Griffiths v Department of Natural Resources and Water
[2010] QLC 48
•26 March 2010
LAND COURT OF QUEENSLAND
CITATION: Griffiths v Department of Natural Resources and Water [2010] QLC 0048 PARTIES: Peter Griffiths
(applicant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: VLA148-07 and VLA007-08 DIVISION: General Division PROCEEDING: Appeals against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 26 March 2010 DELIVERED AT: Brisbane HEARD AT: Roma PRESIDENT: Mrs CAC MacDonald ORDER: 1. Appeal No. VLA007-08 is allowed.
2. The unimproved value of Lot 3 on Crown Plan FT 840, County of Fortescue, Parish of Kroomgah, being the whole of the land contained within Grazing Homestead Freeholding Lease 40/1457B is determined at One Million, Seven Hundred and Seventy-Five Thousand Dollars ($1,775,000) as at 1 October 2004.
3. Appeal No. VLA148-07 is dismissed.
4. The unimproved value of Lot 3 on Crown Plan FT840, County of Fortescue, Parish of Kroomgah, being the whole of the land contained within Grazing Homestead Freeholding Lease 40/1475B, is affirmed at Two Million, Nine Hundred Thousand Dollars ($2,900,000) as at 1 October 2006.
CATCHWORDS: Valuation – issued valuation – higher figure led by respondent at hearing – reason for such explained – subsequent inspection of property – additional sales evidence.
Valuation – grazing property – effect of Vegetation Management Act on value – reduction in carrying capacity justified.
Valuation – grazing property – sales with some potential for cultivation – whether such potential make them more attractive in market.
Valuation – relativity with other land in locality – relativity important – but valuation must still be soundly based.
APPEARANCES: Mr A Boyd, Agent for the appellant
Mr W Isdale, Crown Law, for the respondent
These proceedings concern two appeals under the provisions of the Valuation of Land Act 1944 by Peter Griffiths (the appellant) against annual valuations of his grazing property, Stuart Downs.
The property in question is described as Lot 3 on Crown Plan FT840, County of Fortescue, Parish of Kroomgah, being the whole of the land contained within Grazing Homestead Freeholding Lease 40/1475B. It has an area of 8,245 ha. The land is situated approximately 74 kms east of the town of Taroom and is used for beef cattle breeding and fattening.
Appeal No. VLA007-08 concerns the unimproved value of the subject land as at 1 October 2004. The value of the land as at that date was determined by the Chief Executive, Department of Natural Resources and Water (the respondent) at $1,950,000 or $235/ha. In the Notice of Appeal the appellant's estimate of the value of the land as at that date was $1,300,000 or $158/ha. However in his statement of evidence he said that he would lead evidence to $1,600,000 or $194/ha.
Appeal No. VLA148-07 concerns the unimproved value of the subject land as at 1 October 2006. The value as at that date was determined at $2,900,000 or $350/ha. The appellant's estimate of the value as at that date was $1,950,000 or $236/ha.
Each of the appeals is dealt with separately in this decision. The hearing focussed mainly on the 2004 valuation, the appellant saying that he did not contest the sales evidence in respect of the 2006 valuation. The appeals were heard together with the evidence in one, so far as it was relevant, being accepted as evidence in the other. Mr Peter Griffiths gave evidence on his own behalf. Mr MC Farrington, a registered valuer employed by the respondent Department, gave evidence on behalf of the respondent. Mr Farrington was the valuer responsible for making both the valuations under appeal.
Section 13 of the Valuation of Land Act provides that the Chief Executive must decide the unimproved value of the land to be valued for the Acts under which local authorities are established. Relevantly, "unimproved value" is defined by s.3(1)(b) of the Act to mean, in relation to improved land, the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist.
VLA007-08
The history of events leading up to this valuation was a source of contention between the parties. The valuation had originally issued at $1,650,000 which was reduced on objection to $1,600,000. The appellant then appealed to the Land Court estimating the value of the property as at 1 October 2004 at $1,000,000. A preliminary conference was conducted by the Judicial Registrar of the Land Court in an endeavour to assist the parties to reach a settlement of the matter without the necessity for a full hearing. Subsequently an officer of the Department of Natural Resources and Water wrote to the registrar of the Land Court advising that settlement had not been achieved and requesting that the matter be set down for hearing and determination by the Court. That letter also advised that it was the intention of the Chief Executive of the Department of Natural Resources and Water to seek the leave of the Court, at the hearing of the appeal, to lead evidence to a revised valuation amount of $1,950,000. The letter went on to say that the respondent's investigations indicated that the issued valuation of $1,600,000 was not supported by sales evidence and evidence would be lead to support the higher figure.
The matter was listed for hearing before the Land Court on 1 October 2007 but by notice received in the Land Court on 27 August 2007, the appellant withdrew the appeal. In a covering letter sent to the Court with the notice of withdrawal, the appellant's agent (Mr A Boyd) advised that the appellant had received quotes from his legal and witness team as to the cost of representing him at the Court hearing and faced with those costs and the threat that the department would be leading to a higher valuation, Mr Griffiths had instructed Mr Boyd to withdraw the appeal.
Subsequently a new valuation was issued on 18 December 2007 valuing the land as at 1 October 2004 at $1,950,000. That is the valuation which is the subject of this appeal.
Copies of documents obtained on behalf of the appellant under the Freedom of Information Act 1982 indicate that a number of Ministerial complaints had been made by Mr Boyd concerning the conduct of the department and some of its officers in relation to these valuations. While such complaints would not normally be relevant to an appeal of this nature in this Court, there were suggestions that the integrity of the valuation process has been affected. Included in the documents released is a copy of an email from Mr Farrington to a Mr J Puccini dated 27 August 2007. The email notes that the first appeal in this matter had been withdrawn but refers to the fact that an appeal had also been lodged against the 2006 valuation. Mr Farrington goes on to say –
"If the case had involved an owner represented appellant I would have been inclined to simply let the matter slide, but I am concerned that in this instance the owners' agent is likely to make fresh allegations of professional misconduct against me if the intention of the Department to lead evidence to a higher value is not acted upon. He has already lodged numerous written complaints to the Department and Government Ministers over the past 6 months claiming discourteous behaviour, victimisation, bullying tactics, discrimination and intimidation of his client by me and … if action is not taken to retrospectively amend the 2004 value to the amount I intended to defend in the Land Court.
It is more than likely this action will lead to a fresh objection and appeal against the revised value, however at least Mr Boyd will no longer have any reason to accuse the Department (or me) of unsubstantiated threats against his client."
In a briefing note from the Director of State Valuation Services to the Director-General of the Department of Natural Resources and Water dated 11 January 2008, it is pointed out that the revised valuation amount is the same figure that was intended to be lead at the Land Court hearing in respect of the original appeal. The briefing note goes on to say that "the intention of the Department to lead evidence to a higher value was conveyed to both the owner and to the Land Court after a detailed inspection of the subject property by the SVS valuer revealed the valuation was too low relative to surrounding property valuations and too low relative to recent relevant property sales". The letter also says "the primary reason for increasing the Griffiths valuation is because it was too low as it stands in comparison to other property valuations in the locality. … The correction of this valuation anomaly will restore equity amongst the property valuations in this sector of the Taroom Shire".
Mr Farrington confirmed that, following an inspection of the subject in May 2006 he had formed the view that the revised original valuation of the subject was too low. His sales evidence (described further below) lead him to alter the value attributed to the second class scrub grazing area on the subject from $323.40/ha to $400/ha and, accordingly, the total valuation to $1,950,000.
I have accepted Mr Farrington's evidence that this was the reason for the alteration in the valuation. Although the appellant was aggrieved by the increase, particularly in the light of the impact on his land of the Vegetation Management Act 1999 (discussed below), I consider that the inspection of the subject in May 2006 was sufficient to enable Mr Farrington to form the opinion, consistently with the sales evidence, that the previous valuation was too low.
The respondent's valuation
Mr Farrington said that Stuart Downs is situated at the headwaters of Cockatoo Creek with its eastern boundary formed by the crest of the Auburn Range. The property comprises a mixture of undulating brigalow scrub, open forest watercourse frontage and inferior quality forest slopes and ridges. Approximately 5,400 ha (65% of the property) has been cleared for grazing and established to improved pastures of buffel grass and rhodes grass while the balance remains uncleared.
Mr Farrington's country classification is -
· 4,100 ha (50%) of developed second class scrub grazing comprising a mixture of heavier textured grey clays and lighter brown clay loam soils originally timbered with brigalow, belah, sandalwood, Dawson gum, bottle tree and vine.
· 900 ha (11%) of cleared second class forest grazing comprising mainly drainage lines and minor watercourse frontages originally timbered with poplar box, sandalwood, silverleaf, ironbark and gum. Generally shallow brown/grey sandy clay surfaced duplex soils.
· 400 ha (5%) of cleared third class grazing comprising predominantly shallow sandy surfaced soils originally timbered with narrow leaf and silverleaf ironbark occurring on the fringes of the developed brigalow scrub country.
· 900 ha (11%) remnant mixed scrub as described above.
· 250 ha (3%) remnant second class forest as described above.
· 1,695 ha (21%) remnant third class forest as described above.
Mr Farrington said that the unimproved value of the subject was assessed by direct comparison with unimproved values analysed from recent local sales of land comprising similar land types to the subject. He relied primarily on four sales in support of the valuation but said that he also had regard to rural property sales that had occurred throughout the Taroom Shire as well as in other adjoining local government areas leading up to the date of valuation.
Sale 1, Alva Downs, is a property of approximately 2,591 ha which sold on 10 May 2004 for $1,560,000 or $602/ha. Mr Farrington analysed the sale to $561,843 or $217/ha and applied a value of $535,000 or $206.ha.
The sale property is situated approximately 2 kms west of Dulacca and approximately 45 kms west of Miles. Mr Farrington said that the sale property was in a superior location and had superior access as compared with the subject.
The sale property comprises 1,400 ha (54%) mixed brigalow, belah, with areas of poplar box influence; 1,040 ha (40% remnant) third class ironbark, wattle, Bendee forest ridges; 151.33 ha (6%) remnant brigalow belah scrub. Mr Farrington's opinion was that the scrub country was overall inferior to the scrub component of the subject property but that the remnant third class forest and scrub were similar on both properties. The sale was inferior to the subject in country types and country composition.
The property is used for cattle breeding and fattening with some opportunity cropping which, Mr Farrington said, was a superior use to that of the subject.
The water on the sale property comprises eleven earth tanks and dams (1,000 – 7,500 cubic metres), and there is natural water in Dulacca Creek with holes that last up to 6 months. Mr Farrington considered the sale property to be slightly better watered than the subject.
The carrying capacity of the sale is 375 adult equivalent (AE) or approximately 1:6.9 ha which, Mr Farrington said, was overall inferior to the carrying capacity of the subject.
In summary, Mr Farrington said the sale comprised a mixed scrub and poor forest grazing property purchased as additional area by established local graziers. The vendors sold to retire. Further clearing of the property is impacted by the Vegetation Management Act 1999. In Mr Farrington's opinion the sale was slightly inferior to the subject on a rate per hectare basis.
Mr Farrington used the sale to establish a rate per hectare on an overall basis for the subject property. He considered it to be a useful sale because it was a property that consisted of a mix of remnant country and cleared country. It also contained a mixture of scrub country and forest country and although it was somewhat removed from the subject property, he considered that it provided a reasonable comparison with the subject land on an overall basis.
Mr Farrington's Sale 2 is a 1,734 ha property called Diamond Downs which sold on 1 August 2003 for $1,851,600 or $1,068/ha. Mr Farrington analysed the sale to $730,019 or $421/ha and applied a value of $730,000 or $421/ha.
The sale property is situated approximately 9 kms east of Wandoan. Mr Farrington said that it was superior in situation and access as compared with the subject.
The sale property comprises 1,000 ha (58%) of second class undulating brigalow, belah, bauhinia, sandalwood scrub grazing; 600 ha (35%) second class box, sandalwood, wilga forest grazing creek flats and adjacent low slopes; and 134.415 ha (8%) second class silverleaf ironbark, box forest grazing ridge. Mr Farrington said that the scrub country on the sale was of a similar quality to the scrub on the subject property. The forest country on the sale was overall superior to all the forest on the subject property and in his opinion the sale was overall superior to the subject in quality of country.
The artificial water on the subject comprises 22 earth tanks and dams (500 – 13,000 cubic metres). There is natural water in Weringa Creek with short term (2 to 3 months) seasonal holes. Mr Farrington said that the sale was better watered than the subject.
The carrying capacity of the sale is 450 AE cattle or approximately 1 beast to 3.85 ha, which, overall, is superior to the subject's carrying capacity.
Mr Farrington said that the sale comprised a fully developed mixed scrub and forest grazing property purchased as additional area by an established local grazier. The sale property is located about 50 kms south-west of the subject. He said that overall, the sale was superior to the subject on a rate per hectare basis.
Mr Farrington said the subject property is comprised of two main parts. In his opinion, even though the remnant areas comprised about 35% of the total area of the property, their value was probably something less than 5% of the total value of the property so that all the value in the subject property is in the cleared component. In Mr Farrington's opinion, Sale No. 2 comprised an average quality Wandoan thick scrub and second class forest property and as such, he believed it provided a useful comparison in terms of assessing a value for the developed part of the subject land.
Mr Farrington's Sale 3 is Wongalea a property of 1,757 ha which sold on 29 July 2004 for $2,250,000 or $1,281/ha. Mr Farrington analysed the sale to $995,500 or $567/ha and applied a value of $890,000 or $507/ha. He considered that the property was superior to the subject.
This property comprises 1,250 ha (71%) mixed brigalow, belah, bauhinia, wilga, sandalwood, second class scrub grazing and 508 ha (29%) broken slopes of mixed box, bauhinia, ironbark and brigalow scrubby forest grazing. Mr Farrington said that the scrub grazing land on the subject was slightly superior to the developed scrub country on the subject. The scrubby forest was considered to be similar to the second class forest portion of the subject. As there was no poor quality forest grazing or remnant vegetation on the sale it is a far superior property to the subject overall.
The carrying capacity of the sale is 530 AE cattle or approximately 1 beast to 3.32 ha. Overall it has a superior carrying capacity to the subject.
Mr Farrington said that the sale comprised fully developed mixed scrub and forest grazing property purchased as additional area by an established local grazier/farmer. Overall, he considered the sale to be superior to the subject on a rate per hectare basis.
Mr Farrington said that the sale property was an average to slightly above average quality Wandoan district property. He acknowledged that it was superior to both the subject property and Sale No. 2 because there are sections of Wongalea that are suitable for a dual purpose use – either grazing or cultivation. However, he said, the market in the Wandoan area was such, through the late 1990s and early 2000s up to the date of valuation, that it was driven by the cattle market and not by people purchasing land for agriculture. Mr Farrington did not believe that the cultivated land attracted any significant premium over and above the price of the land established to pasture. Although a substantial portion was cultivated at the time of sale it has since reverted to pasture.
Sale 4, Boomerang, is a property of 3,975 ha sold on 11 March 2004 for $6,150,000 or $1,547/ha. Mr Farrington analysed the sale to $3,133,831 or $788/ha. He applied a value of $2,800,000 or $704/ha.
Mr Farrington said that his reason for including this sale was to demonstrate the strength of the market for properties of similar productivity to the subject property.
Appellant's submissions
The principal issues raised by the appellant concerned –
· Classification of country
· Remnant country – the impact of the restrictions on vegetation clearing imposed under the Vegetation Management Act 1999
· Carrying capacity
· Water
· Regrowth
· Market evidence
· Relativity
Each of these issues will be considered in turn.
Classification of country
The appellant did not disagree with Mr Farrington's classification.
Remnant country
The subject property has been impacted by the enactment of the Vegetation Management Act (VMA) which introduced restrictions on future clearing of certain land. The appellant submitted that no proper allowance had been made by the respondent for the impact of the VMA because Mr Farrington had not adjusted the subject's carrying capacity.
Mr Farrington acknowledged that Stuart Downs contains approximately 2,845 ha of remnant vegetation which represents almost 35% of the total area of the property which, he said, is a substantially higher percentage than the district standard average for properties of similar quality to the subject.
Following receipt of the appellant's objection to the original valuation of $1,650,000 as at 1 October 2004, Mr Farrington had allowed for the impact of the VMA by reclassifying the subject from three to six categories. The newly created categories are the areas impacted by the VMA which are the 900 ha of remnant mixed scrub, the 250 ha of remnant second class forest and the 1,695 ha of remnant third class forest. The objection was allowed by the Chief Executive's delegate and the valuation was reduced to $1,600,000. The reasons identified by the delegate for allowing the objection were – allowance for planning/ord/bylaw, allowance for country classification and allowance for unique characteristics. There was no evidence as to how the allowance of $50,000 had been divided between each of these categories.
Although the appellant considered that the allowance of $50,000 was insufficient to reflect the impact of the VMA on 35% of his property, the question of whether the $50,000 was sufficient was not relevant to this appeal because of the issue of the new valuation at $1,950,000. Nevertheless the more general question remains, namely whether in the valuation under appeal sufficient allowance has been made for the impact of the VMA on the appellant's property.
Mr Farrington considered that the 900 ha of remnant mixed scrub and 250 ha of remnant second class forest had been most significantly affected by the legislation as they would comprise good quality grazing land if cleared but offered only limited grazing opportunities in their natural state. However, Mr Farrington said, he did not consider that the restrictions on clearing to the 1,695 ha of remnant third class forest had adversely affected the unimproved value of the property to any real extent because that country comprised mostly very poor quality grazing land which he had assessed as having no development potential.
In the valuation under appeal, the values Mr Farrington attributed to each of the 6 categories were -
4,100 ha 2nd class brigalow scrub - $400.00/ha
900 ha 2nd class box/ironbark forest - $231.00/ha
400 ha 3rd class ironbark forest - $23.10/ha
900 ha remnant mixed scrub - $20.00/ha
250 ha remnant 2nd class forest - $75.00/ha
1,695 ha remnant 3rd class forest - $23.10/ha
Conclusion re values of remnant country
I am satisfied that Mr Farrington has made a significant allowance for the impact of the VMA on the value of the remnant scrub which he has valued at $20/ha as compared with the value of $400/ha attributed to the developed mixed scrub. Similarly Mr Farrington has valued the remnant second class forest at $75/ha as compared with a value of $231/ha attributed to the developed second class forest. However, because Mr Farrington did not consider that the value of the third class remnant forest had been adversely affected by the VMA, he made no allowance for that category. The valuation of the land in that category at $23.10/ha is consistent with Mr Farrington's opinion of the poor quality of that land.
Carrying capacity
Although it is clear that Mr Farrington has made a significant allowance for the impact of the VMA in the values attributed to two of the remnant areas, the appellant submitted that Mr Farrington had not adjusted the subject's carrying capacity to reflect the adverse effect of the legislation. The appellant also submitted that Mr Farrington's attributed carrying capacity was high.
Mr Farrington emphasised that his primary method of valuation of the subject land was by comparison with sales of comparable properties in the locality of the subject and he had used the carrying capacity comparison as a check method only. He had estimated the long-term carrying capacity of the subject property improved to district standard and taking into account the current tree clearing laws at 1,350 Adult Equivalent (AE) cattle. This equates to 1 AE to 6.1 ha.
Mr Griffiths has stock records which show that from 1990/91 to 2005/2006 his stock figures averaged 998 head or 1:8.26 ha. For the 23 years prior to that period his records show an average of 956 head or 1:8.6 ha. Mr Griffiths has recorded the actual numbers of cattle that he has run on the property over the years. In his oral evidence he said that if he adopted a conversion rate of two calves to one adult beast, he estimated that he had 1,050 head on his land at the time of the hearing and that that was consistent with what he had carried on the property for the last 40 years. That figure includes cows, weaners, steers, bulls and spayed heifers. A stocking rate of 1,050 head equates to a carrying capacity of 1:7.8 ha. For the purpose of this decision, I will adopt that figure as Mr Griffiths' actual carrying capacity.
There is some difference between the parties as to the measure adopted for estimating carrying capacity. Mr Farrington used as the basis of his calculation the "Adult Equivalent" which he described as a 450 kg non-lactating beast which equates to a dry cow or a steer. There was no evidence which would enable me to say how Mr Griffith's figure of 1,050 head of mixed cattle could be converted into adult equivalents, the measure adopted by Mr Farrington or vice versa. In the absence of any information as to how the two figures may be reconciled, I cannot compare them.
Both parties sought to rely on previous decisions of the Land Court concerning the carrying capacity of the subject land. Mr Griffiths said that the earlier determinations were
Rental case 1983 1:7 ha
Rental case 1990 1:7 ha
Freeholding case 1989 1:7 ha
Private valuer 1:8 haMr Farrington said that the two Court decisions appended to his report showed that there had been previous agreement that the property had the potential to run 1 beast to 5 ha. One decision was a Rental Determination for the subject land for the third period of the lease which commenced on 1 January 1990.[1] This appears to be the 1990 rental case referred to by Mr Griffiths. The decision indicates that the Court accepted the Crown's evidence that the carrying capacity of the subject property at that time was 1:7 ha but that with further development that could be increased to 1:5 ha, although Mr Griffiths had given evidence that his actual stock figures since 1969 showed that he ran only 956 head (1:8.6 ha) over that period.
[1]Re: Determination of Rent – Third Rental period Grazing Homestead Perpetual Lease 40/1475B, unreported, Land Court, 18 December 1992.
The other decision concerned the determination of the unimproved value of the subject property for the purpose of conversion to a freeholding tenure.[2] It appears that that is the decision referred to by the appellant as the "freeholding case 1989". The evidence in that case was that the valuer called by the Crown considered that the carrying capacity of the subject property at the relevant date was 1:7 ha and that it had a potential carrying capacity of 1:5 ha. The applicant's valuer considered that the carrying capacity was 1:8 ha but agreed that the potential was 1:5. There was no finding by the Land Court of the carrying capacity of the subject land as at the relevant date, 14 November 1989.
[2]Re: Determination of the unimproved value of Grazing Homestead Perpetual Lease No 40/1475"B", Taroom District, for the purpose of conversion of tenure of the selection to a freeholding tenure, Unreported, Land Court, 25 June 1993.
It is to be observed that neither of those cases considered the subject property as impacted by the Vegetation Management Act. In those circumstances, the appellant submitted that the respondent's estimated carrying capacity of 1:6.1 did not take into account the effects of the Vegetation Management Act.
Mr Farrington acknowledged that he had not "consciously meddled" with the carrying capacity to allow for the impact of the VMA. However, he said, the Court decisions showed that there had been previous agreement that the property had the potential to run 1:5 ha prior to the VMA, whereas he had estimated a carrying capacity of 1:6.1 ha.
Conclusions re carrying capacity
Mr Griffiths' evidence, which I accept, was that he had carried 1 beast to 7.8 ha (mixed herd, adjusted as explained above) for the last 16 years. Mr Farrington's analysis was carried out in accordance with the district standard applied by the respondent department for the purposes of determining unimproved values of land in the area. This is designed to ensure that valuations are struck on a consistent basis as between properties and to eliminate differences in carrying capacity caused by different land use and management practices.
It must be remembered that in determining the unimproved value of land it is to be assumed that, as at the date of valuation, the land is unimproved. The relevant question is the potential carrying capacity that the prudent purchaser would attribute to the land as at that date. Prior to the introduction of the VMA, the Land Court had found in the Rental Determination case that the potential carrying capacity as at 1 January 1990 was 1:5 ha.[3] It is assumed that the measure 'adult equivalent' was used by the respondent in that case as it has been in this matter. When compared with the finding of the Land Court, it appears that Mr Farrington has eased the potential carrying capacity of the subject from 1:5 ha to 1:6.1 ha. This indicates that he has made an allowance for the impact of the Vegetation Management Act. The reduction from 1:5 ha to 1:6.1 ha represents a reduction of 299 head. Of the 2,845 hectares of the subject impacted by the VMA, Mr Farrington's evidence, which I have accepted, was that the 1,695 hectares of remnant third class forest had very little development potential, so that it was the 1,150 hectares of developable land where the carrying capacity has been adversely affected. Mr Farrington said that the carrying capacity of that type of land was 1:4.13 ha. On that basis, loss of the capacity to develop the 1,150 hectares would lead to a loss of capacity of 278 head which is consistent with Mr Farrington's reduction in carrying capacity from 1:5 ha to 1:6.1 ha. I am satisfied, therefore, that Mr Farrington has allowed for the impact of the VMA in the carrying capacity he has applied.
[3]Re: Determination of Rent – third Rental period Grazing Homestead Perpetual Lease No. 40/1475B, Unreported, Land Court, 18 December 1992.
There remains the question of whether the carrying capacity attributed to the subject land by Mr Farrington is excessive.
Mr Griffiths considered that the overall carrying capacity attributed to his property by Mr Farrington was excessive for two reasons. One was that Mr Farrington's estimate of carrying capacity was higher than that attributed to first class scrub country in the Goondiwindi and Dalby districts. That evidence was inconclusive and I have not relied on it. Mr Griffiths was able to say that the scrub country in the Dalby and Goondiwindi areas was better than his – but there was no evidence as to the carrying capacity of those areas, nor any detailed information as to the quality of that area as compared with the subject.
The second reason was that the appellant carries fewer head of cattle on the subject land than that attributed to the property by Mr Farrington. As discussed above, it is not clear to me whether the appellant does carry fewer head than that attributed by Mr Farrington, as the parties' figures are calculated on different bases. In any event, as mentioned above, the relevant question is the potential carrying capacity that the prudent purchaser would attribute to the subject land as at the date of valuation. Mr Griffiths' evidence proved the actual numbers of cattle he carried on to the land. Mr Farrington's estimate of the carrying capacity reflects his opinion of a reasonable carrying capacity on the assumption that the property is improved to district standards. I consider that is the figure that a prudent purchaser would adopt and I have accepted Mr Farrington's evidence, as an expert valuer, that that figure is 1,350 AE head of cattle.
Water
There are 21 dams on Stuart Downs. All are open gully dams with hard rock at shallow depths which limits their size. The dams often run dry.
There are limits on the availability of bore water on the subject property. A number of bores were drilled in 1980 which all proved to be useless. After the date of valuation Mr Griffiths successfully sank another bore. However, his general experience has been that bore water is not easily obtainable.
Further, the water from the bore does not comply with drinking water standards and cannot be used for domestic purposes. Domestic water is taken from a dam near the house which dries out from time to time. At those times water has to be carted for domestic use.
This issue is relevant to the application of the sales evidence.
Regrowth
Mr Griffiths has a substantial problem with regrowth in the cleared scrub areas and has expended approximately $500,000 on timber treatment from 1994 to the date of hearing. In his view a prudent purchaser would take those costs into account in determining what to pay for the property, particularly when another property may have obtained a good kill and not have such problems.
This issue is also relevant to the application of the sales evidence.
Sales evidence and conclusions
As set out above, Mr Farrington's Sale 1 was applied at $206/ha. Mr Griffiths accepted that the sale was within the range of the value that he was contending for. However, Mr Griffiths contested Mr Farrington's description of the cultivation on the subject land as "opportunity cropping". He (Mr Griffiths) had driven past the property, he said, and there was very extensive cropping. He did not have the potential to crop the subject land. Mr Griffiths also considered that the sale property had superior access as compared with his property. As the sale is situated about 130 kms from the subject, Mr Griffiths considered that it was not in the same market area as the subject.
Mr Farrington has applied $235/ha to the subject relying primarily on this sale which he applied at $206ha. The sale is useful because both it and the subject have a significant area of remnant land, impacted by the VMA. I have also accepted Mr Farrington's opinion, as a registered valuer, that the sale is in a market which is comparable with the area in which the subject is located.
There are differences between the properties. The extent of the cropping on the sale land was in issue. Mr Farrington said 368 ha (14.2%) were under cultivation as at the date of sale and the evidence was that there may be potential for further cropping. In my opinion this amounts to more than opportunity cropping and indicates that that part of the sale is superior to the subject. The sale property has an area of 2,591 ha only and as such is considerably smaller than the subject. It has a carrying capacity of 375 AE cattle or 1:6.9 ha as compared with the subject's carrying capacity of 1,350 AE or 1:6.1 ha. It also appears that the sale does not have the regrowth problem faced by the subject. The sale is better watered than the subject but Mr Farrington appears to have taken that into account.
Although Mr Farrington said that he did not believe the cultivated land on the sale had attracted a significant premium, I have accepted Mr Griffiths' evidence that there is a difference between country which is capable of cultivation and that which is not and that the potential alternative uses make the sale property more attractive in the market. It is also the case that in his analysis of the sale in his report, Mr Farrington has not shown that he has made any allowance for the subject's regrowth problem. I do not consider that Mr Farrington has made a sufficient allowance for the superiority of the sale over the subject in respect of the cultivation potential of the sale and the regrowth problems on the subject.
Mr Farrington used Sale 2 to value the best country on the subject, that is the developed second class scrub grazing, at $400/ha. The sale shows an application of $421/ha. Mr Farrington acknowledged that the sale was superior to the subject for the reasons set out in his report.
The sale property has a carrying capacity of 1:3.85 ha which is superior to the overall carrying capacity of the subject at 1:6.1 ha. However, Mr Farrington has used the sale to value the developed part of the subject land. The only evidence as to the carrying capacities attributed by Mr Farrington to the different types of country on the subject is contained in a calculation sheet which was tendered as part of an annexure to Mr Griffiths' written statement of evidence. That document shows that, for the revised original 2004 valuation, Mr Farrington attributed a carrying capacity of 1:4.13 ha to the developed part of the subject as compared with the sale at 1:3.85 ha.
Although at the time of sale 56% of the sale property was cultivated or had been developed to cultivation in the past, Mr Farrington said that the main reason for that was to clear the scrub and establish it back to pasture – the standard method of development of that style of country. Further the demand for cattle country in the Wandoan district was such that agricultural land did not attract a significant premium over grazing land. Mr Farrington also considered that the difference in size between the sale and the subject was not significant because market conditions in the last 6 to 8 years were such that bigger properties have achieved a similar rate per hectare to small properties. I have accepted Mr Farrington's evidence on these issues as it was not effectively challenged by the appellant. In my opinion, therefore, the sale supports the rate of $400/ha applied by Mr Farrington to the second class scrub land on the subject.
Sales 3 and 4 are less useful to the determination of the unimproved value of the subject land. Sale 3 is considerably smaller than the subject and at the time of sale 713 ha (40%) were developed to cultivation. Mr Farrington applied a value of $507/ha to the sale which is considerably higher than the value applied to the developed scrub and second class forest areas of the subject. Sale 4 shows $704/ha which indicates in my opinion that the sale is not comparable with the subject.
Although none of Mr Farrington's sales were in the same submarket area as the subject, I have accepted that, with the exception of Sale 4, they are sufficiently comparable with the subject to provide relevant evidence of the value of the subject. However, I am satisfied that there has been some error in the application of Sale 1 to the subject in that the differences between the sale and the subject have not been sufficiently allowed for. In the absence of any sales evidence from the appellant and doing the best I can, I consider that the valuation of the subject should be reduced by $20.00/ha to $215/ha. This leads to an overall valuation of $1,772,670 which should be rounded to $1,775,000.
Relativity
The information obtained by Mr Griffiths pursuant to the Freedom of Information application indicates that a uniform increase of 120% was applied to all rural valuations in the Shire for the valuation as at 1 October 2004. That increase was reflected in the original valuation issued for the subject of $1,650,000. The increase of the subject valuation to $1,950,000 represents an increase of 156% which, Mr Griffiths said, is out of line with valuations of all the other rural properties in the Shire.
Mr Farrington readily conceded that the revised valuation of $1,950,000 represents a higher increase than the average applied to other properties in the Shire. The reason for this was, he said, that the second class scrub land on the subject had been valued at a lower figure and on obtaining the relevant sales evidence, he considered that he should adjust the value applied to that land. When the valuation had issued at $1,600,000, the rate attributed to that country was $323.40/ha. In the revised valuation he had applied a rate of $400/ha to that country and that caused the difference in the two valuations.
It is well established that while relativity between comparable properties is important, it is not tenable to adopt a value for one parcel in relativity with another which has no sound basis.[4] Mr Farrington has adopted the most appropriate method of assessment of the unimproved value of land under the Act, that is by comparison with sales of comparable properties.[5] While I have found that there was some error by Mr Farrington in the application of the sales evidence, I consider that his reasons for increasing the valuation of the subject were sound in principle and supported in general by the evidence. On that basis, the alteration in relativity does not indicate that there has been an error in the valuation.
[4] Barnwell v The Valuer-General (1990-91) 13 QLCR 13 at 16.
[5] Barnwell v The Valuer-General (1990-91) 13 QLCR 13 at 17.
VLA148-07
This is an appeal against the respondent's determination of the unimproved value of the subject land as at 1 October 2006 in the sum of $2,900,000 or $350/ha. The appellant's estimate of the value as at that date was $1,950,000.
No additional evidence was lead by the appellants in respect of this appeal. Mr Boyd requested that the matters that had been raised in respect of the 2004 value be taken over for consideration in the 2006 appeal.
The respondent called Mr Farrington and tendered his report in respect of this valuation. Mr Farrington's evidence was that he had valued the subject, for the purposes of this valuation, by direct comparison with a number of sales.
The 48.7% increase in the valuation is consistent with the average 50% increase applied across the Shire.
While I have found, in respect of the 2004 valuation, that there was some error in the application of the respondent's sales evidence, there is no evidence that that error has been carried into the 2006 valuation because Mr Farrington adduced new sales evidence in support of that valuation. In those circumstances, the reduction I have granted in respect of the 2004 valuation cannot be automatically applied to the 2006 valuation. As there was no specific evidence lead by the appellant to challenge the 2006 valuation, the respondent has the benefit of s.33 of the Valuation of Land Act that the valuation is deemed to be correct because there is no evidence that it is incorrect. Accordingly, this appeal is dismissed.
ORDERS
1. Appeal No. VLA007-08 is allowed.
2.The unimproved value of Lot 3 on Crown Plan FT 840, County of Fortescue, Parish of Kroomgah, being the whole of the land contained within Grazing Homestead Freeholding Lease 40/1457B is determined at One Million, Seven Hundred and Seventy-Five Thousand Dollars ($1,775,000) as at 1 October 2004.
3. Appeal No. VLA148-07 is dismissed.
4.The unimproved value of Lot 3 on Crown Plan FT840, County of Fortescue, Parish of Kroomgah, being the whole of the land contained within Grazing Homestead Freeholding Lease 40/1475B, is affirmed at Two Million, Nine Hundred Thousand Dollars ($2,900,000) as at 1 October 2006.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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