Colhoun v Minister for Lands
[1996] QLC 32
•22 March 1996
|
BRISBANE
22 MARCH 1996
Re: Determination of Unimproved Value for Conversion of Tenure -
Land Act 1962 (Section 207)
Special Lease No. 09/41214
Lessees: Robert G and Kathryn M Colhoun
(Hearing at Atherton)
D E C I S I O N
Mr and Mrs Colhoun made application for the conversion of tenure of the above described lease on 7 January, 1992. It is at that date when the determination of unimproved value is to be made.
Special Lease No. 09/41214 is over land described as Lot 481 on Plan HG592, Parish of Masterton, containing an area of about 2,490 hectares. However, the conversion offer was for an area of about 70 ha only, situated in the extreme south-western corner of Lot 481 and about 18 kilometres south-west of Dimbulah.
The Minister's determination of unimproved value in the amount of $40,000 for that part of the lease was not accepted by the lessees and the matter was referred to the Court for determination.
Mr Colhoun attended the hearing in Atherton and gave evidence in support of a written submission which encompassed the history of the lessees' acquisition of the lease, the reasons for the conversion application, and the lessees' dissatisfaction with the offer being restricted to a very small part of the lease and then the resultant valuation implications. While Mr Colhoun found it difficult to isolate the limited offer from the application for conversion of the total lease, he was aware that the purpose of the hearing was also limited to the determination of the unimproved value of that relatively small area subject to the conversion offer. Nevertheless, Mr Colhoun submitted that the unimproved value of the 70 ha should be determined on the basis of its worth as a very small part of the 2,490 ha parcel of inferior quality grazing land.
In his opinion it was not possible, in a practical sense, to consider the 70 ha parcel in isolation from the balance area. He saw it as capable of existing only because it was an integral part of the total area of the grazing property. Mr Colhoun had previously contested the unimproved capital valuation of that total area and had been successful in having the valuation reduced to $13,800. Mr Colhoun is then at a loss to understand how an area comprising less than 3% of that total area could be valued at $40,000. He said that the 70-ha section, containing the house and structural improvements "is so poor that it has very little worth in isolation". To the best of his knowledge, a residential house block in Dimbulah was worth only about $8,000 fully serviced and the function of the 70-ha parcel for residential use was somewhat similar, but without the advantage of the town services. Mr Colhoun provided examples of large leasehold areas of better quality grazing lands commanding levels of value in the range of $13.50 to $22 per ha. Reference was made to sales of neighbouring well-improved smaller freehold sites at prices which Mr Colhoun saw as reflecting little, if any, land value. That to him, was indicative of the very depressed market which existed for that type of land.
In his opinion the 70 ha parcel should have been valued at no greater sum than $2,000.
The Lands Department assessment had been carried out by Mr W.B. Bowen, registered valuer. He described the location of the 70 ha parcel as being within commuting distance of Dimbulah, via 14 kilometres of bitumen road formation with the balance gravel. The land comprised gently to easily undulating open ironbark, bloodwood and box forest with small pockets of flats on Carbonate Creek, which formed the northern boundary. Intermittent water supplies exist in the creek, but lasting only for about three months in normal seasons. As a separate site, the grazing capacity of the land was extremely limited estimated as being seven head with the provision of water points additional to existing dams and with pasture improvement. Telephone is the only service connected. Although electricity reticulation "is available in the locality" the lessees had opted for generator/solar power as the cost of connecting to the electricity service was high. The land was zoned "Rural A", in which zone the minimum area for subdivision was 60 ha.
In Mr Bowen's opinion, as a separate 70 ha site the land had highest and best use as a rural homesite. Details were provided of 10 sales in the period relevant to the date of application, of lightly improved or unimproved sites ranging in area from about 3 ha to 122 ha and scattered throughout the Dimbulah/Mareeba/Herberton area. These sales had been analysed to show unimproved values in the range of about $20,000 up to $138,000.
It was Mr Bowen's considered opinion that one of the lowest in the range (Sale 2 - a small site of 2.926 ha off the Mareeba/Dimbulah Road, with only slightly superior location, similar services but access to channel water) indicated a level below which the value of the subject land could not lie. Of the other sales, Mr Bowen felt that his Sale 3 - a 72.439 ha block in Top Eureka Creek Road, for $65,000 (analysed unimproved value $63,000) being of similar size with similar access and services indicated the upper level of value for a homesite comparable with the subject but with superior water supply potential. Apart from sales which were located in the area of the Mareeba-Dimbulah Irrigation Scheme, two of his sales (7 and 8) identified a demand for rural homesites in localities well outside the irrigation scheme area. While the subject land was also outside the irrigation area, and marginally within a pastoral locality, Mr Bowen had no doubt that it would be suitable as a separate entity for purely rural homesite purposes.
Mr Bowen explained that the valuation of the total lease area had taken into consideration the restrictive nature of the Special Lease conditions and the concessional provisions under the Valuation of Land Act. Any potentiality for rural homesite use had been specifically excluded from that
valuation. In his opinion, just as it was not appropriate for a comparison to be attempted between 1,012 m2 homesites in Dimbulah, it was also not appropriate to value a rural homesite of 70 ha based on levels of value per hectare for the larger leasehold pastoral holdings.
This Court has been made well aware of the frustration and disappointment which has been and is being experienced by the lessees relative to the conversion policy of the Department. That is understandable, but the fact is that the matter before the Court is the determination of the unimproved value of the offered 70 ha parcel. The relevant legislation in connection with this conversion offer is the Land Act 1962. Conversion of Special Leases is dealt with in s.207 and ss.(7)(a) provides as follows:
"The unimproved value of a lease is the amount that in the Minister's opinion or, if the Minister has referred the matter to the Court, the Court's opinion, experienced persons would be willing to pay for an estate in fee simple in the land if it was offered for sale on the reasonable terms and conditions a bona fide seller would require."
It is clear that there is no one sale in the schedule produced by Mr Bowen which is of directly comparable land and there are, no doubt, particular circumstances of individual sales (for example Sale 1 from Stankovich to Durre, of which Mr Colhoun had some knowledge) which would set the comparability even further apart. Nevertheless, Mr Bowen's is the only professional evidence before the Court which provides an overview of the rural residential market in the district and a well-considered opinion of the fee simple market value of the subject 70 ha. Mr Bowen explained the methodology employed in coming to his valuation conclusion and that has not been faulted.
Whether the lessees decide to proceed with the application which resulted in the limited conversion offer, is a matter for them to consider. However, I am satisfied that the valuation of Mr Bowen provides acceptable evidence that at the date of application, the unimproved market value of the subject 70 ha parcel was related to the then existing rural-residential market. Evidence from that market sector then indicates that experienced persons would have been willing to pay an amount of $40,000 for the subject site. The sales of nearby fairly heavily improved properties referred to by Mr Colhoun, were very recent - and even so not analysed with any precision. It is of interest that, according to Mr Bowen, one of those sale properties had also been recently converted from leasehold, based on an accepted offer on a similar valuation basis as adopted in this matter.
The unimproved value of the land subject of the conversion offer is therefore determined in the amount of Forty Thousand Dollars ($40,000) as at 7 January 1992.
RE WENCK
MEMBER OF THE LAND COURT
0
0
0