Mastrippolito v Department of Natural Resources, Mines and Water
[2007] QLC 131
•18 December 2007
LAND COURT OF QUEENSLAND
CITATION: Mastrippolito v Department of Natural Resources, Mines and Water [2007] QLC 0131 PARTIES: Lynette T & Giovanni G Mastrippolito
(appellants)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NO: AV2006/0710 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944. DELIVERED ON: 18 December 2007 DELIVERED AT: Brisbane HEARD AT: Ingham MEMBER: Mr R P Scott ORDER: The appeal is allowed and the valuation of the subject land is determined at Two Hundred and Ten Thousand Dollars ($210,000). CATCHWORDS: Unimproved value – reduction – adequacy of "allowances" in comparison – nominal value of balance land. APPEARANCES: Mr G G Mastrippolito for the appellants.
Mr D J Lang, Legal Officer, Crown Law for the respondent.
As required by s.13 of the Valuation of Land Act 1944 (the Act) the Chief Executive valued the land owned by the appellants initially determining a figure of $222,500 as at a valuation date of 1 October 2005. Following objection from the appellants the Chief Executive offered, under s.68(2) of the Act, a reduction in valuation to $215,000 which was not accepted. In accordance with s.68(3) of the Act the valuation appealed against is $215,000. For their part of the appellants contended for a figure of $140,350 which is a reduction of just under 20% from the valuation which applied prior to that the subject of this appeal.
Giovanni Giuseppe Mastrippolito, a co-owner, gave evidence for the appellants whilst Stephen Allan Cross, a registered valuer, provided evidence that supported the Chief Executive's figure.
Mr Mastrippolito said that he noticed that properties in the vicinity of the subject land had, as at 1 October 2005, had their valuations reduced by about 19.9% from that which applied previously. It was that evidence which led the appellants to the valuation figure they contend for. Mr Cross gave evidence of detailed investigations that he had undertaken into cane farms in the Hinchinbrook Shire focusing, amongst other things, on cane expansions on farms. He noted that, whereas the previous valuations of the subject property had classified a maximum of 75 hectares as being arable, his inspection of the subject land coupled with the available aerial photography and soil classification data, revealed about 115 hectares should be classified as "poor to fair" arable country. Having regard to that he formed the view that the previous relativity of the subject value with neighbouring properties needed to be reviewed. That is clearly the case. Indeed, Mr Mastrippolito's approach of merely adjusting the value of the subject land by having regard to changes in valuations of other properties is one that has been rejected by this Court on numerous occasions. In Barnwell v Valuer-General[1] the Land Appeal Court said:
"It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation. If there was no justification for change in relativity, the valuer's task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula. This, of course, is undesirable."
[1] (1990-91) 13 QLCR 13 at 17.
The subject property has an area of 254.869 hectares and is located about 29 kilometres by road southerly of Ingham and about 95 kilometres north of Townsville. The land comprises a large irregular-shaped aggregation of low lying ex-coastal forest and tropical scrub country originally timbered with blue gum, bloodwood, messmate, poplar gum and ti tree. It is broken by Waterview Creek and bounded by Cattle Creek and Leichhardt Creek along its northern and its north-eastern boundaries and Broken Gully Creek along its southern boundary. There is a prominent area of ti tree swamp associated with Waterview Creek and a large expanse of tidal mangrove country in the south-eastern corner. The property is downstream from a substantial catchment area and experiences seasonal flooding because of that and because of its low-lying position in the landscape. Approximately 140 hectares of the property has been cleared and developed for either sugar cane or pasture with the remaining area comprising timbered creek lines, ti tree swamp and tidal mangrove country which were together referred to as the "balance land" during the hearing. The property is predominantly utilised for sugar cane farming.
By reference to six sales and checked with comparison with some relativity properties Mr Cross valued the subject land as follows:
115 ha Poor to Fair arable @ $1,885/ha $216,775
Less Allowances
Workability (10%) $21,678
Flooding/Drainage (7.5%) $16,258
Pests/Weeds (5%) $10,839 $48,775
$168,000
(Net Arable reflects $1460 per hectare)
Plus Non Arable/Grazing land
25 hectares @ $750 per hectare $18,750Plus Balance land (timbered areas)
114.869 hectares @ $250 per hectare $28,717254.869 hectares $215,467
The unimproved valuation was rounded to $215,000 reflecting $845 per hectare overall.
The appellant challenged the adequacy of the "allowances" in Mr Cross's assessment, but more particularly focused on the balance land valuation figure. In addition, Mr Mastrippolito raised a series of points arising from his reading of Mr Cross's valuation report. It will be convenient if I deal with those points now.
In accordance with s.34 of the Act Mr Cross valued the subject land, which comprises an aggregation of titles, as if it were a hypothetical single arable parcel; that is, how it is actually used. That approach is both permitted by the Act and leads to a valuation approach which accords more with the way in which the property is held and used than would a valuation which attempted to strike figures for each of the four lots comprising the subject aggregation.
In his valuation report Mr Cross wrote that the access road to the subject land "is a formed gravel road subject to seasonal inundation, in the vicinity of and at the frontage to the subject aggregation. … Access to the subject aggregation is generally considered fair to good with problems experienced during the wet season." Mr Mastrippolito took issue with the description "fair to good" providing me with comprehensive photography and other evidence indicating how the road is affected by flooding. He also said that the road can become quite slippery when wet, yet dusty when dry. Whilst he did not say as much I gather that his broad description of the access road would be "poor to fair". However one might wish to describe it, I at least have a good understanding of the nature of the access road. I accept that Mr Cross had a similar understanding.
Mr Cross said in his valuation report "there are no current restrictions on use". Mr Mastrippolito pointed out that as at the date of valuation permission to clear the timbered areas including the mangrove vegetation would not have been permitted. That was accepted. Mr Cross explained that his reference to there being no restrictions was simply a reference to the ability of the owner of the subject land to farm the arable area without restriction. That is clearly correct.
Mr Mastrippolito mentioned the substantial works needed to transform the virgin land into the improved farm. Mr Cross acknowledged that such works would have been needed. There was no cogent evidence led before me that Mr Cross had not attempted to strike other than an unimproved value of the land.
Mr Cross said this about soils on the subject property:
"Soils on the property comprise second class arable sandy clay loam to loamy clays characterised by the Toobanna and Lee series to third and fourth class arable flooded medium to heavy clays of the Molonga and Brae series."
Mr Mastrippolito challenged Mr Cross's classification of soils as including Molonga class arable, though did not offer an alternative classification. Mr Cross had employed a broad brush soil classification map (Exhibit 7 Appendix 5) which purportedly mapped soil classifications, though patently not in a refined way. Mr Cross also employed aerial photography, a farm plan and sugar suitability data. In addition he researched departmental files and read the valuation report prepared by departmental valuer Dominic Thomas Treston for the valuation dated 5 February 1992.
In contrast to that matrix of evidence, Mr Mastrippolito relied on a small scale map not suited to the purpose of identifying soil types at an individual title level and on Mr Treston's classification of soils in his 1992 valuation report. Whilst it may be acceptable to refer to such materials as Mr Treston's report, it is not appropriate to proceed as if those parts of that report selected by Mr Mastrippolito as accurate are in fact accurate. Mr Treston was not called to give evidence. My conclusion on this point takes into account Mr Mastrippolito's evidence on cane and production figures. I accept that sandy strips may be found in cane fields – a feature consistent with Mr Cross's appreciation of the quality of the land in the subject property. Mr Mastrippolito also made reference to concerns about global-warming, but did not adduce evidence to cogently point to the impact of that from phenomenon on the quality and utility of the subject land at the relevant date for valuation. The better evidence is that Mr Cross's description of the quality of land should be accepted.
I now move to consider Mr Mastrippolito's criticism of the allowances made by Mr Cross and mentioned at [6]. Mr Mastrippolito described the property as being the worst in the neighbourhood with respect to its flooding and drainage difficulties, workability issues and the presence of pests and weeds including feral pigs. Whilst it is well and good to prefer a lower valuation and to target the "allowances" in that quest, an appellant needs to lead tangible comparative evidence in order to influence this Court to depart from the valuation provided by the Chief Executive. Mr Cross said that there was one property only in the Hinchinbrook Shire with greater allowances than the 22.5% total allowances provided for in the case of the subject property. That other property had allowances totalling 25%. I notice that in comparison with the various relativity properties referred by the parties, the allowances in the case of the subject property are the highest in the neighbourhood and are generally higher than sales properties referred to by Mr Cross which I discuss below. Apart from that I observe that the arable values placed on relativity properties in the vicinity of the subject land referred to by Mr Cross are all higher than the net arable value applied to the subject land. In short, Mr Cross has demonstrated acceptance of Mr Mastrippolito's contention that the subject property is the worst in the neighbourhood. That tends to indicate that Mr Cross's allowances are appropriate, subject to what I say below as to the need for a further allowance for flooding/drainage. Mr Mastrippolito provided evidence which converted, for example, Mr Cross's allowance for pests/weeds to a figure which represented the amount of local authority rate reduction for that level of allowance. He contrasted that figure with the annual cost of pest control to purportedly demonstrate the inadequacy of the allowance. I do not accept that as being a valid valuation method.
Mr Mastrippolito was generally critical of the six sales relied upon by Mr Cross suggesting that they did not exhibit disabilities to the extent found on the subject property and thus, the criticism went, the sales were not comparable. Mr Cross conceded that he was not able to find sales in the immediate locality of the subject land therefore needed to cast his net wider and to obtain sales from other localities within the shire. I accept the suggestion that Mr Cross has not been able to identify the perfect sale to compare with the subject property, however there are degrees of comparability and it seems to me that the sales included in his valuation can, with the application of the expert opinion of an experienced valuer, be utilised in valuing the subject land. Each of the sales makes a contribution to the overall intellectual process of valuation, a process which Mr Cross appeared to carry out in an objective and skilled manner. Apart from what I say below about flooding/drainage, the comparisons made by Mr Cross between the sales and the subject property are not upset by any of Mr Mastrippolito's evidence. No sales evidence was provided by Mr Mastrippolito which might have pointed to the utilisation of different sales from those provided by Mr Cross.
Mr Mastrippolito said that all of the sale properties included in Mr Cross's valuation were purchased by out of town individuals at prices not taken up by locals. I have no evidence as to why the locals did not buy these properties nor would I expect such evidence to be readily available. The sales provided by Mr Cross generally reveal a consistent level of value leading up to the relevant date for valuation. Apart from that evidence, if it is the case that a certain class of buyer sets the market then one would not expect a prudent vendor within that market to sell at a lower price level. Mr Mastrippolito also said that each of the sale properties was on the market for a considerable period. The suggestion appears to be that the properties were not attractive at the price being sought by the vendor in each case. That may well be correct, however it is clear that purchasers, not shown to have been over anxious or ill informed, did purchase the properties thus indicating that each property found its market level.
Sales numbered 4, 5 and 6 in Mr Cross's valuation sold in October 2005, November 2005 and February 2006 respectively. Mr Mastrippolito suggested rejection of these sales as sugar prices had sharply increased towards the end of 2005. Whilst sale 6 is clearly after date it is a grazing property therefore not directly comparable and presumably not affected by sugar price changes. It provides support evidence as to market trend. The other two sales are near the relevant date for valuation and prima facie should be accepted, all other things being equal, as suitable evidence for valuation. Mr Cross was aware of the increase in sugar prices. In the absence of comprehensive evidence indicating that sales 4 and 5 were aberrations and did not reflect suitable market transactions in accordance with Spencer v The Commonwealth[2] then they need to be taken into account.
[2] (1907) 5 CLR 418.
In his consideration of Mr Cross's sale number 1 Mr and Mrs Mastrippolito was critical of the fact that the flooding drainage allowance for the subject property was 7.5% but it was 5% on the sale property in circumstances where the subject is clearly inferior in this regard. He also mentioned the pests/weeds allowance, but there was no evidence that the subject property is inferior to sale number 1 in that respect. As to the flooding/drainage allowance – it seems to me that the better approach is to acknowledge that the loading in the allowance in the subject property represents a 50% increase from that applied to the sale property.
In his valuation report Mr Cross said of his sale number 2:
"The property is a fully developed cane farm and whilst it possesses more productive arable country than the subject property it is more flood prone with approximately 75 hectares (or 44%) of the property forming part of the High Hazard Floodway or High Hazard depth zone as delineated in the Hinchinbrook Shire Flooding and Inundation Map (Refer Appendix 8)."
In the statutory valuation of the sale 2 property Mr Cross made a 5% allowance for flooding and drainage. Mr Mastrippolito suggested at one stage that the sale 2 property was not flood prone however the evidence points clearly to that property suffering that disability. Sale number 4 in Mr Cross's valuation report was said by him to experience substantial flooding with approximately 34 hectares identified as forming part of the high hazard floodway. Again only a 5% allowance for flooding and drainage was made on that property in its statutory valuation compared with the higher allowance level applying to the subject.
In his valuation report Mr Cross wrote of the subject property:
"The property experiences seasonal flooding as a consequence of its low-lying position in the landscape and the existence of four creeks either bordering or intersecting the property however flood levels on the property seemingly do not exceed 1.0 metre in height (Refer Appendix 8) as the property has not been identified on the Flooding and Inundation Map of Hinchinbrook Shire."
Appendix 8 was a map entitled "Hinchinbrook Shire Flood and Inundation Map". Notwithstanding that broad description the better evidence is that the map does not purport to deal with flooding other than arising from the Herbert River and within a specified study area. The subject land is not affected by Herbert River flooding according to Mr Mastrippolito and is not within the identified studied area. Flooding on the subject land is localised.
I accept that Mr Cross's reference to the map included as Appendix 8 to his report was erroneous. The allowance that he has made for flooding and drainage on the subject therefore reflect an incomplete appreciation of the effect of flooding on the land which seems to be to a greater depth on parts of the land than Mr Cross understood to be the case. It is also important that the frequency of the flooding on the subject land be acknowledged. It is almost an annual event according to Mr Mastrippolito.
I conclude that having regard to the evidence overall, including oral evidence from Mr Mastrippolito and Mr Cross as well as the sales evidence, the allowances made by Mr Cross in his valuation of the subject property are shown to have been insufficient only with respect to the flooding/drainage allowance. I will increase that to 10%. Mr Cross has otherwise adequately acknowledged the circumstances which apply to the subject land – circumstances quite well demonstrated by Mr Mastrippolito in his oral and photographic evidence.
The value of $250 per hectare placed on 114.869 hectares of "balance land" (including 58 hectares of mangroves) by Mr Cross was, I observe, the issue about which Mr Mastrippolito expressed the greatest concern. He suggested a value of $10 per hectare for that land though only on the basis that he understood that all land must have some value. In truth he preferred that a nil value apply to the balance land though acknowledged that the mangrove area acted as a buffer to his cane production land and therefore afforded a direct benefit to the subject land albeit a passive one. Mr Mastrippolito said that the balance land harbours feral pigs and weeds and is managed by the appellants for the common good. On that basis it should have nil value in his opinion. Mr Mastrippolito's reference to a nil value for the balance land was said by him to be supported by the valuation report by Mr D Treston for the 1992 valuation in which the valuer applied a nil value to 138 hectares of mangroves. That area has now been reduced following the creation of a fish habitat reserve. I notice that in Mr Treston's valuation he applied a value of $50 per hectare to the 29.8 hectares of ti tree swamp identified in his valuation. That is included as part of Mr Cross's balance land class.
The evidence was that there are no sales of pure mangrove or dominantly mangrove country available upon which a valuation might place reliance. Mr Cross provided valuation evidence Pajares v State of Queensland[3] to the effect that mangrove country ought to be valued at $250 per hectare instead of the $775 per hectare contended for by the claimant for the 390 hectares of mangrove resumed.[4] Although the Court preferred and accepted Mr Cross's opinion, the learned President noted there was an absence of sales evidence. I observe that in compensation matters it is appropriate in a case of doubt to lean in favour of the claimant (Commissioner of Succession Duties (SA) v Executor and Agency Co of South Australia (1947) 74 CLR 358) however notice that the Court in Pajares did not resort to the application of that principle, but preferred the figure of $250 per hectare to the figure that would have favoured the claimant.
[3] (2003) QLC 0044.
[4] [273] [274].
In such cases as this where a nominal value approach is adopted, the adequacy of the valuation is a matter that falls for consideration. Mr Mastrippolito noticed that in Pajares arable land was valued at up to $8,000 per hectare. He suggested that $250 per hectare for balance land in the case of the Pajares property may have been appropriate in those circumstances but that balance land on the subject property ought to be proportionally valued having regard to the arable value there. Whilst there is arguably some merit to this thesis it falls down when one has regard to the fact that in Pajares the Court was dealing with the improved value of arable land not unimproved values.
With the exception of sale 1 Mr Cross applied a value to balance land in his sales analyses generally at $350 per hectare. He said that $250 per hectare is his "basement" value which applies where larger areas such as in the subject case are involved. If he had analysed the sales on the basis that balance land had a nil value the result would be to enlarge the amounts placed on other classes within the sale properties including the arable component. The net affect of that would be to increase the value of arable land on the subject property by comparison. The corollary of that is that an application of a nil value to the balance land on the subject property would result in a discounted arable component value in the absence of some further adjustment.
Reference was made to Mr Cross's sale 1 which has 214.513 hectares of land classified as balance and analysed at $250 per hectare. Mr Mastrippolito suggested that the sale land had been used as a quarry in the past and suggested some use as grazing might have been available. No carrying capacity was mentioned. Mr Cross described the balance land on sale 1 as being a "mountain" with no identified potential. The quality of that land can be contrasted with the better quality arable land on the property. The property was purchased for grazing. In my experience graziers would often prefer to fence out rough mountain country rather than invest the time and effort needed to manage it including mustering. Mr Cross said that the sale does not reveal that the purchaser had paid anything for any suggested potential in the balance land.
There are two principles that I think need to be brought to bear on the issue of the value of balance land. The first is that the burden of proving the Chief Executive to be wrong lies on the appellant (s.45(4)). Whilst it is true to say that there is no sales evidence to support a value of $250 per hectare (or $10 or hectare for that matter) for the balance land there was no evidence from the appellant which showed that Mr Cross had made a serious error of fact in his valuation of this class of country or had disregarded principle. Had Mr Cross applied an exorbitant figure to the balance land compared with the other classes of country on the subject land then I would have readily moved to reduce his figure. However, in the context of the overall evidence it seems to me that the value of $250 per hectare not only appears reasonable as a stand alone figure, it is consistent with the balance land values applied to the statutory valuations of other properties in the neighbourhood of the subject land.
The second principle and an authoritative statement of what I have called the first principle, is best expressed by reference to the Land Appeal Court in Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, said at 172:
"The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties."
I have adjusted the calculation which appears at [5] to reflect the increase of the flooding/drainage allowance from 7.5% to 10%. The resultant figure is $210,048 which I round to $210,000. Accordingly, the appeal is allowed and the valuation of the subject land is determined at Two Hundred and Ten Thousand Dollars ($210,000).
RP SCOTT
MEMBER OF THE LAND COURT
0