Johnson v Valuer-General

[2014] QLC 14

LAND COURT OF QUEENSLAND

CITATION:

Johnson v Valuer-General [2014] QLC 14

PARTIES:

Brian Noel Johnson
(appellant)

v.

Valuer-General
(respondent)

FILE NO:

LVA637-11

DIVISION:

General Division

PROCEEDING:

Appeal against annual valuation under the Land Valuation Act 2010

DATE OF HEARING:

30 September 2013

DELIVERED ON:

30 April 2014

DELIVERED AT:

Brisbane

HEARD AT:

Ingham

PRESIDENT:

CAC MacDonald

ORDERS:

1.     The appeal is dismissed.

2.    The unimproved value of Lot 178 on CWL 3263 in the County of Cardwell, Parish of Leach is affirmed at Sixty Thousand Dollars ($60,000) as at 1 October 2010.

CATCHWORDS:

Valuation – Land Valuation Act – appeal against annual valuation – whether sufficient allowance for disabilities

Land Valuation Act 2010
Land Act 1994

APPEARANCES:

Mr P Sheedy, agent, for the appellant
Mr I Pepper, principal lawyer, Department of Natural Resources and Mines, for the respondent

1. Brian Noel Johnson (the appellant) has appealed against the annual valuation of his land as issued by the respondent Valuer-General under the provisions of the Land Valuation Act 2010 (the Act).  Originally, the respondent determined the unimproved value of the land at $72,000 as at 1 October 2010.  This was reduced to $70,000 on objection.  By letter dated 16 April 2012, the valuation was further reduced to $60,000 under s 163 of the Act.  At the hearing of the appeal, the appellant contended for a value of $40,000. 

2. As the property is held by the appellant under a Term Lease issued under the provisions of the Land Act 1994, the valuation is used as a basis for rating and for State Land Rental.

3. The land in question is described as Lot 178 on Plan CWL 3263, held as Term Lease 236104, in the County of Cardwell, Parish of Leach.  It has an area of 10.53 ha and is used by the appellant for sugar cane farming.  It is zoned Rural under the Hinchinbrook Planning Scheme.  The land is situated at El Alamein Road, Abergowrie and is located approximately 45 kms by road north-west of Ingham.  It has an area of 10.5 ha. 

4. Mr Johnson gave evidence at the hearing and also relied on a written statement, together with various appendices, which had been filed in the Court prior to the hearing.  The respondent called Mr SA Cross, a registered valuer employed by the respondent, to give evidence at the hearing.  Mr Cross was the valuer who had made the valuation under appeal.  Mr Cross also provided a written report which had been filed in the Court prior to the hearing.

5. Mr Cross described the subject property as an irregular shaped parcel of gently sloping to undulating ex-coastal forest country located opposite the Lumholtz National Park.  The property falls away from its highest point at the north-western corner to the south and south-east to its lowest point in the south-eastern corner.

6. Although the land is held on a leasehold tenure, it has been valued by the respondent as freehold land as required by s 33 of the Act.  Mr Cross said that he valued the subject land on a freehold primary production basis in accordance with the purpose of the lease, namely primary industry (sugar cane growing).  He valued the land primarily on a direct comparison basis relying on five sales of small farming entities, as detailed in his report.  He valued the land at $60,000 or $5,700/ha.  Mr Cross acknowledged that the land suffers from certain impediments (which are discussed below) and made what he considered were suitable allowances for those impediments.  His valuation calculations were as follows -

   10.53 ha second class arable land @ $7,500/ha                $78,975
   Less allowances

   Stone 10%   $7,998
   Pest and weeds 5%   $3,949
   Drainage 5%   $3,949

   Subtotal  $63,179

   Access 5%    $3,159

   Total   $60,020
   Adopt  $60,000

7. Mr Johnson is a cane farmer.  He did not consider that sufficient allowance had been made for the disabilities of the land.  He said that the land was among the poorest class of land in the Herbert River district, vulnerable to devastation by high rainfall events and subject to pest attacks from cockatoos and uncontrolled feral pigs that live in the adjacent Lumholtz National Park.  In addition, the pest Hamil grass is also plentiful in the National Park in close proximity to the boundary of the subject land from where it infests the land. 

8. The appellant also said that there was a major rock outcrop lying in a band across the subject land and affecting 70% of the land, far more than any other property in the vicinity.  This required substantial special attention in cultivation and planting, to avoid damage to the harvester and to maintain the subject land in a harvestable state.  Mr Johnson annexed photographs to his written statement showing quantities of rock that had been gathered and stock piled on the subject land together with fresh young shoots of cane growing around rocks. 

9. In a good year, Mr Johnson harvests 700 tonnes of cane.  In an average year, the harvest is 650 tonnes.  The effect of recent rainfall events has been that Mr Johnson was unable to complete the harvest on the subject land in the 2010 season when a mere 214 tonnes of cane was harvested and the remainder stood over.  In 2011, after Cyclone Yasi, the total harvest was 371 tonnes of which 285 was eligible for payment, the remainder being below the requisite sugar content and ineligible for payment.  No cane has been harvested on the property since 2011.  There was a similar interruption to harvesting after the 1998 La Nina event and the land remained fallow for several years thereafter. 

10. In addition to the rain events themselves, there are underground springs below the subject land resulting in the moisture level of the land being so high in the wetter years that it cannot be used effectively or efficiently for production.  Mr Johnson tendered photos showing the impact of the water on his land.

11. Because the appellant's lease was due to expire in 2011, Mr Johnson approached the department concerning the defects on the subject land to ascertain if the surrounding conditions could be improved before he committed to renewing the lease.  Two departmental officers inspected the land, in particular -

    1.  the watercourse at the western end which feeds springs in the south-western subsection of the parcel rendering that subsection unworkable;  and

    2.  the proximity of the Hamil grass harbourage area that infests the land. 

12. Mr Johnson said that the officers indicated that the department could assist in both matters, provided the lease was renewed.  He was also told that while the department would not be able to carry out watercourse improvements to mitigate the flooding, permits would be given to enable the appellant to do so.  Previously the department had refused to entertain any such action. 

13. These promises had not been kept, Mr Johnson said.  No work has been done in relation to the Hamil grass and an estimate had been made that to employ commercial contractors to enhance the creek's condition to a departmental standard would cost about $220,000.

14. Mr Johnson also said that access to his property is poor as there is a long haul to a delivery point for the cane which creates a higher cost for harvesting.

15. Mr Johnson's contention was that insufficient allowance had been made for the land's disabilities.  He considered that the most reasonable assessment of the unimproved value, taking into account all the defects and expenditure made by the appellant on improvements to date, was $40,000.  It is unclear how he selected that figure.  Mr Johnson said that he had put the property on the market and was not able to sell it.  He also referred to his property at Broadwater which was valued at $60,000 which, he said, was superior to the subject.

16. As mentioned above, Mr Cross' valuation relied primarily on comparable sales evidence.  While the appellant challenged the comparability of the sales, he did not challenge Mr Cross' analysis and application of the sales.

17. Sale 1 is a 2.805 ha property which sold in February 2008 for $85,000 or $30,303/ha.  Mr Cross analyzed the sale to $52,264 or $18,632/ha.  He applied an unimproved value as at 1 October 2010 of $65,000 on the basis that the property was a rural home site.  Although the sale was valued on a rural residential basis for the 2010 valuation, Mr Cross considered it to have a notional value for primary production of $48,000 ($17,112/ha), as second to third class arable land.

18. Mr Cross said that Sale 1 was inferior to the subject on an overall value basis, but superior on a nett rate/ha basis given its markedly smaller area and better access.  Although it had slightly inferior arable country, it did not have the working disabilities of the subject.

19. Sale 2 is a 7.573 ha parcel of land situated at Raes Road, Abergowrie which sold in January 2008 for $139,500 or $18,420/ha.  Mr Cross analyzed the sale to $74,764 or $9,872/ha.  This property also had been valued as a rural home site for the 2010 valuation, at $105,000, but Mr Cross said that if notionally considered for primary production purposes, it would have an unimproved value of $60,000 ($7,923/ha) as second to third class arable land. 

20. Mr Cross considered Sale 2 to be comparable to the subject land on an overall value basis and superior on a nett rate/ha given its smaller area.  While Sale 2 has marginally inferior arable country and experiences some working disabilities in the form of pests, weeds and flooding, it does not suffer the stony issue experienced by the subject, he said.

21. Sale 3 is a 7.977 ha property situated at Scotts Road, Lannercost which sold in August 2008 for $170,000 or $21,311/ha.  Mr Cross analyzed the sale to $100,791 or $12,635/ha.  He applied an unimproved value of $82,000 or $10,280/ha.  Mr Cross said that the sale property comprised first class arable land and was considered overall superior to the subject on a rate/ha basis given its size, location, arable quality, services and lesser workability issues. 

22. Sale 4 is an 11.847 ha property situated at Palmas Road, Hawkins Creek which sold in November 2009 for $208,000 or $17,557/ha.  Mr Cross analyzed the sale to $124,559 or $10,514/ha.  He applied an unimproved value as at 1 October 2010 of $80,000 or $6,752/ha. 

23. Mr Cross considered that the sale price was high in the context of other market evidence, with the purchaser having leased the farm for a couple of years prior to purchase.  He said that although the sale has third class arable land, it was superior to the subject on an overall basis and a nett rate/ha basis given its superior location, access, services and lesser workability issues.

24. Sale 5 is a 16.88 ha property situated at Barkers Road, Long Pocket which sold in December 2010 for $200,000 or $11,848/ha.  Mr Cross analyzed the sale to $100,000 or $5,924/ha.  He applied an unimproved value of $103,000 or $6,102/ha. 

25. Although the property consists of third class arable land, Mr Cross considered it to be superior to the subject on an overall basis and marginally superior on a nett rate/ha basis given the sale's superior location, services, less workability issues and in spite of its larger area. 

26. Mr Cross' summary was that the sales indicated an unimproved value range for the subject of between $48,000 (Sale 1) and $80,000 (Sale 4) but around $60,000 in accordance with the notional primary production value of Sale 2.  He said that these comparisons reflected the maximum nett rate/ha of $6,100 as prescribed by the applied value of Sale 5.

27. Mr Cross also pointed out that the appellant leases three other cane farms in the Abergowrie locality.  The net arable rate/ha of these properties ranges between $8,050/ha to $9,100/ha compared to the subject’s $7,500/ha.  Property 1 has an applied value of $65,000 or $8,330/ha, Property 2 has an applied value of $68,000 or $8,046/ha and Property 3 has an applied value of $60,000 or $6,205/ha.  Mr Cross said that these figures confirmed the unimproved valuation of $60,000 ($5,700/ha) applied to the subject.

Conclusions

1. Mr Cross valued the property primarily on the basis of a direct comparison with sales.  He reached a value of $7,500/ha for the subject by application of the sales.  He then made various deductions, as set out above, to allow for the subject’s disabilities.

2. Although the appellant challenged the comparability of the sales with the subject, the appellant did not produce any sales evidence to counteract Mr Cross' evidence.  The appellant's case, fundamentally, is that not sufficient allowance has not been made for the disability for the subject property.

3. I have accepted that Mr Cross' valuation methodology is correct.  While Mr Cross' sales are superior to the subject, there is no other sales evidence available to the Court and I do not consider that the differences between the sales and the subject are such as to point to the conclusion that the sales properties were not comparable with the subject.  Mr Cross has explained the differences between each of the sales and the subject and has made what appear to be appropriate allowances for those differences.  Accordingly I have accepted the value established by his sales evidence particularly in light of the fact that the appellant adduced no sales evidence in support of his position. 

4. I am satisfied from Mr Johnson's evidence that the property does suffer from the disabilities described by him but Mr Johnson provided no basis on which the deductions for disability should be allowed.  The question therefore is whether sufficient allowance has been made for the disabilities.  Mr Cross has set out the allowances he has made.  He has allowed for each of the disabilities identified by the appellant – stone, pest and weeds, drainage and access. He said that he had tried to relate the allowances to market evidence to enable him to take the allowances off to levels that he considered were commensurate with analysed values in the market.  He allowed 10% for the stone which, he said, was the maximum allowed to any property in the district. 

5. In my opinion, the appellant has not established that those allowances are incorrect. He gave no evidence to show that the allowances were insufficient.  By contrast, Mr Cross explained the basis on which he calculated the allowances.  In those circumstances, I do not consider that the appellant has discharged the onus of proof, which lies on the appellant in an appeal of this nature, to establish his grounds of appeal.

6. Accordingly, the appeal should be dismissed.

ORDERS
                  1.  The appeal is dismissed.

2.The unimproved value of Lot 178 on CWL 3263 in the County of Cardwell, Parish of Leach is affirmed at Sixty Thousand Dollars ($60,000) as at 1 October 2010.

CAC MacDonald

PRESIDENT OF THE LAND COURT