Allingham & Ors v Chief Executive, Department of Lands [1995] QLC 40

LAND COURT BRISBANE 26 May 1995 Re: Appeal against a rental valuation - Dalrymple Shire Council. RV94-0111. Adam J Allingham and Others v. Chief Executive, Department of Lands D E C I S I O N (Hearing at Charters Towers) This is an appeal against the rental value of $430,000 applied by the Chief Executive, Department of Lands, to "Southwick West" Pastoral Holding (11/578) in the parish of Allingham, containing an area of 21,393 hectares. The appellants contend that the valuation should be $200,000 on grounds going to - (1)the cost of rubber vine control; (2)the incompatibility of rental increases with the direction of the Land Care Movement and the individual cost to the grazier of land degradation and reclamation; and (3)the unrealistically high unimproved value applied by the Chief Executive when viewed in the light of stocking numbers and cattle sold. "Southwick West" is situated about 100 kms north-west of Charters Towers with access by 60 kms of bitumen and 40 kms of formed earth and gravel roads. The property may be described as comprising about 10% of fragmented open black basalt and alluvial creek flats timbered with narrowleaf ironbark bloodwood and ti-tree and the remainder of the holding, good red basalt forest timbered with narrowleaf ironbark bloodwood and ghost gum. The flats along Lion Creek are heavily infested with rubber vine. This weed pest is also prevalent along part of the Great Basalt Wall which forms the southern boundary of the holding. Permanent water is available in Fletcher Creek and holes in Talavera Creek. Artificial waters consist of 12 bores. The property is suitable for breeding and fattening beef cattle. Mr RJ Allingham appeared on behalf of the lessees, whilst Mr M McDougall, registered valuer in the employ of the Department of Lands, spoke to the valuation he wrote on behalf of the Chief Executive. Between these gentlemen it is agreed that the [1995] QLC 40 -- 1 of 4 -- 2 holding in an average season or as Mr Allingham would say would reasonably be expected to carry most of the time about 1900 head or 1 beast to 11 hectares. They also agreed that the district has been in drought and that woody weeds are prevalent throughout the Shire. The approach taken by Mr Allingham to the assessment of the rental value was firstly by a method of capitalising at 2% the rent payable on the holding under the Carter Inquiry recommendations. This yielded a sum of about $240,000. From that sum, using expenditure on controlling rubber vine (about 12.5% of income) he formed the opinion that an allowance of 17% would be reasonable to apply as a recompense in rental form for controlling this problem and thus arrived at a sum of $200,000. Secondly, his advices and enquiries came up with an estimate that improved breeding country was worth between $300 and $350 per beast whilst fattening country was worth $450 to $600 per beast - with a norm, say, of $500. By using the carrying capacity of 1 beast to 10 hectares which was previously applied by the Department he arrived at an improved value of the holding of $1,069,500 which, after allowing $867,418 for improvements, left an unimproved value of about $202,000. In his evidence he addressed the provisions of the Land Act 1962 (s.242) dealing with principles formerly applicable in the assessment of rent and spoke about the change that has occurred in the country since the Allingham family settled in the area well over 100 years ago. These issues included the introduction, over time, of weed pests such as rubber vine and the increase in the growth of saplings on the subject property. Under the former provisions of the Act which, as a matter of law, are no longer relevant, the physical state and condition of the land at the date of the commencement of the existing lease was a relevant consideration in ascertaining value. Under the present legislative process the Valuation of Land Act 1944 in s.15 provides that the value to be used to determine rent under the Land Act "is the unimproved value under this Act". In s.3 of that Act, unimproved value in relation to improved land is the "capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist." Of this sort of provision, the Privy Council has said: "Now, what he (the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken not only as non-existent, but as if they never had existed.... What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvement, what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression 'prairie value'. The land must be taken as it exists at the date of valuation." -- 2 of 4 -- 3 (Toohey's Ltd v. The Valuer-General (1925) A.C. 439 P.C.) In the subject case, the most recently made valuation for rental purposes was that made under the Valuation of Land Act as at 31 March 1992. In ascertaining that value the land, according to Toohey's case, must be taken as it exists at that date. The application of the test is evident in the approach to the valuation taken by Mr McDougall - (a)it would appear on the evidence of Mr Allingham that the carrying capacity has been lightened; (b)the influence of rubber vine in the absence of evidence to the contrary can be taken as being reflected in the price paid for the sale lands; and (c)likewise in respect of profitability or potential profitability. This last aspect is one which caused Mr Allingham some concern for he reasons, and Mr McDougall agrees, that profitability on prices paid can be of the order of 3% or less. For example, Mr Allingham contends that "Greenvale" holding (a sale used by Mr McDougall) is breeding country only and is not worth the price paid. Nevertheless, he freely and sensibly admitted that were "Southwick West" to be sold, it would be priced to the market prevailing at the time the property was put to sale. Mr McDougall put sales of three properties before the Court. "Greenvale" which has an area of 24,970 hectares of forest country with 22% inaccessible range sold in June 1989 for a value reflecting on analysis $13.90/ha and again in May 1990 for a value shown on analysis of $15.60/ha ($925,000 improved). This property is seen by Mr McDougall as a property which is significantly inferior to the subject property. "Mt Oweenee" which contains 40,400 hectares sold in April 1993 for $900,000 and reflected on analysis of the sale an unimproved value of $7.10/ha. This property is also a forest block with an area of about 20% of inaccessible ranges. The property is also seen by Mr McDougall as being considerably inferior to "Southwick West". The third sale is of "Cargoon" holding containing 56,600 hectares of which about 33% is good red and black basalt country and the balance forest. The holding sold in December 1992 for $1,540,000 and reflected an unimproved value of $8.90/ha. On a country to country comparison it is inferior to the subject land - being a mixture of basalt and forest country, inferior in quality and carrying capacity to "Southwick West". Mr Allingham, although knowing of the sale lands, could not compare them with the subject property other than as generally covered in his evidence when comparing beast area values between breeding country and fattening country. In the circumstances, I find that the analyses of the sales have not been proved wrong nor can I find anything in the evidence dealing with the subject property which -- 3 of 4 -- 4 would satisfy me that the sales have been incorrectly applied to the subject land. The evidence of both Mr McDougall and of Mr MJ Campbell, registered valuer in the Department, who gave evidence during the sittings is that woody weeds are prevalent throughout the shire and that the district has been in drought for some years. However, each said that nothing specific could be gleaned from the sales as to the effect weeds have on purchasers - it may be that the district is seen as one where the pest is regarded as common. Further I should say that under the former legislation governing the assessment of rents, the Land Appeal Court held as early as 1926 that drought (and as a logical extension thereof, woody weeds) should be considered only insofar as it is likely to affect the amount which experienced persons would be prepared to pay for similar land with similar problems. See Re: Wakefield Aggregation (1926-27) 11 CLLR 93. In commenting upon these principles, the former learned President of the Court, Mr WF Smith, in his Report on Sheep and Cattle Rental Standards 1970 and having noted that the effects of drought may vary from property to property within a district and between districts observed that "drought relief can be more efficiently and promptly dealt with by the Administration". In the circumstances of the subject case, I find that the valuation applied by the Chief Executive should be affirmed. Accordingly, the appeal is dismissed and the determination of the Chief Executive is affirmed. (DM White) President of the Land Court -- 4 of 4 --