Tindall v Chief Executive, Department of Natural Resources
[1998] QLC 5
•6 February 1998
|
LAND COURT
BRISBANE
6 February 1998
Re: Appeal against Rental Valuation -
Valuation of Land Act 1944 -
Shire of Winton.
(RV96-287).
Godfrey M Tindall and Alice K Tindall
v.
Chief Executive, Department of Natural Resources
(Hearing at Winton)
D E C I S I O N
Mr and Mrs Tindall are the owners of a sheep grazing property known as "Hillview" in the Muttaburra District. "Hillview" comprises Grazing Homestead Perpetual Lease No 23/16437, described as Lot 2 on Plan TL12 and Grazing Homestead Perpetual Lease No 23/16613, described as Lot 3 on Plan TL20, both in the Parish of Culloden; Grazing Homestead Perpetual Lease No 23/16504, described as Lot 5 on Plan No TL41 and Lot 1 on Plan CM15, Parish of Culloden; and Lot 4 on Plan No TL24, Parish of St. Mungo. It has an area of 16,008 hectares.
As at 1 January 1996, under the provisions of the Valuation of Land Act 1944, the respondent Chief Executive determined the unimproved value of that land at $260,000, or $16.24 per hectare. Mr and Mrs Tindall objected against that valuation and after being advised that their objection had been disallowed, they appealed to the Land Court against the respondent's decision upon their objection, advising that their estimate of the unimproved value was $150,000.
The appellants' grounds of appeal were:•Low commodity prices;
•High running costs;
•Carrying capacity 4 acres to the sheep.
At the hearing of the appeal, Mr GM Tindall appeared and gave evidence on behalf of the appellants, while the respondent was represented by Mr D Routh. Valuation evidence on behalf of the respondent was given by Mr RR Taylor, a registered valuer employed by the Department of Natural Resources.
"Hillview" is situated approximately 45 kilometres north-west of Muttaburra and about 170 kilometres north-west of Longreach. Access from Longreach comprises approximately 40 kilometres of bitumen-sealed road, with the balance being formed earth road. Access is not all weather and, according to Mr Tindall, the property has been cut off for up to eight weeks in times of flood. Electricity and telephone services are connected to the property and mail is delivered twice a week.
Mr Taylor's report describes "Hillview" as comprising 2,750 hectares (17%) Landsborough Creek channels, with Bull Mitchell and Flinders grasses, grey/black soils and claypans; and 13,258 hectares (83%) open brown soil downs, lightly shaded in most parts, Mitchell, Bull Mitchell and Blue grasses; an area of open loose downs on the western end, and a harder pebbly ridge on the eastern end.
The property is used for sheep breeding and wool growing and has, in Mr Taylor's view, a carrying capacity of 10,000 sheep, equivalent to 1 sheep to 1.6 hectares, or 1 sheep to 4 acres.
Mr Tindall had no disagreement with that classification and description of country or with the carrying capacity.
Mr Tindall's main argument concerned what he considered to be the high unimproved value of the subject land compared with the low commodity prices and the cost of running the property. In his opinion there was little profitability in running sheep because of the poor wool prices. The situation was little better in running cattle. He quoted from ABARE figures as to the average income of sheep and cattle producers. He also quoted from "The Country Life" newspaper that 60% to 70% of graziers in the area were at risk of going out of business due mainly to low commodity prices.
Mr Tindall went on to say that the situation is exacerbated by the drought, which has been the worst since 1938. Although at the date of hearing the season was what he described as "very ordinary", at the relevant date the area was what he described as "in a roaring drought". That drought had continued for a number of years, drastically affecting the stocking rate of the property.
Mr Tindall also raised the effect of the judgment of the High Court in The Wik Peoples v. The State of Queensland (1996) 187 C.L.R., upon the value of leasehold land. "Hillview" is severed by a stock route and also has access to a camping and water reserve. He said that since the Wik case people have been coming on to the stock route and the reserve, fishing and shooting and generally making a nuisance of themselves.
It was explained to Mr Tindall that the judgment in the Wik case occurred after the date of valuation and, in any case, was not included in the appellants' grounds of appeal, to which he is limited under the provisions of the Valuation of Land Act. Mr Tindall accepted that ruling, but it was clear that like many leaseholders he was vitally concerned about the effect of the Wik case.
Mr Tindall referred to, but did not tender, a study by a Mr George Millear, an agricultural economist with the Department of Primary Industries at Longreach. That study apparently showed that a hypothetical 50,000 acre downs property in the Longreach/Blackall area, with a carrying capacity of 3.5 acres per dry sheep area, had an improved value of $14.25 per acre.
In Mr Tindall's opinion, purchasers who pay more than that price are paying too much for the land, having regard to the present depressed commodity prices.
Mr Taylor was not the valuer originally responsible for the valuation of the area. However, he said that he had made a detailed inspection of the subject property and the sales and agreed with the valuation of $260,000. In support of that valuation, Mr Taylor referred to sales of three improved properties in the general area.
The first of those sales is a property known as "Ban Ban", of approximately 14,264 hectares, situated south-west of Longreach, which sold in April 1995 for $951,345. That sale analysed to show an unimproved value of $15.91 per hectare and as at 1 January 1996, the respondent had applied an unimproved value to that land of $14.90 per hectare.
According to Mr Taylor, "Ban Ban" comprises open to nicely shaded downs with loose patches, with approximately 1,000 hectares of well shaded boree country and 420 hectares of thick to dense gidyea seedlings. He assessed its carrying capacity as 1 sheep to 1.7 hectares.
Mr Taylor considered "Ban Ban" to be inferior to the subject land because, although it had better access being on a bitumen road, its carrying capacity was somewhat less and it did not have the advantage of being watered by a flowing bore.
Mr Tindall thought that the two properties were similar, as he could not see much difference between the two of them. He conceded that perhaps the subject land might have slightly better rainfall, but said that "Ban Ban" had no flooded country. Mr Tindall regarded the channels and flooded country on "Hillview" as a disadvantage, as it was too dangerous for sheep until May and by then all the good grass had gone.
Mr Taylor also referred to the sale of a property known as "Waroona", of approximately 13,581 hectares, situated near Stonehenge, to the south-west of Longreach, which sold in May 1995 for $770,000. That property analysed to show an unimproved value of approximately $11.60 per hectare, which was the unimproved value applied by the respondent as at 1 January 1996.
Mr Taylor described "Waroona" as comprising about 40% open gidyea and boree downs, with the balance being shaded downs and channels. Overall, he regarded "Hillview" as superior to "Waroona," because of its better mixture of country, greater carrying capacity and the fact that it was watered by a flowing bore.
Mr Tindall thought that "Waroona" and "Hillview" should have equivalent unimproved values. They are both approximately 100 miles from Longreach, but in different directions and "Waroona" had a lot of nice boree and pebbly country.
The closest and most comparable sale property to the subject land referred to by Mr Taylor was the property known as "Lerida", with an area of approximately 12,375 hectares, which sold in April 1995 for $850,000. That sale was analysed to show an unimproved value of $18.04 per hectare and, as at 1 January 1996, the respondent had applied an unimproved value to that land of $16.16 per hectare.
According to Mr Taylor, "Lerida" comprises open brown soil downs with loose patches and with fair shade. "Lerida" is situated only slightly to the west of the subject land and has a similar carrying capacity, but no channel country. Mr Taylor regarded "Lerida" as slightly inferior to "Hillview", because it had a higher proportion of loose downs and was not as well watered, relying largely on a bore that ceased flowing in the 1920s and now had to be pumped.
Mr Tindall knew "Lerida" well and, while he thought that they should have the same value, he did concede that perhaps "Hillview" was regarded as firmer country than "Lerida". However, he regarded the sale as being an inappropriate basis of valuation, because he said it was an imprudent purchase, the price being far too high, considering the commodity prices and the costs of production. Indeed, that was his opinion of all the sales relied upon by Mr Taylor.
Mr Tindall referred to the sale of a property known as "Carraward", situated to the west of the subject land, which sold in March 1997 for $410,000. He said two years previously the property had sold for $835,000. "Carraward", which he thought had an area of about 30,000 acres, was not as heavy carrying country as the subject land. However, he emphasised that the sale was an indication of how purchasers had overextended themselves and then had to sell the property for about half the original purchase price.
Mr Taylor had not analysed the sale of "Carraward" because it occurred well after the date of valuation. However, he knew it had sold at auction and from his investigations he thought that it was a cheap sale.
I turn now to consider the provisions of the Valuation of Land Act 1944 in respect of this matter. Section 3(1) of the Act defines "unimproved value" as the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that at the date of valuation, the improvements did not exist.
It is well settled that in the absence of unimproved sales, the most appropriate method of determining the unimproved value is to have regard to the analyses of improved sales. This process involves deducting the value of improvements from the sale price in each case and comparing the unimproved values so derived with the subject land, making the necessary adjustments for differences between sales and subject properties. That is the method which has been adopted by Mr Taylor in this case.
On the other hand, Mr Tindall has based his argument on the productivity of the land and, with the assistance of the report by Mr Millear, has come to the conclusion that it would not be economic to pay more than $14.25 per acre for downs country. Although the report from Mr Millear was not tendered, it would seem from the evidence that his estimate was related to the earning capacity of the country, based on present commodity prices. It does not appear to have been based on actual sales of property.
I can feel a great deal of sympathy for the argument advanced by Mr Tindall. There is no doubt the grazing industry has gone through troubled times in the recent past. Not only has it endured prolonged drought but, as Mr Tindall has pointed out, prices for both wool and beef have been depressed.
However, despite these circumstances, it is clear from the evidence that there is a market for downs country in the central western area. Although Mr Tindall considered the purchasers of all three properties relied on by Mr Taylor were imprudent, particularly the purchaser of "Lerida", he has not been able to demonstrate with any cogent evidence that these purchasers paid too much.
The only contrary evidence was in relation to the sale of "Carraward", but I was not given any details of that sale. Mr Taylor knew of the sale but had not placed any reliance upon it because the sale took place some 14 months after the date of valuation and his investigations indicated it was a cheap sale. In the circumstances, I can place no reliance on that sale of "Carraward".
Under the Valuation of Land Act the onus of proof is upon the appellants. After considering the whole of the evidence I have come to the conclusion that the appellants have not discharged that onus. Therefore the appeal must fail.
Accordingly, the appeal is dismissed and the valuation of the subject land determined by the respondent at $260,000 as at 1 January 1996, is affirmed.
President of the Land Court
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