Peach v Minister for Natural Resources and Water
[2008] QLC 6
•11 January 2008
LAND COURT OF QUEENSLAND
CITATION: Peach v Minister for Natural Resources and Water [2008] QLC 0006
PARTIES: John Peach and Janelle Kay Peach
(appellants)v. Minister for Natural Resources and Water
(respondent)FILE NO: LA2007/0034 DIVISION: Land Court of Queensland – General Division PROCEEDING: Appeal against review decision by the Minister regarding the purchase price for conversion of tenure under the Land Act 1994 DELIVERED ON: 11 January 2008 DELIVERED AT: Brisbane HEARD AT: Ipswich MEMBER: Mr PA Smith ORDERS: 1. The appeal is allowed.
2. The Minister’s review decision is set aside.
3. The purchase price for the purposes of conversion of tenure of Lot 204 on Plan S8964: SL27/48250, Parish of Bowman, is determined at Sixty Seven Thousand Dollars ($67,000).
CATCHWORDS: Valuation – unimproved value of conversion of tenure – method of valuation – principals to be applied – rural views – relativity with other properties
Land Act 1994, ss.170, 422 and 434
APPEARANCES: Mrs J Peach, in person for the appellants
Mr M Heather, Principal Lawyer, Appeals and Advocacy Team, Department of Natural Resources and Water, for the respondent
Background
This matter comes before the Land Court by way of an appeal by the landholders, Mr and Mrs Peach, against an internal review decision of the Minister for Natural Resources and Water (the Minister) as to the purchase price of land for conversion of tenure purposes.
The landowners are the holders of Special Lease 27/48250, being Lot 204 on Plan S8964, Parish of Bowman, with an area of 379m². The land is situated in the township of Somerset Dam in the Esk Shire Council, and has frontages to both Jubilee and Gipps Streets.
The landowners purchased the subject improved property on 15 February 2005 for $85,000. On 13 April 2005 they forwarded a request for conversion of the special lease to freehold to the respondent. The application was received on 18 April 2005. Accordingly, for the purposes of this appeal the date of the valuation is the date that the Minister receives the conversion application, that being 18 April 2005.[1]
[1] See s.170(4) of the Land Act 1994.
The subject land has a frontage of approximately 18.5m and a depth of 20.5m, and is of regular shape. Both the dual street frontages are formed gravel with earthern shoulders. The property is subject to a moderate fall from Jubilee to Gipps Streets in its unimproved state, and is at an elevation below that of the Somerset Dam wall. The subject land is situated approximately 460m south-west of the dam wall. The subject is located adjacent to the Stanley River below the Somerset Dam wall. Little Mount Brisbane rises up from the opposite bank of the Stanley River.
The relevant legislation
Under s.170 of the Land Act, the Minister initially decides the purchase price for the conversion of a lease to a deed of grant following application for conversion by the landholders. The purchase prices is to be the unimproved value of the land being offered as if it were in fee simple.
The meaning of “unimproved value” is contained in s.434 of the Land Act as follows:
“(1)In this Act, the unimproved value of land is the amount an estate in fee simple in the land in an unimproved state would be worth if there were an exchange between a willing buyer and a willing seller in an arms-length transaction after proper marketing, if the parties had acted knowledgably, prudently and without compulsion.
(2)The unimproved value must be decided without regard to the commercial value of the timber.
(3)To remove any doubt, it is declared that the Valuation of Land Act 1944 does not apply to the meaning of unimproved value in this section.
(4)In this section—
paid to the State does not include rent paid to the State.
unimproved state includes, if the value of improvements and development work to the land performed by the State has not been paid to the State, the improvements and development work finished before the lease started or the deed of grant was issued.”
As can be seen, there is a right of appeal against the Minister’s decision as to the purchase price.[2] In the first instance, an appeal against a decision is by way of an application for internal review.[3] The Minister then reviews the original decision and must make a further decision, known as the review decision. The review decision must be to either confirm the original decision; amend the original decision; or substitute a new decision.[4] A person who is not satisfied with the review decision may appeal to the Land Court against the decision.[5] On hearing the appeal against the review decision, the court has the same powers as the decision maker.[6] The appeal is by way of a rehearing.[7] In deciding the appeal, the court may either confirm the review decision; set aside the review decision and substitute another decision; or set aside the review decision and return the issue to the Minister with such directions that the court considers appropriate.[8]
[2] See s.170(2).
[3] See s.422.
[4] See s.426(1).
[5] See s.427.
[6] See s.429(1).
[7] See s.49(2)
[8] See s.429(3).
The hearing
Mrs Peach gave evidence on behalf of the appellants at the hearing. She also called evidence on the appellants’ behalf from Mr G E Kroll, a certified practising valuer. The respondent called evidence from Mr D Wall, a registered valuer employed by the Department of Natural Resources and Water.
Mrs Peach supported her evidence with a large sequence of photographs of Somerset Village. Although Mrs Peach has neither legal nor valuation expertise, she is to be commended for the manner in which she presented evidence to the Court.
The valuation evidence
Mr Kroll for the appellants provided a formal valuation report to the Court. He provided a useful summary of the sales used to arrive at his valuation of the subject of $52,000 as follows:
“The three (3) vacant sites which were completed within the time frame are as follows:
1.Gulbransen Street, January 2005, Lot 22 S 8966 379m² $70 000
This block has a bitumen road, has a view, receives breezes, and is close to the only retail amenity – Superior.
2.Fourth Avenue, January 2003 Lot 30 S 8965 367m² $64 000
It has a bitumen road, extensive views, breezes, an elevated site. – Superior
3.Main Street (26 King Street), May 2004 Lot 506 S8964 397m² $65 000
This has two street frontage (both sealed), elevated with a view, Main Street frontage. – Superior.
Because all of these properties are above Main Street it is proposed to apply a factor of 80% to the range of $64 000 - $70 000 which results in a range $51 200 to $56 000. Since the site suffers from all of the negative features the lower end of this range is applied.
Comparison of Market Evidence with Lot 204
Location RPD Area Sale Price UCV UCV Date Gulbransen Lot 22 379 m² $70 000 $15000 10/02 Fourth Av Lot 30 367 m² $64 000 $16000 10/00 Fourth Av Lot 31 367 m² $16000 10/02 Main Street Lot 506 397 m² $65 000 $15200 10/02 Jubilee St Lot 204 379 m² $52 000 $12800 10/02
”
Mr Wall for the respondent also provided the Court with a formal written valuation. Like Mr Kroll, Mr Wall relied upon three sales. A summary of Mr Wall’s sales from his valuation report is as follows:
Sales Area Date of Sale Sale Price Zoning Analysed U/Value Comparison 1
26 King Street
Somerset Dam397m²
17/05/2004
$65,000
Village
The sale is located within the township of Somerset Dam. It is similar in size and has similar services. It also has dual street frontage. The subject has clearly superior shape, views and position being adjacent to Stanley River.
Inferior2
22 Guldbransen Street Somerset Dam379m²
28/01/2005
$70,000
Village
$68,000
The sale is located within the township of Somerset Dam. It is identical in size and has similar services. The subject has clearly superior views and position being adjacent to Stanley River.
Inferior3
Main Street
Somerset Dam316m²
24/04/2006
$105,000
Village
$103,500
Smaller land area with dual street frontage. Does not have the views or position of the subject. Purchased by an adjoining owner. Clearly supports purchase price.
A review of Mr Kroll’s sales compared to Mr Wall’s sales shows that each valuer has relied upon the Guldbransen Street sale (sale no. 1 for Mr Kroll; sale no. 2 for Mr Wall) and the 26 King Street sale (sale no. 3 for Mr Kroll; sale no. 1 for Mr Wall).
Mr Wall is critical of Mr Kroll’s sale no. 2 as it occurred in January 2003 which Mr Wall says is too early to be of any great assistance. In similar vein, Mr Kroll is critical of Mr Wall’s sale no. 3 as occurring over 12 months after the relevant valuation date, being a sale which occurred on 24 April 2006. Both valuers support these sales for essentially the same reason. That is, that the sales are an indication of the market which they say is clearly demonstrated by their other two sales.
Analysis of the evidence
In essence, the differences in the valuation evidence, and indeed the evidence given by Mrs Peach, is that Mr Wall is of the view that Somerset Village is a small, discrete village which has essentially one market, whilst Mr Kroll and Mrs Peach are of the view that there are two distinct markets in Somerset Village, being those blocks of land below Main Street and those blocks of land above Main Street.
The difficulty in this matter arises because neither valuer has been able to point to any comparable vacant sales below King Street to either prove or disprove their assertions regarding the market in Somerset Village.
It is clear from Mr Wall’s evidence as set out in his comparison statements above for each of the sales properties, as well as his oral testimony, that he is of the strong opinion that the best views are those which occur close to the Stanley River and have near views of the river and nearby hills. As he said at the hearing:[9]
“The outlook from the subject and why the subject is superior to the sales is because it has superior views to the sales and part of those views is the uninterrupted view from the subject property to the Stanley River, the surrounds on the banks, the rocks, the trees and Little Mount Brisbane at the rear. It’s a close view as opposed to looking over distance, it’s closer to the subject, you’re directly across the road, and all those attributes, including the river, including all those other attributes, make the view from the subject superior to the sales.”
[9] Transcript page 53.
Taking an entirely different view, consistent with his valuation report, Mr Kroll had this to say during cross-examination by Mr Heather:[10]
“Mr Wall in his report has taken the view that sale properties are inferior to the subject land because of the superior views of the subject. Do you still disagree with Mr Wall?-- Most definitely. I think I’d rather have the views you can get from those sales than the view of the river.”
[10] Transcript page 36.
There is also dispute between the valuers as to the different breezes experienced by the subject property to sale properties. Mr Kroll is of the clear opinion, based on his knowledge and expertise in Somerset Village and the surrounding shire, that the breezes are better further up the slopes of the hill than they are at the lower point such as where the subject is located. However, my view of Mr Kroll’s evidence is that he had not undertaken any specific analysis of the various breezes that can be obtained at different locations in Somerset Village and he based his views merely on general observations. Likewise, Mr Wall was not able to be dogmatic in supporting his view that the breezes are similar throughout the village. As Mr Wall said in cross-examination:[11]
“Commenting on the breezes – look, I’d be a little bit hesitant to comment on the exact breezes and different levels of the town. My view on that would be that it is a small township of approximately, I would say, 100 to 120 lots within the township is the total. It is only a small township and it’s in a very defined area or confined area, if you like, and, given the amount of terrain around it, I would think it would be difficult to – you know, some blocks are more elevated than others, but how that attributes to the breezes, I’d hazard a guess as to the exact extent of it.
In your view, would there be some Lots which would get more breeze than others?-- Again I wouldn’t – I think that’s a difficult thing to draw on. I would think, given the confined area of the township, I would think they would be similar in that they would all be similarly affected. Given the size of the township, where it is and the surrounding topography, I would think it wouldn’t be huge differences between properties.”
[11] Transcript page 43.
Another key difference in the evidence related to that of odour. It is clear from Mr Kroll’s expert report that he considers the subject property to suffer from time to time from strong sulphur odours from the river. Mr Wall’s evidence is that, at the time of his inspection, he did not notice any sulphur odours. The evidence of Mrs Peach is consistent with that of Mr Kroll. Mrs Peach has attested that the subject property is adversely affected from time to time with sulphur odour. It is alleged that the sulphur odour arises from pools of stagnant water in the Stanley River containing rotting vegetation, and that the odour is especially bad during those times when water is released from Somerset Dam, causing the rock pools with the rotting vegetation to be stirred up.
There is also some common evidence regarding disabilities suffered by the subject property. It is without doubt that the subject land is located low down a slope, and therefore suffers more from the natural affect of water runoff during times of rain down the hill than properties further up the hillside. It is also essentially common between the parties that the impact of the gravel road formations to the front and rear of the subject, combined with the absence of kerb and channelling has an adverse impact in causing additional water to flow into the subject than would be the case if the relevant streets were sealed and kerbed and channelled.
Decision
In my view, both valuers have done an appropriate job with their valuation reports, the differences arising from the fact that both valuers clearly have fundamentally different opinions of what is or is not a superior view in a rural outlook.
For the purposes of this decision, in my view it is appropriate that the Court takes into account predominantly those two sales which are common to both expert valuers’ reports, those being the sales on Gulbransen Street of January 2005 and 26 King Street of May 2004.
I note that Mr Wall in his valuation report relies on the Gulbransen Street sale as being serviced by an unsealed road at the time of sale, and that Mr Kroll has conceded that he made an error in referring to the Gulbransen Street sale as being serviced by a sealed road. I note and accept Mrs Peach’s evidence that Gulbransen Street was sealed subsequent to the sale on 28 January 2005, and that she has had discussions with the local authority as to the likely prospects of her street frontages being sealed and has been informed that there are no future plans within council for those roads to be sealed. Mrs Peach was made aware of the intended sealing of Gulbransen Street, and although she gave evidence that the purchaser of Gulbransen Street could have been aware of the intended sealing of such road, such evidence by Mrs Peach is mere speculation and is not supported by any evidence from the purchaser of Gulbransen Street.
Mr Heather asserts that, absent any direct sales evidence to show a different market above Main Street to below Main Street in Somerset Village, I should reject Mr Kroll’s evidence and accept that of Mr Wall. However, Mr Heather’s submissions fail to adequately take into account that the Valuer-General by his valuations made under the Valuation of Land Act 1944, as evidenced by Mr Kroll, has taken into account different values for different parts of Somerset Village. Of course, valuations made under the VLA are for rating purposes and not for the purposes of conversion under the Land Act, but nevertheless such valuations can be of some assistance when considering issues of relativity within a locality.
In my view, there is additional support for the view put by the appellants that there are two markets in Somerset Village, this evidence being in my view clear from the significant photographic evidence provided to the court of the nature and form of housing located throughout Somerset Village. The photographic evidence tendered does suggest a different market in the lower part of Main Street to that of the upper part of Main Street. Although it is to agree speculation, I do accept the evidence of Mrs Peach and Mr Kroll that the better form of housing has been placed higher in Somerset Village to take account of the outlook across the dam area and across the distant hills rather than the close up views of the Stanley River, which in drought time is little more than a series of pools of water, and of the lower dam wall. Perhaps the distinction in housing as between those blocks above Main Street to those blocks below Main Street is as simple as an analysis that those blocks above Main Street are generally above the level of the dam wall, whilst those blocks below Main Street are generally below the level of the dam wall.
That having been said, however, I do accept Mr Wall’s evidence that the outlook from the subject land, across the Stanley River with its abundance of trees and other natural vegetation, with fine views of rural mountains, is a pleasant view.
In his written submissions, Mr Heather[12] criticises Mr Kroll for his valuation approach. As Mr Heather asserts:
“He assigns the lowest end of his allotted range to the subject land, on the basis that he has all of the deficiencies that exist in the town and then deducts a further 20% for being on the riverside of Main Street. Setting aside the respondent’s submission above that the distinction is wrong and without basis in the market, these two deductions are for the same attributes. The distinction Mr Kroll drew in the market in Somerset Village was based on the views and breezes available on each side of Main Street and it is on this same basis that he selects the lowest end of his range of values. As a result, the appellant’s valuer has 'doubled dipped' in his analysis and so has arrived at an unfairly low unimproved value of the subject property.”
[12] At paragraph 5.29.
Although as indicated above I accept Mr Kroll’s and Mrs Peach’s evidence that there is a distinction between land above and below Main Street, I also accept Mr Heather’s submission that the valuation methodology adopted by Mr Kroll has resulted in a double dipping.
I note that Mr Kroll, by his analysis of the sale properties, arrived at a range of $64,000 to $70,000 for the subject property as at 13 April 2005, which has been taken by both the parties to be of no material difference to the relevant date which is 18 April 2005. Rejecting his factor of 80% to his range, but accepting his range of $64,000 to $70,000 for the subject, and taking into account all the evidence presented before me and in particular that evidence specifically referred to above, in my view it is appropriate to value the subject property as at 18 April 2005 in the sum of $67,000, being the point midway between Mr Kroll’s range.
One further issue raised by the appellants needs to be addressed. The appellants complain that the respondent has taken an inordinate length of time, with several very long unexplained delays in the process, to both make an offer and to review such offer. They also complain that the proposed payment methodology with respect to the offer has altered.
As indicated earlier, it is clear that under ss.170 and 422 of the Land Act 1994, the only basis of appeal in matters of conversion is as to the unimproved value or the timber value for the conversion to a deed of grant. The question of timber value is not relevant in this matter. Accordingly, the terms for payment are not matters which may be addressed in this decision. Likewise, it is not appropriate for the court to address the appellant’s concerns regarding the delays that they have alleged against the respondent. As Member Scott said in Moar v Minister for Natural Resources and Minister for Mines & Energy:[13]
[13] [2004] QLC 0067 at para. [7].
“The grounds of appeal were expressed in narrative form. They included complaints about the process employed by the Minister’s department in dealing with a conversion application. These are matters that are not within the jurisdiction of the court which is confined to a consideration of a decision, that is the offer price.”
Orders
1. The appeal is allowed.
2. The Minister’s review decision is set aside.
3. The purchase price for the purpose of conversion of Lot 204 on Plan S8964, Parish of Bowman, is determined at Sixty Seven Thousand Dollars ($67,000).
P A SMITH
MEMBER OF THE LAND COURT
0
0
1