Driscoll v Chief Executive, Department of Natural Resources [1997] QLC 146

LAND COURT BRISBANE 12 SEPTEMBER 1997 Re: AV96-576 An appeal against an unimproved valuation - Valuation of Land Act 1944 - Shire of Broadsound K.J. Driscoll v. Chief Executive, Department of Natural Resources (Hearing at Brisbane) D E C I S I O N Mr K.J. Driscoll is the owner of a grazing property known as "Iffley" situated about 73 km south of Nebo and about 163 km south-west of Mackay. The property contains an area of 25,665 ha and is described as Lot 1 on Plan KL159, Lot 11 on Plan KL135 and Lot 2 on Plan KL134, Parish of Coxendean, County of Killarney. As at 1 January 1996 the respondent chief executive assessed the unimproved value of the land in the amount of $1,100,000 but, on objection, reduced that amount to $1,000,000. Being dissatisfied with that decision an appeal was filed in the Court, the owner estimating the unimproved value to be $670,000. The grounds of appeal are as follows: "1. The Department did not base its increased valuation on any sales of comparable properties in the area. Properties sold to mining companies are not comparable sales. 2. The Department has not taken into account the continuing depressed price of large rural properties in the area and the State in general. 3. Increasing the value of a property because it has had no increase in valuation for a number of years is an incorrect method and principal (sic) of valuation. 4. The Department has not fully taken into account the unavailability of certain sections of the property for cattle grazing/breeding purposes due to large infestation of noxious weeds including parthenium. 5. Further it has underestimated the value of improvements on the land." At the hearing, Mr K Driscoll conducted his case and called one witness, his son, Mr M. Driscoll who is the general manager of the group of companies which operate eight cattle grazing [1997] QLC 146 -- 1 of 9 -- 2 properties throughout Queensland one of which is "Iffley". Mr Driscoll highlighted the following disadvantages of the property:  The property is severed by the Isaac River which is up to 300 metres wide with normally a dry bed. During any wet season it is impassable for long periods after floods for both stock and vehicles. A gravelled crossing was recently washed away in a major flood and the cost of its replacement was estimated to be about $30,000. It was expected that regular repairs/replacement would be required to any crossing, as a result of flood damage. Although there is a surveyed road to the western severance, which was said to comprise about one-third of the total property, that road is unformed and the Broadsound Shire Council has refused to construct the necessary access (at an estimated cost of $300,000) as the Council's policy is to provide and maintain only one access to any lot. When access is unavailable across the river, management of "Iffley" relies "on the good grace" of neighbours, for access, but that is nothing more than a verbal arrangement and not guaranteed. About 1,400 breeding cows were run on that section of the property.  The eastern severance was predominantly lighter country which is phosphorous deficient, requiring the provision of supplements to prevent bone chewing and potential botulism outbreaks. Leptospirosis is an endemic disease on "Iffley" (and in the general locality) and to improve the calving percentage, bi-annual as opposed to the normal annual vaccination is necessary with the consequent increased mustering and vaccine costs.  Dingoes and feral pigs are a significant problem.  White ants are prevalent and it is necessary for steel to be used rather than timber, in construction of improvements such as stockyards.  "Big-head" disease in horses results from grazing the buffel pastures and provision of specific pastures is required for the stock horses.  About 4,000 ha is heavily infested with parthenium.  Harrisia cactus is prevalent. Parkinsonia is so thick in places to be impenetrable and to require aerial rather than ground spraying for its control.  There is no permanent natural water.  Bore water (used for domestic purposes) is of extremely poor quality and corrosive, causing abnormal plumbing maintenance and replacement of pumping equipment, fittings and fixtures (including hot water systems). It was revealed during the hearing that Mr K. Driscoll had purchased "Iffley" in 1994. Mr M. Driscoll's evidence was that at the date of hearing the property was carrying 4,300 breeding cows. As I understood the evidence, significant development work had been carried -- 2 of 9 -- 3 out since the purchase. In his opinion, with further development of the melonholey brigalow country the carrying capacity in average seasons might be increased by up to 1,000 head. However, one of his concerns (and of relevance to the fifth ground of appeal) was the cost involved in developing the country and the difficulty then, for valuation purposes, in recognition of the true unimproved nature of country once developed. Respondent's Evidence Mr. O.L. Eisenmenger, registered valuer, took responsibility for the valuation appealed against. It was his verbal evidence that he had estimated the carrying capacity of "Iffley" to be 2,650 head as fully developed (which is 1 beast to approximately 9.7 ha overall). He suggested that his estimate was "very conservative". That would seem to be a reasonable comment, based on Mr Driscoll's evidence relative to the actual carrying capacity and its potential. In Mr Eisenmenger's tendered report, his description of "Iffley" under the heading "Nature of Land" was as follows: "About 5400 hectares (20%) of mixed brigalow, blackbutt, yellowwood and associated scrub which is mainly melonholed with regrowth hard to control and expensive to bladeplough. About 4188 hectares (16%) of better forest country associated with the Isaac River frontage comprising coolibah, Moreton Bay Ash, and Box flats. About 14877 (60%) of forest comprising box, ironbark, bloodwood, ti-tree, wattle and bull oak forest on sandy and in places spewey soils. About 1200 hectares (4%) of mountain. The property is served by the Isaac River and also the Annandale-Iffley road serves the property. In normal years the Isaac River contains some non-permanent waterholes and a sand riverbed from which water is drawn via sand spears. There is no permanent natural water on the property with water supplies being provided by sand spears in the Isaac River, bore (whose water is of poor quality) and numerous dams. Parthenium is a problem on the river country and is becoming more of a problem on the rest of the property. Harrisia Cactus and Parkinsonia are other plant pests with pigs from the river and dingoes from the mountain significant animal pests. The Isaac River severance is major disability associated with the property, as 6800 hectares of the property lies west of the Isaac River with no formed access apart from the property crossing built and maintained by the property owners. While there is gazetted access to this western area the access is not formed. The Annandale-Iffley road severance also creates a management problem in that the road is not fenced and the road is increasingly used by heavy vehicles as a short cut from Middlemount to Moranbah rather than an access road for local traffic as it was designed." -- 3 of 9 -- 4 While there was reference in the appellant's evidence to the access disability affecting about one-third of the total area, I accept Mr Eisenmenger's evidence that "6800 hectares lies west of the Isaac River". Basis of Valuation It was Mr Eisenmenger's evidence that the valuation of Broadsound Shire as at 1 January 1996, had been undertaken after "all property sales which were notified to the Department since the previous date of valuation 1.1.95 were inspected, investigated and analysed to establish a basis of valuation for the overall shire." Appeals relevant to 1 January 1996 valuations of grazing properties in both Nebo and Broadsound Shires were heard during the same (and this adjourned) sitting of the Court. These have been referred to as the Angus, Turner, Bell and Driscoll appeals. Evidence relating to sales of the properties "Chesterfield", "Daunia", "Mavis Downs", "Suttor Creek North" and "Rookwood" was received from various sources. In this matter no reference was made to the before-mentioned sales other than "Rookwood". The comments which appear in the other appeal decisions with regard to that sale are as follows: "Rookwood" The sale of this property became relevant to the Turner, Bell and Driscoll appeals. Mr Bein was the Department's valuer in Turner and Bell, while Mr Eisenmenger had taken responsibility for the Driscoll appeal. Mr Bein had offered the sale as primary evidence in Turner, but not in Bell. The sale was Mr Dodds' primary evidence in Bell. Mr Dodds analysed the sale to show an unimproved value of $61 per ha. He estimated the carrying capacity potential as 2,652 head, or 1 beast to 6.6 ha overall. That potential reflected an unimproved BAV of $403, or, on the basis as adopted by Mr Dodds, a BAV of $550 including the cost of clearing and pasture development, excluding water and fencing improvements. He classified the country as: 4,566 ha of frontage country (c/c 1 to 7). 7,000 ha of brigalow scrub (c/c 1 to 5). 6,000 ha of forest (c/c 1 to 10). It was Mr Bein's evidence that he had adopted the analysis of another valuer, but had inspected "Rookwood" prior to the appeal. The Department's analysis (which had been carried out by Mr Eisenmenger) showed an unimproved value of $65.20 per ha and the land was classified as follows: About 5,140 ha (29%) mixed brigalow, blackbutt, yellowwood and associated scrub. -- 4 of 9 -- 5 About 2,185 ha (12%) flooded mixed brigalow scrub and coolibah. About 9,110 ha (52%) mixed box, ironbark, bloodwood and Moreton Bay ash forest on mainly red sandy soils. About 1,132 ha (7%) hard forest ridges and tableland with rosewood and lancewood. In the Driscoll appeal, Mr Eisenmenger gave his opinion of the carrying capacity potential of "Rookwood" as being 1 beast to 7 ha or a rounded 2,500 head, but suggested that was a conservative estimate. In the document tendered through Mr Bein in the Angus and Turner appeals ("Sales Carrying Capacity and BAV") referred to earlier, the carrying capacity of "Rookwood" was shown as "1 to 8", but the total number of head as 2,500. The BAV was shown as $459 (unimproved) which is reasonably consistent with Mr Eisenmenger's evidence (1 beast to 7 ha - unimproved analysis of $65.20 per ha = BAV $456). In the Bell appeal, Mr Bein was quite specific in confirming his estimate of carrying capacity for "Rookwood". When discussing Mr Dodds' evidence he said - "I think his overall carrying capacity is 2,600 head - well we've assessed the Department's carrying capacity (as) roughly 2,200 head, so I think Mr Dodds is possibly a bit generous on some of the forest country ...". Then later - "just what the file says, it's historically been 1 to 8 right through or ever since they started bringing in the potential in the scrub country." Valuation Basis - "Iffley" Mr Eisenmenger, in his valuation report, included three sales in which he found support for the valuation appealed against. Those were of the property "Rookwood" as already mentioned, then "Connors Junction" of 5,255 ha which had sold to show an analysed unimproved value of $148 per ha and then "Norwich Park" near Dysart, of 6,317 ha, sold to show an analysed unimproved value of $55 per ha. After hearing Mr Eisenmenger's evidence, it was clear that his primary basis for the valuation of "Iffley" had been obtained from the sale of "Rookwood". Little is served by discussing his evidence regarding the other two sales except to say that having considered the totality of the sales evidence, Mr Eisenmenger was comfortable with his valuation of "Iffley". He readily admitted that there had been no sales of property which could be considered ideally comparable to "Iffley" at about the date of valuation. He did not agree with the suggestion put to him that the lack of comparable sales evidence at about that time was due to a lack of interest resulting from a decline in cattle prices. In his opinion the decline in cattle prices had accelerated significantly subsequent to the date of valuation. Although the sale of "Rookwood" had in fact occurred in September 1994, it had not been reported to the Department until early 1995. It had been decided to include it as a basis for the 1 -- 5 of 9 -- 6 January 1996 valuation, particularly for the larger properties. His investigation had disclosed the sale to be at arm's length and the purchaser to have been well informed. In comparison with "Iffley" he made the following comments: "The sale property has similar services as the subject. The sale property has a similar location with slightly superior access as it does not have any gravel road access. The sale has better water with permanent waterholes which can be reticulated. The sale property is superior in country with a larger percentage of scrub country and the forest country on the sale is of superior quality to the forest country on the subject. The sale does not suffer the severance created by the Isaac River and internal road which is on the subject. Overall the sale is superior." As already discussed, Mr Eisenmenger's estimate of the fully developed carrying capacity of "Rookwood" was given verbally as being 1 beast to 7 ha but he also suggested that estimate to be conservative. He believed that historical Departmental estimates might now be overly conservative due to the more efficient but expensive development techniques being employed, including blade ploughing. Mr M. Driscoll whose knowledge of "Rookwood" had been obtained from aerial observations, was not in a position to agree or disagree with Mr Eisenmenger's analysis of the sale. However, in his opinion, "Rookwood" was not comparable to "Iffley" due to the superior nature of the country overall, the permanent natural water and importantly "Rookwood" did not suffer the difficulties of access through the Isaac River severance as did "Iffley". It was Mr Eisenmenger's evidence that he had discussed the valuation of "Iffley" with Mr Driscoll and had been made aware of most of the problems associated with its management to which reference had been made in the evidence for the appellant. In Mr Eisenmenger's opinion, sufficient allowance had been made in the valuation for the disabilities and in particular the severance caused by the Isaac River. He was of the opinion that, apart from the severance factor, many of the problems to which reference had been made would be common, even if to a lesser degree to other properties in the district. Suitable underground water for stock or domestic use was not commonly available in the locality. Findings The evidence is that the unimproved value of "Iffley" had remained static in the amount of $670,000 from 1992 through to 1995 then increased eventually to the $1,000,000 appealed against. The thrust of the appellant's appeal is the lack of sales evidence in the period from 1 January 1995 to support the significant increase in value which had occurred in that period. It is true that the sale of "Rookwood", for example, may have been more relevant to the earlier valuation had the details been reported or at least known to the Department at that time. -- 6 of 9 -- 7 However, it is not the 1995 valuation which is relevant in this matter. It is understandable why a decision to increase significantly a valuation used for revenue-gathering purposes would cause concern. Aggrieved landholders are entitled to contest such a decision. However, under the Valuation of Land Act (s.56(2)), once having decided to institute an appeal, an appellant must state the grounds of the appeal "and the burden of proving any and every such ground shall be upon the owner". Proving a valuation to be wrong is not always an easy task, particularly in the absence of professional assistance. In this matter, in answer to the first ground of appeal, the Department's evidence is that "Rookwood", although superior, is capable of comparison and the sale, even if more relevant to the 1995 valuation, remained as evidence of value as at 1 January 1996. It had not been a sale to a mining company. The second ground of appeal refers to an unproved statement that there existed (at the date of valuation) a "continuing depressed price of large rural properties in the area and the State in general". An opinion had been offered by Mr Driscoll that declining cattle prices would logically result in depressed grazing land values. It was Mr Eisenmenger's opinion that the significant decline in cattle prices occurred subsequent to the date of valuation and it was his opinion that there was no "continuing" depressed sale prices of grazing properties evident at the date of valuation. If the appellant's opinion is supported by subsequent market evidence then that will become relevant to subsequent valuations. Nothing of assistance in the determination of this matter emerged from the evidence of Mr Driscoll and the submissions for the appellant that, subsequent to the date of valuation, an adjoining property to "Iffley" had been put to auction unsuccessfully, indeed without even attracting a bid. More relevant, may have been some cogent evidence from either party as to the sale to the appellant of the subject property in mid-1994. If the sale of "Rookwood" in September 1994 and, in other matters the sale of "Suttor Creek North" in January 1994, were seen to be evidence of value as at 1 January 1996, then the sale of "Iffley" fell within the same time frame. Mr Eisenmenger's explanation of the decision not to analyse the sale was that the property had been overcapitalised with domestic improvements and the sale price was further clouded by the inclusion of cattle in the contract price. Nevertheless, when there is a dearth of closely comparable sales evidence, an arm's length sale of the property subject of the valuation and appeal, even if its analysis was liable to dispute, would be expected to give some assistance to either the appellant or the respondent in support of their respective valuation opinions. -- 7 of 9 -- 8 I am satisfied on the evidence of Mr Eisenmenger that no basis exists for the allegation in Ground 3 of the appeal. I am also satisfied that Ground 4 of the appeal has not been proved and that the Department was aware of the nature of the country prior to development. (Ground 5). Mr Eisenmenger's evidence is that he arrived at a valuation o f $40 per ha for the subject land overall primarily by "direct comparison" with "Rookwood" to which land $60 per had been applied based on the analysis of its sale. In the Angus, Turner and Bell appeals the following comments were made: "There are inconsistencies in the Department's evidence which are seen to have some impact on the important aspect of comparison of the quality of the land contained within the sale properties as compared to the properties the valuations of which are subject of the various appeals. The carrying capacity potential of grazing properties with no arable content, is the logical criterion on which market considerations are based. It would be seen as the common denominator upon which cogent comparisons are possible. Clearly, the market would also be expected to recognise particular features both positive and negative with regard to individual properties, in that comparison process. The valuer's expertise comes from the ability to first compare like with like and then to identify those features of individual properties which would affect market value." Then in the Bell appeal was the following comment: "While the direct comparison approach is no doubt in response to wide criticism of the classification approach to valuations of grazing lands, particularly when there is no sales evidence available as to specific classifications of land, it is seen as an extraordinarily difficult task for grazing land of varying classifications, to be cogently compared, unless some common denominator, such as carrying capacity potential is introduced into the comparison process." As in the Bell appeal, it would seem in this matter that there must have been some methodology to assist in the process of direct comparison with the sales evidence. Mr Eisenmenger however made no reference to carrying capacity in his written evidence. If there was, other than a mental procedure, adopted, for example, in considering the severance factor, then such methodology was not exposed to the Court in support of the resultant valuation. Once the respondent has accepted the challenge to support a valuation, it is seen as reasonable that the Court be provided with some cogent explanation of the criteria fed into the process of "direct comparison" of properties which are arguably not "directly comparable". Nevertheless, it seems to me that had it not been for the severance issue, the valuation of "Iffley" might have been expected to be somewhat closer to the valuation applied to "Rookwood" based on the analysis of that sale, even after the superior features of that sale property are -- 8 of 9 -- 9 considered. I am satisfied therefore that the severance issue has been given weight of some significance for a valuation of $40 per ha to be applied to the subject land. Further conservatism is indicated by the rounding of that calculation to a total valuation of $1,000,000. It follows that I have not been convinced that the grounds of appeal have been proved or that the valuation appealed against has been shown to be wrong. The appeal is therefore dismissed and the determination of the chief executive affirmed. Another matter which needs to be formalised is a question of the costs of an adjournment of the hearing from Mackay where it was originally set down, to Brisbane. The application for the adjournment was made by the appellant and was granted on the basis that the respondent would be given leave to make application for costs of the adjournment. The cost of Mr Eisenmenger's return travel to Brisbane was proved to the appellant's satisfaction in the amount of $554. Counsel for the respondent made application for those costs accordingly. In the circumstances it is seen as reasonable that the respondent be reimbursed for those costs. The appellant is therefore ordered to pay to the respondent the sum of Five Hundred and Fifty-four Dollars ($554). RE WENCK MEMBER OF THE LAND COURT -- 9 of 9 --