as at 1 October 2001, the respondent applied an unimproved value of $710,000, or $169.33 per ha.
"Eumara Farm" is situated about 30 km west of the town of Springsure (well to the west of the subject land), with access by means of the bitumen sealed Dawson Development Road. According to Mr Schefe, it comprises about 1,048 ha of undulating brigalow blackbutt scrub and about 3,144.97 ha of river flats, timbered with coolibah, gum and some brigalow, which is subject to flooding.
Mr Schefe went on to say that about 360 ha of the property have been cultivated and it has been developed to its full potential. It is watered by five dams and two bores, with permanent holes in the Nogoa River. He assessed its carrying capacity at one beast to 5.4 ha, or 781 head, on a mixed herd basis. In comparing the sale and subject properties, Mr Schefe considered the sale property to be superior per ha overall because of its superior location, access, quality of country and carrying capacity, water and the proportion of country capable of development.
According to Mr Schefe, "Eumara Farm" resold in August 2002 for $3,100,000, or $739 per ha.
Mr Schefe's Sale 3 is a property known as "Allambee", containing an area of 7,076 ha, which sold in May 2000 for $3,000,000. That sale analysed to show an unimproved value of $1,288,600 and as at 1 October 2001, the respondent applied an unimproved value to that land of $1,200,000, or $169.59 per ha.
"Allambee" is situated 63 km south-east of the town of Rolleston, with access by means of 29 km of the bitumen sealed Dawson Development Road, 20 km of bitumen sealed road and 14 km of earth and gravel road. According to Mr Schefe, "Allambee" comprises about 1,430 ha of sloping bonewood, softwood scrub, about 3,346 ha of brigalow box scrub, about 1,570 ha of box ironbark forest and about 726 ha of unavailable mountain range. About 5,740 ha has been cleared and developed to its full potential. The property is watered by five dams and a shared bore. Mr Schefe assessed the carrying capacity at one beast to 5 ha, or 1,414 head, on a mixed herd basis.
In comparing the sale and subject properties, Mr Schefe was of the opinion that the sale property is superior to the subject property because of its superior quality of country and carrying capacity, notwithstanding that he considered the two properties to be similar with regard to the proportion of country that could be developed and the availability of water, and the fact that the sale property has inferior location and access.
The Case for the Appellants
In his written and oral evidence, Mr Gibson raised a number of issues, most of which, on a liberal interpretation of the grounds of appeal, could be related to one or the other of those grounds. However, following an objection by Mr Fisher, I ruled that the evidence relating to Mr Gibson's attack on the analyses of Mr Schefe's sales, was inadmissible. For convenience, I will deal with each of the remaining issues in the order in which they were raised.
(i)Classification of Country
Mr Gibson disagreed with Mr Schefe's classification of "Coonabah". Through a computerised mapping program, combined with his personal knowledge and experience of the property, Mr Gibson measured the following areas:
· 2,247 ha of brigalow country;
· 4,121 ha red grey sandy forest to hard setting ironbark forest; and
· 413 ha of unproductive wattle country.
However, Mr Gibson's description of his classified areas differs substantially from the way Mr Schefe described the various areas of country.
Mr Gibson explained that he had used a computerised mapping program known as "Auto Sketch", to measure the various categories of country. Mr Gibson said that he was able to accurately mark those areas on an aerial photograph because of his detailed knowledge of the property. When questioned about this detailed knowledge, Mr Gibson explained that "Coonabah" is developed as a cell grazing project, comprising 80 paddocks each supplied with water. This project involved moving cattle on a daily basis, resulting in his intimate knowledge of the property.
Mr Gibson went on to explain that at a preliminary conference prior to the hearing, it seemed that there was a discrepancy in relation to the areas shown on the tree clearing permit. Following that conference, Mr Gibson said that he had made a close investigation and measured the areas of each type of country.
The tree clearing permit to which Mr Gibson referred, was accompanied by a letter dated 28 October 2003 from the Vegetation Management Officer at Emerald and included a related Administrative Plan AP5961. The plan shows a shaded area of about 5,468 ha which is described as regrowth, while the remaining area is shown in white. The tree clearing permit permits the landowners to clear that area of 5,468 ha, which was stated to comprise "3,261 ha of brigalow, blackbutt regrowth only, 1,466 ha of poplar box, blackbutt, silver-leafed ironbark regrowth only, 435 ha of poplar box regrowth only and 306 ha of sally wattle regrowth only". No clearing is permitted apart from the areas marked on Plan AP5961. Quite clearly, the areas on the permit differ from both the areas measured by Mr Schefe and the areas measured by Mr Gibson.
There was no explanation of how the Vegetation Management officers calculated the areas shown on the permit. Mr Schefe thought that they used satellite mapping which was later ground proofed by inspection. However, Mr Gibson said that there had been no inspection by Vegetation Management officers before this permit was issued.
Mr Schefe explained that the areas in his valuation report were arrived at by a combination of the Department's historical records, his measurement of the areas shown on satellite imagery measured by the Department's mapping program called "Map Info", supplemented by his own inspection of the property.
Having regard to the evidence given by Mr Gibson, and his undoubted detailed knowledge of the property, I am of the view that his areas should be accepted. While the areas classified by Mr Schefe may well be accurate, I am of the opinion that they are too generalised. His classification of the better country includes areas of lighter country. His description of the balance area of 3,581.144 ha (53%) of red sandy forest, timbered with box, broad leaf ironbark, wattle and patches of scrub, must cover country ranging from reasonably productive to poor. On the other hand, Mr Gibson isolated the unproductive wattle country which he had measured at 413 ha. Mr Schefe agreed that from his memory of the inspection, those areas contained wattle.
Although Mr Schefe stated that he adopted the direct comparison method of valuation, I assume that he also adopted the classification method, at least as a check. If the classification method is to be used, even as a check, it is preferable to isolate the unproductive country from the area which, from the description of the types of timber, would have been quite productive country. Furthermore, the tree clearing permit states that an area of 5,468 ha of scrub and mixed forest had been developed on "Coonabah". However, according to Mr Gibson, there are only 2,247 ha of good brigalow country. That means that a large proportion of what Mr Schefe has described in a generalised manner has been cleared, while some could not be cleared.
In most cases, the resources of the respondent which include aerial photographs, satellite imagery and computerised mapping, are such that they could generally be expected to be reasonably accurate. However, questions of credibility aside, there can be no doubt that a landowner such as Mr Gibson, who is so intensively using the property, would have the more detailed knowledge of the various types of country. When this is combined with aerial photography and a computerised mapping program, in my view there is, in this case, sufficient evidence to accept the landowner's measurements, rather than the respondent's. Here there is not only a difference in the areas measured, but also in the classifications themselves.
Where there is a mixture of productive country with development potential, there seems to be little point in including within it an area of unproductive country. It would be far better to isolate the potentially productive country, in one or more classifications as necessary, from the unproductive or undevelopable country. This was the process adopted for the classification of the respondent's Sales 1 and 3.
Mr Schefe conceded that the areas marked by Mr Gibson as being the unproductive wattle country were, to the best of his memory, accurate. In the circumstances, therefore, I prefer Mr Gibson's classification of the country to Mr Schefe's. Mr Gibson has isolated the most productive brigalow country, followed by the less productive country, not all of which has been developed, then the unproductive wattle country.
(ii)The Developable Area
This issue relates to the fact that the tree clearing permit authorised the clearing of 5,468 ha of regrowth, while the balance area was not to be cleared. Those areas are plainly shown on Administrative Plan AP5961. Mr Gibson gave evidence that he measured the remnant vegetation shown on the plan with his computerised mapping program, which indicated a discrepancy.
Regardless of the correctness of those measurements, Mr Schefe was well aware that an area of 5,468 ha of scrub and mixed forest had been developed and that the tree clearing permit authorised the treating of regrowth over that area. The areas to be retained were largely strips of vegetation along roads, fence lines and riparian zones. Therefore, in my view, any discrepancy between the area shown on the plan and the area measured by Mr Gibson, would not affect the way the property was valued. Therefore, that issue does not affect the valuation.
(iii)Increase in Marsupial Pests
Mr Gibson contended that an area of about 3,000 acres of the adjoining property to the north-west of the subject land known as "Lowesby", must remain undeveloped. He said that this was a condition attaching to the recent sale of that property. His concern was that when the regrowth control on the balance of "Lowesby" is complete, that remaining remnant vegetation on "Lowesby" will become a refuge for wallabies and kangaroos, which will become a severe problem to the adjoining subject land.
Mr Schefe was not aware of any such condition attaching to the transfer of "Lowesby". However, the EOA Regional Ecosystem Map (Exhibit 4) shows areas of "endangered" and "of concern" vegetation on the boundary of "Lowesby". Mr Schefe said that such a problem was not unique in the area and that many other properties would be similarly affected. In any case, he made the point that if such a problem did develop, this could be considered in future valuations.
I accept Mr Schefe's view. There is no evidence that there is an immediate problem from this remnant vegetation. In my view, no adjustment to the valuation is necessary because of this issue.
(iv)Water Quality
The landowners conduct a cell grazing operation on "Coonabah" and have an extensive network of pipelines and troughs. Mr Gibson gave evidence that the high pH of the bore water causes blockages in pipes due to the build-up of shale. He said that recently approximately 600 metres of two inch polythene pipe had been totally blocked with shale. He stated that the only remedy is to dose the water with hydrochloric acid at a cost of $2,700 per annum, in addition to the cost of two dosing pumps at approximately $600 each.
Mr Gibson went on to say that he did not believe that other properties in the area had a similar problem. He knew of only one other bore on the property to the south, that was similarly affected and that bore was not used.
Mr Schefe frankly admitted that he was unaware of the water quality problems. However, in his view, it did not affect the unimproved value. His valuation assumed that the property could gain access to artificial water. "Coonabah" was watered by both bores and dams, with some good dams and some smaller ones.
I accept the evidence of Mr Gibson that there is a water quality problem which is costly to treat. However, the Act provides that the unimproved value of the land has to be ascertained on the assumption that the improvements did not exist. If the subject land was unimproved, a prudent purchaser of the land would be aware that the land could be watered by bores or by dams, or by a combination of both. The evidence in this case indicates that "Coonabah" is not totally dependent upon bore water. While it is understandable that Mr Gibson raised this issue, in my view, it is not a matter to be taken into account in determining the unimproved value. Therefore, I agree with Mr Schefe that this is not a matter which requires adjustment to the unimproved value.
(v)Relativity
Mr Gibson challenged the comparability of the sales to the subject land, particularly "Eumara Farm" and "Allambee". "Mt Sunlight" is located closest to the subject land. Although it has some good brigalow/bonewood scrub, which he regards as very good country, Mr Gibson agreed that "Mt Sunlight" is inferior per ha to "Coonabah". To that property which has an area of 8,308 ha, Mr Schefe had applied an unimproved value of $47.54 per ha, compared with $108 per ha on "Coonabah". He considered the sale property to be significantly inferior to the subject. Mr Gibson was not challenging that relativity.
However, he considered the other two sale properties to be far superior. He considered "Eumara Farm" to be superior not only in country, but in water and carrying capacity. A large area of the property has been cultivated and there is no unproductive country. Mr Gibson had spoken to the new owner of "Eumara Farm" and ascertained that 600 ha of the property had been farmed. He was of the view that if the applied value of $169 per ha was correct for "Eumara Farm", then $108 per ha was excessive for the subject land.
Mr Gibson considered that it was impossible to compare the Acacia Valley country, where "Allambee" is situated, with "Coonabah". He considered the bonewood/softwood scrub to be some of the best country, certainly superior to any of the country on "Coonabah". Mr Schefe had applied an unimproved value of $169.59 per ha to "Allambee", compared with $108 per ha for "Coonabah". However, having regard to the quality of the country and the number of cattle that can be run, Mr Gibson considered that "Allambee" was probably twice as good as "Coonabah".
In his written statement, Mr Gibson questioned why the respondent did not use the sales of "Bundaburra" and "Eumara South/Hillside", which he considered to be more comparable to the subject land than the sales which were referred to by Mr Schefe. "Bundaburra" sold in July 2001, while "Eumara South" probably sold at auction at much the same time as "Eumara Farm", in August 2000.
Mr Gibson thought that those properties would be much more comparable, as they are both grazing type country. "Bundaburra" he believed to be of a similar type of country to "Coonabah", with a similar carrying capacity. "Eumara South/Hillside" is more of a cattle grazing property than "Eumara Farm". It had been valued by the respondent at $113 per ha, but Mr Gibson said, had 4,600 ha of good brigalow scrub. I took that to mean that he considered the comparison with "Coonabah" at $108 per ha to be too close.
On the other hand, "Bundaburra" was valued at $92 per ha and he considered it to be very similar to the subject land. He thought that both properties should be valued at the same rate per ha.
Mr Schefe knew the properties "Bundaburra" and "Eumara South/Hillside". In his oral evidence, he explained that "Bundaburra" was bought by an adjoining owner who thought that he had paid too much for the property. A large area of the country had to be retreated after the sale. While the current unimproved value applied to "Bundaburra" is $92 per ha, Mr Schefe did not have the details, but thought that he had analysed the sale to show between $170 and $180 per ha. If that was so, then clearly he had abandoned the sale of "Bundaburra" as a basis of valuation, as he considered it to be out of time with the other sales.
As for "Eumara South/Hillside", he explained that the aggregation known as "Eumara" had sold at separate auctions. The northern part of that property, which I took to be "Hillside", he described as fairly rough with hard ironbark and lancewood country, while the southern part, "Eumara South" (?) comprised undulating scrub country, with some forest country at the back. In his opinion, it is superior to the subject land, but not to the same extent as "Eumara Farm".
In order to show the relativity of properties in the vicinity of the subject land, Mr Schefe produced a map (Exhibit 4) showing the values applied to two properties. The first of those properties, "Katrina", directly adjoins the subject land to the east. That property of 16,453 ha, he described as comprising 8% scrub and scrubby forest and 30% reasonable forest country, 53% forest tableland and 9% unavailable mountain range. That property was valued at $49 per ha, compared with the subject land at $108 per ha.
The other property, known as "Humboldt", with an area of 18,196 ha, according to Mr Schefe, comprises 24% brigalow, blackbutt scrub country, 24% reasonable scrubby forest, 40% hard forest tableland and 12% mountain range. Mr Schefe considered it to be slightly superior to "Katrina", but inferior to the subject land. It was valued at $68.70 per ha, compared with $108 per ha for the subject land.
Although it was not put in so many words, it seems that the intention of comparing the relativity of the subject land with "Katrina" and "Humboldt" was to demonstrate the correctness of the value applied to the subject land per ha. However, I note that both properties are more than twice its size.
Conclusion
Having considered all the issues validly raised by Mr Gibson, I have come to the conclusion that there is really only one which causes me to have some doubt about Mr Schefe's valuation. I have found that I prefer the classification provided by Mr Gibson to that provided by Mr Schefe.
Under s.45(4) of the Act, the appellants have the onus of proving their grounds of appeal. Unless they are able to do so, under s.33, the respondent's valuation is deemed to be correct.
While the difference in the descriptions of the country on "Coonabah" could largely be a result of Mr Schefe and Mr Gibson describing the same country in different ways, sufficient doubt has been raised in my mind as to whether Mr Schefe may have overestimated the area of better brigalow scrub country. To that extent I am of the opinion that the appellants have discharged the onus of proof and that the statutory presumption of correctness should be set aside. However, I do not think that major adjustment to the valuation is necessary.
Taking into account as best I can the various differences between those properties, in order to resolve all doubts in favour of the appellants, I feel that some adjustment to the respondent's unimproved value is necessary. I therefore propose to reduce the unimproved value from $108 per ha to $102 per ha. That amounts to a rounded valuation of $691,700.
Order
The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Six Hundred and Ninety-one Thousand Seven Hundred Dollars ($691,700).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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