Adair & Ors v Minister for Lands [1992] QLC 266

f -. - , Re: Determination of Rent - LAND COURT, BRISBANE. 18th December, 1992. Second rental period - Grazing Homestead Perpetual Lease No. 16/10462 Lessees: Alexander Allan Adair, Kathryn Anne Adair and Brian Lindsay Adair (Hearing at Dalby) DECISION The Crown is seeking an annual rent of $1,258 per annum (19.9 cents per hectare) for the second period of Grazing Homestead Perpetual Lease No. 16/10462, which commenced on 1st January, 1990. The lessees have requested that this matter be referred to the Land Court for hearing and determination. The rent for the first period of lease was $297 per annum (6.1 cents per hectare). This Grazing Homestead Perpetual Lease comprises the land described as Lot 18 on Plan DV. 1092, Parish of Marmadua .and Lot 1 on Plan PG.476, Parish of Toombilla, containing an area of 4873.677 hectares. It is situated approximately 35 kms south of Tara by formed gravel and earth road and about 84 kms south west of Dalby by bitumen road. The Crown report describes the land as comprising about 2,095 hectares (43%) of brigalow, belah and wilga scrub country with level areas of box influence and melonholes and undulating to sloping in parts, with the balance 2778.677 hectares (57%) comprising undulating to ridgy inferior sandy forest country, [1992] QLC 266 -- 1 of 7 -- - Page 2 - timbered with cypress pine, black pine, ironbark, mollybox, wattle and bulloak, and some lancewood ridges. Mr Alexander Allan Adair appeared and gave evidence on behalf of the lessees. Mr Adair tendered a written statement that the lessees purchased the property in December, 1988 for $570,000 which he said was at or near the top of the market. He describes the country as brigalow country in patches surrounded by large areas of forest and State Forest. Wallabies have proved to be a major problem in this area, because the Forestry Department does not allow burning in the forest country. The undergrowth has therefore built up, making an ideal breeding ground for wallabies. Any pasture that is- planted is completely wiped out by the heavy wallaby infestation during dry weather. Mr Adair estimates that the present carrying capacity is 400 head of cattle. Mr Adair's statement also included costs of clearing and fencing, and an estimate of the amount of money that has been spent on the property since it was purchased. He also included an analysis of the sale of a neighbouring property_ called "Bellvue", containing an area of 2,673.383 hectares, which sold in June 1992 for $300,000. This area included 1,673 hectares of Forestry special lease. Mr Adair's estimate of the value of improvements exceeded the sale price by $214,200. Mr Adair saw this as evidence that property values had not increased since the last reassessment of rent and that they had decreased. He said that the lessees would not have purchased the subject property if they had known the area. Despite substantial development since purchase, the carrying capacity had not increased greatly because of the regrowth and the wallabies. He considered that the unimproved value was nil, but he did realise that -- 2 of 7 -- - Page 3 - if the property was placed on the market in its virgin state it would bring a price. Mr Adair contended that there is no permanent arable country on this property. He said it is only semi-arable and not grain growing country because it lacked the required depth of soil. He said that he will grow oats and lucerne on the country that he has ploughed and then allow it to go back to grass over the next 5 years. Although he is presently cultivating 120 hectares to grow oats, he considers that no land should be assessed as arable. Mr Adair admitted that he brought the property to grow crops, but because of the marsupials and melonholes, crop growing was not viable. He considers that the forest country, about 57% of the property, is ·completely useless as it will not carry cattle for more than two months in flush times and at such times there was no need to use the forest country. He agrees with the Crown that approximately 60% of the property is inferior forest, containing cypress pine, ironbark and bulloak. Mr Adair considers that the Crown carrying capacity of 1 beast to 11 hectares of 428 head is too high, his own estimate being 400 head. He does agree, however, that with further clearing and development the potential carrying capacity of this property is 1 beast to 8 hectares, or 589 head. However, because of the wallaby problem, he considers that this can be achieved only by the expenditure of large amounts of money to nett or electric fence the developed areas. Mr Adair was shown the factor sheet used by the Crown and, although he agreed with it generally, he contended that the allowance should be increased because of the wallaby problem and the cost of getting artificial water. Under cross examination Mr Adair conceded that an area of about 100 acres did not have -- 3 of 7 -- - Page 4 - problems with marsupials as it was situated further from the forest areas. Mr Evan Zander, Senior Valuer employed by the Department of Lands gave evidence on behalf of the Crown and tendered a report and basis for the assessment of rent. The background to the method of assessment used by the Crown in applying the Carter Rents is discussed in the decision in the determination of rent for GHPL 40/1475 B, Lessee: Peter Griffiths, which was delivered today. I do not propose to repeat that background. It is sufficient to say that Mr Zander approached the assessment of rent on the same basis. Mr Zander explained that there appeared to be an excessive increase in the rent of the subject property, because in 1981 an area had been excised for forestry purposes and through an administrative error, the rent was not adjusted correctly. The previous rent should have been $390 per annum and not $297 per annum. Using the method approved by the Land Appeal Court, Mr Zander assessed the subject land as having 160 hectares of arable country, which he assessed as having an unimproved value of $100 per hectare, or $16,000. The balance 4,713.677 hectares was assessed as grazing land on the basis of a potential carrying capacity of 1 beast to 8 hectares, or 589 head. Using the scale which was drawn up for the Dalby District, Mr Zander adopted a rate of 270 cents per beast, compared with the hypothetical best for the Dalby District of 315 cents per beast, as recommended by Mr Carter. Making allowances·for the situation, access, water, timber treatment, quality, pests and other disabilities, and location, Mr Zander arrived at total deductions of 19%. When this was deducted from the 270 cents per beast, a net rate of 218.9 cents per beast was arrived at. When this was divided by his assessment of the number of hectares required to run one beast, based on the -- 4 of 7 -- - Page 5 - present carrying capacity of 1 beast to 11 hectares, this showed a rate of 19.9 cents per hectare. When this net rate is multiplied by the grazing area of 4,713.677 hectares a total of $938.02 is the result. Adding 2% of the unimproved value of $16 ,000 for the arable area, or $320, results in a total rent of $1,258 per annum. Mr Zander explained how he arrived at the percentages for each of the factors in his calculations. He said that there were only 9 blocks in the Dalby District which were regarded as having arable land content. He said that he had taken all the problems discussed by Mr Adair into account and had assessed only the cultivated area on the western side of the property as being arable, as it was the closest to the town of Tara. He had classed the other cultivated areas as grazing. Despite the concern raised by Mr Adair, Mr Zander said that the area he had assessed as arable land was comparable in quality to other land in the area which he had considered to be arable. With regard to the water allowance, Mr Zander had assessed the percentage allowance at only 1% and readily conceded that he could have allowed another 1% or 2% for the water factor. However, he emphasised that the factor system is really only a guide and not a precise calculation, being used in an endeavour to bring relativity between parcels of land. Mr Zander considered that the sandy forest area had a carrying capacity of 1 beast to 35 hectares. This would amount to 80 head. However, under cross examination by Mr Adair, Mr Zander said that he had not realised that the Forestry Department would not allow burning of the forest country which was essential in order to maintain the carrying capacity he had applied to this country. Mr Zander, conceded that if this was the case the lessees should be given the benefit of a -- 5 of 7 -- - Page 6 - reduced carrying capacity if they were not able to run any cattle in the inferior area. I am of the opinion that the lessees must be given the benefit of any doubt that arises in such cases. In the Commissioner of Succession Duties v Executor Trustee and Agency Comp an y of South Australia Ltd (1947) 74 CLR 358 at p 374, Dixon J, as he then was, said - "In a case of compensation doubts are resolved in a more liberal estimate, in a revenue case, a more conservative estimate." Accordingly I intend to resolve such doubts in favour of the lessees. Although Mr Adair agrees that the potential carrying capacity of this property is 1 beast to 8 hectares he points out that this could be achieved only at a considerable cost. In view of Mr Zander's submission that he did not realise that the forest country could not be burnt, it is in my view appropriate that this potential carrying capacity be adjusted by 80 head, which equates approximately to 1 beast to 9½ hectares. On Mr Zander's scale this carrying capacity equates to a rate of 256 cents per beast. As Mr Zander admits that another 1 or 2 percent could be added to the water deduction this would make a total of 21 % deductions. Adjusting the rate of 256 cents by 21% equals a net rate 202.2 cents per beast. As I have accepted his assessment of the capacity of the forest country, I intend to rely on Mr Adair's estimate of present carrying capacity of about 400 head. This equates to 1 beast to 12 hectares for the nett rate of 202.2 cents per beast or 16.8 cents per hectare. This results in an annual rent for the grazing component of the property of $792 per annum. To this must be added the rent on the arable component which Mr Zander assessed at $320, being 2% of the unimproved value -- 6 of 7 -- .. - Page 7 - of the arable component of $16,000. However, because of the wallaby problem, I am of the opinion that an allowance should be made and I intend to reduce the unimproved value of the arable land by 10% to $14,400, 2% of which is $288. This results in a rent of $1080 per annum. Accordingly the annual rent for Grazing Homestead Perpetual Lease No. 16/10462 for the second rental period of the lease is determined at $1,080 (One thousand, and eighty dollars) per annum. (J.J. Trickett) Member of the Land Court. -- 7 of 7 --