Krause v Department of Natural Resources and Mines
[2004] QLC 106
•6 December 2004
LAND COURT OF QUEENSLAND
CITATION: Krause & Anor v Department of Natural Resources and Mines [2004] QLC 0106 PARTIES: Bertram C Krause (AV2003/0210)
Jason Paul & Warren Garth Krause (AV2003/0211)
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NOS.: AV2003/0210 and AV2003/0211 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 6 December 2004 DELIVERED AT: Brisbane HEARD AT: Caboolture MEMBER Dr NG Divett ORDER: Both appeals are upheld, and the Chief Executive's determinations are set aside. The unimproved values of Lot 2 (AV2003/0211) and Lot 3 (AV2003/0210) are each determined at Seventy Thousand Dollars ($70,000). CATCHWORDS: Valuation – statutory valuation – Relativity – Impact of flooding – Remedial eradication of noxious weeds APPEARANCES: Mr Bertram C Krause for both appellants
Mr P Rabaa, Counsel of Crown Law appeared for the respondent
Background:
This matter relates to two adjoining parcels located at 540 Kilcoy-Beerwah Road, Stanmore and described as Lot 3 on RP 217344 (AV2003/0210) and Lot 2 on RP 217344 (AV2003/0211). The subject lands have areas respectively of 16.7995 hectares (Lot 3) and 18.8773 hectares (Lot 2), and both are zoned Rural under the Town Planning Scheme of the Caboolture Shire Council of 12 March 1988, effective at the date of valuations of 1 October 2002. Services and access to both parcels are as discussed in a previous decision of this Court in the matter of Bertram C Krause & Anor v Chief Executive, Department of Natural Resources and Mines (AV2001/0379 and AV2001/064), 4 October 2002, unreported. The key issues in the current matters are changes in the values, impact of flooding and comparison of sales.
On 24 February 2003 the Chief Executive issued valuations of $76,000 for each of the subject lands. Following objections the Chief Executive confirmed those figures on 17 June 2003. The appellants have now appealed claiming the unimproved values should each be $50,000.
Mr Bertram C Krause appeared and gave evidence for both appellants. Mr P Rabaa, Counsel of Crown Law appeared for the respondent, calling evidence from Damien Peter Jones, the departmental registered valuer responsible for determining the valuations. It was agreed that the matters would be heard concurrently.
History of the valuations –
The background to the two properties were outlined in the previous decision on 4 October 2002. However since that decision of this Court Mr Krause argues that the respondent would appear to have ignored the directions of the Court, and has now further increased the unimproved value from that previous determined at $60,000, to now $76,000. From advice from his Parliamentary representative, Mr Krause is of the understanding that the decision of this Court should have remained in force for a period of about 5 years.
Mr Jones rejects that understanding, advising that he had implemented this Court's decision of 4 October 2002, and the valuation roll had been amended accordingly, including reducing the surrounding parcels in the western part of the Shire by 20% (T 55). However he advises that those unimproved values were relevant at the valuation date of 1 October 2000, and the current valuations have been determined with effect of 1 October 2002, some two years later. Mr Jones advises that the increase of about 25% in the unimproved values reflected general market evidence of similar rural lands in the Caboolture Shire. Those changes are discussed later. The processes of annual valuations has operated in Queensland since 1985. Where the market remains unchanged, the Chief Executive may decide not to undertake an annual valuation, up to a maximum period of three years.
Nature of the lands –
The nature of both subject lands remains as detailed in the decision of 4 October 2002, and I will not repeat those findings. It was also confirmed by Mr Jones that as the two adjoining properties (Lots 2 and 3) were separately owned, although they are currently used in conjunction for "farming" purposes, there needs to be two separate valuations. He notes that because of those separate ownerships of the two separate parcels, the total area of 35.68 hectares could not be valued as a single parcel for "farming" purposes.
There was some speculation that the appellant may have a possible claim for compensation from the Caboolture Shire Council in respect of an Easement A on RP 189416, which was acquired over Lot 2. However subsequent evidence indicates that Easement A was acquired by the Council some time prior to the compiled plan of resurvey on RP 217344, which was registered on 17 December 1987, some four years prior to the appellant's acquiring the subject land in 1991. If there had been any possible compensation due as a consequence of that Easement A for drainage purposes, it would have lain with the former owner. The appellants appear to have no residual claim for compensation, and that is not an issue for consideration in these matters.
However Easement A is a current imposition upon the title of Lot 3, which may be considered in the valuation of that parcel. Its purpose would appear to provide for unlimited access by the Council to maintain clearance of water discharge points across Beerwah Road. That could be seen as a positive benefit to assist with the reduction of potential flooding of the subject land. On that basis I believe it would have little deleterious impact upon the unimproved value of Lot 3.
In respect of the general topography of the subject lands, as outlined in the previous decision, there tends to be surface water discharges during heavy rains from various directions onto the subject land. Mr Jones agrees with those conclusions, as noted in paragraphs [10] and [12] of that decision.
In respect of the use of the subject lands, Mr Jones offers an opinion that perhaps Mr Krause has exceeded the general level of pasture improvements upon the subject lands, compared to other owners using similar lands for grazing purposes. He notes that while the appellants now use the lands for grazing purposes, it was their initial intentions to farm the land for small cropping. However because of repeated river flooding experiences, the appellants have now changed to a less intensive use. Mr Jones notes a similar experiment in small cropping at a site (the Blue Shed sale – Hancey), just north of the subject lands, which is predicted to suffer similar river flooding problems. Mr Jones notes that while Mr Krause may have had some special purpose for his high level of improvements, they would now appear to be comparatively over specialised for general grazing purposes. Mr Jones argues that the average land use is grazing, not cropping in that locality.
It is agreed that the subject lands may be classed as good properties, particularly as they also have the benefit of irrigated pastures. Mr Jones argues that a lot of lands in the Stanley River area have to rely only upon natural pastures, without the benefit of irrigation, which is an advantage to the subject land. On that basis Mr Jones argues that the subject lands are better than the average good farming lands in that area. He notes that with the build up of alluvial soils from river floods over many years, the subject lands are now good cattle fattening pastures, rather than just cattle breeding pastures, and are therefore in demand in the area.
However Mr Jones argues that the subject lands only collect a small percentage of the runoff waters from the Commissioner Flats area off the Blackbutt Range to the west of the subject lands. He notes that much of that surface water is discharged into Running creek, which enters the Stanley River to the north of the subject lands, passing through the Wild property further to the north. Flooding of the subject lands from Running Creek only occurs when the high level of the Stanley River causes backup in the creek.
Mr Rabaa also notes the photograph of the subject pastures on the letterhead of Mr Krause's statement (Exhibit 2). He suggests that photograph shows many cattle, indicating a high level of productive pasture lands. Mr Krause agrees that he currently has a personal unregistered arrangement with the adjoining owner to the north of the subject land, where up to 170 head of milking cows may be strip-grazed on the subject land for short periods of say 24 hours. However he argues that does not demonstrate such a high carrying capacity on a long term basis. Mr Krause also advises that the subject lands, in the vicinity of his main dam, can be subjected to large areas of inundation after only a local storm in the area (Exhibit 3 – photograph 24).
Changes in the unimproved value –
In explaining his approach to the valuations, Mr Jones advises that the previous decision on these matters on 4 October 2002, brought the subject lands into alignment with a general market movement of 30% increase in the Kilcoy and Caboolture farming areas. He explains further that with the current valuations at 1 October 2002, there was no revaluation undertaken in the neighbouring Kilcoy Shire, so that those unimproved values in Kilcoy Shire continue to reflect the 2000 valuation.
In adopting an increase across those general farming areas of Caboolture Shire, it was determined from sales evidence to apply an increase of 28% to the 2000 valuations. In applying that increase the previous relativities between farming properties in that area had been maintained. To demonstrate that consistent relativity, Mr Jones advises that the unimproved value of a parcel one lot removed to the south of the subject land at Lot 8 on SP 126349 (Powell), was previously valued in 2000 at $60,000, and is now valued at $66,000.
Mr Jones notes that the old relativity between Lot 8, and the subject land supports the current valuation of $76,000 on each of Lots 2 and 3 of the subject lands. On that basis I agree that he has appeared to have followed the directions of the Court, and has still maintained the previous relativities between parcels. In explaining why Lot 8 is seen as less valuable than the subject lands, Mr Jones argues that was because of its more irregular shape, and also because of its less fertile rainforest soils, and its also more heavier forest country.
Impact of flooding –
The major concern of Mr Krause is the ongoing impact of regular flooding, and the resulting problems encountered with pest flood maintenance, and in particular the attempts to eradicate the pest weeds including hyacinth. As noted previously in 2002, the impact of both the Stanley River flooding, and also local flooding from the surface waters off the Blackbutt Ranges, results in the subject lands becoming heavily inundated with waters from surrounding areas.
Now while Mr Jones admits that he had not seen the subject lands when they were badly affected by hyacinth, he maintains that weed eradication is not restricted to the subject land, and is consistent with other Stanley River frontage properties in that area. However he agrees that on his inspections of the subject lands, he had seen evidence of recent disturbance occasioned by eradication measures. Mr Jones notes that had occurred after the Council had demanded remedial work to remove the declared pest weeds. Mr Krause advises that in addition to the major repair costs provided at the last appeal (paragraphs [19] to [22]), he had also spent $2,000 on a special weeds spraying system, and also a further $2,000 to replace a fence destroyed by weed build up during flooding of the lands.
Mr Jones advises further that he had made some provision for flooding in his valuation for the regular flooding of the land. He notes that had he considered that flooding was seen by the Court as a reason for the reductions, then he may have only increased the subject lands by about 25% instead of the 28% applied across the farming lands. Mr Jones understood that the reduction by the Court in the 2000 valuation was merely to align the property with the 30% increase in the Kilcoy valuations.
Mr Krause argues that it is virtually impossible to remove all pest plants including hyacinth from the subject land, due to the inability to ensure surrounding lands remain free of the pest. Accordingly he argues that because of the overall low lying nature of the subject lands, those weeds can never be completely eradicated. Mr Jones agrees that pest plants 1 and 2 type under the Land Protection legislation depend upon the good grace of neighbouring owners, but he argues that hyacinth can be substantially reduced. He notes the subject lands are not unique in receiving runoff waters from several directions, and it is a general problem along the Stanley River.
Mr Jones agrees with Mr Krause that the hyacinth problem for the subject lands was the subject of a "test or display area" by the departmental pest control officers, where a biological control agent approach had proven inconclusive. However Mr Jones notes that those tests occurred prior to the previous decision of this Court on 4 October 2002, and was the result of previous lack of control by the appellants, which has since been brought under better management, and is now not such a problem.
Comparison of sales –
Mr Krause provides no sales evidence, but has some knowledge of Mr Jones' Sale 3 (Blackrock Ridge) and Sale 5 (Avoca View). Mr Jones provides the following rural sales:
· Sale 1 – (Frizzo to Fullerton Farms – Lot 329 on CG 4525 – "Frizzo"). This is a 164.3 hectare parcel located about 6 kilometres south-east of the subject land, and 9.7 kilometres north-east of Woodford. Access is via 2 kilometres of bitumen, 6.5 kilometres of formed gravel and 1.2 kilometres of rough forest track. The sale comprises 24% good red/brown horticultural forest slopes, 21% marginal grey/yellow horticultural forest slopes, and 55% creek flats forest grazing lands. The sale is used for macadamia and pine plantation, with the balance suitable for grazing. There is one dam and seasonal water in Blackrock Creek. The subject land has superior access, better country and a smaller size, although the sale has a greater percentage of flood-free arable land. Overall the sale is inferior, but comes closer to the subject land due to the horticultural areas on the sale. The sale sold in April 2002 for $850,000 ($2,094 per acre), was analysed at $554,045 ($3,372 per hectare), showing a factor of 1.4. The sale was applied at $515,000 ($3,134 per hectare, showing a 30% increase).
· Sale 2 – (Smith to Rimbond Pty Ltd – Lot 174 on CG 85 – "Smithfield"). This is a 105.5 hectare property located about 6.6 kilometres west of the subject land, and about 11.3 kilometres west of Woodford. Access is by 8.3 kilometres of bitumen sealed D'Aguilar Highway, then 1.5 kilometres bitumen Eaton Lane, and 1.5 kilometres dirt road. The sale comprises 23% heavy wet forest creek flats, 44% gentle forest slopes and 33% light grey easy to moderate forest slopes. The sale is used for cattle breeding. There are ten medium to small dams and seasonal water in Stoney Creek. The subject land has superior access, more fertile country, is smaller in area, and more arable areas, and more permanent water on the Stanley River. Overall the sale is much inferior grazing country. The sale sold in January 2002 for $650,000 ($2,493 per acre), was analysed at $157,842 ($1,496 per hectare), showing a factor of 1.4, and applied at $144,000 ($1,365 per hectare), showing a 27% increase.
[24]
· Sale 3 – (Willaton to McInnes – Lot 153 on C 31856 – "Blackrock Ridge"). This is a 60.6 hectare parcel located about 3.6 kilometres south of the subject land, and 6.1 kilometres north of Woodford. Access is by 2 kilometres of bitumen sealed D'Aguilar Highway, 1.9 kilometres Kilcoy-Beerwah Road, 1.2 kilometres bitumen strip Cove Road, and then bitumen McCabe Road. The access can be cut off by flooding in Stanley River. The sale comprises 46% creek flats, and swampy forest country, and 54% level to easy wattle and gum forest. The sale is used for cattle breeding and fattening, and has one dam, one bore and seasonal water in Blackrock Creek. The sale has similar access, inferior country type and no arable or fertile soils, and inferior permanent natural water due to the river frontage of the subject land to the Stanley River. Overall the subject land is smaller in size, but has superior land quality and water, with similar access and flooding. The sale sold in May 2001 for $450,000 ($3,005 per acre), was analysed at $140,629 ($2,320 per hectare), showing a factor of 1.48, and has been applied at $120,000 ($1,980 per hectare). The sale shows a 26% increase.
· Sale 4 – (Galven to Olsen – Lot 6 on RP 207660 – "Lawn Springs"). This is a 36.55 hectare parcel located about 11.7 kilometres south of the subject land and 23.8 kilometres west of Caboolture. Access to the sale is via 20 kilometres of bitumen D'Aguilar Highway, 2 kilometres of bitumen sealed Mount Mee Road and 1.8 kilometres of bitumen strip Newman Lane. The sale comprises 19% easy sandy grey forest marginal arable slopes, 16% easy loamy to black soil forest creek flats, and 65% moderate to steep timbered iron bark, apple and bloodwood brown soils. The sale has one main irrigation dam and underground water and pipe lines. The sale was used as a turf farm now used for cattle and horses. The sale has similar access, inferior country type, but no flooding problems. The subject land has superior permanent water and opportunities for irrigation. Overall the sale is inferior due to 65% poorer country, while it is larger in size with similar access. The sale sold in August 2002 for $230,000 ($2,547 per acre) was analysed at $85,786 ($2,346 per hectare), and applied at $81,000 ($2,216 per hectare), showing a 27% increase.
· Sale 5 – (Creffield to McMahon – Lot 7 on RP 166930 – "Avoca View"). This is a 40.03 hectare parcel located about 0.3 kilometres west of the subject land. Access is similar to the subject land, and then 0.2 kilometres along bitumen strip Hill Road. The sale comprises 45% swampy gum forest flats, 40% low brown soil forest slopes, and 15% moderate forest slopes. The sale is used as an ex-cattle stud and now for cattle fattening and breeding. There is a well and four small to medium dams. The subject land has similar access, superior soils, and superior permanent water on the Stanley River. Overall the sale has inferior country type, water and arable potential, and has comparable rainfall and location. The sale reflects a conservative sale value as it was a divorce settlement sale, and after the valuation date, and is used only as a support sale. The sale sold in January 2003 for $460,000 ($4,650 per acre), was analysed at $182,475 ($4,558 per hectare), and applied at $88,000 ($2,198 per hectare), showing an increase of 28%.
Mr Krause concedes that the subject land had better country than Sale 3 (Blackrock Ridge) as he notes that he has spent considerable more money on it than has occurred on Sale 3. He agrees that he has permanent water from the river, but argues that Sale 3 also has permanent water from Blackrock Creek. Mr Krause also is familiar with Sale 5 (Avoca View), and he notes that land was previously used for stud cattle. He agrees that Sale 5 has wetter lands to the rear, but argues that surface waters from the high front lands of Sale 5 actually drain on to the subject land. Mr Krause concedes that he would prefer his own properties than either Sales 3 or 5, but argues that might not be the opinion of the owners of those two properties. He argues that there is not much difference in value between the three properties. However he notes that neither Sale 3 nor Sale 5 have the inherent hyacinth problems that regularly occur on the subject lands.
Mr Jones notes that all of his comparable sales have inferior natural water, and are all larger in size than the subject land as separate parcels.
Decision:
In respect of the highest and best use of the subject lands, that is clearly outlined in paragraph [40] of the previous decision of 4 October 2002. That situation has not changed, nor has the problem of regular flooding from both the river and surrounding high lands to the west. I will not repeat those findings. While I accept that the appellants have expended considerably more in improvements upon the subject land than the sales supplied, I accept Mr Jones' observation that really reflects Mr Krause's early moves to establish small crops in that riverfront location. The ravages of time have demonstrated the unlikely success of such an enterprise, in view of the major rectification works needed after each regular flooding. I agree with Mr Jones that the best use of the subject land is for grazing purposes, with the benefit of irrigated pasture as a consequence of the plentiful natural water available.
Relativity –
While Mr Jones has sought to retain the previous relativity between surrounding parcels, the current difference between Lot 8 ($60,000) and each subject land ($76,000) is said to relate to the more irregular shape of Lot 8, and its inferior soil types. While that previous relativity between those two parcels may reflect the departmental understanding of the benefits of regular river flooding, compared to any downside of that flooding, that balance needs to be considered in the light of the evidence of the actual effects of the floods.
Indeed the impact of the severe regular flooding of the subject land in paragraph [42] of the decision of 4 October 2002, provided some difficulty in drawing comparisons between the sales evidence in that matter. It was really any doubt in respect of that flooding which influenced the Court to only adopt an increase of 30%, compared to the then applied 50% increase at 1 October 2000. To then see how that effect of flooding occurs, we need to consider the potential ongoing impacts upon the subject land.
Comparison of sales -
If I consider then the sales provided by Mr Jones, I have the following comparisons:
Sale Area Applied Rate Comparison
1 (Frizzo)164.3 ha $3,134 per ha Inferior
2 (Smithfield) 105.5 ha $1,365 per ha Much inferior
3 (Blackrock Ridge) 60.6 ha $1,980 per ha Inferior
4 (Lawn Springs) 36.55 ha $2,216 per ha Inferior
5 (Avoca View) 40.03 ha $2,198 per ha Inferior
Lot 2 (subject land) 18.88 ha $4,050 per ha -
Lot 3 (subject land) 16.8 ha $4,550 -
Mr Jones has assessed the unimproved value of the subject lands on the basis of alluvial arable rainforest ($6,000 per hectare), dry gum forest arable land ($4,900), and flooded swampy grazing lands ($2,700). There is nothing in those comparisons to suggest that he has made an error, and in fact the most comparable Sales 3 and 5, as agreed by Mr Krause, are about twice the size of each of the subject parcels. It is also agreed that smaller parcels of land tend to sell at higher rates per hectare than larger parcels, generally due to the more competitive marketplace for the smaller parcels.
The Impact of flooding –
The only matter then to consider is whether Mr Jones has correctly allowed for the impact of regular flooding of the subject lands. I agree that the benefits of regular inundation are likely to add to the quality of the pastures over time. Mr Krause does not challenge that aspect of the flooding. However what he does challenge is the resulting problems that repeatedly occur on the subject land from declared weeds, such as hyacinth, which are introduced onto the lands from adjoining lands.
In his understanding of the reasons for the previous Court decision on these properties on 4 October 2004, Mr Jones comments that he had understood that the flooding was not a more significant issue in that matter. Had he understood otherwise he observes that he would have made a slight reduction in the value. (See paragraph [18]).
As noted in the previous decision of 4 October 2002 at paragraph [58], the relativity between Lot 8 and the subject lands was a matter for later consideration by the Chief Executive. In the event that did occur, and the Chief Executive did reduce the value of Lot 8 by 20% to $48,000, thus reflecting the former relativity between those parcels. But the question now is whether the subject lands are impacted more deleteriously than was previously understood.
On the evidence I accept that both subject lands continue to require remedial eradication attempts to remove the noxious weeds. As that is a compulsory requirement under s.5 of the Land Protection (Pest and Stock Route Management) Act 2002, it is binding upon both the Council and the owner/appellants to ensure the management of the declared pest plants. Powers of the authorities to enter and issue warrants requiring remediation are enshrined in Part 3 of Chapter 7 of that Act, which may be executed through the courts. Penalties for failure to comply with the directions under the Act are exercised under ss.261 onwards in the Act.
In the current matters the directions of the Pest Management exercises are in line with s.4(e) of the Act which directs as its purpose:
"4 How purpose is achieved
The purpose is to be achieved mainly by the following –
…
(e)preventing the spread of declared pests in the State, including, for example, preventing their spread by human activity;"
On the evidence I also agree with Mr Krause that total eradication of the pest plants is most unlikely, due to the topographical nature of the lands. The history of the site reveals that regular floodwaters can enter the subject lands from the river to the east, Running Creek overflows to the north, and from the Blackbutt Range area to the west. The topographic mapping (Exhibit 5, map 3) supports those levels. I believe that the flooding impacts are similar on both subject lands, and also the adjoining Lot 8 to the south. That was noted in paragraphs [23] and [24] of the former decision of this Court on 4 October 2002.
Now Lot 8 has been valued at $60,000 due to its less fertile soils and its irregular shape. As noted in paragraph [56] of the decision of 4 October 2002, while Lot 8 has a more irregular shape than the subject land, that is generally not a major issue for lands for grazing purposes. It has more relevance where cropping or horticulture is the land use, but that is not relevant in the current matters. The key difference I agree would be the less fertile soils, and on that basis Lot 8 should be valued at less than the subject lands.
I consider Mr Jones' suggestion that had he believed that the impact of floodings was more significant, then he would have applied only an increase of 25% (paragraph [18]). I find that would have resulted in an unimproved value of the subject lands at $75,000. However I believe that would have made an inadequate allowance for the ongoing pest problems. In my opinion, unimproved values of $70,000 would be more realistic, due to those problems.
Conclusion:
Having considered the whole of the evidence, I am persuaded that the appellants have partly proved their cases. Both appeals are upheld, and the Chief Executive's determinations are set aside. The unimproved values of Lot 2 (AV2003/0211) and Lot 3 (AV2003/0210) are each determined at Seventy Thousand Dollars ($70,000).
NG DIVETT
MEMBER OF THE LAND COURT
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