Cape Hillsborough Tourist Development Pty Ltd v The Valuer-General [1992] QLC 257

.. Re: Appeals against determinations of the Valuer-General. AV91-987 and 988 - Shire of Pioneer LAND COURT, BRISBANE. 1st October, 1992 Ca pe Hillsborou gh Tourist Develo p ment Pty Ltd · V. The Valuer-General (Hearing at Mackay) DECISION The Valuer-General has assessed the unimproved value of the land comprising the Cape Hillsborough Tourist Resort, in the amount of $175,000 as at 31st March, 1989, then $200,000 as at 31st March, 1990. Objections against both valuations were disallowed by the Valuer-General and these appeals are against those decisions. The appellant company contends for valuations of $50,000 as at both dates. The land subject of the valuations is described as follows: Lot 1 on Plan Per 5374 being Permit to Occupy 30/5374; Lot 399 on Plan Ci 4299 being Special Lease 30/47098; Lot 522 on Plan Ci 4425 being Special Lease 30/50082; and Lot 346 on Plan Ci 585 Parish of Ossa, County of Carlisle. Of the total aggregation of 4.357 hectares, it is the freehold land (Lot 346) [1992] QLC 257 -- 1 of 9 -- - Page 2 - and the adjacent SL 30/47098 (Lot 399) which contain the main resort development. The combined area of these lots is about 2.06 hectares. SL 30/47098 (1.01 ha) was granted for the purpose of Business (caravan park and camping site). SL 30/50082 (about 2 ha) was granted for the purpose of Recreation conditional on that land being used "for recreation purposes in association with the Tourist Resort ............. and for no other purposes whatsoever." Permit to Occupy 30/5374 relates to a narrow strip of varying width within the esplanade adjoining the northern boundary of Lot 346 and the eastern section of the northern boundary of Lot 399. Cape Hillsborough Resort is described as a low-key tourist development containing units, van and tent sites, amenities block and restaurant. It is located on a narrow isthmus separating the 2 promontory sections of the Cape Hillsborough, Wedge Island National Park, located about 52 kms by road north-westerly of Mackay. Access is bitumen sealed to within about 4 kms of the property then mainly earth and gravel formed. The Valuer-General describes the main resort area as comprising about 2 hectares of sandy soil isthmus originally timbered with coastal rainforest and having a 255 metre frontage to an esplanade containing an excellent sandy beach. The main balance area (SL30/50082) is open salt pan flat, sparsely grassed with marine couch. The land is zoned "Rural A" . Electricity and telephones services are connected. It is considered relevant to this matter that on 24th May, 1991, my learned colleague, Mr C H Carter delivered a decision in which he determined the rent to -- 2 of 9 -- - Page 3 - be charged for the second period (commencing on 1st October, 1989) of the primary Special Lease (30/47098). He did this after a contested hearing when evidence was given by Mr R R Sach, a shareholder of the family company lessee. Evidence was also given by a registered valuer who conducted the lessee company's case. Primary to the basis adopted for the determination was consideration of the unimproved value of that land as at 1st October, 1989. Mr Carter was influenced to adopt an unimproved value of $120,000 for the site of 1.01 hectares. This resulted in a rent somewhat lower than that which had been sought by the Crown. As might have been expected, that decision relative to part of the aggregation has been taken into consideration by the Valuer-General in this matter, at least as to the support it gives to the 1990 relevant date valuation. Mr Sach again appeared and this time conducted the appellant company's case without professional valuation assistance. Mr Sach's detailed evidence before me as to the disabilities of the land and the location is consistently similar to that given before Mr Carter, being readily recognised from a reading of Mr Carter's decision. No doubt disappointed with the degree of success achieved in the Land Court rent determination, Mr Sach set about investigating and analysing some of the sales evidence referred to in that matter, as well as other market activity which he considered to be relevant. To best describe the various points which Mr Sach sees as the disabilities of the subject Cape Hillsborough Resort, I will include here the headings (in question form - with his answers relevant to Cape Hillsborough in brackets) which Mr Sach used to make comparisons with these other properties. -- 3 of 9 -- - Page 4 - The headings are as follows: Town Water Supply (No) Have to Transport water at own cost to supply Property (Yes) Bore Water Available (No) Pioneer Shire Council Rubbish Collection (No) Mains Power Available (No) Council upkeep of Public Boat Ramp (No) Van Park pays for upkeep of Boat Ramp (Yes) All weather Bitumen Road (No) Access Road Originally built by Van Park (Yes) Have to maintain access road by self in wet season to allow guest access (Yes) Phone line originally installed by self (Yes) lnterference\Restrictions placed on operation by National Parks (Yes) Direct competition and undercutting of prices by National Parks and Pioneer Shire Council (Yes) Affected by Beach Protection Authority (Yes) Building set-back of 100 metres applies to Van Park (Yes) Have to s'pend own money on beach and foreshore protection and cleaning (Yes) Land fill and tree planting by self to make land suitable for intended purpose (Yes) Suitable for subdivision (No) At the original cost of the appellant company, spring water has been reticulated for some distance from within the National Park. In return for such concession, a point of supply is made available to the public at the competing Shire controlled camping reserve. At times of peak demand, which can extend for long dry periods, the available supply becomes, with competing use, inadequate for the needs of Cape Hillsborough Resort. This necessitates road cartage of water from another reserve at significant cost. No Shire garbage collection service necessitates private disposal at the nearest public facility involving a regular 23 kms round trip. The subject property suffers direct competition from camping facilities provided by both the Shire and the National Parks and Wildlife Service. It is said that inadequate amenities and lack of supervision encourages campers at those -- 4 of 9 -- - Page 5 - places to trespass on to the subject complex seeking (illegal) use of private guest amenities. Mr Sach complains of the resultant conflict and management problems and the lack of co-operation, particularly from the National Park administration, in clear identification of areas available for public access. He says that the weight of public usage of the area and its effect on the locality is a detriment to the exclusivity of the subject property and its immediate external environment. Another of the more specific disabilities is the lack of regular and efficient Shire maintenance of the unsealed section of the access road. After wet weather the road may be closed and regular private maintenance is carried out. The properties with which Mr Sach made his comparisons in schedule form are as follows: * * * A 3.2 hectare site at Blacks Beach which sold in 1988 for $312,000. This evidence was used by Mr Sach's valuer in the earlier Land Court hearing. The Ball Bay caravan park site, of 8.4 hectares which, as I understand the evidence has been offered for sale at auction but failed to sell with the reserve set at $200,000. Halliday Bay Resort of "over 10 hectares", recently sold (1992) for $2,000,000, at which price, Mr Sach says a nil land value is shown. The grounds of appeal in this matter include the effect of the various disabilities; an opinion that values had not risen from 1989 to 1990 but had instead fallen, as evidenced by the number of failed tourist related businesses in the Mackay region; the excessive level of value when compared to other properties and a contention that the Valuer-General's valuation reflects the improvements made on the property. With regard to the latter point Mr Sach is of the opinion that the valuation -- 5 of 9 -- - Page 6 - process does not find a genuine and equitable unimproved value, because as he sees the position, no recognition is made of the fact that infrastructure both internal and external and necessary for the establishment and operation of the resort, was originally provided at the expense of the owners of the property. It appears to me that Mr Sach has difficulty in accepting that the subject land is to be valued as if the land itself was in unimproved or virgin state, but located in the environment in which it exists, such environment meant to include the existence of external public utilities, capable of connection to the property, disregarding who was faced with the expense of providing that infrastructure in the first place. This aspect was discussed by the Land Appeal Court in Clough PH v The Valuer-General (1981/82) 8 CLLR 70 where at pp. 73, 74, it said: "A road, or service (sewerage, water or electricity) are not in the strict legal sense appurtenant to a parcel of land. They do not belong to it as a property right. They do not pass with it as an appendage to its ownership. In point of fact the land in the road is owned by the Crown. Similarly the wires, pipes or drains exterior to the parcel (and in some cases within the bounds of the parcel) are owned by the relevant service authority. No improvement which is not on the subject parcel or strictly appurtenant thereto can be considered an improvement for the purposes of Section 12 of the Valuation of Land Act." The Privy Council found in Tooheys Ltd v The Valuer-General (1925) AC 439 at p 443 when dealing with the definition of unimproved value: "What the Act requires is quite simple. Here is a plot of land; assume that there is nothing on it by way of improvements, what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression 'prairie value.' The land must be taken as it exists as the date of valuation." Mr A M Solager, AVLE (Val), registered valuer, employed by the Department of Lands, gave evidence in support of the Valuer-General's valuations. Through him were tendered valuation reports relevant to each date of valuation, together -- 6 of 9 -- - Page 7 - with the basis adopted. It is Mr Solager's opinion that in the Mackay region, the evidence indicated an increasing level of value over the relevant period in this matter, for land with waterfront proximity. He relied on one sale (which had been evidence common to both valuers in the rent determination matter) for the 1989 valuation. That was the sale of a 1.5326 hectare beach front site at Armstrong Beach (south of Mackay, near Sarina) which sold on 19.10.89 for $120,000. He described that land as having 240 metres frontage to a sandy beach, 85 % low-lying meleleuca within an erosion prone area. It is zoned "Rural B", has bitumen access to within 300 metres but then an earth track which is impassible after rain. For the 1990 valuation, he provided the evidence of two sales, both of which showed increases over the level of value which had been applied for the 1989 valuation. One was of a 3,630 m 2 site at Blacks Beach zoned "Comprehensive Development" and the second of an improved Resort property of 1.866 hectares at Gloucester, near Dingo Beach, north of Proserpine. This later sale was analysed to show a land value of $207,280. Both sales had formed part of the Crown basis in the rent determination. It is clear that none of the sales evidence is directly comparable, although of properties with waterfront or esplanade location, and with some features capable of limited comparison. It seems however that the level of value shown by the Armstrong Beach and Gloucester sales and indeed even the 1988 sale of the site at Blacks Beach which was referred to by Mr Sach, show that the appellant's estimate of value is unrealistic. Mr Solager takes the totality of the evidence one step further. The evidence -- 7 of 9 -- - Page 8 - put before the Court by the Crown in the rent determination matter (being the same overall evidence here), together with the valuation evidence of the lessee, influenced Mr Carter to adopt an unimproved valuation for SL 30/37098 as at October, 1989, of $120,000. Mr Solager reasons that a valuation of the total aggregation of 4.357 hectares, notwithstanding that about half of that area would carry nominal value only, due to the restricted usage permitted, of $175,000 as at 31st March, 1989 and $200,000 as at 31st March, 1990 should be seen to be more than reasonable in comparison with the findings of the previous Court, for the smaller parcel. The onus of proof in these matters in on the appellant to show that the Valuer-General's valuation is wrong. Mr Sach for the appellant company has demonstrated quite adequately that the land as it presently exists has been improved significantly from its unimproved state; that development of the subject land has been instrumental in introducing infrastructure which did not previously exist; that the specific location and nature of the use of adjacent lands creates nuisance; the profitability of the enterprise is affected significantly by lack of urban services; and that development of the land is fettered by restrictions, associated with lease conditions and erosion susceptibility. Nevertheless the site is a physically attractive one, in a location popular with the public with natural attributes providing positive features as well as those negative. I can place no weight on that evidence of value introduced by Mr Sach such as the Halliday Bay transaction, evidence which may, depending on proper analysis, be relevant to value at a later date, or on the unrealised reserve price of -- 8 of 9 -- - Page 9 - the Ball Bay property. I am convinced that, regardless of the many positive features which Mr Sach finds with the Blacks Beach property which sold in 1988, in comparison with the negative features of the Cape Hillsborough subject property, that sale does not support his estimate of value. The question to be asked is "Would the subject land in its hypothetical unimproved state, but in the environment which existed at the relevant dates have been capable of realising the Valuer-General's valuations?." The supporting evidence is weak, but I accept that the aggregation would have realised $175,000 as at 31st March, 1989. The only valuation evidence I have before me as to the change in level of value as at 31st March, 1990 comes from Mr Solager. Any questions as to the effect of economic and tourist related difficulties on values subsequent to 31st March, 1990 will need to be addressed at another time. As I do not find the Valuer-General's valuations to be proved wrong or to be unreasonable, the appeals are dismissed and the valuations affirmed . . (Signed) R. E. Wenck Member of the Land Court. -- 9 of 9 --