Louis v Minister for Lands

[1994] QLC 19

[1994] QLC 19

 

  LAND COURT

BRISBANE

31ST MAY, 1994.

Re:     Determination of Rent
  Third Rental Period
  Special Lease No. 11/36260
  Charters Towers District

Lessee:        Arthur Louis

(Hearing at Charters Towers)

D E C I S I O N

For the third rental period of Special Lease No. 11/36260, Charters Towers District, which commenced on 27th April, 1992, the Crown is seeking an annual rent of $525.  The rent for the second period of the lease was $180 per annum and the lessee has requested that this matter be referred to the Land Court for hearing and determination.
           Special Lease No. 11/36260 is in respect of the land described as Lot 23 on Plan DY 598, Parish of Millchester, containing an area of 6.98 hectares.  The Special Lease was granted for a term of 30 years from 27th April, 1972, originally for business (farming and grazing) purposes, but this was later amended to include residential.
           The land is situated approximately 4.5 kilometres south-east of Charters Towers Post Office and access is by means of 4 kilometres of bitumen road, the balance being formed earth and gravel road.  Electricity, telephone and town water services are available to the property.
           The evidence indicates that the land is easy sloping forest country falling to Gladstone Creek.  It was originally timbered with ironbark and bloodwood, but was cleared of natural timbers by mining operations many years ago.  It now carries moderate to heavy Chinee apple, rubber vine, some lantana and mimosa.  The soil is generally poor red stony to rocky sandy loam, interspersed with small areas of better loam.
           The property is improved with a dwelling-house and is used for rural residential purposes.  In conjunction with this use, the lessee runs a small number of cattle and has cultivated approximately 4,000 sq. metres of the better soil for growing stock feed.  He irrigates this small area of cultivation from a well on an adjoining property owned by his relatives.  While there is a well on the subject land, it is unsuitable for irrigation, being suitable for stock only.
           The land is zoned "Rural" under the town planning scheme for the City of Charters Towers and the Crown regards its highest and best use to be rural residential.
Mr Arthur Louis, the lessee, appeared and gave evidence. He tendered a statement contesting the Crown's rent on a number of grounds. His first ground concerned the nature of the land. Upon the land is the remains of an old cyanide heap and some cement pylons, the remains of an old crushing plant. The evidence indicates that such cyanide heaps are not uncommon in the Charters Towers area and, despite the provisions of the Contaminated Land Act 1991, such heaps are not registered on the Contaminated Sites Register. Indeed, they do not seem to be of great concern to residents of the area. The point made by Mr Louis is that the area occupied by the cyanide heap, which he estimates to be about half an acre, is useless as nothing grows on it. He makes the same point about the area occupied by the cement pylons are which, although much smaller, is rendered useless by their existence.
           Mr Louis states that the country is bare and rocky and, apart from a small area, quite unsuitable for farming.  He tendered a number of photographs taken from various points on the property, all of which show the rocky nature of the land.  On the cultivated area he is presently growing silk sorghum as fodder for his stock which at the date of the hearing comprised nine weaners and one horse.  He said that he attempted to grow citrus trees and planted approximately 50 of them, but very few have survived.  He does not know whether this was because of the water or the generally poor nature of the land.
           Mr Louis said that he took up the land with the intention of farming it.  However, this proved impractical and he later obtained permission from the Minister for Lands to construct a house on the land.  He admitted that there are several sites upon which a house could be built, but he pointed out that the rocky nature of the land caused difficulties in sinking the stumps for the present house.
           The second ground of challenge raised by Mr Louis was in relation to a water analysis report by the Department of Primary Industries dated 12th October, 1993, which clearly shows that the water is unsuitable for irrigation and only suitable for stock.  Mr Louis said that the well is 17 feet deep and was equipped with a small electric motor.  However, he no longer uses that well as he obtains water from the adjoining land. 
           The third point made by Mr Louis was that there was no proper inspection of the land or proper comparison made with similar areas.  However, he agreed that Mr McDougall from the Department of Lands had fully inspected the property.  He went on to say that he considered that the increase in rent being sought is unreasonable and unjustified, and while he fully understands the necessity of some rise in rent, the increase had no relevance to the capacity of the subject land.  He thought that a fair rent would be $350 per annum. 
           Unfortunately, however, Mr Louis was unable to assist me with the details of any market rents in the area or of any sales of comparable lands.  His estimate of rent was what he thought to be a fair thing.  In relation to the sales used by the Crown, Mr Louis considered that all three properties were superior to the subject land and pointed out that they were all of MHPL tenure, which was considerably superior to that of a special lease.
           Mr Michael McDougall, registered valuer employed by the Department of Lands, gave evidence on behalf of the Crown.  Mr McDougall tendered a report and valuation which shows that he arrived at his recommended rent of $525 per annum by adopting 3 per cent of the unimproved value of the land, which he assessed at $17,500.  Mr McDougall arrived at this unimproved value by having regard to three sales in the vicinity of Charters Towers.
           Mr McDougall's Sale No. 1 is of an area of 8.094 hectares, situated in Old Dalrymple Road, approximately 5 kilometres north of Charters Towers, with access by means of 2.5 kilometres of bitumen road, 2 kilometres of formed earth and gravel road and 500 metres of earth track.  The services are similar to those available to the subject land.  This property is zoned "Rural Residential" and sold in May 1991 for $21,000.  Mr McDougall analysed this sale to show $20,700.  He said that the property is similar in situation, access and country, but is larger and therefore overall slightly superior.
           Mr McDougall's Sale No. 2 is situated in Mt Leyshon Road, approximately 2.5 kilometres south of Charters Towers, with access by means of a bitumen road to within 300 metres of its boundary and then by formed earth and gravel road.  The services are similar to those available to the subject land and it is also zoned "Rural".  This property has an area of 2.033 hectares and sold in November 1991 for $20,000.  Mr McDougall analysed this sale to show an unimproved value of $18,000.  He comments that it is similar in access, services and situation, but superior in country type and access.  However, it is smaller and all things considered, he thinks it is similar to the subject land. 
           Mr McDougall's Sale No. 3 is situated in Aberdeen Road, approximately 3 kilometres south of Charters Towers, with access by means of 2.5 kilometres of bitumen road, with the balance being earth and gravel road.  Similar services are available to the property as are available to the subject land.  This property is also zoned "Rural" and has an area of 6.58 hectares.  It sold in February 1992 for $22,000.  Mr McDougall analysed this sale to show an unimproved value of $20,750 and comments that it is similar in situation, access and services, but superior in aspect and country.  Overall he considers it to be superior to the subject land.
           In general, Mr McDougall did not disagree with Mr Louis's description of the land.  However, he said that the cyanide heap is not listed as a contaminated site and is situated at one edge of the lease, well away from the more elevated areas which were suitable as house sites.  He did not think that the cement pylons affected the land's value as a rural homesite. 
           Mr McDougall agreed that the subject land is rocky and stony, but said that he had not assessed it for its agricultural potential, as such use was merely an adjunct to its principal use as a rural residential site.  He also said that each of his three sales, to a more or less extent, had rocky and stony land.  He had taken this into account in assessing the unimproved value of the subject land compared with those disclosed by the  sales.
Mr Louis challenged Mr McDougall regarding the tenure of the sales compared with the tenure of his land. Mr McDougall agreed that mining homestead perpetual lease tenure is a much more secure tenure than that of special lease. However, he said that he had adopted the method of arriving at the rent by adopting 3 per cent of the unimproved value of the land, as there was no evidence of market rents in the area. In adopting this method, he had had regard to the provisions of the Land Act, which required the assessment of rent to be made on the basis that the land is held in fee simple tenure. Therefore, he was not comparing a secure tenure with a special lease tenure, but was having regard to the unencumbered fee simple value of the subject land, rather than its value as a special lease.
           Further evidence was given about the demand for rural residential sites in the Charters Towers area.  Mr McDougall said that there was a strong demand for such sites and that values were generally increasing over the years. 
           While I can understand Mr Louis's concern at what appears to be a large increase in the annual rent, he has been unable to assist me with evidence of other market rents or sales in the area.  In this case the Court is required to determine the annual rent under the provisions of Section 204(5B)(c) of the Land Act 1962, which states as follows:

"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."

It is clear that the legislation does not require the Court to arrive at the annual rent by means of adopting a percentage of unimproved value.  However, in certain circumstances where there has been no evidence of market rents available, the Court has, where appropriate, adopted this method of assessment.  Indeed, as has been pointed out by counsel for the Crown, the Court has adopted this method for the assessment of rents of rural residential sites in the Charters Towers area.  In the circumstances, therefore, in the absence of any other evidence I intend to adopt this method.
           It remains to consider whether the unimproved value determined by Mr McDougall of $17,500 is fair and reasonable.  Mr Louis challenges that valuation as it is based on the sales of more secure tenure.  However, Mr McDougall is quite correct in adopting the unimproved value as if the land was held as unencumbered fee simple land.  I have carefully considered the sales used by Mr McDougall and have concluded that his assessment of $17,500 is appropriate.
           Accordingly, the rent for Special Lease No. 11/36260, Charters Towers District, for the third period of the lease, is determined at the sum of $525 per annum.

J J TRICKETT
  MEMBER OF THE LAND COURT