Nerang Pastoral Co Pty Ltd v Chief Executive, Department of Natural Resources

[1997] QLC 102

[1997] QLC 102

 

LAND COURT BRISBANE 3 JULY 1997

Re:     AV93-265 and 266 and AV95-212

Appeals against an unimproved valuations - Valuation of Land Act 1944 -

Nerang Pastoral Co Pty Ltd v.

Chief Executive, Department of Natural Resources (formerly Department of Lands)

(Hearing at Coolangatta) D E C I S I O N

The appellant owns land which it now operates as a quarry and which was valued by the respondent for the purposes of the Valuation of Land Act 1944 for 1992 and 1995 relevant dates. Appeal AV95-212 is with respect to a valuation as at 1 January 1995 over the land comprising the combination of that covered by two 1992 appeals, the valuation figure applied by the Chief Executive being $2,300,000. I will call this the “combined site”. For this appeal the appellant said in the appeal form that the value ought to be $1,000,000, however, led evidence during the hearing to a figure of $725,000. Appeal AV93-265 is against the respondent’s valuation of $465,000 as at a relevant date of 31 March 1992. In the appellant’s view, that land should have a value of $350,000 placed on it. Appeal AV93-266 refers also to a valuation as at 31 March 1992, and is concerned with a separate parcel of land which the Chief Executive has valued at $1,100,000. The appellant wrote on the appeal form that the valuation ought to be $640,500, however, led evidence to a value of $367,500. Each of the appeals was heard together with the consent of the parties.

Mr Bryan Boyd Kelaher, registered valuer, gave valuation evidence on behalf of the appellant. Mr Peter Dudley Grennan, registered valuer, an employee of the Department of Natural Resources, which includes the former Department of Lands, gave valuation evidence in support of the Chief Executive’s valuations. Mr Grennan explained in his evidence that the Chief Executive had not seriously addressed the question of the values that ought to apply to “Extractive Industry” lands until the 1995 valuation was prepared. He said that this explained the substantial increase in value between that applied in 1992 and the 1995 valuation.

The “combined site”  comprises 84.03 ha situated about 20 km north-west of the Southport Central Business District along the Oxenford-Coomera Gorge Road. The land was described by Mr Grennan as being a “medium to gently undulating coastal forest ridge” and from the various plans tendered, I would describe the “combined site” as being shaped somewhat in the form of a parallelogram. The land is cleared and was at the time of the hearing

being used, in part, for the extraction by quarrying of a hard rock known as meta-greywacke: frequently called greywacke or blue metal. This material is used as an aggregate in concrete mix, whilst lesser quality material is used for less demanding uses such as for road base. The land has what are described as “buffer areas” which are included in the overall land area. It is not clear to me when actual quarrying commenced.

Appeal AV93-265, a 1992 appeal, relates to Lot 3 on RP 183196 in the Parish of Barrow, County of Ward, having an area of 46.45 ha. If one can imagine that the parallelogram representing the “combined site” was severed by a diagonal line travelling from the north-west to the south-east corner, Lot 3 occupies the south-west severance which results. In Mr Grennan’s report he said that about 6.6 ha of the land was zoned “Extractive Industry”, about

26.6 ha was zoned “Special Facilities” and about 13.2 ha was zoned “Rural B”. I note in passing that Mr Kelaher said in his valuation that the “quarry” area was 21.22 ha, the “buffer” 12 ha and the “Rural B” area 13.2 ha.  Evidence from Mr Dugald Gray, the general manager of the company which manages the quarry operations on the subject “combined site” supported Mr Grennan’s area of “Extractive Industry”; however, given my conclusion on how the land should be valued, I do not need to explore whether there was any real disagreement between the valuers concerning the zoning of the balance of the land. Mr Grennan’s valuation included reference to three sales, one of which (Sale 2) is the sale of the land subject to this appeal. The sale to the appellant company took place in August 1988 for a price of $500,000 which for the

46.45 ha shows $10,323 per ha, unimproved, after the deduction of $14,000 for clearing and

$6,000 for fencing. Mr Grennan wrote in his valuation that the subject land was “purchased when negotiating to acquire adjoining extractive industry land”, however, evidence from the appellant’s side was to the effect that this purchase was independent of a later purchase of land which is the subject of appeal AV93-266. That evidence came from Mr Gray, who was not cross-examined on this point. I accept his evidence on this aspect as being superior to that of Mr Grennan’s.

The two other sales referred to by Mr Grennan included (Sale 1) a sale from Midland Credit Limited to the appellant company of that part of the “combined site” forming the north- eastern severance of the parallelogram. This land has an area of 37.58 ha and sold in May 1989 for $2,000,000. Mr Grennan deducted $11,000 for clearing and $4,000 for fencing to arrive at an unimproved figure of $52,820 per ha. About 1.5 ha of the sale property was zoned “Special Facilities”, whilst the balance was zoned “Extractive Industries” according to Mr Grennan’s evidence, however, there was other evidence which indicated that the whole of the sale land was zoned “Extractive Industry” at the date of sale. As I understood the evidence, the “Special Facilities” zoning was not put into place until some time later. In Mr Grennan’s opinion, Sale 1 is superior to Sale 2 on a pro-rata basis because of its availability for an extractive industry in the form of a hard rock quarry.

Sale 3 took place in July 1987 and comprised the sale of 8.819 ha to CSR Ltd for

$505,000. After the deduction of $5,000 for clearing, fencing and roads, Mr Grennan arrived at an unimproved figure of $56,676 per ha for the sale. The Sale 3 land has no apparent greywacke available and was purchased for the extraction of road base material, filling material and landscaping product. In Mr Grennan’s view, Sale 3 supports the level of value indicated by Sales 1 and 2 in that Sale 3 is inferior pro rata to Sale 1 because the extractive material is of a lesser value than the greywacke material. The Sale 3 land adjoins the Sale 1 land to the north.

I will put aside Sales 1 and 3 for the moment. The sale of the land the subject of Appeal AV93-265 (Sale 2) was not challenged as being anything other than a market transaction. Mr Kelaher did not refer to this sale in his valuation, but advanced the view that the subject land was worth $350,000 based on a method which included the deferral for 25 years of the value of the non-quarry land as if it were residential. The reason for the selection of the 25-year period for the 1992 relevant date and the period of 22 years for the 1995 relevant date will become clearer, later, when I discuss the “”Rezoning Agreement””. The deferral method was also employed in his 1995 valuation and I will come to a detailed consideration of that in due course, however, there was nothing in Mr Kelaher’s valuation of this land, or in the evidence, which displaces reliance on the subject sale. I should therefore determine the value of the land which is the subject of Appeal AV93-265 at $465,000, the figure revealed by the sale.

I will now turn to the other 1992 appeal, that is AV93-266. This land comprises 37.58 ha and was, in the appellant’s view, all zoned “Extractive Industry” at the time of sale. Although Mr Grennan analysed the sale price to an unimproved figure of $52,820 per ha, he applied only $30,000 per ha in arriving at an unimproved value for the purposes of the Valuation of Land Act, though he gave no detailed reason as to why he did not fully apply the sale. I can only assume that he saw his task as being to support the respondent’s valuation figure and applied the sale accordingly. Such an assumption is supported by his evidence that the Chief Executive had only seriously addressed the valuation of such properties in 1995. The appellant led substantial evidence designed to demonstrate that this subject sale (Sale 1) was not a marketplace transaction of a type that would satisfy the test provided by Spencer v. The Commonwealth (1907) 5 CLR 418. It will be convenient if I now deal with that evidence before considering further the matter of the valuation of the land.

Sale 1 is best introduced by a brief historical digression. The appellant company was described by Mr Gray as being basically a landholding company, whilst the active arm is Nucrush Pty Ltd. The companies are privately owned and form part of the Neumann Group of Companies. Nucrush produces aggregate materials for the pre-mix concrete industry, in particular to an associated company with the name of Nucon, and also produces and supplies road base products for the civil construction industry as well as other numerous rock products for construction and landscaping. The appellant company and its associated companies established operations in the early 1970s, not far from the present location of Movie World, a theme attraction somewhat northerly and inland of the Gold Coast proper, and in the 1970s the

operation was based on a sand and gravel deposit off stream from the Coomera River, referred to in evidence as the Hart Street deposit. A processing plant was established there and continued to operate for the next 20 years or so. In the mid-1980s the deposit was showing signs of being exhausted and a graph was put into evidence indicating the rate of depletion of the Hart Street deposit and the rate of sales of product. Mr Gray explained that approximately a three-year lead time was needed to commission a new quarry and, given the circumstances confronted by the appellant company, the situation was becoming quite serious towards the end of the 1980s. The tendered graph indicates that sales peaked in the 1988-89 year, dropped a little over the following year then started to fall away from 1989-90. In 1988 the land which is the subject of Sale 2 became available and although only about 6 ha out of the total land area of 46 ha was zoned “Extractive Industry” the land was purchased. Mr Gray said that the area of “Extractive Industry” land was not sufficient to establish a quarrying operation, however, it did have a hard rock resource and, as he put it, that was “better than none”. In 1989 the Hart Street deposit had been mined to approximately 90% complete when the land which became the subject of Sale 1 came onto the market. The appellant company appointed a firm of experienced consulting geologists to investigate the feasibility of establishing a hard rock quarrying and processing operation on the site and feasibility studies were produced. These studies showed that the deposit consisted of a ridge rising to about 75 metres and contained several rock types known generally as meta-sediments comprising meta-greywacke, meta-silt stone, some argillite or shale-like material and some quartzite. Core samples were retrieved by diamond drilling within the deposit and these, together with samples taken some years previously, indicated that the deposit would be suitable for the production of material able to be used particularly in pre-mix concrete and as construction aggregates though only some of the rock would be suitable for concrete aggregates. The Hart Street deposit was due to be mined out by the end of 1990 and, given the requirement for a three-year lead time period, it was clear that the appellant company was in an awkward position, having not acquired suitable land prior to the time that the Sale 1 land became available. According to Mr Gray, the appellant company purchased the land in September 1989, however, a photocopy of the contract was tendered and it bore the date 17 May 1989.  Mr Grennan adopted this date. Nothing appears to turn on the difference in date as there was no challenge from either side concerning it. I accept that Mr Gray’s evidence probably reflects an otherwise accurate description of the history surrounding the transactions, though Mr Gray was apparently not appointed to his position as general manager until after the contract dates for the land in Sales 1 and 2. His evidence in these regards was largely hearsay therefore, though no objection to it was raised by the Chief Executive. It is important to the appellant’s case that I mention that there was no challenge from the respondent’s side to the appellant’s evidence of being in an awkward business position in 1989 and being anxious to buy suitable land upon which to continue business operations.

The appellant company was indeed fortunate in obtaining the Sale 1 land as it adjoins

the Sale 2 land acquired some months previously. Whether the prospect of the Sale 1 land becoming available was known to the appellant is not clear to me, but as I have said, the appellant’s evidence, and there was no challenge on this, was that the transactions were quite separate even though when the appellant purchased the Sale 2 land, it purchased land which could not support a viable quarry. I am not aware of whether the appellant has any other lands.

The purchase of the Sale 1 land was a rather complicated matter. The contract of sale contained certain conditions to which my attention was drawn. I note first of all that the sale land did not exist as a separate title at the time of contract, but had to be subdivided from a larger parcel. The contract was conditional upon the granting of an exemption to the provisions of the Land Sales Act 1984 which would otherwise apply to the sale of land a part of another title, and reference was made in the contract to a plan attached to the contract where the land to be purchased was “delineated in red”. Unfortunately, the photocopy did not reveal the red colouration though, from the evidence I heard, it appears that the purchase was concerned with what subsequently became described as Lot 463 on Registered Plan 228373, that is the land the subject of Sale 1.

Special Condition 36.1 of the contract binds the purchaser to certain obligations expressed in a letter attached to the contract. That  letter, dated 19 October 1988,  was apparently sent from the solicitors for the vendor to the solicitors for the local authority setting out the terms of a settlement of an appeal brought before the Planning and Environment Court by the vendor following a subdivision application relating to the parent parcel from which the Sale 1 land was to be subdivided. The land which is the subject of Sale 1 lies in the western part of the parent parcel and there is between the sale land and the balance, a part of which I will call “the estate land”, having an area estimated by Mr Grennan to be about 30 to 33 ha, referred to in the evidence as the “quarantined land”. The letter sets out an agreement that the “quarantined land” will not be subdivided until the life of a quarry on the sale land ends, either because of the exhaustion of resources or because further quarrying becomes unlawful. The intent appears to be one of establishing a suitable buffer between the quarrying activities intended to be carried out on the sale land and the residential development which is to take place on the balance of the “estate land”.

Abutting the “quarantined land” to its west is part of the sale land, which I will call the “north-east corner”, which has an area of 10.5 ha and which the letter says will be subject to an application for rezoning from its existing “Extractive Industry” zone to “Rural B”. The intent appears to be one of extending the buffer area beyond that provided by the “quarantined land”. The party bound by an undertaking to apply to rezone the land in the “north-east corner” of the sale land is effectively saying that neither quarrying activity nor processing will not be carried out in that part of the land.

Clause 36.2 of the contract of sale provides that the purchaser will develop the land being purchased, in the way set out in “David Kershaw’s Report”, a report dated 20 July 1988.

I understand that Mr Kershaw is a geologist.

Clause 37.1 of the contract acknowledges that the vendor wishes to develop the “estate land” to the east and that the purchaser undertakes not to apply for the consent of the local authority to allow crushing and processing activities to be carried out on the land which is the subject of the sale. It will be recalled that the purchaser, the appellant company, had already acquired the land which is the subject of Sale 2 which adjoins the Sale 1 land, and part of that land would be available for such processing activities subject to the consent of the local authority. Alternatively, a rezoning of part of the Sale 2 land to the “Special Facilities” zone would allow processing on that land: and such a rezoning did subsequently take place. Clause 38 of the contract acknowledges that the Sale 2 land may be put to such a processing use and relaxes the inhibition imposed by Clause 37.1 to the extent of allowing processing to extend into the Sale 1 land to a line specified as contour RL 35.

The next document of interest is a “”Development Agreement”” dated 12 September 1989 entered into between the vendor of Sale 1 and the Council of the Shire of Albert. The “Development Agreement” refers to the contract of sale and makes it clear that the intent of the agreement is to allow both the quarry land and the estate land to be developed and to minimise conflict between the uses during that development. Clause 5 of the agreement sets out the undertaking for the vendor to apply to rezone the land in the “north-east corner”: clearly the transfer under the contract of sale has not yet occurred. Clauses 7.1 and 7.2 create a “division line” which represents the eastern boundary of the “quarantined land” and Clause 7.3 expresses again the reason for having buffer land in existence.

Clause 8.1 binds the vendor to not make an application to the local authority for approval to subdivide any part of the “quarantined land” until the exhaustion of the quarry or until it becomes unlawful to continue, thus purportedly preserving the “quarantined land” as buffer for a substantial period. Clauses 9 and 10 effectively oblige the local authority to consider the subdivision of the balance “estate land” without having regard to the intended quarry use. Clauses 11 and 12 provide for the quarry development on the sale land to be carried out in accordance with the report of David Kershaw & Co dated 20 July 1988, including the carrying out of crushing and screening operations. Clause 13 notes that no plan of use for the sale land has yet been formulated or adopted by the vendor and therefore the local authority acknowledges that some variations to the Kershaw report may be desirable.

Clause 18 of the “Development Agreement” is significant in that it provides for the vendor to arrange for the purchaser of the sale land to enter into a “Deed of Novation” so that the purchaser would become contractually bound to the local authority to perform and fulfil any conditions which attach to the sale land and which at the time of transfer remain unfulfilled. There is, attached to the “Development Agreement”, a number of sketch plans of the lands affected by the agreement and, whilst it is tolerably clear which parts of the land relate to which parts of the “Development Agreement”, the absence on the photocopied plans of the coloured

lines referred to in the plan of development make the discovery of the relevant land portions a matter of some difficulty. Moreover, the dimensions of the various portions of land are unclear, and in this regard I refer particularly to the land in the “north-east corner” and to the “quarantined land” whose area I referred to earlier was an estimate made by Mr Kelaher and Mr Grennan, respectively.

A copy of the Deed of Novation between the vendor, the purchaser and the Council of the Shire of Albert dated 12 September 1989 was tendered. The effect of the Deed is simply to pass on to the purchaser the obligations referred to earlier. There are some other provisions in the Deed, however, no useful purpose will be served in my reference to them all. I should mention though that the Deed refers to a further contract of sale of 4 September 1989 under which the purchaser purchased some land which the evidence suggests was part of the “quarantined land”. The reasons for this purchase were not made clear to me though, in the absence of argument concerning it, it would appear to be a matter of no significance.

The next document, a copy of which was tendered, was a “Rezoning Agreement” in the form of a deed made on 17 March 1992. Some time before this date the purchaser had become the registered proprietor of the Sale 1 land and had applied to the local authority to rezone part of the land which is the subject of Appeal AV93-265 and part which is subject to Appeal AV93-266 apparently for the purposes of allowing the quarry development to proceed. That application, according to Mr Kelaher’s written valuation, was made on 26 October 1990.The Council refused the application following which the landholder appealed to the then Local Government Court and the matter was settled in the form of the “Rezoning Agreement” tendered. The rezoning was gazetted on 26 June 1992, bringing the land to the zoning status described by Mr Grennan and set out at the commencement of this decision. The “Rezoning Agreement” is comprehensive and provides a set of conditions described by Mr Cronin for the appellant as being “very restrictive”, though my reading of the conditions is that they are directly relevant to the intended quarry use. Whether they are more or less restrictive than conditions imposed on other quarry lands was not made known to me. One of the conditions of the “Rezoning Agreement” was to the effect that quarrying and processing activities could be carried out for a period of 25 years after the date of gazettal of the rezoning. The provision went on to say, however, that the local authority would not unreasonably withhold any approval for an extension of that period. Mr Cronin also suggested that the considerable time lapse of about three years from date of purchase to date of gazettal of the rezoning was a matter of some relevance, particularly when consideration is given to the use of Mr Grennan’s Sale 3 to which I will come in due course. Located on the Sale 3 land was an approved and operating quarry at the time of the land’s purchase. I note, first, that on my calculation, the time lapse from rezoning application (26 October 1990) to gazettal (26 June 1992) was 20 months: or 17 months to the date of the “Rezoning Agreement”. I observe also that the gazettal of the rezoning to allow the “combined site” to be developed and used in the manner that it is today

took place during the period of jurisdiction for both the 1992 appeals and was in place at the time of the 1995 appeal. Mr Grennan’s written valuation said that the date of issue of the 1992 valuations was 26 October 1992. On the basis of this and on the reasoning expressed in Walker

v. The Valuer-General (1978) 5 QLCR 128 at 131 (and endorsed by the Land Appeal Court: (1978) 5 QLCR 347 at 349) I am to view the lands which are the subject of the 1992 appeals as zoned on 26 June 1992. Given that the zoning was appropriate to the development of the “combined site”, it would be the case that there was an enhancement in the land by virtue of that rezoning compared with the price paid for each part of the “combined site” in the two sales which took place in 1988 and 1989. The 1988 sale, that is Sale 2, was made without any clear prospect of the purchase of the Sale 1 land, whilst the Sale 1 land was purchased in full knowledge that a rezoning would be required to allow quarry development to proceed.

Mr Grennan said (and I refer now to Appeals AV93-266 and AV95-212) that he thought the best evidence of value was the sale of the subject land. He said that the purchaser had the benefit of having carried out test bore holes prior to the purchase, though his advice from a person from Hymix, who was unnamed, that all of the quarry country was much the same in quality differs from the evidence from Mr Gray which I set out in a little more detail below. Mr Grennan was aware of the various documents that I have somewhat laboriously outlined above and he accepted that a premium was probably paid for the Sale 1 land in order for the “quarantined land” to be encumbered in the way that the “Development Agreement” reveals. He said that the “quarantined land” of about 30 to 33 ha was worth about $300,000 to $400,000 in his view, though the amount that the purchaser had in mind at the time of the transaction in Sale 1 taking place is a matter of conjecture. Mr Kelaher said that the Sale 1 land would have been worth about $10,000 per ha, that is similar to that in Sale 2, therefore I have deduced that the premium that would have been paid for the “quarantined land” would be, depending on the actual area of it, between $49,000 and $54,000 per ha on his view. No basis for this opinion of value, nor of that advanced by Mr Grennan, was given though Mr Grennan indicated that his figure of $10,000 per ha related to the Chief Executive’s statutory valuation of the “quarantined land” as part of the “estate land” retained by the vendor. Given the disparity of opinion between the two valuers and the lack of basis for each, I am not in a position to conclude the extent of the premium, however, given what I say in the following paragraph, it is clear that I cannot accept Mr Kelaher’s view of the value of the “quarantined land”.

In Mr Grennan’s opinion, no allowance needs to be deducted for the premium paid for the Sale 1 land, as the presence of the “quarantined land” and the inhibitions imposed on that land by the “Development Agreement” is a characteristic inherent in the value of the Sale 1 land as it provides a valuable buffer to the land. Indeed, Mr Gray said that he was aware of numerous examples where quarries had succumbed to urban encroachment “so it was an absolutely essential integral part of the viability of this quarry that the land outside it to the east be quarantined”.  I agree that it is a matter of difficulty as to how much value the presence of

the “quarantined land” adds to the Sale 1 land, however, it cannot in my view be equal to the value of the “quarantined land”, either as an independent site or as part of the “estate land” overall. This is because first, the “quarantined land” and its future use are not in the control of the appellant and in this regard the appellant is not in a position to ensure the enforceability on the “Development Agreement”. Second, the appellant will not be the beneficiary once the quarry use is exhausted and the quarantine is lifted. It is this second reason that leads me to reject Mr Kelaher’s opinion of the value of the “quarantined land” would add to the Sale 1 price, particularly given that he applied only $4,637 per ha to other buffer lands which were owned by and in the control of the appellant.  I think that the view expressed by Mr Grennan is to be preferred. The purchaser has acquired land which will have the advantage of some buffer land in the form of the “quarantined land” which it need not purchase outright. There would, it is agreed, be some cost in buying the land with that attribute, but it is a cost that adds value to the purchased land during its life as a quarry. The imposition of the condition with respect to the “quarantined land” may be viewed also as part of the cost of obtaining local authority consent to the carrying out of processing activities on the “combined site”. Other of the requirements set out in the “Development Agreement” and accepted by the purchaser, now appellant, in the Deed of Novation may be viewed similarly. I refer, in particular, to the requirement to apply for the rezoning of the land in the “north-east corner” of the “combined site” from “Extractive Industry” to “Rural B” and to thereby enlarge the area of buffer land. The question to be asked is, therefore, not whether the presence of the various conditions which attach to Sale 1 show it to be an unreliable sale, but whether it falls outside the Spencer formulation for other reasons. The evidence concerning the Sale 1 transaction and the anxiety associated with the decision to purchase are circumstantial matters, only, when one is concerned with the issue of whether the transaction accords with the Spencer test.

I accept Mr Gray’s evidence that the appellant was anxious to buy the Sale 1 land to ensure the continuation of its business, an anxiety that would have prevailed when it purchased the Sale 2 land nine months earlier. It was recorded in Mr Kelaher’s valuation document that Mr Neumann, the principal of the appellant company, was now of the view that “he was unwise to pay the money he had” for the land. As Mr Neumann was not called to support and explain his change of mind, I have no regard to this evidence. I have no evidence of what other lands the appellant may have considered before deciding on this purchase, but it is apparent that the appellant did go about the purchase with eyes open and with the benefit of test drilling to ascertain the quality winnable material on the land. Whether the desire to maintain the quarry and pre-mix concrete businesses led to a decision to pay too much for the land is not a conclusion, however, that I would easily draw. Evidence which may lead to such a conclusion would be sales evidence which shows the sale in question to be out of line. Mr Grennan referred to two other sales, one of which, Sale 2, I have already commented on and I would say that the difference in sale level between it and Sale 1 is too great for Sale 2 to be used as a clear

indicator as to whether Sale 1 is out of line or not.

His third sale, though, is a different matter. It sold at an unimproved figure analysed by Mr Grennan to be $56,676 per ha for its 8.819 ha, which is in proximity to the $52,820 per ha paid for Sale 1 on an unimproved basis. Sale 3 is smaller than Sale 1, has a lower quality of winnable material and was operating and ready for continued operation at the time of purchase. On the face of it, it tends to support the level of value shown by Sale 1, however, there were some aspects with respect to Sale 3 that the appellant’s side raised concerns about. The first of these was that the sale land comprised a working quarry, zoned appropriately and with relevant approvals in place. According to Mr Grennan, some old equipment including a “sifting gadget” was included in the sale, but he spoke to an unnamed person from the purchaser company who told him that there was nothing significant on the land at the time of purchase. He understood that the purchasers did not buy the land to run it in the way it had operated in the past. Mr Grennan said that he would not expect that the sale land “had enormous goodwill” and that he had made allowances for clearing, fencing and roads only in arriving at his unimproved figure. He was not aware whether or not the land was operating in full capacity at the time of sale, but given the advice from the purchaser, this is not a matter that he saw to be relevant.

Valuers who give evidence in this and other Courts enjoy the privilege, as experts, of being allowed to give opinion evidence. Opinions must be based on admissible evidence and in this jurisdiction hearsay evidence is frequently admitted, where it is a basis upon which a valuer has formed his opinion. This is authorised by s.41(5)(c) of the Land Act 1962 and this relaxation of the Rules of Evidence is explained with clarity in the decision of Parker J in Smith

v. Walsh & Anor (1995) 90 LGERA 122. I am asked to accept that Mr Grennan made adequate inquiries concerning Sale 3, in particular regarding the improvements in the sale and the value of them and of the nature and value of the ongoing operation. The names and dates of persons interviewed in connection with the sale and the date of inspection were not made known to me. Apparently, contemporary notes were not made of the process and detail of investigation of the sale - this is a practice that I would urge valuers to employ as an assistance to this Court, as an aid to their recollection of the facts and as a support to their credibility. This is not to say that it would be appropriate to expect a full account of all of the relevant facts, for it will often be the case that no amount of investigation and inquiry will reveal all. Nevertheless, a valuer appearing as a witness in Court must always be mindful of his duty to the Court and to his profession.

The difficulties concerning Sale 3 were compounded by the fact that it comprises a sale to an owner who operated a quarry material processing plant some 200 metres away from the sale land, according to Mr Kelaher, and therefore was able to transport extracted product there for processing.  He said that “initially (the purchaser) didn’t put a plant in” the purchased land. It is not clear to me whether processing subsequently was carried out on the sale land. The mere fact that a sale is to an adjoining owner or is one where the purchaser has the advantage of

proximity is not sufficient for such a sale to be rejected. It was said in Ussher v. The Valuer- General (1986) 11 QLCR 169 that “there is no law or practice which says that such sales must be rejected as not providing evidence of land values” (p.177). In the instant case, the proximity of the analysed unimproved values of Sales 1 and 3, albeit with imprecise evidence in support of the actual analyses, supports reliance being placed on Sale 3.

What I have said about Sale 3 does not lead me with confidence to a conclusion that it supports Sale 1, notwithstanding the apparent relativity in sale prices. The value of any evidence, however flimsy or strong it may appear in isolation, turns, however, very much on the totality of the evidence available. In valuing the extractive industry component of the land at each relevant date. Mr Kelaher relied primarily on relativity between the subject land and valuations applied to other properties by the Chief Executive. All of the relativities were 1995 valuations, no distinction being made by him on the basis of date. It will be useful if I now consider this evidence which included the following:

“  Value per ha

applied     by  Chief Executive

V.7919      CSR-Readymix         Peachy Road,      75.47 ha  $12,000

Ormeau.

V.7916      Sellars  Peachy Road,      182.9 ha  $11,000

Ormeau.         (Leased to Readymix)

V.7922	Pioneer Concrete	Harts Road, Luscombe.361.2 ha Ormeau.	$7,750
V.14267	Boral Resources	Upper Coomera Rd117.2 ha Ormeau.	$10,250
V.21385 V.20612/1 V.20612/3 V.20612"	Hymix Industries	Gaven Way, Gaven360.7 ha Pacific Highway	$16,000

Before coming to the detail of this evidence, there are some general points to consider, the first with regard to the question of rock quality. Mr Gray said that there were some inherent weaknesses in rock on the subject “combined site” with some slate-like material intimately mixed with the better quality rock. The weaker material has to be removed and this is done by blasting the rock into finer particles using explosives and sieving out the weaker particles as the first part of the processing operation. Sometimes, he said, the product needs to be downgraded and a price reduction results. Production costs would be higher and the utilisation of raw material would be lower in the case of the subject quarry than an acceptable standard. The bulk

of the relativity properties referred to by Mr Kelaher are in the Darlington Range area where, according to Mr Gray, it is known that meta-greywacke is of good quality, though there is some variation in quality. Mr Gray has a good knowledge of each of the relativity properties referred to by Mr Kelaher though he could not, of course, carry out the same level of investigation as on the subject lands. Overall, it was his view that the subject was inferior in rock quality. He also commented that those quarries closer to Brisbane (and that includes all of the relativities apart from Hymix) had the advantage of access to a larger market and on this account would be superior to the subject which is confined to the Gold Coast market. In respect of the Gold Coast market, the subject land was generally said to be disadvantaged in terms of transport costs, according to Mr Kelaher who said that all of his relativities had fewer hills which loaded trucks would have to climb on their way to service the Gold Coast market, even though they were, excepting for the Hymix property, all further from the Gold Coast market than the subject lands. As I understood Mr Gray’s evidence, however, it was the case that apart from the Hymix quarry, the other quarries referred to by Mr Kelaher had a transport cost advantage to the Gold Coast only because of their capacity to backload to some extent, but more particularly because of the larger carrying capacities of the trucks that they used. His evidence was that if the appellant company used similar trucks, the subject quarry would enjoy a price advantage compared with their other quarries. I understand that the main reason why smaller trucks are employed by the appellant company was related more to its comparatively smaller size compared with its competitors and not to some objective factor associated with the subject land. In striking a value of land for the purposes of the Valuation of Land Act, it is not appropriate to take into account idiosyncratic or subjective matters such as a business decision or the financial capacity of the land owner in putting the land to its highest and best use.

Notwithstanding all of the above evidence concerning differences between quarries, it needs to be pointed out that there is not what one calls a “level playing field” in the quarrying business, in particular with regard to that aspect of supplying aggregate to pre-mix concrete plants. Mr Gray’s evidence was that the quarrying companies supply aggregate to their own concrete mixing companies and that a small company such as the appellant could not expect to supply aggregate to competitor pre-mix concrete companies, even if there was an apparent price advantage. This market situation makes an objective consideration of the differences between quarry properties a matter of some difficulty. Apart from this, Mr Kelaher said that comparison between properties was made difficult because of the limited amount of information available and, whilst he made an attempt to compare relativities with the subject on a block-to-block basis, his valuation was necessarily a global one.

Mr Kelaher saw all of the relativity properties as being superior to the subject land because of the factors mentioned above, yet applied $12,000 to the quarry component of the subject land at each of the relevant dates. In addition to the general points of comparison mentioned above, Mr Kelaher supplied a schedule which included further information.  With

respect to the CSR Readymix relativity property, he said that this was all zoned “Extractive Industry” and the property produced greywacke and quartzite. In his valuation he wrote that there were no restrictions on the operations of this quarry and though he was not cross- examined on this point, I would find it difficult to accept that the local authority would allow carte blanche operation of a quarry without some conditions with regard to environmental matters. Mr Kelaher said that a greywacke supply for about 60 years was available on this land. The quarry has good access to the Brisbane market, and good rock quality and because of that, according to Mr Gray, has a higher quality rating with the Government than does the quarry product from the subject land.

The Sellars Road relativity property has about 83 ha zoned “Rural” and is quarried in conjunction with the CSR Readymix quarry.  The comments concerning rock quality and proximity to market are similar to that mentioned with regard to the CSR Readymix relativity. The Sellars Road property has, according to Mr Kelaher, at least 100 years’ supply of material. The Pioneer Concrete relativity property has 307 ha of “Extractive Industry” land producing greywacke and 54.2 ha of “Rural” land described by Mr Kelaher as buffer.  He said that supply of material exists for at least 100 years.  He also mentioned that there were no

restrictions on operations of this quarry and was not questioned about this.

The Boral Resources relativity property is all zoned “Extractive Industry”, again has no restrictions, according to Mr Kelaher, and he said that it has supplies of material for about 70 years.

The Hymix quarry is well placed, according to Mr Gray, to service the Gold Coast market, being better positioned than the subject land. It was not valued by the Chief Executive as one site, there being four separate valuations. The first of these, where the actual quarry is located, comprises an area of 161.4 ha all zoned “Extractive Industry” and valued at $20,500 per ha by the Chief Executive. The rock is superior to the subject property, with a supply of at least 60 years according to Mr Kelaher. He sees the Hymix quarry property as being substantially superior to the subject. Another portion of the Hymix land has an area of 107.644 ha, is zoned “Rural B” and has a valuation of $10,600 per ha applying to it from the Chief Executive. There is a further “Rural B” zoned parcel of land which has electricity and water available and has an area of 82.44 ha.   The Chief Executive’s valuation for this parcel is

$15,250 per ha. The final parcel in the Hymix group has an area of 9.192 ha, is zoned “Rural” and was valued at $240,000 as a rural homesite. Mr Kelaher expressed incredulity at this suggested highest and best use, given the immediate proximity of the quarry, quarry roads and the consequent nuisance. I am unaware whether there was a house on this fourth parcel. In addition to the relativity properties I have outlined, Mr Kelaher referred to three sales at p.9 of his valuation:

“  Figures from

actual sales
pha.

V.14269     Cossack Holdings     Ormeau Rd,  30.1491 ha

KingsholmeJune  ‘94

$10,000

$10,000

do.            July  ‘94

Lands Dept .. 8,250 pha

V.7918/5    Stephens/Chow         Peachy Rd.48.16 ha

Ormeau     June  ‘94

$9,400

Lands Dept .. 9000 pha

V.7918Stephens/Chow                Peachy Rd.56.83 ha

Ormeau  Dec.     ‘91

$9,100

Lands Dept .. 11,000 pha”

Mr Kelaher said little further about the sales as his main bases were the relativity properties discussed earlier. He said, however, that his analysis of the sale price back to an unimproved figure was a “broad” analysis only in respect of the sales and that the Stephens/Chow sales had some adjoining owner influence. Mr Grennan’s only comment on the sales was that they indicated that the Chief Executive had applied sales in the area in striking statutory valuations. I take this to mean that the levels indicated by those sales are similar to those shown by the relativity properties located in the same area.

I come now to consider the overall evidence of value. What I am asked to do by the appellant is to reject Sale 1 on the basis that it represents a purchase by an anxious party and reject Sale 3 on the basis that the analysed unimproved figure is presented without appropriate reference to the circumstances of the transaction and those matters included within it. I am asked to prefer the relativity valuations referred to by Mr Kelaher and to his global comparison between those and the subject lands “Extractive Industry” component.

In Fischer v. The Valuer-General (1983) 9 QLCR 44 at 46 the Land Appeal Court said: “It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion

of the sales evidence. Mr Fischer’s argument assumes that there has not been any factors which may have had a bearing on the relative market for sites in the St. Lucia area over the long period from 1966 to 1979. The best test of value at any particular time is the market for land, and the only sales evidence, albeit perhaps not ideal, is that provided and relied upon by the Valuer-General.”

From the respondent’s side that I am presented with Mr Grennan’s valuations for the 1995 appeal and for Appeal AV93-266 in 1992 based on Sale 1, the circumstances of which are

complicated but which reveals a price per ha similar to that shown by his Sale 3. Now the evidence regarding how Sale 3 was analysed to an unimproved figure was presented in a somewhat casual way, but the relativity evidence from Mr Kelaher suffers in that, first, it is not sales evidence and, second, in that a comparison between the individual sales and the subject land is difficult to carry out, excepting on a global basis. His sales, according to his view, are less than satisfactory.  The difference in level of value between the relativity properties located at Ormeau and the subject land which would result from reliance on Sale 1 is a matter of concern to me and it is a matter on which I have little explanation. Mr Grennan explained the difference by saying that  the  respondent applies sales  according to the location and the difference would appear to be explained as a “locational value” factor. This may be so and it may also be the case that the locational aspect is relevant to the residual value that the land will have at the expiration of the quarrying activity. A substantial part of the “combined site” will not be quarried. The wildcard in such an explanation appears to be the Hymix relativity property. Whilst it is not in the same location as the subject property, the Hymix property is closer to the Gold Coast and is superior as a quarry, according to both Mr Kelaher and Mr Gray. Mr Grennan was not asked why the valuation of the subject land “Extractive Industry” component is higher than that placed on the Hymix land, nor was there evidence, adduced or sought by the appellant, of the basis of the Hymix “Extractive Industry” valuation.

In Grahn v. Valuer-General (1992-93) 14 QLCR 327 the Land Appeal Court provided and endorsed a summary of the authorities on the question of relativity and I refer, in particular, to the following words taken from p.328:

“It is desirable that valuations made for the purposes of the Valuation of Land

Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p.16 and cases cited in it).”

In the absence of evidence concerning the basis of valuation of the Hymix relativity property, it would not be appropriate in the circumstances of this case for reliance to be placed on it. Despite my misgivings about the evidence from the Chief Executive’s side, I have not been convinced to reject that evidence in favour of that provided from the appellant’s side and that is effectively what I have been asked to do. I am influenced also by the fact that Mr Grennan did not apply Sale 1 fully at either the 1992 or 1995 relevant dates, applying $30,000 per ha in respect of the AV93-266 appeal and $40,000 per ha for the AV95-212 appeal. In circumstances such as this, it is appropriate to refer to the legal burden of proof which remains with the appellant throughout. This is expressed in ss.45(3) and (4) of the Valuation of Land Act which provides:

“ (3) An appeal shall be instituted by filing a notice of appeal in the Land Court

registry.

(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.”

Section 33 of the Act Provides:

“         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.”

The precursor to s.33 was considered by the High Court in the case of Brisbane City Council v. The Valuer-General (1978) 140 CLR 41 and the following quotation explains the nature of the obligation that an appellant has in a case such as this:

“The question then is whether a court on appeal is bound to accept the Valuer-

General’s figure as correct unless it is positively established that the true value is lower, or whether it is enough to show that the value was reached as the result of an error in principle. 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 is true that the Valuer-General might by coincidence reach the right result by a wrong process of reasoning, but I cannot attribute to the legislature the capricious intention that a valuation shown to have been erroneously made should be presumed correct simply because by mere chance the Valuer-General may have hit on the right figure. If, for example, lands were valued as suitable for high rise city buildings although the law forbad them to be put to that use, or as rich agricultural land when in fact they had been rendered useless be excessive salinity, it would be absurd to hold that the valuation, although shown to be radically wrong, still must be deemed correct. In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted.” (p.56)

In the instant matters the appellant has failed to rebut the presumption. He has raised in my mind a doubt about the correctness of the relativity between the valuation contended for in Appeals AV93-266 and AV95-212 and the relativity properties relied upon by Mr Kelaher, in particular the Hymix one, however, the raising of such a doubt is not sufficient to discharge a legal burden of proof.

I am therefore going to adopt Sale 1 as the most suitable basis of valuation presented to me for Appeals AV93-266 and AV95-212. For Appeal AV93-266 Sale 1 comprises a subject sale so I will adopt the analysed unimproved figure presented by Mr Grennan. I will use Sale 1 as the basis for the “Extractive Industry” component of Appeal AV95-212 and will need to establish a separate value for the buffer lands.

I was not informed of any statutory requirement for an operating quarry to have land set aside to buffer the operations from other land, in particular from residential land, however, there was general agreement between the parties that if sufficient buffer land was not available,

encroaching development may bring about an early cessation of quarrying and processing activities where the quarry is located in the path of encroaching residential development. Dust, noise from trucks and machinery and the carrying out of explosions constitute substantial nuisances to residential areas nearby and generate concern and consequent pressure on the local authority to discontinue the quarry use when opportunity presents.

Mr Grennan included an area of 39.8 ha under the description “Buffer Ancillary Purposes” which was made up of 26.6 ha approximately, zoned “Special Facilities”, and 13.2 ha approximately, zoned “Rural B”, leaving an area of 44.2 ha classified as “Extractive Industry”. Mr Kelaher said that there were 45.52 ha classified as “Extractive Industry and Special Uses”, 13.23 ha “Rural B”, 10.5 ha “Extractive - Development Prohibited” and 14.78 ha as “Buffer Areas - Development Prohibited”.  Although there is a similarity in area if one is to combine the classifications identified by Mr Kelaher, and the parties appeared to agree that the areas were too similar to raise any issue on the point, I am left with some uncertainty as to whether each of the valuers was, in arriving at their classifications, speaking of the same parts of the “combined site”. Nevertheless, I will proceed on the basis of the areas as identified by Mr Grennan as he has allowed slightly less as being classified as “Extractive Industry”.

Mr Grennan referred to a sale of land to Hymix Industries Pty Ltd which took place in July 1992 of an area of 106.5 ha at $1,115,300 or $10,472 per ha. He understood that the land was purchased by Hymix for the purposes of buffer, though the precise source of that understanding was not made clear to me. Nevertheless, given that the zoning of the land is “Rural B” and that buffer lands in the Hymix Group of properties were valued by the Chief Executive at figures of $10,600 per ha and $15,250 per ha, I will proceed on the basis that the sale represents a purchase for the purposes of buffer.

In reliance on this sale, Mr Grennan placed a figure of $13,000 per ha on the 39.8 ha described as “Buffer Ancillary Purposes” of the subject land. He said that he had applied a slightly higher figure than indicated by the sale as the buffer land in 1995 had become joined with the extractive industry land. He was not challenged on this point.

Mr Kelaher valued the buffer area at an overall $4,637 per ha by placing a value on the land as if it was residential and then deferring that value for 22 years at 7% in the case of the 1995 valuation and for 25 years for the other two appeals. The period of deferral was taken from the 25-year life of the quarry referred to in the “Rezoning Agreement” comment upon earlier in this decision. Mr Grennan commented that the deferral method may be useful in the case of a stream of cash flow, but that it is not particularly applicable in the ascertainment of land value. I agree. Sales constitute the best evidence and the Hymix sale, supported by the relativity properties I referred to, constitutes the best evidence and should be relied upon. I therefore adopt the figure of $13,000 per ha for the 1995 buffer land value.

The result is that each of the appeals is dismissed and the valuations of the Chief Executive are affirmed.

RP SCOTT MEMBER OF THE LAND COURT