Hetherington v Department of Natural Resources and Mines
[2004] QLC 11
•27 February 2004
LAND COURT OF QUEENSLAND
CITATION: Hetherington v Department of Natural Resources and Mines [2004] QLC 0011 PARTIES: (1) JW & RJ Hetherington
(applicants)
(2) JR, MD, RJ, TJ and JW Hetherington
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NOS: (1) AV2002/0681
(2) AV2002/0682DIVISION: Land Court of Queensland PROCEEDING: Appeals against Unimproved Valuations - Shire of Balonne DELIVERED ON: 27 February 2004 DELIVERED AT: Brisbane HEARD AT: St George MEMBER Mr RE Wenck ORDER: Both appeals are dismissed and the unimproved valuations of the chief executive as at 1 October 2001 are affirmed. CATCHWORDS: Statutory Valuations - Unimproved value - Valuation of Land Act 1944
Sales Evidence - Sales to adjoining owners - Effect of moisture profile - Market trends
Market Trends - Effects of changing potentialities
APPEARANCES: Mr MD Hetherington for the applicants
Mr K Fisher, Crown Law for the respondent
These appeals relate to unimproved valuations of adjoining parts of a family aggregation held in differing individual ownership.
The aggregated property is known as "Nindi-Thana", which is situated about 30 km by road, at the nearest point, south-east of Dirranbandi, first via about 14 km of the bitumen sealed Castlereagh Highway, then the formed earth and gravel Narine Road.
Appeal AV2002/0681 refers to land described as Lot 2 on Crown Plan BLM711, Parish of Bumble, containing an area of 4553.6139 ha. The valuation appealed against is in the amount of $216,000. The date of valuation is 1 October 2001. The owners' estimate of unimproved value as contained in the notice of appeal is $183,600.
Appeal AV2002/0682 refers to Lot 1 on Crown Plan BLM683 and Lot 8 on Crown Plan BLM1199, Parish of Bumble, containing 2780.7447 ha. The valuation appealed against is $147,500, the owners' estimate being $125,375.
Evidence for the appellants was given by one of the owners Mr MD Hetherington who conducted their case. Mr Hetherington is a registered rural and urban valuer but has not practised recently in a full-time capacity having been a farmer/grazier for 18 years.
Mr AJ Dunk, registered valuer, did not make the valuations appealed against but subsequent to the appeals having been lodged had inspected the land and the relevant sales evidence. In his opinion the valuations were fair and reasonable. He took responsibility for defending them.
The single ground of both appeals was to the point - "Market evidence doesn't support the valuation."
Mr Hetherington tendered a brief report/statement in which he stated that his valuations were the estimates contained in the notices of appeal and, based on his analyses of the sales of the properties "Braemore Park" and "East Ardrossan". He also submitted that "the sale and subsequent resale of 'Tamarisk' … illustrates that parts of the Shire have risen substantially in value but that this does not apply across all country types and that the whole of shire approach does not adequately reflect the movements in submarkets such as the subject area." It was Mr Hetherington's evidence that the relevant submarket in which the subject lands are located is and had historically been a specialised sheep grazing area dominated by the heavier soil land types. However, the main demand for property in the general locality had come from cattle graziers with a preference for the country suitable for the development of buffel grass pasture and in particular the soft red soil country west of Dirranbandi and the Balonne River.
There was close consistency between the thrust of the case presented by Mr Hetherington and that presented by Mr Perkins in the immediately preceding matter. The Perkins' property is located in the same "submarket" area. In this locality the chief executive had accepted, after consideration of the arguments put forward by owners at objection conferences, that values for the heavier soil grazing lands had not increased to the same extent, since the previous valuation, as reflected by the market in other parts of the Shire. As a consequence, the chief executive had reduced the valuations in this locality by 25%. The result represented an increase of about 80% over the level of value established at the previous valuation. However, as I understood the evidence, the initial "blanket" increase of 140% which had been applied had not elsewhere been altered by the chief executive. Although the previously existing relativity between valuations had been altered, the Hetheringtons and the Perkins are convinced that the reduction applied in the locality of their properties did not go far enough and failed to achieve a fair interpretation of the changing market trends.
The catalyst for the reduction of the unimproved valuations in this submarket area had been the sale of "Braemore Park". As it was a sale to an adjoining owner, it had initially not been accepted by the chief executive as providing reliable market evidence. The strength of argument put forward by landowners, to the effect that the sale should have carried some weight in support of their view that a different market existed in this locality, influenced the original valuer and Mr Dunk to accept that, as it was the only sale in the immediate locality it should be given consideration. The analysis of the sale indicated an unimproved value of $60.77/ha. A valuation of $56.46 had then been applied to that property. As I understood the evidence that represented an 80% increase over the previous valuation and a 25% reduction from the valuation first issued.
A contentious issue which arose between the appellants and Mr Dunk was the extent of premium which may have been paid by the purchaser for the adjacency factor. The purchaser had advised Mr Dunk and the valuer before him, that in the purchaser's opinion, the sale price may have included a premium of between $1 and $2/acre (say $2.5 to $5/ha). Mr Hetherington agreed with the earlier evidence given by Mr Perkins that the practical management benefits associated with the acquisition of adjoining land were worth at least $25/ha.
Another issue related to the sale of "Braemore Park" was the question of the worth of the moisture profile, in the arable land, which had been provided by preceding rains. This had allowed the purchaser to immediately sow a wheat crop at the optimum planting time. Mr Dunk did not disagree that a suitable moisture profile would have existed at the date of purchase or that the purchaser had indeed sown a crop. However, it was his evidence that, despite specific inquiry made of the purchaser as to the circumstances surrounding the sale, there had never been mention of a premium having been paid for that planting opportunity. From a valuation point of view he did not consider that the arable land in this locality offered more than potential for opportunity cropping in any event and that potentiality was an inherent but not a separately identifiable component of the market value of the particular type of country.
Also consistent with the evidence of Mr Perkins was the suggestion by Mr Hetherington that Mr Dunk's allowance of $162,828 for timber treatment was conservative, based particularly on the costs of clearing and development of this type of country for cultivation. Mr Hetherington's analysis of the sale (unimproved value of $234,879 or $51/ha) was not detailed and it is not clear what added value he would have placed on the timber treatment. However, he gave persuasive evidence to suggest that the development cost of "Braemore Park's" 1000 ha of cultivation would be in the vicinity of $275,000. Mr Dunk had not been examined in any detail as to the basis of his assessments of the added value of timber treatment on any sale property, but it was clear from his evidence that when land provided only opportunity cropping potential, the added value of clearing for cultivation did not, in his opinion, equate full development cost.
The sale of "East Ardrossan" had been analysed by Mr Hetherington to show an unimproved value of $40.94/ha. However this sale was also to an adjoining owner and according to Mr Dunk had standing crops at differing stage of maturity which were difficult to value at the date of sale. It was located in the same area, north of Dirranbandi, as the sale properties "Karee" and "Kendal", which had formed part of Mr Dunk's valuation basis. In the circumstances I have gained more assistance from those latter sales. In any event, Mr Hetherington was forthright in his opinion that the sale of "Braemore Park" should provide the primary basis for assessment of the unimproved value of the subject lands.
Mr Hetherington suggested that the weight which might be placed on the "Karee" sale was limited by the purchasers' lack of knowledge of the potentialities of local land types, together with the conservative value attributed by Mr Dunk to the reasonably extensive areas of clearing for cultivation on both "Karee" and "Kendal". Nevertheless, he believed that those sales and their respective country types which comprised a relatively small percentage of the grey/black soil country supported his opinion that, in comparison with the sale of "Braemore Park" and its relatively high percentage of that type of country, the market trend now significantly favoured the lighter type red soils.
On Mr Dunk's analyses the "Karee" sale, which was slightly after the relevant date of valuation, showed an analysed unimproved value of $59.76/ha with an application of $56.33/ha and the "Kendal" sale showed $71.58/ha with an application of $70.50/ha. As I understood the evidence the applied valuations to those sale properties represented the "blanket" increase of 140% above the previous valuations while the increase applied to "Braemore Park" was, as earlier discussed, reduced from 140% to 80%, based on the analysis of that specific sale.
Nothing will be served by discussing in detail Mr Dunk's overall sales evidence or his classification of the nature of the land on each of the subject properties. Mr Hetherington agreed generally with those classifications and also with the comparisons between each of the sale properties and the subject lands. Part of the smaller subject block is used for opportunity cropping as was each of the sale properties. Mr Hetherington's valuations adopted a similar relativity between each of the subject properties as did the valuations of Mr Dunk.
As was discussed in the Perkins' appeal decision which is also delivered today, Mr Dunk had not analysed the sale of "Tamarisk" which had taken place about one year after the date of valuation in these matters. That sale according to both Mr Perkins and Mr Hetherington confirmed the contention that a significantly different market had emerged for the buffel country than that which existed in other parts of the Shire, even at the date of valuation. Mr Dunk agreed that there was some sales evidence which could have been interpreted to support the appellants' contentions. However as many as 15 rural sales which had taken place throughout the Shire in the period leading up to the date of valuation had been interpreted as more consistently supporting the previous relativity between valuations and the applied increases. "Braemore Park" had been the only sale in the immediate locality of the subject properties and it had not reflected the general trend.
Mr Hetherington submitted that in originally applying a blanket increase, then "tinkering around the edges" the chief executive had failed to establish the proper relativity between valuations in the various areas and the overall Shire valuation did not serve the intended purpose of equitable rate distribution.
Conclusions
It may well be that, with the benefit of hindsight, any sales evidence in the country west of Dirranbandi which the chief executive rejected as being "out of line" and too high for general application in that area, was more likely the consequence of an emerging market trend, even at the date of valuation. However, when the chief executive's valuers are not convinced by the overall evidence that a specific trend has emerged at a particular date, they are well advised to take a cautious approach.
As the Land Appeal Court said in Grahn v Valuer-General (1992-1993) 14 QLCR 327 at 328:
"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."
Then later at 328:
"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. …"
Both valuers in these appeals found the need to place reliance on the sale of "Braemore Park", due primarily to a paucity of directly comparable sales evidence in this submarket area, and despite the circumstances surrounding the sale to an adjoining owner. I have not been persuaded that Mr Dunk's analysis of that sale is wrong or that Mr Hetherington's "analysis" should be preferred. Mr Dunk then obtained further evidence from sales of property with mixed classifications of land but also including some with heavier soil content. He sees the red soil buffel country west of Dirranbandi as difficult to physically compare with the subject land types.
The evidence surrounding the circumstances of the sale of "Braemore Park" are such that it would not normally be accepted as reliable evidence for general application in the statutory valuation process. Nor would it, in isolation, be seen as indicative of a specific market value trend. There is no cogent evidence upon which any premium which may have been paid by the adjoining owner purchaser could be assessed, or upon which Mr Dunk's analysis should be disturbed. However, once the sale of "Braemore Park" is considered in conjunction with the sales of "Karee" and "Kendal", I am satisfied that Mr Dunk's approach to the application of the sale was fair. I am also satisfied that the chief executive provided the benefit of a reasonable doubt in reducing the initial valuations which had been applied to land in this specific submarket area. The consequence of that was to alter the historical relativities between the valuations applied to land in this and other submarket areas.
Whether the chief executive's valuations of the red buffel country are too low in comparison with valuations in the subject submarket area, as at the relevant date, is not an issue which falls to be determined in these appeals. Clearly if those valuations are shown to be too low at a subsequent date of valuation, the chief executive will need to correct the situation. However the valuations appealed against have not been proved to be wrong.
Order
Both appeals are dismissed and the unimproved valuations of the chief executive as at 1 October 2001 are affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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