McDonald v Chief Executive, Department of Natural Resources
[2001] QLC 25
•12 April 2001
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BRISBANE
12 APRIL 2001
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 4726 -
Local Government: Nanango Shire -
(AV99-712).
Peter M McDonald
v.
Chief Executive, Department of Natural Resources
(Hearing at Nanango)
D E C I S I O N
Background:
This matter relates to lands at Wengenville, about 38km south-west of Nanango and 45km from Kingaroy. The subject land has an area of 847.6 ha and is described as Lot 5 on FY559, Lot 8 on FY2202 and Lot 38 on FY818, Parish of Tureen. Access is available from Maidenwell - Bunya Mountains Road, Harland Road, Oaky Creek Back Road and an unformed graded track. Part of the access is via bitumen and formed gravel roads, but vehicular access for heavy transport livestock vehicles is difficult during wet weather.
Because of these difficulties cattle are normally transported by the appellant's body truck, as double deck and single deck trailers have difficulty in negotiating the access. The subject land is zoned "Rural" under the Nanango Shire Transitional Planning Scheme of 16 September 1989, current at the date of valuation of 1 October 1998. The key issues are comparison of sales and the nature of the land. Relativity is also for consideration.
On 29 March 1999 the Chief Executive issued a valuation for the subject land at $157,500. Following an objection the Chief Executive issued an amended valuation at $156,500 on 2 July 1999. The appellant has appealed that figure arguing that the unimproved value should more properly be $135,000.
Colin Stanley Otto, a registered valuer, appeared and gave evidence for the appellant, calling evidence also from Peter M McDonald. Mr R Vize, Counsel of Crown Law, appeared for the respondent, calling evidence from Peter George Mariner, the Departmental registered valuer responsible for determining the valuation.
The Evidence:
At the commencement of proceedings Mr Vize raised the preliminary point that the grounds of appeal contain no specific reference to comparisons of relativity between the subject land and surrounding parcels. While Mr Otto was unable to draw specific reference to the matter of relativity in the stated grounds of appeal, he was aware that this Court is constrained under s.45(4) of the Act to consider only matters included in the notice of appeal. The problem for Mr Vize was that the matter of relativity was not raised with the respondent until the last moment prior to the hearing, thus also disadvantaging his valuer who had no time to fully analyse the four properties used for relativity comparisons.
The Court had noted however that the grounds of appeal drew reference to the impact of a powerline across the subject land (Eastlink). The appellant noted that "in all compensation deliberations Powerlink had rated this land as of a lower value". The appellant argued that Powerlink is also a Government authority. On the basis that the reference to "lower value" could be related to adjoining lands which are apparently not impacted by the powerline, then the matter of relativity could be inferred in the grounds of appeal. However in allowing the matter of relativity for consideration, the Court ruled that the matter of weight that might be applied to the relativity arguments would depend upon the evidence provided. Mr Vize had argued that the reference in the notice of appeal to "a lower value" referred, in his opinion, to the comparison with the unimproved value now applied to the subject land by the respondent and now appealed against. Mr Otto agrees that the relativity comparisons are really secondary to his comparison with sales.(1) The Nature of the Land -
Mr Otto argues that the classification of the subject land by Mr Mariner as "mostly gentle to moderately sloping open forest grazing falling to fairly arable creek flats" provides an unrealistic appraisal of the subject land. Mr Otto notes that the 30 ha of black soil flats along Barker and Wengen Creeks exist only in small flood-prone pockets varying up to 4 ha in size. He argues the scattered and small nature of those pockets makes those black soil flats virtually uneconomic to cultivate. He notes that similar neighbouring country was initially cropped up to 15 years in the past, but have now been sown down to improve pastures.
Mr Otto also notes that the soils on the subject land are more a basalt, with areas of sand, and areas of very poor rocky steep country which are difficult to improve. Mr McDonald provides evidence also that the steeper country can only be worked on horseback, a problem compared to other lands. Mr Otto also argues that because of the steep country the cattle yards for breeding are of necessity located in the lower areas, thus increasing difficulties for trucks in transporting cattle from the site.
Mr Otto also argues that the subject property is full of timber, and therefore harder to work with cattle. Mr McDonald argues that he purchased the subject land in 1968, and by tordon treatment he has been able to clean up the timber, and with subsequent treatment has kept the undergrowth down. Millable timber has been retained, and also trees for shade and regeneration. The land is watered by creeks, springs and 23 dams.
The subject land is used for cattle fattening, and the young cattle, after weaning, are returned to other family properties on the scrub country. The bullocks are then returned to the subject land for fattening for about 6 weeks prior to sale in the markets. Mr McDonald advises that the carrying capacity was about 180 breeders, but that has now been increased to 280 stock. During periods of drought the appellant hand feeds with molasses and urea, and while costly ($700 per week), no cattle are ever lost during droughts.
In support of his classification of the subject land Mr Mariner has relied upon Departmental records prepared after discussions with the appellant in July of 1989. Those records show the subject land is 30 ha of arable dry creek flats and second class creek flats, and 817.6 ha of second class forest grazing. Mr Otto classifies the lands as comprising 30 ha of small pockets of black soil flats along the creek, and the remainder as second class grazing, mostly black to brown loamy country with stone. About 200 ha has been cleared and sown with pastures, and a further 40 ha stick raked, but not yet cleared. Mr Mariner defines the 30 ha as arable as he believes that at the time of inspection in 1989, the higher potential would have been recognised by Mr McDonald.
Mr Mariner also advises that an allowance has been made for the impact of the powerline following an objection conference. That allowance was provided to compensate for intrusions upon the 13-odd ha involved in the powerline, from contractors and people using the gates, etc. As a result of that additional allowance the unimproved value of the subject land had only been increased from its former value of $135,000 to the current $156,500 ($185/ha) representing a 15% increase. Mr Otto however notes that the powerline was not constructed until after the date of valuation, although he agrees it would have existed at the date of the objection conference.
In respect of the availability of telephone and power to the subject land, Mr Otto argues that should be considered in the context of likely costs in order to bring the electricity (about 1 km) to any potential house site. Mr Mariner argues such costs would be considered by any purchaser contemplating a large primary production property with the expectation of locating a house there.(2) Comparison of Sales -
In support of his estimate of the unimproved value Mr Otto provides the following sales:
- Sale 1 - (Arakoon Pty Ltd to Duncombe - Lots 186, 187 and 222 on FY432, Lot 185 on FY433, Lots 201 and 203 on FY474, Lot 11 on FY894, Lot 2 on RP 50314, Lot 1 on RP 53337 and Lot 1 on RP56139)
This is a 1096 ha parcel located about 15 km north of Nanango, on the main bitumen highway. The sale comprises open gentle undulating to easy sloping forest country. Mr Otto argues the sale has about 80ha of black soil flats along the southern side of Reedy Creek, although Mr Mariner suggests there is only about 30ha of that country. Those flats are agreed to have been cultivated and suitable for forage cropping and lucerne hay production.
Mr Otto argues that there is about 220 ha of gently undulating green country to the south of Manumbar Road which has not been developed. There is 520 ha which has been pulled, raked and burnt, and 280 ha of well treated timber. The sale has a homestead, workers cottage, yards, dip and farm sheds and is suitable as a stud. The carrying capacity is 500 mixed cattle (1 beast per 1.25 ha), exclusive of the 220 ha undeveloped and unused country. On a breeder basis the sale reflects carrying capacity of 350 breeders (1 beast per 1.8 ha).
The sale is seen as overall superior, and sold in October 1997 for $840,000, and was analysed at $214,200, and has been applied at $207,500 ($189/ha).
- Sale 2 - (Eden to Madder - Lot 1 on RP168372 and Lot 82 on B0192)
This is an 837 ha parcel located about 40 km from Kingaroy, and access is superior to the subject land. The sale comprises 100 ha of black soil creek flats, 168 ha of gently sloping scrub grazing, 520 ha of gently sloping forest grazing and 489 ha of poorer forest grazing, including 48.9 ha of spotted gum country. The property is improved with a homestead, sheds and yards and is watered by semi-permanent creeks, springs, bores and dams.
The sale is seen as superior to the subject land, and sold in August 1998 for $585,000, was analysed at $165,500 and has been applied at $150,000 ($180/ha).
To support his valuation Mr Mariner provides the following sales:
- Sale 1 - (Arakoon Pty Ltd to Duncombe)
This is a common sale with Mr Otto's Sale 1. Mr Mariner records an analysed unimproved value of $215,000 ($196/ha), and an applied unimproved value of $189/ha. Mr Mariner also agrees that access to Sale 1 is superior to the subject land, the sale is also larger in size than the subject land, and the sale is better located to facilities at Nanango and Kingaroy, and has power available to the homestead. In applying $185/ha to the subject land Mr Mariner argues that that allows for the superior nature of Sale 1, and also the impact of the powerline easements upon the subject land.
In further analysing the country types, Mr Mariner believes the 30 ha of better creek flats on the subject land is comparable to the 30 ha of first class grazing on the sale. On comparing the second class grazing country Mr Mariner argues the rate of $205/ha for the sale compared to $174/ha for the subject lands, reflects the superior qualities of the sale, and the poorer country of the subject land. Mr Mariner bases those conclusions on records from Departmental files following discussions in August 1988 with the owner of Sale 1 (Richards). Mr Mariner saw Sale 1 as the key sale compared to the smaller sales in the area, and to other more remote sales from the area.
- Sale 2 - (Ballin to Coyne - Lot 143 on FTZ3771 and Lot 2 on RP900952)
This is a 127.615 ha parcel located about 7 km north-west of Nanango. Vehicular access is via formed earth and gravel Ballins Road and an unformed unnamed road. The land comprises gently to moderately sloping open forest grazing, falling to good arable Barkers Creek flats. The sale was included to demonstrate the level of value for arable country.
The sale sold in September 1997 for $292,500, and has been applied at $50,000 ($392/ha).
- Sale 3 - (Barbour to Trace - Lot 56 on FY815)
This is a 225.798 ha parcel located about 39 km south-west of Nanango, and in the general vicinity of the subject land. The sale is far smaller, but has access difficulties, an amount of steep country, and also suffers from similar pest problems. However it does not have the impact of the power line. Sale 3 was negotiated in conjunction with the adjoining Sale 4 at $192,000 (499.86 ha @$384/ha).
The sale sold on 29 June 1998 for $96,000, and has been analysed at $47,000 ($208/ha) and applied at $207/ha.
- Sale 4 - (Barbour to Trace - Lot 59 on FY815)
This is a 274.063 ha parcel adjoining Sale 3. It sold on 29 June 1998 for $96,000, and has been analysed at $56,000 ($204/ha), and applied at $205/ha.
In concluding his analysis of sales Mr Mariner has examined all sales that occurred in the Nanango Shire during the relevant period, concluding that unimproved values had increased by at least 20%. He notes that the "Arakoon" sale in fact reflected a rise of 29% in the unimproved value, while some other sales reflected increases much greater. Mr Mariner had adopted a conservative figure which resulted in an increase of 20% for the subject land, which was later reduced to allow for the impact of the power lines. Mr Otto agrees with Mr Mariner's analysis of the "Arakoon" sale, but disagrees with its application to the subject land. Mr Otto had personally inspected that property and discussed the land types with the owner in preparing a valuation for selling purposes. He had concluded an area of 80 ha of blacksoil flats after referring to his original field notes prepared about 10 years ago, although he was unable to provide them to the Court for examination. The copies of Departmental files were used by Mr Mariner during his evidence. However from his personal inspection of Sale 1 Mr Otto confirms that there was a lot more than 30 ha of blacksoil flats.
Mr Otto argues that the better carrying capacity of the used part of Sale 1 (exclusive of the 220 ha across the road), supports his conclusion that the sale is better country than the subject land, which he contributes to the larger better blacksoil flats, and the absence of rock country. If the better access to Sale 1 and its closer proximity to Nanango is then further considered, Mr Otto argues that an application much less than $190/ha would be appropriate. Mr Otto has adopted a rate of $160/ha which was the former unimproved value.
Mr Otto seeks support also in comparison with his Sale 2 (Eden to Madder), which is seen as superior to the subject land. Sale 2 has been applied at $180/ha, although Mr Otto advises that sale really comprised two separately owned parcels which were sold as two separate contracts on the same date. One parcel was owned by Mr Eden, and the other by Mr Eden, his sister and his mother. Parcel 1 (508.9 ha) sold for $340,000, and Parcel 2 (328.29 ha) sold for $245,000. Mr Otto adopted the combined sales in his analysis, but notes that may be in conflict with directions of this Court in Appeals in the Shire of Esk v. Valuer-General (1972) 39 CLLR 130, at 141. The "Eden to Madder" sale apparently was adopted as a basic sale in the revaluation of the adjoining Kingaroy Shire.
Mr Otto rejects comparisons with Mr Mariner's Sale 2, which he sees as a little mixed farm with irrigation available. He also notes that Sales 3 and 4 were negotiated on the same date, but were separate sales, similar to his "Eden to Madder" sale. Mr Otto also challenges that Sales 3 and 4 are very heavily timbered, and may include an amount for commercial timber in those sales. Mr Mariner's advice from the purchaser of those sales was that there had been no allowance for timber. Mr Mariner saw those sales as supporting sales only.
Mr Otto also rejects that sales in the area supported a 20% increase in unimproved values, noting a recent resale of a property which sold in 1990 for $1.25 million, including 700 head of cattle. That sale analysed to $1 million for 6000 ha. The property has just been contracted at $1.3 million, after $300,000 to $400,000 of timber treatment. Mr Otto argues that resale demonstrates his argument that sales of improved properties have not increased, and that properly analysed unimproved values should follow a similar pattern.
Mr Otto concedes that then raises the issue of the added value of improvements. Mr Otto also agrees that there could be high sales in the area, but argues those should not be adopted when determining the basic sales for an area, which should also not be restricted to shire boundaries. Mr Mariner agrees that it does not matter whether sales of primary production properties occur in particular shires, and Mr Mariner has considered sales across the South Burnett area. However he concedes that valuers for the respondent who are responsible for adjoining shires do not fully analyse the basic sales used in revaluing the separate shire because of work pressures. The different valuers subsequently compare applied unimproved values near shire boundaries in order to rectify any inconsistencies. Mr Mariner was not aware that Mr Otto's Sale 2 had been used as a basic sale for Kingaroy Shire.
(3) Relativity -
In support of his sales evidence Mr Otto also refers to relativities with four properties:
- Property 1 - (Lots 45 and 50 on FY814 - Tucker)
This is a 332.7 ha parcel west of the subject land, with frontage to Tim Shea Creek Road and backs onto Tim Shea Creek. The land is gently undulating black basalt country, with 25% blacksoil alluvial flats, and the property is used to fatten bullocks. The property is superior to the subject land, is less than half its area, and is applied at $65,000 ($195/ha). Mr Mariner notes that the Tucker property is also impacted by the powerline easement.
Property 2 - (Lot 31 on FY511 - Greenslade)
This is a 657 ha parcel, adjacent to the subject land on its north-east, comprising gently undulating to steep forest country with 100ha of black soil cultivation along the south of Barker Creek, which was used for crop and serial production. Since the death of his wife Mr Greenslade no longer crops the arable lands, but it retains its potential for fodder crops. While the ridge country is inferior, overall the property is superior to the subject land. Mr Mariner sees Property 2 as inferior overall to the subject land. The property has been applied at $118,000 ($179/ha).
- Property 3 - (Lots 47 and 48 on FY813 - Cross)
This is a 297.9 ha parcel adjoining the subject land to the north, comprising gently undulating basalt forest country which has been 65% to 70% cleared and is cultivated to peanuts, cereals and row crops. The parcel is greatly superior and has been applied at $84,000 ($282/ha). Mr Mariner however sees Property 3 as inferior to the subject land based upon its applied value.
- Property 4 - (Lot 249 on FY505 and Lots 250 and 255 on FY509 - Bywater and Wilson)
This is a 436 ha parcel about 25 km west of Nanango, and comprises gently undulating to steeper bullock fattening country, seen as superior to the subject land. Mr Mariner sees Property 4 as inferior country to the subject land. Mr Mariner notes that property sold in August 1998 for $300,000 ($373/ha), but he regards that sale as a high sale because, in his opinion, it represented a potential homesite. Mr Otto rejects that because of access problems to that land. Access to the property is only by body truck, and the area is only half the size of the subject land. The property is applied at $77,000 ($175/ha).
Mr Otto provides the relativities only as supporting evidence of his comparison with sales, and mainly as three of the parcels adjoin the subject land, and the fourth parcel has similar access problems for the movement of cattle. Property 4 reveals lower applied rates in the vicinity of the "Arakoon" sale than for lands in the Wengen area near the subject land.
Mr Mariner advises that when he compares properties he always makes an allowance for any differences in area of the parcels. However he has no fixed rule to apply for differences in size, treating each on a case by case basis. He concedes however that when comparing the 1096 ha of the "Arakoon" sale to the 847ha of the subject land, there was unlikely to be any great allowance made for that difference in size.
Decision:
(i) The Nature of the Land -
Areas of disagreement between Mr Otto and Mr Mariner lie in their understanding of the effective use of the 30 ha of blacksoil flats, the steepness and difficulty of working cattle upon the land, and the impact of the difficult access for transporting cattle to and from the property.
While Mr Mariner has relied upon the previous discussions with the appellant in 1989, I accept Mr Otto's personal opinion following his inspection that the areas of blacksoil flats along the creek are isolated and too small to justify the separate cultivation and cropping arrangements, and the most likely use for those areas would be as sown pastures.
On the basis of difficulty with working the land on horseback, and also access by cattle trucks, I agree that any comparison should make adequate allowance for those disabilities. However I note that the subject land is seen to be probably the best presented block in the area, testimony to the personal endeavours of the appellant.
In respect of any impact of the powerline easement upon the unimproved value, I note that allowance has been made, although that may have been generous at the relevant date, as the powerline did not then exist. However it was likely that public knowledge would have anticipated its existence, and any prudent purchaser was likely to have taken that on notice at the relevant date.(ii) Comparison of Sales -
I note first Mr Otto's concern that his Sale 2 was in fact a conjunction sale of two separate properties, as is also Mr Mariner's Sales 3 and 4. Now while the use of joint sales as a single unit was rejected by this Court in Appeals in the Shire of Esk v. Valuer-General (supra), I note that matter followed guidance of the Land Appeal Court in Conversion of Grazing Selection No 3701, Barcaldine District (1966) 33 CLLR 246. In the Barcaldine decision, the Land Appeal Court considered two sales where the stock had been subject to separate contracts, followed by subsequent contracts for the land and improvements. The Land Appeal Court found at p.250:"In our view, the sale of the land and improvements, at the total price set out in the transfer documents, and authenticated by statutory declarations, should not be disregarded as evidence of the price paid for the land and improvements as was suggested on behalf of the lessees. "
In the current matter both of the joint sales were negotiated simultaneously on the same day, and the valuers have made enquiries of the sales prior to considering them as a joint sale. I believe both sales can be distinguished from the principle established in respect of the joining of separate contracts, and I see no problem in accepting those sales.
If I look then at Mr Mariner's Sale 2 I note that is really only used to demonstrate the value of arable land, is far superior ($392/ha), and is only one-quarter the size of the subject land. In respect of Mr Mariner's Sales 3 and 4, even considered as a joint sale of 499.86 ha, that combined area is much smaller than the subject land. I note also that both Sales 3 and 4 have been applied at rates almost 100% of the analysed rate, reflecting the small nature of those sales about one quarter the size of the subject land. Those two sales are also only used as supporting evidence by Mr Mariner. The most useful sales are the common sale ("Arakoon") and the "Eden to Madders" sale. I note Mr Otto agrees with Mr Mariner's analysis of the "Arakoon" sale, only disagreeing with its application to the subject land. Both valuers agree the "Arakoon" sale is the key sale. The comparisons provided reveal:
Sale Area Applied rate/ha Comparison "Arakoon" 1096 ha $189 Superior (Otto)
Superior/larger (Mariner)Eden to Madder 837 ha $180 Superior (Otto) Subject land 848 ha $185 -
If I accept Mr Mariner's evidence that while he normally allows some reduction in rate per ha because of increase size of parcels, I also note that in respect of the difference in size between the "Arakoon" property and the subject land, he notes that was unlikely to be any great allowance as a factor in isolation. Accordingly I believe the difference in the rate for those two parcels was likely to reflect the access availability, and the usability of the black soil plains.
In respect of accessibility I would agree with Mr Otto that access to the "Arakoon" sale was via a bitumen road just north of Nanango, and capable of handling cattle trailers for stock movements. That is far superior to the subject land. In respect of the carrying capacity of the two properties I also note that the "Arakoon" sale carries 350 breeders compared to the subject land at about 280 breeders, which has been well developed by the appellant. That carrying capacity is apparently exclusive of a further 220 ha on the "Arakoon" property which has remained uncleared and unused.
Now there is some difference between the valuers in respect of whether there is a comparable area (30 ha) of blacksoil flats on either property. Mr Mariner did refer in court to his records of the country type of the "Arakoon" sale, while Mr Otto had to rely upon his memory of his field notes. Both of the field records were prepared after inspections about a decade ago. However I note Mr Otto's very extensive knowledge and experience in this area, and I have no reason to doubt his evidence given under oath that the area of blacksoil flats on the "Arakoon" sale was greater than 30 ha.
I believe the real difference between the valuers' understanding of the contribution of those blacksoil flats, irrespective of their area, lies in the usability of the lands. It is not disputed that the blacksoil flats on the subject land are in much smaller areas. I agree with Mr Otto that those smaller areas (up to 4 ha) are more likely to support grazing on sown pastures, rather than any arable potential. The history of surrounding properties would support such a conclusion.
On that basis I believe that Mr Mariner's allowance of $4/ha reduction in the rate on the subject land would appear inadequate for the disabilities of the subject land, excluding any allowance for the potential impact of the power easement. However the question is by how much should that rate be further reduced? If I look then to the "Eden" sale I could conclude that the rate should be something less than $180/ha.
Relativity:
If I then seek support from the relativities provided, and conscious that I must consider the weight that I apply to those relativities, then I find:
Property Area Applied rate/ha Comparison1 333 ha $195 Superior
2 657 ha $179 Superior (Otto)
Inferior (Mariner)3 298 ha $282 Greatly superior (Otto)
Inferior (Mariner)4 43 6 ha $175 Superior (Otto)
Inferior (Mariner)
I note that properties 1 to 3 adjoin the subject land, and property 4 is further removed, but has similar uses and access problems, but is about half the size of the subject land. On balance I believe a rate something less than $175/ha would be appropriate for the subject land.
However if I am then to weight the relativity evidence at a lesser level than the sales, then the adoption of a rate of $175/ha would appear reasonable on the evidence. The preference for comparisons on a sales basis, compared to the use of relativity, was a principle upheld by the Land Appeal Court in WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44, at 46; and also followed in R and MM Barnwell v. Valuer-General (1990-91) 13 QLCR 13, at 16.
Summary:
Adopting a rate of $175/ha I conclude that an unimproved value for the subject land should be $148,330, rounded down to $148,000. In the matter of whether the percentage change in the unimproved value has some significance in the comparisons, I note that change is only a potential indicator that an error may have occurred. As the Full Court of Queensland found in C and BD Hendricks v. Valuer-General (1983) 9 QLCR 59, at p.63:
"The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase at different rates over a period of five years. "
Conclusion:
Having considered the whole of the evidence I am persuaded that the appellant has partly proved his case. The unimproved value as determined by the Chief Executive is set aside, and the unimproved value of Lot 5 on FY559, Lot 8 on FY2202, and Lot 38 on FY818 is determined at One hundred and forty-eight thousand dollars ($148,000).
NG DIVETT
MEMBER OF THE LAND COURT
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