Stent-Smith v Chief Executive, Department of Lands
[1995] QLC 87
•30 August 1995
|
BRISBANE
30 AUGUST 1995
Re: Appeal against an unimproved valuation
for rental purposes -
Valuation of Land Act 1994 -
Dalrymple Shire (RV94-123)
A.D & L.C Stent-Smith
v.
Chief Executive, Department of Lands
(Hearing at Charters Towers)
D E C I S I O N
As at 31st March, 1992, the unimproved value of land described as Grazing Homestead Perpetual Lease 11/722: Lot 12 on Plan DP 6, Parish of Vincent, County of Balfe, containing 3,110 hectares, was assessed by the Department of Lands in the amount of $87,000. The land forms part of "Tarangie", a property of 5,872 hectares, situated about 50 kilometres west of Charters Towers.
The separate valuation of this land was required for the calculation of annual rent for the period commencing 1st July, 1993. The valuation appealed against is in the amount of $87,000, equivalent to $28 per hectare. The appellants' estimate in the Notice of Appeal is $52,870.
Mr and Mrs Stent-Smith purchased "Tarangie" on 25th January, 1990. The evidence provided by that sale formed part of the basis of the 31st March, 1992 unimproved valuations by the Department in parts of Dalrymple Shire. It also was the primary basis for the valuation of the "Tarangie" aggregation itself. The sale showed an analysed unimproved value of $28.34 per hectare for the aggregated area and a valuation of $26.25 per hectare had been applied.
Mr Stent-Smith, who conducted the case for the lessees, held the view that, with hindsight, the price paid for "Tarangie" had been too high, due to its grazing disabilities influenced by inferior soil types and particularly the phosphorous deficiency. He now considered himself to have had insufficient experience at the time of purchase to have been able to appreciate the grazing limitations of this type of country. Nevertheless he accepted that the Department's analysis of the sale could not be criticised as having been unreasonable.
When the separate valuation was applied to the leasehold land, as it was required for rental purposes, he could not accept that it had represented a fair apportionment of the worth of the aggregation. It was his opinion that the applied valuation had been unduly, and incorrectly, influenced by the rate per hectare applied to the total aggregation. The lessees had been provided with certain information at the time of their objection to the valuation, which related to valuations of adjoining properties and certain sales in the Shire. This information was stated (in a letter from the Department dated 30th November, 1993) to be the basis of the Department's valuation. Mr Stent-Smith through his investigations at the time of the purchase, was in a position to consider that basis. In the lessees' opinion, the correct value of the separate subject parcel was less than $21.43 per hectare (the valuation applied to an adjoining parcel containing 8,740 hectares). In their opinion the unimproved value of the subject land should not have been greater than $17.79 per hectare (which was derived from the sale of a property known as "Percy Springs").
Mr Stent-Smith submitted that the balance area of "Tarangie" being land of freeholding tenure, with immediate highway access, electricity connection and being adjacent to township facilities and rail transport, with generally better quality land, was of much greater value on a pro-rata basis than was the subject land. He spoke of the lack of formed access to the subject land if it was to be considered as a separate entity, and the cost of connecting electricity to its boundary.
Evidence for the Department was given by Mr M. McDougall, registered valuer. In his tendered report Mr McDougall noted the lack of independent formed access and the lack of connected services. He described the property as being used for breeding beef cattle with a carrying capacity of one beast to 14 hectares (222 head). The nature of the land was described as comprising generally level to gently undulating sandy silver leaf ironbark, quinine, narrow leaf ironbark, and gum forest, generally with a thick understorey of wattle. The land is intersected by narrow box flats and a lancewood and yellowjack ridge in the south-west corner.
Mr McDougall had not been responsible for the valuation appealed against, but took on the task of supporting that valuation for the appeal process. Rather than adopt the basis which had been said to have been used in the original valuation, he set about establishing his own valuation basis. He saw support for the valuation being provided by three sales as follows:(1)"Keval Park" of 1,526 hectares which sold in February, 1991 to show an unimproved value of $62.90 per hectare and an equivalent beast area value of $817, based on an estimated carrying capacity of 117 head. The valuation applied to that land was $60.90 per hectare. His comments relative to that sale were "The sale is located closer to Charters Towers, and has more sealed road than the subject. Situation and access considered superior. Similar services. Similar waters. Similar country. Overall sale is considered superior on a rate per hectare and overall due to superior location and access."
(2)"Dillon Creek" of 2,953 hectares which sold in March, 1990 to show an unimproved value of $22 per hectare and an equivalent beast area value of $440, based on an estimated carrying capacity of 147 head. The applied valuation was $20 per hectare. Mr McDougall's comments were "Similar situation and services. Access is slightly superior. Water similar. However the sale has significantly poorer country and carrying capacity, with almost half the property inferior scrub country. This rough scrub and gorge country makes basic management very difficult. Similar in size. Overall inferior."
(3)Part of "Virginia Park", 1,535 hectares, sold February, 1993 to show an unimproved value of $67.10 per hectare and an equivalent beast area value of $738 based on an estimated carrying capacity of 140 head. The valuation applied to that property had been $60 per hectare. Comparison comments were as follows, "Similar situation, access and services. Slightly superior waters. Generally sale is superior in country overall, however the sale has a relatively heavy rubbervine infestation, particularly along the frontage to the Fanning River. Overall sale is considered superior on a rate per hectare, mainly due to its smaller size and slightly better country."
Mr McDougall was conscious of the need to consider the question of lack of access and connection of services and this had been one consideration in his selection of sales. His inquiries indicated to him that if the subject land was indeed a separately owned entity, the Council would feel an obligation to provide some form of access. Mr Stent-Smith's inquiries on the other hand had indicated to him that the Council would be loath to provide other than a graded track and then at the initial cost of the owner. Mr McDougall had been informed that the cost of electricity connection would be at the rate of $3,000 per kilometre, together with the provision of a transformer, making a total cost of about $22,000 to the boundary. Two of the sale properties had a similar disability.
The evidence in this matter, as it has been in others, is that a premium in value attaches to smaller holdings, decreasing as distance from Charters Towers increases. Mr Stent-Smith felt that location and size would have been particular features of the land involved in Mr McDougall's Sales (1) and (3). It seems fair to note that apart from the location considerations these sale properties are both less than half the area of the subject land. This was one reason why Mr McDougall rejected consideration of the sale of "Tarangie" itself - the fact that the total area was "near" twice the size of the subject parcel.
When all things are considered, I find no real assistance from consideration of Sales (1) and (3). They are of hardly comparable properties as indicated by the analysed values. Mr McDougall's Sale (2) is clearly of land of inferior grazing quality, permitting a much smaller scale grazing operation than does the subject.
I am persuaded to accept, as a market fact, that within reasonable proximity to Charters Towers, smaller grazing holdings command values not strictly related to grazing potential but are influenced to varying degree, relative to location, by the inherent rural residential potential. It would seem to follow that the smaller the scale of the grazing potential, whether caused by size or the nature of the country, the greater will be that rural residential influence in a strict unit of area value comparison.
It seems to me that the sale of the subject land as part of a larger holding cannot be ignored completely. Mr McDougall said that the sale price of "Tarangie", when compared to the market evidence for that size of holding, represented fair market value. That may give the lessees some comfort, for their grazing neighbours have told them they paid too much. Mr McDougall then says that all disabilities considered, the applied value of $28 per hectare, for an individual parcel a little over half the size of "Tarangie", through that premium value factor, is reasonable. I perceive that Mr Stent-Smith would accept that, if the subject land possessed the same attributes as did "Tarangie" as a whole.
The fact is that the subject land as an individual parcel of 3,110 hectares does not enjoy the attributes of the total property. There is no disagreement that on a pro-rata comparison, the balance 2,762 hectares of "Tarangie" is considerably more valuable.
What Mr Stent-Smith argues seems to me to be logical. It would be unrealistic to simply adopt the overall value of $26 per hectare for "Tarangie" and then add some premium for the smaller size of the component parts. That could only be correct if all of "Tarangie" on a pro-rata basis enjoyed the same country, access, electricity, telecommunication facilities and proximity to amenities. If there was to be any premium over the $26 per hectare, it seems that would be limited to the balance freeholding tenure area. On a strict comparison then with the attributes of that balance area, I accept the argument that the value of the subject land would be less than $26 per hectare even with the premium for smaller size.
Nevertheless, while the evidence is difficult to interpret, I am not convinced that the resultant value would not be greater than that applied to the sale property "Dillon Creek".
I will determine the unimproved value at $23 per hectare, rounded to a total of $71,500.
The appeal is allowed, the determination of the chief executive set aside and the unimproved value determined in the amount of seventy-one thousand five hundred dollars ($71,500).
RE WENCK
MEMBER OF THE LAND COURT
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