Gilah Pty as Trustee v Department of Natural Resources and Mines

LAND COURT OF QUEENSLAND

CITATION:	Gilah Pty as Trustee v Department of Natural Resources and Mines [2013] QLC 2
PARTIES:	Gilah Pty Ltd ACN 010 263 359 as Trustee (Appellant)
v.
Department of Natural Resources and Mines (formerly known as Department of Environment and Resource Management (Respondent)
FILE NO:	LAA205-10
DIVISION:	Land Court of Queensland
PROCEEDINGS:	A Hearing of an Appeal Against Internal Review for Conversion of Term Lease to Freehold.
DELIVERED ON:	30 January 2013
DELIVERED AT:	Brisbane
HEARD AT:	Cairns
MEMBER:	His Honour Mr WL Cochrane
ORDER:	1. The review decision of 3 July 1997 be set aside and the unimproved value of the land as at 3 July 1997 is determined at Eighty Thousand Dollars ($80,000).
CATCHWORDS:	Conversion of Lease to A Deed of Grant - Land Act 1994 – s.170, 422, 427.
CASES REFERRED TO:	Hans and Else Grahn v The Valuer-General (1992-93) 14 QLCR 327 PH Clough v The Valuer- General (1981-82) 8 QLCR 70 Salvemini v Minister for Natural Resources and Water [2009] QLC 0052
APPEARANCES:	D P Morzone instructed by Murray Lyons, solicitors, for the Applicant. R J Byrnes, of counsel, instructed by the legal services section of the Department of Environment and Resource Management on behalf of the Respondent, the Chief Executive of that department.

This is an appeal by the Appellant Gilah Pty Ltd (as Trustee), pursuant to s.427 of the Land Act 1994.

The Subject Land

The subject land has a tenure TLO/208169 and is more particularly described as Lot 12 on Crown Plan 903633 County of Caldwell, Parish of Woodleigh contained in Title Reference 4009285.
The land has an area of approximately 146 hectares and is located approximately 23 kms west of Mount Garnet in Far North Queensland. It is otherwise referred to in the general locality as “Wild River Station”.
One of the valuer’s reports referred to in evidence provides an appropriate synopsis of the property in the following terms:
“Property Synopsis:
The subject property comprises a 146 hectare lease and is used in conjunction with an adjoining Special Lease of approximately 3,944 hectares, for beef cattle breeding.
The land is situated approximately 28.5 kilometres west of Ravenshoe and 22 kilometres east of Mount Garnet and adjacent to the Wild River. Structural improvements comprise a rustic but apparently sound dwelling and a number of machinery and equipment sheds. Land improvements include stock fencing, three earth dams, domestic water system and stock yards. The added values of the improvements are not included in our assessment.
Locality & Surrounding Development:
This is principally a rural homesite/rural area centred on the Wild River. There is freehold land used for lifestyle and pastoral purposes to the south of the subject, the Special Lease which is utilised in conjunction with the subject is situated to the west and north and there are rural homesites to the east on the opposite side of the Wild River. The large holdings in the locality are used principally for beef breeding of Bos Indicus type cattle on natural pastures with lick supplements during the dry season.
Services:
Power and telephone are connected, water is obtained from the Wild River and septic is installed at the dwelling.
Access:
The property is accessed from Ravenshoe by travelling westwards on the Kennedy Highway for approximately 21.5 kilometres. The Kennedy Highway is a bitumen sealed dual carriageway which links the Coast, the Atherton Tablelands and the Gulf region. This road is continuously being upgraded and is in good condition. Turn right off this road just before the Wild River bridge onto Wild Rive Road and travel on a dedicated gravel/earth roadway for approximately 7 kilometres to the boundary of the subject property. The dedicated road continues through the subject property.”[1]

[1] Exhibit 5, page 2.

Background

On or about 3 July 1997 the Appellant’s predecessors in title, Jeremy Burnett and Wilhelmina Jacoba Burnett, made application for the conversion of leasehold land described as Lot 11 on CWL3655 in the Ravenshoe area.
The principal of Gilah Pty Ltd Mr Quirk gave evidence that he had extensive experience running grazing properties in Far North Queensland and had purchased Wild River Station with the intention of moving into semi-retirement and purchasing land near it to the East Coast.
The Appellant, Gilah Pty Ltd, purchased Wild River Station from the Burnett’s in June 2007, aware that an application to convert the term lease to freehold had been lodged by the then vendors Mr and Mrs Burnett.
Pursuant to s.170(4) of the Land Act 1994 the unimproved value of the land is to be calculated at the day the Chief Executive receives the conversion application accordingly the relevant date for the valuation is 3 July 1997.
From the evidence before me it appears that nothing much happened with respect to the application for conversion until 2010 when the Department of Environment and Resource Management provided notification of its determination of the freehold cost to convert the term lease at a price of $100,000.[2]
[2] Exhibit 3, page 2 paragraph 6.
Subsequent to the decision of the Department of June 2010 Mr Quirk sought, as he was entitled to do an internal review of the decision of the Department of Environment and Resource Management.[3]
[3] See Land Act 1944 s.422 – 427.
By notice issued on 8 June 2010 the Department of Environment and Resource Management gave notice to the Appellant that the internal review had been completed and that the valuation of $100,000 plus associated costs remained unaltered.
From that internal review decision the Appellant appeals to this Court.
Against the price of $100,000 the Appellant contends that an appropriate cost for conversion should be $40,000.
In the notice of appeal filed on 28 July 2010 the Appellant raises the following grounds of appeal:
1.The determination by the Minister of the Valuation of $100,000 for the conversion of Term Lease 208169 is excessive as the Minister has failed to take into consideration:
(a)The remote location of the land.
(b)The limited areas available for use of the land for agricultural purposes.
(c)The poor quality of soil.
(d)The history of the limited use of the land;
2.The Applicant will refer to comparative sales data to support the appeal upon further investigation.
It should be noted that in the review decision the reasons of the reviewing officer provided in accordance with the requirements of s.426(3) of the Land Act 1994 were identified as follows:
“The reviewing officer has considered the content of your submission. The reviewing valuer has performed the assessment after conferring (sic) with evidence of the rural/residential market within the Mount Garnet to Ravenshoe Environs. After considering the characteristics of the site, together with comparable sales evidence, the valuation of $100,000 has been confirmed.”

The Statutory Background

The decision with respect to an application to convert a lease to freehold is made pursuant to s.170 of the Land Act 1994.
Section 170(1) sets out the approach to be taken by the Chief Executive to the determination required to be carried out by him.
Section 170 of the Act provides, interalia,
“170 Purchase price if deed of grant offered
(1)Unless a price or formula has already been stated in the lease to be converted, the chief executive decides the purchase price for the conversion of a lease to a deed of grant.
(2)The lessee may appeal against the chief executive’s decision on the purchase price.
(3)The purchase price is an amount equal to the total of—
(a)the unimproved value of the land being offered, as if it were fee simple; and
(b)the market value of any commercial timber that is the property of the State on the land.
(4)The unimproved value of the land is calculated at the day the chief executive receives the conversion application.”
An appeal right is provided for as set out above in s.170(2) but that is conditional upon compliance with s.422 which provides:
“422 Appeal process starts with internal review
Every appeal against a decision (an original decision) under this Act must be, in the first instance, by way of an application for internal review.”
Section 423 sets out who may apply for a review and refers the reader to schedule 2.
Schedule 2 to the Land Act identifies the original decisions relevant to s.423 and includes a decision “about the unimproved value or the timber value for the conversion to the Deed of Grant.
It has previously been held by this Court that the inclusion of a reference to s.170(3) it scheduled to the Act evinces an intention by Parliament that a right of appeal be granted to an applicant for conversion of tenures with respect to the purchase price which has been determined by the Chief Executive pursuant to s.170(1).[4]
[4] See Salvemini v Minister for Natural Resources and Water [2009] QLC 0052 at [9].
The Applicant in the present instance has proceeded appropriately by way of seeking internal review from which it now appeals. That review decision is a decision of the relevant Minister.[5]
[5] See s.426.
Section 429 of the Land Act sets out the power of the Court in an appeal of this sort.
That section provides:
“429 Powers of court on appeal
(1) In deciding an appeal, the court has the same powers as the decision maker.
(2)An appeal is by way of rehearing.
(3)The court may—
(a)confirm the review decision; or
(b)set aside the review decision and substitute another decision; or
(c)set aside the review decision and return the issue to the Minister with directions the court considers appropriate.”
The determination of the conversion price is required, pursuant to s.170(3) set out above to be “the unimproved value of the land being offered as if it were fee simple”.
To understand that concept it is necessary to consider s.434.
Section 434 provides:
“434 Meaning of unimproved value
(1)In this Act, the unimproved value of land is the amount an estate in fee simple in the land in an unimproved state would be worth if there were an exchange between a willing buyer and a willing seller in an arms-length transaction after proper marketing, if the parties had acted knowledgeably, prudently and without compulsion.
(2)The unimproved value must be decided without regard to the commercial value of the timber.
(3)To remove any doubt, it is declared that the Land Valuation Act does not apply to the meaning of unimproved value in this section.
(4)In this section—
paid to the State does not include rent paid to the State.
unimproved state includes, if the value of improvements and development work to the land performed by the State has not been paid to the State, the improvements and development work finished before the lease started or the deed of grant was issued.”
According the task of the valuer’s in the present instance is to value the land in its “unimproved state” ignoring the value of any improvements.
As set out in the observations below there was no issue taken by either valuer as to the issue or value of improvements on the subject site.
It should be noted that in the determination the Court is called upon to make in these circumstances, the Court has the same powers as the decision maker and there is no statutory presumption requiring the Court to prefer the valuation contended for by the Chief Executive over that contended for by an Appellant.
The case must be determined upon the merits of the evidence adduced before the Court on the review hearing.

The Witnesses

The Appellant, represented by Mr D Morzone of Counsel, called evidence from Mr Douglas Quirk the Principal of the Appellant Company Gilah Pty Ltd. Mr Quirk’s filed statement contained Exhibit 3.
The Appellant also called evidence from Richard Larkin a Licensed Real Estate Agent whose statement was Exhibit 4 and from Maxwell George Dickinson a Certified Practicing Valuer whose report became Exhibit 5.
There had earlier been a joint meeting between Mr Dickinson and a Miss Hunter a valuer engaged by the Respondent and those valuers had prepared a joint valuation experts report which became Exhibit 6.
Mr Byrnes of counsel who appeared for the Respondent called evidence from Amanda Louise Hunter a Registered Valuer in the employ of the Department whose written report became Exhibit 7. Miss Hunter had participated in the joint meeting with Mr Dickinson which produced the document tendered as Exhibit 6.

The Joint Valuers Report

The meeting held between the valuers on 23 September 2010 produced more points of disagreement than of agreement.
The only general point of agreement was that the gazetted but unformed road which traverses the subject property is a disability.
There was also general between the two valuers about the nine sales (three from the Respondent and six from the Applicant) which were considered in the joint meeting. Those areas of agreement are dealt with below.
The Respondent Department Valuer, Miss Hunter, relied upon three sales (Sales Numbered 1 to 3) which were part of an extensive rural/residential subdivision known as the Millstream Estate which was originally a large grazing aggregation which adjoined the subject property but which was subdivided and developed from the mid 1980’s up to the present time.
The Millstream Estate properties were developed to the south-west of Ravenshoe.
The Appellant’s valuer Mr Dickinson identified six additional sales (Sales 4 to 9) which were all located on the Kennedy Highway at Mt Garnet, but some distance from the township.
Those sales are from a subdivision excised from a grazing property known as “Sugarbag” beginning about 27.5 kms south-west from the township of Mt Garnet and strung along a distance of approximately 8.5 kms so that the sales were then something of the order of 55 kms by road of south-west of the subject property.
With respect to the Respondent’s sales 1 to 3 it was agreed that all of those sales were inferior in area to the subject property but that sales 1 and 2 were superior in location.
It was also agreed that the subject property had inferior access to that which characterised sales 1 to 3.
Miss Hunter was familiar with the Sugarbag development having conducted an inspection of that property for freehold conversion purposes during the late 1980’s and having interviewed the vendor regarding the subdivision in 1993.
With respect to the sales identified by Mr Dickinson (sales 4 – 9) the valuers agreed that:
(a)Sales 7 (Lot 9) is comparable in size to the subject.
(b)Sales 6, 7, and 8 (Lots 8, 9 and 5) are closest to the valuation date.
(c)All sales have good highway access.
(d)All sales are some distance from the town of Mt Garnet.
(e)All sales have limited services.
(f)All sales possess inferior land types as rural/residential sites.
(g)All sales lack river frontage.
(h)Access to the subject is inferior to the access situation of sales 4 – 9.
As pointed out late in this decision Miss Hunter resiled from reliance upon her sale 1 because she became aware that there were extraordinary circumstances involved in the sales.[6]
[6] Exhibit 7, page 4, para 4.
That concession by Miss Hunter necessarily compromises her view as expressed in the Joint Report that:
“Amanda Hunter disagrees that Sale 1 is a high sale as she considers it to be representative of the property market for larger sites at that point in time.”[7]
[7] Exhibit 6, page 2.
It does not, however, compromise her view that with respect to her sales 2 and 3 they were inferior to the subject either because of inferior land type, an absence of an actual water supply or inferiority in area.
It is clear, to me, from the joint statement, that Mr Dickinson’s approach[8] was that all of the sales even though in distant locations were of similar appeal in the market place to the subject site because they targeted those purchasers seeking larger isolated bush lifestyle blocks as contrasted to the smaller rural/residential lots located in the Millstream Estate development. Miss Hunter disagreed with that approach and rationalised it on the basis of the sales’ proximity to the town of Ravenshoe (being the largest centre), the lack of river frontage and the inferior country type.
[8] Exhibit 6, page 3.
The only other noteworthy point in the joint statement was the maintenance by Mr Dickinson of his reliance upon the devaluing effect of the severance created of the dedicated but unformed Wild River road which bisects the subject property.
At this juncture it is appropriate to observe that the joint report of the valuers was prepared consequent upon Orders made by me on 9 August 2010.
Order number 4 read:
“Further evidence will not be received from any expert witness at the final hearing that differs from that contained in a joint written statement to which the expert is a party, without leave of the Court.”
Early in the proceedings Mr Byrnes for the Respondent raised a relatively important issue that frequently seems to arise in these sorts of proceedings.
That issue was that while Mr Dickinson and Miss Hunter had met and discussed a number of relevant sales (three advanced by Miss Hunter and six advanced by Mr Dickinson), when Mr Dickinson’s final report emerged, about a month before the hearing, three additional sales not identified by Mr Dickinson were contained within and referred to in his report.
Unsurprisingly Mr Byrnes contended that that was contrary to the Order and the spirit of the Order earlier made.
I agreed with him that leave needed to be sought by the Appellant if they were to be entitled to rely upon reference to those three additional sales.
Mr Byrnes for the Respondent frankly conceded that, having had Mr Dickinson’s report for about a month Miss Hunter was not in a position where she could contend to the Court that she had not had an opportunity to consider the three additional sales prior to giving her evidence but, again unsurprisingly, Mr Byrnes raised the point that it would be necessary for him to seek leave to adduce additional evidence from her in the witness box and that possibly she may wish to refer to an additional sale that she not previously raised because of the late emergence of Mr Dickinson’s three additional sales.
My inclination, subsequently agreed with by Mr Byrnes, is fully set out in the transcript.[9]
[9] T. 1-24 L. 40.
It was to allow Mr Dickinson’s report in in its entirety but to give Mr Byrnes the opportunity to cross-examine on the sales and if necessary to adduce additional evidence, orally if necessary, through the valuer called by the Respondent. I required that advance notice be given to the Appellant of any sales intended to be raised in a responsive way by Mr Byrnes.

The Evidence

Mr Quirk for the Appellant gave evidence supported by documentation exhibited to his filed statement (Exhibit 3). At the time he purchased the lease in 2007 the term lease as issued to his predecessors in title in 1997 permitted the use of the leased land for “agricultural and grazing purpose namely Primary Industries (Rural Pursuits).”
Mr Quirk also pointed out, by exhibiting the land rent/free-holding instalment document issued to the predecessor in title, that the “category” of the land identified in that land rent/free-holding instalment document which operates effectively as a Tax Invoice, as “intensive primary production”.
No further evidence was forthcoming about the relevance of the description in the term lease or of the description in the land rent/free-holding instalment invoice. In any event I do not see that those unexplained descriptors in the documentation prevent either of the valuers carrying out a fair and proper valuation of the property having regard to the actual uses that could be made of the property.

It seems to me that Mr Quirk’s concerns about those category matters are not concerns that carry any weight in the decision which I have to make.
Matters that do however carry weight are his largely un-contradicted descriptions of the subject property. Mr Quirk described the property this way
“23.The property is located west of the Great Dividing Range, approximately 23km from the town of Mt Garnett. Based upon by experience and knowledge of the property, the property is suitable only to grazing and has a very low carrying capacity for stock. I estimate that the property has a capacity of 25-30 head of adult stock with young cattle being sold off as stores. The gross return from that enterprise cannot ever service a rental payment for the lease let alone council rates.
24.The property can really represent only a ‘lifestyle block’ or ‘hobby farm’ where someone might live to get to town, have a few horses or cattle etc.
25.The property is totally unsuited to any form of intensive farming. I have told the Department on a number of occasions that the lease has been incorrectly classified as ‘intensive primary production’ and should be properly classified in accordance with the actual Lease, which is for agriculture and grazing purposes.
26.With a total area of just over 140 hectares and the terrain of the property and soil type, the property was only ever going to be suited to grazing, which is what it had been traditionally used for. As I have outlined earlier, the Lease came into existence when the rest of Wild River Station was converted to a state forest, leaving the original house and yards and what was probably the primary holding paddocks used when mustering the larger property.
27.With reference to any suggestion that the property can be used for ‘intensive agriculture’ I would reasonably estimate that there is approximately two (2) hectares of alluvial flats, which could be ploughed and planted for crops. Unfortunately most of that area, which could be ploughed, floods on an annual basis and is well within riparian zones.
28.I noted when I brought the property that an attempt has been made to clear another small area, which had resulted in serious regrowth problem and will need remedial work. Clearly the attempts by the previous owner to increase the area available for planting any form of crop (even crops like lucerne the like) have proven unsuccessful. I have never used the property for any form of agriculture and I cannot see how someone could do that except as may be a small supplement crop for stock.”[10]
[10] Exhibit 3, paras 23-28.
Other relevant evidence given by Mr Quirk was to the effect that the Wild River which constitutes the western boundary of the subject property is not a permanently flowing watercourse but does provide (through waterholes which remain during the dry season between September and December of each year) a permanent water supply for stock and domestic uses. He believes that the amount of water supply available during dry periods would make any irrigation for agricultural purposes uneconomical.
Mr Quirk also referred to the access of the property from the Kennedy Highway which becomes limited during heavy rainfall periods.
One issue acknowledged by both the valuers was that, through the central section of the property from the north to south, there runs a dedicated but unmade road.
The existence of that road has the consequence that Mr Quirk is unable to refuse access to any members of the public aware of that unmade road from traversing it to get to other properties.
He expresses concern that applications for mining leases and for other leases may rely upon access along that gazetted but unmade road thereby causing, he anticipates, “a significant detriment disturbance to the ambience and amenity of the property. This would affect my lifestyle and the lifestyle of any potential future owner.”[11]
[11] Exhibit 3, para 38.
In summary Mr Quirk’s contentions were to the effect that the subject property constitutes a “lifestyle block” unlikely to support a viable economic enterprise from either grazing or any other use of the property.
That evidence was contradicted by the presence on the property, as referred to below in the evidence of Mr Larkin, of a viable apiary business being conducted from the premises.
Mr Quirk deposed to information provided by his real estate agent that the detriments to the sale of the block as it presently stands are poor access, limited use for the block and what he describes as “the quiet economic conditions”.[12]
[12] Exhibit 3, para 43.
That last passage of evidence is clearly hearsay but was somewhat repaired by the evidence given by Richard Larkin a real estate agent called by Mr Quirk.
In his statement Mr Quirk asserted that the carrying capacity of the subject property was between 25-30 head of adult stock with young cattle being sold off as stores.
Under cross-examination Mr Quirk acknowledged that the subject property could be described in the following way:
“The subject property is regular in shape and comprises undulating and broken Ironbark forest country on the eastern boundary improving to easy, gently sloping Bloodwood Box and Gum forest on the western boundary.”[13]
[13] Exhibit 7, page 3.
Subsequently in the same passage of cross-examination Mr Quirk acknowledged that the following descriptions from the valuation report of Miss Hunter were also apposite:-[14]
“a. Native grasses are predominantly black spear and kangaroo grass.
b.Small areas of better quality soils are interspersed throughout the property.
c.A small area of up to about 8 hectares was approved for clearing for cultivation purposes.
d.Fertile river flats are interspersed along the Wild River frontage country.”
[14] T. 1 – 29 and 30.
Mr Quirk also acknowledged that he is currently conducting an apiary on the subject property with about 200 hives.[15] Mr Quirk pointed out that those hives are rarely on the subject property.
[15] T. 1-30 L.22.
In the course of cross-examination it also transpired that the subject property seems to have been listed for sale with Mr Larkin, for the real estate agent called by the Appellant.
Included in the description on a (Landmark) website exhibiting the subject property for sale is reference to the carrying of 920 Brahman Heifers, two Brahman Bulls and two Droughtmaster Bulls on the property.
Mr Quirk explained that by saying that in addition to the subject property he has a grazing permit over the Bluff State Forest for an area of about 4,000 hectares of which not all is usable for grazing.[16]
[16] T. 1-31.
That lease is apparently transferable and Mr Quirk conceded that without the lease he would probably not have bought the subject property.
The advertisement for sale also contains reference to the business conducted as Wild River Honey by Mr Quirk and a suggestion that if the purchaser of the subject property wished they could also purchase the honey business/apiary which is described as having 200 plus hives, a 3 tonne Isuzu truck, a forklift and various other assets.
Within the advertisement for sale the subject property is described in rather more attractive terms than those adopted by Miss Hunter when it says:
“There is a mixture of country ranging from fertile river flats, open forest to undulating hill and range country. This country is ideal for cattle grazing, horses and lifestyle; pastures consist of Black Spear and Kangaroo with some Wincasia and Seca Stylo.”
Mr Quirk, under cross-examination, conceded that that was an accurate description of the property being offered for sale.[17]
[17] T. 1-32.
Mr Quirk also gave evidence that the adjoining grazing lease to the north relies upon access through the gazetted road on his property and that access was utilised about a half a dozen times a year.
Further, on three or four occasions mining exploration operations or individuals have gone along that road to get access to other areas.
Mr Quirk was also cross-examined about the amenity benefits of the extensive river frontage (being 1.8 to 1.9 kms long) to which he responded by pointing out that only about 3 or 400 metres of the river is easily accessible the balance being blocked by a very steep rocky outcrop that made access difficult.
Mr Larkin the real estate agent was next to give evidence.
Mr Larkin’s evidence was in the form of an affidavit.[18]
[18] Exhibit 4.
Mr Larkin asserted experience in the sale of large cattle properties, farms and smaller rural/residential properties.[19]
[19] Exhibit 4, para 2.
Mr Larkin’s evidence was to the effect that the subject property is too small to be used as a grazing property and the area of land which could be cultivated is also so small that he told the Court he could not think of a use someone could put the land to in order to achieve any commercial return.
Mr Larkin also seemed to ignore that there was, although small, an area of approximately 8 Ha which was approved for clearing for cultivation.[20]
[20] Exhibit 7, page 3/23.
Mr Larkin supports the notion that the subject property is best contemplated as a “lifestyle” block subject to a range of detriments including the distance from the township of Ravenshoe and the poor road access into the property.
Curiously there was no reference by Mr Larkin in his statement to the existence of the gazetted but unmade road passing through the centre of the property being a detriment to a prospective purchaser.
Mr Larkin gave evidence[21] that he had been a real estate for the last 12 years with experience in the sale of rural properties in and around the Atherton Tableland, Cape York and the Gulf of Carpentaria and, was aware of his professional obligations pursuant to the Property Agents & Motor Dealers Act.
[21] See Exhibit 4.
Mr Larkin had composed the advertisement on the Landmark website attempting to sell the subject property.[22]
[22] Exhibit 8.
Mr Larkin confirmed that he was aware that the proposition that the property carried 90 Heifers and 4 bulls of varying description was given to him by Mr Quirk and that while he was aware that to achieve that carrying capacity one needed access to the additional area of the lease in Bluff State Forest. No mention of that property appeared in the advertisement.
Mr Larkin also selected the photographs which appeared in the website advertisement.[23]
[23] T. 1 - 46 L. 30.
Having pressed Mr Larkin to acknowledge that he was the author of the advertisement for sale which adverted not only to a carrying capacity of 90 Brahman Heifers and four bulls, but also two fertile river flats, open forest to undulating hill and range country and pastures of black spear and kangaroo with some wyn-cassia and seca stylo,[24] Mr Byrnes for the Respondent then pressed Mr Larkin about the contention that the property also carried with it a Wild River Honey business available for sale at a price of $300,000.
[24] T. 1 – 46 L. 20.
Indeed the inspection of the property revealed that that honey business occupied a significant part of the industrial building located near the residence constructed on the property.
It should be noted that at page 3 of the advertisement, the advertisement contains:
“This Wild River property offers an excellent opportunity for a mix of grazing, investment and lifestyle for those looking for quality of life. The Ravenshoe area is famous for its cool climate, rainforests, beautiful rivers and relaxed country lifestyle.”
Earlier in the advertisement the property itself was described as:
“There is a mixture of country ranging from fertile river flats, open forest, to undulating hill and range country. This country is ideal for cattle grazing, horses and lifestyle. Pastures consist of mainly black spear and kangaroo with some wyn-cassia and secca stylo.”
Mr Larkin was pressed by Mr Byrnes[25] to reconcile the evidence contained in that advertisement of which he was the author and his statement for the Court.[26] In which he said (at paragraph 6):
“The area of land which can be cultivated is also a small area and I cannot think of a use someone could put the land to so they could make any money off the property in a commercial enterprise.”
[25] T. 1 – 47 L. 35.
[26] Exhibit 4.
Mr Larkin was also pressed about the apparently glowing terms in which he described access to the township of Ravenshoe in the advertisement and the opinion expressed in his statement that:
“The property is located over 20 kilometres from the town of Ravenshoe. This distance combined with the poor road access into the property from the Kennedy Highway would certainly be considered a negative by a Buyer who is considering purchasing this property as a lifestyle block.”[27]
[27] Exhibit 4, paragraph 9.
He went on to observe in his sworn statement that:
“8.This particular block of land has a range of detriments which, I think would mitigate against the property achieving a sale price higher than or comparable to a similar block closer to the town of Ravenshoe.
9.The property is located over twenty (20) kilometres from the town of Ravenshoe. This distance combined with the poor road access into the property from the Kennedy Highway would certainly be considered a negative by a Buyer who is considering purchasing this property as a lifestyle block.”
The Court was left in a position where on the one hand Mr Larkin had composed an advertising campaign which he effectively “talked up” the qualities of the subject land including highlighting the frequency of cattle markets in nearby townships and the abundance of water together with an alleged carrying capacity of 90 Brahman Heifers two Brahman Bulls and Two Droughtmaster Bulls which relied upon, he now says, the access unidentified in the advertisement, to a National Park lease. It also highlighted the capacity to carry on on the subject property the “Wild River Honey” business. In that respect it spoke in terms of 200 plus hives on pellets but, again, did not identify, according to the evidence of Mr Larkin that those hives were not located on the subject property.
On the other hand Mr Larkin swore an affidavit which he effectively “talks down” all of the qualities of the subject land and highlights the distance from the town of Ravenshoe and poor access. I am bound to observe that the advertisement for the property spoke positively of the property “only 27 kilometres from Ravenshoe”.
I found the evidence given by Mr Larkin most unsatisfactory. I do not propose to give it substantial weight, save that he convinced me that the property was capable of supporting some commercial primary production type activities.
Each of the valuers considered, and reported upon the same nine (9) sales which had been considered at the joint meeting which produced the document that became Exhibit 6.
The applicant called evidence from Maxwell George Dickinson a registered valuer.
Mr Dickinson’s report became Exhibit 5. It needs to be considered with Exhibit 6 which is the Supplementary Joint Report of the Valuation Experts, of September 2010 to which I have referred extensively above and the summary of which has been provided.
Mr Dickinson introduced three additional sales that were not referred to in the joint report. They were Mr Dickinson’s sales four (4), five (5) and six (6) which ultimately became sales ten (10), eleven (11) and twelve (12) to generate congruence between the numbering used in the report of Miss Hunter and that ultimately adopted by Mr Dickinson.
Mr Dickinson also did not refer to sale seven from the joint report.
Mr Dickinson in his report highlights what he says are the five major disability factors which characterise the subject property.
They are:[28]
(1)     Isolated location, poor road access, some distance from a major town.
(2)     Poor land type with limited agriculture use and income earning potential.
(3)     Poor water supply from seasonal river and the basalt soils have poor water holding characteristics for dam construction.
(4)     Irregular land shape and extensive river frontage adding to the cost to survey fence and manage the lot as opposed to a regular shaped parcel.
(5)     Areas of the Wild River frontage and the land around the junctions of Whelan and Copper Creeks with Wild River are subject to flooding resulting in stock fence losses during most wet season.
(6)     The dedicated road passing through the central section of the property from south to north past the existing structures is a serious disability for the property as it provides public access through the subject two properties to the north. Currently, and at date of valuation, the road is not a major road; however as the road is a dedicated roadway and the owner of the subject property is unable to refuse access to the public.
[28]     Exhibit 5, page 7.
A considerable period of time was spent, in the course of cross-examining Mr Dickinson on seeking clarification of the comparisons he made between lots of land located in what has been described as the Mill Stream area and the subject land.
Mr Dickinson characterised the Mill Stream area properties as being in a different market and reflecting a different rate that people were prepared to pay in that area.
In the sales contemplated by Mr Dickinson, sales 1, 2, 3, 10, 11 and 12 are all “Mill Stream” sales.
It is somewhat regrettable that Mr Dickinson’s valuation report was not a “speaking valuation” in the sense in which that term has been used by Lord Denning MR in two decisions in the 1970’s[29],[30].
[29] Campbell v Edwards 1976 [1976] 1 All ER 785 (at 788) & Arenson vArenson [1973] 1 Ch D 346 (at 363).
[30] See the discussion in A. A. Hyam - The Law Affecting Rent Review Determinations Federation Press 2005 at Chapter 7 – Speaking Valuations p. 195.
In Mayne Nickless v Solomon[31] Sheahan J observed (at 179)
“In the instant case the valuation of [the valuer] is, I consider, a ‘speaking valuation’ in the sense that it is one which, on its face, discloses the method of valuation used namely replacement costs less depreciation.”
[31] (1980) QdR 171.
Simply put, a valuation is a speaking valuation if the valuer gives the reasons or calculations which underlie the final valuation figures.
Mr Dickinson was taken to task by Mr Byrnes for the Respondent because in the analyses done by him to reach an analysed price consequent upon the sale of a property which included improvements one cannot glean from the report itself how that analysed price was reached.[32]
[32] See T. 1 - 63 – 1 - 69.
Also, when pressed, it became clear that Mr Dickinson had not brought to Court with him documentation or calculations which supported the analysis figures generated by him.
In his cross-examination Mr Byrnes also sought to emphasise that the valuation exercise being carried out was at a 1997 valuation and Mr Dickinson had only become registered as a valuer at the end of 2000.
Mr Dickinson conceded under cross-examination that comparable sales in what he described as the Silver Valley area in which the subject land is located were very scant and that, in any event he had not been involved in valuing land in that area around the “1996, 97, 98 period.[33]
[33] T. 1 – 74 L. 52.
Normally actual experience in a particular area at a particular time is not an impediment to a valuer carrying out a valuation exercise. Sales records are available and areas are able to be inspected and opinions formed even sometime after a particular hypothetical date.
In the present case however, as will become clear when I make observations about the evidence of Miss Hunter, familiarity with the actual area at the particular time is a relevant although not entirely compelling consideration.
While he characterised it as being “a bit simplistic” Mr Dickinson did not enthusiastically contradict the proposition put to him by Mr Byrnes[34] that with respect to the lower rate calculated per hectare for properties in the Mill Stream development area, using Sale 12 (one of the three “late” sales introduced by Mr Dickinson) at $466 per hectare and applying that to the 146 hectare area of the subject site produced a figure of $68,000.
[34] T. 1-75 L. 10.

Mr Dickinson then discounted taking into account the poor road access, the distance from Ravenshoe and the unformed road cutting across the property.
It might be noted that in her Evidence-in-Chief, upon being given an opportunity to comment on that sale number 12 the valuer called for the Respondent, Miss Hunter came to a similar view with respect to the analysed price per hectare.
The only real exception Mr Dickinson took to that characterisation was to maintain his proposition that the Mill Stream estate properties were superior as rural residential type properties because of the location and the shape and size of those properties.[35]
[35] T. 1 – 75 L. 15.
Mr Dickinson conceded that the sale 12 Mill Stream property is closer to the subject property in that it is in the locality and probably one of the properties closest to the subject with a superior river frontage does give an indication of the value of the subject property because, to use Mr Dickinson’s words
“It is an indication because it is in that market (of where we are talking about). It is not a smaller lifestyle property closer back on the Mill Stream Ravenshoe, it is not one of the rough river blocks out at Mt Garnet.”[36]
[36] T. 1 - 75 L. 44.
In re-examination Mr Dickinson highlighted the absence of good evidence available of comparable sales and indicated that he resorted to the Mill Stream Estate sales to get some guidance but conceded that most of the blocks in that estate are smaller being of only 1 or 2 hectares in size and constituted a much more desirable rural residential area.
It was his evidence that the further you went away from Ravenshoe the market diminished and to use his expression:
“The values come back.”[37]
[37] T. 1 – 80 L. 22.
In the context of “lifestyle blocks” it was Mr Dickinson’s view that size was not important and, again, to use Mr Dickinson’s expression:
“Being a 100 or 150 acres doesn’t always make it a big difference, but there is definite trend in the Mill Stream that the market is a lot stronger for smaller blocks towards Ravenshoe.”[38]
[38] T. 1.
Miss Amanda Hunter gave evidence for the Respondent.
The sales relied upon by Miss Hunter for the Respondent were all in what has come to be referred to, for convenience, as the Millstream Development.
Sale one (1) was Lot 19 on RP 746731 and located on the Kennedy Highway. The sale date was 1 September 1996 at a price of $110,000 for a 59.23 hectare site with reported improvements including a donga, fencing, clearing, a dam and boar with pump. Miss Hunter analysed that sale to $57,000 once allowance was made for the improvements.
Miss Hunter informed the Court that subsequent to the meeting which resulted in the joint report she had became aware of additional information relevant to her sale number 1 which led her to the view that, given some extraordinary circumstances involved with the sale, it did not reflect a proper market value and accordingly she omitted it from her evidence for the purpose of this hearing.
Miss Hunter’s evidence was, with respect to the subject site that she added a 10% premium for the absolute river frontage.[39] Miss Hunter told the Court that that river frontage gave certain statutory rights available to it under the Water Act 1989.
[39] Exhibit 14, page 1.
She also acknowledged that the road which goes through the centre of the property from south to north was a disability,[40] but that she did take that into account in her assessment of values.
[40] T. 1 – 95 L. 50.
In his cross-examination of Miss Hunter, Mr Morzone of Counsel for the Applicant emphasised a number of features of the subject property which with, ultimately Miss Hunter concurred.
Those features were:
(a)The river frontage;
(b)The potential for flooding during the wet weather;
(c)The potential for access to be problematic during wet weather;
(d)The six or seven kilometres of dirt road constituting access from the bitumen road to the subject property and some soil types that were not really suitable for cultivation.
Mr Morzone also pressed Miss Hunter to concede that the highest and best use of the property was as rural residential or rural lifestyle.
Upon Miss Hunter making that concession Mr Morzone went on to press her to concede that once the land was identified as a rural residential or lifestyle block there was less significance placed upon the rural or primary production aspects of the property.
Miss Hunter balked at that proposition and observed[41] that people chose a property based upon what they like and obviously a property with better characteristics sells more readily than one that doesn’t have those particular characteristics.
[41] T. 1 – 98. L. 50.
Mr Morzone put the following proposition to Miss Hunter:
“I suppose what I'm trying to say is that people within the market seeking a rural lifestyle block, that is rural residential, rural lifestyle or hobby-farm, don't place any weight upon the commerciality of the property, that is, its ability to earn an income?”
To which she responded:
“In the main that's correct.”[42]
[42] T. 1 – 99. L.10.
The strength of Miss Hunter’s evidence in respect of the SLAM valuation report (Exhibit 14) was somewhat diminished by the revelation in the course of cross-examination and in response to some questions which I asked of Miss Hunter that that SLAM valuation report was a modification of an earlier report which allegedly contained more detail but which had not been disclosed.
It transpired that, while the departmental position was that the document was not in a form suitable for tendering Miss Hunter had been able to review that document and the highest that she could put its unsuitability for tendering was that it was “scrappy”, for want of a better word.[43]
[43] T 1 – 102. L. 22.
The second departmental sale was Lot 2 on RP 835432 again located on the Kennedy Highway and sold on 6 April 1998 at a sale price of $80,000 for 42.64 hectares of land with improvements which included fencing.
Miss Hunter analysed that to $70,000 for the land value.
The third departmental sale was Lot 701 on RP 912539 located at Wooroora Road at Millstream. That sale occurred on 24 June 1998 at a price of $85,000 for an area of 85.13 heaters. The subject property had an actual water hole and a creek and well formed and maintained gravel access together with reported improvements including minor fencing. Miss Hunter analysed that to a land value of $84,000.
In the joint report it was agreed that all three of those sales were inferior in area to the subject but that sales one (which was ultimately disregarded) and two were superior in location to the subject land while sales one to three had superior access to the subject site.
The seven sales advanced by Mr Dickinson at the joint meeting were all on the Kennedy Highway at Mt Garnet.
Miss Hunter disagreed that the seven sales advanced by Mr Dickinson were of land which would have a similar appeal in the market place to the subject.
She rationalised that view on the basis of the proximity of those lots to the town of Ravenshoe being the larger centre, the lack of a river frontage and inferior country type.
Sale four (i.e. the first of Mr Dickinson’s sales) was for Lot 10 on RP 845177 which sale occurred on 10 April 1992 at a price of $52,000 for 209.9 hectares with reported improvements including fencing and a dam. Mr Dickinson analysed that sale to $50,000 after allowance was made for existing improvements.
Sale five was for Lot 8 on RP 845177 at 7 June 1996 for an area of 404 hectares which reported improvements including fencing and a dam.
Mr Dickinson analysed that sale to a land value of $90,000 or $235 per hectare after allowance for the existing improvements.
Sale six was for Lot 4 on RP 845178 on 16 June 1995 at a value of $35,000 for a land area of 314.8 hectares with reported improvements including fencing.
Mr Dickinson analysed that sale to a land value of $33,000 after allowance was made for the existing improvements.
Mr Dickinson chose not to refer to his sale seven in his report for the hearing. In any event, Miss Hunter had objected to reliance upon that sale as not reflecting a fair market price it being a sale between related parties.
Mr Dickinson’s sale eight was in respect of Lot 5 on RP 845178 on 13 February 1998 at a price of $50,000 for a land area of 311.1 hectares with reported improvements including fencing and a dam.
Mr Dickinson analysed sale eight to $45,000 for land value after allowance was made for the existing improvements.
Sale nine was in respect of Lot 6 on RP 845177 on 8 August 1999 at a price of $65,000 for a land area of 316.1 hectares with reported improvements including fencing and dam.
Mr Dickinson analysed that sale to a land value of $60,000 after allowance was made for the existing improvements.
As commented upon above it is unfortunate that those analyses carried out by Mr Dickinson cannot be critically reviewed.
In the first place, he does not set out the basis for the analysis in his report and then secondly, under cross-examination was unable to cast any light upon the process which he had adopted.
With respect to Mr Dickinson’s sales Miss Hunter in her report[44] characterises the divergence of views between herself and Mr Dickinson in the following terms:
“The main point of disagreement in relation to these sales refers to the land type, with the Appellants Valuer suggesting they have similar appeal in the market place as the subject targeting those purchasers seeking larger isolated bush lifestyle blocks rather than the smaller rural residential blocks located in the Millstream Estate development.
Although sales five and eight are just over 300 hectares in area, only about 40% of the total area is accessible/usable as the balance is rocky and mountainous being part of the Great Dividing Range.
It is my opinion that these sales do not have similar appeal in the market place due to location, country type and water availability.”
[44] Exhibit 7, page 6/23.
Against those characteristics she contends that the subject property is superior for rural residential use as it is of a superior land type with some good quality soils with an area suitable for cultivation purposes.
Mr Dickinson, it appeared to me gave no weight to that feature of the subject land. In her report, Miss Hunter provided a schedule of sales which enabled her to make a direct comparison with the subject for lot and concluded that, on a direct comparison basis with the scheduled sales the subject parcel was considered superior and, on her approach, contended that:
“The unimproved value of the subject parcel must be greater than $90,000 being the highest analysed price. Having regard to the sales evidence and the attributes and the disabilities of the site an unimproved value of $100,000 for the property is considered fair and reasonable.”[45]
[45] Exhibit 7, page 7/23.

Conclusions

At the end of the day the Court is confronted by the following evidentiary difficulties:
(a)Neither valuer was able to identify a directly comparable sale.
(b)The sales which each valuer has relied upon are in different areas, the Applicant’s valuer, at the joint meeting of experts contending for sales located close to Mt Garnet, all of which sales were of a greater area than the subject. On the other hand at the joint meeting the departmental valuer relied upon three sales in the Millstream Estate Development located on the Kennedy Highway all of which sales are of a smaller area than the subject and which were generally agreed to be relevant to a slightly different market sector.
(c)The departmental sales were all proximate to the town of Ravenshoe whereas the Applicant’s sales were close to the township of Mt Garnet.
(d)Late in the peace the Applicant’s valuer identified three additional Millstream Estate sales which he analysed to a per hectare price ranging from $466/hectare to $1,195/hectare.
(e)It was difficult to place reliance upon the Applicant’s valuer’s analyses of improved lot sales because the basis for the analysis was not set out in the report.
(f)Every sale relied upon by each valuer had features which enabled the sale to be distinguished from the subject land.
(g)There was disagreement about the utility of the area which was available for cultivation.
(h)The subject land had been advertised, on a bona-fide basis, for sale at a much higher price than was contended for at the hearing and there was no evidence provided by the listing real estate agent that he regarded that price as unrealistic.
(i)It is difficult to draw comfort from sales achieved for smaller rural residential lots located close to a town in assessing a fair price for larger isolated bush lifestyle blocks.
Having regard to the evidence of each of the valuer’s I have come to the view that Mr Dickinson has placed excessive weight on the presence of a gazetted but unformed road traversing the property but at the same time has not made sufficient allowance for the potential to cultivate approximately 8 hectares of land approved for clearing for cultivation purposes and nor has he made sufficient allowance, in my view, for the presence of some good grazing grasses on the property.
Similarly in my view Mr Dickinson has not made a proper allowance for the benefit of the western boundary frontage of approximately 1.9 kilometres to the Wild River.
The Respondent, in its written submissions, points out that the most appropriate method of comparing residential land parcels is on a site to site basis and not on the basis of a unit area valued comparison and for that proposition relies upon the passage from Hans and Else Grahn v Valuer-General[46]
“The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its decision on the appellants' previous appeal (H and E Grahn v The Valuer-General, AV89-246 and 247, 13 December 1990): ‘for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size on the lots, the situation of and access to the lots, the shape and topography of the lots etc and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features.’ ”
[46] (1992-3) 14 QLCR 327 at 330 p. 3 [9].
That proposition of course does apply to predominantly residential land parcels but as I understood, at least part of the Respondent’s case, it was asserted that the subject land ought be considered not merely as residential land but as land with some capacity for commercial rural activities.
Usefully the Respondent also points out relying upon PH Clough v Valuer-General[47] where the judgement says:
“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvement.
Because there is less room for difference of opinion as to value of the various items of improvement and comparison in thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.”
[47] (1981-2) 8 QLCR 70 at 76.
The difficulties, as I have highlighted above, are that neither valuer and consequently nor this Court has been able to consider directly comparable sales or land.
On balance for the reasons set out above I prefer the approach taken by Miss Hunter although I have come to the view that a more substantial allowance should be made for both distance from Ravenshoe and because of the impact of the gazetted but unmade road even though it is but infrequently used at the moment, it would, in my mind, and as contended for by Mr Dickinson, constitute a detriment which would exercise the mind of a potential purchaser.
In particular I have been influenced by Miss Hunter’s analysis of sale three located some 12 kilometres south westerly from Ravenshoe and approximately 42 kilometres south east of the subject via the Wild River Road, Kennedy Highway and Wooroora Road.
Sale three occurred in 1998 a date not distant from the date relevant for the calculation of the value of the subject site and, by Miss Hunter’s analysis calculated out at $84,000 for the land component of 85.13 hectares so that that represented a price of $987 per hectare.
It is not however a simple matter of multiplying a figure such as that by the area of the subject land (146 hectares) to produce a figure of $144,000.[48] Some reduction must apply because of the factors mentioned above, in particular distance and the bisecting road as well as problematic access during the wet season.
[48] See the observations in respect of Grahn v Valuer-General referred to above.
As pointed out above Miss Hunter contends for a valuation for the subject land of $100,000 but subject to the criticisms made of her approach I incline to the view that a more appropriate valuation to be placed upon the property for purposes of conversion is $80,000 and I find accordingly.
The decision of the Court is that the review decision of 3 July 1997 be set aside and that the unimproved value of the land as at 3 July 1997 is determined at Eighty Thousand Dollars ($80,000).

HIS HONOUR, WL COCHRANE
MEMBER OF THE LAND COURT

[2013] QLC 2

30 January 2013