Perkins v Department of Natural Resources and Mines
[2004] QLC 13
•27 February 2004
LAND COURT OF QUEENSLAND
CITATION: Perkins v Department of Natural Resources and Mines [2004] QLC 0013 PARTIES: Donald John and Belinda Catherine Perkins
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: V2003/0601 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an Unimproved Valuation - Shire of Balonne DELIVERED ON: 27 February 2004 DELIVERED AT: Brisbane HEARD AT: St George MEMBER Mr RE Wenck ORDER: The appeal is dismissed and the valuation of the chief executive as at 1 October 2001 affirmed. CATCHWORDS: Statutory Valuation - Unimproved value - Valuation of Land Act 1944
Sales Evidence - Sale to an adjoining owner - Market trends - Differing land types - Relativity between valuations
Adjoining Owner Sale - Not reliable evidence in isolation - Differing opinions as to the worth to an adjoining owner
Market Trends - Demand for land suitable for development with buffel grass - Recent trend - Whether reflected in evidence at date of valuation
Relativity - Correct relativity important - Correct valuation should not be disturbed to achieve proper relativity
APPEARANCES: Mr DJ Perkins for the applicants
Mr K Fisher, Crown Law for the respondent
This is an appeal against an unimproved valuation made by the chief executive, of properties known as "Nelyambo" and "Éurah", in the Shire of Balonne as at 1 October 2001.
"Nelyambo" is situated on the bitumen sealed Castlereagh Highway (Dirranbandi/Hebel Road), approximately 18 km south of Dirranbandi. The real property description is Lot 9 on Crown Plan BLM838, GHFL39/3486, Parish of Booligar, containing an area of 8,168.519 ha.
"Éurah" is situated on the earth/gravel formed Narine Road, off the Castlereagh Highway, approximately 61 km south of Dirranbandi. The real property description is Lot 3 on Crown Plan BLM270, Parish of Marilla, containing an area of 3,264.194 ha.
Initially separate valuations had been issued for each of the individual properties. However, after objection by the owners, a fresh single valuation was issued for the properties in aggregation. Section 34(1)(b) of the Valuation of Land Act 1944 provides for the inclusion in one valuation of non-adjoining parcels owned by the same person and worked as one holding exclusively for the purposes of farming. A further objection was lodged against that one valuation and being dissatisfied with the decision on the objection, the owners have appealed to this Court.
The valuation appealed against is in the amount of $465,000. The appellants' estimate of unimproved value in the notice of appeal is $285,800 ($25/ha).
Mr Perkins conducted the case for the appellants and gave oral evidence in support of a written statement which dealt with the issues associated with the grounds of appeal. In summary, the thrust of the appeal relates to the appellants' opinion that, in recent years, the trend in the local market had been associated with the introduction of buffel grass into the red sandy loam country west of Dirranbandi and that historical relativities between the unimproved value of various classifications of land had altered significantly. It was submitted that there is sales evidence and in particular, sales and resales of individual properties that support the appellants' opinion but the shift in relativities is not demonstrated or properly demonstrated in the chief executive's valuations.
Evidence for the chief executive was given by Mr AJ Dunk, registered valuer. He had not been responsible for making the valuation appealed against but had initially assisted in the relevant Shire valuation process. He had been given the task of defending the valuation and had personally inspected the properties and conducted his own investigations relative to the sales evidence. He was satisfied that the valuation was fair and reasonable.
It should be said at this stage that although there were significantly differing opinions with regard to factors affecting the unimproved value of the subject lands and the relevance of the overall sales evidence and market trends in the locality at the date of valuation, the Court was assisted by the quality of evidence given by both witnesses. Mr Perkins is an experienced local grazier who has in-depth knowledge of land types, their productive capacities and development potentialities. He produced a well-reasoned written response to the valuation report of Mr Dunk and provided helpful photographic evidence depicting some of the relevant country types with which he was concerned. Mr Dunk's experience in his profession is not yet extensive but he demonstrated a mature application of the principles and practice of valuation, together with the research which is necessary to support the opinions expressed and he demonstrated a forthright approach in the delivery of his evidence.
In his valuation report Mr Dunk described the nature of the land in the individual properties as follows:
"Nelyambo"
Approximately 1620 ha (20%) - grey soil coolibah, belah country. Interspersed with patches of lignum.
Approximately 4000 ha (49%) - red and brown soils, timbered predominantly with box, false sandalwood, leopard wood, white wood interspersed with scalded areas and claypans.
Approximately 2548.519 (31%) - sand hills timbered with box, pine and false sandalwood."Éurah"
Approximately 1254 ha (39%) - black soil, timbered with coolibah, belah, myall, white wood and leopard wood.
Approximately 593 ha (18%) - heavy clay soil, low-lying lignum country.
Approximately 686 ha (21%) - red and brown soil, timbered with leopard wood, box, false sandalwood interspersed with claypans/
Approximately 536 ha (16%) - soft red sandy country timbered with pine, wilga, white wood and carbeen.
Approximately 195 ha (6%) - gravely ridge, timbered with wilga, box and pine, hard tops containing pine, silver leaf ironbark and some whipstick mulga.The valuation was calculated as follows:
"Nelyambo"
8169 ha @ $41.58/ha (say) $339,735
"Éurah"
3264 ha @ $46.60/ha (say) $152,113
$491,848
Less: Physical separation allowance 5% $24,540 (sic)
$467,250
Adopt$465,000
Although there was some broad variance between the description of the lands contained in the notice of appeal, and in the written response to Mr Dunk's report, Mr Perkins generally agreed with Mr Dunk's land classification. However he pointed out that contained within the 1,620 ha of grey soil coolibah, belah on "Nelyambo", the "patches of lignum" comprised an area of about 400 ha. This area was the heavy originally regularly flooded country before the advent of upstream floodwater extractions and now was heavily vegetated with coolibah regrowth, lignum and wattle with little, if any, pasture growth even after irregular flooding events. In Mr Perkins' opinion this type of land together with a similar classification on "Éurah", is now virtually waste land and uneconomical to improve. It is the type of country which he believed had historically been regarded in the statutory valuation process as being second in value only to the better quality coolibah soils. Mr Perkins also pointed out that of the total area of the red country classifications, there was about 2,500 ha which was capable of buffel development while the balance area was generally of harder clay type soils unsuitable for development. In his opinion the red country capable of buffel development and which once was considered by the Department to be one of the lesser valued land types was now capable of being compared in terms of unimproved value as reasonably equivalent to the better class coolibah country. However the harder red country remained as an inferior land type with quite limited stock carrying capacity.
Mr Perkins' inquiries had revealed that the red buffel country in Balonne Shire, despite its favour in the marketplace, as a result of the relatively cheap cost of development and the highly productive grazing capacity, had been valued by the Department at levels of value ranging from $13/ha to $30/ha. He was able to accept that the better class coolibah country and the 2,500 ha of buffel country totalling about 43% in aggregation on the subject lands could be valued in the range of $35-$40/ha but once the 57% of inferior country was taken into account he believed his overall estimate of $25/ha would demonstrate correct relativity. He was unable to accept that in comparison with the values applied to the buffel country that the chief executive's valuation of the subject lands was in any way reasonable. In his opinion such a valuation had represented an inflexible carry over from the 1950's when different market and seasonal conditions were experienced, regular beneficial flooding of the heavier country was an expectation, regrowth was not a problem and before the potential for buffel grass development of the softer red country had been recognised.
As support for his argument regarding market trends, Mr Perkins referred to the 1980's sales of the properties "Braemore Park" and "Tamarisk", then their resales in 2001 and 2002 respectively. "Braemore Park" which adjoins "Éurah" and comprises predominantly the heavier grey soil country had been sold (by the appellants) in 1988 for the equivalent of $139/ha improved then resold (to an adjoining owner) in 2001 for $148/ha improved, after further improvements had been effected. In his opinion, bearing in mind the adjoining owner factor and the further improvements involved, this sale showed an effective decline in improved market value over the intervening period. In contrast, "Tamarisk", which is situated west of Dirranbandi and suited to buffel development sold in 1985 for $49/ha improved then resold in 2002 for $148/ha improved. Notwithstanding the development of that property which had taken place and that the resale was "some 12 months" after the relevant date of valuation in this matter Mr Perkins saw the increased resale price of "Tamarisk" and the stagnant resale price of "Braemore Park" as a clear indication of the shift in demand between the red buffel country and the heavier soil country. On his analysis of the two sales "Tamarisk" showed a significantly higher unimproved value than "Braemore Park", yet the latter was valued by the Department at $56.46/ha, while "Tamarisk" was valued at $20.85/ha.
Mr Dunk did not dispute that there may be market evidence subsequent to the date of valuation which would support Mr Perkins' opinions as to the market trends at least for the red buffel country. However any sales subsequent to the date of valuation including the sale of "Tamarisk" had not been investigated as such evidence was considered more relevant to any subsequent date of valuation. Mr Dunk was confident that most of the sales evidence of the red country in the two-year period up to and near the date of valuation had supported the level of unimproved value which had been applied and the relativity which had existed previously. He contributed information to the effect that there had been one sale in the better red country, that of "Buffel Park" which on analysis had shown what had been considered at the relevant time to be an unrealistic increase of 370% over the previous valuation. No reliance had been placed on that sale in light of the other sales evidence available. The overall evidence had been interpreted by the departmental valuers as generally supporting the application of a blanket 140% increase above the previous valuation of grazing lands throughout the Shire. One eventual exception was in the locality of and including the subject lands where, subsequent to objection conferences with various property owners, the sale of "Braemore Park", previously not considered to be reliable evidence due to the adjoining owner circumstances of the purchaser, was given further consideration. The decision was taken to alter the 140% increase applied to "Braemore Park" to about 80% and valuations in that locality were then reduced by about 25%. More will be said of the "Braemore Park" sale later.
Mr Dunk would not be drawn into revealing the levels of value which the Department would apply to the individual land classifications of the subject lands. However, as opposed to the type of evidence given by other valuers in other matters recently, it was refreshing to hear his evidence that it was necessary for the Department to give consideration to land classification values as a tool for checking relativity between valuations. The primary departmental valuation approach was direct comparison of the overall property to be valued with the individual sale properties and the level of value indicated by those sales, on an overall unit of area basis. It appears that it may be departmental practice to discuss opinions of individual land classification values with property owners, but only on a "without prejudice" basis.
Mr Dunk had, in the end result, relied on the sales of not only "Braemore Park" which was the only property sold in the immediate locality of the subject lands but also of the better located properties "Karee" and "Kendal", north of Dirranbandi and about 50 km south of St George. Both of those latter properties comprised a mixture of heavier coolibah type country and red country and are of agreed superior quality to the subject lands. Those sales showed analysed unimproved values of $59.76/ha (with an application of $56.33/ha) and $71.58/ha (with an application of $70.50/ha) respectively. A relatively small area of the subject aggregation was cultivated and share farmed, and other lands in the immediate locality were cultivated on an opportunity basis, as were those sale properties. However, Mr Perkins was of the opinion that the locality in which those sale properties were located was considered in the market to have a significant "farming" (arable) potential.
The more contentious issue which arose with regard to the "Braemore Park" sale was in connection with the perceived effect on the sale price through the purchaser being an adjoining owner. The purchaser had indicated to Mr Dunk and the departmental valuer before him that the sale price may have included a premium of between $1 to $2/acre (say $2.50 to $5/ha) due to the adjacency factor. Mr Perkins' advice had been that the purchaser had considered the adjacency factor to be worth $10 to $15/acre (say $25/ha to $37.50/ha) and had decided against purchasing a comparable property available for $50/ha less than the price paid for "Braemore Park". In Mr Perkins' opinion, another factor associated with the sale of "Braemore Park" had been the preceding local rainfall and the soil moisture profile which had allowed the immediate planting of a crop in an area of cultivation. Furthermore, while Mr Perkins did not, in his analysis challenge Mr Dunk's assessment of the added value of the various improvements, he believed that the allowance for timber treatment was conservative. In the end result he would have adjusted Mr Dunk's analysis by allowing $25/ha for the adjacency factor to find an unimproved value of $35.77/ha which supported his estimate of $25/ha overall for the subject lands.
Mr Dunk was of the opinion that the application of $56.46/ha unimproved to "Braemore Park" or 93% of the analysed sale price was a sufficient discount, based on his investigation of the circumstances surrounding the sale. Furthermore, he pointed out that the 1988 sale of "Braemore Park" had provided basic evidence of value at that time and, despite subsequent movements in unimproved value, the valuation applied in 2001 was near the same amount as in 1989 and in line with the evidence provided by the analyses of the original sale and the resale. The valuation of the subject aggregation is now lower than the total of the individual valuations in 1989.
Conclusions
If the sale of "Braemore Park" was to be considered in isolation, the controversy surrounding the adjoining owner influence would lead to the conclusion that the sale would not provide reliable evidence of open market value. However when considered in conjunction with the sales of "Karee" and "Kendal ", it seems to me that the subject valuation has received a reasonable benefit of doubt in that the "Braemore Park" sale had the direct influence of reducing the initial blanket increase of 140% over the previous valuation of the sale and subject property to 80%. This had the effect of disturbing the previously existing relativity between the valuation of the subject lands and other land classifications in the district albeit not to the extent sought by the appellants.
I am persuaded by Mr Perkins' local knowledge that, with the benefit of hindsight, a significant rise in the unimproved value of the buffel country will be expected to emerge through sales evidence subsequent to the relevant date. The sale of "Buffel Park", for example, although within the relevant valuation period may have flagged that trend. It is apparent however that if it is subsequently shown that the relativity between the valuations applied to the mixed country with heavier land type influence and the red buffel country was wrong as at the date of valuation, that was not because the valuation appealed against was necessarily wrong.
As the Land Appeal Court said in Grahn v Valuer-General (1992-1993) 14 QLCR 327 at 328:
"It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis."
Then later at 328:
"Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence. …"
If, as the appellants strongly contend, the chief executive's 1 October 2001 valuations of the country west of Dirranbandi are shown, with the benefit of hindsight, to be too low in comparison, and that is not a question which is to be determined in this matter, then the chief executive's future task will be to properly interpret the available evidence at the next subsequent date of valuation.
The appellants were entitled to take the stance which they did, but I am satisfied on the sales evidence and the analysis of that evidence produced by Mr Dunk that the valuation appealed against has not been proved wrong.
Order
The appeal is dismissed and the valuation of the chief executive as at 1 October 2001 affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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