Help Enterprises Ltd v Chief Executive, Department of Natural Resources and Mines
[2001] QLC 73
•18 July 2001
LAND COURT BRISBANE 18 JULY 2001
[2001] QLC 73
Re:Appeal against Annual Valuation Valuation of Land Act 1944 Property ID: 1218581 Local Government: BCC-Toombul (AV00-176)
Help Enterprises Ltd v.
Chief Executive, Department of Natural Resources and Mines
D E C I S I O N
Background:
This matter relates to land at 520 Curtin Avenue, Eagle Farm, and described as Lot 979 on Plan SL6192, and contains an area of 2.024 ha. The subject land is held under a Deed of Grant of Land in Trust in the name of Help Industries Ltd (the appellant). Help Industries Ltd is a registered charity which provides employment and training opportunities and support for people with disabilities. The only issue between the parties is whether the restrictions enshrined in the Deed of Grant of Land in Trust have been properly considered in the valuation by the Chief Executive at 1 October 1999 under the Valuation of Land Act 1944 (the Act).
On 27 March 2000 the Chief Executive (the respondent) issued a valuation of the subject land at $1,500,000. Following an objection, the Chief Executive confirmed that figure on 27 June 2000. The appellant has now appealed claiming the unimproved value should more properly be $750,000. An offer for a Court supervised preliminary conference was rejected by the respondent, and the matter was set down for hearing on 16 May 2001. By letter of 18 April 2001 the appellant applied under Rule 35(1) of the Land Court Rules 2000 for the matter to be heard without an oral hearing, which was consented to by the respondent on 2 May 2001, and approved by the Court under Rule 36.
Written submissions were subsequently provided to the Court for consideration. It was agreed by both parties that the only matter for determination by the Court was whether the restrictions imposed by the Deed of Grant of Land in Trust should be taken into account in the valuation. Both parties agree that in the event that the restrictions in the Deed of Grant of Land in Trust are to be ignored then an
unimproved value of $1,500,000 is appropriate; and if the restrictions are to be considered then an unimproved value of $1,125,000 would be appropriate.
Written submissions were provided by Deacons (Lawyers) for the appellant; and by Mr JB O'Rourke, Principal Legal Officer for the respondent.
The Appellant's Submissions -
The appellant argues that the restrictions contained in the Deed of Grant of Land in Trust should be taken into account by the respondent when valuing the land under the Act. The appellant argues that to rely upon s.14(1) of the Act in isolation of s.14(2) to s.14(5), misinterprets the purpose of the Act. It is argued that s.14(1) is a general provision intended to be read subject to subsections (2) to (5), which specifically list the circumstances under which the unimproved value is to be valued, with or without regard to particular restrictions, covenants or conditions. It is argued that s.14(1) is not an "absolute" or "catch-all" provision, as evidenced by the inclusion of s.14(2) which specifies when a restriction may be disregarded.
The appellant also argues that s.14(2) has no direct relevance to the subject land; s.14(4) and s.14(5) provide directions that a valuer must not disregard all restrictions affecting a property; and there is nothing in s.14 or elsewhere in the Act which specifically directs that the restrictions of a Deed of Grant of Land in Trust are to be disregarded.
The appellant therefore argues that the common law methodology of voluntary bargaining as espoused by Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, at 432 should be followed. On that basis a prudent vendor and purchaser would consider any restrictions, covenants or conditions imposed by a Deed of Grant of Land in Trust when determining an appropriate market value for the land.
The appellant further argues that the restrictions imposed by the Deed of Grant of Land in Trust constitute a fetter upon the use of the land, seeking support in the principles espoused in The Valuer-General ats.Queensland Club (1991) 13 QLCR
207. While that matter dealt with the impact of the restrictions imposed by the heritage provisions of the Brisbane Town Plan, the analogy in the current matter lies in the restrictions placed upon the use of the land. The heritage restrictions in that matter were found to run with the land, similar to the restrictions of the Deed of Grant of Land in Trust, and therefore restrain the maximum use of the land for other purposes. The Queensland Club matter preceded the amendment to the Act in respect of the now s.14(5)(d).
The appellant also seeks support in the findings of the Land Appeal Court in Ballow Chambers Ltd v. Valuer-General (1992-93) 14 QLCR 422. In that matter it was determined that the restrictions imposed by heritage listing must be considered when valuing the land. As was found in the Queensland Club and Ballow Chambers matters, while the Act contains no specific direction that restrictions on the use of the land for heritage purposes at that time should be considered, the Land Appeal Court directed for that to occur. The appellant argues that a similar analogy should be construed in the current matter in respect of the restrictions imposed in the Deed of Grant of Land in Trust.
The Respondent's Submission -
The respondent argues that under s.14(1) of the Act, the subject land is deemed to be held in fee simple. It also notes that under the provisions of the Deed of Grant of Land in Trust the Crown granted the subject land in fee simple, subject to certain restrictions. The respondent concedes that while s.14(5) of the Act directs that the purposes and conditions of a lease issued under the Land Act 1994 are to be taken into account in valuing such lands, there is no equivalent provision relating to the Deed of Grant of Land in Trust.
Because s.14(5) is expressly directed at concessional treatment to Crown leases and certain specified tenures, the respondent argues that other tenures, including Deeds of Grant of Land in Trust, are not to enjoy such concessions. The respondent, however, concedes that the restrictions placed upon a Deed of Grant of Land in Trust issued under the Land Act 1994, and its predecessor, the Land Act 1962, are not found upon other grants in fee simple. However, the respondent argues that restrictions and limitations on Crown leases are in general terms to be disregarded under s.14(2) of the Act.
The Legislation -
Before considering this matter it is important to understand the wording of the relevant legislation. Firstly in respect to the Valuation of Land Act 1944, s.14 states:
"14.(1) For the purpose of deciding the unimproved value of land that is not granted in fee simple, the land is taken to be land granted in fee simple.
(2) For the purpose of deciding the unimproved value—
(a) of land held from the Crown for an estate of leasehold upon a tenure which is subject to any restriction, limitation, or other onerous covenant or condition; or
(b) of land (whether freehold or land held from the Crown for an estate of leasehold) the use whereof is restricted or limited for that the appropriate local government has given due notice of the realignment of any road whereon that land abuts;
the unimproved value of the land must be ascertained without regard to the restriction, limitation or other covenant or condition.
(4) A valuation of the unimproved value of any land made under this part shall take into account the existence and effect of any easement, registered under any Act, in respect of which such land is the dominant tenement or the servient tenement.
(5) In making, under this part, the valuation of the unimproved value of any land—
(a) in respect of which a stock grazing permit granted under the Forestry Act 1959, section 35 , the National Parks and Wildlife Act 1975, section 33 or the Nature Conservation Act 1992 is in force; or
(b) in a lease, licence, permit or permission to occupy under the Land Act 1994 or granted or issued by the coordinator-general or the chief executive of the department responsible for the administration of the Forestry Act 1959; or
(c) in a lease from Queensland Rail; or
(d) subject to a heritage agreement under the Queensland Heritage Act 1992, part 6;
the unimproved value of that land shall be determined having regard to and making proper allowance for any restriction or limitation of use having regard to the purpose and conditions to which that permit, lease, licence permission to occupy or agreement is subject."
If I turn then to the Land Act 1994 I note that Division 3 - Deeds of Grant in Trust establishes that State land may be dedicated as a reserve or granted in fee simple in trust for community purposes, and how those lands are to be properly and effectively managed (s.30). I note that the way the land so granted is used must not be inconsistent with the community purpose for which it was granted, or for an additional community purposes approved by the Governor in Council (s.35). I note also that a Deed of Grant of Land in Trust may be cancelled under s.38, including among others where the Governor in Council considers it appropriate in the public interest (s.38(1)(d)).
I note further that the above conditions of the Deed of Grant of Land in Trust replaced previous legislation in the former Land Act 1962, in particular s.334, s.337,
s.338(1) in respect of the trustee being seen as the absolute owner of the land, s.334(1) in respect of the lack of power to sell the land to other than the Crown, or with the approval of the Governor in Council surrender the estate or interest in the land to another body corporate constituted under any Act.
The thrust of the above directions from the Land Acts is that the transfer of the Deed of Grant of Land in Trust brings with it restrictions upon the free use of the land, not encountered on other fee simple lands. I note also that the use of the land must be for community purposes.
If I then look to the Acts Interpretation Act 1954 I find that s.14 states:
"14A(1) In the interpretation of a provision of an Act, the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.
(2) Subsection (1) applies whether or not the purpose is expressly stated in the Act."
The Deed of Grant of Land in Trust -
The history of the tenure of the subject land confirms that the land was initially conveyed to the appellant from the Crown as a lease for special purposes under s.203(a) of the Land Act 1962. The Special Lease was issued on 1 February 1970 for a nominal yearly rent of $6 for industrial purposes. The conditions of that Special Lease expressly precluded any right to assign or sublet the land to another person.
On 4 June 1987 a Deed of Grant of Land in Trust was issued to the appellant under s.334 of the Land Act 1962 for "charitable institution purposes, and for no other purpose whatsoever". As part of that grant in fee simple to the land the Crown attached the special condition that the "land shall revert to the Crown where the trust conditions and reservations are not being duly observed and performed". The reservations related to matters such as minerals, searching for mines and forests and quarry materials, generally also excluded from freehold lands, and reserved to the Crown. The "special condition" in respect of the use of the land distinguishes the Deed of Grant of Land in Trust from other freehold lands. As an existing Deed of Grant of Land in Trust the subject land continued under s.451(1) and (2) of the Land Act 1994.
The reservation by the Crown also carries with it the lack of power for the trustee to sell the land (s.54). However, the trustee can mortgage a Deed of Grant of Land in Trust under s.67(2); and where a trustee defaults under a mortgage over a
Deed of Grant of Land in Trust, the Minister must determine the unimproved value of the land in mortgage as if the land was not restricted by the trust (s.69(2)).
When such land is subsequently sold, after due procedure and exposure to public auction, the buyer is entitled to have a new Deed of Grant issued in the buyer's name, but subject to other registered encumbrances that have not been released (s.71(c)). The disposal of the sale price is to include the unimproved value of the Deed of Grant in Trust, the mortgage debt, any expenses reasonably incurred in the sale, and any balance of remaining funds are then to be paid to the State (s.72).
The purpose of s.69 is clearly to protect the interests of mortgagees who have loaned against the value of the property. However, the thrust of s.69 is directed towards securing the property once the trustees have defaulted upon their Deed of Grant of Land in Trust. It is not directed to the enjoyment of the use of the land in accordance with the Deed. Bearing in mind the community purpose of the Deed of Grant of Land in Trust, and the generous nature of the financial consideration of that Deed, there would appear to be some recognition by the Crown of a public interest in those conditions.
The Common Law -
While statutory law takes precedence over the common law, it is not without influence upon the unimproved value of the land that I consider the impact of the marketplace in this matter. I am directed by the appellant to considerations of the marketplace, and how a prudent purchaser might see the value of the Deed of Grant of Land in Trust. To that end I note that a prudent buyer/seller relationship would be conscious of all facets of the marketplace, and the tenure of the land, including any restrictions placed upon the free dealing of the land imposed by the Deed of Grant of Land in Trust. (Spencer v. The Commonwealth of Australia - supra). To that end the sale price of the subject land in its unimproved state would tend to carry baggage not evident in other freehold lands.
Because of the general nature of the permitted use of the land under the Deed of Grant of Land in Trust, I must also consider that there was likely to be a more restricted market for the land for its community purposes. While a restricted market might not always result in a lower price for a product, such is where such product is in limited supply, there is nothing in the actual nature of the subject land to suggest such a market distortion. On that basis I believe there was likely to be less potential purchasers for the subject land than for other comparable lands not encumbered by a Deed of Grant of Land in Trust. While I have no indication of the nature of the
market evidenced agreed by the parties, the above conclusions would tend to direct me towards a more conservative estimate of the value.
Decision:
If I consider first the implications of s.14(1) of the Act, I note that only relates to the treatment of all lands as if they were fee simple lands. There is no question that the subject land is fee simple, and I believe s.14(1) has no other implications. The implications of s.14(2) relate only to leasehold land or lands which are impacted by a notice of realignment of a road; and s.14(4) relates only to lands impacted by an easement.
While s.14(5) makes no specific mention of a Deed of Grant of Land in Trust, the thrust of that subsection provides for recognition of restrictions upon other tenures from the State, or a State authority, and lands subject to heritage agreements (s.15(5)(d)). In the absence of specific directions about Deeds of Grant of Land in Trust I turn to other guidance from legislation.
I note from s.14A(1) of the Acts Interpretation Act 1954, that the interpretation of a provision, whether it is expressly stated or not, is to be the meaning that best achieves the purpose of the Act. If I look then at s.14(5)(d) of the Act I see that where land, in addition to leases or permits directly from the State, has a noted restriction upon the use of the land such as a heritage listing, then that restriction is to be recognised in the valuation. It would seem consistent with the wording of s.14 of the Act, that where the State has likewise conditioned or restricted the use or ownership of a fee simple of the land, then such restriction should also be recognised for purposes of valuation.
If I turn for precedence in concluding that the Act was not meant to exclude such recognition, I note the history of Queensland Club v. Valuer General (supra). In that matter the argument between the parties was whether the heritage listing related to the land or only to the building. The Land Appeal Court found at p.221:
"In this case the valuer must put from the mind that as at 31st March, 1989, the fact that the Queensland Club existed, or ever existed, but for no other reason than to see the land in its virgin state but as zoned and in the existing environment. Once this scene has been set, the making of the valuation would indeed be conducted in a vacuum if any statutory restrictions (or advantages) attaching to the use of that land (no matter the historical happenings which created those restrictions or advantages, whether related to the local environment or confined within the boundaries of the particular site) and which had an effect on 'the capital sum which the fee simple of the land might be expected to realise if offered for sale', were to be ignored. If the valuation was conducted in such a vacuum the result would be plainly wrong."
That principle was also followed in Ballow Chambers Ltd v. Valuer-General
(supra), where the Land Appeal Court said at p.430:
" Just as a statutory easement taken over property for the purpose of public utilities - such as power, etc. - will sometimes reduce the value of the land affected because the existence of the statutory easement will or may limit the potential of the land, so it seems to us the imposition of the statutory constraints upon the owner of a 'heritage building' will sometimes, although not necessarily always, reduce the value of the land should the listing reduce the potential which would otherwise exist for a development of the land for its highest and best commercial use."
In its conclusion in Ballow Chambers the Land Appeal Court found at p.436:
" We take the view that from the plain effect of ss. 8, 10 and 18 of the Heritage Buildings Protection Act 1990, the heritage listing of 'Ballow Chambers' imposes constraints upon the use and development of the subject land which must be taken into account when valuing that land for its highest and best use, even though its improvements must be assumed not to exist at the valuation date."
Subsequently the now existing s.14(5)(d) was included in the Valuation of Land Act on 27 March 1992 by Part 10 Section 71(1) of the Queensland Heritage Act 1992, to recognise the impact of heritage listing upon the valuation of land.
The analogy drawn in the current matter is that, while a Deed of Grant of Land in Trust is not specifically identified as a tenure for special consideration under s.14(5) of the Valuation of Land Act, its highest and best use is conditioned by a restriction imposed under s.38 of the Land Act 1994. In my opinion, any prudent purchaser of the Deed of Grant of Land in Trust would recognise the restriction imposed by s.38, and take that into consideration when assessing the value of the subject land.
Now it is not a matter for this Court to contemplate what might be the outcome of such considerations in the marketplace, but merely to recognise that the legal consequences of the Land Act 1994 should be considered in the valuation process. The legislative restrictions imposed by that Act, in my opinion, must be recognised as they impact the use of the subject land in accordance with the principles stated in Royal Sydney Golf Club v. Federal Commissioner of Taxation (1955) 91 CLR 610.
Now the "use" of the subject land is determined to be for "charitable institution purposes" under the Deed of Grant of Land in Trust. I note that under s.14.1 of the Town Plan for the City of Brisbane 1987, such a use for the support of people with disabilities was likely to be zoned as a "Special Use" zone, and is recognised as being used for "public services" in the community. Where a use of such land is proposed to
cease, or be altered, the Town Plan either allows for a rezoning to occur or, subject to Council consent, for the "Special Use" zoning to continue, where a further community purpose, welfare purpose, or recreational purpose is proposed. The thrust of such planning controls upon the use of such lands is to recognise the "special nature" of their intended use.
If I turn then to perceptions in the marketplace, I believe any prudent purchaser would be aware that the subject land was restricted in both its "purpose" and its approved "use", and would allow for those restrictions in estimating the value of the land. For the respondent to do otherwise would seem inconsistent with the permitted highest and best use of the land.
Conclusion:
In concluding the unimproved value of the subject land I therefore determine that the restrictions enshrined in the Deed of Grant of Land in Trust must be considered when valuing the land. In accordance with the agreement between the parties, I therefore determine the unimproved value of Lot 979 on Plan SL6192 at One Million One Hundred and Twenty-five Thousand dollars ($1,125,000).
NG DIVETT MEMBER OF THE LAND COURT
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