Graham v Minister for Lands
[1996] QLC 38
•29 March 1996
|
BRISBANE
29 MARCH 1996
Re: Determination of Unimproved Value for
Purposes of Conversion of Tenure -
Grazing Homestead Perpetual Lease No 37/3785,
Springsure District.
Lessees: Elizabeth MIG Graham and John C Graham
AND
Grazing Homestead Perpetual Lease No 37/3491,
Springsure District.
Lessee: Diana Carol Graham
(Hearing at Emerald)
D E C I S I O N
Grazing Homestead Perpetual Lease No 37/3785 known as "Withersfield" and Grazing Homestead Perpetual Lease No 37/3491 known as "Woodbine", are part of an aggregation of approximately 50,000 hectares of cattle grazing land held by the Graham Family and located near the Willows in Central Queensland.
Under the provisions of s.139 of the Land Act 1962, the respective lessees applied for the conversion of the tenure of those two leases. The relevant date for the conversion of GHPL 37/3785 is 15 January 1993, and the relevant date for conversion of GHPL 37/3491 is 8 March 1994.
GHPL 37/3785 ("Withersfield") is described as Lot 142 on Plan PT 396, Parishes of Argyll and Withersfield, containing an area of 26,670 hectares. However, the conversion application relates to part of the lease only, an area of about 10,979 hectares.
GHPL 37/3491 ("Woodbine") is described as Lots 8 and 9 on Plan PT 74, Parish of Woodbine, containing an area of 3,172.736 hectares.
The Minister's determination of the unimproved values of those lands for conversion purposes were $115,000 and $143,000 respectively. The lessees have requested that the unimproved values be determined by the Land Court.
Background
Mr JC Graham gave evidence on behalf of the lessees. He explained that he had lived at Withersfield Station" from 1974 and had taken over the management of the aggregation from his father in 1980. The Graham family conducted a breeding and store cattle grazing enterprise on the property. Cattle are bred on "Withersfield" and on the Argyll block, then brought to "Withersfield" for handling and quietening. "Woodbine" is used for running store steers until they are ready for sale. Usually the "Withersfield" homestead block runs 220 to 240 cows and calves, in addition to about 500 weaners for about half the year. "Woodbine" usually runs approximately 400 mixed cattle.
Because of the highly erosive nature of the country and its regrowth problem, Mr Graham said that they stock the country conservatively. He said that the main difficulty with "Withersfield" is the rough nature of its country. It could be described as genuine range grazing country. It is difficult to fence, difficult to muster and difficult to construct roads through. It is also dingo country. In addition, it had infestations of parthenium and rubber vine. Much time was spent on the maintenance of rubber vine, checking creeks and gullies. There is zamia along the range.
"Woodbine" was not quite as rough as "Withersfield", but with the exception of zamia, the problems are much the same.
"Woodbine" was purchased by Mr Graham's wife in 1993. He explained that it had been part of the "Withersfield" aggregation in 1954 when his father purchased it. However, financial reasons had forced him to sell it in 1973. Mr Graham explained that the family were keen to purchase it again when it came on the market. One of the principal reasons was that access to one of their blocks is through "Woodbine" and they had to walk cattle through the middle of it. This was a nuisance, particularly when there were not always amicable relations between the owner of "Woodbine" and themselves. Mr Graham regarded it as a classic adjoining owner purchase.
The Evidence for the Lessees
Evidence for the lessees was also given by Mr JC Compton, a registered valuer and director of the valuation firm, Herron Todd White, at Rockhampton.
"Withersfield"
Mr Compton described "Withersfield" as being located approximately 80 km west of Emerald, with access by means of 71 km of bitumen-sealed Capricorn Highway, and then nine kilometres of formed earth and gravel road. Anakie is approximately 40 km away. Internal access is poor because of several creek crossings and the rough nature of the country.
There are telephone and mail services to the property and a school bus service to Anakie School via the Capricorn Highway. However, there is no power.
Mr Compton described the country as follows:
"The property comprises principally inferior forest breeding country generally moderate to steeply sloping rough forest on the southern side of the Anakie Range which forms the western and northern boundaries, becoming more gently sloping undulating forest along the eastern boundary, broken by several creeks, mainly Central, Blackboy and Jumbuck Creeks which have generally narrow frontages except for broader flats on lower Blackboy and Jumbuck Creeks. "
He classified the country as:
626 hectares superior creek frontage country principally timbered with gum, box and moreton bay ash. Some silverleaf ironbark, bloodwood and black ti-tree influence. Mainly located along Lower Blackboy and Jumbuck Creeks.
4908 hectares undulating to steep silverleaf ironbark forest ridges with some bloodwood and narrowleaf ironbark influence and currant bush, wattle sandalwood undergrowth throughout intersected by narrow silverleaf ironbark/bloodwood creek flats and gullies with some gum, box and black ti-tree influence, erodable shaley clay soils.
5445 hectares steep and rough narrowleaf ironbark forest ranges with zamia and wattle. Parts semi-open with some silverleaf ironbark influence. The majority of this area is not grazed by cattle due to its inaccessibility.
Mr Compton went on to say that there had been minimal development of the property because of the fragile nature of the soils. However, areas along the creek flats and extending into the lower silverleaf ironbark forest slopes have been rung or tordoned, particularly along Blackboy Creek and around water facilities. There were two permanent waterholes in Blackboy Creek, while artificial waters comprised three equipped wells, five equipped bores and eight small unequipped dams.
Mr Compton estimated the carrying beast at 1 beast to 19 hectares, or 577 head.
In making his valuation he said that he considered the following:
. Parthenium and rubber vine infestation spreading along Blackboy Creek flats;
. Erodable clay soils similarly requiring light stocking;.Poor internal access and lack of services, particularly power;
.Inability to fence boundaries;
. Dingoes breeding in the ranges.
As the basis for his valuation of "Withersfield", Mr Compton had regard to three sales. Sale No. 1 was of a property known as "Cloyne", 80 km from Alpha with an area of 10,811 hectares, which sold in May 1992, for $810,000. Mr Compton analysed that sale to show an unimproved value of $271,034, or $25.07 per hectare.
According to Mr Compton, "Cloyne" comprises 6,300 hectares of brigalow, box, ti-tree scrub with silverleaf/mountain coolibah influence, 780 hectares of mountain coolibah/ silverleaf ironbark ridges and 3,730 hectares of Drummond Range forest narrowleaf ironbark.
Mr Compton regarded "Cloyne" as superior to "Withersfield", although it is situated west of the range in an inferior location, because it has superior brigalow country and carrying capacity.
Mr Compton's Sale No. 2 was "Mentmore", situated 30 km north of Alpha, with an area of 4,100 hectares, which sold in September 1994, for $630,000. Mr Compton analysed that sale to show an unimproved value of $161,326, or $39.35 per hectare.
Mr Compton described "Mentmore" as comprising 1,422 hectares of brigalow/box scrub, 424 hectares of box gum flats, 878 hectares of sandy box silverleaf ironbark forest and 1,376 hectares of inferior ironbark gum spinifex forest. He thought that "Mentmore" was superior to "Withersfield", because it has superior country, carrying capacity and access, although it had similar water and an inferior location.
Mr Compton's Sale No. 3 was "Crescendo", situated 16 km south-west of Capella and 45 km north of Emerald. That property of 7,176 hectares sold in November 1991, for $1,000,000. Mr Compton analysed that sale to show an unimproved value of $486,619, or $67.81 per hectare.
He described "Crescendo" as comprising 1,500 hectares of flooded coolibah and scrub flats, 720 hectares of broken downs, 2,365 hectares of red/brown soil sandy scrub with forest influence, and 2,591 hectares of light sandy scrubby forest with wattle influence. "Crescendo" is considerably superior to the subject land, because of its superior country, water and potential. It also has better location, access and services, but is disadvantaged by flooding and parthenium.
From those sales Mr Compton valued "Withersfield" as follows:626 ha creek flats @ $40 per ha = $ 25,040
4908 ha undulating forest @ $10 per ha = $ 49,080
5445 ha steep and rough zamia infested
ranges @ $2 per ha = $ 10,890
Total $ 85,010
Less allowances for lack of services and
parthenium and rubber vine infestation
10979 ha (rounded figure) = $ 82,340
"Woodbine"
Mr Compton's report stated that it is located approximately 71 km west of Emerald on the Capricorn Highway and 7 km of formed earth track to the boundary. Access from the highway is poor. "Woodbine" has no services, although a mail service is available on the highway.
According to Mr Compton, "Woodbine" comprises undulating, generally moderate to steeply sloping forest country below the Zamia Range on the western boundary, forming the upper catchment of Woodbine Creek, extending onto a narrow frontage to Jumbuck Creek on the eastern boundary.
He classified the country as follows:
.1300 ha superior Woodbine Creek frontage flats and easy slopes onto low ridges on the western side of the creek into Zamia Range foothills. Timbered with box, gum, moreton bay ash, silverleaf ironbark, broken by silverleaf ironbark, sandalwood ridges and scattered brigalow influence.
.1130 ha undulating moderate to steeply sloping shaley forest ridges east of Woodbine Creek, erodable "breakaway" soils, timbered with silverleaf ironbark, bloodwood, sandalwood, currant bush with narrowleaf ironbark and silverleaf wattle on ridges, black ti-tree along gullies.
.743 hectares steep basalt staircase ridges onto the Zamia Range along the western boundary and high narrowleaf ironbark ridges on the north-eastern boundary.
Mr Compton stated that about 2200 hectares of available forest country has been pulled and partly seeded to buffel, and about 900 hectares of shaley ridges, only light, natural and improved pasture. He estimated that the present carrying capacity of the property was 1 beast to 8 hectares, or 400 head, with a potential of 1 beast to 7 hectares, or 453 head. Woodbine Creek has seasonal waterholes while artificial supplies consist of one equipped bore, three equipped wells and 10 dams.
In valuing the property, Mr Compton said that he took into account the following matters:.Parthenium infestation spreading along Woodbine Creek flats and its effect upon carrying capacity;
.Erodable clay soils similarly requiring light stocking;
.Poor access and lack of services;
.Severe drought affecting the district in 1992.
As the basis for the valuation of "Woodbine", Mr Compton referred to the same three sales that he used to value "Withersfield".
Mr Compton reasoned that although the "Cloyne" sale has superior brigalow country, being in a slightly lower rainfall area and interspersed with forest, it has a similar carrying capacity. Its location and access are inferior. Overall he considered it to be inferior to "Woodbine".
Mr Compton thought that the "Mentmore" sale was superior to "Woodbine", because it had superior country, carrying capacity and access, although the water was similar and the location inferior.
He also considered the "Crescendo" sale to be superior to "Woodbine", as the sale had superior country, water and potential, as well as superior access, location and services. However, it was disadvantaged by flooding and parthenium.
From these three sales Mr Compton valued "Woodbine" as follows:1300 ha fair box/silverleaf ironbark/brigalow/sandalwood
forest flats/easy slopes @ $50 per ha = $ 65,000
1130 ha inferior ironbark/bloodwood/sandalwood erodable
forest ridges @ $25 per ha = $ 28,250
743 ha steep narrowleaf ironbark range and ridges
@ $5 per ha = $ 3,715
$ 96,965
or $30.56 per hectare
After allowing for lack of services and parthenium infestation, Mr Compton applied $30 per hectare to the 3,173 hectares, which he rounded to a total unimproved value of $95,000.
The Evidence for the Crown
Evidence on behalf of the Crown was given by Mr DP Jones, a registered valuer employed by the Department of Lands. Mr Jones was not the valuer originally responsible for the Crown assessment of the freeholding values for "Withersfield" and "Woodbine", but had taken over that responsibility after the other valuer had left the Department. Mr Jones felt obliged to present the reports prepared by that valuer and added some notes and opinions of his own. He made it clear from the beginning that he considered that the valuations recommended for both properties by the previous valuer were conservative. If he was undertaking the task from the beginning, the valuations would be somewhat higher.
"Withersfield"
The description of "Withersfield" contained in the previous valuer's report is as follows:3420 ha (31%) fair ironbark wattle ridges broken by
narrow box gum flats (c.c. 1-10ha or 342 head)
5854 ha (53%) poor very steep ironbark wattle, odd
narrow gum creek flat (c.c. 1-30ha or 195 head)
1705 ha (16%) unavailable ranges (c.c. nil)
Total carrying capacity - 537 head, rounded to 1-20ha or 550 head.
As a basis for his valuation, the original valuer commented that there was a lack of suitable sales evidence, but he had used two sales to establish a beast area value and resulting overall rate per hectare.
The two sales used were "Cloyne" (also used by Mr Compton), which showed an analysed unimproved value of $27 per hectare and a beast area value of $368, and the sale of "Telarah", which showed an analysed unimproved value of $24.75 per hectare and a beast area value of $228.
From this sales evidence the valuer adopted a beast area value of $210 for the 550 head carrying capacity of "Withersfield", arriving at an unimproved value of $115,500, or $10.52 per hectare. He then adopted a rounded rate per hectare of $10.50 to value the 10,979 hectares, arriving at an unimproved value which he rounded to $115,000.
It was obvious that Mr Jones was unhappy with this valuation. In his own statement he made the following comment:"I have perused all relevant sales evidence in the locality as attached and can find no sales low enough to support the level of value applied to the subject.
The only sale that would lend any support to a figure of $10.50/ha ($210/beast) on the subject is that of "Crystal Creek" which is a 30 year restrictive grazing special lease over part of Timber Reserve 148 north of Rubyvale. It was sold on 03/04/92 for $250,000 and based on the previous analysis (sale 17/08/88 $390000) would show $140,000 unimproved value for 9692 ha which is $14.44/ha or $289/beast for 1:20.0 forest and virgin scrub (485 head) - SL 12/42002. This lease allows for no development of the timber and is a poor comparison for freehold value."
Mr Jones went on to comment on the approach taken by the previous valuer, concluding that he believed that a direct comparison method of valuation should have been used to value the subject land. He thought that the best evidence was the sale of the adjoining property, "Woodbine", which could be compared directly on a rate per hectare with the better country of "Withersfield". He adjusted the previous valuer's analysis of the sale to show $68.60 per hectare, or a beast area value of $823, at a carrying capacity of 1 beast to 12 ha.
Mr Jones included a schedule of some 11 sales which occurred between July 1991 and March 1994. Only the sale of "Crystal Creek", with a carrying capacity of 1 beast to 20 hectares, an analysed unimproved value of $14.44 per hectare and a beast area value of $289, came close to the figures applied to "Withersfield".
"Woodbine"
The valuation of "Woodbine", found Mr Jones in only a slightly better position. The previous valuer had described the country on "Woodbine" as follows:327 ha (10%) creek flats forest grazing
1558 ha (49%) forest grazing SLIB wattle
1288 ha (40%) poor steep forest grazing
He assessed the carrying capacity of 1 beast to 12 hectares, or 264 head.
The valuer's report showed that he used two sales as a basis for the valuation. Sale 1 was the sale of the subject property, which he analysed to show an unimproved value of $70.77 per hectare, making the following comment:
"The subject property is considered to be a high sale. The property was purchased by the adjoining owners who are currently attempting to re-aggregate the original Withersfield Holding. "
The second sale used by the valuer is a property known as "Stanleys", with an area of 1450 hectares, situated approximately 5 km north-west of Anakie. "Stanleys" sold in July 1991, for $240,000 and was analysed to show an unimproved value of $136,072, or approximately $94 per hectare. The carrying capacity was assessed at 1 beast to 10 hectares.
However, apart from being a smaller property, "Stanleys" appears to comprise 74% of scrubby forest, 11% scrub and 5% downs, with 10% lancewood ridges and is agreed to be a much superior property.
From that sales evidence, the original valuer arrived at an unimproved value of $45 per hectare for "Woodbine", a rounded total of $143,000.
In his own note attached to the valuer's report, Mr Jones made the following comment:"I have interviewed the purchaser of the subject sale and found prudent steps were taken in negotiating the sale which was not tested on the open market. I have perused all the other relevant sales evidence at the time and can find no evidence to suggest that the sale was greatly out of line. The most relevant support sales are Helmores' part of 'Tadcaster' and 'Marilla'. The sale was re-analysed slightly to allow for some timber treatment adjustments to show a new analysed value of $68.60 per hectare (previously $70.77 per hectare) and I would have no difficulty in applying a value of $60 per hectare to the subject.
Therefore, I find the valuation of $45 per hectare very supportable and have attached a review of the sales evidence in the locality. "
The Crown's Sales
Mr Compton was critical of the Crown description of the sale "Cloyne". He also drew attention on the differences between the Crown's analysis and his own.
Although "Cloyne" was used as a basis by the previous valuer, Mr Jones had not fully inspected the property nor undertaken an analysis of the sale. Therefore, I find the evidence submitted by the Crown in relation to the sale "Cloyne" to be of no assistance.
Mr Compton's evidence was to the effect that although it was sold at auction, "Cloyne" was purchased by an adjoining owner at what Mr Compton described as "the top of the market". However, it seems that Mr Compton was prepared to accept his analysis of $25 per hectare as a reasonable basis of valuation.
Mr Compton was also critical of the use of other sales by the Crown. He thought that "Stanleys" was an inappropriate basis of valuation because of its small area and its situation where he thought there was a gemfields influence. Although he had not inspected "Telarah", Mr Compton said that from the description of the country in the Lands Department report, it must be a superior property.
The Problems which Confronted Mr Jones
It was obvious that Mr Jones did not agree with the valuations applied by his predecessor. He had trouble reconciling the valuation of $10.50 per hectare on "Withersfield" with the valuation of $45 per hectare on "Woodbine". He did not think that they related one to the other. While he accepted the valuations and the use of the sales, if he was undertaking the task from the beginning, he would have applied a higher value in each case.
During the hearing it emerged that Mr Jones knew only three of the eleven sales included in his schedule, "Woodbine", "Crescendo" and "Stanleys". However, he could be confident only with the analysis of "Woodbine", as he had undertaken a re-analysis of the sale and arrived at a slightly lower unimproved value than had the previous valuer.
It is clear from Mr Jones' notes that he would have applied a valuation of approximately $60 per hectare to "Woodbine", rather than the $45 per hectare he was defending. He did not think that the sale was greatly in excess of market value. However, the evidence to the contrary is almost overwhelming.
First, there is the evidence of Mr Graham who provided a background to the purchase of "Woodbine". The Graham family was obviously anxious to acquire the property for a number of reasons. In such circumstances a purchaser may well be prepared to pay more than market value.
Second, there is the evidence of Mr Compton, who considered "Woodbine" to be a classic adjoining owner sale and therefore not a true indication of market value.
Third, there is the written statement of the Crown's original valuer, with whom Mr Jones did not agree. He analysed the sale to show $70 per hectare and yet applied only $45 per hectare for the purposes of conversion of tenure.
Against this evidence, we have Mr Jones' opinion that the sale does not seem unduly high. However, as Mr Jones had not undertaken his own analysis of any of the other sales, he really has no firm foundation from which to judge the relative merits of the "Woodbine" sale and the unimproved value derived therefrom. It may well be that if he undertook analyses of the other sales he would disagree with the previous valuers' analyses of them.
Conclusions
Needless to say, because of the unsatisfactory state of the Crown evidence, I prefer that provided by Mr Compton. However, having regard to the whole of the evidence I have come to the conclusion that although Mr Compton's valuations are to be preferred, they are somewhat low.
Section 141(1) of the Land Act 1962, provides that for the purposes of conversion of tenure, the unimproved value of any land shall be the amount which in the Court's opinion experienced persons would be willing to pay for an estate in fee simple in the land assuming the land was in the prescribed state (in these cases an unimproved state) and was offered for sale on such reasonable terms and conditions as a bona fide seller would require.
Applying this test in respect of "Withersfield", although there are no reasonably comparable sales in the area, it is difficult to envisage that despite the rough nature of the country, an area of 10,979 hectares situated near the Willows, if unimproved, would bring less than $10 per hectare. However, having regard to the area of steep, rough, virtually inaccessible zamia infested ranges, the lack of services and the parthenium and rubber vine infestations, I have come to the conclusion on the state of the evidence that an unimproved value of $9 per hectare would be appropriate.
With regard to "Woodbine", there are no directly comparable sales. The sale of the subject land to an adjoining owner I find to be of no assistance. I also reject Mr Jones' opinion that the sale is not out of line with others in the area. If that was so, then the doubt would arise as to whether the analyses of any of those other sales was correct. I am of the opinion that the sale price of "Woodbine" was excessive.
The other sales produced by Mr Compton are not directly comparable. Perhaps the closest would be the sale of "Mentmore", which Mr Compton analysed to show an unimproved value of $39.35 per hectare. Although it has superior carrying capacity and type of country, it is situated 30 km north of Alpha. In any case, to achieve the carrying capacity, a large proportion of the country had been treated.
"Woodbine", hectare for hectare, is undoubtedly superior to "Withersfield". However, if the area of virtually unavailable country is excluded from "Withersfield", there is some similarity between the other types of country, although "Withersfield" has by far the larger proportion of steeper country. Having regard to the various proportions of country, I have come to the conclusion that although Mr Compton's carrying capacity is supported by the actual numbers run by the Graham family, in relative terms by comparison with "Withersfield", a carrying capacity closer to that adopted by the Crown is more appropriate for comparison purposes.
I note from Mr Compton's report that the unimproved value applied to "Woodbine"under the provisions of the Valuation of Land Act 1944, as at 30 June 1993, was $99,000, or $31.20 per hectare. That valuation was re-applied as at 1 January 1995. Although the provisions of the Land Act 1962 are different and the unimproved values determined under each Act are for quite different purposes, the fact that the Lands Department applied an unimproved value of $31.20 to "Woodbine" reinforces my opinion that the valuations in these cases contended for by Mr Jones are unrealistically high. On the other hand, it is appreciated that unimproved values applied for the purposes of the Valuation of Land Act might well be somewhat conservative. Therefore, I have come to the conclusion that an appropriate value for conversion purposes for "Woodbine" is $35 per hectare.
Orders
Accordingly, the unimproved value for Grazing Homestead Perpetual Lease No 37/3785, Springsure District ("Withersfield), for the purposes of conversion of tenure is determined at $9 per hectare, or $99,000.
The unimproved value for Grazing Homestead Perpetual Lease No 37/3491, Springsure District ("Woodbine"), for the purposes of conversion of tenure is determined at $35 per hectare, or $111,000.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
0
0
0