Nicholas v Department of Natural Resources and Mines
[2005] QLC 3
•18 January 2005
LAND COURT OF QUEENSLAND
CITATION: Nicholas v Department of Natural Resources and Mines [2005] QLC 0003 PARTIES: Thomas G and Colleen Nicholas
(appellants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0327 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation DELIVERED ON: 18 January 2005 DELIVERED AT: Brisbane HEARD AT: Clermont MEMBER: Mr JJ Trickett, President ORDER: The appeal is dismissed and the amended valuation of Seven Hundred and Ninety Thousand Dollars ($790,000) applied by the respondent is affirmed. CATCHWORDS: Unimproved value - Direct comparison with comparable sales - Classification of land - Factors affecting unimproved value - Statutory prohibitions on development - Valuation of Land Act 1944 APPEARANCES: Mr TG Nicholas for the appellants
Mr K Fisher, Crown Law, for the respondent
This is an appeal by landowners against the unimproved value applied to their land in the Shire of Belyando, by the Chief Executive, Department of Natural Resources and Mines (the respondent) as at 1 October 2001.
Background
Mr and Mrs Nicholas are the owners of a property known as "Solferino", described as L5DC113:TL212381, and L2DC14:GHFL2340, Parish of Solferino, containing an area of 7,044 ha. As at 1 October 2001, the respondent applied an unimproved value to that land of $940,000, under the provisions of s.37(1) of the Valuation of Land Act 1944 (the Act). Mr and Mrs Nicholas objected against that valuation and subsequently appealed to the Land Court. However, by correspondence received in the Land Court registry on 15 July 2004, the respondent advised that the valuation had been reduced to $790,000 (or $112 per ha) under the provisions of s.68 of the Act. In accordance with s.68(3), that reduced valuation is deemed to be the value appealed against and the respondent's valuer led evidence to that amount.
The Notice of Appeal contained nine grounds. However, during the hearing Mr Nicholas, who appeared and gave evidence on behalf of the appellants, concentrated on four grounds, in addition to the general ground that the valuation was excessive and unrealistic. Those grounds were to the effect that:
1.the Department has wrongly classified the country types;
2.the Department has not taken into account the State and Federal Governments' Vegetation Management restrictions, which prevent 40% of the property from being developed;
3.the capability of the country is limited by salinity, parthenium and flooding;
4.the relativity of the Department's applied unimproved value is not consistent or equitable with previous unimproved values and land prices.
The Subject Land
"Solferino" is situated about 63 km north-west of Clermont, with access via the Kilcummin-Diamond Downs Road, a formed gravel road which is considered to provide good access. According to the report tendered by the respondent's valuer, Mr David Doyle, the property comprises:
500 ha(7%) crop assisted scrub grazing comprising mix of gidyea brigalow scrub;
l,050 ha(15%) crop assisted downs grazing, comprising open to lightly timbered downs country;
1,000 ha(14%) fair scrub grazing, comprising developed gidyea brigalow scrub, with areas of forest influence;
1,300 ha(19%) good forest grazing, comprising mix of open forest country, with patches of gidyea and boree;
1,150 ha(16%) fair downs grazing, comprising open to moderately timbered country;
922 ha(13%) flooded channel country, with areas of virgin gidyea scrub;
370 ha(5%) gravely ridge country; and
752 ha(11%) virgin gidyea brigalow scrub.
The Relevant Legislation
The responsibilities of the respondent in valuing the subject land are set out in the provisions of the Act. The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean in relation to improved land, the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that the improvements on that land did not exist: s.3(1).
The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that there were no improvements on the land, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power and other services.
The "market value" of land was defined by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over anxious buyer would pay to a willing but not over anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property. (See Griffith CJ at 432 and Isaacs J at 441).
It has been well established that unimproved market value is ascertained by reference to prices that have been paid for similar parcels of land. Pike J said in Waterhouse v Valuer-General (1927) 8 LGR (NSW) 137 at 139 that:
"Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it, but - as with other commodities - the best way to ascertain the market price is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales."
The Respondent's Valuation
Mr Doyle gave evidence that the sales throughout the Emerald district and in Belyando Shire in particular, indicated that the rural market had "jumped" around August/September 2000, due to favourable market conditions, including low interest rates, high cattle prices and relatively good seasons. The most sought after country was fattening country, in particular scrub country, but this interest filtered down to the forest and downs grazing country, but not to the same extent. However, cultivation country was less in demand than previously, with some scrub cultivation properties reverting to grazing.
According to Mr Doyle's evidence, the respondent's valuers analysed 17 sales in the area, from which he concluded that the most comparable sales to the subject land were the properties known as "Yarmina" and "Charlton Park". He defended the respondent's valuation of the subject land by direct comparison with those two sales.
"Yarmina" is situated approximately 140 km north-west of Clermont and contains an area of 23,700 ha. In November 2000 it sold for $5,750,000 and was analysed to show an unimproved value of $1,421,672. As at 1 October 2001, the respondent applied an unimproved value to that land of $1,200,000, or $50.60 per ha. That represented an increase on the previous valuation of 2.14 times.
According to Mr Doyle, "Yarmina" comprises approximately 2,900 ha of coolibah, 8,800 ha of fair to poor scrub, 1,120 ha of open to lightly timbered downs, 3,400 ha of fair forest and 7,480 ha of desert. The property had been extensively developed, with approximately 15,000 ha pulled, burnt and grassed. In comparing "Yarmina" with the subject property, Mr Doyle concluded that on a per ha basis overall, "Yarmina" was inferior to the subject property, because it has a larger proportion of poorer country, including desert. It is also much larger.
"Charlton Park" is situated approximately 61 km north of Clermont with good access. It contains an area of 10,471.28 ha and in April 2001 it sold for $4,200,000 and was analysed to show an unimproved value of $1,817,567. As at 1 October 2001, the respondent applied an unimproved value to that land of $1,600,000, or $153 per ha. That represents an increase from the previous valuation of 2.22 times.
According to Mr Doyle, "Charlton Park" comprises 450 ha of crop assisted scrub cultivation, 350 ha of crop assisted downs grazing, 200 ha of downs grazing, 7,000 ha of good developed brigalow scrub grazing and 2,471 ha of fair forest grazing, comprising ironbark country. The property was purchased by the owners of an adjoining property. In comparing "Charlton Park" with the subject property, Mr Doyle concluded it is superior on a per ha basis because of its superior type of scrub and the fact that it is less broken than "Solferino". It is also better located.
Mr Nicholas did not attempt to analyse any sales and so did not challenge Mr Doyle's analyses of those two properties. However, he was under the impression that at one time the Department had relied on two other sales known as "Mt Wilkin" and "Greenhills". However, under cross-examination by Mr Fisher, Mr Nicholas conceded that both properties are smaller than the subject property and that each has a larger proportion of cultivated country. From the figures that were put to Mr Nicholas, it seems that both those properties have much higher unimproved values per ha applied to them.
Mr Nicholas did not raise any other matters relating to the relativity of unimproved values applied to properties in the area, nor did he challenge the prices paid for any of the sales. In those circumstances, Mr Nicholas has produced no evidence in relation to his ground of appeal No. 4.
The Case for the Appellants
As the evidence emerged, it seems that the appellants' ground of appeal No. 1 is no longer applicable. Following the lodgement of the appeal, Mr Doyle inspected the property with Mr Nicholas. With the assistance of the Department's mapping program called Map Info, satellite imagery and the regional ecosystem plan, together they marked out the areas of various country types, upon which they largely agreed. In fact, there was only one point of disagreement by Mr Nicholas of the classifications of country on the map produced by Mr Doyle (Exhibit 4). Mr Doyle had marked an area of flooded country (in yellow) as a narrow diagonal strip through the property. However, Mr Nicholas said that the whole of the northern portion of the property was flooded, which he marked on the map. Mr Doyle did not disagree with the area marked by Mr Nicholas, but he made the point that within that area there are a number of different classifications, including areas with potential for development, which he wished to show as discrete country types, rather than broadly classify as simply flooded country.
Therefore, it seems to me that there was little disagreement about the classification of country, in which case, the appellants' first ground of appeal is no longer applicable.
The appellants' second ground of appeal relates to the effect of State and Federal Government legislation imposing restrictions preventing further development of the property. In Mr Nicholas' terms, the legislation has the effect of "locking up 40% of the property to development". He said that the legislation had come into effect in 1999, prior to the date of valuation. Therefore, he contended that it should have been taken into account in making the valuation. I understood Mr Nicholas to be referring to the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 and the Queensland Vegetation Management Act 1999. Mr Nicholas understood that the combined effect of those two Acts would prohibit the development of the 40% of "Solferino" which had not been developed. However, where land had been developed, he understood that there was no prohibition on treating regrowth, unless it had reached the stage of being 70% of the height and 50% of the canopy of the original timber.
In his opinion, neither of the comparable sales used by Mr Doyle as a basis for the valuation of "Solferino" would be as badly affected by the legislation as the subject property. He tendered a regional ecosystems map which he had obtained from the Department of Natural Resources and Mines (undated), which showed areas of vegetation which were considered to be endangered and of concern.
Mr Nicholas was concerned not only with the lack of accuracy of the map, but particularly with the method used to arrive at the various classifications. As far as he knew, they were all based on satellite imagery, without any ground proofing. He had attempted to challenge the classifications on the map, but became frustrated with the process.
Mr Doyle admits there are errors on the regional ecosystems map. He said that following his inspection of the property he approached the Vegetation Management Officers in Emerald and had advised them that some of the marked areas had actually been developed Mr Doyle said they advised him that if the map was incorrect, then Mr Nicholas should contact them and if there was an error, the maps would be changed free of cost.
Mr Doyle tendered a later regional ecosystems map, dated July 2004 (after the date of valuation), which showed that there had been some corrections, but other errors remained.
However, Mr Doyle recognised that there were some classes of country which could not be further developed and he had taken those classes at their natural carrying capacities rather than their potential. He had taken this into account in his adjusted valuation.
In my view, the evidence indicates that the appellants had a valid ground of appeal in relation to the Commonwealth and State legislation affecting the further development of the property. However, it seems that Mr Doyle has recognised this problem and has sought to make allowance for it by his adjustment of the classification of the various types of country and by reducing the carrying capacity on those areas which cannot be further developed. However, he did not regard that country as completely useless, as it can still be grazed, albeit at a reduced carrying capacity.
The appellants' third ground of appeal contends that the Department did not make sufficient allowance to reflect the limitations caused by the infestation of parthenium weed and from salinity. Mr Nicholas gave evidence that parthenium requires careful management, as it infests the better types of country. As with the areas affected by salinity, parthenium has the effect of reducing the carrying capacity of the property.
Mr Doyle gave evidence that he was aware of those problems. He said that parthenium was regarded as being endemic to the whole area, and was present on the sales. It is generally a problem that needs management on cultivation country that is left fallow, or is eaten out or during dry times. However, no specific allowance had been made for it as it was present on the sales and generally throughout the Shires of Peak Downs and Belyando. The reduced carrying capacity of the areas affected by salinity had been taken into account.
Ground of appeal No. 4 relates to the alleged inconsistency of the previous unimproved value to the present unimproved value and with land prices not being equitable. However, while it was clear that Mr Nicholas was concerned about the unimproved value applied to the property, there was no evidence relating to relativity. He did not contest the reasonableness of the two sales used as a basis for the valuation.
On the other hand, Mr Doyle explained that at the date of valuation the sales indicated that the main demand was for scrub country with a higher carrying capacity and that demand had flowed on to other types of country. This had caused the Department to change the existing relativity to reflect the increased demand for the scrub country. However, he explained, cultivation country was less in demand because cattle prices were very good. Furthermore, it seems that some former cultivation country had been converted to grazing to reflect the emphasis on cattle.
Mr Doyle further explained that the principal method of valuation was by direct comparison. He had two sales, one of which was superior and the other inferior. In order to check his valuation, he said that he had carried out check valuations using carrying capacity, beast area values and the classification of various types of country. However, although no details were provided, he emphasised that these were check methods only and not the principal method of valuation.
Conclusion
Under s.45(4) of the Act, the appellants are limited to the grounds stated in their appeal and have the burden of proving any and every such ground. In this case the appellants have relied principally upon four grounds of appeal from the original nine which they stated on their Notice of Appeal.
However, as a result of the lodgement of the appeal, Mr Doyle inspected the property with Mr Nicholas and the evidence indicates that they have largely agreed on the classification of country. Where there seemed to be a disagreement, it was largely because Mr Doyle felt that he needed to classify the flooded country in more detail than simply showing it as flooded. Similarly, the evidence indicates that as a result of his inspection, Mr Doyle revised his opinion of the potential of parts of the country which would now not be able to be developed to its full potential. As a result of the adjustments, the valuation of the subject land has been reduced from $940,000 to $790,000. In accordance with the Act, that becomes the valuation which is the subject of the appeal.
Mr Doyle relied upon two sales. Whatever their shortcomings, he considers them to be the most comparable to the subject land of the 17 sales that he had available. There are never any perfect sales, and a valuer must make the best of the sales evidence that is available at the date of valuation. No evidence has been produced by the appellants which would indicate that those sales are either inappropriate or wrongly analysed. While they are not by any means identical to the subject land, there is no evidence to indicate that Mr Doyle's comparison of the subject land with each of those sales is inappropriate.
Of the remaining two grounds of appeal, I am satisfied with Mr Doyle's explanation that he was aware of the salinity problem and that parthenium is endemic to the whole of the area. Furthermore, there was no evidence to indicate that there was a problem with the relativity of applied values or that the sale prices of the two sale properties used as a basis of valuation were such as to render them inappropriate for use for that purpose.
The valuation was reduced from $940,000 to $790,000 following Mr Doyle's inspection and reclassification of the country types. This altered valuation represents an increase of 1.83 times over the former valuation of $430,000 as at 1 October 1999. This compares with increases of 2.14 times and 2.22 times for the valuations applied to the sale properties. Although such evidence is by no means determinative, it does indicate that it is unlikely that on a relative comparison, the subject property is overvalued.
In the circumstances, I am of the view that after consideration of the evidence, the appellants have not proved their grounds of appeal. Therefore, the appeal must be dismissed.
Order
The appeal is dismissed and the amended valuation of Seven Hundred and Ninety Thousand Dollars ($790,000) applied by the respondent is affirmed.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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