Peter Squire v Department of Natural Resources and Mines

Case •

[2008] QLC 136

•

2 July 2008

LAND COURT OF QUEENSLAND

CITATION: Peter Squire v Department of Natural Resources and Mines  [2008] QLC 0136
PARTIES: Peter Squire
(applicant)
v.

Chief Executive, Department of Natural Resources and Mines
(respondent)
FILES NO: AV2005/1624 and RV2005/1625
DIVISION: Land Court of Queensland
PROCEEDINGS: Appeals against annual and rental valuations under Valuation of Land Act 1944 – General Division
DELIVERED ON: 2 July 2008
DELIVERED AT: Brisbane
HEARD AT: Emerald
MEMBER: Mrs CAC MacDonald
ORDER:

1.    The appeals are dismissed. 

2.    The unimproved value of Lot 3 on Crown Plan BU 52 GHPL 37/3198 in the County of Buckland, Parish of Hawthorne is affirmed at Seven Hundred and Seventy Thousand Dollars ($770,000) as at 1 October 2004. 

CATCHWORDS: Valuation – Valuation of Land Act – acceptable sales – relativity – onus of proof
APPEARANCES: Mr P Squire on his own behalf
Mr W Isdale, Crown Law, for the respondent

  1. Peter Squire (the appellant) is the owner of a cattle grazing property, Buckland Plains, situated about 108 kms south-west of Springsure.  Pursuant to the provisions of the Valuation of Land Act 1944, the Chief Executive, Department of Natural Resources and Mines (the respondent) determined the unimproved value of the property at $770,000 as at 1 October 2004.  Mr Squire has appealed against that determination, estimating the unimproved value of his land to be $247,000.  There are two valuations under appeal, each of $770,000, an annual valuation and a rental valuation. 

  2. Buckland Plains has an area of 3,517.249 ha.  Mr PD Schefe, a registered valuer who gave evidence on behalf of the respondent, described the property as an irregularly shaped holding severed by two roads.  The property is predominantly watered by dams and bores.  Access to the land from Springsure is via a dual carriageway of formed earth and gravel road.  The road is not trafficable in all weathers and is considered to be inferior to district standard.  Telephone and electricity are connected to the property. 

  3. Mr Schefe classified the subject property as follows -  

    ·    approximately 800 ha (23%) of brigalow, sandalwood and some box

·    approximately 850 ha (24%) of flooded coolibah creek flats including approximately 450 ha (13%) of downs cultivation valued as flooded coolibah creek flats

·    approximately 1,450 ha (41%) of easy black soil downs, some silverleaf ironbark

·    approximately 417 ha (12%) of ironbark ridges

He estimated the carrying capacity of the property at 1 mixed head of cattle to 5.88 ha (598 head total).

  1. As the land is held under a Grazing Homestead Perpetual Lease issued under the Land Act 1994 its use is restricted to grazing and agricultural purposes and Mr Schefe valued it as a farming property under s.17 of the Act.  Mr Schefe considered its highest and best use to be for grazing purposes with opportunity cropping.  He valued the land at $770,000 ($219/ha) by direct comparison with two sales. 

  2. The grounds of appeal were, in summary, that -

    ·    the market evidence did not support the applied value because all the facts relating to property sales in the area had not been taken into consideration;

    ·    due to the new vegetation management laws in Queensland, if the scrub country on the subject were still in its natural state it could not be touched and would therefore have an extremely low market value;

·    there were several properties in the area with similar types of country valued at an extremely low rate in comparison with the subject which was on an extremely high valuation in comparison to these properties;

·    the respondent had in the past said that smaller holdings like the subject were valued higher because there are more buyers for smaller holdings.  This was no longer the case because buyers look to purchase larger areas with smaller land valuations in preference to small holdings with high valuations.  Small holdings like the subject were becoming less viable and harder to sell due to the higher rates and rent and lower productivity;

·    properties with prime softwood scrub country in the district range from

1.        Outstation   $46.87

2.        Mount Vexation           $106.31

3.        Glentana  $126.00

4.        Mantuan Downs            $81.36

5.        Conniston   $70.41

6.        Wheelholme                $119.66

The subject scrub country is a poorer quality. 

·    Mantuan Downs has identical downs country to the subject but their valuations do not compare

1.The subject $230 [The valuation was reduced on objection to $219/ha, which is the value under appeal]

2.        Mantuan Downs $81.36

·    due to the fall in world evaporation rates there is less moisture in the atmosphere to come back down as rain and therefore the carrying capacity of this country is declining 

·    approximately a quarter of the area of the subject is now rendered valueless because of the new vegetation management laws in Queensland

Relevant Legal Principles

  1. Section 13 of the Valuation of Land Act requires the respondent to decide the unimproved value of land to be valued for the Acts under which local authorities are established.  "Unimproved value" is defined in s.3 of the Act which provides in subs.(1)(b) that, in relation to improved land, unimproved value means 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, at the time as at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist.

  2. In Grahn v Valuer-General (1992-93) 14 QLCR 327 at 328, 329 the Land Appeal Court said that previously decided cases were authority for the following propositions –

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

    (b)the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).

    (c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56).

    (d)  Once it is shown that: 

    (1)in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact;  or

    (2)the valuation was made by a method fundamentally erroneous,

    the presumption created by section 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7).

    (e)    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 (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46).

    (f)     If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it)."

Sales Evidence

  1. Sale 1 is a 4,193 ha property, Eumara, which sold on 30 August 2002 for $3,100,000 ($739/ha).  Mr Schefe analysed the sale to $1,494,621 or $356.46/ha and applied an unimproved value of $333.89/ha.

  2. Mr Schefe described the sale property as, overall, superior to the subject.  The sale was superior to the subject in location, access (all weather bitumen access to Springsure), country type (25% developed brigalow blackbutt scrub with some box influence and 75% developed flooded coolibah forest), carrying capacity (1 to 5.4 ha for the sale and 1 to 5.88 ha for the subject) and availability of water.  It was similar to the subject in that both properties have telephone and electricity available.

  3. Mr Squire, who presented his case and gave evidence at the hearing, also considered that Eumara was superior to the subject land.  He said that Eumara was in a higher rainfall area, has black soil cultivated flats which are superior to his soil, and the flooded coolibah country on Eumara floods regularly whereas the flooding on the subject is a 1 in 25 year event.  In addition, Eumara has school bus access and mobile phone reception is available. 

  4. The parties agree that the sale is superior to the subject.  Mr Schefe said that he had allowed for the differences in the properties by applying $219/ha to the subject as compared with $333.89/ha applied to the sale and Mr Squire's evidence did not persuade me that an insufficient allowance had been made.  The value applied by Mr Schefe to the sale is consistent with the analysed unimproved value of that land, $356.46/ha.  It is also consistent with the beast area value for each property - $1287 for the subject and $1803 for the sale.  I conclude, therefore, that the unimproved value applied to the subject is supported by the sale. 

  5. Sale 2 is a 4,042 ha property, Lexington, which sold on 10 October 2003 for $3,400,000 ($841.17/ha).  Mr Schefe analysed the sale to $2,267,108 ($560.89/ha) and applied an unimproved value of $1,115,000 ($284/ha).  He described the sale as superior to the subject. 

  6. I do not consider that this sale should be used in the valuation of the subject.  The sale analysed to an unimproved value of $560.89/ha yet Mr Schefe applied an unimproved value of $284/ha which is less than half the analysed value per hectare.  In the absence of any explanation from Mr Schefe, the difference between the applied and analysed values leads me to infer that he considered that the sale price was well above market value.  Moreover, twenty per cent of the sale area is cultivation land and as such is not comparable with the subject.  I consider therefore that the sale is not useful for the valuation. 

  7. Mr Squire challenged the respondent's sales evidence on the basis that there were other sales which the respondent had not mentioned that were more relevant to the valuation of his property – Kurrajong, Glenrock, Beauchamp, Box Arm, Vandyke and Collinlea.  He said that a number of the sales took place during the dry period when people were paying to get grass.  He had bid at auction for a lightly improved well grassed property, Box Arm, for that reason.  That property (1,604 ha) sold to another buyer for $1,175,000 in June 2003.  Mr Squire also said that a number of sales including the property next door to the subject were not attracting a bid when put up for auction.  There was no further information about these failed sales. 

  8. Mr Schefe said that he had not used the Box Arm sale because the property was much smaller than the subject and he considered it to be in a different market.  That sale analysed to $511/ha and the applied unimproved value as at 1 October 2004 was $355/ha.  Mr Schefe did not have the details with him in Court but, similarly, he thought that Rosebank was much smaller than the subject, Kurrajong was an older sale and Glenrock was a much larger property than the subject and comprised a large proportion of unavailable mountain country. 

  9. As neither Mr Squire nor Mr Schefe provided any detailed information about those properties nor their prices, I consider that there was not sufficient evidence to enable me to say that these sales should be used in the assessment of the value of the subject. 

Relativity

  1. Mr Squire identified six properties where the unimproved values were, he considered, out of relativity with the value placed on the subject property.

  2. Outstation (part of Karella) has an unimproved value of $46.87/ha.  The evidence established that the total area of the property was 36,270 ha which Mr Schefe classified as follows -  

    3,400 ha (9%) developed scrub
         910 ha (3%) good open downs
         1,440 ha (4%) reasonable forest
         30,520 ha (84%) unavailable mountain country

  3. Mr Schefe attributed no value to the unavailable mountain country.  On that basis the remaining 5,750 ha, which consisted of 59% developed scrub, 16% good open downs and 25% reasonable forest, would be valued at $296/ha. 

  4. Mt Vexation has been valued at $1,600,000 or $106.31 ha.  It has an area of 15,051 ha which was classified by Mr Schefe as –  

    3,022 ha (20%) good forest country

    5,784 ha (38%) reasonable scrubby forest country

    2,245 ha (15%) hard forest country

    4,000 ha (27%) unavailable mountain ranges

  5. Mr Isdale submitted that if the hard forest country and unavailable mountain ranges were taken out of the equation, the balance 11,051 ha would be valued at $144.80/ha which is less than the $219/ha attributed to the subject.  However, Mt Vexation is nearly five times larger than the subject so that comparison of the two properties is difficult.

  6. Mr Schefe said that comparing the average rate per hectare of Mt Vexation with the average rate per hectare of the subject did not take into account all of the compositions of country and the attributes and disabilities associated with Mt Vexation. 

  7. Glentana (15,841 ha) has an unimproved value of $2,000,000 or $126.25/ha.  Mr Schefe classified the property as -   

    2,881 ha (18%) good scrub country

    5,000 ha (32%) reasonable forest country

    4,130 ha (26%) reasonable scrubby forest

    3,830 ha (24%) mountain ranges

  8. Mr Squire considered that Glentana was comparable with his property because there is a lot of similar country on the two properties, although there was some valueless country on Glentana.  He disagreed with the respondent's valuer that the better parts of Glentana were inferior to the subject. 

  9. Mr Schefe said that Glentana is inferior to the subject.  Although the good parts of Glentana were comparable with the subject, the mountain country (24%) on Glentana added no value to the property.  The balance of the property averaged $166/ha which was comparable with the subject at $219/ha because Glentana is much larger than the subject property.  This meant that there would be fewer potential purchasers for Glentana in the market and the rate paid per hectare would be lower. 

  10. Mantuan Downs is a 141,000 ha property with an unimproved value of $8,300,000 or $58.72 ha.  Mr Squire estimated that there were about 70,000 acres of downs country on Mantuan Downs, a lot of flooded country which is more flooded than his country and a lot of scrub country which was similar to better than his.  He also considered that not all of the mountain country was unavailable as there was some beautiful country in the gorges with a lot of feed available. 

  11. Mr Schefe said that 21,294 ha (15%) of Mantuan Downs is unavailable mountain country and 49,314 ha (35%) is brigalow scrub which cannot be cleared because of the provisions of the Vegetation Management Act with the result that the value of that area has been significantly reduced. 

  12. Two properties, Coniston and part of Troopers Bluff have been combined for the purpose of the valuation described as Coniston.  The total area is 10,652 ha which has an unimproved value of $750,000 or $70.41/ha.  Mr Schefe classified the combined property as - 

    400 ha (4%) developed brigalow scrub

    1,400 ha (13%) good forest

    750 ha (7%) good open downs

    4,000 ha (38%) harder ironbark forest – most of which is in the Troopers Bluff area

    4,102 ha (39%) unavailable mountain – virtually all in the Troopers Bluff area

  13. Mr Schefe acknowledged that if the Coniston property were valued separately it would be comparable with the subject, which it adjoins, but said that the overall valuation is affected by the inclusion of Troopers Bluff.  Mr Isdale submitted that if the mountain country were excluded, the Coniston property would be valued at $117.56/ha. 

  14. Mr Squire's evidence established that the part of the Coniston valuation which adjoins his property has similar country to Buckland Plains although the types of country in each are in different proportions.  However there was not sufficient evidence to enable me to compare the rate per hectare attributed to that part of Coniston with the subject's rate per hectare and, therefore, I am unable to say whether the valuation of that area is in relativity with the subject land.

  15. Wheelholme (4,095 ha) shows an average value of $119.66/ha.  Mr Schefe classified the property as -   

    200 ha (5%) good downs valued as grazing country
      650 ha (16%) good brigalow scrub
      2,050 ha (50%) reasonable ironbark forest
      1,195 ha (40%) hard mountain country

  16. Mr Schefe considered this property to be greatly inferior to the subject because of the large component of hard mountain country on Wheelholme which, effectively, was of no value.   

  17. Mr Squire challenged the classification of 40% of this property as unavailable mountain country because, he said, he was familiar with the property and there was a lot of usable country in that 40%. 

  18. There is some confusion as to the percentage attributed by Mr Schefe to the hard mountain country on Wheelholme.  If the area of hard mountain country is 1,195 ha, that amounts to about 29% of the property, not 40%, and Mr Squire's challenge to the quantification of hard mountain country at 40% would be correct.  However, the consequence remains that if 1,195 ha is the correct area of hard mountain country and that is excluded, the balance country (2,900 ha) would be valued at $169/ha.  The subject (3,517 ha) is valued at $219/ha. 

  19. The difference between those rates per hectare was not explained.  They may be attributable to the different quality of country on the properties although it is noted that Mr Squire said that he thought that the two properties had the same earning capacity.  In the absence of any further evidence, my conclusion is that although there may be some discrepancy between the relative values of the subject and Wheelholme there is not sufficient evidence to enable me to say that that has been proved.   

Conclusions as to relativity submissions

  1. Although on the face of it the average value applied to the relativity properties is lower than the unimproved value of the subject, I consider that a comparison made on the basis of an average rate per hectare does not reflect the differences between those properties and the subject.  In particular each of the relativity properties has substantial areas of unavailable country of little or no value because of the terrain and, in the case of Mantuan Downs, because of the effect of the Vegetation Management Act.  If the poorest country on Mt Vexation and Glentana is treated as valueless, the rates per hectare for the balance areas are less than those attributed to the subject even though those balance areas include large portions of good quality country.  However, each of those properties is larger than the subject and Mr Schefe's evidence was that they would, therefore, achieve a lower rate per hectare than the subject.  While Mr Squire challenged that opinion, he did not bring any evidence to prove that it was inaccurate and therefore, I have accepted Mr Schefe's evidence in this regard.    

  2. Mr Squire made the point that larger properties such as Mantuan Downs and Glentana have areas of land larger than Buckland Plains where the quality of the country is similar to that on Buckland Plains yet the valuation per hectare on those properties was lower than for Buckland Plains.  However, if the valueless areas are excluded, the balance areas of Mantuan Downs and Glentana are still considerably larger than the subject.  That difference in size is, I consider, sufficient to warrant the difference in the rate per hectare applied to those properties as compared with the subject.  On the evidence before me, therefore, I do not consider that it has been established that the value of the subject is out of relativity with those properties. 

  1. I do not consider that the uncertainty as to the relativity between two properties, Wheelholme and Coniston, and the subject is sufficient to establish that the valuation of the subject is incorrect.  As cited above (at [7]) the Land Appeal Court in Barnwell said that while proper relativity is desirable, it is untenable to adopt a value for one parcel in relativity with another which has no sound basis.  The effect of the evidence before me was that the subject valuation is consistent with the admittedly limited sales evidence and is in relativity with all the properties discussed with the possible exception of Wheelholme and Coniston.  In those circumstances, I do not consider that those possible discrepancies establish an error in the valuation under appeal. 

Other Grounds of Appeal

  1. Mr Squire referred to the impact of the vegetation management laws on his property.  However, he conceded that he did not intend to clear the property any further and that there would be no real economic gain in doing so.  It appears therefore that little of his property is adversely affected by the legislation so that the value of his property has not been diminished.

  2. Mr Squire also asserted that small holdings like the subject were becoming less viable and harder to sell because of the higher rents and rates and lower productivity. 

  3. Mr Schefe's response was that there are many more potential purchasers at the smaller end of the scale than for a larger property with a price of $20,000,000 to $30,000,000.  Further, he said there was no discrimination in the market place between freehold and leasehold properties.  The same increase (100%) had been applied across the board to Bauhinia Shire so that existing relativities had been maintained.  The only other evidence relevant to this ground of appeal was to the effect that as a result of changes to the method of calculating rentals on State leases, the rents are tied to the 2001 valuation and are capped to the lesser of 1½% of the current valuation or a maximum increase of 20% per annum on the previous rent, for the next 10 years.  This indicates that the increases in rent will not be as substantial as they were prior to these changes.  This ground of appeal has not been proved.

  4. The appellant also said that the carrying capacity of his property was declining because of the fall in world evaporation rates.  Again, there was no evidence relevant to this ground of appeal other than by Mr Schefe who was of the opinion that if the world evaporation rates were falling, all the properties in the area of the subject would be similarly affected.  This ground has not been established. 

Conclusions

  1. I do not consider that the appellant can succeed in these appeals. Section 33 of the Valuation of Land Act provides that any valuation made by the Chief Executive under the Act shall be deemed to be correct until proved otherwise on appeal.  Section 45(4) provides that the burden of proving every ground of appeal shall be upon the owner. 

  2. Although the sales evidence is not ideal, I have found that Sale 1 is sufficiently comparable with the subject to enable it to be used in the valuation of the subject.  I have also found that Mr Schefe has allowed for the differences between the sale and the subject in the unimproved value he has applied to the subject as compared with the sale.  Moreover the appellant brought no persuasive evidence of other sales to establish his submission that the market evidence did not support the applied value.

  3. Further, I do not consider that it has been proved that the valuation of the subject is out of relativity with the valuations of the six properties identified by the appellant.

  4. My conclusion is, therefore, that the appeals should be dismissed. 

Orders

1.   The appeals are dismissed. 

2.The unimproved value of Lot 3 on Crown Plan BU 52 GHPL 37/3198 in the County of Buckland, Parish of Hawthorne is affirmed at Seven Hundred and Seventy Thousand Dollars ($770,000) as at 1 October 2004. 

CAC MacDONALD

MEMBER OF THE LAND COURT

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Mack v Commissioner of Stamp Duties (NSW) [1920] HCA 76
Brisbane City Council v the Valuer-General [1978] HCA 40