Stewart v Chief Executive, Department of Natural Resources
[1999] QLC 86
•13 August 1999
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LAND COURT
BRISBANE
13 AUGUST 1999
Re: V99-74
An Appeal against an Unimproved Valuation –
Valuation of Land Act 1944 –
Mareeba Shire.
Donald F Stewart
v.
Chief Executive, Department of Natural Resources
(Hearing at Cairns)
D E C I S I O N
This is an appeal against the chief executive's unimproved valuation of a cane farm on the Atherton Tableland.
Subsequent to an application by Mr Stewart, he was advised by the Queensland Sugar Corporation, in a letter dated 23 December 1996, that a 100 ha assignment in the Tableland Mill area had been granted on land described as Lot 2 on RP 741713, Parish of Culgar.
The chief executive issued a fresh notice of valuation which was intended to reflect the effect of the granting of the assignment at a level of value which had existed at 1 January 1996 – the date which had been fixed by the chief executive for the valuation of the Mareeba Shire. The valuation, in the amount of $120,000, took effect for rating purposes from 1 January 1998.
Having gone through the objection process, Mr Stewart appealed against the chief executive's determination. His estimate of unimproved value is $70,000 which, according to the evidence, was the valuation in existence prior to the granting of the assignment.
The land contains an area of 142.7 ha and is situated with frontage to Springmount Road, about 5 km south-west of the site of the Tableland Sugar Mill (the construction of which was not completed until 1998). Access to the mill site is by way of formed gravel road, then there is about 25 km of bitumen road to Mareeba about 30 km to the north-east. The land is located within the Mareeba-Dimbulah Irrigation Area (MDIA). Electricity is available for extension to the land but the cost of extension would be at the owner's expense.
The grounds of appeal included the assertion that the "cane assignment and water contributes to the value of the land". Mr Stewart argued that the assignment was not in existence at the date of valuation. Furthermore, he had been informed that it was arguable whether it was a waterworks licence or actual access to water for irrigation which should be seen as attaching to unimproved value. Mr Stewart was concerned about the practical irrigation efficiency of the subject land's "design flow rate entitlement" of 0.723594 ML/day.
The remaining grounds of appeal related to the cost of connection of electricity from the existing mains; the "vast amounts" of rock; the marginal nature of the land for farming purposes and the restricted area of arable land available on the property because of the soil types and topography; the need to pump water to irrigate 30% of the arable land; the excessive costs involved in developing the land for irrigated cane production; the need for underground mains and deep tail water drains; the need for gravel internal roads and dump pad; the external gravel access road; the deflated state of the global economy.
Mr Stewart provided a written statement and gave evidence enlarging on the grounds of appeal. Included with the tendered papers was a statement by a Mr Colin Bendall, an expert in the field of irrigated agriculture, but who was not called to be examined. Mr Bendall's statement confirmed Mr Stewart's reservations about the irrigation potential of about 30 ha due to the steep slopes and shallow soil types underlain by rock, exposed on the surface in several areas. His statement contained the opinion "that all suitable land for irrigated sugar cane has been developed on this property being approximately 97 hectares." That opinion was in accord with Mr Stewart's evidence that the actual development had proved to him that it was not possible to take advantage of the full 100 ha of allotted assignment. In Mr Stewart's opinion soil mapping which had been developed by the Department of Primary Industries was not totally accurate. He pointed out that the grant of the assignment of 100 ha had been conditional upon, inter alia:"1. The assignment holder growing sugarcane on the assignment's land sufficient to exercise fully the entitlement conferred by the assignment by 30 November 1998."
In Mr Stewart's opinion there had been genuine uncertainty about the scheme to construct the Tableland Mill at about the date of valuation and land values for potential cane lands had remained depressed until the mill had become an operational reality by commencing crushing in June 1998. Mr Stewart who has had some experience in a real estate agency, had carried out some research into sales evidence and quoted details of three sales of improved property which he said demonstrated that there had not been a rise in value of "large or small property". Each of the sales were well after the date of valuation and with insufficient details supplied for any cogent comparison to be made on an analysed unimproved value basis.
Mr Stewart made reference to the existence of a quarry on adjoining land and a proposal for a large refuse dump in the locality. He considered that these factors detracted from the residential amenity of the locality and the market value of the subject land.
Evidence for the chief executive was given by Mr William Brett Bowen, AAPI, registered and Certified Practicing Valuer, who currently holds the position in the Department of Natural Resources titled Regional Advisor – Valuations, for the Northern Region. Mr Bowen had been the operational valuer for the Mareeba Shire since 1992 and was the valuer responsible for the valuation appealed against.
Mr Bowen's valuation and associated research experience was reflected in his detailed written and oral evidence. It seems that there has been landholder grievances with regard to subsequent valuations in Mareeba Shire, and in valuations with which Mr Bowen has had participation. Increased valuations for rating purposes rarely go unchallenged but any particular landholder level of discontent and any political involvement that such discontent may generate, should not be interpreted, as Mr Stewart apparently did, as necessarily reflecting professional incompetence or lack of experience of the departmental valuers involved. Indeed, the contrary can often be shown to be the case when the appeal process results in the need for the involvement of the Land Court in adjudication of valuation disputes.
It may be, as Mr Stewart contends, that subsequent events such as the commencement of operations of the Tableland Mill did remove inherent doubts about the potential of the local sugar growing industry with a consequent effect on land values. However, in this matter, the Court is concerned with the level of value which would have existed for the subject property as at 1 January 1996. The valuation did not come into effect until 1 January 1998, when the assignment had been granted. The purpose of the valuation appealed against was to provide an equitable and uniform rating base for the land, with the assignment in place at the date of effect, but based on values which existed as at 1 January 1996.
Mr Bowen's valuation was the result of the following calculation:
100 ha assigned cane land, add 5% (5 ha) headlands
105 ha @ $1400/ha $147,000
Less Cartage
105 ha @ $300/ha $31,500 $115,500
Add Value of non-assigned land
37.7 ha @ $150/ha $5,655 $121,155
Apply $120,000
$850/ha.
In adopting a developable area of 105 ha including the assigned area and associated headlands, Mr Bowen had regard to soil mapping classifications developed by soil agronomists within the Department of Primary Industries (DPI) with which classifications he agreed. From mapping and an agricultural suitability evaluation developed by the DPI in conjunction with the Department of Natural Resources, the following classification of soils on the subject property resulted:
1.2.94 ha of 1st class arable
2.76.78 ha of 2nd class arable
3.53.24 ha of marginal arable
4.9.74 ha of unarable
It was within the third classification of marginal arable where the stone influence and slope, among other criteria, created the limitations on suitability.
Mr Bowen took comfort from the classification in reaching the conclusion that the assigned area, with the necessary headlands, was capable of being fully developed. The fact that a lesser area was capable of flood irrigation, and then part of that lesser area fell within the sloping area, was not, in Mr Bowen's opinion, the result of insufficient land being available to fully exploit the assignment. Instead he saw it as a matter of farm management choice, particularly with regard to irrigation practices. Mr Bowen had observed that the area which had been included in the "1st class arable" classification remained unimproved, with timber cover.
As I understood Mr Stewart's evidence, it was his belief that no reliance could be placed on the soil mapping classification and, for example, the area included in the "1st class arable" classification was in fact broken by gullies. He was critical of the total area of the assignment being adopted as the basis for the valuation when in practice he had achieved a planted area of only 97 ha. Nevertheless he agreed that the actual area of assignment was the criterion on which the cane farm market was based. He was also critical of the inclusion of a nominal 5 ha as being occupied by headlands when he believed that at least some of the actual headland area as necessary to maintain the actual 97 ha of cane, encroached onto the surveyed access strip of an adjoining property.
Mr Bowen provided a background to the valuation methodology which had been adopted. Sugarcane had been grown in the Mareeba district since about 1980 and developed cane farms had been tightly held with no "going concern" sales within the MDIA since 1988. Research had shown that cane land values in the various mill areas related to their production history. The primary evidence of value for cane lands in the Mareeba area had been accepted as coming from cane development lands, with applied values being generally lower than for other mill areas. Nevertheless the analyses of sales in the coastal mill areas was considered to offer support for the lower values which had been applied. In this particular matter, Mr Bowen had considered the evidence provided by sales, in the period from July 1992 through to April 1996, of:(a)Two properties purchased in a "green" state for cane development within the Mareeba locality.
(b)Three sales of improved properties within the Mareeba locality and which were subsequently granted cane assignments.
(c)One sale of a property in the Julatten locality and which had since been granted a cane assignment.
(d)Two sales of coastal (Mossman and Babinda) "going concern" cane farms.
Mr Stewart had been provided with a copy of Mr Bowen's valuation report which contained the sales evidence on which Mr Bowen had relied. Mr Stewart had not been in a position to challenge that evidence and I do not propose to discuss it in detail. It is observed however that in the analyses of the "green" sales, the unimproved value had been obtained after an allowance for interest on the gross land content for a notional development period, which, as I understood Mr Bowen's evidence, was intended to liken the analyses of "green" sales with analyses of sales where development had actually taken place. Whilst I am not persuaded that such an allowance is correct in principle, it at least provides a "conservative" result for the application of value.
Mr Bowen spoke of the formation of a local "Valuation Advisory Group" involving the canegrowers' organisation and interested growers, before the proposed valuations of cane lands in the Mareeba district, which had become effective at the earlier date of 30 June 1996, were issued. Levels of value which had been proposed in the standard which was accepted had involved a base value of $1,700 per ha for the Biboohra locality, less an allowance of $225/ha for the specific Mareeba area, $1,400 for the Arriga/Springmount locality (within which the subject land is located) less a cartage allowance of $225/ha, then $900/ha in the Walsh West locality, less a cartage allowance of $300/ha. Balance unassigned areas were valued in the range of $135-$150/ha.
Mr Bowen's report contained the following passages:
At p.4:"Essentially, any cropping regime within the MDIA is totally reliant upon irrigation. The parcel has a water licence from the Irrigation Channel located to the east of the subject, and the entitlement comprises 800 megalitres per annum. This was purchased at a set price of $80 per megalitre."
Then at p.9:
"The levels proposed in the 'standard' have all been sourced from blocks which are either rain reliant, or from sales within the irrigation area that have no or minimal water allocations. Significant water allocations have been generally purchased since these sales occurred. It could be argued, that if water had a sale price of $80/megalitre, that an additional $64,000 could be applied to the subject to arrive at an 'irrigated' canefarm rate."
There is no dispute that a water licence with an annual allocation of 800 megalitres attached to the subject property at the date when the valuation became effective. It seems to me that if it could have been shown from sales evidence that the unimproved value of assigned cane land with location and the quality of the subject 105 ha, with a waterworks licence providing an annual allocation of 800 megalitres, was worth $179,500 ($115,500 plus $64,000) ie $1,710 per ha, then, in accordance with the decision of the Court of Appeal in The Chief Executive, Department of Lands v. RJ & BH Webster (1994-95) 15 QLCR 394, the higher valuation should have been applied.
Counsel for the respondent invited me, on the basis of Mr Bowen's evidence, to increase the valuation by an amount of $64,000 pursuant to s.66 of the Valuation of Land Act 1944 which relevantly provides as follows:"Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Appeal Court may –
(a)affirm the valuation appealed against; or
(b)reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act; …
I decline that invitation. The evidence of Mr Bowen, as I understood it, was that the level of value which had been adopted had been based on the best evidence available at the time and after consultation within the industry. While it seems, prima facie, that the "standard" levels of value adopted for the valuation effective from 30 June 1996 were fully supported by evidence obtained from sales of land with no waterworks licences, it has not been fully explained how the evidence from the sales of land with "minimal water allocation" was dissected and applied. For example, one of the basic sale properties (Sale 4 – Arriga/Springmount) showed an analysed unimproved value of $73,395 and the unimproved value applied was $69,000. That land was said to have had a water allocation of 180 megalitres.
I gained the distinct impression from Mr Bowen's evidence, that an increase in the subject valuation purely for reasons associated with the waterworks licence, would have upset the established uniformity of valuations as at the same relevant date, of other comparable lands in the Shire, including those with waterworks licences.
Again, the evidence of Mr Bowen suggests to me that the valuation "standard" adopted for cane lands in the Mareeba locality, as at the relevant date, has not been shown to be fundamentally wrong, although probably quite conservative. If that is the case and that valuation "standard" has been consistently applied to lands within the MDIA, including those with waterworks licences, then it would be inequitable to adopt an increased valuation for the subject land, purely on the basis of prices paid for available water allocations. If my assumptions are incorrect as to how the standard has been applied, then it seems to me that the question of any enhancement in unimproved value resulting from the existence of waterworks licences in the MDIA, and their various water allocations, will be addressed in the analysis of sales evidence for subsequent valuations.
I have given consideration to the various grounds of appeal in coming to the conclusion that the valuation appealed against has not been shown to be wrong or unreasonable. For example, the land has been valued on the basis that it was used for purposes of farming, when matters such as the proximity of a quarry or the potential nearby location of a refuse dump, have not been shown to have the effect that would have applied to land used exclusively as a rural residential site. The cost of extension of electricity to the boundary of the land is clearly a factor which could affect unimproved value, but the valuation is supported by sales of land with a similar disability. The sales evidence relates to the date of valuation and does not include any of the increase which Mr Stewart perceived to have been the result of the commencement of the operation of the Tableland Mill. Although Mr Stewart seemed dissatisfied with the extent of the inspection conducted by Mr Bowen, I am satisfied from Mr Bowen's evidence that his knowledge of the subject property was more than sufficient for him to have obtained a proper understanding of the positive and negative features affecting its unimproved market value.
Finding
The appeal is dismissed and the valuation of the chief executive affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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