QNI Metals Pty Ltd & QNI Resources Pty Ltd v Chief Executive, Department of Natural Resources and Mines

[2002] QLC 36

LAND COURT

BRISBANE

17 MAY 2002

Re:     V2001/0114

An Appeal against an Unimproved Valuation
  Valuation of Land Act 1944
  Local Government:    Thuringowa

QNI Metals Pty Ltd and QNI Resources Pty Ltd
v.

Chief Executive, Department of Natural Resources and Mines

DECISION ON COSTS

1. Following a successful appeal to the Land Court in this matter the appellant now seeks an award of costs in its favour.  The valuation contended for by the Chief Executive was $4,235,000 while the landowner provided an estimate of unimproved value at $1,012,250.  However, through its valuer Mr Craig Stack, it led evidence at the hearing to a figure of $1,225,000.  In a decision of 8 March 2002, the Court made a determination at this last-mentioned amount.
   Power to Award Costs

2. Under the relevant costs provisions of the Land Court Act 2000 (s.34) and the Valuation of Land Act 1944 (s.70), a discretion exists in the Court to award costs to the appellant in this case. This discretion is activated by the determination being on the appellant's side of the median between the parties' figures initially placed before the Court. Section 70 of the Valuation of Land Act  provides:

   "70 Costs of appeal against valuation

   (1)  Where the value of land as finally determined upon an appeal against the valuation is the value stated by the owner in the owner’s notice of appeal against the valuation, or is nearer to that value than to the valuation appealed against, costs shall not be awarded against the owner.

   (2) Otherwise costs shall not be awarded against the chief executive."

1. Judicial guidance has been provided in a number of cases as to the manner in which this discretion is to be exercised.  Key considerations are well summarised by the Land Appeal Court in Scougall v. Department of Natural Resources (1996-97) 16 QLCR 536 at 556:

   "          Historically, the Land Court and Land Appeal Court have been reluctant to award costs in annual valuation matters except in extraordinary circumstances.

   In Bowden v The Valuer-General (1980-81) 7 QLCR 138 the Land Appeal Court said:

'Easy access to the Land Court to air grievances and have valuations reviewed is, as we have already stressed, most desirable in revenue cases, and such access should be available without fear of costs being awarded to either party except in special cases.' (at 147)

Decisions by the Land Appeal Court in cases such as Santos Ltd v The Valuer-General (1989) 12 QLCR 231 and Hymix Industries Pty Ltd v The Valuer-General (1990) 13 QLCR 173 support the conclusion of the former President of the Land Court that:

'the attitude which the Court should take in the exercise of its discretion is primarily one of restraint which, speaking broadly, may be exercised against the Valuer-General if satisfied that he has acted arbitrarily or capriciously and against the owner if satisfied that he has acted in a frivolous or vexatious manner.' (Queensland Landmark Developments Limited v Valuer-General (1992) 14 QLCR 168 at 171)."

1. Both Bowden and Hymix illustrate a further aspect to be taken into account in considering whether an award of costs should be made.  That aspect concerns the complexity of the case.  That complexity may relate to the law or to the facts and to the extent to which either may be within the knowledge of the landowner.  In Hymix Industries Pty Ltd, the Land Appeal Court concluded that:

   "... The evidence has demonstrated that some complexity was involved and in our opinion there still remains some doubt as to the correct value of this land.  In the circumstances we are of the opinion that no order should be made."  (p.186)

1. A similar approach was adopted in Bowden where the Land Appeal Court also observed:

   "Within our knowledge there have not been many valuation appeals where a party has obtained an order of costs in his or its favour."  (p.146)

Although that observation was made in 1980, subsequent authorities indicate that it still holds true today.

1. The essential question then is whether the Chief Executive acted in an arbitrary or capricious manner.  "Arbitrary" conveys the meaning that the figure was "... derived from mere opinion or random choice; capricious; unrestrained; despotic; ..." (The Concise Oxford Dictionary, tenth impression, (1980).
   The Submissions

2. The appellant contends that the primary issue in the valuation process, that is the assessment of the highest and best use of the land, did not receive proper consideration by the respondent; instead it was determined in an arbitrary and capricious manner.  It alleges the issue did not receive proper assessment from Mr Schy, the respondent's valuer, that submission being based on the following contentions:

   "i       Mr Schy, as a valuer in Townsville for many years, must have been aware of the closure of the Greenvale Mine which supplied the nickel processing plant on the subject land and its subsequent sourcing of ore from overseas.  Yet he clearly never considered this when assessing what use would be made of the land in its hypothetical undeveloped state.  Instead he merely assumed, without any investigation, that QNI or some other party would, at the relevant date, establish a nickel processing plant on the land.

   iHe never properly considered the question of whether any other single use industrial complex would comprise the highest and best use of the site.  Indeed, it has to be submitted that Instead of conducting a proper inquiry into the likelihood of a market for such a use, he acted instead on fanciful notions of what could occur.  He then compounded this by ignoring the issue of worsement arising from the existing structures and tailings dams on the land.

   iMr Schy presented an alternative use of 'further subdivision into not only residential and rural residential lots, but also into more intensive farming lands which could utilise the 8638 megalitres of water available at no cost to the owners of the site.'  Again this opinion was expressed without any proper assessment.  He never considered at all the question of whether that water would be available for uses other than a nickel processing plant.  He certainly never presented any evidence showing that the land was suitable for farming and he again ignored the issue of worsement."

1. Certain of the respondent's points in reply to these contentions relate more to aspects that may properly be raised in further appeal, rather than in this issue as to costs.  Most relevant to the specific costs question are:

   "i        Mr Schy (a resident of Townsville) was aware that the nickel ore was no longer being obtained from the Greenvale Mine but was also aware that it was being obtained from the nearby French possession of New Caledonia. 

   ·Mr Schy considered that closure of the Greenvale Mine was of greatly reduced relevance because of the continuing availability of the New Caledonia ore."

   ...

   "i       The question of an alternative single use site as stated was examined from the context of future strategic industrial land for Townsville.  Reference was made to the Townsville City Council purchasing land at Woodstock for this purpose, the Queensland Government acquiring land in the Stuart area for a large industrial site land bank.  If at the date of valuation, and if the site was vacant, then these parties may have purchased the QNI site.  The fact of there being a need for a base load power station site for Townsville was also considered.  It was pointed out that the subject would be ideal for all these alternatives because of the zoning and infrastructure currently in place."

   ...

   "i       It was stated in evidence that all or a major allocation of 8,638 megalitres of water could be reasonably assumed to be available for use by a rural subdivision.  There was no reason not to assume the water exclusively allocated to QNI would be available to a subdivision of the subject."

Consideration

1. Authorities indicate that a successful party has a high hurdle to negotiate to achieve an award of costs in its favour.  It is relatively rare for such to be made in the Valuation of Land Act matters.

2. The appeal against valuation in the present case is rather complex, involving a range of valuation and legal issues.  The appellant's approach, ultimately accepted by the Court, was largely founded on the expert evidence of Mr Muller.  He concluded that the site in its notional unimproved estate did not have a highest and best use as a nickel refinery.  While this conclusion was accepted by the Court, the expert analysis of Mr Muller would not have been available to Mr Schy when completing his valuation.  The Chief Executive was entitled to have the matter subjected to cross-examination at the hearing to test the validity of this proposition, even though no expert rebuttal evidence was tendered.  Also, the grounds of appeal lodged by the appellant did not specify that the subject site did not, at the relevant date, have a highest and best use as a nickel refinery in its unimproved state.  Other related matters complicating the valuation task included the fact that the refinery was continuing operation with sources from overseas suppliers – this perhaps makes understandable Mr Schy's primary valuation approach; that there was a commercial benefit in continuing in its present manner and the subpoenaed valuations supplied to the respondent indicated a value supportive of that tendered by Mr Schy.  Again, while the Court accepted an explanation by the appellant on each of these matters consistent with the appellant's contended valuation, such does not point to arbitrary conduct by the respondent.

3. Other factors raised by the appellant in the costs submission (and found in its favour in the valuation determination) are of lesser significance.  These include -

   ·The alternative single use industrial site.  Although this was not fully supported by analysis, it appeared to be a fall-back position by the respondent. 

   ·Worsement.  Given the initial justification for Mr Schy's primary approach as discussed above, it follows that worsement was not required to be considered in that approach.

   ·The continued grant of water permits.  Whilst these were not assured in any alternative uses to the nickel refinery, the presence of the aquifer in itself would remain a consideration in assessing the likelihood of access to water permits.

1. Individually or collectively, these additional items do not suggest arbitrary or capricious conduct on the part of the Crown valuer or, indeed, the wider Crown case to justify a costs award.
   Decision

2. Accordingly, no award of costs is made in the circumstances of this case.

RP SCOTT
MEMBER OF THE LAND COURT