Bennett & Anor v Minister for Land [1991] QLC 245

Re: Determination of Unimproved Value - Conversion of Tenure purposes - LAND COURT, BRISBANE. 24th May, 1991. PCL 30/1119 A (NCL) and PCL 30/1119 B (NCL) Lessees: P. M. and F. K A Bennett DECISION Applications for conversion to freeholding tenure have been made for PCL 30/1119 A (NCL) and PCL 30/1119 B (NCL), Mackay District as at a common relevant date of 3rd October, 1988. The leases are more particularly - PCL 30/1119 A (NCL) - Lot 45 on Plan Ci 1790, Parish of Sarina containing an area of 8.567 hectares. PCL 30/1119 B (NCL) - Lot 46 on Plan Ci 1790, Parish of Sarina containing an area of 27. 797 hectares. The leases adjoin, are zoned "Rural A" under the provisions of the Shire of Sarina Town Planning Scheme, and are situated at the edge of Middle Creek Dam at Middle Creek, about 16 kilometres by road west of Sarina. Access to the sites is provided by about 300 metres of graded track, 4. 7 kilometres of formed gravel road with the balance being of bitumen construction. The Crown, through Land Inspector Stephen Francis Penny recommends an unimproved value of $35,000 for PCL 30/1119 A (NCL), and an unimproved value of $50,000 for PCL 30/1119 B {NCL). The lessees have provided [1991] QLC 245 -- 1 of 10 -- t ', - Page 2 - an estimate to the Court of an unimproved value of $8,000 for PCL 30/1119 A (NCL) and an unimproved value of $12,000 PCL 30/1119 B (NCL). Practicing Registered Valuer Jeffrey David Dodds values PCL 30/1119 A (NCL) land at $20,000 and PCL 30/1119 8 (NCL) land at $35,000. The leases are respectively rural homesites situated in what is described by Mr Penny as a .popular rural residential area within reasonable proximity to Sarina. Each site has a frontage to and good views over the Middle Creek Dam. Now Mr Dodds describes PCL 30/1119 A (NCL) site as being long and narrow with a width of approximately 11 0 metres and a length of 780 metres, and PCL 30/1119 B (NCL) site as being irregularly shaped with a general width of 320 metres and a length of some 930 metres. He says the leases are situated at the foot of the Connors Range in a small valley formed around the head of Middle Creek. They are situated in a small rural residential subdivision surrounded by grazing county with some other scattered rural homesites. Mr Dodds informed the Court that at the relevant date for valuation there was a formed road to within 350 metres of the southern boundary of the leases with a rough track extending from the end of the formed road across a wide gully through the subject leases to a grazing property. This track does not follow the line of the gazetted road through the subject leases, and since the date of valuation the lessees have relocated the track on the line of the gazetted road, and with neighbours and the Sarina Shire Council have upgraded the road through the subject land to formed earth standard, including the placement of culverts across the gully of the southern side boundary of PCL 30/1119 A (NCL). Mr Dodds points out that there are no services connected to the land, -- 2 of 10 -- - Page 3 - the nearest electricity supply being some 350 metres from the property at the corner of Germans Road. Power can only be connected at considerable cost. '"" Mr Dodds describes PCL 30/1119 A (NCL) land as rising from the Dam to about 1.8 hectares (20%) low easy sloping ridges at the eastern end, and is cut by a gully some 150 metres from the eastern boundary, with approximately 6.3 hectares (75%) of land to the west of the boundary rising to steep stony ridges running up to the top of the Connors Range. He says PCL 30/1119 B (NCL) land comprises approximately 9 hectares (32%) undulating to easy forest ridges in the centre of the block, 5 hectares (18%) moderate to steeply sloping ridges to the north east corner and 14 hectares (15%) steep forest ridges rising from the western side of the lower ridges to the western boundary. Mr Dodds confirms that the highest and best use of both properties is for rural residential purposes, in conjunction with possible orchard or grazing uses. Mr Dodds sees the subject lots as being attractive rural residential sites with a fairly good outlook over the dam but suggests the advantage of the dam frontage and views is diminished by the fact that in dry years the water usage from the dam for the Plane Creek Sugar Mill and the Town of Sarina virtually leaves it dry. Mr Dodds stresses that important factors from a valuation point of view include the reasonably remote location and lack of formed road access, and the attractive outlook over the dam in wet years, together with the lack of services. He has made an allowance for the cost of power connection to PCL 30/1119 A (NCL) of $7,500 and to PCL 30/1119 B (NCL) of $10,000 in his valuation assessments, costs which are well below costs advised by the lessees as will be shown later. As a basis for his valuation Mr Dodds has had regard to a number of sales of rural residential sites in the general locality including the purchase of the -- 3 of 10 -- - Page 4 - subject leases from P.J.L. German on 9th February, 1988 for $40,000. Mr Dodds analyses the subject sale after allowing $10,000 for the value of some 9 hectares of clearing for cultivation and 2 hectares of clearing for grazing and for some fencing, to show an unimproved value of $40,000. Mr Dodds says that the purchasers were locals and thought at the time that they would be able to obtain a property with freehold tenure for an investment of $60,000 to $70,000. Mr Dodds agrees with a proposition put by Counsel for the Crown that the PCL tenure is something less than freehold tenure in the market place. Lot 9 on RP 735242 with an area of 1.475 hectares situated in Germans Road, Middle Creek sold from P. and F. Bennett to J. and L. Fountain for $25,000. This is a small rural residential site without views located in the rural residential subdivision adjacent to the subject properties. It had formed gravel access and power connected. Mr Dodds' analysis of this sale shows an unimproved value of $20,000 for the 1.475 hectare site. He says it is an inferior site to the subject sites prior to the making of an allowance for electricity connection and access. Lot 1 on RP 720932 in Walshs Road, Shinfield with an area of 4.502 hectares sold from D. Patroni to R. C. Maguire in September, 1988 for $13,350. Again this is a small rural residential site of level creek frontage which is former cane land. It was purchased by an adjoining owner grazier who uses the land for beef cattle grazing. It has good gravel access and electricity available. Again Mr Dodds suggests it is inferior to the subject leases prior to the electricity connection and access. Another sale is Lot 2 on RP 720932 also in Walshs Road, Shinfield with an area of 6.088 hectares which sold again from D. Patroni to C. and M. -- 4 of 10 -- - Page 5 - Misfud in May, 1988 for $18,000. This site adjoins the sale site Lot 1 on RP 720932 and is similar type land and again inferior to the subject leases. This land has '.beeR reassigned for cane growing and in used for this purpose. It also is an adjoining owner sale. The final sale referred to by Mr Dodds is of Lot 4 on RP 744326 in Ventons Road, Plane Creek witb an area of 13.38 hectares which sold from C. Deguara to K. and J. Hill in October, 1988 for $57,000. This is a good rural homesite being undulating former cane land situated 15 kilometres west of Sarina with excellent rural views (but inferior to the subject views), with bitumen road access and with electricity connected. At sale date it was improved with a high set Queenslander style dwelling, had a bore and water supply. Mr Dodds analyses the sale to show a value of $27,000 exclusive of structures or $18,000 unimproved. He sees Lot 4 as being comparable to the smaller subject lease and inferior to the larger subject lease, prior to the allowance for electricity connection and access. Mr Dodds recognises that this is an improved sale but suggests his analysis of it shows that the Crown valuation of the larger site (PCL 30/1119 B (NCL)) at $50,000 is excessive. Commenting generally upon the market conditions in the region for rural homesites Mr Dodds expressed the opinion that the market was dead during 1988 because of a surfeit of rural homesite subdivisions allowed by the Sarina Shire Council in the early 1980's. He says that the subject leases were purchased during the dead period. The market improved considerably in 1989 and Mr Dodds illustrated this by the sale of Lot 66 on Plan PC 1805 (this site adjoins Lot 1 on RP 720932 in Walshs Road) containing an area of 3. 728 hectares in August, 1989 for $33,000. Mr Dodds points out that Lot 66 is an inferior block to Lot 1 and sold for -- 5 of 10 -- - Page 6 - a higher price. Paul Martin Bennett, one of the lessees, who lives at Middle Creek told us he has lived in the area for 6 years. Mr Bennett says that the subject leases were on the market for several years and that he purchased them through a real estate agent. At that time he made enquires at the counter of the Lands Department in Mackay about the cost of freeholding the leases and was told that the Crown valuation was $28,000 for the two leases. He was under the impression that that was the value at which he could convert the tenures, and he confirmed that he expected that his total investment with the purchase price of $40,000 after freeholding would be $60,000 to $70,000. It turns out however the Crown valuation of $28,000 was made for rental purposes on 1st July, 1980 for PCL 30/1119 (NCL) before it was subdivided. It therefore is not of relevance here, except perhaps for the influence, if any, it had upon the purchase price Mr Bennett was prepared to pay for the subject leases. Mr Bennett was working for the Mackay Electricity Board at the time of the lessees' purchase of the subject leases. He enquired as to the availability and cost of the power connection to the separate subject sites. It was available he was advised, at a cost of $20,000 to $30,000. Mr Bennett agrees that the subject sites are attractive when the dam is full but during the last three years the dam has mainly been empty with "just a little bit of water at one end". He produced a photograph taken by him in 1988 to illustrate the lack of water in the dam. Mr Bennett confirmed Mr Dodds' evidence about the access situation at relevant date and about the work carried out on the road by the tessees since that time. Mr Penny describes PCL 30/1119 A (NCL) land as being steeply to more moderately sloping from the lower slopes and ridges of the Connors Range in -- 6 of 10 -- - Page 7 - the west, falling in an easterly direction to the dam. He confirms the narrow nature of the site. As for PCL 30/1119 A (NCL), Mr Penny describes the country agatn as steeply to moderately sloping from the range in the west falling to the Middle Creek Dam. Mr Penny bases his valuation of PCL 30/1119 A (NCL) land on two sales. The first sale is of Lot 1. on RP 40440, Parish of Sarina containing 11 .75 hectares from C. Deguara to W.G.J. Self on 23rd November, 1987 for $35,000 - analysed unimproved value $31,500. This is a rural residential hobby farm site situated 10 kilometres from Sarina. It comprises undulating cleared forest country being old cane land and has good views. Mr Penny says PCL 30/1119 A (NCL) land is similar to the sale land in land quality but suggests that the subject lease has an advantage due to its -better views, although the subject land has inferior access. The second sale used by Mr Penny for PCL 30/1119 A (NCL) valuation is Lot 1 on RP 45821, Parish of Sarina with an area of 14.3 hectares on 27th February, 1989 from S. and F. Spratt to G. B. Truscott again for $35,000 - analysed unimproved value $34,000. This is a steeply sloping rural residential site with more easily sloping elevated country in the eastern end and has limited views. It is 15 kilometres from Sarina and in reasonably close proximity to the subject leases. Again Mr Penny sees the land quality on this sale to be similar to that on PCL 30/1119 A (NCL) but he says it is a considerably inferior block again due to the subject land's better views, although the subject land has inferior access which is flood prone. As for his valuation of PCL 30/1119 B (NCL) land, Mr Penny relies upon three sales. The first is Lot 2 on RP 746403, Parish of Sarina containing 32.39 hectares on 27th April, 1988 from E. and A. Kippen to LG. and C.W. Goode -- 7 of 10 -- - Page 8 - for $45,000 - analysed unimproved value $42,600. This is undulating country being former cane land rising to broken stony forest country at the rear. It has similaf land qualities as the subject land but PCL 30/1119 B (NCL) has better views and in Mr Penny's opinion is a superior parcel. The sale site is 6 kilometres from Sarina. The second sale used by Mr Penny is Lot 5v on 0124.639, Parish of Sarina containing 55.442 hectares from C.K. and H.D. Watson to W.F. Rebetzke and Others on 18th October, 1988 for $42,000 - analysed unimproved value $40,760. This site is eight kilometres from Sarina with 700 metres of rough unformed track access. It is generally steeply to moderately sloping from a ridge along the western boundary falling to a creek on the eastern boundary and has good rural views but which Mr Penny describes as being inferior views to those available from PCL 30/1119 B (NCLJ. Mr Penny says the services available to POL 30/1119 B (NOL) land are superior to those for the sale land, and both blocks suffer from seasonable access flooding. The third sale relied upon by Mr Penny is a Lot on RP 39654, Parish of Sarina containing an area of 40.43 hectares which sold on 19th September, 1985 from G. Spratt to R. and J. Martin for $55,000 - analysed unimproved value $51,500. This block has a frontage to the Middle Creek Dam and like the subject land has a good view over it. It has greater access difficulties than has the subject lease as there are three major creek crossings which become impassable due to flooding for extended periods. There is also no power or phone available whereas the subject has the services available albeit at a cost. Mr Penny also placed in evidence photographs showing the pleasant views from the subject leases when the supply in the dam is plentiful and of the Creek crossing on the access road to the sale Lot RP 39654 land. -- 8 of 10 -- .. - Page 9 - Mr Penny agrees with Mr Dodds and Mr Bennett in so far as their description of the access to the subject sites at relevant date is concerned but stresses that the access to sale RP 39654 land is very much more difficult. Mr Penny was aware of the sale of the subject leases but did not use them as a basis of valuation as the tenures were less than fee simple. He comments that the adjoining owner sales relied upon by Mr Dodds are irrelevant as they were not purchased as rural homesites but for primary production use. In summary there really is little in dispute between the valuers as to the description of the subject leases and the problems with access and the lack of connected services. The matter of the determination of the unimproved value of the subject leases really depends upon my appreciation of the merit of the relevant sales evidence. I find that the best evidence for the valuation of PCL 30/1119 A (NCL) land is the sale of Lot 1 on RP 45821 used by Mr Penny. It is in close proximity to the subject land but the only doubt I have is that it should not be applied in full in valuing the subject land due to Mr Dodds' evidence about the market resurgence in 1989. I note that Mr Dodds considers that Mr Penny's sale of Lot 1 on RP 40440, being adjacent to one of his sales, supports his valuation of the subject lease. As for the valuation of Lot PCL 30/1119 B (NCL) land the most relevant sale appears to be RP 39654. It like the subject lease fronts the dam. It has inferior access and lack of services. It is of course, a very much larger rural homesite than is the subject and took place well prior to the relevant date. Mr Dodds' sale of Lot 9 on RP 735242 is so small as to be not comparable with either of the subject leases and l agree with Mr Penny that the adjoining owner influence in the Walshs Road sales make them less useful as a -- 9 of 10 -- - Page 10 - basis of valuation. In addition, they were purchased for use as primary production land. It must also be said that Mr Dodds' sale in Ventons Road does not provide a reliable basis of valuation since it is a relatively highly improved sale with consequent difficulty of analysis. However it must also be said that despite this difficultly, some regard must be had to Mr Dodds' evidence that it shows that an unimproved value of $50,000 for l?CL 30/1119 B (NCL) is too high. In all the circumstances the evidence leads me to the following determinations - (A) the unimproved value of PCL 30/1119 A (NCL), Mackay District for the purpose of the conversion of tenure is determined in the sum of $30,000. (B) the unimproved value of PCL 30/1119 B (NCL), Mackay District for the purpose of the conversion of tenure is determined in the sum of $45,000. (C. H. Carter) Member of the Land Court. -- 10 of 10 --