Ferreira & Anor v Chief Executive, Department of Lands [1996] QLC 119

LAND COURT MOSSMAN 9 SEPTEMBER 1996 Re: Appeals against Annual Valuations Valuation of Land Act 1944 Shire of Mareeba Dates of Valuation: 30 June 1993 (V96-35) 1 January 1995 (V96-36) Pedro LD Pinto Ferreira and Lesley K Watson v. Chief Executive, Department of Lands (Hearing at Mossman) D E C I S I O N This is a case involving the valuation of a highly degraded parcel of land for two valuations. The first valuation was an interim valuation which arose as a result of the survey, as I understand it, of a special lease. At the time that the land was surveyed the Chief Executive was required under the provisions of the Valuation of Land Act to make a separate valuation of the separately surveyed area. As the valuation that was in force at the time was made as at 30 June 1993, the Chief Executive made his valuation as at that date, even though it did not take effect until 18 August 1994. At that time the Chief Executive valued the land at $23,000 and that was subsequently reduced to $21,500 as a result of the objection. The land in question, the legal details of which are set out adequately in Mr Quirk-Anderson's report. Mr Quirk-Anderson was the valuer for the Chief Executive in both these matters. I do not propose to go through the details as they are readily ascertainable from the reports. At the hearing the owners both gave evidence in respect of the valuation. Miss Watson gave detailed evidence of the extent of the degradation and the history of the use of the land, which at one time had been extensively used by the local authority for the purpose of gaining gravel for road construction. The top soil and gravel had been removed to a depth of at least a metre as was shown in a video which, although not tendered as evidence, the Court viewed in order to be able to better understand the evidence on the matter. [1996] QLC 119 -- 1 of 5 -- 2 It was common ground that at least 75% of the area had been so degraded, Mr Quirk-Anderson even conceding it may have been more. The degradation has resulted in considerable further gully and sheet erosion which is apparent, not only in the video, but in the photographs which accompany Miss Watson's report which is Exhibit 3. In addition, an area of the subject land has at one time been used as a rubbish tip. There is still a considerable amount of rubbish on the subject land, including at least one car body and numerous other pieces of rubbish, including the remains of an old washing machine. The whole of the old rubbish tip area is littered with bottles, rusty cans and other rubbish, including an area where broken glass litters a considerable area of the subject land. The land itself is situated in Bakers Road, a single lane formed gravel carriageway about 1.5 kilometres from the Peninsula Development Road, which is a dual carriage bitumen road. Although Mr Quirk-Anderson states that grid power and telephone are available to the property, the evidence from the owners indicates that the cost of gaining both services is considerable. In addition, the land is situated adjacent to an operating rubbish reserve and across the road from a cemetery reserve. The situation of the subject land is by no means ideal for its highest and best use, which is agreed to be as a rural residential site. The land is zoned rural A under the relevant town planning scheme and Mr Quirk-Anderson points out that it has no subdivisional potential. The land obviously has no immediate potential use for agricultural or farming purposes and, although by no means an ideal rural residential site, I find that its highest and best use is as a rural residential site. Mr Quirk-Anderson valued the land by having regard to a number of sales which he concedes are superior, both as far as rainfall and from the point of view of being attractive rural residential sites. These sales for his 1993 valuation showed sale prices when analysed of $51,500, $74,440 and $61,800, to which unimproved values of similar order were applied. Therefore it is obvious that the sales are considerably superior to the subject land. Mr Quirk-Anderson realised that he had difficulty in valuing the subject land, so he also included a schedule which he's called a “schedule of relativities” of other lands in closer proximity, but which also are generally better situated than the subject land. These properties, which were the subject of some contest during the evidence, have applied values which include $17,200 to a 4-hectare property, which he describes as having inferior locality to the subject, further from a population centre, slightly smaller than the subject. He regards the subject land as superior. -- 2 of 5 -- 3 Another property, a 3.64 hectare property, which he has valued at $22,500, is smaller than the subject, with bitumen road frontage, similar type of country and poor internal access. He regards the subject land as slightly inferior. His four other sales are superior to the subject land and need not have further comment. With regard to the first two sales, I formed the opinion that they are both superior to the subject land. They were not in any way degraded and they do not suffer from being situated adjacent to an operating rubbish dump or a cemetery. With respect to the 1995 valuation, Mr Quirk-Anderson valued the land by reference to three sales, all of which he concedes are in a better area than the subject land and all of which have analysed unimproved values considerably higher than that applied to the subject land. Therefore, they can have been only a guide to Mr Quirk-Anderson in valuing the subject land. Mr Quirk-Anderson referred once again to the relativity of the same six properties as he did in the earlier case, this time having increased the valuations somewhat as a result of the increase in the general market levels in the Mt Molloy/Julatten area. In this case he valued the subject land at $27,000, commenting that it was originally valued at $29,000, being reduced after objection to take further into account the degradation of the property. Mr Quirk-Anderson has commented, that if the land had not been degraded and if the disabilities of the property did not exist, in the 1993 valuation a reasonable unimproved value would have been $31,000. In the 1995 valuation, he said if the property did not have those disabilities, a reasonable unimproved value would be $38,500. I have come to the conclusion that Mr Quirk-Anderson was somewhat over-optimistic with regard to the unimproved values that he would have applied if the land had not been degraded. I formed the opinion, having regard to the situation of the subject land next to an operating rubbish dump, and next to a cemetery, that those unimproved values would be excessive, particularly having regard to the conditions of the special lease. The provisions of the Valuation of Land Act charge the Director-General to value the land as if it was held in fee simple, without regard to restrictive conditions and covenants. However, it also charges the Director-General under Section 14(5) of the Act, in making the unimproved value of land that is held in a lease under the Land Act, that the unimproved value of that land be determined having regard to and making proper allowance for any restriction or limitation of use, having regard to the purpose and conditions to which the lease is subject. -- 3 of 5 -- 4 In this case there is a condition in the lease giving a permittee of the Forestry Department permission to enter upon the land and to extract, as I understand it, timber and gravel. The exact wording of that condition does not matter. I do not have it before me, but it is such as appears often in leases of this kind. It has been in earlier cases considered that such a limitation is not a limitation on use, having regard to the purpose for which the lease was granted. However, in very recent times the Land Appeal Court has delivered a judgment in respect of the unimproved value of a special lease on Hinchinbrook Island, where a somewhat similar condition of a lease was given judicial consideration, with regard to access by third parties. In its judgment the Land Appeal Court has given us some guidance on what to look for with regard to those types of conditions. Mr Quirk-Anderson said that he had difficulty in determining just what percentage to allow for the degradation of the subject land. He talked to other valuers and he also had regard to the policy of the Department with regard to land which is listed on the Contaminated Sites Register under the Contaminated Land Act. Mr Quirk-Anderson points out in his report that although the subject land is not registered on the Contaminated Sites Register, because of its former use as a rubbish dump or part of its area as a rubbish dump he considers that it would have to be regarded as a probable contaminated site. In the event, he told me that he had allowed, after objection, approximately 30% in that regard. Mr quirk-Anderson is a registered valuer experienced in valuing land in this area and his opinion would have to carry some weight. In this respect his judgment is backed up by the recent decision of the Land Appeal Court in Caltex v. The Valuer-General, where the Land Appeal Court had before it the consideration of the unimproved value of a parcel of land which was a former service station site. That land was listed on the Contaminated Lands Register and the dilemma facing the Department was what additional allowance should be made for the fact that it is regarded as a probable contaminated site. Various arguments were put to the Court, including the argument that it should be an allowance for the full remediation of the site. That varied from a small amount of money to something that exceeded the unimproved value of the land itself. No evidence could be given of the exact cost of the remediation, because the relevant tests had not been carried out. In the event the Land Appeal Court made an allowance which amounted to approximately $20,000, which reduced the valuation from $135,000 to $115,000. That allowance of $20,000 was at the lower end of the range of possible costs of remediation of -- 4 of 5 -- 5 the whole of the land, but that was not the basis on which the Court decided and it felt constrained to point out three things. Only one relevant in this regard and that is that when there is no evidence of the actual cost of remediation, then the allowance should be at the lower end of the scale. The lower end of the scale I take to be the lower end of the possible or probable costs of remediation, rather than at the higher end. There is no evidence before me as to the cost of remediation of the subject land. The owners have indicated that they have remediated part of the land where the house is situated and they have planted trees. It is their intention to remediate the land further progressively as money and other resources allow. Having regard to the whole of the evidence, I have come to the conclusion that Mr Quirk-Anderson's allowance of 30% should be allowed for the fact that the land is degraded. However, he has admitted that if he had known of the Hinchinbrook Island decision and the fact that third parties can access this land, which must have an effect upon the owners' use and enjoyment of the land, he would have made a further allowance. Therefore, some further adjustment must be made to both valuations. Therefore, with respect to case No. V96-35, the interim valuation as at 30 June 1993, the appeal is allowed, the valuation of the respondent is set aside and the unimproved value of the subject land is determined at $17,000. With regard to appeal No. V96-36, the valuation as at 1 January 1995, the appeal is allowed, the valuation of the respondent is set aside and the unimproved value of the subject land is determined at $23,000. JJ TRICKETT PRESIDENT OF THE LAND COURT -- 5 of 5 --