Kennedy, Franz v Chief Executive, Department of Natural Resources and Mines
[2002] QLC 35
•10 May 2002
LAND COURT
BRISBANE
10 MAY 2002
Re: AV2001/0012; AV2001/0062; AV2001/0073 and AV2001/0083
Appeals against Unimproved Valuations –
Valuation of Land Act 1944
Kilkivan Shire
NJ & RG Kennedy; EJ, LG & HA Franz; NB & JA McSweeny; BH & IE Portas
v.
Chief Executive, Department of Natural Resources and Mines
D E C I S I O N
The chief executive conducted an annual valuation of all rateable lands in Kilkivan Shire as at 1 October 1999. Subsequent to the objection process a significant number of appeals were lodged in the Land Court by various landowners, some of whom held several separately valued parcels.
The four appeals which are now to be decided were selected by the parties as cases representative of the forest grazing lands located predominantly, although not exclusively, in the western section of the shire.
At the hearing of the appeals in Gympie on 10 and 11 December 2001, Mr Andrew Kelly, Solicitor of Kingaroy, represented the appellants. Mr Noel Kennedy gave oral evidence in support of the appeal AV2001/0012, which related to the valuation of one part of a larger family aggregation. Mr Noel Lloyd Maddern, a registered valuer had been engaged by the appellants to conduct valuations on their behalf and he gave evidence accordingly.
Mr Damien Grealy, Principal Legal Officer with Crown Law appeared on behalf of the respondent chief executive. Mr Peter J Haydon, a registered valuer in the employ of the chief executive had been responsible for the Kilkivan Shire annual valuation and gave evidence in support of the individual valuations appealed against. Mr Anthony G Clift, registered valuer who had been responsible for the relevant date annual valuation in Woocoo Shire adjoining Kilkivan Shire, was also called to give evidence for the chief executive in relation to timber treatment allowances and the analysis of one sale in Woocoo Shire.
At the conclusion of the oral evidence, written submissions were received from Mr Grealy on 22 January 2002 and from Mr Kelly on 7 February 2002.
Background
The Kilkivan Shire unimproved valuations, as originally issued, represented an increase of 50% over the previously existing valuations as at 1 October 1997, for those lands in the shire classified as forest grazing. After consideration of objections the increase in valuations of those lands was reduced to 40%.
It is common knowledge that the annual valuation methodology as used by the chief executive involves adoption of the previously existing valuations in a local government area as the relativity base, in the various market categories. "Blanket" factorised adjustments are then made based on the departmental valuers' interpretation of market movement within those market categories as at the relevant date of valuation.
The Issues
The issues which are predominant in these matters are identified as follows:
· the extent of the increase over the previously existing valuation;
· the sales evidence which provides the most reliable evidence of market value as at the date of valuation;
· the unimproved value component in that sales evidence;
· the added value of the treatment of the original and regrowth forest timbers on the sale properties.
Another issue which is not necessarily of a representative nature but which is inherent in the evidence relevant to individual appeal properties and sale properties, relates to the existing relativity between the valuations of various properties.
In considering these issues it is seen as appropriate to discuss the last-mentioned question of relativity first.
Relativity
The degree of comparability, or lack of it, between the lands subject of the sales upon which Mr Haydon relied and some of the individual appeal properties, was one of the criticisms of the chief executive's valuations. It was suggested that lack of comparability stemmed from matters such as, for example, quality of country, location, natural water, availability of services such as electricity, telephone and access.
It was suggested that, in some cases, Mr Haydon's description of country was misleading or inaccurate.
Mr Haydon's response to these criticisms was that his extensive experience in the conduct of valuations pursuant to the Valuation of Land Act (the Act) gave him confidence in adopting long-established relativities between existing valuations, within defined market-related categories in a local government area. He pointed out that one of the tasks involved in conducting an annual valuation is the identification of changing trends not only in each market category but between market categories, such as, for example in Kilkivan Shire, forest grazing lands and scrub grazing lands. However, within each market category, existing relativities between valuations had become established over a long period of statutory valuation history. That history had evolved from the initial regular inspections by departmental valuers together with input from individual owners as to matters raised through the various objection and appeal processes. He accepted that it is still found necessary to alter valuations based on relativity issues but saw this as part of the continual review process and fine-tuning of existing relativities. He also accepted that the available sales evidence for each annual valuation was not, and could not be expected to be directly comparable to each and every parcel within a particular market category. However, it is his belief that, over the years, reliable relativity had been established from the market evidence which had become periodically available for lands of differing quality and with the various features which affect market value, within each market category. For that reason he did not see it as reasonable to alter existing relativities unless adjustment was proved to be necessary either between the sale properties and each individual property or in the case of any specific individual property.
While it is reasonable for an appellant to raise issues in their grounds of appeal which relate to the effect of the various matters which will affect relativity of valuations between individual properties, the onus of proving the grounds of appeal rests with the appellant (s.56(2) of the Act).
In terms of the general annual valuation methodology employed by the chief executive, it is observed that in Wilson v. Chief Executive, Department of Lands (1994-95) 15 QLCR 63, the Land Appeal Court said at 70, 71:"The scheme of annual valuations enables values to follow the market on an annual basis. The scheme would not work without the aid of computers. Nor would it work, if as Mr Wilson would appear to submit, that each allotment should be individually inspected annually and a valuation produced in a form detailing every aspect of the relevant lot, the value placed on it and the basis for the valuation."
Then later at 71 the Court found:
"The process in our opinion does not offend the statute."
As to the broader relativity issues which have been raised, in particular with regard to the comparability of sales, I found Mr Haydon's evidence to be, in most cases, persuasive. However each individual appeal will be decided on its merits.
The Sales Evidence and the Extent of Increase in Valuations
It may be assumed that the trigger to the level of complaint against the valuations of the forest grazing lands as originally issued, was the significance of the increase over the previously existing valuation. While this is an understandable response, it is not the task of this Court to test the veracity of the earlier date valuation. Consequently it is not the degree of change to that earlier date valuation which is relevant in deciding these matters, but the correctness of the actual valuations appealed against.
Indeed, it was Mr Haydon's oral evidence that, in his opinion, the sales evidence did not indicate a market increase, during the relevant valuation period, as high as the increase in valuations which had been applied. Instead he was of the opinion that the level of value which had previously existed had proved to be too conservative at that earlier date and the percentage increase had been warranted to better interpret the market which existed as at the new date of valuation.
Mr Haydon's evidence was that all recorded sale transactions within the relevant valuation period had been considered in one way or another. "Out of line" sales which reflected too great a variation from his interpretation of fair market value expectations, through being either too high or too low, were not initially investigated further. Then, in the investigation process which took place, any transactions which were considered to be tainted in some way and as a consequence, unreliable evidence of open market value, were also discarded. That culling process left the nucleus of the evidence on which the basis for the new valuation was established. The valuations had not been decided or applied until that basic evidence had been fully investigated, inspected and analysed.
If it happened that other relevant sales evidence became exposed or if some of the previously discarded evidence was argued by landowners to be relevant, then further investigations had been instigated at least before appeals were to be heard.
In these appeals, Mr Haydon eventually relied on four sales which will be scheduled and discussed in more detail later. One of the sales (Brown to Corfield) was of a property in Woocoo Shire. That sale had been analysed by Mr Clift and relied on by him as part of the basic evidence for the same relevant date valuation of that shire. Mr Haydon had inspected the property and was comfortable in relying on Mr Clift's analysis of the sale.
Mr Haydon had initially interpreted the evidence as supporting a 50% increase over the previous valuations of these lands. As mentioned earlier that increase was, in his opinion, due largely to the overly conservative level of value which had been applied at the earlier date. The 50% blanket increase was applied but then reduced to 40% after the objection process. The evidence was that the reduced increase resulted from a more liberal approach having been adopted in assessments of the added value of some categories of timber treatment, in the sales analyses.
Mr Maddern accepted that the Brown to Corfield sale in Woocoo Shire reflected market value as at the date of sale and provided evidence relevant to valuations of comparable lands within Kilkivan Shire. However his analysis of the sale resulted in an unimproved value component significantly lower than that found by Mr Clift. That was due to differences of opinion in part as to the value of millable timber, but primarily the added value of timber treatment. Of the remaining sales used by Mr Haydon, Mr Maddern had paid regard to one (Stumm to Davrale Pty Ltd) although he was of the opinion that the non-grazier purchaser had paid in excess of fair market value.
Mr Maddern was convinced that the remaining sales used by Mr Haydon should be disregarded. The purchaser in one (Ashcroft Meats Pty Ltd) owned adjoining land and Mr Maddern saw the sale price as being "obviously" inflated. He had inspected the sale property and was able to provide an analysis of the sale. The remaining "sale" (to May) in fact comprised several contracts between various vendors and Mr May. The multiplicity of contracts was seen by Mr Maddern as sufficient reason for the evidence to be regarded as unreliable. He had not inspected or analysed the May purchases.
Mr Maddern introduced evidence provided by another six sales, four of which were regarded as providing bases for the various appeal lands which he had considered comparable. Two of those sales had been considered by Mr Haydon but he had discarded them as not being representative of fair market value.
All sales and the various unimproved value analyses will be considered in detail in determining these appeals.
Added Value of Timber Treatment
This issue is crucial to the correct analyses of the various sales. Specific findings will be made when these analyses are considered later.
It is appropriate however to discuss the evidence generally at this point because there are significant differences between the parties as to the added value of timber treatment in most categories of the development of the forest grazing lands.
Mr Clift provided a schedule of the allowances which he had adopted in the analysis of sales within Woocoo Shire. His evidence was that these allowances had been discussed with a group of influential graziers experienced in that local Woocoo Shire market. One of the group was Mr P Corfield, a member of the family who had purchased the Woocoo shire property relevant to these matters. According to Mr Clift the grazier group had accepted the scheduled allowances as being fair and reasonable.
It was submitted by Mr Kelly that little reliance could be placed on those allowances merely because of Mr Clift's evidence that a group of unrepresented graziers had found them acceptable. Furthermore in his submission even if the allowances were found to be reasonable for Woocoo Shire they were not in accordance with the added value estimates submitted by Mr Maddern based on actual contracts for work done in Kilkivan Shire. Mr Clift's schedule of allowances was set out as follows:" Forest Grazing Allowances
Note: These allowances are to apply to medium to larger sized forest properties (150 ha to 1000 ha), which have a highest & best use for cattle grazing. Typical timber types would include blue gum, various ironbarks, GT box, spotted gum, etc.
Forest Country with little to nil regrowth problems (generally softer better class country)
Tordoned or rung 100% effective
Allow: Initial Treatment @ $150 + One of 1Follow Up Treatment @ $50 = $200/ha
Forest Country with regrowth problems (generally harder average to poorer class country)
Tordoned or rung 100% effective
Allow: Initial Treatment @ $150 - $150/haNote:Would not normally be 100% effective due to on going regrowth problems.
Forest Country with regrowth problems but has had extensive retreatments resulting in regeneration not being as major problem.
Tordoned or rung 100% effective
Allow: Initial Treatment @ $150 + Quarter of 1 Follow
Up Treatment @ $35 = $185/haNote: Would not normally be 100% effective due to ongoing regrowth problems.
Forest Country with little to nil regrowth problems (generally softer better class country)
Effectively cleared to grass (May be old rung country where the standing dead timber has disappeared due to fire or disintegration over time)
Allow:Pull $75.00
Rake$125.00
Burn$12.50
Stick Pick$12.50
$225.00
Half of 1 Follow Up Treatment of $150 = $75.00
$300.00Total $300/ha
Forest Country with little to nil regrowth problems (generally softer better class country)
Effectively cleared to improved pasture
Allow: Pull $75.00
Rake $125.00
Burn $12.50
Stick Pick $12.50
Plough $125.00
Seed $35.00
Fertilizer $70.00
$455.00Say $450/ha "
Under cross-examination Mr Clift agreed that "pulling" is not generally practised in these localities and that efficient pulling would be less expensive than single dozer "pushing", particularly in larger clearing projects. However, if large areas actually existed in their unimproved state he felt that pulling would probably then be the preferred method of clearing, at least in the less steep country.
As I understood the evidence, Mr Haydon had initially applied timber treatment allowances similar to those adopted by Mr Clift. However he had subsequently increased the allowance for fully effective tordoning of the softer country to $225/ha and for development of improved pasture to a minimum of $500/ha and upwards where he considered the circumstances warranted some premium.
In addressing the added value of the timber treatment of forest grazing lands, Mr Maddern posed the question – "What work would a hypothetical prudent landowner undertake (at the dates of the sales ie during 1998 to early 2000) to bring the grazing lands from virgin state to its level of production at the date of sale?"
He concluded -"That the majority of landowners would not engage in ringbarking or tordoning on the easily to moderately sloping lands (eg around the water courses, hollows etc) but they would rather use a dozer and push all the smaller trees and some of the larger trees. Any trees which are suitable for millable purposes, posts, sleepers etc would probably be left standing or, if pushed, any usable timber would be recovered before the paddock was burnt.
This operation would then be followed by burning and rough stickraking. If improved pastures are to be established the land would probably be disced twice, seeded, rolled and fertilised."
In the easy to moderately sloping country "which is fairly clean" he made the following allowance:
" push, stack and burn most trees but leaving
the larger trees and rough stick rake - $450/ha
If the land has been established to improved pastures, a further allowance of $400/ha should be made."
Mr Maddern recognised that, because of erosion potential, most graziers would tordon rather than doze the steeper sloping lands. "In the majority of cases most areas have been rung or tordoned and burnt several times over the years and there is now very little evidence of virgin trees in land which has been treated." He took the view "that the added value of any timber treatment in these types of areas is far higher than the cost of a single tordon treatment due to the economic effectiveness (ie grass cover and resultant increase in productivity) of the work which has been done over many years."
Where sale properties carried regrowth he believed the added value of fully effective treatment should be reduced by the cost of retreating the existing regrowth. That deduction, based on costings he had obtained, would range "from $50 to $80/ha ... depending on the slope of the land, size and density of trees."
Where land was "probably not as clear of timber as it would be if it had been stickraked etc" he considered that a further deduction "of between $100 and $200/ha is appropriate."
For land which had been cultivated Mr Maddern estimated the cost as follows:Average blue gum country in 1999:
"Push/stack/burn $1,200 per ha
Stickrake/re-burn $200 " "
Rip $180 " "
Stickpick $120 " "
Disc twice $180 " "
Scarifier $90 " "
Administration, owner's time, contingencies etc
- allow 10% of above $197 " "
$2,167 " "
Allow $2,150 " "
Heavy blue gum flats $2,500 per ha
Ironbark, box etc country in 1999:
Push/stack/burn $500 " "
Stickrake/reburn $200 " "
Rip and cross rip $120 " "
Stickpick $120 " "
Disc twice $180 " "
Scarifier $90 " "
Administration, owner's time, contingencies etc
- allow 10% of above $127 " "
$1,397 " "
Allow $1,400 " " "
Mr Maddern provided various costings obtained from clearing and timber treatment activities within the Kilkivan Shire locality. There was no significant difference in the "cost" of clearing to cultivation standard between Mr Maddern and Mr Haydon. However, in some cases, significant differences in assessments of the added value of such development were revealed.
In respect of the rung and tordoned country, the chief executive's valuers placed reliance on their interpretation of the decision of the Land Court in Appeals against Determinations of Valuer-General – Shire of Esk (1972) 39 CLLR 130 (the Esk decision).
In those matters, the Valuer-General had contended for an allowance of $4 per acre as the added value of timber treatment which had brought virgin forest country to a very clean condition. That allowance included a "minimum" of 50 cents per acre for follow-up treatment of seedlings. The appellants contended for an allowance of $10 per acre, comprised of an initial tordon treatment of $6 per acre with two "follow-ups" each of $2 per acre for seedlings. Mr WFG Smith, the Land Court member, as he then was, in the absence of evidence as to the cost of "seedling re-treatment following tordoning" was "doubtful that the second re-treatment or follow-up would cost as much as $2 per acre" (at p.234 - emphasis added). After serious consideration of all the evidence, Mr Smith decided "to adopt $8 per acre for timber treatment of formerly medium timbered forest grazing lands but in cases of more densely timbered areas and for steep country" thought it "reasonable to apply $9 per acre or even a little higher in particularly difficult country."
In these matters the chief executive's valuers seem to have interpreted that decision to support an assessment of the added value of tordon treatment based on the initial treatment cost plus one follow-up for the "softer better class country". My interpretation of the Esk decision is that included in the $8 per acre which was allowed, was an amount of something less than $2 per acre for a second re-treatment of seedlings. In other words, it is probable that Mr Smith did not allow the full $6 per acre for the tordon treatment and then something less than $4 per acre for two follow-up seedling treatments, in adopting the total allowance of $8 per acre for the easier medium density timbered country.
Section 6 of the Act provides the relevant legislative meaning of "improvements", and includes "all such destruction of suckers and seedlings as is incidental to the destruction of timber, and also includes the destruction of other vegetable growths ... to the extent to which such destruction retains its utility, but does not include the destruction by any person of any such growths ... which are allowed to establish themselves ... except to the extent (if at all) to which it restores wholly or partly so much of the utility of a previous improvement in the nature of the destruction of such growths ... as is, by the subsequent provisions of this definition, deemed to have been lost, and any improvement consisting of the destruction of such growths ... by whomsoever the same may be effected, shall be deemed to have lost its utility to the extent to which, after it has been made, other growths ... are allowed to establish themselves on the land."
As best I can interpret that legislative language, the expenditure on timber treatment which is necessary to obtain full effectiveness, including any necessary follow-up treatment of suckers and seedlings, is to be regarded as the capital cost (and subject to s.5 of the Act) the added value of fully effective treatment. However, once the full effectiveness of the various steps required to achieve that condition is lost through lack of maintenance, the cost of maintenance is not an improvement but expenditure necessary to reinstate full effectiveness of the original improvement.
Mr Maddern had been advised by many landowners "that tordoning work which has been undertaken over recent years has been the second, third, fourth or even fifth time those areas have been treated." One of the regrowth treatment costings which he had obtained was of an area of 368.8 ha of reasonably thick regrowth in the parishes of Boonara/Grongah, in late 1999/early 2000 at $80.74/ha. That was the second regrowth treatment after original ringbarking in 1956 and first re-treatment in 1967.
In that example the original ringbarking would be regarded as part of the added value and possibly the first re-treatment some 11 years later. However, it would be drawing too long a bow, in my opinion, to see the 1999-2000 work as other than maintenance necessary to restore the full utility and added value of the original destruction of timber and sucker/seedling regrowth.
Section 5 of the Act provides the legislative meaning of the term "value of improvements" as follows:"(1) The 'value of improvements' means, in relation to land, the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act, irrespective of the cost of the improvements, ...
(2) However, the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of a nature and efficiency equivalent to the existing improvements."
In O'Brien Nominee Pty Ltd v. Valuer-General (1979) 6 QLCR 280, the Land Appeal Court said at 286, in relation to the assessment of the added value of improvements (in the circumstances of that case at a time when economic conditions were depressed):
"... it is a matter of ascertaining the amount which the hypothetical prudent purchaser, fully appreciative of the depressed economic conditions, would give for the actual improvements, irrespective of the cost of making them. In short it is the value the market is prepared to pay for the specific improvements on the property."
Mr Haydon expressed concern that there would be seen to be conflict with the findings in O'Brien Nominee if, for example, the added value of original ringbarking or tordoning was found by consideration being given to some other method of clearing, such as mechanical clearing, ie pulling or pushing.
It is my view that, in the case of timber treatment, it is the destruction of original vegetation which constitutes the improvement, not the method by which the destruction was effected. The hypothetical prudent purchaser would be expected to have regard not only to the most cost-effective method of making the improvement, as at the date of the sale, but also the economic benefits which would flow from the making of such improvement.
I see nothing artificial in the legislative definition of "value of improvements" in s.5 of the Act which, in my opinion, articulates a principle of valuation. The findings in O'Brien Nominee should not be read down to limit the methodology which might be cogently utilised to find the value of any improvement.
The methodology which Mr Maddern, or indeed in some cases Mr Haydon and Mr Clift, used in finding the added value of timber treatment is not, in my opinion, wrong in principle simply because the improvement may have been made by some different technique. The valuation result would, however, be wrong if it did not equate the added value which the improvement gave to the land by reference to the marketplace.
However, I have not been convinced on the evidence that the hypothetical prudent purchaser of cleared to grass grazing land in Kilkivan Shire would be prepared to pay, in addition to the value of the land, an amount for the timber treatment which would be equivalent to the cost involved in mechanical clearing.
There is no dispute that if economic benefit is possible, through destruction of vegetation on the harder/steeper country, the method of destruction on that type of country is limited to tordoning with follow-up treatment of initial regrowth necessary for full effectiveness. Even then, the nature of the country is such that full effectiveness of timber treatment will be lost if maintenance of the improvement is not carried out.
Past district practice has been to ringbark or tordon the vegetation on the better quality forest lands to improve its productive capacity. Although follow-up treatment has been accepted as part of that original process, ongoing maintenance is no doubt far less a problem than on the harder country. Native pasture management has included suitable season burning which, in turn, has reduced to varying degrees the quantity of dead trees and debris resulting from the timber treatment. In circumstances where the better country has been well cleaned-up by the original processes, some graziers have then further developed the land and established improved pastures. In other cases old cultivation lands which had been cleared and developed in association with past usage for dairying or grazing operations has been allowed to revert to natural pastures or sown to improved pastures.
If it could be shown that the highest and best economic use of the better quality lands involved development to improved pastures and the most cost-effective method of improving virgin land for such use was by initial mechanical clearing, then there would be validity in Mr Maddern's approach to the added value of timber treatment. However, I have not been convinced that the market evidence for forest grazing lands supports such a conclusion. Instead, the staged longer-term development process involved in ringbarking or tordoning combined with the effect of pasture management and grass fires has provided a development base which is capable of economical extension to the more intense development of improved pastures.
It is important that, in the valuation of improvements pursuant to the Act, the added value test is properly applied for the purpose of ascertaining unimproved value. It is now difficult to establish the actual density and size of the vegetation which existed on the better quality lands in their virgin state. However any assessment methodology which would result in too high an allowance being made for the added value of timber treatment on that type of country, in comparison with the allowance made on the harder country, must result in incorrect unimproved valuation relativities and as a consequence, inequitable distribution of the rating burden.
There was agreement between the valuers that the cost of tordoning unimproved country would generally be expected to be more expensive than treatment of regrowth on that same type of country, provided that no worsement had occurred. The problem facing the valuers was that it is now rare to obtain a contract cost for the treatment of unimproved land. Mr Haydon had spoken to a local contractor who thought that $60/acre ($150/ha) would be a fair cost estimate for tordoning virgin forest. Naturally, the density of original timber cover and the topography of the land would be relevant considerations.
There was evidence of costs of treatment of regrowth ranging from $50/ha to in excess of $150/ha. Again, the density of regrowth, the nature of the country, the strength of the chemical used, etc, are the type of factors which will have an effect on actual cost.
While it is difficult to arrive at standard costings, the overall evidence leads me to conclude that for average density timber cover on the softer country an allowance of $150/acre for an original tordon treatment is fair. However, with no direct evidence as to the extent of regrowth treatment which might have been necessary on that better type of country, but perceiving that there has been some misinterpretation of the reasoning in the Esk Appeals decision, I propose to adopt an added value of $250/ha for tordoning treatments required as the initial stages of fully effective development to natural pasture.
Both Mr Clift and Mr Maddern have related the added value of clearing where dead timber has now disappeared, to the cost of primary mechanical clearing including raking and burning. Mr Clift arrived at $300/ha (with some chemical follow-up treatment) but Mr Maddern estimated $450/ha. I would have found Mr Maddern's estimate more convincing had cost equated added value. Mr Haydon, although concerned about the implications of the O'Brien Nominee decision, thought that the added value found by Mr Clift for the well cleaned-up country was indicative of the amount "the market was prepared to pay".
There is no dispute then that there should be some premium attaching to the added value of the timber treatment which has been effected as a result of the management of original treatment and the burning of dead timber. For the effectively cleared to grass category, again on the assumption of average density original timber cover but where at least some raking, picking and burning would still be required before ploughing for establishment of improved pasture, I propose to allow, primarily on Mr Haydon's reasoning as to market considerations, up to $300/ha.
When it comes to the harder/steeper country I am unable to accept the basis upon which Mr Maddern assessed the added value of tordon treatment. The district average treatment of that type of country is clearly by tordoning and to adopt a fully effective base derived from mechanical clearing costing is, in my opinion, flawed. I have come to the conclusion that although much of the on-going regrowth treatment in that steeper type of country should be regarded as maintenance, rather than capital expenditure, the original treatment should be expected to be more expensive than on the softer and probably more open country. It would also be expected that the original treatment and at least initial follow-up regrowth treatments would retain some utility and residual value even when fairly heavy regrowth existed as a lack of maintenance. It is then unrealistic to adopt a basic "fully effective" added value less than that for the softer country. Consequently, if regrowth is a continuing problem the estimated cost of maintenance at the date of valuation (the date of sale) would be deducted from the assumed fully effective added value. I will adopt a base $250/ha as the added value of all cleared to grass notionally fully effective tordon treatment.
There was criticism of the component parts of Mr Clift's added value allowance for improved pasture development. Mr Clift's response to that criticism was that the allowance of $450/ha was representative of his opinion as to the amount "the market would pay" rather than an actual cost assessment. Mr Haydon increased this allowance to at least $500/ha but Mr Maddern's estimate was $850/ha or $400/ha more than his assessment of a cleared to grass standard. Mr Haydon's evidence as to the market range which could be expected for improved grazing lands in this locality again leads me to agree with him that for Mr Maddern's estimate of added value of improved pasture development to be realistic, there would need to be a higher market value indicated for such improved land than appears to exist.
Furthermore I have not been convinced that there is market evidence to support Mr Maddern's contention that grazing land fully developed to improved pasture would fetch $400/ha more than the well cleaned-up natural pasture lands. Nevertheless, bearing in mind the development cost basis on which Mr Maddern came to his assessment, and the level of value which Mr Haydon was prepared to attribute to some old cultivation areas which had reverted to pasture, I have decided to increase his "base" allowance for the added value of improved pasture development to $600/ha.
The Sales Evidence
Brief details of the various sales which were considered to be relevant by either Mr Haydon or Mr Maddern are set out in the following schedule.
| Ref | Vendor/Purchaser | Date | Area (ha) | Sale Price $ | Unimproved Analysis | Chief Executive's Applied UIV | |
| Haydon | Maddern | ||||||
| 1 | Stumm/Davrvale Pty Ltd | 10.08.98 | 598.9 | 340,000 (567/ha) | 170,255 (284.28/ha) | 93,171 (155.57/ha) | 122,000 |
| 2 | Enrav Pty Ltd Ashcroft Meats Pty Ltd | 11.06.98 | 741 | 460,000 | 188,567 (254.48/ha incl. RL) | 176,547 (244.78 ex. RL) | 165,000 (222.50/ha incl. RL) |
| 3 | Honey Valley Pty Ltd & Ors/May | 12.01.99 | 1937.2 | 1,050,000 (542/ha) | 351,584 (181.49/ha) | - | 325,000 |
| 4 | Brown/Corfield | 15.05.99 | 596.6 (incl Special Lease) | 485,000 (813/ha) | 206,400 (346/ha incl SL) | 143,951 (261.91/ha ex SL) | 205,000 (345/ha incl SL) |
| 5 | Walthall/Smith | 12.07.99 | 513.1 | 200,000 | - | 35,807 (69.79/ha) | 53,000 (103.29/ha) |
| 6 | Tokai Investments Pty Ltd/Atthow | 24.08.98 | 343.2 | 95,000 (277/ha | - | 37,556 (109.43/ha) | 61,000 (177.74/ha) |
| 7 | Green/Berry | 21.01.00 | 113.28 | 250,000 (2207/ha) | - | 42,329 (373.67/ha) | 77,000 |
| 8 | Lord/Stanton | 19.11.98 | 43 | 125,000 (2907/ha) | - | 25,595 (595.23/ha) | Not separately valued |
| 9 | Bath/Smyth | 17.03.99 | 108.07 | 300,000 (2776/ha) | - | 31,867 (294.87/ha) | 55,900 |
| 10 | Elliott/Carr | 12.07.99 | 374.39 | 310,000 (828/ha) | - | 94,837 (253.31/ha) | 176,000 |
Individual Sale Analyses
Sale 1 - Stumm to Davrale Pty Ltd
Real Property Description: Lot 3 on Registered Plan 221159 and Lot 103 on Plan 109142, Parish of Barambah.
Area: 598.9 ha
Location: The property is located at the corner of Kilcoy and Elginvale Roads approximately 20 km south/south-east of Goomeri.
Services: Electricity and telephone services are available. Elginvale Road is bitumen sealed adjacent to Lot 103. Kilcoy Road is bitumen from Goomeri to Lot 103 and then of formed gravel construction.
Description of Land:
Mr Maddern: "Gently to moderately sloping to undulating ironbark ridges intersected by a number of gullies. The country becomes reasonably steep in places. Part of the land particularly on Lot 3 is quite elevated and distant rural views are available from several elevated ridges. There are lasting holes in intersecting gullies. Grey and brown sandy loams parts of which are subject to a stony influence. There is heavier soil along the gullies/hollows but soils to parts are quite light."
Mr Haydon: "The subject land comprises about 337.9 ha (56%) of 2nd forest grazing being broad-leaf and narrow-leaf ironbark, bloodwood and Moreton Bay ash, easy to parts moderately sloping ridges with stony brown and greyish soils and about 261 ha (44%) of 3rd class forest grazing being narrowleaf ironbark, bloodwood and some spotted gum influence, moderate to parts steeper sloping stony ridges. Water comprises semi-permanent holes in creek, one equipped bore and three gully dams."
Use: Cattle grazing (breeding and fattening).
Carrying Capacity: Mr Maddern - at sale – one beast to 3.2 ha.
Mr Haydon - one beast to 4 ha.Analysis of Sale: During the course of the hearing Mr Haydon and Mr Maddern agreed on the value of some improvements but could not agree on the added value of the timber treatment. Agreement was reached as follows:
Fencing and yards $20,000
Water facilities $40,000Mr Maddern's valuation of the timber treatment was as follows:
300 ha old rung/tordoned country in good order
@ $400/ha $120,000240 ha old rung/tordoned country carrying mainly
light regrowth @ $325/ha $78,000 $198,000Add interest for one year @ 5.25% $10,395
$208,395Mr Haydon's valuation of the timber treatment was as follows:
300 ha easy sloping forest 100% effective
@ $225/ha $67,500
250 ha forest ridges 70% effective @ $105/ha
(retreated after sale) @ cost of $60/ha) $26,250 $93,750Plus interest for half of two years, or one
year full $4,922
$98,672
For reasons outlined earlier I will adopt the following added values for timber treatment together with Mr Haydon's estimate of treated areas:
300 ha old rung/tordoned @ $250/ha
fully effective $75,000
250 ha old rung/tordoned @ $190/ha
($250 minus $60/ha to retreat) $47,500 $122,500
Interest @ 5.25% for half of two years, say $6,430
$128,930
The sale analysis which will be adopted is therefore:
Sale price $340,000
Less:
Fencing and yards (as agreed) $20,000
Water facilities (as agreed) $40,000
Timber treatment $128,930 $188,930
Gross unimproved value $151,070
Less development interest $7,535
Net unimproved value $143,535
Equates 598.9 ha @ $239.66/ha
The adopted analysis compares with Mr Maddern's initial analysis of $93,171 ($155.57/ha) and Mr Haydon's of $170,255 ($284.28/ha).
Chief Executive's Applied Valuation:
As at 1 October 1999 - $122,000.
The valuation as at 1 October 1997 had been $87,000
Remarks:
The evidence was that the director of the purchasing company is a Brisbane medical practitioner. Mr Maddern's inquiries indicated that the property had been on the market for about 18 months. It has been run subsequent to the purchase in conjunction with other nearby adjoining lands by a local grazier who is a friend and advisor to the purchaser. Mr Maddern said that the purchaser intended to construct a dwelling on the land and had seen taxation benefits in its acquisition. There was an intention to on-sell the land to the manager/friend at some future date.
Mr Maddern had reservations about the sale being a genuine purchase for grazing purposes and although he himself used it as a basis for valuation of three of the appeal properties it was his opinion that the sale should be "applied conservatively". During his cross-examination he suggested that an application of between 90% and 95% of the analysed sale price was justified.
Mr Haydon had commented that while the purchaser was not a local, the land was purchased with advice from the local grazier and the vendor "was happy with the price paid". It was his evidence that, while he believed the sale fell within the expected market range, it had been used more as a support for the valuation which had been applied to the sale land.
Conclusions
The circumstances of the sale are not seen to be such that the evidence provided by it should be rejected and it is clear that both valuers would have applied the sale in a conservative way.
The analysis of the sale which I will adopt supports not only the valuation applied to that sale land as at the relevant date, but also the chief executive's contention that a 40% increase in value from the previous valuation was justified.
Sale 2 - Enrav Pty Ltd to Ashcroft Meats Pty Ltd
Real Property Description: Lot 1 on RL 4903, Lot 11 FY1655, Lot 2 on RP 7162, Lots 9 and 10 on FTZ3716 and Lot 2 on RP 810648, Parish of Barambah
Area: 741 ha
Location: 18.5 km south/south-east of Goomeri.
Services: Electricity and telephone services are connected. Lot 2 fronts a bitumen road.
Description of Land:
Mr Maddern: "The land varies from near level to gently sloping blue gum and apple tree flats along Moonda Waamba and Black Franks Creeks through gently to moderately sloping to undulating ironbark ridges to steeply sloping and broken narrow and silver-leaf ironbark, bloodwood, grass tree hills and ridges."Mr Haydon: "About 95 ha (13%) of 1st grazing flats being blue gum and apple flats, about 320 ha (43%) of 2nd forest grazing being broad-leaf and narrow-leaf ironbark, bloodwood and Moreton Bay ash, easy to parts moderately sloping with stony brown and grey soils and about 326 ha (44%) of 3rd class forest grazing being narrow-leaf ironbark, bloodwood and some spotted gum influence, moderate to parts steeper sloping stony soils."
Water: One bore, two gully dams and permanent water in creek.
Use: Grazing (breeding, growing and fattening).
Carrying Capacity: Mr Maddern - at sale – one beast to 2.7 ha (274 head). Mr Haydon - one beast to 3.6 ha (about 200 head).
Analysis of Sale: During the course of the hearing the valuers agreed to adopt the following valuation of improvements:
Structures $39,000
Fencing $43,000
Water facilities $17,000There was the consistent disagreement with regard to the added value of the timber treatment.
Mr Maddern's added value of the timber treatment was calculated as follows:
60 ha formerly mainly contoured cultivation
@ $800 $48,000
113 ha mainly cleared land @ $400 $45,200
316 ha old rung/tordoned carrying regrowth
@ $250 $79,000 $172,200
Add interest for one year @ 5.65% $9,729
$181,929
Mr Haydon's assessment of the added value of the timber treatment was as follows:
15 ha blue gum and apple black soil flat –
old cultivation to improved pasture
$825/ha added value (50% of cultivation cost) $12,375
100 ha easy sloping broad-leaf ironbark,
bloodwood and gum slopes – old cultivation
reverted to grass, with improved pasture as highest
and best use @ $550/ha including 10% premium
for higher standard of development, but depreciated
15% requiring one working and fertilising $46,750
Plus interest for half of three years $5,100 $64,225320 ha easy sloping forest ridges tordoned with
very light regrowth @ 95% of $225/ha $68,400
110 ha easy to moderate forest ridges tordoned
@ 50% of $150/ha $8,250
196 ha easy to moderate forest ridges tordoned
@ 25% of $150/ha $7,350
$84,000Interest for half two years development period $4,830 $88,830
Total timber treatment including development
Interest $153,055It was Mr Haydon's evidence that the area of previously cultivated flats had some potential for opportunity cropping due to the availability of irrigation but in his opinion it was unlikely that such a relatively small area would warrant development to cultivation standard by current district grazing standards. Nevertheless because it existed and had once been irrigated he saw the cultivation as having an added value somewhat greater than for district standard improved pasture. No irrigation licence attached to the property and I think that Mr Haydon has been generous in his added value assessment for this old cultivation if its highest and best use has reverted to improved pasture development, which I accept it has. For the reasons given earlier however I would have allowed a slightly increased added value to the balance area of the old cultivation suitable for pasture development. Weighing both considerations I have decided to adopt Mr Haydon's overall assessment of the added value of the clearing for highest and best use as pasture development in the total amount of $64,225, in preference to Mr Maddern's assessment of 60 ha of former cultivation @ $800/ha, before development interest.
Again for the reasons given earlier I do not accept Mr Maddern's assessment of the added value of "mainly cleared land" or the old rung/tordoned country carrying regrowth. I will adopt Mr Haydon's area assessments but adjust upwards the added value of tordoning as follows:320 ha @ 95% of $250/ha $76,000
110 ha @ 50% of $250/ha $13,750
196 ha @ 25% of $250/ha $12,250 $102,000
Interest for half development period $5,865
$107,865
Added value of improved pasture development $64,225
Total timber treatment including
development interest $172,090
I will adopt the following sale analysis:
Sale price 460,000
Less:
Structures including yards (as agreed) $39,000
Fencing (as agreed) $43,000
Water facilities (as agreed) $17,000
Timber treatment $172,090 $271,090
Gross unimproved value $188,910
Less development interest $10,270
Net unimproved value $178,640
Equates 741 ha (including road licence) @ $241.08/ha
This compares with Mr Maddern's initial analysis of $176,547 ($244.78/ha) and Mr Haydon's of $188,567 ($254.48/ha).
Chief Executive's Applied Valuation:
$165,000 as at 1 October 1999
Remarks:
It was not disputed that the purchaser owned adjoining land or that the sale was negotiated directly between the parties, after the first approach by the vendor to the eventual purchaser. The principal of the purchasing company advised Mr Maddern that "it suited him very well to purchase the property as he already owned adjoining land." Mr Maddern observed that through adjacency of ownership the purchaser now owned a considerable area of land on both sides of Moonda Waamba Creek. Mr Maddern saw that as a distinct advantage. In his opinion "this sale should not be used as a main basis of valuation unless it is heavily discounted". In his oral evidence he at first suggested that the discount should be in the range of 25% to 30% but later resiled somewhat from that estimate.
On the other hand, the principal of the purchasing company had informed Mr Haydon that he "considered the price paid reflected the market for that type of land at the time of sale". Mr Haydon agreed with that opinion, particularly in comparison with the price paid by Davrale Pty Ltd (Sale 1) which was somewhat inferior in country quality and potential carrying capacity. Mr Haydon had also spoken to the vendor who advised him that he had been happy with the price realised but would not have been prepared to accept any less.
Mr Haydon said it was not uncommon for land in this locality to be purchased by an adjoining owner wishing to extend a holding. However, in his experience, if there was ever any premium paid in the open market it was usually no more than "one more bid at an auction". He pointed out that the land purchased had double frontage to Moonda Waamba Creek and he accepted that as being advantageous. However he did not see any significant advantage extending to the land already owned by the purchaser due primarily to the difficult topography which separated the two holdings.
It is generally accepted that adjoining owner purchases need to be treated with caution in terms of evidence of open market value. However such sales are not necessarily to be excluded from consideration. It has been held that, particularly when there is no sales evidence available "to support a party's contention that the sale to an adjoining owner reflects something more than market value it is incumbent on that party to point to some circumstances associated with the sale or with the property itself for the position, needs and desires of the purchaser to justify the inference that the selling price was an excessive one" (Hardie J in Hurdis v. Minister 2 LGRA 132 at p.140). Mr Maddern's version of the purchaser's opinion as to the reliability of the sale differs from Mr Haydon's who not only interviewed both parties to the transaction but satisfied himself that the price paid for the improved property fell within the expected market range for comparable quality forest grazing land in the locality. Mr Haydon's evidence, as the valuer wishing to rely on the sale, is persuasive while Mr Maddern as the valuer wishing to discard the sale has pointed to circumstances which may have influenced the purchaser to pay an excessive market value but has failed to demonstrate that any such circumstances did in fact result in the price being excessive.
Conclusion
This is not seen as a sale which should be removed from consideration.
The analysis upon which I will rely, although indicating a lower unimproved value than had been found by Mr Haydon, still comfortably supports the valuation applied to the sale property as at the relevant date.
Sale 3 - Honey Valley Pty Ltd and Others to May
Real Property Description: Lots 1 and 2 RP 164039, Lots 1 and 2 RP 64720, Lot 120 LX1484 etc.
Area: 1,937.2 ha
Location: No precise details were provided as to the location of the property but it is observed on Mr Haydon's accompanying mapping that it is a relatively short distance to the north-west of Kilkivan.
Description and Classification of Land:
Mr Haydon's description of the land is as follows: "About 1,000 ha (52%) 2nd class forest grazing being broad-leaf and narrow-leaf ironbark, blue gum, bloodwood and Moreton Bay ash, easy to parts moderately sloping forest ridges and some small flats on Wide Bay Creek, about 713 ha (36.5%) 3rd class forest grazing being narrow-leaf ironbark, bloodwood and spotted gum, steep to moderate forest hills, about 50 ha (2.5%) being 2nd class scrub grazing – mainly easy to moderately sloping and about 175 ha (9%) considered unavailable steep scrub.Water facilities comprise three bores (two being equipped), permanent natural water in Wide Bay Creek and 10 gully dams.
Use: The property is used for grazing purposes.
Carrying Capacity: Mr Haydon's estimate of carrying capacity was one beast to 4.5 ha or 430 head.
Analysis of Sale: Mr Maddern did not analyse these transactions because of the multiplicity of contracts involved.
Consequently while there is no challenge to Mr Haydon's analysis by the appellants who contend that the sales should be discarded, it is appropriate for me to make comment about the added value of the timber treatment allowed by Mr Haydon. He described various classifications of improved pasture development as having added value, if fully effective, averaging about $525 /ha for an overall area of 675 ha. His assessment of the effectiveness of the pasture development ranged from 50% to 85%. The total added value, before development interest then averaged about $430/ha. As with this type of development on Sale 2, I have concluded that his added values range from generous to conservative. However bearing in mind Mr Maddern's costings for various steps in the development process, I think Mr Haydon may also have been somewhat light in his depreciation rates on some of the categories of development. In weighing these factors, I have concluded that it is reasonable to adopt his overall assessment for this category of timber treatment in the amount of $316,598 including development interest.
However, for consistency I will increase Mr Haydon's added value assessment of the tordoning treatment of some 450 ha of easy to moderate ridges which he assessed as being 75% effective based on a cost of $150/ha. Adopting the same depreciation rate but a fully effective added value of $250/ha for this treatment results in a total allowance including development interest of $89,142 increasing Mr Haydon's estimate from $53,485. The analysis of the sale would then result as follows:
Total sale price various contracts $1,050,000
Less plant and machinery $7,500
$1,042,500
Less structures including interest $97,922
Treated, fenced and water $944,578
Less yards $37,619
Fencing $81,752
Water facilities $73,744
Timber treatment -improved pastures $316,598
tordoning $89,142 $598,855Gross Unimproved Value $345,723
Less development interest 5.65% for 1½ years $27,011Net Unimproved Value $318,712
Equates $ 164.52/ha overall (including unavailable area).
This compares with Mr Haydon's analysis showing an unimproved value of $351,583 or $181.49/ha.
Chief Executive's Applied Valuation:
$325,000 as at 1 October 1999
Remarks:
Mr Haydon's evidence was that the several parcels had been owned separately by various Japanese interests, but were under common management. The purchaser's initial interest in the aggregation had been dampened by the apparent need to negotiate separate sale prices with the individual owners and the difficulties which were envisaged as a consequence.
The purchaser advised the vendors' agent that he was prepared to pay an acceptable total price, but the individual owners would need to agree between themselves as to the apportionment of prices to be shown on the individual contracts. The appellants contend that this transaction should be disregarded "as it is clearly a case of several sales and not one sale." The Court was referred to "the numerous precedents allowing it to discard this type of sale, particularly when other sales to experienced local purchasers are available."
It is no doubt true that there are circumstances where the evidence provided by separate contracts of sale needs to be considered in the light of the property described in the individual contracts. However I see no reason why the cost of putting together an aggregation, whether of urban or rural lands cannot be accepted in principle as representative of the market value of that aggregated holding. There could be a different view as to the evidentiary weight of the individual contracts as they apply to the individual parts of the aggregation. In the circumstances of these transactions, the purchaser did not concern himself with the contract price of the individual lots only the total price to acquire the aggregation.
It is my view that the circumstances said to have surrounded these purchasers would lend at least similar evidentiary weight as to the market value of the one aggregated holding as did the circumstances in, for example, Fenton Nominees Pty Ltd v. Valuer-General (1981) 57 LGRA 71 (Wells J).
Conclusion
The analysis of the sale which I will adopt shows a slightly lower unimproved value than that applied to the sale property by the chief executive. It might be an argument that insufficient allowance has been made in that applied valuation, for the large area of the sale property. This property is of a relatively highly improved nature and the reliability of analyses of the sales of such properties can be questionable. However, when considered in the light of the balance of Mr Haydon's sales evidence, I am able to accept that this sale may be regarded as reasonably supporting the value applied to the sale land by the chief executive and as a consequence the level of value applied generally to comparable quality predominantly forest grazing land within the shire.
Sale 4 - Brown to Corfield
Real Property Description: Lot 1713 on Plan L37962, Parish of Gigoomgan and Lot 63 on Plan LX2314 Reserve 682: Special Lease 31/44438, Parish of Teebar.
Area: 596.606 ha.
Location: Approximately 45 km north-west of Woolooga with access via the bitumen sealed Brooweena-Woolooga Road.
Services: Electricity and telephone are connected.
Description of Land:
Mr Maddern: "The property has a long frontage to Teebar Creek and rises from good blue gum and apple tree flats estimated at 100 ha to approximately 370 ha of gently sloping mainly ironbark, bloodwood etc ridges. An area estimated at 20 ha comprises former cultivation which had reverted to grass and an area estimated at 80 ha comprises a hard spotted gum stony ridge. Practically all of the balance of the freehold land comprises old rung mainly cleared forest country which was mainly in fairly good order but parts were subject to suckers. There was some commercial timber on the property and this was estimated by the purchasers to have a value in the order of $15,000."Mr Clift: "The property consists of a long, relatively narrow block with Teebar Creek on its western boundary. The country comprises easy undulating forest with about 200 ha of good quality creek flats and hollows to about 300 ha of low rises and slopes of fair forest and a small area of about 50 ha of harder forest. A Special Lease of 47 ha over a Camping and Water Reserve consists of mainly better class forest."
Water: Stock water is obtained from Teebar Creek, a lagoon, two small dams and an equipped bore and well.
Use: Cattle grazing (breeding, growing and fattening).
Carrying Capacity: Mr Maddern estimated the carrying capacity as at the date of sale to be one beast to 2.2 ha (271 head) while Mr Clift estimated the carrying capacity to be one beast to 3 ha or 200 head.
Analysis: The valuers agreed during the course of the hearing to adopt the added values of the structures, fencing and water facilities as being $120,000. The items remaining in dispute and my findings are as follows:
Millable Timber:
Mr Maddern's evidence was that he had discussed the question of millable timber with one of the purchasers (Mr David Corfield) who informed him that since the purchase sufficient timber had been cut for the construction of an extension to the house and the trees cut for milling hadn't "made a dent at all in the commercial timber that was there". Mr David Corfield had estimated that there would have been $15,000 of commercial millable timber at the date of sale.
Mr Clift's evidence was that his inquiries of Mr Peter Corfield (Mr David Corfield's father) soon after the purchase had made him aware that there had been "some but not a great lot" of millable timber on the property. Mr Clift had estimated that there were green clumps totally about 25 ha which contained millable trees and thought that $3,000 would have been a fair in situ value of the millable timber. After he had seen Mr Maddern's estimate he again spoke to Mr Peter Corfield who told him that he believed Mr Maddern had been given an estimate of "between $10,000 and $15,000 by his son but that Mr Peter Corfield himself thought $10,000 would have been "probably more likely".
Mr Clift had taken the view that it would be unlikely that responsible management would have involved the destruction for sale of all millable timber when only relatively small reserves remained to provide future needs, stock shade and some aesthetic features. He estimated that the in situ value of the timber logged for milling since the sale would have been in the range of $1,500 to $2,000. Mr Clift had not been prepared to review his estimate and was confident that it was representative of the purchaser's opinion at the time of the sale. He accepted however that the owner's present estimate may have been based on a better knowledge of the reserves which actually existed.
The evidence is that the purchasers had made an offer to purchase the property at a higher figure some 12 months earlier, but that offer had been refused. The overall evidence does not suggest to me that the existence of "some" millable timber was, at the time of sale, a matter of the same apparent significance to the purchasers as now exists in terms of the analysis of this sale. The question is not capable of confident resolution on the evidence before the Court and in the absence of expert evidence from a timber assessor, but, resolving doubts in favour of the appellants I have decided to allow an amount of $10,000.
Timber Treatment
Mr Maddern's assessment of the added value of the timber treatment was as follows:
20 ha former cultivation reverted to grass
@ $800/ha $16,000
450 ha old rung/tordoned @ $350/ha $157,500 $173,500Interest for 1 year @ 5.65% $9,803
Total $183,303
Mr Clift's assessment of the added value of the timber treatment was as follows:
10 ha blue gum and apple flats cleared to grass
(ex cultivation) @ $300/ha $3,000
514.606 ha of 1st and 2nd class forest cleared
to grass with some/odd standing dead timber and
stumps – 85% effective @ $255/ha $131,22547 ha lease country with scattered timber –
40% cleared to grass @ $120/ha $5,640 $139,865Interest half of two years @ 5% $6,993
$146,858I am persuaded by Mr Clift's oral evidence that any areas of apparent old cultivation in excess of his estimate of 10 ha could relate to originally open wetter flats. However, the "added value" which he attributed to this old cultivation seems low, in comparison to the values attributed by Mr Haydon to areas of old cultivation reverted to pasture, albeit with some opportunity for irrigated cropping on Sales 2 and 3. I commented in those matters that I thought Mr Haydon may have been generous in his allowances as influenced by that irrigation/cropping potential. However for the better standard of development which preparation for cultivation would have given to this land, before establishment of improved pasture, I have decided to increase Mr Clift's allowance to $600/ha for the 10 ha of old cultivation. I have given reasons earlier in the general discussion regarding added value of timber treatment for not accepting Mr Maddern's assessments.
Mr Maddern has allowed 450 ha of old rung/tordoned country while Mr Clift has allowed 514 ha. Mr Clift appears to have adopted that area after deduction of the area of the lease as surveyed and the untreated areas. Mr Maddern's oral evidence indicated that he had over-estimated the area of untreated country. However, the overall evidence including that regarding the open flat areas leads me to conclude that, probably mainly on the flats there was some naturally open type country which did not require treatment.
I have decided to adopt an area of 485 ha being the approximate median between the two estimates as the area which might be regarded as 85% effective selectively treated old rung/tordoned country. Having decided earlier to adopt the figure of $300/ha as the added value allowance for old rung/tordoned country which has been generally well cleaned up over the years as a result of fires and management practices, I will adopt Mr Clift's added value 85% effective assessment of $255/ha but for the reduced area of 485 ha and then his assessment of 40% effective treatment for the leasehold land.
While I prefer Mr Maddern's methodology in attempting to separate the freehold land from the small area of Special Lease, for the purpose of analysis of freehold value, I can see no disadvantage to the appellants in this case, where an overall unimproved value has been analysed (and applied to the total area of the property including the lease, pursuant to s.14 of the Act).
The slightly higher interest rate used by Mr Maddern is explained, as I understand the chief executive's approach, by his valuers' use of the long-term bond rate at the actual date of sale rather than the average over a six month period as I understand was the basis adopted by Mr Maddern. I will use Mr Clift's 5% as being relevant at the specific date of sale.
On review of the evidence I will adopt the following allowance for timber treatment:10 ha old cultivation @ $600/ha added value $6,000
485 ha old rung/tordoned and burnt country
85% effective @ $255/ha $123,675
47 ha old rung/tordoned country
40% effective (leasehold) @ $120/ha $5,640 $135,315
Interest for half development period – 1 year @ 5% $6,765
$142,080
Adopt $142,000
The sale analysis will then be as follows:
Sale price $485,000
Less:
Millable timber estimate $10,000
$475,000
Less:
Structures, fencing, water facilities
(as agreed) $120,000
Timber treatment $142,000 $262,000
Gross unimproved value $213,000
Less development interest $10,143
Net unimproved value $202,857
Equates $340.02/ha overall.
This compares with Mr Maddern's initial analysis showing $261.90/ha for the freehold land area and Mr Clift's initial analysis of $346/ha overall including the Special Lease.
Chief Executive's Applied Valuation:
As at 1 October 1997 - $205,000 (equates $343.61).
Remarks:
It is accepted by both parties that this sale should be used as basic evidence of value for the better quality forest grazing lands in the district. It is seen as relevant that the sale was applied in full, based on Mr Clift's analysis, to the actual sale property as at the same date as is relevant in these matters. The oral evidence was that the valuation as applied was not challenged by the then recent purchasers.
I have reduced Mr Clift's sale analysis slightly but at the same time have adopted his assessment of the added value of the old rung/tordoned country – one of the controversial issues in these appeals.
Conclusion
I find that, except for the question of the value of the millable timber, the sale provides sound evidence of value, reasonably supports the level of value applied to that land and, importantly, supports the relativity of values applied to the lands in Mr Haydon's Sales 1, 2 and 3.
Sale 5 - Walthall to Smith
Real Property Description: Lot 51 on MZ575, Parish of Booubyjan.
Area: 513.1 ha.
Location: The property is located approximately 42 km north of Goomeri.
Services: Bitumen and gravel roads to within approximately 2 km and then by an earth track. Electricity and telephone are connected.
Description of Land:
Mr Maddern estimated that 245 ha (47.7%) comprises easy sloping to undulating mainly ironbark but some spotted gum etc forest country, approximately 60 ha (11.7%) comprises near level blue gum, bloodwood etc flats, approximately 108 ha (21%) comprises fairly steeply sloping forest and the balance (approximately 100 ha – 19.5%) comprises range/jump-up country. Soils are of a grey and brown sandy and loamy type with some stony areas.Water: Semi-permanent holes in one creek, seasonal water in several gullies and in some clay holes in the back part of the property, equipped bore (good supply but salty).
Use: Cattle grazing (breeding and growing) in conjunction with adjoining land.
Carrying Capacity: Mr Maddern estimated the carrying capacity at the date of sale to be one beast to 5 ha with potential to be increased to one beast to 4 ha.
Analysis: Mr Maddern's analysis of the sale is abbreviated as follows:
Sale Price $200,000
Deduct value of improvements:
Structures $56,821
Fencing $11,837
Water facilities $4,707
Timber treatment $88,501 $161,866Gross unimproved value $38,144
Deduct interest during half development period $2,327Unimproved land value $35,807
This reflects $69.79/ha.
Mr Maddern then dissected that result as follows:
413 ha forest grazing @ $80 $33,040
100 ha jump-up/steep forest @ $25 $2,500
$35,540This sale had not been analysed by Mr Haydon and no challenge was made to the analysis by Mr Maddern for reasons which will be later discussed. However an issue between the parties is the basis upon which Mr Maddern assessed the added value of timber treatment on the sale properties and it is appropriate for me to consider his assessment in this analysis.
Mr Maddern's assessment of the added value of the timber treatment was as follows:
8 ha former cultivation reverted to grass @ $600 $4,800
52 ha mainly cleared for cultivation @ $400 $20,800
230 ha old rung/tordoned carrying varying
regrowth @ $250 $57,500 $83,100Add interest for one year @ 6.5% $5,401
Total value of timber treatment $88,501
If I was to take a consistent approach to the old rung/tordoned timber treatment, which would appear to represent about 55% effectiveness on Mr Maddern's base $450/ha, an added value of something less than $150/ha might well have resulted, reducing the added value of the timber treatment by at least $23,000, before interest, on that classification alone.
If that adjustment was made the net unimproved value would increase to near $59,000 when the chief executive's valuation, as at 1 October 1999, according to Mr Maddern, was $53,000.
Remarks
The purchasers who were adjoining owners had leased this land for about 10 years first from the vendor's father until his death, about one year prior to the private sale. Mr Maddern saw it as realistic that the purchasers would have paid a premium of between 10% and 20% above market value because of the adjacency factor and the purchasers' special knowledge of the property and their past usage and management of it.
Mr Haydon's evidence was that he had initially considered the sale to be well below the expected market range and at a rate per ha as improved below a nearby treated, fenced and watered "paddock" sale. As I understood his oral evidence the latter sale (the "Shanks" sale) had not been adopted as basic evidence because it had been considered above the expected range. Mr Haydon had intended to inspect the subject sale specifically for these appeals until discussion with the male purchaser who convinced him of his knowledge of the local market and that the purchase price of the subject land was below market value. Mr Haydon then decided not to "waste his time" analysing the sale.
As it happens however it may have been of assistance to his case had Mr Haydon fully inspected the property and analysed the sale.
Conclusion
Due primarily to the fact that I have not been persuaded that Mr Maddern's assessment of the added value of the timber treatment, particularly the old rung/tordoned country, on the various sale properties has been realistic, his analysis of this sale is also rejected. In fact the sale on a revised analysis is seen as more likely a support to the chief executive's case than that of the appellants.
Sale 6 - Tokai Investments Pty Ltd to Atthow
Real Property Description: Lot 136 LX 994, Parish of Kilkivan.
Area: 343.2 ha.
Location: Approximately 11 km north of Kilkivan.
Services: Gravel track to the south-eastern corner of the property. Practical access is from the western side of the property across adjoining land.
Description of Land:
Mr Maddern's description of the land is as follows: "About 40 ha (11.6% of flats along the creek had been bulldozed and about 100 ha (29.1%) of forest ridges carried regrowth which has been tordoned since the sale, about 83 ha (24.2%) of the old rung/tordoned country which had virtually reverted and the balance of about 120 ha (35%) comprises rough box, stringy bark etc in the northern end of the property. Soils are of a grey sandy light loam type, stony and rocky to much of the property."Water: Semi-permanent natural water in creek, seasonal in gullies, two earth dams.
Use: Cattle grazing (breeding and growing).
Carrying Capacity: Mr Maddern assessed the carrying capacity at the date of sale as one beast to 6.8 ha with potential to be increased to one beast to 5 ha.
Analysis: Mr Maddern's analysis of the sale is set out as follows:
Sale Price $95,000
Deduct value of improvements:
Structures $3,079
Fencing $8,188
Water facilities $6,315
Timber treatment $37,890 $55,472
Gross unimproved value $39,528
Deduct interest during half development
Period – one year @ 5.15% $1,972
Unimproved land value $37,556
This reflects $109.43/ha overall.Mr Maddern dissected this analysis as follows:
223.2 ha forest grazing @ $155 $34,596
120 ha rough grazing @ $25 $3,000 $37,596
Chief Executive's Applied Valuation:
As at 1 October 1999 $61,000 ($177.74/ha)
Remarks:
This is another sale to an adjoining owner.
The property was apparently listed with an agent (there was no evidence as to the listed price) but Mr Maddern said, "The vendor told the agent they wanted to sell the property and would be open to offers. An offer of $90,000 was made by the purchaser and the vendor agreed to sell the property for $95,000." In Mr Maddern's opinion no premium had been paid for the adjacency factor due to the offer and negotiation circumstances.
Mr Haydon had initially considered the sale as being a very low sale and well below market expectations. However when he became aware that the appellants were placing reliance on the sale he made contact with one of the purchasers who told him that the vendors "were very desirous of selling and they (the purchasers) made one offer which was accepted, much to their surprise." Mr Haydon had discussed with the purchaser the general market in comparison with the purchase price of $277/ha and was convinced that no good purpose would be served by a specific inspection and analysis of the sale. He held the belief that, on a relativity basis the better country of the sale property would have been expected to sell on a par with the Davrale purchase (Sale 1), and even with a relatively nominal value attributed to the section of rough country he thought the sale price should have been in excess of $130,000. He had been unable to converse with the Japanese vendor and apparently did not approach the agent, but believed any prudent vendor or purchaser would have informed themselves as to the ruling market for the better country component, at least. He did not accept that the area of rough country would have any specific deleterious effect on the value of the better country, but only on the total sale price.
The appellants submitted that it was inappropriate to make comparisons by simply excluding the 35% of poor land on this sale property particularly in comparison with the Davrale purchase, because "the carrying capacity and unimproved value of the whole of the land is going to be considerably less." With respect, I think it was entirely appropriate for Mr Haydon to consider the relativity between those components of country on the subject and Davrale sale properties which were capable of cogent comparison.
Conclusion
I am persuaded that Mr Haydon made sufficient inquiries and gave sufficient consideration to the facts when comparing the sale price with the available sales evidence of country capable of comparison, before arguing that no weight should be placed on the sale as being representative of market value.
Just as there were "high" sales which Mr Haydon saw fit to exclude from his basic evidence, I accept that this was a "low" sale which would not provide evidence on which the Court could reasonably rely.
I have not attempted therefore to analyse the sale further. However it is observed that Mr Maddern's assessment of at least the old rung/tordoned country appears to be consistently excessive.
Sale 7 - Green to Berry
Real Property Description: Lot 2 on Registered Plan 901097, Parish of Kilkivan.
Area: 113.28 ha.
Location: The property is located approximately 3 km by road north of Kilkivan.
Services: Bitumen strip road, practical access to the property is via a timber bridge constructed over Wide Bay Creek. Electricity and telephone are connected.
Description of Land:
Mr Maddern's description of the land was as follows: "The property has frontage to Wide Bay Creek which has permanent natural water. Approximately 22 ha (19.4%) was cultivated, approximately 25 ha (22%) was formerly cultivated (part contoured) but had reverted to grass and approximately 66 ha (58.3%) has been cleared for grazing. The land comprises near level to gently sloping blue gum creek flats rising through near level to gently sloping ironbark ridges with a smaller area comprising hard ironbark ridges. These areas are generally subject to a stony influence. There is a three-quarter length grassed airstrip." Soils are of a dark grey/black clay loam to the creek flats and lighter grey and brown forest soils which are subject to a stony influence in places.
Water: Apart from Wide Bay Creek which forms the southern boundary, there is an earth dam and an equipped irrigation bore.
Use: Lucerne and crop growing and cattle grazing (breeding and fattening).
Carrying Capacity: Mr Maddern estimated the carrying capacity to be one beast to 2.4 ha on the grazing component.
Analysis: Mr Maddern's analysis of the sale was as follows:
Sale Price $250,000
Deduct:
Crop $10,000
Now Mr Haydon's experience has been that a water diviner "generally can find a stream of water but he can't guarantee depth or quality or quantity". He thought that Mr Kennedy's evidence that bore 9 was sunk deeper than bore 8 was an indication that deeper bores might reduce or overcome the supply problem. In this specific relevant date valuation Mr Haydon said that an additional allowance of 5% had been made for "this ongoing water problem" which he said had been recognised by the Department through allowances in earlier valuations.
At p.115 of the transcript Mr Haydon said:"I would have been a little more concerned that the allowance may not have been enough except with the knowledge I've got from these bores, which we only got yesterday".
This passage referred to Mr Haydon's understanding of Mr Kennedy's earlier evidence. He thought that Mr Kennedy had said that the two bores were on the same stream but that clearly was not Mr Kennedy's evidence, as confirmed by the earlier quotation from the transcript.
Mr Haydon had estimated the carrying capacity of the aggregation as being one beast to 8 ha (225 head) overall, while Mr Maddern's estimate was one beast to 10.8 ha – 120 head – (excluding the unavailable) country which he estimated as containing 155 ha consistent with Mr Kennedy's evidence. Mr Kennedy had suggested 160 head overall under average seasons – sometimes higher, sometimes lower. Mr Haydon accepted that wire grass infestation was present on this land but it was his opinion that it was a natural native grass which probably had spread to the better country through a natural tendency for stock to overgraze that country. He felt that, as a consequence, past management practices may not have recognised the threat of the wire grass invasion. He accepted that controlled grazing would be difficult in this country and that carrying capacity might have suffered as a result of the infestation.
Mr Haydon's evidence was that, from a valuation perspective, wire grass infestation could be regarded similarly to the problems associated with Parthenium weed in that no diminution in value was now allowed by the Department, because the market attitude was that if a property in an infested locality didn't have it now, it soon would. His overriding reasoning seemed to be, however, that he was required to consider the land in its virgin state and the evidence was that the infestation of wire grass had only occurred in more recent years.
With regard to the area which was said by Mr Kennedy and accepted by Mr Maddern to be "unavailable" Mr Haydon did not dispute that some areas would be unavailable. However he had followed the departmental historical description of the country and its potential carrying capacity. In his opinion a broad description of the inferior country was more practical than attempting to identify areas which might be unavailable for grazing or, for that matter, areas of superior pockets and hollows within the overall inferior classification.
The appellants and Mr Maddern are critical of the use by Mr Haydon of sales of superior country in valuing this aggregation. Mr Haydon's response was that there were good reasons not to adopt the sales used by Mr Maddern regardless of the fact that those sales were more comparable in location and quality. He was forthright in acknowledging that there were no sales which he considered were representative of fair market value for the subject lands. In his opinion however the existing relativities of valuations of forest grazing lands in Kilkivan Shire had stood the test of time and once a market trend was capable of being identified within any part of a market category the trend had historically been applicable throughout the whole of that category.
Findings
As it happens for reasons expressed in discussing Mr Maddern's Sale 5 (Walthall to Smith) it is unfortunate that Mr Haydon had not analysed that sale despite his perception that he would have been wasting his time. Mr Maddern found that sale property to have similar highest and best use; to be generally similar to Lot 137 in terms of services but superior to the balance lots; then superior to the subject in all other respects. In direct comparison with his analysis of that sale, showing an unimproved value of $69.79/ha he valued the subject land at $36.95/ha overall (about 53% of the value shown by the sale on his analysis).
According to Mr Maddern's report that sale property had been valued by the chief executive at the relevant date at $103.29/ha. The subject valuation appealed against equates $57.77/ha (about 56% of the valuation applied to the sale property).
Mr Maddern's valuation of the subject land represents 33.76% of his analysis of Sale 6, while the subject valuation appealed against represents 32.5% of the valuation applied by the chief executive to the Sale 6 land.
Primarily due to the added value applications for timber treatment, I have rejected Mr Maddern's sales analyses. However, it can be seen that there is no significant differences between the valuers on a strict relativity comparison, between the subject lands and the Sales 5 and 6 lands.
It is Mr Haydon's evidence that the chief executive has recognised on an ongoing basis, a water disability associated with the subject lands. The evidence is that the increasing disability was recognised by the application of a further 5% reduction in the total valuation at this relevant date. Mr Haydon is of the opinion that deeper drilling might go some way to providing better supplies, but it is clear that he misinterpreted Mr Kennedy's evidence regarding bores 8 and 9. On his own admission, I think some further additional allowance would be warranted for that disability as the question of whether deeper drilling at some locations would alleviate the problem of course at greater cost, is purely speculative.
The evidence suggests that the wire grass infestation on these properties, and no doubt other parts of the family aggregation is at this time more serious than elsewhere in the locality. If it was a district problem, no doubt the market evidence would be expected to recognise that fact. However, in my opinion, Mr Haydon would be wrong if he chose not to recognise a problem specific to an individual property purely because the degree of infestation would not have existed on the lands in their unimproved state. In my opinion, individual examples of such infestation if it is not a common district problem, may be regarded as a form of worsement. In Raynbird v. The Valuer-General (1980-81) 7 QLCR 106 the Land Appeal Court referred to Marano v. The Valuer-General (1978) 5 QLCR 194 where the Court had said "Where a worsement results from prior operations on the land, that land must be valued 'as it exists' when ascertaining its unimproved value. In general the unimproved value for statutory purposes cannot be higher than the market value for the fee simple." Then at p.110 in Raynbird the Court said, "Correct valuation principle requires that regard be had to worsement and we are bound to make due allowance for it in appropriate cases. The question of the period during which any such allowance should continue equitably to be recognised as affecting the incidence of rating is a matter for legislative rather than judicial consideration." I am unaware of any subsequent legislative consideration which affects the general principle. Mr Haydon agreed that the wire grass infestation would have a deleterious effect on carrying capacity potential.
I have rejected Mr Maddern's basic sales evidence, or his analyses of the sales evidence and in the absence of sales of strictly comparable land I find nothing wrong in principle in the maintenance of existing relativity of valuations within the same market category, at least until it can be shown that market trends have not been maintained throughout such a category. In this case Mr Haydon has seen fit to fine tune the relativity to take further account of the worsening water situation, but on the evidence he probably has not gone far enough. I am also of the opinion that the evidence would suggest that the carrying capacity of at least the subject lands has deteriorated as a result of wire grass and some allowance should be made for that.
I accept Mr Haydon's opinion that a broad description of an inferior land classification would generally provide a more practical result than one which was derived from endeavouring to estimate isolated pockets of unavailable or conversely superior country to the general description. However where there is a relatively large component of unavailable country in one tract, and I accept that in this case there is such a component, then that disability should be properly identified in the valuation result.
Mr Haydon suggested that the departmental estimates of carrying capacity are generally conservative in this locality and that seems to be confirmed from the evidence overall. However, in this case, his estimate is challenged and I accept that the historical estimate, if it ever was correct, is now too optimistic. It could be that the water disability and the extent of wire grass are responsible for that but it might also be that the extent of unavailable country has not been recognised fully by the Department in the past.
With regard to the specific grounds of appeal, I find some support attaching to Grounds 1, 2 and 3. Mr Haydon's evidence and earlier discussion relative to the market movement during the period of review, supports Ground 4, but does not assist the appellants' case. The question of the added value of timber treatment has been dealt with at length in terms of Ground 5 as has the market evidence in terms of Ground 6. There was no cogent evidence as to the effect of Ground 7 on the valuation as at the relevant date.
While the oral evidence of Mr Haydon has led me to conclude that a reduction in this valuation is warranted, there is little guidance as to the proper extent of that reduction.
If I relied on Mr Maddern's direct comparison of the subject property with the chief executive's valuations of the Sales 5 and 6 lands, then the reduction would be relatively slight.However, I have decided that a reduction to $52.50/ha overall to include all disabilities, is an appropriate assessment sufficient to resolve doubts in favour of the appellant. Such rate per ha results in a valuation overall of $94,500 which will be adopted.
Order
The appeal is allowed. The chief executive's unimproved valuation is set aside and the unimproved value of the subject land as at 1 October 1999 is determined in the amount of Ninety-four Thousand Five Hundred Dollars ($94,500).
Owners/Appellants: EJ, LG & HA Franz
Real Property Description: Lot 87 on Plan FY2616, Parish of Manumbar.
Area: 606 ha.
Valuation appealed against: $125,000.
Owners' Estimate: $89,000
Situation: About 2 km north-east of Manumbar and about 43 km south-east of Goomeri.
Roads and Access: About 41 km bitumen sealed road then about 2 km earth and gravelled access.
Services: Electricity and telephone services are not connected but are said to be available in the "general" area.
Description of Land:
Mr Maddern: "The land has a long frontage to Barambah Creek which forms its northern boundary. There are some narrow creek flats which were originally timbered with apple, blue gum etc. The land is then gently to moderately sloping to undulating mainly narrow-leaf ironbark ridges. It is estimated that 20 ha comprises cleared creek flats, approximately 80 ha has been pastured, approximately 130 ha have been band seeded, approximately 30 ha have been pushed and stickraked, approximately 250 ha have been selectively cleared but not raked and approximately 96 ha comprise mainly standing forest country. There is a give and take fence along the northern boundary of the property."
Soils are described as "mainly granite type soils with some stony and rocky outcrops. Small areas near Barambah Creek have dark grey clayey loam type soils."
Mr Haydon: "The subject land comprises about 50 ha (8%) of blue gum and apple flats along Barambah Creek frontages and gullies. The balance of the parcel comprises about 556 ha (92%) of easy undulating narrow-leaf ironbark, broad-leaf ironbark, blue gum, bloodwood and Moreton Bay ash forest ridges. Soils range from heavier black soils on the flats to granite soils on the ridges.
Water:
Mr Maddern: "Permanent natural water in Barambah Creek which forms the northern boundary. Over the years this section of Barambah Creek has silted up and waterholes dried up during one year in the 1990's. Sand had to be excavated from the creek to obtain water. There are three earth dams."Mr Haydon: "Gully dam and semi-permanent water in Barambah Creek."
Use: Grazing (breeding and growing) in conjunction with other family-owned lands.
Carrying Capacity:
Mr Maddern: One beast to 2.2 ha (275 head)Mr Haydon: One beast to 3.6 ha on a mixed herd basis.
Grounds of Appeal:
"1.The Chief Executive, Department of Natural Resources has not made sufficient allowance for the value of improvements when analysing sales to arrive at an unimproved value.
2.The Chief Executive, Department of Natural Resources has failed to recognise that sales of generally similar properties in the district have not shown any substantial increase, if at all, in the achieved market prices during the period under review."
Bases of Valuations: Mr Maddern's valuation was based on his analysis of Sales 1 and 6 and he adopted $89,000 as the value of the subject land, which equates about $147/ha.
In comparison with Sale 1, Mr Maddern considered the subject property to be inferior in location, services and soil types but with superior natural water. Overall on a per ha basis he saw the subject land as being inferior, and believed in any event that Sale 1 should be applied conservatively.
Mr Haydon was of the opinion that the Sale 1 land was "overall slightly inferior". He had applied the sale conservatively to the sale land. He also relied on Sales 2, 3 and 4 and the relativity which had historically existed for forest grazing lands in the shire.
Oral Evidence:
There was some criticism by Mr Maddern of the area of Barambah Creek flats and the reference to heavier black soils on those flats, as contained in Mr Haydon's report. Mr Maddern had been accompanied on his inspection by one of the owners and it was estimated at that time that the area of Barambah Creek flats did not exceed 20 ha, located in the north-eastern quarter of the property. Mr Maddern's opinion was that the creek flats alluvial type soils were better described as dark grey in colour. There was some further disagreement by Mr Maddern with Mr Haydon's description of the access to the subject property and its comparability between various aspects of the sale properties.
Mr Haydon had inspected the subject property and the sales and, being comfortable with the historical descriptions as to the nature of the country and the relativities of valuations, had adopted the descriptions of country on the files. As he said, he didn't dig up the flats to check the soil colour but confirmed as best he could that the flats were originally timbered with blue gum and apple and comprised superior quality grazing country. He agreed that there would not have been 50 ha of flats in any particular location but instead that description was intended to be spread along the creek frontage and hollows. Mr Haydon said that the departmental record included two past interviews by inspecting valuers with different members of the Franz family, when agreement with the classification of country as now had been adopted by him, had been noted.
Mr Haydon accepted that electricity and telephone services were not immediately available and the cost of connection could be significant if it was required. Again he assumed that such matters were an inherent part of the valuation and relativity history of the property as nothing had changed in that regard. On similar assumptions he had made no specific allowance for the lack of connection to services on any properties where those services were not immediately available.
Findings
Regardless of the differences of opinions as to the matters raised in the oral and written evidence, I have not been persuaded that any misdescription of the attributes or negative features of the subject property, if they could be proved, would materially alter the basis upon which Mr Haydon's valuation relies. As it may affect the quality of the land, it is observed that Mr Maddern's estimate of carrying capacity on the basis of present development, exceeds fairly significantly the Department's historical estimate of potentiality.
For reasons given elsewhere I am unable to accept the result of Mr Maddern's analysis of Sale 1 or the reliability of Sale 6 as being representative of fair market value.
While some adjustments have been made to Mr Haydon's sales analyses for the purpose of determining these appeals, the results remain sufficiently supportive of the general level of values applied that I do not find that Ground 1 of appeal has been proved to the degree necessary to disturb the valuation applied.
Mr Haydon does not necessarily disagree with Ground 2 of the appeal, but his professional appreciation of the market is that the valuation is supported by the sales evidence. The increase was said to have been necessary to correct what was in his opinion the overly conservative level of value which had been previously applied.
Order
The appeal is disallowed and the chief executive's unimproved valuation in the amount of One Hundred and Twenty-five Thousand Dollars ($125,000) is affirmed as at 1 October 1999.
Owners/Appellants: NB & JA McSweeny
Real Property Description: Lot 1 Road Licence RL3066, Lot 5 Plan CP816651, Lot 420 Plan LX593, Lot 422 Plan LX638, Lot 1 Plan MPH3263, Lot 1 Plan MPH3274, Lot 1 Registered Plan 159720, Lot 2 Registered Plan 186490, Parish of Kilkivan.
Area: 288.086 ha.
Valuation appealed against: $98,000.
Owners' Estimate: $71,000 (Notice of Appeal)
Situation: This aggregation contains two severed parcels, situated about 6 km south of Kilkivan.
Roads and Access: Bitumen sealed Blacksnake Road to the western severance, bitumen sealed Rossmore Road to eastern severance.
Services: Electricity and telephone are connected to the western severance.
Nature of Land:
Mr Maddern:
Western Severance:
12 ha (30.8%) 2nd class creek flats
13 ha (33.4%) 3rd class cultivation13.904 ha (35.7%) easy sloping forest grazing, creeks etc.
Dark grey black clay loams on the creek flats with lighter grey soils subject to a stony influence on the balance.
Coppermine Creek has permanent natural water. 4 ha are irrigable from this creek. Two irrigation bores and one stock bore.
Eastern Severance:
Gently sloping creek flats rising through gently then moderately sloping ridges to elevated hills, timbered with ironbark and bloodwood. 50 to 60 ha of this severance has been cultivated in the past and much of this has been contoured. The lower ridges have been rung or tordoned and these areas are subject to varying regrowth. Soils are of a dark grey/black clay loam along the flats with lighter grey and brown soils subject to a stony and rocky influence to the balance.
West Coast and Fat Hen Creeks have permanent natural water. Seasonal water in gullies, two bores and two dams.
Mr Haydon:
Mr Haydon did not provide separate descriptions of the two severance areas. His overall description was as follows:
"The subject land comprises about 40 ha (14%) of blue gum and apple flats along Coppermine Creek frontages and gullies, of which about 24 ha is considered irrigable/arable, about 145 ha (50%) easy undulating narrow-leaf ironbark, broad-leaf ironbark, blue gum, bloodwood and Moreton Bay ash forest ridges and about 103.086 ha (36%) being moderate to steep sloping forest ridges and hills timbered with narrow-leaf ironbark, bloodwood and spotted gum with areas of grass tree. Soils range from heavier black soils on the flats to brown and grey stony soils on the ridges."
Permanent natural water in Coppermine Creek, two irrigation bores off Coppermine Creek (2 x 15,000 GHP), 3 equipped bores and 1 gully dam.
Use and Carrying Capacity: Mr Maddern described the use of the western severance as being cattle breeding and fattening with a carrying capacity of one beast to 2.4 ha on the grazing component. The use of the eastern severance was described as breeding and growing and the carrying capacity was estimated as being one beast to 5 ha.
The departmental estimate of carrying capacity on a mixed-herd basis has been one beast to 4.5 ha on the overall grazing component.
Grounds of Appeal: The grounds of appeal suggest a carrying capacity of one beast to 12 acres (4.85 ha) and that the valuation should have been based on the unimproved state of the land rather than on sales in the area. The land was described as very hilly and steep and "most paddocks had man-made water such as dams and wells." The appellants suggested that a 20% rise in the valuation would have been sufficient if there had to be any rise at all.
Valuation Bases: Mr Maddern valued the land in its separate parts as follows:
Western Severance:
12 ha 2nd class arable blue gum flats @ $900/ha $10,800
13 ha 3rd class arable forest @ $700/ha $9,100
13.904 ha forest grazing @ $200 $2,781
Total$22,681
Adopt$22,500
Eastern Severance:
249.182 ha$43,500
($174.57/ha)
Total overall valuation both severances $66,000
The overall valuation of $66,000 equates $229.10/ha.
Mr Maddern's valuation of the western severance was based on his analyses of Sales 7 and 8 and of the eastern severance on Sales 1 and 6.
Mr Haydon's overall valuation of $98,000 ($340/ha) was said to have been based on Sales 1, 2, 3 and 4 and existing relativities. As discussed earlier, while he had analysed Sale 8 as a basis for valuation of arable lands, he had not provided that analysis to the Court. Mr Haydon had valued the two parcels together as he was required to do pursuant to s.34(1)(b) of the Act. He saw advantage to the owners in having the two severed areas valued as one single holding and did not see the severance of the holdings as having any off-setting effect on that perceived advantage. His evidence was that the western severance was not under cultivation at the date of his inspection, but he accepted that the highest and best use of the arable land was for cultivation.
Mr Haydon's oral evidence was that although an overall valuation had been written, the file record showed that there had been an apportionment of value to the western severance. An area of 24 ha of the flats had been classified as irrigable cultivation and valued at $845/ha overall. The balance of that parcel had been valued as grazing land at $420/ha. Had the land been valued separately and not as part of the one holding, it would have been valued at $26,500.
Findings
It would appear on the evidence available to the Court that analyses of Sales 7 and 8 would not support the values which were or would have been applied by the chief executive to those sale properties. It would have been expected then that those sales would not have supported the value which had been applied by the chief executive to the predominantly arable western severance of the subject aggregation.
Mr Maddern's valuation of the western severance had apportioned $19,900 to 25 ha or arable flats or about $800/ha overall while Mr Haydon's valuation of a smaller area of 24 ha of arable land would have been $845/ha totalling $20,280.
It seems somewhat odd that both valuers used what prima facie would have been significantly different analyses of sales of arable lands to value that component of this severance within a reasonably similar range. It is the forest grazing components where the real difference would be. Mr Maddern valued the small balance area of the western severance at $200/ha and the eastern severance at about $175/ha. Mr Haydon would have valued the small forest grazing component of the western severance at $420/ha and, by extrapolation of his evidence, the eastern severance at $98,000 minus $26,500 or $71,500 which equates about $287/ha.
The one common basic grazing sale in this appeal was Sale 1. Both valuers suggested that the overall grazing component of the subject aggregation was inferior in terms of potential carrying capacity to that sale property while the location and natural water of the subject property was superior. Both agreed that the subject grazing component is superior in terms of market value per ha, although the opinions as to the degree of superiority vary significantly. There is little evidence available to assist in assessing the effect of location on market value in terms of comparability with the sales evidence. As a general statement I have indicated that I will give preference to Mr Haydon's opinion that existing relativity of valuations should not be disturbed in the absence of proof that change is necessary in individual cases.
Accepting Mr Haydon's evidence that he would value the western severance in the amount of $26,500, if it was to be valued separately, I am unable to interpret the overall evidence, including opinions of carrying capacity and quality of country, to suggest that the eastern grazing severance is influenced to such a degree by location, natural water and size, to be worth, by extrapolation, $287/ha, in comparison with Sale 1 or indeed any of the sales upon which Mr Haydon has relied.
It is my finding of fact that, on a relativity basis, the eastern severance of the subject lands is worth less than $287/ha.
However as I have rejected Mr Maddern's analysis of Sale 1 and the evidence provided by Sale 6, I am unable to accept Mr Maddern's assessment of $175/ha for the eastern severance, based on those sales.
I have decided that the grazing country overall in both severances should not be valued at a figure greater than $250/ha overall.
That leaves the arable component. While there was no sales evidence tendered by Mr Haydon as to the worth of arable lands, it would seem that even Mr Maddern's analyses of Sales 7 and 8 before any adjustment for timber treatment on at least the grazing components, sufficiently support Mr Haydon's assessment of $845/ha overall, but for the lesser area of 24 ha.
An application of values by classification would result as follows:24 ha arable land @ $845/ha $20,280
Balance 264.086 ha forest grazing @ $250/ha $66,021
Total $86,301
For practical purposes I adopt a determination of $86,000 which equates about $300/ha overall.
Order
The appeal is allowed. The chief executive's unimproved valuation in the amount of $98,000 is set aside and the unimproved value of the subject lands determined in the amount of Eighty-six Thousand Dollars ($86,000) as at 1 October 1999.
Owners/Appellants: BH & IE Portas
Real Property Description: Lot 1712 on Plan L371001, Lot 9 on Plan L371013 and Lot 1 on Registered Plan 800043, Parish of Marodian.
Area: 185.554 ha.
Valuation appealed against: $42,500.
Owners' Estimate: $30,500 (Notice of Appeal)
Situation: About 17 km north-west of Woolooga, fronting Running Creek Road off the Brooweena-Woolooga Road.
Roads and Access: Running Creek Road is gravel formed then the Brooweena-Woolooga Road has about 14.5 km of bitumen and 2 km of formed gravel to Woolooga. Mr Haydon described the access as being all-weather. Mr Maddern referred to a concrete crossing over Running Creek which cuts access during moderate flooding.
Services: Electricity and telephone are not connected. Mr Maddern's report states that these services "are not available in the immediate locality" while Mr Haydon's report states that they "are available in the area but not connected".
Description of Land:
Mr Maddern: "The land comprises easy to gently sloping to undulating forest country in the northern and western parts. It rises to quite steeply sloping hills and broken ridges which are mainly in the eastern part and comprises an area estimated at 40 to 45 ha. Running Creek and several gullies pass through the property. The country was originally timbered with spotted gum, wattle, stringy bark and some ironbark and bloodwood with blue gum along the creek and box along the gullies. Considerable areas particularly along watercourses are infested with lantana." He estimated that 12 ha (6.5%) comprises fairly good red soil much of which is subject to a gravelly influence, approximately 43.5 ha (23.4%) comprises brown and grey soils which are subject to a stony influence and the balance comprises fairly poor quality whitish and grey gravely soils which are strongly acidic, the calcium magnesium ratio is out of balance and these soils are very low in phosphorous. Mr Maddern included in his report a copy of a test and analysis of similar type soils taken on the adjoining Lot 1739.
Mr Maddern said there is permanent natural water in Running Creek but it is reduced to three holes during most seasons and has been down to one hole. There is seasonal water in one gully and there are two earth dams.
Mr Haydon: The description of the land as adopted by Mr Haydon is as follows: "About 24 ha (13% of blue gum and apple creek flats, about 110 ha (59%) of easy undulating narrow-leaf ironbark, broad-leaf ironbark, spotted gum and Moreton Bay ash forest ridges and 51.554 ha poor steep spotted gum ridges." Mr Haydon described the soils as ranging from heavier black soils on the flats to brown and grey stony soils on the ridges and hills.
My Haydon described the water as being provided by two gully dams and semi-permanent water in Running Creek.
Use: The land is used for grazing purposes (breeding and growing) in conjunction with other lands in the locality.
Carrying Capacity: Mr Maddern estimated the carrying capacity of the land as currently developed as being one beast to 3 ha (62 head) while the departmental estimate of carrying capacity has been one beast to 4 ha on a mixed-herd basis.
Grounds of Appeal: There were 12 grounds of appeal. Most of the grounds were of a general nature normally associated with appeals against valuations of the chief executive. Those which are identified as possibly individual to this land or this appeal are as follows:
"6.The Chief Executive, Department of Natural Resources has not made proper allowance for topographical characteristics affecting said land in its unimproved state.
8.The Chief Executive, Department of Natural Resources has failed to take into account the changes in the availability of water in the region and the adverse effect that this has had on the unimproved values of land.
9.The Chief Executive, Department of Natural Resources has failed to recognise that sales of generally similar properties in the district has not shown any substantial increase, if at all, in the achieved market prices during the period under review.
11.The Chief Executive, Department of Natural Resources has failed to consider the prevailing climatic conditions in this district when assessing the unimproved value of the land."
Valuation Bases: Mr Maddern's valuation of $30,500 or $164.37/ha was the chief executive's valuation as at 1 October 1997. His basis for valuation relied on Sales 1 and 4. Mr Haydon's valuation of $42,500 equates $230/ha and relies on Sales 1 to 4 and the existing relativity of valuations of forest grazing lands throughout the shire.
The Evidence:
There was again criticism by Mr Maddern of Mr Haydon's reference to "heavier black soils on the flats", the inclusion of broad-leaf ironbark as part of the original timber cover on the easy undulating ridges, and the exclusion of bloodwood, box and wattle in his classification descriptions.
Mr Haydon accepted that there were some inaccuracies in his transcription of the historical departmental records into his written report. As examples the soils on the flats were recorded as "sandy loam"; reference to "silver-leaf" had been limited in those records to the flats and reference to wattle regrowth had been omitted. He also accepted the probability of some soils on the subject land having similar inferior qualities to those on adjoining land from where the soil test as referred to by Mr Maddern, had been taken.
Nevertheless Mr Haydon was comfortable with the comparisons as described between the subject land and the sale properties, based on his personal inspections.
There were also some differences of opinion between the valuers as to the description of access and services both as they factually related to the subject land and in comparison with various sale properties. Mr Maddern saw it as relevant that the nearest electricity to the subject parcels was 4.7 km distant and there was no cabled telephone service available. There was no conflict in the oral evidence that as it related to the subject parcel rather than other family-owned property in the locality, the access to only the western part of this parcel would be cut by Running Creek during moderate flooding.
The question of the location of the subject property in comparison with some of the sale properties, became an issue. Mr Maddern expressed the opinion that as Goomeri and Kilkivan provided better facilities and services than Woolooga, some of the sale properties should be regarded as having superior location rather than the inferior description given by Mr Haydon. Mr Haydon however was firmly of the opinion that the superior locality of the subject property referred to proximity to Gympie rather than to Goomeri or Kilkivan and he believed that superiority was clearly reflected in a positive manner in the overall market evidence.
The common basic sales in this matter were Sales 1 and 4.
Mr Maddern commented that the subject land was superior to Sale 1 "on a per ha basis due to location and services but the sale needed to be applied conservatively due to the circumstances of the sale." His valuation of the subject land equated $164.37/ha in comparison with his analysis of Sale 1 equating $155.57/ha. However his oral evidence was that the circumstances of Sale 1 would influence him to apply a discount of between 5% and 10% of the sale analysis on an application to the sale property. It is observed that if for example a 7.5% discount was applied to the sale property then the relationship between the subject and the sale would be $164.37/ha compared with about $144/ha.
Mr Haydon's valuation as applied to the subject land equates about $230/ha while his application to Sale 1 was $202.5/ha.
On analysis there seems to be little difference between the valuers as to the relativity which should exist between Sale 1 and the subject property.
Mr Maddern commented that in comparison to Sale 4 the subject land is inferior due to services, land quality, water and carrying capacity. His valuation of the subject land was about 37% less per ha than his analysis of Sale 4.
Mr Haydon's valuation of the subject land was about 33% less than the valuation applied to the Sale 4 land.
Consequently while there were various criticisms of Mr Haydon's valuation, it can be seen that in comparison to the two common sale properties there are no significant differences between the valuers on a relativity basis.
Findings
As indicated in comments on the individual sales analyses, I have been unable to accept Mr Maddern's assessment of the added value of timber treatment associated with either Sale 1 or Sale 4. Instead the analyses of those sales which will be adopted are found to support the valuations applied to the sale properties by the chief executive.
The expert valuation evidence, when analysed, indicates that there is no difference of significance as to the relative worth of the subject land in comparison with Sale 1 and Sale 4 lands. It follows then that the chief executive's valuation of the subject land has not been proved wrong on the basis of the evidence of those two sales. The chief executive's valuation is then further supported by Sales 2 and 3 as well as the existing relativity of valuations for forest grazing lands throughout the shire.
Those grounds of appeal which are of a general nature have not been proved either in this appeal or in the representative appeals overall. There was no specific evidence in this appeal to support Grounds 6, 8 or 11. Mr Haydon's oral evidence relative to his opinions regarding the movement in the market during the valuation period under review lends some support to Ground 9, but the reasons for the increase have been exposed and his interpretation of the market evidence has been found to support the level of value applied to the subject land at the relevant date.
Order
The appeal is disallowed and the chief executive's unimproved valuation of the land in the amount of Forty-two Thousand Five Hundred Dollars ($42,500) is affirmed as at 1 October 1999.
General Findings in relation to Representative Cases
It has been found that the relevant sales evidence generally supports the chief executive's valuations as applied to those relevant forest grazing sale properties as at 1 October 1999. That applied level of value translates to a 40% increase over the level of value which had been applied by the chief executive to the forest grazing lands as at 1 October 1997.
There are no grounds therefore for any general reduction of value in the forest grazing lands. It has also been found that there are no grounds relating to market evidence which have shown that the general level of relativity between valuations of forest grazing lands throughout the shire should be disturbed.
However as should be expected, each individual appeal needs to be determined on its merits and it has been found that alterations have been necessitated in specific cases, on the exposed facts.
Summary of Individual Appeals and Orders
Appeal AV2001/0012 – NJ & RG Kennedy
The appeal is allowed. The chief executive's unimproved valuation in the amount of $104,000 is set aside and the unimproved value as at 1 October 1999 determined in the amount of Ninety-four Thousand Five Hundred Dollars ($94,500).
Appeal AV2001/0062 – EJ, LG & HA Franz
The appeal is disallowed and the chief executive's unimproved valuation in the amount of One Hundred and Twenty-five Thousand Dollars ($125,000) as at 1 October 1999 is affirmed.
Appeal AV2001/0073 – NM & JA McSweeny
The appeal is allowed. The chief executive's unimproved valuation in the amount of $98,000 is set aside and the unimproved value as at 1 October 1999 determined in the amount of Eighty-six Thousand Dollars ($86,000).
Appeal AV2001/0083 – BH & IE Portas
The appeal is disallowed and the chief executive's unimproved valuation in the amount of Forty-two Thousand Five Hundred Dollars ($42,500) as at 1 October 1999 is affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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