Loeskow v The Crown
[1991] QLC 33
•1 November 1991
|
BRISBANE.
1st November, 1991.
Re: Determination of Compensation - Resumption for National Park.
Bray Hills Pastoral Holding - Lot 5192 on Plan PH947,
County of Flinders, Parish of Eurimbula. (A90-78)
Arthur Loeskow
v.
The Crown(Hearing at Bundaberg & Brisbane)
J U D G M E N T
By proclamation notified in the Government Gazette on 2nd June, 1990, Bray Hills Pastoral Holding No. 19/5192 having an area of 34 square kilometres was resumed, under the provisions of Section 306 of the Land Act 1962 - 1989, for National Park purposes.
On 23rd November, 1990, a claim for compensation in the sum of $524,006 was filed in the Court. At the hearing of this matter in Bundaberg leave was sought and granted to amend the claim as follows:Land 467,500.00
Improvements
Caretakers dwelling 17,200.00
Cattle yards and spray dip
(or alternatively as severance) 27,500.00 44,700.00
Injurious Affection
Mustering 69,843.00
Payment for scrubbers 25,000.00
Removal of plant & machinery 3,000.00
Solicitors' costs, stamp duty,
and outlays on purchase of property
to the value of $536,500 22,494.75 120,337.75
$632,537.75
Contained within the same claim for the resumption for National Park purposes and/or pursuant to Section 314 of the Land Act were the following items of improvements:
Dwelling No.1 28,000
Dwelling No.2 17,850
Shed 1,950
Lawn locker 500
Total $48,300
There was no disagreement between the parties that the last mentioned improvements were sited on an esplanade.
Evidence was given by the claimant, Mr Arthur Loeskow, that he had acquired a share in the original Bray Hills Pastoral Holding in 1958 then the balance in 1960, when it had an area which he had always understood to be 11,000 acres (44.5 square km). The original lease in fact was stated to have had an area of 17 square miles (44 square km). Application for a new lease was made in 1970 and the subject lease was granted for a period of 30 years from 1st October, 1973, having 13 years and 4 months to run at the date of resumption. Excluded from the original area was an esplanade, in part 200 metres wide and in part 60 metres wide, and the area of the original lease reduced from the 17 square miles to 34 square km. Evidence given during the course of the hearing was that the esplanade did not contain 10 square km (1000 ha) but more like 4 square km (400 ha). It seems that the likely cause of this was the availability of more refined mapping at the time the new lease was granted. Mr Loeskow says that, although the application for the new lease had indicated the available accommodation on the original lease as being one hut with one intended to be erected, there were in fact two huts. When the new lease was granted, both were located on the new esplanade, together with a shed. While the Crown disputed this, based on the contents of the application form, Mr Loeskow's evidence in this regard is supported by that of his grandson and a retired Stock Inspector. I accept the evidence that the structure now described as Dwelling No.1 was in fact not in existence in 1973 but had replaced an original hut of smaller dimensions which did exist and that Dwelling No.2 and the shed also on the esplanade, also existed on the original lease in 1973.
No claim had ever been made for the loss of improvements on the new esplanade, which has now prompted the claim under Section 314 of the Land Act. More will be said of this later.
The Crown's assessment of compensation, excluding any structures on the esplanade, was in the sum of $316,000, although this was reduced by an amount of $31,000 under the heading of severance, when it was agreed between the parties that the severance claim had been resolved by the issue of a stock grazing permit over part of the resumed area.
I am advised that an advance against compensation in the sum of $200,000 was made on 11th December, 1990, with a further advance of $105,000 on 3rd May, 1991.
Bray Hills Pastoral Holding is located at Rodds Peninsula, joined to the mainland by a section of tidal coastal flats about 100 metres wide (over which a causeway has been constructed) to the north of Bustard Bay and Middle Island, with the Pacific Ocean to the east and north and Rodds Harbour to the south-west. It is about 50 km by road from Miriam Vale, 80 km from Gladstone and 120 km from Bundaberg. The lease is severed, the major section being Rodds Peninsula, with the southern severance on the mainland waterfront and known as Swan Point. The Crown's description of the land is as follows:"About 280 hectares (8%) reasonably level paper bark tea tree flats, sandy to spewy grey clay soil, fair to good grazing.
About 1970 hectares (58%) which includes Swan Point (about 195 ha), comprises ironbark and bloodwood easy to moderate ridges falling to more open reasonable level coastal forest around the foreshores, timbered with ironbark, moreton bay ash, bloodwood, rough barked apple, wattle, and she-oak with patches of paper bark tea tree and blue gum, fair grazing, including about 10 hectares of marine couch on the island.
About 340 hectares (10%) undulating to steep ironbark bloodwood and grasstree ridges, poor grazing.
About 565 hectares (17%) low lying, coarse sand soil, pandanus palm and bracken fern coastal forest carrying mainly blady grass.
About 240 hectares (7%) reasonably level thick coastal banksia, a patch of tall rank swamp grass and patches of needle tea tree, sandy soil, very poor grazing. "
The lease is in its natural state except for about 3 hectares around the caretaker's cottage, but on the esplanade section is an area of about 45 hectares of clearing planted to improved pasture. Apart from a small natural spring with an adjacent excavation there are 16 earth dams on the peninsula and another on Swan Point.
Under the terms of the lease the use of the land was restricted to grazing. The Crown's estimate of carrying capacity, exclusive of the esplanade is 1 beast to 10 hectares, 340 head, the property being considered best suited to grazing dry breeding stock.
Much was to be heard of the carrying capacity estimates for the property. It had been used by the lessee in conjunction with the freehold Portion 308 (on the adjacent mainland, through which access was gained to the peninsula) but more importantly with the aggregation of property known as "Taunton", some 55 km to the south. The Loeskow aggregation of property included about 3,640 hectares of freehold running a total herd of about 2,200 head and according to Mr Loeskow, the loss of Bray Hills would cause a reduction in the safe herd size down to 1,500 head. Bray Hills is in a high rainfall area and provides winter relief grazing, on Mr Loeskow's figures for between 500 head and 600 head of tick and buffalo fly resistant cattle (with Brahman infusion) for usually 8 or 9 months of the year. In 1980, under drought conditions, 700 head were run on the holding and in recent years some cattle had been left there during the summer months as well. Mr Loeskow states that as opposed to his neighbours around "Taunton" he has never had to buy in stock feed during the winter months when the "Taunton" spear grass country is at its worst. He estimates that, including the esplanade, Bray Hills is now, with the management practices he has employed, particularly with regard to burning and with the water facilities provided, capable of running 450 to 500 head of mixed dry and growing cattle on a year round basis. Had he been permitted to clear suitable land, the carrying capacity could have been increased significantly. He says that he had become aware over the years that "National Parks" had been showing interest in the Holding. He had received numerous approaches to sell the property and two separate contracts had eventuated - one with a sale price of $2,000,000 but subject to conversion of the lease to Grazing Homestead Perpetual Lease, an application for which was refused, and a second for $2,500,000, subject to partial freeholding with a non-refundable $50,000 deposit. Shortly after the second contract and the investigations carried out by the proposed purchaser, resumption action was commenced.
Mr Loeskow is now quite elderly and had some difficulty recalling some matters. He was questioned regarding details provided as to estimated carrying capacity in a 1989 application for the new lease in connection with the first-mentioned contract. In that application the estimated carrying capacity was stated as "1 beast to 9 hectares in dry season" and "1 beast to 15 hectares in wet season". While he said that these estimates referred to the lease, it is obvious that he was referring to an area as he understood it of 11,000 acres. In fact, Mr P.J. Marles, solicitor for the claimant, was called to confirm that the application had been completed on the basis of Mr Loeskow's advices that 500 head were carried in the dry season and 300 head in the wet season.
Mr B.T. Loeskow, a grandson of the claimant, commenced full-time work with his grandfather at a very young age and has now progressed to assisting in management of the family aggregation of property. His evidence generally was forthright, well considered, and impressive as a factual portrayal of the overall grazing situation. He agreed generally with his grandfather's evidence as to stocking rates on Bray Hills. He said that depending on the seasons, the normal practice was for Bray Hills to be mustered twice annually although it was visited regularly as part of its management. Due to erratic seasons in recent years more cattle were being left there and for longer periods. The management plan was not to have bulls on the Holding but mainly heifers and cows some of which calved there. A herd of scrubber cattle, including mickey bulls had built-up due to the difficulty of mustering in the timbered country with areas of thick undergrowth and he estimated that about 20% of the stock carried on the Holding could now be classed as scrubbers. He said that at the time of the hearing there were at least 420 head (including the scrubbers) and about half of that total number had been recently mustered and handled. He said that depending on the nature of the mob, it takes up to two full days to walk cattle between Bray Hills and "Taunton". Since the date of resumption cattle had been moved on and off with the intention of replacing wilder cattle with those more manageable - no doubt to make more efficient the final musterings. A small number of scrubbers had recently been trapped and sent to the meatworks. He felt that with reasonable notice, the manageable stock could now be moved quickly although he was concerned that if the present drought continued the cost of finding suitable agistment for the excess cattle would be uneconomical, although it was also undesirable to have to sell any of the female herd which had been built-up. Based on his experience, he felt the total property could be mustered in a total of about 10 days with five men, including himself and his brother. This time would not allow a clean muster of the scrubbers.
Mr J.C. Burchill, now retired but the District Stock Inspector at Bundaberg from 1968 to 1978, was called by the claimant. Mr Burchill had visited Bray Hills on the average once a year whilst he had been stationed in Bundaberg. He recalled that he had slept in the structure known as Dwelling No.2 in the late 1960's and there had been another hut on what is now the esplanade. He had been aware of the stock movements between "Taunton" and Bray Hills because it had been necessary for cattle to be dipped clean before they were moved from "Taunton" to the north. The estimation of carrying capacity had not been part of his work duties, but in practice he believed he had acquired a knowledge of the potential of grazing property over his years of dealing with stock and owners. He had always considered Bray Hills as including the esplanade and the freehold block, and while he did not consider that country as the best grazing in the district, he felt that a carrying capacity of 500 head of mixed cattle was realistic, on an all year round basis.
The heading of claim - "mustering" and "payment for scrubbers" was based on advice obtained from Mr E.F. Haberman, a grazier and contract musterer with experience on island type properties. His instructions had been to visit the property and provide an estimate of the cost to provide a clean muster. He had inspected it by four wheel drive in June, 1991. Based on sightings of cattle and his experience of this type of country, he estimated that a clean muster could involve 400 to 500 head. He estimated that of these up to 100 head would eventually be found to be uncontrollable both branded and unbranded cattle. These would be classed as scrubbers if it was found necessary to throw and tie them and those that survived would be taken to the meat works. He says that it would be a reasonable arrangement for the gross sales of these animals, which would range downwards from $800 per head and probably average $500 per head, to be split evenly between the owner and the mustering contractor. In his opinion, the clean muster would take 5 experienced men 30 days in three periods each of ten days. He also allowed each of these men another 12 days to walk coacher cattle from "Taunton" and then the mustered cattle back to "Taunton". He said it would also be necessary for the two grandsons to be available for the whole of the period to assist with stockwork but also to identify any stray branded cattle, and he suggested that their time should be costed at the same rate as the professional musterers.
Allowing $200 per day for his men, the labour cost came to $42,000. Then the incidental costs of stock-horse and yarded cattle feed, drugs and meat to be supplied by the owner came to a further $11,043. With the Loeskow grandsons included, the total estimate of cost came to $69,843. On the basis of retrieving his interest in the scrubber cattle the owner would lose half their estimated $500 average sale price and based on the estimated 100 head which would fall into this category, this would be an effective $25,000 additional cost to the owner.
With consideration to the estimate of mustering time as suggested by Brett Loeskow, who has worked on the property since 1979, I find Mr Haberman's estimates to be excessive. If the extra time involved over and above Brett Loeskow's opinion of mustering time was in fact realistic, then it is clear that the owner would be better served by writing off the scrubbers and even a percentage of previously manageable cattle. The necessity for a clean muster is not a condition of the resumption but a question of economics. If it costs more than their worth to remove the scrubbers then the commercial reality is that the they might as well be left to become, after June 1992, based on official advice the property of the Crown, to be disposed of as it sees fit. The scrubber cattle asset of the owner is their net realisable value after consideration of the costs involved in delivering them to the meatworks. It seems on the evidence, that while small numbers may be retrieved under normal management practices, the nature of the country would ensure a permanent herd of scrubbers unless the owner decided to take the specific action of clean mustering at his own cost. I do not see that as a cost which is one emanating from the resumption - brought forward no doubt, but also with an earlier realisation of the asset.
Indeed, due to the continued grazing arrangement offered by the Crown, it might be seen that the mustering operation of manageable cattle which will be eventually effected, is nothing more that a normal management/agistment operation. However, as I will be finding that no interest will be payable on compensation, due to the continued rent free use of the land, I will also find that the mustering which would have been necessary had vacant possession been sought within a reasonable time of the date of the resumption, is a compensable disturbance item. This will however, be based on 5 men for 10 days mustering plus an additional 6 days walking cattle between Bray Hills and "Taunton". I have some doubts that the five men would be required for the full sixteen (16) days which will be allowed. The Crown's assessment was four (4) men for a total of twelve (12) days each at $200 per day, including all expenses. I will adopt this daily rate and am confident that if there are incidental expenses the total cost of mustering will be covered by the award, which will equate 80 man days at $200 per day or $16,000 total. For the reasons given, any costs to the owner in mustering scrubber cattle are not considered compensable, but a normal outlay if the asset is to be realised.
Valuation evidence for the claimant was given by Mr C. Browning, a registered valuer in private practice in Bundaberg. He describes the property as a 34 square km, light to thickly timbered cattle grazing block, about 40 hectares of which had been cleared and sown with siratro and fine stem stylo. (It seems this area of improved pasture is actually within the esplanade). He refers to the country being generally undulating to flat with high ridges to the north and east with sections inclined to become water-logged during heavy wet summer seasons. He sees adequate stock water having been provided by the strategically placed dams and refers to the added expense of providing such facilities due to the effect that isolation and poor access roads have on heavy machinery operating costs. Internal access through the property has been provided over a distance of about 40 km of cleared and partly maintained tracks. Under the heading of improvements, Mr Browning includes his description and valuation of the dwellings, shed and lawn locker located on the esplanade, as at the date of resumption. His verbal evidence with regard to the structures on the esplanade was directed to the probable situation as at the date of granting of the existing lease. The caretaker's cottage sited on the lease is described as being 80 square metres floor area, high set, constructed on steel posts, bearers and joists with fibro external cladding and internal sheeting. A cattle yard and spray dip contained 45 panels of timber yards plus ten gates, metal sheeted dip walls with concrete floor and concrete draining pens.
Mr Browning described the history of the property in the claimant's hands, and the improvement in carrying capacity under such management to the stage of resumption and he adopts a carrying capacity of 500 head of grown cattle including the unfenced esplanade. Based on the sales of three properties being "Deraby" at Mundubbera; Rosewood Island Pastoral Holding near St Lawrence and Oaklands Pastoral Holding at Woorabinda and with the adjustments he sees as necessary to the values shown from the analyses of these sales, Mr Browning values Bray Hills Pastoral Holding "on the open market" at $850 per head of his adopted carrying capacity. However, as he sees the property possessing special value to the owner because of its winter relief grazing qualities, he applies a 10% premium to its "open market value". This results in a beast area value, fenced and watered of $935, or the equivalent of $137.50 per hectare fenced and watered, for the area of the lease.
The amended claim is based on Mr Browning's itemised headings and these will be dealt with elsewhere.
Two witnesses were called by the Crown, the first being Mr J.W. Wright, District Adviser in Agriculture employed by the Department of Primary Industries and stationed at Bundaberg. His experience in coastal type grazing lands is considerable and he had personal knowledge of Bray Hills from various visits but for the purpose of this hearing had carried out an inspection in July 1991. He assessed the sustainable carrying capacity of the specific holding of 34 square km as being one adult beast to 12½ hectares or 272 head. He had calculated, based on its measured length by its known width, the area of the esplanade to be about 400 hectares with a carrying capacity, due to its generally superior grazing quality, estimated as a further 76 adult head. He said the adult head equivalent was the proper common denominator which should be used in calculation of carrying capacity. If the constitution of a mixed herd was known, it was a simple calculation to convert those numbers to adult equivalent. He was unable to relate his estimate to the numbers said to be carried by the owners unless he knew the categories of those stock. He explained that "sustainable" carrying capacity was meant to interpret the numbers which could be carried over a long period without degradation of pasture. At the time of his inspection (during a sustained dry period) there was no indication of over-stocking except on a relatively small area of sweeter pasture. He said that had overstocking (by his standards) been practised the results would have become visible within four to five years of the commencement of such management practice. This indicates to me that the management practices of the claimant did not involve over-stocking. Counsel for the claimant criticised the acceptance of Mr Wright's assessment of carrying capacity on the basis that he had not been asked to give his opinion as to the carrying capacity of the sales that were used by the Crown, and this is a relevant point.
The Crown's offer of compensation was based on a valuation carried out by Mr B.T. Little, Land Inspector and registered valuer, employed by the Department of Lands. His valuation before the Court was as follows:Pastoral Holding Lease - about 3400 ha @ $70 per hectare
treated, fenced and watered $238,000
House 18,000
Yards - Spray Dip 6,000
Severance 31,000
Disturbance
Muster 10,000
Removal of furniture and effects 2,000
Cost of purchase of alternative property 11,000
Total $316,000
As stated earlier, it has been agreed between the parties that the severance item which referred to a fencing requirement between the retained freehold land and the Swan Point section of the resumed land will not be necessary as a grazing permit has been granted over Swan Point.
This effectively reduces the Crown's valuation to $285,000.
Mr Little's basis of valuation has been gained from the sale of Rosewood Island Pastoral Holding and Oakland Pastoral Holding and he also introduced evidence of a sale of a freehold parcel known as "Fairy Springs".
There is general agreement between the valuers that the sale of Rosewood Island offers the best evidence of value. It involves a coastal island with unfenced esplanade and Pastoral Holding leasehold with an unexpired term similar to that of the subject. It is however in a different geographical location, comprises different country type and the sale is clouded by generous vendor's terms and the inclusion of an Occupation Licence. There are differences between the valuers in analysis of the sale although the end results are, in valuation terms, not so far apart. Details of the sale and the analyses are as follows:-Rosewood Island Pastoral Holding 35/5170, 2616 ha, Occupational Licence 35/1641, 1580 ha, 21st September, 1989, $750,000, vendor terms $350,000 cash on delivery, balance $400,000 interest free 12 months then 6 monthly repayments of $20,000 plus interest at 11% beginning 18 months from delivery.
Analyses: Little Browning
$ $
Land (treated fenced & watered) 321,370 355,000
Per Hectare (including O.L) 76.59 84.60
Comparison to Bray Hills 70 137.50
Carrying Capacity 1/10 *1/8.4
Total Herd 420 500
Beast Area Value (T,F,W) 765 710
Structural Improvements 123,252 140,500
Plant and Machinery 76,500 50,000
Livestock 150,000 150,000
Vendors Terms equivalent 78,878 53,760
*Mr Browning's estimate is based on total stock numbers, partly grazed external to lease and licence.
There are differences of some significance in the assessed values of the structural improvements, plant and machinery and vendor's terms. I am unable to resolve the difference in the value of improvements, with little detail provided. Mr Little's approach to the value of plant and machinery indicates more detailed enquiry and I accept his figures. Mr Browning has accepted an actuarial assessment of the present value of the instalments, based on actual and assumed future overdraft rates, after consideration of taxation, to determine the equivalent cash purchase price. He is confident that the interest free period has been taken into consideration although that is not clear in the schedule of figures supplied, and the stated criteria adopted. There is no evidence that taxation considerations were a relevant factor when the sale price was negotiated. While it is recognised that the incidence of tax may well be a matter of significance in certain financial arrangements, it is also dangerous for these assumptions to be made unless it is known that taxation implications did affect the sale price. As Else-Mitchell J. said in Chong v. Fairfield Municipal Council (1968) 88 WN (NSW) 346 at p.350 - when discussing income tax -
"it is an exaction imposed by government and quantified by factors and criteria which in many respects are personal to the taxpayer and are capable of arrangement or re-arrangement so as to vary the total tax burden."
Mr Little did not provide his calculations in the vendor's terms allowance. He referred to the return from Government 10 year Bonds and QIDC 5 year term investments and in his verbal evidence said that he simply calculated the payments with interest then the present value of those payments at the date of sale based on the long term bond rate.
It seems to me that the premium which would be sought by the vendor would be an amount sufficient to cover the loss suffered through not having the funds available for theoretical gilt-edged investment over the interest free period, together with any perceived loss at the date of sale through the rate of interest charged over the balance period of the loan. The advantage to the purchaser, theoretically in funds for such an investment is identical. A broad check indicates to me that Mr Little's calculation, more so than that adopted by Mr Browning based on the advice provided to him, would be more realistic.
In the end result I accept Mr Little's analysis of the sale as showing a land value, treated fenced and watered, for the total area including the Occupation Licence, of $321,370.
The next matter to be considered is the comparison between Rosewood Island and the subject lease. Whilst having more difficult access, Mr Little sees Rosewood Island as superior country, with "available scattered feed among mangroves" and with superior grazing potential. He says he has restricted his estimate of carrying capacity to the actual lease and licence areas, exclusive of the esplanade and the land below high water mark. It does appear however that he has included mangrove areas within his perception of the boundaries of the Occupation Licence. A plan tendered by Counsel for the claimant would indicate this inclusion to be erroneous. The evidence indicates to me that the carrying capacity of Rosewood Island is enhanced to some significant degree through the ability of cattle to graze the mangrove and salt water couch areas external to the lease and licence areas. Mr Little has significantly increased the previous Lands Department estimate of carrying capacity from 226 head to 420 head. He has done this consciously - being convinced the previous estimate was too conservative. In fairness, he has also increased the previous Departmental estimate of carrying capacity on Bray Hills, and he is quite entitled to form his own opinion and not necessarily slavishly follow the opinions of others. Mr Browning points to the large claypan type areas with questionable grazing potential on Rosewood Island, the superior benefits of external grazing availability but the inferior water as compared with Bray Hills. He estimates the total herd capacity of both properties as being 500 head of stock but sees the Rosewood Island as having to rely to a greater extent than Bray Hills on the external grazing. In making a comparison he also sees the Occupation Licence area as being 50% less valuable than the Pastoral Holding. Whilst criticised for being so specific, without supporting evidence, he has formed the opinion that such difference is realistic and he refers to the unwillingness of lending institutions to accept such licences, which may be terminated on short notice, as security. Mr Little has not made any distinction between the Pastoral Holding and Occupation Licence. He says that in this instance the Occupational Licence runs in tandem with the Pastoral Holding and its continuance during the term of the Pastoral Holding Lease is at relatively minor risk. He did admit however that the property would be seen in the market place as being more valuable if it was totally Pastoral Holding tenure. It seems on the evidence that the Occupation Licence could well have influenced the need for the vendor to offer the terms for which allowance has been made in the sales analyses. In the particular circumstances of Rosewood Island, while it would appear to be a reasonable expectation for the continuance of the Occupation Licence I find that the tenure of Bray Hills in comparison must be superior.
The remaining problem with Mr Little's comparison of Rosewood Island with Bray Hills is that he sees the potential for extension of tenure or the granting of another type of lease for the Rosewood Island Pastoral Holding as being good while Bray Hills Pastoral Holding had 13 years to run and no potential for extension. This position is factual, but it was agreed by Counsel for the respondent (and in fairness to the claimant) that any lack of potential for extension of the term of the Bray Hills Pastoral Holding which was in fact associated with the requirement of the land for public use including the purpose of the resumption should be disregarded. To reduce the value of the land because its potential was limited by the requirement of its use for public purposes, it was submitted, was against the reverse of the Pointe Gourde principle. The reverse application of the principle is well held. In the Privy Council judgment, Melwood Units Pty Ltd v. The Commission of Main Roads (1978) 52 ALJR 593 is found at p.596:
"Under the Pointe Gourde principle (see Pointe Gourde Quarrying and Transport Co Ltd v. Sub Intendent of Crown Lands [1947] A.C.565) the landowner cannot claim compensation to the extent to which the value of his land is enhanced by the very scheme of which the resumption forms an integral part, that principle in the Lordships' opinion operates also in reverse. "
In the assessment of the value of Bray Hills Pastoral Holding at the relevant date, the tenure of the lease and its unexpired term are matters which must be considered. The question is, would persons best able to judge assume that the lease had no possibility of extension on its expiry, and if so, the reasons for that assumption. The actions of the Crown in refusing applications for conversion of the lease to freeholding tenure, in my opinion, should not have been seen as being indicative of lack of potential for renewal or extension of the existing tenure. A refusal of an application for destruction of timber which was referred to in evidence certainly was indicative of a restriction on increasing its potential for grazing purposes but if that restriction was capable of being construed as associated with future National Park requirements, then, as I see it, that would form part of the scheme for which the land was resumed. I have concluded that any knowledge by Mr Little or indeed by any person, as to the lease as it stood being required for future public use should be seen as forming part of the scheme of resumption and that knowledge should be excluded from considerations.
By now it should be obvious that the sale of Rosewood Island, with its terms purchase, large area of Occupation Licence and the polarised view of the valuers as to its comparability as land and tenure, affords a weak basis for the valuation of Bray Hills. Nevertheless there is at least agreement between the valuers that, in a difficult exercise, it is the best evidence available. It is not possible to resolve the difference between the valuers and while it may seem an over-simplification of a difficult matter I have decided to see Rosewood Island as being a Pastoral Holding of 2616 hectares with additional Occupation Licence rights and unfenced esplanade which allow a carrying capacity on Mr Browning's estimates of 500 adult cattle. The property, on the evidence, was purchased as a grazing proposition. The sale shows an analysed land value, treated fenced and watered of $321,370 for the area of the Pastoral Holding but with the positive feature of having a licence over a large area then physically unrestricted grazing availability external to the lease and licence areas. Bray Holding in comparison has a larger area of Pastoral Holding, no licence area and also enjoys physically unrestricted grazing over the esplanade area. While I have some doubts as to the ability of either holding to carry on a sustainable year round basis the numbers estimated by Mr Browning, his is the only evidence as to the total estimated carrying capacity of each - and it is 500 head in each case. On the basis that both properties are capable of carrying similar herds included the grazing availability attached to both holdings, but seeing the overall tenure of Bray Hills to do this as being superior, I find that the land value treated fenced and watered for Bray Hills should be greater than the $321,370 analysis for Rosewood Island.
Turning to the sale of "Oaklands", the details of the sale and analyses are as follows:Oaklands Pastoral Holding 35/831, 9600 hectares; Special Lease 35/35237, 971.246 hectares; 28th February, 1989, $1,050,000.
Analyses - Little Browning
$ $
Land (treated fenced & watered) 573,689 610,400
Per hectare (including Special Lease) 54.20 57.74
Comparison to Bray Hills 70.00 137.50
Carrying Capacity (at date of sale) 1/11 1/13.2
Total Herd 961 800
Beast Area Value (T,F,W) 597 763
Structural Improvements 166,961 132,500
Livestock 309,350 307,100
Both valuers used this sale as it was predominantly a Pastoral Holding Lease, although this time with a much longer unexpired term, and with a long-term Special Lease over Forestry land. Neither valuer dealt with the Special Lease tenure issue, although it is obviously a consideration in terms of market value. "Oaklands" does not comprise coastal country and for that reason alone it is hardly comparable in the market place to Bray Hills which has Pacific Ocean frontage, regardless of the restriction on use to grazing purposes. There are some differences again between the valuers as to the correct analysis of this sale although again, in the end result, the analysed values of the total leasehold land are reasonably close. There is also disagreement between the valuers as to the carrying capacity of "Oaklands". The extrapolated beast area value varies considerably due to the varying opinions as to the carrying capacity. I find this sale of a much larger area with inland location to be of limited assistance in the matter before me.
Mr Browning's third sale, that of the property "Deraby" had not been inspected by Mr Little until shortly before the hearing. Again differences of opinion arose as to carrying capacity, and the added value of various improvements ("Deraby" having once been part of a larger family aggregation, with an over-capitalisation of structural improvements related to its present size). On Mr Browning's analysis the sale showed a beast area value, treated fenced and watered of $1,275 and a land value on the same basis of $195 per hectare. It also has inland location and significantly superior tenure and again is of no real assistance.
On the premise of showing, not so much what Bray Hills was worth but rather what it could not be worth, in his opinion, Mr Little introduced the sale of a Callide Valley property "Fairy Springs". This property comprises 2105.9 hectares of freehold and Miners Homestead Lease (the latter being capable of freeholding at minor cost) and 730 hectares of Stock Grazing Permit. The sale was analysed to show a treated fenced and watered land value of $129.33 per hectare overall - including the Stock Grazing Permit - as at December 1989. Because of the improved nature of the land, Mr Little found the necessity to then reduce the analysis to a similar standard of timber treatment as Bray Hills (virtually unimproved) and found a land value watered and fenced of $98.42 per hectare. Mr Little expressed the opinion that if a superior grazing property such as "Fairy Springs" with a large proportion of freehold/freehold equivalent with a Stock Grazing Permit with a 6½ year term remaining, had sold for an equivalent $98.42 per hectare, then Bray Hills must be worth considerably less. Here again is Mr Little's contention that the analysis of the sale should include the area of the Stock Grazing Permit, but there is no market evidence as to the added value of that permit, which Mr Browning suggests (with I might add market logic) has little more than nominal value. It would seem to me far more logical, for the unit of comparison to be the freehold area exclusive of the area of the Stock Grazing Permit. Then another figure emerges - a value of $132.50 per hectare, watered and fenced with the permit to graze another 730 hectares. This permit may in theory be more secure than the unwritten right to graze the esplanade of the subject but in practice and in the eyes of the informed market place, I doubt that it would be so perceived.
Mr Browning prefers to adopt the beast area value basis for comparison of the sales and the valuation of the subject property. His adopted opinions of carrying capacity are supported by owners' opinions and he refers in this regard to Lodge v. Water Conservation and Irrigation Commission (1967) 14 LGRA 88, where at p.92 Hardie J. said:
"there is judicial authority of long standing that the value of grazing properties can best be determined on a carrying capacity basis "
then at p.93:
"a purchaser would have paid much more regard to what the property had carried in the past than the view of experts as to what it was capable of carrying. "
In the subject matter I am of the view that a prudent purchaser of Bray Hills would have had regard to past carrying capacities, although the property is recognised for its winter relief grazing qualities rather than its year round grazing potential. A prudent purchaser would also recognise that physically unrestricted grazing is available on the esplanade. The danger in Mr Browning's exercise is that he does not at any time distinguish between the lease and the esplanade, and if a strict carrying capacity basis of valuation is adopted, based on sales, it might be seen that he is seeking compensation for land to which the claimant has no title.
In this matter I accept that carrying capacity is an important factor in endeavouring to establish some degree of comparability with the sales evidence, but the peculiar circumstances of tenure, additional grazing areas, geographic location with regard to the sales do not allow a sound basis for assessment of a beast area value for the subject. It seems to me that the dominant tenure must be the basis of a comparison and where it is necessary to make further adjustments to the sales evidence, additional benefits should be considered on the basis of perceived market effect on the dominant tenure.
With particular regard to the sale of Rosewood Island and doing the best I can on the divergent evidence of comparisons, but then having regard to all of the sales evidence on the basis on which it has been put before me, I have decided that the fair open market value of the subject land as fenced and watered was at the relevant date $390,000.
Special Value to Owner
In considering the open market value, the winter relief characteristics of Bray Hills is a matter which influences its carrying capacity and its open market value. While the winter grazing is a most valuable asset to the lessee's freehold "Taunton" aggregation, I do not see this as being unique to "Taunton". I would expect that the grazing characteristics would create demand amongst other graziers in the locality who are forced to purchase stock-feed or seek agistment when their winter pastures decline or fail. The adopted valuation of $390,000 is considered to reflect the positive qualities of the Holding as a predominantly winter grazing property.
There is however a particular situation which exists with the lessee, in that he has acquired the freehold Portion 308 adjoining the Swan Point section of Bray Hills and the causeway access to the peninsula. The evidence is that this block was acquired specifically to provide guaranteed access to the Holding and was run in conjunction with it. With the home block "Taunton" some 55 km distant, the freehold Portion 308 with no structural improvements including yards, would be seen to have limited usage potential in its own right. Mr Browning describes it as a 450.8 hectare parcel which received less rainfall than the subject lease and which has an inadequate stock water supply.
It is logical to accept the evidence that the specific purpose of acquiring Portion 308 had been for it to be used in association with Bray Hills. Now the situation is reversed - in assessing the value of Bray Hills, its value to the owner is influenced by the complementary ownership of the freehold Portion 308. As found in Pastoral Finance Association v. The Minister [1914] AC 1083 at p.1088:"The value to the owner, in the circumstances, is what a prudent man in his position would have been willing to give for the land having regard to this potential use, rather than fail to obtain it. "
Here it needs to be decided if the claimant as a prudent man, and as an adjoining owner would pay any more for Bray Hills than any other likely purchaser. I have decided that he would, but in the circumstances he would not be prudent unless he related any extra payment to the value of the freehold portion. There is no evidence before me as to that value. Mr Browning says the special value to the owner of "Taunton" would amount to 10% of the open market value of Bray Hills. I do not accept that proposition as its special qualities are not of unique use potential to the claimant but to any local grazier wishing to utilise its winter relief grazing potentialities.
I will determine compensation on the basis of value to the owner being in the sum of $400,000.
Structural Improvements
In terms of the resumption with which this judgment was intended to deal, there is one dwelling to be considered. At least here there are no differences of significance between the valuers. Taking the more liberal approach I will adopt Mr Little's assessment of $18,000.
The yards and spray dip have been dealt with differently. Mr Little has assessed their added value in the sum of $6,000. Mr Browning has taken the view that an equivalent new set of yards should be erected on the remaining freehold. The yards, on the evidence, were not substantial or in particularly good condition. I will adopt Mr Little's assessment. In the context that the value to the owner has been seen to reflect the availability of facilities on Bray Hills capable of use in conjunction with the freehold, I do not see any additional claim for a new set of yards on the freehold as being justified. What is being sought is a new set of yards for and older facility and that in itself would place the lessee in a better position than previously existed.
Severance
The initial claim under this heading in the sum of $31,250 (an amount which Mr Little included in his valuation as $31,000) was to allow fencing necessitated by the resumption.
This claim is withdrawn and the Crown's valuation reduced accordingly.
Disturbance Items
Mustering
For the reasons given before, I will allow an amount of $16,000 under this heading.
Removal Items
Mr Browning suggests there would be the necessity for removal of three truck loads of plant and machinery, chattels etc. at $1,000 each load, totalling $3,000.
Mr Little says that, considering the quantity of furniture, plant etc. removal should not take longer than 4 days for 2 men plus the hire of a truck. Mr Little's approach is considered generous.
I will allow his assessment of $2,000.
Legal Fees
The legal fees involved in preparation of the Claim for Compensation have been agreed in the sum of $3,120.
Valuation Fees
Mr Browning's memorandum of fees to the stage of compilation of the claim, and as paid by the claimant were in the sum of $5,185. This claim was not admitted by the respondent although Mr Browning states that his fees were in accordance with the scale recommended by the Australian Institute of Valuers, together with associated outgoings. The claimant is entitled to be recompensed for this necessary expenditure.
The full amount of $5,185 is awarded under this heading.
Costs of Acquisition of Replacement Property
Bray Hills is an important segment of the claimant's grazing operation. I am informed that the claimant needs to obtain replacement property and while difficulty is anticipated, from enquiries made to date, the need will become reality as the grazing rights over the resumed land become closer to expiry. If replacement property is not able to be obtained, disposal of stock making up the herd which has been bred up over the years will become necessary. I accept the evidence that acquisition of replacement property is a natural consequence of the resumption and costs of acquiring replacement property are compensable. Had that not been the case then alternative claims for losses sustained through forced disposal of stock may have needed to be considered. Mr Little accepts the possible need for compensation under this heading but suggests it should be paid only if alternative property is purchased. Compensation must be assessed on a one claim basis to reflect the loss sustained at the date of resumption. Disturbance items have been likened to special value to the owner and I accept here that there is genuine intent and need to acquire replacement property.
I will allow the amount of $17,500 under this heading to compensate for the legal, stamp duty and incidental costs associated with the purchase of grazing property of similar value to the compensation awarded under the headings of land and structural improvements.
Claim for Compensation for Improvements Pursuant to Section 314 of the Land Act
Counsel for the claimant submits that as the amended claim for compensation was served on the Crown the week before the hearing and lodged with the Court immediately prior to the hearing, the Court was at liberty to determine compensation for those items claimed to be compensable pursuant to Section 314 of the Land Act. Section 314 deals with compensation for improvements and sub-section (1)(b) reads as follows:
"Upon the expiration of the term of a pastoral lease or upon the surrender to the Crown of any pastoral lease or grazing homestead perpetual lease, for any improvements upon any part of the land comprised therein which is reserved and set apart for any public purpose or dedicated as a road; "
The purpose of the hearing before me is to determine compensation payable consequent upon the resumption for National Park purposes. This clearly does not embrace determination of compensation for improvements under Section 314 of the Land Act. Counsel for the claimant submits that as the claim has been served on the Crown in the form of an amendment or separation of the claim for compensation in the National Park resumption matter, then filed in the Court through its advance notice of the amendment prior to the hearing, I could hear and determine this matter at the same time. Section 310 (1)(b) of the Land Act provides that provisions of Part IV of The Acquisition of Land Act apply with respect to compensation payable in any case referred to in Section 314 of the Land Act, subject to the modifications set out in sub-section (2). I accept that in a technical sense the claim under Section 314 had been served in accordance with Section 19 of The Acquisition of Land Act but I am not convinced that an amendment of a claim in another matter such as has occurred here may be construed properly as a reference to the Court for hearing and determination.
Nevertheless, certain submissions were made by both Counsel as to the right to claim compensation under Section 314, in this set of circumstances. It is the Crown's submission that under sub-section 1(b), compensation would be payable for any improvements which at the time of expiration of the lease, existed on land reserved and set apart for any public purpose or dedicated as a road. In other words land "which is reserved" is interpreted as being reserved at or prior to expiration of the lease rather than subsequent to expiration. Counsel for the claimant submits that such interpretation is illogical and the word "is" must be intended to reflect present tense, the claim arising because of the reservation and setting apart of land contained in the original lease. He drew comfort for this argument from sub-section 5 of Section 314 which reads:"The provisions of this Section shall extend to improvements made, with the approval of the Minister, or of the Court under the repealed Acts upon any part of the land comprised in an Occupation Licence where such part is, on expiration or determination of the Licence, set apart and reserved for any public purpose or dedicated as a road. "
He says that this should be interpreted as an extension of the intent of sub-section (1)(b).
Without intending to in any way influence the hearing and determination of this matter should it be formally referred to the Court at a future time - had I seen fit to determine the question on the submissions before me then I would be against the submission of the Crown. In accord with the submission of the claimant, it seems to me that to interpret sub-section (1)(b) other than to look to reservations subsequent to the expiration of the lease is illogical. I would interpret the wording "upon" and "is reserved" to reflect actions subsequent to such expiration.
In the interests of practicality and for the purpose of possible assistance in any negotiations which may take place relevant to Section 314 I feel obliged after the submissions put to me to say that, on the evidence before me:
(1)Dwelling No.1 as it now stands was re-constructed in 1976. The previous structure was old and close to the ground with a consequent sand-fly problem. Mr Browning, doing the best hypothetical exercise he can, based on the description by Mr B. Loeskow, suggests an added value of $4,000 in 1973. Bearing in mind that it was reconstructed in 1976, not so much, it appears, because of its old physical condition, but because of the sand-fly problem, it seems to me that Mr Browning's assessment could not be supported, and its added value was a far more nominal figure. I would see a sum of $500 reflecting my perception of its added value in 1973.
(2)Dwelling No.2. As Mr Browning says, the house was reportedly built in 1967, and his verbal assessment of an added value of $7,000 would appear to be the maximum figure supportable as at 1973.
(3)Shed & Lawn Locker. There is no evidence which confirms the lawn locker was in existence in 1973 but assuming it was, I see it as unlikely that the added value of both these structures, would have exceeded $750 in total at that relevant date.
In the circumstances of the continued use of these structures at no rental, and as the lessee has not seen fit to serve a claim for compensation for some 17 years I would not award interest on the value of structures existing at the time of expiration of the previous lease.
Resumption of Bray Hills Pastoral Holding
In summary, compensation is calculated as follows:-
Leasehold land - fenced and watered
including special value to owner $400,000Structural Improvements
Dwelling (caretaker's) 18,000
Yards and dip 6,000 24,000Disturbance Items
Mustering 16,000
Removal items 2,000
Legal fees expended in compilation of claim 3,120
Valuation fees expended in compilation of claim 5,185
Costs of acquiring replacement property
to the value of $424,000 - allow 17,500
TOTAL $467,805
Interest:
The claimant has enjoyed the full use of the resumed land at no cost from the date of resumption, and will continue to enjoy such privelege until, a stock grazing permit is issued to allow removal of cattle from the peninsula section by 30th June, 1992. It is submitted by the claimant that this continued use should be seen as offsetting compensable losses which would have emanated from any requirement for the early removal of stock, such as forced sales, and not to offset any interest payment.
The facts are that possession has been retained at no cost and there is an award for mustering costs when that operation may well have been seen to be a normal agistment/management expense under the rent free arrangement. I will not order the payment of interest.
Member of the Land Court.
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