McNiven v Chief Executive, Department of Lands
[1996] QLC 117
•5 September 1996
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BRISBANE
5 SEPTEMBER 1996
Re: Appeals Against Annual Valuations
Valuation of Land Act 1944
City of Hervey Bay (AV94-665 and AV95-108)
William MD McNiven
v.
Chief Executive, Department of Lands
(Hearing at Maryborough)
D E C I S I O N
These are appeals against the determinations by the respondent of the unimproved values for the same parcel of land for two consecutive annual valuations. Mr McNiven is the owner of land described as Lot 2 on Registered Plan 157517 and part of Lot 28 on Registered Plan 35173, Parish of Urangan, County of March, containing an area of 1,876 m². As at 30 June 1993 the respondent determined the unimproved value of that land under the provisions of the Valuation of Land Act 1944 at $450,000. Following an objection by the owner, the unimproved value was reduced to $440,000. As at 1 January 1995 the respondent determined the unimproved value of the same land at $485,000. An objection against that valuation was disallowed.
The owner appealed to the Land Court against the respondent’s decisions upon his objections, advising that his estimate of unimproved value was $300,000 in each case.
The subject land is situated in the Central Business District of Pialba, on the corner of Torquay Road and Bryant Street, next to the Post Office, in an area comprising commercial development, as well as church and residential dwellings. Torquay Road and Bryant Street are both bitumen sealed with concrete kerbing and channelling. Bryant Street is a one-way street south to north connecting Torquay Road and Hillyard Street. Good access is available from Torquay Road.
Water, sewerage, telephone and electricity are available to the land which is zoned “Business” under the Hervey Bay Town Planning Scheme.
At the hearing of these appeals Mr W McNiven appeared and gave evidence, while Mr D Gaedtke, a registered valuer employed by the Department of Natural Resources (formerly Department of Lands) appeared and gave evidence for the respondent.
The report tendered by Mr Gaedtke described the subject land as having a gentle fall to the road from the rear. He explained that Lot 28 on RP 35173 was developed partly for commercial purposes and partly for residential purposes. The Chief Executive had declared the land occupied by the residence to be a separate parcel and valued it separately. That parcel is not the subject of these appeals. The southern part of Lot 28 was valued in conjunction with Lot 2 on RP 157517, which was also used for commercial purposes.
The subject land had been used as a service station when Mr McNiven purchased the land in the early 1980s, but by June 1994 it had ceased to be so used. The land is presently being used for commercial purposes, comprising a vehicle repair workshop, a vehicle detailing business and a retail business selling batteries etc.
It is common ground that the highest and best use of the land is for redevelopment for commercial purposes. Mr McNiven explained that he had, in 1993, negotiated to sell the land (with other adjoining land), to the Maryborough and District Friendly Society. However, he said that the National Bank had refused to finance the purchase on the grounds that the site was an old service station and was regarded as contaminated.
Mr Gaedtke noted that Lot 2 on RP 157517 is listed on the Contaminated Sites Register as a “probable” contaminated site under the Contaminated Land Act 1991, because of its previous use as a service station. Although Lot 28 on RP 35173 is not listed on the Register, the southern part of it was also used for service station purposes and would also be regarded as a “probable” contaminated site.
There is evidence of at least some remediation. Mr McNiven stated that following discovery of a leaking fuel tank in May 1994, the Shell Company removed the tanks and the business closed down. This work also involved the removal of contaminated soil and the filling of the excavated areas. It seems that Mr McNiven had to bear the cost of removal from the site of the six abandoned tanks. However, evidence was given of some further underground tanks remaining under the existing buildings, which may or may not contain sump oil.
In support of the respondent’s 1993 valuation, Mr Gaedtke referred to the sales of three parcels of land in the vicinity, all zoned “Business” and all inferior to the subject land. Those three properties ranged in area from 933 m² to 2,228 m² and sold between July 1992 and February 1994 (that last mentioned sale being a support sale only), for prices which showed unimproved values of between $145 per m² and $265 per m², to which the respondent had applied unimproved values of between $125 per m² and $200 per m².
None of the sale properties was situated on a corner, although one of them had rear access. They were all further removed from the main Pialba Central Business District. After making adjustments for the various differences between the sales and the subject land, Mr Gaedtke considered that the sales supported the applied unimproved value of $235 per m², or $440,000, on the subject land.
Mr Gaedtke supported the 1995 valuation by referring to four sales, which included his Sale No. 3 above, which he had used as a support sale for the 1993 valuation. Those sales ranged in area from 714 m² to 1,222 m² and sold between January and June 1994 for prices ranging from $200 per m² to $285 per m² analysed unimproved.
Those properties were all inferior to the subject land, being smaller and further from the main Pialba CBD, but Mr Gaedtke considered that they supported the applied unimproved value of $260 per m² or $485,000, applied to the subject land.
Mr McNiven was not able to refer to any sales to support his estimate of unimproved value of $300,000 in each case. His grounds of appeal and most of his case related to the difficulties that he had with the service station use of the land and with his tenants, and with the economic environment in Hervey Bay. He admitted that the highest and best use of the land was as a redevelopment site.
In this case Mr Gaedtke has supported the respondent’s valuations of the subject land by comparing it with sales of land in the vicinity, in accordance with the correct principles of valuation as stated in the decision of the Land Appeal Court in Grahn v. Valuer-General (1992) 14 QLCR 327. Mr McNiven presented no evidence to challenge the basis in either case. Therefore, the appeals should be dismissed unless Mr Gaedtke has overlooked or failed to make allowance for any detriment suffered by the subject land.
In this regard there is one further matter for consideration. The fact that part of the land had been entered on the Contaminated Sites Register as a “probable” contaminated site was raised by Mr McNiven as a ground of appeal and he gave evidence about it. The effect upon the unimproved value of land which was a former service station site has recently been considered by the Land Appeal Court in Caltex Oil (Australia) v. Chief Executive, Department of Lands (AV93-561) judgment delivered 26 April 1996.
In that case the parties agreed that the highest and best use of the former service station site was for residential purposes. That land had been listed on the Contaminated Sites Register as a “probable” contaminated site. The Land Appeal Court considered the provisions of the Contaminated Land Act 1991 in some detail and the effect that classification as a “probable site” would have upon the mind of a hypothetical prudent purchaser of the site.
The Court concluded at pp.23-24:
We have concluded that the classification of the subject land as a ‘probable site’ would affect the value of that land if the land was being sold in its unimproved state for residential use. We accept that prudent vendors and purchasers of land will ‘inevitably and necessarily’ examine the impact of statutory controls on land use before deciding what a particular block of land is worth in the market place, and that the effect (if any) of a particular control is a question of fact. ...
This Court must determine the unimproved value of the land with its current classification of ‘probable site’, that is in an unremediated condition. We assume, in the absence of any evidence to the contrary, that (other things being equal) there is no difference in value between land which has been remediated and land which has never been contaminated. However, even if the cost of remediation were precisely known, it would not necessarily be correct to determine that value simply by subtracting that cost from the agreed value of the land as uncontaminated land; nor do we think such an approach is supported by the evidence in the present case, although cost is no doubt a relevant consideration.”
The Court then had regard to the evidence of the cost of remediation in that case, which was to the effect that the cost of a preliminary site investigation was $6,000, and total cost of remediation ranged from $20,000 for a minor level of contamination, to $120,000 for a major level of contamination. As the level of contamination was not known, the Court reduced the valuation from $135,000 to $115,000, adopting an allowance which seemed to be at the lower end of the range of costs which were in evidence in that case.
However, the Court felt compelled to make the following observations at p.26:
“We were told that the parties considered this case to be a test case. We do not speculate about the possible application of this decision in other circumstances. It may assist the parties, however, if we make three observations about the decision.
First, where land which is being used as a service station has a higher and better use, and it would be necessary for the land to be classified as a ‘former site’ or a ‘released site’ before it could be put to that use, the extent of the reduction (if any) in the unimproved value of the land must be determined by reference to evidence of the actual or probable cost of remediation. Where there is insufficient evidence to establish that the land is, or is highly likely to be, significantly contaminated, the allowance made for the effect of the contamination should be small.
Second, this case does not raise for decision the question whether any reduction in the unimproved value should be made in those instances where service station land is classified as a probable site and the highest and best use of the land is as a service station.
Third, this case does not raise for decision whether a different valuation should apply to land which was once used for service station purposes but has been remediated and is classified as a ‘former site’ at a later date of valuation.”
In the present case, there is evidence that Lot 2 RP 157517 was classified as a “probable site” as at 30 June 1993. Although it was not listed on the Register of Contaminated Sites, Lot 28 RP 35173 was, in all likelihood, also a “probable site”. By 1 January 1995, Lot 2 had been remediated largely at the expense of the Shell Co and would probably be regarded as a “former site”, while the status of Lot 28 was unchanged.
Mr Gaedtke said that the respondent had regard to the fact that the subject land was a “probable site” by reducing the valuation by $10,000 when Mr McNiven objected against the valuation of $450,000 as at 30 June 1993. He did not allow for a larger amount as he reasoned that as the highest and best use of the land was for redevelopment for commercial purposes, significant excavation must be undertaken for basement car parking and for foundations. Such work would contribute significantly to any necessary remediation.
Since the underground tanks remained on Lot 28, Mr Gaedtke considered that as at 1 January 1995, the subject land should still be regarded as a “probable site” and he reasoned that a similar approach should be taken to the remediation of the land. As at that date the respondent applied $260 per m², or $485,000, based on sales evidence.
Mr Gaedtke’s approach to the valuation does not seem to conflict with the principles established in the Caltex Case and I accept his reasoning. In these circumstances, the appeals should be dismissed.
Accordingly, in respect of AV94-665, the appeal is dismissed and the unimproved value determined by the respondent at Four Hundred and Forty Thousand Dollars ($440,000) is affirmed.
In respect of AV95-108, the appeal is dismissed and the unimproved value determined by the respondent at Four Hundred and Eighty-five Thousand Dollars ($485,000) is affirmed.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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