Brown v Chief Executive, Department of Natural Resources [1999] QLC 89

LAND COURT, BRISBANE 17 August 1999 Re: Appeal against Annual Valuation Valuation of Land Act 1944 Shire of Livingstone. (AV98-324). Kevin Emslie Brown and Helen Ann Brown v. Chief Executive, Department of Natural Resources (Hearing at Rockhampton) D E C I S I O N This is an appeal by Mr and Mrs Brown against the unimproved value applied to their land by the respondent Chief Executive under the provisions of the Valuation of Land Act 1944 (“the Act”). Introduction: Mr and Mrs Brown are the owners of land described as Lot 1 on Registered Plan 601105, Parish of Meadow Flats, containing an area of 16.22 hectares. As at 1 October 1997 the respondent applied an unimproved value to that land of $55,000. Mr and Mrs Palmer objected against that valuation and after being advised that the respondent had reduced that valuation to $47,000, they appealed to the Land Court advising that their estimate of the unimproved value was $30,000. Subsequently, the respondent further reduced the valuation to $42,500 under the provisions of section 68 of the Act. The grounds of appeal related to the following matters:  Comparison with seven blocks adjacent to or near the subject land on the eastern side of Coowonga Road;  The disparity on a per hectare basis between the subject land and adjoining blocks;  Almost 25% of the subject land being unusable tidal or tide-affected land;  Water supply on the subject land being brackish; [1999] QLC 89 -- 1 of 7 -- 2  Comparison with recent sales of superior land;  The market for land in the area; and  The severe sandfly and mosquito problems. At the hearing of the appeal, the appellants were represented by Mr KE Brown, while the respondent was represented by Mr BT Coe and valuation evidence was given on behalf of the respondent by Mrs CA Cowan, both of the Department of Natural Resources. The Subject Land: The following details are taken from the report of Mrs Cowan: The land is situated on the formed gravel Coowonga Road, approximately 4 kms south-west of the town of Keppel Sands. It is approximately 900 metres from the bitumen sealed Keppel Sands Road. Electricity and telephone services are connected to the property, which is zoned “Rural A” under the Livingstone Shire Council Town Planning Scheme. It is used by the owners for rural residential purposes. The subject land comprises an iron bark ridge falling to low sandy gum and bloodwood flats, with approximately one-third of its area being tidal mud flats. Mr Brown did not disagree with the physical description of the land. He explained that he and his wife purchased the property about 16 years ago for $50,000; they purchased it because they could buy it more cheaply than they could buy a house in Rockhampton at that time and the extra area would be suitable for their young family; it was cheap because virtually no-one else wanted the place; they had attempted to run cattle but they had found that the grasses were of no value; they had attempted to plant grasses but they did not flourish, as the area was so sandy. He explained the land suffers from some inherent disabilities. It is infested with sandflies and mosquitoes. There is a major problem with lack of water. The water in a bore sunk on the property tested for salinity at 10,000 parts per million, which was marginal for stock purposes only and, according to Mr Brown, was of no use for domestic purposes. A well on the property tested at 2400 parts per million and Mr Brown said that although it is a poor supply (100 to 150 gallons per day), they use that water for some domestic purposes. A small dam does not hold water. Their only drinking water is from rainwater tanks. -- 2 of 7 -- 3 Mr Brown explained that the subject land had a mere 30 metre frontage to Coowonga Road at the bend in the road which made access difficult, dusty and dangerous. There had been a number of accidents at that location. The Case for the Appellants: Mr Brown contends that the market for properties in the Coowonga area is very slow. He referred to four properties that went to auction recently and attracted no bids; another property had been on the market for more than two years with apparently no interest. In addition, Mr Brown identified three blocks which had been owned by a Mr Frank Ellrott, which had been extensively marketed for about a year before going to auction. According to Mr Brown, no bids were received and the blocks were sold privately but only after the owner drastically reduced his price. One of those blocks, Lot 11 RP 897960, of 40.43 hectares, resold in August 1998 for $57,000. This land has an extensive frontage to Coowonga Road and is two and one half times the size of the subject land. According to Mr Brown, it has a large area of high ground suitable for further development (the owner has cleared 30 acres to plant date palms) and would have access to swamps which carry potable water under the sand. He went on to say that there is no salt pan on that property and no wasteland, it is sheltered from the salt pan by a dense stand of trees and it does not have the sandfly problem to the same extent. He concedes that the block is traversed by powerlines, but considered the effect to be marginal as there is room for three houses clear of the lines on the high ground. Mr Brown also referred to the resale of another of Ellrott’s blocks, Lot 1 on RP 609391, of 75.811 hectares, which sold in July 1998 for $55,000. He said that block is over four times the size of the subject land, has an extensive bitumen road frontage, has high ground suitable for a house site and also has access to the swamps which carry potable water. He went on to say that there are magnificent stands of palm trees which could be developed as a tourist attraction and there is no wasteland except for a small sand quarry. Mr Brown compared the valuation of the subject land with that of Hitchcock’s block which adjoins to the east, which has an area of 80.965 hectares and which the respondent has valued at $45,000. He said it is very similar country to the subject land except that it does not have any high ground. However, he thought that there were numerous building sites on that block, which he considered were superior to any -- 3 of 7 -- 4 on the subject land. He thought it had potential for development for agriculture, whereas the subject land had only 7 or 8 hectares of sandy country, the use of which was very limited. In addition, he said, the neighbouring land had no mud flats, and swamps at the bottom of the block carry very good water which once supplied the township of Keppel Sands. Mrs Cowan described Hitchcock’s property as “very low lying, very swampy and very sandy”. While she conceded that it could be built upon, she thought it would be “at great expense”. The Case for the Respondent: Mrs Cowan relied upon four sales to support the respondent’s unimproved value of $42,500. Sale No 1 is situated in Keppel Sands Road, close to the township of Keppel Sands, with an area of 21.08 hectares. That property sold in October 1997 for $55,000 and that figure was applied to the property at the relevant date of valuation, 1 October 1997. Mrs Cowan described the property as being level to low- lying, with approximately one-third of its area salt pan and tidal mud flats. It backs onto Pumpkin Creek and was very overgrown at the time of sale. She considered it to be superior to the subject land because of its location, its bitumen road frontage and because it backed onto Pumpkin Creek. Mr Brown thought that Sale No 1 was much superior to the subject land. It is within walking distance of school, hotel, Post Office, beach and shops and has good access to Pumpkin Creek, which he described as a favourite fishing and crabbing spot. He also thought that it had good potential for development in the future, although its present zoning of “Rural A” prevented immediate development. Sale No 2 was considered by Mrs Cowan to be the most relevant sale, as it adjoins the subject land to the south and east. It has an area of 40.43 hectares and sold from Lucht to Bills in August 1998 for $57,000. The sale was analysed to show an unimproved value of $56,500 and $52,500 was applied by the respondent to that land at the relevant date of valuation. Mrs Cowan described that property as being an elevated forest ridge falling to sandy low-lying swampy flats. Although much larger than the subject land, it was traversed by two powerlines which restricted the location of a dwelling house, although she conceded that the best building site is probably on the southern side so that the powerlines probably would not restrict building on that site. However, she thought they were visual impediments. -- 4 of 7 -- 5 That is the property referred to by Mr Brown as Lot 11 on RP 897960 which he considered to be substantially superior to the subject land, because the proposed homesite was much more elevated, had a better aspect and was “much more pleasant”. Sale No 3 is a 1-hectare property situated in Hoffmans Road some distance to the north-west of the subject land. It sold in October 1996 for $32,000, analysed to show an unimproved value of $29,600 and as at 1 October 1997 the respondent applied an unimproved value to that land of $27,000. Mrs Cowan described that land as being level to low-lying, approximately half forest flat, with the balance area being creek banks. She regarded it to be inferior to the subject land, principally because it was smaller. However, it had a better water supply. Mrs Cowan went on to say that she thought that purchasers of rural homesites were principally seeking a place on which to build a house and would not pay proportionately more for the balance land. She drew attention to Sale 3, comparing the sale price of $32,000 for 1 hectare, with Sale No 2, where 40 hectares sold for only $27,000 more. She contended that those two sales demonstrate that the areas could not be compared on a per hectare basis. Mr Brown thought as a rural residential site, Sale No 3 had many features which were superior to the subject land. First, it did not have a sandfly problem. Second, it had plenty of water. Third, it was an old farm with good soil. He could not see that it was a valid comparison. Sale No 4 is of a 2,023 square metre property situated on Keppel Sands Road, approximately half way between Sale No 1 and Sale No 2. That property sold in April 1996 for $17,000, analysed to show $16,000 and the respondent had applied an unimproved value of $15,000 as at the relevant date of valuation. Mrs Cowan described it as a small low-lying site, with a wet depression at the front rising to a forest flat. She considered it to be vastly inferior to the subject land because of its size. Mr Brown knew that property and said that it was not one he would like to own because it goes under water in flood time. He did not regard it as a good comparison. The Issues: -- 5 of 7 -- 6 The subject land is clearly a rural residential site with a number of problems: it is infested with sandflies and mosquitoes; it is situated on the bend of a gravel road with only 30 metres frontage; about one-third of its area is tidal mud flats; the balance of the area is very sandy and of no use for agricultural or grazing purposes; it has, at best, an indifferent water supply; the only bore on the property is too saline to be of any use; the well is somewhat better but of only a limited supply. It is understandable, therefore, that those problems affected the market value of the property. The Browns purchased it some 16 years ago because it was cheap and no-one else wanted it. It suited their purposes at the time. It seems from the evidence that there was not a ready market for land in the area at the date of valuation. Sale No 1 is larger, but has somewhat similar characteristics to the subject land, with about one-third of its area salt pan and it is probably infested with sandflies and mosquitoes. However, it is much more attractively situated on a bitumen road, on the outskirts of Keppel Sands. It also backs onto Pumpkin Creek, which is said to be a popular fishing and crabbing spot. With all those attributes, it sold for only $55,000. Sale No 2, which is two and one half times larger than the subject land, with no waste area, and despite the powerlines, has a superior homesite, sold for $57,500. According to Mr Brown, that property has good water and potential for agricultural development. The unusual background to that sale emerged in evidence. It seems that the property, together with the 40 hectare property to the east and the 76 hectare property to the south, were owned by Frank Ellrott. He unsuccessfully tried to sell those three parcels at auction and later sold two of them to Lucht in June 1998 for $70,000. Then in July 1998 Lucht sold the 76 hectare parcel to Hoff for $45,000. Both Mr Brown and Mrs Cowan thought that was a cheap sale, as one month later Lucht sold the property referred to as Sale No 2 for $57,000. They agreed there was not much between the two properties and this is borne out by the fact that the respondent has applied unimproved values of $55,000 and $52,500 to those two properties. In my view, Sales 3 and 4 were of no assistance in this matter. They are far too small to provide a basis for the valuation of the subject land. -- 6 of 7 -- 7 Conclusion: The appellants have raised issues of comparability with the sales that have occurred and with respect to the valuations applied to much larger and superior parcels of land. Mrs Cowan has defended that relativity of the valuations by saying the properties are valued as rural residential sites and cannot be compared on a per hectare basis. She is quite correct in adopting that approach. It is well established that rural homesites, unlike agricultural and grazing land, do not sell on a price per hectare. The purchasers of rural residential land are primarily looking for a site upon which to build a house. That represents the major element of the purchase price. They must therefore be compared mainly on their relative attributes as homesites, rather than on a rate per hectare. However, in my opinion, the attributes which make a rural homesite attractive include access, elevation, water supply, proximity to facilities and the prospect of quiet enjoyment. Having regard to the disabilities suffered by the subject land, I have come to the conclusion that the applied unimproved value of $42,500 appears to be too close to the values applied to the sales and to surrounding lands which are larger and which would be superior as rural homesites. Particularly having regard to the attributes of Sale No 1, I feel that the detriments suffered by the subject land make it considerably inferior. Having regard to the whole of the evidence, I feel that the valuation of the subject land should be reduced to $40,000. Order: Accordingly, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Forty thousand dollars ($40,000). (JJ TRICKETT) President of the Land Court -- 7 of 7 --