Mitchell v Department of Natural Resources, Mines and Water
[2010] QLC 94
•30 June 2010
LAND COURT OF QUEENSLAND
CITATION: Mitchell & Anor v Department of Natural Resources, Mines and Water [2010] QLC 0094 PARTIES: Ian J and Pauline J Mitchell
(applicants)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NO: VLA158-06 DIVISION: General Division PROCEEDING: Land Court of Queensland DELIVERED ON: 30 June 2010 DELIVERED AT: Brisbane HEARD AT: Blackall PRESIDENT: Mrs CAC MacDonald ORDER: 1. The appeal is allowed.
2. The unimproved value of Lot 11 on PL92:TL219583 in the Parish of Wilton is determined at Sixty-seven Thousand Dollars ($67,000) as at 1 October 2005.
CATCHWORDS: Unimproved value – grazing property in Aramac Shire – highest and best use of component part of aggregation – direct comparison with determinations of selected cases – sales relied on in determination of selected case – Valuation of Land Act 1944 APPEARANCES: Mr A Boyd, agent, for the appellants
Mr W Isdale of Crown Law for the respondent
Ian J and Pauline J Mitchell (the appellants) have appealed, under the provisions of the Valuation of Land Act 1944 (the Act), against a determination by the respondent, the Chief Executive, Department of Natural Resources, Mines and Water, of the unimproved value of certain property, for rental purposes, as at 1 October 2005. The valuation issued at $72,000. The appellants estimated in their Notice of Appeal that the value of the property was $43,000. However, they led evidence at the hearing to a value of $60,000.
The property in question is part of an aggregation, Scotstoun, situated in the Aramac Shire approximately 37 kms north-west of Aramac. The total aggregation is made up of two leases one of which is the subject lease, a term lease issued under the provisions of the Land Act 1994 (TL219583), having an area of 517 ha.
The respondent has valued the subject lease at $139/ha on the basis that this part of the property has a carrying capacity of 1:1.4 ha (sheep). The appellants have contended for a value of $116.50/ha submitting that the subject property should be valued on the same basis as the remainder of the aggregation at $116.50/ha.
The recent history of the valuations of Scotstoun is relevant to the issues that were raised in this appeal. The valuation of the aggregation, as at 1 October 2005, was initially issued by the respondent at $950,000 or $127/ha. Following a hearing in the Land Court, the Court found the carrying capacity of the aggregation to be 1 sheep to 1.5 ha and determined the unimproved value at $871,000 or $116.50/ha.[1] In a separate decision the Land Court also determined the unimproved value of the major leasehold parcel (comprising 6,953.208 ha) at the same value, namely $116.50/ha.[2]
[1] Mitchell v Department of Natural Resources and Water [2008] QLC 0114.
[2] Mitchell v Department of Natural Resources and Water [2008] QLC 0115.
Mr PD Schefe, a registered valuer employed by the respondent, gave evidence on behalf of the respondent in the subject appeal. In his report Mr Schefe said that he had relied on file notes to describe the property as open well grassed brown soil downs, timbered with scattered whitewood, vine tree, boree and mimosa. There were scattered infestations of Parkinsonia and prickly acacia on the north-west boundary and a handful of prickly acacia on the south-western boundary. The subject property is rectangular in shape, is adjacent to the parent parcel of Scotstoun and has a frontage to the bitumen Aramac-Muttaburra Road.
Mr Schefe had not inspected the subject land at the time he made the valuation. However he had taken the opportunity to look at the property prior to giving evidence at the hearing. He was not accompanied by the owner. He had driven along the southern boundary and had entered onto the property at one or two places. Although Mr Schefe did not travel across the whole of the property, he felt that his inspection was adequate because the property was only 1.6 km deep.
Evidence was given on behalf of the appellants by Mr T Elliott who is the son-in-law of the appellants and who has worked the subject property as well as the parent parcel and his own property in the area. Mr Elliott accepted Mr Schefe’s description of the subject property as comprising downs country but said that it was probably the ashiest paddock on the whole of Scotstoun. The ashy content of the country meant that the soil was looser and dried out more quickly and that feed deteriorated a lot more quickly. Mr Elliott agreed with Mr Schefe’s estimate of the carrying capacity of the subject at 1:1.4 ha. In his opinion the value of the subject should be the same as the main block because the country was about average compared with the main block.
It was clear from the evidence that Mr Elliott was much more familiar with the subject property than Mr Schefe and that Mr Schefe had misunderstood the location of the ashy part of the subject property. In the end, however, it appears there was no real difference between them as to the description of the subject country nor its carrying capacity.
Although the values of the aggregation and the major leasehold component had been determined by the Land Court at $116.50/ha, Mr Schefe considered that, when valued as a separate parcel as required by the provisions of the Valuation of Land Act, the unimproved value of the subject land was higher than that of either the aggregation or the other component lease. Mr Schefe had three reasons for holding that opinion. The first was that the subject property is significantly smaller than the parent block. Land Court determinations of the value of a number of properties in the area, he said, showed that smaller blocks were receiving higher valuations than larger blocks, everything else being equal, so that size was significant. Accordingly the subject should be loaded for its small size. Secondly, by contrast with the remainder of the aggregation, no development was necessary on the subject land to enable its use for grazing purposes. The subject consisted of 100% downs country which involved no development costs, whereas a portion of the aggregation was developed country for which an allowance had been made in determining its unimproved value. The third difference was that the carrying capacity of the subject property was 1:1.4 ha whereas the carrying capacity of the parent parcel had been determined by the Court at 1:1.5 ha.
Overall, therefore, Mr Schefe considered that the subject parcel was superior to the parent parcel and should be valued at a higher rate than the parent parcel.
The appellants submitted that the subject property should be valued at the same rate as that determined for the parent parcel, $116.50/ha. They relied principally on a decision of the Land Court in a matter of Ogg v Department of Natural Resources and Water[3] to support that submission. In that case, the Land Court determined the unimproved value of a Permit to Occupy at the same value as the parent parcel to which the Permit to Occupy was an adjunct. It seems that the type of country on the Permit to Occupy was similar to that on the parent parcel. The Court decided that the highest and best use of the land the subject of the Permit to Occupy was as an adjunct to the principal parcel, rejecting a suggestion that the land may have a higher value than the principal parcel because the owners would pay a premium simply to exclude someone else from holding land within their aggregation.
[3] [2008] QLC 0160.
Mr Schefe considered that the decision in Ogg was not applicable to the subject land for a number of reasons. A Permit to Occupy is not transferable, a term lease is. The long narrow shape of the parcel in Ogg would create management and fencing difficulties if held as a separate parcel. In Ogg, the country on the Permit to Occupy was essentially the same as on the parent block, whereas in the subject case the land on the subject property was superior to the parent parcel because the subject did not require development. The carrying capacity on the subject (1:1.4) was superior to the parent parcel (1:1.5).
I consider that Mr Schefe was in error in relying on the lack of transferability of a Permit to Occupy as a point of distinction between the Permit to Occupy in Ogg and the term lease in the subject matter. Section 14(1) of the Act provides that where land is not granted in fee simple, the land is taken to be granted in fee simple for the purpose of deciding the unimproved value of land. Therefore the differences in the tenures are to be ignored for the purposes of a valuation under the Act. However, I do not consider that that error affects Mr Schefe’s comparison in any fundamental way.
There is no dispute between the parties that the highest and best use of the subject is for grazing purposes. However, unlike the Permit to Occupy in Ogg, the subject land is not in the middle of an aggregation but adjoins the Aramac/Muttaburra Road and another property Highbury. While I have accepted Mr Elliott’s evidence that there would be no market for the subject as a rural retreat or a small commercial enterprise, I consider that the subject would be marketable as a separate property. In other words, the subject property is distinguishable from the Permit to Occupy in Ogg because the highest and best use of the subject is not only as an adjunct to the parent parcel.
The appellants also relied on a Land Court determination of a property called Cooee where, it seems, a small parcel of land had been determined at the same value as the parent parcel. There was no satisfactory evidence about that matter and I have not taken it into account in this decision.
I have accepted Mr Schefe’s opinion that a higher rate should be applied to the subject property than the parent parcel for the reasons identified by Mr Schefe, namely that the subject is smaller and the evidence was that smaller properties achieve a higher rate per hectare; the subject property does not contain any developed land; and the carrying capacity of the subject is higher than the parent parcel.
Mr Schefe said that he had valued the subject property by direct comparison on a dollar per hectare basis. For these purposes he relied on a number of determinations by the Land Court as follows –
· In the test case of Glenample[4] the Court determined the rate per hectare of a property with a carrying capacity of 1:1.5 ha at $112/ha. Glenample is part owned by Mr Elliott, who gave evidence for the appellants in this matter. It is situated across the road from Scotstoun.
· Scotstoun issuing[5]. The Land Court determined the value of this property at $116.50/ha. The property has a carrying capacity of 1:1.5 ha.
· Small Glenample[6]. This property is part of the aggregation of Glenample. The Land Court determined the value of this property at $97/ha. The carrying capacity is 1:1.75 ha.
· Brendallan. Brendallan is a sale which Mr Schefe relied on in valuing the aggregation of Glenample referred to above.[7] In the Glenample appeal, Mr Schefe said that the carrying capacity of Brendallan was 1:1.4 ha and that he had applied a value of $126.50.
[4] Elliott v Department of Natural Resources and Water [2008] QLC 0009.
[5] Mitchell v Department of Natural Resources and Water [2008] QLC 0114.
[6] Elliott v Department of Natural Resources and Water [2008] QLC 0162.
[7] Elliott v Department of Natural Resources and Water [2008] QLC 0009.
Mr Schefe concluded that the subject property was far superior to the comparison properties on a dollar per hectare basis. This was because the subject did not have any of the development costs associated with developing gidyea country on the comparison properties. Mr Schefe said that the downs on the subject property were directly comparable with the downs on all of the comparison properties, the formed bitumen access was comparable to the comparison properties. However the subject was far smaller in size as compared with the other properties. He considered that the subject was most aligned with the Scotstoun determination but superior because it consisted wholly of Mitchell grass downs rather than the poorer quality areas of Scotstoun that required development.
I have accepted that the subject property is superior to the comparison properties for the reasons given by Mr Schefe. However, I do not consider that the evidence supports a value of $139/ha for the subject. The Brendallan sale ($126.50/ha) is the most comparable with the subject in terms of carrying capacity. However in the determination of the unimproved value of Brendallan[8], the former President pointed out that Brendallan is adjacent to the town of Aramac with all weather bitumen sealed access.[9] The learned President also said that the bitumen sealed Aramac/Muttaburra Road to Glenample is cut by creeks and is not all weather.[10] Similarly, therefore, the subject does not enjoy all weather access. It is also further removed from Aramac than the sale. There is no evidence that Mr Schefe has taken those factors into account in his comparison.
[8] Elliott v Department of Natural Resources and Water [2008] QLC 0009.
[9] At [65].
[10] At [10].
I consider that an allowance should be made for those factors and therefore that the valuation should be reduced. A reduction would also provide more consistency with Mr Schefe’s opinion that the subject is most aligned with the Scotstoun determination. Accordingly, I consider that the unimproved value of the subject should be determined at $130/ha or $67,210, rounded to $67,000.
ORDERS
1.The appeal is allowed.
2.The unimproved value of Lot 11 on PL92:TL219583 in the Parish of Wilton is determined at Sixty-seven Thousand Dollars ($67,000) as at 1 October 2005.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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