Charles & Anor v Minister for Lands [1992] QLC 267

... LAND COURT, BRISBANE 18th December, 1992 Re: Determination of Rent - Third Rental Period - Special Lease No 24/36313. Lessees: Francis Charles and Dorothy May White DECISION (Hearing at Ingham) The Crown is seeking an annual rent of $720 per annum for the third rental period of the abovementioned Special Lease, which commenced on 28th February, 1992. The lessees have requested that this matter be referred to the Land Court for hearing and determination and have advised that their estimate of the annual rent that should be charged is $480. The annual rent for the second period of the lease was $360. The subject Special Lease is in respect of the land described as Lot 149 on Plan CWL 2504 in the parish of Lannercost, containing an area of 8.498 hectares. It is situated in the Stone River area, about 32 kilometres south of Ingham and access is by bitumen sealed road. This Special Lease was granted for a term of thirty (30) years from 29th February, 1972, for Manufacturing, Residential, Industrial or Business purposes. It is presently not used and the Crown report describes the land as comprising about 3.5 hectares of arable forest country and 5 hectares of broken forest country which is not arable. It goes on to say that part of the land could be used for sugar cane expansion, but its highest and best use is as a rural homesite. Mr Francis Charles White appeared and gave evidence that he bought the lease about 2 years ago for the purpose of growing cane. He estimates that only about 2.5 hectares can be used for this purpose, the balance being broken country with large gullies. Mr White said that he had been advised by a valuer in Ingham that cane farmers are leasing land for $24 7 per hectare ($100 per acre), such land being [1992] QLC 267 -- 1 of 3 -- 2 cleared and ready for planting. He therefore cannot see how the Crown can justify a rent of $720 per annum as the land would have to be cleared, cutterbarred and made ready for planting at a cost of approximately $2,200 per hectare. Mr White does not agree that the land would be in demand as a rural homesite, as it is so far from Ingham. He refers to an adjoining parcel of about the same size, the owners of which have been trying to sell for some time. He also gives instances of other people in that area who have moved closer to Ingham. Although he thinks that $24,000 is excessive as the unimproved value of the subject land, Mr White is prepared to pay $480 in rent, being based on 2% of that unimproved value. Mr Dominic Treston, registered valuer employed by the Department of Lands, gave evidence for the Crown. He tendered a report and valuation in which he described how he arrived at the recommend_~d rent of $720 per annum by applying 3% of the unimproved value, which he assessed at $24,000 on the basis of its highest and best use as a rural homesite. Mr Treston arrived at this unimproved value by reference to sales of three rural residential properties. As there were no recent sales of such lands without improvements in the immediate area, he had regard to sales in other areas. Mr Treston said that he had worked in the area for four years and during that time the number of rural homesites in the general area was increasing. He agreed that the distance from Ingham was a detriment, but the subject land did have bitumen road access and two of his three sales were further away from Ingham. Mr Treston's sale No 1 is of an area of 1.159 hectares, located about 4 kilometres from Ingham by bitumen road. It sold on 18th March, 1991, for $26,000 and Mr Treston analysed this sale to an unimproved value of $21,000. Although better situated than the subject, he considers that it is inferior due principally to its size. Sale No 2 is of an area of 5.528 hectares situated at Mt Fox, about 60 kilometres south-west of Ingham, with access being mainly bitumen sealed road. It sold on 13th August, 1991, for $21,700 and Mr Treston analysed this sale to an unimproved value of $19,700. Because of its access, location and water -- 2 of 3 -- 3 availability, Mr Treston considers it to be inferior to the subject land. Sale No 3 is of an area of 20.28 hectares, situated on the bitumen sealed Bruce Highway about 36 kilometres south of Ingham. Only about 8 hectares of the land is of easy sloping ridges, the balance being steep rugged mountain. It sold on 13th June, 1991, for $48,000 and Mr Treston analysed this sale to an unimproved value of $41,200. The purchaser intends to use it for rural residential purposes and Mr Treston says that it is superior to the subject land mainly because of its location. Mr Treston added that the subject land had attraction as a rural homesite as it has frontage to the timber-lined Stone River which has water for most of the year and even when the surface water has disappeared, water is available by use of sand spears. I can understand Mr White's concern that he purchased the land for the purpose of growing cane and that the rent has increased on the basis of its use as a rural homesite. However, it is well established that the rent must be assessed on the basis of the land's highest and best use, having regard to the requirements of Section 204(5B)(c) of the Land Act 1962. There is evidence that lands in the area are being used for rural homesite purposes and, although the sales used by Mr Treston are somewhat removed from the immediate area, they do indicate the prices purchasers are prepared to pay for land as rural homesites. In the circumstances, I am satisfied that the unimproved value of $24,000 assessed by Mr Treston is well supported. In the absence of evidence of market rents, this Court has held on many occasions that 3% of the unimproved value is a reasonable basis for the assessment of rent and I propose to adopt it on this occasion. Accordingly, the rent for Special Lease No 24/36313 for the third period of the lease is determined at the sum of Seven hundred and twenty dollars ($720) per annum. (J.J. Trickett) Member of the Land Court -- 3 of 3 --