Betagamma 41 Pty Ltd v Chief Executive, Department of Lands
[1995] QLC 23
•31 March 1995
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BRISBANE
31 March 1995
Re: Appeal against a decision on objection - Atherton Shire.
Unimproved valuation - Valuation of Land Act 1944.
(AV94-0298)
Betagamma 41 Pty Ltd
v.
Chief Executive, Department of Lands
(Hearing at Atherton)
DECISION
The appellant company is the registered proprietor of land described as Lots 2 and 4 on Registered Plan 843625, County of Nares, Parish of Barron, containing 80.63 hectares. As at 30th June, 1993, the Department of Lands, after objection, assessed the unimproved value of the land in the amount of $520,000.
Through its valuer, Mr K.F. Malone, the appellant company contends for a valuation of $450,000.
The land at the relevant date was zoned Rural Residential "C". It is located on the western frontage of Bulankof Road, about 3.5 kilometres north-west of the township of Tolga and 8.5 kilometres north-west of Atherton. Adjoining to the north is the original "Rangeview Glen" subdivisional estate of 1 hectare lots, then to the west is the "Rangeview Park" estate of predominantly 4,000 square metre lots. The older established "Tandarra" rural residential estate lies across Bulankof Road to the north-east.
Good access is provided to the land. Bulankof Road is bitumen sealed with gravel shoulders and earth table drains, while Newman Drive and Rankine Drive, being full width bitumen sealed carriageways to concrete kerbing and channelling, provide access points to the western boundary. Reticulated water, electricity, telephone and cleansing services are capable of being provided.
Mr Malone described the land as comprising "a gently sloping to undulating open forest parcel generally falling away from the south towards the north-west. There is one reasonably steep gully which truncates the property and a second smaller gully. About 14.2 hectares in the south-western corner is too steep to subdivide...".
There is no real dispute as to the physical nature of the land. The Department of Lands valuation was carried out by Mr R.G. Moroney. While Mr Moroney accepted that the 14.2 hectares is too steep to subdivide, he pointed out that a design for development of the land, would allow the excision of that area as a separate and somewhat exclusive lot having a serviced building site available at the road frontage. There is also no dispute that the potential of the land is for subdivision into rural residential lots, with a design having been produced for 126 lots, exclusive of the 14.2 hectares.
One of the disabilities of the land is that, due to its elevation, the south-eastern corner is unable to be serviced by the existing reticulated water infrastructure. Mr Malone had calculated that 60 of the proposed lots "will be located above the 850 metre contour and to service these lots an additional reservoir, pump station, rising main and associated access and site works need to be constructed." Consultant engineers had estimated these works to cost approximately $119,000. Mr Moroney was aware that subdivisional approval involved what he had understood to be a contribution for water infrastructure "including the acquisition of a reservoir site", in the order of that amount stated by Mr Malone.
Mr Malone referred to the evidence of three sales of in globo parcels. Two of these sales also provided Mr Moroney's valuation basis. The first common sale which will be referred to as the "Walker" sale was of a parcel of 35.76 hectares, about 800 metres to the north of the subject land which had sold subject to rezoning to Rural Residential "C" at a contract price of $250,000 on 3rd March, 1993. The sale did not settle until 9th February, 1995, and, according to Mr Malone, rezoning costs and additional roadworks contributions required an adjustment of an additional $28,957 to bring the sale price to the equivalent zoning position of the subject land. He also considered that the loss of interest involved in the delayed settlement required further adjustment to bring the equivalent sale price, as rezoned, to $302,370 or $8,455 per hectare. He considered that the timber treatment to the land for its past arable use did not add value for the highest and best use as rezoned. Mr Moroney on the other hand, took what he admitted was a conservative view and deducted the value of timber treatment in the amount of $24,000 to arrive at an unimproved state. He was also more conservative in his allowance for "rezoning charges and resurvey costs" for which he added the additional total amount of $12,530. Mr Moroney's analysis of the sale, as rezoned and in unimproved condition resulted in the amount of $238,530 or $6,670 per hectare.
There was difference of opinion as to the physical comparison of the Walker land with the subject land. Mr Malone saw the Walker land as being superior, for, while of generally lower elevation, the environment in which it was located provided in his opinion superior outlook unlikely to be built out or affected by subdivisional intrusion, in the foreseeable future. The Walker land had potential for a greater pro-rata yield of developed lots, with a designed development of 69 lots from the 35.76 hectares as compared to the subject land's designed potential of 126 lots, (or 127 lots if the steep area was accepted as one lot) from the total 80.63 hectares. If the 14.2 hectares was excluded, he saw the balance 66.43 hectares as marginally inferior in value, for the reasons of inferior outlook and the larger area of the parcel -if all other considerations were seen to be alike. He adopted a value of $8,300 per hectare for the 66.43 hectares, and $1,000 per hectare for the steep 14.2 hectares, totalling $565,569 equating $7,014 per hectare overall. However, he recognised that to make a proper comparison on a like with like basis with the subject land, the development cost of the subject land was greater due to the necessity to provide additional water infrastructure. The Walker land was capable of being serviced from the existing infrastructure. As I understand the evidence the cost of additional infrastructure associated with the subject land will not attract any compensating reduction in the headworks charges.
On that basis Mr Malone deducted the additional development cost of $119,000, reducing his valuation to $446,569, rounded to $450,000 (equivalent to $5,581 per hectare).
The second sale common to both valuers' evidence was of 64.75 hectares of Rural A zoned land on 16th December, 1992, for $600,000. This land is near adjacent to the south-east of the subject parcel. Mr Malone did not analyse the sale which showed $9,266 per hectare, improved. On the advice he had received, the vendor retained the removal rights to the dwelling. Mr Moroney analysed the sale, on an unimproved basis, to show $6,212 per hectare. Mr Malone's enquiries indicated to him that the land was "purchased with intent to subdivide to Rural Residential C based on information supplied by selling agent". The Council then refused a rezoning and subdivisional application. Mr Malone questioned the prudence of the purchaser in not securing a contract conditional on rezoning. He felt the sale was of no assistance other than to show an upper level of value for such land had the purchaser's expectations been realistic. Mr Moroney said that he had discussed the transaction with the purchaser. He had formed the opinion that the rezoning application was no more than a "testing of the water" relative to the potential of the land. Regardless of the Council refusal, Mr Moroney saw the land as possessing rezoning potential in the medium to long term. He saw the sale as indicating a level of value for arable land of better quality than was the subject but, due to rezoning implications, land with inferior subdivisional potential.
Mr Malone's third sale was of a parcel of 120.17 hectares, some distance removed, of undulating to steeply sloping land, which at the date of sale, 21st December, 1992, had been approved for subdivision into 27 Rural Residential "A" lots. The sale price was $200,000 - equivalent to $1,664 per hectare. Mr Malone saw this sale as suggesting that his in globo valuation of $1,000 per hectare for the 14.2 hectares of steep land was generous.
Mr Moroney had valued the subject land on a direct comparison with the sale of the Walker land and the near opposite Rural A land. In his opinion, the larger area of the subject land in comparison with the Walker land, provided an advantage to a developer rather than it being a disadvantage. He also held the opinion that the superior elevation of the subject land made it physically more desirable. He said that he had made his valuation after recognition of the extent of the steep land on Lot 4 and the disability relative to water supply. While his primary evidence was the sale of the Walker land, he found support in the sale of the Rural A parcel.
Mr Moroney's valuation was calculated as:
Lot 2 - 42 ha @ $6,750 per hectare $283,500
Lot 4 - 38.63 ha @ $6,000 per hectare $231,780
$515,280
Adopt $520,000
On the basis of the sales analyses adopted by Mr Moroney (which provide a clearer unimproved component although some question arises as to the added value of the timber treatment for subdivisional purposes) the second sale does appear to reflect the unrealistic rezoning expectations which were referred to by Mr Malone. By itself, the second sale is of no assistance, but for the reasons highlighted by Mr Malone it is seen to offer some support to the strong basis provided by the Walker sale. Again while Mr Malone's evidence as to the actual rezoning costs may have been more accurate based on his advice from the appellant company, I am not persuaded that there was need to adjust the level of value shown by the sale for the interest costs to the vendor (or savings to the purchaser) due to the long settlement delay. I prefer to accept that the price had been negotiated as at the date of contract, reflecting the value of the land had it been rezoned at that date. While this is a criticism of Mr Malone's analysis of that sale, he cannot be criticised for taking a view biased towards his client, for his approach resulted in a higher land value.
Mr Malone attempted to show that developed lots which were more aligned to the environment of the Walker land sold at a relatively higher level of value than did lots in the environment of the subject locality. However, I am not persuaded that on a like with like basis, the Walker land, in globo, is superior to the subject land, not that the argument reflected heavily in Mr Malone's valuation. Then I am also not persuaded by Mr Moroney that the size of the subject parcel would be advantageous to a developer, on a unit of area basis, particularly when the deleterious effects of reduced lot yield and relative costs of development are considered.
It seems on the evidence before me that lot yield and costs of development are matters for particular consideration in this exercise. Provided the additional development cost (water infrastructure) is a specific additional cost to the developer, as Mr Malone has argued, then his valuation is seen as giving a result tempered by fact yet not overly conservative. In fact it might be seen that his professional opinion as to level of value has overridden an argument which might have produced an even lower result. On the other hand, on that same assumption relative to water infrastructure, which did not seem to be disputed, I am not convinced that sufficient allowance has been made by Mr Moroney. Further when the apportionment of values (as formed the basis of Mr Moroney's total valuation) is considered, it seems clear that insufficient allowance has been made for the inferior lot yield potential of Lot 4.
I will allow the appeal in full. The valuation of the Chief Executive is set aside and the unimproved value of the land as at 30th June, 1993, is determined in the amount of $450,000.
(RE Wenck)
Member of the Land Court
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