Newson v Chief Executive, Department of Natural Resources
[2001] QLC 27
•12 April 2001
|
BRISBANE
12 APRIL 2001
Re: Appeal against Annual Valuation
Valuation Roll No.: 2603
Local Government: Wondai
(AV99-1177).
Ian A and Karen S Newson
v.
Chief Executive, Department of Natural Resources
(Hearing at Nanango)
D E C I S I O N
Background:
This matter relates to land at Hivesville and Stonelands Roads, Hivesville. The property has an area of 277.6 hectares, is known as "Bottletree Park", and is described as Lot 52 on FY1075 and Lot 1 on RP108897, Parish of Mondure. The subject land is located 2 km north-east of Hivesville and 32 km north-west of Wondai, and is zoned as "Rural" under the Wondai Town Planning Scheme effective at the date of valuation of 1 October 1998.
Access to the subject land is by bitumen sealed Wondai-Proston Road, and then bitumen sealed Hivesville-Windera Road. The eastern and southern boundaries have bitumen sealed road frontages. The key issues are relativity, comparison of sales, the added value of improvements to land, and changes in the market for grazing lands.
On 22 March 1999, the Chief Executive issued a valuation of the subject land at $47,000 ($169/ha). Following an objection the Chief Executive confirmed that figure on 29 July 1999. The appellants have now appealed claiming the unimproved value should more properly be $27,760. At the hearing the appellant was granted leave to lead for an unimproved value of $26,900 ($96.92/hectare).
Ian Anthony Newson, a registered valuer and long-term resident of the area, appeared and gave evidence for the appellants. Mr R Vize, counsel of Crown Law, appeared for the respondent, calling evidence from Bruce William Gaskell, the Departmental registered valuer responsible for determining the valuation.
The Evidence:
(1) The Nature of the Land -
There is general agreement between the parties in respect of the use of the land for the grazing of cattle. The level of services available is also agreed to include power and telephone, which are connected to the subject land, and that the Proston Water Scheme is not available to the land. The nature of the land is seen to comprise gently sloping dark brown soils, which are timbered with silverleaf ironbark. There are also narrow creek flats sloping up to steeper poorer lighter forest country, timbered with narrowleaf ironbark, wattle and gum. The land is classified as a forest block.
It is agreed by Mr Newson that the subject land has an area of better alluvial flats (about 8 ha to 10 ha) along the northern side of Four Mile Creek, which passes through Lot 52. Mr Newson also agrees that the south-eastern portion of Lot 52, and Lot 1, are the better country of the subject land. Aerial photographs in June 1999 confirmed those areas as having been well cleared and cultivated for pasture (Exhibit 6).
However, Mr Newson argues that the adjoining parcel to the west (Lot 39 on FY1778) was relatively uncleared, and also likely to have similar patches of alluvial flats along Four Mile Creek, which also transits that parcel. Mr Newson is familiar with the adjoining lands to the west (Lot 2 and Lot 39), noting that while the land has not been cleared of timber, the soil types are similar to the subject land. Mr Gaskell feels that the incidence of creek flats was likely to be less on the western adjoining parcels.
Mr Newson argues that the subject land comprises three types of country. A southern part of 129.68 ha (Lot 1) is suitable for cattle breeding/fattening and limited crop-assisted grazing; and 127.92 ha of Lot 52 to the north is cattle breeding/fattening country with some arable (grains) potential. The remaining 20 ha along the western boundary is poorer waste country, comparable to the adjoining Lot 2 on FY1247 to the north-west of the subject land. Mr Newson argues that in their natural state the different classes of the subject land are similar to the adjoining lands on Lot 39, Lot 2 and also Lot 51 on FY1075 to the north ($107/ha).
Mr Gaskell argues that the creek flats on the subject land are only part of the better country, noting that there is other fair to moderate to fair good grazing country also. Mr Gaskell notes that Lot 51 to the north is poorer forest grazing, but agrees it is better than Lot 39 or Lot 2.
Mr Newson argues that the subject land has an extremely heavy infestation of saffron thistle over at least 60% of the land, thus restricting grazing in those areas for half of each year. It is his argument that the presence of that noxious weed is well known in the area, and would have a serious impact upon the market perception of the value of the subject land. Mr Newson also notes the adverse impact of sheet and gully erosion upon the land. Mr Gaskell agrees that the land is impacted by the noxious weed and sheet and gully erosion, and argues that allowance has been made for that impact in the unimproved value determined at previous occasions in 1993 and 1995. Mr Gaskell has maintained previous relativities.(2) The Method of Valuation
In comparing his parcels for relativity purposes Mr Newson has adopted average rates for those parcels, not differentiating for the percentage of different land class types upon his property. He adopts those figures as supplied by the respondent. However, in doing so he acknowledges that each of those parcels was likely to represent differing land class types in varying proportions. Mr Newson concedes that his major professional work as a valuer is to determine market prices for land parcels, rather than determine unimproved values. However, he maintains a close check on unimproved values, which he argues should closely reflect market value trends.
Mr Newson argues that the better alluvial flats on Lot 52 would be included in the average rate for Lot 52 applied by the respondent, as each land classification is not separately defined. Mr Gaskell advises that his approach has been to identify the separate areas of each land type on each lot, as established over many years, and then to use sales to identify any increase or decrease in that type of country.(3) Relativity -
In seeking relativity with adjoining parcels Mr Newson argues that the southern part of the subject land (Lot 1) is directly comparable to similar lands to the west of the subject land (Lot 39 on FY1778). That parcel has an area of 455.4 ha, and an analysed rate of $91.13/hectare. Mr Newson argues that the larger area of Lot 39 compared to the subject land (Lot 1 - 129.66 ha) assists the viability of the grazing operations. Mr Gaskell advises that Lot 39 has been valued as second to third-class forest grazing country for many years.
Mr Newson also draws comparisons with the northern part of the subject land (Lot 52 - 147.913 ha) with comparable lands to the north (Lot 51 on FY1075 - 109.066 ha). Mr Newson argues that the adjoining Lot 51 has a greater percentage of arable land which has been cultivated, also has greater frontage to Stonelands Roads, and has an analysed unimproved value of $107.84/hectare. Mr Newson argues that the poorer grazing land (20 ha) on the west of the subject land is similar to adjoining country immediately to the west of the subject land (Lot 2 on FY1247), which has an analysed unimproved value of $64.67/ha for 742.2 ha. Mr Newson agrees that overall Lot 2 is poorer country to the subject land.
Mr Newson agrees that lands immediately to the east of the subject land have higher unimproved values, noting in particular Lot 53 on FY1075 which has an area of 112.047 ha and a rate of $221/ha. It is his opinion, however, that those unimproved values are extremely high, and in his opinion, do not represent a correct relativity. Mr Newson also notes that that parcel has a different land use, being used until recently for dry land dairy farming. He concedes that the $221/ha is a grazing value, but argues that that land has an added value for the superior use. However, he concedes that he has not analysed that value fully.
Comparison is also drawn with a comparable parcel to the north of the subject land (Lot 39 on MZ 555). That parcel has an area of 335 ha, has inferior location and access, with similar land classification, but has frontage to a weir on Barambah Creek. Lot 39 has an analysed unimproved value of $59.70/ha, and sold as an improved property in February 1997 for $127,000. Mr Gaskell saw that as predominantly a poorer block. However he concedes that a small area of Lot 39 has an irrigation licence for Barambah Creek.
In support of his estimate of the relativity between the subject land and Lot 51 to the north, Mr Gaskell provides aerial photographs (Exhibits 6 and 8), which he claims demonstrate that parts of Lot 51 to the north, and much of the subject land, and areas of land to the east and south of the subject land, have all been subject to extensive contour cultivation and tree clearing. Mr Gaskell notes by comparison the lands to the west (Lot 39) and to the north-west (Lot 2) are all relatively uncleared and not cultivated. Mr Gaskell argues that such levels of cultivation indicate, in his opinion, that comparisons of direct comparability with the western lots are not supported by the evidence. Mr Gaskell agrees that Lot 2 has a large percentage of fairly poor ridge country and is overall inferior to the subject land. That lesser country is reflected in the rates for the northern part of Lot 39 ($91/ha) and the western part of Lot 2 ($64/ha)
Mr Newson agrees that trees have been cleared over about 70% of the subject land, but argues that does not prove that there is not comparable soils upon certain parts of Lot 39 and Lot 2 to the west. Mr Gaskell concedes that he has not personally inspected Lot 39. However, overall there is reasonable agreement about the percentage of areas of poorer forest country, (in the north-western corner of the subject land), with Mr Gaskell estimating 27% and Mr Newson 30% of the total area of the subject land.
Mr Newson estimates an overall rate of $97/ha, with poorer country to the north, and superior country to the south and to the east. Mr Gaskell argues that he has maintained the former relativities established since 1995. Mr Gaskell further argues that following objections in 1993 and 1995, the unimproved value of the subject land was reduced by 15% and 20% respectively, to allow for the matters currently being argued in the present matter, including infestation by weeds, and an incorrect classification of an area as used for crops. Mr Newson seeks support in the current land use codes allocated to the respective parcels. Mr Gaskell argues that land classification should be compared, and not just to rely upon the current land use codes.
In seeking his comparisons on a relativity basis, Mr Newson tends to rely upon a weighted averaging arrangement to determine an overall land classification rate per hectare for individual parcels. Mr Gaskell advises that averaging is not a technique adopted by the respondent, who relies upon adopting a bigger picture approach across the shire, with a view of avoiding discrepancies at the junctions of adjoining markets or administrative boundaries.
To support his estimate of the unimproved value, Mr Newson provides comparisons of six comparable lands valued between $42.06/ha (389.9 ha), and $126.92/ha (279.7 ha). He also provides a further six properties which he saw as vastly superior varying between $145.84 /ha (397.7 ha) and $172.95/ha (225.5 ha). The superior lands tend to include better quality scrub lands, irrigation facilities, and less weed infestation. It is Mr Newson's argument that those relativities demonstrate that superior lands have an unimproved value per hectare similar to the subject land; while comparable properties tend to support Mr Newson's estimate of $97/ha for the subject land.
Mr Newson notes in particular a parcel in Gayndah Road immediately to the north-west of Lot 2 On FY1247, and adjoining Sunday Creek (Lot 60 on FY2286). He agrees that parcel is 80% forest country, but argues that there is 20% of some creek land, and also the capacity to irrigate out of Sunday Creek. He notes that parcel has a rate of $158.76/ha compared to the subject land at $169/ha. Mr Gaskell argues that Lot 60 is better country than Lot 39, but agrees he was unaware of any irrigation from Sunday Creek, or water flows comparable to Four Mile Creek.
Mr Gaskell agrees that the subject land is on the edge of the merge line between the poor forest country to the west, forest country to the east, and scrub country to the south.(4) Comparison of sales -
Mr Newson queries the wisdom of comparing sales in the Kingaroy Shire with properties such as the subject land in the Wondai Shire as he argues it ignores local factors such as proximity to markets, etc.. Mr Gaskell rejects that thesis noting that it is one large market for comparable lands, irrespective of administrative boundaries such as local government areas. Mr Newson provides comparisons with sales of improved properties; noting that only sales of irrigated properties within the Bjelke-Petersen Dam benefit area, or other properties with access to irrigated water, have shown any increase in value. Mr Newson knows of no totally unimproved properties sold in the area in the relevant period. Mr Newson provides the following sales of comparable improved lands:
Sale Parcel Area Price Date Unimproved Overall
(Ha) ($) Value Rate per ha
Lot 16 on BO122 129.5 120,000 Aug 98 $ 23,000 $177.60
Lot 17 on BO122 129.6 185,000 Dec 96 $ 22,000 $169.70
Lot 29 on BO494 129.3 115,000 Jul 98 - -
Lot 32 on BO120 129.5 200,000 Apr 97 - -
Lot 20 on BO122 194.2 200,000 Nov 98 $ 40,500 $208.50
previously sold 194.2 160,000 Sep 92 $ 29,000 $149.30Lot 27 on FY1755 57.3 65,000 Sep 98 $ 17,000 $296.70
previously sold 57.3 48,000 Apr 89 $ 11,400 $198.90Lot 17 on BO 72 129.0 202,500 Aug 98 - -
previously sold 129.0 252,500 Sep 90 - -Lot 158 on FY2335 97.25 85,000 Oct 98 - -
previously sold 97.25 70,000 Jan 95 - -Lot 207 on B085 124.7 115,000 Apr 98 - -
previously sold 124.7 160,000 Jan 91 - -
Mr Newson does not analyse his Sales 3, 4, 7, 8 and 9 relying only on changes in the improved values of those properties. It is noted that all of those improved properties are smaller than the subject land.
To support his valuation Mr Gaskell provides the following sales of grazing lands:· Sale 1 - (Stalworth Road - Robertson to Smith - Lot 211 on B092)
This is an area of 104.348 ha, and was purchased by an adjoining owner following an auction. The sale is mainly sloping red scrub country, with similar location and access, but superior country type and access to water. Overall the sale is agreed to be superior to the subject land.
The sale sold in September 1998 for $92,000, which after allowing for improvements was analysed at $30,341 ($292/ha), and applied at $28,000 ($269/ha). That sale showed an increase in the unimproved value of 19%, and was applied at 92% as a basic sale.
Mr Newson notes that Lot 211 was sold together with the adjoining Lot 212 as a combined sale for $215,000 in 1980. He then notes that Lot 212, which he sees as superior to Lot 211, sold in July 1992 for $160,000, and which he assesses represented $60,000 for improvements, and $100,000 for the land in a similar state as that purchased for Lot 211 in 1998. On that basis he has difficulty in recognising a 20% increased in the unimproved value of the land as now claimed by the respondent. Mr Gaskell rejects the earlier sales evidence as not relevant to the current matter.
· Sale 2 - (Kawl Kawl Road - Ramke to Ramke - Lot 4 on FY347)
This has an area of 129.563 ha, and was purchased between second cousins, although a fair market price was accepted as paid. The sale comprises narrow creek flats to gently sloping forest, rising to harder forest ridges. The sale is seen as similar in location, access, water and country type, and is overall superior to the subject land. Mr Newson knows that sale well, and analysed the sale for the purpose of ascertaining market values in the area. He agrees that sale appears to be under the market compared to other sales.
The sale sold in December 1998 for $111,000, which after allowing for improvements was analysed at $31,973 ($247/ha), and applied at $30,500 ($236/ha). This is a basic sale being applied at 95%, and the sale demonstrates an increase in unimproved value of 20% from the last valuation in 1997.
· Sale 3 - (Brigooda Road - Harling to Scanlan - Lot 3 on BO120)
This is 129.499 ha parcel sold as a bare lot with limited improvements. Mr Newson agrees that Sale 3 was lightly improved with structural improvements, but argues the land has been considerably developed as a result of clearing, contouring and cultivation of crops. However he concedes that the land development would be consistent with other lands in the area. The sale is seen to be slightly inferior in location and access, is about 35 km to the west, but slightly superior in water and country type. Overall the sale is seen as superior.
The sale sold in November 1998 for $120,000, which after allowing for improvements was analysed at $34,937 ($270/ha), and applied at $32,000 ($247/ha). The sale was seen as a basic sale and was applied at 92%, and reflected an increase in unimproved value of 19%.
Mr Newson notes that the adjoining parcel to Mr Gaskell's Sale 3, (Mr Newson's Sale 3 - Lot 29 on BO494 - area 129.287 ha) sold in July 1998 for $115,000. Mr Gaskell was aware of that sale but notes that it was a highly improved sale, and he selected the lesser improved Sale 3 because of difficulties in assessing the added value of the improvements.
A similar sale to Mr Gaskell's Sale 3 (Mr Newson's Sale 1 - Lot 16 on BO122) was also noted by Mr Newson. That sale occurred in August 1998 for $120,000, and Mr Gaskell argues Lot 16 is 50% scrub and 50% forest, compared to 60% scrub and 40% forest on Sale 3. Mr Newson feels Lot 16 is predominantly forest type country. However, Mr Gaskell advises that his analysis of the sale of Lot 16 revealed a larger increase in the unimproved value than for Sale 3. Mr Gaskell adopted a conservative approach in selecting his Sale 3.
A matter of difference between the valuers rests in the assessment of development costs of scrub and forest country on Lot 16. Mr Gaskell concedes that generally it is more costly to clear and develop scrub lands compared to forest lands, in order to bring them to cultivation. Mr Newson also questions why Mr Gaskell did not refer to Mr Newson's Sale 4 (Lot 20 on BO122). That sale is close by to Mr Gaskell's Sale 3, and in Mr Newson's opinion is more closely related to the land types of the subject land. Mr Gaskell rejected the sale of Lot 20 because of the level of structural improvements upon that sale.
Mr Gaskell rejects the lack of any detailed analysis of Mr Newson's improved sales, arguing that a fair indication of trends in unimproved values can only be obtained from comparisons of unimproved lands. Mr Newson relies upon his professional knowledge of improved sales in the area in his practice as a valuer, and his lifelong experience of living in the area. Mr Newson queries the wisdom of comparing good scrub land with forest lands. Mr Gaskell advises that the superior sales were selected to show what was occurring in the marketplace, and direct comparisons of scrub country were not applied. Mr Newson is familiar with Mr Gaskell's Sales 1 to 3, noting that Sales 1 and 3 have been developed and used for cropping, but only have lightly improved structures. He argues that the purchaser was anxious to purchase Sale 3, and may have paid a price above the market.
Mr Gaskell rejects that his sales are out of line with the market, arguing that those sales were selected only because of their close proximity to the subject land. He advises that he investigated about 15 sales overall in the area, those sales supporting Sales 1 to 3, and also supporting an overall increase in unimproved values in the area by at least 20%. Mr Gaskell advises that there had been no increases in values at the last valuation in 1997, and the last increase occurred in 1995. He notes that there had been a serious drought in the area during 1997.
Mr Newson summarises his comparisons by noting that sales of improved properties in the area suggest that the market has not risen by 20% since the last valuation in 1997. He concludes that if unimproved values were assumed to have risen by 20%, then the added value of development of the lands must be assumed to now relate to considerably less than the actual cost of developing the land. However, he notes that development costs have in fact increased during that period, and he therefore concludes that Mr Gaskell's analysis of his sales must be flawed, and unimproved land costs have in fact not risen.
Mr Gaskell argues that the 20% increase is not over a period of 2 years since 1997, but has really occurred since the last valuation in 1995 (4 years ago). He notes that in 1997 there had been no increase applied overall for the shire. However at that time there had been pockets of increases, which indicated the start of a change in the market. By the date of the current matter Mr Gaskell argues that trend had been further strengthened, and an overall increase had then been applied.
Decision:(i) The Nature of the Land -
While both parties agree generally about the nature of the land, the major difference would appear to relate to whether the respondent has adequately allowed for its disabilities. Mr Gaskell argues that was allowed for in 1995, while Mr Newson argues that saffron thistle infestation and the erosion have increased in impact, despite the appellants' best land management efforts to control those issues. Mr Newson provides photographs of his clearing, re-contouring and pasture improvement programs. Mr Newson also provides on-going costs of spraying for saffron thistle for 138 ha at $3,378 in 1999. However, while the level of infestation remains a management issue for the appellant, from the evidence it would appear that some allowance has already been applied for that factor. For the purposes of this matter I accept Mr Newson's classification of the subject land into three general types of country. However, in seeking comparisons with the better lands of Lots 1 and 52 I note the creek flats and other fair to moderate grazing levels on those parcels.
(ii) Relativity -
Before considering the matter of relativity, I note that former relativities have been maintained since last amended in 1995. In broad terms the subject land has been valued at an unimproved rate overall of $169/hectare, while lands to the west have unimproved rates of $91/hectare (Lot 39) and $64/ha (Lot 2). The more improved lands to the east have rates of $221/hectare (Lot 53).
In applying his overall average rate for each parcel, Mr Newson has sought a broad-brush approach, in order to classify properties. While such an approach has a superficial attraction, the method does lack the rigour of comparing lands upon a land country type basis. If I note the variants adopted for each type of land, it is easy to recognise the potential variations that could occur in valuing the lands by that process.
In my opinion the better approach is to determine the actual areas of each land type, and then estimate the value for each type of country at the market rate for that type.
However to that assessment must then be included allowances for the particular features of each parcel of land, such as its location, access, type of water, and working difficulties. In the end it is then a comparison on a lot to lot basis which is paramount in determining the unimproved value of the land.That principle was adopted in HM Hungerford - Application for Conversion of Tenure (1967) 34 CLLR 278, where the Land Appeal Court said at page 281:
"We have adverted earlier in this judgment to the matter of the classification of the subject land made by the Crown valuer. In our opinion, there are many factors to consider when valuing a piece of land and we think it is a mistake for a valuer when valuing the land to rely solely on a classification of land into its arable and non-arable parts to which values according to land quality only are applied. Such factors as the adequacy of natural water as compared with the necessity to provide artificial water and factors of access, situation and the number and location of areas of arable land comprising the total amount assessed as arable, must be considered. The classification method cannot be applied rigidly if these factors are to receive due recognition. "
That was later followed in IP Scougall v. Valuer-General (1980-81) 7 QLCR 51, at page 57; and also in PB Cooper and FRG Strickland v. The Crown (1984-85) 10 QLCR 23, where the Land Appeal Court said at page 25:
"The classification method of valuation has been criticised by the Land Court and this Court on several occasions. Its application, in the circumstances of the individual cases, has been condemned and disallowed. It has, however, not been over-ruled in principle as a method of valuation."
In Cooper and Strickland the Land Appeal Court also noted at p.25 that the classification method had in fact been applied by the High Court in Rumble v. The Commonwealth (1974) 48 ALJR 483, where Stephen J said at page 484:
"The Commonwealth's method of valuation is quite different. In the absence of any recent sale of a precisely comparable property in the locality analyses are made of the varying qualities of land comprised in each of a number of reasonably comparable properties the subject of recent sales and the per acre sale price of each of those different qualities of land is sought to be deduced from the total sale price and is then applied to the corresponding parcel of land, said to be of similar quality, on Riverbank. The sum of the resultant values is then taken as the value of Riverbank. This is no more than the conventional valuation technique involving comparable sales, complicated only by the fact that Riverbank contains lands of very variable quality and that, naturally enough, no other recent sale of land in the locality involved precisely the same combination of land qualities.
There are, of course, aspects of the Commonwealth's method of valuation which may lead to error; the analysis of qualities of land both on Riverbank and on comparable properties is to a degree a matter of judgment and even the first step of selecting sales of properties thought to be sufficiently comparable is attended with difficulty. But all this is the stuff of valuation, the reason why it is an art, not a science, and, once recognised, it nevertheless does not detract from the character of this method of valuation as a proper one for use in determining, for the purposes of section 23(1)(a) of the Act, 'the value of the land at the date of acquisition'."
Direct comparisons of sales of properties which have more than two distinct classes of land generally do not provide satisfactory bases. In such cases an experienced valuer would then call upon his experience and knowledge of transactions in other areas to make reasonable apportionments. (Land Valuation and Compensation in Australia by Rost & Collins, 3rd Edition, page 342.)
In the absence of comparable sales of like type country, Mr Newson relies upon the sale of improved properties, and then deducts the added value of the improvements. Where sales do not exist, that principle was outlined by the High Court in L Kiddle and Anor v. Deputy Federal Commissioner of Land Tax (1919) 27 CLR 316, where Knox CJ, determining the value of improvements, said at page 320:"The improvements may be divided into four classes: (a) fencing, (b) other structural improvements, (c) improvements due to timber treatment, and (d) improvement caused by making ready for the plough land which had undergone timber treatment and by planting willows. With regard to each of those items, it is necessary to find the added value which such improvement gave to the land at the date of valuation irrespective of the cost of the improvement, but not exceeding the amount that should reasonably be involved in bringing the unimproved value of the land to its improved value as at the date of assessment. ---- This amount would be found by ascertaining the amount which it would cost to make the improvements in question at the relevant date, including a proper allowance for loss of interest on all outlay during the period which must elapse before such outlay became fully productive, and by deducting from the sum so ascertained a proper allowance for depreciation or partial exhaustion of the improvements. "
The need to consider the added value of improvements in a state of a depressed market was assessed in O'Brien Nominee Pty Ltd v. Valuer-General (1979) 6 QLCR 280, where the Land Appeal Court said at page 284:
"In such circumstances it is unrealistic to conclude that land, the commodity basic to the enterprise, has a minus or nominal value. It is logical to assume that in times of adversity and depression, when purchasers pay less for properties as a going concern, that the lesser price attaches not only to the land component but also to the improvements. The question facing valuers in analysing improved sales in these circumstances is what value is fairly to be attributed to the improvements? "
The Land Appeal Court then went on to say at page 285:
"It seems to us that the concept of 'added value' of improvements involves at least two methods of valuation, the appropriateness of which depends to a substantial degree on the economic conditions prevailing at the relevant time.
In times of normal, and above normal, prosperity the added value which improvements give to the land generally exceeds their value deduced by the traditional method of replacement cost less depreciation. The 'added value' of the improvements in these circumstances is usually ascertained by the method of adding to their value ascertained by the traditional method, interest for half the period of time it would take to put the improvements on the land and for them to become fully productive. "
If I look then at Mr Newson's method of seeking a weighted average rate for his relativity comparisons, I note that precedents do not favour the use of aggregating and averaging in order to provide a basis for valuations. That was addressed in Daandine Pastoral Company Pty Ltd v. Commissioner of Land Tax (1943) 7 The Valuer 229, where Williams J said at page 305:
"This method of averaging is to my mind unsound. The prices obtained at comparable sales should not be aggregated and averaged, especially when the prices obtained on sales of small areas are dealt with in this way in order to obtain the value per acre of a larger area. The only safe course is to compare each sale with the subject land separately. "
Fundamental to Mr Newson's relativity comparisons is his assumption of a rate per hectare based upon a piecemeal comparison of part of the subject land (Lot 1) with part of the adjoining land to the west (Lot 39); and part of the subject land (8 ha of Lot 52) with part of the land to the west (Lot 2). However the subject land has been assessed as a single valuation of 277.6 ha at $169.30/ha, while the land to the west (Lot 39) has a rate of $91/ha and an area of 455.4 ha; and Lot 2 has an area of 749.2 ha ($64/ha).
If I consider the aerial photography evidence (Exhibits 6 and 8), that supports Mr Gaskell's opinion that existing clearing of timber would suggest some difference between the subject land and Lots 39 and 2 to the west, which remains relatively uncleared. While Mr Gaskell was unable to personally refute Mr Newson's claim that soils are comparable upon both properties, the evidence of past farming practices would suggest otherwise. I note that former relativities between those properties have been maintained in the current valuation. I also note that relativities had been adjusted in 1993 and 1995 in order to allow for the disabilities now being requested.(iii) Comparison of Sales -
In comparing Mr Newson's sales, I note that he has sought support in sales of improved properties in his conclusion that increases in the area do not reflect a 20% rise since the last valuation in 1997. I note that his sales reveal the following variations:Sale Last Sold Change
5 1992 25% (increase)
6 1989 35% (increase)
7 1990 20% (loss)
8 1995 21% (increase)
9 1991 28% (loss)
I note that Sale 7 (Lot 17) was previously sold in 1990 for $252,500, including livestock and machinery and plant estimated at $72,500. The remaining land and fixed improvements reflected a value of $180,000, demonstrating an increase in the land and fixed improvements of only $22,500 (12.5%) over eight years.
Sale 9 (Lot 207) was seen to reflect the current depressed nature of the market for smaller rural properties, a not uncommon outcome in view of problems currently confronting rural industry in Australia. However, without more detailed analysis of those two sales, it is difficult to gain much insight into changes in the unimproved value of lands in that area. The remaining Sales 5, 6 and 8 in fact tend to support that there has been an increase in the price improved sales, albeit over a longer period than one year since the 1997 valuation.
If I then consider Mr Gaskell's sales, I note that both valuers agree that sales of vacant or lightly improved lands is the preferred method of determining unimproved value. (PH Clough v. The Valuer-General) (1981-82) 8 QLCR 70, at 76; and WM & TJ Fischer v. The Valuer-General (1989) 13 QLCR 13, at 17).
However, there is a difference between the valuers in terms of the level of improvements, and as to whether that relates to structural improvements or also land development improvements. It is Mr Newson's argument that land development improvements on rural lands are by far the most significant, compared to structural improvements. Mr Newson argues that the added value of clearing, contouring and bringing to cultivation is generally more significant than the added value of structural improvements. However, he concedes that the land development evident on the sales adopted by Mr Gaskell was consistent with other lands in the area.
What the valuers are charged with determining is the added value that any of the improvements, both structurally and for land development purposes, bring to the land, in order to develop it to its highest and most economic use. Where there are comparable proportions of land development extant on sales selected, then it would be reasonable to adopt those sales, where the structural improvements are minimal, for comparison purposes.
The problem for Mr Newson is that his sales of improved properties would indicate to him that improved properties have not increased greatly in value over the relevant period. However, Mr Newson has not fully analysed all of his improved sales, and provides only the broad market prices to demonstrate his argument. As noted, his Sales 5, 6, 7 and 8 all support some increase in value for the land component.
If I compare then Mr Gaskell's sales I note that his Sale 1 is predominantly scrub country, and that shows a rise in unimproved value of 20%. His Sale 3 is also agreed to be 60% scrub land and 40% forest type, and also reflects a rise of 19%. On that basis I have some support for Mr Newson in that the majority of both Sales 1 and 3 are superior scrub country as noted by the applied rates adopted. In fact all three sales are seen as superior country.
However, I also note that Mr Gaskell has analysed Mr Newson's Sale 1 (Lot 16), which is seen to have 50% scrub and 50% forest, and demonstrates a larger increase than 20% over the relevant period. Now while Mr Newson challenges that Lot 16 is 60% scrub, and argues it is predominantly forest country, the quantification of those land use types for that sale leaves some element of doubt as to whether scrub country and forest country are actually varying in value at a different rate of change. There is no doubt about the extra value of scrub country, but is it changing in value any different to the rate of forest country?
In the end, as noted by Stephen J in Rumble v. The Commonwealth (supra), the analysis of the quality of the land depends upon the judgment of the valuers. I believe that the preferred approach in the current matter is as adopted by Mr Gaskell. As I understand it, he has assessed the various land types upon the subject land, and determined the current market value of each of those types as demonstrated by his sales. The resultant quantification has then resulted in an overall rate of $169/ha.(iv) Changes in the Unimproved Value -
In the matter of whether the rise in the unimproved value should be seen to have occurred only since the last revaluation on 1 October 1997, I note Mr Gaskell's advice that market trends had already started to appear in 1997, but that a conservative approach was adopted to ignore evidence of a rise until it was more widely established. In accordance with principles established by the High Court in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited and Others (1946-47) 754 CLR 358, per Dixon J at p.373, doubts are to be resolved conservatively in revenue matters. Accordingly, I believe the perceived increase has been growing since at least 1995, and I see no evidence to seek to discredit the evidence of sales on that basis.(v) Summary -
In summarising this matter I am impressed by Mr Newson's detailed knowledge of the different land types of the subject land, which no doubt reflects his long period of residency in the area. For that reason I accept his classification into the three land types. However, I believe he has applied too broad an approach to comparing those land types to adjoining lands, which in themselves also have different land types. The better approach is to compare the land types as adopted by Mr Gaskell.
On the evidence of sales, there is nothing to discredit Mr Gaskell's sales, although I would have preferred sales of lands more directly similar to the forest country of the subject land. I believe sales of scrub country provide no confidence to the appellant as a guide to his forest lands.
However, in the end I am reminded that s.33 of the Act directs that the unimproved value is deemed to be correct unless proved to the contrary. I am also reminded that the onus to prove his appeal rests upon the appellant under s.45(4) of the Act.
Unless he can prove that the respondent has followed a wrong principle, or made a serious error of fact, then the valuation is not discredited (Brisbane City Council v. The Valuer-General (1977-78) 140 CLR 41, at 56). That has not occurred.
Conclusion
Having considered the whole of the evidence, I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 52 on FY1075 and Lot 1 on RP 108897, as determined by the Chief Executive in the sum of Forty-seven Thousand Dollars ($47,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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