Daniels & Ors v Chief Executive, Department of Natural Resources [1998] QLC 22

LAND COURT BRISBANE 20 February 1998 Re: Appeals against Annual Valuations - Valuation of Land Act 1944 - Shires of Cloncurry and Boulia. (AV96-623 and AV96-625). Jeffrey J Daniels and Vivian Daniels v. Chief Executive, Department of Natural Resources AND Jeffrey J Daniels, Vivian Daniels and Donald I MacMillan v. Chief Executive, Department of Natural Resources (Hearing at Mt Isa) D E C I S I O N These are appeals against the unimproved values determined by the respondent Chief Executive in respect of a grazing property in the Cloncurry District known as "Toolebuc". Toolebuc Pastoral Holding, described as Lot 346 on Plan PH 1950, in the Parishes of Balthar and Willsallen, has a total area of about 136,490 hectares. The area of "Toolebuc" in Cloncurry Shire is about 120,950 hectares, while the balance of about 15,540 hectares is situated in Boulia Shire and was referred to during the hearing as "the Bullock Paddock". As at 1 January 1996, the respondent Chief Executive determined the unimproved value of "Toolebuc" at $391,000, the area in Cloncurry Shire being valued at $335,000, while the Bullock Paddock was valued separately at $56,000. The owners objected against those valuations and as a result the valuation of "Toolebuc" was reduced to $368,000, the area in Cloncurry Shire being reduced to $315,000, while the Bullock Paddock was reduced to $53,000. Following advice of these decisions upon their objections, the owners appealed to the Land Court, advising that their estimate of the unimproved value was $325,000, apportioning the amount at $280,000 for the Cloncurry Shire land and $45,000 for the Bullock Paddock. At the hearing of the appeal, Mr JJ Daniels appeared and gave evidence on behalf of the owners, while the respondent was represented by Mrs T Johnson, of counsel. Valuation evidence on behalf of the respondent was given by Mr LR Croton, a registered valuer employed [1998] QLC 22 -- 1 of 7 -- 2 by the Department of Natural Resources. "Toolebuc" is situated approximately 240 kilometres south-east of Cloncurry, with access by sealed two directional road for 110 kms, the balance 130 kms being by means of the formed earth and gravel McKinlay-Boulia Road. Access is not all weather. In his written report Mr Croton described the Cloncurry Shire part of "Toolebuc" as comprising about 90,000 hectares (75%) of open mitchell grass pebbly downs, with coolibah channels along the Warburton channels and the Hamilton River and about 30,950 hectares (25%) of poor, gravelly to stony spinifex hills, with patches of open and fair flats. He assessed the carrying capacity of that area as 1 beast to 22 hectares, or 5,497 head. Mr Croton described the Bullock Paddock as comprising approximately 50% Hamilton River channels and the other 50% comprising mainly open mitchell and flinders grass downs, broken by a limestone ridge. He assessed the carrying capacity of the Bullock Paddock at 1 beast to 22 hectares, or 706 head. "Toolebuc" is watered by nine earth tanks, three dams and 15 bores. Holes in the Hamilton River last up to six months after average rainfall. Mr Daniels, who in addition to being a grazier, is also a stock and station agent, and real estate agent. He is not a registered valuer, but in his professional capacity he has made valuations for many years. Mr Daniels did not disagree with Mr Croton's description of the country. However, he disagreed with Mr Croton's assessment of the carrying capacity. He said that since acquiring "Toolebuc" in 1980, the lessees have not been able to run 5,000 head of cattle on the "Toolebuc" aggregation, which in addition to the subject land, includes the properties known as "El Rita" and "Beaudesert". In Mr Daniels' opinion, the carrying capacity of the Cloncurry part of "Toolebuc" is 1 beast to 50 hectares, or 2,419 head, while he thought that the Bullock Paddock would carry about 500 head. Mr Daniels went on to say that 1997 was the best year for rainfall since 1980 and would have given Mr Croton a false impression of the quality and quantity of feed. He said that for the total aggregation of about 640,000 acres, the carrying capacity in a good year might have been about 5,500 head. However, for most of the time since 1980, stock numbers have been down to about 4,000 head. He felt that the value of the Warburton and Hamilton River channels had been over-emphasized, as they are not as wide as the Diamantina and Gilliat channels. The channels on "Toolebuc" are close to the headwaters of the rivers, with a lot of bare country and scalded claypans. Further downstream from "Toolebuc" those channels spread out into much better country. Mr Daniels said that "Toolebuc" was regarded as light carrying sweet country, provided sufficient rain fell and at the right time of the year. Even with the present good season, Mr Daniels was concerned that if rain fell in winter and the weather turned cold, then what had been a good year could turn to a disastrous one. He said that has happened many times. -- 2 of 7 -- 3 Mr Daniels was concerned about the mining activity in the area. On the adjacent property, "Trepell", he said that BHP Minerals had established the largest silver and lead mine in the world. In a dewatering program, the company had been licensed to drill 19 water bores, 17 of which will be on "Toolebuc". He was concerned that the dewatering will result in the lowering of the water table. Although the mining company has agreed to compensate landowners for any additional pumping expense which might be incurred, it was a matter that he thought would greatly influence the price that a potential purchaser would pay for the property. As part of the mining project, power lines have been constructed through "Toolebuc" for approximately 30 kms. Mr Daniels said they are a danger to mustering helicopters. He went on to say that the mining project had added to the management costs of the property as the lessees have had to build a home and station complex in the area to monitor the movements of the employees of the mining company on "Toolebuc". Mr Croton said that in valuing "Toolebuc", in accordance with the provisions of the Valuation of Land Act, he had valued the whole property and then apportioned values between the Cloncurry and Boulia parts. When doing so, he had taken into account the overall situation and access of the property, the nature of land, water and any advantages or disadvantages in respect of the mining activity that was being carried on at the date of valuation. That mining activity was confined basically to the northern section of the property, which he considered to be the roughest country on "Toolebuc". Mr Croton arrived at the valuations for the property by analysing sales which have occurred in the area. In his opinion, the most comparable sale was "Strathelbiss", as it was in the same sort of rainfall area, consisted of some channels and some downs country, with a mixture of some harder ironstone ridges. "Strathelbiss" is a split property, so it does have working difficulties. Although it was the most comparable sale, it has a much smaller area, which Mr Croton said he had taken that into account when he was making comparisons with the subject land. "Strathelbiss" is situated about 18 kms north-east of Boulia, with access mostly by formed earth and gravel road, which is not all weather. Boulia is about 312 kms south of Mt Isa by sealed bitumen road. "Strathelbiss" has an area of 30,820 hectares and sold in July 1995, for $760,000. That sale analysed to show an unimproved value of $99,760, or $3.24 per hectare. As at 1 January 1996, the respondent applied an unimproved value to that land of $2.80 per hectare. Mr Croton described the nature of land on "Strathelbiss" as follows: "About 6400 ha (21%) Channels and flooded flats of Burke River, Mackandama, Limestone Creeks, Coolibah, gidyea, gum and some claypans; About 14000 ha (46%) Mitchell grass downs mixtures and gidyea creeks; About 5380ha (17%) hard ironstone pebble downs, some mitchell grass; And about 5040 ha (16%) stony ridges and broken gullies. " -- 3 of 7 -- 4 "Strathelbiss" is watered by eight equipped sub-artesian bores, one permanent waterhole and other waterholes lasting from six to nine months. Mr Croton estimated its carrying capacity as 1 beast to 25 hectares, or 1,233 head. "Toolebuc" was considered by Mr Croton to be superior on a per hectare basis to "Strathelbiss", due to its superior mixture of country and access to water. He said that was partly offset by the inferior situation of "Toolebuc", being further from an urban centre and its access, which was mainly formed earth and gravel roads, whereas "Strathelbiss" was only 18km from bitumen roads to Mt Isa and Winton. Mr Croton elaborated on the comparison in his oral evidence in these terms: "The country on 'Strathelbiss' suffers the same sort of problems as winter rain, its probably lighter carrying similar to the subject, it has channels which are probably not as good as the subject property. The channels on the Burke and other rivers consist of mainly loose country and have large claypan areas as does the subject property, as well through the channels, but overall "Strathelbiss" is a much smaller block and it is a split block and has major problems with access in the second part between the Burke River. There's considerable problems there during the wet in accessing that northern section. " In relation to carrying capacity, Mr Croton said that he arrived at the figure of 1 beast to 22 hectares by having regard to the previous findings of the Land Appeal Court and Land Court. Mr Daniels considered "Strathelbiss" to be an inappropriate basis for the valuation of "Toolebuc". It was so much smaller, situated only 18 kms from Boulia, a town serving a large pastoral area, with bitumen roads to Mt Isa and Winton. One of the purchasers was the Boulia publican and Mr Daniels seemed to consider that would have influenced the price. He thought the price was rather high, considering that 33% of the area was hard country. For the same reason he thought that Mr Croton's carrying capacity of "Strathelbiss" was overoptimistic at 1 beast to 25 hectares. He thought that it would be more like 1 beast to 30 hectares. Mr Croton considered the sale of "Strathelbiss" to be a prudent transaction. He had interviewed one of the purchasers, the publican from Boulia, and had satisfied himself that he was a prudent purchaser. The purchasers had looked at a number of other properties before purchasing "Strathelbiss", which they considered to be the best value for money at the time. Mr Croton's second sale was a property known as "Split Rock", situated about 140 kms north-west of Mt Isa and about 81 kms east of Camooweal. "Split Rock" has an area of 65,600 hectares and sold in June 1995 for $692,000. That sale analysed to show an unimproved value of $88,030, or $1.34 per hectare. As at 1 January 1996, the respondent had applied an -- 4 of 7 -- 5 unimproved value to that land of $1.06 per hectare. Access to "Split Rock" is by the bitumen sealed Barkly Highway. It comprises two pastoral holdings, Bagur Holding and Walkwalo Holding. Mr Croton described the nature of the land thus: "Bagur consists of downs country fronting Plain Creek, rising to level to gently undulating gidyea plains and frontage country adjoining creeks, to snappy gum open forest, with dense lancewood patches (particularly in the eastern sector) for the bulk. The north-western section consists of broken undulations, intersected by small gullies and watercourses with minimal frontage country and rocky/stony outcrops. Walkwalo comprises areas of undulating spinifex ridges broken by numerous gullies in the north and south western sections. The balance comprises small areas of plain, gidyea flats and broken gidyea along watercourses. " Mr Croton estimated the carrying capacity of "Split Rock" at 1 beast to 35 hectares, or 1,874 head. He regarded "Toolebuc" as far superior to "Split Rock". Mr Croton admitted that there had been other sales in the area at about the relevant date. They included "Lorna Downs", "Milkamundra" and "Wilgunya". However, he said that when he analysed them, for various reasons he had to discard them. There was some grass influence involved and other circumstances, which he did not specify, which made them show considerably higher figures than the sales which he had used and which he considered were truer indications of value. Mr Croton went on to say that even though "Split Rock" is closer to the Darwin markets, he had been advised that the owners would have to bring stock back to Mount Isa to obtain a certificate of clearance prior to going to Darwin. Therefore, it had no advantage in location. Mr Daniels considered the comparison with "Split Rock" to be completely inappropriate, because of its situation and type of country. In his opinion a carrying capacity of 1 beast to 40 hectares would be more appropriate than Mr Croton's carrying capacity of 1 beast to 35 hectares. Mr Daniels also raised the fact that "Toolebuc" was subject to a native title claim which he felt affected the market value of the property. However, he conceded that he could produce no sales to prove that opinion. In any case, Mr Croton said that the majority of claims in the area had been lodged since the date of valuation and Mr Daniels conceded that he thought the claim had been lodged since that date. In those circumstances, and particularly since the judgment of the High Court in The Wik Peoples v. The State of Queensland (1996) 187 C.L.R. which has caused so much concern in the pastoral areas of the State, was not delivered until December 1996, I cannot have regard -- 5 of 7 -- 6 to the possible effect of the native title claim upon the unimproved value. I turn now to consider the effect of evidence in these matters. The two sales presented by Mr Croton are far from ideal. They are so much smaller and comprise different types of country. "Split Rock" is situated so far away and is so inferior to "Toolebuc" that it is of little assistance as a basis for the valuation. That leaves the sale of "Strathelbiss". Even though it is so much smaller and better situated than "Toolebuc" it does comprise a mixture of downs country and harder country. Having regard to Mr Croton's description of "Toolebuc", I agree with him that it is a better mixture of country than "Strathelbiss", even if the quality of the channels has been somewhat over-estimated as alleged by Mr Daniels. However, Mr Croton considered that "Toolebuc" is inferior on a per hectare basis to "Strathelbiss" because of its situation, being further from an urban centre, its inferior access and because of its size. He reasoned that this is partly offset by the superior mixture of country on "Toolebuc" and the accessibility of dam sites. The issue of carrying capacity cannot be resolved on the evidence before me. Mr Croton admits that his carrying capacity of 1 beast to 22 hectares was based on the findings of the Land Court and Land Appeal Court in previous cases. However, Mr Daniels argued strongly that such carrying capacity was too high, contending that the owners had never been able to run 5,000 head on "Toolebuc". Those numbers could only be achieved on the whole aggregation which includes the properties "El Rita" and "Beaudesert". Therefore, I leave the matter of carrying capacity aside for the purposes of comparison. The other major part of Mr Daniels' case was the effect of the mining activity on the neighbouring property. That has resulted in a de-watering program which will result in the sinking of many bores on "Toolebuc" and the risk which this poses to the property's supplies. In addition, 30 kms of power lines have been constructed on "Toolebuc", as well as roads and pipelines. Mr Croton said that he had not taken those matters into consideration in arriving at the unimproved value of "Toolebuc", as they were events which had occurred after the date of valuation. Mr Daniels agreed, but said that at the date of valuation it was known that the mine would go ahead and that there would be likely disruption to the neighbouring properties. In his opinion that would have affected the price that a prudent purchaser would be prepared to pay. Having regard to the whole of the evidence, and particularly to the fact that Mr Croton was of the opinion that "Toolebuc" with an applied value overall of $2.70 per hectare was inferior to "Strathelbiss" with an applied value of $2.80 per hectare, and having regard to the fact that at the date of valuation a prudent purchaser would have been able to ascertain that a major mining venture was to take place on the adjoining property, I have come to the conclusion that a further allowance should be made. However, I have not attempted to assess the impact that the adjoining mining venture has had upon "Toolebuc" since the date of valuation. That is -- 6 of 7 -- 7 a matter to be ascertained at the date of the next valuation. I am satisfied that Mr Croton has adopted the correct approach in valuing the whole of "Toolebuc" and apportioning the value to the part in the Cloncurry Shire and to the part in the Boulia Shire. It is quite clear that the Bullock Paddock in Boulia Shire, apportioned at $3.41 per hectare, is much superior overall per hectare to the balance of "Toolebuc" in the Cloncurry Shire, apportioned at $2.60 per hectare. It is also clear that the Bullock Paddock is considerably superior per hectare to the sale property "Strathelbiss", which I accept is the most comparable sale. Although there was some argument about carrying capacity, there was really little argument about any other aspect of the valuation of the Bullock Paddock. After considering the whole of the evidence, I have come to the conclusion that the unimproved for that part of the property should not be disturbed. It is in respect of the part of "Toolebuc" in the Cloncurry Shire that I intend to give the owners the benefit of the doubts that have been raised. I have come to the conclusion that an appropriate rate per hectare for the Cloncurry part of "Toolebuc" as at 1 January 1996, is $2.50 per hectare. This amounts to (rounded) $302,300. Therefore, in respect of AV96-625, the valuation of the part of "Toolebuc" in the Boulia Shire, the appeal is dismissed an the unimproved value determined by the respondent Chief Executive as at 1 January 1996, at $53,000 is affirmed. In respect of AV96-623, the valuation of the part of "Toolebuc" in the Cloncurry Shire, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Three hundred and two thousand, three hundred dollars ($302,300). JJ Trickett President of the Land Court -- 7 of 7 --