Assman & Anor v Minister for Lands [1993] QLC 151

Re: Determination of Rent Second Rental Period Special Lease No. 09/49572 Cairns District LAND COURT BRISBANE 26TH NOVEMBER, 1993. Lessees: Ann Isabel ASSMAN and Leslie ZACKRISEN {Hearing at Cairns) DECISION In this case the Crown is seeking an annual rent of $390 for the second period of the lease of Special Lease No. 09 / 49572, Cairns District, which commenced on 1st April, 1993. The rent for the first period of the lease was $160 per annum. The lessees have requested that this matter be referred to the Land Court for hearing and determination. Special Lease No. 09/49572 is in respect of the land described as Lot 84 on Plan SR 416, Parish of Mowbray, containing an area of about 14.8 hectares. It is situated about 20 kilometres south of the town of Mossman and about 10 kil.ometres from Port Douglas and 65 kilometres from the City of Cairns. The bitumen sealed Captain Cook Highway, a major arterial road, passes through the subject property. This Special Lease was granted for a term of 20 years from 1st April 1988 for primary industry (agriculture) purposes. The Departmental report tendered on behalf of the Crown describes the land as being of irregular shape, cut into three severances by the Captain Cook Highway and an unused road formation that was [1993] QLC 151 -- 1 of 7 -- 2 the old highway. The eastern severance consists of about 5.85 hectares of gently sloping ti-tree forest merging into tidal mangrove. The middle severance consists of about 3.86 hectares of gently sloping ti-tree forest and the western severance consists of about 5.24 hectares of steeply rising open ironbark forest on broken foothills. The soils are described as being light to very light sandy loam with a clay base, subject to inundation and salinity in places. About 4. 7 hectares is used for the growing of sugarcane in conjunction with other land owned by the lessees. About 4 hectares of this is situated on slightly higher country on the northern part of the eastern severance and is without inundation and salinity problems. However, the balance .7 hectares suffers from marginal to severe inundation and salinity. Mr Leslie Zackrisen appeared and gave evidence on behalf of the lessees. He tendered a written statement upon which he elaborated. Mr Zackrisen said that the land is only marginal agricultural land, being of a low-lying nature and to some extent suffers from salt intrusion. However, with the aid of drains and bedding, the available area is farmed with their neighbouring fields, producing only about 50 tonnes of cane per year. However, it is useful in the sense that it provides headlands and access to the other fields. In addition, the mill transport equipment for transferring cane to the mill is situated on the subject land. It also acts as a fire control measure and for the elimination of feral pests. Mr Zackrisen is most concerned at the extent of the increase in rent for the second rental period. He said that such an increase is prohibitive in a time when the industry is just getting by. He thinks that as the subject land is in the vicinity of Port Douglas, this may have had some influence upon the increase in rent. Mr -- 2 of 7 -- 3 Zackrisen explained that only 10 acres (4 hectares) of the subject land is assigned to the Mossman Central Mill, but it is used in conjunction with his other cane lands. He emphasised that while the subject land, being in three severances, is useful to the lessees, it could be used only by an adjoining owner and it would be useless to any other canegrower. Mr I Quirk-Anderson, registered valuer employed by the Department of Lands, gave evidence on behalf of the Crown. He arrived at the recommended rent of $390 per annum by applying 3 per cent of the unimproved value of the subject land which he assessed at $13,000. Mr Quirk-Anderson arrived at this unimproved value by reference to sales of two properties which he considered to be comparable in class of country to the subject land. Sale No. 1 is of an area of 60. 7 hectares situated approximately 8 kilometres north of the subject land and about 4 kilometres from Port Douglas and 14 kilometres from Mossman. Access is by means of the bitumen sealed Captain Cook Highway which passes along the north-eastern boundary of the sale property. It enjoys similar services to the subject land. Mr Quirk-Anderson describes this property as consisting of 30 per cent easy sloping rainforest scrub, while the balance 70 per cent consists of gently sloping to level coastal ti-tree forest. This property is a cane farm with approximately 55 hectares of assigned land. It is much larger than the subject property with areas of much better soils. However, its lower capacity soils are considered to be marginally better than the subject land. Overall it is superior to the subject. This property sold in September 1992 for $252,351 and was analysed to show an unimproved value of $79,000. Mr -- 3 of 7 -- 4 Quirk-Anderson classifies its unimproved value as follows: 18.64 hectares, capacity 12, at $2,100 per hectare 22.51 hectares, capacity 9, at $1200 per hectare 13. 75 hectares, capacity 8, at $900 per hectare 5.8 hectares, unassigned, at $130 per hectare Sale No. 2 is situated some distance away, being only 9 kilometres from lnnisfail. Access is by means of the Bruce Highway and then 2.5 kilometres of gravel road. This property is also a cane farm, with an area of 19.48 hectares and Mr Quirk-Anderson describes it as being all level to low rainforest scrub, with about two-thirds of the area broken clay loam soils, while the balance is low, wet and poorly drained clays. While this property is superior and has areas of better country, Mr Quirk-Anderson considers that the poorer country is similar to the subject land. This property sold in July 1992 for $92,945 and was analysed to show an unimproved value of $41,500. Mr Quirk-Anderson classifies this unimproved value as follows: 12.9 hectares, capacity 10, at $2,600 per hectare 5.05 hectares, capacity 8, at $1,500 per hectare 1.53 hectares, unassigned, at $250 per hectare. Applying the figures apportioned from the sales, Mr Quirk-Anderson then values the subject land as follows: 7.76 hectares, capacity 9, at $1,300 per hectare 1.79 hectares, capacity 8, at $1,000 per hectare 5.24 hectares, unassigned, at $130 hectare. -- 4 of 7 -- 5 That gives a total of 14.77 hectares for $12,559 and he adopts $13,000. With regard to the concern expressed by Mr Zackrisen about the increase in the rent, Mr Quirk-Anderson said that there had been a substantial increase in the unimproved value of the subject land since the first period rent was assessed in 1988. It had then been based on 3 per cent of the unimproved value which was determined at that time at $5,477. He was not the valuer responsible for that former unimproved value and could give no evidence as to whether it was correct or not. Mr Quirk-Anderson said that he realised the difficulties of the severance of the property into three parts, but it also provided the owners with substantial benefits. The subject land connects two freehold portions owned by the lessees. It therefore has a considerable value to adjoining owners. He added that most sales of cane farms are to adjoining owners anyway, so for these reasons he had not discounted the unimproved value for the fact that the property is cut into three parts. He said that the property had been valued as part of a cane farm and as it was valued on a cane basis, being close to Port Douglas had not enhanced the unimproved value. Because of its size, Mr Quirk-Anderson said that he valued this land at a higher rate per hectare than had been applied to the larger areas of the sales. He rationalises this on the basis that the smaller the area, the higher the rate per hectare. He does not believe that this method penalises the smaller farmers. The determination of this rent is for a very limited period, being only three months before the new method provided for by the Lands Legislation Amendment Act 1991, came into force . However, be that as it may, the duty of the Court is to -- 5 of 7 -- 6 determine this rent on the same basis as if it was to be determined for the full five- year period. The Court's duty is set out in Section 204(5B)(c) of the Land Act 1962, which provides as follows: "The Court shall determine the annual rent at such sum as it considers an experienced and bona fide person would be willing to pay as annual rent for the land comprised in the lease during the rental period in question, having regard to the use to which the land may be put in accordance with the purpose for which the lease was granted and under the terms and conditions of the lease." Having regard to these provisions, I agree with Mr Quirk-Anderson that the subject land has a value to the neighbouring owners and particularly in this case as it connects two parcels of canegrowing land owned by the lessees. However, I am sure that an experienced and bona fide person, being in the position of the lessees, would pay no more as annual rent for the land than was absolutely necessary. As the land has a value only to adjoining owners, there would be little or no competition for three severed parcels of land, none of which was big enough to grow a substantial amount of cane and none of which on their own could be used for any other worthwhile purpose. Therefore, while the land is useful to the lessees, they would be very unlikely to overlook the reality that its value to any other person would be very limited indeed. In such circumstances, I propose to give the benefit of any doubt to the lessees. In this regard I note that Mr Quirk-Anderson's classification of sale No. 1 shows the capacity 9 cane land at $1,200 per hectare whereas in the case of the subject land he has applied a rate to the capacity 9 cane land of $1,300 per hectare. I propose to apply the rate shown in sale No. 1 for this capacity land. Also I note that with regard to the capacity 8 land in the same sale, it is shown as $900 per hectare whereas the subject land is shown at $1,000 per hectare. In the -- 6 of 7 -- •' 7 case of the unassigned land, it comprises land of such poor quality that I intend to reduce the application from $130 per hectare to $100 per hectare. Applying these classifications to Mr Quirk-Anderson's area, the valuation becomes: 7.77 hectares, capacity 9, at $1,200 per hectare 1. 79 hectares, capacity 8; at $900 per hectare 5.24 hectares at $100 per hectare Adopt $9,324.00 $1,611.00 $ 524.00 $11 ,459.00 $11,500.00 In addition, I feel that an experienced and bona fide person in the position of the lessees would discount the unimproved value of the subject land because of the fact that it is severed into three parcels. If it was not for the fact that the severance itself is of some value to the lessees as outlined by Mr Zackrisen, I would discount it far more heavily than the 10 per cent I propose to apply. Applying this 10 per cent discount brings the unimproved value to $10,350 (adopt $10,000). In the absence of any market rents, the adoption of 3 per cent of the unimproved value seems appropriate and reasonable in the circumstances. Accordingly, the rent for the second period of the lease for Special Lease No. 09/49572, Cairns District, is determined at the sum of $300 per annum. J J TRICKETT MEMBER OF THE LAND COURT -- 7 of 7 --