Nalder v Department of Natural Resources and Water

Case •

[2007] QLC 132

•

18 December 2007

LAND COURT OF QUEENSLAND

CITATION: Nalder v Department of Natural Resources and Water [2007] QLC 0132
PARTIES: John Stanley Nalder
(appellant)
v.
Chief Executive, Department of Natural Resources and Water
(respondent)
FILE NO: AV2005/0544
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: Ipswich
MEMBER: Mr PA Smith
ORDERS:

1.     The appeal is allowed.

2.     The valuation of the subject land is determined at One Hundred Thousand Dollars ($100,000) as at 1 October 2004.
CATCHWORDS:

Valuation – unimproved value – factors in valuation –valuation evidence – presumption in favour of correctness of valuation – proximity to poultry farm – impact of odour – awkward shape of block

Valuation of Land Act 1944
APPEARANCES:

Mr E Denman, for the appellant
Mr J O’Rourke, Principal Legal Officer, Department of Natural Resources and Water, for the respondent

Background

  1. This matter involves an appeal by the appellant against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (the VLA) which initially valued the subject property situated at the eastern end of Sawmill Road, Aratula, in the sum of $125,000 as at 1 October 2004.  The amount of the valuation was reduced on objection to $120,000, and was further reduced by the respondent pursuant to s.68 of the VLA to $110,000.  The appellant contends for a valuation of $60,000. 

  1. The subject land is described as Lot 2 on CC 1943, Parish of Fassifern, containing an area of 31.15 hectares.

  1. The subject land, is located approximately 700 metres east of the Cunningham Highway and the village of Aratula.  Electricity, town water and telephone services are available within Sawmill Road.  Aratula is a rural based village situated approximately 50 kilometres south south-west of Ipswich.  There are a number of services available at Aratula, including two service stations, a hotel, bakery, café, arts and craft stores and primary school.  The main administrative commercial and retail centre for the district is Boonah which is located approximately 20 km away.  Boonah provides a comprehensive range of services including hospital and high school. 

  1. The subject land is of an irregular, awkward shape.  The predominant reason for the irregular shape of the subject is that the northern boundary of the property follows the alignment of an old curving rail corridor.  This has resulted in the land having an elongated, narrow neck to the north-east and a long, somewhat wider but nevertheless elongated look to the south-west.  The access point to the land is from Sawmill Road at the western extremity of the land.  To the immediate south of the south-western corner of the subject is located a relatively large commercial poultry farm, with the poultry sheds located 70m in from the common boundary with the subject.  Additionally, a sawmill is located approximately 300m from the western boundary of the subject.

  1. The subject land is also situated close to the Boonah Shire Council’s effluent ponds which take waste water from Aratula.  The ponds are located about 150m from the northern boundary towards the western or front section of the property.

  1. The subject land has a shed constructed in close proximity to the south-western boundary, almost opposite the poultry sheds.  The subject property also has a horse riding ring established to the east of the property, which is in general terms easy sloping with several moderately elevated potential homesites available offering rural views from the south-west to the north-east.  There is no dwelling erected on the subject. 

  1. As at 1 October 2004, the property was designated Rural B and Rural C under the Boonah Shire Planning Scheme 1998, which permits the erection of a single dwelling house on the subject.  Additionally, there are no planning restrictions which would have prevented the construction of a dwelling upon the subject land as at 1 October 2004.

  1. The appellant was represented at the hearing by Mr Denman, a registered valuer.  The appellant, Mr Denman and Mr Jonathon King, a real estate agent and auctioneer, gave evidence on behalf of the appellant. 

  1. The respondent was represented by Mr O’Rourke, Principal Legal Officer employed by the respondent and relied on the evidence of registered valuer, Mr Jason Carey. 

Relevant legislative provisions

  1. Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land.  Relevantly, s.3(1) of the VLA says as follows:

    “3.(1) For the purposes of this Act –
    ‘unimproved value’ of land means –

    (a)in relation to unimproved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and

    (b)in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.”

  1. I note that the subject land in this matter is improved.  Accordingly, put simply, the task is to find the market value of the land on the assumption that none of the improvements are on the subject land.  An assessment is then undertaken as to the highest and best use of that land.

  1. As the President said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs 11 and 12:

    “[11] The principles for determination of the 'market value' of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property. (See Griffith CJ at 432 and Isaacs J at 441).

    [12] It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land.  In Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:

    'Land in my opinion differs in no way from any other commodity.  It certainly is more difficult to ascertain the market value of it but – as with other commodities – the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date – and that is evidenced by sales."” ’ ”

I respectfully agree with these observations.

Presumption of correctness of valuation

  1. I now turn to section 33 of the VLA, which states as follows:

    “33     Status of valuation
    Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.”

  2. This section was considered by the High Court in the case of Brisbane City Council v The Valuer-General for the State of Queensland 1977-78 140 CLR 41 where Justice Gibbs (as he then was) made the following observation at page 56:

    “In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s. 13(7) is rebutted.”

It should be noted that s.33 of the VLA is in essentially the same terms as what was then s.13(7) of the Act. 

Issues in the appeal

  1. The key issue in this appeal relates to what allowance should be made for the disabilities suffered by the subject land.  Further, by his notice of appeal, the appellant set out as one ground that because of the existence of the poultry farm next door, the block was now essentially unsuitable for building a residence on.

  1. As between the respective valuers for the parties, there was not a great deal of dispute as to their respective sales evidence.  However, there was clear dispute as to the applicability of the sales evidence to the facts and circumstances of the subject.  Additionally, there was dispute as to the market impact that proximity to poultry farms had had on various sales.

Sales evidence

  1. Mr Denman for the appellant has provided a useful summary of his sales as follows:

    “Sale No. 1
    The property is described as Lot 36 on SP 149876 Parish of Fassifern, is situated at Lake Moogerah Road Charlwood, contains an area of 19.28 hectares and sold vacant on 16th August 2004 for $170,000.

    The property comprises a regular shaped mixed scrub and forest block which is considered to be considerably superior to the subject.  It has bitumen road access and does not have the disadvantage of the broiler farm odours.

    DNR application to this property is at 31st October 2004 is $141,000.

    Sale No. 2
    The property is described as Lot 39 on SP 149876 Parish of Fassifern, is situated in Lutter Road Charlwood, contains an area of 18.84 hectares and sold vacant on 12th February 2004 for $115,000.

    The property comprises mixed scrub and forest country and is undulating to broken and adversely shaped in relation to property maintenance.  Again, it does not have the disadvantage of the broiler farm odours.

    DNR application to this sale property as at 31st October 2004 is $146,000.

    Sale No. 3
    The property is described as Lot 357 on Plan CC799 Parish of Fassifern, is situated in Zinglemann Road Milbong, contains an area of 16.061 hectares and sold vacant on 10th September 2004 for $121,000.

    This is similar country to the subject but not as well situated, poultry farm excepted.

    DNR application to this sale property as at 31st October 2004 is $108,000.

    Sale No. 4
    The property is described as Lot 1 on Registered Plan 213417 Parish of Clumber, is situated on the Cunningham Highway at Mt Edwards, contains an area of 19.46 hectares and sold vacant on 27th May 2004 for $82,775.

    This property is similar country to the subject and as far as I am aware is unaffected by the poultry farm.

    DNR application to this sale property as at 31st October 2004 is $118,000.

    Sale No. 5
    The property is described as Lot 59 on Registered Plan 196793 Parish of Fassifern, is situated at 22 Charlwood Road Aratula, contains an area of 2.217 hectares and sold vacant on 8th September 2003 for $60,000.

    DNR application on this property is $71,000.

    Sale No. 6
    The property is described as Lot 13 on Registered Plan 196794 Parish of Fassifern, is situated at 4 Evelyn Street Aratula, contains an area of 1.858 hectares and sold vacant on 22nd September 2004 for $75,000.

    DNR application on this property is $74,000.

    Sale No. 7
    The property is described as Lot 54 on Registered Plan 196794 Parish of Fassifern, is situated at 2 Surawski Drive Aratula, contains an area of 2.105 hectares and sold vacant on 20th April 2004 for $65,000.

    DNR application on this property is $51,000.

    Sale No. 8
    The property is described as Lot 31 on Registered Plan 229853 Parish of Fassifern, is situated at 5 Matilda Street Aratula, contains an area of 2.001 hectares and sold vacant on 5th July 2004 for $82,500.

    DNR application on this property is $83,000.”

  1. Mr Carey for the respondent has also provided the Court with a highly useful valuation report which contains a tabular assessment of various sales evidence.  I have summarised Mr Carey’s tabulated sales as follows:

Sales Area
Ha 		Date of Sale Sale Price Zoning Analysed sale price Applied U/Value Comparison
1
Charlwood Rd
CHARLWOOD

17.16

29/06/2004

$205,000

Rural

$184,205

01/10/2004
$170,000

Superior
2
Charlwood Rd
CHARLWOOD

16.01

30/08/2004

$197,000

Rural

$189,830

01/10/2004
$152,500

Superior
3
Charlwood Rd
CHARLWOOD

79.23

10/05/2004

$569,000

Rural

$294,714

01/10/2004
$207,500

Superior
4
Carneys Creek Rd
CROFTBY

16.19

21/09/2005

$171,000

Rural

$165,820

01/10/2004
$152,500

Smaller but better shaped.  Less impact of a poultry farm
5
Ipswich-Boonah Rd
PURGA

16

12/11/2004

$250,000

Rural

$234,700

01/10/2004
$200,000

Superior
6
Sawmill Rd
ARATULA

3.092

24/05/2006

$347,000

Rural

$138,000

01/10/2004
$90,000

Inferior

  1. This case is a little unusual as, at the end of the day, there is essentially agreement as between the parties as to the appropriate value to be applied to the subject property in the event that the poultry farm did not exist next door.  The respondent contends that the value of the property without the poultry farm as at 1 October 2004 would have been $150,000.  Mr Carey’s evidence and the sales he referred to clearly support such a valuation. 

  1. During cross-examination, Mr Denman stated that:

    “I think if the poultry farm wasn’t there, Mr Nalder would be happy to have it at a $150,000”.[1]

Mr Denman went on to explain that although he had not considered the value of the subject as at 1 October 2004 without the existence of the poultry farm specifically, he conceded that an appropriate valuation in those circumstances would be somewhere of the order of $150,000.[2] 

[1]     T. page 21.

[2]     T. page 21.

  1. On the basis of the evidence presented before the Court, I am prepared to accept that the unimproved value of the subject land as at 1 October 2004, without the existence of the adjoining poultry farm, would have properly been set at $150,000.  The key question in this appeal then is to make an assessment as to what impact the poultry farm has on the subject. 

Impact of poultry farm

  1. Substantial evidence was given by the parties as to the impact of odour emanating from the poultry farm on the subject.  A number of points are clear.  Firstly, the poultry sheds are located in very close proximity to the south-west corner of the subject and run in a parallel direction with the southern boundary.  There are five poultry sheds, each having a holding capacity of 40,000 birds, resulting in a potential combined capacity of 200,000 birds.  Each poultry shed has what is known as tunnel ventilation, which means that fans are located on the eastern end of the sheds and the air is drawn in from one end and through the shed and blown out towards the east.  The poultry go through a growth cycle of approximately 6 weeks, and during approximately the first two weeks of the growth cycle when the chickens are small, there is very little odour or dust.  As the chickens grow in size, the incidence of nuisance from odour and dust increases. 

  1. It became clear from the evidence that much of the impact of odour and dust nuisance from poultry sheds is quite subjective in nature.  I note that the existing poultry sheds next door to the subject land have been the subject of numerous complaints from the surrounding district, but I also note and accept on the evidence that the adjacent poultry farm meets or exceeds industry best practice in its operating techniques.  However, that said, that does not mean that no odour is produced by the poultry sheds.  On the contrary, it is clear that odour and dust nuisance is produced by the poultry sheds. 

  1. Mr Carey contends that, in reducing the unimproved value as at 1 October 2004 which would otherwise have been $150,000 down to $125,000, then $120,000, and finally $110,000, the respondent has taken ample allowance for the impact of the poultry farm on the subject. 

  1. Mr Denman for the appellant initially contended by the grounds of appeal that the existence of the poultry farm resulted in the subject land being inappropriate for a residential home to be built on it.  He fell from that position somewhat during the hearing, acknowledging that there were suitable homesites further to the east on the subject property, but that the price of developing a home on those sites, due to the prohibitive costs of electricity in particular, had to be taken into account. 

Decision

  1. In my view, Mr Carey for the respondent has appropriately taken into account the disabilities suffered by the subject land in light of the existence of the poultry farm, save for an appropriate allowance reflecting the additional costs which will necessarily be incurred in constructing a residence away from the preferred site at the south western corner of the subject.  Although Mr Carey would contend that its reduction to $110,000 adequately takes into account the costs of building an alternate site on the subject, my view of the comparative sales evidence does not entirely agree.

  1. In many ways, the subject property is unique.  Other sales properties are of a regular shape and thus have the advantage of, in the main, having various alternatives for building sites on the respective blocks.  However, as regards the subject, the situation is entirely different.  Clearly, the most cost effective place to construct a residence is at the south-west corner of the block, at the Sawmill Road access area.  This is also the area of the land in close proximity to the poultry sheds.  At this point, the land is elongated in an east-west direction due to the awkward shape of the land caused by the northern boundary following a railway curved alignment.  On the evidence, I find that the shape of the subject, combined with the location of the adjoining poultry sheds, results in the best building sites on the subject being much further removed from access to utilities at Sawmill Road than would otherwise be the case.  However, I am not satisfied that the respondent through his evidence has properly established the additional costs involved in building on sites away from Sawmill Road.  For instance, the evidence as to the cost of supplying electricity to a homesite to the east of the subject, by both the appellant and the respondent, is less than satisfactory.

  1. However, there is evidence that I do take into account in determining the appropriate value of the subject as at 1 October 2004. 

  1. During cross-examination, Mr Denman gave evidence that, because of the impact of odour, an allowance of $14,000 for air-conditioning should be made for a residence at a more distant site.  Mr Denman’s evidence is that to overcome the odour problem inside a residence, ducted air-conditioning to the entire house would be required as compared to the usual occurrence of a couple of single air-conditioning units to a lounge and bedroom.[3]

    [3]     T. page 22.

  1. Mr Denman also referred to the figure of $14,000 for ducted air-conditioning as at 1 October 2004 in his report of 26 February 2007.[4]  However, this figure does not take into account the air-conditioning costs which would be saved by not having to install the smaller units referred to in evidence by Mr Denman.  Doing the best I can with the evidence, I discount the cost of ducted air-conditioning down to $10,000 as at 1 October 2004. 

    [4]     Exhibit 4 page 2.

  1. During cross-examination, Mr O’Rourke sought to make out that an allowance for air-conditioning was in effect double dipping as site allowances had already been taken into account by the respondent in reducing the valuation of the subject.  In the manner in which I propose to deal with this matter, I do not accept that making an allowance for ducted air-conditioning results in double dipping. 

  1. In determining this matter, doing the best that I can with the evidence before me, and accepting that the appellant has made out a case that the respondent has not fully taken into account the disabilities suffered by the subject and has therefore rebutted the onus as set out in section 33 of the VLA, I am prepared to make a valuation of this property pursuant to the VLA as at 1 October 2004 on the presumption that a home could be constructed at the south-west corner of the subject, in close proximity to the poultry sheds, but that to overcome odours which would be in existence at various stages of the poultry growth cycle, it is reasonable to take into account an allowance for air-conditioning in the sum of $10,000.  Allowing for a house site to be located at the south-west corner of the subject results in no additional allowance being made for higher costs for getting services to more distant parts of the property, but of course also has the impact of the property still being subject to the noise and dust nuisance of the poultry farm in the vicinity of a residential house site on the subject. 

  1. Of course, the value being considered is an unimproved value based on the assumptions that no improvements exist on the subject land but that all of the surrounding disabilities are in existence.  In my view, the existence of the poultry sheds on the subject land have an almost unique impact on the subject compared to other locations, given the irregular, awkward shape of the subject and the location of the poultry sheds close to the narrow neck of the subject land which is the access point of the subject land to Sawmill Road.  In all of the circumstances, and taking into account all of the evidence, in my view the appropriate unimproved value of the subject land as at 1 October 2004 is $100,000. 

Postscript

  1. It is unfortunate that the delivery of this decision has taken longer than anticipated.  At the time that I heard the matter, I only held a part-time appointment to the Land Court, my full-time appointment being as Deputy President of the Land and Resources Tribunal.  Requirements of the Land and Resources Tribunal, beyond my control, necessitated all Land and Resources Tribunal work taking precedence over this matter.  Fortunately, that situation has been resolved by the amalgamation of the bulk of the jurisdiction of the Land and Resources Tribunal into the Land Court, and my corresponding appointment as a full-time Member of the Land Court.

Orders

1.The appeal is allowed.

2.The valuation of the subject land is determined at One Hundred Thousand Dollars ($100,000) as at 1 October 2004.

P A SMITH

MEMBER OF THE LAND COURT


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Spencer v The Commonwealth [1907] HCA 82
Spencer v The Commonwealth [1907] HCA 82