Idle v Department of Natural Resources, Mines and Energy
[2004] QLC 53
•16 July 2004
LAND COURT OF QUEENSLAND
CITATION: Idle v Department of Natural Resources, Mines and Energy [2004] QLC 0053 PARTIES: William Leslie and Cynthia Idle
(applicants)v. Chief Executive, Department of Natural Resources, Mines and Energy
(respondent)FILE NO:
AV2003/0188
DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 16 July 2004 DELIVERED AT: Brisbane HEARD AT: Caboolture MEMBER Dr NG Divett ORDER: The appeal is upheld, the unimproved value of the Chief Executive is set aside, and the unimproved value of Lots 16 and 17 on RP 35940 is determined in the sum of One Hundred and Twenty-Eight Thousand Dollars ($128,000). CATCHWORDS: Valuation – Sales evidence – Sales analysis – Vegetation Management Act 1999 – Impact upon market value.
Valuation – Factors in valuation – Impact of pest plants – Rural Lands Protection Act 1985.APPEARANCES: Mr WL Idle appeared on behalf the appellants
Mr P Rabaa of Crown Law appeared on behalf of the respondent
Background:
This matter relates to land at 150 Bass Road, Campbell’s Pocket, Parish of Durundur, and known locally as “2 K Q”. The subject land is described as Lots 16 and 17 on RP 35940, and is located about 10 kilometres south of Wamuran, and 21 kilometres west of Caboolture. The subject land has an area of 78.689 hectares, and is zoned Rural under the Caboolture Shire Council’s planning scheme of 12 March 1988, and effective at the date of valuation of 1 October 2002. Access to the property is available via Bass Road, Campbell’s Pocket Road and the D’Aguilar Highway, all of which are bitumen sealed, and provide all weather access for large cattle transport or milk tankers. The subject land is used for dairying purposes, and utility services of telephone, electricity and mail are available. The key issues are comparable sales, relativity, impact of environmental protection restrictions and the impact of pest plants, in particular Giant Rat Tail grass.
On 24 February 2003 the Chief Executive issued a valuation of the subject land at $131,000. Following an objection the Chief Executive confirmed that figure on 17 June 2003. The appellants have now appealed claiming the unimproved value should more properly be $49,375.
William Leslie Idle appeared and gave evidence on behalf of the appellants. Mr P Rabaa, Counsel of Crown Law appeared for the respondent, calling evidence from Damien Peter Jones, the departmental senior registered valuer responsible for determining the valuation.
The Nature of the Land –
It is agreed that the subject land contains the following land classification types:
· Good forests – 30 hectares (38%)
· Fair forest/ bastard scrub – 41 hectares (52%)
· Unavailable scrub – 7.689 hectares (10%)
A thorough examination of those land categories was concluded at the previous valuation of the subject land at 1 October 2002. Those details were noted in a decision of this Court in WL and C Idle v Chief Executive, Department of Natural Resources and Mines (AV2001/0354 ) 19 February 2004, unreported, and I will not repeat those findings where there is no dispute between the parties.
There was some discussion about the current carrying capacity of the subject land, which was assessed by Mr Jones for relativity purposes, as reflecting 41 full grown beasts (or 1 beast per 1.9 hectares). Mr Idle advises further that he currently operates the subject land in conjunction with the adjoining agistments on 74 Bass Road (52.7 hectares), and two 16 hectare properties across Bass Road. The total current carrying capacity of the four properties is 75 full grown beasts for the total 163.3 hectares. Mr Idle further agrees that those lands have similar carrying capacities. On that basis there is no significant difference about the effective carrying capacity of the subject land.
In respect of the current highest and best use of the subject land it is agreed that is for the existing use for “farming” purposes under s.17 of the Act. On that basis any comparative sales analysis should also be for a similar farming purpose.
Relativity –
Mr Idle seeks relativity on a rate per hectare basis with the adjoining property to the south at Lot 58 (Murray). That parcel has an area of 111.6 hectares, and Mr Idle’s advice from the respondent department is that its unimproved value at 1 October 2001 was $170,000, or $1,532 per hectare. He compares that with the current rate for the subject land at $131,000 or $1,664 per hectare. Mr Idle notes that Lot 58 currently has no Environment Protection restrictions similar to those registered upon the subject land, and the rate per hectare should be at the most only equal to Lot 58. Because of the vegetation constraints, he argues that the rate per hectare for the subject land should be less than for Lot 58.
Impact of Environment Protection
Mr Idle further notes that the subject land currently has 30% of its area designated as “Remnant Vegetation Not of Concern” (see Exhibit 2). Under that Environmental Protection Authority mapping, Mr Idle advises that before he can undertake any further clearing in those designated areas, he must obtain a permit for clearing from the respondent Department of Natural Resources, Mines and Energy. He notes that there is still timber in that 30% of designated classification in the south-eastern corner of the subject land that cannot be enhanced without a permit. He notes that uncertainty continues with whether clearing permits would be forthcoming, as demonstrated by a current two year unanswered application to the respondent department for approval in the south-western corner of the subject land. Mr Idle argues that such uncertainty must impact the value of the land for a potential purchaser. Mr Idle further notes that four of Mr Jones’ five sales have all been cleared, and are not subject to EPA restrictions.
Impact of Pest Plants
Mr Idle also challenges Mr Jones’ understanding of the impact of the pest plant Giant Rat Tail grass (GRT grass) upon the subject land. While Mr Jones acknowledges that GRT grass is an emerging problem in that area, he argues that its presence is not peculiar to the subject land, having been first identified in the head waters of the waterways passing across the subject land about 20 to 25 years ago, and also in the Maleny area. However it is agreed by both parties that one property in the head waters of the river, has now been so badly infested by GRT grass that the land no longer carries cattle.
Mr Idle argues that the GRT grass is a more significant problem on the subject land, requiring an ongoing regular program of management that involves about 75% of Mr Idle’s time, and about 60% of the management costs associated with the subject land. Mr Idle estimates his undocumented annual costs, excluding labour at about $25,000 to control the GRT grass infestation. Mr Idle further argues that GRT grass is unlike most other pest plants, in that the Government advisory agencies agree that it cannot be totally eradicated. To support that conclusion Mr Idle provides advisory information sheets about best practice, which he follows. (Exhibits 5 and 7). Mr Idle argues that while the GRT grass is currently under reasonable management, that has only occurred as a result of his major expenditure on maintenance, which extends over all of its area of 79 hectares.
Mr Jones rejects that the subject land is severely impacted by GRT grass, and he has allowed for the regular good maintenance of the subject land, which has kept impacts upon grazing operations to a satisfactory level. He notes that GRT grass exists as scattered infestations, rather than being fully infested, but agrees that the GRT grass problem is now an increasing problem in the general area. Mr Jones advises that Sale 1 is infested with groundsel and lantana, and his Sale 5 has some GRT grass and lantana infestations.
Mr Jones argues that noxious weed infestations by various declared pest plants can occur. Mr Idle provides Government fact sheets for GRT grass, lantana, Crofton weed and Mistflower, all of which occur in the locality of the subject land. (Exhibit 7). Mr Jones advises that with the emerging concerns about GRT grass, the respondent department has only recently allowed a 2½% reduction to a valuation for a property which adjoins an area where GRT grass is now prolific. However he advises that GRT grass on the subject land does not reach that level of infestation to warrant any special reduction in the valuation. Mr Idle argues that GRT grass infestations are more severe than other pests, and his advice is that GRT grass cannot be totally eliminated. Mr Jones notes that lantana poisoning of young cattle can be a serious problem where lantana infestations occur. However he concedes that the toxic variety of lantana is not prevalent in the Shire.
Mr Idle also notes that due to its potential cross-infestation, any cattle being moved in GRT grass areas must be held over for spelling for five days before moving to other areas. Mr Rabaa notes that with good stock management practices in many areas, cattle are held in resting paddocks for some days, before being moved to other areas. He notes that GRT grass is not such a major disability on that impact.
Comparison of Sales –
While he provides no sales evidence himself, Mr Idle is familiar with Mr Jones’ sales provided in his valuation report. Mr Idle also rejects any reliance upon Mr Jones’ Sale 5 (“Everest”), which he notes did not occur until after the date of valuation of 1 October 2002. To demonstrate how the use of late sales could impact the market level at the relevant date, Mr Idle provides a schedule of 82 sales from October 2000 to March 2003 (Exhibit 3). He notes that only 71 of those sales occurred prior to 1 October 2002.
Mr Idle also argues that any use of lands which are used for rural residential home site purposes is an inappropriate method of determining the value of “farming” lands. Mr Idle rejects Mr Jones’ reliance upon any aspect of the subject land associated with the expansive distant views, which are more appropriate to rural residential home sites. Mr Idle argues such features provide no impact upon the farming capacity of the land. To demonstrate his concerns, Mr Idle argues that of the 71 rural sales west of Caboolture in Exhibit 3, only four of those rural sales are not rural residential sites. Mr Idle also notes that the existence of views on several of those rural home sites were of particular features in their sale prices.
To support his valuation Mr Jones provides the following sales:
· Sale 1 – (“Frizzo” – Lot 329 on CG 452). This is a 164.3 hectare rural property located about 9.7 kilometres north-east of Woodford. Access is via two kilometres of bitumen sealed Cemetery Road and then 6.5 kilometres of formed gravel Woodford-Beerburrum Road, and 1.2 kilometres of rough forestry track. The land comprises 40 hectares (24%) of good red brown horticultural forest slopes, (21%) marginal grey/yellow horticultural forest slopes, and 89.3 hectares (55%) creek flats and wet slopes forest grazing lands. The sale is used for macadamia development and pines, and the balance is suitable for grazing. There is seasonal water in Black Rock Creek and one dam.
The sale has inferior access to the subject land, but has superior land type due to its horticultural capacity, although the balance country has wetter inferior soils than the subject land. The sale has inferior permanent water in the creeks. Overall the sale is much larger and is superior due to its horticultural capacity; although access to the sale is inferior to the subject land. The sale sold in April 2002 for $850,000, was analysed at $554,045 ($3,372.16 per hectare) and applied at $515,000 ($3,134.51 per hectare – 93%). The sale shows a 30% increase from the previous valuation.
[17]
· Sale 2 – (“Smithsfield” – Lot 174 on CG 85). This is a 105.5 hectare rural parcel located about 11.3 kilometres west of Woodford. Access is via 8.9 kilometres of bitumen sealed D’Aguilar Highway, 1.5 kilometres on Eatons Lane and 1.5 kilometres of dirt road on Montford Road. The sale has 25 hectares (23%) of heavier wet forest creek flats, 46 hectares (44%) of gentle forest slopes and hollows, and 34.5 hectares (33%) of lighter grey easy to moderate forest slopes.
The sale is used for cattle breeding, and has seasonal water in Stoney Creek and 10 medium to small dams. The sale has much poorer access than the subject land, and inferior fattening ability and fodder cropping. The sale is larger in area, has a lower rainfall, and less versatile mixed country, but is less steep country than the subject land. Overall the sale is inferior due to the less rainfall, inferior access, and less permanent water than the subject land. The sale sold in January 2002 for $650,000, was analysed at $157,842 ($1,496.13 per hectare), and applied at $144,000 ($1,364.93 per hectare – or 91%). The sale shows a 27% increase since the last valuation.
· Sale 3 – (“Blackrock Ridge” – Lot 153 on C 31856). This is a 60.6017 hectare rural parcel located about 6.1 kilometres north of Woodford. Access is via bitumen sealed D’Aguilar Highway for two kilometres, then bitumen sealed Kilcoy-Beerwah Road for 1.9 kilometres, bitumen Cove Road for 1.2 kilometres, and bitumen strip McCabe Road. The sale can be isolated by the Stanley River. The sale comprises 28 hectares (46%) of creek flats and swampy forest hollows and 32.6 hectares (54%) of easy NLIB Wattle and Gum forests. The sale is used for cattle breeding and fattening, and there is seasonal water in Blackrock Creek with one dam and one bore. The sale has poorer rainfall, similar access but easier slopes and heavier river flats. Overall the sale is slightly superior.
The sale sold in May 2001 for $450,000, was analysed at $140,629 ($2,320 per hectare) and applied at $120,000 ($1,980 per hectare – 85%). The sale shows a 26% increase since the last valuation.
[19]
· Sale 4 – (“McClure” – Lot 1 on RP 41237). This is a 64.292 hectare rural parcel located about 6.7 kilometres south-west of Wamuran, and 17.7 kilometres west of Caboolture. Access is by bitumen sealed D’Aguilar Highway for 10 kilometres, then 6.3 kilometres of bitumen Campbell’s Pocket Road, Basin Road and Sampson Road and 0.4 kilometres of poor dirt track on Flux Road. There is currently an informal access across neighbouring land to Williams Road, which is the only access currently used. The land comprises 10 hectares (15%) north-east facing gravel forest slopes suitable for bananas, and 54.292 hectares of moderate to steeper timbered narrow leaf Iron Bark, Pink Box and Bloodwood lighter grey forest country. The sale is used for bananas and cattle growing on agistment, and the only water is via three dams. Overall the sale is inferior country, but is superior in use due to its horticultural potential, but is in a lower rainfall area.
The sale sold in November 2001 for $195,000, was analysed at $153,043 ($2,380 per hectare) and applied $138,000 ($2,146 per hectare – 90%). The sale reflects a 10% increase from the last valuation. This lesser increase resulted from the 50% increase previously applied in 2000, and not amended to 30% following the decision of this Court in the Kilcoy matters of Wild & Ors v Chief Executive, Department of Natural Resources and Mines (AV2001/0605), 27 August 2002, unreported.
[20]
· Sale 5 – (“Everest” – Lots 3 to 5, 19-20 and 22 on RP 30010, Lot 2 on SL 708 and Lot 3 on RP 852159). This is a 189.0977 hectare rural parcel located about 19 kilometres south of D’Aguilar, and 39 kilometres west of Caboolture. Access is via D’Aguilar Highway for 20 kilometres of bitumen, and 19 kilometres of bitumen sealed Brisbane/Woodford road to gravelled Murray Road. The sale comprises 10 hectares (5%) easy rain forest scrub soils, 135 hectares (72%) steeper vine and bastard scrub improved pastures and 44.0977 hectares (23%) of fair steeper heavy forest. The sale is an ex-dairy farm and is now used for cattle fattening and breeding. There is permanent water in Flagstone and Byron Creeks, with two small house dams. Overall the sale is superior country, due to the superior water and improved pastures, and is similar in rainfall and location. The sale sold as a conservative mortgagee in possession sale on 9 November 2002 for $1,450,000, just a few weeks after the relevant date, and was therefore applied conservatively at only 75.4%. The sale was analysed at $643,428 ($3,402 per hectare) and applied at $485,000 ($2,565 per hectare, showing an increase of 28% since the last valuation.
Mr Idle argues that it is unreasonable to suggest that differences in rainfall in the localities of Mount Mee and Woodford would be significant in comparable sales evidence. He notes that the annual rainfall registrations from the Queensland Meteorological Bureau indicate average annual rainfalls of 1,507 mm (Mount Mee) and Woodford (1,376 mm). He argues that difference is not significant for “farming” purposes, an observation with which I would agree.
In respect of comparisons with Mr Jones’ sales evidence, Mr Idle claims that Mr Jones has made inappropriate allowances for dams on those sales, as each should be considered on an unimproved basis, without the development of the dams. He also argues that each of the sales is easier country for farming purposes.
In drawing comparisons Mr Idle notes that all Sales 1 to 4 are 100% usable country compared to the 90% of usable land on the subject land. He argues that in his opinion Sales 1, 2 and 3 are all superior to the subject land. While he agrees that Sale 4 (McClure) is the closest comparison to the subject land, he speculates that parcel may have some rural residential potential. He notes that Sale 4 was originally used for banana horticulture, but is now used for residential purposes. Mr Idle asks how can that horticultural land be increased in valuation by only 10%, while the subject land is increased by 27%, Sale 2 by 27% and Sale 3 by 26%. While he rejects Sale 5 as a late sale, Mr Idle argues that the steep land on that sale is similar to the steep land on the subject land. Mr Idle also notes that Sale 3 is not designated land on the EPA mapping provided, and is therefore not subject to development constraint approvals by the government.
Mr Jones rejects that he has incorrectly drawn comparisons with his sales, noting that he has drawn comparisons on an overall basis, rather than drawing selected individual component comparisons, as proposed by Mr Idle. Mr Jones also advises that the rear part of Sale 3 is still covered with timber that would require development permits, as that timber is now classified “of concern remnant vegetation”. However he advises that at the date of valuation of 1 October 2002 that timber could have been eligible for a clearing permit.
One major feature with the sales is their relative inferior access, compared to the all weather bitumen access for cattle trucks and dairy tankers at the subject land. Sale 1 has only gravel road access, and is not accessible by milk tanker. Mr Idle notes however that Sale 5 has three legal access points to Newgate Road from the north, Murray Road from the north to the south, and Mount Mee Road to the west (Exhibit 8). Mr Jones agrees that those legal frontages occur, but argues that two of those roads are undeveloped, and lie along steep country. However he concedes that roads such as those along ridge lines are generally the better location for road alignments. In respect of Sale 5 Mr Jones argues that the physical access points are restricted. Mr Jones also notes that the soils on Sale 5 are fertile chocolate coloured on the higher slopes, brown bastard scrub soils on the lower lands, and harder brown forest soils on the eastern lands. Mr Jones advises that Sale 5 has similar topography to the subject land.
Decision:
Relativity –
I turn first to Mr Idle’s concern that relativity between the subject land and Lots 30 and 58 (Murray) to the south is currently inconsistent. However I note that the unimproved value of Lots 30 and 58 was $170,000 at 1 October 2001, one year prior to the relevant date of valuation of the subject land at 1 October 2002. (Exhibit 4). It is also noted that the valuations of the adjoining Shires of Caboolture and Pine Rivers are currently out of step. To make comparisons on a relativity basis between two different time periods, where there is some evidence of changes in the market levels, provides no real check on relativities.
Impact of pest plants –
The control of pest plants is executed in Queensland under the Rural Lands Protection Act 1985. Once a pest plant is “declared”, responsibility for maintenance and control, or possible eradication, is vested in the Minister for Natural Resources and Energy, and local governments can direct that actions be taken to control the pest. In that respect it is noted that while GRT grass is a “declared” pest, there is no formal designation of lantana as a declared pest. It is also noted that while GRT grass was introduced into Queensland from the 1960s, the much more wide-spread lantana has existed in the State for a century. In fact biological control agents against lantana were introduced as early as 1914. It is perhaps possible that because of the wider infestation of lantana, and the greater problem of total eradication, its declaration for eradication has been seen as impractical to date. However on the evidence that GRT grass is a P3 declared pest, its perceived impact may be seen as of greater concern. While some toxicity from lantana is a concern, the major impact of GRT grass is to render pastures difficult for cattle to digest, and resulting lack of productivity.
Mr Jones agrees that where GRT grass has become well entrenched upon lands there is some diminution in the value of the land, as demonstrated by the property which no longer carries cattle. (Paragraph [9]). The impact of GRT grass from an adjoining property has already resulted in a 2½% reduction in a valuation. (See paragraph [12]). While the subject land may be currently well managed against GRT grass, that is at a cost of about $25,000 plus labour costs on an annual basis. That is a cost not comparable on properties where GRT grass does not exist. While Mr Jones’ Sale 5 has GRT grass and lantana, there was no evidence of any annual maintenance costs associated with those pests on Sale 5. On the evidence the subject land can be concluded to have a larger problem from pest plants than the sales provided.
Impact of Environmental Protection –
The evidence is that the subject land is designated partly as “remnant not of concern regional ecosystem vegetation” under the Vegetation Management Act 1999, while the sales comparisons, except Sale 3, do not have any vegetation management implications. In considering the implications of “not of concern” vegetation management, it is noted that classification merely carries with it the present understanding of its existing state of clearing of remnant vegetation. When the land is at the point that any further clearing could cause the land to change its vegetation management status to one “of concern” classification, then the land is seen to have reached its threshold level. The EPA regional ecosystem data on the map supplied was determined as at August 2002, just prior to the date of valuation at 1 October 2002.
Under s.21 of the Vegetation Management Act1999, before any clearing of remnant vegetation can proceed upon any land, either freehold or leasehold, an application for clearing must be lodged with the Chief Executive as defined under the Integrated Planning Act 1997 (IPA). A mandatory requirement, in addition to other development requirements under s.3.2.1(3)(a) of IPA, is for a property vegetation management plan to be prepared and submitted to the Minister. Failure to satisfy those responsibilities may lead to prosecution (ss.58 to 61) with penalties ranging from 835 penalty points to 4,165 penalty points or five years imprisonment (s.61(b)).
There are also powers for authorised officers to enter lands (s.30), obtain information (ss.49 to 52), and also to require compliance to cease clearing or rectify the damage caused to vegetation. The Vegetation Management provisions are far reaching, and have been the subject of wide public discussion over recent years. It would certainly be known to a prudent purchaser. A Property Vegetation Management Plan must supply details of clearing of native vegetation proposed for the entire property, not just the area for which approval to clear is being sought in the application. (Explanatory Notes 1999, p.2125).
While it is noted that Mr Idle has unsuccessfully sought approval to clear timber in the south-west corner of the subject land for some two years (paragraph [8]), that delay would be consistent with the general approach to timber clearing by the Government, which finally led to the total prohibition moratorium upon clearing under the Vegetation Application For Clearing Act 2003, later assented to and taken effect from 2 June 2003. There are no appeals against refusals for clearing executed under that Act. There are minor amendments allowing clearing if they are, among others, for weed control, fencing or public safety (s.3(3)). Existing exemptions from requiring a vegetation clearing permit continue where the regional ecosystem is not mapped as an endangered regional ecosystem, or for a declared area of high natural conservation value (Explanatory Notes 2003 p.1117).
While the latter Act has only had legal standing subsequent to the date of valuation at 1 October 2002, its background, and the political imperatives, were the subject of major concern to property owners during 2002. Subsequent to the new legislative requirement for Property Maps of Assessment Vegetation now demanded of owners, there have been public speculation about the relative difficulties for owners in establishing clear definition of remnant or regrowth vegetation. While that is not a matter for speculation by this Court, it does lend support to Mr Idle’s claim that comparisons with sales of lands where no vegetation classification is relevant, must lead to some uncertainty when compared to the subject land, which is part of the regional ecosystem declarations.
To further demonstrate community uncertainty, I note the more recent decision of the Federal Court in respect of illegal clearing under the environmental legislation in Minister for the Environment and Heritage v Greentree No. 2 [2004] FCA 741, 11 June 2004. In that matter the land owner (Greentree) had cleared about 20% of an area of about 100 hectares of his property known as Windella, which overall comprised a total area of about 2,000 hectares. The 100 hectare portion was declared as the “Windella Ramsar” site, which comprises part of the Ramsar Gwydir Wetlands of area 823 hectares, all of which had been designated as waterfowl habitat lands under the Environment Protection and Biodiversity Conservation Act 1999. As that Act is Commonwealth legislation, the actions under that Act were brought before the Federal Court of Australia. The 20 hectares that had been cleared in the north-eastern corner of the Windella Ramsar site, together with some dredging of the Gingham Channel, had later been sown with wheat (p.20.) The Ramsar Wetlands were designated under an international agreement determined at a convention in Ramsar, Iran in 1971. [1975] ATS 48.
The respondent had argued, among others, that under the Noxious Weeds Act, the owner was required to prevent the spread of noxious weeds. The Court rejected that argument, noting that the whole cleared area had subsequently been sown with wheat, which did not demonstrate that the clearing was to control weeds, but was designed to cultivate the land with wheat (p.46). In the end Sackville J found that the owner had breached s.16(1) of the EPBC Act, and found that a penalty under the Act should be imposed, and also granted an injunction restraining the owner from similar future clearing (p.51). The quantum of the penalties has still to be determined, but it is anticipated to be significant in nature.
While the Greentree matter dealt with different environmental legislation, and is a later occurrence, the analogy is raised to note the level of concern now pervading the rural industries. It would be reasonable, in my opinion, to conclude that any prudent buyer in the locality of the subject land, would give serious consideration to any vegetation management implication for further clearing of lands in that area. These implications were agreed to exist on the subject land, and also on the rear part of Sale 3 during 2002, but had no effect upon the other sales. The question to be answered is to what extent would any uncertainties affect the value of the subject land?
The clearing of native vegetation protected under the Native Vegetation Act 1997 (NSW), was also the subject of a decision of the Land and Environment Court in Director-General of Department of Lands and Water Conservation v Bailey [2003] 128 LGERA 1. In that matter an owner cleared declared land for the purpose of constructing a large water storage area. While the owner was subsequently acquitted in line with exemptions allowed under the Act, Talbot J found that the clearing had been undertaken without a suitable development permit as required under the Environmental Planning andAssessment Act 1979 (NSW), legislation similar to the IPA in Queensland. The message from that decision also emphasises the necessity for formal approval to any clearing where lands are declared under the Act, and any potential impact upon the market value of lands.
Comparison of Sales –
I turn then to Mr Idle’s concern that Mr Jones’ Sale 5 occurred after the date of valuation and, in his opinion, cannot be used in the current matter. I note that Sale 5 occurred on 9 November 2002, some six weeks after the relevant date. In respect of using such a later sale, I note that it is generally held that it is appropriate to compare sales up to the date of issue of valuation (24 February 2003). That was directed in KP and RD Weisenberger v The Valuer-General (1978) 5 QLCR 125; and also in RG McMurray v The Valuer-General (1983) 9 QLCR 35, at 36.
I note also the decision in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299. In that matter Williams J in the High Court of Australia said at 304:
“Values must be calculated in the light of circumstances which existed on the material date, in this case, 30 June 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless.”
Support for the use of subsequent sales is also to be found in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1, per Williams J at 16; and also in Federal Commissioner of Taxation v Harris (1980) 30 ALR 10 at 18. However in Harris, Fisher J noted at 25 that the subsequent event cannot create an expectation which was not in existence at the relevant date. I note that Mr Jones has adopted a conservative application of 75.4% of the analysed value of Sale 5 to allow for the later date of that sale in a rising market. On that guidance I accept Sale 5 as a reasonable sale for comparison purposes.
In seeking comparisons with sales used for a different purpose to the subject land, I note that was recently considered by the Victorian Supreme Court in Alpine Shire Council v MHSC Transportation Services Pty Ltd (2002) 120 LGERA 377. In that matter the valuation of land for the Mount Hotham Airport in Victoria had been valued by the local authority for rating purposes by comparisons with sales of vacant rural residential lands. The sales adopted were defined as being a highest and best use as “a lifestyle rural property with an airstrip”. (p.401). To those sales of vacant lands the valuer had sought to add further amounts relating to the airport facility. Balmford J noted at 401:
“The sales of vacant rural lifestyle allotments of 35 to 80 hectares on which he relied cannot be regarded as comparable sales for the purpose of the valuation of an operating commercial airport.”
The local authority valuer (Mr Bourke) had argued that, as the airport had an operating loss, then, in his opinion it “was unviable and over-capitalisation of the land” (p.392). He saw “the highest and best use of the property was as a lifestyle rural allotment with the non-commercial airfield available only for periodic use, which might include promotional activities not requiring the engagement of airport staff.”. (p.392). The Court rejected that approach.
While in the current matter the differing land uses of “farming” and “rural residential sites” are not as dissimilar as those considered in the Alpine Shire Council matter; it does provide some caution about comparing sales which are used for different purposes to the subject land. A similar finding was adopted in Yalgan Investments Pty Ltd v Council of the Shire of Albert (1997-98) 17 QLCR 331. In Yalgan the learned Member noted at 361:
“The view has frequently been expressed by this Court and other jurisdictions that the most suitable method of valuation involves the use of comparable sales often referred to as the direct comparison method. … The level of comparability of a sale is, however, a question of fact (Hurtis v The Minister (1957) 2 LGRA 132) and involves the consideration of such issues as the similarity in locality, land type, size, sale date and the similarity in highest and best use between the sale and the land to be valued.
I would add to these observations that the appropriateness of the particular method of valuation also turns on the transparency and the methodology including the mental process of reasoning employed by the valuer.”
The degree of comparability of the sales compared to the subject land, and the assessment of the risks of any adjustments, falls within the skills of a registered valuer. (Brewarrana Pty Ltd v Commissioner of Highways (SA) (1973) 32 LGRA 170, at 180).
At the heart of this matter however is the comparative nature of the highest and best use of the available sales evidence. Mr Idle argues that only four of the 71 rural sales on Exhibit 3 are genuine “farming” properties. However Mr Jones rejects that conclusion, arguing that the inferior nature of the road access to his sales mitigates against their use for rural residential purposes. In his analysis of his sales evidence, Mr Jones has therefore compared those sales on a per hectare basis, after allowing for interest costs associated with the land improvement process. Mr Jones notes that if he had analysed the sales on a rural home site basis, he would have done that on a “site basis” rather than a per hectare basis, and made no allowance for interest costs for development purposes. Even though both “farming” and “rural home site” purchases must compete on the same market in this area of generally smaller parcels, the analysis on a highest and best use basis for “farming” makes allowance for the s.17 uses.
The question then to be asked is whether the use of “farming” under s.17 of the Act for grazing or horticultural purposes, would reflect a highest and best use of the sales. The current use of Sales 1 and 4 would suggest that their highest and best use is for horticulture; while Sales 2, 3 and 5 reflect grazing purposes. A comparison of the applied rates per hectare reveals:
Sale Area Rate Use Percentage Comparison
per haincrease
1164.3 ha $3,134 Horticulture 30% Larger/superior
2105.5 ha $1,365 Grazing 27% Larger/inferior
360.6 ha $1,980 Grazing 26% Slightly superior
464.3 ha $2,146 Horticulture 10% Superior
5189.1 ha $2,565 Grazing 28% Superior
Subject78.7 ha $1,665 Grazing 27% -
land
As noted in paragraph [19] the lesser increase of Sale 4 was because that previous unimproved value was not reduced for 1 October 2001 in line with the 20% reductions in the Kilcoy decisions of this Court. On that basis, noting the different qualities of the country type, and the varying size of the sales, there is nothing to suggest that the sales are inappropriate comparisons, or that an error has been made.
In respect of Mr Jones’ referral to the existence of dams upon the sales evidence, I note that the sales have been reduced to an unimproved land basis for comparison purposes, and that Mr Jones has compared the sales on an overall basis, of which access to the natural waters and dams is only one criteria. The percentage increase applied to the subject land appears consistent with the overall market increase for “farming” lands.
Summary:
In summarising this matter I believe that the most comparable sales comparisons are with Sales 2, 3 and 5, which are all used for grazing purposes. Because of the potential uncertainties in respect of clearing upon the subject land, compared to the already cleared Sales 2 and 5, I believe Sale 3 is the most directly comparable land type. However any uncertainty in respect of the timber clearing lies only in the relativity of the subject land to those parcels. On balance I accept that the subject land rate per hectare falls below Sale 5 and above Sale 2. While Sale 3 has inferior permanent natural water to the subject land, I agree with Mr Jones that, because of the easier nature of the sale land, then Sale 3 is slightly superior to the subject land. On that basis Mr Jones’ comparisons appear reasonable.
However a matter which I believe has not been fully allowed for is whether the agreed infestation of GRT grass is a matter for which some further disability allowance should be made. I accept Mr Jones’ advice that where an adjoining property is badly affected, there has only recently been determined to provide a 2½% reduction in an unimproved value for that disability (paragraph [28]). While the subject land is currently well managed against GRT grass, that has only occurred at a substantial cost. That should be allowed for in the valuation, and I determine that a reduction of 2½% ($3,000) should be granted.
Conclusion:
Having considered the whole of the evidence I am persuaded that the appellants have partly proved their case. The appeal is upheld, the unimproved value of the Chief Executive is set aside, and the unimproved value of Lots 16 and 17 on RP 35940 is determined in the sum of One Hundred and Twenty-Eight Thousand Dollars ($128,000).
NG DIVETT
MEMBER OF THE LAND COURT
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