Benson v Minister for Lands [1995] QLC 90

LAND COURT BRISBANE 31 August 1995 Re: Determination of unimproved value for conversion purposes - Special Lease No 35/39677 - Rockhampton District. Lessee: Charles James Benson. (Hearing at Rockhampton) D E C I S I O N Mr Benson is the lessee of Special Lease No 35/39677, Rockhampton District, which is in respect of land described as Lot 106 on Plan LN1995, Parish of Cawarral, with an area of 8.5 hectares. Under the provisions of section 207 of the Land Act 1962, Mr Benson applied to the Minister for Lands for conversion of the lease to freehold tenure. The parties agree that the relevant date is 3 July 1992. The Minister determined the unimproved value of this land for conversion purposes at $28,000 and under the provisions of s.207D(3)(b) of the Act, Mr Benson has requested that this matter be referred to the Land Court for hearing and determination. Mr CJ Benson appeared and gave evidence. He stated that he applied to freehold the land in July 1992 at which time his annual rent was $280 per annum. Since then, his rent has increased to $882 for the 1993/94 period and $909 for the 1994/95 period. He states that had his application been processed in the first twelve months he would not have had to pay the two years increased rent. He suggests therefore that the rent for those two years, or at least the difference between his original rent of $280 per annum and the increased rent for those two years, should be deducted from the freeholding price. Mr Benson states that when he acquired the lease at auction in November 1975, it was virgin scrub country, with the timber so thick that it was almost impossible to traverse on foot. It was a new lease, unsurveyed, with no fences or water. Since then he has improved the property and constructed a house. He states that he had power put on at a cost of $1100, a bore which cost $650, dozing $1535 and grading a house site $67.20, a total of $3,352.20. Mr Benson states that now that the block has a good view, is basically clean and surveyed, he feels he should not be penalised for the 20 years of work to improve it. [1995] QLC 90 -- 1 of 5 -- 2 He points out that his valuation under the Valuation of Land Act for Local Government purposes was reduced to $27,500 at about the relevant date. He contends that this should be the starting point from which should be deducted a rebate of $1791 for the delay in processing his conversion application and the cost of improvements of $3,352.20. This would bring the unimproved value to approximately $22,360. Mr Benson also referred to the valuations of three adjoining properties, the details of which he obtained by searching the records of the Department of Lands. Each of these valuations was made under the provisions of the Valuation of Land Act 1944 with a date of valuation 30 June 1993. The first is in respect of 64.09 hectares owned by VR and DF Olsen and valued at $19,000. This land adjoins the subject property to the east and Mr Benson feels that if a property eight times larger is valued at only $19,000, it illustrates that $28,000 on his property is not correct. The second property referred to is owned by RE Wood, contains an area of 55.04 hectares and adjoins the subject land to the west. Mr Benson comments that this much larger site is higher than the subject land, has a better view over the ocean and yet is valued at only $12,400. The third property referred to is also owned by VR and DF Olsen, contains an area of 23.49 hectares and is valued at $15,600. This property is situated to the south of Wood's property, close to, but not adjoining, the subject land. It also emerged in evidence that at that date of valuation, 30 June 1993, the subject land was valued under the Valuation of Land Act at $30,500. Mr Benson said that he had difficulty in finding any relevant sales in the area. However, he knew of sales of five 40 hectare properties situated to the north-east of the subject land, which sold in early 1994 for prices of between $46,000 and $56,000. As each of these properties is about five times the area of the subject land, Mr Benson was of the opinion that the valuation of $28,000 is excessive. When asked for his opinion of the highest and best use of the subject land, Mr Benson said that he hoped to be able to use it for primary production purposes, growing pineapples and pawpaws. However, circumstances had so far prevented him from doing so. Evidence on behalf of the Crown was given by Mr DW Drew, a registered valuer employed by the Department of Lands. Mr Drew explained that Special Lease No 35/39677, commenced on 25 November 1975 for the purpose of grazing. Permission for the erection of a dwelling was granted on 17 May 1977. Mr Drew's report indicates that the land is situated about 1.5 kms north of the -- 2 of 5 -- 3 township of Mount Chalmers, with access by means of a formed gravel road along the eastern boundary. He describes the land as being an undulating to elevated hillock, intersected by a stony creek and timbered with mahogany and ironbark. He states that a residential dwelling has been erected on the subject land which is occupied by the lessee. About 4 hectares have been cleared and part blade ploughed. In arriving at his valuation of $28,000 at the relevant date, Mr Drew had regard to three sales. Sale No. 1 is situated in Glenora Road to the south of Cawarral, has an area of 10 hectares and sold in January 1991 for $35,000. Mr Drew states that the only improvement was clearing and the sale analysed to show an unimproved value of $33,000. Mr Drew describes this land as relatively level grey soil flat rising at the rear, timbered with gum top box and iron bark. The country becomes boggy when wet. In comparing it with the subject land, Mr Drew said that the sale is slightly larger and better located with similar access. While he considers that the subject land has a better view, he thinks that overall the sale is slightly superior. Mr Benson knew this property and while he generally agreed with Mr Drew's description and comparison, he said that the subject land had better views only after the trees were knocked down and he felt that in similar circumstances the sale would have a "fairly good view". Sale No. 2 is situated in Dodson Lane also to the south of Cawarral, contains an area of 12.04 hectares and sold in February 1993 for $35,000. Mr Drew states that the only improvements were some clearing to the value of $1500 but, at the time of sale, the developer undertook to supply a dam or bore to the value of $1,000. After deducting $2,500 from the sale price, Mr Drew arrived at an unimproved value of $32,500. He describes the land as undulating country, with mature ironbark and gum forest, intersected by a wide open shallow depression. He considers that it has a "poor hatchet shape". In comparing this land with the subject property, Mr Drew said the sale is slightly larger, with a poor shape, but better located. Despite the subject land having a better view, he considers that, overall, the sale property is superior. Mr Benson also knew this sale. He points out that the sale date in February 1993 is eight months after the relevant date. He agrees that it is better located to the shop and school in the township of Cawarral and overall is superior. Sale No. 3 is situated adjacent to Sale No. 2, with access by means of the Tungamull-Cawarral Road. It contains an area of 10.01 hectares and sold in February 1993 for $35,000. Mr Drew states that the improvements and undertaking by the developer were similar to those in Sale No. 2. He analysed this sale to show an unimproved value of $32,500. -- 3 of 5 -- 4 Mr Drew describes the land as undulating country, with mature ironbark and gumtop box forest, with a small area of rock outcrop. It is a corner lot with a formed gravel road. He states that it is slightly larger than the subject land, situated on a corner, with a limited rural view, but better located. Overall he considers that the sale is superior to the subject land. Mr Benson also knew this property and while he generally agreed with Mr Drew's description and comparison, he commented that this sale also was well after the relevant date. Mr Drew commented that although the subject land has a better view than any of the sale properties, they are better located and slightly larger. Therefore, he applied an unimproved value of $28,000. Mr Drew knew of the valuations applied to each of the three nearby parcels of land referred to by Mr Benson. He stated that each of them had been valued under the concessional provisions of the Valuation of Land Act 1944 as land used for purposes of "farming" as therein defined. Mr Benson stated that while Wood's property was growing pineapples and pawpaws, the two Olsen properties had not grown pineapples for some time. He considered that they were no longer used for purposes of farming. With regard to the 40 hectare sale properties referred to by Mr Benson, Mr Drew said that it was his opinion that purchasers of these rural properties were basically looking for a homesite with a view and ease of access. His sales indicate that for a 10-hectare site, a purchaser will pay between $30,000 to $35,000, but will not pay proportionally more for a larger site. Therefore, he concluded that a valuation should not be related to proportion of area. This matter is governed by the provisions of section 207D(7) of the Land Act 1962 which states: "... the unimproved value of a lease is the amount that in ... the Court's opinion, experienced persons would be willing to pay for an estate in fee simple in the land if it was offered for sale on the reasonable terms and conditions a bona fide seller would require ... " Section 244 of that Act makes it clear that in ascertaining the unimproved value of land from a consideration of sale prices of comparable land, allowances shall be made for the value of improvements. Section 245(1) of the Act makes it clear that the expression "unimproved value" in the Valuation of Land Act 1944, does not apply in these circumstances. Therefore, I cannot have regard to the valuations applied to the three adjoining properties referred to by Mr Benson. They were made under the provisions of the Valuation of Land Act and can have no bearing on this matter as those valuations were made on the concessional basis that the properties were used for -- 4 of 5 -- 5 the purpose of farming. It is immaterial whether or not they were correctly applied. They simply cannot be related to the unimproved value of the subject land. Mr Drew has approached the valuation in the traditional manner, by direct comparison with sales of three comparable properties. Although two of these sales are well after the relevant date, it appears from the sale prices that there was little change in the market in the intervening period. In any case, I have no evidence to the contrary. In the circumstances, I accept the sales used by Mr Drew rather than the sales and the comparisons referred to by Mr Benson. Mr Benson knew the three sales and had little argument with Mr Drew about any of them. With regard to the delay in processing Mr Benson's application for conversion, Mr Drew explained the administrative reasons for the delay. In any case, the duty of this Court is clear and that is to determine the unimproved value at the relevant date. In doing so I cannot make the allowances suggested by Mr Benson. After considering the whole of the evidence I have come to the conclusion that the unimproved value determined by Mr Drew is fair and reasonable as at the relevant date. Accordingly, the unimproved value of Special Lease No 35/39677, Rockhampton District, for the purposes of conversion of tenure, is determined at Twenty-eight thousand dollars ($28,000). (JJ Trickett) Member of the Land Court -- 5 of 5 --