Vadoog Pty Ltd v South East Queensland Water Board
[1993] QLC 14
•11 June 1993
|
LAND COURT,
BRISBANE.
11th June, 1993.
Re:Determination of compensation payable consequent upon the resumption of land for a purpose of the South East Queensland Water Board Act 1979
viz: Glendower Dam - A92-51
Vadoog Pty Ltd
v.
South East Queensland Water Board
J U D G M E N T
By proclamation published in the Queensland Government Gazette, the South East Queensland Water Board, pursuant to the Acquisition of Land Act 1967, took, on seventeenth day of July, 1992, the land contained in the following schedule:
County of Ward Parish of Nindooinbah
Certificate of Title
Volume Folio Real Property Description Area
1100 156 Lot 3 on Registered Plan 28700 1.563 ha
2774 66 Lot 1 on Registered Plan 63887 1.148 ha
3384 189 Lot 10 on Registered Plan 91875 72.537 ha
3384 190 Lot 11 on Registered Plan 91875 3693 m2
7461 163 Lot 3 on Registered Plan 229280 94.87 ha
Total Area Taken = 170.48 hectares
A family company, Vadoog Pty Ltd, was the registered proprietor of the land taken. The aggregated parcel, known as "Wyambyn", was, at the relevant date, used for farming and grazing purposes. It comprised irrigated flats and drainage hollows adjacent to the Albert River, then easily undulating to moderate and steeper, partly cultivated, forest ridges. A feature of the property is its imposing homestead, constructed in about 1908 and maintained in excellent condition. In addition, the property supports a cottage together with various farm buildings and structures.
"Wyambyn" is situated about 6 kms easterly of Beaudesert, fronting the Tabragalba House Road, off the Beaudesert-Nerang Road.
The land is zoned Rural under the Beaudesert Shire Town Planning Scheme. The Subdivision of Land By-Law provides a minimum lot size in the Rural zone, of 100 hectares, although the Council has a discretion to vary this minimum size. The Strategic Plan which is appended to the Town Plan Scheme, includes a map which shows preferred dominant land uses. The subject land lies partly within the "Rural Residential Area" designation and partly within the "Arable Resource Area" designation. The boundary between the two designated areas is not precisely identified, but is accepted as intending to indicate, in this case, a contour line where the lands rise above the river influence.
The Claim for Compensation as served on the constructing authority was in the sum of $2,203,225, comprising $1,803,225 under the heading of Land and Improvements and $400,000 for Disturbance items. An advance payment of $897,400.42 (including a rates adjustment) was made by the respondent on 24th September, 1992.
Before the Court hearing commenced, agreement had been reached between the parties as to the value of the improvements being in the amount of $416,000. During the course of the hearing disturbance items comprising legal fees of $5,000, valuation fees of $8,985, and survey fees of $900 were agreed.
It was also agreed that in light of a negotiated occupancy agreement, the Court would not be asked to consider any award for interest on compensation.
The remaining item on which agreement could not be reached was the value of the land. At the outset, counsel for the claimant advised that evidence would be led to a land value of $1,169,450, being the amount of a valuation conducted by Mr K.C. Herron, a registered valuer in private practice. Leave was sought and granted to amend the Claim for Compensation to the total amount of $1,600,335, including disturbance items.
The valuation placed before the Court by the respondent constructing authority, had been prepared by Mr L.J. Hamilton, a registered valuer, also in private practice. Mr Hamilton assessed the land value in the amount of $777,880. The respondent's total valuation, to include the agreed amounts for improvements and disturbance, effectively became $1,208,765.
The valuers agreed that, as at the date of resumption, the highest and best use of, at least the majority of the property, was for farming and grazing purposes. Both agreed that the elevated land, being within the "Rural Residential Area" designation of the Strategic Plan, had future rural residential subdivisional potential. Mr Herron stated under the heading "Highest and Best Use" in his valuation report, that "The highest and best use for the property is as a combined farming and grazing property, with rural homesite potential in the medium term. Two small lots could be sold off without interfering with the existing use." Under the sub-heading "Sale in Part" in his heading "Valuation Considerations" Mr Herron stated:"There are two small lots - one adjacent to the entrance road and one adjoining the river - which are flood free and which would find a ready market as rural homesites without further work and without interfering with the balance land. The main area of the property could most likely be sold in two lots or as one large combined lot."
His verbal evidence left no doubt that his valuation as set out, was based on the aggregated value of four parcels, the "main balance area" comprising Lot 10 on Registered Plan 91875, with area said to be 72.539 hectares as one parcel (Parcel (c)), the second being a parcel (Parcel (d)) comprising Lot 1 on Registered Plan 83887 and Lot 3 on Registered Plan 229280 with a combined area of 96.02 hectares.
Mr Herron's evidence indicated that, while the highest and best use of the "main balance area" remained as being for "combined farming and grazing", he saw that use as capable of being carried out in two operations on separate parcels. The value of the aggregation was, in his opinion, influenced by the existing survey and title position which permitted a sale in the four parcels as identified.
Mr Hamilton, on the other hand, whilst recognising the existence of the five surveyed lots, saw the value of the property being related to its existing farming and grazing use as a total aggregation, rather than being fragmented by sale in several lots. He saw it as "reasonable to assume that in the long term the property would have potential, at least on the higher slopes to be subdivided into residential and/or rural-residential allotments." Mr Hamilton valued the land as a farming and grazing aggregation of 170.47 hectares, which he classified as comprising 24 hectares of river frontage of good deep arable soils with the balance open flats and ridges, partly cultivated.
Both parties presented town planning evidence led through Mr P. Bell for the claimant and Mr C. Schomburgk, for the respondent. Their evidence generally, indicated agreement that the elevated lands within the subject property had potential for rezoning to permit rural-residential style subdivision. Both saw the intensity of such development potential related to the orderly progression of subdivisional development, radiating from Beaudesert. A significant rural-residential land-bank remains available between "Wyambyn" and the nearest existing residential and rural-residential style development known as "Brayford Park", on the eastern outskirts of Beaudesert. The master plan for that development extends to the western and north-western boundary of "Wyambyn".
The Strategic Plan provides for the "Rural Residential Area" to be rezoned into 3 categories, being:
Residential Low Density with average lot size of 5,000 sq. metres
Rural Residential B with average lot size of 1 hectare
Rural Residential A with average lot size of 2 hectares.
Availability of reticulated water is a prerequisite for rezoning to either Residential Low Density or the Rural Residential B zone.
Mr Bell had received written advice from Beaudesert Shire Council that town water could be supplied, at the developer's cost, to a development on the subject land - albeit by means of a low pressure constant flow or "trickle" system. A constant flow system requires the provision of water storage facilities on the individual lots. On the basis of the availability of water, Mr Bell identified the highest and best use of the potential subdivisional land as being for development consistent with the Residential Low Density category. Mr Bell stated that he had "no doubt that the subject land would be on the development threshold within a 5-10 year period." Mr Bell's predictions were based on an earlier take-up of the Brayford Park Estate Residential Low Density land than might be realistic based on the actual sales history - evidence of which emerged during the hearing.
Mr Schomburgk saw it as unlikely that a reticulated water supply system would extend eastwards from the existing storage facility (in Brayford Park Estate) to the subject land, and even if it did, he saw the cost as being "almost certainly prohibitive". He had not been aware of the Council advice given to Mr Bell regarding the constant flow reticulation potential. On his perception of water supply, Mr Schomburgk envisaged a Rural-Residential A category development (2 hectare average) as being the most viable. He saw such style of development as catering to a different market than did "Brayford Park" and saw "nothing from a planning viewpoint that would have prevented a successful application to rezone this part of the site to the Rural Residential A zone at the time of resumption ....". On that density of development, subject to valuation and marketing considerations, he did not consider "timing" to be an issue.
There is no evidence before the Court to suggest that Rural Residential A style of development would have been viable at the relevant date. It seemed to be accepted by Mr Herron that future potential for more intense subdivision was a greater influence on the market value of the elevated land than any immediate potential for rezoning to the 2 hectare category. While Mr Herron tended to take a "medium term" approach to the more intense development, it seems there would need to be a significant improvement in marketing conditions, sales and development extension for any intense development potential to be capable of realisation in a period less than the general "long term" prediction of Mr Hamilton.
From the evidence overall, it is seen as reasonable to reach the conclusion that the elevated land, shown broadly on the Strategic Plan as "Rural Residential Area" had potential at the date of resumption for rezoning to "Rural Residential A" (average 2 hectare subdivision) although the viability of development as such was unproven. Potential for the extension of water reticulation and rezoning to Rural Residential B or Residential Low Density existed, but that potential is at best related to a "medium to long term" forecast. The land shown broadly on the Strategic Plan as "Arable Resource Area" and being generally the land of lower elevation (although not necessarily flood prone) including the prime irrigated arable river flats and the river drainage channels providing good quality grazing, will remain within the Rural zone.
The valuation question to be decided in the first instance is whether the resumed land should be seen as having highest and best use at the date of resumption as:(a)a single entity aggregation used for overall farming and grazing purposes - as is the approach adopted by Mr Hamilton
or
(b)an aggregation of land capable of sale in four parcels, two for use as small rural residential sites with "the main balance area" as a further two parcels, initially capable of individual farming and grazing use but with later rural residential subdivisional potential on one. This was the approach taken by Mr Herron.
It is worthy of mention that the structural improvements, possessing significant added value, particularly with regard to the homestead, are, not unnaturally, accommodated on the elevated land. It is this land which Mr Herron sees as having value enhanced by future subdivisional potential, yet, in terms of the rural pursuits of farming and grazing is clearly inferior in quality to the prime farming land provided by the irrigated river flats. The parties have agreed on the added value of improvements, as it turned out, regardless of the different approach to the valuation of the land which emerged, although the respondent's valuation envisaged the improvements as remaining associated with the aggregated use of the total land. Mr Hamilton's evidence, under cross-examination, was that the significance of the improvements residing on one fragmented parcel was one matter he considered when deciding the best use of the property was its retention in an aggregated parcel, at least until the subdivisional potential was capable of realisation. Mr Herron, when the question was put to him, did not see the added value of the improvements diminishing by reason of their location on a separate parcel of primarily elevated land.
Mr Hamilton gave evidence to the effect that fragmentation of the aggregation, even to the extent of disposal of the two smaller lots would affect the desirability, future potential and present marketability of the balance area. He had not been aware that one of the small parcels (Lot 11), adjacent to the river, and severed from the main aggregation by a surveyed and formed public road, was already utilised by another neighbouring farmer. The second smaller lot which Mr Herron saw as capable of separate sale, was located at the main entrance to the property (with the access track to the homestead traversing part of the site). Mr Hamilton held the view that if control of this site was lost, the main holding both in its present form or later, if subdivided, had the potential to be adversely affected by any "entrance statement" of a sub-standard nature. He was more particularly concerned though, as to the saleability and residential type use of these small lots, and particularly Lot 11 adjacent to the river, through what he had understood to be susceptibility to flooding. Lot 11 also adjoined a Council water pumping station with continuous associated noise from the electrical pumping equipment. Then, with regard to the main balance area, and at least until the elevated land was ripe for subdivision, Mr Hamilton felt that, to fragment the harder, inferior quality soil types associated with the undulating to ridgy land, from the better quality irrigable river flats would not be marketing the overall property to its best advantage.
The question of the flooding susceptibility of the land will be dealt with later, but it seems to me that any detrimental effect on the main balance area resulting from the sale of the two smaller lots (Lot 3 and Lot 11) has been overstated by Mr Hamilton. If the value of the total property is enhanced by the potential for sale to several purchasers then the dispossessed owner is entitled to consideration of that potentiality. The question of whether a benefit would accrue from the assessment of market value based on the sale of the property to several purchasers at the relevant date, as opposed to a sale to one purchaser, has been held to be a question of fact - see Canberra Freeholds Ltd v. Queanbeyan Municipal Council (1971-73) 27 L.G.R.A. 134 where at p. 137 Else-Mitchell J. said:"As I see the position, it is a question of fact for determination by the tribunal assessing compensation in the light of the circumstances of each resumption, whether one should assume the immediate sale of the entirety of the land resumed to one purchaser or the sale of individual subdivided lots to several purchasers;"
I have come to the conclusion that Mr Herron's approach in dealing with at least Lots 3 and 11 as separate lots capable of individual sale is practical in the circumstances of the subject aggregation.
I am not convinced however, that there is the need to deal with "the main balance area" specifically as two separate parcels. There is seen to be the risk that a sale of the land accommodating the homestead and main structural improvements, (Parcel (d)), comprising generally the area with the majority of the elevated land, but land of the lesser quality for farming and grazing usage would be premature until a more intense subdivisional proposal is capable of realisation. This risk is seen to be intensified by the potential of an interim over-capitalisation of the suggested Parcel (d), which accommodates the structural improvements possessing significant (and agreed) value. Regardless of the fact that the value of the improvements has been agreed between the parties, it would be wrong to then expect that the Court might take a "blinkered" view when considering the question of sale of individual parcels, by supposing that the land was devoid of improvements, or not subject to improved value considerations.
While the balance area is capable of sale in two parcels, with the possible advantage of meeting a market for smaller parcels, it has been concluded that, in this case, no particular overall market advantage would result from such a proposal at the relevant date. Indeed in Mr Herron's verbal evidence, he referred to the attraction the property would provide in the market place as a "superannuation" type investment, allowing the farming and grazing use and the associated lifestyle to continue until the subdivisional potential ripened. He indicated that the family associated with the claimant company had considered the option of retaining the higher elevation land above the dam buffer area (accommodating the structural improvements) and had in fact preferred to have the total property resumed.
The question of flood susceptibility now becomes relevant, with regard to the two smaller lots. There are no formal flood records available. Mr Herron had relied on information provided by Mr I. Gooding, a member of the family associated with the claimant company. Mr Gooding had prepared a flood map of the property "based on highest flood in living memory". He was called during the hearing and gave evidence as to his knowledge of flood levels on "Wyambyn". The family purchased the property in 1981. The highest flood level recorded since then was from localised flooding in 1990. Based on his personal knowledge of that flood level, the flood plan, intended to show broadly the effect on the cultivation land, had been compiled. He had enquired of long term residents of the area and had been informed that the 1990 flood had reached a level on local property equivalent to the 1974 flood. Those particular floods were accepted by the long term residents as being the highest known. Mr Gooding's flood plan indicated that the river breaks its banks to the south of "Wyambyn" then flood waters flow northerly within the property in a channel of varying width contained for the most part within Lot 10. A levee bank has been constructed on the western bank of the river protecting the frontage cultivation, including that on the small Lot 11. A further levee bank has in recent years been constructed to protect an "island" area of about 6 hectares of an 8 hectare paddock of originally blue gum river flat now cleared to cultivation, separated from the river frontage area by the drainage channel.
Mr Gooding told the Court that Tabragalba House Road opposite the flood channel can be cut by fast flowing flood water up to about 60 centimetres deep at its peak, when it would be impassible to a conventional vehicle. This flood condition lasts for a relatively short period. When it occurs, access to Lot 11 would be cut, but Mr Gooding says that Lot 11 itself is not flooded. He says the point of access from Tabragalba House Road to the homestead is not affected by flooding, and the adjacent Lot 3 is neither flood affected nor inaccessible during any flood event.
Mr Hamilton was of the belief that the Arable Resource Area as depicted on the Strategic Plan was an indication of land susceptible to flooding. It was Mr Schomburgk's evidence that such an impression was entirely reasonable as the boundary between the Arable Resource Area and the Rural Residential Area appeared to follow a contour line which may well have indicated a maximum floodline. This proposition is not proved. At the request of the parties, and in the company of their representatives, an inspection of "Wyambyn" and much of the sales evidence was conducted. It was observed that a new low set dwelling was being constructed on "river terrace" land within the Arable Resource Area on a sale property at Gleneagle. This again is not proof that that particular new homesite area was not flooded, but indicates the use to which part of the designated Arable Resource Area land was capable of being placed, at least at Gleneagle.
Mr Hamilton had sought advice from a hydrologist employed by the Water Resources Commission. He had been informed that recordings had been made of flood levels in the Albert River near the pumping station in the period from 1966 to 1972. A maximum recorded height in that period was RL 72.12 metres in June, 1967. Mr Hamilton understood the RL to be State Datum. He had been informed that since 1972 the Beaudesert Shire Council had taken over the flood height recording and at the nearby Chandler Bridge, a flood height of 72.46 metres was recorded in March, 1974. Again he understood the RL to be State Datum. Based on a contour plan provided to Mr Schomburgk (a plan which was somewhat confusing, as it turned out, in connection with the accuracy of the RL 70 metre contour - and with contours understood to be at Australian Height Datum), Mr Hamilton felt that his opinion that both the small lots could be expected to be susceptible to flooding, was confirmed. No evidence was introduced to the Court to show the relativity between Australian Height Datum and State Datum in this locality. The respondent tendered a "permanent mark sketch plan" which indicated an RL of 71.59 metres AHD in Tabragalba House Road, in close proximity to both Chandler Bridge and Lot 11. This appears to be in conformity with a level of about 72 metres AHD on Lot 11 rising to a levee bank adjacent to the River - levels which could be interpreted from the contour plan referred to earlier. Levels of Lot 3 are not known precisely but appear to between RL 70 and RL 72 AHD.
In the end result, it is the evidence before the Court that there is no official information available as to whether these lots should be regarded as susceptible to flood inundation and, if so, to what degree. Mr Gooding impressed as an honest and forthright witness and for the purpose of this exercise I accept his evidence that the lands in question (Lots 3 and 11) have not been flooded since 1981. On his information the long term residents of the area would have it that the 1990 flood to which Mr Gooding referred, reached a level equivalent to any flood during this century. It is unknown to what degree the flood mitigation works involved in the past construction of levee banks has affected flood paths and levels of floodwater within the river channel where the recordings had been taken. The difference in levels of floodwater within the river channel and parts of the flood plain is unknown, although differences are known to exist.
It is unlikely that a prudent and informed purchaser of at least Lot 11 would not be somewhat apprehensive as to the possibility of, and effects of flooding. In this regard, the immediate adjacency of Lot 11 to the river, the presence of levee banks and the known isolation which can occur caused by flood waters cutting Tabragalba House Road to the immediate west, would hardly encourage confidence that matters related to flooding should be ignored.
Another matter raised by the respondent is the unknown attitude which would be taken by the Council to any application to erect dwellings on these sites and particularly Lot 11. Use for a dwelling house is as of right, yet Council has the power to refuse to issue a building permit where difficulties relating to flooding and flooded access can be identified.
Valuation of Lots 3 and 11:
Mr Herron has valued Lot 3 (1.563 ha) in the amount of $50,000 and Lot 11 (3690 m2) $35,000. His basis of valuation in each case was a comparison with two sales of rural residential sites in fairly close proximity, fronting the busy Beaudesert-Nerang Road. The first was a negotiated settlement in September, 1992 between the owner and the resuming authority in this matter (SEQWB) of a 1 hectare site at an analysed land value of $50,000. Comments will be made later in terms of the use of settlements as evidentiary evidence. The second sale, also fronting Beaudesert-Nerang Road opposite the first sale was of a 2 hectare site in June, 1990 for $52,500. Mr Herron saw the busy road location of the sale sites and the lack of a water supply as disadvantages in comparison with the subject sites. Lot 11 has the river frontage and availability of water from that source while Lot 3 is traversed by a Council water supply line (and its accommodating easement) from the pumping station. A connection to that supply (untreated water) had been made available. An unequipped well also is capable of providing water to Lot 3.
Due to his single aggregation highest and best use approach, Mr Hamilton had not separately valued these lots. He agreed that a comparison with the sales used by Mr Herron was possible, at least with regard to Lot 3. Although with quieter position relative to traffic, Mr Hamilton saw Lot 3 as being less valuable than Mr Herron's second sale property due to its lower elevation and paddock type location within a larger property. He saw potential conflict in the residential use of land adjoining or in close proximity to cultivation and cropping activities. He drew attention to the need for relocation or accommodation of the "Wyambyn" access road traversing the rear section of Lot 3. If Lot 3 was accepted as having no flood disability, a matter which he did not accept, but still having regard to the lower elevation of the land, its location and availability of an untreated water supply, he felt a valuation in the range of $40,000 to $45,000 would be more realistic. Again if he was asked to ignore what he saw as the flood susceptibility of Lot 11, but having regard to the disabilities of access, low elevation and adjacency to the farming activities and the pumping station, but with the otherwise advantageous river side location, he saw the value of Lot 11 as being something "less than $20,000". He referred to a recent auction of a 4,000 m2 well elevated site in a grazing, rather than cultivation, environment, at Boyland, some distance further from Beaudesert where a price of $20,000 was realised.
I have decided that Lot 3 should be regarded as being capable of sale for Rural Residential use, (including the construction of a dwelling). Mr Herron has carried out his valuation on the basis that the land should be regarded as totally flood free. On Mr Gooding's interpretation of the flood history prior to 1981, based on hearsay, this would be a reasonable assumption, although in a purchaser's mind some doubt should exist when the recorded flood height information obtained by Mr Hamilton and the uncertain highest RL of Lot 3 are considered. In the circumstances it seems to me that a market informed to the same degree as is the Court, would make some allowance for the need to further explore flood potential relative to building site levels. There is also the question of some accommodation arrangements being made for the access road into "Wyambyn". I will adopt a value of $45,000 for Lot 3 bearing in mind the availability of an untreated water supply, and the sales evidence provided by Mr Herron.
I have formed the opinion, however, that the sales used by Mr Herron are of no assistance in valuing Lot 11 as an individual site. This site has the desirable feature of riverside location but that very feature, (including the presence of levee banks) should create, in a prudent purchaser's mind, in the absence of precise information, real uncertainty as to long term flood susceptibility and the suitability of the land for the construction of a residence. Then there is the known flood-affected access, adjacency of the pumping station and an exposed yet isolated cultivation paddock environment. I have come to the conclusion that while it is capable of sale as a separate lot, an informed market place would discount its usage potential so heavily as to give Lot 11 little more than nominal value in a rural residential category. I will adopt a valuation of $15,000 which is intended to reflect that conclusion.
The balance area:
Apart from the question which has been decided relative to the smaller lots, the valuers agree that the highest and best use of the balance area, was, at the relevant date, for farming and grazing purposes. There is the difference in opinion whether that use should be seen as relating to two individual parcels or as an aggregated holding. Both recognise that potential exists for future subdivision, and that potential would enhance the market value of the elevated land. Neither was able to identify the specific subdivisional potential premium which would attach to the pure rural use value. Both have endeavoured to value the land on the basis of direct comparison with sales, the perceived potentialities of the sale properties being one element of the comparison process.
Mr Hamilton relied on four sales:
(1)"Gleneagle", an ex dairy farm of 140.6 hectares on the Logan River, 6 kms north of Beaudesert, sold by the mortgagee in December, 1991 for $937,500 analysed to show an overall land content, excluding structures, of $5,974 per hectare. This was apportioned as 80 hectares of river frontage (flooded flats) at $7,000 per hectare and the balance (described as river terrace) at $4,650 per hectare.
It is noted that the entire property is included within the Arable Resource Area in the Strategic Plan although it was on this river terrace area where mention has been made of a dwelling having recently been constructed.
There has been criticism of Mr Hamilton's use of the "Gleneagle" sale in that it was a mortgagee in possession sale; the arable component suffered a severe and dangerous flood disability; there was insufficient natural shade; gravel deposits existed on the flats; access to the dairy buildings was gained by way of an easement through adjoining land used as a farm animal theme development orientated towards group visitation by children. It was suggested by Mr Herron that Mr Hamilton's analysis of the sale resulted in a level of land value distorted by an under-valuation of improvements. He saw this as an endeavour to overcome the influence of the mortgagee in possession circumstances. Mr Hamilton said that before he accepted that the sale provided basic evidence he had fully investigated the mortgagee in possession circumstances. The sale had been effected subsequent to two auctions, one arranged by the owner, the second by the mortgagee after wide advertisement. The mortgagee had been seen to have made every effort to achieve market value. Mr Hamilton had assessed the value of improvements based on their condition at the time of sale and his perception of the value added to the land. Mr Hamilton had been aware of the existence of gravel deposits and had made enquiries of the Council relative to the approval status of an application for extraction of those deposits. He had considered the question of the dangerous flooding frequency as well as adverse effects of the access to the dairy buildings. In the end result Mr Hamilton was confident that his application of $8,000 per hectare to the prime arable land on "Wyambyn" reflected the resultant superiority of that land in comparison with the $7,000 per hectare analysis of the "Gleneagle" arable land.
It is accepted that the forced sale element which is generally perceived to attach to a mortgagee sale, or a sale effected by a vendor under severe financial pressure, may preclude the resultant evidence from being reliable. The investigations carried out by Mr Hamilton relating to the circumstances of the "Gleneagle" sale indicate to me that the mortgagor's interests were adequately protected and that the mortgagee was careful in fully testing the market. I see no reason why the evidence should not be accepted as a reliable reflection of the sale property's market value, in the particular circumstances as described to the Court. The evidence is that the purchaser was an experienced dairy farmer whose property on the Albert River had been resumed by the respondent here.(2)Lot 19 Kerry Road, Kerry, 10 kms south of Beaudesert, a fully contoured and cultivated paddock of 50.44 hectares falling from the road frontage to the Albert River, sold in September, 1991 for $280,000 or $5,550 per hectare overall, apportioned as 12 hectares irrigated flats at $9,000 per hectare and the balance at $4,475 per hectare.
It is noted that the sale land falls within the "Rural Area" and "Arable Resource Area" in the Strategic Plan. Mr Hamilton's sale 2 was also referred to by Mr Herron. Further comment will be made when dealing with Mr Herron's evidence.
(3)"Erin View", Kerry, 13 kms south of Beaudesert, described as a "highly improved well balanced property" of 1,063.8 hectares, sold in March, 1992 for $1,500,000, analysed to show a land content classified as 69 hectares arable flats at $4,700 per hectare, 320 hectares of easy creek flats and low ridges at $1,850 per hectare and 674.8 hectares moderately sloping ridges at $600 per hectare.
It is noted that this land falls partly in the "Arable Resource Area" but predominantly in the "Rural Area" in the Strategic Plan.
Criticism was also levelled at Mr Hamilton's use of this sale. Mr Herron had close knowledge of the circumstances leading to the sale. It was his evidence that the vendor had been under severe mortgagee pressure to sell and the price achieved had reflected Mr Herron's previously expressed professional opinion as to a forced sale valuation expectation. He had closely inspected "Erin View" for valuation purposes and disagreed with Mr Hamilton's classification of country type. While he agreed there was an area of 69 hectares of river flats, he said that only 44.5 hectares should be regarded as prime and capable of irrigation from the available water supply. Of the balance area he disagreed with the description of "320 hectares of easy creek flats and low ridges and then 674.8 hectares of moderately sloping ridges." On his inspection, Mr Herron had identified 200 hectares of fair to good undulating forest but found the balance 795 hectares to be better described as "poor to mountainous". The property had been developed as a horse and cattle stud but more recently utilised as a farming and grazing property and Mr Herron saw the existing improvements as an over capitalisation of the land for the farming/grazing use for which it was purchased. Mr Herron was also concerned about the possible effect in the market place (since the announcement of the Glendower Dam) as to the unknown future restrictions on the usage of properties within the Dam catchment area as was "Erin View".
Mr Hamilton agreed that the improvements on "Erin View" resulted in over capitalisation which he had reflected in his analysis of the sale. He had not relied heavily on what was intended to be a broad description of the land. He agreed that the sale property as an overall aggregation was difficult to compare with "Wyambyn" but the sale was useful, in his opinion, in indicating the nature of property with farming and grazing potential which had been available for purchase for $1,500,000 at about the time of the resumption.
I prefer Mr Herron's evidence with regard to the physical qualities of "Erin View" and the circumstances surrounding its sale.
I find the sale to be of little assistance in determining the prime arable value component of "Wyambyn" or indeed that of the forest classifications.
In this sale as opposed to the "Gleneagle" sale, the evidence given by Mr Herron as to the financial circumstances of the vendor suggest that there was a forced sale element reflected in the sale price.(4)Corner Beaudesert-Nerang Road and Birnham Range Road, about 3 kms east of Beaudesert and opposite "Brayford Park", 27.09 hectares described as "well elevated land with a number of gullies, purchased subject to rezoning to accommodate Residential A and Green Street development types", sold December, 1990 for $270,900 or $10,000 per hectare.
This sale was also referred to by Mr Herron. While it is seen not to be directly comparable with any of the subject land, it indicates a value for property with significantly superior development potential.
Mr Hamilton's valuation:
Mr Hamilton valued "Wyambyn" (the total aggregation) as follows:
24 ha river frontage @ $8,000/ha = $192,500
146.47 ha flats and ridges @ $4,000/ha = $585,880
$777,880
Mr Herron's valuation:
Mr Herron valued the balance area in the two parcels as follows:
Lot 10 RP 91875 (river flats to easy undulating forest) - (Parcel (c))
30 ha prime irrigation @ $9,500 = $ 285,000
42.539 ha flats and lower slopes @ $5,250 = $ 223,330
(72.539 ha @ approx $7,000/ha) $ 508,330
Lot 1 on RP 83887 and Lot 3 on RP 229280 - (Parcel (d))
96.02 ha easy slopes to higher forest @ $6,000/ha = $ 576,120
$1,084,450
In his report was contained a comprehensive list of "district sales". Mr Herron commented as follows - "none are really directly comparable but provide a quite reasonable basis of comparison and from these sales I have deduced the various values shown in the conclusion. Mortgagee in possession sales have been ignored given the number of free market sales available."
Apart from the two rural residential site sales to which reference has already been made, Mr Herron's list comprised twenty sales, two of which were resales. Another, (18a) was added during the course of his evidence. The sales information was provided in the following format together with individual analyses sheets.
| SALE NO. | PARTIES | AREA | CLASSIFICATION PER HA CLEARED FENCED AND WATERED | ||
| Prime Arable | Forest | Overall | |||
| 3a. | Cunningham to Presswood | 13.6515 | $12,728 | $12,728 | |
| 3b. | Presswood to Knight | 13.6515 | $19,819 | $19,819 | |
| 4. | Ludwig to Murphy | 15.97 | $ 9,150 | $ 5,000 | $ 8,768 |
| 5. | Lincez to Kelly | 18.81 | $ 7,443 | $ 7,443 | |
| 6. | Snip to Tanner | 20.01 | $ 7,996 | $ 7,996 | |
| 7. | Woods to Reid | 24.35 | $ 7,187 | $ 7,187 | |
| 8. | Neergaard to Chriselle Pty Ltd | 27.09 | $10,000 | $10,000 | |
| 9. | Hiscock to Yarwood Pty Ltd | 39.53 | $ 7,589 | $ 7,589 | |
| 10. | Dennis to Laws | 40.45 | $ 6,180 | $ 6,180 | |
| 11. | Deerain to Sexton | 50.44 | $ 8,000 | $ 4,735 | $ 5,551 |
| 12. | Cook to Trustees of De La Salle Brothers | 60.33 | $10,000 | $ 5,500 $ 2,460 | $ 5,221 |
| 13. | Thwaites to Gatwood | 63.94 | $4,379 | $ 4,379 | |
| 14. | Larsen to Kin-Coast Pty Ltd | 85.94 | $13,900 | $13,900 | |
| 15a. | Arthy to Hinze | 91.97 | $ 8,000 | $ 4,220 | $ 6,480 |
| 15b. | Hinze to Christoffel | 91.97 | $ 8,400 | $ 4,422 | $ 6,800 |
| 16. | Barry to Klatte | 123.0 | $ 3,474 | $ 3,374 | |
| 17. | Ruiter to Hohl | 163.97 | $ 6,000 | $ 2,079 | $ 2,580 |
| 18. | Klatte to Trustees of De La Salle Brothers | 182.0 | $ 9,000 | $ 2,000 $ 5,939 | $ 4,176 |
| 19. | Hester to SEQWB | 119.58 | $ 9,688 | $ 6,000 | $ 7,263 |
| 20. | Ludwig to SEQWB | 266.60 | $ 9,000 | $ 5,000 $ 3,042 | $ 5,082 |
| 18a. | to Trustees of De La Salle Brothers | 123.837 | $10,000 | $ 5,500 $ 2,000 | $ 2,826 |
It will be seen that Mr Herron's sales 8 and 11, were Mr Hamilton's sales 4 and 2.
With regard to the prime arable classification, the purpose of providing sales 3a and 3b was said to support the level of value shown in sale 4, which was of land a short distance downstream of "Wyambyn". The irrigated flats on sale 4 were "of very similar soils to the river flats of the subject" which was "much larger and therefore more viable." The parties to the sale were related and the sale was distant in time. Sale 3a and its resale comprised flooded alluvial Logan River flats and was developed subsequent to 3a but prior to 3b as a horse spelling business. While the assistance provided by sale 4 is by itself limited, it is accepted as forming part of the overall evidence capable of consideration.
The differences between Mr Herron and Mr Hamilton with regard to sale 11, were the area of prime arable, (Herron 12.61 ha - Hamilton -12 ha) and the
apportionment of value applied to the balance area (Herron - $4,735/ha - Hamilton $4,475/ha). Mr Herron commented that the sale land was "similar to river flats and lower level slopes of the subject, but much further from amenities." His verbal evidence indicated that the arable flats were affected by flooding. He saw the sale as being at a level lower than "free market sales" which he put down to the property not having been offered on the open market and bought by an adjoining owner. Mr Hamilton took the view that, if anything, the sale should be seen at a high level of
value, as the adjoining owner purchaser needed the land for expansion of a horse spelling business. Although the circumstances surrounding the sale cloud the reliance which might be placed on the evidence, it is considered to be of some assistance, subject further to considerations of size but particularly its location.
The land involved in sale 15a and its resale as 15b is located with Logan River frontage and comprises 55 hectares of irrigated flats and 36.97 hectares of riverbank and grazing hollows. The original sale took place in June 1989 and the resale immediately prior to the hearing (March, 1993). A milk quota had been involved in the original sale. Mr Herron saw the flats which are subject to flooding, as being inferior to the flood free arable flats of the subject. Mr Hamilton had not analysed the original sale because of its early date and the milk quota involvement, and not unnaturally, had no knowledge until the hearing, of the resale. Having had the opportunity of considering Mr Herron's analyses of the sales, Mr Hamilton held the opinion that the evidence gave support to the level of value indicated in his "Gleneagle" sale. While the original sale was clouded by the early date and the milk quota entitlement, in light of the support given by the resale, it seems to me that the evidence should be regarded as being of considerable assistance.
Mr Herron found sale 17 not to be comparable with "Wyambyn". Sales 12 and 18 were purchases subsequent to an original acquisition by the Trustees of De La Salle Brothers, of the land in sale 18a. The land is located in the Biddaddaba Valley to the east of the Albert River. The original purchase was said to be of a farm to be used for rehabilitation of "minor offenders". The irrigable creek flats comprised 4 hectares. The later purchases were of a farm and a horse stud adjoining on either side of the original purchase. Mr Herron's enquiries indicated that these adjoining properties were acquired when they came on the market and in his opinion the purchasers did no more than meet the market. Nevertheless, due primarily to the reasons for the original purchase, the adjoining owner circumstances of the subsequent sales, and the locality of the sale properties, I find the evidence provided to be of no assistance in this matter.
"Sales" 19 and 20 were, in fact, settlements reached between other dispossessed owners and the respondent in this matter (SEQWB). Both Mr Herron and Mr Hamilton were involved in the eventually successful negotiations. Mr Herron's analyses contained a classification of the total land involved in each settlement. It appears that the final settlement with regard to "Sale" 19 resulted from a reluctant acceptance by Mr Hamilton that the highest and best use for that particular property was for sale as several hobby farms in parcels as surveyed. He had some doubt about the ability of the aggregation to be sold readily as hobby farms due to the lack of attractive building sites, and the settlement was reached after his assessed gross realisation from the sale of four parcels, ranging from 16 hectares up to 36 hectares, was discounted to allow for the bulk holding. Again with "Sale" 20, while Mr Herron's analysis of the settlement was based on a classification of the total aggregation of four surveys, the settlement negotiations were conducted on the basis that the highest and best use of the aggregation was for sale as separately surveyed parcels. In that case Mr Hamilton used that approach from the outset, settlement having been reached when he conceded that a bulk holding discount was inappropriate.
Much has been said in the past as to the weight which should be given to the evidence provided by settlements in resumption matters. In Merivale Motel Investments Pty Ltd v. The Brisbane Exposition and South Bank Redevelopment Authority (FC) (1987) 11 Q.L.C.R. 235 at p. 239 when considering the question of settlements, Matthews J said (in a majority decision):
"It seems to me that the question is not one of admissibility but one of weight to be given to such transactions or the use which a valuation Court decides to make of them and if the Court has available to it other evidence which it considers satisfactory for its purposes, it will not act irrationally if it concludes that it would not derive assistance from the evidence of settlements."
In this matter, the Court does have other evidence available to it, but not to the extent that assistance would not be gained from consideration of cogent "like with like" comparable evidence derived from settlements.
Senior counsel for the respondent argued that any evidence derived from settlements in resumption proceedings should be treated with considerable caution, and particularly so in this matter, where the respondent's valuer had taken a different approach in the settlements to the question of sale in several parcels. Counsel for the claimant submitted that where both the valuers involved in this matter had also been involved in the settlements, the analyses of those settlements provided considerable evidentiary weight.
Mr Herron agreed that the analyses provided were his interpretation of the settlement results and not the basis of those settlements. Under cross-examination he gave verbal evidence as to how he would apportion the settlements amongst the various parcels involved. There is no specific evidence before the Court as to the classification of land comprising each parcel - only the classifications of the aggregated holdings in each case.
In the circumstances, comparisons with the total subject balance area could be clouded by considerations such as the size and nature of individual parcels involved in the settlements. While Mr Herron's analyses do not present the total picture, I am, after consideration of his verbal evidence, persuaded to have some regard to the use to which he put the analyses, in his assessment of the value of "Wyambyn's" prime arable component. It seems to me however, that the evidence, particularly with regard to the "forest" component, is distorted by the site or hobby farm sale potential.
Area of Prime Arable Land:
Another area of difference between the valuers is the extent of prime irrigable arable land on "Wyambyn". There is no disagreement that there is an area of 24 hectares of actual river frontage irrigable land. There is then another area, said to be about 8 hectares, of somewhat irregularly shaped cultivated original blue gum flat, now partially protected by levee bank, separated from the main river frontage by the flood channel area. This land has been developed for cultivation since the property was acquired by the claimant company. Mr Gooding gave evidence to the effect that part of this land, near the road frontage, suffered some flood disability but the main area (6 hectares) in its new cultivation condition was equal to if not superior to the direct river frontage lands. He was not aware of any depth of soil inferiority attaching to this new cultivation. It seems that an area of 30 hectares is capable of irrigation under the relevant Licence. Mr Herron has not differentiated between the direct river frontage flats and this severed area. He valued 30 hectares as prime irrigable and flood free arable land. Mr Hamilton held the opinion that it was only the direct river frontage land which should be regarded as prime arable. His evidence as to why the severed area should be excluded was not convincing. I will adopt Mr Herron's estimate as to the area of prime irrigated arable land. It is noted that the frontage arable land is of irregular shape narrowing considerably to the south. This shape irregularity overall and the severance of the prime areas is seen to be a matter requiring valuation consideration.
Value of Prime Arable land:
Mr Herron expressed the opinion that the arable flats of "Wyambyn" are superior to the Logan River arable flats. Mr Hamilton's opinion appears to be influenced by his knowledge that the Logan River irrigable flats have been assessed historically for the purpose of revenue gathering valuations, as superior to the Albert River flats. He says that the Logan River has wider arable flats with deeper soils. Furthermore, the Logan River is a regulated stream and associated waterworks licensees are afforded a greater degree of protection for the available water allocations. In comparison the Albert River is not designated as a regulated stream and irrigation water availability is said to be less secure. It is part of the claimant's case, however, that "Wyambyn" is favoured by having the river water augmented by an excellent underground supply sourced by an irrigation bore. It is also argued that the 30 hectares of "Wyambyn" arable land is flood-free, protected by levee banks, while Logan River flats have a history of flood susceptibility and, in cases such as the "Gleneagle" property, severe flooding, dangerous to property and stock.
It seems to me that the claimant has established a case for the "Wyambyn" arable land to be regarded as superior to the Logan River sales evidence, including Mr Herron's sale 15a supported by 15b. As part of the aggregated balance area, the prime arable land is not large in size in comparison with the overall area and is seen to be crucial to the good balance of country acknowledged to exist by Mr Hamilton. After considering the factors influencing value, including the mix of country, the location of the property, its flood free history with levee bank protection, and adequate irrigation supplies, but then the shape and severance disabilities, I will adopt a value of $8,750 per hectare overall for the prime arable area of 30 hectares.
Land other than Prime Arable:
Of the balance aggregated area of about 138 hectares, the evidence (Mr Schomburgk's) indicates an area of about 104 hectares comprises the elevated partly cultivated land with future subdivisional potential. The remaining 34 hectares of lower elevation land which affords good quality grazing and some non-irrigated cultivation, lies within the Arable Resource Area with future use limited to rural pursuits.
As mentioned before, neither valuer would be drawn into providing an opinion as to the degree of enhancement, above pure rural use value, which might result from the rural- residential potential of the elevated lands.
Mr Hamilton, from his dissection of the sales evidence already discussed, valued the total balance area at $4,000 per hectare overall. He sees the size of the area as important to his considerations. The grazing component indicated in his sales 1 and 2 is apportioned as $4,650/ha (60.6 ha) and $4,475 (38.44 ha) respectively. It is again mentioned that the Strategic Plan indicates that neither of the sale properties possess potential for rural residential development.
Before dealing with Mr Herron's valuation of the balance area, it seems to me that Mr Hamilton's valuation of $4,000 per hectare is harsh in comparison with his own sales 1 and 2. I have formed the opinion that he has either placed too great an emphasis on the deleterious pro rata effect of the size of the parcel, or has paid insufficient regard to the location and town planning considerations. While there may be no argument that the highest and best use at the relevant date related to rural activities, the future potential would logically influence the minds of a prudent vendor and purchaser. The effect of size, it is considered, should be seen in the context of the associated good mix of country provided for rural usage while the highest and best use so remains.
Mr Herron's valuation is directed to the smaller areas contained in the existing surveys making up Parcels (c) and (d). The reason for this might be obvious, in that, as Mr Hamilton agrees, smaller parcels of land will generally sell for higher pro rata values than larger parcels, all other things being equal. I do not accept, in this case, that Mr Herron's approach has given due consideration to the overall attendant risks, already discussed, in fragmenting the main balance area. In any event, the areas of both parcels (72.539 ha and 96.02 ha) are large by district site or hobby farm standards.
While I am not adopting Mr Herron's individual parcel approach, it should be said that even so I find his valuations of the land classifications in those parcels to be excessive, on the overall evidence, including that provided by Mr Hamilton. I do not find Mr Herron's valuation of $5,250 per hectare for an area of 42.539 hectares of "flats and lower slopes" as part of Parcel (c) to be comfortably supported by the sales evidence. I refer particularly to his analyses of the "forest" component in sales 11, 13, 15(a) and (b). I have already given reasons for placing no weight on the analyses of "forest" component in "Sales" 19 and 20. Neither do I find his valuation of $6,000 per hectare for the area of 96.02 hectares of "easy slopes to higher forest ridges" in Parcel (d) to be supported. Sale 7, of 24.35 hectares is described as a rural homesite/hobby farm, "similar to high country on the subject but inferior neighbours and aspect" and the deduced value of $7,187 per hectare is seen to relate to the site category in which Mr Herron places the sale land. Sale 8 (Mr Hamilton's sale 4) showing $10,000 per hectare for 27.09 hectares is of land with significantly superior development potential, in terms of intensity and location and is hardly comparable. Sale 9 is described as "reasonably similar to "Wyambyn's" higher land and it has potential for rural-residential subdivision. The subject has higher prospects for smaller scale subdivision." The 39.53 hectares sold for $7,589 per hectare. Apart from a significant size differential in terms of potential development land, I am persuaded by the evidence generally as to the superior development potential of land northerly of Beaudesert and closer to the Brisbane influence. Any "smaller scale" subdivision potential of the subject land is considered on the evidence, to be more distant than is expressed in the opinion of Mr Herron.
While no good purpose is seen to be served by commenting at length on each of the sales put forward by Mr Herron in support of his valuation overall, many of the sales are seen to be of little, if any, assistance in arriving at a valuation of the subject non-irrigable forest component of "Wyambyn". Briefly these sale include Sale 4 (1.47 ha forest); Sale 5 (18.81 ha rural homesite); Sale 6 (20.01 ha rural homesite/hobby farm); Sale 14 (near Canungra "futuristic" golf course/residential development approval); Sale 16 (inferior location); Sale 17 (inferior location); Sales 12, 18 and 18(a) (purpose of original acquisition, adjoining owner purchases and location).
In the end result, I have decided to adopt a valuation of $5,000 per hectare for the non-irrigable balance area.
Determination of Compensation
Compensation is determined as follows:
Lot 11 on Registered Plan 91875 - site value $ 15,000
Lot 3 on Registered Plan 28700 - site value $ 45,000
Balance Area:
30 hectares prime irrigable arable @ $8750/ha $262,500
138.55 hectares grazing and dry farming, with partial
subdivisional potential @ $5,000/ha $692,750
Land Value: $1,015,250
Improvements - as agreed $ 416,000
Disturbance items - as agreed
Legal fees $5,000
Valuation fees $8,985
Survey fees 900 $ 14,885
Total Compensation under all heads $1,446,135
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As agreed between the parties no order is made for the payment of interest.
(R. E. Wenck)
Member of the Land Court.
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