Kemp v Department of Natural Resources and Water
[2010] QLC 49
•26 March 2010
LAND COURT OF QUEENSLAND
CITATION: Kemp v Department of Natural Resources and Water [2010] QLC 0049 PARTIES: Christopher L and Robyn J Kemp
(applicants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NOS: VLA282-08 and VLA283-08 DIVISION: Land Court of Queensland PROCEEDINGS: Appeals against annual and rental valuations under the Valuation of Land Act 1944 DELIVERED ON: 26 March 2010 DELIVERED AT: Brisbane HEARD AT: Roma PRESIDENT: Mrs CAC MacDonald ORDER: 1. Appeal No. VLA0282-08 is allowed.
2. The unimproved value of Lot 1 on Plan MNG44:TL213409 (being a lease over State Forest Reserve 8) and PTB of Lot 5 on Plan MNG47:GHPL10/3142 in the County of Munga, Parish of Koolbellup is determined at Four Hundred and Twenty-Five Thousand Dollars ($425,000) as at 1 October 2007.
3. Appeal No. VLA0283-08 is allowed.
4. The unimproved value of Lot 1 on Plan MNG44:TL213409 (being a lease over State Forest Reserve 8) in the County of Munga, Parish of Koolbellup is determined at Two Hundred and Twenty-Two Thousand, Five Hundred Dollars ($222,500) as at 1 October 2007.
CATCHWORDS: Valuation – comparative sale only applied at 57% of sale figures – no reasonable explanation – either sale not reliable on sale and subject not comparable – sale rejected by Court.
Valuation – major part of subject a forestry lease – restriction on burning and developing land – approvals necessary for other activities – comparable sale not subject to such restrictions – allowance for such difficulties.
APPEARANCES: Mr A Boyd, Agent, for the appellant
Mr WA Isdale, Crown Law, for the respondent
Christopher Lawrence and Robyn Jean Kemp are the owners/lessees of "Hoganthulla", a property which straddles the boundary between the Murweh Shire and the Roma Regional Council. These appeals are concerned with the part of the property situated in the Roma shire. The appellants have appealed against two valuations issued by the respondent, the Chief Executive, Department of Natural Resources and Water under the provisions of the Valuation of Land Act 1944.
Appeal No. VLA0282-08 is concerned with the rating valuation for the whole of the subject property (18,537 ha) which was issued by the respondent at $485,000 as at 1 October 2007. The appellants estimated the value of the property as at that date at $385,000.
The second appeal, VLA0283-08 is a rental valuation for part of the property (14,130 ha) namely Lot 1 on Plan MNG 44, TL 213409 (being a lease over State Forest Reserve 8) in the County of Munga, Parish of Koolbellup. This valuation issued at $255,000 as at 1 October 2007. The appellants estimated the value of this portion of the property at $201,500 as at the relevant date.
At the hearing, the appellants were represented by Mr A Boyd, agent, and the respondent was represented by Mr W Isdale of Crown Law. Mr CL Kemp gave evidence on behalf of the appellants and Mr PD Schefe, a registered valuer employed by the respondent Department, gave evidence on behalf of the respondent. Mr Schefe did not carry out the original valuation on the subject property but had taken over the matter when the valuer who had originally valued the property left the respondent department. Mr Schefe said that he had checked the previous valuer's figures and agreed with them. He had inspected the subject and the sales properties in 2009 and had verified the analysis adopted by the previous valuer.
Mr Schefe described the subject property, in his written report, as situated about 112 kms north-west of Mitchell. Access to the property is gained via the Warrego Highway from Mitchell to Mungallala, followed by about 20 kms single lane bitumen. The balance of 90 kms consists of formed earth road. Access, said Mr Schefe, was not all weather.
VLA282-08
Mr Schefe's primary method of valuation of the subject land was by direct comparison with sales. On that basis he valued the subject property as follows - 18,537 hectares at $26.25/ha which equals $486,596 (rounded to $485,000).
The appellants' estimates of values did not rely on sales evidence. Rather, Mr Kemp said, they were based on percentages of increase in the area, mainly in the 4,000 ha Perpetual Lease sales.
Mr Schefe classified the property as follows –
Approx. 150 hectares (1%) of developed brigalow belah and box scrub
Approx 110 hectares (1%) developed box flats
Approx 301 hectares (1.5%) of developed box, ironbark forest
Approx 1,047 hectares (5.5%) of remnant good box forest country
Approx 16,929 hectares (91%) of remnant standing pine, bulloak, ironbark, box sandy forest with some small isolated patches of remnant brigalow scrub.Mr Schefe said that there is a stock route passing through the property which had been fenced in and utilised with the subject. He had not included the stock route in the valuation as the appellants have no tenure over this land.
Mr Kemp described the subject land as –
94% inferior forest (94% = 17,425 hectares)
Approx 1,000 hectares of creek watercourse, grey box and myall country (1,000 hectares = 5.39%).Although some extended evidence as to country classification was given at the hearing, it appears that the parties' descriptions of the types of country are fairly close to one another and I do not consider that anything turns on the small difference between them.
The appellants have appealed against the valuation on the grounds that it is unrealistic and excessive. Mr Kemp's evidence was that the subject land is unfit for grazing and that it is not used in conjunction with the adjoining part of the appellants' property. The appellants purchased the property in 2003 for drought feed. According to Mr Kemp, they proceeded to stock the property after purchase but lost a large percentage of the cattle which disappeared with feral cattle because of the poor state of the fencing. It is difficult to fence the country effectively against neighbouring cattle, he said. The appellants obtained approval, after approximately 18 months, to fence the boundary between "Hoganthulla" and the forestry leases. The fence was constructed in 2005/2006 but a number of cattle were lost in the meantime. Mr Kemp denied a suggestion that he was deliberately not stocking the country in order to build up the grass so that the areas could be burned. He said that the State forest cannot be burnt off.
Mr Kemp said that the country is very seasonal and receives autumn rain. There are problems with pimelea which have resulted in considerable loss in the value of stock. The block consists mainly of wall to wall Cyprus pine country with rocky outcrops. The density of the timber on the property makes it very difficult to muster. The available water on the property is limited and because of the costs of fencing and improving the water supply and the need to obtain departmental approval for such improvements, the appellants have formed the view that the costs of development are unviable, given the price obtainable for cattle/beef in the market.
Mr Schefe estimated the carrying capacity of the property to be 1 head of cattle (on a mixed herd basis) to 33 hectares (total 562 head of cattle). Mr Kemp said that this was not realistic given the costs of development and the inferior nature of the country. The appellants have only a short term lease and taking that into account together, with the complications of dealing with government departments, the insecurity of State forest land and the inability to develop and build infrastructure for long term use the costs needed to improve the property are unrealistic.
Mr Schefe relied on two sales in support of the valuation. The first sale, a property called "Bullen Bullen", is a 13,270 hectare property which sold on 7 December 2005 for $1,000,000 or $75.36/ha. Mr Schefe analysed the sale to $286,568 ($21.60/ha) and applied an unimproved value of $255,000 or $19.22/ha.
Mr Schefe said that the sale is located 200 kms north of Mitchell by road. The property adjoins the Carnarvon National Park and is 40 kms north-east of the subject in a straight line. Mr Schefe said that the sale was comparable with the subject in terms of location and access but the sale had a slightly superior rainfall. He considered the sale to be inferior on a rate per hectare basis as compared with the subject in relation to the nature of the land because the sale contained no developed country whereas 3% of the subject is developed. The sale has an overall carrying capacity of 1:40 ha on a mixed herd basis which is inferior to the subject at 1:33 ha. He said that the sale was comparable to the subject with regard to water availability. Mr Schefe said that the sale was inferior to the subject on a dollar per hectare basis overall, primarily because of the nature of the land, inferior carrying capacity and access.
Sale 2 is a property called "Forfar/Mt McLeay" which sold on 12 March 2007. The property has an area of 30,065 hectares. The sale price was $2,075,000 which Mr Schefe analysed to $1,043,967 or $34.72/ha. He applied an unimproved value of $600,000 or $19.96/ha.
It is noted that Mr Schefe has applied the sale at approximately 57% of the analysed unimproved value. His explanation for that was that the sale had taken place in the latter stages of a rising market. To my mind that is not a reasonable explanation for the difference between the applied and the analysed unimproved values. If the market was rising through to the date of valuation, I consider such a sale should be applied at closer to 100% rather than at a lesser value. In any event, the effect of the discrepancy between the applied unimproved value and the analysed unimproved value is that I can only conclude that the sale is not reliable or that the sale and the subject are not comparable. Either way, the sale should not be used in the valuation of the subject.
That leaves only Sale 1 to support Mr Schefe's valuation. While that sale, as applied by Mr Schefe, does appear to support the issued valuation, I do not consider that the difficulties in managing the subject property have been adequately taken into account by Mr Schefe in his comparison between this sale and the subject. Although Mr Isdale sought to attack Mr Kemp's credibility, I am satisfied that Mr Kemp's evidence was given honestly. I have accepted Mr Kemp's evidence as to the difficulties faced by the appellants in managing and developing the subject land. That evidence was not effectively challenged by any evidence given on behalf of the respondent. Although there was evidence given by Mr Schefe that, on his inspection of the subject, he had seen areas where the country had been burned, there was also evidence that the Forestry department had carried out burning. The major part of the subject land is a forestry lease which, Mr Kemp said, imposes restrictions on clearing and developing the land, for example, he is not able to burn the country. Further the appellants are required to obtain departmental approval for developments such as fencing and the construction of dams etc. which takes time and adds expense to the management of the property. There was no evidence that the sale property is subject to the same or similar restrictions.
The carrying capacity attributed to the subject appears to be unrealistic, in the light of Mr Kemp's evidence as to the difficulties in managing the country. While it is accepted that that carrying capacity has been attributed for the purposes of providing a comparison with the sales properties and to avoid discrepancies caused by individual management regimes, I am not satisfied, for the reasons set out above, that the attributed carrying capacity is appropriate because I do not consider that the subject property's difficulties have been sufficiently taken into account.
My conclusion is that the subject's superiority to the sale has been overstated by Mr Schefe and therefore that the issued valuation of the subject is too high. Accordingly, I consider that, in the absence of any evidence supporting the appellants' estimate of value, the unimproved value of the subject should be determined at $23.00/ha which leads to a total value of $425,351. This should be rounded to $425,000.
VLA283-08
As stated above, this appeal concerns the rental valuation issued in respect of the leased area of the appellants' property. The issued valuation is $255,000 (approximately $18/ha).
Mr Schefe provided a separate written report in relation to this appeal. He relied on the same sales evidence he had given in relation to VLA0282-08. His evidence was that he had valued the leased areas at a lower rate per hectare than he had applied in the rating valuation because there was a higher proportion of inferior country in the leased area.
For the reasons set out above in my decision in VLA0282-08, I do not consider that Sale 2 should be used in the valuation of the subject.
Mr Schefe's overall conclusion, after comparing Sale 1 with the leased area of the subject, was that the sale is slightly inferior to that part of the subject because of inferior carrying capacity and inferior area of developed country. Having applied an unimproved value of $19/ha to the sale, Mr Schefe applied an unimproved value of $18/ha to the subject.
As discussed in my decision in VLA0282-08, I do not consider that Mr Schefe has paid sufficient regard to the difficulties in managing the subject in his comparison between the subject and the sale. Therefore I consider that the issued valuation in this appeal should be reduced to $15.75/ha or $222,547.50, rounded to $222,500.
ORDERS
1. Appeal No. VLA0282-08 is allowed.
2.The unimproved value of Lot 1 on Plan MNG44:TL213409 (being a lease over State Forest Reserve 8) and PTB of Lot 5 on Plan MNG47:GHPL10/3142 in the County of Munga, Parish of Koolbellup is determined at Four Hundred and Twenty-Five Thousand Dollars ($425,000) as at 1 October 2007.
3.Appeal No. VLA0283-08 is allowed.
4.The unimproved value of Lot 1 on Plan MNG44:TL213409 (being a lease over State Forest Reserve 8) in the County of Munga, Parish of Koolbellup is determined at Two Hundred and Twenty-Two Thousand, Five Hundred Dollars ($222,500) as at 1 October 2007.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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