Nucifora v Chief Executive, Department of Natural Resources and Mines
[2002] QLC 44
•29 May 2002
LAND COURT
BRISBANE
29 MAY 2002
Re: Appeal against an Annual Valuation
Valuation of Land Act 1944
Shire of Johnstone
(AV2001/0207)
Albina and Salvatore Nucifora
v.
Chief Executive, Department of Natural Resources and Mines
(Hearing at Innisfail)
D E C I S I O N
This is an appeal by landowners in the Shire of Johnstone against the unimproved value applied to their land by the Chief Executive, Department of Natural Resources and Mines (the respondent), under the provisions of the Valuation of Land Act 1944.
Background
Mr and Mrs Nucifora are the owners of a cane farm described as Lot 1 on RP 734126 and Lots 7 and 8 on RP 704848, Parish of Japoon and Lots 1 and 2 on RP 714693, Parish of Mourilyan, containing a area of 91.581 ha. As at 1 October 2000, the respondent determined the unimproved value of that land and following an objection against the valuation, the owners appealed to the Land Court against a valuation of $247,500, advising that their estimate of the unimproved value was $170,000.
The grounds of their appeal related to several matters:
· climate change, such as excessive unseasonable and erratic rainfall, with the clay base soil becoming water logged resulting in a fall in production of sugar cane;
· extensive underground tile drains on the property;
· two creek crossings on the farm are severely damaged each year;
· growing cane in this area has become so unprofitable that the owners are considering scaling down or ceasing their operations;
· the value of the property has been significantly reduced due to its low earning capacity;
· allowances from the potential sale price of the farm for clearing, draining, creek crossings, buildings and machinery, would leave very little for the unimproved value.
The Subject Land
The land, the valuation of which is the subject of this appeal, is situated about 35.5 km south of Innisfail and about 3.85 km north-west of Silkwood. Access is by means of Walter Lever Estate Road, which is bitumen sealed with grass shoulders. The formed gravel Guillota and Cuthill Roads, provide access to the rear of the property.
The property is described by the expert witness for the respondent, registered valuer Mr ML Donnelly, as comprising approximately 79.1 ha (86%) arable lands, with soils predominantly easy sloping clay loam to loamy clay to depressions. Extensive drainage has been undertaken particularly in the rear paddocks. The balance lands, approximately 12.48 ha (14%), comprise creeks, gully lines and scrub country which intersect the arable area.
It is common ground that the property is regarded as a problem farm, a "wet farm", requiring extensive underground drainage to produce that area of arable land.
The subject land is zoned "Rural" under the Shire of Johnstone Town Planning Scheme, gazetted 14 November 1997. Electricity and telephone services are connected to the property.
The land is used for canegrowing, having an assignment to the South Johnstone Mill. Production figures from the mill (Exhibit 4) show that the farm peak since 1992 has been 6,388 tonnes; in that period production exceeded peak in all but two years to 1997, but in 1999 production was down to 4,471 tonnes, in 2000 production was 3,127 tonnes and in 2001 production was 3,330 tonnes.
The Respondent's Valuation
Mr Donnelly was the valuer responsible for the valuation under appeal. He explained that in valuing cane land in the Johnstone Shire, he investigated the market since the date of the previous valuation, 1 October 1997. He referred to six sales to support the unimproved value applied to the subject land, which occurred in 1998 and 1999. He said there were no sales in the year 2000 up to the date of valuation, although there had been some later sales, but he had not analysed those sales for the purpose of this appeal.
Mr Donnelly explained that he valued the subject land by direct comparison with the sales which had been analysed to reflect land values. He relied principally on his Sales 1, 2 and 3, but he also had regard to three other sales, his Sales 4, 5 and 6, which he considered to be supporting evidence. The sales were heavily improved cane farms and Mr Donnelly analysed each of them by valuing all improvements on the farm, as well as attributing values to the plant and machinery and any crop or stools which passed with the sale, then deducting those values from the sale price, to arrive at the land value for each sale.
Mr Donnelly's Sale 1 is the sale of a small cane farm of 36.80 ha, which sold to a local cane/banana farmer in June 1998 for $437,000. Mr Donnelly noted that the vendor had purchased the farm for $480,000 in June 1995. The 1998 sale was analysed to show a land value of $95,791. As at 1 October 2000, the respondent had applied an unimproved value of $93,000, or approximately $2,527 per ha, to that property.
Mr Donnelly described the sale property as comprising mostly near level coastal forest country, with soils varying from sand to poorly drained clay and clay loams, and he considered the whole area to be arable. He considered the sale property to be inferior to the subject land per ha, because generally the country is poorer, and although it is less broken, it does not possess the better soils and greater arable area of the subject land; both properties suffer drainage problems.
Mr Donnelly's Sale 2 is the sale of what he described as a run-down farm of 169.258 ha, which had been on the market for a number of years before being purchased by a major cane/banana farmer. That farm sold in September 1998 for $640,000 and was analysed to show a land value of $226,769. As at 1 October 2000, the respondent had applied an unimproved value of $215,000, or approximately $1,270 per ha, to that property.
Mr Donnelly described the farm as comprising 56.74 ha of easy to moderately sloping former scrub country, with frontage to Jingu Creek; the property includes a significant area (112.98 ha) of steeply sloping, broken, scrub covered ridges and creeks and gullies. He commented that the farm had patches of easy brown creek loams, moderate red schists and depressions, with some sand and stone; the farm is broken in nature as it is intersected by some deep gullies. He considered the arable area of the sale property to be superior overall to the arable area of the subject property per ha, notwithstanding that the arable area was smaller and had problems, being broken in nature, with some lower paddocks being flood prone and with some erosion.
Mr Donnelly's Sale 3 is the sale of a cane farm of 93.02 ha, which had been on the market for three or four years, with an original asking price of $1.3 million. The farm sold in March 1999 for $876,000, with a separate contract for crop and stools, and was analysed to show a land value of $236,377. As at 1 October 2000, the respondent had applied an unimproved value of $222,500, or approximately $2,392 per ha, to that property.
Mr Donnelly described the farm as comprising approximately 81.49 ha (88%) of predominantly easy sloping former scrub country and areas of former forest country, with mainly sandy loam to loam soils and large areas of low and wet country; it has patches of sandy country and some frontage to Liverpool Creek; because of its low-lying topography, it suffers from flooding. He considered the arable area of the sale property to be inferior overall per ha to the arable area of the subject land, because of its higher proportion of poorer soils, notwithstanding that the arable area of the sale property is slightly larger. Both farms have problems; the sale suffers from flooding, while the subject land is more broken, with soils prone to drainage problems.
Mr Donnelly's support sales, Sales 4, 5 and 6, can be dealt with shortly. They are all high sales. Sale 4, of 70.171 ha, sold in August 1998 for $685,000, including crop, stools, plant and machinery. It analysed to show a land value of $291,870 and as at 1 October 2000, the respondent had applied an unimproved value of $180,000, or $2,565 per ha, to that property.
According to Mr Donnelly, the farm comprises approximately 54.63 ha of easy sloping former coastal forest and scrub country, with mainly sandy loam to sandy clay loam soils, having some low, wet, depressions and sandy areas. The balance area of approximately 15.541 ha is easy to moderately sloping ridge country and creeks. He considered the arable area of the sale property to be superior per ha to that of the subject property, as it is slightly less broken and has well drained soils, although the arable area is smaller.
Sale 5, of 125.93 ha, sold in December 1998 for $2,150,000. It was analysed to show a land value of $793,702 and as at 1 October 2000, the respondent had applied an unimproved value of $500,000, or $3,970 per ha, to that property. Mr Donnelly noted that this was a heavily improved sale, including crop and stools and a considerable amount of plant and machinery. The property had been on the market for up to 18 months at asking prices of $2.3 million to $2.5 million. The purchasers were experienced cane farmers from the Ord River in Western Australia.
According to Mr Donnelly, the farm comprises generally gently sloping former scrub country with parts former forest country, with a creek intersecting it near the southern boundary; 120.32 ha were regarded as arable, with mainly loams to clay loams and sandy loams to sandy clay loams, with some loamy clays and low depressions and banks. The poorer country towards the south has some open drains and some internal drainage. The 5.61 ha that is not farmed is creek. Mr Donnelly regarded the arable area of the sale property as significantly superior to the arable area of the subject land, because of its larger area of higher quality arable land and its better location, access and services.
Sale 6 was a more recent purchase by the purchasers of Sale 5, of the adjoining farm of 54.464 ha for $747,000 in August 1999. That sale was analysed to show a land value of $264,993 and as at 1 October 2000, the respondent had applied an unimproved value of $200,000, or approximately $3,672 per ha, to that property.
According to Mr Donnelly, 53.53 ha has good arable potential, comprising mostly scrub loam, to sandy loam and sandy loam to clay loam, but with some areas of low wet depressions and some flooding, which is common to the locality. He considered the sale property to be superior to the subject property despite the fact that it is smaller, because of the good quality arable land and its better location, access and services.
After discussing the sales, Mr Donnelly's report went on to state:
"Given all the evidence at hand the fair and reasonable value of the subject property is as follows:
79.097 hectares Arable @ $3,050 per hectare $241,245
(An allowance for workability and drainage is inherent in
the above arable rate)12.485 hectares gully lines and
balance lands @ $500 per hectare $6,24491.582 hectares $247,489
Apply $247,500 (or $2,705 per hectare overall)"
The Case for the Appellants
Mr S Nucifora appeared and gave evidence on behalf of the appellants. He explained that their challenge to the valuation was based on their opinion that for the last four years there had been a climate change, with erratic and dramatic changes in the weather. Instead of the usual wet season after December, the area had experienced excessive rainfall in an unseasonal and erratic manner from September to December, with eight inches falling in August two years ago. This unseasonal rain washed out plant cane and damaged growing cane. Mr Nucifora explained that their farm is regarded as a "wet farm", requiring extensive underground drainage. While they can cope with excessive rainfall during the usual wet season, it was the unseasonal and erratic rainfall that adversely impacted upon their production of sugar cane, as it fell during the planting and growing periods.
According to Mr Nucifora, the property is becoming an unviable business, with losses over the past four years amounting to $40,000; they are preparing to cease cane production in the coming season. At the production figures achieved for the last four years, he was of the opinion that canegrowing was no longer a sustainable business. Although he expects a better tonnage this year, the price of cane is substantially down and he considers that it is uneconomic to plant cane under those conditions. In his view, the climate change is probably going to be permanent.
If the property ceased to grow cane, Mr Nucifora said that the only alternative use would be to run cattle, or for agistment. While he conceded that part of the subject land would be suitable for growing bananas, he contended that bananas had reached saturation point in the district. He said it would be impossible for all canegrowers to convert to bananas; if the appellants did so, they would have to join the queue and find a market for their bananas.
To support his argument, Mr Nucifora produced an article from the Canegrowers Magazine of 27 August 2001 which dealt with the threat posed by global climate change to the Great Barrier Reef, which he said was only about 20 km away from their farm. The article was a comment on a book recently released by the Australian Institute of Marine Science, entitled "Status of Coral Reefs of the World 2000". The article points out that while an earlier report concluded that the major threat to coral reefs was as a result of direct human impacts from nutrient pollution and excessive sediments, global climate change was not then an issue. The article went on to say that within four years of that report the authors have become convinced that global climate change poses an equal, or even greater threat, to coral reefs than direct human impacts. However, there was no reference in the article to the impacts of climate change on canegrowing land or anything other than coral reefs.
Mr Nucifora submitted that there had been a drop in property values as reflected in sales and they have been established at that lower price. As an example of what is happening in the industry, Mr Nucifora said that the South Johnstone Mill went into receivership and was later sold for the low price of $14,000,000. It seems that canegrowers are paying a levy to keep the mill in production. He went on to say that the year 2000 for cane was devastating and that all indications are that sugar prices will be even lower in the future.
In support of his contention that property prices had fallen, Mr Nucifora referred to another article which appeared in the Canegrowers Magazine of 17 December 2001. That article was headed "Property values stabilising" and referred to the drop in the prices of cane farms of up to 50% in the Herbert/Wet Tropics areas, from the mid-1990s to 2001. The article ended on a positive note stating:
"However values in most districts have stabilised since the reduction experienced in 1999-2000. The number of sales started to pick up slowly during the later half of this year. As conditions within the industry continue to improve into next year we should expect to see higher values emerge."
It is obvious from Mr Nucifora's submission that he does not expect that optimistic prediction to come true.
Mr Nucifora rejected the sales used by Mr Donnelly to support his valuation, as they were all transacted in 1998 or 1999, more than 12 months prior to the date of valuation, 1 October 2000. He said that those sales occurred at a time when the market was reasonably buoyant and farmers and millers were not going broke. He produced a brochure distributed by the Department of Natural Resources and Mines which stated:
"Property valuations are based on sales in a local government area over the preceding 12 months. If your property valuation has increased or decreased, it means that property sales in your local government area support this change."
This statement, Mr Nucifora contended, reflects the intention of the Act to produce true values.
In Mr Nucifora's opinion, there are three sales within the 12-month period which better reflect the value of land at the date of valuation. The first of those sales was the sale of a cane farm containing an area of 28.75 ha, from Sammut to Kavanagh and Stace, on 1 January 2001 for $365,000. Mr Nucifora had inspected the sale property and discussed the transaction with one of the new owners, Mr Kavanagh.
As a result of his inspection and discussions, Mr Nucifora attempted an analysis of the sale, attributing values to the structural improvements, plant and machinery and the cane crop. His analysis showed a cleared land value of $2,828 per ha. He contended that if a deduction was made for clearing at $3,000 per ha, the unimproved value would be less than zero. Mr Nucifora went on to say that this sale property is situated only one property removed from the subject land and is very similar to it.
The second sale referred to by Mr Nucifora was the sale of a cane farm (area not stated) on 1 June 2001, from Scrapiona to Curcuruto, for $560,000 (transcript p.8, line 19). Mr Nucifora explained that in analysing this sale, he had valued the improvements by driving along the road and discussing their condition with the next-door neighbour. He analysed this sale in a similar manner, attributing values to the structural improvements, machinery and cane crop, which amounted to a total of $286,653, before clearing and draining, leaving a value for the cane land of $278,347, or $2,747 per ha. He said this demonstrates the dramatic reduction in value of cane-producing properties. According to Mr Nucifora, this property comprises an average soil type and can produce well if farmed diligently. Compared with the subject land, he thought it was a more farmable property, more level, with open not underground drains, and would be more valuable than the subject land.
The third of the sales referred to by Mr Nucifora, was the sale of a cane farm of 187 acres on 22 September 2001, from Taifalos to Melvin Pty Ltd, for $440,000. He said that he had inspected this property and had discussed the sale with a representative of the new owner. In his analysis of the sale, he attributed values to the structural improvements and machinery and to the cane stools. He apportioned a value of $2,000 to the 10 acres of uncleared land, leaving a value for the 167 acres of productive land of $218,000, or $3,262 per ha, before clearing. He considered the farm to be far superior to his property; it was one substantial block, with a few open drains feeding into a communal drain.
Mr Nucifora argued that it stands to reason that if sale prices diminish, that should be reflected in the unimproved values. He conceded that each of the three sales that he had referred to was due to repossession, but he contended that they were indicative of a reduction in unimproved values.
In addition to his other arguments, Mr Nucifora submitted that consideration should be given to the handicaps suffered by the subject property, such as the prolific underground drainage, the inability to operate under minimum tillage, as the property can be farmed only with modern machinery because of the extensive underground drainage, being more vulnerable to the excessively wet conditions experienced over the last four years.
He went on to explain that most properties can resort to minimum tillage using green trash blanketing, but because of the heavier clay soils of the subject land this was not possible. Green trash blanketing is not feasible as it becomes sour and cane will not grow under those conditions. He produced calculations from the BSES showing the additional cost of conventional cultivation.
Before considering the merits of the evidence submitted by the appellants and by the respondent, I will briefly discuss the legal principles which are applicable in this case.
The Relevant Legal Principles
This case is an appeal against the unimproved value applied by the respondent to the subject land under the provisions of the Valuation of Land Act 1944, as at 1 October 2000. The responsibilities of the respondent in making unimproved values are set out in the various 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). However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time at which the value is required to be ascertained: s.3(2).
The "value of improvements" means the added value which the improvements give to the land, irrespective of the cost of the improvements. However, the added value shall in no case exceed the amount that should reasonably be involved in effecting improvements of a nature and efficiency equivalent to the existing improvements: s.5.
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 the improvements on the land had not been made, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power and other services, and that the adjoining land and the environs are in their existing condition.
The test of "market value" was laid down by the High Court in Spencer v. The Commonwealth (1907) 5 CLR 418. The High Court found that the market value of land at a particular date is the amount that would have been paid for that land if it had been sold by a willing but not over-anxious seller to a willing but not over-anxious purchaser, both of whom are fully acquainted with the land and aware of all the circumstances which might affect its value, either advantageously or negatively.
It is well-settled law that sales of vacant or unimproved land provide the best basis for the assessment of unimproved value: see Grahn v. The Valuer-General (1992) 14 QLCR 327. However, where vacant sales evidence is not available, it becomes necessary to analyse sales of improved lands for the purpose of ascertaining what part of the purchase price related to improvements and what part is attributable to the land itself: see Marano v. The Valuer-General (1978) 5 QLCR 194 at 200-201.
The Courts have long recognised that there is a difference in the task of the valuer in assessing unimproved values by reference to sales of unimproved land and by reference to the analyses of sales of improved land. As the Land Court explained in Kern Bros Ltd v. The Valuer-General (1973) 40 CLLR 127 at 131, the task of the valuer where he has sufficient sales of unimproved land may be relatively simple. The Court went on to say that
"Where, however, there are no such sales, but only sales of improved land, from which to work, the task becomes not necessarily more difficult but more detailed and investigative, because the exercise commencing with 'improved value' within the limits imposed by [the provisions of the Act] has now to be carried out."
The analyses of improved sales is a difficult task for a valuer. There is a degree of subjectivity in the value to be attributed to individual improvements. The accuracy of such analyses depends very largely on the skill and experience of the individual valuer. Courts have recognised that where sales of improved properties are used for the purpose of determining the value of unimproved land, there is always a liability of error in making deductions for the value of improvements by putting their value either too high or too low: Taylor v. The Valuer-General (1928) 9 LGR (NSW) 52; and that the method has shortcomings, especially where the value of improvements is high in relation to the land value: Griffith v. Talbragar Shire Council (1950) 17 LGR (NSW) 239.
This task becomes even more difficult when it is undertaken by a non-expert. Although Mr Nucifora has gone to a great deal of trouble to attempt to analyse the three sales which he contends supports his argument, I can place little weight on his analyses of those sales. As the authorities indicate, the task is difficult enough for a trained valuer. It is virtually impossible for a layman. In any case, in all three analyses the exercise is incomplete. Mr Nucifora has made no deduction for the value of clearing. If he had done so, the result would probably be a negative land value. That result would not be acceptable: see O'Brien Nominee Pty Ltd v. The Valuer-General (1979) 6 QLCR 280 at 284.
Furthermore, Mr Nucifora has readily conceded that the three sales are forced sales by mortgagees in possession. Mr Donnelly rejected those three sales because he considered that they were not arm's length transactions between willing but not over-anxious vendors and willing but not over-anxious purchasers, as required by the test of market value in the Spencer case.
While the authorities make it clear that mortgagee sales are admissible and not to be rejected out of hand, the weight to be attached to such sales will depend upon the evidence of the circumstances of those sales: see for example Waterhouse v. The Valuer-General (1927) 8 LGR (NSW) 137; re Murray (1934) 13 LVR 25 and Dobson v. The Valuer-General (not reported) a decision of the Land Court dated 22 November 1988.
However, it is clear that such sales must be treated with caution. In their text "Land Valuation and Compensation in Australia", published 1971, Messrs Rost and Collins make reference to forced sales at p.95 of the 1996 reprint:"It is often assumed that when a mortgagee, sheriff, or receiver exercises his power to sell a property, he is concerned primarily to recover the amount advanced or the amount of the debt. Consequently, there is some inclination to discard such sales as conclusive evidence of value. This view, however, has not always been taken by the courts."
After considering some of the authorities, the authors conclude:
"Thus the extent to which reliance should be placed upon sales made to satisfy debts will depend on the circumstances under which the sales were made. If other sales of a more normal character are available, sales of a doubtful nature should not be used although they should be fully investigated."
In my view, Mr Donnelly should not have rejected those three sales out of hand, particularly as there was an absence of sales activity after 1999. If he had investigated and analysed those sales, he would have been in a position to give direct evidence as to whether or not those sales fulfilled the Spencer test and if they did so, whether they indicated a decline in values.
Mr Donnelly was also of the view that as those sales occurred after the date of valuation, they were not relevant. However, it is well established that sales subsequent to the date of valuation are both admissible and relevant, provided that circumstances have not significantly changed. The matter was considered by the High Court in Daandine Pastoral Company v. Commissioner of Land Tax (1943) 7 The Valuer 299, where Williams J said at p.304:"Values must be calculated in the light of circumstances which existed on the material date ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless. ... The whole tendency of the courts is to admit evidence of any events prior to the date of trial which will throw any real light on the issues."
Williams J expressed similar sentiments in McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1 at 16.
Mr Nucifora contended that the six sales referred to by Mr Donnelly should be rejected, because the brochure published by the Department of Natural Resources and Mines stated that property valuations were based on sales in a local government area over the preceding 12 months. However, that statement is not necessarily correct. It seems that the brochure was written to attempt to explain the process of annual valuations. However, it does not always apply to valuations which are made at less frequent intervals. While s.37 of the Act provides that the Chief Executive make annually a valuation of all land in an area, there is provision for the Chief Executive to make valuations at less frequent periods under certain circumstances. That is the situation in the present case, where the previous valuation was made some three years earlier, as at 1 October 1997.
The legislation does not limit the sales upon which a valuation may be based to a 12-month period. However, there is no doubting that the most appropriate sales are those which are closest to the date of valuation. In the present circumstances, it seems to be common ground that there were no sales from mid to late 1999, until after the date of valuation.
I must add that nor is the Chief Executive limited to basing valuations on sales which occur within a particular local government area. It is appropriate and often essential that reference is made to sales in adjoining local government areas where the class of country is similar to that of the land being valued.
It is unfortunate that the brochure has misled Mr Nucifora. However, such brochures are produced in an effort to inform landowners of the process of valuation in a generalised manner and do not purport to provide a legal interpretation of the provisions of the Act. I can place no weight in the information provided in the brochure.
Conclusions
The appellants' principal grounds of appeal related to the effect of the unseasonal and erratic rainfall over the last three or four years and to the disabilities suffered by the subject land. Mr Nucifora was convinced that there had been a dramatic climate change in the area, which had led to excessive and unseasonal rainfall which affected the production of sugar cane and had significantly reduced the value of the land. On the other hand, Mr Donnelly thought that weather patterns are cyclical and that there was no evidence of a permanent climatic change. While it was most unfortunate that there have been three bad years, on the evidence presented in this case, I must agree with Mr Donnelly, that it does not mean there has been permanent climate change.
Mr Donnelly considered that the drop in the farm's production figures could not be pinpointed to one factor, but he conceded that the unseasonal wet conditions would be a major contributor. However, he was of the view that those climatic conditions would also have affected the sale properties; from the sales that he had investigated there was no dramatic downturn in the market. He thought that if there was a global climatic change and it permanently affected the production of cane farms, it would manifest itself in the market; however, no such decline in the market was evident in October 2000.
The sales relied on by Mr Donnelly took place in 1998 and 1999. There was essentially no challenge to his analyses of those sales or of their comparability to the subject land. He gave evidence that there were no sales of cane farms in the year 2000 until on 19 November 2000 there was a sale from Reppel to Franco, which occurred just after the date of valuation. However, Mr Donnelly said that he did not analyse that sale as it was after the date of valuation and he regarded it as a high sale, which would show a very substantial increase in the unimproved value.
Mr Donnelly listed other sales of cane farms in 2001, which he had investigated but not analysed:
· the sale on 1 February 2001 from Feltrin to Thompson, which he thought would show a downturn in values;
· the sale on 23 March 2001 from Stephenson to Singh, which would not show a downturn in values;
· the sale in April 2001 from Prior to Singh, which would show a downturn;
· the sale in June 2001 from Pernase to Cecchi, which would not show a downturn.
Having regard to the legal principles discussed earlier, I cannot accept the analyses of the three sales advanced by Mr Nucifora for the reasons previously stated. Therefore, the only acceptable sales evidence is that put forward by Mr Donnelly. That evidence indicates that there had been no downturn in values, at least until August 1999 when his Sale 6 was transacted.
It is unfortunate that Mr Donnelly had not analysed the sales which occurred after the date of valuation. In the circumstances, I have no alternative but to accept his opinion that the sale from Reppel to Franco, which occurred only one month after the valuation date, was a high sale and would not indicate a downturn in the market. In his opinion and without analyses, the sales which occurred later in 2001 were inconclusive. Some, he thought, would indicate a downturn, while others would not. However, that is a matter for the future valuation. On the evidence, the appellants have not proved there was a downturn in the market from August 1999 until the date of valuation, 1 October 2000.
I turn now to consider whether the disabilities of the subject land have been sufficiently taken into account. Mr Donnelly was aware that the property required extensive drainage to maintain its production. He was aware that it was regarded as a "wet" farm and a problem farm to work, requiring skilled management to maintain its productivity. He said that he made an allowance in his valuation for the problems of drainage and workability.
Mr Nucifora pointed out that the subject land is disadvantaged as minimum tillage using green trash blanketing cannot be practised. Mr Donnelly conceded that he had not made any allowance for that factor. He agreed that working costs would be at least $130 per ha higher.
The respondent's valuation as at 1 October 2000 is $247,500, which is a reduction from the previous valuation of $275,000 as at 1 October 1997. That seems to recognise that there has been some decline in the value of the subject land since that date. Mr Donnelly expressed the view that the sales in 2001 and later may show that the market has declined further, but he thought that the evidence was inconclusive. He is satisfied, however, that the unimproved value of $247,500 as at 1 October 2000 is supported by the sales. In the absence of any cogent evidence to the contrary, I must accept that the sales support the general level.
However, I am not convinced that Mr Donnelly has made sufficient allowance for the drainage and working problems suffered by the subject land. His report Exhibit 6 states that an allowance for workability and drainage is inherent in the value of $3,050 per ha applied to the arable land. It did not state the extent of that allowance, but it appears from his oral evidence that the allowance was 5%, which seems to be for both workability and the drainage problems (see transcript pages 49, 52 and 60).
In my view the allowance for drainage and workability of the property should be increased to 10% for the arable area. That would reduce the value of the arable area to $2,880.
Therefore, the valuation of the subject land is calculated as follows:
79.1 ha arable land @ $2,880 per ha $227,808
12.48 ha balance land @ $500 per ha $6,240
91.58 ha $234,048
In my view, the valuation should be reduced to $234,000.
Order
The appeal is allowed, the valuation of the respondent is set aside and the unimproved value of the subject land as at 1 October 2000 is determined at Two Hundred and Thirty-four Thousand Dollars ($234,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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