Smith v Department of Natural Resources, Mines and Water

[2007] QLC 90

LAND COURT OF QUEENSLAND

CITATION:	Smith & Ors v Department of Natural Resources, Mines and Water  [2007] QLC 0090
PARTIES:	Keith Ashburn Smith and William David Smith, and Christine Forrester and Barbara Russell appellants
v.
Chief Executive, Department of Natural Resources, Mines and Water respondent
FILE NO:	AV2006/0727
DIVISION:	Land Court of Queensland
PROCEEDING:	Appeal against annual valuation under the Valuation of Land Act 1944
DELIVERED ON:	31 October 2007
DELIVERED AT:	Brisbane
HEARD AT:	Cairns
MEMBER:	Mr RP Scott
ORDER:	The appeal is allowed, and the valuation of the subject land is determined in the amount of Three Hundred and Forty Thousand Dollars ($340,000).
CATCHWORDS:	Valuation – unimproved value – sales evidence preferred to relativities – percentage based escalation of previous valuation rejected.  Valuation – unimproved value – steepness of country – measurement based on contour lines preferred to broad assessment – steepness not absolute, but relevant as a point of comparison.
APPEARANCES:	Mr WD Smith for the appellants Mr G Smith (Senior Lawyer, Department of Natural Resources and Water) for the respondent

1. Pursuant to the provisions of Valuation of Land Act 1944, the Chief Executive, respondent, placed a statutory valuation on the appellants' land in the amount of $350,000 as at a valuation date of 1 October 2005. 

2. The appellants objected against that valuation and subsequently appealed to this Court.  William David Smith, one of the co-owners appeared for the appellants and gave evidence.  He said that the valuation ought to be $174,000, not the figure of $116,000 which appeared in the Notice of Appeal.  The higher figure was produced by applying a 50% increase to the pre-existing valuation on the basis of Mr Smith's understanding that a 50% increase was justified having regard to increases in the statutory valuations of primary production properties throughout the Shire.  He obtained that figure from a newspaper article concerning valuation increases.  That is not an acceptable approach to placing a valuation on land for the purposes of the Act.  In Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17, the Land Appeal Court said:

   "It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation.  If there was no justification for change in relativity, the valuer's task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula.  This, of course, is undesirable."

   For similar reasons I reject other evidence from Mr Smith concerning valuation increases for a number of other properties.

3. David Frank Paton, a registered valuer, provided valuation evidence in support of the Chief Executive's valuation figure.  He explained that the reference in the newspaper article referred to above, related to different lands from that in the land the subject of this appeal.  In his valuation report Mr Paton said that the subject land which has an area of 81.6302 ha is used for the raising, breeding and fattening of beef cattle largely for the purposes of a beef cattle stud.  The land is located about 400 metres north of Myola and about 3 kms north-west of Kuranda, 22 kms north-west of the Cairns Post Office and 30 kms north-east of the Mareeba Post Office.  It is located on the northern side of the Barron River which must be crossed to access the property.  The subject land shares a boundary with the Kuranda National Park which is the source of associated management problems including wild dogs and pigs who take refuse in the park.  The land is broken by two creeks and associated gullies such that the topography of the land includes parts with what might be described as having a steep contour.  There was disagreement between the parties as to the proportion of the country which might be so described.

4. In his valuation report Mr Paton described the topography of the subject in some detail, then in summary said "overall contour can be summarised as easy to moderately sloping with steeper slopes to gullies.  The majority has been cleared from scrub except for steeper gully lines and Barron River bank."

5. In contrast to that description Mr Smith described the land as comprising "moderately to steeply sloping scrub country".  He said also that the land "is very steeply sloping over at least 40% of the block".  That description was challenged by the Chief Executive, however there was no disagreement that steeply sloping country can cause working problems in relation to fencing, pasture management and fertilising. 

6. In his valuation report, Mr Paton classified the subject as follows: -  

   Easy to moderate scrub 61.68 ha @ $5,150 per ha               = $317,652

   Steep scrub 5 ha @ $2,575 per ha  =   $12,875

   River bank and gullies 14.95 ha @ $1,275 per ha                 =   $19,061

   Total$349,588

   Rounded$350,000 ($4,288 per ha)

   It can be seen from this classification that Mr Paton has described about 25% of the land as being steep in contrast with Mr Smith's figure of 40%.  The difference between them relates to a little over 12 ha assuming that their respective adoption of "steepness" was the same.  In Mr Paton's case he adopted a 20º slope as being the maximum slope that one might clear timber from and work for grazing purposes, whilst Mr Smith based his classification of steepness on a safety factor.  That is, if it was country over which he felt he could not safely drive his tractor then it was steep.  I was not told the type of tractor involved and whether the same safety issue arose during wet and dry times. 

7. The appellants did not measure the 40% estimate of steep country but according to Mr Smith it was "an estimated guess" based on his tractor safety criterion.  Mr Paton, who was familiar with operating machinery on rolling hill country in New Zealand, said that a four wheel drive tractor with wheels set wide would be safe at dry times over the area he described as "easy to moderate scrub".  He agreed that during times when that class of country was wet, it may be unsafe to operate a tractor over it particularly a two wheel drive vehicle.

8. Whilst I acknowledge the practicality of Mr Smith's approach to the steepness issue, it appears to me to be imprecise for present purposes.  Mr Paton provided a contour plan of the subject land including contours at 10 m. intervals.  It is clear to me from that evidence that there are parts of the land that should properly be described as "easy" and some such as in the vicinity of creeks that should clearly be described as steep.  Whilst Mr Smith was reticent to adopt the epithet "easy" as applying to any of his country it seems to me that the issue between the parties relates to the land between these two extremes which the appellant claims to be steep.  That is the 12 ha to which I referred above.

9. I have studied attempts by the witnesses to indicate steep areas on maps tendered.  In conjunction, I have perused an aerial photo flown in 2006 showing areas of the subject property that are cleared.  Having regard to that evidence and to the oral evidence, I cannot agree that the appellants' 40% estimate would be right.  Mr Paton's method of measuring by reference to the contour lines would be the more accurate and is supported by the mapping evidence tendered. 

10. In the end however, it is not a matter of absolutes in classifying which parts are steep and which are not, as the value of the land is to be determined by reference to the sales evidence and in the process of comparison between sales and the subject land.  In that respect it seems to me that Mr Paton has adopted a consistent standard. 

11. In carrying out his valuation report, Mr Paton referred to Short v Wet Tropics Management Authority [2003] QLC 1 (at paras 54, 74, 80, 82 and 83) in which the weight of evidence pointed to a conclusion that slopes up to about 20º were amenable to clearing. Whilst the adoption of a 20° standard might have been an appropriate outcome given the evidence in that case and the class of country involved, it at least has the advantage of indicating clearly the standard applied by Mr Paton before me.

12. As is common with properties found on the northern side of the Barron River, access over the river is frequently cut during the wet season.  In addition, access to properties such as the subject includes portions of undedicated "roadway" including over bridges crossing the Barron River.  Whilst there is a dwelling located on the subject land, Mr Smith said there is no permanent resident or caretaker there primarily due to the access problem during the wet season.  Mr Paton's approach to the issue was to, where he could, identify comparable sales which had similar access difficulties.  I now turn to these sales. 

13. Finding suitable sales evidence in the Kuranda locality proved difficult to Mr Paton, especially when he was seeking sales of properties with a similar use to the subject, with similar country and with the same access constraints.  Land availability in Kuranda is inhibited by the presence of the aforementioned national park and the State forest which occupy a large part of a narrow corridor of wet tropics rainforest.  Apart from that, many of the available sales include large areas of remnant vegetation which cannot be lawfully cleared and many of which are used for rural residential or hobby farm purposes.  Given this situation, Mr Paton saw value in including two sales from the Julatten area. 

14. He included seven sales in his valuation report, all of which were improved though some to a lesser degree.  He said that the sales evidence indicated clearly to him that the market for land being purchased for grazing of beef cattle was rising strongly from 2003 through to 2006 and that he had included some sales after the relevant valuation date in an attempt to understand this change in the market.  In addition to that, he had the difficulty of finding sales which exhibited features of the type which are discussed in the preceding paragraphs.  No single sale was able to be found which could offer precise points of comparison similar to that of the subject property, so he selected a range of sales each of which he saw contributed to the overall valuation approach. 

15. Another difficulty confronted by Mr Paton was that the sales had to be analysed to an unimproved figure in some cases taking into account relatively substantial improvements.  Nevertheless, I notice that Mr Paton employed the method approved by this Court for valuing improvements on a farming property, including an appropriate allowance for interest.  There was an even further complication and that lay in the need to consider sales which reflected country types similar to those found on the subject land including areas of steep country.  Unfortunately valuers are not able to manufacture sales evidence but must take from the market place such evidence as they can unearth.  It seems to me that Mr Paton has been assiduous in discovering the best sales evidence that he could and then applying it in the valuation approach in a disciplined intellectual manner subject to one issue to which I refer below.  In Chief Executive, Department of Natural Resources v Radlett Enterprises Pty Ltd (1998) 18 QLCR 397, the Land Appeal Court had to deal with evidence in which the sales selected by the valuer could best be described as a basket of sales, none of which was directly comparable with the subject land. The Land Appeal Court recognised (at 406 to 407) that it was the application of expert opinion to the available evidence that needs to be considered. Similarly to the position confronting the Land Appeal Court in Radlett, I find myself in a position of largely having to rely on the expertise of Mr Paton.  He certainly presented as a thorough, honest and technically sound witness in whom I could place substantial reliance.  He even so far as to make reference to some sales that he had elected not to rely on for reasons that I accept as being justified.  Having said that I need to consider some of the sales evidence in a little more detail. 

16. His first sale took place in January 2004 and involved a sale of $425,000 which he analysed to an unimproved figure of $179,362 or $2,771 per ha for the 64.73 ha involved.  Given his appreciation of the market growth he described that sale as being early and low and therefore not directly comparable with the subject.  Mr Smith knew the sale land to some extent having worked on it as an adolescent and, whilst he had driven past it on occasions since then, had not visited the property for some time.  He consulted the vendor who told him that the dwelling on the land was a significant structure covering 384 m².  Mr Smith did not speak to the purchaser so was unaware of his intentions, as he told Mr Paton, to re-establish a grazing enterprise on the sale land.  The vendor was elderly and had allowed the production on the property to decline leading up to the time of the sale.

17. I think that Mr Paton investigated this sale thoroughly and that his conclusion that the sale price reflected a sale for grazing purposes rather than as a rural residential site should be accepted.  There was no cogent challenge to his analysis of the sale.

18. Before I come to another sale in Mr Paton's valuation I should introduce a sale on Kay Road which Mr Smith said was sold for $375,000 in September 2005.  He said the sale comprised some 68 ha of good arable forest country within the Mareeba Dimbulah irrigation scheme and, whilst the block has minor structural improvements, it has a water licence.  Mr Smith did not inspect the sale nor did he obtain an analysis of the sale to an unimproved figure, but appeared to place reliance on the statutory value increase from the previous valuation to that applied as at 1 October 2005.  It will be clear from what I said above that I do not accept that as a valid approach to a valuation in a case such as this.  Apart from that I accept Mr Paton's evidence that the Kay Road sale relates to a different market from that which applies to the subject property.  The sale property is in a drier area and its arability can only be taken advantage of by the costly application of irrigation water.

19. Sale 3 in Mr Paton's valuation report sold in November 2004 for an analysed sale figure of $211,469 or $3,266 per ha.  The infrastructure on the sale land is limited such that the property could not readily be utilised efficiently for grazing purposes without further expenditure.  Mr Smith expressed the view that the property should be classed as a rural home site.  Nevertheless in cross-examination he accepted that with some investment use of the property for grazing purposes, could be achieved.  Putting that issue aside I think that Sale 3 is of interest in that whilst its dry weather access is poorer than that of the subject property, during the wet season the sale property has alternative though undedicated access which remains open.  It seems to me that to ensure security of livestock and improvements on the subject land and for the purposes of ongoing management of the subject property, the current inability of the subject property to sustain ongoing habitation throughout the year is a point of detriment that is not adequately reflected in Mr Paton's valuation. 

20. Sale 2 in Mr Paton's report involved a sale at Julatten.  According to Mr Paton that sale formed the main basis for valuation levels at Julatten notwithstanding the fact that on 26 October 2005 a further sale (Sale 5) at Julatten of a property referred to as "Chipalee" indicated that the value level evidenced by the Sale 2 property may have been too low.  Mr Smith properly expressed concern that if the later Julatten sale were to be adopted in his case then the level of value that would apply to his property would be out of kilter with the level of value that would apply to properties in the Julatten area.  That may be so but my task is not that of ensuring the correctness of valuations throughout an area or areas but in dealing with the appeal before me and the question of the valuation of the property the subject of that appeal.  In these circumstances the Sale 5 transaction is a transaction that is open to consideration. 

21. A further issue arising with respect to the Sale 5 transaction is that Mr Smith gave evidence that in a valuation report provided to him by a private firm of valuers, the opinion was expressed that the Sale 5 property was thought to be superior to the subject.  The author of that valuation report was not called to sustain and explain that opinion so it is not one that I can properly take into account.

22. As I have indicated earlier I intend adjusting Mr Paton's valuation for what I perceive to be insufficient allowance for the access difficulties suffered by the subject property.  I can do nothing more than have regard to the same basket of sales evidence supplied by Mr Paton and in that respect make particular mention of his Sale No. 3.  I conclude that the valuation of the subject land should be reduced to $340,000 and that therefore the appeal should be allowed. 

RP SCOTT

MEMBER OF THE LAND COURT