Galli Developments (Qld) Pty Ltd v Chief Executive, Department of Natural Resources
[1997] QLC 73
•23 May 1997
LAND COURT BRISBANE 23 MAY 1997
[1997] QLC 73
In the matter of appeals against valuations.
ValuationRollNo.: 5343/14000 LocalGovernment: Gold Coast DatesofValuation: 30 June 1993 (V95-05) 31 March 1992 (V95-06) 1 January 1995 (AV95-306)
Galli Developments (Qld) Pty Ltd v.
Chief Executive, Department of Natural Resources (formerly Department of Lands)
(Hearing at Coolangatta) D E C I S I O N
Galli Developments (Qld) Pty Ltd (Galli) owns land which has, for a number of years, been in the process of being subdivided for residential purposes, there being three estate names employed for various parts of the land, namely Arundel Park, Arundel Crest and Arundel Gardens. The land is situated at the western end of Napper Road, Parkwood, and is well located with good access to public and private schools, major shopping centres at Southport and Ashmore and is approximately 12 km from the Gold Coast Mail Centre. The residential subdivision carried out on the subject land comprises a mixture of single residential, duplex and townhouse lots, all of which are commonly referred to as “dry” lots; that is, they do not front a manmade canal.
The subject land was valued by the Chief Executive pursuant to the provisions of the Valuation of Land Act 1944 (the Act) as at relevant dates of 31 March 1992, 30 June 1993 and 1 January 1995. The Chief Executive placed a valuation of $4,300,000 on the subject land as at both the 1992 and 1993 relevant dates (referred to as the 1992-1993 matters hereinafter) and a figure of $4,100,000 as at the 1995 relevant date. The lower figure for 1995 is a reflection of the reduced area requiring to be valued, not a reduction in the pro-rata value of the subject land.
The land owner objected against these valuations and, having failed to convince the Chief Executive to reduce the valuations, appealed to this Court citing the following grounds of appeal for the 1992-1993 valuations:
“ 1. the valuation is wrong;
2.the valuation is not based on comparable sales;
3.the relativity is incorrect;
4.the particular dis-abilities of the subject land have not been given proper consideration;
5.the unusual & high residential costs of developing the land have not been
given proper consideration;
6.so far as Section 25(1) application is concerned - the quantum is wrong.”
The grounds of appeal for the 1995 valuation were drawn in similar terms, except that ground 6 was not included. By consent of the parties the matters were heard together.
By a letter dated 1 July 1996, the Chief Executive informed the appellant company that, at the hearing of these matters, evidence would be led to values of $6,500,000 for the 1992-1993 matters and $7,900,000 for the 1995 matter. A further letter was sent from the Chief Executive to the appellant dated 12 July 1996 in which the appellant was advised that a figure of
$8,600,000 would be sought for the 1992-1993 valuations and $9,900,000 for the 1995 valuation. In contrast with these figures, the appellant stated in the appeal document that for the 1992-1993 valuations a figure of $3,400,000 would be sought, whilst an amount of $2,600,000 was the amount which the appellant said should apply to the 1995 valuation. At the outset of the hearing, the appellant led evidence to a figure of $2,555,000 for the 1992-93 valuations and
$2,476,000 for the 1995 valuation.
The bulk of the evidence was taken in Coolangatta on 16 and 17 July 1995, however, there was a disagreement between the parties as to the area to be valued at each relevant date. It will be understood that, given that the land was in the process of subdivision, the area to be valued was in the process of being reduced as lots were subdivided and sold. The parties attempted, but were unable to agree on the areas to be valued and at the conclusion of the Coolangatta hearing indicated to the Court that they were close to agreement and would forward a letter indicating the agreed areas at each relevant date. In due course the matters were listed for mention on 30 January 1997 when the parties advised on the areas agreed to, however, I asked that each side consider any adjustment that might need to be made to their calculations and final valuations before the evidence would be closed. On 20 February 1997 the parties provided a joint letter advising that there was agreement that the area to be valued as at each of the 1992- 1993 relevant dates was 92.074 ha, whilst the area for the 1995 valuation was 75.6826 ha.
For the purposes of the 1992-1993 valuations, the parties agree that the total area of the “subdivided allotments”, is 9.2665 ha. The “balance land” is 76.7089 ha, whilst 6.095 ha is described as “dedicated parklands (as at 30.6.94)”, which I take to mean that such lands have been set aside for parklands, however, have yet to be surrendered. For the 1995 valuation, the area of “subdivided allotments” is 10.4679 ha, that of the “balance land” is 55.0671 ha and “dedicated parklands (as at 30.6.95)” is 9.5894 ha. In addition, an area of 0.5582 ha is described as “D.O.T. strip” which I understand to be a buffer strip to be surrendered as part of a buffer between the subject land and Smith Street. Reworked calculations prepared by the respective valuers for the parties were forwarded with the letter of 20 February and, whilst these reflected some changes in calculations and resultant final figures, the parties elected to stay with the valuations contended for at the commencement of the hearing. For the purpose of simplicity, I will be proceeding on the basis of and referring to the calculations presented with the letter.
Before moving to the substantive matters of dispute between the parties, I will dispose of
one matter. Material was tendered from the appellant which was obtained through the processes available under the Freedom of Information Act 1992, such material showing something of the valuation history of the subject land in documents called “pilot cards”. I have studied this material, but find it of no assistance to me in the exercise of my jurisdiction in these appeals.
An important reason for the Chief Executive having changed the valuation figures from those originally notified to the appellant company, was the view taken by the respondent of the history of the ownership and development of the subject land. To appreciate this point, it is useful to first of all set out s.25 of the Valuation of Land Act:
“(1) Notwithstanding any other provision of this Act except subsection (3),
where an owner subdivides land into 6 or more parts the parts that continue to be owned by the owner (being not less than 6) shall be deemed to form a single parcel and shall be valued as such pursuant to this Act (notwithstanding that the same may not adjoin) and in valuing that parcel any enhancement in the value thereof by reason of works carried out by that owner on the land so subdivided shall be disregarded.
(2) However, the unimproved value of that parcel shall be not less than 5 times the average unimproved value of the parts continuing to be so owned and for the purpose of determining the unimproved value of each such part it shall be taken to be a part to which this section does not apply.
(3)Nothing in subsection (1) shall affect the operation of section 17.”
These requirements caught the attention of the respondent and, in turn, gave rise to the increased valuations; but before discussing this point, I should supply some terminology which should make the discussion of s.25 a little clearer than it might otherwise be.
In short, s.25(1) provides that where land is subdivided into six or more parts, the valuation method is not based on each part being valued as a separate parcel but, subject to certain complexities I deal with later, is to be dealt with as if the separate parts constituted what I will call a “notional single parcel”. The result is that a lower value emerges for the area of land to be valued.
For the purpose of my discussion, I will refer to that land which comprises a combination of any land subdivided and disposed of or surrendered together with the subject land at each relevant date as the “original parcel”. The “original parcel” comprised land on the southern side of Napper Road which has been in the process of subdivision since its acquisition. This was added to by the purchase of 27 ha of land on the northern side of Napper Road from JC and SW O’Brien in October 1989 and I will refer to this as the “O’Brien land”. None of the “O’Brien land” was subdivided at any of the relevant dates. I will refer to allotments produced by the process of subdivision for the purpose of sale as “subdivided allotments”, or similar. That part of the land which remains following the production of “subdivided allotments” will be referred to as the “balance land” and will include the “O’Brien land” unless the context suggests otherwise but will not generally include “public land”. Land designated to become parks, roads or buffer areas or such like will be referred to as “public land”. The term “initial parcel” will be used to
describe that part of the “original parcel” which represents a combination of the “subdivided allotments” and the land dedicated as “public land” for the purpose of producing those “subdivided allotments”. Thus, if we have 10 “subdivided allotments” and “public land” produced out of 1 ha, the “initial parcel” comprises the hectare of land. The term “initial parcel” will be useful when I discuss the treatment of a part of the “original parcel” which has been developed as a subdivisional estate which includes “subdivided allotments” and “public land”.
In the instant case, the “original parcel” of land, was owned by Vanglow Pty Ltd (Vanglow). This company subdivided parts of the “original parcel” and sold various allotments produced by the subdivision, however, at the 1992-1993 relevant dates a total of 5.2126 ha of these “subdivided allotments” (69 allotments in all) remained unsold and at the 1995 relevant date 2.1388 ha (29 allotments) remained. The evidence showed that the company called “Vanglow Pty Ltd” was no longer the owner of the remaining “subdivided allotments” at each of the 1993 and 1995 relevant dates because on 14 May 1993 Vanglow had changed its name to Galli Developments Pty Ltd. Mr Gregory Patrick Crowley, a registered valuer employed by the Department of Natural Resources, which includes the former Department of Lands, gave evidence on behalf of the respondent and he placed some significance on this change of name. Mr Crowley was not the valuer who carried out the original valuations for the Chief Executive and when he came to prepare the valuation evidence for the Court hearing, he learnt of the history of the subdivision of the land which I have outlined above. He referred to s.25 of the Act and formed the view that since it was not the current owner at each relevant date, that is Galli, which had subdivided the land to be valued, the appellant could not avail itself of the method of valuation provided for in s.25. It will be noted that the wording of s.25 requires that the subdivision to be carried out by the “owner” and for the remaining subdivided “parts” to continue in the ownership of that owner, if the “notional single parcel” basis of valuation is to be employed. Mr Crowley therefore valued the “subdivided allotments” not as part of a “notional single parcel” but as individual lots, then deducted an allowance of 30% “for bulk” producing a figure of $2,800,000 for the 1992-1993 valuations and $1,350,000 for the 1995 valuation; the balance of the Chief Executive’s valuation figures being made up by the value placed on the balance of the land as at each date.
It is quite clear that a company is capable of being the “owner” of land for the purposes of the Valuation of Land Act.
Section 7 of the Act provides a meaning of “owner” much of which is not relevant for present purposes, however, s.7(1) provides:
“7.(1) An ‘owner’ of land is the person who -
(a)is entitled to receive the rent for the land; or
(b)would be entitled to receive the rent for the land if it were leased at a rack-rent.”
Section 2 provides a definition of “person” which is inconclusive for present purposes, however, s.36 of the Acts Interpretation Act 1954 provides: “In an Act - ‘person’ includes an
individual and a corporation”. Section 2(1) of the Acts Interpretation Act provides that that Act “applies to all Acts”, therefore the term “person” in s.7(1) of the Valuation of Land Act includes a corporation and, it follows, includes Vanglow Pty Ltd or Galli Developments (Qld) Pty Ltd.
The question as to whether the change of name has any effect on the entity, which is the owner of the land for the purposes of s.25 of the Valuation of Land Act, is answered simply by reference to s.382 of the Corporations Law, in particular to ss.(4):
“ (1) A company may, by special resolution and with the approval of the
Commission, change its name.
(2) The Commission must not approve a change of name of a company under subsection (1) unless the proposed new name is available to the company within the meaning of section 367.
(3) If the name of a company is (whether through inadvertence or otherwise and whether originally or by change of name) a name that is not available to the company:
(a) the company may, by special resolution, change its name to a name that is available to the company; and
(b) if the Commission so directs, the company shall so change its name within 6 weeks after the date of the direction or within such longer period as the Commission allows, unless the Minister, by writing, annuls the direction.
(4) A change of name by a company under this section does not:
(a) create a new legal entity;
(b) prejudice or affect the identity of the body corporate constituted by the company or its continuity as a body corporate;
(c) affect the property, or the rights or obligations, of the company; or
(d) render defective any legal proceedings by or against the company;
and any legal proceedings that could have been continued or begun by or against the company by its former name may be continued or begun by or against it by its new name.”
It follows from an application of this provision that the “owner”, Vanglow, is the same entity as Galli and that the lands subdivided by Vanglow to the extent that s.25 of the Valuation of Land Act otherwise applies, are to be valued as if they continue to be owned by the same appellant company at each relevant date.
I note in passing that, given the date of the name change, the owner of the land was and continued to be Vanglow at the date of the 1992 valuation, that is, 31 March 1992.
The conclusion that I have drawn is not affected by the decision of the Court in Mooloolaba Yacht Club Limited v. The Valuer-General (unreported 17 October 1986) which was referred to by Mr Grennan, the advocate for the Chief Executive. In that case, the learned President had to consider the question of two related companies and found that he could not, for
the purposes of the Valuation of Land Act, pierce the corporate veil. The facts of the instant case are quite different as I am not presented with two separate legal entities, but with the same entity with a name change.
Mr Crowley provided me with adjustments to his valuation figures which would apply were I to find against the Chief Executive on this question of company name change. The new figures are: -
1992-1993 $6,600,000
1995 $9,000,000
I will now deal with the method of valuation authorised by s.25 of the Valuation of Land Act in cases such as this. Mr Bryan Kelaher, a registered valuer in private practice, gave valuation evidence in support of the appellant’s case. Shorn of its refinements, Mr Kelaher’s method was to refer to in globo sales and in comparison with these, to attribute a value to the “subdivided allotments” as a “notional single parcel” to which he added an amount for headworks paid to the local authority. A value for the “balance land” and “public land” was added to give a total value.
Mr Crowley’s method of valuation of the “subdivided allotments” may be contrasted with the Kelaher method. Mr Crowley commenced in a manner similar to that of Mr Kelaher in that he placed a value on the subdivided allotments as a “notional single parcel” and as if it were in globo land, and added to that an amount for headworks. At this point the methods diverge as Mr Crowley then divided the resultant figure by a factor of 0.7 to cater for the fact that although the subdivided land is smaller in area than the “initial parcel” by virtue of the loss of land as “public land”, on his view it has not reduced in value from its worth before subdivision. I will now call this aspect of his valuation the “factor method”. The rationale put simply is that if prior to subdivision the “initial parcel” was worth, say, $1,000,000, the value of the “notional single parcel” should be no less and should be unaffected by the fact that land has been lost as “public land” for there is, following subdivision, no need to give up any further land as “public land”. For Mr Kelaher’s part, he said that “he would not pay one extra dollar for the land you’ve got to surrender to the Crown”. He employed such an approach in Tebuk Pty Ltd v. Chief Executive, Department of Lands (unreported 12 August 1994) where the learned Member adopted an approach similar in most respects to that described by Mr Crowley:
“ The advocate for the Department argued that it would be taking the intended benefit too far, unless the ‘destruction’ of part of the raw land was considered. To illustrate the Department's contention he gave the example of 10 hectares of in globo land worth $1,000,000 increasing to $1,400,000 when headworks to the value of $400,000 were paid prior to subdivision. If the land was subdivided into 7 hectares of developed land it would be unreasonable for the developer to expect a valuation under section 11D to be less than $1,400,000 or $200,000 per hectare for the net 7 hectares remaining.
In this example, the basis suggested by Mr Kelaher would result in a valuation
of 7 hectares at $100,000 plus actual headworks charges of $400,000 totalling
$1,100,000. The Department's policy would result in a valuation of $1,400,000.
I do not agree that the Department's approach is wrong or in conflict with the legislation. The enhancement from the works is disregarded. The enhancement in value results from the in globo land becoming a net area, capable of residential subdivision without loss of land for infrastructure such as roadworks. In globo land if peculiarly favoured by such a situation would clearly be more valuable than in globo land incapable of providing the same net yield, although otherwise comparable.” (s.11D is now s.25)
Mr Cronin, for the appellant, was well aware of the decision in Tebuk and submitted that I should find differently, in particular that I should find that s.25 authorises the valuation method employed by Mr Kelaher. Given this submission, a survey of the decided cases may be useful, however, before doing so I should mention that Mr Kelaher included in his valuation document calculations using the “factor method”, using his own figures. It was made quite clear to me that this method was considered an unacceptable option by Mr Kelaher, though I assume he put forward his own calculations in case I rejected his method of valuation.
The first case I located in which s.25 was considered is Riverside Drive Estate Pty Ltd v. Valuer-General (1989) 12 QLCR 165. In that case the Court was presented by the Valuer- General with a valuation based on a “notional single parcel”, the argument being concerned with whether headworks and costs of local authority approval should be added to the in globo value placed on this notional parcel. The Valuer-General had not in Riverside used the “factor method” employed in the present case by Mr Crowley. The learned Member decided in favour of the Valuer-General’s method concerning the addition of headworks and approval costs and that approach has been employed consistently since then, as far as I can discover, though the valuing authority has not always included approval costs in its valuation.
In Kern Land Pty Ltd v. The Valuer-General (unreported 29 April 1993) the Valuer- General presented an approach similar to that approved of in Riverside, whilst the appellant raised, once again, the question of whether it was appropriate to add to the in globo value of the “notional single parcel” headworks already paid. The Court followed the Riverside decision. Again, the issue of valuing the “notional single parcel” at a higher rate than its in globo value (plus headworks), given the loss of land for public purposes, was not raised.
The issue of whether the “notional single parcel” should have a value higher than similar quality in globo land arose in Flagstone Creek Pty Ltd v. Chief Executive, Department of Lands (unreported 16 August 1996). In that case the valuer for the Chief Executive valued the “subdivided allotments” at an in globo valuation rate, then divided that figure by a factor of 0.9 “which he said took into account the area lost to road”. In respect of this method, the learned President said this:
“ I do not think the approach of either valuer is correct. Mr Wiemann is clearly wrong in his approach. Mr Crothers is more correct in endeavouring to value the subdivided lands as if they were still in globo, but has felt compelled to take into
account the area lost to roads. There is nothing to justify such approach.
The section requires that land which is in subdivision (or partially in subdivision) and which continues to be owned by the owner who has subdivided the land, must be valued as if it was a single parcel, rather than the sum of the valuations of each subdivided lot. Once a plan of subdivision is registered, then the area dedicated to roads is lost to the original subdivider. There is no reason for Mr Crothers to adopt the factor approach that he has. It must be valued as part of the in globo land and the fact that it consists of a number of surveyed lots ignored.”
Further on, these words appear:
“ Therefore, in the absence of evidence to the contrary, I accept that the area of 25.4793 ha is the area of the land in subdivision, excluding the area dedicated to roads. The subdivided area should be valued as if it was part of the in globo area of Parcel A, but including the added value of the headworks charges as calculated by Mr Crothers.”
It appears that the Chief Executive presented its argument on this point on the basis that it was appropriate to value the area lost to roads, as if that area were part of the “subdivided allotments”. That puts the argument somewhat differently from the way that Mr Crowley described his approach in the case before me. I should also say that in Flagstone the question of valuation methodology was not central to the question of the value that ought to apply as the value placed on that subdivided area by the appellant was higher than that applied by the Chief Executive.
The critical question that I have to address in considering this issue is the meaning of the words in s.25(1), “... and in valuing that parcel any enhancement in the value by reason of works carried out by that owner on the land so subdivided shall be disregarded.”. The term “works” is not defined in the Act but would, in the context of s.25, refer to such things as road construction, kerbing and channelling, lighting, water and sewerage piping, clearing, levelling, filling and drainage and such like.
In considering the meaning of the words in s.25(1) that I have isolated, the first question which arises is what land do the words “the land so subdivided” refer to? Section 25(1) uses the phrase “where an owner subdivides land” as an apparent reference to a parcel which is subdivided, then refers to “the land so subdivided” as if reference is being made to the same piece of land, though somewhat different in form. Assuming this to be a correct understanding, the enhancement to be disregarded is with respect to works carried out on both the allotments produced by the process of subdivision and on the land which becomes “public land”. The process of subdivision involves the creation of separate lots (or “parts” using the language of s.25), usually the surrender of land for roads, parks and buffer areas (“public land”) and the construction of works on both the “subdivided allotments” and on the “public land”. It will often be the case that in a large subdivision project there will be “subdivided allotments” which have
been sold and those produced for sale, but still held by the developer; “balance land”; land improved for and surrendered as “public land”; and lands improved as “public land” but not yet surrendered. I will group these into two components: the “subdivided allotments” which have not yet been sold, the “balance land” and the lands improved as “public land”, but not yet surrendered as one component; and “subdivided allotments” which have been sold together with lands surrendered as “public land” as the other. It will be useful if I consider each of these components of the land separately, starting with the component which contains the sold “subdivided allotments” and surrendered “public land”.
Once land has been surrendered or sold and transferred, it is no longer in the ownership of the original owner and therefore would not fall to be valued pursuant to the provisions of the Valuation of Land Act, as it is not land held by the owner for the purposes of the Act. Quite clearly then, the value of the works carried out on such land would not be calculated as part of the valuation of any parcel of land valued for the purposes of the Act. It has been held, however, that the presence of such works and, indeed, other improvements external to the land to be valued should not be put out of the valuer’s mind in the process of valuation. This issue was considered by the Privy Council in Tetzner v. Colonial Sugar Refining Co Ltd [1958] AC 50 and their Lordships expressed themselves in this way:
“What in their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation. The land will then be valued as land void of buildings but situated in the community with the amenities and facilities which have grown up around it. Their Lordships see no objection in the process of valuation to regarding the land as land situated in a sugar town. The valuer need not shut his eyes to the fact that there is a sugar manufacturing industry in existence, though he is not entitled to value the sugar mill and its accessories situated on the subject land. Their Lordships find themselves in agreement with an illustration given by the learned magistrate in his judgment. ‘If the undeveloped capital value of a city power house is being assessed one does not assume a city without electricity and all the consequences of the lack of such an amenity.’”
Is it the case then that s.25 is concerned with modifying the principle expressed in Tetzner? I will return to this point later. Let me first of all consider the component comprising the land retained by the developer in the form of “subdivided allotments”, “balance land” and land to become “public land”. All of this land falls to be valued under the Act.
Section 25, as with all statutory provisions, must not be read in isolation, but must be understood as part of the statute, as a whole (The Metropolitan Gas Co v. The Federated Gas Employees’ Industrial Union (1924) 35 CLR 449). The Valuation of Land Act requires that all valuations be carried out on an unimproved basis (s.13) and improvements are defined by s.6(1) of the Act to include “visible or invisible” improvements, therefore would extend to such things as clearing, levelling, drainage and piping for water and sewerage usually found on allotments
produced as a result of the subdivision process and on land to become “public land”. This view is supported by the oft-cited words of Griffith CJ in Morrison v. Federal Commissioner of Land Tax (1914) 17 CLR 498 at 503:
“Any operation of man on land which has the effect of enhancing its value comes within the definition of ‘improvement’.”
It has been made abundantly clear in the authorities that land to be valued as unimproved must be treated as if any improvements on the land, had never been made. Toohey’s Ltd v. Valuer- General (1925) AC 439 has often been cited as an authority expressing this proposition with words which apply to the then New South Wales legislation and equally to that in Queensland.
At page 443 the Privy Council said:
“Now, what he (that is, the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they had never existed.”
Having regard to the law that I have outlined above, and putting s.25 aside briefly, I should proceed as if the improvements were not there and, in fact, had never been there and to consider the value of this component of the land on that basis. It follows that if improvements are to be disregarded, then so must any enhancement that would flow from such improvements. I must, however, consider the improved environment in which the subject land is located, both in terms of the advantages and disadvantages of that environment. (Tetzner)
It is the case then that enhancement attributable to the works carried out on the “subdivided allotments” would be disregarded were s.25 not enacted. Similarly, it would be the case that where works have been carried out on land which is intended to be, but which is not yet, surrendered as “public land”, such works are presumed to not exist. It follows then that unless I am to treat the words in that part of s.25 which I have said are critical to an understanding of the section as mere surplusage, and I cannot do this (Commonwealth v. Baume (1905) 2 CLR 405) that Parliament must have intended to refer to something other than works carried out on the “subdivided allotments”, “balance land”, and on land intended to become “public land”.
Sydney Municipal Council v. Commonwealth (1904) 1 CLR 208 authorises reference to Hansard “for the purpose of seeing what was the subject matter of discussion, what was the evil to be remedied, and so forth”: (per Griffith CJ at 213-214). This is reflected in s.14B of the Acts Interpretation Act 1954 which includes in ss.(3)(f) a Second Reading Speech as appropriate extrinsic material. In his Second Reading Speech on 7 March 1995 the Honourable MJ Tenni, Minister for Environment, Valuation and Administrative Services said in introducing the amendment to the Valuation of Land Act which enacted the now s.25 together with other
provisions:
“The principal Act is also amended in relation to the method of valuing larger subdivided estates which remain in the hands of the original subdivider.
Under the present Act, from the time of registration of a plan of subdivision, each allotment is valued separately and the total value of the allotments discounted for multiple holding. The developer is therefore required to pay rates upon the increase in value which follows his own expenditure of development works, thus increasing his holding charges.
The provisions of the Bill will require the Valuer-General to value estates of 6 or more allotments as a single parcel, provided they continue to be owned by the original developer. Any enhancement in value by reason of the development works carried out by the developer on the subdivided land will be excluded from that valuation." (Hansard p.3849)
There is nothing in what the Minister said which illuminates further the words contained in s.25, excepting that it is quite clear that the Minister was particularly concerned with the expenditure by a developer on “development works” and the possible impact of such works on the value of the subdivided land.
It will be of value if I now focus more closely on the works carried out on the land which has been surrendered as “public land” remembering that it is part of the “land so subdivided”. Roads, sewerage and water pipes, earthworks, and, perhaps beautification in park areas might be included in such works. The Tetzner rule may be summarised as saying that in valuing land on an unimproved basis that, whilst the land to be valued must be viewed as unimproved, the facilities and improvements found in the vicinity and environment of the land are to be taken into account in the process of valuation. In other words, the land is to be valued in the environment that it is found and any enhancement or diminution in value by virtue of the features of that environment are to be taken into account. Now it appears to me that, by the process of elimination that I have undertaken in my analysis of s.25, the words “and in valuing that parcel any enhancement in the value by reason of works carried out by that owner on the land so subdivided shall be disregarded”, can only be taken to refer to any enhancement in the value of the “notional single parcel” by virtue of works carried out on the land which has been surrendered as “public land”.
At its simplest then, the section is referring to the roads, water and sewerage systems and such like constructed on the surrendered lands and requires that the enhancement in value of the “notional single parcel” by virtue of the presence of those works be disregarded. I say “at its simplest” because a simple application may result in a substantial devaluation of land by virtue of the owner carrying out works. For example, at the outset an in globo parcel of land may have dedicated and constructed access to its boundary and ready access to sewerage, water and electricity connections. As such, the value of the land would take into account the presence of these facilities. Assume for the moment that development of the land proceeds and the facilities
are extended into the land for the purposes of subdividing it and, in addition, roads are constructed with kerbing, channelling and lighting and land is set aside and improved as parkland. For the sake of my example, allotments are created and some are sold off, “public land” is surrendered and the land now to be valued has a boundary some distance inside the original boundary. Between the new boundary and the old boundary lies land not now in the ownership of the land developer. The land still held by the developer falls to be valued pursuant to the provisions of s.25. In adherence to that section, a “notional single parcel” is envisaged but the parcel is now not connected to the services and facilities which originally came to the boundary, but is serviced by the extension of these facilities to the “notional single parcel” by the development works of the landholder. On a simple understanding of s.25, there would be a requirement that the enhancement in value from the presence of such development works would be disregarded but in so doing, the land to be valued would be treated as having no access and no capacity to directly connect with services. The land would, in effect, be devalued. This does not appear to have been the intention expressed by the Minister in his Second Reading Speech and would be an unduly narrow interpretation of the words in s.25. Some of the works may enhance the value of the “notional single parcel” and by this I mean would increase its value over what it would otherwise have been, had no subdivision and associated works taken place. Some works will not enhance such value, however, but will simply have the effect of maintaining the intrinsic value of the land by preserving its pre-existing attributes of connection with access and services.
My conclusion, in giving meaning to the words of s.25, is that in valuing the “notional single parcel”, one should assume that access and services are available to the parcel in the same way that they were available to the “original parcel”; but that any enhancement in the value of the “notional single parcel” by virtue of the owner having carried out works on surrendered land such as beautification on parklands, that is works which have the effect of enhancing the value of the land beyond the value to be found by having regard to the facilities available to the “initial parcel”, should be disregarded. In all other respects, the “notional single parcel” is to be valued in the improved environment in which it is to be found (Tetzner’s case), but as if it was unimproved. This involves the notional removal of the improvements constructed and made upon the land to be valued, but s.25 does not require that the legal incidents of the land should be disregarded. Thus, it is appropriate to have regard, for example, to the Local Authority zoning of the land and any advantages it gives to the land.
Given that in the process of my analysis I have dealt with the land to be valued as if it existed in different parts, it may be useful if I point out that when an “initial parcel” of land is subdivided to produce “subdivided allotments” and “balance land”, the “notional single parcel” required by s.25 comprises a parcel made up of the “subdivided allotments”, together with the “balance land” and any land designated, but not yet surrendered, as “public land”. The definition of “subdivided” provided by s.8 of the Act indicates this. Nevertheless, it will usually be convenient in valuing the “notional single parcel” to value the component parts separately, but on the basis that they are part of the whole.
One of the advantages the “notional single parcel” of land in the instant case has is that it is appropriately zoned for development and has been approved by the local authority for subdivision. The approval costs and some, at least, of the headworks charges have been paid. As will be seen from the cases that I referred to above, the Members of this Court have been consistent in holding or proceeding on the basis that the inclusion of such headworks and development approval charges in the land value is appropriate, and the parties in the matters before me adopted this approach. I see no difference in principle between the inclusion of such charges and in the treatment of land surrendered as “public land”. A purchaser of land would, as was explained in Tebuk, take into account the advantage that the subject land has in that that part of the “notional single parcel” made up of the “subdivided allotments” is not subject to a requirement for any part of the land to be surrendered as “public land”. All of this land is capable of producing saleable allotments.
If I turn briefly to Mr Kelaher’s valuation, I note that he has, for land with normal development costs, applied $35,000 per ha (to which he has added headworks charges) to the land comprising “subdivided allotments” and the same figure per ha to “balance land” which would also have normal costs of development. This must surely be wrong. The valuation task is to value, on the one hand, raw land from which land is yet to be surrendered for park and road purposes and a parcel from which no land needs to be surrendered. The latter parcel must have a higher value. This is recognised by Mr Kelaher in the addition of headworks charges and must, similarly, be recognised by taking into account that there is no requirement for land to be surrendered out of “subdivided allotments” component of the “notional single parcel”. The question which I have to consider, then, is how one should value the “notional single parcel” so that this feature is taken into account.
Mr Crowley says that the valuation method should be one where a value must be first struck for the “subdivided allotments” portion as if it were in globo land, then that value should be increased by a factor which represents the yield of allotments from the “original parcel”. In his case, as I wrote earlier, he divided the raw land value by a factor of 0.7 on the basis that 0.3 of the parent parcel had been lost as “public land”. Whilst a range of methods of valuation are probably available, they would all encounter the same difficulty and that is that they would be attempting to value a parcel of land whose separate existence and some of whose characteristics are the product of the almost esoteric requirements of s.25. The “factor” approach has the advantage of simplicity, but proceeds on the assumption that the land which need not be surrendered is equivalent in value to the land found in the “subdivided allotments”. The hypothetical purchaser of the “notional single parcel” would not, in my view, approach the purchase on the basis that he need not surrender the land actually surrendered, but he would approach his consideration of price on the basis that he need not surrender any land at all in respect of the “subdivided allotments”. Whether the surrendered land was of a higher or lower quality than that found in the “subdivided allotments”, would have no influence on the price he would be willing to pay except to the extent that the surrendered land may, because of its
attribute as “public land”, have an effect on the value of the “subdivided allotments”. Thus, good quality “public land” will, for example, impact positively on the value of “subdivided allotments”. Be that as it may, all I have in evidence is an approach which employs the “factor method” as suggested by Mr Crowley and the same method is included as an unacceptable option in Mr Kelaher’s evidence. I will, therefore, employ this method in determining the final valuations. Before proceeding, however, I observe that there are some further important points to be made about employment of the “factor method”.
The first is to note that the method should apply only to that part of the “notional single parcel” which comprises “subdivided allotments” to the extent that this is appropriate. Thus, it should not apply to that part of the “notional single parcel” which is “balance land” or which is designated, but not yet surrendered, as “public land”. In addition, it should not apply to the “subdivided allotments” to the extent that lands to be surrendered as “public land” is still in the ownership of the land developer. It would be an error in logic to, for example, apply a factor of
0.7 to the in globo value of the “subdivided allotments” and to add to this figure the in globo value of 0.3 ha of land proposed for surrender as “public land”.
The second point is to note the difficulty in adopting an appropriate factor and in globo value. Assume for the moment that the hypothetical prudent purchaser is in the process of deciding a price to offer for “subdivided allotments” in two separate parcels of land. In parcel A he is aware that the yield of allotments from the raw land was seven lots per hectare and in parcel B the yield was five lots per hectare. Viewed as in globo land, parcel A is worth $50,000 per hectare and parcel B is worth $40,000 per hectare. A simple application of the “factor method” would produce these calculations:
Parcel A.
$50,000 ¸ 0.7 = $71,428 per ha Parcel B.
$40,000 ¸ 0.5 = $80,000 per ha
The higher value for parcel B is a reflection of both the adoption of a rigid factor and the application of an in globo value per hectare for land which is not in globo. If it were in globo, presumably the potential yield would be a feature of and an inseparable part of its value. This difficulty places the valuer in an unenviable position in which the best that can be done is to proceed in full awareness of the difficulty and to lean in favour of the ratepayer.
In his valuation approach, Mr Kelaher placed a separate and nominal value on the areas termed “dedicated parklands” and “D.O.T. strip”. His reason for this is that such lands are to be lost to the owner and therefore should not attract full value. Mr Crowley did not make a distinction between those parts of the subject land designated as “public land” and other parts. The difference between the valuers was not debated during the hearing, however, I am left with a requirement to adopt a method which I think is appropriate on the evidence and having regard to the provisions of s.25 of the Act. It seems to me that the question of value on land which is to become “public land” turns very much on the value that a purchaser would attribute to that land
when he is considering a price for the land overall, assuming for present purposes the existence of the “notional single parcel” required by s.25. Where it is the case that the land to become “public land” is so designated by virtue of the fact that certain allotments have been produced by the process of subdivision and are ready for sale, then the designated land has a value which would be reflected in the employment of the “factor method” used by Mr Crowley. That is, the “factor method” takes into account the net yield and proceeds on the basis that the value of the subdivisional allotments is enhanced by virtue of the fact that the purchaser has no requirement to surrender land for public purposes attributable to the allotments. On that basis then, it would be the case that either the factor has to be adjusted or some better valuation method employed; or the value of the land to be surrendered should, at its highest, be nominal but in all probability would attract a nil value, given the proximate requirement that that land be surrendered at no price. On the other hand, if the land designated as “public land” is simply designated as such as part of the process of planning a layout for the overall subdivision, then that land has a value as part of the overall “balance land”. In the instant case there was no distinction made by either party of the type that I have described above. I have no definite means of establishing whether the “dedicated parklands” areas are attributable only to the “subdivided allotments” or whether some of this land is part of the design process. If the former, I would favourably consider a submission to apply a “nil” value, but given the state of the evidence the best I can do is adopt the nominal value Mr Kelaher applied.
One other aspect of valuation methodology needs to be disposed of before I move on. In his valuation, Mr Crowley valued the “O’Brien land” on the basis that it had not been subdivided by the appellant and, therefore, having regard to the provisions in s.25, should not be valued as part of the “balance land”, that is as part of the land which is left following subdivision by either Vanglow or Galli. History shows that the “O’Brien land” was purchased separately from the land to the south of Napper Road, retained its separate legal description and has not been further subdivided by the appellant company. For an allotment to be brought into the provisions of s.25 of the Act, the elements of that section need to be satisfied and those elements, in short, include a requirement that an owner subdivide land into six or more parts and continue to own six or more parts. Quite clearly, the “O’Brien land” does not satisfy these requirements, therefore stands to be valued as a separate parcel. It may be appropriate for the appellant company to treat the land as part of its overall holding for the purpose of managing a combined development of its collection of estates, however, this does not change the legal position. Notwithstanding Mr Crowley’s having stated the legal position correctly insofar as the “O’Brien land” is concerned, he proceeded to value that land as if it were part of the overall holding. I do not intend adjusting his approach in this regard in any way, not the least of all because I have no evidence as to the value of this land as a separate lot.
I now turn to consider the question of the quantum of headworks which should be added in the valuation process, there being a lack of agreement between the parties as to the appropriate amount. Mr Kelaher added $30,600 for the 1992-1993 valuations and $32,500 for 1995. These
figures came from Mr Alan Geoffrey Johnson, a civil engineer, who calculated the average in each of these years of the actual headworks paid and who gave evidence on this issue before me. In contrast, Mr Crowley added a figure of $50,000 per ha for each relevant year and, though he did not initially explain how he arrived at this figure, certain documents were put to him by his advocate which were said to support this figure as being the value that paid headworks would add to the land, notwithstanding that a greater or lesser amount had in fact been paid.
Before dealing with each approach, some background should assist. The subject land, and I assume this includes all of the land, was rezoned from “Rural Residential” to “Special Residential” some years prior to each relevant date, no actual date of rezoning being given in evidence. The subject land is to be found in the local authority of the Gold Coast and was, prior to the amalgamation of the previous Albert Shire and the old Gold Coast City, located within the boundaries of old Gold Coast. The procedure under which headworks were levied by the old Gold Coast City was one where part (Component 1) was applied at the stage of rezoning and part (Component 2) was applied at the subdivision stage. The procedure was that, on rezoning, headworks were assessed for Component 1 and at gazettal a bond would be given by the landholder to the local authority to secure the calculated amount of Component 1 headworks. As subdivision proceeded and survey plans were provided to the local authority for sealing in order that individual titles may issue, cash would be paid for a pro-rata amount of Component 1 headworks and the bond which was established at the rezoning stage would be reduced by the amount actually paid. Component 2 headworks were also paid at the time of the sealing of the survey plan and it would be calculated at that time, having regard to the type of allotments produced. For example, a different rate would apply for a single-unit residential lot to that of a duplex lot. As a general rule, the calculation of headworks charges is referable to the equivalent number of persons who might be expected to occupy the developed allotments, thus the equivalent number of persons (or EP) would be greater in the case of a multi-unit allotment than in the case of a single-unit allotment. In the case of the subject land, the calculation of headworks on the overall estate was based on an average yield for the whole of the parcel rather than for the individual sections, according to evidence given by Mr Kerry Michael Finn, general manager of the appellant company. Mr Finn also said that at the time of purchase by the appellant of the land on the southern side of Napper Road, a headworks credit for a water element headwork of Component 1 was in existence. There was no evidence of the quantum of the credit.
The “Special Residential” zoning which applies to the subject land is employed by the local authority in circumstances where it is decided appropriate to allow the development of land in accordance with an approved plan of development rather than in the employment of a mixture of rigid zonings. The plan of development would indicate the type of development to be carried out in different parts of the relevant land, that is whether lots are to be developed for single-unit or duplex and so on, and it is possible to calculate from that the intended or permitted equivalent person yield.
The approved plan of development for the subject land was not tendered during the hearing, nor were its contents explained in any meaningful way. I am unaware, for example, of how much of the land to be subdivided will produce single-unit lots, how much will result in townhouse development and how much will be assigned to duplexes. Nor am I aware of the sequence of development, that is whether the development which has occurred to date is either single-unit or some more intensive form.
Mr Johnson’s headworks figures which were adopted by Mr Kelaher were based on information contained in a document obtained from the firm Jones Flint & Pike, who provided consultancy services in relation with the development of the subject land. The document relied upon by Mr Johnson was not tendered in evidence. Mr Johnson explained, however, that the document contained a list of all of the stages of development carried out in relation to each relevant date. He was provided with a breakdown of Component 1 and Component 2 headworks charges paid for allotments as plans were sealed. He took this information and, from it, calculated the average headworks paid for each appeal on a per ha basis. In his calculations he started with the headworks paid per allotment or group of allotments and, having regard to the area of the produced allotments, deduced the headworks paid on a per ha equivalent basis. Thus, for example, in the case of Lot 70 on RP 839631 headworks of $2,392 were paid and since Lot 70 has an area of 726 m², Mr Johnson calculated that the headworks payable on a per ha basis would be $32,944. Similarly, in the case of Lots 33 and 36 on RP 854773, allotments of 816 m² each attracted headworks charges of $3,881, therefore the per ha rate calculated was $47,565. He proceeded in this manner and in the 1995 matter calculated that 50 allotments, having a total area of 37,566 m² attracted headworks charges of $122,210, that is an average of $32,532 per ha. He rounded this to $32,500 per ha. For the 1992-1993 matters, the calculation resulted in 111 allotments of 82,977 m² with headworks of $254,246, therefore an average of $30,640 per ha rounded down to $30,600 per ha. In carrying out his calculations, Mr Johnson included in the list of allotments referred to for the 1995 valuation some allotments which were included in the 1992-1993 list, presumably on the basis that such allotments were still held by the developer. Nevertheless, the inclusion of these in both tables would have some impact on the calculation of average headworks paid, though I have not attempted to isolate this factor.
Mr Johnson referred in evidence to a “special arrangement” between Galli Developments Pty Ltd and the local authority under which headworks for the first 250 lots in the total subdivision would attract an extra headworks payment of $2,000 per lot. These amounts were included in the average figures mentioned above. I have no evidence concerning the basis of this payment, in particular whether there was a quid pro quo.
The variation between the average of $30,600 per ha and $32,500 per ha was not explained to me. There were some other differences in the tables presented by Mr Johnson that raised questions in my mind. For example, the headworks amounts paid range between $16,977 per ha to $47,565 per ha. Similarly, if I take the 1995 table of headworks payments, it includes, for example, Lot 13 on RP 810113 of 852 m² and headworks paid $2,906 or $34,103 per ha; and
Lot 897 on RP 854786 with a similar area of 854 m²: headworks paid $1,450, that is $16,977 per ha. The reason for the differences was not explained in evidence. The explanation may lie in the fact that some were single-unit and some multi-unit, however, it is not appropriate that I base substantive conclusions on such speculations. If reliance is to be placed on the actual figures, then they need to be more fully explained.
Another difficulty I have with these actual figures is there is no explanation as to how the water headworks credit referred to earlier is taken into account, if it is, nor, how the additional
$2,000 per lot for the first 250 lots is actually catered for.
I have already explained why I consider that the inclusion of an allowance for headworks already paid is appropriate, that is, it is to do with the increase in value of the land by virtue of the owner being relieved of the requirement to pay a headworks charge. The question of value in respect of headworks is based, therefore, not on what was paid, but on what need not be paid; in other words what might be saved by the purchaser. If the vendor has in the past negotiated particularly advantageous terms with regard to the payment of headworks charges, it would be unusual for him first of all to reveal that to a purchaser during negotiations and, second, to pass on to the purchaser the financial advantage gained out of those negotiations. Similarly, if it were the case that the vendor had paid headworks charges in excess of that which would be required if payable at the date of sale, he could not expect to recoup the excess payment from the incoming purchaser. As a general rule, in the case of valuation of land it is not appropriate to employ a mixture of facts obtained by hindsight and those which might be presumed by the purchaser at the date of sale in attempting to place oneself in the position of the hypothetical prudent purchaser. One must approach the task from the perspective enjoyed or suffered by the hypothetical prudent purchaser who must at the date of purchase make allowances, having regard to the imperfect information available to him at that time. Given this general proposition and the specific issues that I have raised concerning the actual headworks figures presented by Mr Johnson, I decline to apply those figures to the valuation exercise required in this case.
As I have said, Mr Crowley gave no basis for the $50,000 figure included as a headworks element in his valuation, though a document was tendered (Exhibit 8) which was said to be an official document of the Gold Coast City Council and which purported to show headworks charges payable with respect to both Component 1 and Component 2. Advocate for the Chief Executive, Mr Grennan put the document to Mr Finn under cross-examination and appeared to gain an agreement that for land to be rezoned from “Future Urban” to “Residential A” headworks charges would amount to $57,000. Notwithstanding this, Mr Grennan tendered another document which was received by facsimile on the second day of hearing (Exhibit 14) and which he put to Mr Crowley during examination-in-chief. The evidence proceeded on the assumption of a rezoning from “Future Urban” to “Residential A”, There was no evidence that Mr Crowley had referred to either Exhibit 8 or Exhibit 14 or any such similar document in arriving at his allowance of $50,000 for headworks charges, however, with the assistance of his advocate, he adopted a figure for Component 1 headworks from Exhibit 14 and for Component 2
from Exhibit 8. The selection of components from different documents was explained by Mr Grennan as being based on the proposition that it was this combination which produced the lowest calculable figure for headworks for a rezoning from “Future Urban” to “Residential A” and subsequent subdivision. The resultant figure produced a total of $21,210 for Component 1 and $23,067 for Component 2, that is a total of $44,277. It was argued from the respondent’s side, that given that “Residential A” was the least intensive in equivalent person terms of the uses intended on the subject land, the $50,000 figure employed by Mr Crowley was supported. Put another way, headworks charges for duplex and townhouse uses would be higher than single-unit residential, therefore, if the total headworks were calculated on the basis of single-unit residential, then a mix of more intensive uses would produce a higher figure.
Whilst I understand the basis of the evidence which emerged from a consideration of Exhibits 8 and 14, I have nothing before me to say how the headworks charges for the subject land were originally calculated by Mr Crowley nor whether such calculations would throw any light on the headworks charges payable as at each relevant date. The best evidence I have came from the Chief Executive’s side, however, I am not inclined, on the basis of that evidence, to accept the proposition that a $50,000 figure for headworks is clearly sustainable. It may be that a figure in excess of $44,277 can be supported, and I am inclined to the view that that would be the case, however, I do not have enough to be confident in adopting the figure of $50,000. Interestingly, during cross-examination of Mr Johnson on a hypothetical subdivision exercise prepared by Mr Crowley and to which I will refer in due course, he agreed that an allowance of
$5,000 per lot represented the headworks figure used by his firm for estimating purposes in the old Gold Coast City. Unfortunately, this point was not pursued under cross-examination, but is not evidence that I would totally disregard. Doing the best I can on the evidence and without attempting to differentiate between the valuations required at each relevant date, I will adopt
$45,000 as being the headworks allowance which would be added to the raw land value for each valuation.
The allowance for headworks should be based, as I have said, on what the purchaser will save or not have to spend in purchasing a parcel of land in respect of which headworks charges have already been paid. In Mr Crowley’s valuation approach his adoption of a headworks charge of $50,000 per ha was, on the basis that it represented $50,000 for each in globo hectare, not for each subdivided hectare. However, in his factor valuation method as he described it, he struck a value for the “notional single parcel” on the basis of in globo sales, to which he added the headworks charge of $50,000, then applied the factor of 0.7 to the resultant sum. Such an approach has the effect of increasing headworks charges to in excess of $70,000 per ha in globo. The correct method should be to include in the calculation the estimate of headworks payable per ha in globo which would be added to the figure which results from the application of the factor to the in globo figure. If I take, for example, that Mr Crowley adopted for his 1992-1993 valuation a raw land value of $60,000 per ha, his calculation was presented thus:
Mr Kelaher said that the Sunland purchase would be quite similar in nature to the subject land. He said that part only would be steep topography, whilst the balance would comprise a series of gentle undulations with views superior to the subject land. He agreed that some of the developed blocks would be low and of limited outlook, but suggested that the finished product would be similar overall to that of the subject. Mr Kelaher appeared to be of the view that the connection of services to the sale land would be relatively easy - a proposition to be contrasted with Mr Crowley’s evidence of costs actually expended.
I will now set out the sales which Mr Crowley said support his 1995 valuation of
$100,000 per ha in globo. His first sale for this valuation (Camelot) took place in October 1994 and was for an area of 38.31 ha, which sold at $4,000,000 or $102,845 per ha unimproved. The sale property is situated on the corner of Eggersdorf Road and the Pacific Highway at Ormeau, approximately 48 km south of Brisbane and 36 km north of the Bundall Post Office. Town water, sewerage, telephone and electricity were available to the sale property, however, sewage is to be initially removed from the subdivision via tankers carting to the Beenleigh Treatment Plant. Mr Crowley described the sale land as moderately undulating forest ridges with a variance in topography of about 20 metres from the highest ridges to the lowest point towards the eastern boundary. Approximately 4 ha on the eastern boundary adjoining the Beenleigh-Helensvale railway line and is low and subject to flooding, though the majority of the land is well elevated and flood free. The sale land has a frontage of 493.55 metres to the Pacific Highway which affords exposure for marketing purposes. Mr Crowley said that the sale land is partially protected from highway noise by the natural slope of the land and the depth of the highway excavation. In his view, the sale land is inferior in terms of location and amenity to the subject. He considers the topography of the sale land is easier for development than the subject and that the Pacific Highway noise compares with the proximity of the subject land to Smith Street. He suggested median lot sale prices in Camelot would be $55,000 for a 700 m² lot compared with an
average $80,000 per 700 m² lot on the subject. Overall, in his view, the sale property is considered inferior to the subject land. Mr Kelaher’s view is that the sale land is completely out of line for residential in globo land in the area of the sale, though he did not advance reasons for this conclusion. There was evidence from Mr Crowley that the allotments produced out of the sale land were slow to sell and it was suggested in cross-examination that perhaps the price paid for the Camelot land in globo was too high. Mr Crowley’s response was that the market for allotments had fallen some time after the sale had taken place.
The second sale in support of Mr Crowley’s 1995 valuation (Heritage Gardens) was of an area of 28.25 ha in September 1993, selling at $1,700,000 or $59,115 per ha unimproved. The sale land is situated at Reserve Road, Upper Coomera, approximately 32 km from the Bundall Post Office. Town water, sewerage, telephone and electricity are available to the sale. Mr Crowley described the sale land as being well elevated, with undulating, stony forest ridges with small sections having views of the Coomera River. In his view, the sale land is remote in location and is inferior to the subject on a per ha basis. The Heritage Gardens land is steeper than and inferior in topography to the subject land, lacks the amenity of the subject and has inferior development potential. He suggested that the average allotment price on the sale land would be $55,000 for a 650 m² allotment, compared with the $80,000 per allotment he estimated for the subject land. Mr Kelaher thought that sale prices for allotments on the sale land would approximate $60,000 each, though he expressed the view that the sale price of Heritage Gardens in globo appeared to be quite high, given its remote location. Certainly, Mr Cronin was critical of the sale, given its location in Upper Coomera which he suggested in cross-examination was, as with the Camelot sale, in a quite different market from that found in the Arundel area.
The final sale referred to by Mr Crowley for his 1995 valuation (the Kincaid Drive sale) took place in September 1994 and involved a purchase price of $6,250,000 for an area of 32.97 ha. The sale analysed to a figure of $187,746 per ha unimproved and is considered by Mr Crowley to be superior to the subject land. He said that distant views to the coast are available to most of the sale land affording panoramic views to the coastal strip and the prestige development potential of the site and its smaller size are the main indicators of its higher value. He said that the topography of the sale land is inferior to that of the subject overall. He suggested median selling prices in the development of the subject land would be $100,000 per 750 m² allotment. The sale land adjoins the Chaltara sale mentioned above.
As a support and check to his valuation arrived at by direct comparison with sales, Mr Crowley provided two hypothetical subdivision exercises representing valuations for that part of the subject land at each relevant date, south of Napper Road. Whilst this leaves out the 27 ha in the “O’Brien land” in each case, a valuation of $120,387 per ha was calculated for the 1992-1993 relevant dates and $201,785 per ha for the 1995 relevant date. As the case for the respondent was presented, I understand that the valuations by the hypothetical method were intended to indicate a land value on an in globo basis which had then to be subjected to the “factor method” and the addition of headworks charges. From the appellant’s side there was agreement with
many of the figures contained in the hypothetical development calculations presented by Mr Crowley, with the exception of his profit and risk allowance (33.3%)which was thought by Mr Kelaher to be too low; and selling rates (100 lots per annum) which were thought by Mr Kelaher to be too high. Even if I make adjustments to the calculations presented to me, having regard to Mr Kelaher’s criticisms of them, I arrive at values per ha substantially in excess of that which Mr Crowley says are indicated to him by the sales. This bears out the criticism that this Court has frequently levelled at the employment of the hypothetical development method.
Given that I have sales which are suitable indicators of value for the purposes of each of the matters before me, I see no value in commenting further on the detailed contents of the hypothetical development exercises put into evidence. I certainly do not think it appropriate for a primary valuation method supported by sales to be said to be supported by a hypothetical exercise which produces a figure substantially at variance with that indicated by the sales.
When I view the sales overall, I conclude that from Mr Kelaher’s list of sales it is the Kurts and the Leda sales which provide the safest indicators of value, though I have a clear conflict of evidence between the respective valuers concerning the ease and cost of bringing sewerage to the Kurts land. I have already excluded the Beckmar sale for the reasons given. The Pine Forest Estate sale is of limited value, given the substantial size differential between the sale (924.197 ha) and the subject of 75 ha (1992-1993) and 92 ha (1995). The William Bennett sale and the other two Hymix Road sales cannot usefully be compared with the subject land, given their situation and proximity to a substantial quarry with many years of useful life left. At best they may provide a floor value but even on Mr Kelaher’s figures, he saw the subject land as so substantially superior to these sales to make direct comparison a difficult exercise. Turning now to Mr Crowley’s sales in support of the 1992-1993 valuations: I have elected not to rely on the O’Brien sale, but find each of the other sales of some value. The Chaltara sale is of limited value, given its substantial superiority to the subject land, whilst the Mudgeeraba sale is clearly useful, even having regard to its different location from that of the subject land. In this respect, it is similar to Mr Kelaher’s Leda sale which is located some distance north of the subject land in the Coomera locality. Although I have some difficulty in reconciling the calculations presented with respect to the Sunland sale, this does appear to be a useful basis, given Mr Kelaher’s evidence that this basic property is quite similar in nature to the subject land.
Overall then Mr Crowley’s sales evidence for the 1992-1993 valuations is the more reliable, particularly given what I have said about the difficulty I have with the servicing of the Kurts sale introduced by Mr Kelaher and the fact that his Leda sale took place in April 1994 and is therefore more applicable to the 1995 appeal.
I have had regard to the difficulties in comparing the Mudgeeraba sale with the subject land, given the difference in locality and in Mr Kelaher’s appropriate recognition of the similarity between the Sunland property and the subject in drawing my conclusion on the 1992- 1993 values. I have also kept in mind that the subject land is costly to develop: a difficulty identified by Mr Crowley but needing, perhaps, a little more emphasis. Having regard to those
matters, but otherwise proceeding on the basis of Mr Crowley’s comparisons which I found to be lucid and cogent, I have adjusted Mr Crowley’s figure to $55,000 per ha for the 1992-1993 valuation. The only point to add is that I have drawn into this figure the value of that part of the subject land I have called the “O’Brien land” on the basis that it is valued as part of the whole. I have adopted a similar approach to the “O’Brien land” in my 1995 conclusions.
Turning now to the 1995 in globo land value: the Kincaid Drive sale is so superior as to make direct comparison difficult, thus leaving me with the Leda sale, Camelot and Heritage Gardens. The Heritage Gardens property is clearly inferior to the subject land, particularly because of its remote location and its poorer situation at Coomera, thus indicating a subject in globo value higher than $60,000 per ha for 1995. I have an apparent conflict of evidence with regard to the potential in the lower topography land on the Leda sale, however, it seems to me that each valuer has overstated his case in that some of the low-lying land may have potential for canal development, but not all necessarily would. Given that I view the subject land as having sewerage connected, it is superior to the sale land in this regard and in its location, though apparently more costly to develop. Overall I will proceed on the basis that the subject land is marginally inferior to the Leda land. Such a conclusion would appear to fit with the Camelot sale which I have decided to be a little cautious of, given Mr Kelaher’s comments. The result is that I will apply an in globo value of $90,000 per ha to the subject land for the 1995 appeal.
Having regard to the conclusions that I have drawn regarding in globo value and other conclusions that I have arrived at throughout this decision, I will now present my valuation calculations:
1992-1993 Valuations
Value of “subdivided allotments”:
Land × $55,000 per ha Apply factor of ¸ 0.74 = $74,324 per ha
Add
Headworks × $45,000 per ha
| Therefore Land Value Area | = × | $119,324 per ha 9.2665 ha | |
| Land value calculation | . | 9.2665 x $119,324 | |
| Overall Value | = | $1,105,715 | |
| · Balance land Value | × | 76.7089 ha @ $55,000 per ha | |
| = | $4,218,989 | ||
| · “Dedicated parklands” | = | 6.095 ha at Mr Kelaher’s nominal figure | $20,000 |
| Total | $5,344,704 | ||
| Say | $5,300,000 |
1995 Valuations
Value of “subdivided allotments”:
Land × $90,000 per ha Apply factor of ¸ 0.75 = $120,000 per ha
Add
Headworks × $45,000 per ha
Therefore Land Value = $165,000 per ha Area × 10.4679 ha
| Land value calculation Overall Value · Balance land | . | 10.4679 x $165,000 = $1,727,203 |
| Value | × = | 55.0671 ha @ $90,000 per ha $4,956,039 |
| · “Dedicated parklands” and “DOT strip” | 10.1476 ha at Mr Kelaher’s nominal figure = $31,100 | |
| Total | $6,714,342 | |
| Say | $6,700,000 |
In the result, each of the appeals is allowed and the valuation for each of the 1992 (V95-
06) and 1993 (V95-05) appeals is determined at Five Million Three Hundred Thousand Dollars ($5,300,000); and for the 1995 appeal (AV95-306) is determined at Six Million Seven Hundred Thousand Dollars ($6,700,000).
RP SCOTT MEMBER OF THE LAND COURT
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