Drinkwater, Re [1995] QLC 179

[1995] QLC 179 ... -· ... LAND COURT, BRISBANE 12 October 1995 Re: Application for Conversion of Tenure GHPL 32/1949, Monto District. Lessees: Russell D, Katherine V, James H, Marie S and Douglas G DRINKWATER (Hearing at Gayndah) DECISION The abovementioned lessees have applied under the provisions of section 139 of the Land Act 1962 for the conversion of Grazing Homestead Perpetual Lease No. 32/1949, Monto District, to fee-simple tenure. The relevant date of the application is 11 March 1988. As at that date the Crown assessed the unimproved value for conversion purposes at $31,200. The lessees have requested that the Land Court determine the unimproved value. Grazing Homestead Perpetual Lease No 32/1949 is in respect of the land contained in Lots 65 and 66 on Plan RW 203 in the Parish of Culcraigie, containing an area of 1048.946 hectares. However, the Crown report indicates that an area of about 808.946 hectares is required for State Forest (Forestry Entitlement Area) purposes. This leaves two separate areas on the north-west and the south-west of the lease, comprising about 85 hectares and 155 hectares respectively, totalling about 240 hectares, as the area which may be freeholded. The land is situated approximately 22 kms north of Eidsvold, with access by means of 20 kms of bitumen sealed road and 2 kms of formed gravel road. It is used for the purpose of grazing beef cattle. A report tendered by the Crown describes the north-eastern severance as comprising about 85 hectares of undulating brigalow and softwood scrub country with forest fringes. It states that the scrub is fully developed in mainly good condition, with only fair coverage of improved pasture. The southern severance is described as about 155 hectares of fair to good undulating forest country, with an area of good frontage country flanking the Noga -- 1 of 7 -- 2 River and areas of poor ridgy country in the eastern part. Timbers include narrowleaf ironbark, broadleaf ironbark, box, currajong, blue gum, spotted gum and gum top box. About 120 hectares of the forest has been rung over many years and is in mainly good condition. The southern severance has access to water in the Nogo River which is described as permanent. Mr RD Drinkwater, one of the lessees, appeared and gave evidence. Mr Drinkwater explained that the subject land is run in conjunction with adjoining land, which is all used for the grazing of beef cattle. Of the subject 240 hectares, he said that about 100 hectares in the north-western portion consisted of scrub, with the balance being ironbark, black spear grass country, in which it was difficult to establish improved pastures. He said that the scrub had been developed and that the lessees had spent about $12,000 on blade ploughing to try to get rid of the brigalow, but the suckers were coming back. Mr Drinkwater said that the area reserved as Forest Entitlement Area consisted of forest running to sandstone ridge country, with a patch of about 16 hectares of virgin scrub. He said that the whole area of 1049 hectares of the GHPL was run as one paddock in which the lessees ran 100 head of cows plus progeny. He estimated that the carrying capacity of the areas to be freeholded would be about 37 head in normal seasons. Mr Drinkwater went on to say that there is limited access to the river end of the block (the south-west severance) and that after rain, cattle were not able to be trucked from that area. He explained some of the disabilities of the land, saying that there was quite a lot of saltbush in the scrub country, which could not be controlled by spraying and had to be chipped by hand. In addition, there was an alarming amount of African box thorn spreading in the forest country which could only be controlled by means of cutting down the trees and poisoning the stumps. There was also a major outbreak of "mother of millions", or arsenic plant, in the river bed as well as burr seeds carried downstream every time there is a fresh in the river. Mr Drinkwater felt that the value of land is largely influenced by rainfall. He said that over the last 10-15 years there has been a marked decrease in rainfall which had severely decreased the carrying capacity and productivity throughout the area. Eidsvold district had seen a yearly average rainfall of 28 inches decline to -- 2 of 7 -- 3 approximately 23 inches over the last 15 years. He was of the opinion that the rainfall pattern had been adversely affected by the use of storm shattering rockets by citrus growers in the area. Although the Lands Department report indicates the subject land has permanent water in the Noga River, Mr Drinkwater said that the Noga River is not permanent. The subject land is situated below the wall of the Wuruma Dam, which, he said, was down to about 1% of its capacity, with no more water to be released until rains refill the dam. At the time of hearing there was some seepage, but Mr Drinkwater said that if it does not rain, by Christmas there will be no water for stock. He explained that when the dam is full, a flow of water is released to supply the Mundubbera Weir and others downstream. Although the subject land had no water allocation, it was entitled to use the water for stock and domestic purposes. Mr DG Drinkwater, another of the lessees, also gave evidence on this point. He said that the Wuruma Dam had been dry twice in 11 years, in 1983 and in 1994. He said that before the dam was constructed, in previous major droughts it was possible to sand trough the Noga River to obtain water. However, since the construction of the dam, the flow has been cut off and the catchment for their part of the river was much smaller, being confined to the area below the dam. Mr RD Drinkwater contended that the value of the land at the relevant date for conversion purposes should be $60 per hectare. He said that the unimproved value for the whole of the 1049 hectares of the GHPL was, at the relevant time, assessed under the Valuation of Land Act 1944, at $41,000 or approximately $39 per hectare. The balance of the family aggregation of 736.5 hectares, was valued at $47,500, or $64.50 per hectare. He described that land as comprising about one-third scrub, with the balance being undulating forest, with some sandstone country through it. He compared these per hectare values with the $130 per hectare applied to the subject lands for conversion purposes. Mr Drinkwater referred to two sales in the immediate vicinity of the subject land. He said that Portions 74 and 75, Parish of Culcraigie, with an area of approximately 2980 acres (approximately 1192 hectares) sold at about the relevant date for $80,000 improved. He also referred to the sale of Portion 42, Parish of Cynthia, of approximately 1000 acres (400 hectares) which recently sold for $40,000 -- 3 of 7 -- 4 and which had an unimproved value of $33,500. He pointed out that the unimproved values per hectare on both these properties was far below the $130 per hectare proposed by the Department for conversion purposes. However, he provided no further details. Mr Drinkwater also gave some examples of what he conside(ed to be sales of land to imprudent purchasers in the area. He said that such transactions leave a legacy of over-inflated rural land prices. However, this evidence was generalised and non-specific. Evidence for the Crown was given by Mr WJ Kearnan, a registered valuer employed by the Department of Lands. Mr Kearnan was not the valuer originally responsible for the assessment of unimproved value and had the difficult task of trying to defend the valuation which was made as at a date over seven years previously. Mr Kearnan had inspected the subject land and the sales. He said that as best he could, he agreed with the report. This was understandable as the previous valuer's report was made so long ago. The valuer's report described the land as consisting of 35% undulating brigalow and softwood scrub, and 65% fair to good undulating forest country with frontage to the Noga River. Mr Kearnan added that there was poorer ridgier country in the eastern part of the southern severance, timbered with ironbark, spotted gum and gum top box. The scrub has been developed while the forest country had been mostly rung. Mr Kearnan said that at the time of his inspection it appeared that the scrub country had been seeded with rhodes and buffel grass, but due to the prevailing dry conditions, it was hard to say how well established the pasture was. He accepted Mr Drinkwater's evidence that the pastures had greatly diminished. He considered that the highest and best use of the land was for breeding and limited fattening. The valuer's report described the Noga River as having permanent waterholes with other holes lasting most seasons. There was also one unequipped earth dam. The valuer noted that the supply was sufficient. As the basis for his valuation, the valuer had used two sales. Sale No. 1 is situated only 1½ kms south of the subject land and it comprises an area of 361 .308 hectares fronting the Burnett River, which contained permanent water. The sale land -- 4 of 7 -- 5 is described as containing 19% undulating brigalow and softwood scrub and 81% fair to good undulating forest with frontage to the river. The subject land was considered to be superior to this sale because of its greater percentage of scrub country. The quality of the scrub and forest was described as similar on both blocks. This property sold in June 1987 for $182,500 and was analysed to show an unimproved value of $42,191, or $116.77 per hectare. Sale No. 2 is situated approximately 36 kms south-east of the subject land and 49 kms north-west of Gayndah. It has an area of 250.1 hectares and sold in September 1987 for $80,000, which was analysed to show an unimproved value of $44,276, or $177.03 per hectare. The land is described as containing 51 % undulating to sloping softwood scrub, steep in places, with brigalow and forest fringes, 26% gently sloping and undulating forest and 23% poorer forest ridge. The subject land is considered to be inferior to the sale because of its smaller percentage of scrub, the better quality of the scrub on the sale and the fact that there is no permanent natural water on the sale property. The valuer's report comments that the value per hectare of the subject land should be greater than that of Sale No . 1, ., as the subject property is superior in country, while being similar in all other respects. However, it should be less per hectare than Sale No. 2 because, while the subject land is superior in situation, water and access, this is more than offset by the sale's superior country. Unfortunately, Mr Drinkwater did not know either of the two sales used by the Crown as a basis for the valuation. However, he did comment that the sale used from the Gayndah area was much more favourably located in terms of rainfall and that the DPI handbook indicated that the value of farming land at Eidsvold was about half that at Gayndah. He therefore felt that the sale at Gayndah should not be used as a basis. Mr Kearnan had investigated the background to both these sales and he considered that they were a proper basis of valuation as the purchasers were both prudent local graziers. He explained that in accordance with s.140(6A) of the Land Act 1962, the two areas of the subject land had been valued ignoring the fact of the severance. Mr Kearnan was understandably reluctant to compare the valuations made for -- 5 of 7 -- 6 conversion purposes with those applied to other lands for Valuation of Land Act purposes, especially as the relevant date was so long ago. Mr Kearnan knew of the two s~les referred to by Mr Drinkwater. However, as one sold in March 1980, and the other in October 1990, he had not investigated them. The relevant provisions of the Land Act 1962 provide that the unimproved value of the land shall be the amount that in the Court's opinion, experienced persons would be willing to pay for an estate in fee-simple in the land assuming that it was offered for sale on such reasonable terms and conditions as a bona fide seller would require. In circumstances such as the present, if part only of the land is to be valued by reason that another part is subject to a reservation which is a Forest Entitlement Area, the provisions of section 140(6A) require that the unimproved value be determined " ... without regard to any increase or decrease therein on account of severance of the holding or other cause arising from the existence of such reservation". Mr Kearnan is therefore correct in saying that the fact of the severance should not be taken into account. In this case the Crown has relied on two sales to support the unimproved value of $130 per hectare applied to the subject land. Sale No. 2 is situated some distance away and is superior. Sale No . 1 is close to the subject land and is similar in quality of country, although it is regarded as inferior as it has a smaller proportion of scrub than does the subject land. This sale shows $116.77 per hectare and has access to permanent water in the Burnett River. The subject land is also described as having permanent water in the Noga River. However, I accept the evidence of Mr Drinkwater, Snr, that even at the relevant date, the Nogo River could not be regarded as permanent. In addition, the Nogo River is at the extreme south-western end of the south-western severance, which means that maximum use of any water there involves costly pumping and piping. I have therefore reached the conclusion that although the subject land has a lesser proportion of scrub than Sale No . 1, it has a definite disadvantage in its access to natural water. The evidence does not disclose how much emphasis the valuer put -- 6 of 7 -- 7 on permanent natural water on the subject land. However, I intend to give any benefit of the doubt in this regard to the applicants. Therefore, I intend to make a further allowance of 10% for the water disadvantage and the general disabilities suffered by the subject land. This amounts to $28,080 which I will round off to $28,000. Accordingly, the unimproved value of the 240 hectares which was part of Grazing Homestead Perpetual Lease No 32/1949, Mento District, for the purposes of conversion of tenure is determined at Twenty-eight thousand dollars ($28,000). (JJ Trickett) Member of the Land Court -- 7 of 7 --