South East Queensland Water Corporation Limited v Chief Executive, Department of Natural Resources and Mines
[2002] QLC 67
•27 August 2002
LAND COURT OF QUEENSLAND
CITATION: South East Queensland Water Corporation Limited v. Chief Executive, Department of Natural Resources and Mines [2002] QLC 0067
PARTIES: South East Queensland Water Corporation Limited
(applicant)
vChief Executive, Department of Natural Resources and Mines
(respondent)
FILE NOSAV2001/0402; AV2001/0400; AV2001/0427 & AV2001/0422
DIVISION: Land Court
PROCEEDING: Appeals against Unimproved Valuations
Shires of Kilcoy and Caboolture – Valuation of Land Act 1944
DELIVERED ON: 27 August 2002
DELIVERED AT: Brisbane
HEARD AT: Brisbane
MEMBER: RE Wenck
ORDER: 1. Appeal AV2001/0402 (Lessees PA & GF Klein & DM Nicholls)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $149,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of One Hundred and Twenty-two Thousand Dollars ($122,000).
2.Appeal AV2001/0400 (Lessees AB & NC Brown)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $89,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of Seventy-four Thousand Dollars ($74,000).
3.Appeal AV2001/0427 (Lessees GR & AE Tones)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $109,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of Ninety-one Thousand Dollars ($91,000).
4.Appeal AV2001/0422 (Lessees HC & CA Munro)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $162,500 as at 1 October 2000 is set aside and the unimproved value determined in the amount of One Hundred and Thirty-six Thousand Dollars ($136,000).
CATCHWORDS: Statutory Valuation - Valuation of Land Act – exclusive use for purposes of farming – "lifestyle" not a potential use to be disregarded pursuant to s.17(1).
[200]
Statutory Valuation - Valuation of Land Act – restrictions on limitations under leases – land to be taken as land granted in fee simple except pursuant to leases identified in s.14(5).
[206]
Statutory Valuation - Valuation of Land Act – unimproved value – assumption of continuation of use – improvements may be continued – s.3(4).
[219]
Statutory Regulation – Water Act 2000 – use of land restricted under lease – potential for regulatory control pursuant to s.258 and s.259.
[207]
Valuation – use of land restricted under lease – potential for regulatory control – effect of perceptions on unimproved value.
[209] [223]
COUNSEL: Mr R Jones for the applicant
Mr R Paterson for the respondent
SOLICITORS: McCullough Robertson for the applicant
As at 1 October 2000 the chief executive made, pursuant to the Valuation of Land Act 1944 (the Act) unimproved valuations of rateable lands in various local government areas including Kilcoy and Caboolture Shires.
The South East Queensland Water Corporation Limited (SEQ Water) has "inherited" various parcels of land both above and below the full supply level of the Somerset Dam.
The lands above the full supply level of the dam have been leased to various persons. Individual leased parcels have been valued separately by the chief executive.
Those leased areas which are exclusively used for purposes of farming have been valued pursuant to s.17 of the Act which relevantly provides:
"(1) In making a valuation of the unimproved value of land exclusively used for purposes of … farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.
(2) In subsection (1) –
'farm improvements' includes appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business but does not include a dwelling or car accommodation.
'farming' means—
(a) the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or
(b) any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock;
if the business or industry represents the dominant use of the land, and—
(c) has a substantial commercial purpose or character by—
(i) having an average gross annual return, calculated over a 3 year period, of at least $5 000; or
(ii) if the business is the establishment and harvesting of native or non-native forests—having an average anticipated gross annual return, calculated over the period from establishment to harvesting, that is usual for the particular species of tree, of at least $5 000; or
(iii) if the business is the maintenance and harvesting of native forests—having an average anticipated gross annual return, calculated over the period from the start of maintenance to harvesting of the particular species of tree, of at least $5 000; or
(iv) having—
(A) a minimum value of farm improvements or plantings of forest or orchard trees of $50 000; and
(B) the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard trees; and
(d) is engaged in for the purpose of profit on a continuous or repetitive basis."
These lands are leased for terms of 30 years which commenced in 1991 with options for a 30-year extension.
For the primary purpose of protection of the quality of water in the Dam, lease land management plans have been prepared and various restrictions and limitations are placed on the use of the leased lands.
Lessees are responsible for local government rate charges. The valuations of these lands as at 1 October 2000 increased significantly above the previously existing valuations. SEQ Water as the owner of the land objected to the valuations as initially issued and being dissatisfied with the decisions of the chief executive on those objections, has filed a number of appeals in the Land Court.
The parties have selected four of those appeals as being representative of the bulk of the appeals by SEQ Water and have requested the Court to determine these representative appeals accordingly.
The Issues
The issues in these appeals are identified as follows:
·Whether potential for uses other than "exclusive use for purposes of farming" is a factor in any of the sales evidence on which the chief executive's valuations are based.
·The correct level of value of land exclusively used for the purposes of farming.
·The relativity, or lack of it, between the valuations of lands exclusively used for purposes of farming in the adjoining Esk and Kilcoy Shires.
·The effect on market value of land exclusively used for the purposes of farming, subject to or perceived to be subject to restrictions and limitations on use associated with adjacency to the full supply level of the dam.
Representation and Witnesses
Mr R Jones of Counsel, instructed by McCullough Robertson Lawyers, appeared on behalf of the appellant.
Witnesses for the appellant were Mr Mervyn J McAulay, a joint lessee and elected Chairman of the Somerset Dam Lessees' Association; Dr Mark O'Donohue, Water Quality Manager with SEQ Water; Mr Gregory P Steel, Property Services Manager with SEQ Water; and Mr Timothy J Rabbitt, registered valuer in private practice.
Mr R Paterson, Principal Legal Officer with the Department of Natural Resources and Mines appeared on behalf of the respondent chief executive.
Mr Damien P Jones, registered valuer in the employ of the respondent, was his sole witness.
The Evidence
Mr McAulay
Mr McAulay and his wife lease about 380 ha of land from SEQ Water and conduct there on a dairy farming operation. Their leased land was not one of the representative cases.
His evidence was that until 1996, the rental for the leased lands had been based on the unimproved value of the land. In 1996, the lease arrangements were reviewed and rentals were subsequently calculated on a formula related to permitted carrying capacities and movement in the cattle price index. That initially resulted in decreased rentals, but in exchange SEQ Water required lessees to agree to property management plans, the prime objective of which was protection of water quality, through control of farm management practices and the running of conservative stock numbers.
Mr McAulay stated that SEQ Water seeks to enforce compliance with the individual management plans. In his opinion the management plan limitations on the use of the land, through reducing the productivity potential, has had a detrimental effect on the market value of the leasehold interest in these lands. Mr McAulay "used to adopt the benchmark of $1,250 per ha when valuing the leases" but was aware that a lease had recently sold for $1,000 per ha. He accepted that factors other than management plan limitations on use might impact on the market value of the leasehold interests. Other factors to which reference was made included the level of rental charged, the significant transfer levy now imposed by SEQ Water and the absence of houses on some of the leased lands.
Mr McAulay mentioned that some of the leased area, being land adjacent to the full supply level is subject to inundation when heavy rainfall occurs at times when the Dam is full.
Mr McAulay agreed that, depending on the location of the land, relative to the upper reaches of the waters of the Dam, additional land could be used by stock as water levels in the dam receded. However he did not see this as an opportunity to increase stock numbers. Apart from the restriction on carrying capacity imposed under the lease land management plans, the water receded due to dry conditions which affected all pastures. The nature of pasture which grew on land after long periods of inundation was of inferior quality.
The thrust of Mr McAulay's evidence was directed to the recent alleged reductions in the market value of the SEQ Water leases and his opinion that the primary cause of reduced values related to the restrictions on land use.
Dr Mark O'Donohue
Dr O'Donohue is the Water Quality Manager with SEQ Water and is highly qualified for that position. SEQ Water supplies water to local governments within South East Queensland and has contractual obligations to its customers relating to water quality. It accepts a duty of care to maintain water quality for other stakeholders, such as people undertaking recreational activities in, as is relevant to these appeals, Somerset Dam.
Tendered through Dr O'Donohue was a comprehensive statement with annexures relevant to the Corporation's Water Quality Strategy Plan and its framework basis; its "Development Guidelines for Water Quality Management", a document which is intended to provide guidance for development on the Corporation's own lands and generally within the Somerset Dam catchment, copies of lease documents and lease management plans relevant to the representative appeal properties.
Under the heading "Direct Control of Land Use" Dr O'Donohue's statement contained the following paragraphs:
"17. SEQ Water undertakes catchment management in both a direct and indirect manner.
18. SEQ Water is able to directly manage the land owned by it within the catchment of Somerset Dam. SEQ Water leases the land it owns within the catchment areas for Somerset Dam. The uses of the leased lands are governed by the leases and lease land management plans, which are directed to ensuring that the uses made of leased lands do not adversely impact on water quality.
19. For land located immediately adjacent to Somerset Dam, the leases for that land limit the use of the land to the grazing of limited numbers of dairy (sic) cattle and associated stock horses but prohibit all other forms of livestock from the leased area. Lease land management plans for those parcels of land also:
(a)prohibit the chemical control of noxious weeds or woody weeds on the leased area within 30 metres of the water level in Somerset Dam;
(b)prohibit aerial spraying or boom spraying within the leased area;
(c)permitting (sic) only certain types of chemical spray methods within the leased area;
(d)permitting (sic) only certain types of chemical herbicides to be used on the leased area;
(e)prohibiting (sic) the placing of containers of chemicals within 30 metres of the water level in Somerset Dam;
(f)regulate the storage of chemicals within the leased area;
(g)regulate the location of cattle dips on leased areas;
(h)prohibit the open pen spraying of livestock on leased area;
(i)regulating (sic) the fencing of leased areas;
(j)regulating (sic) the use of fertilisers on the leased area."
…
20. SEQ Water also takes an active role in policing compliance with leases and lease land management plans for land owned by it.
…
21. SEQ Water places constraints on the use of the land immediately adjacent to Somerset Dam because this riparian land acts as a buffer strip between the rest of the catchment and Somerset Dam. While, during significant rainfall events, most of the contribution of nutrients and sediments into Somerset Dam which are contrary to water quality in rainfall events comes from streams and rivers within the upstream catchment of Somerset Dam, localised rainfall will lead to isolated run-off from riparian land, which has an impact on water quality.
22. The reason for placing constraints on the use of SEQ Water's land is also that it is an opportunity for SEQ Water to demonstrate good catchment management practice on land within the catchment of Somerset Dam. In turn, this will promote good catchment land management for local governments and other land owners within the catchment of Somerset Dam.
23. Even though these catchment management practices are not specifically required by legislation, SEQ Water adopts these catchment management practices to ensure water quality for its customers and other stakeholders. I would expect that if SEQ Water did not take these catchment management measures, and water quality was compromised to the point that supply was stopped for a period of time, legislation would be put in place to regulate catchment management in the areas of SEQ Water's dams. An example of this occurred in Sydney in recent times as a result of contamination to water."
Mr Gregory P Steel
Mr Steel is employed by SEQ Water as its Property Services Manager. He gave evidence as to the management policies of SEQ Water and the enforcement of lease conditions since SEQ Water "inherited" the lands and leases.
He advised that the full supply level of Somerset Dam was EL99 and the leased lands, being the lands subject of the valuations appealed against, were bounded by and then above that contour level. The land below the full supply level, when exposed by receding Dam waters, was not fenced off and stock were not restricted from grazing on or watering from that land. Lessees extended the side boundary fencing into the dam waters to contain their stock within their lease areas. As far as Mr Steel was concerned, even if an individual lessee sought to increase stock numbers to gain any advantage from the use of land below full supply level, the maximum stock numbers permitted under the lease management plan would still apply.
Mr Timothy J Rabbitt
Mr Rabbitt took the following matters into account in his valuation approach:
(i)the sales evidence of freehold properties surrounding Somerset Dam and within the Shires of Kilcoy and Esk;
(ii)the relativity between the grazing lands in both Shires and the chief executive's valuations of those grazing lands at the same relevant date;
(iii)the sales of leasehold properties leased from SEQ Water;
(iv)the effects of the Water Act 2000 on the subject properties.
Mr Rabbitt accepted that the overall sales evidence had indicated major price increases in Kilcoy Shire for properties in the north-east and east of the Shire, "where prices have risen on the back of rural lifestyle purchases".
He commented -
"These sales are predominantly to out of town people looking for a 'weekender', or a small farm for tax or lifestyle reasons. They are not sales to farmers and/or graziers."
In his opinion such sales did not "meet the test of being a straight primary production sale".
The evidence indicated to him that there had been no such influence extending into the south and west of Kilcoy Shire where the sales of rural properties, on his analyses, showed little or no increase in unimproved values over the previously existing valuations made by the chief executive.
In his opinion, there was support for his interpretation of the sales evidence in the fact that the chief executive's unimproved valuations of grazing lands in Esk Shire adjoining Kilcoy Shire to the south and west, had not been increased above the previously existing level.
Mr Rabbitt had investigated eight freehold sales of which five were regarded as providing reliable evidence of value for lands "exclusively used for purposes of farming" pursuant to s.17(1) and (2) of the Act.
Of those five sales, three had formed part of Mr Jones' basic evidence. Of the remaining three sales investigated by Mr Rabbitt, but disregarded for various reasons, two had formed part of Mr Jones' basic evidence.
The overall freehold sales evidence will be considered later.
Mr Rabbitt had also investigated the sales of five properties adjoining Somerset Dam and leased from SEQ Water. Four of those sales had occurred in the period from 1994 to 1998 and indicated leasehold values in the range broadly between $1,500 per ha and $2,000 per ha, on a treated, fenced and watered basis.
The fifth sale on the same basis of analysis had shown only $867 per ha and had taken place on 22 June 2001, subsequent to the date when s.258 of the Water Act 2000 had come into force (as at 1 October 2000, coincidentally the date of valuation in these matters).
Section 258 of the Water Act 2000 provides as follows:
"For preserving the quality of water, a regulation may declare an area to be a catchment area."
Section 259 then deals with the regulating of land use.
Mr Rabbitt conceded that the single sale subsequent to commencement of the relevant section of the Water Act 2000, could not be interpreted as reliable evidence of a trend deleterious in terms of market value. However he saw the evidence as consistent with the opinion expressed by Mr McAulay that the fairly recent negotiations between SEQ Water and lessees which resulted in alteration to the basis for rent calculation and the introduction of lease land management plans, have had a deleterious effect on the market value of the leases.
Mr Rabbitt saw the restrictions and limitations on use of the leased lands as being an expression of the regulations which could be expected to be enforced for the purpose of protecting water quality if SEQ Water did not own the land immediately above the full supply level of the Dam. As a consequence, it is his opinion that any freehold farming land on which the potential existed for statutory regulation of farming use for the protection of water quality, would be expected, as a matter of logic, to suffer similar deleterious market forces as would leasehold land with restrictions and limitations on use.
Mr Rabbitt did not seek to use the leasehold land sales for any other purpose than to draw a comparison of the perceived effect of recently introduced lease land management plans on leasehold land values, with the probable effect of any similar land use regulations which could be imposed on catchment area freehold properties not in the ownership of SEQ Water.
With regard to relativity issues Mr Rabbitt drew attention to the significantly higher level of value applied by the chief executive at the same date of valuation, to grazing lands within Kilcoy Shire as compared with the values applied to nearby grazing lands in Esk Shire. As mentioned before, the valuations of the Esk Shire grazing lands had not been increased in value generally and that was consistent, in Mr Rabbitt's opinion, with the sales evidence.
This alleged lack of relativity then extended to the effect of there having been no increase in the valuation of lands adjoining the full supply level of Wivenhoe Dam in Esk shire, when the subject lands adjoining Somerset Dam had been increased by nearly 40%.
The individual appeals will be addressed later. However as to the representative cases generally Mr Rabbitt was of the opinion that, if the market value of two otherwise comparable freehold farming properties was to be considered, one unaffected and the other affected by limitations and restrictions on use similar to those imposed under the leases or perceived to be subject to regulatory control for the purposes of protecting water quality, the market value of the latter would be at least 25% less than that of the former.
In his opinion the sales evidence of farming land, untainted by other usage potential, would show, as the worst case for the appellant, a limited increase in value over the previously existing level, if the deleterious effect of adjacency to the dam was ignored. The most relevant leasehold sale had shown a decrease in market value.
Rather than take a pessimistic view as to decreasing values, he felt that he was interpreting the market reasonably in coming to the conclusion that, in the absence of better evidence one way or the other, the chief executive should not have disturbed the previously existing levels applied to these lands adjacent to the Somerset Dam. That had been the case with regard to the valuations applied by the chief executive to the leased lands adjacent to Wivenhoe Dam and owned by the appellant, and then the unaffected grazing lands in Esk Shire.
Mr Damien P Jones
Tendered through Mr Jones were two documents (Exhibits 5 and 6) which contained details and analyses of eight "principal" sales which had been considered by him for the relevant date valuation of grazing/farming lands in Kilcoy Shire.
He had relied on a mix of five of those sales in these matters. Only two of those five sales had formed part of Mr Rabbitt's basis.
Mr Jones had noted that two of the representative leasehold properties had sold previously and gave some details of those transactions. His comments in that regard will be discussed in the individual appeal decisions.
The sales which Mr Jones adopted as basic evidence had on his analyses, shown increases above the previously existing valuation of those sale lands, ranging from 54% through to 99%. In common with the grazing/farming lands generally in the southern part of the shire he had initially applied an increase of 50% above the previously existing valuations of these Somerset Dam leasehold lands, maintaining the then existing relativity between grazing/farming lands generally. SEQ Water had objected to the relevant date valuations. After considering the arguments relative to the regulatory provisions in the Water Act 2000 the valuations had then been reduced by 7.5%, resulting in a net increase of about 40% above the previously existing valuations.
Mr Jones accepted that the legislative regulatory powers relative to the maintenance of water quality as contained in the Water Act 2000, might have some deleterious effect on the market value of any freehold land adjoining the waters of Somerset Dam. However he did not see the actual restrictions or limitations as imposed under the leases on the use of grazing or farming land as much more than good management practices that a prudent owner of the freehold land, already improved for highest and best use, would be expected to follow. With the close association between the date of valuation and the date on which the relevant legislation commenced, there had been no market evidence to indicate the extent of any deleterious effect and it was Mr Jones' opinion that the allowance of 7.5% should be seen to be "very generous" as "in practical terms it had had no effect at the date of valuation" (p.199 Transcript).
In each valuation report, Mr Jones made specific reference to a gross and net lease area. The difference in areas related to the "Flood Margin" which he described as "accessible when the Dam recedes". It was the net lease area which was valued. Mr Jones' written evidence left little doubt that he saw the flood margin area as being, in practical terms, advantageous to the net lease area in that the dam frontage "provides permanent natural water on its edge that cattle can follow down as it recedes". Furthermore his observations were that stock numbers being carried by at least some of the lessees, significantly exceeded the number recommended under the various lease land management plans for "when the dam is full".
However, Mr Jones, in his oral evidence, suggested that any benefits associated with the uses by lessees of land below the full supply level had been excluded from the fee simple unimproved valuations of the net areas subject to the leases. He suggested that the reference to additional benefits was for information purposes only but, in valuation terms those benefits would have added value to the leasehold interests.
Mr Jones said that his estimates of the cattle carrying capacities were for relativity purposes only and were on an unrestricted "district standard" basis and once converted from a mixed herd basis (that is reduced by 25%) to an adult equivalent basis, were not significantly different to the average carrying capacities indicated in the lease land management plans. Where his estimates exceeded those of SEQ Water as the lessor, it was the result, in his opinion, of under estimation by the lessor of the grazing quality of, for example, scrub soil lands which had not been specifically identified in the lease land management plans.
There was some apparently conflicting oral evidence given by Mr Jones as to his considerations relative to the availability of permanent stock water from the lake. It was clear from his comparisons of the individual appeal lands with each basic sale, that the assumed availability of permanent water from the Somerset Dam lake had been seen as a positive feature. When discussing his check classification methodology (p.119 Transcript) he said, "… none of these apportionments have been loaded for the extra benefits that the lake water has on these properties. There has been no extra allowances, generally when a property has permanent natural water well above the normal, positive allowances of 10% to 20% are normally made to a valuation for that aspect." Later in his evidence however he was requested to have regard to the fact that the fee simple boundary of the lands to be valued was the full supply level of the Dam and the availability of permanent water relied on the use of land external to that boundary when the lake level receded. Mr Jones was willing to concede that, if the availability of stock water should be technically regarded as seasonal, rather than permanent, the valuations should be discounted in those cases where alternative permanent natural water was unavailable to the net lease area. He then suggested that a maximum allowance of 5% in the worst individual case would be sufficient to differentiate between the availability of stock water from the lake being seasonal rather than permanent. Eventually there was the concession that the superiority of permanent stock water over seasonal stock water could result in the market value of grazing land increasing by up to 10%.
With regard to the sales evidence, Mr Jones did not accept that any of the sales on which he had relied should be considered as having highest and best use for other than the purposes of farming. In his opinion, most of the rural lands in Kilcoy Shire could be regarded as having some "lifestyle" appeal in the marketplace, due to the handy location relative to Brisbane. He saw such influence extending into the Esk Shire as well, and referred to the lifestyle reference in an advertisement for the sale of one of the grazing properties in that Shire.
Mr Jones indicated no particular concern regarding the now existing relativities between valuations of grazing lands in Kilcoy Shire as compared with adjoining shires. The general 50% increase applied to grazing lands in Kilcoy Shire had been reduced to 40% in the northern section to merge with Kilkivan Shire. He confirmed that many of the valuations in Esk Shire had not been increased but pointed out that other valuations in locations adjacent to Kilcoy Shire had been increased, apparently in the range of 50% to 86% because they had been considered too low and out of relativity.
It was Mr Jones' opinion that factors such as location, rainfall and quality of country significantly influenced the market for land with highest and best use for purposes of farming and interpreted the sales evidence in Esk Shire through to the Kilcoy locality as indicative of the influence of such factors.
Sales Analyses
The methodology adopted by Mr Rabbitt in the analysis of sales evidence drew some criticism, particularly with regard to the manner in which he dealt with interest calculations. For example, in his analysis of the sale of the property "Tilba" (his Sale 1 at p.75 of his report) he found the depreciated value of structural improvements to be $28,890. The next calculation was "less interest at 5.55% for 6 months - $759". The $759 was effectively added to the $28,890 as a further deduction from the sale price. It is observed however that the amount of $759 represents interest at a rate of 5.25% (or 5.55 ÷ 105.55% on $28,890).
In that particular example, the difference in interest calculations is insignificant, but prima facie, if Mr Rabbitt intended to use 5.55% in this analysis, his methodology in finding the added value of the various improvements to include development interest appears flawed and is consistently so throughout each of his sales analyses.
Furthermore once having found a "gross" unimproved value, which historically has been accepted as including interest on the net unimproved value of the land for a development period, Mr Rabbitt failed to make that further deduction. In that final calculation an interest rate of 5.55% on the net unimproved value for one year would have been calculated as 5.55 ÷ 105.55% of the gross unimproved value. On his analysis in that example, the deduced unimproved value of $219,934 would have been extended by a further deduction of $11,564 leaving a (net) unimproved value of $208,370.
The effect of these observations is that in each sale analysis, the result of Mr Rabbitt's calculations would provide an analysed unimproved value higher than would be the case if the interest on the development periods were calculated in the traditional manner.
Mr Rabbitt had made inquiries of contractors operating in the locality to establish replacement cost bases for valuations of various improvements. Those inquiries were made at the time he was preparing his valuations subsequent to the introduction of the Goods and Services Tax and generally some two years after the dates of sale. There was some criticism of his base replacement values on the suggestion that contract prices to effect various improvements had risen significantly in the intervening period. Mr Rabbitt had included with his report a costs schedule for the various improvements and identified the source of the costings adopted.
Mr Jones had followed the traditional departmental methodology in the analysis of sales, adding development interest at a rate appropriate at the date of sale to the valuation of the improvements and deducting interest from the "gross" unimproved value. His replacement cost bases for valuation of the various improvements on the sale properties were said to have come from the "Ipswich Cost Book" compiled by departmental officers using information from actual contracts for works carried out in the locality and/or estimates obtained from various sources including contractors. It is clear from perusal of his various analyses that Mr Jones had maintained a consistent approach in terms of replacement cost of the more common improvements such as yards, fencing, artificial water facilities and timber treatment. However, the "Ipswich Cost Book" was not produced in evidence to support the replacement cost values adopted at the dates of the relevant sales.
Mr Jones was adamant that costs to effect many types of improvements had increased significantly, in the period from the dates of sale to the time when Mr Rabbitt had made his inquiries, for reasons associated with the effects of the GST and the scarcer supply of timber for fencing and yard building. However, in the absence of the transparency associated with Mr Rabbitt's cost schedule, and its source, it is difficult to accept that costs had risen as dramatically as a comparison of the two valuers' replacement cost bases would suggest.
It follows that while there are reasons which support discounting the cost bases upon which Mr Rabbitt relied, in the absence of similar type evidence from Mr Jones relevant to the various dates of sale, and evidence which will be now discussed relative to certain timber treatment costs, it seems reasonable to conclude that Mr Jones' has probably adopted overly conservative cost bases at least for some types of improvements..
Tendered through Mr Jones (Exhibit 14) was a document titled "Report on Improvement Cost" prepared by a Mr Ridley, a recently retired experienced senior departmental valuer who, as I understood it, worked out of the respondent's Ipswich office at the relevant time. The work to which the cost related, as at February 2000, was "to tordon fairly typical regrowth on the steeper slopes of the Upper Brisbane Valley. The density of the timber ranged from areas of medium density to areas of low density with stems small to medium thickness. The timber species comprised silver leaf and narrow leaf ironbark, blue gum, Moreton Bay ash, apple gum and some gumtop box …". The area treated was 71 ha at a total cost of $11,898 or approximately $168 per ha. Mr Ridley had commented that the owner of the property was pleased with the work. Mr Ridley noted "The Tordon mixes of two and three to one are probably stronger than the district standard and as a consequence produce a higher than may be the usual cost."
It is apparent that the Ipswich Cost Book upon which Mr Jones and even Mr Ridley had been relying, suggested that fully effective ringbarking/tordoning should be valued at $175 per ha as at the date of the sales. This was said by Mr Jones to have been based on the estimate of original tordoning cost of $100 per ha for virgin country plus one follow-up treatment of $50 per ha with the actual allowance of $175 per ha intended to reflect a generous estimate.
With regard to Exhibit 14, Mr Jones, in his oral evidence, suggested that the density of regrowth stems in the cost example may have resulted in a cost greater than for virgin country. He highlighted the comments of Mr Ridley relative to cost factors associated with the chemical mix strength. I found his interpretation of the contents of the actual exhibit to be unconvincing.
Indeed, as it happened in the hearing of appeals subsequent to these matters, one of Mr Jones' valuation reports contained a reference to a Land Court decision by Mr White, Member as he then was, regarding the unimproved value of land in the north of Kilcoy Shire. Mr White had cause to consider the added value of timber treatment as at 20 February 1989. He accepted the evidence of the departmental valuers one of whom, coincidentally, was Mr Ridley, that tordoning costs at that time in various localities varied between $50 per ha to $100 per ha and that the fully effective timber treatment of that type of country had an added value of $150 per ha. Once consideration, albeit of a fairly hasty nature, was given by Mr Jones to the probable escalation of costs in the intervening period counsel for the chief executive conceded that $350 per ha could be adopted as the added value of fully effective tordon treatment of forest grazing lands based on an initial cost of $250 per ha and follow-up treatments of $100 per ha.
The concession by the respondent was given in response to questions relative to escalation of costs in the period subsequent to the date relevant to Mr White's decision . The concession embraced the evidence of Mr Todd, the valuer for the appellants in the subsequent appeals who had said that he had allowed "$350 a hectare for the heavy country to tordon it out. That would have to be done in two stages to get it into top condition and I break that up into a first stage over say a three year period would cost $250 a hectare and a second stage would cost $100 a hectare with a final total of $350. They are the basic two treatments that take place within the Shire."
Mr Todd had formed his opinion as to this estimate of timber treatment after discussions with local contractors in the period subsequent to May 2001.
It is noted that Mr Rabbitt had obtained an opinion from a local contractor to the effect that an initial tordon treatment for "moderate forest country" would cost $240 per ha.
At the time these appeals were heard it was made known to the parties that I was still considering evidence heard as to the added value of timber treatment in appeals against the chief executive's valuations in Kilkivan Shire as at the same relevant date. Decisions on representative cases in that Shire were not published until 10 May 2002. Based on the evidence in the Kilkivan matters, the added value of fully effective tordon treatment to native pasture, was adopted as $250 per ha, with a premium added in cases where fires had removed much of the dead timber. Obviously the representatives of the parties in this matter did not have the opportunity to consider the evidence relative to Kilkivan Shire appeals. However I do not feel constrained in taking judicial notice of my findings there, in dealing with the evidence in these matters.
It is clear that it is now rare to obtain the actual cost of tordoning virgin forest, most forest grazing lands worthy of improvement having been treated many years ago. Most costings today are for treatment of regrowth and those costings vary widely depending on factors which include the nature of the country, the density and age of regrowth and the strength of the chemical used. It is observed that with regard to regrowth, some 30 years ago in Appeals against Determinations of Valuer-General - Shire of Esk (1972) 39 CLLR 130, it had been argued and on my interpretation of the decision, accepted, that achievement of fully effective timber treatment of forest country involved the initial treatment then two follow-up treatments of suckers and seedlings. It now seems to be accepted by the valuers that initial treatment and one follow-up treatment achieves full effectiveness. No doubt the quality of the country and the nature of original timber cover would be relevant considerations. The difficulty now facing the valuers in assessing not only the cost of effectively treating forest grazing lands but also the added value of that fully effective treatment, is understandable.
In these matters, I have accepted that costs to effect various rural improvements would have increased since the dates relevant to the sales evidence. The discussions which both Mr Rabbitt and Mr Todd had with various contractors would more likely reflect estimates of costs which applied closer to the date of hearing than at the dates of sales.
I have concluded that the concession made on behalf of the respondent as to the added value of the timber treatment on forest lands in this locality may have been overly generous.
After considering the evidence including the added values ascribed to timber treatment by both Mr Rabbitt and Mr Todd in their sales analyses, I have decided to adopt $300 per ha as the added value of fully effective tordon treatment of forest grazing lands to native pasture as at the date of valuation and before further improvement equivalent to mechanical "raking". If it should be seen by some to be relevant, that amount exceeds the allowance made in the Kilkivan Shire appeals. However, the question of "added value" was a factor of some significance in those appeals. The sales evidence in these matters indicates that forest grazing land values even in Esk Shire exceed those of comparable productive capacity lands in Kilkivan Shire, and the "added value" of improvements, including timber treatment, would be expected to be influenced by market value considerations.
Finally, Mr Rabbitt took a fairly broad, albeit understandable approach to the description of improvements on sale properties, intended to reflect the approach which parties to a transaction would be expected to adopt. On the other hand Mr Jones' descriptions of improvements, calculations of dimensions and the like are quite detailed and in the artificiality associated with assessment of unimproved value pursuant to the Act, are of more assistance to the Court. I will adopt his analyses as the base for any adjustments considered necessary.
Individual Sales Analyses
Sale 1 - "Wunulla" (Mr Rabbitt's Sale 3)
Parties: Nunn to Mahony
Location: 10 km north of Kilcoy on the Mt Kilcoy Road.
Zoning: "Rural A".
Area: 166.1 ha.
Date of Sale: 9 May 2000.
Sale Price: $425,000.
Analysed Unimproved Value: Mr Jones - $200,833 ($1,209.11/ha)
Mr Rabbitt- $215,000
Applied Valuation: $175,000 ($1,053.58/ha).
Nature of Land:
Mr Jones: (3%) 5 ha good alluvial sandy loam cultivation
(45%) 75 ha easy to moderate forest grazing and narrow flats
(24%) 40 ha moderate forest grazing with scrub influence
(28%) 46.1 ha steep stony virgin forest and scrubby gullies
Water: Spring-fed dams, 1 stock bore and 2 low supply irrigation bores.
Use: Cattle breeding and crop assisted fattening.
Carrying Capacity: Mr Jones - 1 beast to 2.4 ha
Comments:
In this case I will adopt the analysis of Mr Jones without alteration, as a close inspection of the property had been denied Mr Rabbitt. Although there were some significant differences between the valuers as to the added value of individual improvements, their total valuations of improvements were reasonably close.
It is the opinion of Mr Jones that this sale represented fair market value for a grazing/farming property of its quality. It is located in an area where rural residential subdivision has taken place. It was Mr Jones' evidence that, due to the "Rural A" zoning of the land, the minimum area permitted in subdivision for any purpose for any one lot, is 200 ha. On that basis, the land had no subdivisional potential.
Mr Rabbitt's evidence was that an informal approach to the Council had given the purchaser confidence that the land had potential for subdivision into three lots. According to Mr Rabbitt the purchaser was a builder who had predicted that a downturn in his business might occur as a consequence of the introduction of the GST and he had been keen to purchase a property which would allow him to put any available spare time to good use. Mr Rabbitt had concluded that the purchaser had "bought the property for lifestyle reasons".
It is the argument of the appellant that sales to purchasers of rural land seeking a particular lifestyle should not be regarded as appropriate evidence to establish "pure" values for purposes of farming.
The question of potential for subdivision is another matter. If such potential use exists "irrespective of whether or not … that potential use is lawful when the valuation is made" it is to be disregarded pursuant to s.17(1) of the Act.
The appellant went part of the way in arguing subdivisional potential. It is said that the purchaser made informal inquiries of the Council as to subdivisional potential and it was believed potential did exist for subdivision of the land into three "lifestyle" lots (Transcript p.56). Mr Rabbitt did not make any specific inquiries of the Council himself as to subdivisional potential because he was convinced that the purchaser's intentions related to "lifestyle" use and investment for capital gain with any subdivisional potential influencing his investment decision. There was no submission from the appellant as to the effect, if any, in this case, of the stated intent of the "Rural A" zone which included:
"Rural residential development is permissible in accordance with Subdivision of Land By-Law 15, with the intention being to protect the viability of farming units while satisfying genuine demand for rural residential living. (Annexure to Exhibit 5 - Queensland Government Gazette No. 1, 1 September 1990, p.8)
On the evidence before the Court, I am persuaded that there was genuine demand for rural residential living in the immediate and general locality of this sale land. I do not accept Mr Jones' evidence that the land had no subdivisional potential merely because it is zoned "Rural A". The question of whether any subdivisional potential existed has not been proved or disproved, on my interpretation of the evidence.
In the circumstances I will summarise my views as to the appropriateness of the use of this sale for valuing either the sale land or any other land exclusively used for the "purposes of farming" after reviewing the balance of the sales evidence.
Sale 2 - "Spring Creek" (Mr Rabbitt's Sale 4)
Parties: Pratt to Harrison and Tripcony
Location: 14 km west of Kilcoy by 11 km bitumen D'Aguilar, then 3 km dirt road
Zoning: "Rural A" (Shire of Esk).
Area: 127.881 ha.
Date of Sale: 14 June 2000.
Sale Price: $140,000.
Analysed Unimproved Value: Mr Jones - $101,562 ($794.19/ha)
Mr Rabbitt- $97,000 ($758/ha)
Mr Todd- $96,825 ($757/ha)
Applied Unimproved Value: 1 October 2000 - $86,000 ($672.50/ha)
Nature of Land:
Mr Jones: (63%) 80 ha moderate to steeper forest
(37%) 47.881 ha steep forest
Water: Seasonal water in Spring Creek, 1 spring and 1 small dam.
Use: Cattle breeding.
Carrying Capacity: Mr Jones - 1 beast to 3 ha
Mr Todd - 1 beast to 4 ha
Analysis of Sale:
I was invited by the parties to consider any evidence in the subsequent appeals which was considered relevant. Mr Todd had analysed the sale of his property which was also one of the "test cases" in those subsequent appeals. I have decided to adopt the following valuation of the improvements:
Yards$3,500 (Jones $3,199 - Rabbitt $4,116 - Todd $3.500)
Fencing$8,137 (Jones $8,137 - Rabbitt $4,015 - Todd $3,750)
Water$3,728 (Jones $3,728 - Rabbitt $3,174 - Todd $2,500)
Timber Treatment $28,755 (Jones $16,774 - Rabbitt $30,852 – Todd $25,500)
Total$44,120
I have increased Mr Jones' valuation of the yards by a broad 10% as an interpretation of my perception of his conservative replacement cost bases as compared with those of Mr Rabbitt. As it happens Mr Todd's assessment under this heading is accepted.
Mr Jones was far more detailed in his description of the fencing and waters than were Mr Rabbitt and Mr Todd and I have adopted his more generous assessments.
Mr Jones assessed 100 ha of fully effective tordoning at $175 per ha while Mr Rabbitt found only 71.6 ha and Mr Todd 85 ha of timber treatment with varying effectiveness at average valuations of $407 per ha and $300 per ha, respectively.
For reasons given elsewhere I adopt $300 per ha as the assessment of fully effective tordoning. However, in this matter, the evidence is that some timber treatment maintenance was required despite Mr Jones' assessment. I have adopted $270 per ha for consistency.
Interest has been allowed at 6.5% per year.
The analysis then becomes:
Sale Price $140,000
Less improvements including interest $44,120
Gross unimproved value $95,880
Less interest 6.5% for 1 year on net unimproved value $5,852
Net unimproved value $90,028Adopt $90,000
Equates $703.78/ha overall.
Mr Rabbitt and Mr Todd were of the opinion that this was a "special purpose" sale. Mr Rabbitt commented as follows -
"High sale. Purchaser is a recreational hunter and advises that they bought the property for its attractiveness as a deer hunting farm. Considered they paid well above market for the style and remoteness of the property."
The evidence was that subsequent to acquiring the land, the purchaser, who apparently is an earthmoving contractor, with other grazing interests, carried out significant improvement to the private access (at an estimated equivalent contract cost in the range of between $25,000 and $30,000) and has replaced some boundary fencing.
It is of interest that this property has been selected as a representative case in subsequent matters heard by the Court. The appellant here and the appellant/owners in the subsequent matter do not deny that the land was previously and continues to be used for purposes of farming, but argue that a premium was paid over and above grazing value, because the land also satisfied the recreational interests of the purchaser.
On the other hand the "Interview with Purchaser" attached to Mr Jones' sale analysis, established that the land had been previously owned and used by a cousin of the male purchaser for dry dairy cattle in conjunction with a dairy farm which had since ceased operation. The report states that the male purchaser "thought this was fair buying in relation to its position to town". It was a private transaction and it was said that the property "would have been listed at $160,000 if put with agent."
Under the interview heading "Proposed Usage at Time of Purchase" was the comment "grazing as handy block to town". The purchaser's perception of carrying capacity was "40 head till further tordoning is done at the back".
Although Mr Jones commented in the report that the male purchaser was a game hunter, he said that was mentioned as a matter of interest rather than a matter relevant to the purchase.
In Mr Jones' opinion, the actions by the purchaser in improving the access and repairing/replacing fencing was indicative of the highest and best use of the land being for grazing in a handy location to town. The level of value paid was considered by Mr Jones to be consistent with the overall market evidence.
Comments:
I accept the evidence that this property provided a recreational hunting opportunity attractive to the purchaser. However I am not persuaded that the highest and best use of the land in terms of its market value is other than for purposes of farming. It seems clear that regardless of any potential for satisfying the purchasers' recreational activities, they intended to and did use the land for the purposes of farming subsequent to the purchase. There is no evidence to suggest that the vendor recognised in the property any usage potential other than for the purposes of farming or had sought a sale price "well above market for the style and remoteness of the property" as was suggested by Mr Rabbitt. Indeed it seems on Mr Jones' evidence that the vendor accepted in private negotiations a price less than would have been asked had it been listed with an agent.
The sale will be given consideration in the light of the overall evidence. It will be seen in a later discussion that the overall evidence suggests to me that this sale should not be disregarded, but should be treated with caution due to the circumstances surrounding the sale.
Sale 3 - "Tilba" (Mr Rabbitt's Sale 1)
Parties: Rossiter to Holloway
Location:10 km north-west of Kilcoy via 3.4 km bitumen sealed D'Aguilar Highway and 6.6 km formed gravel with Oaky Creek floodway.
Zoning: "Rural A".
Area: 315.124 ha.
Date of Sale: 13 February 1999.
Sale Price: $480,000.
Analysed Unimproved Value: Mr Jones - $311,114 ($987.28/ha)
Mr Rabbitt- $219,000 ($694/ha)
Applied Unimproved Value: $305,000 ($967.87/ha)
Nature of Land:
Mr Jones: (3%) 10 ha Oaky Creek flats
(70%)220 ha easy to moderate to parts steeper forest grazing
(27%)85.1 ha steep to very steep forest
Water: Natural creek and springs, 3 dams.
Use: Cattle breeding and eucalypt plantation (subsequent to sale).
Carrying Capacity: Mr Jones - 1 beast to 2.6 ha.
Analysis of Sale:
I have decided to adopt the following valuation of the improvements:
Structures$8,750 (Jones $8,318 - Rabbitt $8,867)
Yards$18,000 (Jones $17,386 - Rabbitt $20,782)
Fencing$21,415 (Jones $21,415 - Rabbitt $16,210)
Water$21,024 (Jones $21,024 - Rabbitt $51,576)
Timber Treatment $128,530 (Jones $83,098 - Rabbitt $162,571)
Total$197,719
I have made relatively minor adjustments to increase Mr Jones' assessment of the structures and yards while decreasing Mr Rabbitt's assessment under these headings, for reasons associated with the replacement costs adopted and discussed elsewhere. Mr Jones' assessment of fencing was detailed and generous in comparison with that of Mr Rabbitt and is adopted accordingly.
Mr Rabbitt's valuation of the water improvements was based on verbal advice he had been given as to the actual cost of those improvements. In the absence of detail as to those "actual" costs, and guided by Mr Jones' detailed inspection notes and estimates of quantities of works involved, together with his advices that certain improvements had been removed by the vendor, the "actual" cost allowed by Mr Rabbitt seems significantly in excess of added value. I will adopt Mr Jones' assessment of the added value of the water improvements.
Mr Rabbitt took the view that the very clean state of the timber treatment had been an inducement to the purchaser, in connection with the arrangement he had made for the establishment of a eucalypt plantation. I found Mr Jones' detailed description of the actual timber treatment, including the areas which had been cleared to cultivation standard or cleared and raked to improved pasture to be of assistance. I have adopted his calculation of areas treated and his assessment of added value except for the tordoned/rung areas. There was persuasive evidence both from Mr Rabbitt and later from Mr Todd which allows me to accept that the particularly clean state of the tordoned area was an inducement to the purchaser. While on Mr Jones' evidence, the treatment had not evolved to a condition equivalent to raking of dead timber, it is reasonable to find an added value in excess of the standard $300 per ha adopted as fully effective for grazing to natural pasture. I have accordingly adopted an added value of $350 for the clean state of the tordoned area calculated by Mr Jones as being 240 ha.
The analysis which I adopt becomes:
Sale Price $480,000
Less added value of improvements $197,719
Gross unimproved value $282,281
Less development interest on net unimproved value $15,096
Net unimproved value $267,185
Equates $847.87/ha).
Comments:
Although this property was purchased specifically for development of a eucalypt plantation, then later associated grazing, there was no evidence before the Court which persuades me that any premium over and above grazing value, attached at the relevant date of valuation, to land suited to forestry purposes.
On the analysis which I adopt, the unimproved valuation applied by the chief executive to the sale land is not supported by the sale itself. However the analysis reflects an unimproved value well above that found by Mr Rabbitt.
Sale 4 - "Ian's" (Mr Rabbitt's Sale 5)
Parties: Kennedy to Webster
Location:25.2 km south-east of Kilcoy via 2.5 km bitumen D'Aguilar Highway, 7.9 km bitumen Neurum Road then 14.8 km poor winding gravel Westvale Road.
Zoning: "Rural A".
Area: 185.92 ha
Date of Sale: 9 June 1999.
Sale Price: $280,000.
Analysed Unimproved Value: Mr Jones - $125,932 ($677.32/ha)
Mr Rabbitt- $95,000 ($510/ha)
Applied Unimproved Value: $119,000
Nature of Land:
Mr Jones:(15%) 28 ha easy gum-topped box, narrow leaf ironbark Oaky Creek frontage forest
(41%)77 ha steeper vine and bastard scrub
(difficult to develop)
(44%)80.928 ha moderate to steeper poor narrow leaf ironbark, wattle and brush box.
Water:Seasonal in Oaky Creek, 4 dams (one spring fed)
Use: Cattle breeding and fattening.
Carrying Capacity: Mr Jones - 1 beast to 2.5 ha.
Analysis of Sale:
I will adopt the following valuation of the improvements:
Yards $21,130 (Jones $17,479 - Rabbitt $23,510)
Fencing $10,533 (Jones $10,533 - Rabbitt $12,073)
Water $9,223 (Jones $9,223 - Rabbitt ($12,708)
Timber Treatment $120,018 (Jones $109,718 - Rabbitt $137,726)
Total $160, 904On my calculations the replacement cost of the yards including a plunge dip, on Mr Jones' estimate was about $47,000. He depreciated the individual components generally by between 60% and 70% to arrive at an added value of about $17,000 before interest. There was dispute between the valuers as to the condition of the yards. Mr Rabbitt suggested a depreciation rate of 25% overall was reflective of the overall good condition of the facility. Mr Jones' oral evidence was that although the purchaser owned nearby property and did not himself use the yards to their full utility, because of the availability of an alternative facility, he had not devalued the yards on that account only for their age and structural condition. Mr Jones gave a detailed description of the yards and ancillary improvements, including a plunge dip which Mr Rabbitt had not valued. I have increased the replacement cost of the yards to a rounded $50,000 increasing some of the component costs due to my perception that Mr Jones' cost base for those items is conservative. However, on the oral evidence I will adopt a depreciation rate of 60% overall which is a little less than did Mr Jones, to arrive at a depreciated value of $20,000 before interest.
I have adopted Mr Jones' detailed assessments of fencing and water facilities.
Mr Rabbitt's advice was that most of the original timber cover on the land had been treated in the same manner and then developed to improved pasture. He valued 180 ha at the overall equivalent of $720 per ha with varying degrees of effectiveness. Mr Jones on the other hand had formed the opinion, based on his specific inspection, that due to the presence of logs on an area of about 30 ha of original forest country, that section had been originally ringbarked and then some improved pasture established. He allowed the standard $175 per ha for fully effective rung/tordoned treatment. Although I have increased in other analyses this standard of improvement to $300 per ha, I am persuaded that the standard of development on this section may have been superior to that allowed overall by Mr Jones, despite the presence of some debris. Bearing in mind that some improved pasture had been established and then the advice given to Mr Rabbitt, I have decided to allow $500 per ha for this 30 ha. On the balance, Mr Jones had allowed the equivalent of $680 per ha overall which he believed may have been generous, based on a discussion he had with a local contractor. Having given the benefit of the doubt to the appellant on the 30 ha, I have adopted Mr Jones' estimate on the 145 ha comprising the area of improved pasture which he accepted as having been pushed and lightly raked.
The analysis which I have adopted is as follows:
Sale Price $280,000
Less improvements $160,904
Gross unimproved value $119,096
Less development interest on net unimproved value $6,369
Net unimproved value $112,727
(Equates $606.32/ha).
Comments:
The unimproved value of this land, with a mixture of scrub country requiring more expensive timber treatment than the forest grazing lands, does not provide an appropriate basis for direct comparison with forest grazing lands of otherwise comparable productive potential.
There was the suggestion by Mr Rabbitt that the purchaser felt he had paid in excess of market value due to his inability to negotiate a lower price than was being asked. It was the proximity of the land to his main holding which influenced his commercial decision to buy the property.
Mr Jones had been advised that as an inducement to purchase the property the vendor had offered some finance terms which may have been advantageous.
Mr Rabbitt:Based on comparisons with his analyses of Sales 3, 4, 7, 9 and 10 then the effects of adjacency to the full supply level of Somerset Dam
103.5 ha @ $750 per ha $77,625
Adopt $78,000
This valuation represents no change from the valuation which existed as at 1 October 1997.
Finding:
Mr Jones' valuation before allowances for the perceived effects of the Water Act 2000 had represented a 50% increase above the previous valuation of $78,000 as at 1 October 1997. I have found that the increase should be reduced to about 30%.
I will adopt the following valuation:
103.5 ha @ $975/ha $100,912
Less allowance for adjacency to Dam 10% $10,091
$90,821
Adopt$91,000
4. AV2001/0422
Lessees: Hugh C and Christine A Munro
Real Property Description:Part A Lot 1 on Plan RP 18117; Part A Lot 2 on Plan RP 18117, Parish of Durundur, County of Canning.
Area: 116.9 ha
Location: Approximately 18.1 km east of Kilcoy via D'Aguilar Highway, Neurum, King and Back Roads, bitumen for 17.3 km then gravel.
Local Authority: Caboolture Shire Council.
Zoning: "Rural".
Services: Electricity, telephone and mail services available.
Classification of Country:
Mr Jones: (9%) 10 ha arable irrigable
(37%) 44 ha gum flats forest
(54%) 62.9 ha easy forestA detailed description of the nature of the country in these classifications was provided in Mr Jones' written report.
Mr Rabbitt: 32.7 ha selectively cleared blue gum alluvial soil flats
84.2 ha gently undulating selectively cleared forest country
Mr Rabbitt adopted the areas of these classifications as identified in the lease land management plan.
Carrying Capacity:
Mr Jones:For relativity purposes - 1 beast to 1.5 ha overall on a mixed herd basis (78 head) which on his evidence converts to 58 adult equivalents.
Mr Rabbitt: 70 head adult equivalents.
Permitted under lease land management plan - 52 head adult equivalents.
Valuations:
Mr Jones: Based on his analyses of Sales 1, 2, 3 and 5
116.9 ha @ $1,400 per ha $163,660
Adopt $162,500 (Valuation appealed against)
Apportionment:
10 ha arable irrigable forest @ $3000 $30,000
44 ha gum flats forest @ $2,000 $88,000
62.9 ha easy forest slopes @ $1,250 $81,770
$199,770Allowances:
Flooding/severance 7.5% $14,982
Water Act restrictions 7.5% $14,982 $29,964
Totalsay $169,805
Shows $1,452.56 per ha
Adopt $1,400 per ha.
Mr Jones commented in his report - "The valuation is typical of the Water Corporation leased grazing lands in the eastern section of Caboolture Shire where a general 50% increase was put through existing levels and then reduced back to a 40% increase at objection. The parcel is severed by the disused Kilcoy Railway line with the tracks and old bridge removed. The irrigation paddock is also cut off by a creek runner and there is a large earthworks crossing over to it."
Mr Rabbitt:His comments were that this property was one of good quality with large creek frontage and good alluvial flats, 8 ha of which is regularly irrigated. He found no directly comparable sales evidence "but taking into account the limited uses" he valued the land as follows:
116.9 ha @ $1,000 per ha $116,900Adopt $117,000
This valuation represents no change from the valuation which existed as at 1 October 1997.
Finding:
This property lies within Caboolture Shire. The same sales evidence was used by Mr Jones in finding a 50% increase above the previously existing valuation. There had been no argument as to incorrect relativity of the previously existing valuations of land exclusively used for purposes of farming between the relevant parts of Kilcoy and Caboolture Shires. For the same reasons as in the preceding appeals I will reduce the base increase to about 30% before consideration of the other issues. This was one of the properties where Mr Jones indicated that the permanent water situation would not be significantly affected if stock access was limited to full supply level due to the availability of alternative natural water in the Stanley River and Neurum Creek. However I will not disturb the existing relativity between valuations. In this case Mr Jones' opinion as to the effect of the severance issues will be adopted although calculated as follows:
116.9 ha @ $1,400/ha $163,660
Less allowance for adjacency to Somerset Dam 10% $16,366
$147,294
Less allowance for severance issues 7.5% $11,047
$136,247
Adopt $136,000
Orders:
1.Appeal AV2001/0402 (Lessees PA & GF Klein & DM Nicholls)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $149,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of One Hundred and Twenty-two Thousand Dollars ($122,000).
2.Appeal AV2001/0400 (Lessees AB & NC Brown)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $89,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of Seventy-four Thousand Dollars ($74,000).
3.Appeal AV2001/0427 (Lessees GR & AE Tones)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $109,000 as at 1 October 2000 is set aside and the unimproved value determined in the amount of Ninety-one Thousand Dollars ($91,000).
4.Appeal AV2001/0422 (Lessees HC & CA Munro)
The appeal is allowed, the unimproved valuation of the chief executive in the amount of $162,500 as at 1 October 2000 is set aside and the unimproved value determined in the amount of One Hundred and Thirty-six Thousand Dollars ($136,000).
RE WENCK
MEMBER OF THE LAND COURT
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