Kosik v Chief Executive, Department of Natural Resources

[1997] QLC 61

[1997] QLC 61

 

LAND COURT, BRISBANE 12 May 1997

Re:Determination of Unimproved Value - Gold Coast City Council (Albert Division) - (V95-275).

B and RM Kosik v.

Chief Executive, Department of Natural Resources (formerly Department of Lands)

D E C I S I O N

Falling for determination is the unimproved value of a 48.36 hectare parcel of land described as Lot 313 on Plan W312356, Parish of Boyd, County of Ward. The land is situated off Dunns Road, Wolffdene, approximately 11 km south-west of the Beenleigh Central Business District. The respondent Chief Executive has determined the unimproved value of the parcel in the sum of $125,000 as at a relevant date of 30 June 1993. The land has been valued as a large rural residential site. The appellants contend within the notice of appeal for an unimproved value of $58,500. The land is zoned "Rural C" under the provisions of the Shire of Albert Town Planning Scheme which was gazetted on 19 March 1988. The preferred dominant future land use for it is "Rural Residential" under the 1988 Shire of Albert Strategic Town Plan.

There is another appeal before the Court against the determination of the unimproved value of the same parcel of land as at a later relevant date of 1 January 1995 (Reference V95- 451). This case was heard separately and I am delivering separate decisions, but the Court records are integrated. It is best if the decisions be read together.

George John Crane, who is a practising registered valuer in the Beenleigh area, conducted the appellants' case and also furnished evidence in the matter. He called in evidence Bohuslav Kosik, who with his wife, Radoslava M Kosik, are the appellants in the matter. But before discussing the evidence which was led in the case, I should tabulate the grounds of appeal as contained within the notice of appeal to which the appellants are bound in accordance with the provisions of s.56(2) of the Valuation of Land Act 1944. They are:

"1.This land is used exclusively for the business of primary production and therefore should receive the benefit of concessional valuation.

2.This land has no legal access.

3.Valuation increase only by CPI as the land is being used for grazing only.

4.Deduction for establishing water supplies for grazing cattle.

5.Compulsory eradication of noxious weeds as required by the Shire Council. "

At the outset of his evidence, Mr Kosik indicated that the appellants are abandoning Ground 1 in the notice of appeal. By implication, it seems that the abandonment of Ground 4 follows.

Mr Kosik outlined the history of the appellants' ownership of the subject land which they purchased in 1990 for $78,000. The reason for its purchase was to graze cattle after clearing certain areas on the property. At the time of purchase, the Kosiks believed the land had legal access through a 20-metre wide easement (purported to be Easement A in what is now described as Lot 3 on RP 192865) leading from the subject property to Dunns Road. They were led to this belief from the vendors of the land - J and J Hart. A few years later Mr Kosik found out that the easement had never been registered. The appellants then approached the owners of Lot 3 who also believed that the easement had been registered, and asked them for permission to access their land through the easement area if it was to become registered. The owner of Lot 3 refused to grant the easement and so the appellants were unable to obtain registration of it. No monetary offer was made by the Kosiks to the owner of Lot 3 for the granting of the easement, although they offered some compensation in kind in the form of building some dams and the upkeep of the easement access since it had been eroded in many places. Accordingly, Mr Kosik says that up to the present time, the subject land has had no legal access, although for a few years Mr Kosik was able to drove cattle to his land along what was the purported easement which provided 4-wheel- drive access only due to the hilly nature of the terrain.

Mr and Mrs Kosik also own Lot 2 on RP 129052 containing an area of 133.076 hectares which adjoins the subject land on its southern boundary.  They purchased Lot 2 in 1994 for

$308,750. Notwithstanding the lapse of time between the date of the purchase of the subject land and the date of purchase of Lot 2, Mr Kosik says that the purchase of Lot 2 was subject to the purchase of the subject land. The appellants also purchased Lot 299 on Plan W312542 containing an area of 7.598 hectares which adjoins the subject land on its western boundary.

This land was purchased on 1 February 1995, after the relevant date for valuation in this case but before the date of issue of the valuation (30 August 1994).

Vehicular access to the subject property at the present time is across Lot 198 on Plan W311697 (Registered Easement A on RP 811439 negotiated in 1994) through Lot 2 on RP 129052, across a narrow strip of forestry land (part of Lot 203 on Plan WD4310), and across the south-east corner of Lot 299. This is very much a roundabout route but Mr Kosik says this was necessary due to the difficult terrain in the area. Mr Kosik told us that the access across the forestry land is gained by permission from the Department of Natural Resources but the department has indicated that it is not in favour of granting the Kosiks an easement.

On 12 January 1994, the appellants applied to subdivide an 8-hectare parcel from the subject land to give to their daughter but consent to the subdivision was refused by the Albert Shire Council on the ground that it was contrary to the Shire Subdivision By-Laws as access to the land was via an easement (as it was then believed) and therefore unacceptable. Mr Kosik claims as a result, the subject land has no potential for subdivision as long as the current by-laws remain in place. This is not a relevant issue in the case as it forms no part of the grounds of appeal, and the respondent Chief Executive has valued the land, not on the basis of its future subdivisional potential, but as for what is considered by him to be its highest and best use as a large rural residential homesite.

Consequent upon enquiry by the appellants as to the cost of providing power to the subject land, the SEQEB advised them on 28 October 1992, that an 11KV supply from Dunns Road to the subject land with a transformer site would cost approximately $26,000 as a non- refundable capital contribution for mains extension for a 3Ø supply and a non-refundable capital contribution of approximately $22,000 for mains extension for a 1Ø supply. Connection costs of

$160 and $50 are additional as well as the cost of poles, cables and clearing. Additionally, Mr Kosik says that the SEQEB has advised that it is not possible to provide power to the property because it is very difficult "to get somebody's easement to actually get through".

Also provided in evidence by Mr Kosik is an estimate by the Albert Shire Council dated 18 June 1993, for the supply of reticulated town water to the subject land. This would involve the construction of a main from the existing main in Beenleigh/Beaudesert Road - a distance of approximately 2,300 metres, and a pumping station at a cost of $200,000. Naturally, Mr Kosik says, this cost is prohibitive.

Mr Crane asked Mr Kosik to outline the circumstances surrounding the purchase of the appellants of Lot 299 on Plan W312542 on 1 February 1995, for $33,000. Mr Kosik constructed a fence along what he and the vendor of Lot 299 believed was the boundary between the subject land and Lot 299 prior to his purchase of the lot. The terrain is rugged and a subsequent survey showed that the fence was not on the boundary but for a significant part of its length, on Lot 299. Mr Kosik experienced difficulties with cattle straying onto Lot 299 after fence breakages from falling timber, etc., and approached the vendor who nominated the price of $33,000. Due to the difficulties, the Kosiks accepted the price which they thought was excessive but in the circumstances acceptable to them as they were anxious purchasers. Due to the location of the fence, only half of Lot 299 is available to the Kosiks for cattle grazing. As it turns out, this evidence as well is not of assistance in the determination of the value of the subject land as at the relevant date of 30 June 1993, as this sale was very much a post-relevant date event and not one relied upon as basic evidence by the Chief Executive in this case.

Mr Crane values the subject land as at the relevant date of 30 June 1993, in the sum of

$60,000. He confirms that it has no frontage to any formed road and has no legal access. He describes Dunns Road as being a narrow gravel surfaced carriageway with no formed water tables and no formed footpaths. He says the existing road access through the aforementioned neighbouring land is a rough, steep, graded track best traversed by a 4-wheel-drive vehicle.

Mr Crane describes the nature of the subject land as consisting of very steep ironbark and grey gum ridges with a small plateau towards the lower south-western portion and with a good building site in the south-east corner from which excellent views are available to the east. He says the subject land is being developed, along with the adjoining lands owned by the appellants, for cattle breeding and fattening. About half the property has been cleared in patches and sown with a mixture of cattle grass seeds as recommended by the Department of Primary Industries. The land has been subdivided into four paddocks, has a cattle yard and a loading ramp. There are three gully dams from one of which water is pumped to a supply tank on the plateau and reticulated to various watering points. The water from the equipped dam has been tested and found to be suitable for human consumption. The boundary is enclosed with a 5-strand barbwire fence, and the subdivisional fences and holding yard are of similar construction with the cattle yard having been built with steel mesh on timber posts. Mr Crane submits that at the time of his inspection on 14 March 1997 (nearly four years after the relevant date for valuation in this case) there were 30 head of cattle on the property. Mr Crane's estimate of the carrying capacity is 50

head of cattle. Now much of this evidence is not relevant in this case as it relates to the abandoned Ground 1 within the notice of appeal. It is, however, relevant in Case V95-451. Mr Crane is of the opinion that due to the lack of legal access, and the high cost of connecting to power and telephone, the highest and best use of the land as at the date of valuation would be as "extra land" to adjoining rural homesites and it is on this basis he assesses his valuation of

$60,000. In particular, he sees this value to be appropriate for adding the subject land to the adjoining Lot 1 on RP 48184 and Lots 1-3 on RP 192865, Parish of Boyd, containing an area of

54.78 hectares. This parcel was valued as at 30 June 1993 in the sum of $300,000 (owner OE Orford). Mr Crane makes the point, and he says there is Court precedent for it, that when valuing a rural homesite, added size over and above the normal size of sites in the area, does not add a pro rata value per hectare and he says that is the principle upon which he worked when assessing the value of the subject land as "extra land". To a lesser extent, but using the same method of valuation, Mr Crane sees a value of $60,000 for the subject land on the basis of its worth as "extra land" to the adjoining Lot 1 on RP 129052 and Lot 1 on RP 8222 containing an area of 70.848 hectares (owners S and H Maudsley). But the record is not clear as to the valuation of this parcel as at the relevant date of 30 June 1993. One document tendered by Mr Crane (Annexure "E" in his valuation report) suggests its value to have been $460,000 - another (a relativity map put in evidence by the respondent Chief Executive) shows the unimproved value to have been $250,000. The registered valuer called by the respondent subsequently stated its value to have been$200,000.

Mr Crane told us that as a general rule in carrying out valuations he does not use the relativity basis of valuation but has used it here since he cannot assist the Court with any evidence as to comparable sales which would assist in the determination of the unimproved value of the subject land.

Registered Departmental valuer Arend Boudewyn Van Hees was called by the respondent Chief Executive to furnish evidence in support of the valuation under appeal. Mr Van Hees was not the valuer responsible for the original valuation but consequent upon his inspection of the property furnished evidence in support of the Chief Executive's valuation of it.

Mr Van Hees is in agreement with the appellants contention that the subject land has no legal access. He also agrees that access to it is through the neighbouring lots as outlined by Mr Kosik by way of a private "right of way" access agreement which has been given to the

appellants' properties. Mr Van Hees acknowledges that the lack of access is a serious constraint upon the subject land.

Mr Van Hees describes the nature of the subject land to be irregular in shape, highly elevated with 360° coastal and hinterland views. He regards the subject property to be "probably one of the best properties in Beenleigh". Mr Van Hees confirms that the land is used for cattle grazing but as aforementioned, values it as a large residential homesite. Mr Van Hees sees the subject land as being an attractive place to reside. While again not a relevant issue in this case, Mr Van Hees says that the grazing activities carried out on the subject land do not qualify for it to have been valued under the provisions of s.17(1) of the Valuation of Land Act 1944 as land used for "the purposes of farming".

Mr Van Hees submits that the valuation under appeal is supported by the following sales evidence:

SaleNo 3 - Lot 99 on RP 842216, Parish of Boyd - 4.836 ha - Charles Calthrop Pty Ltd to AGMA Holdings Pty Ltd on 1.10.93 for $140,000 - applied unimproved value $90,000. Situation Lot 99 Brosnahan Court, Belivah. Zoning "Rural".

Mr Van Hees describes this site as being a high elevated parcel of land with a gentle to steep crossfall to the north-eastern corner, well drained, and with gravel road access. He considers the sale parcel to have inferior views and elevation to the subject land but superior access. He says the sale shows the values paid for highly-elevated rural allotments within the area. Mr Van Hees considers the sale site to be inferior to the subject land.

SaleNo 4 -              Lot 1 on RP 208273, Parish of Boyd - 19.62 ha - Whitlock to Kirk on 25.1.93 for $83,000 - applied unimproved value $82,000. Situation Wichham Road, Wolffdene. Zoning "Rural".

Mr Van Hees says this is a high elevated parcel of land falling steeply on both north- western and south-eastern ridge lines. He describes the area as being thickly vegetated with coastal forest and scrub and has difficult access due to a gravel track in steep terrain. Mr Van Hees considers the sale lot to be comparable in nature of land with the subject land, with access to the sale property being as difficult as that to the subject property. The sale lot is considered by Mr Van Hees to be inferior to the subject land due to the difference in size.

Mr Van Hees regards his Sale No 4 to be the best basis of comparison for the valuation of the subject land because of its difficult access. He sees the subject land as having superior views and overall to have more useable land than Sale No 4. Notwithstanding the lack of legal access

constraint upon the subject land, Mr Van Hees sees its value to be higher than that reflected by his Sale No 4.

Mr Van Hees recognises all the constraints placed upon the property as outlined by the appellants and Mr Crane including the high costs of connecting to mains water which he says most property owners would not even consider. He does not regard the cost of power reticulation to be an expensive proposition, having regard to the size of the subject parcel.

With regard to the lack of legal access, Mr Van Hees says that a valuation of $125,000 reflects this constraint for if legal access was available, he would have valued the land at

$180,000. But for its absence, he feels a discount factor of 30%, or approximately $55,000, makes sufficient allowance for this disability on the basis that the discount seems to equate a reasonable cost involved in the negotiation of an easement through the adjoining property and for the cost of maintenance of access to the land.

Mr Van Hees knows the two adjoining properties referred to in evidence by Mr Crane. He generally describes the Maudsley property as like dairying country. It has steep terrain on the western side but on the eastern side 50% of it is undulating pastures all cleared and suitable for grazing beef cattle or dairy cattle. Mr Van Hees describes the Orford property as being similar to the Maudsley property but 50% of it is quite steep. The Orford land, has also been valued as a rural homesite. Mr Van Hees does not consider the valuation of the subject property at $125,000 to be anomalous with the 30 June 1993 valuations of the Maudsley and the Orford properties. Now, there is a central thread of agreement between the parties as to the physical characteristics of and the disabilities suffered by the subject land, but I have some doubt about the relevance of the basis for Mr Crane's valuation. It essentially, although not totally, involves the principle of valuation relativity and there is no reference to the relativity principle within the

grounds of appeal nominated by the appellants.

Mr Crane's basis for his valuation of $60,000 for the subject land is undoubtedly novel and appears to lack cogence. His opinion as to the value of the subject land as "extra land" to adjoining parcels is at best an opinion which is unsupported by any sales evidence, and in relation to the sales produced by the respondent Chief Executive, far below fair market value as at 30 June 1993.  In addition, notwithstanding the problems with the subject land, a value of

$60,000 for it, especially compared with the value of $300,000 for the adjoining 54.78 hectare parcel owned by Mr Orford, seems, on the evidence of Mr Van Hees as to the type of country on the Orford land, far too low even as "extra land". It is to be noted that Mr Crane did not provide

the Court with the description of the type of country on either the Orford or the Maudsley properties. Further, I certainly could not find that a valuation of the subject land in the sum of

$180,000, assuming it had legal access, is excessive in relation to the sales evidence furnished by Mr Van Hees, especially his Sale No 4.

With respect to the cost of provision of water to the subject land, I find this is excessive in relation to the value of the land it would service, and the use of rainwater and/or dam water is the obvious economic alternative, especially when the land is valued as a rural homesite. I agree with Mr Van Hees in that the cost of power may not be exorbitant but there are obvious problems with power access unless easement access can be negotiated.

I now consider upon the allowance made by the Chief Executive by way of a discount factor for the lack of legal access and the cost of maintenance of such access. Certainly, if a financial inducement to the owner of Lot 3 on RP 192865 was necessary to encourage him to agree to the registration of an easement (proposed Easement "A") for access to the subject land, then Mr Van Hees' suggested inducement of $55,000 would be much more enticing than the rather token offer made by Mr Kosik (the construction of dams and maintenance of the track). For this reason, I am satisfied that the approach to the discounting of the valuation of the subject land as made by Mr Van Hees, and as a consequence his method of valuation, sufficiently allows in valuation terms for the lack of legal access to the land.

Before proceeding to formal determination, I should comment that no evidence was led in the case in respect of Grounds 3 and 5 as contained within the grounds of appeal.

Taking an overview of the evidence, I am not satisfied that the appellants have discharged the onus resting upon them. The appeal is dismissed, and the unimproved value of Lot 313 on Plan W312356, Parish of Boyd, as determined by the respondent Chief Executive in the sum of

$125,000 is affirmed.

CH Carter Member of the Land Court