Barrett v The Valuer-General [1991] QLC 246

Re: An appeal against a determination of the Valuer-General, Shire of Emerald - A V90-406. R.K Barrett v. The Valuer-General . (Hearing at Emerald) DECISION IAND COURT, BRISBANE. 24th May, ,i991-: This appeal is against a decision of the Valuer-General in disallowing an objection against the valuation of the unimproved value as at 31st March 1989, of land described as Lot 2 on CLM528 ("Mt Leura") and Lots 5 and 11 on CLM597 ("Mt Clifford"), Parish of Keilambete, County of Plantagenet. The total area of the aggregation is 6285 hectares and the unimproved value has been assessed in the sum of $128,000. The properties are located about 75 km west of Emerald with final access to "Mt Leura" by gravel road and by a formed track to "Mt Clifford". The properties do not adjoin, being separated by the property "Keilambete". Mr Barret contends for a valuation of $106,500 which is an increase of 25 % over the previous valuation, and attended the hearing to provide evidence in support of the appeal. His primary ground of appeal is that extensive mining (sapphires and gold) is carried out on the property. He lists the resultant disabilities as follows: 1. No control on mining lessees. 2. No restoration of the land is carried out. 3. Unless compensation is paid "up front", in practice, it is not paid at all. [1991] QLC 246 -- 1 of 9 -- 2 4. It is not possible in practice to prevent people ''wandering all over the land". 5. Open pits are left endangering cattle. 6. Fences are either left down or are ineffectively repaired after being opened for the access of machinery. 7. Dust and noise disabilities are associated with the mining activities. Mr Barrett tendered details of some fifteen mining applications which had related, to his knowledge, to the property immediately prior to the relevant date of valuation. He described the difficulties experienced in searching accurate information as to the position with mining applications and leases at any given time, due to the recording procedures adopted. However, the applications to which he referred were scattered throughout the property, covering an area which he calculated to be about 580 hectares. Mr Barrett tendered a number of photographs depicting some of the mining activities both past and present. It is his opinion that the valuations on "Mt Leura" and "Mt Clifford" were out of reasonable relativity with adjoining and nearby properties. It is the Valuer-General's valuation on the property "Keilambete", to which he drew particular reference, as it also is affected by mining activities. He says that a ·Lands Department assessment on "Mt Leura" and "Mt Gifford" in 1979 was based on carrying capacities of 1 beast to 11 hectares and 1 beast to 13 hectares respectively, but the Valuer-General, to his knowledge, adopted a capacity of 1 beast to 9 hectares overall. While he agrees that the subject property is carrying 1 beast to 9 hectares, he understands that a similar carrying capacity is adopted for "Keilambete", a property which he sees as having superior country and grazing potential. As an example, he says that "Mt Clifford" comprises mainly relief country and in his estimation, its overall carrying capacity per hectare would be about half that of "Keilambete". He has been informed that the subject valuation is the result of a discount of 10% having been made -- 2 of 9 -- 3 for the mining activities while he thought a discount of 30% had been allowed on "Keilambete". Under cross-examination, Mr Barrett agreed that the mining application. and lease activity on "Keilambete" might be "a slightly bigger problem" and was not aware that the overall valuation of that section of "Keilambete" within Emerald Shire included grazing rights over approximately 1300 hectares of designated mining area. He understood that the overall valuation of the Emerald Shire section of "Keilambete" was $10.50 per hectare compared with $20.30 per hectare on the subject aggregation. Reference was also made to the unimproved beast area values of $173 on "Whitdale" (1 beast to 11 hectares); $180 on "Silver Hills" (1 beast to 12 hectares); and $153 on "Argyll" (1 beast to 15 hectares), while before the discount for mining activity, the unimproved beast area value on the subject, adopting a carrying capacity of 1 beast to 9 hectares would be $202.50. Evidence for the Valuer-General was given by Mr K.I. Murray, registered valuer. Mr Murray was not the original valuer responsible for the valuation of the subject property, but had subsequently carried out an inspection and prepared the report before the Court, which included a detailed classification of land types as indicated on attached sketch plans of both "Mt Leura" and "Mt Clifford". Mr Murray's description of the aggregation is as follows: 260 hectares Blackbutt Brigalow ridges 960 hectares 3290 hectares Flats to low ridges Easy Broadleaf ridges 950 hectares Narrowleaf ironbark ridges 1255 hectares Poor rosewood ridges The property is used for beef cattle breeding with limited fattening. It is watered by bores and dams. -- 3 of 9 -- 4 Mr Murray explained that there was no one particular sale used as a direct comparison in arriving at the valuation. Rather, the basis had been set by application. of a 50% increase over the previous valuation for grazing lands in the Shire, such trend having been indicated after an inspection and analysis of sales of grazing properties generally across the Central Highlands. The previous relativity had not been disturbed. Apart from the need for ~xplanation of some of the valuations of adjoining properties, Mr Murray agreed that the information provided by Mr Barrett was broadly correct. At the outset he agreed that strictly in comparison with the valuation applied to the property "Keilambete", the subject valuation would be too high even though the level of value of that part of "Keilambete" within Emerald Shire was affected by the much larger size of the total holding (approx. 25000 hectares in both the Shires of Emerald and Peak Downs), together with the inclusion of a relatively large section of "designated mining areas" over which grazing rights were held. The base valuation of "Keilambete" of $15.67 per hectare, had been then discounted by 33 1/3 % (not 30% as Mr Barrett had thought) to reflect the extent of mining activities. Even so he saw the base value of $15.67 or $141.04 per unimproved beast area with a carrying capacity of 1 beast to 9 hectares for "Keilambete" as being out of relativity not only with the subject property, but all other grazing properties adjoining the subject property. In support of this, he provided the following comparisons: Subject - 6285 ha - 1 beast to 9 ha - value if no mining $22.66 per ha - beast area value $203.94 Silver Hills - 11553 ha - 1 beast to 12 ha - $15.00 per ha - beast area value $180.00 Whitdale - 4192 ha - 1 beast to 11 ha - $15.75 per ha - beast area value $173.25 Argyll Paddock - 10240 ha - 1 beast to 15 ha - $10.25 per ha - beast area value $153.75 -- 4 of 9 -- 5 Stanleys - 1450 ha - 1 beast to 7 ha - $3750 per ha - beast area value $262.50 Dam Paddock - 1149 ha - 1 beast to 7 ha - $37.50 per ha - beast area value $262.50 Gem Park - 2532 ha - 1 beast to 13 ha - $15.00 per ha - beast area value $195.00 Keilambete - 9468 ha - 1 beast to 9 ha - $15.67 per ha - beast area value $141.04 (before allowance for mining of 33 1/3 %) While there is no direct sales evidence before me the Valuation of Land Act of 1944 (as amended) provides that the valuation of the Valuer-General is to be deemed correct until proved wrong. Mr Murray for the Valuer-General says there is general evidence that the value of grazing land has risen by 50% in the period of review. Mr Barrett says the increase should not be greater than 25% when the mining disabilities and relativity between valuations is taken into account. For the purposes of determination of this matter, I accept the considered professional opinion of Mr Murray that base grazing values have risen by 50%. On relativity Mr Murray agrees with Mr Barrett that an incorrect comparison exists between the base value of "Keilambete" and the base value of the subject lands, but says that is because the valuation of "Keilambete" is wrong on overall relativity, not the valuation of the subject lands. The evidence provided by Mr Murray generally supports that opinion. There are however other matters to be considered and particularly the effect of the mining activity. Mr Murray again agrees with Mr Barrett that it is a most difficult task to establish the precise position with regard to mining lease applications on the various properties. He cannot assist the Court as to the actual position of mining leases or applications as at the relevant date of valuation but his investigations indicate that as at December, 1990, there were 5 leases covering areas of 76.5 hectares on the subject -- 5 of 9 -- 6 property, while on the area of "Keilambete" in Emerald Shire, not including the designated mining area, there were 37 leases covering 540 hectares. Mr Barrett, while fairly admitting that he had no way of checking that information, was of the opinion (from his own observations) that Mr Murray's information must have also included leases on the designated mining areas. Mr Murray is confident however that his information is correct and again I ,accept his evidence in this regard. There seems to be no disagreement between the parties that the mining activity has reduced in the locality in the period from the relevant date of this matter to the present time, and that such activity fluctuates with economic conditions as well as the price of sapphire and gold. Mr Murray feels, however, that it should be a reasonable assumption that the comparison of mining activity between "Keilambete" and the subject lands would fluctuate along similar trends and if the number of leases on "Keilambete" is presently significantly greater than the subject, then it is reasonable to expect the same position would have existed at the relevant date. Mr Barrett relies on his local experience to judge that comparison and admits that mining activity would be a greater problem on "Keilambete" but not to the extent of difference in disability as allowed by the Valuer-General. I have judicial knowledge from evidence placed before the Court in A.C.S. & B.N. Horn v. The Valuer-General (Reference: V89-299, Taroom Shire) that the Valuer-General has considered, in establishing "rule of thumb" discounts for the various mining activities or potential activities on grazing properties, evidence provided to the Mining Warden in Applications for Mining Lease Nos 2365 and 2366 - Clermont, by the objector to those applications that he had "purchased the subject property" (which I understand to be "Keilambete") "in 1984 at a 30% discount because of the gemstone mining operations on the property." It appears that since that time, a designated mining -- 6 of 9 -- 7 area over which grazing rights have been obtained has been included in the "Keilambete" valuation. A schedule of allowances for mining disabilities presented in. the Horn matter (supra) indicated reductions in valuations ranging from 20% (where a property has up to several hundred fossickers digging for sapphires with about 25% of the property severely affected) to 40% (where a property has several hundred fossickers digging for sapphires in conjunctjon with mechanical mining and over 50% of the property is severely affected). Now it is obviously necessary for uniformity purposes for the Valuer-General to establish criteria in maintaining reasonable relativity from property to property with varying mining disabilities. It seems realistic to expect that with grazing land such as the subject, knowledge of mineralisation and even minor mining activity would influence a prudent purchaser to seek some reduction in price, mainly due to the potential for disturbance to management and the grazing operation. It is also realistic to expect that as the level of mining activity or potential activity increases, the deleterious effect would also worsen. The interpretation of hard and fast valuation rules unsupported by market evidence is obviously difficult. For example, while properties may have similar level of mining activities, in terms of leases and leased areas, the location of such activity may be far more manageable on one if contained in a defined area, rather than if scattered throughout the whole of another property. It is the evidence of Mr Murray that as at December, 1990, there were 37 leases covering 540 hectares on "Keilambete" which also had grazing rights over a designated mining area, while at the same time there were 5 leases covering 76.5 hectares on the subject property. Mr Murray says that at the relevant date, even if there were fifteen leases or applications for leases over 580 hectares on the subject property, it is logical that a proportionately higher level of activity would have been experienced on -- 7 of 9 -- 8 "Keilambete", the valuation of which allowed the reduction of 33 1/3 % for the mining activity (now including the designated mining area). That allowance seems consistent with the owner's opinion of a 30% reduction in value at the time of his purchase. If this opinion was seen to be supported by comparison with values of equivalent grazing lands unaffected by mining activity, then it is seen as prudent for the Valuer-General to recognise that market evidence, as it appears has been done. The difficulty comes in the interpretation of that evidence when it is to be applied to valuations of other grazing properties with varying degrees of mining activity. It is reasonable that the main criterion of comparison will be the nature and significance of mining activity. The distribution of the mining activity on the subject properties is not isolated. Mr Barrett's evidence is that it is virtually impossible to distinguish between authorised and unauthorised entry and the level of activity is distributed throughout both holdings. I am led to the conclusion that the level of activity and potential activity is of a degree which would be interpreted by the market to be significant. On the evidence that level is not to the same degree as on "Keilambete" yet the impact on the market might reasonably be expected to be closer to the 30% reduction in value sought by the purchaser of "Keilambete" than has been allowed by the Valuer-General. The physical severance of "Mt Leura" and "Mt Clifford" by "Keilambete" might also be expected to exacerbate the security and management disabilities suffered by the subject aggregation. In the end result I find that there is no evidence to show that the base value of $22.66 per hectare as adopted by the Valuer-General is excessive for an area of 6285 hectares of grazing land as described by Mr Murray. I find however, that the allowance for the disabilities of mining activity should be increased from 10% to 20% to include the additional management disabilities caused by the severance of the aggregation. -- 8 of 9 -- 9 I will adopt an overall determination of $18 per hectare which results in a total for the 6285 hectares of $113,130 which will be rounded to $113,000. The appeal is allowed, the determination of the Valuer-General set aside, and the unimproved value of "Mt Leura" and "Mt Clifford" in amalgamation is determined in the sum of $113,000 as at the 31st March, 1989. (R.E. Wenck) Member for the Land Court. -- 9 of 9 --