Saint-Martin v Minister for Lands

[1994] QLC 13

[1994] QLC 13

 

  LAND COURT

BRISBANE

6TH MAY, 1994.

Re:     Determination of Rent - Third Rental Period
  Special Lease No. 44/36426, Townsville District

Lessees:      Carl Saint-Martin and Yvonne Felicia Saint-Martin

(Hearing at Ingham)

D E C I S I O N

For the third rental period of Special Lease No. 44/36426, Townsville District, which commenced on 1st April, 1992, the Crown is seeking an annual rent of $1,050.  The lessees requested that this matter be referred to the Land Court for hearing and determination, advising that their estimate of the rent that should be charged is $350 per annum.  The rent for the second period of the lease was $130 per annum. 
           Special Lease No. 44/36426, Townsville District, is in respect of the land described as Lot 93 on Plan WG 271, Parish of Hinchinbrook, containing an area of about 2,590 hectares.  It is situated about 67 kilometres north of Townsville and about 3 kilometres south of Moongobula Rail Siding.  Access is by means of the bitumen sealed old Bruce Highway. 
           Special Lease No. 44/36426, Townsville District, was granted for a term of 30 years from 1st April, 1972, for business (grazing) purposes.  It is subject to the condition that the lessees shall at all times during the term of the lease allow the public free and unrestricted use of all tracks on the leased land existing at the commencement of the term of the lease, for access purposes.  The report submitted on behalf of the Crown also states the following:

"The lease area is subject to a World Heritage Listing.  The proportions are:

World Heritage Area 1821 ha (approx 70%);

Unaffected balance area 769 ha (approx 30%).

The Wet Tropics Management Agency said that at present the only restriction to the lessee over the World Heritage listed area is that the World Heritage Listing prohibits commercial logging activities in the Heritage Listed areas.  Grazing activities would be permitted to continue in the Heritage Listed Areas.

The Wet Tropic Management Agency then gave the informal advice that if the lessee was to request a small area (say on the hill) to clear for a house site, the Wet Tropics Management Agency would probably not object.  If on the other hand the lessee proposed a project on the scale of some grand pasture improvement with a bulldozer, the agency would be less inclined to approving such a proposal.  The Wet Tropics Management Agency advised that they were open to discussion on any proposal and would treat each application on its respective merits."

The report goes on to describe the land by saying that with the exception of a small area in the northern part of the lease, timbered with gum, cocky apple, wattle and associated undergrowth, the country comprises steep rough and stony range country timbered with ironbark, bloodwood, carbeen wattle and gum.  The rougher area is interspersed with better quality grazing areas in the valley.  A small area adjoining the northern boundary has been cleared of wattle and undergrowth. 
           The land is zoned "Rural A" under the Thuringowa City Council Town Plan and is used for rural residential purposes, which is considered to be its highest and best use. 
           Mr Carl Saint-Martin gave evidence on behalf of the lessees.  He said that they bought the property in December 1990 for $37,500.  They originally intended to run stock on the land.  He agreed that they could still run stock in the World Heritage listed part but they would have to fence it.  There was a bore on the land sufficient for domestic purposes.
           Mr Saint-Martin described the land as hilly sort of country, with the only flat area near the house site of about 10 to 12 acres.  He said it had been cleared but has regrown.    He considers that the value assessed by the Crown for rental purposes of $35,000 is excessive, and he has had this confirmed by several real estate agents.  He produced sales of several properties but the details of these were not sufficient to be of any assistance to the Court.
           Mr Saint-Martin said that if the land was of freehold tenure a valuation of $35,000 would not be unreasonable.  However, as the land was leasehold with only about seven years to run, he thought that was not the way that rent should be assessed.  In addition, World Heritage listing gave the agency control over the use of the land and had reduced the value of the property.  For example, he said, the lessees were not able to clear areas for the running of cattle.  However, he agreed there was quite a nice homesite near the creek. 
           Mr Ashley Paul Newcomb, registered valuer employed by the Department of Lands, gave evidence on behalf of the Crown.  Mr Newcomb said that he assessed the rent at $1,050 per annum, based on 3 per cent of the unimproved capital value which he assessed at $35,000.  In arriving at this unimproved value he had regard to two sales in the area and a determination by the Land Court.         The first sale is situated on the Bruce Highway at Coolbie and comprises an area of 10.63 hectares which sold in January 1993 for $100,000.  Mr Newcomb analysed this sale to show an unimproved value of $87,000.  He comments that the sale price was considered to be high and it is after the relevant date.  It has access by approximately 300 metres of formed earth road to the northern boundary from the bitumen sealed Bruce Highway.  The northern portion, or approximately 1 hectare of this property, is gently to moderately sloping, while the balance is moderately to extremely rugged forest country with granite outcrops.  The property is heavily timbered with forest and regrowth and the purchasers intend putting a dwelling on it.  It has excellent sea views from an elevated granite ridge.
           This sale is located about 16 kilometres north-west of the subject land and Mr Newcomb considers that overall the property is inferior to it, due mainly to the latter's larger usable homesite area adjacent to Ponderosa Creek. 
           The second sale is also on the Bruce Highway at Coolbie in the same locality as the first sale.  It has an area of 2.825 hectares and sold in July 1990 for $30,000.  Mr Newcomb analysed this sale to show $27,500.  He comments that the access is by the bitumen sealed Bruce Highway, then by earth track adjoining the southern boundary.  He considers that access is adequate.  The sale property is elevated, moderately undulating forest country, with sandy soils and is heavily timbered with forest and regrowth.  Mr Newcomb considers that this property is also inferior to the subject land for the same reasons as for the first sale.
           As a third basis of valuation Mr Newcomb relies on a Land Court determination in respect of the rent for Special Lease 44/48598, which is situated approximately 3 kilometres north of the subject land.  This special lease has an area of 3.076 hectares and the rent was determined by the Land Court based on 3 per cent of its unimproved value, which was found to be $20,000. 
           This property is situated off the Bruce Highway and access is by an earth track adjoining its western boundary.  Access is considered to be adequate.  This land comprises reasonably level inferior coastal forest originally timbered with bloodwood, tea-tree and poplar gum, with grey sandy loam soils.  It is subject to flooding and is affected by a power-line easement running from the eastern boundary to the western boundary.  Mr Newcomb regards this property as significantly inferior to the subject land. 
           Mr Newcomb goes on to say that the evidence from his first sale was not available at the date of the assessment of the rent of the subject land.  He said that, in hindsight, it would appear that he has been too conservative in assessing its unimproved value.
           The rent for the special lease must be determined by the Court under the provisions of Section 204(5B)(c) of the Land Act 1962 which provides 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."

Clearly the rent is not required to be assessed as a percentage of the unimproved value.  However, in the absence of market rental evidence, the Land Court has held that the adoption of 3 per cent of the unimproved value is appropriate in certain circumstances.  If such a method is to be used, the provisions of Section 242 in relation to the determination of unimproved value are appropriate. 
           Mr Saint-Martin is of the opinion that the rental assessment of $1,050 is excessive.  He does not agree that the adoption of a percentage of the unimproved value is appropriate in the circumstances as the land is a special lease and with a limited time to run.  While he has advised that his assessment of the unimproved value is $350, he has not given me any alternative basis upon which I can proceed.  He has referred to a number of sales, but none are of any assistance.  However, Mr Saint-Martin did say that if the land was unimproved and held in fee simple then he thought that a valuation of $35,000 was reasonable. 
           Mr Newcomb adopted 3 per cent of the unimproved value as if the land was held in fee simple, as the basis for his assessment of the rent.  If that method of a percentage of unimproved value is appropriate in this case, then the unimproved value must be assessed on the assumption that the land is held in fee simple.  In arriving at his unimproved value of $35,000, Mr Newcomb has had regard to two sales and one rental determination.  However, this evidence is by no means ideal.  The two sales are of very small areas of land situated some 16 kilometres from the subject land, in what may be a very different environment.  The rental determination is also of a very much smaller area, although it is only some 3 kilometres from the subject land.  With hindsight Mr Newcomb said that he thinks that the assessment may be conservative.
           In weighing this evidence, I am conscious that I am considering an area of over 2,500 hectares, most of which is in World Heritage listed area.  However, both Mr Saint-Martin and Mr Newcomb agree that there was an area on the banks of Ponderosa Creek which would make an ideal homesite.  This homesite area might validly be compared with Mr Newcomb's basic properties.  It would also appear that World Heritage listing does not entirely restrict the use to which the subject land can be put and that limited grazing could be available in conjunction with the rural homesite area.  The subject land has good access by the bitumen sealed old Bruce Highway.
           In the circumstances, based on the limited evidence which is before the Court, I have come to the conclusion that an unimproved value of $35,000 is certainly not excessive.  However, the evidence is not sufficiently persuasive for me to agree with Mr Newcomb that the valuation is conservative.  In the absence of any other evidence, I intend to adopt 3 per cent of that unimproved value as a basis for the assessment of rent. 
           Accordingly, the rent for the third period of Special Lease No. 44/36426, Townsville District, is determined at the sum of One Thousand and Fifty Dollars per annum.

J J TRICKETT
  MEMBER OF THE LAND COURT