Curtis v Department of Natural Resources and Mines [2006] QLC 13 (2006) 27 QLCR 35

LAND COURT OF QUEENSLAND CITATION: Curtis v Department of Natural Resources and Mines [2006] QLC 13 PARTIES: Richard Howe Curtis (appellant) v. Chief Executive, Department of Natural Resources and Mines (respondent) FILE NO.: AV2005/1036 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation DELIVERED ON: 29 March 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr JJ Trickett, President ORDER: The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Two Hundred Thousand Dollars ($200,000). CATCHWORDS: Unimproved value – Large parcel of land in Shire of Pine Rivers with no access – Land completely landlocked – Method of valuation – Possible methods of valuation – Analyses of sales - Valuation of Land Act 1944 APPEARANCES: Mr JH Curtis, for the appellant Mr K Fisher (Crown Law) for the respondent [1] This is an appeal by a landowner against the annual valuation applied by the respondent to his land situated in the Shire of Pine Rivers as at 1 October 2004. -- 1 of 10 -- 2 Background: [2] Mr RH Curtis is the owner of two adjoining parcels of land situated near Mount O'Reilly on the mountain range in the south-western part of the Pine Rivers Shire, in the vicinity of Mount Glorious and Mount Nebo. Lot 1 on RP 54122 has an area of 11.794 hectares and Lot 4 on RP 54122 has an area of 134.386 hectares, making a total area of 146.2 hectares. They will be referred to as "the subject land". [3] Under the provisions of s.37 of the Valuation of Land Act 1944 (the Act), the Chief Executive, Department of Natural Resources and Mines (the respondent) determined the unimproved value of those two parcels as one valuation as at 1 October 2004 at $390,000. Following an objection against that valuation, the respondent reduced the valuation to $300,000. [4] On 20 September 2005, an appeal was lodged against that valuation stating that the appellant's estimate of the unimproved value as at 1 October 2004 was $150,000. The grounds of appeal may be summarised as follows:  The subject land has no legal or practical access and the obtaining of such access could be both difficult and expensive;  The South-East Queensland Regional Plan has a major negative effect on the value; and  The subject land cannot be used for any purpose and while land sales in general may have increased substantially in the period 2002 to 2005, the sale lands do not suffer from the disabilities of the subject land, and no increase in value from the former valuation of $150,000 is warranted. [5] Mr JH Curtis, brother of the appellant, appeared and gave evidence for the appellant, while valuation evidence on behalf of the respondent was given by registered valuer, Mr ST Larking. The Subject Land [6] There was substantial agreement that the land is generally steep and rugged, being situated on top of a mountain range. Mr Curtis gave evidence that the subject land was purchased in 1937 by his father to run dry cattle in conjunction with a substantial dairy farm situated on Cedar Creek, which adjoined Lot 1 in the north-eastern corner. Cattle were moved on and off according to seasonal conditions and some timber was cut. However, the land has not been used for any form of rural production for the past 20 years. Permanent water is very limited and there are no improvements on the land. The boundary fencing has not been maintained. [7] An aerial photograph clearly shows the generally rugged and unimproved nature of the subject land, the only improvement perhaps being some limited clearing in the north- -- 2 of 10 -- 3 eastern part of Lot 1. It was common ground that there would be house sites on both parcels which would have good views, if access could be provided. It was also agreed that the South-East Queensland Regional Plan which took effect in mid-2005, designates both lots as "Regional Landscape Protection and Open Space" and that further subdivision is prohibited. [8] However, by far the greatest disability suffered by the subject land is that it has no legal access and both lots are landlocked. The Lack of Access [9] There is no surveyed or designated road access to the subject land. The nearest road is Harland Road, approximately 2 km to the west of Lot 4. Harland Road runs from Mount Glorious Road to the western boundary of Lot 3 on RP 208443, with an area of some 440 hectares, which lies between Harland Road and Lot 4 of the subject land. It was generally agreed that the most practical form of access would be by some extension of Harland Road through Lot 3 by road or easement, or by some other arrangement between the owner of that land and the appellant. I accept the evidence of Mr Curtis that access through Lot 3 would be along steep ridges and that the most appropriate access road would follow the ridge top. However, this is potentially the most valuable area of Lot 3 and the construction of a road may restrict its potential for development. [10] Mr Curtis gave evidence that the appellant had an arrangement with the previous owner of Lot 3 (a Mr Ogle), to access the subject land by means of a rough track. However, Lot 3 had been sold in April 2004 and there was no such arrangement with the present owner. A locked gate is at the end of Harland Road with a large sign saying "Private Keep Out". Even if access could be gained to Lot 4, there would still be no access to Lot 1, which is a kilometre further to the east, through rough mountain country. [11] The reason why the subject land has no access was not explained. A copy of a survey plan dating from July 1937 attached to Mr Larking's valuation report, shows that no provision was made for access to the subject land and some other land in the vicinity. When the appellant's father acquired the subject land in 1937, it became part of an aggregation which had access to Cedar Creek Road. The Case for the Appellant [12] Mr Curtis gave evidence that Mr Ogle, the previous owner of Lot 3 on RP 208443, had applied for approval for subdivision. However, the proposal was rejected by the Council on 25 March 2003. An appeal was lodged against the Council's refusal of the proposal, but Mr Curtis was unaware of the outcome. -- 3 of 10 -- 4 [13] Mr Curtis thought that if it had access, the subject land could have been cut into eight blocks, each of 16 hectares, which would have been quite marketable as each would have contained some well-rounded range top country, with excellent views across the countryside and out to the coast. However, that would have been dependent upon access being provided. It seems that the appellant had been hopeful that if development of the land adjoining to the west had been approved, the Council would have required as a condition of such development that access be provided to the subject land. However, with the introduction of the South East Queensland Regional Plan, any subdivision of the subject land was prohibited. [14] Mr Curtis contended that in such circumstances the potential of the subject land had been eliminated and that the increase in the valuation from $150,000 to $300,000 is unwarranted. The Case for the Respondent [15] Mr Larking gave evidence that the values of large parcels of rural land in that area of the Pine Rivers Shire had increased substantially since the previous valuation of the area. In accordance with the market, the respondent had applied a valuation of $390,000 to the subject land. However, after the owner had objected against that valuation, it had been reduced to $300,000. [16] Mr Larking was aware that the subject land had previously been valued under the concessional provisions of s.17 of the Act, as land used for purposes of farming, so any potential for further development had been excluded from the valuation. Mr Larking was under the impression that the subject land continued to be used for cattle grazing under some arrangement between the appellant and an adjoining land owner. Therefore, the provisions of s.17 were again applied and the land had been valued on a per hectare basis. [17] In defending his valuation of $300,000, Mr Larking relied principally upon the sales of remote rural properties situated in the north-western part of the Pine Rivers Shire, comprising steep to unavailable country, with no Council services and with access problems. [18] Sale 1 is situated in Ruckers Road, Laceys Creek, and consists of two parcels with a total area of 199.4 hectares, which sold in February 2005 for $700,000. Improvements on that property were valued at $100,000, leaving a land value of $600,000. As at 1 October 2004, the respondent had applied an unimproved value of $520,000, or $2,607 per hectare, to that property. [19] Mr Larking described the sale property as steep to unavailable forest hills, with a small area of clearing around a modest homestead. An area was cleared on the northern -- 4 of 10 -- 5 sections of both lots many decades ago for bananas, but this had largely regrown. Access is by means of a country dirt road with earth verges. [20] Mr Larking explained that the property was purchased by a semi-retired farmer who intended to run a few cattle. He considered it to be superior to the subject land in an unimproved state. [21] Sale 2 is situated in Costello Road, Laceys Creek, and sold in October 2004 for $430,000. The property has an area of 163.2 ha and the only improvements were minor clearing and part boundary fencing. The sale analysed to show a land value of $400,000. As at 1 October 2004 the respondent had applied an unimproved value to that land of $340,000, or $2,083 per hectare. [22] Mr Larking described the property as steep to unavailable forest hills, with only a small area of clearing around the foothills near the creek. Access is by means of an unformed dedicated road via Costello Road, which was suitable for four wheel drive traffic only. [23] Mr Larking considered this to be a truly rural property without any potential for subdivision. He regarded it as slightly superior to the subject land. Mr Larking's Alternative Approach [24] Mr Larking gave evidence of what he described as a check method to his primary valuation. The subject land comprised two separate parcels, Lot 1 of 11.794 ha and Lot 4 of 134.386 ha, and even though they had no legal access, Mr Larking reasoned that each lot could be sold separately and adjoining owners may wish to acquire them. [25] In order to value Lot 1 separately, Mr Larking had regard to two sales of land situated in what he described as remote outlying rural residential areas. One of those properties (Sale 3) is situated in Mayfield Road, Cedar Creek and has an area of 12.1 ha. It sold in August 2004 for $355,000 and analysed to show a land value of $347,500. Mr Larking described that property as a smaller rural residential property in the Cedar Creek area with excellent elevated position. [26] The second sale (Sale 4), a 61.9 ha property situated in Baxter's Creek Road, Samsonvale, sold in August 2004 for $592,275, which analysed to show a land value of $517,000. Mr Larking described that property as a larger steep rural residential property, on an outlying gravel access road which is steep in parts, in the Samsonvale/Cedar Creek area. According to Mr Larking, that sale represents the price paid for larger rural residential properties. [27] Mr Larking reasoned that Sale 3 and Sale 4 show that the market paid $169,500 for an extra 49.79 ha. Taking 80% of that value for comparison purposes equals $135,600, or $2,723 per ha and applying that rate to the 11.794 ha of Lot 1, results in a valuation -- 5 of 10 -- 6 rounded to $32,000. As I understand his evidence, that would be the price that an adjoining owner would pay to acquire Lot 1. [28] Mr Larking reasoned that Lot 4 should be valued by direct comparison with Sale 1, at $2,607 per ha, and Sale 2 at $2,083 per ha for steep to unavailable land. He concluded that Lot 4 should be valued at $2,000 per ha, which equates to a rounded valuation of $268,000. [29] As I understand Mr Larking's evidence, he reasoned that the subject land had been valued without regard to any development potential, or without regard to the fact that it comprised two separate lots. However, even if the concessional provisions of s.17 of the Act were not applied and the two lots were valued separately, Lot 1 would have an unimproved value of $32,000, while Lot 4 would have an unimproved value of $268,000. The resulting valuation would be the same as his primary valuation of $300,000. The Relevant Legislation [30] The valuation under appeal was made under the provisions of the Valuation of Land Act 1944. That Act requires the respondent to make annually valuations of all land in a local government area: s.37(1). However, in certain circumstances a valuation may be postponed: s.37(3) and (4). This seems to have been so in this case, as there is evidence that the subject land was previously valued in 2001 at $150,000. [31] Each parcel of land is to be valued at its unimproved market value: s.3(1). The test for the determination of "market value" of land was established by the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418. In that case the High Court found that the market value of land is determined by the price that a willing but not over anxious buyer would pay to a willing but not over anxious seller, both of whom are aware of all the circumstances that might affect the value of land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property (see Griffith CJ at 432, and Isaacs J at 441). [32] However, not all land is valued at its market value. There are exceptions such as those provided for in s.17 of the Act. One of those exceptions is where land is exclusively used for the purposes of farming and s.17(1) requires that such land must be valued so that any enhancement in its value because it has been subdivided, or has potential for a higher use, is to be disregarded when the valuation is made. A valuation made under s.17 is often referred to as "a concessional valuation". -- 6 of 10 -- 7 [33] Adjoining parcels of land held by the same owner must be valued in the one valuation: s.34(1)(a). However, there are circumstances (which do not apply in the present case) in which such parcels of land are to be valued separately. [34] A landowner who is dissatisfied with the valuation of his or her land may object to the respondent against that valuation: s.42. If dissatisfied with the respondent's decision upon the objection, the landowner may appeal to the Land Court: s.45. [35] However, the respondent's valuation is deemed to be correct until proved otherwise upon objection or appeal: s.33. In Brisbane City Council v The Valuer-General (1978) 140 CLR 41, the High Court held that statutory presumption of correctness can be rebutted if the respondent has:  acted upon a wrong principle, or  made a serious error of fact, or  made the valuation by a method fundamentally erroneous. The Issues Considered [36] In the present case, there can be no doubt that at the date of valuation, 1 October 2004, there was neither legal or practical access to the subject land. [37] Until the South East Queensland Regional Plan effectively prohibited subdivision, the appellant had hoped that the land could have been surveyed into eight lots. That hope was based on the application by Mr Ogle to the Council for approval to subdivide the neighbouring Lot 3. The appellant hoped that as a condition of any approval, the Council would order that access be provided to the subject land. [38] In my view, the appellant was labouring under a misapprehension in thinking that prior to the South East Queensland Regional Plan, he would have been able to subdivide the subject land into 8 parcels. Without legal access, that was always a vain hope. [39] The appellant seems to have hoped to, as it were, "piggyback" onto Mr Ogle's proposed development of Lot 3 to obtain access which, in turn, would enable him to carry out his proposed development. However, the evidence was that Mr Ogle's subdivision proposal was refused by the Council and that there was an appeal to the Planning and Environment Court. However, it is common ground that Mr Ogle was no longer the owner of Lot 3 because that property was sold for $5,000,000 in April 2004, by the mortgagee in possession. [40] There was no evidence as to the identify of the present owner, but Mr Larking said he was informed by an officer of the Council that the present owner had submitted a redesignated -- 7 of 10 -- 8 proposal and the matter was still "live", possibly with an appeal to the Planning and Environment Court. [41] The evidence was that the South East Queensland Regional Plan took effect in mid-2005, after the date of this valuation. However, Mr Larking's evidence was that the draft plan had been in the public domain before the valuation date. A prudent purchaser would therefore have been aware of its likely impact. Be that as it may, I have come to the conclusion that even without the South East Queensland Regional Plan, there was little short term potential for development of the subject land. There was no evidence of how access could be gained to the land by the development of Lot 3, or what conditions the Council would impose on any development by the appellant. On the state of the evidence, any enhancement in value because of that potential was simply too remote. [42] From Mr Larking's evidence, it seems to me that he assumed that the land was used for the purpose of grazing cattle and that practical access was available from Harland Road by arrangement with the owner of the adjoining Lot 3. Accordingly, Mr Larking had valued the subject land at $390,000 in accordance with the increase in valuations shown by the sales of farming land. [43] It was not until the owner lodged an objection against the valuation that Mr Larking discovered that the subject land was not being used for any purpose and that it was totally landlocked without any legal access, but practical access could be possible. [44] Mr Larking concluded that no allowance had been made for the access disability in previous valuations. He therefore reduced the valuation on objection from $390,000 to $300,000 acting, I assume, on delegation from the respondent. Mr Larking reasoned that the highest and best use of the land was, as he put it, a "difficult rural property without access and services". [45] Mr Larking defended the valuation of $300,000 by direct comparison with his Sales 1 and 2, which comprise rough, mainly timbered country, with no services and very poor to non-existent road access, situated further from Brisbane than the subject land. While the sale properties have surveyed access, Mr Larking doubted that the actual tracks to the properties were on the surveyed road alignments. He thought in each case the owner was using a track through a neighbouring property. Making allowances for the differences between the sales and the subject land, Mr Larking applied a value of approximately $2,500 per ha, rounded to $300,000. [46] Mr Larking undertook a check valuation as described earlier in these reasons, attributing separate values to Lot 1 and Lot 4. With due respect to Mr Larking, I do not think the check method is of any assistance. -- 8 of 10 -- 9 [47] Mr Larking conceded that there was essentially no potential for further development of the subject land. He had reduced the valuation to $300,000 to make further allowance for the lack of legal access, but he assumed that the property could still be used to run a few cattle, either by the appellant or by some arrangement with a neighbouring landowner. [48] In my view, Sales 1 and 2 used by Mr Larking to defend his valuation are appropriate. They are large rough properties, with limited potential, remotely situated and with virtually no services. Most importantly, they suffer from access difficulties. As I understand the evidence, in each case the road falls short of the property by some distance. Access is then gained by means of a rough track in each case, which Mr Larking doubts is within the designated road boundary. In his view, the sales suffer from the same access disability as the subject land. [49] If the subject land had any legal access and some arrangement had been made for access through a neighbouring property, its circumstances would be similar to those of the sales and I would affirm the valuation of $300,000, as it could then be used as a large rural site. However, with no legal access and no foreseeable prospect of legal access in the immediate future, in my view, a prudent purchaser would not have paid $300,000 for the land at the date of valuation. [50] It is common ground that access can only be obtained form the west. The land is on top of the range, with a very steep fall to the north, east and south. There is no demand from those adjoining landowners, nor any likelihood of access in those directions. [51] It may be possible in the future for the appellant to reach agreement with the owner of Lot 3 on RP 208443 for some form of access to the subject land. Failing agreement, it may be possible to seek some statutory right of user of part of Lot 3 for an easement or right of way under s.180 of the Property Law Act 1974. However, the appellant would have to satisfy the requirements of s.180(3) and also be required to pay "compensation or consideration" to the owner of the servient land. Furthermore, the Court would be likely to impose conditions as to use: see, for example, Pacific Coast Investments Pty Ltd v Cowlishaw [2005] QSC 259. [52] Until some form of access is arranged or provided, the subject land is simply not able to be used. The question is, what would a prudent purchaser pay for land with no immediate prospect of being able to use it for any purpose? [53] In the circumstances, I have come to the conclusion that a prudent purchaser would reason that access may be available at some time in the future, but negotiating that access could be difficult and expensive. In my view, taking that risk into account, a prudent purchaser would pay no more than $200,000 for the subject land. -- 9 of 10 -- 10 Order The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Two Hundred Thousand Dollars ($200,000). JJ TRICKETT PRESIDENT OF THE LAND COURT -- 10 of 10 --