Albert v Chief Executive, Department of Lands [1995] QLC 164 (1994-1995) 15 QLCR 510

LAND COURT BRISBANE 21 December 1995 Re: Appeal against Rental Valuation Valuation of Land Act 1944 Shire of Broadsound. (RV94-213). Clive William Albert and Mary-Ann Albert v. Chief Executive, Department of Lands (Hearing at Clermont) D E C I S I O N Mr and Mrs Albert are the lessees of Grazing Homestead Perpetual Lease No 2294 with an area of 8037 hectares, known as "Mt Hillary". As at 31 March 1992, the respondent determined the unimproved value of that land for rental purposes at $300,000, or $37.50 per hectare. An objection against that valuation was disallowed and Mr and Mrs Albert have appealed to the Land Court against the respondent's decision on their objection, advising that in their opinion the unimproved value should be $100,000. The grounds of appeal are based on the nature and productivity of the subject land and the fact that it has been valued on the basis of sales which bear no relativity to it. "Mt Hillary" is situated approximately 75 kms east of Clermont, with access by approximately 11 kms of bitumen road with the balance being formed earth and gravel road. The access is not all weather and the road can be untrafficable in wet weather. Electricity and telephone services are connected to the property but it has no direct mail service. The property is used for breeding beef cattle. At the hearing, Mr MP Galvin, a registered valuer with the firm Turner Valuers, appeared and gave evidence on behalf of the owners. Mr Albert also gave evidence. Mr J O'Rourke, Director of Legal Services, Department of Lands, appeared for the respondent while valuation evidence was given by Mr OL Eisenmenger, a registered valuer employed by the Department of Lands. There was some disagreement about the classification and description of the country on "Mt Hillary". Mr Galvin's report stated: "The subject property comprises about 1,200 hectares (15%) level to gently undulating open, black soil Coolibah forest heavily infested with parthenium; 5,200 hectares (65%) stony hills and ridges, moderately to thickly timbered with Bloodwood, Narrow Leafed Ironbark and some Spotted Gum, with some scarps; and 1,637 hectares (20%) steep stony [1995] QLC 164 -- 1 of 7 -- 2 to rocky sandstone ridges thickly timbered with Lancewood and Wattle. " Mr Eisenmenger saw the property somewhat differently. Under the heading "Nature of Land", his report stated: "About 5000 hectares (62%) comprises some small patches of open black soil Mountain Coolibah country through to moderately timbered slopes, timbered with Mountain Coolibah Bloodwood and Silverleaved ironbark. About 2337 hectares (29%) comprises stony forest ridges and in parts steep hills to mountain, mainly timbered with narrow and silverleaved ironbark, bloodwood, box, wattle and mountain coolibah. About 700 hectares (9%) is inferior forest ridge to mountain timbered with lancewood, some ironbark and wattle. " From these descriptions, it would seem that the valuers were describing different properties. However, they both agreed that from a valuer's perspective the property is very difficult to fully inspect. Mr Albert, who said that the country is so rough it must be worked either by a horse or on foot, has a much better knowledge than either of the valuers. He and his wife have owned the property for some 15 years. Mr Albert added another dimension to the description of "Mt Hillary". His oral evidence about the country on "Mt Hillary" is worth quoting in some detail: "There's a mixture of country. It's situated right on the top of the Peak Range at the intersection of the Peak and the Denham Ranges. It's high, stony country, very hilly country, mountainous terrain. There's an area of virtually useless country largely sandstone outcrops and steep gorges, timbered with lancewood and wattle.The remainder of the country is a stony, black soil, coolibah, bloodwood type country, once again intersected with high mountainous ridges, extremely sharp gullies, a very small area of semi open black soil downs that follow up the valleys of three major creeks that run through the place. These semi open areas of what we refer to as our better country, are severely infested with parthenium. .... Largely the place is all hills, stony hills. I would estimate that a good 60 per cent or better of the place would be high mountain ranges. The actual unusable section of the country would be 15 per cent to 20 per cent of sandstone outcrops and timbered ... with lancewood and wattle. Some of it hasn't got a lot of timber on it in that section but it is very high country that's impossible to fence. We haven't even been able to fence it. There'd be a small area which is only a very small area of creek flats that follow the three major watercourses that lead out of the place. Since we're right on top of the range, all the water runs out of our place. We don't have any water at all running into the place. We're right on the top of the watershed. I'd estimate that those small areas of country would possibly be less than 20 per cent of the entire aggregation. " Later, Mr Albert amended the area of better open country to about 10%. -- 2 of 7 -- 3 These small areas are not contiguous and are broken by gullies and rougher, steeper country. Mr Eisenmenger estimated that the largest individual area might be no more than 50 acres. I found Mr Albert's evidence of the nature of the country and the extent of the various areas to be very helpful. I accept his evidence and, as will appear later in this judgment, I will use it to resolve the conflict between the evidence of the two valuers. Mr Albert also described the problem of finding suitable water on this high watershed country. He said there are 14 sub-artesian bores and one small dam on the property. Further bores have been drilled but they have been unsuccessful. Later in the evidence it emerged that during the dry period of the last few years, eight of these bores failed while the supply in the remainder has diminished. Mr Albert explained that it is particularly difficult to supplement the bore water supply with dams, as the country is not suitable for dams as they leak, the black soil being so shallow with basalt immediately below the surface. In addition, the country is so steep that it is difficult to find a decent catchment for a dam. Mr Albert gave evidence about the country and various attributes of the neighbouring properties, "Calderwood", "Fletchers Awl", "Cluen", "Mt Donald", "Morbridge" and "Bellview". He considered each of these properties to be superior to "Mt Hillary". During the course of his evidence, Mr Albert was shown a map of "Mt Hillary", which had been prepared by Mr Eisenmenger with the assistance of aerial photography. He commented that the plan showed only the tops of ranges, but did not show the ridges falling away from the tops. That country was also mainly high, steep, mountainous country, which had been in the 60% of the area which he had classified as high mountain ranges. He said the ridges fall away to the three major watercourses, Middle Creek, Campbell Creek, and Wolfe Creek, where the country was more useable. However, the higher country grew little grass and had a low carrying capacity. Mr Albert also thought that Mr Eisenmenger had underestimated the extent of the unavailable country. He said that it was very hard to distinguish from an aerial photograph, as some of the higher country did not grow any timber. The lancewood country delineated on Mr Eisenmenger's sketch did not, in his opinion, cover the full extent of the unavailable country. He indicated on the map the area which was fenced out. The carrying capacity of "Mt Hillary", according to Mr Albert, was 740 head on a year-to-year basis. He said the country is suitable only for breeding. They sold store steers straight from their mothers at about eight months old. He said that these cattle were mainly carried on the better 20% of the country which consisted of the small creek flats and lower slopes. He said there was a problem in selling store steers from parthenium country, as buyers were concerned that they were likely to infest other -- 3 of 7 -- 4 country. Mr Galvin had inspected part or all of the adjoining properties and gave evidence as to the nature of those properties and the valuations applied by the respondent to them. He came to the conclusion that the valuation of "Mt Hillary" was badly out of relativity with the valuations applied to the other lands. Based on the valuations that had been applied to those properties, Mr Galvin considered that the subject land should be valued at $147,000, or $18.25 per hectare. His estimate of carrying capacity was 1 beast to 11 hectares, or 731 head. Mr Galvin felt that Mr Eisenmenger had over-estimated the capacity of the 5,000 hectares, or 62% of the country, as he had included the open black soil flats with the mountain coolibah, bloodwood and silverleaf ironbark slopes. His own estimate of the better country was 15%. Mr Galvin said that he could not find any sales in the vicinity of the subject land which were in any way relevant as a basis of valuation. He said that the only sale nearby was the sale of "Calderwood", which sold in February 1992, from Bassett to Garside for $1,050,000, or $247 per hectare. Both he and Mr Eisenmenger agreed that it was a high sale and no indication of the value of the subject land. While Mr Galvin had looked at the relativity of the valuation of "Mt Hillary" overall, compared with those of the other properties, Mr Eisenmenger had adopted a rate per hectare and what he considered to be an appropriate carrying capacity for each of the various classifications of the land on the property. He said that these rates per hectare and carrying capacities had been derived from sales of land over a period of years. He explained that the valuations in that part of the Broadsound Shire had not changed since the general revaluation in 1989. Mr Eisenmenger included with his valuation report a sales schedule incorporating nine sales which had occurred in the two year period leading up to the 1993 valuation. However, for various reasons, each one of these sales, with the exceptions of Sales Nos 7 and 8, he had rejected as sales upon which he felt he could not rely. He conceded that Sales Nos 7 and 8, which were situated some distance from the subject land, comprised quite different classes of country. Also included with Mr Eisenmenger's report was a schedule showing the various values that had been adopted for the various classes of country in the Broadsound Shire, west of the Connors Range. The relevant parts of the schedule of values are reproduced below: GRAZING DOWNS - Open stony downs cc 1-4.5 $115 per ha - Shaded mountain coolibah and blackwood downs cc 1-5 $100 per ha - Shaded downs cc 1-6 $ 80 per ha -- 4 of 7 -- 5 FRONTAGE COUNTRY - Flooded gum, coolibah cc 1-4.5 $115 per ha - Coolibah, bor cc 1-5 $100 per ha - Coolibah, brigalow channels cc 1-6 $ 80 per ha FOREST - Mountain coolibah slopes cc 1-7 $ 65 per ha - Box forest cc 1-8 $ 50 per ha - Ironbark and bloodwood forest cc 1-9 $ 40 per ha - Ironbark and bloodwood ridges cc 1-10 $ 32 per ha - Narrowleaf ironbark ridges cc 1-12 $ 22.50 per ha - Hard ridges to mountains cc 1-20 $ 6.50 per ha - Hard lancewood ridges to unavailable cc 1-30 $ 2.50 per ha Mr Eisenmenger's report showed how these values had been applied to the subject land. A similar approach was adopted in valuing the neighbouring properties and, presumably, all lands west of the Connors Range in Broadsound Shire. Mr Eisenmenger valued "Mt Hillary" as follows: 5000 ha cc 1-7 714 head @ $65/ha $325,000 2337 ha cc 1-30 78 head @ $2.50/ha $ 5,842 700 ha cc 1-40 17 head @ $1.50/ha $ 1,050 8037 ha cc 1-10 809 head $331,892 ALLOWANCES Access, Parthenium Perimeter - 10% $ 33,189 $298,703 or $37.16 per hectare ADOPT 8037 hectares @ $37.50 per hectare $300,000 In order to determine unimproved values in the manner used by Mr Eisenmenger, it is essential that an accurate classification of country on each property is made otherwise the final value will be distorted. A much preferable method would be by direct comparison with sales but, for this valuation, there were no directly comparable sales available. Mr Eisenmenger claimed that the values contained in the schedule are derived from sales. While no further explanation was given, neither was his statement proved to be false. Indeed, Mr Galvin did not challenge the level of values for any particular classification, as his case was based purely on relativity with other properties. Mr O'Rourke submitted that Mr Galvin's approach was not a proper method of arriving at the unimproved value of land. He submitted that the evidence derived from sales was preferable, and that Mr Eisenmenger had adopted that approach. -- 5 of 7 -- 6 Whatever the source of the schedule of values may be, Mr Eisenmenger certainly did not depend upon the analysis of sales to arrive at his valuation in this case. It was merely a continuation of valuations arrived at in 1989. The only use made of the sales evidence, specifically Sales 7 and 8, was to substantiate that there had been no increase in the market for particular types of land since the 1989 valuations were made. That is quite different to saying that Mr Eisenmenger's valuation was based upon sales. As I stated earlier in this judgment, in my opinion the only witness who could give a true appreciation of the country was Mr Albert. I think that the difference between his evidence and that of Mr Eisenmenger, demonstrated that instead of including the open creek flats country with the forest ridges, Mr Eisenmenger should have, as best he could, estimated the area of the open flats and applied an appropriate value to that area as a separate classification. I think that in the course of his evidence he recognised this. In addition, I feel that he has underestimated the unavailable country on this property. Mr Albert said that some of the country at the top of the range is not timbered and may not show up on aerial photographs. In any case, the area delineated by Mr Albert as being fenced out and not used is larger than that assessed by Mr Eisenmenger. Therefore, adopting the approach used by Mr Eisenmenger and the values set out on his schedule, but substituting the classifications and areas given by Mr Albert, I have calculated the valuation of "Mt Hillary" as follows: 800 ha (10%) broken downs or flats cc 1-4.5 or 178 hd @ $115/ha = $ 92,000 4200 ha (52%) forest ridges cc 1-9 or 467 hd @ $40/ha = $168,000 2000 ha (25%) hard ridges cc 1-30 or 67 hd @ $2.50/ha = $ 5,000 1037 ha (13%) unavailable or useless cc 1-50 or 21 hd @ $1.50/ha = $ 1,555 8037 ha cc 1-11 733 hd $266,555 ALLOWANCES 10% $ 26,655 TOTAL $239,900 or $29.85 per hectare Adopt 8037 hectares @ $30 per hectare = $241,110 Rounded to $240,000 It must be emphasised that this classification is based on my appreciation of the evidence presented in this case and is not meant to be a substitute for proper inspection and measurement of the areas contained in the subject land. If subsequent accurate measurement of various areas proves to be different, then they -- 6 of 7 -- 7 can be substituted in future valuations. However, this case must be decided on the evidence presented and that indicates clearly that the broad classification of country adopted by Mr Eisenmenger needed refining. Accordingly, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land for rental purposes is determined at the sum of Two hundred and forty thousand dollars ($240,000). (JJ Trickett) Member of the Land Court -- 7 of 7 --