Wilson v Chief Executive, Department of Natural Resources
[2001] QLC 18
•12 April 2001
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BRISBANE
12 APRIL 2001
Re: Appeals against Annual Valuations
Valuation of Land Act 1944
Valuation Roll Nos.: 3820; 3821 and 4423
Property ID: 40047291 and 40047290
Local Government: Kingaroy Shire
Graham Wilson (AV99-1534)
Diane Wilson (AV99-1535 and AV99-1536)
Graham John Gilmore Wilson (V00-634 and V00-635)
v.
Chief Executive, Department of Natural Resources
(Hearing at Nanango)
D E C I S I O N S
Background:
These matters deal with five parcels located on the Kingaroy-Burrandowan Road, about 35 km by road west of Kingaroy. The lands form a family aggregation known as "Minmore", which is operated by the appellants as a cattle-breeding enterprise. The five appeals were heard concurrently. The subject lands are zoned "Rural B" under the Kingaroy Shire Town Planning Scheme effective at the date of valuation of 1 October 1998. Telephone and power are available in the area, and services and relativities have not changed since the last time the appellants appeared before this Court in 1986 and 1987. The key issues are changes in the market and comparison of sales.
On 29 March 1999 the Chief Executive issued valuations at $109,000 (AV99-1534); $47,000 (AV99-1535); $67,000 (AV99-1536). Following objections, the Chief Executive confirmed the above unimproved values on 14 October 1999. On 8 November 2000 the Chief Executive issued general valuations for the remaining two parcels at $64,000 (V00-634) and $25,000 (V00-635). The appellants have now appealed those figures claiming the unimproved values should more properly be:
AV99-1534 - $73,000
AV99-1535 - $31,000
AV99-1536 - $45,000
V00-634 - $58,000
V00-635 - $22,500
Mr B Bartholomew, Solicitor, appeared for the appellants, calling evidence from Colin Stanley Otto, a registered valuer. Mr R Vize, Principal Legal Officer of Crown Law, appeared for the respondent, calling evidence from Anthony Joseph Hoffmann, the departmental registered valuer responsible for determining the valuations.
The Evidence:(1) The Nature of the Land -
The lands are described as:· Lot 39 on BO486 and Lot 38 on FTZ37338 (AV99-1534). This parcel has a total area of 1,750.526 ha, and comprises 340 ha of crop-assisted grazing lands; 1,170 ha of second-class grazing forest; and 241 ha of third-class grazing forest with very poor forest regrowth. Reasonable water is available from the Boyne River and Taswell Creek, dams, mills and wells.
· Lot 41 on BO563 (AV99-1535). This parcel has a total area of 1,025.291 ha, and comprises 425 ha of easy to undulating second-class forest grazing country; 200 ha of moderately undulating second-class forest grazing country; and 400 ha of steep poor third-class forest grazing country. Water is available from Taswell Creek and dams.
· Lot 227 on FY2483 (AV99-1536). This parcel has a total area of 1,151.2 ha, comprising 900 ha of easy to moderately undulating sandy ironbark forest and 251 ha of mainly poor sugar gum and forest regrowth. Water is available from Reedy Creek and seasonally from Half Mile Gully, and from dams.
· Lot 226 on FY2483 (V00-634). This parcel has a total area of 1,187.128 ha, comprising 800 ha of easy to moderately undulating second-class forest grazing and 388 ha of moderately undulating rocky third-class forest grazing. Water is available from Reedy Creek and seasonally from Half Mile Gully and from a dam and a spear on adjoining Lot 227.
· Lot 37 on CP907216 (V00-635). This parcel has a total area of 833.8 ha, comprising 500 ha of moderately undulating second-class forest country and 388 ha of moderately undulating third-class forest country. Only seasonal natural water is available from a dam on adjoining Lot 41 via Taswell Creek.
There is no real difference between the valuers in respect of the nature of the lands, or relativities between the parcels. Mr Otto describes the third-class grazing lands as shelly top, a volcanic type outcrop which precludes grass growth, but is thickly timbered with wattle, and is virtually useless for cattle grazing. That country does also become a problem with straying cattle after rain when mustering occurs, and is therefore a management problem for the grazing business.
However, the difference in description only relates to terminology, as both valuers agree that third-class forest grazing has virtually little value. There are some patches of very steep rocky country which are also of little economic use. There is also agreement that water levels from the sandy creeks has declined following commercial removal of sand deposits in the area, and Mr Hoffmann has made some concession for that depletion in his valuation, noting that the granite-type country makes dams difficult to hold water.
A large problem is also with timber regrowth, which is prolific and therefore costly to maintain. Mr Otto has lived all his life in the area, and argues that sales of country type similar to the subject lands have declined over recent years, due in part to the high cost of re-clearing, particularly fern-leaf wattle infestation. It is also agreed that Lots 226 and 227 have gravel access, Lots 41, 38 and 39 have bitumen access, but Lot 37 only has gazetted access and physical access through an adjoining property.(2) Comparison of Sales -
To support his estimate of value, Mr Otto provides the following sales.· Sale 1 - (Sloper to Boland and Lee - Lot 29 on BO44). This sale has an area of 405.1 ha and is located on Chinchilla Road about 40 km west of Wondai. The sale is gently undulating ironbark and gum forest with about 80 ha of shelly top. About half of the parcel is well treated while the remainder is green and regrowth forest. There is a dwelling and structure improvements with an added value of $70,000, also including interest.
The sale sold in April 1998 for $155,000 ($71.50/ha) which after allowing for the added value of the fencing, water, timber clearing and interest at 8%, was analysed at $29,000. Mr Otto apportioned the sale at 325 ha forest grazing ($75/ha) and 80 ha shelly top ($25/ha).
· Sale 2 - (Hurford to Interstate Pacific Pty Ltd - Lot 62 on BO203). This is a 1,037 ha parcel on Gordonbrook Road comprising easy sloping grey sandy loam forest along the Stuart River, with access to water. The heavier red brown soils are suitable for fodder cropping, and the sale was improved with sheds and yards, and with good timber treatment. About 100 ha is cleared and contoured. Subsequent to the sale the parcel has been stickraked and cleared and is to be cropped for two years and then sown with improved pastures.
The sale sold in May 1999 for $385,000 ($62.50/ha), was analysed at $65,000, after allowing for the added value of structures, fencing, water, timber improvements, plus interest at 8%. Mr Otto agrees that Sale 2 is superior to his Sale 1, but has a lesser rate per hectare due to its larger size.
· Sale 3 - (Seng to McGill - Lot 21 on BO157). This a 379 ha parcel located at Ironpot about 45 km by road from Kingaroy, comprising 50 ha of scrub country, 60 ha of spotted gum country and the balance undulating to steeper forest grazing. It is improved with yards, fencing and a shed, and the sale included livestock valued at $50,000. The sale was to an adjoining owner across the road, and has three dams. However Mr Otto advises the sale price was settled based upon his personal valuation figure, and is in line with the market.
The sale sold in March 1999 for $200,000 ($97.50/ha) and was analysed at $37,000 after allowing for the added value of the structures, fencing, water, timber and interest at 8%. Mr Otto apportions the sale as 50 ha of scrub country ($200/ha), 270 ha of forest grazing ($90/ha) and 50 ha of spotted gum ($50/ha). Mr Hoffmann had not analysed that sale, but notes the adjoining owner impact.
· Sale 4 - (Lutz to Whittaker - Lot 7 on BO76). This is a 518 ha parcel in Pedersons Road about 45 km from Kingaroy, and 12 km north of the subject lands. The land comprises 60% gently undulating ironbark and gum forest and 40% spotted gum ridges. There is a small shed and poor yards. Subsequent to the sale the purchaser has cleared some of the spotted gum area leaving young saplings to mature for the cutting of poles.
The sale sold in September 1997 for $135,000 ($44.50/ha), and was analysed at $23,000, which Mr Otto argues is about 20% less than the current applied value of $30,000, allowing for similar improvements, the value of standing timber ($20,000), and interest. Mr Otto could not confirm whether the purchaser was aware of the potential value of the existing timber for future pole cutting, but argues that any experienced farmer would have seen that potential in the sale. Subsequent to sale only clearing has occurred, and there has been no moves to fence for grazing purposes, although the sale was purchased with that intention. Sale 4 is a common sale.
To support his valuations Mr Hoffmann provides the following sales:
· Sale 1 - (Lutz to Whittaker - Lot 7 on BO76). This is the common sale with Mr Otto's Sale 4. The sale was seen as inferior overall to the subject lands, and was analysed at $32,000 ($62/ha) and applied at $30,000 ($58/ha).
· Sale 2 - (Bryant to Kleinschmidt - Lot 84 on BO192). This is a 508.285 ha parcel located about 19 km south-west of the subject lands and 56 km by road from Kingaroy. The sale is predominantly easy undulating ironbark forest country, with 418.28 ha of second-class easy to steep undulating forest and 90 ha of black soil stony crop-assisted grazing forest. The sale is inferior to the subject lands overall, but superior on a per hectare basis.
The sale sold in May 1998 for $320,000 ($630/ha), was analysed at $64,500 ($127/ha) and applied at $62,000 ($122/ha).
· Sale 3 - (Eden to Madder - Lot 82 on BO192 and Lot 1 on RP 168372). This is an 837.209 ha parcel located 15 km south of the subject lands and about 41 km by road from Kingaroy. The sale is mainly moderately undulating ironbark forest, with steep sugar gum stony forest, and areas of black soil cultivation along creek flats and easy to moderate sloping softwood scrub. Water is available from seasonal creeks and six bores and five dams. It is overall superior, being superior country but inferior in respect of location and size. There is 100 ha of black soil flats, 520 ha of second-class forest grazing, 168.3 ha of second-class scrub country, and 48.9 ha of third-class forest grazing.
The sale sold in August 1998 for $585,000 ($699/ha), was analysed at $165,000 ($198/ha) and applied at $150,000 ($180/ha).
· Sale 4 - (Bickerton Pty Ltd to Greenup - Lots 65 and 66 on BO190, Lot 67 on BO490 and Lot 68 on RP 800291). This is a 1,855.328 ha parcel located in Ironpot Road, 10 km south of the subject lands and 33 km by road from Kingaroy. The sale is mainly moderately sloping sandy gravelly ironbark forest with rocky ridges and comprises 250 ha of second-class forest grazing (including 81 ha of cleared creek flats), and 605.328 ha of third-class forest grazing. The sale is overall slightly superior to the subject lands due to size, country quality and natural available water. There is a power easement across the property. The sale was an adjoining owner sale.
The sale sold in December 1998 for $680,000 ($367/ha), was analysed at $200,000 ($108/ha), and applied at $129,000 ($70/ha).
If I turn first to the common sale (Lutz to Whittaker) I note that there is some difference between the valuers in the analyses of that sale, which lies in Mr Otto's assessment of $20,000 for millable timber suitable for poles. In concluding his value of standing timber at $20,000, Mr Otto estimates that on the basis of 100 ha at $200/ha. He argues that current royalty payments indicate about $60 to $70 per spotted gum pole, which he feels amply justifies his estimated value of $200/ha. Mr Otto rejects any need to actually count the likely marketable trees, which he notes mature anyhow at varying rates progressively over time. Because he sees the trees as a crop, Mr Otto provides no allowance for interest, distinguishing that from interest foregone when tree clearing operations are involved.
Mr Hoffmann rejects the allowance for timber poles, arguing that his discussions and his inspection with the purchaser (Whittaker) disclose no evidence that the extra value of timber form part of the considerations of that sale. Mr Hoffmann understands that the sale was intended for grazing purposes as a supplement for his other lands in the area. Mr Hoffmann believes that knowledge of the potential for millable timber has occurred subsequent to the sale, and should therefore be seen merely as a benefit accruing to the owner, as might occur with any timbered lands with similar trees.
While the photographs supplied (Exhibit 3) reveal the clearing operations outlined by Mr Otto, and I have no doubt the millable potential of that land is now available to Mr Whittaker, the question to be answered is what extra value did the purchaser see in the property because of that timber when he negotiated the sale at $135,000 in September 1997?
I note also that Mr Otto has concern with the use of Mr Hoffmann's Sale 2 (Bryant to Kleinschmidt), which he sees as basalt country rather than granite country. He agrees that Sale 2 could provide some guide as to value, but argues the different country type is superior to the subject land, and Sale 2 should not form part of the basic sales for the area in order to establish market trends. Mr Otto also queries Mr Hoffmann's Sale 3 for the same reasons.
Mr Otto rejects Mr Hoffmann's Sale 4 (Bickerton to Greenup) as he sees the nature of the adjoining owner influence as severely impacting the sale price. Mr Otto notes that the Greenup family are long-time residents of the area, and their lands virtually surround Sale 4, which historically had been part of the Greenup family properties.
Mr Otto has personally subsequently valued the sale and is very familiar with the property. He notes the sale contains 400 ha of very very poor spotted gum ridges, but there is 100 ha of black soil flats along Manneum Creek and the Boyne River that is used for oats production. Mr Otto argues that the sale was too high as demonstrated, in his opinion, by the respondent's application of that sale at only 70% of the analysed value. For that reason he argues Sale 4 should not form part of the basic sales for the area. Mr Hoffmann agrees that his Sale 4 is a late sale, and is a high sale, but he has only included that sale to demonstrate that he has used sales only at the lower end of the market.
Mr Hoffmann raises concerns with Mr Otto's assessment of interest allowed on the timber clearing operations. Mr Otto has allowed interest at 8% rather than the then Reserve Bank rate of 5.65% to 5.75%, which he agrees may be more appropriate. However, he argues that while that may make some small difference in the analysed value of the land, any small difference was likely to have been absorbed when the final analysed value was rounded off.
Mr Otto has adopted a rate of $100/ha for the tordon treatment of timber, plus additional costs where stickraking has occurred. However, in his allowance for interest Mr Otto estimates that it would take four years to develop the country from its unimproved state to its present standing. He bases that on the need to axe tordon the trees, for them to die, and for grass to come back, and then for fencing and also to place water on the land. Mr Otto rejects that process could be achieved over only two years. Based upon a four-year development period Mr Otto argues that he has allowed development interest for half the period (two years) at the relevant interest rate.
Mr Hoffmann disagrees with the period for development by timber clearing, seeking precedents of this Court in allowing in this type of country for only two years instead of four years.
A further matter of some difference between the valuers would appear to lie in the impact of location upon the sales evidence. Mr Hoffmann notes that location nearby to a large population centre such as Kingaroy was a factor to be considered when purchasers seek to buy land. He argues nearness to well-serviced rural facilities such as schools and shopping is increasingly rising in priority when sales are negotiated. For that reason Mr Hoffmann has taken location as a more important feature of any property in that South Burnett area.
Mr Otto by comparison argues that the principal feature sought by purchasers for grazing was the country type. He suggests that for grazing purposes accessibility to saleyards and abattoirs are more important than proximity to Kingaroy. However, he agrees that there is some location influence when close by to say Kingaroy, but then only up top say 5 km or 6 km from the town. Mr Hoffmann's Sales 2, 3 and 4 are all further located from Kingaroy than the subject lands. Both valuers agree, however, that there is one market irrespective of Shire boundaries.
In the matter of variations in size of comparable parcels, Mr Otto agrees that there is some difference in the rate dependent upon size. However, he argues that once the sale gets in excess of 400 ha, any impact from hobby farms disappears, and there is no real discount in rate because of size.
In respect of any noticeable increase in value of country types, Mr Otto rejects any increase in the South Burnett area over the last few years except in irrigation country. He concedes, however, that he did not analyse all sales in the area, but restricted his comparisons to sales which he believes were fair sales as close as possible to the subject lands. In the sales he adopted there was no increase in value. Mr Otto seeks further support for that conclusion in a sale (Porter to Bath) located in Chahpingah. He notes that sale for $865,000 for 2,000 ha in 1996 reflected $74/ha, which was the same rate that property was offered at auction in 1994, and compared to the current rate for his Sale 2 ($68/ha), in his opinion, indicates no movement in the market.
Mr Hoffmann argues that he has analysed about 12 sales in the Shire, which demonstrate the rise of about 20% in the unimproved values between 1995 and 1998. He also notes that some of those sales demonstrated a rise greater than 20%. Mr Hoffmann notes that increase also relates to the whole South Burnett area, and not just in the Kingaroy Shire. However, Mr Hoffmann agrees that the current market is certainly tight, with fewer sales to rely upon. Mr Hoffmann advises that he would never increase values in an area based only upon a single sale. He also advises that he has not changed the former relativities established by this Court.
Decision:
Before considering the sales evidence I note that relativity and the nature of the subject lands are not at issue. I note also that in the previous hearings on this matter in 1987 (GJG Wilson & Ors v. The Valuer-General (AV87-80) 11 September 1987, unreported) and also in 1986 (V85-1138), 20 June 1986, unreported, the evidence preferred by the Court was the sales of the respondent, which were seen to be nearer in locality and of more comparable size and quality. The sales by Mr Otto in the matter of AV87-80 were seen to be not in the general locality and smaller and better quality parcels. There were no sales provided by the appellant in V85-1138, Mr Wilson relying only upon relativity.(i) Comparison of Sales -
Before considering the analyses of the valuers, I turn first to the different approaches adopted in respect of the assessment of development interest. Both Mr Otto and Mr Hoffmann have agreed that the correct method is to adopt the Reserve Bank rate for half the period during which lands are to be brought from its unimproved state to the standard then existing on the subject lands. That follows principles followed by this Court in Appeals in Shire of Esk v. The Valuer-General (1972) 39 CLLR 130. In that matter the learned Member (later President) followed guidance in Kiddle & Anor v. Deputy Federal Commissioner of Land Tax (1919-1920) 27 CLR 316, at 320 per Knox CJ. In the matter of Appeals in Esk v. The Valuer-General (supra) the learned Member found at p.136:
"For the purpose of the final 'interest' calculation the actual state of development of the particular property at date of sale should be considered and an assessment made of how long it would fairly take for a property having regard to its natural state to reach the actual state of development of the particular sale property at sale date. If the property is fully improved by timber treatment etc the period could well be up to 4-5 years. If it is lightly improved or timber treatment needs maintenance it may take only two years to reach the actual physical condition as at sale date and if there are very few improvements or the country is in a run-down condition it may take one year or even less. It is half of the respective period which the valuer estimates that it would take to reach sale date development or physical condition that is the basis of the period for the final interest calculation. In cases where the land has reverted to its natural state or worse no interest allowance should be made."
In the current matter the evidence is that the subject lands are subject to prolific timber regrowth which is costly to maintain, and which was likely to be seen in the marketplace to be a disability of the lands. On that basis, in accordance with the criteria above, it would be prudent to consider that a more conservative interest period should be allowed as the timber is constantly returning to its unimproved state. In the "Appeals at Esk" the two valuers had sought for development periods of four years (appellant) and five years (respondent).
In the current matter I believe a more conservative period of two years of development to its current state for the subject lands would be appropriate. On that basis interest at the relevant Reserve Bank rate for half that period (one year) would seem adequate for the subject lands. However, I note Mr Otto has applied that interest period only to his Sale 4, but adopted a period of four years for his Sales 1, 2 and 3. On Sale 1 I note that half the parcel is well cleared, while the remainder has regrowth forest; on Sale 2 the property has been kept clean for many years; while the state of clearing is not specified on Sale 3.
On that basis I believe Mr Otto has applied an appropriate period for interest on the sales, but has allowed too high an interest rate. However, as outlined by Mr Otto, any variance in the interest rate leads to minor differences to his analysed values of the sales. Mr Hoffmann's Sale 1 has moderate to heavy regrowth; Sale 2 has some regrowth; Sale 3 has moderate to heavy regrowth; and Sale 4 has continual regrowth problems. On that evidence Mr Hoffmann has also applied an appropriate period of two years for development on his sales.
If I then recalculate Mr Otto's analysed values I find:Sale Analysed Value Comparison of Country Type
1 $29, 920 ($74/ha) Superior/Smaller
2 $66,000 ($64/ha) Superior
3 $37,840 ($100/ha) Comparable/Smaller
4 $23,000 ($44/ha) Inferior
Mr Hoffmann's analysed values are:
Sale Analysed Value Comparison of Country Type
1 $32,000 ($62/ha) Inferior
2 $64,500 ($127/ha) Superior
3 $165,500 ($198/ha) Superior
4 $200,000 ($108/ha) Slightly Superior
However, there is then considerable difference between the analyses of the common sale (Lutz to Whittaker). If I accept Mr Otto's value of standing timber, I find an analysed rate of $44/ha, but if I disallow the timber I conclude a rate of $82/ha. By comparison Mr Hoffmann concludes a rate of $62/ha. I have no details of Mr Hoffmann's added value of structural improvements, fencing, water or timber improvements, only an analysed final figure. Because of that inconsistency I will treat the common sale with some caution.
As further support of his rates per hectare for the country type Mr Otto refers to three properties in the Wondai Shire which he argues have comparability:· Property 1 - (Lots 3 and 14 on BO49 - 1,099 ha). This is about half cleared and pulled, and is superior to any of the subject lots. The property is applied at $49,000 ($44.50/ha).
· Property 2 - (Lots 13, 17 and 18 on BO94 - 1,528 ha). This is good open grazing land, well treated and superior to the subject lands. The parcel is applied at $68,000 ($44.50/ha).
· Property 3 - (Lot 500 on RP 201912 - 3,406 ha). This parcel is half improved with pastures and the rougher shelly top country was developed as rural homesites prior to the sale. The parcel is applied at $178,000 ($52/ha).
Adopting those relativities and the sales evidence Mr Otto has concluded the following rates for country land types:
· Poor shelly top country - $10/ha
· Forest country and fair forest - $62.50/ha
· Forest grazing (343 ha) - $45/ha (Lot 37)
(1,225 ha)- $40/ha (Lots 38 and 39)
(475 ha)$55/ha (Lot 41)
(900 ha)- $47.50/ha (Lot 227)
In summary the following overall rates are argued:
Subject Parcel Mr Hoffmann Mr Otto(AV99-1534) 1,750 ha $62/ha $43/ha
(AV99-1535) 1,025 ha $48/ha $30/ha
(AV99-1536) 1,151 ha $48/ha $39/ha
(V00-634) 1,187 ha Overall $44/ha $47/ha
(Apportioned)
(V00-635) 834 ha Overall $44/ha $25/ha
(Apportioned)
In concluding rates for V00-634 and V00-635 Mr Hoffmann has apportioned values based upon an overall total valuation of $89,000 for 2,019.3 ha or $44/ha.
If I then revisit the common sale I find Mr Hoffmann has analysed that sale at $62/ha, but sees the sale overall inferior to the subject lands, which is inconsistent with his applications of the subject lands. On balance I will therefore accept Mr Otto's allowance for standing timber and his analysed rate of $44/ha.
If I then refer to Mr Hoffmann's Sales 2 and 3 I can agree with Mr Otto that those are superior sales of different country type. For the reasons outlined by Mr Otto I also treat Mr Hoffmann's Sale 4 as a high sale, and not indicative of true market trends. I can also agree with Mr Hoffmann that Mr Otto's Sales 1 and 3 are for much smaller parcels where I feel size difference would have an impact. On that basis I believe the common sale at $44/ha, and also Mr Otto's Sale 2 ($64/ha) provide the most useful comparisons.
Now comparisons with those two sales would tend to support overall rates more in the range of those provided by Mr Hoffmann, rather than rates proposed by Mr Otto. While Mr Otto has demonstrated a very extensive understanding of overall sale prices in the area, it would have been helpful had he analysed all the sales in the area, as Mr Hoffmann would appear to have done.
In the end I am reminded that under s.45(4) of the Act the onus is upon the appellant to prove his case. Unless he has demonstrated that the respondent has used a wrong principle or made a serious error of fact, then the valuation shall stand. (Brisbane City Council v. The Valuer-General (1977-78) 140 CLR 141, at 56 per Gibbs J). The evidence does not support such a scenario, and the appeals must fail.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeals are all dismissed, and the unimproved values as determined by the Chief Executive in the amounts respectively of $109,000 (AV99-1534); $47,000 (AV99-1535); $67,000 (AV99-1536); $64,000 (V00-634) and $25,000 (V00-635) are affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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