McAlpine v Department of Natural Resources, Mines and Energy

Case •

[2004] QLC 34

•

23 April 2004

LAND COURT OF QUEENSLAND

CITATION: McAlpine v Department of Natural Resources, Mines and Energy [2004] QLC 0034
PARTIES: Errol J and Muriel R McAlpine
(applicants)
v.
Chief Executive, Department of Natural Resources, Mines and Energy
(respondent)

FILE NO:

AV2002/0136
DIVISION: Land Court of Queensland
PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944
DELIVERED ON: 23 April 2004
DELIVERED AT: Brisbane
HEARD AT: Ipswich
MEMBER Dr NG Divett
ORDER: The appeal is upheld, the Chief Executive’s valuation is set aside, and the unimproved value of Lot 3 on RP 166654 and Lot 2 on RP 221509 is determined in the sum of Fifty-Nine Thousand Dollars ($59,000). 
CATCHWORDS: Valuation – Impact of planning – Key Resource mining area – Impact on sales.
Valuation – Sales evidence – Use of subsequent sales – Impact of mining activity – Limited sales evidence.
APPEARANCES: Mr EJ McAlpine for the appellants.
Mr J O’Rourke for the respondent.

Background:

  1. This matter relates to land at 44 Stevens Road, Lanefield, via Rosewood, and described as Lot 3 on RP 166654, and Lot 2 on RP 221509, Parish of Grandchester.  The subject land has an area of 26.56 hectares and is located 5 kilometres west of the town of Rosewood, and about 28 kilometres west of the Ipswich commercial and retail centre.  Electric rail transport is available at Rosewood, together with local shopping and primary and secondary schools.  There is a daily school bus, and a mail service is available, together with rural water, telephone and electricity.

  2. The subject land is at the corner of Stevens Road and Rosewood-Laidley Road, both of which are bitumen sealed with earth shoulders and table drains.  Access is good to the subject land, which is surrounded by similar 25 to 40 hectare farming lands.  The subject land is used as a small rural holding with associated sheds.  The land is zoned Rural under the Town Plan of 19 February 1999 of the Ipswich City Council, effective at the date of valuation of 1 October 2001.  The key issues are the nature of the land, impact of a mining key resource area, changes in the values and comparison of sales.

  3. On 25 February 2002 the Chief Executive issued a valuation of the subject land at $66,000.  Following an objection the Chief Executive confirmed that figure on 4 June 2002.  The appellants have now appealed claiming the unimproved value should more properly be $59,000.

  4. Mr Errol J McAlpine, an experienced bank manager appeared and gave evidence for the appellants.  Mr J O’Rourke, Principal Legal Officer appeared for the respondent, calling evidence from Daniel O’Connor, the departmental registered valuer responsible for determining the valuation.

The Nature of the Land –

  1. The subject land has easy sloping arable scrub soils, rising to a slightly higher lighter soil area to the centre of the northern part of the property. There is rural water connected and a dam supply is also available. There is a small remnant mining area in the south–eastern corner adjacent to Stevens Road. Both parties agree that the Lanefield area is lower in elevation than adjoining areas such as Tallegalla about 6 to 8 kilometres to the north, and Lanefield is subject to frost. The subject land also falls within the buffer area of a mining key resource area discussed later in para [12]. The general farming activities in Lanefield tend to be agricultural and cattle grazing, while Tallegalla is steeper country more suited to cattle grazing.

  2. Mr O’Connor confirms that the subject land has been valued as “farming” land under s.17 of the Act. He advises further that comparisons sought with comparable lands in the general locality were also used for farming purposes under the Act.

Changes in Value –

  1. In seeking a valuation of the subject land at $59,000, Mr McAlpine argues that there have been no recent sales in the Lanefield-Ashwell area which would demonstrate a change in the market level for that area.  Mr McAlpine argues that because of uncertainty in respect of the potential impact of mining activities, purchasers are deciding to locate elsewhere and, in his opinion, the unimproved value of the subject land could not be higher than was its former value of $59,000 at the last revaluation by the Chief Executive at 1 October 1998.  There had been three years since the previous valuation. 

  2. Mr O’Connor rejects that assumption arguing that the market had definitely moved upwards between 1998 and October 2001, although he concedes that it had appeared fairly dormant between October 2001 and July 2002.  He observes that subsequent to July 2002 the market increased again, such that the subject land would be valued at $120,000 in October 2003.  However he agrees those subsequent market levels have no bearing upon an assessment at the relevant date of 1 October 2001. 

  3. In seeking to explain these movements, Mr O’Connor further advises that the market had increased between 1992 and 1996, and also between 1998 and October 2001, the values for “farming” purposes had increased in the area of Tallegalla (40% to 60%), Lanefield (15% to 25%), and within Ipswich City (5%).  He notes also that as you move westward from Tallegalla towards Mount Marrow and into Walloon, the 60% increase dropped away to about 5%.  He notes that his Sale 2 which is his most westerly sale reflected an increase of 10% to 15% for the lighter quality country type, while beyond the range at Mount Marrow, the country is steep, poor quality forest country where a lesser increase was evident.  The subject land had been increased by 12%, which he argues is reasonable over that three year period.

  4. To support his argument that values in Lanefield had not increased during the three years, Mr McAlpine supplies a statutory declaration from a local real estate agent. While Mr Burton was not available to be cross-examined in respect of his statement, and the weight that could be applied to it was therefore a matter of judgment by the Court, the letter to a local political representative appeared to support Mr McAlpine’s assumptions. I will discuss that matter later in para [36].

  5. Mr O’Connor rejects reliance upon Mr Burton’s statement, which he argues demonstrates a level of vested interest by Mr Burton. Mr O’Connor is aware of Mr Burton’s concerns, and his several articles to the press on those issues. However Mr O’Connor advises that Mr Burton has so far declined to be personally interviewed by the Department, and Mr O’Connor places little regard in the substance of Mr Burton’s observations. Mr O’Connor further speculates that any suggestion by Mr Burton that sales in that area have declined in recent years, may reflect a steadying of mining influenced sales to Tetard Holdings, as that mining company is now more selective in its buying strategy. The possible impact of sales to the mining company, which contain a premium, is discussed later in para [37].

The Impact of Mining –

  1. Mr McAlpine relies upon Mr Burton’s statutory declaration that the presence of a Key Resource Area (KRA) in the Ipswich City Structure Plan is having an adverse impact upon land values in the Lanefield area.  Mr McAlpine argues that any uncertainty as to when mining might occur in the KRA is a key influence in why purchasers are choosing to buy elsewhere away from the KRA.  Because of that uncertainty, Mr McAlpine argues that the legal precautionary principle dictates that, in the absence of reliable comparable sales evidence, land values should remain constant in Lanefield.

  2. To support his argument that land values have not risen in that area, Mr McAlpine provides comparisons over time for the following sales of properties in close proximity to the subject land:

SaleArea                 Date of Sale       Sale Price          Improvements     Land                 $ per

Hectare

1A (Lenihan) 32.37 ha  Sep/92               $235,000 $105,260 $129,740 $4,008

1B (Heathwood)   40.516 ha            May/02              $230,000 $135,770 $94,230               $2,326

2A (Newman)      32.37 ha              Mar/96               $300,000 $112,370 $187,630 $5,796

2B (Stark)40.08 ha              Sep/02               $250,000 $114,670 $135,330 $3,376

Mr McAlpine bases those added values of improvements on figures supplied by the respondent for Sales 1B and 2B.  He further adjusts those added values as a result of his personal experience of the properties 1A and 1B, concluding rates per hectare for 1A (1992) of $3,544 and 1B (2002) of $1,898.

  1. Based upon those analyses he concludes that land values have declined by about $1,682 per hectare to $1,646 per hectare between 1992 and 2002;  and by about $2,420 per hectare between 1996 and 2002.  Mr McAlpine advises that in his analyses of those sales he has allowed for the similar land uses of the Lenihan property (1A) for agriculture, cattle and horse raising;  and the Heathwood (1B) for agriculture and cattle raising.  He notes also that the dwelling improvements on both properties were similar at the respective dates of sales, although the dwelling on the Heathwood property has been subsequently renovated.  Both the Newman and Stark properties are predominantly used for agriculture and cattle raising.  From an overall sale price perspective, he notes that a similar sale price had been paid for those two similar properties over a period of 10 years, indicating no significant change in the market levels.  However on a rate per hectare basis, he argues that the analyses indicated a decline in the value of the land in that locality.

  2. In explaining the principle of the Key Resource Areas, Mr O’Connor advises that the planning strategy by the Ipswich City Council followed the recommendations of the Department of Mines and Energy (O’Flynn Report 1998).  That report identified significant areas of mineral and extractive resources, and areas of old underground mining, which were then included in the Ipswich City Council’s planning scheme of 1998, and subsequently reviewed in 2001.  (Exhibit 4).  He argues that since the adoption by the Ipswich City Council of those KRAs, the level of uncertainty and speculation in the marketplace has now subsided.  The KRA now restricts the development and use of lands within the areas of the mineral resource itself, and also in a further buffer area surrounding the resource.  The subject land and three of Mr O’Connor’s sales all fall within the buffer area of the west deposit and the Kunkala KRAs.

  3. Mr O’Connor advises that his research had indicated that prior to the publication of the KRAs, there had apparently been considerable speculation about the extent of the mining resources.  Accordingly people had sought to influence the mining company (Tetard Holdings Pty Ltd) to pay significant premiums for lands that may have had a mining resource underneath the surface.  That had resulted in sales to Tetard Holdings Pty Ltd which have continued to include significant premiums above lands further removed from the mining resource.  Mr O’Connor has analysed all of those Tetard sales, and has rejected those inflated sale prices in his current valuation.  Mr McAlpine questions whether owners have seen the mining activity as a bonus for selling;  arguing that in his opinion owners were very apprehensive about the value of their lands because of the mining activities. 

  4. Mr O’Connor also notes that in correspondence to the Department, Mr McAlpine had expressed concern that since the adoption of the KRA strategy, the prices for properties affected by the KRA had fallen to about 50% of the price prior to the adoption of the KRA.  Mr O’Connor advises that Mr McAlpine had referred to the “speculative margin” on sale prices as having now gone.  (transcript 25).  However Mr O’Connor provides no documented evidence of such correspondence from the appellant.

  5. Mr O’Connor also offers comment in respect of the two private party sales in 1992 (Lenihan) at $7,259 per hectare, and in 1996 (Newman) at $9,268 per hectare as improved properties. He notes both of those sales appear high sales compared to current sales information. Mr O’Connor speculates that both of those old sales may have been sold as “hobby farms”, rather than for the business of primary production as “farming” land under s.17 of the Valuation of Land Act.  On that basis those properties would have been valued on a site basis rather than a per hectare basis.  He advises that amendments in 2000 to the Valuation of Land Act 1944 has now “lowered the bar” for recognition as farming land under the Act.

The Use of the Land –

  1. Mr McAlpine questions whether the use of predominantly grazing lands in the Tallegalla area are comparable to the predominantly agricultural lands in Lanefield. He also suggests that much of the Tallegalla land could be used for lifestyle or hobby farm purposes. Mr O’Connor advises that much of Tallegalla would qualify now for “farming” purposes concessional valuations under the broader definition introduced into s.17 of the Act in 2000. However Mr O’Connor also explains that the definition of “farming” use under s.17 covers a wide range of land use types, including both grazing and agricultural pursuits.

Comparison of Sales –

  1. Mr McAlpine questions the comparability of sales in Tallegalla for comparison purposes in Lanefield.  He argues that those two areas are completely different in topography and land types.  Mr O’Connor agrees that Tallegalla sales are of a superior nature, pointing out that his analysis confirms that issue.  However he argues that as both areas pursue similar land use outcomes, then comparisons between the two localities are appropriate.  Mr O’Connor also agrees that Tallegalla is frost-free, while Lanefield is low lying and subject to frost.  Mr McAlpine notes that while Mr O’Connor’s Sale 3 falls within the buffer area of the KRA, because of the terrain, that sale is totally out of line of sight of the unsightly scarring of the landscape by mining operations, as is obvious in the Lanefield area.  Mr McAlpine concedes that visual effects do not impact farming activities, but he argues that an ugly open cut scenario does not influence prospective purchasers.

  2. To support his estimate of the unimproved value of the subject land, Mr McAlpine analyses the two common sales for Heathwood (Sale 1B - $1,898 per hectare) and Stark (2B - $3,376 per hectare).  (See para [13]). 

  3. To support his valuation Mr O’Connor supplies the following sales:

    ·    Sale 1 – (Tallegalla Road, Tallegalla – Lot 722 on SP 133345).  This is a 16 hectare vacant parcel located about 6 kilometres north of the subject land.  The sale is just clear of the KRA buffer area, and is an elevated fully cleared brigalow scrub parcel with undulations to Tallegalla Road.  The sale has no rural water, and whilst smaller in size, is seen as overall superior on a per hectare basis, due to the quality of country, elevation and outlook.  The sale sold in August 2000 for $120,000, was analysed at $94,210, and applied at $84,000 ($5,250 per hectare).

  4. ·    Sale 2 – (Ivy Hansen Road, Tallegalla – Lot 666 on CH 31858).  This is a 40.469 hectare vacant parcel located about 6 kilometres north-west of the subject land.  The sale is outside the KRA buffer area.  The sale is an elevated easy sloping high scrub parcel with forest intrusions, with good access from Ivy Hansen Road.  The sale has no rural water, has inferior access, country and location and is seen as inferior to the subject land on a per hectare basis.  The sale sold in December 2000 for $135,000, was analysed at $82,780, and applied at $81,000 ($2,000 per hectare).

  5. ·    Sale 3 (Kraatz Road, Tallegalla – Lot 3 on RP 35878).  This is a 24.116 hectare improved sale located about 6 kilometres north of the subject land.  The sale is within the buffer area of the KRA, and is undulating to easy slopes with good Tallegalla scrub, and good gravel formed road access.  Rural water is connected and there is a dam.  The sale is superior overall in elevation, country type and outlook.  The sale sold in March 2001 for $230,000, which was analysed at $108,270, and applied at $96,000 ($4,000 per hectare).

  6. ·    Sale 4 – (Laidley Road, Lanefield – Lots 1 and 2 on RP 109796 and Lots 1 and 2 on RP 22834).  This is a 40.516 hectare improved sale located immediately across Laidley Road from the subject land.  The sale is similar in location although larger and slightly poorer country.  The sale also has a frontage to Stevens Road.  The sale is superior to the subject land.  The sale was a late sale selling on 8 March 2002 for $230,000, and was analysed at $94,230, and applied at $90,000 ($2,200 per hectare - 96%).

  7. ·    Sale 5 – (Laidley Road, Lanefield – Lot 1 on RP 51117).  This is a 40.08 hectare improved sale located adjoining Sale 4, and diagonally across Laidley Road and Stevens Road from the subject land.  The sale also has frontage to Stevens Road.  The sale has similar location and is larger, with slightly superior quality land being more useable.  Overall the sale is superior.  The sale sold in July 2002 for $250,000, was analysed at $124,670, and applied at $101,000 ($2,520 per hectare). 

  8. Because Sale 5 was a late sale after the date of valuation, it has been applied very conservatively at only 81%.  Sale 4 was applied at 96% as it was seen that a subsequent resale of an existing house on one of the titles of that parcel, indicated that Sale 4 was a low sale. 

  9. Mr McAlpine argues that Sales 4 and 5 were the only two sales in the local submarket area of Lanefield, and falling within the KRA.  Those sales, in his opinion, support his argument of a flat market in that locality.  Mr O’Connor advises that Sale 4 was negotiated privately, and therefore the negotiated sale price of $250,000 included no agent’s commission.  He included those two late sales because of their proximity to the subject land.

Decision:

The Legislation –

  1. I turn first to the Valuation of Land Act 1944 and note that the meaning of “farming” is defined in s.17 which relevantly states:

    “17.(1)  In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.

    (2)In subsection (1) –

    ‘farm improvements’ includes appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business but does not include a dwelling or car accommodation.

    ‘farming’ means -

    (a)       the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry;  or

    (b)       any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock if the business or industry represents the dominant use of the land, and –

    (c)       has a substantial commercial purpose or character by -

    (i) having an average gross annual return, calculated over a 3 year period, of at least $5,000;  or

    (iv)      having -

    (A) a minimum value of farm improvements or plantings of forest or orchard trees of $50,000;  and

    (B)the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard trees;  and

    (d)       is engaged in for the purpose of profit on a continuous or repetitive basis.”

  2. In seeking guidance in respect of what is to be considered in the use of the land for “farming”, I am referred to the decision of this Court in The Proprietors “Whyanbeel Gardens” Group Titles v Chief Executive, Department of Lands (1992-93) 14 QLCR 524, where the learned Member (now President) said at 532:

    “The provisions of Section 11(9) require that if land is used for the purposes of "farming", any enhancement in its value because of a potential use for any other purpose shall be disregarded. However, where that higher potential is within the definition of "farming", it cannot be disregarded. Therefore, all land used for farming must be valued at its highest and best farming use. In the case of the subject land, it is correctly valued at its horticultural value. However, in respect of the lands held by Schultz and by Wertz, if these properties are similar to the subject land and are capable of being used for horticulture, then it is quite incorrect to have them valued at a lesser value simply because they are used for a lesser primary production purpose.” (Section 11(9) is now section 17 in the amended Act).

  1. Now while that principle ensures that all “farming” lands of a similar highest and best use type are to be valued in a similar manner, it does not direct that all the different types of “farming” use have the same value.  For example the value of “farming” land for grazing purposes may well be quite different from the “farming” lands used for agricultural purposes.  The marketplace itself will govern those respective rates.  However what Whyanbeel Gardens demonstrates is that where similar types of lands are used for different purposes, but where their highest and best uses are seen to be similar, then those lands used for a purpose less than the highest and best use are to be valued as if they were the highest and best use.  In that matter the grazing use was accepted as a lesser value, but the higher and best use of those lands currently used for grazing, were seen to be suitable for horticulture, and should be valued accordingly, in spite of the personal decision of the owner not to use it for horticultural purposes.  That principle removes any personal effects of choice in the valuation process.

  2. There is currently no market evidence before this Court to support any further sub-classification of types of “farming” use.  It is also noted that the Court is not an investigating Tribunal (Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167 at 172). The onus to provide justification for such a proposal lies with the appellants under s.45(4)of the Act, which states in respect of a notice of appeal:

    “45.(4)  Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”

  3. In the event I accept Mr O’Connor’s advice that the “farming” in both Tallegalla and Lanefield are comparable uses under s.17 of the Act, and only the quality of the localities and each parcel determines the market rate per hectare. I accept that conclusion as the only valuer’s opinion in this matter. On that basis the use of sales in Tallegalla and Lanefield form a reasonable basis for comparison purposes.

The Impact of Mining –

  1. In respect of Mr McAlpine’s observations that mining activities in the area have created a high level of uncertainty in the marketplace, I note that similar views were expressed in the matter of RT Armstrong and Ors v Chief Executive, Department of Natural Resources (AV97-436/437, 4 December 1998, unreported.  Those matters dealt with land adjoining the Ebenezer Mine about 2 to 3 kilometres south-east of Rosewood.  The Member noted at 9: 

    “It is also noted that allowance has already been made in the valuation for the impact of the Ebenezer spur railway line, and the general presence of the mining operations.  Once those operations commence excavating in the new area towards the south-west, the impacts will further increase.  However while they are yet to commence, the potential impact is likely to influence public expectation about a declining value for the land.”

  2. However I note that matter occurred prior to the formalisation of the KRA planning constraints in 1998, and in line with Mr O’Connor’s evidence in this matter, it would align with his opinion that public speculation was evident in the absence of the publication of the planning intents in the KRAs.  In Armstrong that property had also been directly impacted by flooding from the mine area, and the likely increase of flooding from the construction of a further bund wall around the mining operation.  There is no such proposal at the subject land.

  3. In respect of Mr Burton’s personal opinion that the implementation of the KRAs in the City Structure Plan was likely to have an adverse effect upon land values in Lanefield, I see two sides to that situation.  The purpose of the structure plan as a planning document is to guide future development within the constraints of known physical limitations.  That purpose is likely to be aimed at clarifying uncertainties, rather than escalating them.

  4. I could accept Mr O’Connor’s advice that prior to the release of the City Structure Plan, there would have been considerable uncertainty for both the landowners and the mining company.  That could lead to the willingness of the mining company (Tetard Holdings Pty Ltd) to offer premium prices to prospective sellers in order to remove potential restrictions.  Mr O’Connor’s evidence of the Tetard Holdings sale being high sales supports such a conclusion.  Once the KRA became public documents, that uncertainty would be removed, and the former premium prices were likely to have returned to true market levels.

  5. However while the presence of the KRA has now clarified the potential mining intentions, any comparisons with sales evidence must allow appropriately for that KRA.  For example to compare sales outside of a KRA, with lands within the KRA, would lead to uncertainties about the effects of the KRA.  The principle of “like with like” should be paramount.

  6. In respect of Mr McAlpine’s use of the 1992 sale of Lot 84 (Lenihan), I note that Mr O’Connor did not analyse that sale at that time, but he offers comment that property may have been valued previously as a rural residential site.  As such the unimproved value of that parcel would have been valued on a site basis rather than on a per hectare basis.  Comparisons between different market categories was rejected as a useful measure of relativity in the matter of DF and M Ward v Valuer-General (1983) 9 QLCR 48, where the Land Appeal Court said at 50:

    “Relativity with different land use market categories is not tenable.  Such cross-reference of values is not a valid valuation exercise or in conformity with the cardinal principle of valuation which calls for comparisons of like with like in all relevant points of comparison including highest and best use.  Sites are valued overall and not on a rate per hectare basis.  The experience of the market place reflects the former not the latter practice.” 

  7. However Mr McAlpine’s main comparison was on a site basis, where he notes that the sale price of an improved 32.37 hectare parcel (Lenihan) had sold in 1992 for about the same price as the 40.516 hectare improved parcel (Heathwood) in 2002.  But the added value of improvements used for the 1992 sale (Lenihan), was analysed at the same rate as those adopted for the 2002 sale (Heathwood), without any reference to whether those rates were applicable 10 years previously.  Such an approach leaves some doubt as to the reliability of such comparisons over such a time interval.  It is also inconsistent with Mr O’Connor’s evidence that the market had moved upwards between 1998 and October 2001.

Comparison of Sales –

  1. In seeking comparisons of sales of “farming” lands, I note that Mr O’Connor has sought a range of improved farming lands within both the Lanefield and Tallegalla areas.  Sale 1 is just beyond the KRA buffer area in Tallegalla, while Sale 2 is removed from the buffer area, but is further to the west towards Mount Marrow in the lighter quality country.  Sales 3, 4 and 5 all fall within the KRA buffer area, and are therefore similarly impacted by mining activities.

  2. I turn then to Mr McAlpine’s concern that Sales 4 and 5 occurred well after the relevant date, and should therefore not be used for the current valuation.  I note that the use of subsequent sales was discussed in respect of the use of land for the business of primary production in KP and RD Weisenberger v Valuer-General (1978) 5 QLCR 125, and also in RG McMurray v The Valuer-General (1983) 9 QLCR 35, where the Land Appeal Court said at 36:

    “As is stated in the decision handed down by the learned President, the Land Court, and on appeal the Land Appeal Court, can only consider the primary production activities carried on on the land between the date of valuation (31st March, 1980) and the date of the issue of the valuation (12th February, 1981).  We are unable to have regard to anything that has occurred since that date.”

  3. However in McMurray the Land Appeal Court was directed in that matter to determine whether the use of the land had been for the business of primary production under s.11(1)(vii) of the Valuation of Land Act 1944. Section 11(1)(vii) as it then was is now s.17, and the use of the subject land for “farming” purposes under that less restricted criteria is not challenged in the current matter.

  4. The use of a subsequent sale was also considered in the matter of Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299.  In that matter Williams J in the High Court of Australia said at 304: 

    “Values must be calculated in the light of circumstances which existed on the material date, in this case, 30 June 1939, but subsequent events can be taken into account in order to determine the proper weight to be attached 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.”

  5. Support for the use of subsequent sales is also to be found in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1, at 16; and also in Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at 18. However in Harris, Fischer J noted at 25 that the subsequent event cannot create an expectation which was not in existence at the relevant date.

  6. On the evidence Mr O’Connor advises that the market level in that locality had been fairly dormant between October 2001 and June 2002, and therefore his Sale 4 (March 2002) and Sale 5 (July 2002) have relevance to a 1 October 2001 valuation date.

  7. If I then consider the most relevant sales I find the following comparisons:

    SaleArea               Rate per Hectare                  Comparison

    324.116 ha        $4,000  Superior

    440.516 ha        $2,200  Superior (low sale)

    540.08 ha          $2,220  Superior

    Subject land          26.56 ha          $2,485  -

  8. If I then compare Mr McAlpine’s estimate of the unimproved value at $59,000 ($2,221 per hectare), I find that could also be consistent with the sales evidence;  but inconsistent with Mr O’Connor’s advice of a general increase of about 15% to 20% in the Lanefield area.  But much of that Lanefield area could be outside the KRA buffer zone.  While Mr O’Connor’s advice that Sale 4 appeared to be a low sale compared to Sale 5, the reverse situation could also be said to occur where there are only two sales provided in that locality to demonstrate the general market level.  On balance I will accept Mr McAlpine’s evidence that $59,000 represents a fair comparison with Mr O’Connor’s sales.

Summary:

  1. In summarising this matter I accept that s.33 of the Act directs that the Chief Executive’s unimproved value is to be accepted as correct unless demonstrated to the contrary.  However I am also reminded that in a valuation for rating or revenue purposes, any doubts arising from uncertainty in the evidence, should be resolved in the appellant’s favour.  That was explained in Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited & Ors (1946-47) 74 CLR 358, where Dixon J said at 373:

    “I have had the advantage of reading the judgment prepared by Williams J. and agree in it.  I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases.  In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax.  While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test.  In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”

  2. However that liberal estimate does not imply that all doubt must, on the balance of probabilities, be resolved in favour of the appellant.  The important issue is to arrive at a figure which fairly reflects the fair value of the land.  (Land Acquisition 4th edition, by D Brown, Butterworths, at 108).  On the evidence I believe that an unimproved value of $59,000 does reflect a fair value for the subject land at 1 October 2001.

Conclusion:

  1. Having considered the whole of the evidence I am persuaded that the appellants have proved their case.  The appeal is upheld, the Chief Executive’s valuation is set aside, and the unimproved value of Lot 3 on RP 166654 and Lot 2 on RP 221509 is determined in the sum of Fifty-Nine Thousand Dollars ($59,000). 

NG DIVETT

MEMBER OF THE LAND COURT

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