Saint-Martin v Minister for Lands

[1996] QLC 12

[1996] QLC 12

 

  LAND COURT

BRISBANE

21 FEBRUARY 1996

Re:     Application for Conversion of Tenure -
  Determination of Unimproved Value -
  Special Lease No.:  44/36426, Townsville District
  Lessees:  Carl and Yvonne F Saint-Martin

(Hearing at Ingham)

D E C I S I O N

Mr and Mrs Saint-Martin purchased Special Lease No. 44/36426 being of land described as Lot 93 on Plan WG271, Parish of Hinchinbrook, containing an area of 2,590 ha, for the sum of $37,500 in December, 1990.  The land was unimproved save for some fencing and clearing said to have added value of $2,500.
           On 2nd July, 1992, application was made for conversion of tenure and, subsequent to investigation, the Court was advised that an offer was made for conversion under section 207 of the Land Act 1962, not of the total leased area, but of a site of about 25 ha only.  The Minister's determination of the unimproved value of that site, as at the date of the original application, is in the amount of $37,500.  That determination was based on a valuation carried out by Mr B Milles, who is employed by the Department of Lands in the capacity of a Senior Valuer. 
           For the purposes of determining this matter, the Court is required to find the amount that experienced persons would be willing to pay for an estate in fee simple in the land if it was offered for sale on the reasonable terms and conditions a bona fide seller would require.  "An estate in fee simple" is a term which I interpret to accept that title is available.  For that to be so, the survey has to be assumed to have been completed. 
           This is a matter,  however, where the conversion applies to part only of a larger area.  In cases where the lease in respect of which the Minister has granted an application has not been surveyed or a plan of survey has not been deposited, the Minister under the legislation then relevant was required to make a written conditional offer to sell an estate in fee simple subject to the condition that the lessee, at the lessee's expense, is to have the necessary survey made.  In this matter that requirement includes the survey of an easement to accommodate existing water pipeline/s.  The evidence is that the survey could cost somewhere between $4,000 and $8,000, with the uncertainty due to the easement requirements. 
           If my interpretation of the intent of the legislation is correct, where unsurveyed lands are concerned, there is an apparent discrimination against the lessee.  In this particular matter had the area of land offered for conversion been originally surveyed, together with the easement encumbrance, then the purchase price sought by the State and the ultimate cost to the lessee would have been $37,500.  However, due to its unsurveyed state, the cost to the lessee will be somewhere between $41,500 and $45,500 , for the same land.
           It is unreasonable, in my opinion, for a vendor of land still requiring survey to expect to receive payment on the basis that the title is available unless the cost of survey was at the vendor's expense.  However, I do not interpret the words "reasonable terms and conditions" in the definition of unimproved value to extend to other than a sale of "an estate in fee simple".
           Where unsurveyed land is involved, in conversion matters, the lessee is not, of course, obliged to accept the Minister's offer.  However, it is obvious that, if the intent of the legislation is as I have found, the lessee will ultimately pay more for the land than its unimproved value.
           The lessees do not accept the Minister's valuation in any event.  Their own opinion of value is unclear in terms of a precise amount.  Mr Saint-Martin presented the lessees' case.  He is unable to understand several aspects of the valuation process.  The lessees had contested the rental sought by the Crown for the rental period commencing 1st April, 1992.  That rental had been based on a percentage of an unimproved value of $35,000 but, for the total area of 2,590 ha.  As Mr Saint-Martin understood it (and his understanding was correct) the valuation in that matter had been based on sales of freehold sites.  As it happened, while the basis of that valuation required that restrictions in the lease (the purpose of which was for the business of grazing) be taken into consideration, the restrictions were seen to limit the value to that of a large site of difficult terrain through which public access could not be restricted, and much of which was the subject of a World Heritage Listing.  The disputed rental was determined by the Land Court, and part of the written decision was tendered by Mr Saint-Martin.  He referred particularly to the comments of my learned colleague, Mr J.J. Trickett, in his discussion relative to the potential of the leased land to provide a homesite with limited grazing and his conclusion that while the assessed unimproved value was not proved excessive, it was also not "conservative" as had been suggested by the valuer.  The thrust of Mr Saint-Martin's submission in this regard was that, if the Land Court had agreed with a valuation of $35,000 as the unimproved value of the total area of 2,590 ha at a date not dissimilar to the relevant date in this matter, the very small part subject of this valuation had to be logically much less, and certainly not higher.
           The next matter which he found to be confusing was the information he had obtained that certain rural residential type Miners Homestead Leases in the immediate vicinity had in recent times been converted to freehold for amounts in the range of only $400.  He saw it as grossly unfair that the freeholding of Crown land could be effected for vastly differing sums, regardless of the tenure which had previously existed.  He was not aware of the legislation relevant to the freeholding of Miners Homestead Leases.
           Mr Saint-Martin provided very brief information as to two other sales of land in the locality.  One sale was of 235 ha for $30,000 in April 1993 and another was of 25.39 ha for $50,000 in June 1992.  Mr Milles was able to inform the Court that the first sale was of an Occupation Licence (with very limited security of tenure) and even so there had been certain complications surrounding the sale.  Mr Milles had investigated the second sale which was to an adjoining owner.  While he felt that the land was unlikely to have created market interest from other parties, due primarily to access disabilities, and the sale could have been argued to have represented fair market value, he chose not to accept it as evidence of open market value due to the adjoining owner circumstances.  If it had represented open market value, the sale would have, in his opinion, supported a much higher valuation than $37,500 for the subject site.
           Apart from survey costs, Mr Saint-Martin had obtained a quote to have electricity connected.  While a connection was available at the street frontage, installation of a transformer was necessary.  A provisional quote for the total works involved had been received from a representative of the supply authority in the amount of $10,240.
           Other matters raised by Mr Saint-Martin included his concerns that if the lessees did not accept the conversion offer, the lease might be resumed or not renewed on its expiry (in 2002) regardless of the written assurance given him on 27 May 1991 by the then Minister for the Arts, Sport, the Environment, Tourism and Territories, the Honourable Ros Kelly MP, that they would not lose their property "simply because it lies within the World Heritage Area, and that there are no plans to acquire it".  Apart from the fact that the Department of Lands was not prepared to recommend conversion of other than the homesite area of 25 ha, for various reasons, Mr Milles knew of no State requirements which would involve resumption of the lease.  No lease was available over the balance area however if the conversion offer was to be accepted.  That balance land would become part of an adjacent National Park.
           The valuer involved in the Land Court hearing regarding the rental matter was not Mr Milles.  He had become involved when the original valuer had been transferred.  Mr Milles was aware of the Land Court decision and the unimproved value basis on which the rental had been determined.  After his investigation of the conversion application and the recommendation that an offer be made for conversion of part only of the lease, he set about establishing a basis of valuation for a rural residential site of 25 ha, located at the north-eastern extremity of the original lease.  He investigated a number of sales in the district, the brief details of 16 of which were provided in chronological order, from 1990 through to 1993.  There was, in his opinion, a lack of sales evidence which could be described as directly comparable with the subject conversion site.  He saw the rural-residential site component of the subject land as the dominating influence on value.  A secondary consideration was the suitability of the land for associated uses "such as agriculture and small grazing activities".        Mr Milles interpreted the Land Court rental valuation as having been approached on a site basis with limited regard for the much larger area, primarily because of the "costs associated with making the balance area suitable for grazing, namely the cost of fencing".
           He saw the balance area as being "an impediment due to the associated problems for no real benefit".  He stated -

"The requirement of allowing public access along tracks existing at the commencement of the lease and the inherent risks associated therewith is seen to be the major detraction.  Further, and having regard to the restrictive purpose, grazing, the listing of the major part of the balance as part of the Wet Tropics World Heritage Area is also seen as a detraction as it adds another bureaucratic tier to the public administration of the block and again for no real added benefit".

The foregoing was Mr Milles's rationale in coming to the following conclusion -

"Consequently, the subject conversion area is considered to be superior as it does not include the impediments and it has lost no real advantage having regard to the restrictive nature of the existing lease conditions.  If the balance area was freehold with no overriding restriction on usage, it would of course be a different matter."

I do not accept that a 25 ha parcel within one of 2,590 ha, regardless of the disabilities and restrictions on use of the balance 2,565 ha, would be regarded in the marketplace as being more valuable than the total area.  It seems to me that Mr Trickett, in his Land Court determination did not accept the suggestion that a valuation of $35,000 was conservative because he had limited evidence to be so persuaded.  Nevertheless on that limited evidence he had come to the conclusion "that an unimproved value of $35,000 is certainly not excessive".  Mr Milles was not bound by the basis on which the Land Court determined the rental valuation, although he was prudent in bearing that decision in mind.  He was correct in carrying out his own investigation of sales evidence.  While his search revealed no sales of directly comparable land, he drew on his professional experience in arriving at a valuation for the subject land, after detailed consideration of the available evidence of value.  Because that valuation was higher than a basis adopted by the Land Court for another purpose at about the same time, does not prove that Mr Milles's valuation was wrong.  His explanation of why the land should be worth more than the Land Court's adopted basis is not considered logical, but his basis of valuation is obviously well researched and the result a reasoned one.
           It is evident that Mr Milles has applied the benefits of doubt in favour of the lessees with regard to the effect of the encumbrance of the pipeline easement and the deleterious effect on market value caused by the effect of severance and visual impact of the above-ground pipeline construction.  The design of the lot to be created will provide for an alternative access, if the existing access relative to the pipeline, became, for any reason, unavailable.  Mr Milles offered the opinion that had the pipeline and accommodating easement not been in existence, a valuation of at least $60,000 could have been supported taking a reasonable view of the sales evidence.  He was not surprised to learn of the quote for electricity connection, but saw this potential expense as a common factor in much of the sales evidence.
           The lessees have put their case forcefully, and, not unnaturally, are surprised with the effects of differing legislation on freeholding and valuation procedures.  Nevertheless, the task of this Court is to determine in this matter "the amount that experienced persons would be prepared to pay for an estate in fee simple in the land if it was offered for sale on the reasonable terms and conditions a bona fide seller would require".  Mr Milles's evidence is the only professional evidence before the Court.  His valuation is clearly supported by sales evidence even if that evidence is, on his own description, not directly comparable.  Sales evidence put forward by Mr Saint-Martin, including the lessees' own purchase of a lease with tenure far less secure than freehold, does not suggest to me that any alteration of the Milles's valuation is warranted. 
           The unimproved value of the land subject of the conversion application is determined in the amount of $37,500 as at the date of application which was 2nd July, 1992. 

RE WENCK
  MEMBER OF THE LAND COURT