Shelton v Chief Executive, Department of Lands
[1995] QLC 14
•17 March 1995
LAND COURT BRISBANE
[1995] QLC 14
17 March 1995
Re: Appeal against rental valuations and annual valuation
Valuation of Land Act 1944
(RV94-0189, RV94-0191, RV94-0190 and AV94-0371)
Bernard David Shelton and Elizabeth Annie Shelton v.
Chief Executive, Department of Lands
Hearing at Taroom
D E C I S I O N
These are three appeals against the rental valuations applied to special leases and one appeal against the annual valuation applied to an aggregation of land comprising those special leases and a grazing homestead freeholding lease.
Mr and Mrs Shelton are the owners of land described as
.Grazing Homestead Freeholding Lease No 36/7933, being Lot 8 on Plan AB200, Parish of Stephenton;
.Special Lease No 36/38141, being Lot C on Plan AB203 (part State Forest 55), Parish of Stephenton;
.Special Lease No 36/38142, being Lot 9 on Plan AB202 (part State Forest 55), Parish of Stephenton; and
.Special Lease No 36/38602, being Lot A on Plan AB117 (part State Forest 55), Parish of Hallett.
This aggregation comprising an area of 16,890 hectares is known as "Springwater" and is situated about 43 kms east of Injune with access by about 22 kms of bitumen road and 21 kms of formed earth and gravel roads.
Under the provisions of the Valuation of Land Act 1944 (the Act) the aggregation was valued by the respondent as at 31 March 1992 and also as at that date the three special leases were valued under the provisions of section 15 of that Act for rental purposes. In broad terms the provisions of the Act require that the annual valuation of the aggregation be made as if the aggregation was held as one parcel, while the provisions of section 15 require that for rental purposes the unimproved value of each special lease be determined as if it was held separately and not part of an aggregation.
The owners' grounds of appeal in each case are as follows:
. incorrect classification of country;
. unfair unimproved valuation when compared with neighbouring properties;
. tick status; and
. problems due to position of "Springwater" in Taroom Shire.
At the hearing at Taroom, Mr BD Shelton gave evidence on behalf of the owners. With respect to the first ground of appeal, Mr Shelton explained that the valuation of the three special leases had increased dramatically and that after objecting to these valuations at an objection conference held in Dalby, he was made aware that the Department of Lands had made errors in over-estimating the areas of scrub. These were recalculated and the unimproved values of the special leases were reduced substantially. The appeals are against the reduced valuations. However, Mr Shelton no longer had any faith in the ability of the Department to estimate areas of country.
Mr Robert James Quaite, registered valuer employed by the Department of Lands, gave evidence on behalf of the respondent and explained that the over- calculation of the areas of scrub resulted from the Department using previous records for the assessment of the unimproved value of the special leases. At the objection conference Mr Shelton demonstrated by means of an aerial map mosaic that the areas of scrub and better country on the special leases had been dramatically over-estimated. Mr Quaite said that using a planimeter he had scaled off these areas and then confirmed them by inspection. He recalculated the valuations of the special leases and reduced the valuations accordingly.
With regard to the second ground of appeal, Mr Shelton said that the valuation of "Springwater" is unfair compared with the valuation of a property known as "Pony Hills", situated in the neighbouring Bungil Shire. Mr Shelton said that this property, comprising an area of 23,316 hectares, is substantially superior to "Springwater", having a larger area of scrub and carrying a substantially larger number of cattle. Mr Shelton produced extracts from the Queensland Country Life advertising the auction of "Pony Hills" on 3 May 1994. These advertisements claimed that a little more than half the area is hilly brigalow and softwood scrub country, while the carrying capacity was variously estimated at 2,000 breeders plus 1,000 bullocks, and 4,000 plus steers, with the potential to increase that number. This compares with Mr Shelton's estimated carrying capacity of "Springwater" of 650 to 700 breeders, a total of perhaps 1500 cattle.
Mr Shelton said that he had driven around "Pony Hills" and, while he was not sure of the area of scrub, he thought that the advertisement might be somewhat exaggerated. However, he said that he was confident that there would be at least 20,000 acres, or 8,000 hectares, of scrub. He was also confident that "Pony Hills" would carry three to four times more cattle than "Springwater".
Mr Quaite had not inspected "Pony Hills", but had obtained details of the valuation from the Department's Roma office. He said that these details included the
| classification of country as follows: 3150ha of belah brigalow box and wattle @ $45.50/ha | = | $143,325 |
| 1350ha of brigalow belah ironbark and box @ $39/ha | = | $ 52,650 |
| 2100ha of box cypress pine and silverleaf ironbark @ $26/ha | = | $ 54,600 |
| and | ||
| 16712ha of rough hills and slopes @ $1.95/ha | = | $ 32,588 |
Thus for a total area of 23,312ha, "Pony Hills" has a valuation of $285,000, or
$12.50/ha. This compares with the total valuation of the "Springwater" aggregation of
$335,000, or $19.80/ha.
The third ground of appeal, tick status, related to the difficulties in moving cattle from "Springwater" to a tick-free area, compared with the simple process of moving cattle from "Pony Hills", which was outside the tick area. Mr Shelton was of the opinion that this affected the relative values.
The fourth ground of appeal relates to the fact that "Springwater", although situated in the Taroom Shire, uses Roma as its principal town and seldom if ever uses the facilities of the Taroom Shire. While access to Roma was reasonable, the road to Taroom was particularly rough. Mr Shelton said that he did not know any of the councillors on the Taroom Shire Council, which was a disadvantage if he wanted to avail himself of any of the local authority services. He felt that this also affected the value of "Springwater".
THE RENTAL VALUATIONS OF THE THREE SPECIAL LEASES
Because of the manner in which the appellants conducted their cases, it is convenient to first deal with the rental valuations of the special leases. The special leases adjoin one another and form most of the southern boundary of the aggregation.
SPECIAL LEASE NO 36/38141
This special lease is the eastern most of the three, is irregular in shape and has an area of about 1865.601ha. Mr Quaite described it as comprising about 140ha (8%) undulating mixed scrub and forest and about 1725ha (92%) undulating inferior cypress pine, bulloak, wattle, ironbark forest. The valuation is now $8,500, or $4.55/ha.
Mr Shelton felt that the Department had still over-estimated the area of scrub and his assessment of the country types and relative valuations were as follows:
28ha cleared second class scrub @ $30/ha = $840.00 81ha fair forest @ $3/ha = $243.00 1757ha sandy cypress bulloak @ $1.50/ha = $2,635.50
TOTAL $3,718.50
Mr Shelton said that he adopted these values as he thought they were the per hectare figures the Lands Department had applied and he considered that they were reasonable. He felt that they were a lot lower than freehold values, because of the
condition of the lease that the timber could not be developed on the special lease. Mr Shelton added that most of the mixed brigalow scrub had been cleared and some of the area had been blade ploughed to beat the regrowth and seeded with buffel grass. It is undulating country with fairly shallow soils which tended to erode and was stony in parts.
The 81ha of fair forest was mostly box, with some ironbark and patches of cypress pine. Most of it had been rung and some adjoining the scrub country had been blade ploughed. It carried fair grass, even though it was undulating and rocky in patches. He thought that $3/ha was reasonable, compared with the value on the scrub.
The 1757ha of sandy cypress bulloak country was typical of the inferior country and ran cattle only in the summer, Mr Shelton said. He felt that at $1.50/ha it was probably not even half as good as the forest country.
Mr Shelton's comparison for all three special leases was "Pony Hills". He was well aware of the differences in the areas, but could not assist the Court with details of the valuations of any smaller areas. Mr Shelton was sure that Mr Quaite had over- estimated the area of scrub at 140ha and may have included some of the forest in the scrub area.
In arriving at his valuation for this special lease, Mr Quaite relied upon his analysis of two sales, "Box Grove" and "Wongalea". "Box Grove" contains an area of 2015ha, is of GHFL tenure and is situated about 26km north of Taroom on the bitumen sealed Leichhardt Highway. Mr Quaite described it as comprising about 1800ha (89%) of easy to moderately undulating box/ironbark forest and about 215ha (11%) of inferior ironbark/lancewood forest and ridges. This property sold in November 1992 for
$340,000 and Mr Quaite analysed this sale to show $97,000, or $48/ha. He described it as substantially superior to the subject land.
"Wongalea" is of freehold tenure, contains an area of 1942ha, situated about 24kms north of Taroom, with mainly bitumen road access. Mr Quaite described it as comprising about 1290ha (66%) easy undulating brigalow, softwood, Dawson gum scrub, about 400 ha (21%) box/silverleaf ironbark forest and about 252ha (13%) inferior ridgy box, narrowleaf ironbark, bloodwood, rosewood and lancewood forest. This property sold in April 1992 for $475,000 and Mr Quaite analysed the sale to show
$182,883, or $94/ha. He described this property as considerably superior to the subject land.
Although Mr Quaite said that the sales are superior, they are the only sales which were comparable in area. He considered that the values shown by the sales support the values applied to the special leases, having regard to the restrictive lease conditions that apply to their use. He reasoned that the values applied to the special leases must therefore be much less than those applied to freehold land. Mr Quaite
admitted that the two sales are handily situated to Taroom and with good access, but he believed he had made sufficient allowance for the remote location of the special leases. SPECIAL LEASE NO 36/38602
This special lease contains an area of about 2527.262ha, of which approximately 651ha is situated in Bungil Shire. For the purpose of the rental valuation, the whole area has been valued, but only the area in Taroom Shire has been included in the valuation of the aggregation for annual valuation purposes.
Mr Quaite described this special lease as comprising about 250ha (10%) of undulating brigalow/belah/wilga scrub, about 560ha (22%) box/sandalwood forest with areas of scrub influence, and about 1717ha (68%) undulating, inferior, cypress pine, bulloak/wattle forest. He had applied a value of $30/ha to the scrub and $2.50 to both areas of forest, as he considered that the better box forest was of no more value than the inferior forest because, under the lease conditions, it could not be developed.
Mr Quaite had used the same two sales of "Box Grove" and "Wongalea" to value this special lease. His total valuation is $13,200.
Mr Shelton again thought that Mr Quaite had over-estimated the area of scrub.
Measuring from the aerial photograph, he had calculated the country types as follows:
206ha cleared second-class scrub @ $30/ha = $ 6,180.00 162ha fair forest @ $3/ha = $ 486.00 2159ha sandy cypress and bulloak @ $1.50/ha = $ 3,238.50 $9,904.50
SPECIAL LEASE NO 36/38142
This is the smallest and most westerly of the three special leases and has an area of about 488.961ha. Mr Quaite described it as comprising undulating, inferior, sandy cypress pine, wattle and bulloak forest. He applied a valuation of $1200, or
$2.50/ha.
Mr Shelton said there is no scrub on this block, but he assumed there has been an over-estimation by the Department of the fair forest grazing. His assessment of the property is as follows:
16ha fair forest @ $3/ha = $ 48.00 473ha cypress bulloak @ $1.50/ha = $ 710.00
$ 758.00
Mr Quaite admitted that there is a small area of better forest, but he saw no purpose in classifying it separately. As a basis for his valuation Mr Quaite relied on the sale of "Box Grove" and also the sale of a property known as "Kiewa", which contains an area of 659.8ha. This property is situated about 12 kms south-east of Wandoan, with access by the bitumen Leichhardt Highway. It is also much superior to any of the special leases, comprising level to easy undulating blue gum, apple, box and ironbark forest with sandy creek flats. This property sold in May 1993 for $255,000 and Mr
Quaite analysed it to show an unimproved value of $66,000, or $100/ha.
Mr Quaite commented that although it is substantially superior to the subject land, it was the only sale of a small area of grazing land that he had available. He considered that the application of $2.50/ha on the subject land was well supported by the sales. Although it was hardly an attractive grazing proposition, Mr Quaite considered that an adjoining owner would willingly pay $1200 for the special lease, having regard to its restrictive lease conditions.
THE 'SPRINGWATER' AGGREGATION
This aggregation comprising GHFL 36/7933 and the three special leases (excluding the 651ha of SL36/38602 which is in Bungil Shire) contains an area of 16,890ha.
Mr Quaite described the property as comprising about 2911ha (17%) undulating brigalow/belah scrub in scattered patches, about 7089ha (42%) fair quality box/ironbark forest, flats and plateaux, about 2659 (16%) rough inferior forest range and gorges, about 390ha (2%) brigalow scrub, about 560ha (3%) box/ironbark forest and about 3281ha (20%) inferior, sandy, cypress pine, wattle and bulloak forest.
Mr Quaite calculated the valuation as follows:
2911ha @ $70/ha = $203,770 7089ha @ $15/ha = $106,335 2659ha @ $1.50/ha = $ 3,989 390ha @ $30/ha = $ 11,700 560ha @ $2.50/ha = $ 1,400 3281ha @ $2.50/ha = $ 8,203
TOTAL $335,397
which he rounded to $335,000.
The last three classifications are of the composite areas contained in the special leases.
Mr Shelton originally classified the area of the GHFL only, his classifications and applied values being as follows:
2569ha second class scrub @ $70/ha = $179,830 2835ha rung out box ironbark cypress and wattle @ $15/ha = $ 42,525 3798ha green ironbark cypress and bulloak @ $3/ha = $ 11,394 3441ha hard rangy cypress wattle and ironbark @ $1.50/ha = $ 5,162
TOTAL $238,911
To this then must be added the values that Mr Shelton attributes to the three special leases.
While the valuations applied by Mr Quaite and by Mr Shelton to each class of country are not substantially different, they differ on the estimation of areas.
As a basis for his valuation of the aggregation, Mr Quaite relied upon his analyses of two sales, "Tecoma" and "Sugarloaf".
"Tecoma" is of GHFL tenure and consists of 4126ha, situated about 45 kms north of Wallumbilla, with access by means of bitumen and formed earth and gravel roads. According to Mr Quaite, it comprises about 2600 ha (63%) brigalow/belah/ softwood scrub, about 1000 ha (24%) mixed marginal scrub and forest and about 526ha (13%) box/silverleaf ironbark forest. This property sold in May 1989 for
$1,350,000 and Mr Quaite analysed this sale to an unimproved value of $357,950, or
$86.75/ha.
Mr Quaite apportioned the sale as follows: 2600ha of scrub @ $99/ha,
1000ha mixed scrub and forest @ $70/ha, and 526ha of box ironbark forest @ $52.50/ha -
a total of $355,000.
"Sugarloaf" is also mainly of GHFL tenure, but has an area of special lease, part of State Forest No 27. It contains an area of 4797 ha and is situated about 42kms north of Wallumbilla, with access by means of bitumen and formed earth and gravel roads. Mr Quaite classified this country as comprising 1800 ha (37.5%) undulating mixed brigalow/wilga scrub and box forest, about 1958ha (41%) lighter ironbark/box forest and about 1039 ha (21.5%) undulating, inferior, cypress pine, ironbark and wattle forest.
This property sold in July 1992 for $650,000 and Mr Quaite analysed this sale to show an unimproved value of $221,337, or $46/ha. He apportioned this unimproved value as follows:
1800ha mixed scrub and forest @ $88/ha,
1958ha lighter forest @ $25/ha,
1039ha ironbark etc forest @ $12.50/ha - a total of $220,000.
The two sales are much smaller in area than the subject land, but Mr Quaite said that he had no sales of comparable size in the vicinity. He considered that the values derived from the sales support the figures that he applied, particularly the scrub value derived from "Sugarloaf" of $88/ha, compared with the $70 applied to the scrub on the subject land. In addition, the forest on "Sugarloaf" is better than that on "Springwater" while the inferior forest on "Sugarloaf" @ $12.50/ha reflects the fact that it contains patches of fringing scrub. The country on "Tecoma" is much better than the subject land.
Mr Quaite commented that the sales are much better situated than "Springwater"
and, even though it has natural water, there are problems in gaining access to it in places. He realised that he was comparing a property of nearly 17,000ha with sales about one-quarter of the size, but thought that an allowance for size is reflected in the different values. However, he admitted that he did not consciously make such an allowance.
On the matter of relativity, Mr Quaite compared the subject land with nearby properties, "Strathblane" and "Yebna". "Strathblane" is an inferior property, comprising 900ha of second-class scrub, 600ha of third-class scrub, 3200ha of sandy forest and 22,217ha of poor forest, to which an unimproved value of $180,000 or $6.70/ha has been applied.
On the other hand, "Yebna" is reasonably comparable to the subject land, according to Mr Quaite. It contains 3200 ha of second-class scrub, 4800ha of second- class forest and 10,059ha of inferior forest, for a total unimproved value of $365,000, or 18,059ha @ $20/ha. This is very close to the subject land at $19.80/ha.
Mr Quaite made the point that because of its size and location, it was difficult to find a basis to value "Springwater".
Perhaps the area of greatest disagreement on the Grazing Homestead Freeholding Lease was as to the area and relative quality of the forest country. Mr Shelton questioned the application of $15/ha to an area of 7089ha, as he said that a substantial area of this consists of steep, undulating country and gorges. Mr Shelton thought that Mr Quaite may have misjudged the quality of this country, as he strongly disagreed that it could be called "fair" forest. He has estimated that there is an area of approximately 3800ha which is much inferior to the quality of the better forest. While he conceded that it is better than the gorges and ridges on the other side of Hutton Creek, he said it contains cypress pine, wattle and bulloak.
On the other hand, Mr Quaite said it has better areas mixed in with the poorer country and believed that $15/ha is fair.
Mr Quaite believed that the values he has applied to the component parts of "Springwater" and to the aggregation as a whole are soundly based on sales evidence and in relativity with other properties of similar size in the locality.
Mr Shelton does not accept that. He said that because of the massive errors made in the original valuations, he had lost confidence in the ability of the Lands Department to calculate areas accurately. He said that he found it amazing that the adjoining property "Pony Hills", with four times more scrub country and running three to four times more cattle than "Springwater", with tick free status, has been valued at substantially less per hectare than "Springwater".
After considering the whole of the evidence I have arrived at the following conclusions:
SL36/38141 It appears to me that the reason for the difference between Mr
Shelton and Mr Quaite in this case, is that Mr Quaite has included the area of better forest in with the scrub in classifying 140ha of mixed scrub and forest. Mr Shelton, on the other hand, classified 28ha of scrub and 81ha of fair forest. He was adamant that Mr Quaite had over-estimated the area of scrub, because it merged with the forest and was difficult to tell where one stopped and the other started.
I am, on the state of the evidence, prepared to accept Mr Shelton's estimate as being more accurate. Therefore, I find it more probable that an area of 110ha comprises the scrub and better forest, which would make the calculation as follows:
110ha mixed scrub and forest @ $30/ha = $3,300 1755ha inferior forest @ $2.50/ha = $4,390
Total $7,690
SL36/38602 In this case, for the same reasons, I am also prepared to accept Mr Shelton's estimate of the scrub area and find that the values should be as follows:
210ha scrub @ $30/ha = $6,300 2317ha forest @ $2.50/ha = $5,792
Total $12,092
Adopt $12,090
SL36/38142In this case, I think the approach adopted by Mr Quaite and the value applied has been very fair. I therefore intend to determine this valuation at $1200.
THE "SPRINGWATER" AGGREGATION
The state of the evidence in this case is far from ideal. Mr Quaite has used sales which are much smaller than "Springwater" in order to arrive at a basis for his valuation. While the figures that he has applied to the individual classifications are well supported by his analyses of the sales, I do have some concerns about whether he has allowed for the difference in areas and the difference in location. Although he said that he felt he has made sufficient allowance, he was not able to adequately explain in giving his evidence, how he did so.
Mr Shelton relied entirely upon the comparison of the subject land with the adjoining property in Bungil Shire, "Pony Hills". Although there does seem to be a great discrepancy in the description of the country given by Mr Shelton and that contained in
the "Country Life" advertisements, compared with the description given by the Department of Lands, Roma Office, it is impossible on the state of the evidence to reconcile these differences. It is unfortunate that Mr Quaite did not inspect "Pony Hills" before this hearing. Mr Shelton is convinced that the valuation relativity is incorrect and until the two properties are inspected and compared, this feeling of injustice will remain. It is to be hoped that before the next valuation that Mr Quaite or his successor will inspect both properties and make the required comparison.
Mr Shelton also thought that Mr Quaite had over-estimated the area of better forest country on "Springwater". However, on the state of the evidence, I cannot hold that Mr Quaite has made such an error. He felt that he had adequately inspected the property and confirmed his inspection from aerial photographs. Without further evidence, I am not prepared to adjust his classifications, apart for the findings I have made in respect of the two special leases.
However, I have doubts about the allowances made for the size and situation of the subject land compared with the sales. In the circumstances, I think that an allowance of 10% would resolve these doubts. Accordingly, I intend to reduce the valuation to $300,000, which also takes into account the adjustment in the valuations of the special leases.
The relevant provisions of the Valuation of Land Act
Section 3(1) of the 1994 reprint of the Act requires that the unimproved value of land be determined at the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable conditions as a bona fide seller would require, assuming that the improvements did not exist.
However, section 14(1) provides that for the purpose of deciding the unimproved value of land that is not granted in fee simple, the land is taken to be granted in fee simple. But, under sub-section (5) the unimproved value of any land in a lease under the Land Act shall be determined having regard to and making proper allowance for any restriction or limitation of use, having regard to the purpose and conditions to which that lease is subject.
In these cases Mr Quaite said that he has applied a lesser value to the land contained in the special leases because of the restrictive conditions in special leases over State Forests. While I was not provided with the details of these restrictions, it was suggested that they might prohibit the clearing and development of land. Restrictions on stocking rates may also apply.
In such cases it would be appropriate for the special lease conditions to be tendered to the Court or that it is otherwise demonstrated that a value less than unimproved fee simple value should apply. However, in the absence of such evidence in these cases, I intend to accept the lesser values per hectare that Mr Quaite has applied to the areas of land in these special leases.
11
Determinations
In the case of RV94-0189, Special Lease No 36/38141, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value for rental purposes is determined at Seven thousand, six hundred and ninety dollars ($7,690).
In the case of RV94-0190, Special Lease No 36/38602, the valuation of the Chief Executive is set aside and the unimproved value of the subject land for rental purposes is determined at Twelve thousand and ninety dollars ($12,090).
In the case of RV94-0191, Special Lease No 36/38142, the appeal is dismissed and the unimproved value of the subject land for rental purposes is confirmed at One thousand, two hundred dollars ($1,200).
In the case of AV94-0371, the "Springwater" aggregation, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Three hundred thousand dollars ($300,000).
(JJ Trickett)
Member of the Land Court
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