McArthur v Minister for Lands

[1994] QLC 39

[1994] QLC 39

 

  LAND COURT

BRISBANE

5 August, 1994

Re:     Determination of Third Period Rent -
  SL44/36010  Townsville District -
  Lessees:  JH McArthur, AR and DA Brittain.

D E C I S I O N

The Crown seeks a third period rent of $1,950 per annum (3% of an unimproved value of $65,000) for SL 44/36010, Townsville District.  The lessees' estimate is of a rent of $200 per annum.  The 10 year third period of the lease commenced on 1 February, 1992.  The lease is more particularly described as Lot 193 on Plan EP 1295, Parish of Magnetic, and contains an area of 4.452 hectares.  It is situated in West Point Road at West Point, Magnetic Island, about 8 kms north-west of Picnic Bay.  The lease issued originally for the purpose of Business (Bamboo Growing) but the purpose was altered on 18 January, 1979, to Business (Production of Timber for use in connection with oyster farming).  At that time, an additional condition was attached to the lease which reads:-

"The lessee shall use the leased land for the purpose of the production of timber for use in connection with oyster farming and for no other purpose whatsoever other than the erection of structures incidental thereto.  "

The leased land is zoned "Future Urban" under the Townsville Local Government Town Planning Scheme.  Under this zoning, the erection of a dwelling house is a consent use.  There have been no applications made by the present lessees for this consent use.
           Ian Douglas Ivers who is a practising Registered Valuer at Magnetic Island, was called in evidence by the lessees.  Mr Ivers values the land as at 1 June, 1994, at $50,000.  This is Mr Ivers' fee simple valuation of the leased land subject to the existing conditions of the lease.
           Mr Ivers says there are no services provided to the land except for telephone.  He considers its situation to be remote and told the Court that it has very poor access.  West Point Road is mainly a single lane unmade carriageway.  There is virtually no surrounding development.
           Mr Ivers estimates that 65% of the site has low areas.  There are three high areas and a sand ridge to the eastern boundary and a ridge to the front boundary.  65% of the site can be inundated during a wet season.  The soil is fine grained which sets like concrete in dry times and becomes a black boggy surface when wet.
           Mr Ivers informed the Court that the demand for larger freehold sites on  Magnetic Island has been relatively flat of recent years and there has been a general downtrend in values on Magnetic Island since 1992.  Mr Ivers referred to two sales in West Point Road to illustrate the point. 
           Lot 46 on EP 191 containing 16.88 hectares sold on 26 May, 1993, for $145,000 while Lot 41 on EP 191 containing 16.18 hectares sold on 20 August, 1993, for $125,000.
           Lot 27 on EP 192 containing 3.387 hectares sold on 26 May, 1993, for $70,000.  The parcel has a bitumen road frontage and water and power are available.  Lot 2 on RP 743779 situated at the corner of Sunglow Avenue and West Point Road containing 4.006 hectares sold on 17 March, 1994, for $70,000.  Mr Ivers sees this sale lot to be superior to the subject land.
           Mr Ivers considers Lot 1 on RP 743779 situated in West Point Road to be the most comparable of the sale parcels.  It contains 3.432 hectares and sold on 15 April, 1994, for $52,000.  It is lowlying and becomes inundated after heavy rain.  It is closer to facilities than the subject and Mr Ivers suggests it has a little more appeal.
           Mr Ivers tendered in evidence a copy of a contract of sale of Lots 2/3 on RP 743779 containing 8.012 hectares on 11 December, 1992, for $120,000.  This land is situated in Sunglow Avenue.  Mr Ivers suggests that the sale at $60,000 per lot supports his valuation of the subject land.
           The Crown rent recommendation was made by Registered Departmental Valuer Peter Geoffrey Simmonds.  He describes the best use of the lease permitted under the terms, conditions and purpose of the lease to be for a caretaker's residence and the production of timber with the erection of structures incidental to that use.  Mr Simmonds referred the Court to a letter from the Land Administration Commission to CM and DP Miers dated 8 November 1982 indicating to the then lessee that the Department offered no objection to a request to erect a substantial permanent dwelling on the leased area for the housing of a caretaker to protect the business interests on the land and on an oyster lease.
           Mr Simmonds describes the nature of the subject land as comprising mainly level forest country timbered with gum, bloodwood, pandanus and ti-tree.  He has valued the land as a rural residential site on the basis of two sales in the area.  Lot 1 on RP 804289 situated in West Point Road containing 5.082 hectares sold on 19 September, 1991 for $85,000 (analysed unimproved value $80,000).  Lot 3 on RP 804289 also situated in West Point Road containing 5.331 hectares sold on 24 April, 1992, for $95,000 as an unimproved site.  Mr Simmonds considers the subject lease to be inferior to both sale parcels for the reasons set out in his tendered valuation report.  He values the subject land at $65,000 in comparison with the sales and taking into account the conditions of the lease.  Mr Simmonds agrees with Mr Ivers in that the market for land on Magnetic Island has taken a downturn since 1992.
           Mr Simmonds was not aware of the sale of Lot 2 on RP 743779 for $52,000.  Had he been, he quite fairly and properly offered the opinion that his valuation may have been adjusted down by a greater factor than he had already done.  (The original Crown valuation of the land was $75,000).
           As this Court has often commented, it has not been for many years now a requirement that the rent of special leases be determined at 3% of unimproved capital value as at the date of the commencement of the relevant period of the lease.  The method for the determination of rent is provided for us in section 204(5B)(c) of the Land Act of 1992 (now repealed) which reads:

"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.  "

However, on the evidence before me, I simply have no alternative but to give weight to the assessment of rent on the 3% of unimproved capital value rule since both valuers rely on fee simple valuations of the land.  Further, it must be said that rent is to be assessed and determined during a rental period and not as at the date of the commencement of a specific period.  On this basis, I am prepared to consider the evidence of Mr Ivers which, in the main, relates to land value post the date of the commencement of the third period of the lease (1 February, 1992).
           Doing the best I can, I find that the assumed experienced and bona fide person would be prepared to pay $1,650 per annum (3% of an unimproved capital value of $55,000) by way of rent for SL 44/36010, Townsville District, during the third period of the lease which commenced on 1 February, 1992.  The rent is determined accordingly.

(C.H. Carter)      
  Member of the Land Court