Gleeson v Chief Executive, Department of Natural Resources

[1999] QLC 82

[1999] QLC 82

 

 

LAND COURT

BRISBANE

30 JULY 1999

In the matters of appeals against valuations

Valuation of Land Act 1944

Valuation Roll No.:      11801/10000  

Date of Valuation:       1 January 1996       (AV97-31)

31 March 1992       (AV97-32)

1 January 1995       (AV97-33)

1 June 1993            (AV97-34)      

Local Authority:           Townsville

Paul V Gleeson

v.

Chief Executive, Department of Natural Resources

(Hearing at Townsville)

D E C I S I O N

The appellant owns a property comprising an amalgamation of 14 separate titles located about 30 km by road south of Townsville.  For the valuation date of 31 March 1992 the Chief Executive placed a value of $337,500 ($230 per ha) on the property and continued that level of value for the valuation dates 1 June 1993 and 1 January 1995.  For the valuation date 1 January 1996 the Chief Executive has increased the amount of valuation to $365,000 ($250 per ha). The appellant provided an estimate of value for each of the valuation dates in the amount of $240,000 in the form of appeal lodged with the Court, however, called evidence to a value of $200,000.  That evidence came through Peter Honnef, a certified practising valuer, who provided a written valuation in evidence.  Valuation evidence from the respondent Chief Executive was provided through Montague John Campbell, also a certified practising valuer.

The parties did not join issue with respect to the description of Mr Gleeson's land which I will call the "subject land" and its surrounds, and whilst there is some difference in the descriptive language used in each of the valuers' reports, I have, in the following descriptive paragraphs, relied largely on the description contained in Mr Honnef's report.  The subject land comprises a number of separate freehold titles and has a total amalgamated area of 1,466.12 ha.  The property is located about 30 km by road south of Townsville (though Mr Campbell said 20 km in his report) and the parties were in agreement that the property was in a favourable location affording easy access to the wide range of facilities available in Townsville. 
The property is developed and used for cattle grazing and is improved for that purpose. A small-scale commercial operation involving the breeding, growing and limited fattening of beef cattle is carried out on the land together with another parcel of land. There is no disagreement between the parties that the land falls to be valued having regard to the provisions of s.17 of the Valuation of Land Act 1944 which provides that land used for the purposes of farming is to be valued without regard being had to any potential for a higher use including subdivision of the land for the purpose of sale.
The subject land has a mixed zoning with part being designated "Rural B" where a minimum subdivision requirement of 20 ha applies and part "Rural C" which allows subdivision down to 8 ha. Mr Honnef said that the land has potential to be subdivided for sale, particularly given its location on the fringe of Townsville's suburban rural residential region, and it was a matter of concern in his valuation approach that such potential be disregarded, having regard to the provisions of s.17 of the Valuation of Land Act to which I have referred.  The subject land comprises an amalgamation of 14 lots ranging in size from 8 ha to 535.92 ha.  There are eight lots of around 8 ha in size.
           The subject land fronts the Flinders Highway, a bitumen sealed dual carriageway connecting Townsville with Mt Isa and onto the Northern Territory.  This highway carries a moderate to high volume of traffic.  Other roads fronting the property include Isaacs and Mount View Roads, both formed gravel roads with parts of each becoming impassable for short periods during wet weather.  Electricity and telephone services are available in the area, but are not connected to the property.  Electricity is available along Mount View Road to the south and extension of electricity to the subject property would be costly in Mr Honnef's view. 
           The subject land is irregular in shape, fronting Anthill Creek to the north, the Mount Elliott National Park to the east, Isaacs Road to the south and as I have said, Flinders Highway to the west.  Mr Honnef writes that about 430 ha of the land comprises relatively productive grazing land, being the superior landform on the property, whilst about 666 ha is described as "fair grazing" which requires strict stocking rate controls because of the fragile nature of the country.  The remaining 370 ha comprises timbered hills leading to the lower slopes and hills of Mount Elliott, and Mr Honnef described this landform as being the most marginal on the property, again requiring stocking rate control.  He noted that extensive areas of the subject property, particularly the open country, is heavily infested with chinee apple and that rubbervine is to be found throughout various creeks.  Each of these noxious plants calls for continued control measures to be taken. 
           Mr Honnef made inquiries of the appellant concerning the historical stocking rates on the land and, having regard to that information, placed an average carrying capacity on the land of 1 beast to 3.75 ha.  Mr Campbell's carrying capacity was expressed at 1 beast to 6 ha, however, he said that the respondent Department is traditionally conservative in the carrying capacity rates applied and he expressed no surprise at the rate settled on by Mr Honnef having regard to actual carrying capacity figures for a period.  I come now to the manner in which each of the valuers arrived at his respective valuation.
           As an adjunct to his valuation, Mr Honnef referred to three factors which he said influenced the value of rural properties.  The first factor referred to was the rainfall data which indicated that for each of the years of valuation in these appeals the rainfall for a site located at Mingela was below the mean calculated for the period 1964 to 1998.  He provided in support of his second factor, a graph indicating the Queensland Cattle Market Index for the period 1988 to 1998 which showed a peak in the market at around 1994, followed by a substantial drop during the 1995-96 period and a gradual recovery thereafter, but not up to the earlier 1994 levels.  The third factor he mentioned was what has become known as the Wik decision, a decision of the High Court concerning the matter of native title and in his report Mr Honnef said that that decision substantially dampened the confidence and significantly curbed market activity in the property market throughout North Queensland.  This factor appears to me to not be a matter of significance in the context of the present appeals, particularly given the fact that the subject property is freehold and not a pastoral lease:  the type of tenure under consideration by the High Court.  In addition, Mr Honnef does not claim in his written valuation that the effect of the Wik decision was to depress values.  In so far as the matters of rainfall data and the Queensland Cattle Market Index are concerned – it is my understanding of Mr Honnef's valuation approach that such factors were included by him only as background information and not as the basis for a proposition that the market value of grazing land is in some way directly connected to the movement of such indicators. 
Mr Honnef made reference to four sales in his valuation, however, let me first describe the valuation approach that he employed. He was concerned, as I have indicated, that the value of the subject property for the purpose of the statute not be influenced by the subdivision potential of the land and that it be valued as grazing land only, though with the advantage of proximity to Townsville. His approach was, therefore, one of establishing a value for the subject property as grazing land situated, as I understand it, in a similar locality to the sales that he relied upon, then adding to that figure an allowance for the fact that the subject property is in a superior location to the sales. His value for the subject property as grazing land was $100 per ha, to which he added an amount of $35 per ha to take into account the locational advantage. There were no sales nor other market evidence to which Mr Honnef referred in support of the $35 per ha locational figure, that amount having been determined by him based on his professional experience. Sales evidence was available in the area of the subject land to which Mr Honnef may have referred, however, he expressed concern that the price paid for such lands included some payment for the potential for subdivision purposes and in this regard he was critical of Mr Campbell's Sale No. 1 to which I will come in due course. Mr Honnef formed the view that it would be a safer approach in ensuring the sanctity of the application of s.17 of the Act that he not use sales close to the subject land. I now come now to the sales evidence referred to by Mr Honnef. These sales are located between 55 km and 65 km from Townsville in the Reid River area. It was Mr Campbell's evidence that the area around those sales was beyond the range of land suitable for rural residential development and that the sales reflected a grazing value. Given Mr Honnef's valuation approach this is a view which he also held, as I understood him, though he did attribute subdivision potential to his second sale, the most removed from Townsville of his sales.

Mr Honnef's first sale took place in April 1990 and involved the sale of 824.1 ha, about 55 km from Townsville.  He analysed the sale to a figure of $59 per ha, unimproved.  The sale land was similar to the subject land in terms of its access, services and water, but the country was inferior, in Mr Honnef's view, as there were no open plains and he allocated a carrying capacity of 1 beast to 5 ha to the sale property.  He formed the view that his Sale 1 property was overall inferior to the subject land and he made particular reference to the fact that the tenure of the sale property was Grazing Homestead Perpetual Lease (GHPL), an inferior tenure to the fee simple of the subject.  The Chief Executive's side drew attention to the inferior tenure of the sale property and to the sale date, which is well prior to the relevant date in respect of each of the appeals.

Mr Honnef said that the area of the sale property was substantially smaller than that of the subject land and that in the marketplace the purchasers of smaller properties would generally be found to pay a higher price per ha than they would for a larger property.  There was no disagreement on this point from Mr Campbell who made the point that the corollary also applies. The sale land does not have a problem with noxious weeds.

The second sale referred to by Mr Honnef took place in December 1990 and involved the sale of 1,772 ha of land located 65 km from Townsville.  He calculated an unimproved figure of $79 per ha.  Access to the sale property is similar to the subject land, services are superior with phone and power being connected and access to water is superior on the sale property as it has access to the Reid and Haughton Rivers.  One disadvantage of the proximity of those waterways is that noxious plants of the type found on the subject land find the conditions to their liking.  Mr Honnef formed the view that the sale property country was superior to that on the subject and he assessed a carrying capacity of 1 beast to 3 ha for the sale land. 

The Sale 2 property comprises 20 saleable freehold titles together with a Special Lease over a camping reserve which occupies, on Mr Campbell's calculation, 78% of the land area included in the sale.  Mr Honnef said that the subdivisional potential of the sale property was an advantage, however, that the premium attributable to that advantage was offset by the inferior tenure of the Special Lease with, in effect, each of these aspects cancelling out the effect of the other.  In his comparison between the Sale 2 property and the subject land, he said that the location of the sale property was the main consideration and that the sale land was slightly inferior to the subject in this respect.  I find that comment with regard to Sale 2 (which I will mention later, also applies to Mr Honnef's Sale 4) a little perplexing, given the valuation approach which he said in oral evidence that he had employed.  That approach, I might say, is not evident on the face of his valuation, however, the approach, as I understood his explanation, is one where location would not be a consideration in striking the grazing value figure of $100 per ha that he had settled upon, it becoming a consideration only when the premium for the location of the subject land is to be catered for; and as I said, Mr Honnef catered for that by applying a premium of $35 per ha based on his professional judgment.  Mr Campbell did not think that the sale land had any identifiable potential for subdivision and that the sale price would have reflected a pure grazing value.  He was particularly critical of the use of the sale given the component of Special Lease involved.  The country is open and therefore any lease conditions would not unduly impact on the land's use for grazing purposes.  However, the lease is terminable with no evidence of the prospects of renewal.  Mr Campbell expressed the view that it would not be appropriate to place any reliance on this sale.  That is a view I accept on the evidence.  In Determination of Rent PCL 22/1974 NCL and PCL 22/1975 NCL (unreported, 9 May 1986) the learned Member Mr Barry said:

"His other sale is a sale of a special lease and sales of such leases do not form a sound basis of arriving at a fee-simple value unless, upon investigation, it can be shown that there is sound basis for assuming a security of tenure."

I cannot accept that there is sufficient subdivision potential in this sale property to offset its inferior tenure.  Indeed, the suggestion that it has such potential, given its location 65 km out of Townsville, is in conflict with Mr Honnef's valuation approach.

Mr Honnef's third sale occurred in September 1990 and he analysed the sale price to an unimproved figure of $115 per ha.  The land area in this sale was 518 ha involving two freehold titles.  The sale land is located 60 km from Townsville and access is inferior to the subject land, comprising a rough track for about 3 km.  Services are similar to the subject land, whilst the sale property has access to the Reid River and was therefore, in Mr Honnef's view, superior in this regard.  He assessed a carrying capacity of 1 beast to 5 ha on the sale property and noted that the land had noxious weeds, though in his view was not as badly affected as the subject land.  Overall he formed the view that, from a grazing value perspective, the sale property was inferior to the subject land because of its country type and inferior access.  It was suggested from the appellant's side that the sale price comparison between this sale and Mr Honnef's second sale ($79/ha) was explained by the differences in area (518 ha versus 1,772 ha).  As I have indicated earlier, the explanation that I accept is that the price difference is mainly attributable to the Special Lease tenure involved in the Sale 2 property.  Of interest also is the difference in the level of unimproved values between Sale 1 ($59/ha) and Sale 3 ($115/ha).  Each are similar in most respects except that the Sale 3 land has the advantage of river frontage and superior tenure.  In Mr Campbell's view those differences were not sufficient to explain the difference in sale prices.  Unfortunately, this issue was not pursued with Mr Honnef during cross-examination.

Sale 4 in Mr Honnef's valuation took place in March 1992.  The area of this sale at 5,199 ha is much larger than the subject land and Mr Honnef analysed the sale price to an unimproved figure of $80 per ha.  The sale property is located 63 km from Townsville and access includes about 10 km of formed earth and gravel road.  Telephone, but no power, is connected to the sale property and there are abundant supplies of underground water.  Mr Honnef assessed the carrying capacity of the sale block at 1 beast to 3 ha and in describing the country as superior to the subject land noted that the sale land is mostly level and 325 ha has been planted to sugarcane since the purchase of the land, with plans to extend that area to about 2,000 ha.  Mr Honnef acknowledged the size differential as being a relevant factor in comparing this sale with the subject land, noting that the price per ha would be lower for such a large area than it would be for a block of 1,466 ha.  In addition he commented that the location of the sale land is inferior to the subject land, a comment which I have noted above in the discussion on his Sale No. 2, is difficult to reconcile with the valuation approach that he employed.  The comparison made by Mr Honnef noted that the tenure of the sale land was slightly inferior to the subject as about 1,240 ha of the sale property is made up of a Special Lease Purchase Freehold tenure.

Mr Campbell was critical of the use of this sale because of the larger size, indicating in his view a property falling into a quite different class from that of the subject property.  He said that the sale price at $1,100,000, improved, placed this property in a different market from the subject land which, improved, would be priced around $300,000 on his valuation.  Presumably it would be less on Mr Honnef's valuation which tends to reinforce what I think is a valid point.

In addition to the matters of comment I have included above, Mr Campbell was generally critical of the sales evidence referred to by Mr Honnef on two bases.  First, the sale dates for Sales 1, 2 and 3 are, in his view, too far removed from the dates of valuation and, second, the sale properties are located substantially further away from Townsville than is the subject land, thus placing the sale properties into a different market from the market of the lands in the area of the subject.  Mr Honnef's answer to this second criticism is to say that all of the sales of land near the subject land of which he was aware had an inherent subdivision potential and therefore ought not to be relied upon in attempting to strike a grazing value for the subject land.  The appellant's side tendered a letter (25 June 1998) from the office of the respondent to the appellant saying, amongst other things, "During the relevant period of the valuations there have been a number of sales in the area bounded by Townsville, Giru and the Crimea area which I believe will provide sufficient evidence for the valuations."  The area described is triangular in shape with Giru being located on the south-eastern corner and the Crimea on the south-west.  The Crimea is an area near Mr Honnef's sales.   That letter was sent nominally by the Regional Operations Manager, Townsville, however, on Mr Campbell's evidence, it appears that it was written by Mr Peter Simmonds, the valuer who had originally been charged with the task of valuing the subject land.  I understand from the evidence that the area indicated in the letter encompasses a wider area than those sales referred to by Mr Honnef and that, by implication, the respondent can be taken to have indicated that Mr Simmonds at least is of the view that sale properties as far afield as those selected by Mr Honnef would not be inappropriate for the purpose of valuing the subject land.  That may well be so, however, Mr Simmonds did not appear before me to give evidence and I have nothing to indicate whether he is of the view that the better sales evidence comes from further afield than the locality of the subject land or whether such evidence would be supporting evidence only.  Indeed, I would hesitate to rely on the letter as an expression of opinion.  It may be that the author of the letter chose a wide geographical area as part of a process of "playing his cards close to his chest".  Whilst the appellant seeks support in the mention of Giru and the Crimea, I note that there is also mention of Townsville, whereas I would assume that sales in Townsville would not provide a suitable basis for valuation.  I do not, however, intend resolving that matter by conjecture and would prefer to rely upon the direct evidence given by Mr Campbell and Mr Honnef on this matter.

I now turn to consider the issue of sale dates which in the case of Mr Honnef's valuation are:

Sale 1              April 1990

Sale 2              December 1990

Sale 3              September 1990

Sale 4              March 1992

Mr Honnef said that he had not discovered any increase in value during the period 1990 to 1996, that is, covering the dates of the subject appeals from the date of three of his sales.  He said that the major influences on land values, that is, rainfall and cattle prices, did not indicate an influence towards a price rise.  He included no sales, however, with a sale date after March 1992, but said that Mr Campbell's sales supported his view that the market had not changed between 1990 and 1996.  I will come to that evidence shortly.  For Mr Campbell's part, he expressed the view that sales closer to the relevant date would generally be more reliable than sales in 1990, in particular, but said he could not be emphatic that the level of values had changed between 1990 and 1993.  It is, however, implicit in Mr Campbell's valuation levels that he is of the view that valuation levels did increase up to 1996.  I return to this last mentioned matter later.

Mr Campbell's first sale took place in August 1992 and involved the sale of 1,324 ha for a sale price of $410,000, which he analysed to an unimproved figure of $267 per ha.  The sale property has a common boundary with the subject land along Anthill Plains Creek and Mr Campbell expressed the view that the country types are similar on both properties and that the carrying capacity on the sale land is 1 beast to 6 ha.  Nevertheless, and for reasons not addressed in evidence, he sees the sale property as slightly superior overall to the subject property.  The appellant attacked this sale from two perspectives.  First, it was suggested that the sale property had subdivisional potential and this was reflected in the sale price and, second, that the purchaser was not a grazier.  Let me deal with the second point first.  Evidence from Mr Honnef is that the purchaser, a Mr Alford, is not a grazier as he was described by Mr Campbell, but is a Charters Towers businessman who owns an arcade business and a hotel in Charters Towers and who runs horses.  Mr Campbell had not interviewed the purchaser and was unable to comment on this evidence, which I must therefore accept. What is of more interest, however, is Mr Honnef's opinion that the sale property has subdivisional potential and that that potential is reflected in the sale price to such an extent that it would be inappropriate to rely on the sale as a basis for valuing the subject property.  Mr Campbell said in his written valuation that the sale property was, "Not suitable for subdivision due to surveyed roads being unformed.  Access to NW corner only.", yet in his evidence-in-chief he volunteered that the sale price could be 5% to 10% higher because of the subdivisional potential, such as it is, that might exist in the sale.  This expression of opinion concerning potential was not gathered from any interview of the parties involved in the transaction, however, appeared to be an opinion arrived at by Mr Campbell following the preparation of his written valuation.  On the other hand Mr Honnef had interviewed the purchaser who told him that he had purchased the property as his "superannuation" bearing in mind its subdivision potential.  Mr Alford told Mr Honnef that he would have paid only $100 per ha, for example, for land if he had wanted grazing land, only.  That may have been his hope, however, it is not reliable evidence of value.

Mr Campbell drew attention to the fact that the sale property had been used for grazing only since purchase, with no action being taken to initiate subdivision.  Whilst the suggestion is that the subdivision potential has not yet ripened, this evidence is also consistent with Mr Alford wanting to keep the property as "superannuation".  Evidence was produced by Mr Honnef indicating subdivision potential of other lands in the area.  One such property called the Mount Elliot Estate adjoins the Bruce Highway and also adjoins a corner of the subject land.  The proposed subdivision would give the subject property and Mr Alford's property access to the Flinders and the Bruce Highways.  Mr Campbell said that his Sale 1 has access via an unformed track only off Brookhill road and that there would be substantial costs in providing suitable access.  He said also that the area of the proposed Mount Elliot Estate was superior for rural residential purposes to the area of the sale.  Mr Honnef also referred to an existing subdivision called Rocky Springs No. 1 which I understand is to the north of the land purchased by Mr Alford and in his view would be similar for the purposes of subdivision.  Mr Campbell made reference to a subdivision north of his Sale 1 where he said only two of the lots had been sold after a number of years.  It was suggested to him that a third block had recently sold.  He said that the lots were 40 to 60 ha parcels and that subdivision into such sized parcels was not viable given the costs of development of roads.  I understand Mr Campbell to have been referring to the Rocky Springs No. 1 property.

Mr Campbell acknowledged that subdivisions had taken place at Alligator Creek and Oak Valley and that the new Flinders Highway had been established.  He said, however, that successful subdivisions were generally found closer to Townsville than Sale 1 and the subject land and involved the production of 2 to 4 ha properties not the larger 40 to 60 ha lots attempted at Rocky Spring No. 1.

The second sale referred to by Mr Campbell took place in April 1995 and involved a sale price of $480,000 for an area of 1,178.5 ha.  Mr Campbell analysed the sale price to an unimproved figure of $202 per ha.  The purchase was made by an adjoining owner through whose property access to the sale land is available.  The sale comprises a number of surveyed parcels, however, Mr Campbell expressed the view that given that there was no formed access, the parcels could not be sold separately.  The property is severed by a double-barreled creek, which is infested with rubbervine and chinee apple, however, that creek provides limited irrigation potential, according to Mr Campbell's report, for about 500 ha of second-class flats.  The balance of the property comprises level to easy sloping forest grazing country.  Overall Mr Campbell expressed the opinion that the sale is inferior to the subject land, given that it has no services available and significantly inferior access, and is 30 km further from Townsville; notwithstanding his observation that the sale land has superior land types.

Mr Honnef was aware of this sale and said that the purchaser is a potato grower who purchased the property for the purpose of growing potatoes under irrigation.  He said that the purchaser told him that he understood that there was extensive water on the property and he wanted to secure that water.    Mr Campbell had interviewed the purchaser and had been advised that whilst the prospect of growing potatoes was an element of consideration in the transaction, the purchaser was not confident that sufficient water would be available on the property for that purpose and that water might have to be supplied from the adjoining land.  He said that the availability of underground water in the area of the sale is uncertain both in terms of quantity and quality.  Mr Campbell acknowledged that the sale land has potential for potato growing, however, on his understanding of the uncertainty of water availability and of the quality of the soil, and of the purchaser's position on those matters, expressed doubt that the land would attract any appreciable premium above grazing values.  Now it may have been the case that the purchaser told Mr Honnef and Mr Campbell conflicting stories, but I was not assisted by cross-examination designed to point to whether this was the case or whether there is some other explanation for the conflict in evidence.  I do understand from the evidence, though, that the sale land is in an area where cropping is undertaken, whereas the cropping prospects on the subject land are uncertain.

Mr Campbell said that given that the sale of this land took place at an auction, the prospect of the purchaser paying substantially above market value was remote.  He acknowledged that the purchaser was an adjoining owner, but said that the fact that access was not readily available other than through his property may have been a factor militating against wider interest.  Access using a dedicated road has been provided by the purchaser since purchase.  This involved the construction of a low-level creek crossing.

Mr Campbell's Sales 3, 4 and 5 involve the sale and resales of the same property being a GHPL of 1,590 ha located south-westerly of the subject land about equidistant between Sale 2 and the subject.  Mr Honnef was aware of the Sale 3 transaction for this land which took place in June 1992 for a price of $420,000.  Mr Campbell analysed the sale price to an unimproved figure of $134 per ha.  This particular transaction was not squarely put to Mr Honnef during cross-examination, however, I note that both Mr Honnef and Mr Campbell observed that Sale 3 took place at a higher level than the resale of that property in October 1993.  On that occasion the property sold for $350,000, which Mr Campbell analysed to an unimproved figure of $106 per ha, however, he formed the view that the sale price was low and the valuation applied for the purpose of the Valuation of Land Act was $115 per ha.  Mr Honnef said that the property was in severe drought at the time and that the owner was persuaded by financiers to sell. He said also that the 1992 sale was influenced by the purchaser wishing to purchase land near his relatives and, given that the applied value on that occasion was the same as that which applied following the 1993 sale, it appears that the Chief Executive's valuer may also have seen that sale as being slightly high. 

The sale property involved in Sales 3, 4 and 5 has poor access according to Mr Campbell and electricity is not available.  The carrying capacity of the property is 1 beast to 5 ha, in Mr Campbell's opinion, and he expressed the view that the poorer access which involves two creek crossings; and the location of the sale property being further removed from Townsville than is the subject land, indicates that the subject land is substantially superior.  Mr Campbell included in his comparison between the sale property and the subject land mention of the fact that the sale has a tenure which limits development of the land when compared with a freehold parcel and that the location of the land within the Ross River dam catchment area would limit the prospects of the land being freeholded.  It is this last-mentioned factor that is of particular relevance with respect to the Sale 5 transaction of this land which took place in November 1994.  On that occasion the land sold for $487,000, and was analysed by Mr Campbell to a figure of $139 per ha unimproved.  Mr Honnef had discussed the 1994 purchase with one of the purchasers and had been told that the purchasers had an intention of extracting silica sand from the property and that the purchase price reflected a component for that potential of about $55,000 or in the range of $40,000 to $70,000.  According to Mr Honnef, the party to whom he spoke was the better informed of the two purchasers concerning the prospect of sand extraction and was also the party with the greater financial capacity.  Mr Campbell had interviewed the other purchaser involved in the transaction and had been advised that the prospect of extracting silica sand was a possibility at the time of purchase, but the price did not reflect any allowance for that possibility. Under the GHPL tenure the purchasers could not lawfully extract sand and freeholding was a necessary prerequisite.  Given, however, the location of the land in the Ross River dam catchment area, freeholding was not approved and as I appreciated Mr Campbell's evidence, the rejection of the freeholdng application would not have been a surprise to a prudent purchaser. 

Mr Honnef's view which I mentioned earlier of the market trend being static during the 1990 to 1996 period is based on the proposition that Mr Campbell's 1992 sale (Sale 3) was high as was the 1994 sale (Sale 5), in his view.  Whilst his evidence implied that the 1993 sale (Sale 4) was low, he did not expressly say this.

There are two issues that are relevantly connected to the issue of market trend.  The first of these matters relates to the question of the use of the 1990 sales referred to by Mr Honnef, whilst the second relates to the question of the 1996 value applied by the Chief Executive.  I will consider this second matter first.  The sales evidence closest to the relevant date of 1 January 1996 is Mr Campbell's Sale 5 which took place in November 1994.  That sale, all other things being equal, would be most relevant to the valuation as at 1 January 1995 and not to a valuation one year later.  Even if I accept Mr Campbell's evidence fully with respect to his Sales 3, 4 and 5, it is clear that there was no upwards trend revealed given that the 1992 sale was at $134 per ha, whilst the 1994 sale was at $139 per ha, a difference which does not to my mind reveal a trend.  Even if it did, the question might reasonably be asked as to whether that trend persisted through to January 1996.  There is, however, no sales evidence after 1994 supporting the Chief Executive's valuation at 1 January 1996, nor was there any explanation forthcoming from Mr Campbell orally nor apparent on the face of his valuation report outlining the reason for an increase in valuation as at this later date.  This is an unsatisfactory state of affairs and it was one upon which the appellant seized, submitting that, since there was no evidence from the Chief Executive in support of the 1 January 1996 valuation, I must therefore allow the appeal and determine the value in accordance with the level of value indicated by Mr Honnef.  Such a submission, in my view, attempts to reverse the onus of proof as is provided for in the statute and I refer to s.45(3) and (4) and s.33:

"45(3)  an appeal shall be instituted by filing a notice of appeal in the Land Court registry.

(4)               Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner."

"33.     Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."

The state of the evidence is that there is no evidence from either side in support of a valuation as at 1 January 1996 nor was there any cross-examination of Mr Campbell as to the basis of his valuation as at that date. In the circumstances I find the following quotation from Qualischefski v The Valuer-General (1979) 6 QLCR 167 at 172 most appropriate:

“However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradistinction to jurisdiction conferred under the Land Act."

I find that the appellant with respect to the appeal against the 1996 valuation has failed to discharge the burden of proof and that, therefore, the appeal must be disallowed.
This brings me to the question of the reliability of the 1990 sales referred to by Mr Honnef given the suggestion from the Chief Executive's side that the sale date was too far removed in time from the relevant appeal dates for those sales to provide suitable comparisons. The question of the issue of date is, however, not one that I need to decide. This is because I do not accept the validity of the approach employed by Mr Honnef in striking his valuation. I understand his rationale but do not accept it. He has relied upon sales in a different environment from the subject land, being substantially removed from Townsville and has compounded the lack of comparability of those sales with the subject land by adding a premium for location which is based on unsupported opinion, indeed opinion that was neither explained nor justified in evidence. I think it is preferable as a method of valuation to consider sales in the area of the subject land and to discount those sales, if needed, for any features which it might be seen would offend against the proper and complete application of the "farming" provisions of s.17 of the Act. It is preferable therefore to employ Mr Campbell's sales evidence.
     One of Mr Campbell's sales, that is Sale 3, was not as I have said, put squarely to Mr Honnef in cross-examination, though Mr Honnef had, he said, considered Sales 3, 4 and 5 in the process of preparing his valuation and in considering the issue of market trends.  It was submitted by the appellant that I would attach no weight to the evidence concerning Sale 3, given the deficiency in cross-examination.  I understand the appellant to be relying on the authority of Browne v. Dunn (1893) 6 R 67 (HL) which was referred to more recently by Hunt J in Allied Pastoral Holdings Pty Ltd v. Commissioner of Taxation [1983] 1 NSWLR 1 at 16 in these terms:

"It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings.  Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn."

In The Queen v .Foley (CA No. 136 of 1998, unreported) in a joint judgment the Members of the Court of Appeal said:

"          This case highlights the problems that ensue when defence counsel fails to put his case to Crown witnesses followed by an arguably excessive resort by the Crown Prosecutor to the so-called rule in Browne  v. Dunn ((1893) 6 R 67). We say 'so-called rule' because it involves a rule of professional practice and certain countermeasures that the Court may permit to be taken when a cross-examiner fails to observe the rule. The essence of the professional rule is that a cross-examiner should put to an opponent's witness matters that are inconsistent with what the witness says and which are intended to be asserted in due course."

The so-called rule has particular application in criminal and civil matters in which factual evidence of lay persons predominates, for it is in such matters that particular factual assertions may have a special significance in the conclusions to be drawn by the tribunal of fact on matters in issue.  In matters of the type involved in these appeals before me where it is the factual basis of expert opinion and the implications of such facts which is in issue, the rule is of equal importance; however, ought to be adhered to for a range of practical reasons other than, for example, the charge of "recent invention" which might arise in the case of a criminal matter.  Such practical considerations include reference to the rule against case splitting and also to the difficulties which a Court might confront, as was observed by Wells J in Reid v. Kerr (1974) 9 SASR 367 at 373-374:

"a judge (or a jury) is entitled to have presented to him (or them) issues of facts that are well and truly joined on the evidence; there is nothing more frustrating to a tribunal of fact than to be presented with two important bodies of evidence which are inherently opposed in substance but which, because of Browne v Dunn has not been observed, have not been brought into direct opposition, and serenely pass one another like two trains in the night."

Now this Court is a Court of equity and good conscience and is not bound by "technicalities or legal forms or the practice of the other courts" (s.44(15) Land Act 1962) and, as such, it is open to a party disadvantaged by a failure by the other to observe the so-called rule in Browne v. Dunn to seek leave to have the deficiency remedied.  In the present case the fault lay with the Chief Executive for not fully putting its case to the appellant's valuer witness, however, the flow of evidence indicated that the appellant's side was aware of that deficiency and could have made application to have Mr Honnef recalled to allow cross-examination on Sale 3 to proceed. 
           Counsel for the Chief Executive put the view that since the valuation prepared by Mr Campbell had been tendered during the cross-examination of Mr Honnef, that the appellant's side was on notice as to the intention of the Chief Executive to rely on the full contents of that valuation, including Sale 3, and that therefore there was no requirement for the Chief Executive's side to cross-examine fully on the document.  Certainly it is the case that where notice of a particular matter appears in a pre-trial document or even in an opening, it will not be a matter for Browne v. Dunn to be adhered to, however, I do not think that the tendering of a valuation during cross-examination in a matter such as the present which was heard in one day, constitutes sufficient notice to relieve counsel of the obligation to adhere to the Browne v. Dunn practice.  In any event, I note that the valuation of Mr Campbell as originally tendered contained errors in the schedule of sales, such that it was not clear to Mr Honnef that Mr Campbell was even aware of the details of Sale 3.
           I add to the above observations the view that in a matter such as the present, which is confined almost exclusively to the evidence of experts and where the factual evidence of one side may be of assistance to the Court in its consideration of the viewpoints put by the other, the principle inherent in Browne v. Dunn would require not just that the facts intended to be relied upon but put in cross-examination, but also any valuation implications not obvious in the putting of those facts.  It is appropriate even for the appellant to put in cross-examination to the Chief Executive's witness as much of the appellant's case as is not clear on the face of the evidence given from the appellant's side.  In other words, valuation implications upon which it is intended to rely and which might be drawn from the appellant's evidence or from that evidence in combination with evidence of the Chief Executive should also be put in cross-examination. 

A failure to comply with the practice supported by Browne v. Dunn and not corrected by a later procedure such as the recall of a witness, does not operate by itself to exclude from consideration the evidence in issue.  Consideration of the evidence and its weight is a matter for the Court. I think that is a matter which was understood by the appellant's counsel, who submitted not that I disregard the Sale 3 evidence but that I apply no weight to it.  Nevertheless, an application of no weight has the same effect as rejecting evidence, whereas in the context of the evidence as it fell it seems to me that the comments that I heard from Mr Honnef on the Sale 3 transaction are of value and ought not to be rejected, just as comments on the same aspects from Mr Campbell ought also to be considered.  Other matters concerning the sale, such as the description of the property and its comparison with the subject land are similar in the case of Sale 3 as in Sales 4 and 5 and therefore appropriately also fall for consideration.

I accept Mr Honnef's evidence that Mr Campbell's Sale 1 has greater subdivision potential than Mr Campbell has acknowledged, however, I have concluded that that potential does not lie in subdividing the land into 40 to 60 ha lots but of more intense subdivision.  Subdivision would be deferred for some years as I appreciate the evidence including the evidence that Mr Alford purchased the land as part of his superannuation.  The evidence concerning Mr Campbell's Sale 2 is not wholly satisfactory given the conflict in evidence concerning water.  However, I take judicial notice that the prediction of underground water being available is a notoriously risky undertaking.  These two sales are the best evidence of value, supported by the other sales.  I accept that Sale 5 may have included some allowance for the possible extraction of silica sand, though I do not think that a premium of $55,000 is indicated, particularly given the location of the property in the Ross River Dam catchment and the risk that freeholding would not be approved.  For the reasons discussed earlier Sale 4 is probably a low sale, whilst Sale 3 is probably a little high, though on Mr Honnef's suggestion would be above market to a similar extent to Sale 4:  a proposition I cannot accept.  There will always be a range of motives involved in the purchase of particular properties, however, I cannot accept without very clear evidence, that the purchaser in the case of Sale 3 paid such a substantial premium to be near his family.

In the result, I find that Mr Campbell's applied value of $230 per ha for the 1992, 1993 and 1995 valuations is a little high in comparison with those sales.  I think, on the other hand, that Mr Honnef has led himself into error by employing the method of valuation that he did.  His suggested level of value is much too low and is of no influence on me.  I will reduce Mr Campbell's valuations for the reasons given and will strike a value between Mr Campbell's Sales 1 and 2.  I cannot, I think, go below the level of $202 indicated by Sale 2 and will therefore strike a valuation of $308,000, that is at about $210 per ha .

Accordingly, the appeals against valuations of 31 March 1992, 1 June 1993 and 1 January 1995 are allowed and the valuation of the subject land is determined at Three Hundred and Eight Thousand Dollars ($308,000).  The appeal against valuation of 1 January 1996 is dismissed.

RP SCOTT

MEMBER OF THE LAND COURT