Zander v Minister for Lands
[1996] QLC 10
•21 February 1996
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BRISBANE
21 FEBRUARY 1996
Re: Special Lease 44/44630, Townsville District -
Application for Conversion of Tenure
Lessee: Cherelyn Maree Zander (nee Payne)
(Hearing at Ayr)
D E C I S I O N
Mrs Zander is the lessee of Special Lease No. 44/44630, Lot 608 Plan J11223 (GS800824) Parish of Selkirk, containing 594 m2, situated at SS Heatherbell Avenue, Jerona.
Jerona is a small fishing village about 42 km north-westerly of Ayr and about 16 km by gravel road off the Bruce Highway.
On 11th January, 1993, application for conversion of tenure of the lease was made. That is the date at which the unimproved value of the land is to be determined. The Minister's offer for conversion was based on an unimproved valuation of $8,400 as carried out by Mr J.R. Hoult, valuer. The Minister referred the determination of the unimproved value to the Court.
Mrs Zander contested the Department's valuation. She contends for a value of $4,800. The basis of her estimate is the Department of Lands' valuation (under the Valuation of Land Act 1944) which had been in force at the date at which the application had been made.
Mrs Zander attended the hearing. It is her impression that delays in processing the application have resulted in a significant increase in the Department's valuation. She said that she had been "assured by numerous Lands Department Employees - including John Hoult - valuer, that the amount I would have to pay for Freeholding the land would be the value at the time the application was lodged." She expected that the valuation effective at the relevant date for rating purposes was the figure which the Lands Department would adopt for the conversion under the Land Act. While that may be understandable, both valuations emanating from the same Department, even if under different legislation, Mrs Zander had not taken into account that the effective valuation for rating purposes had been made at an earlier date. Mrs Zander had established that a rating valuation of $4,800 had in fact remained in effect until 30th June, 1994 after which date it increased to the same as the conversion offer - $8,400. In her terminology, the Department "back-dated" that valuation to 30th June, 1993. More precisely, the Department's valuation for rating purposes increased to $8,400 (about six months after the conversion date) but that valuation did not become effective until 30th June, 1994. It seems that the valuation of $4,800 had not increased from dates of valuation at 31st March, 1990 through to 31st March, 1992.
Mrs Zander has convinced herself that she has been unfairly treated. However the question which is before the Court is whether the valuation of $8,400 as at 11th January, 1993 is a reasonable assessment of "the amount 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."
Mrs Zander was concerned that the computer print-out search which she had conducted, indicated that the land was not flood-prone. She produced photographs which showed that the immediate locality had been subject to flooding from both tidal and rain waters, although it seems not regularly. She pointed out that there are times when Jerona is isolated during wet weather due to the state of the road off the Bruce Highway and then flooded causeways. Furthermore the land is seen to be inferior through the saltwater table being relatively close to the surface and "nothing grows except native vegetation and a few salt resistant shade trees."
Mr Hoult gave evidence in support of his valuation. He denied having ever told Mrs Zander that the freeholding price would be $4,800. Indeed, on the evidence provided by Mr Hoult, it is observed that there had been seven Special Leases freeholded in Jerona, with dates of application for conversion (and consequently dates of valuation) ranging from October 1990 through to September 1992 at prices ranging from $5,500 in SS Star of Hope Avenue (to the rear of the subject land) to $6,500 on The Esplanade. Two of the conversion offers had been accepted as early as April 1993. I find it inconceivable that any responsible person, and particularly Mr Hoult, being aware of information relevant to conversion applications in Jerona would tell Mrs Zander that the land would be freeholded at the rating valuation of $4,800. It seems to me more likely that Mrs Zander has incorrectly interpreted advice she has received that the conversion offer would be made based on the valuation as at the date of application. This translated in her mind into the Lands Department valuation, which then existed for rating purposes, of $4,800 and that was an incorrect assumption.
It is Mr Hoult's evidence that there had been in recent years no sales of freehold land to indicate market value until 18th September, 1992 when a site described as Lot 114/GS1012, of 807 m2, fronting the surveyed SS Wakefield Avenue and backing onto esplanade frontage land, sold for $11,000. That sale had been analysed to show an unimproved value of $9,700. By direct comparison with that sale the subject land had then been valued at $8,400. Mr Hoult said that earlier valuations for conversion purposes and no doubt for the rating valuations, had been carried out on the very weak evidence provided by sales of leasehold lands. Mr Hoult had interviewed Mrs Kelly, one of the purchasers of the freehold site and was satisfied that the Kellys were well acquainted with Jerona and were satisfied with the price they had paid for the land. That sale subsequently became the benchmark for valuations, not only under the Valuation of Land Act, but for conversion applications. In Mr Hoult's opinion, the Jerona township being what it is with low intensity and generally substandard weekender type development, and where it was not the custom for owners to fence their lots, the actual area of individual sites was not a significant, if any, factor influencing site value. It was Mr Hoult's evidence that his valuation of the subject land in comparison with the sale had however taken into consideration such matters as its smaller size, inferior location but the surveyed corner position. He had been aware of the flood susceptibility.
Now as it happened, Mrs Zander had met the purchaser Mrs Kelly. Mrs Kelly had complained to her that Mrs Zander had been able to purchase her property at a significantly lesser price than the price it had been offered to Mrs Kelly. Mrs Zander agreed that the Kelly family had known Jerona and had stayed there on a number of occasions in the past. In Mrs Zander's opinion, it would have been necessary, based on her perception of local attitudes, for the Kelly family to pay a premium to acquire any property at Jerona. While I am confident that Mrs Zander misinterpreted what she was told about the valuation date, as opposed to the valuation figure, I am also confident that she did not deliberately set out to discredit the Department's valuation base here, by innuendo relating to the parties involved in the sale. She was challenging the veracity of the sale as evidence of open market value, based on her own local knowledge. Furthermore she believed the location of the sale property was superior to that of her own and disagreed with Mr Hoult's opinion as to the area of the site having no significant influence in terms of desirability.
At the best of times, one sale even if it was genuine, would be seen to provide a weak foundation on which to build a geographical valuation base, because its level of value is not able to be tested for reliability. In the township of Jerona, there was, of course, other evidence, although not meeting the criteria of open market transactions. In the circumstances here it is my opinion that that evidence should not have been discarded completely. That evidence was provided by the acceptance of offers made by the Minister for conversion of leases at levels of unimproved values which remained static from 1990 through until three months prior to the date relevant here. Based no doubt on professional valuation opinion, on the evidence then available as to unimproved value and at virtually the same date as the freehold land sold in SS Wakefield Avenue for $11,000 lightly improved, the Minister offered to convert another lot in that same street for $6,000. That lot is in closer proximity to the subject land and closer to The Esplanade. Mr Hoult went to some trouble to consider relativity of valuations as distance from The Esplanade increased. He advised that, based on the freehold sale, any application to convert a Special Lease in SS Wakefield Avenue after 18th September, 1992, would result in an assessment of site value of $9,100, then $8,400 in both SS Heatherbell and SS Star of Hope Avenues. He was comforted in that relativity opinion by the rentals realised at auction in June 1992 for Special Leases in Jerona. Although of no real consequence in this matter, it is observed that the rental realised for a lease in SS Star of Hope Avenue was less than the level achieved in SS Heatherbell Avenue, which is closer to The Esplanade.
It is not difficult to appreciate the valuation difficulty faced by Mr Hoult in his genuine effort to establish market value, when there was but one freehold sale. However, it seems to me that a more cautious approach was warranted than complete adoption of that sale as the fresh valuation base for matters such as this, at least until further supporting evidence emerged.
For that reason, I find that a lower valuation than that of Mr Hoult is warranted. Mrs Zander's estimate of value has no acceptable foundation being based on flawed assumptions.
I determine the unimproved value of SL 44/44630 in the amount of $7,000 as at 11th January, 1993.
RE WENCK
MEMBER OF THE LAND COURT
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