Smith v Chief Executive, Department of Lands

[1995] QLC 38

[1995] QLC 38

 

  LAND COURT

BRISBANE

26 May 1995

Re:     Appeals against rental determinations -
  Dalrymple Shire Council.
  RV94-99/100.

RJ and RM Smith
  v.
  Chief Executive, Department of Lands

D E C I S I O N

(Hearing at Charters Towers)

These are two appeals against determinations by the Chief Executive, Department of Lands, of rental values applied to "Bluff Downs" and "Allingham" Pastoral Holdings in the Charters Towers district as at 31 March 1992, which valuations took effect on 30 June 1993.
           "Bluff Downs" which comprises an area of 39,400 hectares is valued at $827,400 (or $21/ha) whilst "Allingham" containing an area of 13,050 hectares is valued at $314,505 (or $24.10/ha).  The appellants contend that rental values should be fixed at $15/ha and $14/ha respectively.  "Bluff Downs" and "Allingham" are situated about 100 to 112 kms north-west of Charters Towers with access by bitumen sealed road for 80 kms and then by formed earth and gravel road which it is admitted is rough and can be boggy in wet seasons.  The road actually passes through "Bluff Downs".  "Allingham" which is referred to by the appellants as "Talavera" adjoins "Bluff Downs" on the south-west.  The holdings are worked in conjunction and are used for the purposes of breeding, growing and fattening beef cattle.  "Bluff Downs" is used for fattening cattle which it is agreed is its highest and best use.  Classifications of the country were put in evidence by Mrs Smith.  These classifications were obtained from the Department of Primary Industries and coincided with an assessment of the country made by Mr M McDougall, registered valuer in the employ of the Department of Lands, who wrote the valuations which are before the Court.  The break-up has "Bluff Downs" comprising about 16,500 hectares (42%) open black basalt plain lightly timbered with bloodwood and ghost gum and about 17,100 hectares (43%) level to slightly undulating red basalt country timbered predominantly with narrowleaf ironbark.  There is an area of about 5,800 hectares (15%) in the northern corner which comprises sandy and gravelly ironbark interspersed with areas of box country running into hard yellowjack tableland.  It is agreed that the area north of the intersecting road consists of the open black soil plain land generally free of stone and that the prevalence of stone south of the road in the red basalt country varies from medium to heavy.  It is agreed that the carrying capacity of "Bluff Downs" is 4,000 head of beef cattle (1 beast to 10 hectares).  "Talavera" possesses about 1330 hectares (10%) of open black basalt country with the balance being generally red basalt country subject to stone.  This property is given a carrying capacity of 1 beast to 11 hectares or 1186 head of cattle on a breeding and fattening basis. 
           Mrs Smith conducted the appeals on behalf of the lessees.  The particular grounds of appeal dealt with matters going to the difficulties encountered in developing and running cattle on basalt country.  The general headings include such matters as the accessibility of water, soil types, vegetation, rainfall, altitude whilst general grounds comprised headings on relativity, false lending/land values and valuation of existing improvements.  There is no dispute that "Bluff Downs"/"Talavera" has been in drought for some years and that in recent times most stock normally run on the properties are on agistment.  At present about 2000 head are kept on the blocks.  Mr McDougall is in agreement with Mrs Smith on all points of general disabilities including the costs of fencing basalt country (double the labour component of sandy country) and on such matters as access to water points, access to the property from the bitumen road and the necessity to supplementary feed.  He is also in agreement with Mrs Smith on the presence of rubber vine and on the existence of parthenium on "Talavera" which it appears on the evidence is invading the property from the north along the watercourses.  Mrs Smith sees this as a potential threat to "Talavera".  The general disabilities are, in the opinion of Mr McDougall, common to basalt country and accordingly are reflected in the sale market for such lands.  He and Mrs Smith agree that the best comparison that can be made in ascertaining value is by way of sales of comparable country. 
           Mr McDougall put in evidence sales of three blocks for comparison purposes comprising "Greenvale" which reflected on analysis of the sale a value of $347,000 or $13.90/ha (applied value $12.80/ha), "Cargoon" which reflected on sale a value of $8.90/ha (applied value $8.15/ha) and "Mt Oweenee" which reflected a value of $7.10/ha (applied value $7.00/ha).  "Greenvale" which was purchased in 1989 for $875,000 was resold in May 1990 for $925,000.  Mrs Smith said that the original purchaser resold the block on becoming aware that poison peach was present on the block.  The block may be described as a forest block and is suitable for breeding purposes only.  Mr McDougall gave the block a carrying capacity of 1 beast to 15 hectares.  The block is inferior to "Bluff Downs".  "Mt Oweenee" which is one block removed to the north of "Bluff Downs" is also a forest block possessing about 20% of steep and inaccessible ranges.  The carrying capacity of this block is estimated at 1 beast to 20 hectares.  It is also a breeding block and is inferior to the subject properties.  "Cargoon" which has an area of 56,600 hectares was sold in December 1992 for $1,540,000 and reflected on analysis of the sale made by the Department an unimproved value of $504,000 or $8.90/ha.  The value applied for the purposes of the 1992 valuation is $460,000 or $8.15/ha.  This property has about 18,500 hectares (33%) of good red and black basalt forest timbered with narrowleaf ironbark box, Mt Coolibah and ghost gum.  It also contains about 12,500 hectares (22%) fair granite forest country timbered with narrowleaf ironbark box and bloodwood.  The balance of the property of about 25,600 hectares or 45% consists of poor forest ridges timbered with broad and silverleaf ironbark bloodwood box wattle and yellowjack.  Mr McDougall gives the property a carrying capacity of 1 beast to 16 hectares or 3537 head.  Clearly, the property is inferior to the subject properties in having a large percentage of poor forest.  Of the three sales, it is probably the most comparable with the subject land in that it does possess a good percentage of red and black basalt forest.  The difficulty in applying the sale, of course, is the problem that arises by virtue of the fact that "Cargoon" is predominantly forest country with a substantial part of it very inferior forest country.  Nevertheless, the sale does establish that "Bluff Downs" and "Allingham" are considerably superior.  This conclusion is also reached on a comparison of "Bluff Downs" and "Allingham" with the sales of "Greenvale" and "Mt Oweenee" which are suitable for breeding purposes only.
           On this evidence, Mr McDougall would value "Bluff Downs" at $21/ha and "Talavera" at $24.10/ha notwithstanding that "Talavera" has a slightly inferior carrying capacity and is a little further from Charters Towers.  The reason for doing this is that smaller properties with a lesser capital sale value than larger properties of comparable country will fetch more in the marketplace as there are more potential buyers in the market for such lands.  The Court has found that this is a feature of the market throughout the State and is not surprised to hear the argument repeated in this case.
           Mrs Smith whose evidence contained a long list of sales of properties could not speak to any sale as she did not know the properties and she agreed that carrying capacities where stated in sales brochures were generally more optimistic than carrying capacities applied by the Department.  For this reasons, no useful purpose can be served by considering such evidence.
The general principles which apply in a matter of this nature are found in the Valuation of Land Act which, in s.15, provides that the value to be used to determine the rent applying to a lease under the Land Act "is the unimproved value under this Act". Section 3 of that Act defines "unimproved value" in relation to improved land as the capital sum the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist. A definition of this kind has been considered by the Privy Council. In Toohey's Ltd v. The Valuer-General (1925) A.C. 439 P.C., Lord Dunedin at page 433, in discussing "unimproved value" said:-

"Now, what he (the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken not only as non-existent, but as if they never had existed.... What the Act requires is really quite simple.  Here is a plot of land; assume that there is nothing on it in the way of improvement, what would it fetch in the market?  It will be observed that the value is not what has been sometimes designated by the expression 'prairie value'.  The land must be taken as it exists at the date of valuation."

In the circumstances of the subject case, it may appear simplistic to say, as Mr McDougall would say, that many of the problems which have been encountered by the lessees of "Bluff Downs" in recent years (including those problems which are peculiar to basalt country) are matters which are common to comparable country or common to the shire.  On this issue I may cite from Metropolitan Water Board v. Chertsey Assessment Committee [1916] AC 337 where at p.346, Lord Loreburn said:

"When a man pays a price for the fee simple of land, whatever fitness or capability for profitable use then existed in the land or may run with it is surely covered by the price he pays.  "

That passage was referred to by the Full Court of Queensland in the case of The Australian Pastoral Company Limited v. The King (1919-1921) 8 CLLR 311.  Similar expressions of opinion may be found in the decision of the High Court in Spencer v. The Commonwealth (1908) 5 CLR 418. Further I may refer to authority dealing with the consideration which the Court may give to the effects of drought. As early as 1926, this Court held that it was not a drought tribunal as such and that drought can only be considered insofar as it is likely to affect the amount which experienced persons would be willing to pay for similar land. See Re: Wakefield Aggregation 1926-27 11 CLLR 93.  I also note that the former learned President of this Court, Mr WF Smith, in his Report on Sheep and Cattle Rental Standards (1970) after referring to the consideration which the Court may give to drought said that drought relief can be more efficiently and promptly dealt with by the Administration (p.11).  A logical extension of that principle would, in my opinion, cover the question of the incidence of woody weeds and also of their increase during drought.
           On reflection of the whole of the evidence and in consideration of the comparability of the subject properties each to each and with the sales mentioned by Mr McDougall, there is no doubt that the subject properties are superior to the sales mentioned and in the absence of any cogent evidence to depart from the opinions expressed by Mr McDougall of the comparability of such properties I will adopt his opinions.
           Accordingly, the appeals are dismissed and the determinations of the Chief Executive affirmed.

(DM White)            
  President of the Land Court