Lyons v Chief Executive, Department of Natural Resources and Mines

[2001] QLC 104

LAND COURT

BRISBANE

28 SEPTEMBER 2001

Re: AV00-615

An Appeal against an Unimproved Valuation
Valuation of Land Act 1944
Local Government: Dalrymple

Gerard F and Elizabeth A Lyons

Chief Executive, Department of Natural Resources and Mines

J U D G M E N T

Pursuant to the provisions of the Valuation of Land Act1944 the Chief Executive valued "Junction Creek", a property owned by the appellants, at a figure of $640,000 as at a relevant date of 1 October 1999. The appellants contend for a value of $504,000. Gerard Francis Lyons, a co-owner, appeared for the appellants and gave evidence. Stephen Brooks Gilbert, a registered valuer, provided valuation evidence in support of the Chief Executive's valuation figure.
[2] "Junction Creek" is situated approximately 203 km north-west of Charters Towers and is accessed by 57 km of bitumen strip Lynd Highway, then 146 km formed earth and gravel road, which is frequently impassable during most wet seasons. The property has an area of 24,000 ha and is used for the breeding and fattening of beef cattle
Mr Gilbert described the nature of the subject land as follows:
"The property comprises approximately 1547 ha (6.5%) open to lightly timbered black soil, 17,862 ha (74%) good open red basalt forest, 2296 ha (9%) good to fair ironbark and box forest, with the balance 2295(9.5%) generally fair to poor forest ridges of box and ironbark on gravely forest soils."
Whilst Mr Lyons offered no objection to the above description, he said that in its valuation approach the Chief Executive had not made allowances for variations in soil qualities. He said that whilst it was appropriate to describe 74% of the subject land as being red basalt forest, regard should also be had to the fact that this red basalt area could be broken down further into 13% coolibah, 27% ironbark and 34% ironbark and gum. He provided evidence of soil tests which show that the coolibah country has high levels of phosphorous and potassium and reasonable levels of other macronutrients, but is low in sulphur, a common characteristic of most basalt soils. The ironbark and ironbark gum country types exhibit low phosphorous levels in comparison to the coolibah country and low zinc and sulphur also. These soil types are also not as well structured as the coolibah soils. There was also evidence that, given the difference in soil nutrient levels and the uncertainty as to whether available nutrients are fully utilised, there would probably be a requirement for different licks in different paddocks.
Part of a letter from the Department of Primary Industries under the signature of Joseph Rolfe (Extension Officer) included a discussion on carrying capacities for the three classes of country discussed in the previous paragraph. Mr Rolfe was not, however, called to give evidence so, as I indicated to the appellants during the hearing, I will not have regard to his evidence on that topic. Mr Gilbert had estimated the carrying capacity of "Junction Creek" at one beast to 10.5 ha, however, Mr Lyons estimated a carrying capacity of one beast to 11.5 ha. Given that Mr Lyons' estimate relied on the contents of the letter from Mr Rolfe, I am not in a position to adjust Mr Gilbert's carrying capacity. I note, however, that Mr Gilbert has employed a similar methodology in the assessment of carrying capacity on the subject property as he had on two sales which he relied on in his valuation, so any adjustment in the carrying capacity of "Junction Creek" would need to lead to the prospect of adjustment of the carrying capacity in the case of those two sales. Clearly, the result would be that the value relationships would be maintained. I note also that Mr Gilbert has relied upon "Junction Creek" as a subject sale in valuing the property, thus as long as the sale is considered to be an appropriate basis for valuation, the question of comparison with other properties on a detailed basis does not arise to the extent that it would in the case of properties that have not themselves sold.
Another difficulty that I have with the appellants' evidence regarding soil quality on "Junction Creek" is that I do not have in evidence a similar level of detail with respect to soil quality on the other two sales relied upon by Mr Gilbert, that is "Amelia Downs" and "Lava Plains". It would be reasonable to assume that those properties would exhibit similar variations in soil nutrients as the subject property, though not necessarily the same variations.
I do not have evidence that soil analyses of the type tendered by the appellants are normally utilised in the marketplace as part of the purchase/sale process. Undoubtedly, there will be different levels of knowledge that individual purchasers or vendors will have with respect to a particular property being offered for sale, however I think that, given the state of the evidence, it is not inappropriate for me to accept the broader country classification method used by Mr Gilbert and reflected in the description of the "Junction Creek" country, which I have included above. I am to some extent comforted in drawing this conclusion in that Mr Lyons in his comparisons with other properties referred to by him relied on an even more generalised description of country than that provided by Mr Gilbert. I now return to the description of the subject property.
In his valuation report Mr Gilbert said that the natural water on the subject land is limited to waterholes in Junction Creek, surplus from a spring on the boundary with "Ellenvale" and several permanent and non-permanent springs. There are also holes in creeks which are seasonally dependent. He said that all springs/soaks/holes can become boggy and claim weak cattle. Mr Lyons said that the banks of Junction Creek are steep and rocky and therefore dangerous to breeding stock. He also said that that part of the property in the west is not suitable for the construction of earth dams and therefore there is a requirement to sink bores there - a water facility which is more costly to equip. Apart from that, the sinking of bores does not always achieve a successful outcome. Mr Gilbert acknowledged each of these factors.
There is grader grass along all public road frontages and scattered small patches through the eastern half of the property. There is also scattered parthenium in the east and rubbervine around Black Swamp, the steer paddock and creeks and waterways. Mr Lyons said that there is black ti-tree, which grows together with a softwood scrub, which can make mustering difficult. These areas are therefore fenced out. Mr Lyons also mentioned the presence of dingoes and Mr Gilbert acknowledged that there were dingoes on the area of a sharp jump-up. He said that dingoes were common to the area in a similar class of country, though suspected that the subject may suffer a little more in this respect than the average.
The jump-up mentioned in the previous paragraph is quite sharp and runs generally parallel with the northern boundary for most of its length. Mr Gilbert said that this creates some cattle management problems.
"Junction Creek" is generally between 640 metres and 700 metres above sea level and suffers frosts commonly during winter. Supplementary feeding is therefore carried out, as is common in the district, in order that cattle may be carried through to the summer period. Mr Gilbert acknowledged in his valuation that the subject property has a greater susceptibility to frosts than his sale properties.
In his valuation Mr Gilbert referred to access being impassable during most wet seasons "especially early in the year when cattle are ready and prices usually firm". This was a point which I noted was particularly acknowledged by Mr Lyons.
In his valuation Mr Gilbert relied on three sales, one being the sale of the subject property and the others being the sales of "Amelia Downs" and "Lava Plains". The subject land sold for an analysed unimproved price of $753,681 ($31.40 per ha) on 1 July 1996.
"Amelia Downs", sold for an analysed unimproved price of $667,184 ($32.40 per ha) on 14 January 1998. The Chief Executive applied an unimproved value to that property as at 1 October 1999 of $650,000 or $31.56 per ha.
This sale property has an area of 20,595 ha and is located 120 km north-west of Charters Towers via 77 km of bitumen road with the balance formed earth and gravel. "Amelia Downs" comprises approximately 2,500 ha (12%) open black soil plain with the balance 18,095 ha (88%) good red basalt forest country intersected by areas of gorge along the Basalt River and W Creek. Mr Gilbert estimated the carrying capacity of the sale property at one beast to 10 ha. The property is used for the breeding and fattening of beef cattle.
"Lava Plains", sold for an analysed unimproved price of $587,278 ($14.32 per ha) on 19 September 1996. The Chief Executive applied an unimproved value of $570,000 to this property, that is $13.90 per ha. "Lava Plains" has an area of 41,000 ha and is located 260 km north of Charters Towers and approximately 90 km south of Mt Garnet. The sale property comprises approximately 34,300 ha (84%) of open red basalt and red sandy forest country, according to Mr Gilbert, and approximately 6,700 ha (16%) unavailable lava flow or areas inaccessible due to lava flow.
Mr Lyons said that he and his wife had been on a property in the Gulf, which had a tourist facility which operated in conjunction with the grazing enterprise but that they had found that venture to be overall too stressful. They, therefore, disposed of that property and on return to Charters Towers sought a property there. He and his wife had family in the Charters Towers area, their children were at school there and he knew the grazing property values there. Mr Lyons was of the view that the price paid for "Junction Creek" was higher than might normally be expected for the property. Evidence was given in support of that view by Lorin Philip Bishop who is described as a "rural property salesman" with the Stock and Station Agency, Primac Elders. Mr Bishop gave evidence in another hearing at the sittings in Charters Towers involving the property "Cuba Plains" and it was agreed between the parties that that evidence could be received in the present matter, as well as other evidence Mr Bishop gave before me.
Mr Bishop said that the sale of "Junction Creek" was at a price which included a premium of 10% to 15% "above normal values", though also mentioned a figure of 15-20% in the "Cuba Plains" appeal, but freely admitted that the basis for that opinion was subjective and was not based on hard evidence. He said that many cattle properties had suffered the ravages of drought, whilst some such as "Junction Creek" had benefited from patchy rain and carried a good body of feed. The cattle market was depressed so there were purchasers in the market seeking properties with feed. He said that there was a general view that given the depressed cattle market, it was expected that cattle properties would drop in value accordingly. He gave details of three other individuals with an interest in buying "Junction Creek" because of the body of grass available on it and suggested that in those circumstances Mr and Mrs Lyons faced a lot of competition for the purchase. He said that the presence of a heavy body of feed on the property had featured in the marketing campaign carried out by his agency. The vendor, who was under financial pressure, owned three properties and decided to sell "Junction Creek" because it was well grassed in comparison with the other two.
Mr Gilbert agreed that "Junction Creek" was well grassed at the time of sale, but said that vendors usually attempt to sell at times of cattle market buoyancy or when properties are well presented with grass. In the case of "Junction Creek" the beef market was not buoyant, but the property was clearly well presented. He said that examples of other sales taking place in a well-grassed state in the early 1990's included "Talavera", "Craigs Pocket" and "Lava Plains", though Mr Lyons suggested that "Talavera" was not well grassed at the time of sale. Mr Gilbert had, however, obtained his information from the purchaser. Mr Gilbert said that a sale of "Junction Creek" in 1994 was analysed to show an unimproved price of $30.04 per ha, a price not inconsistent with the analysed unimproved figure of $31.40 per ha in the case of the 1996 sale. Mr Bishop was of the view, however, that a price the same as that paid in 1994 was expected.
Mr Bishop said that the beef cattle property market had improved "quite sharply" between 1996 and the relevant date for valuation purposes in 1999 - the date of valuation. I note also that in Mr Gilbert's application of the subject sale he has not adopted the full $31.40 per ha as representing the value that ought to apply, but has adopted a much lower figure of $26.67 per ha. He said that this was done to maintain the relativity in statutory valuations. Whilst it is perhaps coincidental, I note that the analysed sale price of $31.40 per ha is greater than 15% higher than the value contended for by the Chief Executive of $26.67 per ha. In all of the circumstances I think that the application of the subject sale in valuing "Junction Creek" is appropriate. In drawing this conclusion I have been supported by the consistency between the level of value applied to the subject property and the two other sales included in Mr Gilbert's valuation.
In his valuation Mr Gilbert said that "Amelia Downs" enjoys superior access and a superior situation to the subject property. "Amelia Downs" is similar in area to "Junction Creek", however, has a higher percentage of fragmented black soil country and, given the significant area of sandy forest on "Junction Creek", Mr Gilbert said that "Amelia Downs" is superior in regard to country. He said that the two properties are similar in terms of their access to natural water, so concluded overall that the carrying capacity of "Amelia Downs" was superior to that of the subject land.
Mr Gilbert's inspection of "Amelia Downs" revealed to him that that property has a slightly worse weed problem than "Junction Creek" and, given its downstream location, he considered it had a greater risk of that problem exacerbating. He thought, however, that the subject land would suffer more from frosts given its higher altitude.
Overall Mr Gilbert thought the subject land to be inferior to "Amelia Downs" on a per ha basis. Mr Lyons had not inspected "Amelia Downs".
Mr Gilbert said that "Lava Plains" is inferior in situation compared with "Junction Creek", however, enjoys superior access. Mr Lyons was of the view that the sale property was in a better location to take advantage of the markets, which I take to be the markets of Innisfail, Mareeba, Townsville and Karumba during those periods when access to "Junction Creek" is cut, yet cattle prices are usually firm. Mr Gilbert noted this aspect in his valuation and I assume that it was an aspect that would have been known when the subject property was purchased.
Mr Gilbert said that the "Lava Plains" property is considerably larger than "Junction Creek" and whilst both properties are mostly red basalt, that class of country is lighter carrying on "Lava Plains" than on the subject and contains areas of lighter sandy loam forest. In addition he noted that "Lava Plains" has a significant area that is unavailable to stock. The sale property has limited natural surface water and, in Mr Gilbert's view, is inferior to "Junction Creek". Underground water is available on the sale property, but at considerable depth compared with the subject property.
Mr Gilbert said that "Lava Plains" suffers more greatly from frosts than "Junction Creek", given its location approximately 550 metres above sea level on the Great Dividing Range. It also suffers from weeds as does the subject property.
Overall Mr Gilbert concluded that "Junction Creek" is markedly superior to "Lava Plains" on a per ha basis. Mr Lyons did not, however, accept that this Sale 3 property is inferior to the subject. He had not inspected "Lava Plains", but said that "Lava Plains" was broadly similar country and, in saying that, appeared to draw support from his appreciation of the quality of stock being turned off at a standard similar to that of "Junction Creek". The considered and detailed comparison made by Mr Gilbert is to be preferred.
Mr Lyons introduced three other property comparisons in a written statement tendered before the Court. Each of those sales was a valuation by the Chief Executive. The first of these, "Wandovale", is to the north and east of "Junction Creek", the properties having 35 km of common boundary. "Wandovale" sold in May 1998 for, as I understand it, an unimproved price of $5.45 per ha. Mr Lyons noted that the Chief Executive's valuation for that property had decreased by 14.28% between 1998 and 1999 and thought that this factor ought to be taken into account. He recognised that "Wandovale" with an area of 220,000 ha gave rise to what he called a "bulk factor", however, thought nevertheless some reference to that sale might be useful. He said that the country on "Wandovale" is identical to that of "Junction Creek" where the two properties join.
Mr Lyons also included reference to a property called "Newburgh" which joins "Junction Creek" on the western and part of the southern boundary of the subject land. The properties share 12.5 km of common boundary. He said that at the relevant date of 1 October 1999 "Newburgh" had a value of $12.28 per ha. He accepted that "Newburgh" has areas of heart leaf, less basalt soils and more sandy conglomerate areas than "Junction Creek", however, said that it is safer breeder country because of this lighter country.
"Ellenvale" adjoins "Junction Creek" on its southern boundary and before me the Chief Executive led evidence to that property having a statutory value of $23.37 per ha. Mr Lyons said that "Ellenvale" and "Junction Creek" were both cut off "Wandovale" at the same time, that they are similar in size (24,000 ha for the subject and 23,100 for "Ellenvale") and similar in terms of country type. He said that "Ellenvale" had a similar percentage black soil country as the subject, but said that "Ellenvale" is safer for breeding as it may have a little more sandy soil. He put forward the argument that as both properties were cut off "Wandovale" at the same time, it was probable that the then Lands Department would have had in mind producing properties that would carry similar sized herds. I think that matters such as natural features, access, water and such like would also feature in the block design. Perhaps a minimum herd size was a major criterion and in this respect I note that, according to Mr Gilbert's carrying capacities, the subject property would carry 2,008 head, whilst "Ellenvale" would carry 2,285 head. He placed a carrying capacity of one beast to 11.5 ha on "Ellenvale", a figure which Mr Lyons suggests ought to apply to "Junction Creek".
Mr Lyons said that of the three properties introduced by him, "Ellenvale" is the most appropriate property for comparison purposes. He said that he had flown over "Ellenvale" and had inspected part of it and, of course, was aware of the country that adjoined his own. He had also spoken to the owner of "Ellenvale" and on the basis of this evidence concluded that the carrying capacities would be similar. He said that the black soil on "Ellenvale" was of a similar class to that on "Junction Creek".
Mr Gilbert said that "Ellenvale" had a black soil component of only 7%, therefore had a similar proportion to the 6.5% he had estimated for the subject property, but said that 30% sandy forest with wattle and quinine on "Ellenvale", with the balance country of broken red basalt with some coolibah, meant that the country on that property was clearly lighter carrying than that of "Junction Creek". He acknowledged that the sandy country is safe to breed on compared with black soil country and that it responds more quickly following rain, but said that his analysis of a range of sales had made it clear that purchasers preferred heavier carrying country and were prepared to pay for it. He also said that on "Ellenvale" there are difficulties accessing water.

Mr Gilbert said that he had not inspected "Newburgh", but that file records show a property that is much inferior to "Junction Creek" and therefore merits a lower valuation. I need not set out the description of country as its assessed carrying capacity of one beast to 20 ha is sufficient to show that it is substantially inferior to "Junction Creek", according to the Chief Executive's valuers. I accept that evidence.
"Wandovale" is a very large property and in Mr Gilbert's view is in a quite different market from "Junction Creek". Accordingly, it does not provide a suitable basis to value the subject property.
Reference to other valuations of the Chief Executive as at the same relevant date as the property under appeal are frequently of limited value given the requirement in the Valuation of Land Act for the Chief Executive and therefore the Court to determine a value and not to determine the correctness of relativities. However, in the present case comparison with "Ellenvale" is not inappropriate, given that the valuation of that property was the subject of an appeal in the same hearings at Charters Towers in which I heard the appeal with respect to "Junction Creek". "Ellenvale" has been valued by the Chief Executive through the skills of Mr Gilbert, having regard to the same sales included in the valuation of the subject property. I also had the advantage of hearing the evidence of an owner of "Ellenvale" and conclude that on a per ha basis that property is inferior to "Junction Creek".
The result is that I cannot conclude that the appellants have shown the valuation of "Junction Creek" made by the Chief Executive to be wrong. Accordingly, the appeal is dismissed and the valuation of the Chief Executive is affirmed.

RP SCOTT
MEMBER OF THE LAND COURT

[2001] QLC 104

28 September 2001