Schmidt v Department of Natural Resources and Mines
[2003] QLC 55
•1 August 2003
LAND COURT OF QUEENSLAND
CITATION: Schmidt v Department of Natural Resources and Mines [2003] QLC 0055 PARTIES: Noel Felix Schmidt
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0062 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an unimproved valuation - Shire of Paroo - Valuation of Land Act 1944 DELIVERED ON: 1 August 2003 DELIVERED AT: Brisbane HEARD AT: Cunnamulla MEMBER Mr RE Wenck ORDER: The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value of "Avondale" as at 1 October 2001 is determined in the amount of Two Hundred and Fifteen Thousand Dollars ($215,000). CATCHWORDS: Statutory Valuation - Unimproved value - Valuation of Land Act 1944
Valuation - Sales evidence - Sales analyses - Direct comparison methodology - Classification methodology - Degradation - Worsement
Degradation - Woody weed infestation - Overgrazed Mitchell grass - Feather Top grass infestation
Worsement - Degradation of pasture - Feather Top grass infestation
APPEARANCES: Mr N Schmidt on his own behalf
Mr K Fisher (Crown Law) for the respondent
Mr Schmidt is the owner of the property known as "Avondale", situated about 80 km south-east of Cunnamulla described as Lot 3, NO3 and Lot 4, NO4:GHFL15/1698 and Lot 6, NO55 (Non-Specific) Reserve 2 SL15/46993, Parish of Weelamurra, containing a total area of 17,130 ha.
As at 1 October 2001 the chief executive made an unimproved valuation of the total area for rating purposes in the amount of $227,500. That valuation represented a rounded increase of 25% over the previous valuation of $182,500 as at 1 October 1998. Consequent upon an unsuccessful objection against the new valuation Mr Schmidt filed an appeal in the Land Court. His estimate of the unimproved value in the notice of appeal was in the amount of $182,500. Evidence was led during the hearing to a valuation of $171,000.
Mr Schmidt is a well-known grazier who has extensive knowledge of the district and the productive capacities of the various country types. He put considerable effort into the preparation of the appeal and raised a number of issues which he believed to be relevant.
The grounds of appeal were of an all-encompassing and general nature. After considering the voluminous evidence eventually placed before the Court it is fair to say that the primary grounds of appeal relate to Mr Schmidt's contentions that:
·Analyses of sales and resales of two local properties, in the period between 1988 and the date of valuation suggest that fluctuations in the chief executive's unimproved valuations over that same period provide a net result which is inconsistent with the market.
·The basic sales evidence on which the chief executive has relied is either unreliable or of country not capable of direct comparison with the subject property on an overall per ha basis.
·Relativity between valuations is incapable of verification due to the valuation methodology adopted by the chief executive.
·No or insufficient regard has been given to the deleterious effects on unimproved value caused by degradation.
Sales Evidence
The evidence of Mr Schmidt was that two properties, "Gamarren" and "Warambah" have a sales history as follows:
"Gamarren", a property of 26,523 ha adjoining "Avondale" sold at auction in 1988 bare of stock and plant at an improved price equivalent to $42.62 per ha. In April 2001 it resold with stock for $30.17 per ha including sheep or $24.51 per ha excluding sheep. The sheep had been valued by a Mr R McLaren, a stock and station agent, prior to the sale and his valuation supported the apportionment in the sale contract. Mr McLaren was called to substantiate his involvement with the value of the stock. Mr JR McKenzie, who was the joint purchaser, with his wife, was called to give evidence as to the sale apportionment and his appreciation of the sale price in terms of market value. The property had been well exposed to the market, had failed to sell at auction, and Mr McKenzie thought the price was fair at the time, but certainly "no bargain". There was no dispute that "Gamarren" suffered a significant woody weed problem. The fluctuations in unimproved valuations reflected a net increase of 26% over the period between 1998 and 2001 while the sale price as improved reflected a decrease of about 42.5%.
"Warambah", a property of 32,827 ha also adjoining "Avondale" (and one of the basic sale properties relied upon by the chief executive) sold in 1998 for the equivalent of $73.11 per ha, then in August 2000 for the equivalent of $42.77 per ha, a decrease of 41% while again the chief executive's unimproved valuation had shown a net increase of 26% to the date of valuation in 2001. One of the original purchasers and then vendors, Mr IG Dunsdon, was called as a witness. His evidence was that the improvements had been well maintained and others constructed during the intervening period and original timber treatment had remained effective. However an area of red sandy country had become "completely ruined" by woody weed infestation.
Mr GG Naish, registered valuer, took responsibility for the chief executive's valuation. He had relied on the evidence obtained from analysis of four sales then "direct comparison" between those properties and "Avondale".
One of the four sales was of the property "Yerinan". The purchasers of "Yerinan" (AJ & JA O'Brien) were also appellants against unimproved valuations of that property as at 1 October 2001. Those appeals were the first to be heard at the sittings of the Court. It had been the O'Briens' contention that the sale had not supported any increase in valuation since the previous date. Their evidence had been that the proximity of "Yerinan" to their nearby holding had been a significant attraction as was the increased productive capacity and management flexibilities offered by amalgamation of the two holdings. However, an important aspect of the O'Briens' contentions was that a number of unbranded cattle and some plant had been included in the sale but not shown in the contract or the sale price apportionment. Mr Schmidt challenged the analysis of the sale by the chief executive on the basis of the circumstances to which the purchasers had referred in their appeals. In those appeals I found that the circumstances surrounding the sale "were such that any unimproved value analysis would be sufficiently clouded as to be an unreliable basis for valuation purposes". While the chief executive's basis of valuation had been found to be weakened accordingly, the removal of this sale from consideration in the "Yerinan" appeals was not accepted as proof of the contention that there had been no increase in value since the previous date of valuation. This sale is removed from consideration in the subject appeal although the question of the relativity between "Yerinan" and "Avondale" remained part of Mr Schmidt's case.
Brief details of Mr Naish's descriptions of the remaining sale properties together with Mr Schmidt's comments are as follows:
(1)"Warambah" - 32,827 ha - sold 24.8.2000 - $1,404,000 ($42.77 ha) - analysed unimproved value $385,569 ($11.75 ha) - applied unimproved value $385,000 ($11.73 ha) - carrying capacity 1DSE to 2.5 ha - nature of land (5%) open brown soil Mitchell grass plain - (28%) watercourse, brigalow, gidyea, coolibah, grey brown soil (not gilgaied) open to thick brigalow, coolibah, box and watercourses - (40%) gidyea, brigalow, box on red brown soils - (28%) sandy to sandhills with red soil mulga and box - located on the fringe of the eastern section of the Warrego Floodplain, merging into mulga lands. Woody weed problem in red sandy country. In comparison to "Avondale" comprises similar access and location to a service centre, inferior country, much larger size, and overall inferior on a per ha basis.
Mr Schmidt challenged Mr Naish's description of "Warambah" and particularly the small component of open plains included in the overall classification and the suggestion that the watercourse classification was not gilgaied. He had direct knowledge of the property having agisted cattle on it. On the morning of the hearing, but with insufficient time to assess fully its content, Mr Schmidt had obtained a property map compiled at some time in the past by Mr Tannock, a local and well-respected valuer. He was confident that the map and the country classifications contained within it confirmed his opinion as to the under estimation of the open plain country. He was unable however to take that aspect further after it was indicated that an objection would be lodged to the tendering of the mapping other than through its author Mr Tannock. During his examination of Mr Dunsdon, Mr Schmidt had directed questions as to the extent and condition of timber treatment and other improvements. It seems that he had hoped to be placed in a position which would have enabled him to examine Mr Naish's detailed analysis of the sale. However, as it happened, Mr Naish had not brought the relevant file with him and was unable to provide the detail sought.
While Mr Schmidt did not "discount" the sale as representing fair market value for "Warambah", he expressed the opinion that it was a most difficult property to compare with "Avondale" because of different country types, size, production and management potential.
(2)"Cleland" - 32,590 ha - sold 19.6.2001 - $1,090,611 ($33.46 ha) - analysed unimproved value $308,866 ($9.48 ha) - applied unimproved value said to have been $300,000 ($8.62 ha) (sic) - ($9.20 ha) - carrying capacity 1DSE to 2.8 ha - nature of country classified as - (15%) open Mitchell grass plain, coolibah, box, gidyea - (11%) broken coolibah and gidyea - (5%) box, coolibah flats and claypans - (40%) mulga/box - (26%) sandridges running into box/gidyea and ironwood - (4%) Spinifex - located on the northern section of the Warrego Floodplain, merging into mulga lands - woody weed problem in red sandy country. In comparison to "Avondale" comprises superior location and access with inferior country type - larger in area - overall inferior to the subject on a per ha basis.
Mr Schmidt did not consider "Cleland" to be a property capable of cogent direct comparison with "Avondale", particularly because of its larger proportion of mulga country.
(3)"Randwick Downs" - 19,560 ha - sold 16.6.2000 - $800,000 ($40.90 ha) - analysed unimproved value $237,007 ($12.12 ha) - applied unimproved value $232,500 ($11.89 ha) - carrying capacity 1DSE to 2.6 ha - country described as (52%) brown soil flooded coolibah, lignum, brigalow, some scalded Mitchell grass - (38%) red soil gidyea scattered to thick with wilga, dogwood, sandalwood, brigalow - (10%) sandhills, cypress pine, wilga, mulga, ironwood, leopardwood - woody weed problem in red sandy country. In comparison to "Avondale" comprises inferior location, access and country type - similar in area - inferior on a per ha basis overall.
Mr Schmidt described "Randwick Downs" as "part flooded and different country" difficult to make a direct comparison on an overall per ha basis with "Avondale".
It was Mr Schmidt's opinion that the sale of "Gamarren" in 2001 should have formed part of the chief executive's considerations relevant to an analysis of the market trend. He had endeavoured to analyse the sale based on the partial apportionment contained in the contract and Mr McKenzie's evidence relative to other items which had been apportioned separately. It was his conclusion that the sale had not supported either the original valuation made by the chief executive at the relevant date or a second revised valuation. Mr Naish's evidence was that the sale had been considered by the chief executive's valuers but found to be low and out of line with the overall market evidence. Furthermore "Gamarren" had no open plains and did not provide a mix of country comparable to "Avondale".
Market Evidence Finding
There was no evidence led by the appellant which effectively challenged the result of the analyses of the sales of "Warambah", "Cleland" and "Randwick Downs". There was no suggestion that the inability of Mr Naish to produce his detailed analysis of "Warambah" was intentional. Nevertheless there should be no assumption made by departmental valuers that a sale analysis is incapable of challenge by an appellant who has chosen not to obtain professional assistance. There seemed to be a perception by Mr Naish that he was not required to provide detailed information when there had been no such exchange by the appellant. Land Court Rules 2000 (Rule 23) requires expert evidence only to be served on each other party.
Mr Schmidt accepted that the sales used by Mr Naish reflected market value for those particular properties just as he held the opinion that the sale of "Gamarren" also reflected its market value despite the departmental opinion that it was a "low" sale. With regard to "Gamarren", his analysis based on apportionments in the contract and the purchaser's opinion of the added value of some items confirmed that the unimproved value component was less than had been applied, even after review, by the department. The question of the assessment of added value of improvements is not satisfactorily answered, however, by simply accepting the apportionment of values adopted for the purposes of the contract. In this case, despite an analysis obviously having been carried out by the department, Mr Schmidt's estimate of the unimproved value reflected by the sale was not challenged. That estimate reflected a 6.13% increase over the previous valuation while the revised valuation of the chief executive represented a 17% increase.
Mr Naish's report contained a statement that the valuation of "Avondale" represented an increase in the order of 25% and that there were a number of basic sales which had occurred during the relevant period in the locality of "Avondale" "that support the level of increase in the unimproved value as at 1 October 2001, on a Direct Comparison Basis".
It is assumed that, if as he said, the "relativity that existed on 1 October 1998 has been maintained" the basic sales used also showed at least a 25% increase above the unimproved values of those properties as at 1 October 1998.
No assistance has been gained from the sales analyses history conducted by Mr Schmidt of the properties "Warambah" and "Gamarren" since 1988. Those analyses were conducted on the assumption of "constant condition of asset". If that was intended to mean that both land and improvements remained in the same condition, then it is an untenable assumption, for valuation purposes. For example the evidence was that at least parts of both properties had been further degraded through woody weed infestation. That no doubt would be seen by Mr Schmidt as supporting his argument. However, where a market is in decline the added value of improvements could not be expected or assumed to remain constant. It is not unreasonable for Mr Schmidt to conclude that "something must be wrong" if over a fairly long period the applied unimproved values indicated, through first a decrease then later increases, a net overall increase while improved values indicated a significant decrease. However the question presently before the Court is not whether unimproved values at various dates in the period from 1988 were correct but whether the unimproved value applied to "Avondale" as at 1 October 2001 is incorrect, as alleged.
Unimproved values in the Warrego Floodplain Sub Market Area (SMA) were seriously challenged in the Land Court but with only limited success as at 1 October 1998. The evidence now relied upon by the chief executive supports a finding that the unimproved values of at least three sale properties have increased.
If the previously existing relativities between unimproved values within the SMA were correct, it is reasonable for the chief executive to alter the previous level of value by a uniform increase, based on the mass valuation methodology adopted. Mr Schmidt's opinion in relation to relativity between valuations will be discussed later. However until relativity issues are considered, the correctness of the chief executive's valuation of "Avondale" will depend on the challenge to the extent of increase applied by the chief executive.
In the "Yerinan" appeals the following comments were made in the decision delivered on 9 July 2000 at para [30] -
"After hearing Mr Naish's evidence as to the review which had taken place to the original analysis of the 'Yerinan' sale and bearing in mind that valuation is not an exact science, it would be optimistic for the respondent to expect that a close examination of each component of the analysis of any highly improved sale would not reveal some areas where review could be argued as warranted. It is for that reason that some caution needs to be exercised in the application of sales evidence. It is observed that in the sales of 'Warambah', 'Cleland' and 'Randwick Downs', the analysed unimproved values were near fully applied (99.8%, 97.4% and 98.1%) when the added values applied to the improvements were assessed at $1,018,431 (72.53% of the sale price), $781,745 (71.67%) and $562,993 (70.37%) respectively. Those figures suggest that little margin was allowed for any possible review of the sales analyses."
In this matter evidence was produced regarding the sale of "Gamarren". That sale did not support the trend indicated by the chief executive's analysis of the sales of "Warambah", "Cleland" and "Randwick Downs". I do not accept the contention that the sale of "Gamarren" proves the chief executive's interpretation of trend to be necessarily wrong. However when considered in the light of my findings in relation to the "Yerinan" sale, the "Gamarren" evidence, in my opinion, further weakens the support for the chief executive's decision to apply fully the trend interpreted from the basic evidence.
In the "Yerinan" appeal, a small reduction was considered warranted due to the lack of any meaningful benefit of doubt having been reflected in the chief executive's valuation. That position is no different in this matter or indeed in any of the current appeals where the sales of "Warambah", "Cleland" and "Randwick Downs" formed the sole remaining basis of the chief executive's valuation.
Relativity Issues
It was part of Mr Schmidt's argument that the sale properties are very difficult to compare with "Avondale" due to their different mixes of country. It his belief that the veracity of the direct comparison methodology is incapable of proof unless the sales analyses are further refined to allow consideration of the levels of value which would reasonably be apportioned to the various country types. Comparisons on a like with like basis would then be more transparent.
Mr Naish is of the opinion, as are many valuers both departmental and in private practice that direct comparison from block to block overall is possible and a function of the professional valuation expertise in comparing like with like. The direct comparison methodology has found judicial favour and there is an argument that it reflects the manner in which the market operates in a practical sense. In the departmental valuation comparison process estimation of stock carrying capacity potential on an overall basis is said not to be a conclusive test but a helpful "tool" in the process.
Mr Schmidt, as a result of his experience as a grazier, does not place much weight on estimates of carrying capacities in "average seasons". His philosophy is that in this arid rangeland region "when the feed is on the ground use it" with high stock numbers in good seasons then "if stocking numbers are damaging pastures sell or agist and remove ferals" with flexibility being the key to management and survival. He says that gidyea tree ring growth studies indicate that there have been periods of 40 years of below "average" rainfall within the last 200 years and, for example, carrying capacity of this country "in the wet years of the 1950's was vastly different to that of the drier years of the 1970's." Kangaroos cause difficulties and degradation of pasture during drought conditions, particularly in paddocks in the "merge" areas, and decrease the productive potential of those areas.
The "classification" method of valuation has many shortcomings, probably foremost the cogent establishment of a market-related basis for the various country classifications when factors peculiar to individual properties also affect market considerations. Nevertheless, despite judicial criticism and even condemnation in some individual cases, the classification methodology has not been overruled in principle and is recognised as capable of providing supporting evidence of valuation (see Cooper and Strickland v The Crown (1984-85) 10 QLCR 23 - Land Appeal Court). I agree with Mr Schmidt, that in these types of cases, if departmental records included any classification check methodology, that information would assist in the overall decision-making process when the relativity between valuations is subject to challenge.
The mass valuation methodology as now utilised by the chief executive relies in the first instance on the correctness of existing relativity, then adjustment, generally on a uniform basis, within SMA's based on the market evidence available. It seems to me that the point which Mr Schmidt argues is that on individual properties where, for example, degradation has occurred over the years on a certain class of country, relativities which may once have been correct could well have altered. As I understood his submission he accepted that if the analysis of any particular sale showed an increase in unimproved value and the degraded country on a sale property would realistically have reduced in value, then the increase indicated would relate to the other categories of country on that sale property. For that reason he submitted that it "is the percentage of a property that is degraded which is critical and it is generally much higher in 'merge' areas ... There is a need to treat 'merge' country with values discounted from that of large areas of major land type."
Mr Schmidt submits that it is not sufficient for the department to rely on the observation that on each of the basic sale properties there was a "woody weed problem in red sandy country" in the absence of identification of the degree and deleterious effect caused by the problem.
Mr Schmidt used "Yerinan" as an example of his classification of values approach, based on his knowledge of the property and the quality of the land types. He apportioned his estimation of values to the actual land classifications which had been adopted by the department. He found a total unimproved value slightly exceeding that which had been applied by the department. Of the 2,750 ha of red sandy country he allowed a discount "for up to 1,000 ha" degraded by woody weeds and the result then matched the department's valuation near precisely. However, when he applied his direct comparisons of those classified values with the land types of "Avondale", excluding the special lease area, and before any allowance for degradation, his total valuation was about $13,500 less than the chief executive's valuation appealed against. It was observed that the total area excluding the special lease in his calculations was 192 ha less than had been valued. He thought that might have been caused by the inclusion of a road reserve. However on checking, it can be seen that he allowed the rounded 2.5 acres per ha instead of the more precise 2.47105 acres per ha. Those minor differences would reduce the discrepancy to about $11,000, if the values which he apportioned to the various classifications could be accepted. As I understood his approach, he could account for the difference by increasing marginally some of his classification values. However, even so, it was his submission that no allowance could be identified for the areas of degradation on "Avondale". His description of that degradation and his estimates of affected areas will be discussed later.
Mr Schmidt did not conduct a similar classification of values approach in considering the "Warambah" or "Cleland" properties. It is observed however that both had been described by Mr Naish as being located on the fringe of the Warrego Floodplain merging into mulga lands. Both sales according to Mr Naish's analysis, had supported the increases applied. "Warambah", according to Mr Dunsdon, had about 8,000 ha of "useless" degraded red country. The department's classification of that property included 9,121 ha (28%) of the red sandy country.
The percentage of red sandy country on "Randwick Downs" is relatively small (10%). Nevertheless, that sale appeared to support the uniform market trend identified by the chief executive in the period since the previous date of valuation.
Mr Schmidt had produced a relativity schedule which set out the various land classification apportionments for "Avondale", "Yerinan", "Randwick Downs", "Willacora/Coona" and "Robina". The latter two properties were sale and appeal properties in the Land Court representative cases relevant to the 1998 valuation. The 2001 valuations on an overall per ha basis and the departmental estimates of carrying capacity including those figures for "Warambah" were set out in that document. However, it is not clear how the overall "relativity" evidence including comments in other parts of his submission was intended to support Mr Schmidt's final estimate of value for "Avondale".
Based on judicial knowledge gained from past disputes relative to western grazing lands and despite the assertions of departmental valuers that the classification methodology has no place in modern valuation practice, it would surprise if existing historical relativities had not obtained their foundation from consideration of classified values. If that was the case, and degradation has become an issue on some properties to a greater extent than others and possibly "Gamarren" could be such an example, then a closer examination of valuations of such properties would be warranted on relativity grounds. A departmental review clearly occurred with regard to the "Gamarren" valuation although there was no evidence as to the basis upon which the reduction from the original valuation was made.
It is obvious that if, within a defined SMA, inferior classes of country become relatively less valuable and superior classes become more valuable based on market trends, then a criticism of the mass valuation methodology which involves the adoption of a uniform trend is that it must inevitably lead to the inferior country carrying an unfair rating burden.
Therefore if the classification of values methodology does form part of the "tool kit" capable of being accessed by the chief executive's valuers, as is, for example, historical estimates of carrying capacity, there should be no reticence by the chief executive in the disclosure of the manner in which that methodology has been, or might have been, utilised. It is, as Mr Schmidt has found, extremely difficult even with professional assistance, to provide the necessary proof to show that a perception of incorrect relativity is a reality, unless the degree of "superiority" or "inferiority" in direct comparisons is capable of check quantification. The chief executive correctly takes the stance that the legislation provides that the onus of proving the grounds of appeal against an unimproved valuation rests with the owner (see s.45(4) of the Valuation of Land Act 1944). However as the chief executive's valuation is deemed to be correct "until proved otherwise upon objection or appeal or until altered or further altered" (see s.33 of the Valuation of Land Act 1944) there is an inherent duty upon the chief executive to take all reasonable steps necessary in the process of making a "correct" valuation.
In the end result I have not been convinced on the evidence before the Court that relativity between valuations within the Warrego Floodplain SMA has been proved to be generally flawed. However I accept the possibility that in some individual cases a shift in relativities could result from emerging factors affecting market value and not necessarily exposed by the mass valuation methodology.
The factor raised by Mr Schmidt as affecting market value is the worsening problem of land degradation. That factor will be considered as a separate issue as it relates to "Avondale".
Nature of Land
The chief executive's classification of the land on "Avondale", including the camping and water reserve special lease, is as follows:
4,800 ha (28%) - open Mitchell grass plain
3,985 ha (23%) - brown and grey soil coolibah channels
2,830 ha (17%) - red soil gidyea, box, sandalwood
5,515 ha (32%) - sandy to sandridges and some red soil mulga and claypans.The carrying capacity is estimated as 1DSE to 2.3 ha.
Mr Schmidt had initially understood that the department had adopted a description of land types as provided by him at an objection conference. His description had relied on work done by Mr Tannock (the local valuer mentioned earlier) in compiling a property map in 1969 with assistance from 1952 aerial photography. Mr Tannock's classification of the land types (excluding the camping and water reserve), as abbreviated by Mr Schmidt was as follows:
10,687 acres (26.2%) - open
206 acres - coolibah depressions
4,995 acres (12.2%) - coolibah watercourse
3,712 acres (9.1%) - broken coolibah and brigalow45 acres - claypans
1,957 acres (4.8%) - brigalow and broken gidyea
9,202 acres (22.5%) - thick gidyea
8,887 acres (21.7%) - sandridges and sand hollows
1,192 acres (2.9%) - red soil cut-out mulga
40,883 acres - 16,353 ha (sic) (16,545 ha)
Mr Tannock's classifications as adopted by Mr Schmidt who believed them to be at least 95% accurate, are somewhat more descriptive than those of Mr Naish which rely on broader interpretation of country types based on satellite imagery. Even with the grouping of Mr Tannock's more comparable land types, and with consideration given to the area and nature of the special lease (585 ha) it is difficult to reconcile the differences. However the more significant differences can be traced to the lesser area of predominantly gidyea country in Mr Naish's classification, and the greater area of sandy and red mulga country. On the classified values which Mr Schmidt suggested in his comparison with "Yerinan", it is reasonable to conclude that if the satellite imagery had been misinterpreted, then the result favoured "Avondale" for the purpose of a rating valuation, as the red sandy country is acknowledged by Mr Schmidt as being the least valuable. It is mentioned that Mr Naish considered the gidyea country to have had further development potential at the date of valuation. Mr Schmidt believed that to be an unrealistic opinion in view of the difficulty involved in obtaining tree-clearing permits. That is a difficulty which had not been proved at the relevant date of valuation, but one which may have significant effect on the value of some undeveloped lands, at subsequent dates of valuation.
Degradation
Woody Weed Infestation
From his knowledge of the country and by reference to Mr Tannock's mapping, Mr Schmidt estimated that an area of 3,305 ha of the red sandy and cut-out mulga country now suffered heavy woody weed infestation with most of it totally unproductive providing little more than "an impenetrable haven for goats and kangaroos (mainly greys)".
Mitchell Grass Pasture
By similar methodology Mr Schmidt estimated that an area of about 890 ha of the open plain country had lost 50% of its value through the effects of over grazing of the Mitchell grass pasture and its inability to regenerate through the non-setting of seed. It is his submission that most of this degradation of natural pasture has occurred in the "merge" paddocks of broken country where the premium land is in pockets totalling less than 30% of the area of the paddock. Despite good management practices and removal of stock from these paddocks when seasons demand, the damage is then done by kangaroos.
Feather Top Infestation
Mr Schmidt estimated that an area of about 910 ha of Mitchell grass pasture had become infested through introduction of Feather Top grass as a result of stock from infested areas having been agisted on a neighbouring property in the early 1950's. He understood that the Court had recognised Feather Top as a disability in "northern regions". He offered no specific opinion as to the degree of deleterious effect on value but provided evidence as to the significantly lower prices received for wool affected by the seed. Reference was also made to hide and carcass damage, loss of sheep body weight, and the "poor doing" stock grazing the Feather Top infested areas.
Identification of Degraded Areas
Mr Schmidt tendered a property plan overlay on which he had identified the areas affected by the three types of degradation. He also tendered an overlay showing the route which he had traversed (with Mr Naish following in a separate vehicle) on the inspection undertaken in connection with the appeal.
Clearly a reasonable inspection had been organised and the route passed through or within proximity of many of the areas now identified as affected by degradation.
Specific mention was made by Mr Naish of the "problem of woody weed infestation" on "Avondale" but that problem also having been "present in the sales used by the department ...".
Having regard to the significance which he attached to degradation issues it would have been surprising and remiss of Mr Schmidt had he not drawn Mr Naish's attention to these matters during the inspection. There was no evidence before the Court as to the extent of Mitchell grass degradation including Feather Top infestation on other properties within the relevant SMA. Clearly however the woody weed problem is present albeit to varying degree on much of the red sandy country throughout the district.
There is a question of worsement, regardless of its origin, which becomes a valuation consideration. I accept the chief executive's stance with regard to the woody weed problem in that if it is a common problem throughout a district and the sale properties suffer the disability then any deleterious effect would be expected to be reflected in the sale prices. The difficulty as discussed earlier, is identifying the deleterious effect on any particular class of inferior country when unimproved values are increasing for properties with mixtures of both inferior and superior quality country. Mr Schmidt made the point that the worsement associated with deteriorating Mitchell grass pasture through lack of regeneration, is more relevant to the pockets of better quality country in the merge areas through the pressures of over grazing, whether from commercial or feral animals. However that problem is no doubt also present on those properties merging from the open and/or more productive country into the lighter classifications. Again, whilst no doubt also difficult to identify with cogency, the deleterious effect of pasture stress would be a market consideration when sales of the merge country take place. The "Warambah" and "Cleland" sale properties were described as having merge location. While Mr Schmidt has identified pockets of degraded pasture, "Avondale" is described as containing higher proportions of open Mitchell grass plain than any of the three remaining basic sale properties.
There was no challenge to Mr Schmidt's evidence relevant to the Feather Top infestation on "Avondale" or evidence from the chief executive as to the extent of the problem elsewhere in the district. It has not been identified as a problem on the sale properties. In the circumstances I am able to accept that this infestation is a form of worsement which can be identified separately in this appeal, but which had not been regarded as common throughout the whole of the SMA as at the relevant date.
Overall Considerations and Findings
I accept that on a direct overall per ha comparison basis, "Avondale" is inferior to "Yerinan" but superior to the basic sale properties "Warambah", "Cleland" and "Randwick Downs". There is on the evidence before the Court no alternative other than to accept the broad descriptions of "superiority" or "inferiority". Although it has some similar country to "Gamarren", "Avondale" is clearly superior to that property. However I do not accept that the basic sales provide, even on an unchallenged analysis basis, sufficiently strong evidence for a uniform increase of 25% above the previous unimproved valuations of those properties or of "Avondale". The use which the chief executive made of the "Yerinan" sale and his rejection of the "Gamarren" sale further support that conclusion. I have decided that before consideration of the Feather Top infestation issue, an overall valuation of $12.80 per ha allows the benefit of the real doubt which has emerged as to the extent of the increase since the previous valuation.
There is presently unrefuted evidence before the Court that "Avondale" suffers worsement not evident on the sale properties as a result of Feather Top infestation. In the circumstances I find that the market value of "Avondale" would be expected to be affected, in a practical sense to a relatively minor overall degree in terms of improved value but more significantly so in terms of unimproved value. This worsement relates to part of one country classification but in the absence of evidence other than Mr Schmidt's opinion as to the value of that specific land classification or the overall effect, I will allow a nominal amount of $4,500 for worsement resulting from Feather Top degradation of an area of approximately 910 ha of open plain country.
The unimproved value is determined as follows:
17,130 ha @ $12.80 per ha $219,264
Less Worsement - Feather Top infestation $4,500
$214,764
Adopt$215,000
Order
The appeal is allowed. The valuation of the chief executive is set aside and the unimproved value of "Avondale" as at 1 October 2001 determined in the amount of Two Hundred and Fifteen Thousand Dollars ($215,000).
RE WENCK
MEMBER OF THE LAND COURT
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