Caloundra Fishermens Wharf Pty Ltd v Chief Executive, Department of Lands
[1996] QLC 150
•6 November 1996
|
BRISBANE
6 NOVEMBER 1996
In the matter of an appeal against a valuation
Valuation of Land Act 1944
Valuation Roll No.: 2374
Local Government: Caloundra (AV95-294)
Caloundra Fishermens Wharf Pty Ltd
v.
Chief Executive, Department of Lands
(Hearing at Maroochydore)
D E C I S I O N
The respondent placed a valuation of $1,450,000 on the land which is the subject of this appeal as at a relevant date of 1 January 1995 pursuant to the provisions of the Valuation of Land Act 1944. The appellant objected against this valuation and, having failed in that objection, appealed to this Court saying that a valuation of $1,100,000 ought to be the figure applied to the property. The subject property comprises a lease which issued under the provisions of the Land Act 1962, being a lease for 15 years commencing on 4 November 1994. The lease contains a number of conditions, many of which would be standard for a lease of this type, however, one condition requires special mention in that it governs the use to which the land may be put:
“The lessee shall use the leased land for caravan park purposes, for purposes incidental thereto and for no other purpose whatsoever.”
Section 14(5)(b) of the Valuation of Land Act 1944 provides as follows:
“In making, under this part, the valuation of the unimproved value of any land -
...
(b)in a lease, licence or permission to occupy under the Land Act 1994 or granted or issued by the Coordinator-General or the Primary Industries Corporation; ...
the unimproved value of that land shall be determined having regard to and making proper allowance for any restriction or limitation of use having regard to the purpose and conditions to which that permit, lease, licence permission to occupy or agreement is subject.”
Whilst the above provision makes reference to the Land Act 1994 and not to the 1962 statute, it is provided in s.476 of the 1994 Act that a Special Lease is taken to be a lease issued under the 1994 Act. Accordingly s.14(5)(b) of the Valuation of Land Act 1944 has full application.
The following are the grounds of appeal:
“1.The Chief Executive failed to have regard to and make proper allowance for any restriction or limitation of use of the land contained in the Special Lease.
2.The Chief Executive applied a comparative approach in determining the unimproved value without sufficient comparative evidence being available in the Caloundra area.
3.The Chief Executive failed to have sufficient regard to the current value of the improvements relating to the use to which the land is subject, pursuant to the Lease.
4.That the Chief Executive erred in not determining the unimproved value of the land by reference to its improved value less the value of improvements or by reference to the hypothetical development method, in the absence of any evidence of sales of comparable unimproved land.
5.That the Chief Executive erred in not having any or any sufficient regard to restrictions on the use of the land arising under the planning scheme for the City of Caloundra and under Special Lease No. SL200883.
6.That the Chief Executive erred in not having any or any sufficient regard to and not making proper allowance for, the restrictions or limitations of use of the land arising from the purpose and conditions to which Special Lease No. SL200883 is subject.”
Jeffrey Graham Southwell, a registered valuer in private practice, gave valuation evidence on behalf of the appellant, whilst Jennifer Robyn Manners, a registered valuer employed by the Department of Natural Resources (which includes the former Department of Lands) gave valuation evidence in support of the respondent’s valuation.
The subject property has an area of approximately 3.804 ha according to the lease document. Both valuers agree that the usable area, excluding a creek which bisects the property, is 3.32 ha. The property is to be found on the south side of Bowman Road at the intersection of Landsborough Parade and Park Road, approximately 1 km west of the Caloundra Post Office. It is directly opposite the “Sunland” Shopping Centre which includes Coles and Kmart shops.
The property is on the western fringe of Caloundra’s Central Business District. Bowman Road runs into Bullcock Street and comprises the arterial roadway linking the Central Business District to the Bruce Highway. Whilst Pumicestone Passage is immediately accessible to the land, the nearest surfing beach is within 1 km and shops are within easy walking distance. Bus services pass the land and schools are within 1 km. Reticulated town water, electricity, telephone and sewerage are connected to the site.
The land is generally a level allotment except where severed by Pumicestone Creek, has direct water frontage to the Pumicestone Channel and enjoys an attractive northern and eastern aspect over that channel to Bribie Island and Bullcock Beach. Mr Southwell said that the land floods during periods of heavy rainfall, mainly due to tidal surge and backup of Pumicestone Creek, and did not expressly disagree with Ms Manner’s suggestion that the land would be subject to 1 in 10 to 20 years’ flooding.
The land is zoned “Special Facilities Refreshment Services, Shops, Professional Offices, Indoor Entertainment/Tourist Facilities, Apartment Building, Hotel Facilities and Motels” under the town plan for the City of Caloundra gazetted on 17 December 1987. Such zoning permits the use of the land for caravan park, consistent with the requirements of the lease condition mentioned above.
The land has been improved by the establishment of two caravan parks named “Tripcony” and “Hibiscus” respectively, separated by the Pumicestone Creek. It is a matter of no surprise that both valuers valued the land on the basis of its highest and best use being as used.
At the commencement of his valuation approach, Mr Southwell said that the subject land enjoyed numerous positive features including the adjacency to the Central Business District; frontage to Pumicestone Creek; and proximity to surfing beaches and to transport. To these Ms Manners would add: the aspect over Pumicestone Passage. Mr Southwell also included a list of negative features: the limitation on usage provided for in the Special Lease condition cited already; rental being based on unimproved value; there being a fixed lease term without an option for renewal; and the fact that the land is subject to flooding. Whilst none of these negative features, apart from the lack of potential beyond caravan park usage, featured prominently during the hearing, I think it useful to place them in the correct context. The limitation on usage to caravan park purposes is a relevant consideration, as is flooding, however, having decided that the value of the subject property must be based on a highest and best use as a caravan park or caravan parks and that there is no higher potential, then this limitation should not re-enter for consideration. Insofar as the matter of rental is concerned: certainly there is provision in s.15 of the Valuation of Land Act 1944 to the effect that the unimproved value is the basis upon which rental will be calculated, rent being 6% of such figure on an annual basis according to the lease document. The fact that rental is calculated in this manner can have no impact at all on the unimproved valuation to be struck. Were it to be otherwise, there would clearly be a “doubling up”. Insofar as the absence of an option is concerned, I refer to s.14(1) of the Valuation of Land Act 1944:
“For the purpose of deciding the unimproved value of land that is not granted in fee simple, the land is taken to be land granted in fee simple.”
That is, the task is to value the land, not the lease.
Mr Southwell’s approach to his valuation was to refer to two sales and to support his application of these sales by the inclusion of a check method based directly on the use being made of the subject property at the relevant date.
Sale No. 1 was of a property known as “Maroochy Holiday Resort” located on the David Low Way at Bli Bli. The sale land comprises three lots totalling 5.4608 ha. One lot is improved as a relocatable home park with 96 sites and two duplex cabin sites together with a manager’s office and other improvements. The second lot has 82 cabin sites on it with associated improvements, whilst the third lot has been improved as a marina. Income received by the sale land at the time of sale comprised rental on the marina complex, ground rental of cabins, management commissions on permanent and holiday let cabins and recoverable electricity. Net profit at the time of sale in November 1994 is calculated at $357,436 per annum, showing a yield of 14.59%. Mr Southwell calculated the added value of improvements on the sale land at $1,383,500 and goodwill at $375,500, leaving a land value of $691,000 or $12.65 per m². In his view, the area occupied by the marina distorts the overall value, so he carried out a series of calculations which resulted in a figure of $143,000 for the marina being deducted from the gross land value of $691,000, leaving a net figure of $548,000 which, based on a now net area of 5.172 ha for the remaining land, resulted in a figure of $10.59 per m² for unimproved land value. In his valuation, Mr Southwell expressed this value as $3,011 per cabin for the 182 sites on the sale land, exclusive of the marina.
Mr Southwell’s second sale is common with Ms Manners and comprised a sale in March 1994 of an area of 17.87 ha at $1,376,000. This sale land is also located on David Low Way, Bli Bli, however, is somewhat closer to the subject land than Mr Southwell’s first sale, being located 8 km east of the Nambour Post Office. At the time of sale local authority approval existed for development of the land with 168 relocatable home sites and ancillary facilities, though a requirement remained for the purchaser to pay sewerage and water headworks charges totalling $343,804 to the local authority. Ms Manners describes the sale land as having an elevated area of easy to moderate sloping land, suitable for development and an area of unusable flood-prone parkland and a saltwater man-made lake fed by Petrie Creek, suitable for swimming, fishing, crabbing and canoeing. She calculated 9.5 ha of developable land and applied all of the sale price to that area. Mr Southwell employed a similar approach, however, he employed a net land area for development at 11.3 ha. Mr Southwell had been advised by surveyors that the area of lake on the sale land is about 6.4 ha, a figure which he deducted from the total area to produce his net land area. As this calculation was not challenged in evidence and as Ms Manners did not produce supporting evidence for her calculations, I accept Mr Southwell’s net land area of 11.3 ha as being the relevant applicable figure.
Ms Manners and Mr Southwell diverged in one other aspect concerning the utilisation of this sale. Whereas Mr Southwell added the total cost of sewerage and water headworks to the sale price to arrive at a total sale price figure, Ms Manners, who acknowledged that there were no headworks contributions and that these would need to be paid, made no adjustment to the purchase price. Her explanation was that she understood that contributions would be paid as each lot is developed and that since such payments would be of an ongoing nature with rates subject to change by successive Councils, no adjustment should be made. Her approach appears to have been to simply take into account the circumstances regarding these headworks in comparison with the subject land, an approach in the context of her valuation approach which lacks precision and clarity but is arguably not unreasonable, given that the sale is not directly relied upon as a basis for arriving at the valuation she contends for on the subject property. Insofar as Mr Southwell’s approach is concerned, I will come to the manner of application of the sale in due course, however, would say that given the evidence of Ms Manners concerning the state of play regarding headworks charges, his approach is a little rigid and tends to inflate the sale price beyond what might have been in the minds of the parties to the transaction at the date of sale, however, it has the advantage of making the consideration of the headworks aspect quite transparent.
Mr Southwell took his two sales and presented a summary as follows:
| Sale | Land Area | Sale Price | Analysed Land Value | No. of Sites | Rate/Site | Rate/m² of Land Area |
| 1. | 5.4608 ha | $2,450,000 | $548,000 | 182 | $3,011 | $11/m² based on area of 5.172 ha net area |
| 2. | 11.3 ha Net | $1,376,000 | $1,719,804 | 208 | $8,268 | $15.22/m² |
He calculated that the density of development on Sale 1 allows 284 m² per cabin, whilst the intended development on Sale 2 would require 543 m² per site. On Mr Southwell’s figures, the subject property has a total of 205 sites which analyses to a density of 162 m² per site. I should interpose here that elsewhere in his written valuation Mr Southwell says that the subject property has 205 sites, 11 cabins, 11 on-site vans and four beach-side units, totalling 231, whereas Ms Manners has a figure of 220 in total. If the 11 on-site vans occupy 11 of the mentioned 205 sites, then both valuers’ figures would agree. Nevertheless, Mr Southwell included the figure of 205 sites only in the analysis of his density area and in the application of his two sales.
He said that with respect to Sale 2 the low density resulted from the developers endeavouring to target the upper end of the mobile home market, an approach which appears to have failed with the property being currently marketed under forced circumstances. I take from this that development of the property has occurred since sale. He therefore proceeded to adjust the density of the Sale 2 development to a figure of 398 cabin sites, analysing to a figure of $4,321 per cabin. He then included additional headworks charges allowing a total of $1,653 each for the notional 398 sites, resulting in a total “price” of $2,033,894 or $5,110 per site. In summary then, Sale 1 has analysed to $3,011 per cabin and Sale 2 at an adjusted density, which Mr Southwell considers to be more viable, would analyse to $5,110 per site based on a notional total cost of $314,090 higher than the actual purchase price, including the headworks charges yet to be paid.
In his comparison between the two sales as adjusted, he had regard to the higher density on the subject caravan park (based on 205 not 220 sites) and the subject enterprise being a more traditional holiday park with income being derived from permanent holiday van sites, tent sites, cabins, on-site vans and small units. That is, he had regard to the enterprise currently conducted on the subject property though proceeding to value the property as if it were unimproved. I see this as a defect as one ought to proceed, where one can in cases such as this, on the footing that there are no improvements on the subject land. In the process he adopted, and taking into account the superior location of the subject property and its smaller size, he concluded that the value of the subject property would lie between $5,000 and $5,500 for 205 sites, that is, $1,025,000 or $1,127,500 in total. Were these figures adjusted to take into account 220 sites, they would have been $1,100,000 and $1,210,000 respectively.
Mr Southwell settled on a valuation of $1,100,000, but appears to have been not totally comfortable with the valuation evidence available to him. He found that he was forced to exclude the marina from his Sale 1 as part of the process of comparison, however, found that the income capacities resulting would be relatively consistent between the Sale 1 operation and the enterprise being carried out on the subject property. I must say that I am comfortable with the technique he used in his analysis of this sale as his adjustment was made simply to make the comparison with the subject property more valid. Sale 2 is a different matter. He wrote in his valuation, “Sale 2 is difficult to justify since rental rates peak at $65 per week on the Sunshine Coast however the owners of this park are endeavouring to obtain $85 per week.” It was apparently this concern which prompted him to adjust Sale 2 to reflect a density of sites more in line with what Mr Southwell thought ought to be the case in the market. In my view, it is not appropriate to deal with a basic sale in this manner. It is quite appropriate to take into account headworks charges (though the manner of doing this is open to question) as such charges would have been within the contemplation of the purchaser at the time of the transaction. As such, an adjustment of that type is an appropriate valuer’s device to render a sale suitable for comparison, however, it is not appropriate valuation practice to take a sale price that on the available evidence was arrived at on a certain basis and then to adjust that basis in a manner not apparently contemplated by those party to the transaction. I find support for the concern that I have expressed in the decision of Gobbo J in Waalt Homes Pty Ltd v. Road Construction Authority (1987) 64 LGRA 346 where His Honour said at 352-353:“As a matter of valuation principle, it seems proper to make adjustments which are necessary to bring the land into a state that characterises the sale values being employed. If one is seeking to arrive at the common starting point of a vacant land sale, more or less capable of being developed, then one should take into account any significant expense to bring the sale in question to that point. This is on the basis that the purchaser would have taken this likely expense into account in formulating his price. It is a recognition that there is no proper measure of comparison if the rate extracted from the other sales is on the basis of more or less cleared land ready for development, whereas the sale in question required both costly demolition and roadworks before any development could occur. There are some riders to this. In the first place, such adjustment should not be made if the possibility and nature of the expenditure, as opposed to its details, were unexpected and not known before the sale, for in that event the sale price was presumably not capable of being affected by these factors. Secondly, the adjustment should not be made where the works are properly part of the subsequent development itself. This would be so, for example, where the roadworks were not, as here, mandatory whatever the development, but were carried out to achieve a particular project. Thirdly, the adjustment should relate to the expectation as to costs anticipated at or before sale and not necessarily the actual costs subsequently incurred.”
This does not mean that Mr Southwell’s Sale 2 could be used as a basis at all but, rather, ought to be used on the footing that the purchaser paid a figure approximating$8,000 per site for land to be developed for a certain venture involving lower density and intended higher “rental” charges; the question remaining as to the utility of that transaction as an indicator of value for the subject property. I conclude that Mr Southwell’s Sale 2, which is Ms Manners’ Sale 1, would be of marginal assistance only in the task which confronted the valuers. This conclusion is supported by the submission of counsel for the appellant.
The next part of Mr Southwell’s valuation was to carry out a check valuation whereby he placed a value on the subject caravan park as a going concern, as improved at the relevant date. He capitalised the net income for the subject enterprise at 12.5%, a figure agreed to by Ms Manners, yielding an overall value of $3,100,000. He deducted from this a figure of $1,100,000, being the land value found earlier by him through the application of his sales evidence, then considered the resultant $2,000,000 figure for improvements. Making no allowance for goodwill or the value of on-site vans, cabins or beach-side units, Mr Southwell calculated the replacement cost of 205 sites at $9,756. No allowance was made for depreciation. There was no evidence as to when the sites were constructed, nor of any obsolescence considerations. He took the figure of $9,756 and compared that with Rawlinsons’ Cost Guide which indicated that in Brisbane a basic standard caravan park cost per site would be between $8,900 and $10,900. This would include electric power to all sites, office and retail facilities, laundromat, barbecue areas, small swimming-pool, roads and parking. One page only of Rawlinsons’ Cost Guide was tendered, there being no introductory comments, nor explanatory notes of the type which are generally found in such publications guiding the reader to the application of the included cost information.
The Land Appeal Court recently considered the use of the capitalisation method of valuation in determining an unimproved value in the case of G.E. Cominos & Co Pty Ltd v. Chief Executive, Department of Lands (unreported 15 August 1996) and said this:“While the capitalisation of net rentals is undoubtedly a recognised method of valuation to arrive at the value of an improved property, we have some doubts about its use to ascertain an unimproved value. It can only be relied upon when certain steps are taken.
First, it is necessary to arrive at the correct improved value. That involves three basic assumptions: that the present use of the land is its highest and best use, that the rent paid is market rent, and that the capitalisation rate is appropriate. These matters can only be ascertained by investigation and analysis of appropriate sales.
Second, the improvements must be valued precisely. That involves the problem discussed previously of arriving at an appropriate added value of improvements, particularly in a falling market. Commercial properties are usually highly developed, which increases the difficulty of accurately assessing the value of those improvements.”
Putting aside for the moment that Mr Southwell employed the capitalisation on the subject land as a check method only, it seems to me that the requirements referred to by the Land Appeal Court have not been satisfied. First, it is not clear that the use of the subject property in January 1995 represented the highest and best use of the land for caravan park purposes. For her part, Ms Manners expressed the view that a higher proportion of en suite cabins was the modern trend, though debate on this aspect was not taken to finality. Second, there was no attempt by Mr Southwell to value the improvements precisely, nor to include in the valuation any allowance for goodwill. Some of these allowances, if included, might have increased the resultant unimproved value figure whilst others may have reduced it, however, it is not suitable to rely upon the process involving presumed compensating errors. I hasten to say that Mr Southwell did not contend that this was the case, his view being that the check valuation approach was nothing more than an attempt to demonstrate that his assessment of land value by reference to the sales he had included was not out of line. My view of check valuations is that they ought to be carried out precisely, though in saying this, it should not be understood that I am expressing support for the employment of the capitalisation method in unimproved valuation cases. The epithet “check method” ought generally to be employed in circumstances where an independent valuation exercise is carried out in accordance with proper valuation practice, but where such method is not the primary method relied upon in the matter in question.
I turn now to consider Ms Manners’ other sales evidence. In addition to the common sale which she had included as Sale 1 in her valuation, she referred to two other sales. The second sale, the Crengate sale, was of an area of 2.531 ha zoned “Residential A” selling in March 1994 at $1,100,000, analysed by Ms Manners to an unimproved figure of $43 per m². She described the sale land as being a low-lying, regular shaped corner allotment, located approximately 400 metres west of the Golden Beach foreshore, being cleared and with significant drainage problems and requiring filling at the date of sale. She concluded that the subject land is superior to the sale because water, sewerage and electricity are connected to the subject which has an absolute waterfront position; whilst the sale land requires headworks contribution for water and sewerage and filling and drainage, though these matters are offset somewhat, in her view, by the smaller size of the sale compared with the subject land. The sale required filling and levelling costs of about $270,000, drainage of $150,000, street contributions of the order of $95,000 and park contribution of $57,000, none of which would be required on the subject land.
Under cross-examination, Ms Manners agreed that the sale land has a potential for a greater intensity of development than does the subject, however, she explained that this sale was more of a back-up to her remaining sale than a direct basis. In Mr Southwell’s view, this Crengate sale is of no use at all as a basis. He said that his partner had valued the sale land, once it was filled and other site works had been completed, and that his valuation of $1,160,000 indicated that the purchase price at $1,100,000 was out of line. He said that the intended use of the sale land by the purchaser of an integrated housing development was not able to be adequately compared with the use on the subject property as the sale use indicated development and on-selling, whilst the subject property’s use was for the purpose of investment and the receipt of ongoing income.
Ms Manners’ Sale 3 was of a property of 1.124 ha zoned “Residential E” which sold in June 1994 for $1,370,000. Ms Manners deducted $893,811 for the improvements, comprising a caravan park and holiday units, resulting in an unimproved figure of $476,189 or $42.50 per m². The sale land is a regular shaped inside parcel of land located behind the esplanade, about 100 metres west of the Golden Beach foreshore and about 2.5 km south of the Caloundra business district. In comparison with the subject land, Ms Manners said that the sale is a smaller site which does not enjoy a waterfront position or the views that are available from the subject property. The sale land does not have the advantage of exposure to a large volume of traffic such as that which passes the subject property, according to Ms Manners.
Whilst Ms Manners analysed the sale back to an unimproved value as a caravan park, Mr Southwell was of the view that the sale land had a ready potential for development under its “Residential E” zoning which allows for the construction of a multi-storey residential building. Whilst the land continues to operate as a caravan park and is one of a number of caravan parks owned by the purchaser who resides on the Gold Coast, it is Mr Southwell’s understanding that the purchaser acquired the site as a future redevelopment site with the caravan park remaining as a short-term holding proposition only. Mr Southwell knows the purchaser and has valued the land for financing purposes. The purchaser told him that he is buying cabins or mobile homes on the site as they become available from outgoing owners, so that he will not be presented with problems when he decides to proceed with the redevelopment. Mr Southwell said that when he had valued the sale land, he had valued it both as a caravan park and a redevelopment site and, to cater for the prospect of redevelopment of the land to a higher use than caravan park, he had adopted a 10% capitalisation rate in his caravan park valuation,, whereas he would have adopted a 14% to 15% rate if further development was not a live prospect. Mr Southwell did not disagree with the value of improvements assessed by Ms Manners.
Counsel for the appellant cross-examined Ms Manners concerning the question of development potential on her Sale 3 and she explained that whilst the purchase price of $1,370,000 may have included some allowance for such potential, the fact that she had deducted improvements on the basis of an operating caravan park meant that her analysed unimproved figure was based on the current usage as caravan park. I have some difficulty with this reasoning which I might demonstrate by reference to a, perhaps outlandish, example. If a valuer was confronted with a sale of land in the Central Business District of Brisbane, but with nothing more than a kiosk constructed on it, would an analysis which involved the deduction of the value of the kiosk mean that the resultant unimproved land value indicated the value of such land for kiosk purposes? I think not. Nevertheless, I think it significant that there is, in fact, some agreement between the valuers concerning the value of improvements on Sale 3 and that Mr Southwell did not seek to discount the value placed on these improvements by Ms Manners in any way to take into account the potential that the sale land has for higher use. I note also Ms Manners’ evidence that no application has been lodged with the local authority for development of the sale land.
I will consider this question of potential further. If a “nil” value is attributed to the improvements on the sale land, the purchase price calculates to an unimproved value of about $122 per m²: $120 was mentioned during the hearing. Ms Manners said that $120 per m² does not approach a redevelopment value and, in saying this, referred to another caravan park site which had sold at Golden Beach, further north of Sale 3, for about $400 per m². This sale fronts the esplanade, is zoned “Residential E” and had been developed in a similar manner to Sale 3 at the time of sale.
If I consider Mr Southwell’s suggestion that he would have employed a capitalisation rate of 14% or 15% had he valued Sale 3 for caravan park purposes only, and if I adopt a rate of 14.5%, on my calculation the value of the sale land as a caravan park without further potential would have been about $945,000. I should mention that in arriving at this figure I have assumed, possibly incorrectly, that the net profit of the caravan park is about $137,000 per annum, having arrived at this figure on the assumption that Mr Southwell’s 10% capitalisation rate supported the actual sale price. The difference between the resultant $945,000 and the actual purchase price of $1,370,000 is $425,000. If I am to understand Mr. Southwell’s reasoning correctly, it seems to me that he would be saying that the purchaser would on such an analysis have paid an extra $425,000 for the potential for redevelopment, that is about $37.80 per m². If I deduct this from the $42.50 per m² unimproved, as analysed by Ms Manners and accepted by Mr Southwell, then the resultant unimproved value ostensibly for caravan park purposes is clearly wrong, having regard both to Mr Southwell’s Sale 1 and to his conclusion that the unimproved value on the subject land ought to be $33.13 per m².
There is little more that I can do with the evidence adduced by Mr Southwell with respect to Ms Manners’ third sale. I accept that he was told by the purchaser that redevelopment on the land was intended, however, the evidence placed before me does not support a suggestion that the immediacy of such redevelopment had a substantial effect on the sale price of the property. Having said this, it seems to me that the appellant has sufficiently demonstrated that there is a potential in the sale land which is not available to the subject, the remaining difficulty that I have is placing a quantum on that potential. If I refer to the Crengate sale, I do not gain a great deal of assistance, for it seems to me that, on the evidence, that sale was a high sale and even if I put that aside, there is the difficulty of comparing lands which are differently zoned. Local authority zoning does not, of course, make the highest and best use of land, however, the evidence is clear in this case that the Crengate sale land has the prospect of a higher use than does the subject property. Nevertheless, limited reference may be made to this sale as support for the level of values indicated by the analysis of Ms Manners’ Sale 3.
Let me provide a brief summary and, in so doing, observe that neither valuer was, in this case, presented with market evidence which might easily be compared with the subject land. I have rejected the manner of analysis of Mr Southwell’s Sale 2 (Ms Manners’ Sale 1) and have found the transaction of quite limited assistance. Whilst his Sale 1 should not be rejected, it is apparent that its application to the subject land is a matter of difficulty. That is, it is difficult to arrive at a conclusion that a figure of $33.13 per m² is indicated by reference to a sale showing $10.59 per m². I do not accept Mr Southwell’s check valuation as a reliable guide.
Ms Manners’ Sale 3 is clearly the best evidence we have, given the agreement between the valuers on the value of improvements included in the sale, though the question of potential of the sale land for a higher use is a matter of some difficulty for Ms Manners. I think that some allowance must be made for this factor in the sale, though on my appreciation of the evidence, this allowance need not be at a level that makes the sale a poor comparison with the subject. Whilst some allowance should be made for the smaller size of the sale compared with the subject, it is the subject’s location and outlook that makes it superior for caravan park purposes. When I allow for the development potential in the sale land, I consider that a value of something less than $40 per m² should be placed on the usable portion of the subject land.
I allow the appeal and determine the value of the subject land at One Million Three Hundred Thousand Dollars ($1,300,000).
RP SCOTT
MEMBER OF THE LAND COURT
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