Lloyd v Department of Natural Resources, Mines and Water
[2010] QLC 93
•30 June 2010
LAND COURT OF QUEENSLAND
CITATION: Lloyd & Ors v Department of Natural Resources, Mines and Water [2010] QLC 0093 PARTIES: Donald G Lloyd, Anne E Lloyd and Jeffrey D Lloyd
(applicants)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILES NO: VLA445-06, VLA446-06, VLA447-06 and VLA448-06 (formerly AV2006/0445, RV2006/0446, RV2006/0447 and RV2006/0448) DIVISION: General Division PROCEEDING: Land Court of Queensland DELIVERED ON: 30 June 2010 DELIVERED AT: Brisbane HEARD AT: Blackall PRESIDENT: Mrs CAC MacDonald ORDER: 1. Appeal VLA445-06 is allowed. The unimproved value of various Lots comprising the aggregation of Jedburgh, Property ID 4014123, in the County of Cheviot, Parish of Metz and others, is determined at One Million, One Hundred and Thirty-Three Thousand, Five Hundred Dollars ($1,133,500) as at 1 October 2005.
2. Appeal VLA446-06 is allowed. The unimproved value of Lot 3369 on Plan PH2091 : PH3/3369 in the County of Cheviot, Parish of Metz and others is determined at One Million and Eighty Thousand Dollars ($1,080,000) as at 1 October 2005.
3. Appeal VLA447-06 is allowed. The unimproved value of Lot A on Plan AP 2416 : PO210721 in the Parish of Metz is determined at One Hundred and Twenty-one Thousand Dollars ($121,000) as at 1 October 2005.
4. Appeal VLA448-06 is allowed. The unimproved value on Lot 5 on Plan CV 30 : SL3/46308 in the County of Cheviot, Parish of Metz is determined at One Thousand and Three Hundred Dollars ($1,300) as at 1 October 2005.
CATCHWORDS: Unimproved value – appeal against an annual valuation – disabilities of property not completely taken into account – Valuation of Land Act 1944 APPEARANCES: Mr A Boyd, Agent, for the appellants
Mr W Isdale of Crown Law for the respondent
These four appeals have been brought by the appellants, Donald G Lloyd, Anne E Lloyd and Jeffrey D Lloyd against determinations under the provisions of the Valuation of Land Act 1944 (the Act) by the respondent Chief Executive, Department of Natural Resources, Mines and Water of the unimproved value of their property Jedburgh as at 1 October 2005. The aggregation of Jedburgh is made up of a Pastoral Holding, a Permit To Occupy and a Special Lease.
Appeal VLA445-06 concerns the value of the aggregation of Jedburgh which has an area of 66,679.4 ha. The issued valuation is $1,300,000 or $19.50/ha. The appellants estimated the value in their Notice of Appeal at $255,000 but led evidence at the hearing to a value of $9.56/ha or $637,455.
Appeal VLA446-06 concerns the valuation for rental purposes of the Pastoral Holding which has an area of 63,600.4 ha. The valuation under appeal is $1,250,000 or $19.65/ha. The appellants estimated the value at $245,000 in the Notice of Appeal, but led evidence to a value of $9.56/ha or $608,000.
Appeal VLA447-06 concerns the valuation for rental purposes of the Permit To Occupy which has an area of 3,026 ha. The valuation under appeal is $139,000 or $45.90/ha. The appellants estimated the value at $27,700 in their Notice of Appeal but led evidence to a value of $9.56/ha or $29,000.
Appeal VLA448-06 concerns the value for rental purposes of the Special Lease which has an area of 53 ha. The valuation under appeal is $1,500 or $28/ha. The appellants estimated the value at $300 in their Notice of Appeal but led evidence to $9.56/ha or $500.
At the hearing Mr DG Lloyd, one of the appellants, gave evidence on behalf of the appellants. Mr DA Routh, a registered valuer employed by the Department of Environment and Resource Management gave evidence on behalf of the respondent.
Appeal VLA445-06
There was no dispute between the parties as to the description of the aggregation which Mr Routh described as situated about 80 kms south-east of Jundah and 60 kms south-west of Yaraka in the Barcoo Shire. The road is predominantly a formed earth and gravel road which can be impassable for weeks at a time in wet weather.
Mr Routh said that the property comprises -
22,000 ha – downs – 33%
21,080 ha – channels etc. – 32%
10,000 ha – gidyea – 15%
13,600 ha – mulga, bendee etc – 20%.
He said that Jedburgh is channels and clay pans along the Barcoo with some soft watercourses and channels. There is approximately 20% stony to rough ridgey country with gidyea and mulga in the west and south-west. To the east the country runs to open brown soil to pebbly open boree and better types of gidyea with some ashy areas interspersed with several coolibah watercourses.At the hearing, Mr Lloyd produced a large aerial map on which he pointed out the various types of country on the subject and the difficulties with a large part of the property. There is no real dispute between the parties that the subject suffers from the disadvantages that were set out in some detail by Mr Lloyd in his written statement and which he also described graphically in his oral evidence. Briefly those disadvantages are –
· The subject property suffers from extensive flooding, up to 15 kms wide, in the wet season which causes damage to fencing and makes the channel country unusable for several months. Similarly, access to the paddocks from the homestead is blocked during flood times for periods up to 10 days. The hilly nature of the country causes heavy silting with the dams having to be desilted on a regular basis.
· Welford National Park is a breeding ground for pigs.
· The rough hilly country and adjoining country is a breeding ground for wild dogs.
· The main town is Blackall, 230 kms from Jedburgh. Obtaining suitable staff is a problem.
· There is no mains electricity and the cost of diesel for generating electricity is excessive.
· The rainfall in the area is unreliable.
· There are areas where there is no grass or herbage and the river flats grow mainly pig weed and saltbush.
While I have accepted Mr Lloyd’s evidence as to those disadvantages, I also consider that the other properties in the area suffer from similar disadvantages and therefore sales in the area should reflect in general terms those disadvantages, subject to any adjustments necessary to account for individual differences between properties.
The carrying capacity of the subject property was in dispute between the parties. Mr Routh had estimated carrying capacity in terms of cattle because the property is now used for cattle grazing. His estimate of the carrying capacity was 1:24.5ha or 2,725 cattle. He said that he had relied for his assessment on the departmental records which go back to 1957.
The appellants estimated the carrying capacity in terms of sheep but since the property is now used for cattle grazing, I have decided to deal with the carrying capacity in terms of cattle. There is no dispute between the parties that the carrying capacity of sheep can be converted to cattle by dividing the number of sheep by seven. The appellants’ estimate of carrying capacity was 15,000 dry sheep or 1:5.5 ha. This converts to a cattle carrying capacity of 1:31.5 ha.
Mr Lloyd considered the department’s carrying capacity to be too high. His estimate had been based on the appellants’ experience in running the property and took into account droughts, the extensive flooding in good seasons during the summer months and the losses from wild dogs and feral pigs. He considered that the property would be overstocked if it carried the number of cattle estimated by the department and this would cause long lasting damage which would be difficult to recover from. Mr Routh said that he had adopted the carrying capacity of 1:24.5 ha relying on departmental records and using the district standards used by the department for the assessment of carrying capacity. This eliminated differences in management practices between different property owners, he said, and provided a basis on which the department could properly assess relativity between various properties within the district.
I have some doubt as to whether the departmental carrying capacity is correct because there is evidence that it is high given the nature of the subject country and Mr Lloyd’s reasons for the adoption of more conservative stocking levels.
Mr Routh relied on three sales to support his valuation of the subject land.
Sale No. 1, Budgerygar is a property of 107,700 ha which partly adjoins Jedburgh. The property sold for $32.96/ha on 25 May 2004. Mr Routh analysed the sale to $15.11/ha and applied an unimproved value of $8.45. He said that the sale property has a carrying capacity of 1:36.5 ha and a beast area value (BAV) of $308. His overall assessment was that the sale was inferior to the subject.
Sale No. 2, Milo, is a 116,000 ha property in the Quilpie Shire which sold on 1 June 2004 for $28.45/ha. Mr Routh analysed the sale to $6.28/ha and applied a value of $5.34. He said the carrying capacity of the sale property was 1:35 ha which gave a BAV of $186. Overall, Mr Routh’s assessment was that the sale was inferior to the subject.
Sale No. 3, Mount Marlow, is a 73,100 ha property located east of the subject property in the Shires of Barcoo and Isisford. The property sold on 23 August 2004 for $68.40/ha which Mr Routh analysed to $34.06/ha. He applied an unimproved value of $31.60/ha. Mr Routh said that the carrying capacity of the sale was 1:20 ha which gave a beast area value of $644. Mr Routh’s assessment was that overall the sale was superior to the subject.
The appellants submitted that the Mount Marlow sale should not be used in the subject’s valuation because the sale was a family transaction and therefore not at arm’s length. Mr Lloyd said that he believed there were some family factors affecting the sale price but he was not prepared to disclose those in Court. Mr Routh’s evidence was that he had investigated the sale. The vendor was a Mr Mick Gibson who was a well known pastoralist and the property was purchased by Consolidated Pastoral Company which was one of Kerry Packer’s companies which had extensive property holdings. In Mr Routh’s opinion the sale was an arm’s length transaction. I have accepted Mr Routh’s evidence in this regard and consider that no circumstances have been established which would prevent use of the sale for the valuation of the subject.
The appellants have challenged the subject valuation on a number of grounds. They say that none of the sales properties is comparable to the subject. In their opinion, the subject valuation was reached by applying an increase of 400% to the previous valuation of the subject ($3.82/ha in 2001), 400% being the standard increase applied across the Barcoo Shire. The appellants say that the sales evidence does not support an increase of 400% in the Shire or in relation to their property. Such an increase failed to take into account the severe disadvantages suffered by the subject property. Moreover property values in the adjoining Quilpie Shire had only been increased by 150%, and Milo, one of the sales relied on by Mr Routh, was a property in the Quilpie Shire which reflected an increase of 150%. The appellants submitted that any artificial line drawn between the Barcoo and Quilpie Shires for the purposes of the valuation should be ignored and, since the increase of 150% on properties in the Quilpie Shire was well supported by the sales in that Shire, they considered that it would be appropriate to apply an increase of 150% to the 2001 valuation of the subject, giving a value of $9.56/ha.
Mr Routh said that the valuation of the subject had not been made by simply applying an increase 400% to the previous valuation. As set out above, he relied on the sales of three properties, Budgerygar, Milo and Mount Marlow.
The appellants relied on comparisons with two properties in the Quilpie Shire to support their estimate of value. One of those properties was the sale of Milo which was also relied on by the respondent. The other property is Bulls Gully.
While I accept that there is some difficulty with the sales evidence relied on by the respondent, which is discussed further below, I do not consider that those difficulties are such as to prevent use of the respondent’s sales evidence. Apart from Milo, which was common to both parties, the sales of Budgerygar and Mount Marlow are to be preferred to the sale of Bulls Gully, relied on by the appellants, because Mount Marlow and Budgerygar are located closer to the subject property and the size of the properties is more comparable with the subject than Bulls Gully.
Further, reliance on relevant sales evidence, where available, is to be preferred as a valuation methodology to a valuation based on relativity. I have not accepted, therefore, the appellants’ submission that the valuation of the subject should be made by applying a 120% increase to the 2001 valuation.
The following table sets out some points of comparison between the subject and the respondent’s sales -
Property Carrying Capacity Applied Rate per hectare BAV Subject 1:24.5 ha $19.50 $477 Budgerygar 1:36.5 ha $8.45 $308 Milo 1:35 ha $5.34 $180 Mount Marlow 1:20 ha $31.60 $644
It is evident from the table that Budgerygar and Milo are most similar to one another in terms of carrying capacity and applied rate per hectare. However the beast area values on each of those properties differ considerably from one another which indicates some discrepancy in the figures. In the absence of any explanation for this, I do not consider that the valuations should be based on beast area values. In those circumstances I consider that the valuation should be carried out on a rate per hectare basis.
As can be seen from the table above, the rates per hectare applied by the respondent in each of the sales differ considerably ranging from $5.34/ha through to $8.45/ha to $31.60/ha. None of these figures points directly to a valuation of $19.50/ha for the subject. It would appear that that figure was reached by applying the 400% increase which was applied generally across the Barcoo Shire to the previous value of the subject.
Of the three sales I consider that Mount Marlow provides the best comparison with the subject property in terms of property description and carrying capacity although it is acknowledged that Mount Marlow is superior to the subject. Milo and Budgerygar appear to be considerably inferior to the subject and indeed there is some difficulty with the evidence relating to Budgerygar in that the sale has been applied at 56% of the analysed sale price indicating, as Mr Routh acknowledged, that the sale is high.
Mr Routh’s description of the subject property which is set out above, indicates that approximately 65% of the property might be described as good country comprising downs, channels etc. Similarly Mount Marlow has 72% of good country being frontage country to the Barcoo River and open boree and gidyea woodland with stony patches. Jedburgh has 15% gidyea, Mount Marlow 12% virgin gidyea scrub. Jedburgh has 20% mulga bendee etc, and Mount Marlow 16% light to inferior pebbly stony mulga and gidyea. However, Mr Routh elaborated on his description of the poorest country on Jedburgh describing it as stony to rough ridgey country with gidyea and mulga in the west and south-west. There is no indication there is any equivalent of the rough ridgey country on Mount Marlow, and I consider that this should be taken into account in any comparison between the two properties.
Given my doubts about the carrying capacity of the subject and the evidence as to the rough stony ridgey country on the subject, I consider that the valuation should be reduced to reflect these factors. The value of the subject property as at 1 October 2005 is determined at $17/ha or $1,133,549 rounded to $1,133,500.
Appeal VLA446-06
The Pastoral Holding comprises 63,600 ha of the total aggregation. The appellant estimated the value of the Pastoral Holding at the same value as the aggregation, namely $9.56/ha. The respondent issued the valuation of the Pastoral Holding at $19.65/ha.
The channel country on the Pastoral Holding is some 3,080 ha smaller than the area of channel country on the aggregation. Mr Routh has recognised the loss of some of the better country and has let out the carrying capacity on the Pastoral Holding to 1:25 ha. However he has valued the Pastoral Holding at $19.65/ha compared with $19.50 on the aggregation. There was no reason given by Mr Routh for the increase in the rate per hectare applied to the Pastoral Holding in the face of a reduction in the carrying capacity. The differences in size were not identified as the reason for the higher value.
I consider that the Pastoral Holding should be valued at the same rate as the aggregation because, although the carrying capacity of the Pastoral Holding may be slightly lower than for the whole of the aggregation, my determination of the aggregation takes into account the uncertainty of the carrying capacity of the subject.
The valuation of the Pastoral Holding should therefore be $17/ha or $1,081,200, rounded to $1,080,000.
Appeal VLA447-06
This appeal concerns the valuation for rental purposes of the Permit To Occupy of 3,026 ha. The valuation under appeal is $139,000 or $45.90/ha. The appellants estimated the value at the same value as the aggregation and all the other components, that is $9.65/ha or $29,000.
The Permit To Occupy is channel country and Mr Routh estimated the carrying capacity at 1:17 ha saying that this country was most relevant to the Mount Marlow sale. Mr Routh said that the conditions of the Permit To Occupy limited its use to grazing purposes only and he considered that the highest and best use of the land was for grazing purposes. The Permit To Occupy is over a stock route so there are issues with travelling stock. The property is only 3,000 ha and therefore was worth more per hectare than the larger parcels, for example the Pastoral Holding or the Mount Marlow sale.
The appellants submitted, relying on the decision of the Land Court in Ogg v Department of Natural Resources and Water[1] that the same value should be put on the Permit To Occupy as was put on the parent parcel because the highest and best use of the land was as an adjunct to the parent block.
[1] [2008] QLC 0160.
Mr Routh’s response was that in Ogg there was a similar run of downs country on both the Permit To Occupy and the parent parcel. In this matter, the Permit To Occupy comprises channel country which is part of the better country on the subject parcel and, therefore, the Permit To Occupy was superior when compared with the adjoining parent parcel as a whole.
I accept that a higher value per hectare should be put on the Permit To Occupy as compared with the aggregation because the Permit To Occupy comprises better channel country and because of its comparatively small size.
However there was no evidence as to whether the Permit To Occupy would be marketable as a separate property. It is to a large extent bounded by the river and the subject property although access is available at each end of the long narrow strip.
The applied value of Mount Marlow is $31.60/ha for a 73,100 ha property. I have accepted Mr Routh’s opinion that the channel country on the Permit to Occupy is comparable with the analysed value of Mount Marlow and that an allowance should be made for the comparatively small size of the Permit To Occupy. However the question of the marketability of the Permit To Occupy is a matter of some doubt and I consider that that should be taken into account in the valuation. On that basis, I consider that the value of the subject Permit To Occupy should be $40/ha or $121,040 rounded to $121,000.
Appeal VLA448-06
The valuation of the Special Lease of 53 ha is $28/ha or $1,500. The appellants led evidence to a value of $9.56/ha or $500.
The Special Lease was granted for the purposes of residential and primary industry grazing. The house and the main buildings are located on the Special Lease which is landlocked, with access being via the stock route. If the Special Lease is terminated, no compensation is payable for improvements although the lessee would be given time to remove the improvements after the termination.
Mr Routh considered that the only market for the Special Lease was to the adjoining owner. Thus he valued it at $28/ha as compared with $45 for the adjoining Permit To Occupy.
I have accepted Mr Routh’s reasoning in relation to his valuation of the Special Lease. However to reflect my reduction of the rate per hectare on the aggregation, there should be a proportionate reduction on the value of the Special Lease which accordingly should be valued at $25.50/ha or $1,351 rounded to $1,300.
ORDERS
1.Appeal VLA445-06 is allowed. The unimproved value of various Lots comprising the aggregation of Jedburgh, Property ID 4014123, in the County of Cheviot, Parish of Metz and others, is determined at One Million, One Hundred and Thirty-Three Thousand, Five Hundred Dollars ($1,133,500) as at 1 October 2005.
2.Appeal VLA446-06 is allowed. The unimproved value of Lot 3369 on Plan PH2091 : PH3/3369 in the County of Cheviot, Parish of Metz and others is determined at One Million and Eighty Thousand Dollars ($1,080,000) as at 1 October 2005.
3.Appeal VLA447-06 is allowed. The unimproved value of Lot A on Plan AP 2416 : PO210721 in the Parish of Metz is determined at One Hundred and Twenty-one Thousand Dollars ($121,000) as at 1 October 2005
4.Appeal VLA448-06 is allowed. The unimproved value on Lot 5 on Plan CV 30 : SL3/46308 in the County of Cheviot, Parish of Metz is determined at One Thousand and Three Hundred Dollars ($1,300) as at 1 October 2005.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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