Brampton Island Pty Ltd v The Valuer-General [1993] QLAC 43

LAND APPEAL COURT, BRISBANE. Appeals from a decision of the Land Court Re: (1) Determination of the Valuer-General of the unimproved value of the land contained in Valuation Roll No. 11621, Pioneer (a) As at 31st March, 1988 (V90-671) Brampton Island Pty Ltd V. The Valuer-General (b) As at 31st March, 1989 (V90-672) The Valuer-General V. Brampton Island Pty Ltd By appeal and Brampton Island Pty Ltd V. The Valuer-General By cross appeal (2) Determination of rent to be charged for Perpetual Country Lease No. 30/2323 (NCL) during the third rental period. The Crown V. Brampton Island Pty Ltd By appeal and Brampton Island Pty Ltd V. Brampton Island Pty Ltd By cross appeal JUDGMENT Delivered this fourth day of June, 1993 [1993] QLAC 43 -- 1 of 23 -- ' I 2 Brampton Island lies off the Central Queensland coast about 35 kilometres north-east of Mackay, from which it may be accessed daily by sea (Roylen Cruises) or by air (Australian Airlines - Twin Otter service). It is about 75 kilometres to the south-east of Shute Harbour (the mainland access point to the Whitsunday Islands). Brampton Island is said to contain an area of 7.7 square kilometres. It is principally National Park with a Tourist Resort area of about 11.25 hectares, comprising Perpetual Country Lease being Lot 5 on Plan C14322 containing an area of 10.4489 hectares and Special Lease of an original esplanade area of 7974 square metres, being Lot 28 on Plan Cl4322. The resort land is zoned Comprehensive Development (Pioneer Shire). An airstrip adjoins the resort. There is a deep-water jetty facility external to the resort with a connecting train line about 1.25 kilometres in length. The resort generates its own electricity requirements. The unimproved value of the leasehold lands comprising the resort area had been assessed by the Valuer-General for rating purposes, as at 31st March in the years 1988 and 1989. The Minister had determined the rental for the Perpetual Country Lease for the third period commencing 1st October, 1988. Section 212 of the Land Act provides that the annual rent payment "shall be a sum equal to 3 per centum of the unimproved capital value of the land ..... ". The lessee, Brampton Island Pty Ltd contested the quantum of the various unimproved valuations in the Land Court, all matters having been heard together. The learned Member of the Land Court delivered his decision on 17th May, 1991. Details of the Government valuations, those of the lessee Company and the Land Court decision are as follows:- Ref. Date Description and Area Govt. Purpose Lessee Land Court (Plan Cl4322, County Val. Val. Carlisle, Parish of Ingot) {1) 31.3.88 Lot 5 and Lot 28 $2 .8m Rating $1.62m $2.Bm (11 .25ha) (Valuer-General) -- 2 of 23 -- \.•"" .., .. (2) 31.3.89 {3} 1.10.88 3 Lot 5 and Lot 28 $4.2m Rating $1.62m $3m (11.25ha} (Valuer-General) Lot 5 (10.4489ha) $3.3. Rental $1.35m $2.4m The Min ister's determination was based on an unimproved capital value of $3.3m. Government valuation evidence was led in support of a valuation of $3.7m. The appeals from the Land Court decision now come before this Court by way of re-hearing. Both parties purported to rely on the Record of the hearing in the Court below, as well as calling fresh evidence before us. In the Land Court, valuation evidence for the lessee Company was given by Mr T. Jones. He was subpoenaed by the Government to attend this Court, but was unable to do so due to ill health verified by a medical certificate. Fresh valuation evidence for the lessee Company was adduced through Mr R.L. Brett. The Government's primary valuation evidence was given by Mr J.N. Smith. He had been responsible for the rating valuations which had been contested in the Land Court. It was Mr Smith's evidence which was led in the Land Court in support of a rental higher than the Minister's determination. Mr Brett's assessments of unimproved values at the various dates were as follows:- 31st March, 1988 (Lots 5 and 28 - 11.25ha) - $1,500,000 31st March, 1989 (Lots 5 and 28 - 11.25ha) - $1,600,000 1st October, 1988 (Lot 5 - 10.4489ha) - $1,240,000 It was agreed that the lessee Company's evidence would be led first. There is no argument that the highest and best use of the subject Brampton Island land is otherwise than as an island tourist resort. It is then argued by the lessee Company that, in comparison with the recognised Whitsunday region, with its mainland services infrastructure and access from Shute Harbour, together with the airport facility at Hamilton Island, the location of Brampton Island off Mackay is inferior. While it is argued by the Government that Brampton enjoys some transport benefits from its proximity to Mackay, we would agree with the lessee Company's -- 3 of 23 -- 4 contention that Brampton Island suffers some disability as a tourist resort destination, particularly in terms of access and lack of mainland infrastructure, on a direct comparison with islands within the immediate Whitsunday region. An important aspect of the lessee Company's case is related to the density of development potential afforded by the natural attributes of the Brampton Island Resort area. It is argued that the existing development which provides accommodation of 108 guest rooms, together with the resort infrastructure and staff accommodation, is the maximum practical development density. The primary reason provided to the Court for a restriction on development density is the available water supply. Evidence was given before us by Mr R. M. Hopkins, a civil engineer, specialising in water engineering. The fresh water supply system currently in use at Brampton Island was designed and implemented under Mr Hopkins' direction. This system of dams and bores, primarily external to the resort leases, is designed to produce an annual supply of 55 megalitres with a 95% level of reliability, requiring what Mr Hopkins described as being achievable only with "careful management practices in relation to the utilisation of the various elements of the water supply system". He stated that the total water consumption by residents and staff was very low when compared with other better quality resorts. Even so, there have been occasions (October and November, 1991 and at the end of 1992) when it had been necessary to barge water to the island. Mr Hopkins agreed that the ground water resources available to the Brampton Island Resort, while limiting the density of guest accommodation if reliance was restricted to those water resources, provided significantly greater cost efficiencies in comparison with alternatives of barging of water from the mainland or the provision of an adequate desalination plant. He agreed that the existing development made minimal use of roof water catchment. He also agreed that -- 4 of 23 -- 5 availability of water resources was a problem facing many islands isolated from mainland infrastructure and that the provision of a desalination plant was an alternative, although the economy of scale was a major consideration. He was aware, for example, that the prestigious Hayman Island Resort relied exclusively on desalination for its water supply. He provided the opinion however, that desalination of salt water was not practical for Brampton Island. He stated that "Desalination requires large amounts of energy, and is technologically complex. To produce the power, it would be necessary to import substantial extra quantities of diesel fuel, at substantial expense, and the use of which might have significant environmental consequences." While Mr Hopkin's experience in his field is not questioned, we gained the impression that his comments relative to the practicality of providing alternative water supply to Brampton Island, such as by desalination, were predicated by the question of viability, not so much in comparison with other resorts, such as Hayman, but in terms of augmentation of the already existing natural supplies. If there are reasons, other than augmentation of water supplies, which would preclude development larger than that existing on Brampton Island and more in keeping with the accommodation density on other islands, then no mention was made of them, before us. It is noted that the Member in his decision below said "and it is accepted that the potential of the area is not significantly greater, lest the island atmosphere be destroyed." Nevertheless, we perceive that denser development could be shown to be economically viable, even with more expensive water supply augmentation, but related to a resort with differing management and development strategies. Such matters, in the absence of evidence one way or another, remain speculative, yet we are not convinced that the density of guest accommodation potential of the Brampton Island Resort, is limited by the single -- 5 of 23 -- 6 factor of available water supply. We can accept that the available water supply is advantageous to a development limited to the existing density. The lessee Company argues that a further disability exists in that the primary water supply infrastructure, together with other resort infrastructure, is located within the adjoining National Park and there is a lack of permanence and security of tenure relating to usage of those facilities. It is further suggested that as the lease of the adjacent airstrip is held by a company other than that holding the resort lease, insecurity of air access could result. In respect of all matters associated with infrastructure located on the adjoining National Park, we agree that a prudent purchaser of the subject lands would need to be satisfied that the operation of a tourist resort would not be prejudiced by any lack of security for use of the installations on the National Park lands. On the evidence presented to both this Court and the Court below, we agree with the logic of the findings of the Member there. We find that at the relevant dates, while the external location of resort infrastructure was a question to be considered, the logical conclusion is that a prudent lessor (in this case the Government) would be unlikely to prejudice the potential of its lessee's interest by denial of the use of necessary infrastructure. As far as the airstrip is concerned we would see its operation as being just as dependant, if not more so, on the operation of the resort, than would be the reverse situation. Our attention to the water supply resources of Brampton Island has been important in terms of our acceptance of some aspects of Mr Brett's valuation evidence. He has approached the valuation exercise from several directions, being guided to his final conclusions by what he described as "sign-posts." In his written description of the resort is found the comment - "Primarily because of the limited water supply, the present 108 guests' units represent the maximum practical -- 6 of 23 -- 7 development for the foreseeable future." Elsewhere, under the heading of "Services" is found the subheading:- "Water:- Lack of adequate fresh water is a major factor limiting expansion of the resort beyond its current 108 guest rooms .. .... " There can be no doubt that Mr Brett has adopted the existing development as the optimum development potential of Brampton Island, in conformity with the opinion of Mr Hopkins. We have already commented on our perceptions of Mr Hopkin's conclusions. Mr Brett proceeded to make comparisons on a relativity basis of "unimproved value per guest room" between the existing Brampton Island resort development and various Whitsunday Island resorts. He sees this method of comparison as a useful yardstick and his analysis indicated to him that the valuation of Brampton Island, being $2,800,000 as at 31st March, 1988, or the equivalent of $25,926 per room, is patently wrong when the applied values on a guest room basis on Hamilton, Hayman and South Mole were $3,856, $14,953 and $14,851 respectively. He took this form of comparison further to the Daydream, Happy Bay and Lindeman resorts and gained further comfort in his conclusions that the deduced value per room for Brampton is far too high. The one thing which becomes obvious from the overall evidence in this regard is the lack of criteria on which "optimum development" may be decided. It appears that the relevant town-planning criteria is of no real assistance in determining island resort population density. Economic considerations relevant to such matters as projected demand, availability of, or lack of, natural resources and amenities and the consequent costs of development, will all obviously play their part dependant on the philosophies of the individual resort developers. We see -- 7 of 23 -- 8 nothing before the Court however to provide any "optimum" or "actual" guest density criteria which may be reliable in terms of proper "like with like" comparisons between the various resort sites. Mr Brett then looked at seven (7) sales which had been referred to in the lower Court. He set out, in chronological order, the details, as follows, accepting the Government analysis of the land component in each instance: Island Nth Keppel Happy Bay Palm Bay Keswick Dent Wild Duck Date 4.5 .85 11.4.86 22.8.87 1.6.88 2.6.88 27.7.88 Paradise Bay 26.1.89 Area 15 .8 ha 7.694 ha 127.470 ha 135.165 ha 2.342 ha 4.047 ha 6.389 ha 500.00 ha (abt) 194.2 ha 18.95 ha 107.55 ha 126.50 ha 3.237 ha Tenure S.L. P.C. L. S. L. P.C. L. S.L. Grazing Holding Grazing Holding P.C.L. S. L. S. L. Land Component $1,200,000 $1,080,000 $1 .285,000 $1,611,000 $1,200,000 $ 880,000 $1,650,000 Mr Brett concluded that no single sale provided ideal evidence of value. He observed, however, that "a notable feature of all these sales is the narrow band within which the analysed land values fit, $880,000 to $1,650,000. None approach the value of $2,800,000 applied by the Valuer-General to Brampton Island." We make the observation that "the narrow band" of value, contains sales the comments on which range to include "remote in both time and location", "complicated by the existence of various sub-leases", "a Grazing Holding subsequently converted to a Development Lease." We see the methodology of Mr -- 8 of 23 -- 9 Brett in reducing this largely non-comparable evidence to be contained within "a narrow band of value" to be akin to a type of averaging process which is offensive to the principles of valuation. Mr Brett goes on to state that "In the absence of reasonably comparable and reliable sales, it is necessary to look at broader parameters. Resorts are a business with income dependant to a large degree on the number of guests' rooms it can economically accommodate." We have already commented on the difficulties in establishing that criterion. We do however agree with Mr Brett's further statement that such properties "where aesthetics, means of access and cost of servicing are as important as the area occupied, comparisons are best made on a site to site basis." Mr Brett then goes on to describe the various matters which he sees as affecting the value of island resorts including the various advantages and disadvantages as he sees them, of the Brampton Island resort. He finally concludes reverting back to the narrow band of values, as follows: "Having examined the individual points of comparison with each of the sales, there is no justification for the March 1988 value of Brampton to fall outside the range established by those sales. A value of $1,500,000 places Brampton at the top end of the range. This value reflects $13,889 per guest room for each of the 108 units. It is an amount which compares with the top end of the range of values applied by the Valuer-General to island resorts in the Whitsunday area." We are unable to find any valuation evidence of substance to support Mr Brett's overall conclusions with regard to the March, 1988 valuation. With regard to the unimproved value as at March, 1989 Mr Brett states that there is no quantative evidence establishing a rise in values between March, 1988 and March, 1989. He says, to the contrary, various industry relevant parameters would reveal to a prospective purchaser in March, 1989 an already established -- 9 of 23 -- 10 pattern of a significant increase in room numbers, a growing vacancy rate and only moderate growth in achieved room rates. At the same time he says, construction costs continued to rise. He said that by March, 1989 it was evident that an oversupply situation was developing and one which would result in higher vacancies and stagnating tariffs. He said that continuation of the trend was foreseeable in March, 1989 and is now, with the benefit of hindsight, able to be confirmed. Nevertheless he states that if there was any increase in unimproved value between March, 1988 and March, 1989 it would be minimal. He accepted that a slight increase over the March, 1988 value was in keeping with the Land Court's conclusion and concluded himself that the value as at March, 1989 should be in the sum of $1,600,000. With regard to the 1st October, 1988 assessment of unimproved value for rental determination, Mr Brett held the view that, as that relevant date was midway between March, 1988 and March, 1989, the unimproved value would fall between those two assessments. He agreed with the Land Court decision in that the Perpetual County Lease would command value equivalent to 80% of the aggregated value of the two resort leases. His assessment of the unimproved value of Lot 5 on Plan Cl4322 as at 1st October, 1988 then became $1,240,000. In the Court below, it had been Mr Jones' contention that the May, 1985 sale of a Special Lease on North Keppel Island (off Yeppoon), and a July, 1988 sale of leasehold land comprising Wild Duck Island (off Carmila, well to the south of Mackay) afforded the best evidence to decide the value of the Brampton Island land. Mr Jones had found that the Whitsunday region sales of the Happy Bay resort (he said March, 1986) and Palm Bay (August, 1987) both on Long Island, as well as the sale of Dent Island (June, 1988), near Hamilton Island, to be of qualified assistance. Mr Jones had found the sales of Paradise Bay (Long Island, January, -- 10 of 23 -- 11 1989) and Keswick Island (June, 1988) to be of no assistance. Before us, evidence was called by the lessee Company from witnesses who had knowledge of the sale of Wild Duck Island. Apart from the fact that the land is hardly comparable, there are sufficient reasons for the sale to be discarded without evidence being considered as to whether the price achieved was reasonable or not. We have considered the overall valuation evidence contained in the record of proceedings in the Court below. The Member there found that, with regard to the valuation as at 31st March, 1988, the best evidence of value was provided by the sale of Palm Bay, on 22nd August, 1987 showing an analysed land component of $1,285,000 for an area of 2.342 hectares of non-competitive lease, capable of resort development, together with an additional area of 4.04 7 hectares of special lease with development restrictions. The vendor in the transaction was Palm Bay Long Island Pty Ltd and the purchaser Page McGeary Holdings Pty Ltd. The lessee Company called Mr G.W. McGeary, a joint managing director of the purchasing Company. Mr McGeary's Company is heavily involved in running coach tours throughout Australia and New Zealand, competing in a global market. At the time of the purchase, the Great Barrier Reef was considered the single biggest destination influence on the overseas market, in Australia. The company ran camping tours from Melbourne and Sydney as well as accommodated tours where the Whitsunday region provided the primary Barrier Reef destination. The Company had experienced some difficulties with several camping destinations and regardless of some disabilities, particularly related to management, Palm Bay had become a tour highlight, featuring Barrier Reef and Island cruise tours. Palm Bay was in close proximity to Shute Harbour and afforded an inexpensive mainland transfer. Mr McGeary says that a competing operator had acquired the nearby -- 11 of 23 -- 12 Happy Bay resort and had shown an interest in acquiring Palm Bay. When the property came up for auction, Mr McGeary and his partner decided to gain the security of their tour highlight by purchasing the resort. They hoped that they might acquire it for about $750,000 but eventually had to bid $1,700,000 which Mr McGeary thought was "a lot over" the market price. He said that in his view the purchase price could not have been justified on the basis of the existing resort operation, but it was a key to the coach tour sales. Under cross-examination, he was unable to answer whether he would have bid more, had the circumstances required him to do so. He did "want the place". While the resort was sold at public auction he had been unable to establish the identity of any opposing bidders and "didn't known whether there was anyone else bidding against me." He had questioned the auctioneer subsequent to the auction and while he was informed there was a competing bidder he remained unsure. It is clear that the purpose in calling Mr McGeary was to attempt to establish that Palm Bay had held some special value to the purchasers at the time and that an over-anxious motive resulted in an inflated price being paid. We are not convinced that while the purchaser had a particular interest in the potential offered by the Palm Bay resort, and had hoped to acquire it at a lesser price, the purchaser did anything more than successfully compete in an open market as at the relevant date. It seems obvious, on the evidence, that a competitive market was expected. While Mr McGeary portrayed a situation of anxiousness to secure the property, because of its potentialities and business opportunities, he also impressed us as being an experienced operator in the tourist industry, one who had taken the time to consider the level of the local market based on a sale of the Happy Bay resort and not a person who would overlook ordinary business considerations in an acquisition of this nature. We would not discard this sale as -- 12 of 23 -- 13 evidence of the open market value of Palm Bay at the relevant date of sale. On the evidence provided in the record of the Land Court proceedings, we would agree with the Member that Mr Jones had been in error in the manner in which he applied the evidence of the Palm Bay sale to Brampton Island. His application of the sale, by including the ·restricted use special lease area as part of an overall pro rata value for the purpose of valuing an area with unrestricted development potential on Brampton Island was clearly wrong. In the Land Court Mr Smith, in conducting his valuations for the Government, had relied on the Palm Bay, Paradise Bay and Keswick Island sales. The Member below gained most assistance from the sale of Palm Bay discussed before, (6.389 hectares comprising 2.342 hectares non competitive lease and 4.047 hectares of restricted special lease) on 22nd August, 1987 for $1,700,000 analysed to show an unimproved value of $1,285,000 for the resort area of 2.342 hectares, in deciding to affirm the Valuer-General's valuation as at 31st March, 1988 of the Brampton Resort area of 11.25 hectares in the amount of $2,800,000. It might have been assumed that with his valuation as at 31st March, 1988 having been affirmed by the Land Court, the Valuer-General's position with regard to the lessee Company's appeal against that particular valuation would have been clear. That was not the situation. At the close of the case of the lessee Company, Mr Quinn of Counsel advised the Court that the Valuer-General through Mr Smith, would be leading evidence to a valuation of "somewhere between $2,800,000 and $3,700,000," as at 31st March, 1988. It eventually emerged that the valuation for which the Government contended as at that date was $3,700,000. The basis for this change in the long-standing professional opinion of Mr Smith, was the sale of the subject Brampton Island Resort which had taken place on 1st May, 1985, in the amount of $6,000,000. The Valuer-General had, in 1985, analysed that sale and -- 13 of 23 -- 14 found an unimproved land content (which at the time included a special lease over the National Park area) of $2,833,347. Mr Smith had assisted directly in the original analysis of the sale. He had revisited the Island on two occasions subsequent to the sale and prior to writing the valuation as at 31st March, 1988. He had observed that certain redevelopment works had, or were being undertaken. The officer of the Valuer-General's Department who had carried out the 1985 sale analysis with the assistance of Mr Smith, had written an unimproved valuation of the subject Brampton Island land in the amount of $2,000,000 as at 31st March, 1987, two years subsequent to the date of sale. It is clear that those responsible for the analysis of the sale, after what must be presumed to have been consideration of the more recent evidence and interpretation of the overall market, found the sale to be of no assistance in approaching the task of ascribing unimproved value in terms of the Valuation of Land Act 1944 (the Act) at the 1987 and 1988 relevant dates. Mr Smith was one of those officers. Why then, at a time, it seems subsequent to the commencement of the hearing before us, and after, on his own evidence, close and detailed consideration of the evidence relevant to the valuation as at 31st March, 1988, and at various times between 1985 and 1993, did he change his professional opinion? Mr Smith says that it was not so much with the benefit of hindsight but more so that he had become aware that a valuer in private practice had ascribed "a hypothetical land value" component of $3,000,000 in an improved valuation of $6,000,000 for the Brampton Island resort carried out at about the time of the sale. Furthermore, company accounts subsequent to the sale verified the write off of certain improvements replaced in the redevelopment. Indeed, as it appeared from his cross-examination, it is closer to the facts that he was concerned that if the 1989 sale of Paradise Bay, being his primary basis for finding an increase of 50% in the level of island resort values from 1988 to 1989 -- 14 of 23 -- 15 was discarded by this Court as reliable evidence (as it had been by the Land Court) then support for his October, 1988 and March, 1989 valuations was lost. Other than the Paradise Bay sale, Mr Smith took comfort from the sale of Keswick Island which was a sale of a Grazing Holding, but with potential for negotiation of change in tenure, as supporting his unchanged opinion that the unimproved value of Brampton Island as at March, 1989 was $4,200,000. The Member below found the sale of Keswick Island to be of limited assistance "in that it lacks comparability with the subject land and smaller sized resorts...... Keswick and Dent may be useful in establishing a value of those properties or in valuing area with a comparable potential to that envisaged by the purchasers." We are of the opinion that with the Grazing Holding tenure of the two islands, Keswick and Dent, it is necessary to accept firstly that negotiation of tenure was required before cogent comparison with island resort property is possible. Secondly, and regardless of the opinions of the experienced persons acquiring the right to negotiate acceptable development tenure, the extent of development potential was unknown at the date of sale. These reasons may well have provided support to the proposition that the market for island resort, or potential resort, property had not stagnated by the date of the sales - June 1988. We find the evidence of the sales of Keswick Island (or Dent Island) to be of no assistance in establishing the value of Brampton Island in March, 1989. If there were reasons for Mr Smith's unshaken opinion as to the value of Brampton Island, as at March, 1989, other that the sales of Paradise Bay and Keswick Island, then they were not cogently canvassed before us. Nevertheless his reasoning appeared to be that, if the Paradise Bay and Keswick Island sales were not accepted as properly reflecting the applied increase in value form March, 1988 to March, 1989, then it was not that the 1989 valuation should be found to be -- 15 of 23 -- . " 16 wrong, but that the 1988 valuation was too low. If he further ignored the 1987 Palm Bay sale which had previously been basic to his March 1988 valuations, but which sale was now also under challenge, all Mr Smith was left with was the sale of the subject land itself in 1985. His reason for not applying that sales evidence had previously been that sales effected in 1985 and even in 1986 were too distant in time for the 1988 valuation. However, if the 1985 sale was the only evidence with which he was left, the level of value shown then should, in his opinion, be now seen as the bottom line, because he held the opinion that island values had increased significantly from 1985, peaking in about April, 1989. He felt that an increase averaging 10% per annum over that period was a conservative estimate of market movement. He gained support for this opinion at least in the period from 1985 to 1988 from the evidence of Mr Jones, in the hearing below, and in principle if not quantum, from the evidence of Mr Brett. Mr Smith agreed that the analysis of the 1985 Brampton Island resort sale as a going concern, with partial and staged redevelopment proposals, was a complex and difficult valuation exercise. There had been found the need to review some of the original calculations. At the time of the original analysis no significance had been placed on the evidentiary weight of the sale. That situation remained until the time of this hearing. It seems that the value which should be ascribed to the special lease of the National Park area or the adjustment which should be made for the smaller area of Lot 5 (the special lease over Lot 28 having been granted later in time), were matters broadly left for the consideration of the Court. Nevertheless, if an unimproved value of $2,800,000 was adopted from the May, 1985 sale of Brampton Island and that value was compounded at 10% per annum up to 31st March, 1988, then that was the basis for Mr Smith's fresh valuation of $3,700,000 as at that date. -- 16 of 23 -- 17 It is clear that Mr Smith has, over a long period, gained considerable experience in the assessment for statutory purposes, of the unimproved value of various Island resort properties. There are obviously complex valuation problems related to location, available resources, development potentialities, tenure and the associated relativity of values of the individual resorts. The extent of evidence allowing confident application of the somewhat artificial unimproved fee-simple concept required by the relevant legislation is limited. There is virtually no sales evidence of vacant fee-simple island resort sites. A valuer taking on the onerous task of regular valuation of this style of property, which it is demonstrated is subject to volatile influences, will no doubt form professional opinions as to reasonable levels of value and relativities. These opinions, regardless of any logical base, will be difficult to support in the absence of directly comparable evidence. It seems to us that the concepts of level of unimproved value in vogue amongst those responsible for the valuations of the Valuer-General, in the period immediately subsequent to 1985, did not embrace acceptance of the 1985 Brampton Island sale as reliable evidence for the analysis of the unimproved value of either Brampton Island or its application to other island resorts, for statutory purposes. This is clear when on a recognised rising market, the values applied to Brampton in 1987 ($2,000,000) and 1988 ($2,800,000) are considered. It seems that the sale was not presented as evidence of value when the Land Court was required to determine the unimproved value of Happy Bay, on Long Island, for rental purposes as at October, 1986. It seems instead, that an earlier transaction involving Happy Bay itself, was considered more relevant by another Government valuer. Then, the sale of Palm Bay on Long Island, referred to earlier, became the prime evidence of value for island resorts as adopted by the Valuer-General for his valuation in 1988. As it is now urged by Counsel for the Government, had the sale of Brampton -- 17 of 23 -- 18 Island been adopted as evidence of value then, a much higher level of value should have been applied to Brampton Island in March 1988. It would follow that if the no doubt, well considered relativity of values for the various island resorts generally was correct, then the valuations applied to the Whitsunday group, at least, from as early as March, 1986, were all too low and, significantly so. The proposition put to us is that, regardless of the consequences of the alleged mistakes which have been perpetrated, due to the non-acceptance of the Brampton Island sale (and no doubt other sales of improved resorts as going concerns) the Valuer-General nevertheless eventually "got it right" with the level of value found for Brampton Island (and other island resorts) as at March, 1989. How did this occur? It seems, that without prior reference to the 1985 Brampton Island sale, the correct level of value was found through the evidence provided by the sale of Paradise Bay. There seems no doubt that, of all the resorts or potential resorts in the Whitsunday region, Paradise Bay is now recognised, if not generally so before particular development feasibility studies were performed, as being of significantly inferior quality. There are circumstances surrounding the prudency of the purchaser in that transaction which create doubt as to the suitability of the evidence for the formation of opinions as to the unimproved value of island resorts generally. Nevertheless, on the totality of the evidence relevant to this sale, we would not have been prepared to ignore its worth as support for Mr Smith's interpretation of the market as at March, 1989, if other reliable evidence had formed the basis of that valuation. However, even had the purchasers been better informed as to not only the potentialities of the land, but also the tenure of lease which had been acquired, we would have found the Paradise Bay sale to have been a weak basis as the sole support for the interpretation of market value of island resorts as at March, 1989. We found Mr Smith's evidence as to his new found opinion as to the -- 18 of 23 -- 19 reliability of the 1985 Brampton Island sale to be nothing more than an attempt to support his interpretation of the 1989 market. The result was not persuasive and, if Mr Smith himself was convirwed as to the need to rethink the evidentiary position, them some doubt must be cast on the veracity of the Valuer-General's valuations of island resort properties in general and over a long period of time. The Government sought to substantiate the evidentiary worth of the Brampton Island sale and the level of island resorts generally, by the introduction of evidence related to the opinions of other valuers, called on subpoenae, as well as the contents of company reports, relative to Brampton Island. As we saw this evidence, the "land values" as interpreted for the Brampton Island resort from the valuations of others, were derived from opinions of improved value on a going concern basis, and were not intended to reflect the definition of unimproved value as it relates to improved land in terms of the Act. Where opinions of values had been given by others, in relation to property other than Brampton Island, such opinion was qualified by assumptions which we found to be of no assistance in the matters before us. In the Land Court decision, while accepting a rising market had continued to influence the unimproved value of island resorts from March, 1988 to March, 1989, the Member rejected the sale of Paradise Bay as indicative of the proper test of market value, or, as a consequence, the trend in island resort values in the relevant period. Doing the best he could, having rejected Mr Smith's basis for a significant increase from 1988 to 1989, a valuation of $3,000,000 was adopted as at 31st March, 1989. Our conclusions are as follows:- Valuation for Ratin g purposes - 31st March, 1988 While it is not evident from the length of time involved in this hearing, the -- 19 of 23 -- 20 matters before the Land Court and now before us are, put simply, questions of valuation. The specific task is obviously not a simple one, made difficult by the state of the evidence of value and comparability of that evidence. Evidence which became available in a period much earlier than the relevant valuation dates here could have resulted in significantly higher levels of value being argued not only for Brampton Island but island resort property in general. For that argument to have been successful, however, it seems that a basis would have to be established for either discarding, on a rising market, the later sales of the Happy Bay and Palm Bay, Long Island resorts, or alternatively adopting some other criteria for comparing relativities of value between those particular sale properties and other island resorts. We have formed the opinion that if those Government valuers experienced in interpreting the unimproved market for statutory purposes, were not prepared to consider the higher level of unimproved value indicated by the sale of Brampton Island in 1985, either as evidence of value at that time for its own later assessment, or for island resort properties capable of direct comparison, then it is more likely a matter of hindsight which would encourage adoption of that level for the proceedings before us. We have not been convinced that the pattern of market movement indicated by the Happy Bay and then the Palm Bay sales were not matters of evidence which vindicated the earlier decision by those Government valuers not to rely on the Brampton Island sale in formulating levels of value, particularly in March, 1988. There is no evidence before us to suggest that the March, 1988 valuation of Brampton Island in the amount of $2,800,000 as determined by the Valuer-General and affirmed by the Land Court is too low in comparison with the valuation applied to Palm Bay from the evidence of that sale. The argument put by the Government is simply that the valuation of Brampton Island as at March, 1988 is too low compared with the sale of that resort -- 20 of 23 -- 21 in 1985. On that basis the Government submission is that, in terms of section 21 (7)(b) of the Act, we should increase the Valuer-General's valuation to the extent necessary to determine the same correctly. We are not convinced that an error has been made. We agree that the most satisfactory method of valuation of these island resorts is on the basis of a direct site to site comparison, taking cognisance of all matters, including area, which affect development potential, and as a consequence, market value. We have not been provided with suitable criteria, and indeed see it as unlikely that suitable criteria is capable of being provided, for adoption of a basis of "optimum guest room potential" for any particular island resort. Even if such criteria was available, we see any associated unit of value criterion being, of necessity, allied to a "like with like" development comparison. The argument by the lessee Company that the valuation of Brampton Island is too high on a "guest room" relativity basis in comparison with other resorts, is not accepted as we are not convinced that the necessary optimum potential, or a proper "like with like" basis of comparison, has been adopted. We find no reason to disturb the decision of the Land Court with regard to valuation as at 31st March, 1988. Valuation for Ratin g purposes - 31st March , 1989 We do not accept that the sale of Paradise Bay affords evidence of sufficient weight to find a general increase of 50% in the unimproved value of island resort property, from 31st March, 1988 to 31st March, 1989. It is now the evidence of Mr Smith, that in his opinion, the increase in value between those dates is from $3,700,000 to $4,200,000, which represents 13.5%. We find that Mr Smith has provided no evidence to support any particular level of increase. -- 21 of 23 -- - . (' 22 Mr Jones in the Court below had found no increase in the relevant period. Mr Brett also with no specific evidence suggests a maximum increase from I $1,500,000 to $1,600,000 or about 6.6%, which is broadly in line with the increase found by the Land Court. With the paucity of evidence on which we are prepared to rely, we see no reason to disturb the decision of the Land Court in finding a valuation of $3,000,000 as at 31st March, 1989. Valuation for Rental purposes - 1st October, 1988 Alternative methods of apportioning value to the smaller area of the Perpetual Lease as compared with the aggregated parcel, to that accepted by the Member below, have been suggested by Mr Smith. The Member found that of the total aggregation valued for rating purposes, the Special Lease attached to the Perpetual Lease has no restrictions or limitations which may require special consideration under section 11 (1) (v) of the Act, in determining value. He found that for reasons put forward by Mr Jones, the Special Lease, being originally esplanade land, was more valuable on a pro rata basis than was the aggregated parcel, to the degree that the Perpetual Lease carried 80% only of the aggregated capital value. He found no reason to differentiate between the capital value as at 1st October, 1988 and 31st March, 1989. As he was required to do, the Member determined the rental at 3% of the unimproved capital value, which became $2,400,000. This resulted in a rental of $72,000 per annum. While it is now the Government's submission that the value of the Perpetual Lease should be no less than an overall pro rata value of the aggregation, we see no reason to disturb the determination of the Member below. -- 22 of 23 -- 23 Findings (1) The appeal against the decision of the Land Court in affirming the Valuer- General's valuation of $2,800,000 of the resort lands at Brampton Island as at 31st March, 1988 is dismissed. (2) The appeals against the decision of Land Court in finding the unimproved value of the Brampton Island resort lands in the amount of $3,000,000 as at 31st March, 1989 are dismissed. (3) The appeals against the decision of the Land Court in determining the rent to be charged for Perpetual Country Lease No. 30/2323 (NCL) during the third rental period of the lease in the sum of $72,000 per annum, are dismissed. (signed Ambrose J) A Justice of the Supreme Court. (signed DJ Barry) President of the Land Court. (signed RE Wenck) Member of the Land Court. -- 23 of 23 --