Turner v Chief Executive, Department of Natural Resources

[1997] QLC 147

[1997] QLC 147

 

LAND COURT

BRISBANE

12 SEPTEMBER 1997

Re:     AV96-577 and 578

Appeals against unimproved valuations -

Valuation of Land Act 1944 -

Nebo Shire

A.B.G. Turner and Estate D.V. Turner
v.
Chief Executive, Department of Natural Resources

(Hearing at Mackay)

D E C I S I O N

These appeals are against the unimproved valuations determined as at 1 January 1996 for two properties in Nebo Shire, the details of which are as follows:

"Tiverton" - AV96-577 - Alexander B.G. Turner - Lot 3357 on Plan PH 2101, Pastoral Holding 3357, Parishes of Exmoor, Tiverton, County of Hillalong - 23,570 ha - unimproved valuation $950,000.

"Carbethon" - AV96-578 - Estate Dina V. Turner Deceased - Lot 4433 on Plan PH 658, Pastoral Holding 4433, Parish of Exmoor, County of Hillalong - 10,720 ha - unimproved valuation $350,000.

The grounds of appeal in each matter are wide with estimates of unimproved value in the Notices of Appeal being $781,000 for "Tiverton" and $265,000 for "Carbethon".  The appellants' case was conducted by Mr D. Turner and evidence given by Mr A.B.G. Turner.  That evidence led to revised estimates of value in the amounts of $29 per ha ($683,530) for "Tiverton" and $21.50 per ha ($230,480) for "Carbethon".

Mr Turner's evidence was presented in the form of written statements prepared by the appellants' solicitors.  Those solicitors had also prepared the statements for C.M. and B.J. Angus whose appeals had been heard immediately preceding these matters.  In the Angus appeals there had been criticism of the "classification methodology" said to have been adopted by the Department in its initial valuation approach.  In these matters similar criticism was directed at that approach which Mr Turner said had been the basis for discussion and settlement of an objection relative to the unimproved value of another property "Cluen" in Broadsound Shire at the same valuation date. 

Mr R.M. Bein, registered valuer employed by the Department of Natural Resources had been the valuer who took responsibility for the subject and Angus' appeals.  It was his evidence in the Angus' appeals that values for various land classifications had been discussed at objection hearings as a basis for explaining relativity issues.  The valuation methodology adopted as the basis for defence of the valuations under appeal was direct comparison of the appeal lands with the properties providing the sales evidence. 

As in the Angus' appeals, the appellants here had understood that the evidence adopted by the Department as a basis for the valuation appealed against had been the sales of "Mavis Downs" and "Daunia".  It was not until exchanges of evidence had taken place prior to the hearing that it had been revealed that the "Daunia" sale had been deleted from that basis (for reasons explained by Mr Bein in the earlier hearing).  Instead the sale of "Suttor Creek North" had become a common basis and for these appeals the sale of "Rookwood" was also included.

Mr Turner had not inspected either "Suttor Creek North" or "Rookwood", his knowledge of the properties being limited to their general localities.  He was adamant that "Mavis Downs" comprised such superior country as not to be comparable with the subject holdings which comprised predominantly forest grazing country with relatively minor scrub influence and of much lighter carrying capacity.  Mr Turner had inspected the property "Chesterfield" (about 60 km distant) and Mr Turner supported the evidence given by Mr Angus as to the nature of the country contained within that property and the weight which should be given to the level of value indicated by that sale.

Whilst he had not inspected a property known as "Mt Gregory" he had been provided with details of the sale of that property (about 160 km distant) which he believed to be capable of comparison with "Tiverton" and "Carbethon" in terms of country and grazing potential.  He had been informed that that sale had been analysed by the Department to show $22 per ha.

On the property "Tiverton", Mr Turner had accepted the classification of country which had been contained in a Departmental report relative to a previously contested rental matter.  That classification was as follows:

·4,700 ha (about 20%) rough to unavailable mountain and hills.

·2,200 ha (about 10%) brigalow and associated scrub, some turkey bush, sandalwood and yellowwood.  500 ha are good clay loams while the balance is poorer sandy soil.

·16,670 ha (about 70%) undulating forest timbered with ironbark, bloodwood, sandalbox, box, coolibah, Moreton Bay ash and undergrowth.

Mr Bein had described the major part of the property as comprising good quality forest country varying from good flats to more moderate slopes and having a scrub influence in places.  He had found about 2,100 ha of good quality brigalow, turkey bush and sandalwood scrub on what he described as good clay loam to sandy soils.  The remainder of the property was described as comprising about 3,770 ha of steep inferior forest ridges and ranges on the eastern and western boundaries and in the central southern section. 

There was agreement that the carrying capacity of "Tiverton" was 1 beast to 10 ha overall.  Mr Turner expressed the opinion that the range country was generally unavailable for grazing due to steepness and lack of water except after heavy rain.

On "Carbethon", there was general agreement between Mr Turner and Mr Bein's classification of country although Mr Turner had estimated a slightly larger area of unavailable range country.  Mr Bein's classification was as follows:

3,200 ha (about 30%) rough mountain range country in the north and south-west.
500 ha (about 4%) good softwood brigalow scrub.
7,020 ha (about 66%) mainly low ironbark, bloodwood, stony ridges with patches of coolibah, box and gum along the creeks.

There was however difference of opinion as to carrying capacity.  Mr Taylor was adamant that "Carbethon" could not carry better than 1 beast to 13.5 ha in average seasons, while Mr Bein's estimate had been 1 beast to 12 ha.

Some objection was taken to Mr Bein's reported "Situation and Access" of the properties which was admitted by Mr Bein to need correction.  There is no suggestion that Mr Bein was not in a position to consider the actual location of the properties which he had visited.

It seems that Mr Bein had adopted historical descriptions relative to availability of natural water on both properties which Mr Turner found to be either misleading or overstating the actual position.

Basic Sales Evidence - Nebo and Broadsound Shires

Appeals relevant to 1 January 1996 valuations of grazing properties in both Nebo and Broadsound Shires were heard during the same (and one adjourned) sitting of the Court.  These have been referred to as the Angus, Turner, Bell and Driscoll appeals.

Evidence relating to sales of the properties "Chesterfield", "Daunia", "Mavis Downs", "Suttor Creek North" and "Rookwood" was received from various sources. 

I see it as both reasonable and necessary to consider the totality of the sales evidence as it has been placed before the Court in individual appeals.  The following comments as they apply  to sales and relativities will therefore appear in the decisions, where considered appropriate.

"Chesterfield"

Mr Bein had been fully aware of the sale of "Chesterfield" to the Angus family.  It was confirmed in the Angus appeals that the sale had been analysed to show an unimproved value of about $29 per ha.  In fact, the formal Departmental analysis of the sale was tendered in the Turner appeals showing an unimproved value of $28.40 per ha.  The previous valuation of "Chesterfield" at $30.21 per ha had been rewritten as at 1 January 1996. 

It was Mr Bein's opinion that "Chesterfield" was sold at a level of value lower than that which would have been expected after consideration of the market evidence generally.  He suggested that a sale price as high as $2,000,000 (as against the actual price of $1,700,000) would not have been seen to have been out of line with the market as had been indicated by other sales.  As Mr Angus had anticipated, Mr Bein saw the effect of potentially harsher tree clearing restrictions than actually eventuated, as one reason for the sale price of this leasehold land to have been depressed.  It had also been suggested to Mr Bein by another Departmental valuer that the vendor of "Chesterfield" may have been overanxious to sell due to financial pressure but Mr Bein had no proof of that. 

As I understood Mr Bein's evidence, there had been, at the date of sale, about 11,000 ha of virgin brigalow on "Chesterfield" on which country the Department's estimate of carrying capacity in its natural state had been 1 beast to 20 ha.  The Department's assessment of carrying capacity overall had been 1 beast to 10.6 ha.  Mr Bein, after a personal inspection believed that the capacity of that particular country in its unimproved condition was higher than the Departmental estimate because it was more "brigalow forest" than "scrub" with areas of open grassland.  He indicated that Mr Angus' opinion of 1 beast to 15 ha might have been realistic for that area had it been retained in its unimproved condition.  Nevertheless, at the date of sale, even though Mr Angus had believed that commonsense tree clearing considerations would prevail, after having made specific inquiry of the Department, there could have been no guarantee as to the extent of, if any, clearing which would have been permitted.  Subsequent to the sale a permit to clear 2,400 ha had been granted. 

It seems to me that it would have been a cavalier approach for an intending and informed purchaser not to have considered the risk involved in obtaining even commonsense development approval from a Department at a time when tree clearing guidelines were being formulated in an atmosphere which was causing wide industry concern.  I am not convinced that the purchasers as the astute, prudent and experienced persons which I see them as being, would not have taken a pessimistic approach, when it came to negotiating the purchase price.  Mr Angus suggested that a higher price, resulting in a higher improved beast area value, would not have reflected the economic expectations of the grazing industry at that time.  However the overall sales evidence does suggest that a number of purchasers were prepared to pay prices (on an improved beast area basis as discussed by Mr Angus) significantly higher than he suggested was reasonable.

In the end result while I accept that the "Chesterfield" sale was conducted at arm's length and genuine in that sense, there existed at the time circumstances particularly as they related to potential tree clearing restrictions on leasehold land, which may have influenced a vendor's negotiation strength.  If that was not the case in that particular transaction, then it appears to me that the sale price, in comparison with the overall market was as Mr Bein suggested inexplicably low.

"Daunia"

According to Mr Bein, the Department had originally adopted this sale as basic valuation evidence as had been alleged by the appellants Angus and Turner, through their solicitors. 

However, subsequent inquiry had established that substantial feedlot infrastructure, which had specifically not been included in the sale price, had not been removed from the site by the vendor.  Furthermore, soon after the transaction had taken place, the purchaser on-sold part of the property to a mining company.

Rather than have the sale challenged as being evidence clouded by other than open market circumstances, the sale was discarded as a basis, at least by Mr Bein.

"Mavis Downs"

This property, containing 6,169.4 ha, had sold in May 1994 for $1,180,000.  The sale had, according to Mr Bein, been analysed to show an unimproved value of $517,476 or approximately $84 per ha.  Mr Bein confirmed that the valuation applied at the relevant date had been $480,000 (approximately $78 per ha).

Mr Bein's analysis had not been challenged during his examinations in the various appeals.  However, Mr Angus'' statement contained the information, that he had been "informed the Crown analysed the sale of 'Mavis Downs' at a far greater figure than what they applied ...".  Reference earlier in the statement had been made to an analysis of unimproved value having been shown as $99.30 per ha.

Indeed, in an exhibit tendered through Mr Bein in the Angus and Turner appeals, being a schedule titled "Sales Carrying Capacity & BAV" the analysed BAV was shown against the details of "Mavis Downs" as being $567 for an estimated carrying capacity of 1,102 head of cattle.  That would have indicated an unimproved value analysis of 1,102 x $567 or $624,834 equating $101.28 per ha.  The scheduled carrying capacity of 1,102 head (1 beast to 5.6 ha) had been as adopted by Mr Bein.

On his tendered analysis, the beast area value (BAV) reduced to $470 and the applied valuation reflected a BAV of $435.

The carrying capacity for "Mavis Downs" as estimated by Mr Bein or alternatively the relativity between the valuation applied to "Mavis Downs" was consistently challenged in the Angus, Turner and Bell appeals.

Mr Bein's classification of "Mavis Downs" was as follows:

About 3,800 ha (62%) brigalow scrub with sections of blackbutt, yellowwood and associated scrub timbers.
About 1,970 ha (32%) mixed box, ironbark, bloodwood and Moreton Bay ash, undulating forest on sandy and black to brown clay loams.
About 400 ha (6%) downs timbered with coolibah and sections of brigalow, blackbutt.

The appellants Angus and Turner accepted as fact the contents of the sales brochure in which a carrying capacity of 2,000 head or 1 beast to 3 ha had been suggested.  Mr Dodds, valuer in the Bell appeal, was concerned with forest country so inferior, in his opinion, to the quality of "Mavis Downs" (which he described as a bullock fattening paddock with arable usage) for the sale to be of no assistance in that matter.  While I am not influenced by the sales brochure estimates prepared by some person who was not available for examination, Mr Angus had specifically inspected "Mavis Downs" as a prospective acquisition, before finally purchasing "Chesterfield".  At least, his strong challenge to the opinion of Mr Bein relative to the carrying capacity and quality of "Mavis Downs" cannot be disregarded.

Mr Bein suggested that while the carrying capacity of the scrub content of "Mavis Downs" might have been "slightly better" than 1 beast to 5 ha, it was his personal opinion that no scrub country in Nebo Shire should be generally regarded as having greater potential than 1 beast to 5 ha.  He agreed that areas of "Mavis Downs" had been cultivated but felt that such use would have been seen in the marketplace as marginal.

He saw the severance of "Mavis Downs" by both a road and railway as creating a management problem and a negative feature of the property. 

The question of the quality of "Mavis Downs" in comparison with the relevant appeal blocks will be dealt with later.

"Suttor Creek North"

It was Mr Bein's evidence that this sale had not been included in the original basic evidence because of some confusion as to the actual date of sale.  It had been confirmed however that the sale had occurred in January 1994 and, in Mr Bein's opinion, that was within the period relevant to the 1 January 1996 valuation.

"Suttor Creek North" contains 6,730 ha.  It sold for $1,550,000, the sale analysed by Mr Bein to show an unimproved value of $480,138 or $71 per ha.  A valuation of $65 per ha had been applied.  The carrying capacity was stated by Mr Bein as being 1 beast to 8 ha.  That would equate 841 head, suggesting an analysed BAV of $571 or an applied BAV of $520.

The appellants Angus and Turner were caught somewhat by surprise in finding that the sale of "Daunia" had been replaced by "Suttor Creek North", as part of the basic evidence of value.  They knew of the property but not sufficiently well enough to challenge the details provided by Mr Bein.

Mr Dodds however did have close knowledge of this property.  In his opinion it was considerably superior to the country with which he was concerned in the Bell appeal.  He described it as including "very good forest country - it's been highly developed - it has coolibah and blue gum forest country and it has a carrying capacity of some 1,250 head of cattle."  If he was correct that would equate 1 beast to 5.4 ha.

Mr Bein's description of "Suttor Creek North" was as follows:

About 2,330 ha (35%) mixed brigalow, blackbutt, sandalwood and softwood scrub.
About 3,700 ha (55%) Moreton Bay ash, poplar gum with some bluegum and areas of steeper ironbark and bloodwood ridges.
About 700 ha (10%) hard forest ridges of bendee, lancewood and wattle.

It was also described as "a very well improved property ... three houses and three large sheds".  He had not thought that the improvements would be classed as normal on a grazing property of that size.  However, as the purchaser "had other interests" and was using the property in association with those other interests, Mr Bein said that in his sale analysis, he had applied "full value" to each of the improvements. 

The real difference of opinion between Mr Bein and Mr Dodds which developed in the Bell appeal was the carrying capacity potential of "Suttor Creek North", although Mr Dodds' assessment was not specifically challenged in cross-examination.

"Rookwood"

The sale of this property became relevant to the Turner, Bell and Driscoll appeals.  Mr Bein was the Department's valuer in Turner and Bell, while Mr Eisenmenger had taken responsibility for the Driscoll appeal.  Mr Bein had offered the sale as primary evidence in Turner, but not in Bell.  The sale was Mr Dodds' primary evidence in Bell.

Mr Dodds analysed the sale to show an unimproved value of $61 per ha.  He estimated the carrying capacity potential as 2,652 head, or 1 beast to 6.6 ha overall.  That potential reflected an unimproved BAV of $403, or, on the basis as adopted by Mr Dodds, a BAV of $550 including the cost of clearing and pasture development, excluding water and fencing improvements.  He classified the country as:

4,566 ha of frontage country     (c/c 1 to 7).

7,000 ha of brigalow scrub       (c/c 1 to 5).

6,000 ha of forest   (c/c 1 to 10).

It was Mr Bein's evidence that he had adopted the analysis of another valuer, but had inspected "Rookwood" prior to the appeal.  The Department's analysis (which had been carried out by Mr Eisenmenger) showed an unimproved value of $65.20 per ha and the land was classified as follows:

About 5,140 ha (29%) mixed brigalow, blackbutt, yellowwood and associated scrub.

About 2,185 ha (12%) flooded mixed brigalow scrub and coolibah.
About 9,110 ha (52%) mixed box, ironbark, bloodwood and Moreton Bay ash forest on mainly red sandy soils.
About 1,132 ha (7%) hard forest ridges and tableland with rosewood and lancewood.

In the Driscoll appeal, Mr Eisenmenger gave his opinion of the carrying capacity potential of "Rookwood" as being 1 beast to 7 ha or a  rounded 2,500 head, but suggested that was a conservative estimate.  In the document tendered through Mr Bein in the Angus and Turner appeals ("Sales Carrying Capacity and BAV") referred to earlier, the carrying capacity of "Rookwood" was shown as "1 to 8", but the total number of head as 2,500.  The BAV was shown as $459 (unimproved) which is reasonably consistent with Mr Eisenmenger's evidence (1 beast to 7 ha - unimproved analysis of $65.20 per ha = BAV $456).

In the Bell appeal, Mr Bein was quite specific in confirming his estimate of carrying capacity for "Rookwood".  When discussing Mr Dodds' evidence he said - "I think his overall carrying capacity is 2,600 head - well we've assessed the Department's carrying capacity (as) roughly 2,200 head, so I think Mr Dodds is possibly a bit generous on some of the forest country ...".  Then later  - "just what the file says, it's historically been 1 to 8 right through or ever since they started bringing in the potential in the scrub country."

Summary of Sales Evidence and Relativities

There are inconsistencies in the Department's evidence which are seen to have some impact on the important aspect of comparison of the quality of the land contained within the sale properties as compared to the properties the valuations of which are subject of the various appeals.

The carrying capacity potential of grazing properties with no arable content, is the logical criterion on which market considerations are based.  It would be seen as the common denominator upon which cogent comparisons are possible.  Clearly, the market would also be expected to recognise particular features both positive and negative with regard to individual properties, in that comparison process.

The valuer's expertise comes from the ability to first compare like with like and then to identify those features of individual properties which would affect market value.  As Mr Bein says, even if an assessment of carrying capacity is arguable, possibly because of various management practices, it is important to ensure that consistency of approach is adopted in the comparison process.  In valuations used for revenue-gathering purposes, the importance of establishing correct relativity from property to property cannot be overstated.

The sales evidence in these matters is clearly not ideal for general valuation comfort to be obtained by the various valuers.  The real problem is not seen to be so much the lack of sales evidence however but the differing opinions as to the quality of the sale properties in comparison with the appeal lands.

It seems that there has been some tinkering with the sales analyses, from valuer to valuer, to cause the inconsistencies in the evidence as tendered for the chief executive.  The apparent original analysis of the "Mavis Downs" sale, for example, might well have indicated that the quality of that country is significantly superior to the level of value applied.  Similarly, either the potential of properties such as "Suttor Creek North" and "Rookwood" is greater than that adopted, at least by Mr Bein, or those sales show too high an analysed unimproved value in comparison with Mr Bein's analysis of the "Mavis Downs" sale.

There is insufficient evidence before the Court for it to be suggested that, apart from the identified problem between the section of Bowen Shire and Nebo Shire as mentioned in the Angus appeal, there are glaring examples of lack of relativity within the individual shires.  Nevertheless, there does seem to be sufficient evidence to support the complaints of some of the appellants relevant to the margin between valuations applied to the various qualities of land.

It seems to me that with the passage of time, historical estimates as to carrying capacities may not necessarily reflect modern management practices, particularly with regard to the better quality lands and there may have developed too narrow a margin between the values applied by the Department's valuers, between the inferior and superior classes of grazing country.

In summary, there is no evidence on which I can accept other than Mr Bein's analysis of the sale of "Mavis Downs" as indicating an unimproved value of $84 per ha with an application, for relativity purposes of $78 per ha.  The evidence I have heard suggests that in comparison with the appeal lands, the estimate of the carrying capacity and quality of "Mavis Downs" as suggested by Mr Bein, is too conservative, regardless of the perceived effect of the management difficulties caused by severances.

Again, with "Suttor Creek North", there is no cogent challenge to the analysis of the sale showing an unimproved value of $71 per ha, with an application for relativity purposes, of $65 per ha.  It is observed however that there was in Mr Dodds' evidence an indirect challenge to Mr Bein's estimate of carrying capacity of 1 beast to 8 ha (given in the Angus appeal).  Mr Dodds' estimate was 1,250 head (1 beast to 5.4 ha) and that again was not challenged in his cross-examination.  It is further observed that in the Bell appeal, Mr Bein agreed that "Suttor Creek North" was superior in quality to the much larger "Rookwood" on which he had also estimated a carrying capacity of 1 beast to 8 ha (Mr Eisenmenger - 1 beast to 7 ha).

I have come to the conclusion again that Mr Bein's stated estimate of the carrying capacity potential and quality of "Suttor Creek North" is too conservative.

As it applies to Mr Bein's evidence, I have come to the same conclusion relative to the sale property "Rookwood".

Basis of Valuation

In both valuations, Mr Bein relied on the sales of "Mavis Downs", "Rookwood" and "Suttor Creek North".

All sales are significantly superior to varying degree, as is indicated by the applied values per ha set out below:

"Mavis Downs" "Rookwood"    "Suttor Creek North"    "Tiverton"  "Carbethon"

$78  $60  $65  $40  $32.50

Mr Bein's evidence was that in these appeals the sale of "Rookwood" had been included because that property was of a large area of predominantly forest country as was "Tiverton".

Findings

There is no dispute relative to the carrying capacity of "Tiverton".  It seems to me that even given the conclusion that I have reached relative to what I saw as overly conservative opinions of Mr Bein as to the overall quality of both "Rookwood" and "Suttor Creek North", the property "Tiverton" is also dominated by good quality forest country.  It is deleteriously affected by the area of range country.  However, its valuation does not appear to be out of relativity with at least the sales evidence of "Rookwood" and "Suttor Creek North".  "Tiverton" is larger in size but after close consideration to the evidence provided by the sale of "Rookwood" I find no reason to disturb the valuation of Mr Bein.

One of the complaints of the appellants was that the margin between the valuations of "Tiverton" and "Carbethon" had unreasonably come closer together at the subject valuation date.  As I understood Mr Bein's evidence there had been previously a misdescription of the classification of "Tiverton" relative to inclusion of some downs country.  He had corrected that mistake after an inspection.  Nevertheless, I lean towards the evidence of Mr Turner relative to the carrying capacity of "Carbethon", as assessed by the Department, being excessive.  If that is the case, the broad relativity which existed between the two properties previously might well have been justified.

For the reasons given I am unable to accept that the sale of "Chesterfield" should be adopted as a basis for freehold valuations under the Valuation of Land Act.  The appellants' evidence relating to the sale of the property "Mt Gregory" is of no assistance to me in determining these matters. 

Appeal AV96-577 is, for the reasons given, dismissed and the valuation of the chief executive of the property "Tiverton" affirmed.

Appeal AV96-578 is allowed for the reason that its quality is less than that assessed by Mr Bein and the unimproved value of the property "Carbethon" is determined on the basis of a valuation at $30 per ha, rounded to a total amount of $320,000.  The chief executive's valuation is set aside accordingly.

RE WENCK
  MEMBER OF THE LAND COURT