John H Squire v Chief Executive, Department of Natural Resources and Mines
[2008] QLC 137
•2 July 2008
LAND COURT OF QUEENSLAND
CITATION: John H Squire v Chief Executive, Department of Natural Resources and Mines [2008] QLC 0137 PARTIES: John H Squire
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILES NO: RV2005/1628 and AV2005/1629 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual and rental valuations under Valuation of Land Act 1944 – General Division DELIVERED ON: 2 July 2008 DELIVERED AT: Brisbane HEARD AT: Emerald MEMBER: Mrs CAC MacDonald ORDER: 1. The appeals are dismissed.
2. The unimproved value of Lot 3 on Crown Plan BU22 GHPL 37/3440 in the County of Buckland, Parish of Hawthorne is affirmed at Six Hundred and Forty Thousand Dollars ($640,000) as at 1 October 2004.
CATCHWORDS: Valuation – Valuation of Land Act – analysis of improved sales – relativity – onus of proof APPEARANCES: Mr JH Squire on his own behalf
Mr W Isdale, Crown Law, for the respondent
These two appeals concern the valuations of a grazing property, Kia-Ora, owned by the appellant, John H Squire. Under the provisions of the Valuation of Land Act 1944 (the Act), the respondent, the Chief Executive, Department of Natural Resources and Mines determined the unimproved value of the property at $640,000 as at 1 October 2004. The appellant estimated the unimproved value to be $183,000.
Kia-Ora is situated about 98 kms south-west of Springsure, and has an area of 2601.724 ha. Mr PD Schefe, a registered valuer employed by the respondent, gave evidence at the hearing and described the property as an irregular shaped holding. Access from Springsure is via Buckland Road, a dual carriageway, formed earth and gravel road which does not provide all weather access and which is, in Mr Schefe's opinion, inferior to district standard. Telephone and electricity are connected to the property.
The appellant gave evidence in support of his appeal. Except as noted below, Mr Squire agreed generally with Mr Schefe's classification of Kia-Ora –
· approximately 485 ha (19%) of downs cultivation which Mr Schefe had valued as grazing rather than cultivated country because of the distance to Springsure grain depots. Mr Squire said that part of the cultivated area was inferior creek flats rather than downs country. Mr Schefe accepted that some of the area was creek flats but said that the change did not affect his valuation;
· approximately 950 ha (37%) of brigalow, sandalwood, some box;
· approximately 550 ha (21%) of ironbark, box and coolibah creek flats. Mr Squire said there were very few coolibah trees in that area and that it was better described as claypan flats, predominantly box. Mr Schefe did not disagree with this saying that different words were being used to describe the same country;
· approximately 565 ha (21%) of easy black soil downs, some silver leaf ironbark. Mr Squire said that some of that area has yellow ridges running through it.
· approximately 52 ha (2%) of narrow leaf ironbark, lancewood hills.
Mr Schefe estimated the carrying capacity of the property as 1 mixed head of cattle to 5.77 ha (451 head total). Mr Squire accepted this as accurate.
Mr Schefe considered the highest and best use of the property to be for grazing purposes, with opportunity cropping. As the land is held under a Grazing Homestead Perpetual Lease issued under the Land Act 1944 its use is restricted to grazing or agricultural purposes and Mr Schefe valued it as a farming property under s.17 of the Act at $640,000 or $246/ha, by direct comparison with two sales.
The grounds of appeal were, in summary, that -
· the market evidence did not support the applied value because all the facts relating to property sales in the area had not been taken into consideration;
· due to the new vegetation management laws in Queensland, if the scrub country on the subject were still in its natural state it could not be touched and would therefore have an extremely low market value;
· there were several properties in the area with similar types of country valued at an extremely low rate in comparison with the subject which was on an extremely high valuation in comparison to these properties;. Most properties have gone up by approximately 100% at this valuation but Kia-Ora has increased by 103%. It appears that those properties that objected and received a slight reduction at the last hearing have increased by more than 100% this time.
· the respondent had in the past said that smaller holdings like the subject were valued higher because there are more buyers for smaller holdings. This was no longer the case because buyers look to purchase larger areas with smaller land valuations in preference to small holdings with high valuations. Small holdings like the subject were becoming less viable and harder to sell due to the higher rates and rent;
· properties with prime softwood scrub country in the district range from
1. Outstation $46.87
2. Mount Vexation $106.31
3. Glentana $126.00
4. Mantuan Downs $81.36
5. Conniston $70.41
6. Wheelholme $119.66
The subject scrub country is a poorer quality.
· Mantuan Downs has identical downs country to the subject but the valuations do not compare -
1.The subject $257 [The valuation was reduced on objection to $246/ha, which is the value under appeal]
2. Mantuan Downs $81.36
· due to the fall in world evaporation rates there is less moisture in the atmosphere to come back down as rain and therefore the carrying capacity of this country is declining
Relevant legal principles
Section 13 of the Valuation of Land Act requires the respondent to decide the unimproved value of land to be valued for the Acts under which local authorities are established. "Unimproved value" is defined in s.3 of the Act which provides in subs.(1)(b) that, in relation to improved land, unimproved value means the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist.
In Grahn v Valuer-General (1992-93) 14 QLCR 327 at 328, 329 the Land Appeal Court said that previously decided cases were authority for the following propositions –
"(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).
(b)the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).
(c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56).
(d) Once it is shown that:
(1)in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or
(2)the valuation was made by a method fundamentally erroneous,
the presumption created by section 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7).
(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 (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46).
(f) If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it)."
Sales evidence
These appeals were heard immediately after the hearing of two appeals brought by Mr Peter Squire who is Mr John Squire's brother. With the consent of both parties in the current appeals, the evidence in Mr Peter Squire's appeals (Peter Squire v Department of Natural Resources and Mines [2008] QLC 0136) was treated as the evidence in these appeals, so far as was relevant.
Mr Schefe relied on the sales of two properties, Eumara and Lexington, to reach his valuation of the subject property. These sales were also used by Mr Schefe in his valuation of Mr Peter Squire's property. The details of these sales are set out in my decision in Peter Squire's appeals at [9]-[14] and it is unnecessary to repeat them here.
I held in the Peter Squire decision that the Lexington sale should not be used in the valuation because the sale analysed to an unimproved value of $560.89/ha which is approximately twice the value of $284/ha applied to that property. The same reasoning and conclusion apply in this appeal.
Mr Squire said that he was not familiar with either of the sales properties but he was able to say that the properties were in a different area from the subject and were a long way from Kia-Ora. The roads to Kia-Ora were not as good as those to the sale properties and there was no irrigation or potential for irrigation on Kia-Ora as there was no underground water. He thought that the scrub country on Kia-Ora was probably not as good as that on Eumara.
Mr Schefe said that he had allowed for the inferior location of Kia-Ora in his valuation at $246/ha or $640,000. If the property were just outside Springsure he would have valued it at $303/ha or $790,000 so that he had in effect allowed $150,000 for the subject's location.
I find it difficult to accept that Mr Schefe has allowed $150,000 for the location of the subject. That figure is premised on Mr Schefe's statement that he would have valued the subject at $303/ha if it were located just outside Springsure. The sale of Eumara shows an applied value of $333.89/ha. A value of $303/ha for the subject allows only $20/ha for the superiority of the sale over the subject, which appears to be a small amount given that Mr Schefe said that Eumara was superior to the subject with regard to the nature of the land, carrying capacity, water and size.
However, Mr Schefe has valued the subject at $246/ha, which is some $88/ha lower than the value applied to Eumara. Taken as a whole and in the absence of any other sales evidence to the contrary, I consider that the subject's value is consistent with the applied value of the sale.
Mr Squire challenged Mr Schefe's sales analyses on the ground that Mr Schefe had not made any allowance for the value of the grass on the sales properties. Mr Squire's opinion was that the grass was an improvement because the properties were worth more with grass than they would be without it and, therefore, the value of the grass should be deducted in the sales analysis to reach the unimproved value of the sale.
Mr Schefe said that when the sales were analysed allowances were made for clearing, the cost of grass seed and interest for the development period. However he had not made any allowance for the value of the grass (as distinct from the costs of the seed) and, in any event, in his opinion, there was no way to value the grass. He did not believe that a property with grass would bring a higher price than if it had no grass – the only difference was that a property with grass would sell before a property without grass.
While I do not accept Mr Schefe's evidence that a grassed property would be no more valuable than the same property without grass, I consider that he has adopted the correct methodology in analysing the sales. As noted above, s.3(1)(b) of the Act requires the unimproved value of improved land to be determined by assuming that, at the date at which the value is to be ascertained, the improvements did not exist. Mr Schefe relied on the sales of two improved properties to value the subject land. In order for him to compare like with like it was necessary for him to analyse the sales by deducting the value of the improvements thereon to reach an unimproved value for each of the sales properties. Mr Schefe deducted the value of a number of specified improvements – plant and machinery, structures, yards, fencing, water, timber treatment and interest on land. Although Mr Schefe has not expressly identified his allowances for clearing and seeding in his report, he has allowed $686,149 for timber treatment which, I infer, includes allowances for clearing and seeding.
Where the added value of improvements exceeds the costs of making the improvements, s.5(2) of the Act provides that the deduction for the improvements should not exceed the cost which should reasonably be involved in effecting, at the date of valuation, improvements of a nature and efficiency equivalent to the existing improvements (The Australian Estates and Mortgagee Co Ltd v The Commissioner of Land Tax, The Valuer, 1 July 1931 at 247 cited with approval by the Land Appeal Court in O'Brien Nominee Pty Ltd v Valuer-General (1979) 6 QLCR 280 at 284). Consistently with s.5(2) Mr Schefe has allowed for the costs of making those improvements in analysing Sale No. 1. I consider, therefore, that an appropriate allowance has been made for the costs of clearing and seeding the sale property.
Relativity
The appellant relied on similar submissions to those of Mr Peter Squire in the earlier appeals, in relation to the valuation of the subject property as compared with the properties identified in his notice of appeal. In particular, the appellant submitted that, even if the mountain range country on Glentana were of no value, Glentana would be valued at $166/ha compared with the valuation of the subject at $246/ha. Although the subject property was smaller than Glentana he considered that smaller properties were no longer viable which was why the bigger blocks were selling to the bigger companies. Similarly, Wheelholme had about the same carrying capacity as the subject yet it was valued at about $150,000 less than the subject. Mt Vexation without the mountain country is one of the best blocks in the district, Mr Squire said. The 20% good forest country was much better than that on Kia-Ora.
In the Peter Squire decision I accepted Mr Schefe's evidence that the reason the balance country on Glentana and Mt Vexation was valued at a lower rate per hectare than the subject land was because those properties were considerably larger than the subject. The same reasoning applies here. I also concluded in Peter Squire that there may be some discrepancy between the relative values of Wheelholme and Coniston and Buckland Plains but that had not been proved. I consider that for the same reasons, there may be a similar discrepancy in this matter between these properties and the subject. However, I do not consider that that possible discrepancy is sufficient to establish that the subject valuation is incorrect. Although the appellant obviously considered that his property has been overvalued, he did not adduce any additional evidence which persuaded me that his valuation was out of relativity with the specified properties.
Other grounds of appeal
Mr Squire did not give any evidence in support of his remaining grounds of appeal. Since the facts underlying those grounds have not been proved, those grounds of appeal cannot succeed.
Conclusions
I do not consider that the appellant has discharged the onus that is placed on him by ss.33 and 45(4) of the Act to prove that the valuation of the subject property as at 1 October 2004 is incorrect. Although I accept Mr Squire's corrections to Mr Schefe's description of the various types of country on his property, there was no evidence to enable me to say whether those corrections affected the valuation of the subject. The valuation is supported by Sale 1 and there was no sales evidence to the contrary. Further, with the possible exception of Wheelholme and Coniston, I do not consider that it has been established that the valuation of the subject is out of relativity with the valuation of the properties referred to by the appellant in his notice of appeal.
My conclusion is, therefore, that the appeals should be dismissed.
Order
1.The appeals are dismissed.
2.The unimproved value of Lot 3 on Crown Plan BU22 GHPL 37/3440 in the County of Buckland, Parish of Hawthorne is affirmed at Six Hundred and Forty Thousand Dollars ($640,000) as at 1 October 2004.
CAC MacDONALD
MEMBER OF THE LAND COURT
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