Barlow v Department of Natural Resources and Water [2009] QLC 22

LAND COURT OF QUEENSLAND CITATION: Barlow v Department of Natural Resources and Water [2009] QLC 22 PARTIES: Kevin and Florence June Barlow (appellants) v. Department of Natural Resources and Mines (respondent) FILE NOS: AV2005/1561, AV2005/1562, RV2007/0490, RV2007/0491, AV2007/0492 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuations under the Valuation of Land Act 1944 DELIVERED ON: 17 February 2009 DELIVERED AT: Brisbane HEARD AT: Emerald MEMBER: Mr RP Scott ORDER: The appeals are dismissed. The valuations are determined as follows:  Special Lease 37/49070 (AV2005/1561) as at 1 October 2004 – determined at $155,000  Special Lease 37/49070 combined with Permit to Occupy 37/4802 (AV2005/1562) as at 1 October 2004 – determined at $157,500  Permit to Occupy 37/4802 (RV2007/0490) as at 1 October 2006 – determined at $13,800  Special Lease 37/49070 (RV2007/0491) as at 1 October 2006 – determined at $310,000  Special Lease 37/49070 combined with Permit to Occupy 37/4802 (AV2007/0492) as at 1 October 2006 – determined at $315,000. CATCHWORDS: Valuation of Land Act – valuation – sale must be assumed even if restricted title Valuation of Land Act – s.14(5) – relevant conditions of lease to be taken into account – representations prior to grant of lease irrelevant – discount for restrictive conditions would be minimal if land has limited potential for development -- 1 of 6 -- 2 APPEARANCES: Kevin Barlow for the appellants Desmond Lang (Lawyer, Crown Law Office) for the respondent Background [1] The appellants have appealed against the following valuations made by the respondent under the provisions of the Valuation of Land Act 1944 (the Act):  Special Lease 37/49070 under the Land Act (7,745.279 ha) – Chief Executive valuation $152,000 as at 1 October 2004 however, valuation evidence was led to a figure of $155,000 – appellants’ estimate $52,500 (AV2005/1561)  Special Lease 37/49070 combined with Permit to Occupy 37/4802 under the Land Act over adjoining stock route (190 ha) – Chief Executive valuation $157,500 as at 1 October 2004 – appellants’ estimate $56,500 (AV2005/1562)  Permit to Occupy – Chief Executive valuation $13,800 as at 1 October 2006 – appellants’ estimate $6,650 (RV2007/0490)  Special Lease – Chief Executive valuation $310,000 as at 1 October 2006 – appellants’ estimate $120,050 (RV2007/0491)  Special Lease and Permit to Occupy combined - Chief Executive valuation $315,000 as at 1 October 2006 – appellants’ estimate $126,700 (AV2007/0492) [2] One of the appellants, Kevin Barlow, appeared on behalf of the appellants and gave evidence in support of the appeals. David Robert McKinnon, registered valuer provided valuation evidence in support of the Chief Executive’s valuations. [3] The grounds of appeal were expressed in terms sufficiently wide to encompass the evidence adduced by the appellants. Mr Barlow did not support the various appellants’ estimates of value in these matters, but concentrated on the features of the subject properties which he thought needed to be taken into account in the valuation and which were not, in his submission. In addition, he advanced various legal points that I will now discuss. He said that the Permit to Occupy is not capable of sale and that the Special Lease is not attractive for sale given its restrictive conditions. On that basis he said that the process of arriving at an assumed sale price, being the valuation of each property, would be invalid. [4] The High Court has at least on one occasion dealt with the issue as to the value of a property that may, for various reasons, be incapable of being sold on the open market. One such case was Geita Sebea v Territory of Papua1 where at 557 Williams J decided that, notwithstanding the limitations imposed on the title to the land, a sale had to be assumed. [5] It is clear from what His Honour said that a sale of the subject property must be assumed and its value struck on the basis of such an assumption. In addition, in striking a valuation there is no attempt to find a value of the Special Lease or the Permit to Occupy 1 [1941] 67 CLR 544. -- 2 of 6 -- 3 as such in the market place, but to establish a figure in accordance with s.14(1) of the Act. “14 Deciding unimproved value of certain land (1) For the purpose of deciding the unimproved value of land that is not granted in fee simple, the land is taken to be land granted in fee simple.” [6] Notwithstanding the terms of s.14(1) reference can be made to s.14(5) in ascertaining the effect, if any, of any relevant restrictive conditions in a Special Lease or Permit to Occupy on the value of that property: (5) In making, under this part, the valuation of the unimproved value of any land — (a) in respect of which a stock grazing permit granted under the Forestry Act 1959, section 35, the National Parks and Wildlife Act 1975, section 33 or the Nature Conservation Act 1992 is in force; or (b) in a lease, licence, permit or permission to occupy under the Land Act 1994 or granted or issued by the coordinator-general or the chief executive of the department responsible for the administration of the Forestry Act 1959; or (c) in a lease, licence or permit from Queensland Rail, SunWater or a water authority; or (d) subject to a heritage agreement under the Queensland Heritage Act 1992; or (e) to which a determination of native title or an indigenous land use agreement, under the Native Title Act 1993 (Cwlth), relates; the unimproved value of that land shall be determined having regard to and making proper allowance for any restriction or limitation of use having regard to the purpose and conditions to which that permit, lease, licence permission to occupy, agreement or determination is subject. [7] The Special Lease is a lease over part of a State Forest and is conditioned to allow this public purpose to continue without “interruption or obstruction” (special condition M76). Moreover the following conditions also apply: “ C180 No clearing, ringbarking or cultivation shall be carried out on the leased land without a permit in writing from the Land Commissioner.  L28 The lessee shall not effect any improvements on the leased land without the consent of the Conservator of Forests having been first obtained.” [8] Mr Barlow expressed concern at the restrictions on his freedom to manage the Special Lease as he saw fit. He referred, for example, to the difficulty in obtaining permission to build a machinery shed; though I notice that permission was forthcoming. It is the effect, if any, of a condition/restriction on value that needs to be taken into account, not the inconvenience of being obliged to follow due process in dealing with the effect of a condition. Whilst he is permitted to clear regrowth he is not presently permitted to improve further areas for grazing. -- 3 of 6 -- 4 [9] The complaints to which Mr Barlow referred are therefore consequent upon conditions of the lease. Now it is the relevant conditions of the lease that need to be taken into account under s.14(5) not representations made prior to the grant of lease. A Department of Forestry brochure in 1973 purported to predict the manner in which restrictive conditions would be treated (exhibit 5). The fact that there may be a variation between what might have been expected having regard to that brochure and the manner in which lease conditions are presently dealt with is not a relevant consideration. What is relevant is the impact on the conditions on the value of the land at the relevant date for valuation having regard to the terms of s.14(5). I return to this issue, below. [10] Mr Barlow outlined how his nephew was experiencing difficulty in renewing a lease which he described as being relevantly similar to the Special Lease the subject of this appeal. There was no direct evidence indicating that the lessee would experience similar difficulties with respect to the subject lease. In fact the lease has at the relevant date 29 years to run and has the advantage of a condition which provides: “ M164 Subject to the lessee complying with the conditions of the lease to the satisfaction of the Minister, the lessee will be entitled at the expiration of the lease, to the right to receive the offer of a new lease.” [11] I refer also to s.14(1) of the Act which provides that the valuation needs to be made on the basis that the land would be fee-simple. In other words, the prospect of a lease terminating and not being renewed is not a relevant consideration. [12] Mr Barlow drew my attention to the increase in value that applied to the subject land over a number of years. In Tow v The Valuer-General2 the Land Appeal Court said: “It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.” It follows that the fact of there having been increases involved is not, by itself, relevant to the value to be struck at any particular date. [13] The appellants expressed concern that rent would escalate in coming years as values increased. I understand that concern; however, I need to make clear to the appellants that the Land Court is not a rental tribunal. The jurisdiction being exercised in these appeals is one of determining appeals against the valuations struck in accordance in s.3 of the Act as at a particular date. [14] In his valuation report Mr McKinnon describes the Special Lease in these terms: “Overall the property consists of steeply sloping ridge country with tablelands, and some valleys and flats along the southern and eastern boundaries. The flats and foothill areas are timbered predominantly with narrow leaf iron bark, poplar box forest country with 2 (1978) 5 QLCR 378 at 381. -- 4 of 6 -- 5 small isolated patches of scrub country timbered with brigalow. The ridge and table land country is timbered with narrow leaf iron bark, wattle and bendee and has areas of exposed rock and escarpment. The area is broken up as: Approximately 1541 hectares (20%) of forest grazing land and about 4205.279 hectares (54%) of poor forest grazing land. There is a balance area of about 2000 hectares3 (26%) of steep ridges, exposed rock and escarpment in the central and northern portions of the property. About 1541 hectares (20%) of the land has been cleared and has improved pastures (buffel) and native pastures. Some of the cleared areas have light to moderate regrowth.” [15] Mr Barlow was critical of that description saying that greater than 2,000 ha is unavailable. He said that Mr McKinnon had not traversed the country sufficiently to see the waste land. Mr McKinnon spent a day with Mr Barlow inspecting the property. He was guided by Mr Barlow through that process and placed no limit on what he would be shown. His inspection included the “white areas” (exhibit 4) described in that exhibit as having been previously cleared, though it was the common view of Mr Barlow and Mr McKinnon that those areas were characterised by exposed rock and did not support pastures. [16] Mr McKinnon employed regional ecosystem mapping and aerial photography to complement his inspection in calculating the various land classifications, including the unavailable area. Mr Barlow’s estimate that greater than 2,000ha unavailable country is to be found on the subject land that estimation is not supported other than by the bald expression of an opinion. I think that Mr McKinnon’s method is clearly more cogent therefore supports his classification. That conclusion is supported by the estimated carrying capacity of the property. Mr McKinnon estimated a carrying capacity at 238 head whilst Annette Smith a departmental valuer had previously estimated 261 head – an estimate referred to favourably by the appellants who currently carry more than 500 head on the land. [17] The appellants expressed the opinion that Mr McKinnon had not employed suitable sales in his comparison with the subject land. It was asserted that the type of land evidenced on the subject properties has not increased in value to the same extent as good land found on the sales properties. [18] Mr McKinnon said that the quality of land on his sales properties was superior to that on the subject, but was the best evidence available to him. I appreciate that valuers must take the evidence as they find it. I have perused the sales evidence included in his valuation reports and have concluded that the sales comparisons outlined there by him sufficiently take into account the disabilities evident on the subject property and the quality of the country there. 3 Elsewhere in his report described as “unavailable”. -- 5 of 6 -- 6 [19] Mr Barlow said that as at 1 October 2006 the Permit to Occupy valued at $72.50/ha is out of line with the Special Lease valued at $40/ha overall. Mr McKinnon explained that whilst part of the Permit to Occupy is taken up with a road formation all of the balance land on the Permit to Occupy area is available country in contrast with the inaccessible and other poorer country found on the Special Lease area. That explanation for the difference in valuation is clearly acceptable particularly given that the Permit to Occupy is over a smaller area. The value per unit area would be expected to be higher. [20] In his comparison between the subject properties and the sale properties Mr McKinnon made an allowance of 20% downwards having regard to the restrictive conditions applying to the subject lands, limiting further development.4 Given the description of the country that I have referred to above and the description by Mr Barlow that much of the land is “rough and rugged worthless country” it is not apparent to me that a prudent owner of the subject land would, in any event, want to intensively develop the country any further. [21] A valuation by the Chief Executive is, pursuant to s.33 of the Act, deemed to be correct until proved otherwise upon objection or appeal. Section 45(4) of the Act provides that the burden of proving any and every ground of appeal shall be upon the owner. I have considered the various points raised by Mr Barlow and conclude that he has not demonstrated that the valuations by the Chief Executive are in error nor in the case of appeal AV2005/1561 has he convinced me that Mr McKinnon’s valuation of $155,000 is wrong. Accordingly, the appeals are dismissed. The valuations are determined as follows:  Special Lease 37/49070 (AV2005/1561) as at 1 October 2004 – determined at $155,000  Special Lease 37/49070 combined with Permit to Occupy 37/4802 (AV2005/1562) as at 1 October 2004 – determined at $157,500  Permit to Occupy 37/4802 (RV2007/0490) as at 1 October 2006 – determined at $13,800  Special Lease 37/49070 (RV2007/0491) as at 1 October 2006 – determined at $310,000  Special Lease 37/49070 combined with Permit to Occupy 37/4802 (AV2007/0492) as at 1 October 2006 – determined at $315,000. RP SCOTT MEMBER OF THE LAND COURT 4 As at a particular date. -- 6 of 6 --