GFM Investments Pty Ltd v The Valuer-General
[1991] QLAC 17
•28 June 1991
|
BRISBANE.
28th June, 1991.
Re: Appeal against a decision of the Land Court -
City of Brisbane - AV90-322 & AV90-323.
G.F.M. Investments Pty Ltd
v.
The Valuer-General
J U D G M E N T
G.F.M. Investments Pty Ltd, as at 31st March, 1989, owned two adjoining parcels of land at No.113A and Nos.111-113, on the western frontage of Ipswich Road, Woolloongabba, adjoining on the southern side the overpass of the South East Freeway. Both properties are zoned "Service Trades", both were improved with small, old style shop premises, and used for retailing purposes.
The Valuer-General as at the relevant date, valued the property at No.113A (AV90-322) and being Lot 1 on RP 57022, Parish of South Brisbane, containing 157 square metres in the sum of $39,000. The second property, being Nos. 111 to 113, (AV90-323), Lot 2 on RP 78845, Parish of South Brisbane, contains an area of 210 square metres and was valued in the sum of $52,000.
Appeals were lodged in the Land Court against the decision of the Valuer-General in disallowing objections against those valuations. The learned President, in a decision delivered on 3rd December, 1990, affirming the valuations, found that the approach of the Valuer-General was correct, and that the appellant company had failed to discharge the onus of showing that the Valuer-General had erred. Basic to that decision, was that, on the evidence, the Valuer-General had been correct in valuing the lands in accordance with Section 12(1A) of the Valuation of Land Act of 1944 (as amended) (the Act).
The evidence before the Land Court was that the Brisbane City Council would not permit the redevelopment of the subject sites either individually or in amalgamation, for several reasons. The minimum site area required for service industry development within the "Service Trades" zone is 600 square metres.
The company has now appealed to this Court on the grounds that the best evidence of value was provided by a sale of adjoining vacant land to the appellant company, and that insufficient weight was given to that evidence; that the sales evidence which was accepted by the Land Court related to properties not comparable with the subject land; and that the Land Court was wrong in fact and in law. The appellants had contended for valuations of $28,000 for No.113A and $38,000 for Nos.111-113 respectively.
There is no dispute between the parties that because of the size of the sites, use of the properties at the relevant date constituted a lawful non-conforming use. It is noted from the evidence below that the "Service Trades" zone, while "intended to accommodate industrial and related development ....", "some light industry uses may also be allowed, subject to the consent of Council ...." and that the zone also provides for "a range of small retail establishments." The evidence is also that the location falls within the "City Frame Area" in which area it is said that business premises may be permitted within the "Service Trades" zone. Except where relaxation is warranted, "site cover" including "the area of any carparking space or truck parking space" shall not exceed 75 per centum.
Before us, the appellant company through its solicitor, provided a comprehensive submission that the evidence afforded by the company's purchase of a vacant site of 201 square metres, subject to rezoning to "Service Trades", at an effective rezoned price of $29,673, or about $148 per square metre, should not be discarded through its adjacency factor or because the sale took place shortly after the relevant date. We agree that these matters in themselves would not necessarily preclude the use of that evidence. The submission is then, that since the sale of the adjoining land cannot be criticised "in any other respect" it affords the best evidence of value. It is with this conclusion that we do not agree.
The sale is of vacant land, is (because of its purchase conditional on rezoning) to be treated as being zoned "Service Trades", and is less than 600 square metres in area. Even when the land purchased is aggregated with the land already owned (and subject of these appeals) the total area falls short of 600 square metres. The sale may have been the best available evidence of value for vacant land, incapable of individual development as zoned, with usage potential restricted to virtually yard space or car parking for adjoining development. That is not the value to be found in these matters. In accordance with Section 12(1A) of the Act, each of the subject parcels which is improved with an older style shop building, falls to be valued on the basis that "the land may be used, or may continue to be used for any purpose for which it was being used, or for which it could be used" and that the "improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used". Clearly the use of the subject lands by way of the improvements thereon is a higher and better use than that possible on the vacant land, on which buildings are unable to be erected. The existing use of the subject sites, both less than the minimum site area for development as zoned, falls within the lawful non-conforming use category. A comparison of the vacant land sale with the subject properties does not meet the criterion of "like with like" and the sale is therefore of no assistance in establishing unimproved market value as defined of the subject properties.
The appellant company now concedes that Section 12(1A) of the Act is applicable in these matters, but before us argues that the Valuer-General has not valued the subject land correctly under such provisions. The submission is that while purporting to do so, as the record of proceedings below shows, the valuer did not indicate how Section 12(1A) was applied. If the basis of valuation is adopted from three sales of sites, all larger in area than the subject lands and all capable of full development as zoned, then, it is submitted, the development potential of the sale sites is significantly greater than the highest and best use of the subject lands. The Valuer-General is then accused of not comparing "like with like".
Mr G.W. Lindberg, the registered valuer responsible for the valuations appealed against and who had given evidence in the Land Court, was again called by Counsel for the Valuer-General. He confirmed that he had valued each parcel subject to the provisions of Section 12(1A), as he understood them, on the basis of the use of the land "as a commercial enterprise". He said at the time he had inspected the properties "they were two separate shops".
Mr Lindberg confirmed that he had used the sales of three sites, each of which had been subsequent to sale, redeveloped with substantial two-storied commercial buildings, as the basis of his valuation. One "Service Trades" zoned site of 1335 square metres, in Ipswich Road nearby to the subject lands, had sold in December 1988 and based on the sale, that site had been valued at $270 per square metre, plus corner influence. Another "Services Trades" zoned site in Logan Road of 3278 square metres had sold in October 1988 and was also valued at $270 per square metre plus corner influence based on its sale. A "Commercial" zoned site of 976 square metres also in Logan Road sold in December, 1988, and had been valued at $340 per square metre, before allowances for corner influence and rear access, based on the analysed sale price. As land, Mr Lindberg saw the first two sales as similar to the subject sites but the third sale as being superior.
He said that in making his valuation of the subject lands, he looked at them:"on the basis of vacant parcels of land and looking at what purchasers had paid for those vacant sites and then compared them to the subject land. The potential of the subject land was not a consideration to me. I felt that under Section 12(1A) while that higher use existed, the levels of value that were being paid for that particular zoning in that locality were the things to be taken into consideration. "
In the Court below, Mr Lindberg had explained that in the valuation of each of the subject sites he had adopted a base unit of area value of $270 per square metre then made allowances for siteworks seen as necessary in the building development. It is noted that $270 per square metre is applied to both the "Service Trades" sale sites, before allowances for corner influence. Both sale sites apparently required some siteworks in development. Mr Lindberg is of the opinion that the sales evidence indicates little difference in value for sites of varying size.
The totality of Mr Lindberg's evidence left us with the distinct impression that he saw the use of the subject lands as being of the type that would be permitted within the "City Frame Area" for "Service Trades" zoned land. It seems to us that Mr Lindberg in carrying out the valuation under Section 12(1A) has considered part of the necessary test, but we are concerned that his considerations did not go far enough. For the sales to be applied as Mr Lindberg obviously has done, there is the further need to consider the buildings which have given rise to the application of Section 12(1A). Both buildings are used for retailing purposes, one having a floor area of 72 square metres (No.113A) the other 73 square metres (Nos.111 to 113). No on-site carparking is available. We are informed that within the "City Frame Area" a plot ratio of 1.5 may be achieved for "business premises" as permitted within the "Service Trade" zone. There is no doubt in our minds that the density of development existing on the subject lands is much lighter than that able to have been achieved on the sale lands. While we accept that Mr Lindberg has given consideration to the use of the subject lands and the use of improvements thereon he has not apparently, given any consideration to the density of development as compared with the potential possessed by the sale lands.
In Wickham Properties Pty Ltd v. The Valuer-General (V87-603) in an as yet unreported decision handed down on 2nd February, 1990, Mr D.M. White, a learned Member of the Land Court, considered whether in valuing land under Section 12(1A), the development potential of the land was limited to the density of existing development. He came to the conclusion that not to value the land in this way would be "an undue extension of the section". Mr White referred to another of his unreported decisions in Frodon Pty Ltd and Another v. The Valuer-General (V89-986/8) 13th May, 1988, where in dealing with the valuation of certain areas of land held under lease from the Commissioner for Railways and used for retailing purposes, he said:"Mr Short has, however, valued the lands to their full potential as commercial lands; that is, that the lands, having come within the operation of Section 12(1A) because of the use made of them, have been visualized as lands capable of full development for commercial purposes. In coming to that conclusion he considers that the lessees and the Commissioner for Railways as lessor may, by agreement, do what they will with the land without regard to the relevant town planning laws. In the opinion of Mr Hefferan, the possibility of premises being extended is remote, both from the point of view of permission being obtained from the lessor and under the zoning laws. In view of the movements occurring within the Central Business District which had commenced as at the relevant date, it is questionable as to whether a prudent lessee of the land would be prepared to extend the premises and make full use of the sites. It appears to me that the land may appropriately be valued as freehold parcels of commercial land but limited however in terms of their development potential to the development made of them (the site coverage) at the relevant date. In doing that, rates paid on the lots will be relative to the use made of them. The approach is in my opinion in keeping with the principles of Pye and Another v. The Valuer-General (1972/74) 29 L.G.R.A. 160 followed by the learned President in Keith Lawrie Nominees Pty Ltd v. The Valuer-General 17.10.1987 (unreported). "
Having decided that the basis of valuation adopted by the Valuer-General is flawed, the presumption under Section 13(7) of the Act that the Valuer-General's valuation is deemed correct until proved otherwise is rebutted, and we refer to the comments of Gibbs J. in Brisbane City Council v. The Valuer-General H.C. 1978 (5) QLCR 283 at p.303 where he said:
"However, I accept that in s.13(7) it at least includes the amount of the valuation, and that there is a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct. The question then is whether a court on appeal is bound to accept the Valuer-General's figure as correct unless it is positively established that the true value is lower, or whether it is enough to show that the value was reached as the result of an error in principle. In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s.13(7) is rebutted. "
The problem we are left with in this matter is that the evidence on which the appellant company would have us rely is as unacceptable as that on which the Valuer-General relies. On the state of the evidence, it is reasonable to conclude that the correct value should be somewhere between $148 per square metre and $270 per square metre. We have no evidence on which to rely, yet we do know that the property at Nos. 111-113 was purchased with the shop building for $56,000 with settlement being effected on 28th July, 1988. No analysis of this sale is put forward by either party, but there is no suggestion that it was other than an open market transaction, again to an adjoining owner.
After giving due consideration to all relevant factors, including the purchase of the property at Nos.111-113, the level of value applied to sites capable of development, the level of value actually paid for land with no development potential, and to the site coverage of the existing improvements, we have come to the conclusion that in its unimproved state and with potential for development limited to that of the existing shop, the property situated at Nos.111-113, should be valued in the sum of $44,000. It follows that the property at No.113A, with a higher density of site coverage must also carry a proportionately higher level of pro rata value, and we will adopt an unimproved value for this site of $36,000.
Both appeals are allowed, with the determinations of the Land Court set aside. The unimproved values of the lands as at 31st March, 1989, are determined as follows:
AV90-322 - Lot 1 RP 57022, 157 square metres - $36,000
AV90-323 - Lot 2 RP 78845, 210 square metres - $44,000
J.
Judge of the Supreme Court.
Member of the Land Court.
Member of the Land Court.
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