Jones v Department of Natural Resources and Mines
[2005] QLC 9
•8 February 2005
LAND COURT OF QUEENSLAND
CITATION: Jones v Department of Natural Resources and Mines [2005] QLC 0009 PARTIES: Trevor J Jones
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0372 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation DELIVERED ON: 8 February 2005 DELIVERED AT: Brisbane HEARD AT: Clermont MEMBER: Mr JJ Trickett, President ORDER: The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Seven Hundred and Fifty Thousand Dollars ($750,000). CATCHWORDS: Unimproved Value - Factors affecting valuation - Direct comparison with sales - Relevance of evidence - Relativity of valuations - Valuation of Land Act 1944 APPEARANCES: Mr TJ Jones appeared on his own behalf
Mr K Fisher, Crown Law, for the respondent
This is an appeal by a landowner against the unimproved value applied to his land in the Shire of Belyando, by the Chief Executive, Department of Natural Resources and Mines (the respondent) as at 1 October 2001.
Background
Mr Jones is the owner of a property known as "Myra", described as Lot 8 on Plan DC98, Parish of Eaglefield, containing an area of 10,130 ha. As at 1 October 2001, the respondent applied an unimproved value to that land of $830,000 (or approximately $82 per ha), under the provisions of s.37(1) of the Valuation of Land Act 1944 (the Act). Mr Jones objected against that valuation and subsequently appealed to the Land Court, advising that his estimate of the unimproved value was $600,000.
The Notice of Appeal contained four grounds of appeal relating to:
1.allowance for disabilities associated with the land;
2.incorrect country classification;
3.comparison with sales; and
4.relativity of valuations relating to land classifications.
In a brief written statement supplemented by oral evidence, Mr Jones elaborated on those grounds of appeal.
The Subject Land
"Myra" is situated about 99 km north-west of the town of Clermont and about 49 km west of the town of Moranbah. Access is by means of the formed gravel Kilcummin-Diamond Downs Road.
The evidence indicates that following the lodgement of the appeal by Mr Jones, the respondent's valuer, Mr David Doyle, inspected the property and reached agreement with Mr Jones about the classifications and areas of the various types of country. According to the report tendered by Mr Doyle, the property consists of:
6,765 ha (67%) of scrub grazing, comprising developed gidyea, brigalow country, with moderate regrowth in places;
2,800 ha (28%) of fair forest grazing, comprising easy sloping, fair quality box and ironbark country; and
565 ha (5%) of poor forest grazing, comprising hard gravely country, timbered with rosewood and ironbark.
Mr Doyle's report went on to state in respect of the scrub country:
"It has been identified that the soils are sodic which is common in the area. It is considered that sodic country will be affected more during dry times. Carrying capacities have been eased to allow for this problem in the subject and in the surrounding properties affected."
The property is used for grazing beef cattle, but according to Mr Jones, it is not really fattening country, but "opportunity fattening" country, as seasons and circumstances allow.
The Relevant Legislation
The responsibilities of the respondent in valuing the subject land are set out in the provisions of the Act. The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean in relation to improved land, 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 the improvements on that land did not exist: s.3(1).
The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that there were no improvements on the land, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power, access and the like.
The principles for determination of the "market value" of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property. (See Griffith CJ at 432 and Isaacs J at 441).
It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land. In Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
"Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it, but - as with other commodities - the best way to ascertain the market price is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales."
However, there are many areas of the State, such as the area in which the subject land is situated, where there is essentially no unimproved land, as all land has been improved to a greater or lesser extent. Therefore, there are no sales of unimproved land which can be used as a basis for unimproved value. In such cases, it is necessary to have regard to improved sales. The use of improved sales in establishing unimproved value was considered by the Land Appeal Court in The Valuer-General v Marano(1978) 5 QLCR at 194 and at pages 200 to 201 the Land Appeal Court said:
"It is well established that the best way to ascertain the unimproved value of land is by applying to it sales of unimproved, comparable, lands which took place reasonably close to the date at which the valuation is to be made. But in many districts it is impossible to obtain sufficient unimproved sales to form a sound foundation, and it therefore becomes necessary to analyse sales of improved lands for the purpose of ascertaining, as far as is possible, what part of the purchase price of the sale property relates to improvements and what part is attributable to the land itself."
That was the process adopted by the respondent in valuing the subject land.
The Respondent's Valuation
Mr Doyle gave evidence that the sales throughout the district indicated that the market for rural land had increased sharply around August/September 2000, due to favourable market conditions, including low interest rates, high cattle prices and relatively good seasons. He added that the most sought after country was fattening country, in particular scrub country. According to Mr Doyle, this interest filtered down into forest and downs grazing country, but not to the same extent, while cultivation country was less in demand, with some scrub cultivation properties reverting to grazing.
According to Mr Doyle's evidence, the respondent's valuers analysed the sales in the area and Mr Doyle concluded that the most comparable sales to the subject land were the properties known as "Yarmina" and "Charlton Park". He defended the respondent's valuation of the subject land by direct comparison with those two sales.
"Yarmina" is situated approximately 140 km north-west of Clermont and contains an area of 23,700 ha. In November 2000, it sold for $5,750,000 and was analysed to show an unimproved value of $1,421,672. As at 1 October 2001, the respondent applied an unimproved value to that land of $1,200,000, or $50.60 per ha. That represented an increase from the previous valuation of 2.14 times.
According to Mr Doyle, "Yarmina" comprises approximately 2,900 ha of coolibah, 8,800 ha of fair to poor scrub, 1,120 ha of open to lightly timbered downs, 3,400 ha of fair forest and 7,480 ha of desert. The property has been extensively developed, with approximately 15,000 ha pulled, burnt and grassed. In comparing "Yarmina" with the subject property, Mr Doyle concluded that on a per ha basis overall, "Yarmina" was inferior to the subject land because it had a larger proportion of poorer country, including desert. It is also much larger.
"Charlton Park" is situated approximately 61 km north of Clermont with good access. It contains an area of 10,471.28 ha. In April 2001, it sold for $4,200,000 and was analysed to show an unimproved value of $1,817,567. As at 1 October 2001, the respondent applied an unimproved value to that land of $1,600,000, or $153 per ha. That represents an increase from the previous valuation of 2.22 times.
According to Mr Doyle, "Charlton Park" comprises 450 ha of crop assisted scrub cultivation, 350 ha of crop assisted downs grazing, 200 ha of downs grazing, 7,000 ha of good developed brigalow scrub grazing and 2,471 ha of fair forest grazing, comprising ironbark country. The property was purchased by owners of an adjoining property. In comparing "Charlton Park" with the subject property, Mr Doyle concluded that on a per ha basis it was superior, because of its superior scrub country and because it is better located.
Mr Jones did not attack Mr Doyle's analyses of the two sales. However, he disputed their comparability with the subject land. I will deal with that aspect later.
The Case for the Appellant
Mr Jones' principal argument is that greater allowance should be made for the disabilities associated with the land. His ground of appeal No. 2 regarding the incorrect country classification, has largely been resolved following Mr Doyle's inspection of the property and the agreement with Mr Jones as to the various classifications.
However, in his written statement, Mr Jones expanded on the description given by Mr Doyle. He stated that the majority of "Myra" consisted of brigalow, yapunyah, gidyea, tea tree and blackbutt scrub, most of which is on poorly drained, melon-holed cracking clay soils of a sodic nature. These scrub soils are deficient in phosphorous and high in sodium and chloride. Farming of cereal or fodder crops is not possible.
In preparation for the case, Mr Jones instructed Barnes Agricultural Consulting Pty Ltd to carry out soil tests in two paddocks on "Myra" and a further soil test on Wuthung Road, near the boundary of "Charlton Park".
Mr Jones sought to rely on a report by that company regarding the soil test results and soil comparisons, in the absence of the author. Although I accepted the tender, I indicated to Mr Jones that as the author was not in Court, I could place little weight on the report.
However, in view of the concessions by the respondent that the soil on "Myra" is sodic along with other properties in the general vicinity, whereas there is no mention of sodic soil on "Charlton Park", the report does have some evidentiary value. As well as indicating that the soil on "Myra" is sodic, it states that the soil has very low organic carbon and phosphorous, low potassium, but very high in chloride. When compared to the scrub soil in the "Charlton Park" area, which is free from such production limitation, there would be management issues in respect the "Myra" scrub soil, compared to the scrub soil in the "Charlton Park" area.
The report explained that the better soil quality in the "Charlton Park" area resulted in the pastures being superior to those on the "Myra" scrub soil, which would produce less feed, of lower quality and sooner affected by dry periods. The report summed up by stating:
"Thus stocking rates per area must be managed in a way to reduce the effect of these soil limitations on the 'Myra' scrub soil compared to the 'Charlton Park' scrub soil. Another major limitation of the 'Myra' scrub soil is that due to the sodic nature of the soil establishment of pasture seeding is much harder than the non-sodic 'Charlton Park' scrub soil."
Quite apart from the evidentiary value of the Barnes Agricultural Consulting report, in his written statement Mr Jones asserted that farming of cereal or fodder crops is not possible on "Myra", while in the "Charlton Park" area good sorghum crops, both cereal and fodder, are grown on a regular basis. Furthermore, he stated that pasture rundown is a serious problem affecting the carrying capacity on "Myra". He attributed this to problems with pastures growing in sodic soils.
Mr Jones supported that evidence with a series of photographs which he had recently taken of the various country types on "Myra", which he compared with photographs of the better buffel grass pastures on the non-sodic developed brigalow scrub in the "Charlton Park" area. While such evidence is not determinative, the quite dramatic differences in the quality of the pastures was not challenged by the respondent. Indeed, Mr Doyle's report concedes that "Charlton Park" is significantly superior to "Myra", the only issue is how this is translated into unimproved value.
It emerged in Mr Jones' oral evidence that in addition to the 6,765 ha of developed brigalow scrub associated with gidyea and blackbutt etc, an area of forest country had also been developed and seeded with buffel grass, making a total of 8,500 ha developed in that way. However, he went on to say that a lot of the buffel grass has died out, which he attributes not only to the sodic soil, but also to the fact that the scrub country is melon-holey country, of which about 50% is water logged in a wet season, which further restricts the growth of buffel grass. However, the treated forest country has native pastures as well as buffel grass and was not so affected by pasture rundown. To add to the management problems, buffel grass is favoured by cattle, so that it takes the greater impact of grazing pressure before cattle graze the native pastures.
In addition to his comparisons of the subject land with the sale property, "Charlton Park", Mr Jones also challenged the comparability of the other sale property, "Yarmina". However, Mr Jones was relying on what he had been told by other persons. He had no personal knowledge of "Yarmina". While I cannot accept such hearsay evidence, it was directed in part to the fact that "Yarmina" is a different landform to "Myra". Mr Doyle does not disagree, but his evidence is that "Yarmina" is inferior to "Myra". He has inspected the property, whereas Mr Jones has not. I accept Mr Doyle's evidence in relation to "Yarmina".
In his written statement, Mr Jones disputed the relative carrying capacities which the respondent had attributed to the "Myra" scrub country in relation to the "Charlton Park" scrub country. Mr Doyle had assessed the carrying capacity of "Charlton Park" at 1,800 head, or one beast to 5.8 ha. In his oral evidence, he stated that the respondent has assessed the carrying capacity of "Myra" at one beast to 8 ha, which is equivalent to 1,266 head.
On the other hand, Mr Jones was of the view that the carrying capacity of "Myra" was between 1,100 and 1,200 head, stating that probably around 1,100 on a mixed herd basis would be sustainable. This equates to one beast to approximately 9 ha.
The evidence is clear that following his inspection Mr Doyle adjusted the various classifications of country, conceding that there was less scrub than was shown on the Department's historical record. Mr Doyle made no pretence of being a soil scientist. He was aware that there are variables in relation to sodic soil that he was in no position to comment upon. However, he did concede that the northern portion of the Shire where "Myra" is situated is more sodic than the "Charlton Park" area. His report makes no mention of sodic soil on "Charlton Park".
In view of that evidence and in the absence of any additional information, I accept that for the purposes of this exercise that the carrying capacity of "Myra" is approximately one beast to 9 ha.
The fourth ground of appeal raised by Mr Jones concerned the relativity of the valuation of "Myra", compared with the valuations of other properties. In his oral evidence, Mr Jones made comparisons with a property known as "Pasha", which is situated in the vicinity of the subject land. In particular he challenged the comparison of carrying capacities between that allocated to the scrub on "Pasha", compared to the carrying capacity of the scrub on "Myra".
While Mr Doyle knew the property known as "Pasha", he did not have the relevant details of that property to hand and had to rely on his memory. However, there seems to be no dispute that following an objection by the landowner, the valuation of "Pasha" was reduced to $670,000, or $86.90 per ha.
There is not sufficient evidence before me to make any definitive finding about that relativity. Mr Jones was of the opinion that "Pasha" is a superior property per ha to "Myra". Although the valuation of "Pasha" seems to have been reduced significantly, it is valued at $86.90 per ha compared with $77 per ha suggested for "Myra", which indicates that the respondent recognises that "Pasha" is significantly superior on a per ha basis to "Myra".
Conclusion
The respondent originally valued the subject property at $830,000, or approximately $82 per ha. Following Mr Doyle's inspection and reclassification of the scrub area, Mr Doyle led evidence on behalf of the respondent to a valuation of $780,000, or $77 per ha. He also concedes that the area in which the subject land is situated is much more sodic than the area in which the sale "Charlton Park" is situated.
The two sales relied on by Mr Doyle are significantly different and therefore difficult to relate by direct comparison. However, on a carrying capacity basis, Mr Doyle has assessed the carrying capacity of "Yarmina" at 2,400 head, which is approximately one beast to 9.9 ha. It is also more remotely situated than either the subject land or the other sale "Charlton Park".
Mr Doyle has assessed the carrying capacity of "Charlton Park" at 1,800 head, or one beast to 5.8 ha. It also has an area of cultivation country, which no doubt adds to the attractiveness of that country. "Charlton Park" is also more favourably situated.
Doing the best I can on the evidence and having regard to the carrying capacities and to the advantages and disadvantages of the three properties, I have come to the conclusion that an unimproved value of $750,000, or $74 per ha, for the subject land would be more appropriate and in relativity with the valuations applied to the two sale properties. Therefore, in my view, the appeal should be allowed to that extent.
Order
The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 2001 is determined at Seven Hundred and Fifty Thousand Dollars ($750,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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