The Bromet Family Trust v Chief Executive, Department of Natural Resources
[2000] QLC 49
•7 August 2000
|
BRISBANE
7 August 2000
Re: Appeal against Valuation
Valuation of Land Act 1944
Valuation Roll No: 843
Local Government: Tiaro Shire
(V98-708).
The Bromet Family Trust
v.
Chief Executive, Department of Natural Resources
(Hearing at Hervey Bay)
D E C I S I O N
Background:
This matter deals with a parcel at Bauple, and described as Lot 151 on Plan MCH 82 and Lot 131 on Plan MCH 1232, Parish of Gundiah. The subject land has an area of 81.195 hectares and is located about 10 kilometres south-east of the Bauple township, and is encircled by the Bauple State Forest Reserve. The land is zoned as "Rural" under the provisions of the Town Planning Scheme of the Shire of Tiaro of 30 January 1997, and current at the date of valuation of 1 October 1997. The key issues are comparison of sales, the added value of improvements, the value of timber, and the nature of the land. There are no services connected to the subject land, and the nearest electricity is approximately 4 kilometres away, and connection to the electricity supply would be expensive.
In March 1998, the Chief Executive issued an annual valuation of the subject land at $29,500. Following an objection conference, the Chief Executive reviewed that figure, and on 23 July 1998 issued a revised general valuation of $26,500 under section 28(1)(h) of the Valuation of Land Act. Following a further objection to the revised valuation the Chief Executive confirmed the unimproved value at $26,500 on 17 September 1998. The appellant has now appealed that figure claiming that the unimproved value should more properly be $18,000. At the hearing on 11 May 2000, the appellant was granted leave to amend that figure to $13,000, which is the amount now appealed for.
Mr Mark Bromet, Director of the Bromet Family Trust, appeared and gave evidence for the appellant. Mr Darryl Gaedtke, Senior Valuer, appeared for the respondent, calling evidence from Anthony Gordon Clift, the Departmental Registered Valuer responsible for determining the valuation. An unsuccessful preliminary conference failed to resolve the matter prior to the hearing.
The Evidence:
(1) The Nature of the Lands -
The subject land is described by Mr Clift as comprising mixed topography and soil types varying from easy to part-moderate forest slopes of grey to brown loams, with three gullies draining the property. Mr Clift made those assessments based upon Departmental records, his extensive personal experience in land assessments since 1989, advice from a Departmental soils expert, and discussions with landowners. There are significant ironstone traces in the forest soils, and a higher red soil ridge covering 6 hectares is located on the eastern side of the subject land near an old packing shed.
Clearing has occurred on all of the red soil areas and also on other parts of the balance areas. The original vegetation was coastal forest with grey and red ironbark, spotted gum, blue gum, stringybark and bloodwood timbers. Underground water supplies are available and equipped; and Mr Clift identifies three earth dams including one of capacity of 31 megalitres available for irrigation. However, that largest dam is seen to be fairly shallow in depth. Mr Bromet identifies four dams on the subject land on his apportionment at the sale of the subject land.
The subject land has been improved with three sheds and is being developed for macadamia production purposes. The land has been afforded a concessional valuation under section 17(2) of the Act as being a "business of farming".
Mr Bromet has no detailed evidence to refute Mr Clift's description of the soils, but Mr Bromet notes the description of the original country when it was first subdivided in 1919. Mr Bromet provides copies of the original survey plans of Lot 151 (Plan MCH 82), and the adjoining parcel Lot 168 (MCH 1232). Those plans show the original surveyor's identification of the country. Lot 151 shows the ridge of good red soil identified by Mr Clift; however, Lot 168 reveals no mention of good red soils.
Mr Bromet gets some comfort from the early surveyor's differentiation of the soils of Lot 151 and Lot 168, and argues that the general notation of sandy soils on Lot 168 supports that difference. Mr Bromet's conclusion that the good red soils are restricted to a relatively small area on the subject land is supported by the noting of poor soils along the ridge extending to the north-west corner of Lot 151. However, in view of Mr Clift's assertion of good red soils over only 6 hectares of Lot 151, I find no inconsistency between Mr Clift's assessment and that of the original old surveyor. On that basis Mr Bromet has not seriously challenged Mr Clift's classification of that land.
Another matter of concern for Mr Bromet is the existence of the adjoining State Forest Reserve which almost totally surrounds the subject land. Mr Clift agrees that infestation by declared pests and noxious weeds (lantana and groundsel), is a larger problem for owners adjoining large areas of State Forest Reserve or National Parks, due mainly to the difficulties for the controlling state bodies of maintaining such large areas.
Mr Clift concedes that State Government Legislation excludes such State agencies from the responsibilities required of the general public to contain and prevent intrusion by such flora and fauna. For this reason he has made an appropriate allowance for the additional maintenance required by the appellant in that situation. Mr Bromet provides photos of the extent of the problem, and how it impacts the farming operations on the subject land. Mr Clift also notes that the adjoining parcel (Lot 168) has comparable problems with adjoining the State Forest Reserve.
In respect of the existing dams on the subject property, Mr Bromet provides evidence that those improvements (four) had been apportioned by the parties at the time of purchase of the subject land at $36,000. Mr Clift provides a nominal added value of the small dam and the three bores on Lot 168 at $600. Mr Clift made that assessment based upon verbal advice from the vendor (Mr Blower) that the dams had been built by a dozer in about 8 hours @ $70 per hour for the equipment.
Mr Clift believes the dam was likely to have been built as a matter of convenience when equipment was on-site for, say, timber clearing, and he discounts any suggestion of special location costs in order to locate the equipment. Mr Clift believes his allowance for the dams was adequate, in view of Mr Blower's advice. Mr Blower values the dam on Lot 168 at $4,000. The matter of the added value of the existing cattle yards on Sale 2 (Lot 168) was agreed by both parties to be about $7,000, in view of the substantial nature of those yards.
The shape of the subject land was also a matter of dispute between the parties. Mr Bromet saw the more irregular shape of the subject land, compared to Lot 168, as providing some additional impacts upon macadamia production. He notes that more regularly shaped lots allow for longer straight lines of trees, which were then easier to maintain and harvest.
However, Mr Clift disagrees that the shape of a large parcel such as the subject land (81.195 hectares) is as significant to farming operations, as would be say the location of gullies, rock outcrops or the general topography. Mr Clift sees no special disadvantage to the subject land based entirely upon the shape of the property.
Of more impact is the quality of access to the subject land. The property is really only accessible by a formed forestry road called Eastern Road, which services the subject land from the west, connecting by Deveren Road to the Bruce Highway. Deveren Road has about 4 kilometres of bitumen sealed road, a further 4.5 kilometres of formed earth and gravel road, and then connects to 3.5 kilometres along Eastern Road which is formed earth. Eastern Road becomes very slippery, and often impassable, in wet weather. There is also an unformed surveyed road along the northern and eastern boundaries of the subject land, but this is covered with heavy vegetation and is not passable.
There is a forestry access track further to the east of the subject land. The State Government has given permission for a new track to be cleared on the State Government side of the boundary fence, to be used for maintenance purposes by the appellant. The cost of that track was to be borne by the appellant, as the respondent is unable to assist at present due to the need to develop a whole of Government policy on State lands in respect of pest management. (Respondent's letter of 27 August 1999).
(2) The Value of Improvements -
To support his assessment of the unimproved value of the subject land, Mr Bromet provides details of the apportionment calculations attaching to the contract of sale for the subject land on 9 May 1997. Mr Bromet argues that the apportionment for the subject land was accepted by both the Australian Taxation Office and the Queensland Office of State Revenue (Stamp Duties), and reveals the following purchasers:·Land by Bromet Family Trust - 81.185ha @ $615.90 = $ 50,000
·Assets by Bromet Family Four-Way Partnership
Fencing - $18,400
Buildings - $53,200
Macadamia trees - Nil
Irrigation Equipment - $75,500
Plant & Equipment - $37,900 $185,000
TOTAL PURCHASE PRICE $235,000
The property had been advertised widely in the local newspapers in March 1997 for $255,000. A more detailed breakdown of that apportionment was supplied in a letter to the vendor of that sale (Mr Collins) of 29 April 1997. Key elements of that apportionment included $36,000 for the four dams, and $53,200 for the three buildings. There was no assessment of any added value of existing timber upon the land in its apportionment of $50,000. The only improvements identified in that figure were some clearing and cultivation.
Mr Clift acknowledges the apportionment in the sale of the subject, and was not aware of that component of the sale. Prior to the hearing he had only been aware of the sale of the land component of that sale at $50,000, and he saw that value as inconsistent with other sales of comparable arable lands in the Tiaro area, and he had rejected that sale as out of line with the market. Mr Clift has had extensive experience in the Tiaro Shire and was well aware of general rates for arable lands. Mr Clift further rejects adopting sale apportionments on face value if there would appear to be some inconsistency with other market trends.
Mr Clift argues that what needs to be determined in any assessment of unimproved value, is the added value any improvements bring to the property. He normally seeks to talk to both vendor and purchaser to assess their understanding of the added value seen by both parties in the sale. Mr Clift argues that often some improvements which provide added value to one party, provide little added value to another for their purposes. Mr Clift therefore seeks market guidance to assist in assessing appropriate added values.
However, Mr Clift concedes that the Australian Taxation Office and the Queensland Department of State Revenue both have powers to query any apportionment that is seen to be inconsistent. However that of course depends to some extent upon the resources of those organizations, and the parameters they adopt to assess consistency of returns. Mr Clift could provide no assessment of the reliability of those apportionments, but maintains that his own expertise provides a better guide to the added value of the improvements. However, in respect of the overall price paid for the subject land in 1997 ($235,000), Mr Clift believes the figure is not out of line with the market.
(3) The Value of Timber -
In assessing the added value of timber reserves upon the subject land, Mr Bromet draws support from estimates provided for timber available on the adjoining parcel (Lot 168). He provides no specific details of the apportionment of timber remaining on the subject land when purchased in 1997. However, he now advises that a re-assessment of those remaining reserves provides estimates from half of the subject land that was not cleared (40 hectares), at about $55,000. That comprises current sales of round posts ($5,513), and milled timber ($2,591), and stockpiled timbers on the property for sale valued at $32,000.
Mr Bromet bases his estimate upon advice from a specialised portable sawmill operator (B & D Mobile Sawmilling), which estimates remaining reserves upon Lot 168. B & D Mobile Sawmilling provides a very preliminary estimate on the basis that "inspection of Lot 168 should yield a return of $1,000 to $1,200 per month for four years from standing timber". Lot 168 had been formerly logged by professional timber cutters prior to its sale as discussed later. On the basis of that estimate it would appear that B & D Mobile Sawmilling had not had the opportunity to provide a comprehensive inspection of Lot 168, and was apparently was not fully aware of the actual stumpage numbers on that parcel.
The estimate provided by Mr Bromet is in conflict with the estimate of timber provided by Mr Clift. Mr Clift has based his estimate upon verbal advice from the vendor of Lot 168 (Mr Blowers). Mr Blowers is an experienced timber-feller and had purchased Lot 168 for $125,000 for the purpose of timber harvesting in 1995. Mr Clift was advised that Lot 168 was then resold in November 1998 for $100,000, after Mr Blowers had harvested $100,000 of timber. Negotiations for the resale of Lot 168 had extended over a period of 12 months. It apparently was Mr Blowers' opinion that the remaining timber would be only for fence posts, and Mr Blowers did not agree that timber reserves to $45,000 would be remaining. However the Court was unable to cross-examine Mr Blowers about the basis of his estimates.
It is also noted that B & D Mobile Sawmillers could represent part of the growing industry of specialised suppliers to the cottage industry for selected furniture. Generally speaking, such users of timber are able to maximise the timber from trees, beyond the normal millable logs for general industry purposes. If that assumption is appropriate in the current matter, then the assessment of $45,000 could represent a higher than normal appraisal of the available timbers.
The only proven fact about the timber resource from the subject land is the actual sale of $8,140 for timber sold. Mr Clift has adopted Mr Blowers' advice, and estimated the timber reserve upon Lot 168 at $10,000, in spite of its actual area of timber cover about four times the size of the available 40 hectares on the subject land. On the basis of actual sales I would agree with Mr Bromet that Mr Clift's estimate at $10,000 for Lot 168 would appear low. However it is also noted that Mr Bromet agrees that both Lot 168 and the subject land have formerly been "heavily harvested by timber cutters who have taken a large proportion of the millable timber". (Page 2 of Exhibit 2).
(4) Comparison of Sales -
To support his assessment of the unimproved value, Mr Bromet relies upon the apportionment figures of the sale of the subject land in May 1997. Adopting the apportioned value for the land, Mr Bromet has deducted his estimate of the timber reserves at $37,000, determining an unimproved value of $13,000.
In support of his valuation, Mr Clift provides the following sales:· Sale 1 - (Beaumont Road, Tiaro - Lot 1 on RP 902577)
This is a 100.4 hectare irregular shaped parcel of mixed better class forest, containing broken flats and low rocky ridges. Access is superior to the subject land, and power and telephone are available. The sale was valued as Section 17 "farming" land, with any higher uses ignores. The sale is seen as significantly superior to the subject land.
The sale sold in December 1996 for $150,000, which was analysed at $72,587 ($723 per hectare) and applied at $52,000 ($518 per hectare).
· Sale 2 - (Eastern Road - Lot 168 on MCH 1276)
This is the adjoining parcel to the south of the subject land, and has an area of 164.505 hectares. This is an "after date" sale purchased by the appellant for extension of the orchard plantation. This is a fairly regularly shaped parcel of mixed generally poor class forest country, varying to wallum. There is a small dam and three bores, with cattle yards and logging access roads. The timber reserves are estimated at $10,000, mainly for fence posts. There is no electricity, and access is more remote than the subject land. The sale is seen overall as superior to the subject land due to its larger size.
The sale sold on 7 November 1998 for $100,000, which was analysed at $71,200 ($432.81 per hectare) and applied at $37,000 ($225 per hectare) - 52%.
Mr Bromet rejects Sale 1 as being comparable with the subject land, due to the almost unique nature of the subject land, and its practical enclosure within the Bauple State Forest Reserve. Mr Clift concedes the isolation of the subject land, but argues that the land classification is similar to other arable lands in the Tiaro Shire. Because of its relative isolation and difficult access, Mr Clift made a very conservative application (52%) in his value of $26,500 for the comparison of the subject land.
In comparing Sale 2 to the subject land Mr Clift has relied on his extensive experience in classifying dry land sugar land in the locality. He has also had the assistance of a land classification by a Departmental soil scientist who assessed Lot 168 as part of a sugar land exchange package. Mr Clift adopts a land capacity numbering system, which reflects the relative quality of the soil, and assesses Lot 168 as inferior quality land to the subject land.
Mr Clift also argues that the access to Lot 168 is inferior to the subject land, due to its more remote location, being an additional 3 to 6 kilometres via Eastern Road. Mr Clift notes that alternative access could be available via surrounding timber tracks, subject to approval by the State Forest Department. However he advises that if those tracks were to be used for commercial purposes, then the appellant would also be required to contribute to ongoing maintenance of those tracks. Mr Clift spoke to both the vendor and the purchaser of Sale 2 in order to assess their market expectations.
In applying his rate per hectare to the subject land, Mr Clift adopts relative assessment values which have been tested over many years. He adopts his Sale 1, and also another similar comparable country class property to the north of Tiaro township,
to demonstrate that the better location of those properties is acknowledged in the lower rate per hectare for the subject land. A similar percentage increase had been applied to all similar arable lands in the Tiaro Shire. Mr Clift argues that in view of the uncertainties associated with the differing opinions of the vendor and purchaser of Sale 2 (Lot 168), in respect of the added value of remaining timber, he had applied a conservative application of that sale in his comparison with the subject land. Mr Blowers (the vendor) was of the opinion that most of the millable timber had been removed prior to the sale of Lot 168.
In respect of the level of improvements existing on Lot 168, Mr Clift agrees that official "apportionments" in a recorded sale are of interest in assessing the unimproved value, but argues that it is the added value which the improvements bring to the land which is most important. Mr Clift argues that any taxation benefit which might flow from a certain "apportionment" between the improvements and the land, are developed for the purposes of the legislation, and in the current matter would be subservient to the directions of the Valuation of Land Act.
In assessing the current unimproved value of the subject land at $26,500, Mr Clift argues that he has adequately allowed for the location and access difficulties. Mr Clift also seeks support for relying upon sales evidence, rather than relativity to Lot 168, in the decision of WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44. In his assessment Mr Bromet draws support for the adoption of the "apportionment approach" to Sale 2 (Lot 168) in guidance to be found in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418. Mr Bromet argues that it is the intentions of the purchaser which are important when analysing a sale. He argues that it is best represented by the apportionment figures supplied for the sale, and accepted by the Australian Taxation Office. Mr Bromet further argues that as the difference in timber assessments between the parties was well known by the respondent prior to the hearing, and was not followed up in any "without prejudice" discussions between the parties, then he argues that the appellant has discharged his responsibility in respect of proving his grounds of appeal.
Decision:
(i) The Nature of the Land -
As noted there is no inconsistency between the parties in respect of the nature of the soils, or the impact of fauna and flora intrusions upon the subject land from the adjoining State forest. Mr Clift has allowed for those matters. In the matter of the added value brought to the subject land by the dams, I note that Mr Bromet has apportioned that value at the time of sale of the subject land at $36,000, while Mr Clift sees a much lesser added value for the dams.
In seeking some comparison in respect of the dam on the adjoining Lot 168, I note Mr Bromet has assessed that at $4,000, and Mr Clift at $600. Mr Bromet would appear to have relied upon an estimate based upon an arrangement to purpose build the dam; while Mr Clift has estimated the cost based upon an opportunity basis, using Mr Blowers' verbal estimates. I will allow $1,000 for the dams. It is noted that the parties now agree with the added value of the cattle yards on Lot 168 at $7,000 (see letter of respondent of 29 June 1999).
In assessing the added value of the three dams upon the subject land, I believe Mr Clift may have valued that additional source of water very conservatively. While there is also access to underground waters from the installed pumps, the presence of the three dams would also afford the owners some additional comfort for irrigation purposes. While I have no determination of their added value by Mr Clift, I believe that figure would be greater than NIL. If I use the relative values adopted by the parties for Lot 168, ($4000 by the appellant and $600 by the respondent), I could conclude an added value for the dams on the subject land at $5,400. However I believe that would be a very conservative estimate, and I will allow $10,000 for the dams.
In respect of access to the subject land, it is agreed that the current access via the forestry road is by permit only. It is also noted that should that forestry road be used for a commercial purpose (such as for a macadamia orchard), then its use would be subject to some contribution for maintenance by the appellant. In seeking comparison of access to the adjoining Lot 168 to the south of the subject land, I note that, while that parcel has a longer frontage to the forestry road, it is also further removed from the all-weather access roads connecting the land to the Bruce Highway. On balance I believe there is little difference between the parties in respect of access to the two parcels.
In the matter of the impact of the shape of the subject land, I note Mr Bromet's concern that a more regularly shaped parcel, all else being equal, would lend itself better to the lineal design of orchard production. While I can accept that conclusion, I believe the impacts of topography and soil and rock exposure, would tend to provide a greater impediment to tree planting. Where a land parcel is quite small in size, I could imagine that a more regular shape would be a significant advantage. However, the subject land is of a not insignificant dimension (81.195 hectares), and I believe there would be little difference in the value of the subject land and Portion 168 for that purpose alone.(ii) The Value of Improvements -
The key difference between the parties lies in their approach to assessing the value of improvements. Mr Bromet relies upon an apportionment prepared for taxation purposes at the time of sale. Mr Bromet concedes that such an apportionment is prepared in order to assess certain charges due to the Australian Taxation Office, and also for State Stamp Duty purposes. Mr Bromet also concedes that it is commonly understood that the apportionments are prepared in order to minimise legal taxes due, and usually to the agreed amounts best suiting both vendor and purchaser. While such a process must of course satisfy the requirements of the two taxing authorities, there would appear to be some scope for a broader general understanding of the apportionment values. It is Mr Bromet's argument that as the apportionments reflect the actual amounts considered by both vendor and purchaser, then those amounts should be accepted as meeting the Spencer test for a bona fide sale.
Mr Clift has no argument with the apportionment process, but argues that such apportionments should also be seen in the perspective of other market indicators. Where the apportioned values differ from other market indicators, then Mr Clift seeks to rely upon his own experience and expertise in assessing the added value of any improvements.
In support of Mr Bromet's reliance upon the declared apportionments, I note that under section 49(3) of the Stamp Act 1894, for a conveyance or transfer of property, the true consideration for, or value of the property is to be specified:"49(3) The true consideration for or value of all property included in a transaction (including livestock and movable chattels referred to in sub-section (2)) shall -
(a)be specified in the instrument of transfer or conveyance of property made pursuant to the transaction; and
(b) be declared by declaration made under the Oaths Act 1867. "
The onus therefore lies upon the parties to declare what they believe to be the values of each component of the apportionment attaching to the Contract of Sale. Where the Commissioner feels that the apportionments are inappropriate, then the Commissioner "may make such apportionment as the Commissioner thinks fit and the Commissioner's apportionment shall be conclusive" (section 49(4)). The Stamp Act 1894 does not specify how the actual value of the land is to be determined; but the meaning of the "full unencumbered value" of a property is defined in section 2(a)(1).
In seeking some guidance on the meaning of unimproved value in other legislation, I note that section 3(c) of the Land Tax Act 1915 mirrors exactly the meaning defined in section 3 of the Valuation of Land Act 1944. The definition of "value of improvements" in section 3(B) of the Land Tax Act 1915 is also mirrored in section 5 of the Valuation of Land Act 1944, which states:"5.(1) The 'value of improvements' means, in relation to land, the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act, irrespective of the cost of the improvements, including in such added value the value the any hotel licence the value of which has been included in the improved value.
(2) However, the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of a nature and efficiency equivalent to the existing improvements."
Clearly, for the purposes of State legislation, guidance to the value of land and improvements to land, are most likely to be found in the Valuation of Land Act 1944. The clear thrust of section 5(1) of that Act, in respect of improvements to land, is that it is the "added value" of those improvements which is to be assessed.
Reliance upon personal apportionments, while those may have suited the intentions of the parties to the sale at that time, may not of themselves constitute the added value of those improvements. Indeed the use of personal apportionments, rather than a consideration of added value, was noted in C and BD Henricks v. The Valuer-General (1983) 9 QLCR 59, where, in the Full Court of Queensland, Macrossan J (later CJ) said at page 62:"Although the appellants called no evidence from a valuer they did rely upon the prices demonstrated by a number of sales listed in exhibit number 5 tendered in the Land Appeal Court. Insofar as improvements existed or may have existed on the lands involved in these nine sales the appellants relied only upon the parties' own apportionment of the value of improvements as shown upon the official VG1 forms lodged in each case. For good reason, the courts have held that such figures cannot be relied upon to provide an accurate value of improvements when sales of improved lands are being analysed to discover unimproved land value."
The matter of the weight to apply to an "opinion" on value, was also discussed in Hazeldell Limited v. The Commonwealth (1923-24) 34 CLR 442, where Isaacs ACJ (later CJ), said at page 452:
"The value of land, where there is no market price, is always a matter of opinion. Opinion is largely dependent on the personal equation. We visualize the hard-headed business man desiring the land for the most advantageous use to which it can be put - excluding, of course, in obedience to the statute and the just principle of the thing, the added value by reason of the actual proposal for which it has been acquired. ---- But the hard-headed business man visualized is by inescapable necessity to a great extent the creation of each individual who forms an opinion. Theoretically we say 'What would I think if I were in his place?' - practically it is 'What would he think if he were in my place?' And so the range of deviation is wide. That is so even where the factors relevant to value are comparatively ordinary and stable and open to tests competitive and otherwise."
That finding by Isaacs ACJ emphasises the importance of gauging the "opinion" of a purchaser or a vendor, against the market price. That direction was followed by Mr Clift in the current matter, where he sought to compare the land component of the sale of the subject land, with other comparable arable lands in the Tiaro area. As a result of that comparison, Mr Clift estimates that the land component of the apportionment at $50,000 was out of line with the market for that type of land. It is also noted that the land component in the apportionment at $50,000 did not specify any added value of timber, however it would be reasonable for the appellant to have included such timber value within the overall value of the land at that time.
The principle of adopting the added value of improvements to land was also addressed in O'Brien Nominee Pty Ltd v. Valuer-General (1979) 6 QLCR 280, where the Land Appeal Court said at page 285:"It is clear that the value which the improvements give to the land, subject to the above proviso, is to be ascertained irrespective of the cost, as at the relevant date, of making them."
The Land Appeal Court had followed guidance in that matter in the decision of the High Court of Australia in The Australian Estates and Mortgage Company Limited v. Commissioner of Land Tax (1931) 1 "The Valuer", 1 July 1931, at page 247, per Rich J. The Land Appeal Court went on further to note in O'Brien at page 287:
"The test of 'added value' of improvements is, as the term implies the value added or given to the land by the actual and existing improvements."
I also note guidance relied upon by Mr Bromet in the findings of the High Court in Spencer v. The Commonwealth of Australia (supra), at 432; and also in the findings of the Privy Council in Pastoral Finance Association Limited v. The Minister (1914) AC 1088. Both of those precedents provide fundamental guidance in the establishment of the value of a property. However the Pastoral Finance decision addresses the total value of a property to a dispossessed owner, which equals its "fair market value" which equals its "special value" to the owner. The direction from Spencer is that a prudent buyer and seller should be aware of all of the market forces impacting upon the sale in question. I see no conflict with those directions in the approach taken by Mr Clift in assessing a fair market price for the subject land.
On balance I believe Mr Clift has adopted a fair and reasonable approach to his assessment of the added value of the improvements. Any variations between the apportioned values adopted by Mr Bromet for the purposes of the payment for duty purposes, and assessments of added value for a commercial sale, should be considered in line with other market forces. (See Exhibit 2, folio 3A).
(iii) The Value of Timber -
Based upon the evidence provided, I believe a reasonable estimate for the added value of timber remaining upon Lot 168 would be greater than $10,000. For the purpose of comparison of the land component of Lot 168, and the subject land, I note that $8,104 has already been recouped from the sale of timber on the subject land, since it was acquired in 1997. I therefore will accept a notional value of $20,000 for the existing timbers upon Lot 168, which is to be excluded from the unimproved value of the land.
(iv) Comparison of Sales -
In comparing Mr Clift's Sale 1 (Beaumont Road) I accept that sale to represent a considerably superior property than the subject land. While its use has been restricted only to its current use as for "farming purposes" under section 17 of the Act; its access and utility services are all considerably superior. I accept Mr Clift's advice that the sale was used merely to demonstrate similar arable lands, but with other superior attributes. I also accept Mr Bromet's argument that comparison with sales of properties fronting the Bruce Highway provide little in-depth comparison with the subject land. A similar conclusion also applies to the additional land north of the township of Tiaro.
The best evidence I believe lies in comparisons with the adjoining parcel (Sale 2 - Lot 168). While that sale occurred approximately one year after the relevant date of 1 October 1997, both parties have relied upon that sale. There was no evidence that the market had changed appreciably during the intervening period. (See McCathie and Others v. Federal Commissioner of Taxation (1944) 69 CLR 1, at 16; and also Daandine Pastoral Co Pty Ltd v. Commissioner of Land Tax (1943) 7 "The Valuer" 299, at 304.) On that basis Sale 2 is a sale to which some weight can be attributed. While the sale was to an adjoining owner, the extended period of negotiation indicates that the sale should not be excluded for that reason. (See Hurdis v. The Minister (1957) 2 LGRA 132, per Hardie J at page 140.)
In comparing Sale 2, Mr Clift has made allowance for the difference in country classification; the difference in access and size; the comparable impacts from the adjacent State Forest; and he has seen the applied rates per hectare at Lot 168 ($225 per hectare) and the subject land ($325 per hectare). Mr Clift argues that when comparing similar parcels, all else being equal, he would expect the rate per hectare for a larger parcel to be something less than the rate per hectare for a smaller parcel. That principal was noted in CH Rolfe and Others v. The Crown (1986-87) 11 QLCR 85, where the learned Member (later President), when comparing the unimproved value of rural lands for conversion of grazing homestead perpetual leases, said at page 89:"I come now to one of the more contentious issues in the lessees' case and that is that a classification cannot be applied directly to the subject land without taking into account among other factors the size of the respective parcels. It is submitted that the smaller of two comparable blocks would fetch a higher unit value on sale because it would fall
within the financial scope of a greater number of buyers thereby generating greater competition and hence a higher unit value. ---- The answer I think is obvious and one need only to follow the method of selling large aggregations as a whole or in the alternative by portions to realise that there is something in the argument apart from proof in sales themselves. "
In considering the value of land for orchards and vineyards, I note that "Land Valuation and Compensation in Australia" by Rost & Collins (1996), 3rd Edition, says at page 358:
"The extent to which size may affect market value can best be ascertained by inspection and analysis of sales in the same district as the property being valued. "
The principle was also followed by the Land Appeal Court in Burns Philp & Co Limited v. Valuer-General (1974) 1 QLCR 161, at 166.
Mr Clift has relied upon his experience as a valuer in the Tiaro Shire to assess that relationship, and Mr Bromet has supplied no evidence to discredit that economic logic.
While relativity is considered as important in determining fair and equitable valuations for rating purposes, its use is found to be generally less conclusive than comparisons of sales. That was found in WM and TJ Fischer v. Valuer-General (supra), where the Land Appeal Court found at page 46:"It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence."
If I then review the added value of improvements on Sale 2 and the subject land, I could find:
Item Sale 2 Subject land
(164.5ha) (81.19ha)
Sale Price $100,000 $235,000
Added value of improvements $ 29,400 $159,000
(Incl $1000 for dam) (Incl $10000 for dams)
Value of the land $ 70,600 $ 76,000
Rate per hectare $ 429 $ 936
Applied Unimproved Value $ 37,000 $ 26,500
Rate per hectare $ 225 $ 327
Application 52% 35%
On that basis I believe Mr Clift has applied a very conservative application of the analysed sale, giving any uncertainty to the benefit of the appellant. (See Commissioner of Succession Duties v. Executor Trustee and Agency Company of South Australia Limited (1947) 74 CLR 358, per Dixon J at p.373.)
Summary:
In summarising the evidence I am reminded that in respect of a general valuation, the appellant has the onus of proof of his appeal placed upon him under section 56(2). I am also reminded that unless the Chief Executive has been found to have adopted a wrong principle, or made a serious error of fact, then section 33 of the Act directs that the unimproved value as determined by the Chief Executive is deemed to be correct. (See Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41, at 56.) On the evidence before me, I find that the onus of proof has not been effectively discharged by the appellant.
Conclusion:
Having considered the whole of the evidence, I am not persuaded that the appellant has proved his case. The appeal is dismissed, and the unimproved value of Lot 151 on Plan MCH 82 and Lot 131 on Plan MCH 1232 as determined by the Chief Executive at $26,500 is affirmed.
(NG Divett)
Member of the Land Court
0