Beale v Chief Executive, Department of Lands [1995] QLC 148

LAND COURT BRISBANE 27 OCTOBER 1995 Re: Appeal against Rental Valuation Valuation of Land Act 1944 Shire of Booringa (RV94-32) Peter Beale v. Chief Executive, Department of Lands (Hearing at Roma) D E C I S I O N Mr Peter Beale is the lessee of Grazing Homestead Perpetual Lease No 36/7643, described as Lot 1 on Plan BDR85, Parish of Billin, County of Bundara, containing an area of 15,168.398 hectares, known as "Billin". Under the provisions of the Valuation of Land Act 1944 the respondent assessed the unimproved value of that land as at 31 March 1992 at $255,000. Mr Beale objected against that valuation but the objection was disallowed. Mr Beale then appealed to the Land Court against that decision upon his objection, advising that in his opinion the unimproved value of the land should be $50,000. Mr Beale's grounds of appeal are that the improved value of the subject land is around $680,000 and the value of improvements effected on that land amounts to $939,000, considerably in excess of the improved value, making the unimproved land valueless. He also states that the location of the property and the access roads play a major part in determining its sale value. According to the report tendered on behalf of the respondent, the subject land is situated about 85 kilometres north of Mungallala with access by means of 14 kilometres of bitumen road, the balance being formed earth with some short stretches of gravel road. The basic business centre is Mitchell, which is some 46 kilometres east of Mungallala by means of the bitumen sealed Warrego Highway. Roma is 133 kilometres east of Mungallala by the same road. The report goes on to describe the land as consisting of about 1,210 hectares of mostly open heavy soil myall country, about 6,680 hectares of better box and box/sandalbox country, about 4,000 hectares of suckery brigalow, wilga and sandalbox country and about 3,278 hectares of light sandy, cypress pine, cabbage gum country and lighter shallow box, pine, oak, rocky country, located generally in the north-east, with a much smaller area in several patches in the south-west corner. The land is used for beef cattle grazing with the highest and best use considered to be [1995] QLC 148 -- 1 of 6 -- 2 breeding and fattening. The property is watered by five equipped bores, access to a stock route bore and eight unequipped dams. Mr Beale appeared and gave evidence. He explained that he drew "Billin" in 1959, improvements at that time comprising two bores, some fencing and some old ringbarking. Since then he had carried out comprehensive improvements to the property which, he said, at present-day cost totals $1,097,000. He estimated that the carrying capacity of the property at its present stage of development was 800 cows. He had been advised that properties in the area were selling at $1,000 per cow area and reasoned that the improved value of the property was $800,000. Therefore, he contended that the value of improvements exceeded the improved value of the property. However, he realised that the land must have some unimproved value and thought $50,000 would be reasonable. Mr Beale was concerned that the new guidelines for tree clearing will prevent much of the timber and regrowth on the property being cleared. He explained that up until 1956 regrowth was controlled by burning every year. However, the area burnt could not be burnt again for another five years, because the freshly burnt areas were worked by cattle and it took that length of time before it would again carry a fire. This meant that the whole of the country was burnt every five years in rotation. Mr Beale said that the timber in the box and pine country had become a lot bigger and a lot denser. Previously those areas were more open, because the body of grass resulted in very hot fires, as there was no stock to keep the grass down. Now, he said, the carrying capacity of the box and pine country had been substantially reduced because of the denser timber. According to Mr Beale, there is a delicate balance with the soil. If the grass is eaten out by overstocking, there is nothing to stop the water on the sides of the hills and the slopes so that it runs off and very little soaks in. Steady general rain is needed to re-establish the grass. He said that heavy stocking results in roly poly and salt weed after a few years, even following blade ploughing or offset ploughing and planting with silk sorghum and buffel. He contended that the Maranoa is very cold wintering country and the frosts are too severe for buffel grass. The frosts kill all the grass and the stock lose condition every winter. Mr Beale went on to say that it was difficult to make enough money from the property to improve it without some source of outside income. With the dry seasons and poor cattle prices all he could do was maintain existing improvements. He said that brigalow scrub pulled and planted to buffel grass deteriorates over about four years, even if no cattle are run on it. The buffel uses a large amount of nitrogen and he contends that there are only two ways of restoring nitrogen. One is by ploughing with offsets, planting buffel grass on the ridge country and letting the natural grasses come back on the heavier black soil country, ploughing the suckers again after six -- 2 of 6 -- 3 years. The second is to pull the suckers every 20 years, which could give six years of grazing, with the balance 14 years virtually non-productive. Mr Beale said that all the money made on the land goes into improvements and maintaining improvements, with social effects on families living below the poverty line. He referred to the difficulty of repaying bank loans when there are droughts and poor cattle prices. Even improvements effected do not always pay for themselves. He said that the QIDC had advised him that "Billin" was not viable in the long term, as costs will beat them eventually. He also referred to the isolation and poor access roads to the property, which adds to the cost of maintenance on vehicles. He contended that rates, rent, freight costs and the costs of running the property would deter any prospective purchaser. Mr Beale said that if the property was fully developed it would have a safe carrying capacity of 1,000 breeding cows, but he said this could only be achieved with exorbitant expenditure. While he generally agreed with the valuer's classification of country, he thought that there might be a little more brigalow than had been assessed in the description. Evidence for the respondent was given by Mr MD Redgen, a registered valuer employed by the Department of Lands. He had inspected the subject land and had prepared a report and valuation, including a plan of the property which he had drawn following his inspection and with the assistance of aerial photography. He had calculated the different areas of country by measuring them with a planimeter. Mr Redgen explained how he arrived at his valuation of $255,000. He said that the previous valuation made as at 31 March 1990 had been about $365,000. When making the present valuation he had only two sales of grazing land to refer to, the sales of "Attica" and "Curraweena". These two sales, combined with the evidence shown by sales in other adjoining shires, had indicated to him that the then existing valuations should be reduced by 30%. However, he said that the existing relativity was maintained. Mr Redgen readily conceded that neither of the sales is comparable with the subject land. However, his valuation was not based on a direct comparison with sales, rather a transposition of the results of sales to the previous values. Although Mr Redgen's approach to the valuation of the whole of the area is understandable from an administrative perspective, it is not an accepted method of valuation and it is necessary to examine the two sales that he has referred to to see if they provide a basis for his valuation. The property known as "Attica" is situated 106 kilometres north-east of Morven, somewhat to the north of "Billin" and with worse access. "Attica" has an area of 22,082 hectares and sold in November 1991 for $355,000. This sale was analysed to show an unimproved value of $62,808 and an unimproved value of $62,000 was -- 3 of 6 -- 4 applied as at 31 March 1992. The unimproved valuation as at 31 March 1990 was $88,000. Mr Redgen described the land as predominantly poor sandy forest with narrow water courses. He regards it as considerably inferior to the subject land. Mr Beale agreed that "Attica" is far inferior. He described it as just one big sandhill. He considered that the purchaser did not know what he was doing to pay $355,000 for it. He thought that "Attica" would carry 300 to 400 cows at the maximum, but he said that "Attica" did not carry the cattle, "they just existed there." Because it was all poor country, the cattle were always poor. However, Mr Redgen thought that "Attica" was a sale that could be relied on. He said that it had previously sold in 1990 for in excess of $450,000. He had interviewed the purchaser and his manager at the time he analysed the sale and although the purchaser came from the east, he had a knowledge of livestock and had investigated the market before purchasing. Mr Redgen found him to be well informed and he thought that he paid market value for "Attica" and, he said, subsequent sales have reinforced this view. Mr Redgen's second sale was that of a property known as "Curraweena" which is situated 38 kilometres north of Mitchell. This property, containing an area of only 4,259 hectares, sold in February 1992 for $200,000. The sale was analysed to show an unimproved value of $46,599 and an unimproved value of $42,000 was applied as at 31 March 1992. The valuation that had been applied as at 31 March 1990 was $60,000. Mr Redgen described this land as comprising 360 hectares (8%) open box, myall and plains, 240 hectares (6%) marginal scrub, 1,648 hectares (39%) variable sandy forest and 2,011 hectares (47%) very inferior light sandy forest. Being so close to Mitchell, the access to the property is superior to that of the subject land. Mr Redgen said that although comprising a similar mixture of country, hectare for hectare "Curraweena" was inferior to "Billin", as it contained a greater proportion of inferior country. However, Mr Beale did not accept that "Curraweena" was in any way useful as a comparison because, he said, it is situated almost in the suburbs. During the course of his evidence Mr Beale referred to a number of sales in the locality of the subject land that were purchased by the well-known identity, Mr Sinclair Hill. The latest of these sales was a property known as "Juandah Downs" which sold in 1989 for about $790,000. However, he said this was not a sale which could be relied on as he considered that the purchaser had paid too much for it. Mr Redgen agreed. He said that the sale of "Juandah Downs" had been investigated by the Department and was considered to be high. Mr Beale also referred to the sale of "Oakleigh" in April 1993 for $650,000. However, once again, he considered that the purchaser had paid too much for this property, as it was "all rubbish country". -- 4 of 6 -- 5 Mr Redgen said that the sale of "Oakleigh" occurred well after the date of valuation, too late to be useful as a basis for the 1992 valuation. He confirmed that it had been sold for $650,000 on 20 April 1993. It had analysed to show an unimproved value of $125,000 or $3.50 per hectare. This, he said, supported the 1992 level of values which was rewritten in the 1993 valuation. Mr Redgen regarded "Oakleigh" as a reasonable sale and it had been used as a basis for the 1993 valuation. I turn now to consider how this evidence should be applied in accordance with the provisions of the Act and the principles of valuation. Under the provisions of the Valuation of Land Act 1944 the burden of proving his grounds of appeal is upon the appellant. Mr Beale contended that the value of improvements on the subject land exceeded the price at which it would sell at the date of valuation. However, in arriving at his estimate of the value of improvements at a figure in excess of $1,000,000, Mr Beale has used the present-day cost of effecting such improvements and not the time-honoured valuation approach of cost less accrued depreciation. It is clear that if he had applied such an approach his value of improvements would be much less than $1,000,000. Mr Beale's estimate of the improved value of $800,000 is based on what he had been told by agents and valuers of the value per cow area of $1,000. He advanced no other evidence to support this estimate. However, it emerged during his cross-examination that Mr Beale has recently been offered far in excess of $800,000 for "Billin". Therefore, it would seem that Mr Beale's estimate of the improved value of the property could be far too conservative. On the other hand, Mr Redgen has approached the 1992 valuation on the basis of reducing all the 1990 valuations in the area by 30%. In support of this approach, he has provided details of the analyses of two sales at about the date of valuation. The sale of "Attica", somewhat larger than the subject land and vastly inferior to it, shows an unimproved value of $2.84 per hectare. The sale of "Curraweena", much smaller and better situated than the subject land and somewhat inferior to it, shows an unimproved value of $11 per hectare. During the course of his evidence, Mr Redgen gave details of the analysis of the sale of a property known as "Oakleigh". This property, which is in the vicinity of the subject land and also vastly inferior to it, analysed to show $3.50 per hectare. Although this sale took place over 12 months after the date of valuation, it is clear that there was little or no change in the market during that time. Although all three sales are inferior to the subject land,which has been valued at approximately $16.80 per hectare, there is no evidence has been given of any more appropriate sales. Nor has it been demonstrated that the valuation applied by Mr Redgen is incorrect. In other words, Mr Beale has not discharged the onus of -- 5 of 6 -- 6 proof, nor has he proved his grounds of appeal. In the circumstances, therefore, the appeal must fail. Accordingly, the appeal is dismissed and the unimproved value determined by the Chief Executive is affirmed at $255,000. JJ TRICKETT MEMBER OF THE LAND COURT -- 6 of 6 --