Evans, Re [1997] QLC 184

LAND COURT BRISBANE 15 October 1997 Re: Appeal against internal review decision - Re: Assessment of purchase price - SL09/45488, Cairns District - Lessee: James Bernard Evans D E C I S I O N Pursuant to Section 428 of the Land Act 1994, the abovementioned lessee has appealed to the Land Court against a decision by the Chief Executive, Department of Natural Resources, on 3 December 1996, by way of internal review, not to reduce and advised purchase price of $150,000 for SL09/45488, Cairns District, for the purpose of conversion of the tenure to a deed of grant in fee simple. The relevant date for the assessment of the purchase price was 19 September 1994, and the lease is more particularly described as Lot 567 on Plan NR 7655, Parish of Tinaroo, and contains an area of 175.6 hectares. Lot 567 is situated approximately 12 kms south-east of the town of Mareeba and has a frontage to Tinaroo Creek, Tinaroo Creek Road, and Henry Hannam Drive. The lessee's estimate of a fair purchase price is $80,000 to $100,000. Mrs K Evans, wife of the lessee, furnished evidence in support of the grounds of appeal which read: "1.Purchase price far above expectations. 2.Area is full of basalt rock also severed in four by public roads. 3.Instructed to fence creek out of area. 4.Lifestyle change because of poultry farm and land/gravel and loam mine. 5.Basalt rock covers the whole of SL45488 and it is at much expense to clear them out. Comparison sale of block adjacent is not good when this block has flat unrocky areas as well as basalt. Also this block has one area where the Special Lease is severed in four by public roads. Permanent water is by way of channel water which we pay for so there is no natural water. Erection of two poultry sheds and a sand/gravel and loam mine on either side of us has caused a complete change in our lifestyle and cattle raising. Stench from the poultry farm is at times very unbearable and trucks travelling from 6a.m. to 6p.m. every day except Sunday have caused cattle to move from the area away from the roads. " Mrs Evans submitted a statement in evidence signed by the lessee which reads: "I James Evans have been the lessee of the Special Lease No 45488 for the past 14 years and previous to this the lease was enclosed in OL 358 of which I have been the lessee since my father's death in 1966. All improvements have been carried out [1997] QLC 184 -- 1 of 7 -- 2 by myself over this period. My main source of income comes from the cattle industry. My application to freehold this parcel of land was due to the insecurity of the lease. As this was a lease with a three months resumption clause all improvements were carried out without the aid of any financial institutions as I could not offer enough security to warrant a mortgage over the area. This is NOT to be mistaken for a HOBBY FARM as my livelihood depends on the grazing industry. Plans in the future are to improve the area so a more financial business can be obtained from same. The costs involved in this will be enormous as the area is excessive timber and extra excessive rocky country. The unimproved conditions will allow approx 40 head of cattle per year for grazing and these must be supplemented during the drier months from September to January depending on rainfall. " Attachments to Mr Evans' statement read: "ACCESS The road along Tinaroo Creek Road is not an all weather road nor is Henry Hanam Drive as the causeways along these roads flood heavily during the wet season and often stay in flood for up to a week which hinders our travel to and from work. Many nights we have to stay overnight at relatives as we cannot cross over any of the causeways. SERVICES Previous to our building of our home the power was not as far as our block. It was at our expense that the power is now at our yards. Rubbish is collected by the Mareeba Shire Council at a cost also. USE OF LAND The area is used for dwellings, cattle yards and grazing purposes. Used in conjunction with OL 358 which also has a very insecure tenure and I have been advised by the Lands Department will not be upgraded in the foreseeable future. NATURE OF LAND Very heavily timbered and rocky area surface rock as well as basalt underneath. The dissection of Henry Hannam Drive and Tinaroo Creek Road splits the area into 4 sections. A large area of rock face wall on the Tinaroo Creek Boundary. No natural water since the Lands Department has advised we fence the Tinaroo Creek out of the area. Some very large gullies on the Tinaroo Creek side boundary. Soil -- 2 of 7 -- 3 is of a small amount of red along with basalt clay. The area has little agricultural potential. DISADVANTAGES The subject does not have natural water. Access to channel water is available at a further cost of myself. I have put this access to use as the Lands Department advised to fence the Tinaroo Creek out of the area so there was no natural water for grazing purposes. Clearing for improved pasture or crops will be at a high cost because of the thick timber and rock. This is throughout the whole area and water would have to be manually taken to each of the four areas dissected by the Henry Hannam Drive and Tinaroo Creek Roads. Henry Hannam Drive and Tinaroo Creek Road intersect in the area. These are public roads which are now used excessively by the public and the Woodmans Landscaping Mine which is adjacent to SL 48488. The roads are of grave concern with the constant moving of trucks in the area and I am often hindered in carrying out my grazing activities, that is, moving stock across the roads to the cattle yards erected some 20 years ago. Dust problems over the grazing activities caused by the trucks is also another issue which should be taken into consideration. During the dry season the grass is constantly covered in dust which the cattle will not eat. The area effective by this is about half the lease. The development of new chicken producing sheds (4 in all, which house in excess of 20,000 chickens per shed) has also become a grave disadvantage when taking into consideration the value of the parcel which boundaries these sheds. COMPARISONS DEFAVERI TO ENTSCH My investigations into the comparison with this area provides that the area owned by Entsch is far more superior than SL 45488. In conversation with Mr Entsch he advised that the Lands Department had not been through his block to his knowledge and that they may have investigated the front area only. The front of this area is some rocks mainly surface with red soil. Throughout the area there are some rocks. Mr Entsch advised that he has not cleared many rocks yet he is able to go through 80% of his property on a tractor with a slasher and fertiliser bin to do his work. This would be virtually impossible on the S.L. in question. There are some gullies on the Entsch block but not real grave ones. Approximately 60 acres (24 hectares) of this area is of rich alluvial river flats which are naturally grassed with guinea grass, 30 acres (12 hectares) are red soil and approximately 20 acres (8 hectares) of black soil. The formation and soil in this block are by far extremely superior to the land in question. Another asset to the Entsch block is that it has Barron River frontage to the whole parcel. This area has great potential as to growing any crops without excessive expense. The area also is -- 3 of 7 -- 4 of one parcel and is not hindered by public roads, landscape mines or chicken factories. WYATT TO FLETCHER Once again this parcel is of river flats and Barron River frontage. Similar in formation to the above block with rocks mainly to the front of the area and with red soil and rich alluvial soil. VALUATIONS Copy of the Valuation Notice 1 January 1996. This is the current valuation from the Department of Natural Resources and possibly its true value taking all the disadvantages into account. Please note the area of 2546 hectares is valued at $89,000. The lease in question is enclosed in this valuation and its area of 190 (or 176 hectares whichever is the true area) is being offered for $150,000. With this figure before us, surely the above proposal is far and above the area's true value. " Mrs Evans tendered to the Court a series of 16 photographs illustrating the type of country on SL09/45488 showing the timber cover but more particularly the nature of the surface rock infestation. Mrs Evans largely collaborates the statement of Mr Evans. She says: 1.While the access road is mostly bitumen, the problem is the road can be cut off for up to one week at a time in floods. 2.The power to the yards was installed at a cost of $7,000. 3.The description of the Defaveri to Entsch land as incorporated within Mr Evans' statement resulted from a visit to the property by Mrs Evans. 4.Mrs Evans did not take a very good look at the Wyatt to Fletcher land. 5.The roads in the subject area are now used excessively. The landscaping business attracts 20 to 40 trucks per day with the resultant dust nuisance. 6.Mrs Evans cannot understand the purchase price offer of $150,000 when it and the occupation licences (comprising 2546 hectares) were all valued as at 1 January 1996, for $89,000. 7.Mrs Evans believes the chicken farm was commenced not long after the application to freehold the subject lease was made. The landscaping/loam mining operations have been going on for many years, but it was a small concern until recent times. Called in evidence by the respondent Chief Executive, Department of Natural Resources, was Registered Departmental Valuer Daniel Patrick Glasson. Mr Glasson was not -- 4 of 7 -- 5 responsible for making the recommendation as to the purchase price which is now the subject of appeal but he has made a detailed inspection of the subject property and the sales relied upon by the Chief Executive and agrees with the amount of the valuation. Mr Glasson acknowledges that the property is split by a road into four distinct portions. He describes the Tinaroo Creek Access Road as being a part bitumen sealed two lane local road and part gravel road, and says that the property has approximately 200 metres of bitumen surface frontage. Henry Hannam Drive is described by Mr Glasson as a two-lane local gravel road. Mr Glasson describes the nature of the land as being predominantly gently undulating open forest country, steeply sloping on the western boundary towards Tinaroo Creek and with many rocky outcrops. The majority of the property is timbered with poplar gum and molloy red box on stony basalt soils with a heavy coverage of large surface stones. Mr Glasson informed the Court that the land is zoned Rural A under the provisions of the Mareeba Shire Town Planning Scheme which was gazetted on 19 June 1982. The minimum area for subdivision is 60 hectares. The property is designated rural/non-urban according to the Mareeba Shire Strategic Plan. The property is included in the Mareeba Dimbulah Irrigation Area and is designed as an area of Irrigated Agricultural Production. Mr Glasson says there are no restrictions on the use of the leased land other than it is to be used for primary industry purposes. Mr Glasson has valued the land according to its highest and best use which he says is for rural residential purposes. The method of valuation he used is that of direct comparison with sales of unimproved or lightly improved land. Details of the sales relied upon by Mr Glasson are: Sale No 1 - Lot 10 on RP 835556 - 122.4 hectares - Defaveri to Entsch and Deugro Pty Ltd on 13 May 1991 for $150,000 - Situation Fichera Road, Mareeba. Zoning "Rural A". Analysed unimproved value $145,000. Mr Glasson says this sale land is situated approximately 6 kms south-east of Mareeba. He confirms the property has a frontage to the Barron River and is a partly cleared site comprising approximately 30 hectares of gently undulating cleared country put to native grasses, the balance being moderately sloping medium forest with a heavy cover of large surface stone, falling moderately to the Barron River. Mr Glasson sees the sale land to be in a slightly superior location, with superior situation and access, comparable services and topography and points out that it is a smaller area. Overall Mr Glasson believes the sale lot to be similar to the subject land. Sale No 2 - Lot 5 on RP 7808488 - 39.27 hectares - RW and GF and RW Wyatt to G and A Fletcher on 19 March 1994, for $97,000 - analysed unimproved value $97,000. Zoning "Rural A" - Situation Fichera Road, Mareeba. Mr Glasson says this sale land is situated approximately 4 kms south-east of Mareeba. The property has a small hatchet-shaped frontage to the road and also has frontage to the -- 5 of 7 -- 6 Barron River. The site is generally to moderately undulating open forest and is uncleared. Mr Glasson sees the sale property as being overall inferior to the subject land although it is slightly superior in location, has superior situation, comparable topography but of course it is much smaller and has inferior access. Mr Glasson has carried out some research into the history of the poultry farm development adjacent to the subject lease. He says that the first building gained approval in June 1995, with further approvals in May 1997. As such, Mr Glasson sees the poultry farm as having been developed after the relevant date for valuation in this case. He has no knowledge about the time of the upgrading of the landscaping/loam mining activity. Now it is clear that the valuation of $89,000 for SL09/45488 and the occupation licences was made under the provisions of the Valuation of Land Act 1944 and not under the Land Act 1994. Since the land is used for cattle grazing, then there is little doubt that the Valuation of Land Act valuation reflected the concessional use of the land for the purpose of farming (Section 17(1) of the Act). If this is the case then, no comparison can be made between it and what is required to be ascertained in assessing a purchase price for the purpose of conversion of tenure under the Land Act 1994. The relevant provisions of the Land Act are: "Section 170.(3). The purchase price is an amount equal to the total of - (a)the unimproved value of the land being offered, as if it were fee simple; and (b)the market value of any commercial timber that is the property of the state on the land. Section 170.(4). The unimproved value of the land is calculated at the day the Minister receives the conversion application. "Unimproved value" is defined in the Land Act as follows: "434.(1) In this Act, the `unimproved value' of land is the amount an estate in fee simple in the land in an unimproved state would be worth if there were an exchange between a willing buyer and a willing seller in an arms-length transaction after proper marketing, if the parties had acted knowledgably, prudently and without compulsion. (2) The unimproved value must be decided without regard to the commercial value of the timber. -- 6 of 7 -- 7 (3) To remove any doubt, it is declared that the Valuation of Land Act 1944 does not apply to the meaning of unimproved value in this section. " Now there is also no doubt that the above provisions enable the Chief Executive to assess a purchase price for conversion of tenure purposes under the Land Act on the basis of the highest and best use of the land. This is considered by Mr Glasson to be as a rural homesite, and I really do not have any evidence to the contrary. It follows, then, that I cannot be influenced by the 1 January 1996 relevant date valuation of the subject lease and the occupation licences in this decision. I have carefully weighed all the evidence. The road severance is not really a significant disability when the land is valued as one rural residential homesite. I accept that the poultry farming activities on the adjacent land are a post-relevant date development, and cannot be taken into account. But the landscaping/loam mining operations referred to by Mrs Evans appear to be a pre-relevant date activity, although it has been expanded since that time. The basic sales lots each appear to have some advantages over the subject land, and the frontages to the Barron River, but each, of course, is smaller in area. In the result I find that the purchase price (or valuation) recommended by the Chief Executive is somewhat excessive, and that a purchase price (valuation) of $135,000 more realistically addressed the matters raised in evidence. It follows then, using the terminology set out in Section 429(3) of the Land Act 1944, that the review decision under appeal is set aside, and that the review decision be that the purchase price of SL09/45488, Cairns District, for the purpose of conversion of tenure to a deed of grant in fee simple is One hundred and thirty-five thousand dollars ($135,000). (CH Carter) Member of the Land Court -- 7 of 7 --