Dunlop (Lessee) [1992] QLC 206

·- .. ·•·• • I ..... ;,.. - ,... LAND COURT, BRISBANE. 14th February, 1992. Re: Determination of Rent - Second rental period Special Lease No. 27/43311. Lessee: Lance James Dunlop DECISION Before the c;ourt for determination is the rent to be charged fqr Special Lease No.27 /43311 during the second rental period which is of 10 years duration beginning on 1st May, 1990. Under the provisions of Section 204 of the Land Act the Minister determined the rent at $450 per annum and the lessee requested that the matter be referred to the Court for hearing and determination, indicating that his estimate of the annual rent which should be charged was $100. Subsection (5B)(c) of Section 204 provides: The Court shall determine the annual rent at such sum as it considers an experienced and bona fide person would be willing to pay as annual rent for the land comprised · in the lease during the rental period in question, having regard to the use to which the land may be put in accordance with the purpose for which the lease was granted and under the terms and conditions of the lease. " Special Lease No.27 /43311 is in respect of 242 hectares of land being part of State Forest 329. It was granted for a term of 20 years from 1st May, 1980 for "grazing purposes only". The lease is granted under Section 203(b) of the Land Act and Subsection 2 of Section 35 of the Forestry Act, and as such is subject to what are called "Forestry Second Schedule" conditions. · The leased land is situated approximately 38 kilometres north-east of Nanango and is used by the lessee in conjunction with other lands for the purpose of grazing cattle. The land is described in the Departmental report as steep to undulating forest country rising to the east to scrub, the scrub country forming eastern boundary, and is [1992] QLC 206 -- 1 of 5 -- 2 timbered with Ironbark, Gum, Moreton Bay Ash, Wattle and scrub, with grey brown gravelly soil. The lessee, Mr L.J. Dunlop appeared on his own behalf and gave evidence that his estimate of the rental which he considers should be charged of $ 100 per annum, is based on the relationship between the subject lease and Special Lease No.27 /51845, containing an area of 238.074 hectares, which adjoins it to the south. The rent for the first period of this lease whi_ch commenced on 1st August, 1991, was determined at $112 per annum for the first 5 years. The lands comprised in the two leases are basically similar, although Mr Dunlop considers that the land in Special Lease No.27 /51845 is somewhat superior to the subject, as it has a lesser proportion of steep ridge country and a greater proportion of undulating country and creek flats . He considers that it has a better carrying capacity and would carry 20 to 25 head of dry cattle depending on the seasons, compared with only 15 to 20 head on the subject. Both leases are subject to the same conditions and Mr Dunlop cannot see how the Department can seek rent on the subject property at $450 while the rent on the basic property was determined at $112. Mr P.A. Coe, Land Inspector and registered valuer employed by the Department of Lands, gave evidence as to his recommended rent of $450 per annum. In arriving at that figure Mr Coe had regard to a document entitled "Report on Rentals for Land whose Best Use or Highest Permitted Use is Grazing", prepared by Mr I.R. Heppell, Land Inspector in the Brisbane District Office of the Department of Lands. This report, according to Mr Coe, has been used by the Departmental Officers to assess rents on applicable tenures used for grazing purposes in the Brisbane, Ipswich and Gympie Land Agents Districts from 1st January, 1990, onwards. -- 2 of 5 -- 3 The Report dated 13th August, 1990, purports to be an analysis of current grazing rental policies of "other Government Departments and statutory authorities", (Queensland Forest Service, Queensland Water Resources Commission, Brisbane and Area Water Board and Albert Shire Council). In respect of some 16 rental agreements for grazing purposes, a detailed examination has been made, lessees interviewed and an analysis of the findings is set out. The 16 lease agreements comprised 8 Stock Grazing Permits issued by the Queensland Forest Service since 1st January, 1991, in South East Queensland, and 5 Section 343A leases issued by the Albert Shire Council since that date. In addition, one sub-lease and 2 "private agreements" were investigated and analysed. From this analysis the author of the report arrived at what he has described as a Schedule of Recommended Maxim Rentals for Land whose Highest and Best Use is Grazing, which is applicable for Special Leases, Road Licenses, Permits to Occupy and Occupation Licenses in the area of the former Land Agent's Districts of Brisbane, Ipswich and Gympie. Using this schedule, Mr Coe arrived at a commencing figure of $35 per head per annum based on his estimated carrying capacity of 30 head on the subject property. However, he explained that having regard to the situation of the subject property and what he considers to be the onerous Second Schedule Forestry conditions, he reduced this to $15 per head, which he thought was reasonable in the circumstances. With respect to Mr Dunlap's companson with the rental determined on Special Lease No.27 /51845, Mr Coe explained that this was arrived at using a different methodology because, notwithstanding that the relevant date was 1st August, 1991, the inspection (and presumably also Land Inspector's report and recommended rental) was made in 1988. Mr Coe's enquiries had revealed that the delay in issuing -- 3 of 5 -- 4 the new lease was due to correspondence between the Departments of Lands and Forestry regarding the Second Schedule conditions. Mr Coe was not responsible for the recommended rental on Special Lease No.27 /51845 and made enquiries only on the morning of the Court. It is quite apparent that there were different methodologies applied in the assessment of recommended rentals between the two Special Leases. Mr Coe made it clear that the methodology resulting from Mr Heppell's report were to be adopted. by Departmental officers for all relevant tenures from 1st January, 1990. It is unfortunate that a uniform approach was not adopted in these two cases, as the resulting rentals bear no relationship to one another. It is therefore understandable that Mr Dunlop considers that there .is an inconsistency when the Crown is seeking a rent four times higher in respect of a somewhat inferior piece of land. However, whatever reasoning produced the rental of $112 on Special Lease No.27 /51845, the matter before the Court for determination is the annual rent in respect of the subject lease. Section 204 (5B)(c) makes it quite clear that such rents must be determined at such sum as an experienced and bona fide person would be willing to pay, having regard to the use to which the land may be put in accordance with the purpose for which .the lease was granted and under the terms and conditions of the lease. Although Mr Coe did not compile the report upon which he relied, or undertake the analysis of rental details himself, he has given evidence that he discussed it with Mr Heppell and has endorsed it, having satisfied himself as to its accuracy and rationale. He has come to the conclusion that it produces a more consistent and fairer result than previous methods adopted by the Department, such as the traditional approach of 3% of the unimproved value. Such methods Mr Coe described as somewhat "ad hoc" in cases such as the subject. -- 4 of 5 -- 5 The approach adopted by the Department of Lands appears to me to be an endeavour to comply with the requirements of Section 204(5B)(c) in respect of market rents and to that extent is to be commended. However, the author of the report was not called to give evidence and the accuracy and findings contained therein were not able to be tested, nor were they challenged by Mr Dunlop. In the future Mr Heppell's report and reasoning may be subject to challenge, but for the purpose of the subject case I am prepared to accept Mr Coe's approach of • comparison with market rents with appropriate allowances. A brief comment on carrying capacities is called for. In his written comparison of the two properties, Mr Dunlop has stated the carrying capacity of the subject as 15 to 20 head of dry cattle, depending on seasons. On the other hand Mr Coe has estimated the carrying capacity at 30 head, breeding and grazing. However, Mr Dunlop did not challenge Mr Coe on carrying capacity, although he did make the point that breeding was difficult because of the scrub tick and dingo problems. Having regard to the substantial allowance made by Mr Coe for the situation and conditions of lease from this commencing figure of $35 per head, I am reluctant to disturb the recommended rent of $450 based on 30 head at $15.00 per head, which on the basis of the schedule of market rentals is not unreasonable. Accordingly, the rent to be charged for the second rental period of Special Lease No.27 /43311 is determined at Four Hundred and Fifty Dollars ($450.00) per annum. (J.J. Trickett) Member of the Land Court. -- 5 of 5 --