Marvella Pty Ltd v Chief Executive, Department of Natural Resources

[1998] QLC 145

[1998] QLC 145

 

LAND COURT,

BRISBANE

24 November 1998

Re:     Determination of Unimproved Values -
  City of Brisbane - Division of Brisbane
  (Refs. AV98-34 and AV98-285).

Marvella Pty Ltd
v.
Chief Executive, Department of Natural Resources

D E C I S I O N

Two appeals have been filed against the determinations of the unimproved value of two parcels of land situated within the Brisbane Central Business District respectively at 555 Queen Street and 490 Adelaide Street, Brisbane.  Brief details are:       AV98-34 - An unimproved value of $1,400,000 ($1100 per square metre) for a “Central Business” zoned parcel described as Lot 6 on RP 43033, Parish of North Brisbane, containing an area of 1267 square metres; and
           AV98-285 - An unimproved value of  $500,000 ($950 per square metre) for a “Central Business” zoned parcel described as Lots 5-8 on RP 1137, Parish of North Brisbane, containing an area of 526 square metres.
           The relevant date for the determination of the unimproved values is 1 October 1996, and the appellant company estimates the unimproved value within the respective notices of appeal to be $1,171,995 ($925 per square metre) (AV98-34) and $420,800 ($800 per square metre) (AV87-285).
           Both appeals were heard together. 
           It is practising Registered Valuer Lionel Bruce Johnston who values each appeal parcel at the sums nominated within the notices of appeal.  Mr Johnston regards 555 Queen Street to be a fringe CBD property and informed the Court that it is bounded by Queen Street, Boundary Street, Diddams Lane and Macrossan Street.  He describes this land as being a near-rectangular shaped site of medium elevation with an angled frontage to Boundary Street, but with water views to the Brisbane River being exceptionally limited due to the construction of three residential towers between it and the river by Seymour Corporation.  These buildings are known as “Admiralty Towers 1 to 3”.
           Mr Johnston is of the opinion that there is a physical constraint or barrier separating 555 Queen Street from the Brisbane CBD in that it is necessary (from a pedestrian point of view) to traverse traffic lights on the corner of Queen and Ann Streets to access the site, and he claims that this particular situation then takes away the position of being seen, from a market point of view, as a CBD location.  He told us that 555 Queen Street is at the north-eastern end of the CBD, and is an island site which, he says, is more towards the Fortitude Valley precinct than the recognised CBD precinct in Brisbane.  This, he claims, is because of the road schemes in the area.
           Mr Johnston also points to what he calls “access difficulties with the site due to traffic patterns” but he describes these problems as not being a major impediment but rather as a minor inconvenience.
           With respect to 490 Adelaide Street, which property is separated from 555 Queen Street by Diddams Lane, Mr Johnston says the land enjoys reasonable exposure to passing traffic and again is regarded by him to be on the north-eastern fringe of the Brisbane CBD and again is seen by him to be commercially more towards the Fortitude Valley end of the City precinct.  Mr Johnston describes 490 Adelaide Street land to be a near-rectangular shaped parcel with medium elevation and again with limited water views due to the three Admiralty Towers buildings between it and the Brisbane River.
           For his valuation of 555 Queen Street, Mr Johnston relies upon the analyses of five sales, and for his valuation of 490 Adelaide Street, he again relies on the analyses of five sales including four within his valuation basis for 555 Queen Street.  Details of Mr Johnston’s sales are:

Sale No. 1 - 436 Ann Street containing an area of 971m5 sold on 9 September 1996 for $1,100,000 - improvements comprise approximately 1,800m5 of aged structure which has been extensively refurbished with some extra gross floor area achieved since sale.  The property is now known as “Manhattan Apartments”.  Mr Johnston has analysed this sale to show an unimproved value in the vicinity of $1,032m5 and the respondent Chief Executive’s 1 October 1996 relevant date valuation of it is $999.00/m5.

Mr Johnston considers this sale site to be better located to the CBD than is 555 Queen Street and situated closer to the recently constructed development of an 18,000m5 building known as “Cathedral Square”.  He says it has superior pedestrian access and similar vehicular access.  Mr Johnston considers 436 Ann Street to be a slightly superior site overall to 555 Queen Street.

Sale No. 2 - 446 Ann Street containing an area of 728 square metres sold on 24 December 1996 for $860,000 - improvements comprised an aged warehouse at time of sale.  The site is to be developed as the “Brooklyn Tower Suites”. Mr Johnston analyses this sale to show an unimproved value in the vicinity of $1,082/m5.  The respondent Chief Executive has applied a 1 October 1996 relevant date valuation of $947/m5 to this site. 

Mr Johnston sees 446 Ann Street also to be better situated to the CBD than 555 Queen Street and again closer to “Cathedral Square” and again has superior pedestrian access and similar road access.  He also regards 446 Ann Street land to be slightly superior to 555 Queen Street.

Sale No. 3 - 468-478 Ann Street containing an area of 962m5 sold on 6 November 1996 for $970,000 - improvements comprised aged buildings at time of sale.  The property was purchased for refurbishment and extension, but since that time the buildings have been demolished and the site is now being developed as “The Radison”.  Mr Johnston has analysed this sale to show an unimproved value in the vicinity of $908m5 and the respondent Chief Executive has applied a 1 October 1996 relevant date value to it of $847m5.

Mr Johnston says 468-478 Ann Street has good exposure, and is on the City side of Queen Street.  It has similar road access to 555 Queen Street but a smaller frontage.  Mr Johnston simply states that 468-478 Ann Street is useful for comparison.

Sale No. 4 - 353 Turbot Street containing an area of 1055m5 sold on 13 September 1996 for $925,000 as a vacant site.  This price reflects an unimproved value of $877/m5 and the respondent Chief Executive has applied a 1 October 1996 relevant date value of $768/m5 to the site.

Mr Johnston told us that 353 Turbot Street also has access from Raff Street and Perry Lane.  He considers this sale land to have inferior exposure to 555 Queen Street and says it is overall an inferior site, especially as it is located towards the Spring Hill precinct.

Sale No. 5 - 530-542 Queen Street containing an area of 928m5 sold on 22 August 1996 for $1,450,000 - improvements comprised older buildings which have since been demolished.  Mr Johnston calculates that this sale reflects an unimproved value of $1,562/m5, and the Chief Executive has applied a 1 October 1996 relevant date valuation of $1400/m5 to this site.

Mr Johnston regards 530-542 Queen Street to be a far superior site to 555 Queen Street as it is closer to the CBD and has some water (Brisbane River) views available which he says, are keenly sought after from a commercial point of view.
           Mr Johnston believes that the Departmental valuation of 555 Queen Street is also excessive when compared with the 1 October 1996 relevant date valuation of $830/m5 for Lot 101 on RP 170326 containing an area of 482m5.  This parcel adjoins “The Radison” land and is known as “the Drysdale (chemist shop) site”.  It fronts Ann Street and Perry Lane.  Mr Johnston believes that there is an unimproved value relativity problem between the 555 Queen Street and Lot 101 and he says it does seem a rather quantum leap in value from one to the other when one weighs up the particular location of the sites.  I note that maps put in evidence show that Lot 101 is directly opposite 555 Queen Street.  But I prefer to rely in this decision upon the sales evidence furnished by the valuers rather than this unimproved value relativity comparison.
           The sales evidence relied upon by Mr Johnston for his valuation of 490 Adelaide Street is:

Sale No. 1 - 436 Ann Street.   (also Sale No. 1 in the 555 Queen Street valuation).

Mr Johnston again says 436 Ann Street is better located to the CBD than is 490 Adelaide Street, and is again also closer to Cathedral Square.  He again says 436 Ann Street has superior pedestrian access, similar road access and Mr Johnston again regards 436 Ann Street to be superior overall to 490 Adelaide Street.

Sale No. 2 - 446 Ann Street (also Sale No. 2 in the 555 Queen Street            valuation).
           Mr Johnston again regards 446 Ann Street to be better located to the CBD than is 490 Adelaide Street, again is closer to Cathedral Square, again has superior pedestrian access and similar road access.  Mr Johnston again says 446 Ann Street is superior overall to 490 Adelaide Street.
           Sale No. 3 - 468-478 Ann Street (also Sale No. 3 in the 555 Queen Street      valuation).
           Once again Mr Johnston considers 468-478 Ann Street to be a superior site to 490 Adelaide Street as it has good exposure, is on the City side of Queen Street with similar road access.
           Sale No. 4 - 353 Turbot Street (This is also Sale No. 4 in the 555 Queen Street          valuation).
           Once again Mr Johnston tells us that this sale is useful for comparison.  He again points out that 353 Turbot Street has access off Raff Street and Perry Lane and he says it is superior to 490 Adelaide Street in exposure.

Sale No 5 - 37-49 Herschel Street, containing an area of 1822m5 sold on 15 April 1997 for $1,300,000 - land used as a car park.  This sale price reflects a land value of $713/m5 and the respondent Chief Executive has applied a 1 October 1996 relevant date valuation of $1097/m5 to this site.

Mr Johnston commented that 37-49 Herschel Street was sold by the Federal Government and he says it is a far superior site to 490 Adelaide Street.  The sale site is at the other end of the CBD in a superior position, and this sale gave Mr Johnston some guide as to his assessment of the unimproved value for 490 Adelaide Street.
           The valuations under appeal were made by Departmental Registered Valuer Ian Robert Smith who is no longer in the employ of the respondent Chief Executive.  In his stead, Registered Departmental Valuer George William Lindberg was called in evidence by the respondent to support the valuations and he is quite comfortable with the valuation work carried out by Mr Smith.  As a result, Mr Lindberg’s reports which were tendered in evidence represent either his views or the views adopted by him on behalf of the Chief Executive.
           Mr Lindberg also describes 555 Queen Street as an island site with what he regards as satisfactory access.  He says it is accessible from four streets.  He also says the site is of medium elevation with a moderate fall to Diddams Lane, and agrees it is in a fringe area of the CBD.
           Mr Lindberg has scheduled three sales in support of his valuation of 555 Queen Street.  They are:
           Sale No. 1 - Lots 4-6 on RP 1128, Lot 1 on RP 1130, Lots 1-2 on RP 1131 and       Lot 3 on RP 1132, Parish of North Brisbane - 927 square metres - McGown          Development Pty Ltd to 540 Queen Street Pty Ltd on 22 August 1996 for          $1,450,000 - analysed unimproved value (after adding the demolition costs of   $100,000 for the buildings existing on the site at date of sale)  $1,550,000 ($1672m5) - applied unimproved value $1,400,000 ($1510m5) - situation 530      Queen Street - zoning “Central Business”.
           It is to be immediately observed that this is also one of the sales relied upon by Mr Johnstone for his valuation of 555 Queen Street.
           Mr Lindberg considers 530 Queen Street to be overall similar in value to 555 Queen Street as it is marginally superior in location but inferior in size and shape and has what Mr Lindberg regards as inferior access.
           Sale No. 2 - Lot 4 on RP 857048, Parish of North Brisbane - 1192m5 -        Traxview Pty Ltd to Pawleena Pty Ltd on 21 October 1996 for $3,500,000 -       analysed unimproved value $3,499,000 ($2935/m5) - applied unimproved            value $2,800,000 ($2350/m5) - situation 299 Adelaide Street - zoning “Central           Business”.
           Mr Lindberg considers this sale site to be superior to 555 Queen Street, as it is better located and superior in shape although it has inferior access.
           Sale No. 3 - Lot 12 on RP 200124, Parish of North Brisbane - 912m5 -        Australian Guarantee Corporation Limited to Cerintha Pty Ltd and De Martini      & Son Pty Ltd on 28 March 1996, for $1,200,000 - analysed unimproved            value after allowing for the value of car parking structures $1,066,000   ($1169/m5) - applied unimproved value $1,000,000      ($1100/m5) - situation 30        Tank Street - zoning “Central Business”.
           Mr Lindberg regards 30 Tank Street to be inferior to 555 Queen Street although in a slightly superior location.  It has better shape, is smaller and with inferior access.
           Mr Lindberg describes 490 Adelaide Street, as being a site with medium elevation, approximately level with the street and rising moderately to the rear.  It has a moderate crossfall from north to south.
           Mr Lindberg relies for his valuation of 490 Adelaide Street upon the analyses of two sales, both of which have already been discussed in regard to his valuation of 555 Queen Street.  Details are:

Sale No.1 - McGown Development Pty Ltd to 540 Queen Street Pty Ltd - analysed unimproved value $1,550,000 ($1,672/m5) - applied unimproved value $1,400,000 ($1,510/m5) - situation 530 Queen Street.

Mr Lindberg sees 530 Queen Street as being overall superior to 490 Adelaide Street as it is marginally superior in location, larger, inferior in shape and with inferior access.

Sale No. 2 - Australian Guarantee Corporation Limited to Cerintha Pty Ltd and De Martini & Son Pty Ltd - analysed unimproved value after allowing for the value of car parking structures $1,066,000 ($1169/m5) - applied unimproved value $1,000,000 ($1100/m5) - situation 30 Tank Street.

Mr Lindberg regards 30 Tank Street to be superior to 490 Adelaide Street.  He says it has a slightly superior location, and has superior shape and inferior access.
           Mr Lindberg considers both 555 Queen Street and 490 Adelaide Street properties to have the commercial flavour of the CBD and points out that both properties are developed for commercial purposes.  For this reason, he does not rely upon the sales referred to by Mr Johnston in Ann Street and Turbot Street especially as the properties in Ann Street were bought for residential purposes.  Mr Lindberg sees that part of Ann Street as not having been a successful commercial area for many years notwithstanding that there is a commercial development nearby (Cathedral Square).
           Mr Lindberg is somewhat critical of Mr Johnston’s analysis of the 530 Queen Street sale in that he has made no allowance for the demolition cost ($100,000) of the old buildings on the site after the date of sale.  With this criticism I agree, as it is an accepted principal of valuation to add the demolition costs to the sale price to arrive at an analysed unimproved value (vide Fenton Nominees Pty Ltd v. The Valuer-General (1981-2) 150 CLR 160 p.166 (H.C.)).
           Mr Lindberg does not share the opinion of Mr Johnston about Admiralty Towers severely restricting the view of the river from the subject properties.  He says that Admiralty Towers has broken the available view which is still there.  Nor does Mr Lindberg agree with Mr Johnston’s contention that there is a barrier between the subject properties and other CBD properties.  He says it is a road (Queen Street), not a barrier, and it has a pedestrian crossing across it.
           Mr Lindberg knows of the sale of 37-49 Herschel Street but he does not feel the sale price reflects market value.  He says it is just something unheard of and although sold at auction, the final selling price reflects a sale which “comes along every now and then and everybody wishes they had been there”.  Mr Lindberg says it is a low sale and the only sale since 1995 which has come in at a figure below the current Departmental unimproved capital values in the CBD.  It is also to be observed that this sale took place well after the relevant date for valuation in these cases.
           Taking an overview of the evidence, I am satisfied that the valuations under appeal are marginally excessive.  I say this because I am convinced that the subject properties stand possessed of more commercial flavour than do the Ann Street properties.  For this reason I favour the use as a basis for my finding Mr Lindberg’s sales evidence and Mr Johnston’s sale of 530 Queen Street.  But Mr Johnston’s analysis of 530 Queen Street has to be adjusted upward by $108 per square metre ($100,000) before its application is made to 555 Queen Street for valuation purposes.  I am prepared to find that Mr Johnston has a valid point about his “barrier”, but I  cannot find this has a deleterious valuation effect on the subject properties to the extent envisaged by him.
           In the circumstances, both appeals are allowed, and the following determinations are made:
           AV98-34 -  The determination of the Chief Executive is set aside and the unimproved value of Lot 6 on RP 43033, Parish of North Brisbane, is determined in the sum of One thousand and fifty dollars per square metre, rounded-off in accordance with the Departmental computer assisted rounding-off scale to One million, three hundred and fifty thousand dollars ($1,350,000).
           AV98-285 - The determination of the Chief Executive is set aside and the unimproved value of Lot 5-8 on RP 1137, Parish of North Brisbane, is determined in the sum of Nine hundred dollars per square metre, rounded-off in accordance with the Departmental computer assisted rounding-off scale to Four hundred and seventy-five thousand dollars ($475,000).

(CH Carter)
Member of the Land Court