Maroochydore Central Holdings v Maroochy Shire Council

LAND COURT OF QUEENSLAND

CITATION:Northern Butcheries Pty Ltd v Chief Executive, Department of Natural Resources and Mines
AND
Warringha Pastoral Co Pty Ltd v Chief Executive, Department of Natural Resources and Mines [2002] QLC 77

PARTIES:Northern Butcheries Pty Ltd; (appellant)vChief Executive, Department of Natural Resources and Mines(respondent)ANDWarringha Pastoral Co Pty Ltd(appellant)vChief Executive, Department of Natural Resources and Mines (respondent)

FILE NOS:AV2001/0332; AV2001/0333

DIVISION: Land Court of Queensland

PROCEEDINGS: Appeals against Annual Valuations

DELIVERED ON: 26 September 2002

DELIVERED AT: Brisbane

HEARD AT: Innisfail

MEMBER:Mr JJ Trickett, President
ORDERS: 1. In Appeal AV2001/0332, the appeal is dismissed and the unimproved value as at 1 October 2000 is affirmed at Six Hundred and Thirty Thousand Dollars ($630,000).2. In Appeal AV2001/0333, the appeal is dismissed and the unimproved value as at 1 October 2000 is affirmed at One Million Three Hundred and Fifty Thousand Dollars ($1,350,000).

CATCHWORDS: Unimproved Value – Valuation of Land Act 1944 – sugar cane land in the Shire of Cardwell – valuation of cane land in a falling market – applicability of the analysed unimproved value of improved sales prior to the date of valuation – use of after date sales – comparability of sales – suitability of land to grow cane – effect of the Vegetation Management Act 1999.

APPEARANCES: Mr R Dickson for the appellantsMs R Trigge for the respondent

These are two appeals by landowners in the Shire of Cardwell against the unimproved values applied to their properties by the Chief Executive, Department of Natural Resources and Mines (the respondent) under the provision of the Valuation of Land Act 1944. At the request of the parties the two matters were heard together.

Background

Northern Butcheries Pty Ltd is the owner of land described as Lot 7 on Plan CWL2 and Lots 104/106 on Plan CWL653, Parish of Meunga, containing an area of 283.2 ha. As at 1 October 2000 the respondent valued that land at $630,000, or $2,225 per ha. The owner has appealed to the Land Court against that valuation, advising an estimate of unimproved value of $200,000.
Warringha Pastoral Co Pty Ltd is the owner of land described as Lot 121 on Plan CWL2377, Lot 146 on Plan CWL 2812 and part of Lot 134 on Survey Plan 106046 held as Special Lease 26/41650, Parish of Meunga, containing an area of 1,921 ha. As at 1 October 2000, the respondent determined the unimproved value of that land at $1,350,000, or $700 per ha. The owner has appealed to the Land Court against that valuation, advising an estimate of unimproved value of $500,000.
The grounds for both appeals were similar, essentially that at the date of valuation the market for agricultural land, particularly cane land, had fallen substantially since the peak of the market in 1998.
The properties the subject of these appeals adjoin one another and are worked as an aggregation for cattle grazing and sugar-cane growing.

The Relevant Legal Legislation

These cases are appeals against the unimproved values applied by the respondent to the subject lands as at 1 October 2000 under the provisions of the Valuation of Land Act 1944. The responsibilities of the respondent in making unimproved values are set out in the various provisions of the Act.
The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean in relation to improved land, the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that the improvements on that land did not exist: s.3(1). However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time at which the value is required to be ascertained: s.3(2).
The "value of improvements" means the added value which the improvements give to the land, irrespective of the cost of the improvements. However, the added value shall in no case exceed the amount that should reasonably be involved in effecting improvements of a nature and efficiency equivalent to the existing improvements: s.5.
The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that the improvements on the land had not been made, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power and other services, and that the adjoining land and the environs are in their existing condition.
The test of "market value" was laid down by the High Court in Spencer v. The Commonwealth (1907) 5 CLR 418. The High Court found that the market value of land at a particular date is the amount that would have been paid for that land if it had been sold by a willing but not over-anxious seller to a willing but not over-anxious purchaser, both of whom are fully acquainted with the land and aware of all the circumstances which might affect its value, either advantageously or negatively.
It is well-settled law that sales of vacant or unimproved land provide the best basis for the assessment of unimproved value: see Grahn v. The Valuer-General (1992) 14 QLCR 327. However, where vacant sales evidence is not available, it becomes necessary to analyse sales of improved lands for the purpose of ascertaining what part of the purchase price related to improvements and what part is attributable to the land itself: see Marano v. The Valuer-General (1978) 5 QLCR 194 at 200-201.

The Subject Lands

There was little argument about the description of the subject lands. The following details are from the reports of Mr SA Cross, the registered valuer who gave evidence for the respondent.
The aggregation is situated approximately 25 to 28 km south of Tully, fronting and severed by the formed earth and gravel Nash Road. The Warringha land also fronts the Bruce Highway.
The Northern Butcheries' land is an irregular shaped parcel of predominantly level to easy sloping coastal forest country, severed by Nash Road and with frontage to Dallachy Creek, which Mr Cross thought was a permanent natural water supply. Lots 104 and 105 are bisected by an unnamed seasonal creek/gully. An area of approximately 260 ha has been selectively cleared to improved pasture standard and Mr Cross regards it as having arable (sugar cane) potential.
The Warringha land was described as an irregular shaped aggregation, with Lot 146 being separated from the balance lands by other freehold properties and Nash Road. Lot 146 had an area of approximately 1,907.5 ha at the relevant date, comprising approximately 1,600 ha (83%) of predominantly low-lying and easy undulating coastal forest country in the western section of the property, merging with approximately 307.5 ha of flooded ti-tree swamp country along the eastern boundary. The coastal forest country is intersected by a large sand ridge running north/south adjacent to a section of Deep Creek; a separate ti-tree swamp and two red earth schist rises.
There is also some better quality forest country along the property's Bruce Highway frontage and its southern boundary to the freehold parcels of Lots 175, 104, 105 and 106, with an isolated area of heavy forest/scrub country in the south-eastern corner of the property fronting Dallachy Creek .
The remaining 13.5 ha of the aggregation (Lot 121 CWL 2377 and SL26/41650 described as Lot 134 SP106046) comprises approximately 9 ha of level to gently sloping heavier coastal forest country on good quality arable soils and approximately 4.5 ha of false banks, lower terrace and gullies associated with the adjoining Dallachy Creek.
Approximately 500 ha of the Warringha property have been cleared and developed as either sugar cane or improved pasture grazing. This area of cleared country was considered by Mr Cross to have arable potential (albeit third class) and was assessed on that basis in the calculation of unimproved value.
The whole aggregation is used for a combination of grazing cattle and sugar-cane production. The Northern Butcheries' land is basically all cleared and is used for cattle grazing, although Mr Cross considered that the highest and best use of approximately 160 ha is for sugar-cane production. The Warringha land is used for a combination of cattle fattening and sugar-cane production, which combination Mr Cross considered to be the highest and best use of the land, classifying approximately 500 ha of that land as suitable for sugar-cane production.
The subject lands are both zoned "Agriculture" under the Planning Scheme for the Shire of Cardwell which was gazetted on 16 May 1997.
However, Mr Cross pointed out that as a large area of the Warringha land (approximately 1,400 ha) is timbered, the provisions of the Vegetation Management Act 1999 may impact on the development potential of that land. He went on to state that recent Regional Ecosystem Vegetation Mapping dated May 2002 indicated that approximately 400 ha have been classified as "remnant endangered dominant", which would not be granted clearing approval. Another area of 830 ha of the land had been categorised as "of concern", while an area of 590 ha had been classified as "cleared" and 90 ha as "not of concern". Although that mapping was not available at the time, Mr Cross had valued the whole of the timbered area as land which was unable to be developed, despite the fact that there was a possibility that some may be able to be cleared in accordance with the requirements and principles of the Vegetation Management Act.
The respondent's valuations of $630,000, or $225 per ha, on the Northern Butcheries' land and $1,350,000, or $700 per ha, on the Warringha land were supported by the evidence of Mr Cross, who relied on the direct comparison with the unimproved values derived from sales of improved land.

The Valuation of Cardwell Shire

To understand the respondent's approach to the valuation of the area as at 1 October 2000, it is necessary to consider what had occurred at the time of the previous valuation which was made as at 1 October 1997. Mr Cross explained that at that time there had been a rising market for cane land; at least two of the local mills were seeking more growers. In the Tully area there had been an expansion of the cane-growing area into former grazing land south of the Murray River.
The 1997 valuation reflected that rising market and increases were applied by the respondent not only to the established cane lands, but also to the expansion land and to grazing land with arable potential. It seems that between August and November 1996 the then owners of King Ranch, the Queensland and Northern Territory Pastoral Company, had sold eight parts of the property by tender for between $2,100 and $2,450 per ha. That was improved pasture land which had arable potential. However, there was one parcel of land which sold to the South Johnstone Mill Ltd for the much higher price of $4,438 per ha.
According to Mr Cross, at the time of the October 1997 valuation, there were those eight seemingly bona fide sales reflecting a level of value for larger farms. Those sales became the basis for the valuation of farms in excess of 400 ha in area. The respondent's valuers had regarded the sale to the South Johnstone Mill as out of line and disregarded it. However, over the next 12 months to two years there were sales which demonstrated that far from being out of line, the South Johnstone Mill sale was a market leading sale. Masterlyn Pty Ltd, which had purchased the balance of King Ranch, commenced subdivision and sold large tracts of arable land. Six sales occurred over 20 months from December 1997, at prices ranging from $5,420 to $10,250 per ha, with the "median range" between $7,000 and $8,000 per ha.
Mr Cross said that those later sales reflected a dramatic increase in rates per ha for essentially improved pasture country with arable potential, notwithstanding that the later sales were of superior land quality. Together with other smaller farm sales, those sales indicated that the 1996 King Ranch sales which had been relied on by the respondent, were conservative.
At the time of the October 2000 valuation, the respondent's valuers realized that the 1997 values applied to the larger newer farms and to the lands with arable potential, were too low. However, by that time the market had fallen from the peak of market demand in mid-1998. The last large farm to sell was Masterlyn to Mackay (Sale 2) of 483.77 ha in June 1999 for $3,925,921, or $8,100 per ha, which Mr Cross considered to be equal to prices at the height of the market in mid-1998.
Mr Cross explained that the respondent therefore used what limited evidence there was of the 2000 market to establish a range of values for the arable land for the bulk of the farming properties in Cardwell Shire with areas of up to 250 ha. In valuing the larger farms, allowances were made to discount those values to levels which were considered reasonable for the market demand for those larger farms, having regard to each property's arable area, disabilities, etc.
The valuations of the established cane farms as at October 1997 had not been based on the 1996 King Ranch sales, but had been based on sales of established farms at that time. At the time of the October 2000 valuation, Mr Cross realised that the market had reached its peak in mid-1998 and had fallen gradually from that level to a level lower than that applied to the established farms in October 1997. Therefore, those valuations were reduced by between 5% and 10%. However, the valuations applied to the larger farms south of the Murray River were low compared with those applied to the established farms north of that river because of the misreading of the earlier large sales. The valuations of those farms, including those of the subject lands, were increased to bring them into relativity with the valuations of the established cane farms.
That action by the respondent became a principal issue in these cases.
Mr Cross explained that in his opinion the market value of arable land had increased from about 1995 to mid-1998 when it had plateaued, before commencing a gradual decline to its present level in August 2002. Although he conceded that the market had fallen at the date of valuation in October 2000 from its peak 1998 level, the available evidence at the date of valuation indicated that the fall had been gradual and was not as significant as contended by the appellants. The market had fallen further since the date of valuation.
To support the respondent's valuations of the subject properties, Mr Cross set out the details of a number of sales, their analysed and applied values and comparisons. The analysis of each of those sales demonstrated a higher value for the arable content than the $2,675 per ha applied to the arable land on the Northern Butcheries' property and the $2,500 per ha applied to the arable land on the Warringha property. Neither the details of those sales nor Mr Cross' analyses of them were challenged. However, the relevance of all of them and Mr Cross' comparison in each case with the subject lands were the subject of criticism by Mr Dickson. Because this goes to the heart of the issue between the parties, it is necessary to discuss each of those sales.
Of the six sales, only Sale 1 occurred in 2000 (12 July), while the others occurred in September 1999 (Sale 2), October and August 1998 (Sales 3 and 4), November 1997 (Sale 5) and August 1996 (Sale 6).

The valuation of the Northern Butcheries' Land

In support of that valuation, Mr Cross relied on six sales of land which either had arable land, or land which he considered to have arable potential, suitable either for sugar cane or bananas, or a combination of both
Sale 1, from Kippin to Robson, with an area of 94.45 ha in July 2000 for $850,000, adjusted to the equivalent of $792,000, or $8,385 per ha, analysed to show an unimproved value of $355,000, or $3,760 per ha. Mr Cross considered the sale to be high because of its special circumstances and only $202,500, or $2,145 per ha was applied to that land as at 1 October 2000. Mr Cross pointed out that the applied value was only 57% of the analysed unimproved value. I have assumed that approximately $2,888 per ha was applied to the 65 ha of arable land, 45 ha of which was said to be suitable for bananas and 20 ha suitable for cane.
Sale 2, from McNamara to Dhillon, with an area of 139.6 ha in September 1999 for $1,106,000, or $7,925 per ha, analysed to show $553,000, or $3,960 per ha. Mr Cross commented that the market had softened between the date of sale and the date of valuation, but he considered that the applied value of $340,000, or $2,435 per ha, which was only 52% of the analysed unimproved value was conservative. I have assumed that approximately $2,829 per ha was applied to the 116 ha of arable land. This property was a former cane farm which has been converted to bananas since the sale.
Sale 3, from Masterlyn Pty Ltd to Camilleri, with an area of 189.2 ha in October 1998 for $1,025,000, or $5,400 per ha, analysed to show an unimproved value of $550,000, or $2,900 per ha. Mr Cross commented that this was an improved pasture property which was converted to cane and bananas since the sale. He applied an unimproved value of $490,000, or $2,600 per ha as at 1 October 2000, which represents about 89% of the analysed unimproved value. I have assumed that approximately $3,324 per ha was applied to the 140 ha of arable land.
Mr Cross pointed out that this was one of six properties sold by Masterlyn Pty Ltd of former King Ranch land; it had sold at the lowest rate per ha of those sales.
Sale 4 was also the sale of former King Ranch land, from Masterlyn to Poppi, with an area of 306.6 ha in August 1998 for $2,300,000, or $7,500 per ha, which analysed to show an unimproved value of $1,240,000, or $4,045 per ha. Mr Cross considered the price to reflect the market at the time and similar to that paid for neighbouring properties which converted from improved pastures to cane farming. He applied an unimproved value of $900,000, or $2,935 per ha as at 1 October 2000, which was about 72% of the analysed unimproved value. I have assumed that approximately $3,166 per ha was applied to the 280 ha of arable land.
In March 2001, Poppi sold approximately 76 ha of first-class arable land from that property to Collins, for a price in excess of $11,000 per ha as developed cane land. Notwithstanding that the sale occurred some five months after the date of valuation, Mr Cross considered it to be high because it had sold to the adjoining owner.
Sale 5 is also the sale of former King Ranch land, from Masterlyn Pty Ltd to Collins, with an area of 283.2 ha in November 1997 for $2,000,000, or $7,062 per ha. That sale analysed to show $975,000, or $3,440 per ha. Mr Cross explained that he had included the sale in spite of its early contract date, because the price paid was lower than at the height of the market and he felt it to be more reflective of the market as at 1 October 2000 than most of the 1998-99 evidence. The property was cleared to improved pastures at the date of sale and was converted to cane and bananas after the sale. However, at the date of hearing the property was wholly developed for bananas. The applied value of $850,000, or $3,000 per ha as at 1 October 2000, was about 87% of the analysed unimproved value. I have assumed that approximately $3,224 per ha was applied to the 260 ha of arable land.
Sale 6, from Spreadborough to Santo Silvestro Pty Ltd, with an area of 259.06 ha in August 1996 for $1,450,000, or $5,600 per ha, analysed to show $740,000, or $2,856 per ha. Mr Cross stated that he included this sale in spite of its early contract date to reflect the level of value paid for a grazing property with cane potential in the Upper Murray locality. As with the previous sale, he considered the market at that time to be less than the 1998-99 peak and more indicative of the market at the date of valuation, 1 October 2000. The applied value of $650,000 or $2,500 per ha, was about 88% of the analysed unimproved value. I have assumed that approximately $2,763 per ha was applied to the 230 ha of improved pasture land which Mr Cross considered to have potential for cane. He pointed out that the property was converted to cane after the sale; its clay to clay-loam soils would not be suitable for conversion to bananas.

Despite its early date, Mr Cross considered Sale 6 to be the most comparable to the subject land, although its arable land is of better quality and less broken in nature. He was conscious of the fact that most of his sales occurred in 1998 or 1999, a period when the market was higher, but he emphasised that the unimproved values applied to those sale properties as at October 2000 were low in relation to the analysed unimproved values. He contended that the lower values were applied to recognise the declining market at the date of valuation.
Mr Cross explained that the respondent's valuation of the Northern Butcheries' land was calculated as follows:
260 ha fair arable @ $3000 per ha $780,000 Less allowances for:
Cartage ($175 per ha) $45,500 Workability (broken) 5% $39,000 $84,500 $695,500 ($2,675 per ha) Plus: Balance land, gullies, timbered area etc 23.2 ha @ $500 per ha $11,600 $707,100 Less: Size allowance 10% $70,710 283.2 ha total area $636,390 Rounded to $630,000 ($2,225 per ha)

The Valuation of the Warringha Land

I turn now to consider the respondent's valuation of the Warringha land. Mr Cross referred to six sales to support the valuation, the details of which are contained in his valuation report. Sales 1 to 5 are of much smaller areas and were used to support the rate of $2,500 per ha applied to the arable area of 500 ha. His Sale 1 was Sale 2 for the Northern Butcheries' valuation which I have assumed had approximately $2,829 per ha applied to the 116 ha arable area, which Mr Cross considered to be better quality arable country than that on the Warringha land.
Sale 2, with an area of 483.77 ha, is another sale of former King Ranch land, from Masterlyn Pty Ltd to Mackay Pty Ltd, in June 1999 for $3,925,291, or $8,114 per ha. That sale analysed to show $2,390,000 or $4940 per ha. Mr Cross explained that about 400 ha had been cleared, of which 310 ha was considered to have arable potential. He thought the sale price to be high and this was reflected in his applied value of $1,050,000, or $2,175 per ha, which is only 44% of the analysed unimproved value. I have assumed that about $3,107 per ha was applied to the 310 ha arable area, which Mr Cross considered to be better quality arable land than that on the Warringha land.
Sale 3 is also Sale 3 in the Northern Butcheries' valuation, which I have assumed had about $3,324 per ha applied to the 140 ha of arable land, which Mr Cross considered to be of better quality than that on the subject property. Since the sale it has been converted to cane and bananas.
Sale 4 is also Sale 4 in the Northern Butcheries' valuation, which I have assumed had about $3,166 per ha applied to the 280 ha of arable land, which Mr Cross considered to be of superior in quality to that on the subject property.
Sale 5 is also Sale 5 in the Northern Butcheries' valuation, which I have assumed had about $3,224 per ha applied to the 260 ha of arable land, which Mr Cross considered to be of better quality than that on the subject property.
Sale 6 was the sale by tender of part of King Ranch to South Johnstone Mill Pty Ltd, which Mr Cross had said was at the highest price per ha of the eight parcels sold by tender in mid-1996. That property of 1,465 ha sold in August 1996 for $6,501,440, or $4,438 per ha and the sale was analysed to show $3,050,000, or $2,080 per ha. Mr Cross pointed out that while the price was considered to be high compared with the prices paid for the other seven parcels, later market evidence indicated that the sale was a "market leading sale". That property has an arable area of 1,320 ha, which Mr Cross considered to be superior to that on the subject land. The value applied to that property as at 1 October 2000 was $2,200,000, or $1,500 per ha. I have assumed that about $2,112 per ha was applied to the 1,320 ha of arable land.
Mr Cross explained that the Warringha land had been valued as follows:
500 ha poor to fair arable @ $2,500 per ha $1,250,000 Less: Cartage $80,000 Workability (broken) $125,000 $205,000 $1,045,000 Plus: Balance land, gullies, timbered areas etc 1,113.5 ha @ $500 per ha $558,000 $1,603,000 Plus: Ti-tree swamp 307.5 ha @ $250 per ha $76,875 $1,679,875 Less: Size allowance 20% $335,975 Total $1,343,900 Adopt $1,350,000 or $700 per ha

According to Mr Cross, allowances were made for various disabilities suffered by individual properties. In the case of the subject land, a cartage allowance of $160 per ha was made because of the long haul of 17 km to transport cane to the nearest tramline dump point. A 10% workability allowance was made to reflect the broken nature of the arable land. By far the greatest allowance was the 20% size allowance, which Mr Cross said was made to reflect the above average arable area. It seems that size allowances were made in respect of all properties where the arable area was in excess of a standard. The allowance was increased as the arable area increased. For example, in Sale 2 where the arable area was 310 ha, a size allowance of 10% was made, as it was for the Northern Butcheries' land where the arable area was 283.6 ha. In Sale 6, where the arable area was 1,320 ha, a size allowance of 30% was made. As explained earlier, in the valuation of the Warringha land where the arable area was 500 ha, the size allowance was 20%.

The Case for the Appellants

The appellants were represented by Mr Roy Dickson, who also gave evidence. In addition to being a director of both appellant companies, Mr Dickson is a registered valuer and real estate agent. In a detailed written statement (Exhibit 2), Mr Dickson set out the arguments for the appellants.
First he argued that the valuations did not conform to the requirements of the Valuation of Land Act 1944. This seemed to be largely based on the information contained in an explanation sheet (or brochure) which at some time had been given to Mr Dickson by the respondent's officers. In some earlier discussions the respondent's valuers had explained to Mr Dickson that the valuations of rural land in Cardwell Shire had been undertaken in two stages. It was his understanding that the valuers had reasoned that the market for the older farming area north of the Murray River had declined and values had been reduced by between 5% and 10% from the levels applied as at October 1997. However, the valuations in the new cane area south of the Murray River which had been converted from grazing to sugar cane growing were adjusted to obtain relativity with the valuations of the northern cane areas. That resulted in increases in the valuations in the new cane area, including the subject lands.
Mr Dickson said that he agreed with their objective and would have expected that result if the market had not fallen. He was of the opinion that the valuers had misread the market because there had not been sufficient market sales at the date of valuation. He contended that in such circumstances evidence other than sales must be used as a basis for the valuation, as the effect of a sharp rise or fall in the market is a temporary suspension of sales. In such a situation, he argued, sales cannot be a true reflection of the market. He was of the opinion that the fall in values in the older cane area was greater than 5% to 10%, so that the increases in the southern area to bring them into relativity, were too high. In essence, Mr Dickson argued that the use by Mr Cross of sales which occurred prior to the date of valuation did not accurately reflect the valuation at the date as the market had fallen.
Mr Dickson accepted that sales are normally the best evidence of value but, he contended, in a falling market they are not the only evidence and other evidence such as the opinions of real estate agents should be accepted. He argued that at such time a valuer should use all the information that is available to establish a market, not just sales. In that regard he referred to the fact that Masterlyn Pty Ltd which had previously sold the subdivided parts of King Ranch, including many of the sales referred to by Mr Cross, had called tenders for the sale of the remaining properties at about the date of valuation and received no tenders. He also referred to two after date sales which he contended started to reflect the lower market. These were the sales from Sammut and Scarpignato (the details of which were not provided), which he conceded were forced sales, but in his view forced only in the sense that the vendors were forced to take the market. Both sales, he asserted, confirmed what the industry already knew, that the market was down.
To illustrate his argument, Mr Dickson referred to the sale and resale of a property (the Hilltop property), of 78.61 ha. Although it was not a cane farm, it was good creek land with improved pastures and bananas on it at the time of the first sale. That property sold in October 1999 for $500,000. Eighteen months later, it resold in April 2001 for $380,000. In Mr Dickson's opinion, the resale some six months after the date of valuation demonstrated that the market had fallen before the date of valuation.
Mr Dickson also referred to several other sales which took place after the date of valuation, which he contended confirmed the downward trend:
·    the sale from Kerridge to Crema of 101.6 ha on 12 November 2001 for $300,000, which contained land suitable for sugar cane;
·    the sale from Grillo to Lizzio of 107.2 ha on 9 January 2002 for $390,000, a Tully cane farm;
·    the sale from Watson to Lizzio of 37.09 ha on 20 October 2001 for $123,000, a cane farm on prime land;
·    the sale from Watson to Lizzio of 25.187 ha on 20 October 2001 for $52,000, also a cane farm of reasonable quality;
·    the sale from Watson to Mac's Banana Co Pty Ltd of 29.621 ha on 20 October 2001 for $225,000.
Mr Dickson contended that those sales demonstrate that the cane land market had dropped in 2000 and that this trend had continued into 2001. He also contended that banana land should be considered separately from cane land. He went on to say that the first Watson sale was land which was ideal for bananas, but black sigatoka had been found on an adjoining property so it was sold as cane land, as was the second Watson sale which is only suitable for cane. The third Watson sale was bought to convert to bananas.
Mr Dickson went on to state that Watson was not forced to sell, as was the case in the Sammut and Scarpignato sales; he was forced to take the market, not forced to sell below the market.
Mr Dickson also referred to another sale of 59.85 ha from Bosch to Jackson on 29 August 1997 for $495,000; Jackson got into financial difficulties and placed the property on the market. After a lengthy period it sold recently to Galipo for $250,000, including a crop of sugar cane. Mr Dickson maintained that more than any other sale, that sale proved what the market value was at the time of valuation, as Jackson had tried to sell from around that time but could not.
Mr Dickson gave a further example, referring to the sale from Fagabo Pty Ltd to Nash of 199.4 ha on 16 May 1998 for $665,000. According to Mr Dickson, Nash cleared the land and planted cane; he then resold to Eaton and Piper for $628,700 at great financial loss.
Based on that evidence, Mr Dickson reasoned that if the value of improvements, crops, land levelling and preparation were added to the respondent's unimproved value, the resulting improved value would be in excess of the price that could have been obtained for the Northern Butcheries' land. He undertook an exercise designed to demonstrate that the unimproved value applied to the Northern Butcheries' land was too high, based on the value of improvements added to the unimproved value:
Unimproved Value applied by the respondent               $630,000
Clearing and grassing 260 ha @ $1,500 per ha            $390,000
House, yards, water and fencing  $70,000
Sale price in 2000 based on unimproved value          $1,090,000
Mr Dickson contended that a sale price in excess of $700,000 could not have been achieved since the fall in land prices and that as a cattle property, a price of between $500,000 and $600,000 would be more likely; if the value of improvements was deducted, the result would be a maximum unimproved value of $240,000.
In an attachment to his statement (Exhibit 2), which seems to be information provided earlier to the respondent in support of his objection to the Warringha valuation, Mr Dickson set out a similar exercise in respect of the Warringha land as follows:

"1. Cost of clearing, drainage, levelling and land
preparation for 120 ha cane land @ $5,000 per ha $600,000

2. Cost of clearing and grassing –
380 ha of grazing land @ $1,500 per ha $570,000

3.     Fencing in poor condition  N/V
4.     One bore and two water tanks in the cane land
and not used  N/V
Unimproved value  $1,160,000
        Total  $2,330,000   "

(The unimproved value of $1,160,000 seems to be the respondent's adjusted unimproved value of $1,200,000 following exclusion of the area of 460.7 ha purchased by the EPA, less the allotment values of Lot 121 and Lot 134 of $40,000.)

Mr Dickson contended that as at 1 October 2000 the whole of the Warringha land, including the area acquired by the EPA, could not have been sold for $1,500,000. He reasoned that assuming that a sale price of $1,500,000 could be achieved, if the value of improvements of $1,170,000 was deducted, the result would be an unimproved value of $330,000 and if the values of Lot 121 and Lot 134 were included at $40,000, the resulting total unimproved value would be $370,000.
Mr Dickson's assessment of the movement in the market for cane land was expressed in the following terms:

"There was a rise in market from date of announcement of increased assignments. Particularly affected was land south of Davidson where no sugar previously and particularly after South Johnstone and Mourilyan Mills actively sought new growers. This peaked around '99 and the fall in price expectation caused not a steady decline but a sharp drop to well below any market in recent years. This happened in 2000. Vendors would not willingly sell but what they would not do was meet a market. As a few isolated sales met market, what all in the industry knew was confirmed by sales that were as close to effective date as the higher sales being relied upon. This is the state at present."

Apart from the argument concerning the fall in the market, Mr Dickson contended that the valuation of the Warringha land was adversely affected by the Vegetation Management Act 1999 and the recent introduction of conservation policies which had a major impact upon the property. It seems that the Warringha land was originally included in the World Heritage Area and although it was subsequently excluded, the interest of the environmentalists has continued, apparently because it is regarded as corridor habitat for the mahogany glider.
In addition, he contended that the remaining vegetation on the property has been classified as "of concern" or "endangered". Mr Dickson alleged that he had been warned by EPA staff that any attempt to clear without a permit would attract a heavy fine. He felt that apart from the 800 ha already cleared, the timbered area would have no value as it could never be cleared or put to any use. In any case, he was of the view that most purchasers would avoid a property that had received consistent attention from the EPA and conservation planners interested in vegetation management

Consideration of the Issues

The principal issue between the parties in these two cases relates to a matter of timing. There was no argument about the details of the sales which occurred or the classification of country on the sales. The analyses of those sales used by Mr Cross to support the valuations were not challenged. It was agreed that the market for cane land had gradually increased from about 1995 to a peak in either 1998 (Mr Cross) or early 1999 (Mr Dickson) and that the market had fallen from that peak to the date of valuation, 1 October 2000, and had continued to fall to the date of hearing in August 2002.
What is in issue is the extent of the fall in values to 1 October 2000 and the level of values as at that date. Mr Cross was of the view that the fall in the market was gradual, while Mr Dickson contended that the fall was steep and that the level of values applied by the respondent could not be maintained.
Unfortunately, there is no evidence directly related to the date of valuation. The available sales took place either before or after the date and those closest to the date show somewhat conflicting results. Complicating the whole matter is the fact that what is required to be found is the unimproved value, so that the value of improvements on both sales and subject properties must be excluded from consideration.
Mr Cross analysed each of the sales to which he referred to unimproved values. On the other hand, Mr Dickson referred to improved sale prices. The difficulty in analysing some of the sales is illustrated by Mr Cross' Sale 1 in the Northern Butcheries' case, which occurred only three months prior to the date of valuation in July 2000 and which in normal circumstances should be the best evidence of value. However, there were special circumstances surrounding that sale which lessen its evidentiary value. According to Mr Cross, the purchaser had been leasing the property, which adjoined his own, from the vendor, who provided vendor finance for a substantial part of the sale price. In addition, there was a lease-back of the living quarters to the vendor for $1 per week for three years. To allow for these special circumstances, Mr Cross discounted the sale price to $792,000 and analysed the adjusted price to show $355,000 unimproved value, of which he applied $202,500. However, in my view the circumstances of that sale and the adjustments required are such as to render it less than perfect as a basis. Perhaps the only thing that could be said for the sale is that it is not evidence of a significant fall in the market.
There were other sales of smaller areas of land in June and July 2000, which gave no indication that the market had fallen to the extent alleged by Mr Dickson. Although Mr Cross mentioned them in his oral evidence, it was apparent that they were not comparable to the subject land, which is no doubt why they were not included in his valuation reports. He mentioned the sale from Vipiana to Hodgson of a former cane farm of about 30 ha on 8 July 2000. The purchaser entered into a five-year lease over the property with a predetermined purchase price in five years' time at $320,000. Mr Cross calculated the present value at July 2000 at $237,000, which analysed to $102,000 unimproved value. Mr Cross applied an unimproved value of $79,000 to that property.
He mentioned another sale in June 2000 from Nissen to Moulsdale of 30.9 ha for $260,000, which analysed to show $83,000 unimproved value and Mr Cross applied that figure at the date of valuation. It was an improved pasture sale but valued as arable.
Mr Cross conceded the resale of the Nash property to Piper and Eaton in September 2000 for $628,700, was the only sale that showed a lower unimproved value than he applied as at 1 October 2000. He analysed that sale to show $120,000, but at the date of valuation had applied an unimproved value of $255,000, as he did not feel it reflected market value at that time. His investigations of the sale revealed that the property was sold for reasons of ill health and there were other complications involving farm planning and clearing, which had resulted in the loss of assignment.
Mr Cross went on to say that those sales were the last that occurred before the date of valuation up until the after-date sales in April 2001. In his view, the earlier sales supported the values applied as there was only one sale, the sale from Nash to Eaton and Piper which was against that trend.

The other sales in June and July 2000 gave no indication that the market had fallen below the level applied at the date of valuation. However, Mr Cross did not use them directly as a basis to support his valuation as they were not directly comparable to the subject lands, being of much smaller areas.
Mr Cross was aware of the sales referred to by Mr Dickson which occurred some six months after the date of valuation. However, after examining the circumstances behind each sale, Mr Cross concluded that they were all forced sales and did not comply with the test of market value as set out by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418.
Mr Cross had analysed both sales of the Hilltop property. After deducting the value of improvements, the first sale showed an unimproved value of $267,000. As at 1 October 2000, the respondent had applied an unimproved value of $180,000 to that property. Mr Cross analysed the resale to show $152,000.
As well as those lower sales, Mr Cross stated that there were after-date sales which demonstrated no fall in the market from the date of valuation. In addition to the Poppi to Collins sale already referred to, there was another sale in April 2001 from Porter to Forestry Rewards Pty Ltd, of a 98.34 ha parcel which was thought to have been sold for $515,000. Mr Cross analysed the sale to show $193,000. At the date of valuation an unimproved value of $225,000 had been applied to that property. However, only recently Mr Cross received information that the sale price was not $515,000 but $538,000 which would show an analysed unimproved value much closer to the figure applied.
Therefore, apart from the Nash sale, there is no evidence to indicate that the market had dramatically fallen prior to the date of valuation. There is certainly evidence of some forced sales six months after the date of valuation which could indicate a lower market. However, there is also evidence of after-date sales which would seem to show little or no fall in the market. As explained by the valuers, each of those low sales were made in circumstances which would render them inappropriate as a basis for the valuation.
While the authorities make it clear that mortgagee and other forced sales are admissible as evidence and not to be rejected out of hand, the weight to be attached to such sales will depend upon the circumstances of those sales: see for example Waterhouse v. The Valuer-General (1927) 8 LGR (NSW) 137; re Murray (1934) 13 LVR 25 and Dobson v. The Valuer-General (not reported) a decision of the Land Court dated 22 November 1988.
However, it is clear that such sales must be treated with caution. In the text "Land Valuation and Compensation in Australia", published 1971, Messrs Rost and Collins make reference to forced sales at p.95 of the 1996 reprint:
"It is often assumed that when a mortgagee, sheriff, or receiver exercises his power to sell a property, he is concerned primarily to recover the amount advanced or the amount of the debt. Consequently, there is some inclination to discard such sales as conclusive evidence of value. This view, however, has not always been taken by the courts."
After considering some of the authorities, the authors conclude:
"Thus the extent to which reliance should be placed upon sales made to satisfy debts will depend on the circumstances under which the sales were made. If other sales of a more normal character are available, sales of a doubtful nature should not be used although they should be fully investigated."
I feel that I cannot place any weight on the much later sales, that is, the three Watson sales, and the Kerridge and Grillo sales, as they are too remote from the date of valuation and therefore give no indication of the market at that date. There seems to be little doubt on the evidence that the market for arable land in the Cardwell Shire was significantly lower 12 months after the date of valuation.
After considering all the evidence, I have come to the conclusion that the sales before the date of valuation lend more support to the level of values applied by Mr Cross than to the level of values contended for by Mr Dickson. Both valuers agree that at the date of valuation the sales showed a fall in the market from the peak in 1998 or 1999, but there is little evidence to indicate that the market had fallen as sharply as Mr Dickson asserted.
Mr Dickson contended that the sales relied on by Mr Cross do not reflect the values at the date of valuation, that the market had fallen further and in those circumstances it was to be expected that there would be no sales, as vendors were reluctant to accept that lower market level. Therefore, Mr Dickson asserted, evidence other than sales must be referred to and, among other things, he attempted to justify his conclusion by referring to sales after the date of valuation.
Certainly the after date sales indicate that the market has fallen further since the date of valuation. However, that does not greatly assist the appellants, as the respondent is required to determine the unimproved market values as at the date of valuation. Mr Cross thought that little relevance could be placed on any of the after date sales, even those that occurred only six months after the date.
It is well established that sales subsequent to the date of valuation are both admissible and relevant, provided that circumstances have not significantly changed. The matter was considered by the High Court in Daandine Pastoral Company v Commissioner of Land Tax (1943) 7 The Valuer 299, where Williams J said at p.304:
"Values must be calculated in the light of circumstances which existed on the material date ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless. ... The whole tendency of the courts is to admit evidence of any events prior to the date of trial which will throw any real light on the issues."
Williams J expressed similar sentiments in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at 16.
In the text "The Law of Resumption and Compensation in Australia" 1998, Law Book Company, Marcus Jacobs QC, in discussing the use of comparable sales in assessing compensation for resumption, referred to the following comments by the Federal Court:
"Where comparable sales include transactions after resumption, all necessary adjustments should be made in order to reflect increases in the market and pressures on the market: Cotton v The Queen (1977) 10 LCR 39. Prices paid for comparable land during a period of rapidly increasing sale prices are not as good an index of value as sales in more stable conditions: Nissen v The Queen (1977) 11 LCR 115." (p.280)
This would also apply to sales in a period of falling sale prices, as in the present cases.
In my view, the after date sales are of little assistance in determining the level of values for cane land at the date of valuation. Most of them are not cane land and of those that are, there is the complication that special circumstances may have resulted in prices which could be below the market (eg the Watson sales) or above the market (eg the sale Poppi to Collins).
I have come to the conclusion that the after-date sales do not demonstrate that the values applied by Mr Cross were incorrect at the date of valuation. What they do appear to indicate is that the market had fallen since that date. There is no doubt that the market for cane land has deteriorated since the date of valuation as the circumstances of the sugar industry have worsened. However, I accept the evidence of Mr Cross that at the date of valuation there was still a degree of optimism that the world price of sugar and the profitability of the industry could improve. Unfortunately that has proved not to be the case and the industry is suffering badly. However, the valuations under appeal do not relate to the market today, but at the date of valuation. The test is not what a prudent purchaser would pay today for these properties if they were in an unimproved state, but what such a purchaser would have thought of the prospects of the industry and the market at 1 October 2000.
The exercises undertaken by Mr Dickson to arrive at the unimproved value of each of the subject lands have no validity. They seem to rely on the proviso to the definition of "unimproved value" in s.3(2) of the Act. However, apart from other failings, there is no evidence to establish the improved value or value of improvements in each case, simply Mr Dickson's opinions.
As explained earlier in these reasons, the respondent is required to make valuations annually, but in certain circumstances explained in s.37, the making of an annual valuation in a local government area may be delayed. The purpose of providing for annual adjustments to valuations was explained in the "Record of the Legislative Acts" for the Second Session of the Forty-fourth Parliament of Queensland at p.158, at the time of the 1985 amendments to the Valuation of Land Act 1944:
" The amending Act inserts into the Valuation of Land Act new provisions under which the Valuer-General is charged with the duty of making annual valuations. It provides for a complete code governing the making of annual valuations, the informing of landowners of such valuations and a process of objection and appeal. Annual valuations, like general valuations, will be made by the Valuer-General following an investigation of the market for land based on sales evidence at the date of valuation. The new system of annual valuations should make large increases in valuations a thing of the past. Moreover, the effect of any downward trend in land prices can be reflected in unimproved values shortly after it is identified.
Trials carried out by the Valuer-General's Department have indicated that the system of annual valuations would have the desired results. The trials demonstrate amply that an annual valuation system will allow an early adjustment to values in areas in which land prices are depressed and where market conditions are increasing. The advantages of such adjustments on an annual basis would eliminate the excessive fluctuations which at times accompany valuations which are reviewed at periods of up to eight years."
The evidence indicates that the valuations in this area are now in urgent need of review. There can be no doubt that the market has fallen since 1 October 2000 and substantial adjustments are required.
There is only one other major issue to be dealt with. That is the assertion by Mr Dickson that the provisions of the Vegetation Management Act 1999 and the interest by the Environmental Protection Agency and others have rendered the timbered area of the Warringha land of little or no value. Despite having reservations as to whether a permit could be obtained to clear at least part of that land, Mr Cross has assessed all the timbered land as having no potential for further development. He has valued 1,113.5 ha at $500 a ha and 307.5 ha of the ti-tree swamp area at $250 per ha. While Mr Dickson contended that the values applied to the timbered area are excessive, he produced no evidence by way of sales to show that this was the case. Indeed, the valuation under appeal includes an area of 460.7 ha of the timbered land which has been acquired by the Environmental Protection Agency in September 2001. For the purposes of that acquisition, a value of $1,000 per ha was applied. While that in itself is not evidence of the value of the timbered area, it certainly does not indicate that the values applied by Mr Cross are excessive.
In the absence of evidence to the contrary, I will accept the values applied by Mr Cross to the timbered area.
Finally, it was argued by Mr Dickson that the arable land on Warringha is not really suitable for cane. He said that the Department of Primary Industries had opposed the granting of an assignment over part of that area because it was regarded as being too low and wet. Mr Dickson said that those reservations were proved to be well founded and that very extensive drainage has been necessary to support what he regarded as the largely unsuccessful cane-growing operation on Warringha.
However, the fact remains that cane is grown on part of the area assessed by Mr Cross to have arable potential. The basic rate applied of $2,500 per ha was towards the lower end of the scale of cane values applied by Mr Cross. Furthermore, he has allowed a 10% workability allowance for the arable area and a 20% size allowance to the whole of the property. In the circumstances, it has not been demonstrated that Mr Cross' valuation is excessive.

Conclusion

Section 33 of the Valuation of Land Act 1944 states:
"Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered."
In Brisbane City Council v The Valuer-General (1978) 140 CLR 41 at 56-57, the High Court considered the provisions of the predecessor to s.33 (s.13(7) of the Act. Gibbs J (as he then was), with whom the other members of the Court agreed, said:
"In my opinion once it has been shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by section 13(7) is rebutted ... In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted."
In these cases, Mr Dickson contended that the respondent acted upon a wrong principle in relying upon sales prior to the date of valuation. In addition, he contended that the respondent had made a serious error of fact by not recognizing that the market had fallen significantly in 2000. Furthermore, he contended that the respondent had made the valuations by a method fundamentally erroneous relying upon sales evidence rather than having regard to other evidence to determine the valuations as at 1 October 2000.
I cannot accept Mr Dickson's contentions. In my view, the evidence does not establish that the respondent acted upon a wrong principle or made a serious error of fact or that the valuations were made by a method fundamentally erroneous. Therefore, I am of the view that the presumption of correctness provided for in s.33 of the Act must be given effect and the appeals against these valuations be dismissed.

Orders
1.In Appeal AV2001/0332, the appeal is dismissed and the unimproved value as at 1 October 2000 is affirmed at Six Hundred and Thirty Thousand Dollars ($630,000).

2.In Appeal AV2001/0333, the appeal is dismissed and the unimproved value as at 1 October 2000 is affirmed at One Million Three Hundred and Fifty Thousand Dollars ($1,350,000).

JJ TRICKETT

PRESIDENT OF THE LAND COURT

[2002] QLC 77

25 September 2002