Di Bella & Anor v Minister for Lands [1992] QLC 289

LAND COURT, BRISBANE 29th May, 1992 Re: Determination of Rent - Third Rental Period. Special Lease No 24/34884. Lessees: Salvatore Antonio 01 Bella and Santina Di Bella (Hearing at Ingham) DECISION The matter before the Court is the determination of rent for the third rental period of the abovementioned Special Lease. For this third rental period of 10 years which commenced on 12th January, 1991, the Crown is seeking a rent of $600 per annum. The rents for the first and second rental periods were $50 per annum and $150 per annum respectively. The lessees have advised that their estimate of the rent that should be charged is $250 per annum. This Special Lease is in respect of the land contained in Lot 349 on Plan CWL2348 in the parish of Cordelia, containing an area of 708 square metres. It is situated in the small township of Cassady Beach, approximately 2 kilometres south of the township of Allingham (also known as Forrest Beach). Access is obtained by means of bitumen sealed road to within about 1 kilometre of the subject land, then by formed gravel road to within about 200 metres of the land, then by earth and gravel track. This is not an all-weather road. This Special Lease was granted for a term of 30 years from 12th January, 1971, for residential purposes. It is described in the report prepared by Land Inspector D.R. McKinnon as comprising coastal sand dune country facing Halifax Bay and falling gently to the rear. The area overlooks Halifax Bay and has views towards Palm Island. [1992] QLC 289 -- 1 of 5 -- 2 Mr Salvatore Di Bella appeared and gave evidence on behalf of the lessees. Mr Di Bella said that the lessees had purchased the subject Special Lease on 11th December, 1987, for $15,000. At the time there were some improvements by way of clearing, water connection, underground pipes from the main outlet at Forrest Beach and the road access from Forrest Beach. Later in cross-examination Mr Di Bella admitted that the land was virtually a vacant block at the time of his purchase. The improvements of water supply, and road construction and maintenance were financed by the Cassady Beach Development Fund to which the owners of 8 allotments at Cassady Beach contribute for the purpose of supplying services to the small township. Mr Di Bella said that he considered that sales in the town of Allingham were not really comparable to the allotments at Cassady Beach. He also thought that the 1990 valuation by the Valuer-General at $21,000 was too high, but he did not object to it. Mr Di Bella referred to a rubbish dump near the subject land and situated on the access road, which he felt detracted from its value. He knew of sales of between $12,000 and $15,000 in the town of Allingham, with all services available, but these were not of allotments with beach frontage. Mr Di Bella said that the block had attractive views towards Palm Island, but at the rear was a low-lying mangrove area which lessened its attractiveness. He also gave evidence of erosion problems from the sea and said that he had put a lot of filling and mill mud on the land and had planted coconut trees, but these trees had died in the last drought. Mr Di Bella's main complaint was that the rent had risen from $150 to $600 which he considered to be excessive. He compared the valuation of the subject land to his home allotment in Lannercost Street in Ingham which had all amenities -- 2 of 5 -- 3 and was situated on a corner, and which was valued at $14,500 by the Valuer- General. He considered that the land at Cassady Beach should be valued less than the land in Ingham. Mr D.R. McKinnon, a registered valuer employed by the Department of Lands, gave evidence on behalf of the .Crown. Mr McKinnon tendered a report and valuation which indicated that his recommended rent of $600 per annum was based on 3% of the unimproved value of the subject land, which he assessed at $20,000. Mr McKinnon arrived at that unimproved value by having regard firstly to the conversion determination of SL 24/34881, Lot 352 on Plan CWL 2348 in the parish of Cordelia, about 40 metres south of the subject land, which was converted on 28th April, 1989, for $15,000, a determination accepted by the lessee in that case. This allotment is considered to be similar in all respects to the subject land. Basic number 2 is the sale of the subject land on 17th December, 1987, for $15,000. Mr McKinnon also tendered schedules of sales in 1987 and 1990 of allotments in the town of Allingham (Forrest Beach). These sales clearly indicate that allotments without beach frontage were selling between $7,000 and $11,000 in 1987 and between $15,000 and $18,000 in 1990. From this evidence he draws the conclusion that there was a general increase in values in the area during that period. Mr McKinnon also tendered as a basis a schedule showing rental determinations, which were accepted by the lessees, in respect of three Special - Leases situated approximately 250 metres south of the subject land and which are located closer to the high water mark and consequently the danger of erosion than are allotments in the immediate vicinity. These allotments, Lot 305 on CWL 1525, -- 3 of 5 -- 4 Lot 303 on CWL 1498 and Lot 302 on CWL1525, each have an area of 809 square metres. The rents of $51 0 per annum (being 3% of the unimproved capital values of $17,000 in each case) were determined on 12th April, 1991. Mr McKinnon says that these three blocks are similar to the subject land, with a slight fall to a gully at the rear. Although each of the three blocks is larger than the subject land, overall they are considered to be inferior, due to inferior access, the greater distance from amenities and proximity to the high water mark and risk of erosion. With regard to the rubbish dump, Mr McKinnon indicated that there was an area of timbered country between the subject land and the dump which screened it effectively from view. In respect of the erosion, Mr McKinnon said that the boundary of the subject land was some 31 metres from the eroded area of beach front and that the high water mark was further from the subject boundary than from the boundaries of the properties mentioned on the rental acceptance schedule. In considering the evidence in this case, I must first deal with the submission by Mr Di Bella in respect of the connection of water, laying of underground water pipes and the construction and maintenance of the dirt road from Forrest Beach to Cassady Beach which were carried out with moneys from the Cassady Beach Development Fund. He seemed to imply that the value of these improvements, or at least part thereof, should be deducted from the value of the subject land. This Court has, on many occasions, held that such external works are not to be taken into account in arriving at the unimproved value; e.g. for a case under the Valuation of Land Act 1944 see Clough v. Valuer-General (1981-82) 8 QLCR 70. It is only the value of improvements which actually are on the subject land itself, such as buildings, clearing, draining, filling, etc., that must be disregarded in arriving at the unimproved value. -- 4 of 5 -- 5 On the whole of the evidence, I am satisfied that the unimproved value arrived at by Mr McKinnon of $20,000 is reasonable. The sales in the township of Allingham (Forrest Beach) indicate that allotments are selling at prices up to $18,000 close to the relevant date. These allotments have no frontage to or views of the sea and therefore I am of the. opinion that the subject allotment, with its situation virtually on the beachfront and with views over Halifax Bay towards Palm Island, is appropriately valued at that figure, notwithstanding its undoubted drawbacks. In the absence of evidence of market rents, apart from these in the schedule of rental acceptances tendered by Mr McKinnon which tend to support the rent recommended by the Crown, I am of the view that 3% of the unimproved value of $20,000 is not unreasonable. In terms of Section 204 of the Land Act 1962, I feel that an experienced and bona fide person in such circumstances as envisaged by the Act, would be prepared to pay a rent based on such a percentage. Accordingly, .the rent for the third rental period of Special Lease No.24/34884 is determined at the sum of $600 per annum. (signed) J.J. Trickett Member of the Land Court. -- 5 of 5 --