Armstrong, Re [1994] QLC 23

LAND COURT BRISBANE. 3 JUNE, 1994 Re: Determination of - 1) unimproved value of land and 2) market value of the commercial timber on GHPL20/3563 (Goondiwindi District) for the purpose of the conversion of the tenure of the lease to a freehold tenure Lessees: WM & MG Armstrong D E C I S I O N An application for conversion of the lease of GHPL20/3563 Goondiwindi District to a freeholding tenure was received by the Minister on 29 February, 1992. Under the Land Act 1962 this date becomes the relevant date for the determination of the unimproved value of the land contained within the selection. The market value of any commercial timber on the property is required to be valued at the date of hearing. As the lessees did not accept the determinations of the Minister, the matter has been referred to the Court. GHPL20/3563 is of Lot 7 on Plan PG360, Parish of Dockerill containing an area of 2698.748 hectares. The selection is situated about 87 kilometres north of Goondiwindi and comprises proportions of country consisting of brigalow, belah scrub, box country adjacent to the Weir River and a substantial proportion of bulloak and cypress pine forest country. The lessees purchased the selection in 1982 and in that year applied to freehold the lease. In 1987 the Court determined the unimproved value of the land and the market value of the commercial timber on the selection as follows:- a) land - $10 per hectare b) timber - $21,809 The market value of the commercial timber included timber with commercial potentiality. The lessees did not proceed with the application. For the purposes of the subject application made in 1992, land is valued by the [1994] QLC 23 -- 1 of 5 -- 2 Department at $40 per hectare and timber (including timber with commercial potential) is valued at $52,965. The lessees are of the opinion that the unimproved value of the land is of the order of $30 - $35 per hectare and that the value of timber should be something less than that assessed due to a number of factors including cost of extraction (whether a crossing of the Weir River could be used for the purpose), reliability of the assessment (by strip survey) and the incidence of seedling regrowth of cypress pine which it is believed will lengthen the period during which potential timber is expected to mature. The increase in regrowth is also given as a reason why the carrying capacity in the experience of the lessees has lightened off over the period of their ownership. Mr Armstrong, who appeared for himself and his wife, said that when they purchased the lease they expected to be able to run about 160 head of breeding cattle. At the present time the block carries 140 breeder cattle. Calves are taken off at 10 months of age and grown on the block with which this property is worked. The report on the selection was written by Mr NP Hunt, registered valuer in the employ of the department, and Manager, Land Services at Goondiwindi. He broke the block into:- 645 hectares (about 24%) brigalow, belah scrub 260 hectares (about 10%)useful box country adjacent to the Weir River; and 1793 hectares (about 66%)inferior forest country. In the opinion of Mr Armstrong, this classification is overstating the country. He prefers the classification made by former Land Commissioner, Mr Lynton, who analysed the sale of the land in 1982 and wrote the report for freeholding purposes made in that year. Mr Lynton classified the block into:- 565 hectares (about 21%)scrub 80 hectares (about 3%) merging scrub and box forest 2053 hectares (about 76%) forest country. It may be seen that the differences lie in emphasis only. Mr Hunt says that since 1982, district practices recognise a utility in developing scrub and forest. Mr Hunt sees the Weir River frontage country as possessing a value over and above the -- 2 of 5 -- 3 average value of the inferior forest country. I note that Mr Lynton assessed the carrying capacity at one sheep to 1.6 hectares whilst Mr Hunt has assigned a similar carrying capacity to the property with a cattle equivalent of one beast to 12 hectares. Mr Hunt accepted the increase in seedling regrowth. He is of the opinion that with a return to better seasons some control may be taken of regrowth by burning. Mr K Roach who provided the Court with the timber valuation was also of the opinion that burning could assist in controlling regrowth which in his appreciation was spreading out from the forest areas moreso than spreading within the forest. Mr Hunt's valuation was based on sales with a direct comparison made with two sales of land which comprise a mixture of scrub and forest country. He said that for scrub land in isolation values were of the order of $100 - $150 per hectare. Sale 2, being of two separate blocks known as "Avoca" and "Eightlea", comprises a total area of 2788.096 hectares and is situated about 21 kilometres east of the subject land. This property when sold realised on analysis of the sale by Mr Hunt a land value of $47.41 per hectare. The sale property is assessed as comprising 39% brigalow scrub, 9% gumtop box and 52% bulloak forest. Tha land has no artificial water nor availability of artesian supplies whereas the subject land has natural supplies in the Weir River and shares an artesian bore. The sale land, in having a greater percentage of brigalow country and less inferior forest has a better carrying capacity which is assessed at 1 sheep to 1.2 hectares. Sale 1 is of a property known as "Lindenvale" comprising an area of 2501.046 hectares and is situated about 70 kilometres south west of the subject land. This property comprises about 32% scrub fringe with the balance of the land being hard red box ironbark forest with yarran ridges. The land has a carrying capacity assessed at one sheep to 1.6 hectares and has no natural water. The sale reflected an unimproved value of $45.96 per hectare. In his comparisons, Mr Hunt says that the subject land is superior to Sale 1 and inferior to Sale 2. He says that he has not given full weight to Sale 1 as it appears to be a high sale. It would appear to me also that the sale appears to be slightly high when compared with the price realised for Sale 2. Mr Hunt said, and Mr Armstrong agreed, that regrowth is common -- 3 of 5 -- 4 within the forest areas of the district. Mr Armstrong also accepted that carrying capacity may vary with management and use. Whilst it is accepted that carrying capacity for this type of country may have lightened off to some extent, it may be accepted that other comparable properties within the district are similarly affected including the sale lands. Looking at the sales evidence, it is clear that Sale 2 is superior in country and but for other factors might lead to a conclusion that the higher of the estimates of value advanced by Mr Armstrong has some weight however the subject land has a distinct advantage in water supplies, it being supplied by natural water and a shared bore with two dams whereas the sale land is watered by eight earth tanks. In the circumstances, I am persuaded by the evidence of Mr Hunt to determine the land value in the sum recommended at $40 per hectare. When the market value of timber was last assessed (the 1987 determination) values were derived on a 100% count in certain areas and by strip survey in others. The volumes were as follows:- Type 1 (strip survey) 19 + 468.878 m3 Type 2 (100%) 19 + 1369.618 m3 1838.496 m3 Potential mill timber was assessed as follows:- "The present value of the lowest merchantable d.b.h.o.b. class, 20 cm, was determined. Growth rates were assumed as accurately as can be judged and the value of the 16 and 18 cm d.b.h.o.b. classes were determined by discounting the present value of the 20 cm d.b.h.o.b. class at a compound interest rate of 5% per annum, for the time taken for each smaller class to reach merchantable size. A further allowance was made for mortality to take into account deaths due to fire, drought, insect attack and to allow for defect." In that exercise trees were classified between those which were expected to reach maturity in ten years and those which were expected to reach maturity in twenty years. The count was as follows:- Type 1 - 20 years - 1602 trees - 10 years - 1838 trees Type 100% - 20 years - 2250 trees -- 4 of 5 -- 5 - 10 years - 3755 trees (after allowing for mortality losses of 15% for 20 years and 7% for 10 years). The valuation of the timber which is now before the Court, adopts (without argument) the volume previously valued of 1838.496 m3 of commercial timber and a similar count of potential trees valued and discounted as previously notwithstanding that trees given 10 years to mature in the previous assessment would now be close to maturity for milling purposes. Mr Roach had no doubts that the timber is marketable. I note that questions on allowances made in the discounting process were argued before the Court on the previous occasion and that the Court extensively dealt with the principles applying in the circumstances. I see no reason to repeat these principles. Mr Roach believed that with a return to better seasons and of more consistent rainfall regrowth may be controlled so as not to prejudice the maturing of pine. He said that commercial timber had been taken from the subject block in the 1970's using a crossing of the Weir River within the selection. Little work would be required in his opinion to make the crossing serviceable for a timber getter. He has no fears that the potential timber in the years to come will find a market without restriction or destruction. The whole of the evidence leads me to the conclusion that the assessment has been made in a fair and reasonable manner leaning, if anywhere, towards the lessees. Accordingly for the purpose of conversion of tenure of Grazing Homestead Perpetual Lease 20/3563 to freeholding tenure, the unimproved value of land comprised in the lease is determined at $40 per hectare. The market value of the commercial timber, the property of the Crown thereon, including timber with commercial potential is determined in the sum of $52,965. President of the Land Court -- 5 of 5 --