Inglis v Chief Executive, Department of Lands
[1996] QLC 56
•17 May 1996
|
BRISBANE
17 MAY 1996
Re: Appeal against annual valuation.
Valuation of Land Act 1944
Shire of Gatton (AV94-313)
Robert M, Marion A and Paul M Inglis
v.
Chief Executive, Department of Lands
D E C I S I O N
The abovementioned appellants are the owners of land described as Lot 238 on Plan CA 31519, Lot 242 on Plan CA 31612 and Lot 1 on Registered Plan 157017, Parish of Clarendon, containing an area of 479.3 ha. As at 30 June 1993 under the provisions of the Valuation of Land Act 1944 ( “the Act”) the respondent determined the unimproved value of that land at $237,500. The owners appealed to the Land Court against that valuation, advising that their estimate of the unimproved value is $165,000.
The property is situated about 10 km north of Gatton on the bitumen sealed Gatton-Esk Road which traverses the eastern boundary of Lot 1. The formed gravel Millers Road intersects the property, traversing the northern boundary of Lot 1, the southern boundary of Lot 238 to the eastern boundary of Lot 242. The bitumen sealed and formed gravel Krugers Road traverses the northern boundary and part of the eastern boundary of Lot 238.
The combined property is of irregular shape, with Lot 1 and Lot 242 being situated at the south-eastern and south-western boundaries of the almost square Lot 238. The country comprises flat to gently undulating to sloping light soil, sandstone forest, mostly cleared except for the northern part of Lot 238. Original timbers included narrowleaf ironbark, bloodwood, spotted gum and Moreton Bay ash, with some wattle, oak and tea-tree regrowth.
The property is watered by earth dams and a bore. Electricity, telephone, mail and school bus services are available. The land is zoned “Rural General Farming” under the Shire of Gatton Town Planning scheme and is predominantly used for the grazing of beef cattle.
Evidence for the appellants was given by one of the owners, Mr PM Inglis, who is a registered valuer, and for the respondent by Mr DJ O’Connor, a registered valuer employed by the Department of Lands.
Part of Lot 238 was used as a quarry for gravel extraction, while the evidence indicates that at the relevant date part of Lot 1 was leased to an adjoining turf farmer for the purposes of growing turf. However, it was common ground that the land was predominantly used for grazing beef cattle and therefore qualified for a concessional valuation under the provisions of s.17 of the Act as land used for purposes of “farming” as defined by that section. Therefore, any enhancement in value because of potential of the land for any other use must be disregarded.
Because he thought that the previous valuation was also the subject of an appeal, Mr Inglis led evidence of an unimproved value of the subject land as at 31 March 1992 of $165,000. He said that it should not have increased since the previous valuation made as at 31 March 1991, for reasons which will be discussed later. He also led evidence to prove that the unimproved value as at 31 March 1993 should be increased by only 10% to $180,000.
Although nothing turns on the precise dates of valuation in this case, I should draw attention to the fact that in numerous other cases evidence has been led to the effect that the respondent did not carry out a valuation of local government areas in this part of Queensland in 1991. Therefore, as best I can interpret his evidence, references to a date of valuation of 31 March 1991, should refer to 31 March 1992. The references to valuations made as at 31 March 1993, are clearly intended to refer to those made as at 30 June 1993. I will therefore refer henceforth to what I interpret to be the correct dates of the respective valuations, rather than the ones that appear in Mr Inglis’ reports. The respondent’s unimproved value of the subject land increased by approximately 30% from 31 March 1990 to 31 March 1992, from $165,000 to $215,000.
The Queensland Electricity Commission (“QEC”) had acquired an electricity transmission line easement with an approximate width of 179 metres along the full length of the southern boundary of Lot 1 as part of the Eastlink Project. In addition, as part of that project the QEC had purchased land adjoining the subject land, Lots 2 and 3 on RP 14781, in September 1987 as the site for the proposed Springdale Switching Station. Lots 2 and 3 adjoin the subject land to the south of Lot 238 and to the west of Lot 1, being separated from Lot 242 only by the narrow Lot 202.
The westernmost parcel, Lot 3, of 63.08 ha, was purchased by the QEC in September 1987 for $95,000, or $1,506 per ha. Lot 2 of 56.2 ha, was also purchased in September 1987 for a purchase price of $85,000, or $1,512 per ha. Lot 2 was subsequently sold in June 1989 by the QEC to a Mr P Scneiwe for $75,800, or $1,348 per ha, some $9,200 less than the purchase price. Lot 2, which adjoins Lot 1 of the subject land immediately to the west, is also subject to the same easement that passes through Lot 1. Mr Inglis saw the resale as evidence of a reduction in value because of the effect of the easement and the adjacency to the switching station site.
Mr Inglis gave evidence of the possibility of further easements affecting the various parts of the subject land in the future. Information and maps obtained from the QEC indicated the possibility of future easements affecting all three parcels.
Having regard to the changed circumstances of the subject land because of the development of a national power grid, together with the other detriments affecting the land, Mr Inglis was of the opinion that the unimproved value had fallen significantly between 1991 and 1993. He stated that, “Examination of the circumstances of the property at the date of valuation shows conservatively there is no basis for increasing the UCV above that of the 31.3.1991 valuation, being $165,000". (As explained earlier, the valuation of $165,000 was made as at 31 March 1990).
There were two other factors which in Mr Inglis’s opinion lowered the value of the subject land. Golden Egg Producers Pty Ltd purchased land to the south of the subject land in October 1989 and by the relevant date had established one of the largest egg-producing poultry farms in South-east Queensland, comprising 22 large poultry sheds. In Mr Inglis’s opinion, the noise and smell from the poultry farm adversely affected the amenity of the area.
The second detrimental factor was the large gravel pit or quarry on Lot 238 which in Mr Inglis’ opinion, detracts from the value of the land. It seems that the Gatton Shire Council and the Main Roads Department, by some arrangement which was not fully explained, are able to enter the land, construct earth roads, remove timber, excavate, remove soil and gravel, leaving the land, as Mr Inglis described it, as a “moonscape”. While Mr O’Connor estimated the area of the gravel pit at about 10 ha, Mr Inglis produced evidence of a surveyor’s measurement of the gravel extraction area of approximately 21.47 ha.
As a basis for the 1992 valuation of the subject land, Mr Inglis relied on the sales of Lots 2 and 3 on RP 14781 to the QEC in September 1987 for $85,000 and $95,000 respectively, and in addition, the resale of Lot 2 in June 1989 for $75,800. He also referred to what he described as “parity”, by which I took him to mean relativity of valuations. Under that heading he compared the unimproved values of the subject land as at 1990 and 1992 with those of other lands in the vicinity. The valuations of those lands generally increased by 30% to 35% between the two dates of valuation. However, the valuation of the Golden Eggs Poultry Farm decreased from $310,000 in 1990 to $210,000 in 1992. Mr Inglis contended that the Golden Eggs land at all relevant times was used for farming, that is, the grazing of cattle in March 1990 and the intensive poultry farm in March 1992.
Having regard to all those factors, Mr Inglis contended that the valuation of the subject land had declined significantly between 31 March 1990 and 31 March 1992. He was of the opinion that there was no basis for raising the unimproved value by 30% between those dates of valuation. Between the dates of valuation of 31 March 1992 and 30 June 1993, the valuations of the lands in Mr Inglis’s “parity” comparisons had been increased by the respondent by between 9.5% and 10.3%. Mr Inglis simply increased his 1992 unimproved value of $165,000 by 10% to arrive at his 1993 unimproved value of $180,000.
Mr O’Connor adopted a different method of valuation to arrive at his unimproved value of the subject land at $237,500, or $495 per hectare, as at 30 June 1993, which was an increase of approximately 10.5% on the respondent’s previous unimproved value of $215,000.
To support his 1993 valuation, Mr O’Connor relied upon the sales of three grazing properties situated some distance from the subject land in the Laidley, Esk and Moreton Shires. He explained that he had endeavoured to use as a basis, properties which were sold for grazing purposes and which had no potential for other purposes. To do so, he had to go somewhat further afield than might seem appropriate in other circumstances.
The sales used by Mr Inglis were considered by Mr O’Connor to be not comparable with the subject land for several reasons. First, he said that they were much smaller and more representative of areas used for rural residential sites than for grazing or farming purposes. Second, they were too remote in time, being sold in 1987 with the resale of Lot 2 in 1989. Third, the 1987 sales to the QEC were for the special purpose of establishing a switching station, which may have resulted in QEC paying more than market value at the time. He thought such sales should be avoided as a basis of valuation.
On the other hand, Mr O’Connor’s sales were much larger in area, being between 259 ha and 424.9 ha, which sold between July 1991 and July 1993 and analysed to show unimproved values ranging from $316 per hectare to $608 per hectare, for carrying capacities ranging between one beast to 4.5 ha to one beast to 2.6 ha on a mixed herd basis.
Although those sales were in different shires and were of different zonings, Mr O’Connor had deliberately selected them because they had no potential for any purpose other than grazing, even though two of them comprised several surveyed lots.
Mr O’Connor was well aware of the easement through the southern part of Lot 1 of the subject land and the gravel quarry on the northern part of Lot 248, although he thought it was smaller than the surveyor’s measurement proved it to be. He said that while he considered those matters, he was of the opinion that they did not affect the valuation and made no monetary allowance for them.
As for the nearby poultry farm, although Mr O’Connor thought that it may have had some effect on the value of rural residential sites, he did not think that the noise and smell would affect the grazing value of the subject land. Indeed, there is evidence that the subject land may have some potential for turf farming and Mr O’Connor thought that proximity to a ready source of fowl manure fertiliser may be an advantage rather than a detriment.
The evidence therefore raises a number of issues that must be resolved.
This case involves the valuation of three adjoining parcels of land, all held by the same owners and therefore valued together by the respondent. The land is well situated between the centres of Gatton and Esk, less than an hour’s travel by bitumen road from Brisbane. The land is used predominantly for grazing beef cattle, but there is evidence that the land has subdivisional potential and there is no doubt that each of the three parcels could be sold separately. However, it has been valued under s.17 of the Act as land which is used for “farming” as defined by that section. Therefore, it must be valued in accordance with farming use and any enhancement in value because of potential for any other purpose must be disregarded. (See Whackett v. Chief Executive, Department of Lands (AV93-163 and AV93-164) 3 March 1995, not yet reported).
Before considering the special features associated with the subject land, it is necessary to consider the sales used by the valuers. Mr Inglis’s approach was to value the land as at 31 March 1992 and in so doing he used sales in the vicinity of the subject land, two of which were to the QEC for purposes of establishing a switching station as part of the Eastlink Project. The other sale was the resale of Lot 2 for a lower sale price when it was found to be not required for that purpose.
In my opinion Mr O’Connor was correct in rejecting those sales as being too remote in time for the 1994 valuation. The 1987 sale prices may well have reflected the special purpose for which QEC purchased them. The sales are also smaller than the subject land and of a size more aligned to the rural residential market than the grazing market. Instead, Mr O’Connor went to more remote areas where he found sales which he considered to have no potential for uses higher than grazing, even though two of them consisted of several surveyed lots. In comparing the unimproved values derived from those sales, he made adjustments as considered appropriate for the superior situation and access of the subject land, as well as for the differences in country, carrying capacity, water and other attributes.
In principle, the approach adopted by Mr O’Connor is to be preferred. Although generally sales close to the subject land should be the best evidence of value, the sales used by Mr Inglis are not appropriate. Not only are they remote in time and for special purposes, they are smaller and may well have rural residential potential. When applying s.17 of the Act, it may well be necessary for a valuer to take sales evidence from other areas where potential for higher uses is not a factor. (See APM v. The Valuer-General (1975) 2 QLCR 30).
The High Court of Australia in Spencer v. The Commonwealth (1905) 7 CLR 418, formulated the test for market value. In summary, the Court decided that market value is the price that a hypothetical prudent purchaser would pay to a hypothetical prudent vendor, both of them aware of the attributes and detriments of a property and neither of them so anxious to buy or to sell that they would overlook any ordinary business consideration. Keeping that test in mind, I will now consider the various matters which Mr Inglis contended affected the unimproved value of the subject land.
After considering the evidence in relation to the poultry farm, I have come to the conclusion that the noise and smell may well affect the subdivisional potential of the subject land or its value as rural residential sites. However, as a grazing property of some 479.3 ha, I do not think that the proximity to even such a large poultry farm would influence a hypothetical prudent purchaser to pay any less for the property. Since the land has to be considered as if it was in its unimproved state, and that the improvements on the land had not been made, it would be possible for a prudent purchaser of such land to site a homestead and other infrastructure in such an area that the noise and smell from the poultry farm would have least effect. There is no evidence to indicate that the proximity of the poultry farm would influence a prudent purchaser of the land for grazing purposes to pay any less for it.
The evidence produced by Mr Inglis indicates that the area of the gravel quarry is approximately twice the area assessed by Mr O’Connor. Although Mr O’Connor did not make any allowance in his valuation for the quarry, saying that it did not affect the carrying capacity and was, in any case, part of a fairly non-productive gravelly ridge, I have come to the conclusion that it does have some effect on the unimproved value of the land. There is no doubt that it is a worsement, and that it has rendered the area unproductive for grazing. Since it is a fairly low carrying part of the property, this would seem to have less effect on the overall value of the property than the disturbance and invasion of privacy which results from the ad hoc use by the Gatton Shire Council and the Main Roads Department. I feel that these matters should have been taken into account.
Since the date of hearing of this matter, the new Coalition Government has announced that it will not proceed with the Eastlink Project. However, be this as it may, it is necessary to assess the unimproved value of the subject land as at 30 June 1993. At that time there is no doubt that the Eastlink Project would have been well known to a hypothetical prudent purchaser of the subject land. Even the most cursory inquiries would have revealed that the neighbouring property was the site for the Springdale Switching Station which, on the evidence, was to be a major facility.
A hypothetical prudent purchaser would also have discovered that the major easement of 179 metres in width across the full length of the southern boundary of Lot 1 was to carry three high voltage lines on massive steel towers. However, there was no indication at that date just where the towers would be placed. In addition, there was also evidence that the subject land may have been affected by other easements in the future. Being immediately adjacent to a major switching station, the hypothetical prudent purchaser must have had some concern about the possibility of other powerlines affecting the subject land.
It is immaterial whether the public concerns about the health effects of high voltage powerlines on man or beast have any factual foundation. The fact is that such concerns are widespread and must influence the price paid for land potentially affected by such large scale electrical installations.
Apart from some anecdotal evidence from Mr O’Connor, the only indication that I have of the effect on unimproved value is the reduction in the price paid for Lot 2 between its purchase by the QEC and its resale to the turf farmer. There is no direct evidence that the resale price was affected by the powerline easement or proximity to the switching station. However, Mr Inglis said that conclusion can reasonably be drawn because there was no other change in circumstances between the sale and the resale. The difference in price was approximately 10%.
While the state of the evidence does not allow for any conclusion to be drawn about the effect on the value of Lot 1, I have come to the conclusion that the powerline easement and the proximity to the switching station site, together with the real possibility of further easements and disturbance, would certainly have been of concern to a hypothetical prudent purchaser as at 31 March 1993, and would influence the sale price. There is also the somewhat minor effect on value that the gravel quarry has to the northern part of Lot 238.
Those matters must be taken into account in comparing the subject land with Mr O’Connor’s Sale No. 2, which seems to be the sale most comparable to the subject land, and to which an unimproved value of $422 per hectare was applied. Allowance must also be made for the inferior access and location of Sale No. 2 and the fact that it has steeper country.
After giving consideration to the whole of the evidence, particularly having regard to the matters discussed above, I have come to the conclusion that an unimproved value of $445 per hectare, or approximately $213,000, as at 31 March 1994 is appropriate.
Accordingly, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Two Hundred and Thirteen Thousand Dollars ($213,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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