Bryant v Chief Executive, Department of Natural Resources [1997] QLC 9

LAND COURT BRISBANE 14 FEBRUARY 1997 Re: AV96-285 - An appeal against an unimproved valuation - Valuation of Land Act 1944 - Jondaryan Shire B.M. and P.J. Bryant v. Chief Executive, Department of Natural Resources (Hearing at Dalby) D E C I S I O N As at 1 January 1996, the Department of Natural Resources, as it now is, valued the Bryants’ property near Bowenville in the amount of $232,500. The property contains an area of 331.8 ha and is used primarily for agricultural pursuits with some grazing. Mr and Mrs Bryant had objected to an initial valuation at the relevant date of $260,000. The Department made the decision to reduce the valuation to $232,500 and it is against that amended valuation which the appeal to the Court refers. The appellants, and Mr Bryant is a registered valuer, estimate the unimproved value to be $187,500. It is Mr Bryant’s opinion, as a valuer, that unimproved values of land of the type existing in the particular locality of the subject have remained static since the appellants purchased the land. He had analysed that purchase price, as at 12 June 1992 to show an unimproved value of $193,850 or $584 per ha. The Department’s valuation at that time had been $187,500. Mr Bryant had analysed the sales of three other properties in the locality. The first in his schedule took place in January 1994 for $615,000 and, on his analysis, showed an overall unimproved value of $438 per ha, for a larger block in close proximity. As I understood his evidence, the Department’s valuation of that land at the date of sale was $197,500 or $500 per ha. His analysis provided support to his opinion that sale prices were at that date continuing at a low level. The second of the other sales took place in June 1993 and was of a property of 234 ha, 9 km to the south-east, but of land which he described as having a mixture of soils somewhat similar to the subject. It suffered some flooding disabilities including severance as did the subject land. He considered the sale property to be overall superior to the subject yet the unimproved value on his analysis, showed $433 per ha. [1997] QLC 9 -- 1 of 6 -- 2 The third sale was effected between the same parties as in the second sale and of land adjoining, but as at July 1995. It was fully arable land, 116 ha in area and, in his opinion considerably superior to the subject land. On his analysis that sale showed $682 per ha. Mr Bryant made reference to another sale of a property adjoining the subject, but in the subsequent valuation period. This sale in his opinion would “show a marked decrease in value”. More will be said of that sale later. Other matters which were referred to by Mr Bryant and considered relevant were: (a)The valuation appealed against disturbed previously existing relativity between the subject land and an adjoining property (Lot 110) of 350.8 ha. That adjoining land had previously been valued as superior on an overall hectarage basis ($590 compared to $565 for the subject). Both relevant date valuations had been subject to objection on common grounds yet the amended valuations resulted in the subject land becoming valued as superior on an overall basis (approximately $675 per ha for Lot 110 compared to approximately $700 per ha for the subject). (It should be said here that the evidence before the Court later was that the reduced valuation on the adjoining Lot 110 resulted from a reclassification of some arable land to the less valuable grazing land component). (b)The specific disabilities of the subject property in relation to flooding susceptibility over approximately 70% of its area. This flooding came from Lagoon and Oakey Creeks and was, in Mr Bryant’s opinion, a greater detriment than that experienced on adjoining and other Oakey Creek properties. He referred to the depth and fast-flowing nature of the floodwaters on the subject property which caused severe damage from scouring, debris deposition and weed infestation, as well as damage to fencing. The subject property is severed by several major flood channels and other secondary channels with consequent flood-related access, working and management difficulties. (c)The extent of inferior light and red soil types throughout the arable land and their effect on farm management and productivity. This detriment is exacerbated because strip cultivation is practised in an endeavour to mitigate against the effects of erosion. Mr B.R. Krause, a registered valuer employed by the Department, took responsibility for the valuation appealed against. As I understood his evidence he was not in attendance at the objection conference after which both the valuations of the subject land and the adjoining property (Lot 110 as referred to by Mr Bryant) were reduced. A disturbing aspect of this matter was that Mr Krause had never carried out an on-site inspection of the subject property - nor for that matter the adjoining Lot 110. His knowledge of the property had been gained from file notes compiled after an inspection by another valuer and from viewing aerial photography. It is appreciated that annual valuations cause workloads within -- 2 of 6 -- 3 the Department which do not permit regular individual property inspections and that aerial photography may be of significant assistance in identifying soil types. Nevertheless, when an individual valuation is challenged the Department and the responsible valuer must accept the consequences flowing from the lack of weight which can be given to opinions relative to factual matters capable of confirmation only from physical inspection. Furthermore, specific reference had been made to the nature of the land and its relative value in comparison with other lands, in the grounds of appeal. There seems little doubt that it would have been known to the respondent that the appellant in this matter not only had intimate knowledge of the property from physically working it, but was also a registered valuer. Important to the appellants’ case was the question of the extent of red and inferior soil type intrusion within the area of arable land. There is no dispute that there is an area of about 280 ha (the Department’s estimate being 281 ha) of arable land. Mr Bryant had calculated with some precision, by identifying the dark soil cultivation, that 58% of the total area of the property (ie 182 ha) comprised light red, brown and grey soil cultivation generally interspersed in layers throughout the total area of cultivation. Of that 182 ha he had previously estimated that 80 ha comprised lighter red and forest loams. Mr Krause’s adopted classification and valuation was as follows: 250 ha agricultural treeless plain @ $806/ha 31 ha agricultural red sandy clay land @ $687/ha 50.8 ha watercourse and creek frontage grazing @ $185/ha Mr Krause’s evidence, as I understood it, was that the 250 ha identified as “agricultural treeless plain” was intended to identify not specifically black soil plain but black soil with red and lighter soil intrusions, while the 31 ha of “red sandy clay land” was capable of specific identification. He said that the flooding disabilities of the land were well known to the Department. It was his opinion that the values applied to the various classifications were appropriate in comparison with the sales evidence and took into account, without specific quantification, the deleterious influence of the red and lighter soils in the first classification, the inferior quality of the red soil classification and the extent of flooding disability generally. Mr Krause’s valuation relied on three sales. He agreed that the flooding disability of the subject was greater in each case. Brief details of the sales are as follows: (1)Bazley to Kummerow - 445.6 ha - 10 October 1995 - $690,000 - analysed unimproved value $884/ha - all arable, black soil plain with patches of red country. Described as having superior black soil plain “with the red soil areas of varying quality being similar”. -- 3 of 6 -- 4 (2)Nuske to Hensel - 283.3 ha - 9 March 1994 - $400,000 - analysed unimproved value $964/ha - classified as 263.3 ha black soil treeless plain with areas of lighter red soil cultivation @ $944/ha; 20 ha creek frontage coolibah and box grazing @ $325/ha. The cultivation was described as being superior. “The property was on the market at $450,000 for 3-4 years before Mr Hensel purchased through private dealings with the vendor. Mr Hensel is from the adjoining property and knows the country type well.” (3)Manassa P/L to Hart - 453.6 ha - 4 July 1996 - $780,000 - analysed unimproved value $915/ha classified as - 373.6 ha black soil treeless plain @ $1,025/ha; 20 ha red loam agricultural soils at $375/ha; 40 ha treeless plain watercourse grazing @ $375/ha; 20 ha sloping creek frontage @ $285/ha. Described as superior quality land overall with irrigation potential. (This was the sale subsequent to the date of valuation to which Mr. Bryant had made earlier reference). Mr Krause had investigated the details of Mr Bryant’s third external sale and believed that, although the purchasers were adjoining owners, the vendors had been over anxious and the sale price did not represent fair market value. He agreed that Mr Bryant’s first sale represented fair market value for that land at the date of sale (January 1994) but believed the sale had supported the valuation which had then applied and that the market had improved in the period to the date of the subject valuation. It is observed that Mr Krause’s second (adjoining owner) sale took place shortly after in March 1994. He was confident that the unimproved value of the subject land had increased in the period from the date of its purchase by the appellants to the date of valuation and that similarly Mr Bryant’s second sale in June 1993 was too far removed from the date of valuation. Mr Bryant had not used Mr Krause’s second sale because he believed that the adjoining owner circumstances reflected an inflated price as evidenced by the sales he had investigated in that earlier period. He had provided the information represented by his third external sale because it was within the relevant valuation period. Although also to an adjoining owner it still, in his opinion, showed no increased level of value for land with a relatively high proportion of lighter and red soil cultivation. He had not, it seems, investigated the sale to the same extent as had Mr Krause. Mr Bryant challenged the analysis in Mr Krause’s third sale, particularly with regard to the added value of substantial water improvements. He saw that sale as having the potential to show on a proper analysis, a much lower level of unimproved value than had been analysed by Mr Krause. Regardless he saw that sale as being relevant to the subsequent valuation period. I accept that Mr Krause has closely considered the question of the added value of the water improvements on that sale property. There is however seen to be a problem with -- 4 of 6 -- 5 the date of the sale. It is, and has been held to be, acceptable to use evidence provided by sales after the relevant date of valuation provided it can be shown that market conditions had not changed in the intervening period (see McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at 16, Williams J). Mr Krause did not believe that there would have been any significant change in that interim period and took comfort from the fact that the sale supported the level of value which had been applied to the sale land at the earlier date. As I understood it, the root of the dispute is that the appellants say the level of value for arable black soil treeless plain may have increased since they purchased the subject property in 1992 but not the arable land which had a high content of red or inferior soil types. It seems to me that if Mr Krause is correct in suggesting that there has been an increasing level of value for arable land in the locality, then his Sale 3 would best be used as evidence of value subsequent to the relevant date but not at the relevant date. That leaves two of Mr Krause’s sales, one of which was to an adjoining owner at an earlier date and apparently at a level of value which would not have been supported by Mr Bryant’s second sale at about the same time. In the end result, it seems to me that if there has been an increasing level of value for primarily black soil arable land, that in itself would logically have had some enhancing influence on the arable component of the subject land. The subject land regardless of the red soil intrusions still has a significant black soil content. Mr Krause’s Sale 1 seems to me to give support to that conclusion. For reasons given earlier, I prefer Mr Bryant’s firsthand knowledge of the physical nature of the subject land to any opinion formed without physical inspection. In respect to the sales evidence, I am not persuaded that there has been no increase in the level of value for arable land in this locality since 1982. I accept that the valuation of the adjoining Lot 110 is not fundamentally wrong, having been based on that sales evidence. The Court was advised by Mr Krause that Lot 110 was valued by the Department after objection, as follows: 190 ha plain agricultural @ $785/ha 120 ha plain agricultural @ $670/ha 40.9 ha watercourse grazing @ $185/ha The overall valuation of Lot 110 is $677 per ha. Although the Court was informed by Mr Krause that historically the arable land on Lot 110 had been valued at a slightly lower level than on the subject property, I accept Mr Bryant’s evidence that the flooding disability is a more -- 5 of 6 -- 6 serious problem on the subject land than on Lot 110. Whether or not that has been expressed in the previous arable value relativity is unable to be shown. I propose to adopt an overall value for the subject property of $665 per ha rounded to a total valuation of $220,000. That amount may be seen to be obtained from a further rounding of the following classification of values: 200 ha agricultural treeless plain of mixed black soil and lighter soil intrusions @ $785/ha 80 ha agricultural lighter red soils @ $670/ha 51.8 ha watercourse and creek frontage grazing @ $185/ha The result is that the appeal is allowed, the valuation of the chief executive set aside and the unimproved value determined in the amount of $220,000. RE WENCK MEMBER OF THE LAND COURT -- 6 of 6 --