Simmonds v Minister for Natural Resources
[1996] QLC 136
•23 October 1996
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BRISBANE
23 October 1996
Re: Determination of unimproved value for conversion purposes -
Special Lease No 09/40811
Cairns District.
Lessees: Glen Joseph Simmonds and Robyn Margaret Simmonds
(Hearing at Mareeba)
D E C I S I O N
Mr and Mrs Simmonds have applied for the conversion of an area of 60 hectares of Special Lease No 09/40811, Cairns District, to freehold tenure. The relevant date for this purpose is 9 March 1995. Special Lease No 09/40811, is in respect of land described as Lot 199 on Plan NR 473, Parish of Formartine, containing a total area of 105.37 hectares. A previous application by the lessees for conversion of the whole area was refused because of concerns by the then Water Resources Commission about the water table and other issues. Negotiations with the Department resulted in the present application for conversion of the smaller area of 60ha.
In accordance with the provisions of s.207D of the Land Act 1962, the Minister for Lands determined the unimproved value of that land at $60,000. The lessees have requested that the unimproved value be determined by the Land Court and have advised that their estimate of the unimproved value was $45,000.
The Special Lease was issued for Manufacturing, Residential, Industrial or Business purposes on 22 March 1977. At the date of application, it was used in conjunction with the adjoining freehold Lot 2 on RP 734860, containing an area of 63.009 hectares, for small scale cattle production and rural residential purposes.
The 60 hectare parcel the subject of this application, is situated approximately three kilometres north-west of the township of Biboohra, approximately 11 kilometres north of Mareeba and approximately 75 kilometres west-north-west of Cairns. It is thus well situated with regard to the limited town services available at Biboohra and the more extensive services available at Mareeba. It is within easy commuting distance of the major commercial centre of Cairns.
Access is by means of the bitumen-sealed Peninsula Development Road to within about one kilometre of the northern boundary of the property, and thence by the formed gravel Coyle Road. Access to the house on the subject land is by earth track along the unformed road on the eastern boundary of the property for approximately one kilometre and then by internal earth track for approximately 400 metres to the house. Electricity and telephone services are available to the property but no water, as the property is situated outside the Mareeba/Dimbulah Irrigation Area and does not have access to channel water. There is a school within three kilometres of the property.
The area of the Special Lease the subject of this application, comprises level to open forest, timbered with poplar gum, bloodwood, bulloak and wattle. It has sandy duplex clay soils and native pastures, including kangaroo, wire and spear grass. While there are no views, the property has a rural aspect. The land is zoned "Rural A" under the Town Planning Scheme for the Shire of Mareeba.
At the hearing of this matter, Mrs Robyn Simmonds appeared and gave evidence on behalf of the lessees, while the Crown was represented by Senior Valuer, Mr K Allen, and evidence on behalf of the Crown was given by Mr WB Bowen, a registered valuer employed by the Department of Natural Resources.
Mrs Simmonds gave evidence that in the lessees' opinion, the unimproved value as at the relevant date was $45,000 and not $60,000, as contended by the Crown. Mrs Simmonds based her argument upon two premises:•the valuation of $60,000 applied to the whole of the Special Lease for rental purposes under the Valuation of Land Act 1944; and
•the fact that no water was available on the land which is the subject of this application.
Mrs Simmonds reasoned that as the Special Lease with an area of 105.37 hectares, had been valued at $60,000 as at 30 June 1993, by the then Lands Department for rental purposes, then on a pro rata basis, the subject land could be worth no more than $45,000. It emerged during the course of the evidence that the Department of Lands had revalued the Special Lease as at 1 January 1995, for rental purposes, at $69,000. The unimproved value of $60,000 referred to by Mrs Simmonds related to a date of valuation of 30 June 1993.
By way of comparison, Mrs Simmonds referred to the value of the neighbouring Special Lease No 09/48986, with an area of 83 hectares, which had been valued for rental purposes at $60,000. However, no evidence was given as to whether that was the 1993 valuation or the 1995 valuation.
Mrs Simmonds argued that, since land was valued for rental purposes at its unimproved fee simple market value and the valuation for conversion purposes was on the same basis, then it was unjust that the subject land of only 60ha should be valued at $60,000 for conversion purposes, compared with the rental values applied to the whole of SL 09/40811 and SL 09/48986.
The lessees' principal argument was with respect to the fact that water was unavailable. Mrs Simmonds explained that the lessees purchased Special Lease No 09/40811 for $20,000 and the adjoining freehold Lot 2 on RP 734860 for $60,000 in November 1991. Their intention was to use both for grazing purposes. They initially thought the Special Lease was cheap land, but Mrs Simmonds said they would not have purchased it if they had known they would be unable to obtain underground water.
The lessees have made at least three attempts to obtain underground water on the property. At considerable cost, they sunk three bores, two of them to 140 feet and one to 90 feet. In one of the 140 feet bores, water was found, but it contained so much impurity that it could not be used.
An earth tank was constructed near the south-eastern corner of the Special Lease, to the south of the land the subject of this application, but Mrs Simmonds said that the land was so flat, they had to build channels or drains to fill it. Although the dam water was suitable for stock, it is not suitable for domestic purposes. The only domestic water is from a rainwater tank at the house and this is supplemented by water which is carted in.
Mrs Simmonds said that neighbouring properties have access to water. The property to the south, which is used for growing cane, obtains water from the irrigation scheme. Mr and Mrs Simmonds have been refused access to that scheme.
Immediately to the east of the subject land is a large mango orchard which obtains irrigation water by pumping from the Barron River, approximately 1½ kilometres away. However, such a facility is not available to the subject land.
Mrs Simmonds said the lessees have investigated all possible ways of obtaining water but without any success. She said that they hoped that with possible expansion of the cane industry on the tableland a weir may be constructed on the Barron River. However, there was no suggestion that such a scheme was contemplated in the near future.
Mr Bowen gave evidence that he saw the highest and best use of the subject land as a hobby farm, or as a rural residential property. It was well situated in relation to Mareeba and Cairns, had a bitumen road and all-weather formed gravel road to the northern boundary, although he did concede that the track from there to the house was not all-weather. Although Biboohra is a small township, it did have a State school, a service station, a general store and a railway siding.
Mr Bowen said the subject land would be suitable for agricultural or grazing use if it had access to irrigation supplies. However, he thought that the expenditure required to clear the country for improved pastures would not justify the few head that could be run without adequate irrigation.
Mr Bowen explained the history of the present application for conversion, and said that the balance of the original Special Lease No 09/40811 will be offered to the lessees, either as a grazing special lease or a grazing term lease. He thought that, without irrigation, not more than perhaps 10-20 head could be run on the whole aggregation. He saw no prospect of getting irrigation water to the subject land in the near future. However, he said that if the subject land had access to irrigation water, its unimproved value would not have been $60,000, but would have been about $100,000.
Mr Bowen said that he was well aware of the difficulties that the lessees had experienced in obtaining water on the subject land and had taken that into consideration in arriving at his unimproved value of $60,000. In support of that valuation, he provided a schedule of ten sales to demonstrate that there was a demand for rural residential properties in the locality.
Mr Bowen said that his sales Nos 1 to 4 provided historical evidence. Those properties, which ranged in area from 62.95 hectares to 122.4 hectares, sold between November 1990 and December 1992, for sale prices which analysed to show unimproved values from $77,500 to $137,980. Those properties were all handily situated within five to ten kilometres of Mareeba. In addition, each of them had access to water, three of them to Water Resources Commission water, and the other had frontage to the Barron River. Mr Bowen regarded all of them as superior to the subject land.
Mrs Simmonds knew most of those sales and agreed that each of them was superior to the subject land, particularly as each of them had access to water.
Mr Bowen's other six sales were of various areas of land ranging from approximately 9 hectares up to 131.3 hectares, all zoned "Rural A", which sold between August 1993 and May 1995 for sale prices which analysed to show unimproved values from $35,000 to $91,950. Some of them had access to Water Resources Commission supplies, while others did not.
Of those sales, Mr Bowen considered that Sale No 8 was the most relevant. That property was situated in the Chewko area, about ten kilometres south-west of Mareeba. It had an area of 60.75 hectares and sold in June 1994 for a sale price which analysed to show $69,686. Mr Bowen described that property as consisting of steeply undulating forest, with bitumen road access, no cropping potential and no access to Water Resources Commission water. However, he said that it did have sites which would be suitable for gully dams. He regarded it as slightly superior to the subject land.
On the other hand, he referred to his Sale No 10, situated in the Bilwon area, about ten kilometres north of Mareeba, with an area of 14.97 hectares, which sold in May 1995, for a sale price which analysed to show $45,500. That land he described as undulating forest ridge, with bitumen road access, but no access to Water Resources Commission water. It had no cropping potential and was further from Mareeba than the subject land. He considered that it set the "absolute minimum" for comparative purposes.
Mrs Simmonds questioned the fact that Sale No 10 was some two months after the relevant date. However, that sale is the closest to the relevant date and Mr Bowen said that he did not think that the market had moved significantly in that time.
As another indication of the "absolute minimum" unimproved value, Mr Bowen referred to the determination of the Land Court on 22 March 1996, of the unimproved value of Special Lease No 9/41214, the lessees of which were RG and KM Colhoun. That property, with an area of 70 hectares, is about 18 kilometres south-west of Dimbulah. It was described as comprising gently to easily undulating open ironbark, bloodwood and box forest with small pockets of creek flats. Only intermittent creek water supplies were available, lasting for about three months in normal seasons.
The Land Court determined the unimproved value of that property for conversion purposes at $40,000, as at 7 January 1992.
I will deal first with the lessees' argument concerning the valuation for rental purposes made under the Valuation of Land Act. It is understandable that the lessees see an inconsistency between the unimproved value applied to the Special Lease for that purpose and the value applied for conversion purposes to the smaller area.
This is not the first time the Court has had to confront such an apparent inconsistency and it has often pointed out that the valuations made under the two Acts are for different purposes, although the definition of unimproved value is similar in each Act. In any case, section 245(1) of the Land Act 1962 provides as follows:"The Valuation of Land Act 1944 does not apply to the expression 'unimproved value' in this Act for determining a purchase price for a freeholding lease or to purchase an estate in fee simple."
It was also pointed out that in the Land Act 1994, section 434(3) provides:
"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."
It is clear that the Legislature has recognised that there are differences between the purposes of the two Acts and that unimproved value for conversion purposes and unimproved values made under the Valuation of Land Act may be different, in respect of the same parcel of land.
In this case, the unimproved value is to be determined under the provisions of section 207D(7)(a) of the Land Act 1962, which provides that:"The unimproved value of a lease is the amount which, in the Minister's opinion or, if the Minister has referred the matter to the Court, 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".
The sales produced by Mr Bowen have demonstrated that there is a market in the Mareeba area for properties the size of the subject land. They also illustrate the differences that were paid for properties, depending on attributes such as situation, access and particularly, availability of water. I was told that Sale No 8 is evidence of a property which is "slightly superior" to the subject land with an unimproved value of $69,866, while Sale No 10, on the other hand, sets the "absolute minimum for comparative purposes", with an analysed unimproved value of $45,500. The unimproved value of the subject land must therefore be between $45,500 and $70,000.
The conversion of the Colhoun Special Lease which Mr Bowen stated was at $45,000, was actually determined at $40,000 as at 7 January 1992. Although the relevant date of that conversion was some three years earlier than the relevant date in this case, it does indicate a level of unimproved value for a property about the size of the subject land, but which is inferior to it.
I have carefully considered the whole of the evidence and find that Mr Bowen has adopted the correct approach to the assessment of unimproved value in this case. My only concern is with respect to the difficulty of obtaining water. Mr Bowen is of the opinion that he made sufficient allowance for the lack of water on the subject land, and illustrated that by reference to sales which had access to water.
On the other hand, Mrs Simmonds' evidence clearly indicates the difficulty which the lessees have experienced in obtaining water on the subject land. Three attempts have been made to find underground water without success. The dam on the southern end of the Special Lease provides water which is suitable for stock but not for domestic purposes. The only domestic water available is what they can catch in rainwater tanks. Other domestic water has to be trucked in.
Having regard to the history of the search for water on the subject land, the lack of success and the improbability of securing suitable water in the future, I am of the opinion that some further adjustment should be made to the unimproved value assessed by Mr Bowen to reflect that difficulty. I intend to reduce it by a further $5,000.
Accordingly, the unimproved value of Special Lease No 09/40811, Cairns District, for the purposes of conversion of tenure as at 9 March 1995, is determined at the sum of Fifty-five thousand dollars ($55,000).
President of the Land Court
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