Hammer v Chief Executive, Department of Natural Resources, Mines and Water
[2007] QLC 70
•26 September 2007
LAND COURT OF QUEENSLAND
CITATION: Hammer v Chief Executive, Department of Natural Resources, Mines and Water [2007] QLC 0070 PARTIES: Douglas Andrew Hammer
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NOS: RV2006/0073, RV2006/0074, RV2006/0075, AV2006/0076 DIVISION: Land Court of Queensland PROCEEDING: Appeals against valuations. DELIVERED ON: 26 September 2007 DELIVERED AT: Brisbane HEARD AT: Charters Towers MEMBER: Mr RP Scott ORDER: Each of the appeals is dismissed. CATCHWORDS: Valuation – unimproved value – sales evidence preferred to relativities.
Valuation – carrying capacity – refers to class of country not to number of stock carried at any one time.
APPEARANCES: Mr D A Hammer, in person.
Mr W Isdale, of Crown Law for the respondent.
"Glendillon Station" is located about 36 kilometres west of Charters Towers on the Powlathanga –Red Falls Road. It is used for the grazing of beef cattle. The subject aggregation comprises three leases under the provisions of the Land Act 1994 namely GHPL 11/649, GHPL 11/732 and GHPL 11/706. Pursuant to the provisions of the Valuation of Land Act 1944 the Chief Executive valued the "Glendillon Station" aggregation in an amount of $1,250,000 as at a relevant date of 1 October 2004. In addition to that valuation and for the purposes of the Land Act only, the Chief Executive placed valuations on each of the leases comprising the aggregation. The land owner has appealed each valuation and Douglas Andrew Hammer appeared and gave evidence in these matters. Michael McDougall registered valuer provided valuation evidence in support of the Chief Executive's valuation figure. It was agreed by the parties that the appeals should be heard as a single series with relevant evidence in one being evidence in the other.
I will first consider the appeals against the statutory valuations of the individual leaseholds which make up the "Glendillon" aggregation. These properties are valued independently as they are leases under the Land Act and are accordingly valued on that basis. Pursuant to s.14 of the Valuation of Land Act 1944.
Appeal RV 2006/0073
This appeal relates to GHPL 11/706. This property has an area of 2,837.3523 hectares and is located off the Powlathanga – Red Falls Road approximately 53 kilometres west of Charters Towers. Whilst the property has gazetted access there is no formed gazetted road access; access being obtained through the lessee's adjoining land. Access from Charters Towers is via 32 kilometres of sealed Flinders Highway then 15 kilometres of formed earth and gravel road. Services are not connected to the lease though are provided to the parent property. The nearest power source is approximately 3.9 kilometres from the lease boundary.
The land was originally broad leaved iron bark and wattle woodland though the majority of it has now been cleared. In Mr McDougall's opinion the whole of the land should be classified as "fair developed forest grazing" which he described as "easy sloping cleared broad leaved iron bark and ghost gum, often with a thick understorey of wattle, silver myrtle and bauhinia, and interspersed with areas of lancewood". Mr Hammer took issue with the use of the term "fair developed forest grazing", saying that the land includes areas of poor grazing. In that context he said that the description by Mr McDougall appeared to suggest a wide area of bauhinia. I think that misreads the description which indicates to me that the dominant species are broad leaved ironbark and ghost gum. Whilst the term "fair developed forest grazing" could be broken down into further classifications and descriptions I doubt that that would assist in the comparison process. The refined meaning of that term is provided by the carrying capacity, the soil types and vegetation as well as the types of grasses found there including black spear, Indian Couch, wire and buffel grass.
The property has no permanent natural surface water and whilst it has been improved with three dams and one bore, dam sites are rare owing to the porous nature of the soil. Mr McDougall estimated the carrying capacity on a fully developed basis as 1:11 hectares. It is convenient to mention now that Mr Hammer expressed the view that Mr McDougall's estimate of carrying capacity in this and the other appeals is too high. I deal with this issue below at paragraph [36] where I conclude that Mr McDougall's carrying capacity estimates should not be disturbed.
The regional ecosystem mapping (Queensland Herbarium 2007) indicates that 2,839.44 hectares or 97.85% has been mapped as non-remnant vegetation. The lessee can continue to re-clear this area provided it continues to be mapped as non-remnant vegetation.
Mr McDougall referred to three sales in his valuation. It is worth mentioning at this point that Mr McDougall placed a value of $71.50 per hectare on the subject. That can be contrasted with the level of values revealed by each sale. Sale one "Tomato Springs" sold in April 2004 for an analysed unimproved sale price of $163.33 per hectare which was applied at $144.80 a hectare. This sale and the others referred to as taking place in 2004 were transacted in a robust market. Mr McDougall was concerned, however that there may have been some uncertainty in the market place in 2004 concerning the possible impact of amendments to the Vegetation Management Act1999 which had been introduced in that year. As a result sales were applied conservatively.
Mr McDougall said that the sale property is superior to the subject in terms of access and services and markedly superior in its natural state in terms of country. He expressed the view that the superiority in country is offset to some extent owing to the constraints of the Vegetation Management Act and given the clearing potential realised on the subject. Overall he formed the view that the sale one property is superior to the subject at on a per hectare basis though he estimated a carrying capacity of 1:11 hectares on the sale.
Sale two, "Southern View", is smaller in land area, slightly superior in situation and services but markedly superior in access. In Mr McDougall's opinion the country on "Southern View" is superior to the subject though that is offset to some extent by the smaller percentage of the sale property where development has taken place. "Southern View" sold in August 2004 for an analysed unimproved sale price of $240.33 per hectare applied at $174.91 per hectare. Mr McDougall expressed the view that the sale property is markedly superior to the subject on a per hectare basis. Mr Hammer accepted that opinion adding his opinion that the sale supports a large area of Bauhinia. Mr McDougall estimated a carrying capacity of 1:9 hectares on the sale property.
Sale three, "Chippendale Valley", was transacted in August 2004 and sold for an analysed unimproved price of $221.50 per hectare which was applied at $144.12 per hectare. The sale land is superior in situation and markedly superior in access, according to Mr McDougall, and the properties are similar with respect to services. "Chippendale Valley" would be markedly superior to the subject in its natural state in his opinion though that is offset to some extent due to the effects of the Vegetation Management Act discussed earlier. Overall the sale property is superior of the subject on a per hectare basis. Though he estimated a carrying capacity of 1:11 hectares on the sale.
Having regard to these sales Mr McDougall expressed the view that the unimproved value of the subject lease was $71.50 per hectare. Mr Hammer said that the sales are far superior to the subject in the quality of country and therefore in carrying capacity. He said that each of the sales is located in "goldfield country" which is recognised as having a quite fertile land type. He stressed that the subject lease suffers in having a soil deficient in minerals, especially phosphate, necessitating the costly feeding of supplement. He estimated a value of $165,000 or $58.15 per hectare.
Mr McDougall failed to mention mineral deficiencies in his written valuation report with respect to this and the other leases and the overall "Glendillon Station" aggregation. Nevertheless he expressed the view in oral evidence that the "goldfield country" is superior in fertility to country found on the subject leases overall and that that was a matter that he took into account in the opinions that he had expressed about the quality of country in each case. He said that "Tomato Springs" and "Chippendale Valley" were both "goldfields country". Whilst it would have been preferable for him to have expressly made mention of the topic of mineral deficiencies in his valuation reports, I accept his evidence that this was an issue that he did take into account in his comparison process. I perceived Mr McDougall as both a capable and honest witness and not one who would readily resort to recent invention for the purpose of maintaining a value that was too high.
Appeal RV 2006/0074
This appeal relates to GHPL11/649. This lease has an area of 3,810.851 hectares and is located on the Powlathanga – Red Falls Road approximately 36 kilometres west of Charters Towers. Access to town is via 32 kilometres of Flinders Highway and 4 kilometres of earth and gravel road. No services are connected to the lease though are provided to the parent property. The nearest power source is approximately 2.2 kilometres from the boundary. Whilst Mr Hammer accepted this description he said that any power line would need to be constructed over a longer distance to follow the road, if the property was in individual ownership.
Mr McDougall said that the land was originally vegetated with broad leaved ironbark and wattle woodland intersected by open box flats. The majority of the broad leaved ironbark has now been cleared. He classified the property as having 3,360 hectares (88%) with fair developed eucalypt woodland grazing on sandy to sandy clay lands. He described the balance 450 hectares as good forest grazing, comprising open box woodland on grey clay soils. There is no permanent natural surface water, the property being watered by one dam, three bores and one well. Mr McDougall estimated the carrying capacity at 1:10 hectares.
The regional ecosystem mapping indicates that 3,359.66 hectares or 88.16% has been mapped as non-remnant vegetation. The lessee can continue to re-clear this area provided it continues to be mapped as non-remnant. The balance of the property is mapped as remnant vegetation and owing to the restrictions imposed by the Vegetation Management Act 1999 could not be cleared as at the date of valuation.
Mr McDougall again relied on the three sales referred with respect to GHPL11/706. He noted that "Tomato Springs" is slightly larger in area but said that the properties are similar in situation though "Tomato Springs" is somewhat inferior in access. Services are superior on the sale property and, from a country classification perspective, sale two would be markedly superior to the subject in its natural state in Mr McDougall's opinion, though he said that this is offset to some extent owing to the constraints imposed by the Vegetation Management Act. The sale property is similar in waters to the subject. Overall he considered it to be superior to the subject on a per hectare basis.
"Southern View" is smaller in land area, slightly superior in situation, but with similar access. Services are superior on the sale property. "Southern View" is superior to the subject in terms of country and slightly superior in waters. Mr McDougall formed the view that the sale property is markedly superior to the subject on a per hectare basis.
In his comparison between this lease property and "Chippendale Valley", Mr McDougall said that the properties are similar in area situation and access as well as services, but that "Chippendale Valley" is superior in waters and markedly superior in country and carrying capacity. He considered the sale to be superior on a per hectare basis.
He concluded that the subject lease should be valued at $115 per hectare overall with a break-up of 450 hectares of good forest grazing at $150 per hectare and 3,360.851 hectares of fair developable forest grazing at $110 per hectare.
Mr Hammer suggested that it would be preferable to compare the subject with the Chief Executive's valuation of "Tandanus" which comprises two GHPL leases and which has a combined unimproved of $49.28 per hectare. One lease is valued at $52.46 per hectare having a carrying capacity of 1:26 hectares the other at $36.39 per hectare with a carrying capacity of 1:25 hectares. Mr Hammer said that "Tandanus" is in an inferior location and has slightly poorer country but not to the extent that the subject's $115 per hectare would be in correct relativity.
Mr Hammer also mentioned "Lake View" with a combined two lease value of $72.82 per hectare but which is, in his view, superior to the subject in location and services. Mr Hammer was not aware of the lease break-up of "Lake View". He suggested that the value of the subject should be $300,000 ($78.72 per hectare) in comparison with "Tandanus" and "Lake View".
Mr McDougall responded by pointing out that the two "Tandanus" leases are mapped as remnant vegetation so, pursuant to the Vegetation Management Act, cannot be cleared. That, I accept, is a significant point of difference. Mr McDougall said that access to "Tandanus" is along the Powlathanga – Red Falls Road and requires the crossing of Hann Creek. Access into the property is not along a dedicated road but utilises a private track over an adjoining property.
It seems quite clear to me that the subject land is markedly superior to that found on "Tandanus" and that the subject is superior overall. I see no benefit in addressing "Lakeview" as no block to block comparison was supplied by Mr Hammer. In addition, I should say that neither of the properties referred to by Mr Hammer provides a valuation basis superior to those included in Mr McDougall's valuations of any of the lease properties dealt with in these reasons. Sales evidence is to be preferred.
In Grahn v Valuer General[1] the Court recorded these propositions with approval:
"(a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 16 and cases cited in it."
(e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WMand TJ Fischer v the Valuer-General (1983) 9 QLCR 44, at p.46."
The importance of sales evidence in valuation cases as against the relativity between statutory valuations was stressed by Land Appeal Court in Clough v Valuer-General[2]
"It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements."
[1] (1992) 14 QLCR 327at 328.
[2] (1981) 8 QLCR 70 at 76.
Appeal RV 2006/0075
This appeal relates to GHPL11/732, which has an area of 8,747.609 hectares. The lease property is located on the Powlathanga – Red Falls Road approximately 42 kilometres west of Charters Towers and gains access via 32 kilometres of the Flinders Highway then 10 kilometres of formed earth and gravel road. Rural power and Digital Radio Concentrator Site (DRCS) telephone are connected to the property which enjoys a twice weekly mail service. The homestead for the aggregation is located on this lease.
According to file records the leased land originally comprised broad leaved ironbark and wattle woodland intersected by open box flats. The majority of the iron bark country has now been cleared. Mr McDougall classified the property as having 8,096.609 hectares or 92% as fair developed forest grazing comprising cleared broad leaved iron bark and wattle woodland on sandy to sandy clay loams. He described 520 hectares or 6% as good forest grazing comprising open box woodland on grey clay soils and the remaining 2% or 131 hectares as poor to unavailable grazing comprising thick lancewood forest. The property has no natural surface water, but has artificial water being supplied by four dams, three bores and three wells. He estimated a carrying capacity of 1:10 hectares.
The regional ecosystem mapping indicates that 7,246.34 hectares (82.83%) has been mapped as non-remnant vegetation. The lessee can therefore re-clear this area provided it continues to be so mapped. The balance of the property is mapped as remnant vegetation, however on inspection Mr McDougall discovered that approximately 850 hectares of this was also cleared. He expressed the view that this area would probably be re-mapped as non-remnant vegetation leaving approximately 650 hectares as remnant vegetation having no broad scale clearing potential under the Vegetation Management Act 1999. I accept Mr McDougall's opinion as to the prospect of re-mapping the 850 hectare area should a purchaser apply for a map modification. The risk of it not being re-mapped is not a material one.
Again, Mr McDougall relied on the three sales discussed so far. He concluded that "Tomato Springs" is superior to the subject on a per hectare basis being smaller in area, similar in situation and services and slightly inferior in access. "Tomato Springs" would be markedly superior in country, carrying better native pastures but this would be offset to some extent due to the constraints on clearing imposed by the Vegetation Management Act.
"Southern View" is also considered superior to the subject in Mr McDougall's opinion. That sale is smaller in land area, similar in access, services and water, slightly superior in situation and superior in country quality.
"Chippendale Valley" was also thought to be superior to the subject on a per hectare basis being smaller in area, inferior in services, but superior in waters and in country classification, though this last mentioned aspect is offset to some extent due to the constraints on clearing.
Mr McDougall concluded a value of the subject of $75 per hectare apportioned as 631 hectares of forest grazing at $145 per hectare and 8,096.609 hectares of fair developed forest grazing at $70 per hectare.
Mr Hammer expressed the view that each of these sales is superior in land quality and therefore capacity and has less mineral deficiency than the subject properties. He referred again to "Tandanus" and said that the subject lease should have a value of $500,000 or $57.15 per hectare in comparison with that property. That is it should be higher than the overall value of "Tandanus" at $49.28 per hectare.
Value of the Aggregation
Access to the property from Charters Towers, where comprehensive facilities are to be found, is via 32 kilometres of sealed Flinders Highway then 4 kilometres of the Powlathanga – Red Falls Road which is formed earth and gravel only. Mr Hammer gave evidence that the road is frequently closed by the Shire Council during the wet season when it occurs and that this has an impact on the ability of the property to transport stock to market. This issue of the road being closed from time to time came up in a number of matters heard at the same hearing at Charters Towers as "Glendillon Station", but with some inconsistency between the various recitations of the facts. Following a request by me Mr McDougall made further enquiries about the road closure issue. He spoke to Mr R Jayo and Mr J Gott (Chief Executive) of the Dalrymple Shire. He was told that signs warning of the condition of the road were often erected following heavy rains. For example, if Hann Creek has cut the road or the road is otherwise damaged, the sign will warn that there is no through road. Hann Creek need not be crossed to gain access to the subject property. Mr McDougall was told there was no specific local restriction on the road. Public access was therefore permitted. Just like any earth and gravel road, however, climatic conditions would dictate whether the road was passable. Pursuant to s.7 of the Land Court Act 2000 I take that evidence into account in this matter.
In the final analysis it appears to me that practical access to the subject is inhibited at times which can be inconvenient to the marketing of livestock and can, therefore, result in economic loss. Having said that I notice that Mr McDougall has made allowance in his valuation for the fact that the property has earth and gravel access. That is less desirable than all weather access and impacts on the property's value. No further refinement to Mr McDougall's valuation is warranted for the specifics raised by Mr Hammer . That is the nature of land valuation in which adjustments must necessarily be broad and be based on the application of subjective but professional judgment to the available evidence.
"Glendillon Station" has been heavily developed with the result that the majority of the broad leaved ironbark country has now been cleared. An area of 14,294.812 hectares or 93% of the property was described by Mr McDougall as being fair developed forest grazing land comprising near level to easy sloping cleared woodland of broadleaved ironbark and ghost gum, often with a thick under-storey of wattle, silver myrtle and bauhinia, and interspersed with areas of lancewood. He describes 6% or 970 hectares as good forest grazing comprising open box woodland on grey soils and 1% or 131 hectares as poor to unavailable grazing, comprising thick lancewood forest, interspersed with some more open woodland. There is no permanent natural surface water on the subject aggregation which is watered by eight dams, seven bores and four wells. The subject land has rural power and telephone service by way of D.R.C.S. and the mail is delivered twice weekly.
Mr McDougall estimated the carrying capacity of the aggregation as 1:10 hectares on the basis of an Adult Equivalent herd of 1,539 animals. Mr Hammer said that the property ran about 2,000 head on a mixed herd basis in recent times, however he was not sure of the Adult Equivalent figure, though suggested it might be around 1,2000 head. Mr McDougall said that whilst a range of people might use different stocking rates dependent on seasons, the enterprise being conducted and management style, the Chief Executive's officers usually employed a conservative carrying capacity rate indicated by the class of country. Indeed, it seems to me that the identification of carrying capacities on the basis of potential, tends to have been established over the years as a classification of country having regard to carrying potential over average seasons rather than being based on actual stocking rates which might vary from time to time depending upon the seasons and the practices of an individual property manager. I have considered the issue of carrying capacity in that context and find that Mr McDougall's carrying capacities for the aggregation and for the individual leases should not be disturbed.
An area of 13,445.44 hectares or 87.333% of the subject aggregation has been mapped as non-remnant vegetation under the regional ecosystem mapping. The lessee is in the fortunate position of being able to continue to re-clear areas so designated, provided they continue to be mapped as non-remnant vegetation. The balance 12.667% or 1,950.372 hectares of the property is mapped remnant vegetation, though Mr McDougall's inspection revealed that about 850 hectares of that was also cleared. I have already accepted Mr McDougall's opinion that remapping would readily take place.
In his notice of appeal Mr Hammer provided an estimate of the unimproved value of the aggregation land at $975,000. Before me, he did not adduce valuation evidence in support of that figure; however he took the approach of adopting Mr McDougall's evidence of value as a baseline to which he provided critical comment. Accordingly, I will now turn to consider the valuation evidence provided by Mr McDougall.
Mr McDougall included four sales in his valuation report the first two of which have already been outlined. Sale one, "Southern View" is smaller in land area than the subject, slightly superior in situation but with similar access in Mr McDougall's opinion. He also considered services to be similar, but said that the country on the sale would be superior to the subject having a carrying capacity of 1:9 hectares in his opinion. The sale is slightly superior to the subject in his opinion and he concluded that is superior to the subject property overall on a per hectare basis.
Sale two, "Chippendale Valley" is considerably smaller in land area. In Mr McDougall's opinion the situation and access are similar to the subject, whilst services on the sale are inferior with neither rural power nor DRCS telephone connected. He said that "Chippendale Valley" would be markedly superior in country in its natural state but that this is offset to some extent owing to the constraints imposed by the Vegetation Management Act on the sale property and the clearing potential realised on the subject. He estimated the carrying capacity on the sale property at 1:11 hectares. The sale has superior waters to the subject in Mr McDougall's opinion and on an overall comparison is superior to the subject on a per hectare basis.
Sale three was the sale of "Mt Cooper" a property of 38,942 hectares which was analysed by Mr McDougall to a sale price in October 2002 of $2,868,742 or $73.67 per hectare. The sale was applied at $53.92 per hectare. Mr McDougall formed the view that "Mt Cooper" was slightly inferior to the subject aggregation on a per hectare basis. He considered it to be inferior in country quality largely because the developable area as a percentage of the total property is smaller than that of the subject, though the developed softwood area on "Mt Cooper" is markedly superior to the developed areas of the subject. "Mt Cooper" is superior in waters having better groundwater and dam sites, and practical access to the Burdekin Dam. It is inferior in situation being located a greater distance from Charters Towers and has inferior access given the greater distance of unformed roads.
The fourth sale in Mr McDougall's valuation, "Taemas" has an area of 17,800 hectares and sold in August 2004 for an analysed unimproved price of $131.14 per hectare. The application of that sale was at $103.93 per hectare.
It seems to me that "Taemas" is a particularly useful sale given the land area which is similar to that of the subject aggregation and the sale date which is proximate to 1 October 2004. The sale property is inferior in situation to the subject being 125 kilometres from Charters Towers. Services and access are considered to be similar in Mr McDougall's opinion. From a country perspective "Taemas" is superior to the subject as a similar carrying capacity (1:11 hectare) can be achieved with a considerably reduced amount of clearing given the superior quality of the developed land on the sale property. This is offset to some extent by the fact that only 6,852.61 hectares of "Taemas" is mapped as non-remnant vegetation and the fact that there is a considerable area of poor unavailable lands comprising tablelands and hard ridges timbered with Normanton box and desert ti-tree, Whites ironbark and silver leaf ironbark; and 1,638 hectares of poor to unavailable jumpups and ridges timbered with lancewood, bendee and blackwood scrub.
Unfortunately Mr Hammer did not have an intimate knowledge of the country and the characteristics of "Mt Cooper" and "Taemas", the sales which in my view are the most suitable for valuing the subject aggregation. He observed that each of these are some distance from the subject. I agree that sales closer to the subject would be preferred, however a valuer must make the best of the available evidence. One concern he did raise however was with respect to the question of mineral deficiencies. I have dealt with this issue above.
I have concluded that Mr McDougall has employed the more suitable bases for valuation in each of these appeals and has provided comparisons that support the Chief Executive's valuations. He has not been shown to have been wrong in principle nor to have made any serious factual error. His methodology is consistent with accepted practice. Accordingly each of the appeals is dismissed.
RP SCOTT
MEMBER OF THE LAND COURT
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