Schneider v Minister for Lands
[1996] QLC 2
•23 January 1996
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BRISBANE
23 January 1996
Re: Determination of Unimproved Values
for Conversion of Tenure of
Special Lease No. 35/29533 and
Special Lease No. 35/30026,
Rockhampton District.
Lessee: Jeff Schneider
(Hearing at Rockhampton)
D E C I S I O N
Mr Jeff Schneider has applied for the conversion of two special leases, Special Lease No. 35/29533 and Special Lease No. 35/30026, Rockhampton District, to freehold tenure. The relevant date for this purpose in both cases in 15 June 1993.
Special Lease No. 35/29533 is in respect of the land contained in Lots 75, 76 and 78 on Plan LN 1294, Parish of Yaamba, County of Livingstone. The lots are not contiguous, being separated by unmade streets and have areas as follows: Lot 75, 70.921 hectares; Lot 76, 9.598 hectares; and Lot 78, 18.626 hectares. The total area is 99.145 hectares.
Special Lease No. 35/30026 is in respect of the land contained in Lots 65 and 190 on Plan Y 16911, Parish of Yaamba, County of Livingstone. Lot 65 and Lot 190 are not contiguous, being separated by the unmade Canoona Street, Lot 65 having an area of 4.694 hectares and Lot 190 having an area of 2.144 hectares, a total of 6.838 hectares.
The Special Leases were issued for Manufacturing, Industrial, Residential or Business purposes under the Land Act 1962, but are worked as one property by Mr Schneider for agricultural and grazing purposes. The property is situated adjoining the township of Yaamba, approximately 31 kms from Rockhampton, with access by the bitumen sealed Bruce Highway. Electricity and telephone services are connected.
The property is situated on the flood plain of the Fitzroy River, being originally timbered with blue gum and coolibah. The land is gently sloping to undulating and is affected by periodic flooding, being traversed by flood channels and hollows. There are several higher areas which do not flood in "average" floods, including the site of the house on Lot 75, in the extreme north-eastern corner of the property. However, the evidence indicates that in the 1991 flood, the whole of the 106 hectare property was inundated and there have been higher floods on at least two other occasions.
Virtually the whole of the area, except for the house site and the gum flood channels, has been cleared and approximately 80 hectares is presently cultivated. The property has an irrigation licence to pump a nominal allocation of 54 megalitres (metered) from an 80 mm centrifugal pump located on the bank of the Fitzroy River adjoining Lot 78. About 13 hectares is spray irrigated in rotation for pumpkins, melons and fodder crops, while the balance is used for grazing.
Mr Jeff Schneider gave evidence that he purchased the property in 1977. A house was shifted to the land and located on Lot 75, at the extreme north-east corner adjoining the road, the highest land on the whole property. Mr Schneider estimated that it is about 10 feet higher than the balance of the land. The house was placed on 8 foot stumps, as he knew that the lands were subject to severe flooding.
Mr Schneider said that there was flooding over the land in 1978, 1983, 1984 and 1988. In 1991, two floods occurred in January, about 10 days apart. At that time the whole of the property was flooded, with approximately 3 inches of water under the house. In the previous floods, all but about 5 or 6 acres had been flooded. In all floods he lost crops but in 1991, a paddock cultivated in readiness for planting lost about 8 inches of top soil.
A series of photographs produced by Mr Schneider showed the severity of the 1991 flooding. He said that all floods were disruptive to the working of the property and the water had taken up to 10 days to subside. However, after the 1991 flood it was three weeks before all the water had subsided. Stock have to be moved during flood times.
The working of the property is further disrupted by a water supply pipeline which severs Lot 75 from Lot 78. The pipeline was once used to pump water from Yaamba to supply Rockhampton and consists of a 30-inch steel pipe set in concrete piers. At the relevant date, access over the pipeline was by ramps situated outside the property boundary.
In August 1992, Mr Schneider attempted to sell the property at auction. Prior to the auction, it was announced that the property was prone to flooding. Approximately 50 people attended the auction but only one bid of $50,000 was received, which Mr Schneider said would not cover the costs of improvements. The property was passed in.
Mr Schneider said that he could not derive sufficient income from his farming operations alone and has taken other work to support his farming activities and earn a reasonable income. In addition to its other problems, the property is infested with nut grass, which limits the type of crops that can be grown. After endeavouring to grow other small crops, he has found that water melons and pumpkins, together with forage crops, are the best crops for the property.
Mr JH Wildin, an agricultural consultant with many years experience in the field of pasture production, gave evidence on behalf of Mr Schneider. Mr Wildin knew the property well, having advised Mr Schneider on the growing of crops since about 1978. He had visited the property in times of flood and observed its complete inundation.
Mr Wildin confirmed that the most suitable crops for the property were water melons, pumpkins and fodder sorghum, planted in periods when there is less risk of flooding to maturing crops. He stated that it was not land that could grow high value small crops such as potatoes, beetroot, asparagus or zucchinis. The 54 megalitre water allocation would irrigate only about 13 hectares, thus limiting its crop potential. The balance of the property had potential for grazing, improved pastures and fodder crops, but they were at risk during flood periods.
Based solely on its agricultural productivity, Mr Wildin ventured a valuation opinion. He estimated that the improved irrigated land had an agriculture value of $1500 per hectare, being $2,000 per hectare discounted because of flooding one year in four. For the balance 93 hectares of non-irrigated land he estimated a value of $750 per hectare. This gave him a total value, ex structures, fencing and water, of $89,250. From this he deducted the cost of land preparation, which he estimated at $430 per hectare, or $45,580, leaving an unimproved value of $43,670.
Mr Wildin stressed that this valuation opinion was based only on the land's agricultural productivity and not on the basis of comparable sales. He readily conceded that he was not a registered valuer, but had formed this opinion of value solely on the basis of its capacity.
Valuation evidence was given for the applicant by Mr JC Compton, a registered valuer with the valuation firm Herron Todd White at Rockhampton. Mr Compton said that his general appreciation of the property was that it was not a good farm and it was a poor residential site. It was not a good farm because of the nature of the clay soils, the risk of flooding and the nut grass in the paddocks. It was a difficult proposition to work economically to produce some high-yielding profitable agricultural crops. In that respect it was a poor farm because of the high inputs and lot outputs.
Mr Compton said that about 80 hectares of the land could be cultivated and planted to dry land forage sorghum, provided it was renovated, reworked and replanted after each flood. He thought that Mr Wildin had correctly identified the highest and best use of the land and that was as part irrigation land, utilising the available water allocation, with the balance of the land being used for forage or natural pastures.
Commenting on the flooding of the subject lands, Mr Compton said that most of the land is regularly and, in parts, severely flooded by the Fitzroy. It was completely inundated during the peak floods in 1991, when the water was 75mm deep under the house. Flood heights were recorded at various parts of the property including the top paddocks off Iris Street, where the water was about 75cm to 100 cm deep, the bottom paddocks (Lot 78) where the water was about 2.4 metres deep and the bottom house paddocks (Lot 75) where the water was about 3.6 metres deep.
In arriving at his valuations, Mr Compton took into account the following:
"(1)Flooding - limiting cropping use and potential.
(2)Zoning, Drainage Problem Area under the Town Plan for Livingstone Shire gazetted 21 December 1991. Dwellings prohibited without consent.
(3)Soils, heavy clays not suitable for small crops or lucerne.
(4)Nut grass infestation in the clay soils is severe, increasing cropping costs and risks.
(5)Severance by the old Rockhampton City water pipeline above ground through Lot 78 requiring access for farm machinery at crossings constructed outside the eastern and western boundaries.
(6)High land clearing costs.
(7)Auction of the subject property in August 1992, attracted little interest and only one offer of $50,000. No further interest and property withdrawn from sale. "
Mr Compton rejected the proposition that the property should be valued as a number of rural homesites. Apart from the obvious problem of flooding every four to five years, the highest land on the property is where the present house is situated. In Mr Compton's opinion, people on rural homesites did not like their houses to be located so close to a main road, where privacy and seclusion were lost. Also, rural homesites with views were most popular, or if near a river, where the water could be seen. The subject land did not have any views and the water in the river could not be seen except, of course, during flood times.
Mr Compton went on to say that the subject land had been zoned "Drainage Problem" under the Shire of Livingstone Town Planning Scheme and the Council was likely to restrict building on the flooded allotments.
The relevant part of the Town Plan states:"Drainage Problem - This Zone is intended to be preserved for agriculture and forestry where the areas included within the Zone exhibit poor drainage. These areas are not suitable for urban development prior to the implementation of a drainage strategy to minimise drainage disabilities. Some isolated urban uses are allowable by consent only. "
The Table of Zones shows that the uses permitted in the Drainage Problem Zone are, agriculture, animal husbandry (category b) and forestry. Uses permissible (consent required) include caretaker's residence and dwelling house.
Mr Compton was aware of only one house constructed on the flood plain at Yaamba for many years and that was the house on the subject land. He thought that under the current Town Plan, construction of dwellings on areas zoned "Drainage Problem" would be prohibited, unless they were to be used in conjunction with agriculture. He thought it was highly unlikely that any other building approvals would be given.
Mr Compton valued the land in Special Lease No. 35/29533 as "99.146 hectares of flooded flats disadvantaged by zoning at $650 per hectare", a total of $64,500. In arriving at this valuation, he had regard to a number of sales.
Mr Compton's Sale No. 1 was of a 255.6 hectare property known as "The Pocket", situated close to Yaamba, which sold on 30 April 1993, for $210,000. Mr Compton analysed this sale to show an unimproved value of $629 per hectare.
Mr Compton described "The Pocket" as superior grazing land, with access to flood-free high ground and with natural water in the river, Alligator Creek and waterholes, with water harvesting potential. It is located 4.5 kms south of the Bruce Highway east of Yaamba, but has poor access. Overall, he considered "The Pocket" to be inferior to the subject land.
Mr Compton placed greatest reliance on the sale of "The Pocket". He explained that the sale was from the Holding Family to O'Neill and Angel. The transaction consisted of two contracts, one to O'Neill and one to Angel. He had investigated the background to the sale and determined that Mr O'Neill bought the property in conjunction with Mr Angel and although they had decided to purchase under separate contracts, it was negotiated as one property, all of which was to be used by Mr Angel for grazing purposes.
In the circumstances, Mr Compton concluded that the two contracts should be amalgamated and the sale treated as one. It was the only sale that he could find that was reasonably comparable to the subject land. However, it is larger, and although it has similar Fitzroy River flooded grazing land, it is superior in quality, being more of a sandy loam country. He regarded it as very good flooded grazing country, with an area of high ground that provided a flood refuge for stock.
The only disadvantage was access from the Highway, which was through a surveyed laneway of 4.5 kms of unformed road which was cut by periodic flooding. However, he thought that it was an indication of what people were prepared to pay for Fitzroy River grazing land, naturally watered and suitable for bullock fattening.
Mr Compton's second sale was of a property known as "Wattlebank", of 210.1 hectares which sold on 14 April 1994, for $275,000. Mr Compton analysed this sale to an unimproved value of $921 per hectare, including 100 hectare irrigation licence.
"Wattlebank" is situated on the Fitzroy River to the west of Yaamba. Mr Compton described it as having quite superior small cropping sandy loam soils on the high bank at the junction of the Fitzroy River and Planted Creek, benefited by a 100 hectare irrigation licence, unrestricted except by flow at Riverslea.
It is clear that "Wattlebank" is a much superior property. It was bought specifically for small cropping. A large area of the property can be extensively irrigated.
Mr Compton also looked at the sales of rural residential sites in the area. In his basis of valuation for Special Lease No 35/29533, he referred to the sale of an 8.22 hectare rural residential site (Sale 3), situated on the Bruce Highway to the east of Yaamba, which sold on 13 June 1994, for $17,500. He described it as a vacant swampy site and commented that it reflected a "Basic site value for partly flooded flats with a small area above normal flood height adjoining the North Coast Railway".
In the same report Mr Compton referred to the sale of a 123.5 hectare property in the same vicinity (Sale 4), which sold on 22 March 1993, for $77,500. He described this land as a vacant rural block severed by the Highway and the old Milman Road, with water in Plentiful Creek. He described it as a "Sound sale of a larger block with 40 hectare subdivision potential".
Mr Compton valued Special Lease No. 35/30026 as 6.84 hectares at $1,000 per hectare, a total of $7,000. It seems from his report that he also valued this land as an agricultural property. However, his report referred to the sales of rural residential sites.
The first is in respect of the 8.22 hectare property described above. He also referred to sales of vacant 2,000 square metre sites in the old town of Yaamba, adjacent to the subject land. He included a schedule of the details of these sales which showed a confusing pattern. In 1993, one property sold for $10, one for $150, two at $499, one at $1,000 and one at $5,500. In 1994, one property sold for $10, one (of 8 lots) at $4,000 and one at $5,000.
However, Mr Compton relied on the sale of three lots separated by Auckland Street, which he regarded as the highest ground on the flood plain. These lots sold together on 19 December 1994, for $7,500. One has an area of 3.688 hectares and the other two, 2,023 square metres each, the total area being 4.093 hectares.
Mr Compton commented that this was superior high land which sold 18 months after the relevant date. In his opinion it established the maximum level for the application to the subject property at the relevant date.
Mr Compton said that he included sales of rural residential sites because he realised that the property does have a house site on it. He produced the evidence in case the Court thought that it may have a premium over and above a purely rural value. He included Sale No. 3 to indicate a minimum rural residential site value. It was a small area between the new Bruce Highway deviation to Alligator Creek and the North Coast Railway. He regarded it as an inferior site and, although it was swamp, there was a reasonably well-drained house site adjacent to the railway line.
Sale No. 4 was selected because it was flat land with no views and what he described as "a hotch potch of lines and unopen roads and severances". Only the new Highway deviation was actually used, the rest were unformed. He regarded it as a good grazing block with permanent water.
Valuation evidence was given for the Crown by Mr DW Drew, a registered valuer employed by the Department of Lands. Mr Drew recognised that the property was subject to periodic flooding, but that there was relatively high land on each of the Special Leases. He said that, once freeholded, the individual lots in each property would obtain separate title and would be able to be sold separately. He considered that there were areas of sufficiently high land on each of the lots upon which residences could be built, having regard to the Council's restrictions upon building in a drainage problem area.
Mr Drew said that he had talked to the owner of one of the 2,000 square metre lots in the old town of Yaamba, near Lot 190. This person, who was not named, nor his property identified, told Mr Drew he was "looking at building". He said that the Council required a house to be constructed on a building platform of 1.2 metres, so that the base of the dwelling was 2.9 metres above ground level. In addition, the Council required that any septic system had to be sealed. Mr Drew thought that the construction of dwellings on any of the subject lands would have similar requirements imposed.
Mr Drew thought that it was his duty to value each of the subject lands at their highest and best use which, in the case of Special Lease No. 35/29533, was as three separate rural residential sites. He valued Lot 75, with 70.921 hectares at $65,000, Lot 76 with 9.598 hectares at $14,000 and Lot 78 with 18.626 hectares at $22,000, which he rounded to a total of $100,000.
In arriving at a valuation of $12,000 for Special Lease No. 35/30026, Mr Drew valued Lot 65, with an area of 4.694 hectares, at $8,000, and Lot 190, with an area of 2.144 hectares, at $4,000.
In making those valuations, Mr Drew had regard to the sales of two rural residential properties, one situated at Dendles Road, Milman, near Mr Compton's Sale 4, and the other on the Bruce Highway at Yaamba. These properties had areas of 91.15 hectares and 40.01 hectares respectively and sold in October 1992, for $90,000 and in October 1993, for $50,000. Although they were not subject to flooding, for various reasons Mr Drew considered that the subject property was superior to each of the two sale properties.
Mr Drew also had regard to part of "The Pocket" sale. This was the 109.6 hectares which sold to Angel in May 1993, for $90,000. Mr Drew analysed this sale to show $79,000, or $725 per hectare.
Mr Drew described the sale property as relatively level to undulating river flats, intersected by numerous lagoons, all subject to flooding. Although the subject land was slightly smaller in area, it was similar in country, being more useable and relatively level, with better access. Overall, he regarded the subject land as superior to the sale.
Mr Drew was not aware of any arrangement between Angel and O'Neill for the purchase of "The Pocket". As far as he knew it stood alone and he regarded it as a separate transaction.
In valuing Special Lease No. 35/30026, Mr Drew referred to the sale of a 19.9 hectare rural residential property situated near Yaamba on the Bruce Highway. The property sold in October 1993, for $33,250 and was analysed by Mr Drew to an unimproved value of $31,000. He described it as relatively level to parts low lying, originally timbered with blue gum and ironbark, open forest with black grey soils. He regarded it as superior to the Special Lease as it was larger, with better access and with only a small area of low-lying land subject to local water.
Mr Drew also referred to the sale of a 2,053 square metre allotment situated in Gipps Street in the old town of Yaamba, which sold in September 1993, for $5,500, which he analysed to show an unimproved value of $2,500. He described it as relatively level river flats subject to seasonal flooding. Although the sale is much smaller, it has similar access. He also stated that the subject land "offers more elevated relatively flood free building site". He considered that the subject land was superior to the sale.
Mr Drew investigated the background to the sales of the allotments in the old town of Yaamba. It seems that a real estate agent had purchased large numbers of allotments of the old town which he had sold to unsuspecting people in southern States, who later became aware that they were situated on the flood plain and were subject to building restrictions. Many of the sales mentioned by Mr Compton were by mortgagees exercising the power of sale. For this reason, Mr Drew disregarded the low sales in the area. He concluded that because the sale which he used was to a local, it could be relied on to give some indication of the demand for rural homesites on the flood plain at Yaamba.
However, Mr Compton took an entirely different view. He concluded that there was no real demand for allotments on the flood plain, as the Council would be most unlikely to approve the construction of houses in that area other than in conjunction with agriculture. This view was supported by the fact that there had been no houses constructed on the Yaamba flood plain for possibly 50 years, with the exception of the house on the subject land. Only six or seven houses remained in the old town of Yaamba. He disagreed with the proposition advanced by Mr Drew that people became used to periodic flooding and would be prepared to take the risk by purchasing sites in the old township.
After carefully considering the whole of the evidence, I tend to favour the approach taken by Mr Compton rather than that taken by Mr Drew. I understand why Mr Drew has valued each of the separate titles in the two Special Leases as potential rural residential sites. However, I am of the opinion that the evidence clearly indicates that while there is a demand for flood-free rural homesites in the area, there is little prudent demand for rural residential sites on the Yaamba flood plain.
The sales of rural residential land outside the old town area do have, in each case, some area of flood-free land and good access. In my opinion, that is the type of country that would attract rural residential purchasers. I do not think that anyone would be greatly attracted to the subject land for such purpose with its history of periodic flooding. Similarly, I do not think that "The Pocket" can be regarded as a rural residential sale because of its poor access and flooding.
The difficulty is how to value the subject land as at 15 June 1993, on the evidence that has been presented.
The provisions of section 207D(7) of the Land Act 1962, require that the unimproved value of a special lease for conversion purposes be determined at the amount which, in the Court's opinion, 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.
In my opinion, an experienced person would not expect to be able to obtain Council approval to construct a house on each of the separate titles in the two special leases, that is, as five housesites. However, such a person could reasonably expect to obtain approval for the construction of one house on each special lease in conjunction with agriculture, that is, two housesites.
If the mortgagee in possession sales in the old town of Yaamba are excluded, three vacant land sales remain:•Lot 29 of 2036m2, which sold in September 1993, for $5,500 (Analysed by Mr Drew to $2,500).
•Lot 71 and Lot 22/28 (8 lots), with an area of 1.639 hectares which sold for $4,000 in December 1994, for $4,000.
•Lot 2 (3.388 ha) and Lots 201 and 210 (each 2023m2), area 4.093 ha, which sold in December 1994, for $7,500.
Mr Compton was of the opinion that the purchasers may have been imprudent but there is no evidence of that. An experienced purchaser, as envisaged by s.207 D(7), would be aware of such sales as reflecting the prices paid for periodically flooded land on the flood plain, whether or not the Council would approve the construction of houses on each of them.
While I agree with Mr Compton and Mr Wildin that the highest and best use of each of the subject lands is as agricultural land, I feel that some premium would be paid for one well situated housesite on each special lease.
The land is not good agricultural land because of the periodic flooding and the other detriments suffered, including its infestation with nut grass. While I have some reservations about the combination of the two parts of "The Pocket" sale by Mr Compton, I have no better evidence before me as to the value of agricultural land. I will, in the circumstances, accept Mr Compton's assessment of the value of the two properties, adding an additional amount of $10,000 for the site on SL 35/29533 with highway access, and an additional $3,000 for the site on SL 35/30026 with access from Iris Street and Gipps Street.
Accordingly, the unimproved value of Special Lease No. 35/29533, Rockhampton District, for the purposes of conversion of tenure is determined at Seventy-four thousand, five hundred dollars ($74,500), and the unimproved value of Special Lease No. 35/30026, Rockhampton District, for the purposes of conversion of tenure is determined at Ten thousand dollars ($10,000).
Member of the Land Court
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