Ross v Department of Natural Resources and Mines
[2003] QLC 77
•31 October 2003
LAND COURT OF QUEENSLAND
CITATION: Ross v Department of Natural Resources and Mines [2003] QLC 0077 PARTIES: Donald N & Janice C Ross
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NOS: AV2002/0525; RV2002/0526 and AV2002/0107 DIVISION: Land Court of Queensland PROCEEDING: Appeals against unimproved valuations - Valuation of Land Act 1944 - Tambo and Murweh Shires DELIVERED ON: 31 October 2003 DELIVERED AT: Brisbane HEARD AT: Charleville MEMBER Mr RE Wenck ORDERS: AV2002/0525 - The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value determined in the amount of Four Hundred and Sixty Thousand Dollars ($460,000) as at 1 October 2001.
AV2002/0526 - The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value determined in the amount of Five Hundred and Ten Thousand Dollars ($510,000) as at 1 October 2001.
AV2002/0107 - The appeal is disallowed and the unimproved valuation of the chief executive in the amount of Ninety-six Thousand Dollars ($96,000) as at 1 October 2001 is affirmed.
CATCHWORDS: Statutory Valuation - Unimproved value - Valuation of Land Act 1944
Valuation - Sub market areas - Sales evidence - Mass valuation methodology - Previous valuation - Relativity between valuations
Relativity - Alteration to previous relativity - Between subject property and others - Between sub market areas - Effect of Land Court determination of representative cases at relevant date of valuation
Classification of country - Effect of mistake in valuer's written report - Whether valuation appealed against was affectedAPPEARANCES: Mr DN Ross for the applicants
Mr K Fisher, Crown Law, for the respondent
Background
These appeals are against valuations of the chief executive ("the Department"), as at 1 October 2001, of various parts of the property "Byrgenna", the majority of which lies within Tambo Shire and part within Murweh Shire, about 60 km north-west of Augathella.
As is relevant to these appeals "Byrgenna" comprises an aggregation of about 12,650 ha. It is made up of two leases. One is GHPL3/5966 containing 11,550 ha about 8,756 ha of which lies within Tambo Shire and about 2,794 ha in Murweh Shire. The second lease is Special Lease TL215381 with an area of about 1,100 ha, all of which is in Tambo Shire.
Pursuant to the Valuation of Land Act 1944 (the Act) the Department issued separate valuations of the land contained in the two leases, for the purpose of calculation of rent. As I understood the situation, the owners objected to both valuations but being satisfied with the amount to which the Department reduced the valuation of the Special Lease did not appeal against that decision. Although a reduction was also given on the valuation of the GHPL, the appellants remained dissatisfied with the reduced valuation and appealed against it. That appeal now has the reference RV2002/0526.
The whole of the aggregation was required to be valued by the Department for rating purposes. However, pursuant to sub-s.(1)(c)(i) of s.35 of the Act, unless there is a direction otherwise - "where land in respect of which 1 valuation would otherwise be made under this Act is situated partly in 1 area" (the area of a local government) "and partly in another, the parts that are in such separate areas ... shall be separately valued."
As a consequence separate valuations were issued for the land in Tambo Shire (including the Special Lease) of an area comprising 9,855 ha then the 2,794 ha in Murweh Shire.
The Tambo Shire section valuation was reduced by the Department as a result of the appellants' objection, while the objection against the valuation of the Murweh Shire section was disallowed. Being dissatisfied with both of those decisions, the owners appealed against each valuation. Those appeals against the valuations for rating purposes have the references AV2002/0525 (Tambo Shire) and AV2002/0107 (Murweh Shire) respectively.
The appeals were heard in Charleville on 2 April 2003. Mr Ross appeared and conducted the appellants' case. The parties agreed that the appeals should not be determined until after decisions were delivered by the Court on a number of other cases which had been selected by other relevant parties as representative of a group of appeals in Murweh Shire, lodged by Mr Dominic Devine of Devine Agribusiness Charleville. Those appeals were subsequently heard and decisions delivered on 16 September 2003 (Bauer & Ors v Department of Natural Resources and Mines [2003] QLC 0064).
In these matters Mr GG Naish, a registered valuer employed by the chief executive, took responsibility for the valuations appealed against. Mr Naish had also been responsible for some of the valuations involved in the representative cases and later gave evidence in those matters.
Valuations appealed against and Grounds of Appeal
AV2002/0525 (Tambo Shire Rating Valuation)
The land involved is described as Lot 23 GW58 and Lots 18, 20, 21, 25 GW65: part of GHPL3/5966 and Lot A GW68:TL215381 Parish of Byrganna, containing 9,855 ha.
The valuation appealed against is in the amount of $510,000. Mr Naish explained that the previous valuation, as at 1 October 1998, had been $275,000 and that valuation had initially been increased to $550,000 (a 100% increase) as at October 2001. The valuation was reduced to $510,000 "following the objection conference and re-examining the subject's relativity compared to the sales ..."
The appellants' estimate of unimproved value in the notice of appeal is $450,000.
The grounds of appeal are as follows:
"1. Comparison to other valuations in area.
2. No consistency in the reductions that have been made in alterations to original valuations in area.
3. Do not agree with country classifications by the valuer in regards to 'downs country' and feel that percentage of timbered country has been underestimated."
RV2002/0526 (The GHPL - Rental Valuation)
This land is described as Lot 23 GW58, Lots 18, 20, 21 and 25 GW65 - (in Tambo Shire) - and Lot 27 GW66 - (in Murweh Shire) - being GHPL3/5966, Parish of Byrganna, containing 11,550 ha.
The valuation appealed against is in the amount of $563,000. The previous departmental valuation as at 1 October 1998 had been $306,000. That valuation had initially been increased to $610,000 as at 1 October 2001. The valuation was reduced to $563,000 "following the objection conference and re-examining the subject's relativity compared to the sales ..."
The appellants' estimate of unimproved value in the notice of appeal is $460,000.
There were three grounds of appeal, the first two being identical with those in Appeal AV2002/0526. The third ground was as follows:
"3.Type of country does not correspond to valuation and do not agree with overall classification by the valuer."
AV2002/0107 (Murweh Shire Rating Valuation)
This land is described as Lot 27 GW66 - part of GHPL3/5966, Parish of Byrganna, containing 2,794 ha.
The valuation as at 1 October 1998 had been in the amount of $48,000 and had been increased to $96,000 as at 1 October 2001. That is the valuation appealed against when the appellants' objection was disallowed.
The appellants' estimate of unimproved value in the notice of appeal is $55,000.
The grounds of appeal are as follows:
"1.Do not agree that the market value has doubled in the period prior to valuation date.
2. The valuation does not have any relativity when compared to other properties in the area. The reason for this being based on country type - particularly on an unimproved basis."
Classification of Country
Confusion developed during the hearing as to the correct classification of some of the land contained in the separate valuations. The following classifications were contained in Mr Naish's reports:
RV2002/0526 - The GHPL containing 11,550 ha located in both Tambo and Murweh Shires -
7,155 ha(62%) downs to open forest with red ridges
3,293.502 ha(29%) scrub (gidyea to mixed scrub)
1,099.717 ha ( 9%) channels
AV2002/0526 - Murweh Shire section of GHPL -
2,794 ha(100%) mixed scrub
AV2002/0525 - Tambo Shire rating valuation, balance of GHPL together with Special Lease - 9855 ha
7,155 ha(73%) downs to open forest with red ridges
1,600 ha(16%) gidyea
1,100 ha(11%) channels
Mr Ross agreed that the Special Lease of 1,100 ha was predominantly channel country and that there was about 1,600 ha of "scrub" in the Tambo Shire section of the GHPL. He also agreed that the Murweh Shire area of the GHPL was "scrub" and that the total area of "main mixed scrub" was about 4,393 ha. However, he did not accept that an area of the GHPL shown on the WARLUS mapping which was attached to Mr Naish's primary report (and apparently, coincidentally, containing about 1,100 ha) as "alluvial plains/woodlands" could properly be described as channel country, being "more like creek flats". While he did not disagree that the balance area of the GHPL which was not scrub and by deduction on Mr Naish's figures containing about 7,155 ha, included downs country, Mr Ross described the downs as "broken" downs. It was his evidence that that total balance area included both the creek flats and an area of about 1,000 ha of "timbered" country. That 1,000 ha was not the "open forest" which influenced Mr Ross to describe the downs country as "broken downs" and which was described on the WARLUS mapping as "wooded downs". Instead, he said that 1,000 ha was "not necessarily scrub" with "pretty poor" carrying capacity "meaning sandalwood and clumps of gidyea that are away from the main scrub areas".
It is observed that the WARLUS mapping and the associated satellite imagery included in Mr Naish's report appears to identify a significantly greater area of mixed scrub (undulating gidyea and undulating brigalow) than estimated by Mr Naish and as accepted by Mr Ross (all of Lot 27 containing 2,794 ha in Murweh Shire and 1,600 ha in the Tambo Shire section). The WARLUS mapping could be interpreted to indicate that in the Tambo Shire section the majority of Lots 20 and 21, with a total surveyed area of 3,068 ha and part of Lot 25, comprises mainly undulating brigalow with some gidyea in the western parts.
It seemed to be eventually accepted by Mr Naish that the classification contained in his report on the GHPL was incorrect but it was not entirely clear how that mistake occurred and the effect it may have had on the valuation appealed against. The hearing was adjourned for a fairly lengthy period but in that time the question of the effect, if any, on the valuation could not be resolved between the parties. For logistical reasons the hearing continued and there was a suggestion that if any agreement was reached subsequent to the hearing the Court would be advised accordingly. No agreement eventuated.
It is clear that the area of "scrub" contained in Mr Naish's classification was too little and should have been at least 4,394 ha rather than the 3,293 ha stated. It seems obvious that although there was an area of about 1,100 ha of alluvial plains/woodlands, that area was not the "channel" country in the true sense and could be incorporated into Mr Naish's constant estimate of 7,155 ha of predominantly "wooded downs". It is noted that Mr Naish had included "alluvial plains/woodlands" in his "wooded downs" classification in at least two of the properties involved in the representative cases.
I think it is fair for the GHPL to be described as containing about 4,394 ha of scrub with the balance area being a mixture of "downs and alluvial plains" broken by open forest and areas of sandalwood/gidyea.
The possibility of effect on the valuation of the GHPL through the classification confusion will be discussed later.
Carrying Capacity
Mr Naish had adopted the historical departmental carrying capacities for the various "Byrgenna" sections, being 1 dry sheep equivalent (DSE) to 1.5 ha or 1 beast area (BE - Cattle) to 10.5 ha for the Tambo Shire section of 9,855 ha; 1 DSE to 1.7 ha or 1 BE to 11.9 ha for the GHPL of 11,550 ha and 1 DSE to 2 ha or 1 BE to 14 ha for the Murweh Shire section. Mr Ross was of the opinion that those stock estimates were high and suggested 1 DSE to 1.7 ha or 1 BE to 12 ha; 1 DSE to 1.9 ha or 1 BE to 12.8 ha and 1 DSE to 4 ha or 1 BE to 35 ha for the various sections, respectively.
The evidence indicates that Mr Ross was considering the productive capacity of some of the land in its unimproved state rather than as developed to its full potential. Even so, although no application had been made, he had no confidence that a tree-clearing permit could have been obtained for development of an area of about 800 ha of remnant vegetation on the Murweh Shire section.
From that perspective, Mr Naish took the view that no specific consideration could be given to an assumption that a tree-clearing permit would not issue, until that was proved by an application having been actually refused. In any event, it was his opinion that it was recognised district management practice to retain at least 20% of the area of any original vegetation.
The question of realistic carrying capacities depends to a large degree on individual management practices. For valuation purposes, where carrying capacity estimates may provide assistance in the comparison process, it is important that a consistent standard of estimation is applied. I accept that the consistent adoption of historical estimates by the Department achieves the aim of like-with-like comparisons.
Sales Evidence
For each separate valuation Mr Naish obtained his basis from the sales of the properties "Barwinnock", "Kootchie", "Allandale" and "Gundare". Each of those sales were discussed in the reasons for the decisions in the relevant representative cases. Although challenged on the basis that they did not provide reliable evidence of market value in those cases, Mr Naish's analyses of the sales of "Barwinnock" and "Kootchie" were not rejected. The analysis of the sale of "Gundare" had been accepted by the parties as representing fair market value. Although Mr Naish's analysis of the sale of "Allandale" was not accepted as reliable evidence of value, due to circumstances surrounding the estimated value of livestock included in the sale, the actual valuation applied by the Department to "Allandale" was found not to have been proved wrong.
In these appeals, Mr Ross did not accept that the sales evidence should be interpreted to suggest that unimproved values had doubled in the period between 1998 and 2001. However he was not in a position to challenge the analyses relied on by Mr Naish. Mr Ross did challenge the comparison made by Mr Naish between the "Barwinnock" country and the subject GHPL, in particular. He also pointed out that electricity was connected to "Barwinnock" and not to "Byrgenna" and did not accept Mr Naish's statement that electricity was "available" even to the boundary of the subject property as being necessarily correct when it was unknown to be a fact. Mr Naish suggested if not persuasively, that the comparison with "Barwinnock" had built into it the fact that electricity was connected to "Barwinnock".
"Barwinnock" adjoins the subject property to the west, contains an area of 14,430 ha and the nature of its country was classified as comprising 74% downs (open to wooded downs/open forest) and 26% gidyea/brigalow. The property sold in May 2001 and the sale had been analysed to show an unimproved value of $53.91/ha. A valuation of $49.89/ha had been applied. The property is situated in Tambo Shire but, from evidence in the representative cases, in a Sub Market Area (SMA) identified by the Department for valuation purposes as the Augathella Merge SMA.
Mr Naish considered that the "Barwinnock" country was similar to that part of "Byrgenna" in Tambo Shire (9,855 ha - AV2002/0525), but not having the "Ward River frontage like the subject" was slightly inferior on an overall per ha basis, with applied values of $49.89/ha ("Barwinnock") and $51.75/ha (AV2002/0525) respectively.
Mr Naish considered "Barwinnock" superior to that part of "Byrgenna" comprising the GHPL but not having the "Ward River frontage like the subject" was "slightly" superior on an overall per ha basis, with applied values of $49.89/ha and $48.74/ha respectively.
Mr Naish considered "Barwinnock" overall superior to that part of "Byrgenna" in Murweh Shire with applied values of $49.89/ha and $34.26/ha respectively.
Mr Ross, in concentrating on the comparison of "Barwinnock" with the GHPL of "Byrgenna" commented that there should have been a "fair bit of difference" between the applied valuations. He was particularly concerned with the difference of only $15.63/ha between the applied valuations to "Barwinnock" and the separate Murweh Shire scrub block (AV2002/0107).
"Kootchie" was regarded by Mr Naish to be better located than the subject property and with better access and although in the Tambo Downs SMA was seen to be representative of the lesser quality country within that SMA. It contains a relatively small overall area of 6,782 ha and was classified as comprising 56% downs (open to wooded/open forest) and had frontage to the Langlo River. As with "Barwinnock" it was estimated as having a carrying capacity of 1 DSE to 1.5 ha overall. Mr Naish had analysed the sale of "Kootchie" to show $53.02/ha and had applied $51.61/ha. He saw it as overall "slightly inferior" to the Tambo Shire section of the subject property on a per ha basis (applied $51.75/ha); "superior" to the GHPL (applied $48.74/ha) and superior to the Murweh Shire scrub section (applied $34.26/ha).
"Gundare" had been analysed to show $27.27/ha unimproved and a valuation of $26.94/ha had been applied. That property was located in the Augathella Merge SMA south of Augathella and contained an area of 14,850 ha. It was classified as comprising inferior country overall to each of the sections of the subject property.
"Allandale" is located to the east of Augathella in the Augathella Downs SMA and contains an area of 15,220 ha. Mr Naish had applied $40.08/ha and considered the country of "Allandale" overall to be inferior to all but the Murweh Shire section of "Byrgenna".
Relativity Issues
While Mr Ross understood that the Department's valuations were based on sales evidence, he did not accept that the evidence had been consistently applied to various local properties. He gave examples of valuations of some properties such as "North Bayrick" having been reduced on objection by 26.3% while the reduction on the Tambo Shire section of "Byrgenna" had been only 7.3%. He pointed out that the valuation of the Special Lease land had been reduced from $108,000 to $55,000 and he had accepted that reduction as being fair. However, the valuation of the Tambo Shire section including the Special Lease had been reduced by only $40,000 from $550,000 to $510,000 and he failed to understand the logic behind those differences.
The main thrust of his dissatisfaction with the decisions on objections was the lack of proper relativity, in his opinion, between the valuations of local properties. In support of his opinion he quoted valuations applied to "North Bayrick" ($50.75/ha); the Alarm Creek block of "Oakwood" ($22.41/ha); "Noella" ($19.18/ha) and "Glen Eden" ($41.41/ha) as examples of incorrect relativity in particular with the subject Murweh Shire scrub block valued at $34.26/ha. He found further support in the argument that it would be impossible to bring the scrub block up to the quality of "Barwinnock" for an outlay of only $15.63/ha, from its unimproved state.
Overview
The evidence is that where original valuations of the various sections were reduced and are now subject of these appeals, the Department's reasoning included a reference to relativity issues, at least relativity between the subject and sale lands. On that same basis the valuation of the Murweh Shire scrub block had not been altered. Mr Naish held the opinion that the relativity between the valuations including the Murweh Shire block and other valuations of nearby properties was reasonable. It seems clear that a problem of some significance had been identified by the Department with regard to the original separate valuation of the Special Lease for the extent of reduction made in the objection decision, to be warranted.
I have given consideration to the question of the incorrect classification of country contained in Mr Naish's report with regard to the GHPL, from a relativity perspective. It seems to me that in a comparison between the valuation applied to the GHPL and the valuation applied to the land in Tambo Shire, 8,755 ha of which (excluding the Special Lease) forms part of the GHPL, reasonable relativity can be identified. That indicates to me that the erroneous written classification is more than likely the result of a transposition error which in itself did not reflect in the quantum of the valuation.
Mr Ross' evidence and the evidence from the WARLUS mapping strongly suggests that the Department needs to review and if necessary better classify the country in the GHPL. Nevertheless I accept that any inferiority which could be better expressed in the description of that classification overall has been given consideration in terms of direct comparison with the sale properties "Barwinnock" and "Kootchie", resulting in the original valuation having been reduced on objection.
Mr Ross is concerned that valuations of other properties have apparently been adjusted by the Department in an inconsistent manner. That does not mean, however, that the valuations of the subject lands appealed against are necessarily wrong on relativity grounds. It would be wrong for the Department not to adjust previously existing relativities if on review such adjustment was considered to be warranted.
Mr Ross' argument that the costs involved in development of scrub country should be reflected in the applied unimproved value is logical. In fact those costs are taken into consideration when sales of properties with developed scrub country are analysed. The flaw in the comparison made by Mr Ross of the scrub block with "Barwinnock" was that "Barwinnock" also contained a significant area of scrub country. His comparison of the different values was made on an overall basis. Clearly the scrub component on "Barwinnock" would carry a lower value than the wooded downs, if separate classified values were to be identified.
If it is to be shown that the relativity between valuations applied to scrub country and for example downs country was generally wrong, there would need to be supporting market evidence. While actual costs of development are a consideration in the analysis of market evidence, it needs to be remembered that the cost of effecting an improvement does not always equate the added value of that improvement. It is also seen as relevant that in the representative cases it emerged that demand by cattlemen for developed scrub country or scrub country with development potential had significantly influenced the more recent market for district grazing lands, and particularly in the Eastern Scrub/Cattle SMA.
In the end result, if these appeals were to be decided strictly on the evidence before the Court then the grounds of appeal would not be seen to have warranted any adjustment to the valuations appealed against. As a result of the findings in the representative cases the departmental analyses of the sales of "Barwinnock", "Kootchie" and "Gundare" were accepted and there was found to be no evidence on which the Department's application of values subsequent to objection decisions in the Augathella Merge SMA in Murweh Shire, should be altered. This was despite the change to the previously existing relativities. In the objection process no reductions had been given to the valuation of lands in the northern section of the Augathella Merge SMA where an increase of 100% over the 1 October 1998 valuations had been applied in 2001. That part of the subject land which is in Murweh Shire is also within the Augathella Merge SMA.
The evidence in the representative cases was that no general reductions had been allowed by the Department on objections to valuations of land within the Tambo Downs SMA. That part of the subject property which is in the Tambo Shire, is within the Tambo Downs SMA. Those valuations had also been increased by 100% above the 1998 level. Despite the sale of "Kootchie", which is located in a fringe area of the Tambo Downs SMA, having supported that increase, the overall sales evidence on which the Department had relied for the Tambo Downs SMA increase, was found by the Court to have warranted a more cautious approach. The finding in the representative cases was that an 80% increase, rather than 100%, was supported for the valuations in the Tambo Downs SMA.
In these particular matters, the evidence did not extend to the application of values throughout the various SMAs. However it can be assumed that the relativity which had existed between the valuations of those parts of the subject property in the Tambo Downs SMA (and in Tambo Shire) had been found to be incorrect, when compared with other valuations within both the Augathella Merge SMA and the Tambo Downs SMA. As a consequence, reductions had been made to the subject valuations of the land within the Tambo Downs SMA but not to that part within the Murweh Shire Augathella Merge SMA.
With the Department having, in its opinion, corrected relativity between the subject valuations and other valuations, that correction would be lost if the "blanket" reduction found by the Court to be warranted within the Tambo Downs SMA was not also applied in this case. However, in keeping with the Augathella Merge SMA decisions in the representative cases, despite Mr Ross' relativity opinions I find no basis on the evidence to alter the valuation apportioned to that part of the subject land within Murweh Shire.
In terms of the grounds of appeal, while there has been shown to be a mistake in the classification of the land contained in the GHPL that mistake is not found to have been expressed in the valuation appealed against. The grounds related to incorrect relativity between valuations have not been proved at least with regard to the relativity which existed prior to the effect of decisions in the representative cases. However it is found that with the effect of those decisions and findings relative to the overall Tambo Downs SMA sales evidence, a further reduction is warranted to the valuation of that part of the subject property in Tambo Shire.
Findings
AV2002/0525
Consequent upon the decisions in the representative cases the unimproved valuation apportioned to this part of "Byrgenna" located in Tambo Shire should be determined in the amount of $460,000 rounded from $46.50/ha.
RV202/0526
It follows that with the Tambo Shire section of the GHPL receiving a reduction in value on appeal but the Murweh Shire section valuation remaining unaltered, there is need to further reconsider the relativity between the overall value of the land in the lease and the overall value of the land in Tambo Shire. On that basis in the absence of evidence as to specific classified values, I find that the valuation appealed against should be reduced to $510,000 rounded from $44/ha overall.
AV2002/0107
Consequent upon the decisions in the representative cases relative to the valuations of lands in the Murweh Shire Augathella Merge SMA and for the reasons given I find there is no basis on which the valuation of this land should be altered. It follows that this appeal should be dismissed.
Orders
AV2002/0525 - The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value determined in the amount of Four Hundred and Sixty Thousand Dollars ($460,000) as at 1 October 2001.
AV2002/0526 - The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value determined in the amount of Five Hundred and Ten Thousand Dollars ($510,000) as at 1 October 2001.
AV2002/0107 - The appeal is disallowed and the unimproved valuation of the chief executive in the amount of Ninety-six Thousand Dollars ($96,000) as at 1 October 2001 is affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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