Rea v Valuer-General

[2011] QLC 72

LAND COURT OF QUEENSLAND

CITATION:

Rea v Valuer-General  [2011] QLC 72

PARTIES:

Keith Joseph Rea
(appellant)

v.

Valuer-General
(respondent)

FILE NO:

VLA322-10

DIVISION:

General Division

PROCEEDING:

Land Court of Queensland

DELIVERED ON:

18 November 2011

DELIVERED AT:

Brisbane

HEARD AT:

Rockhampton

PRESIDENT:

CAC MacDonald

ORDERS:

1.   The appeal is allowed.

2.   The unimproved value of Lot 17 on PM 105, Lot 26 on PM 170 and Lot 16 on PM 95 in the County of Pelham, Parish of Tiamby, as at 1 October 2009, is determined at Three Hundred and Seventy-five Thousand Dollars ($375,000). 

CATCHWORDS:

Annual valuation - allowance for degraded land - Valuation of Land Act 1944

APPEARANCES:

Mr KJ Rea in person
Ms L Hawkings-Guy, Principal Lawyer, Legal Services, Department of Environment & Resource Management, for the respondent

1. Keith Joseph Rea (the appellant) is the owner of property used for beef cattle grazing situated at 3271 Drumburle Road, Thangool which is located approximately 43 kms south-west of Biloela.  Mr Rea has appealed against a determination, under the provisions of the Valuation of Land Act 1944, by the respondent Valuer-General of the unimproved value of Mr Rea's land as at 1 October 2009.

2. The valuation issued originally at $435,000 but an objection by Mr Rea against that valuation was allowed and the value was reduced to $425,000.  At the hearing the respondent led evidence to an unimproved value of $390,000 ($462/ha).  Mr Rea estimated the value of the land to be $300,000. 

3. Mr Rea conducted the appeal and gave evidence in support of his grounds of appeal.  Valuation evidence was given on behalf of the respondent by Mr B Haks who is a registered valuer employed by the Department of Environment and Resource Management. 

Valuation Evidence

1. Mr Haks said that the subject property is used for beef cattle grazing with some areas with potential for improved pasture development.  He estimated the carrying capacity as 1:4.5 ha or 188 head. 

2. The property was valued by direct comparison with two sales, details of which were supplied by Mr Haks in his written report.

3. Sale 1 is a 2,888.141 ha property located approximately 15 kms east of the subject.  This property sold on 2 June 2009 for $2,800,000 ($970/ha).  Mr Haks analyzed the sale to $1,437,500 or $498/ha and applied an unimproved value of $1,400,000 or $485/ha.  The carrying capacity of the sale was 1:4.25 ha. 

4. Mr Haks said that the sale was superior in area to the subject, it was slightly superior in country mix of forest/scrub lands, slightly superior in overall carrying capacity and slightly superior in location and access, but inferior in land tenure compared with the subject land.  Approximately 65% of the sale was leasehold land.  Overall, Mr Haks considered the sale to be slightly superior to the subject land. 

5. Sale 2 is a 1,331 ha property which sold on 24 July 2009 for $2,900,000 or $2,180/ha.  The property has a carrying capacity of 1:3.3 ha.  Mr Haks analyzed the sale to $1,089,000 or $818/ha.  He applied an unimproved value of $940,000 or $706/ha. 

6. Mr Haks considered that the sale was superior in area to the subject, superior in country mix of forest/scrub lands compared with the subject, superior in overall carrying capacity, similar in location and access.  Overall Mr Haks considered the sale to be superior to the subject land.

7. Mr Haks explained that following his inspection of the subject property with the appellant on 5 October 2010, he has reclassified the subject land.  Prior to this reclassification the subject property was classified as a good forest block with an overall carrying capacity of 1:4 ha (211 head).  As a result of the reclassification, the land was now classified as -

   90 ha of ex-cultivation forest at 1:3 ha.
        70 ha of rough forest ridge at 1:10 ha
        684.137 ha of good forest at 1:4.5 ha

Mr Rea's Case

1. Mr Rea's grounds of appeal were -

   1.All neighbours except one have a lower value per hectare than subject block.  That neighbour has scrub country.  This is a forest block.

   2.Areas have been farmed in the past and that land is so badly degraded that it is worthless in that state.

   3.In the decision from my objection there has been a small allowance made but nowhere near enough to bring relativity to this block.

2. Mr Rea's grounds of objection were supplemented at the hearing with four objection points -

   ·    Common boundary with block same size       - 844 ha - $515/ha

   - 832 ha - $432/ha

   ·    The subject area has areas of degraded land

   ·    Extreme low brix in these areas

   ·    Poor dam sites.

1. Mr Rea’s principal ground of objection to the valuation was that he considered the unimproved value of the subject land as at the relevant date to be out of relativity with the unimproved value of the property lying immediately to the north of the subject land (the Woodall property).  The subject is now valued at $462/ha whereas the Woodall property is valued at $432/ha.  Mr Rea said that he shared a common boundary of approximately 3 kms with the Woodall property and, in his opinion, the properties were very similar except that the Woodall property contains no degraded land.  Mr Rea's property has scattered areas of land totalling approximately 90 ha which had been cultivated by the previous owner.  Those areas were now degraded as a result of the cultivation and require a considerable amount of work on Mr Rea's part in order to restore carbon into the land and to grow grass there.  Until that work was carried out, which would take some considerable time and money, that area of his property is not suitable for grazing.  He therefore disagreed with the carrying capacity of 1:3 ha that had been attributed by the respondent to this area.   

2. Mr Rea also disagreed with the size of the part of his property that had been classified as rough forest ridge, saying that that classification should have been extended further into the south-eastern corner of his property.  That area should therefore be larger than the 70 ha identified by Mr Haks.  Further, Mr Rea did not agree with the description of the balance area of his land as 'gently modulating'.  He said that they were harder ridges that ran down to creek flats. 

3. Mr Rea also said that there was a seepage problem with his dams - the dams run dry within weeks of heavy rain.  Nevertheless, he has two bores available and to date it has not been necessary to truck water onto the property.  Mr Haks assessed the water on the property as sufficient. 

4. Mr Haks' evidence was that the Woodall property had been valued at a lower amount than the subject for a number of reasons –

   ·    The Woodall property has a higher area of mountainous country along its eastern boundary than the subject. 

   ·    The Woodall property was severed into two parts by a road, which was a detriment to that property. 

He had classified the Woodall property into 3% unavailable rich country;  25% with a carrying capacity of 1:10 ha and 72% with a carrying capacity of 1:4 ha.  The overall classification of the Woodall property was 1:4.9 ha which gave a total carrying capacity of 171 adult equivalent head of cattle. 

Conclusions

1. The carrying capacity of the ex-cultivation areas (90 ha or 11%) on the subject has been assessed by Mr Haks at 1:3 ha on the basis that it has the potential to be improved with pasture and carry that level of stock.  Having heard Mr Rea's evidence as to the degraded state of that land I am satisfied that that land cannot currently run 1:3 ha.  The land in question is capable of remediation and when that is done, it may well have a carrying capacity of 1:3 ha.  The prudent purchaser would be aware of that potential.  However, I do not consider that a prudent purchaser would pay the same amount for the property in its degraded state as would be paid if it were remediated.  I therefore consider that an allowance should be made to reflect the time, expense and work necessary to reinstate the degraded areas.  No evidence was given as to the cost of the necessary work.  That being the case, I consider that the most appropriate way to calculate an allowance is to ease the carrying capacity attributed to the relevant land from 1:3 ha to 1:4.5 ha.  This will reflect both the cost of restoring the land and the potential that the land has to be more productive.

2. If that adjustment is made, the carrying capacity of the 90 ha becomes 20 and the overall carrying capacity becomes 178 head or 1:4.75 ha.  The valuation should be adjusted accordingly.  Doing the best I can, I have determined that the appropriate value to apply is $445/ha.  The valuation of the property thus becomes $375,640 or $375,000 rounded.

3. That figure values the subject property at a superior rate per hectare to the Woodall property.  This is appropriate as I have accepted Mr Haks' evidence that there is more rough mountainous country on the Woodall property than the subject and the Woodall property is severed by the road through it. 

4. I do not consider that the evidence has established any other error in the valuation under appeal.  The sales evidence supports the value proposed.  My conclusion is then that the appeal should be allowed and the unimproved value of the subject be determined at $375,000 ($445/ha).

ORDERS

1.The appeal is allowed.

2.The unimproved value of Lot 17 on PM 105, Lot 26 on PM 170 and Lot 16 on PM 95 in the County of Pelham, Parish of Tiamby, as at 1 October 2009, is determined at Three Hundred and Seventy-five Thousand Dollars ($375,000). 

CAC MacDONALD

PRESIDENT OF THE LAND COURT