Besch & Ors v The Valuer-General [1991] QLC 287

Re: Appeals against determinations of the Valuer-General, Shire of Fitzroy. A V90-422, A V90-425 & A V90-439. I.A. & W,H, Besch and Others v. The Valuer-General (Hearing at Rockhampton) DECISION I.AND COURT, BRISBANE. 22nd March, 1991. As a result of the annual revaluation of the Shire of Fitzroy as at 31st March, 1989, 29 appeals were lodged by Rees R. and Sydney Jones, Solicitors of Rockhampton, on behalf of various landowners. The parties have agreed that selected cases should be heard by the Land Court. Three cases have been selected as being representative of the total group of appeals, and the parties are confident that the eventual outcome of these three cases will allow resolution of the balance. Consent was given accordingly for the balance cases to be adjourned pending the decisions in these matters. Details of the selected cases are as follows: (1) AV90-422 - I.A & W.H. Besch - property known as "Crosses" being Lot 1828 on Plan DT4041, Parish of Ultimo, County of Deas Thompson - 799.3 hectares. - Valuer-General's valuation $80,000 appellants estimate $45,500. (2) A V90-425 - W.H., E.D., A. & I.A. Besch - property known as 11 Eight Mile", being Lot 2184 on DS493, Lot 2081 on DT4060, Lot 210 on DT4088, Lot 211 on DT4092, Lot 27 on DT40111, Lots 31-32 on DT41121, Lot 1 on RP 606476 and Lot 1 on RP 609387, Parish of Ultimo, County of Deas Thompson - 954.4 hectares. - Valuer-General's valuation $114,000, appellants estimate $65,000. (3) AV90-439 - C.J. Kirk - property known as "Rackley" being Lots 1-13, 15-21, 27- 39 and 42-43 on RP 604295 and Lot 2 on Plan DT4066 and Special Lease 25636 Reserve 7 and RL 2247, Parish of Ultimo, County of Deas Thompson, 2587 hectares. - Valuer-General's valuation $350,0000, appellants estimate $245,000. [1991] QLC 287 -- 1 of 12 -- 2 The properties are located between 3.5 km and 9 km south-west of Bajool, which is about 35 km southerly of Rockhampton. Each property is used for the grazing of cattle and there is general agreement between the parties as to the grazing potential and carrying capacities. The areas of dispute are capable of identification firstly, of course, in the quantum of value; then the basic sales evidence to be used and its analysis, particularly with regard to value of timber treatment; and finally relativity of values between the individual properties. In terms of the differing opinions as to the values to be ascribed to timber treatment, the appellants called two witnesses being persons involved in local land development. Mr C.J. Huntly provided estimates which he said were representative of quotes which might be expected for the various phases of machine land development in coastal forest country. He uses large 320 hp machines charged out at $120 per hour each and estimates a cost range of $230 to $300 per hectare, depending on dead or green timber, for pulling, raking and burning, but not ploughing. Later evidence from the Valuer-General's valuer was that he had allowed $130 per hectare for the same operation in average density coastal forest country, and material was supplied indicating the research and investigation which had been carried out in arriving at that figure. Mr Huntly referred to an actual clearing job on Raglan Station which he had analysed and broken up into the staged operation, which he says is supportive of the estimates supplied. The Valuer-General's valuer has investigated the circumstances of the Raglan work and his evidence is that the clearing involved fairly to very heavy timber, with the cost escalated by a difficult raking operation, not representative of average density coastal forest clearing conditions. Mr V.T. Reynolds provided a statement containing various cost estimates for clearing operations which he suggests should be expected for -- 2 of 12 -- 3 the various appeal properties and one of the sales. While Mr Reynolds' experience or local knowledge is not questioned, his evidence was too general and broad in range to be of real assistance in these matters. Valuation evidence for the appellants was given by Mr J.C. Compton, a registered valuer in private practice and for the Valuer-General by Mr B.T. Coe a registered valuer now in the employ of the Department of Lands. Dealing with the individual properties, the evidence is as follows:- "Crosses". Mr ~.D. Leahy a local grazier with life time knowledge of the district attended on behalf of the owners. He said that neither this property or "Eight Mile" in the same family ownership were fattening properties and "Crosses" was used for cattle breeding. It had inferior access to "Eight Mile" and had no permanent natural water. Mr Compton and Mr Coe agree broadly as to the nature of the coastal forest country, the potential of the property and a carrying capacity of 1 beast to 4 hectares. Mr Compton describes its access as only fair and while Mr Coe in his report says access is good, he agreed under cross- examination that there were wet weather access problems. With regard to water, Mr Compton said there was one good small rock waterhole in the north-western part but the property relies for permanent supply on two equipped bores and a well together with a trough from a bore on an adjoining property. Mr Compton values "Crosses" at $80 per hectare, while Mr Coe's valuation under appeal is $100 per hectare. "Eight Mile". Mr Leahy pointed out that Eight Mile Creek, while used for stock-watering, had steep boggy banks and as a consequence the property was unsuitable for breeders and used for dry cattle. Floods were a major problem causing access difficulties and souring of pastures in the melonboley country on the flats. He made mention of the inferior country type with mineral deficiencies on the eastern side of the property. Mr Compton provided a detailed description of the country which be sees as a fair quality forest grazing block while Mr Coe's description is 75% gum, ironbark and box forest flats with melonboley influence in parts; 25% lighter sandy soil undulating narrow-leaf ironbark, titree forest with some ridge influence. Mr Compton confirmed Mr Leaby's evidence relative to -- 3 of 12 -- 4 usage of the property due to the boggy nature of the creek banks and Mr Coe agrees that while there is natural permanent water in Eight Mile Creek, parts are boggy. Both valuers have noted the encumbrance of a high voltage electricity transmission line easement. Mr Compton sees the melonholey nature of the flats, swampy in wet seasons and slow to respond in dry seasons, nut grass infestation, the mineral deficiency in the inferior country then presence of the electricity transmission line easement as well as registered silica mining leases as disabilities, but there is general agreement between the valuers as to the grazing potential of the property and a carrying capacity of 1 beast to 4 hectares. Mr Compton's valuation of "Eight Mile" is $90 per hectare and Mr Coe's $120 per hectare. "Rockley". Mr C.J. Kirk, the owner, said that the property was used mainly for breeding purposes, together with fattening of female cattle but was unsuitable for bullock fattening. Eight Mile Creek through the property was used for stock watering but here the banks were also steep and boggy and he did not consider it a good creek for watering of cattle. A dam had been constructed specifically to keep cattle away from the creek in dry seasons. He said that a bore on the property is pumped at 10,000 gallons per hour and was used to irrigate a bull paddock with improved pastures. He said that flooding caused both internal and external access problems and ponded water in the melonholey flats soured the natural pasture. Some erosion problems were experienced and die-back in blue gum stands had necessitated a replanting exercise. Mr Compton again provides a detailed description of the country and considers "Rackley" to be a good forest grazing block with a balance of black soil gum flats, part melonholey. He confirms that its present use is for the breeding of herd bulls and commercial cattle, with all male cattle sent to another family property, females being retained with cull cows and speyed heifers fattened. He estimates a carrying capacity of 1 beast to 3.2 hectares and stresses that it is not steer or bullock fattening country. He confirms that Eight Mile Creek is permanent on the northern end only and has difficult stock-watering access. Artificial water comprises the irrigation bore~ he says developed to 9000 gallons per hour for irrigation of 18 hectares of pasture, seven equipped stock bores and wells and three dams. He sees the disabilities of the property as being the -- 4 of 12 -- 5 flooded/swampy nature of the melonhole flats which are sour in wet seasons and which are becoming infested with nut grass, regrowth on the lighter soils and on the eastern side of the creek and erosion in black soil gullies. Mr Coe describes the property as comprising 51 % gum, moreton bay ash, box and narrow-leaf iron bark forest flats; 39% melonholey blue gum forest flats; 10% narrow-leaf iron bark, bloodwood and wattle easy sloping gravelly forest ridges. He agrees with Mr Compton's adoption of a carrying capacity of 1 beast to 3.2 hectares. Mr Compton's valuation is $110 per hectare. Mr Coe advised that the original revaluation of "Rockley" was $430,000 or approximately $165 per hectare but his investigations relative to these appeals led him to the conclusion that such a valuation was too high and he had amended the valuation to $135 per hectare. The Valuer-General's valuations rely on a basis provided by four sales, the details of which are as follows:- (1) "Kardinia", located approximately 24 km south-westerly of Mt Larcom, 603.6 hectares, sold July, 1988 for $160,000, analysed to show an unimproved value of $17,392 with an applied value of $17,000 or $28 per hectare. (2) "Bonley", located 5 km west of the Dalma School, 163.1 hectares, sold June, 1988 for $130,000, analysed to show an unimproved value of $30,092 with an applied value of $28,000 or $172 per hectare. (3) "Meura Plains", located adjacent to Rockhampton, 874.9 hectares, sold October 1988 for $940,000 analysed to show an unimproved value of $415,582 with an applied value of $390,000 or $445 per hectare. (4) "Wyalla", located 52 km south-west of Calliope in Calliope Shire, 2191.6 hectares sold July 1989 for $550,000 with terms favourable to the purchaser, analysed to show an unimproved value of $187,971 with an applied value of $140,000 or $64 per hectare. When it comes to specific comparison of the sales evidence with the individual appeal properties, the Valuer-General's basis is not convincing. The real basis for the revaluation was that the sales evidence generally had been interpreted to show a 75% increase over the previously adopted level of value. As is demonstrated with the reviewed valuation of "Rockley", critical to such basis is the correctness of the previous -- 5 of 12 -- 6 individual valuations. The need for the Valuer-General to take the factorised approach is understandable and no doubt practical in attending to regular bulk revaluations. The task before this Court is not however to consider the correctness of a previous level of value, but to determine on the evidence the unimproved value of the appeal properties at the relevant date, being mindful that under Section 13(7) of the Valuation of Land Act of 1944 (as amended) the Valuer-General's valuation is deemed to be correct until proved otherwise. Simply that the sales evidence provided to support the valuation is not seen as being of comp~able land is insufficient to prove the applied values are incorrect. No doubt with this in mind Mr Compton has adopted as a basis of valuation, sales of two properties "The Hut" and "Kelso", both near Marlborough which is some 100 km north-westerly of Rockhampton. "Kelso" is a property of 713.4 hectares which sold in February, 1989, for $550,000, analysed by Mr Compton for this hearing to show an unimproved value of $147.91 per hectare, and is superior in varying degree to each of the appeal blocks. "The Hut" of 2178 hectares sold in December, 1988, for $780,000, analysed by Mr Compton for this hearing to show an unimproved value of $97.90 per hectare. When comparing "Rackley" with "The Hut", Mr Compton states "The subject is superior than the sale in respect of location, description of country and carrying capacity, has comparable access, services and water but has inferior fattening potential. Overall the subject is superior than the sale." When supporting bis use of this sale, in a different locality, Mr Compton had this to say about "The Hut" again in comparison with "Rackley" - "comparable in most respects, first of all in size, in its description of country, availability of water" and that he believed it to be "as good a comparison that could be found in the central coastal region." -- 6 of 12 -- 7 Mr Coe, although not including the sale in his primary basis because of its distant location northerly of Rockhampton, has no difficulties, either, in making a cogent comparison between "The Hut" and "Rackley" although he sees "Roddey" as being superior country with superior water and significantly superior location. After becoming aware that "The Hut" formed the appellants' primary basis of valuation, Mr Coe provided an analysis of the sale showing an unimproved value of $111.57 per hectare. He feels that his application of $135 per hectare on "Rockley" is supported by this analysis. Now it happened that the sale of "The Hut" had figured prominently in a Land Court hearing before my learned colleague, Mr C.H. Carter, in the matter of W,J., M., & B.M, Rea v. The Valuer-General, in which both Mr Compton and Mr Coe had given evidence. In a decision banded down on 7th December, 1990, the question of the analysis of the sale, and particularly the value of the timber treatment component, was discussed at length. Originally Mr Compton bad valued the timber treatment at $264,400 and the Valuer-General at $156,360. Mr Carter said in his decision that he could not reconcile the differences in precise terms but felt that the added value of the timber treatment was around $200,000. Mr Carter commented that Mr Compton's allowance of $250 per hectare added value for pulling, raking and ploughing seemed an excessive rate to apply and that "Perhaps $200 per hectare is more reasonable". Both Mr Compton and Mr Coe bad attempted to analyse Mr Carter's allowance of $200,000 (which was obviously not intended to be precise) and both saw the necessity for review of the original analyses. Although he was prepared to adopt Mr Carter's comments relevant to the $200 per hectare for pulling, raking and ploughing on an added value basis, Mr Compton was unable on his classification of timber treatment, to reconcile the total $200,000 as -- 7 of 12 -- 8 suggested by Mr Carter. He reviewed his classifications and discussed the clearing costs further with contractors and finally allowed an amount of $236,300 before interest, as the added value of the timber treatment. Mr Coe also carried out some further investigations of timber treatment costs and tendered a series of various costs over a wide geographical area as part of the records of the now expanded Lands Department. He had come to the conclusion that the original assessment of the added value of the timber treatment was indeed too low and ·- Mr Carter's allowance was an accurate broad interpretation. He accepted the original Valuer-General's classification of timber treatment as being accurately measured, but increased the value to $195,720 before interest. He further agreed under cross- examination that it would be reasonable to increase the value of an area planted to improved pasture resulting in a value of $198,020, before interest. Mr Coe had found it prudent to also review the value ascribed to the structural improvements and by agreeing with Mr Compton's added value approach to some structures, reduces the total value of structural improvements, including interest from $193,024 to $181,216. "The Hut" is somewhat removed geographically from the subject appeal properties but I accept it as the best evidence of value before the Court particularly for the task of ascribing a value to "Rackley". An attempt at reconciling the remaining differences in the analyses of the respective valuers needs now to be made. Firstly Mr Compton has reviewed his classification of timber treatment and calculates an area of 650 hectares as having been pulled, raked and ploughed and it is on this area that he allows the $200 per hectare added value which he says accords with the suggestion of Mr Carter. Mr Compton is confident of his calculated area under this classification and says that it agrees with an analysis of a previous sale of the original "The Hut" property once put before the Land Court by a Lands Department Inspector in a conversion matter. Mr -- 8 of 12 -- I\ 9 Coe relies on the records of the Valuer-General (the valuer in the Rea matter said that the various areas of timber treatment had been calculated by use of a planimeter) and adopts a total area under plough of 495 hectares of which 115 hectares has been sown to improved pasture. I propose to adopt the Department's classification, which on the evidence, has been subjected to several inspections. Mr Coe accepts what he believes Mr Carter intended as the rost of bringing the land to the ploughed condition, as $200 per hectare, rather than its added value. He says that he should increase this amount to $220 per hectare to incl1:1de the cost of the seeding of the pasture, on the 115 hectares. The second difference of opinion then presents itself. Mr Coe is adamant that if land is ploughed to natural pasture, the ploughing operation should be seen as an item of maintenance in establishing a similar standard of development as fully effective pulling, raking and burning. He says the cost of this operation is, based on his more recent investigations for forest country of the s~e type and density of timber as "The Hut", $130 per hectare. Although he is aware that some ploughing is carried out in the Marlborough locality, in the renovation of natural pasture, he sees the ploughing operation to natural pasture as being above district standard. Mr Compton on the other hand is of the opinion that ploughing is becoming a more common local practice and sees that operation as adding further value, directly related to its cost, even when improved pasture is not being established. There is no evidence as to the attitude of the purchaser in this matter, but on the further evidence of Mr Coe that ploughing is now being carried out on old rung country, (as the area under discussion was) in renovation of natural pasture, I see some added value reasonably attaching to the ploughing operation in the eyes of a prudent purchaser. I am not convinced that the estimates provided by Mr Huntly have not been unduly influenced by actual costs of the operation on "Raglan Station" and I lean more to acceptance of the cost estimates provided by Mr -- 9 of 12 -- 10 Coe. While I appreciate that adoption of Mr Carter's allowance for timber treatment on "The Hut" would save further confusion in the Valuer-General's deliberations in the Shire of Livingstone, I am not bound by Mr Carter's decision, particularly as further evidence has been led before me. If I use Mr Compton's analysis, but adjust the timber treatment in line with Mr Coe's classification, then adopt $170 per hectare for that area ploughed to natural pasture, as an added value, rather than cost, the calculation becomes:- Timber Treatment: 115 hectares old rung, pulled, raked, burnt and ploughed to improved pasture @ $220 per hectare 380 hectares old rung, pulled, raked, burnt and ploughed to natural pasture @ $170 per hectare added value ($200 per hectare cost) 1030 ha old rung, pulled, raked and burnt @ $130 per hectare 80% effective 60 ha old rung, pulled and burnt @ $50 per hectare 80% effective 460 ha old rung, pulled and burnt @ $50 per hectare 60% effective Mr Compton's analysis would then result as follows:- Sale Price Less: Structures including interest Fencing including interest Water including interest Timber Treatment including interest Development Interest $163,081 70,764 42,106 238,806 28,407 Unimproved Value Equivalent to $108.74 per hectare. = $ 25,300 = $ 64,600 = $107,120 = $ 2,400 = $ 13,800 $213,220 $780,000 543,164 $236,836 -- 10 of 12 -- 11 Interestingly however, if the same adjustment is made to the added value of timber treatment in Mr Coe's analysis, an unimproved value of $103.55 per hectare results (due mainly to the higher value applied to the structural improvements). I will adopt an unimproved value of $105 per hectare as being shown by "The Hut" sale. Now, in its application to "Rackley", Mr Compton sees that property as being $10 per hectare or on his analysis 10% superior. Mr Coe sees the superiority of "Rackley" equivalent to 21 % or $23.43 per hectare on his analysis. Although Mr Coe did not use the sale as a qasis, the evidence leads me to the conclusion .that the superiority of "Roddey" in terms of value is closer to Mr Coe,s opinion than that of Mr Compton. I will adopt an application of $125 per hectare for "Roddey", rounded to a total valuation of $325,000. It remains then to consider the unimproved values to be determined for the properties "Crosses" and "Eight Mile". Mr Palmer, the appellants' legal representative, urges me to be guided by relativities which have become established as a result of previous Land Court and Land Appeal Court decisions. It seems, however, that the valuation of "Roddey" has not, at least in recent times, been contested in the Courts, while the valuations of both "Crosses" and "Eight Mile" have been. Indeed Mr Coe sees significant reductions in the valuations of both "Crosses" and "Eight Mile" resulting from Land Appeal Court judgments in connection with the 1981 revaluation, with no corresponding reduction applied to the uncontested valuation of "Rackley" as being a possible explanation for the valuation of "Rackley" being too high. He has used his professional opinion directed specifically to the question of relativity on a direct comparison basis and has reduced the valuation of "Rackley" accordingly. He has maintained the relativity, set by the Land Appeal Court in the 1981 matters, between "Crosses" and "Eight Mile". -- 11 of 12 -- 12 Having decided to reduce Mr Coe's valuation of "Rocl<ley" to $125 per hectare, I will broadly follow the relativity which he sees as correct but rounding values for practical reasons to $90 per hectare for "Crosses" and $110 per hectare for "Eight Mile". In summary my decision in these matters is as follows: A V90-422 - "Crosses" - the appeal is allowed, the valuation of the Valuer-General set aside and the unimproved value at the relevant date determined in the sum of $72,000. A V90-425 - "Eight Mile" - the appeal is allowed, the -valuation of the Valuer-General set aside and the unimproved value at the relevant date determined in the sum of $105,000. A V90-439 - "Rackley" - the appeal is allowed, the valuation of the Valuer-General set aside and the unimproved value at the relevant date determined in the sum of $325,000. (R.E. Wenck) Member of the Land Court. -- 12 of 12 --