Mellick & Oakden Investments Pty Ltd v Chief Executive, Department of Natural Resources
[1998] QLC 117
•6 October 1998
|
BRISBANE
6 OCTOBER 1998
Re: Determination of Unimproved Values -
Local Authority: Pine Rivers -
K and HA Mellick and Oakden Investments Pty Ltd
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Five appeals have been filed in the Land Court Registry by the above appellants against determinations of unimproved value of land within the Local Authority of Pine Rivers as at relevant dates of 1 October 1996, and 1 October 1997. Details are:
Appeal Ref: AV97-424 - an unimproved value of $1,800,000 for a parcel of land described as Lot 22 on RP 817556, Parish of Warner, County of Stanley, containing an area of 6.575 ha - appellants’ unimproved value as contended within the notice of appeal $685,000 - relevant date of valuation 1 October 1996.
Appeal Ref: AV97-491 - an unimproved value of $1,840,000 for four parcels of land described as Lots 40, 41, 42 and 46 on RP 910691, Parish of Warner, County of Stanley, containing an area of 6.7827 ha - appellant’s unimproved value as contained within the notice of appeal $1,000,000 - relevant date of valuation 1 October 1996.
Appeal Ref: AV97-492 - an unimproved value of $1,500,000 for a parcel of land described as Lot 34 on RP 907831, Parish of Warner, County of Stanley, containing an area of 5.8860 ha - appellant’s unimproved value as contained within the notice of appeal $685,000 - relevant date of valuation 1 October 1996.
It is to be noted that a copy of an I.V.A.S. report on the Court file indicates that the Department of Natural Resources valuation of Lot 34 was originally $1,850,000 and that this valuation was reduced on objection to $1,800,000, but the Department led evidence in this case to a valuation of $1,500,000.
Appeal Ref: AV98-85 - an unimproved value of $1,560,000 for a parcel of land described as Lot 46 on RP 910691, Parish of Warner, County of Stanley, containing an area of 6.031 ha - appellant’s unimproved value as contained within the notice of appeal $685,000 - relevant date of valuation 1 October 1996.
Ref. AV98-153 - an unimproved value of $1,560,000 for the same parcel of land described as Lot 46 on RP 910691, Parish of Warner, County of Stanley, containing an area of 6.031 hectares - appellant’s unimproved value as contained within the notice of appeal $685,000 - relevant date of valuation - 1 October 1997.
All appeals really relate to the same property notwithstanding the differing real property descriptions which have resulted, on my appreciation of the evidence, mainly from on a series of changes in respect of property easements (both for access and drainage) over the period of time ranging from 24 March 1997 (the date of issue of AV97-424 and AV98-85 valuation notices) to 23 March 1998 (the date of issue of AV98-153 valuation notice). But there is one exception and that is that AV97-491 valuation notice incorporated four separately surveyed parcels of land which was formerly described as Lot 34 on RP 907831 (Appeal Ref. AV97-492 parcel). Three of the separately surveyed lots have since been sold.
The appeal property is situated on Samsonvale Road, Old North Road and Everest Street, in the suburb of Warner. Consequent upon a decision of the Planning and Environment Court following a hearing on 31 March 1994 (P & E No 352 of 1993), the subject parcels were excluded from the “Future Urban” zone of the Pine Rivers Shire Town Planning Scheme to the “Special Facilities” zone (District Retail/Community Centre) comprising:Precinct A - Shop (not to include a Discount Department Store), Commercial Services, Retail Nursery, Intensive Recreation, Hardware Shop, Child Care Centre, Restaurant, Veterinary Clinic, Late Night Shop and District Centre and Hotel Access and Carparking (the development of the buildings intended for shop purposes shall be controlled in terms of size, position, composition and timing as specified in the rezoning conditions).
Precinct B - Intensive Recreation, Child Care Centre, Veterinary Clinic, District Centre and Hotel Access and Carparking and Ancillary Services (but not including any retail uses) Zone and the Special Facilities (Hotel, and Hotel and District Centre Access and Carparking) Zone.
I might here mention that the valuation of Lot 22 on RP 817556 (Appeal Ref: AV97-424) as at relevant dates of 30 June 1993, 1 January 1995, and 1 January 1996, has been before the learned President of this Court for determination, and on 19 March 1997 he brought down his decision allowing appeals against the Chief Executive’s valuation of $1,000,000 for Lot 22 at these relevant dates with a consequent determination of an unimproved value of $685,000. The learned President’s determination of the unimproved value was made as follows:
Lot 22 - 65,750 sq.metres sound land @ $40 per sq.metre - $2,630,000Less
Additional costs of roadwork and drainage $1,184,570
Cost of removal and replacement of
highly reactive clay material $ 760,000 $1,944,570
UNIMPROVED VALUE $ 685,430
(Adopt $685,000)
Before proceeding further with this decision, it is perhaps noteworthy to comment that the learned President had the benefit of engineering evidence from the appellants (K and HA Mellick) but did not have before him for his consideration engineering evidence from the respondent Department of Natural Resources.
Now it is obvious that the learned President’s determination is the basis for the appellants’ unimproved value in Appeal Refs. AV97-424, AV97-492, AV98-85 and AV98-153. As for the Appeal Ref. AV97-491, I cannot discern just what is the basis for the appellants’ unimproved valuation of $1,000,000. But more about the valuation of this parcel later when I deal with the valuation evidence called in this case.
Now the decision of the learned President as to the allowance made for the additional costs of roadwork and drainage ($1,184,570) and of the cost of removal and replacement of highly reactive clay material ($760,000) was the result of his adoption of a report by Geoffrey Bryan Greenhalgh, who is a consulting engineer in the firm, Karamisheff Nagel Pty Ltd. Mr Greenhalgh had calculated the extra over development construction costs on Lot 22 for a proposed District Community Centre over and above the development costs normally associated with the development of sound land to have been the sum of $1,184,570. This is calculated as follows:Costs on land with specific problems $2,062,668
Less
Costs on land without specific problems $ 878,098Extra over development costs $1,184,570
As for his calculations for the cost of removal and replacement of highly reactive clays in the sum of $760,000, Mr Greenhalgh estimated the additional cost for the ground slab for the proposed District Community Centre shop involved the removal and replacement of an area of 10,000 square metres of clay to a depth of 2 metres at a cost of $38 m; ($6 m; excavation and $32 m; replacement).
Here I might comment that it is perhaps best if this decision is read along with that of the learned President (Ref V95-568/570 and AV96-538) who so aptly described the topographical difficulties with the site from a development point of view (page 2 of decision), encompassed the history and the decision of Planning and Environment Court (page 3) and the difficulties with the easement drainage system (page 4).
Mr Greenhalgh was again called by the appellants in these cases. His evidence as to the extra over development costs of the subject in globo parcel, (whether it be Lot 22, Lot 34 or Lot 46) largely in accord in quantum with the figures he previously placed before the Court. I say largely because there are minor differences in quantums and while there is a big departure in the method used by Mr Greenhalgh to assess the cost of removing and replacing of the reactive clay for building foundations, his reviewed cost of dealing with this problem bears striking similarity with that of $760,000 placed before the President. I do not propose to tabulate details of Mr Greenhalgh’s revised construction costs, save to say that he now estimates these costs for Lot 46 land with its specific development problems to be $2,020,109, and for Lot 46 land without specific problems to be $873,143. By simple subtraction, Mr Greenhalgh now estimates the extra over construction costs for Lot 46 to be $1,146,966 in lieu of his earlier costs, as adjusted by the learned President, of $1,184,570 for Lot 22. Mr Greenhalgh now estimates that construction costs for Lots 22 or 34 with specific problems to be $2,187,913 and without specific problems to be $1,012,388. Again by simple subtraction, he calculates the extra over construction costs for Lot 22 and/or 34 to be $1,175,525.
Mr Greenhalgh has revised his method of estimating the cost of the removal and replacement of the reactive clays following receipt of reports from special geotechnical consultants, Golder & Associates (Mr Bruce J White) and Civil Quality Assurance (Q) Pty Ltd (Mr PG Fraser).
Mr White provided Mr Greenhalgh with a geotechnical appraisal of Lot 34 for its development for a proposed shopping centre which provided advice on suitable foundation systems. Mr Greenhalgh had presented Mr White with his engineering calculations presented to the Court. Mr White referred in his report to the result of the soil test analyses on nearby sites - the Warner Medical Centre - Report on Geotechnical Investigation - prepared by Arup Geotechnics Pty Ltd in May 1996, and to that for Lot 40, Old North Road, prepared by Civil Quality Assurance (Q) Pty Ltd on 2 September 1997.
Mr White says that it is his understanding that the development currently proposed for Lot 34 is a shopping centre building with a floor area of approximately 12,400 square metres with perimeter car parking on a total site area of about 6 hectares. Mr White was not provided with any soil survey data for Lot 34, and understands that no geotechnical investigation has been undertaken on the site, but his inspection of the land indicated that it is reasonably “flat” and he envisages that cut and fill depths required for platform construction for a shopping centre and the grading of car-parking areas would be expected to be in the order of 1 metre depth maximum.
Based on Mr Greenhalgh’s appraisal of the site and the likely presence of high plasticity clays, Mr White’s suggestion for the provision of satisfactory foundations envisages the excavation of clays to the depth of 1 metre, its replacement with stable fill, and then the adoption of a conventional high level footing system. It is on this basis that Mr White considers the “excavate and replace” option proposed by Mr Greenhalgh to handle the reactive clays is likely to be an appropriate and economic foundation solution for the development proposed for the site.
It is upon Mr White’s recommendation that Mr Greenhalgh now proposes a different method of assessment of the cost of ridding the site with the over reactive clays. The method reads:
“Proposed building footprint area includes:
Nett lease area 9,000m5
Plant, equipment, mall, etc 2,100 m5
Loading docks 500 m5
Indoor recreation area 800 m5
Total building area 12,400 m5
Area of 5 metre wide perimeter band 3,000 m5
Additional area under shallow footings
(i.e. 2 x 250m x 4m) 2,000 m5
Total Building Footprint 17,400 m5
Total Estimated Replacement
(17,400m2 x 1m depth) 17,400m;
Estimated Cost of Replacement
(including excavation) 17,400m3 @ $38.00/m; $661,200
Subsurface drains 1100m @ $16.00/m $ 17,600
Trim subgrade to profile 15,400m2 @ $1.00/ m5 $ 15,400
Sub Total $694,200
Contingency (5% minimum) $ 34,710
Soil Testing/Additional Investigation $ 10,000
Engineering Fees $ 10,000
TOTAL EXTRA OVER BUILDING COSTS $748,910 ”
Practising Registered Valuer, Bryan Boyd Kelaher, who furnished evidence before the learned President, was again called by the appellants before me. In his valuation document he summarises his valuations of the appeal parcels as follows:
VALUATIONS: (4)
Lot 22 6.575 ha 5.5799 m5 x $400,000 = $2,231,960
Esmts. .9951 m5 x $300,000 = $ 298,530
Total $2,530,490
Less Engineers calculations $1,924,435
$ 606,055
Say $ 685,000Lot 34 5.886ha 4.5367ha x $400,000 = $1,814,680
US - $ 685,000 Esmts. 1.3493ha x $300,000 = $ 404,790
$2,219,470
Less Engineers calculations $1,924,435
$ 295,035
Say $ 300,000
Lots 40/42 and 46 6.7827ha.
4.6817ha x $400,000 = $1,872,680
Esmts. 1.3493ha x $300,000 = $ 404,790$2,277,470
Less Engineers calculations $1,895,876
$ 381,594
DNR
Lot 40 - 2006m5 - $162,000) $ 487,000
Lot 41 - 1951m5 - $128,000) $ 868,594
Lot 42 - 3560m5 - $197,000 $ 86,859
.7517m5 - $487,000 Accept - Less 10% bulk $ 787,735
Say $ 800,000
Lot 46 - 6.031ha 4.3822ha x $400,000 = $1,752,880
Esmts 1.6488ha x $300,000 = $ 494,640
Total $2,247,520
Less Engineers calculations $1,890,876
$ 356,644
Say $ 350,000
At a late stage of the hearing of the matters, and in view of Mr Greenhalgh’s adjusted engineering advice as to development costs, Counsel for the appellants submitted that Mr Kelaher’s valuations should be adjusted to read:
Appeal Ref: AV97-424 - Lot 22 - 6.575ha - substituted engineering costs calculations $1,879,856 - amended unimproved value $650,063 - say $650,000.
Appeal Ref: AV97-492 - Lot 34 - 5.886ha - substituted engineering costs calculations $1,879,856 - amended unimproved value $339,614 - say $339,600.
Appeal Ref: AV97-491 - Lots 40, 41, 42 and 46 - 6.7827ha - substituted engineering costs calculations $1,879,856 - amended unimproved value $884,614 - say $884,000.
I doubt if this submitted calculation is correct as there appears not to have been taken into account the 10% bulk holding allowance made by Mr Kelaher and by the Chief Executive.
Appeal Refs: V98-85 and AV98-153 - Lot 46 - 6.031ha - substituted engineering costs calculations $1,879,856 - amended unimproved value $367,664 - say $367,000.
It is to be noted that although the appellants have adopted the determination by the Land Court as a basis for their values of the subject lands in the notices of appeal, the amended valuation of Mr Kelaher departs quite markedly from a valuation of $685,000 for the in globo parcel of development land whether it be Lot 22, Lot 34 or Lot 46. This is mainly because Mr Kelaher has not adopted for his starting point in his unimproved value calculations, a value of $40 per square metre as determined by the Land Court for the lots as sound land. He adopts a value of $40 per square metre ($400,000 per hectare) for the land unencumbered by easements but reduces this to $30 per square metre ($300,000 per hectare) for the land encumbered by easements with the effect that his valuations before allowing for the engineers’ calculations are below the $40 per square metre determined by the Court for the parcel overall
Mr Kelaher is aware, no doubt as a result of “without prejudice” discussions with the respondent in these matters, that the Chief Executive is to lead evidence to a value of $45 per square metre for the subject in globo parcel before engineering cost allowances are made. He expressed the opinion that there is no sales evidence, or at least none which he could identify, which leads him to a conclusion that the unimproved value of the subject lands, before allowances are to be made for specific engineering difficulties with the site, should be increased from $40 per square metre as at the relevant date of 1 January 1996, to $45 per square metre as at a relevant dates of 1 October 1996 and 1 October 1997.
Mr Kelaher tabulates the basis for his valuation of the land at $40 per square metre. It comprises four sales of shopping centre sites, details of which are:
Sale No 1 - Lot 1 on RP 160614, Parish of Redcliffe - 3.267 hectares - land sold on 22 December 1995 (date of possession 18 March 1996) to adjoining owner (Tulip Town Shopping Centre) for $2,240,000 ($68.56 per square metre) - situation Anzac Avenue, Kallangur - zoning “Central Business”.
Mr Kelaher has analysed this sale to reflect an unimproved value of $61 per square metre ($1,992,870). Improvements on the land at sale date are described by Mr Kelaher to have included clearing (which he values at $16,335 or $5,000 per ha) and cut and fill which he believes is on the site and for which he does not specifically nominate a value.
Mr Kelaher describes his Sale No 1 land as being level land and level with the highway (Anzac Avenue) with a slight fall to a minor drainage easement in favour of the land on its western side and with a major drain at the rear which, Mr Kelaher says, does not affect any proposed shopping centre development - in fact Mr Kelaher sees his Sale No 1 land to be fault-free land with superior zoning to that of the subject land. He also says Sale No 1 land is in a very much superior business location on a main road to which it has about 120 metres frontage - giving what he describes as “outstanding visibility and access”. Mr Kelaher stresses that his Sale No 1 was to an adjoining owner with land very much superior to the subject land, and says that it is a genuine sale at $60 per square metre in comparison with which the value of the subject land as sound land, could not exceed $40 per square metre or $400,000 per hectare. But before leaving Mr Kelaher’s Sale No 1, I should comment that it was one of the sales placed in evidence before the President by Mr Kelaher and the President discarded it as being satisfactory sales evidence as “it is difficult to see how any of the sales advanced by the valuers could be other than the broadest of guides to the unimproved value of that land at the relevant dates” (page 15).
Sale No 2 - A 3.258 hectare site which sold on 22 February 1995 (date of possession 18 March 1995) from Tulip Town Shopping Centre to PT Pty Ltd for $5,760,000. Erected on this site at sale date was a drive-in shopping centre which Mr Kelaher values at $4,510,000 - reflecting an analysed unimproved value of $38 per square metre. I do not feel the need to further examine this sale in this decision as the analysis of it involves the valuation of significant structural improvements, and it is well recognised that the analyses of highly-improved sales, when the valuation task is to assess unimproved values, is not to be preferred to the use of vacant or lightly improved sales evidence. (Vide decision of Land Appeal Court in Re: Appeal by Landholder against a determination of the Valuer-General - City of Brisbane - (1983) 9 QLCR 44 p.46). It is also to be noted that this sale, which also was placed before the learned President by Mr Kelaher, was likewise discarded by him.
Sale No 3 - Lot 980 on SL 1469, Parish of Redcliffe - 2.784 hectares - sold on 11 May 1993, for $475,000 - vacant land - situation Brickworks Road, Kallangur - zoning “Local Business”.
Again this sale was placed before the learned President by Mr Kelaher and again it was discarded by him. I also place no reliance upon it - it is a dated sale (1993) and only shows an unimproved value of $17 per square metre for cleared land and can scarcely be compared with a parcel with an agreed unimproved value (as between the Land Court and the appellants) of $40 per square metre ($400,000 per hectare) as sound land as at a relevant date of 1 January 1996.
Sale No 4 - Lots 5/6 on RP 98956 - 2.026 hectares - land sold in 1994 as vacant land for $1,250,000 ($61.50 per square metre) - situation cnr Beckett Street and Hamilton Road, Chermside. Mr Kelaher has been unable to analyse this sale to show unimproved value as there has been extensive cut and fill to the site which is now developed as the Franklin Village Shopping Centre. Mr Kelaher told us he only included this sale in his report as his information was it was a sale to be relied upon by the respondent in these cases.
Mr Kelaher placed before the Court an unimproved value relativity schedule showing the unimproved values applied by the respondent to the subject land ($1,850,000 or $28 per square metre) as at 1 October 1996, compared with the Land Court decision ($685,000 or $10.50 per square metre) as at 1 January 1996. The schedule also shows the unimproved values applied to other shopping centre sites but it really takes Mr Kelaher’s evidence little further in the matters.
The respondent Chief Executive called in evidence Timothy Richard Poole, who is a consulting civil engineer in the employ of the firm, John Wilson & Partners. Mr Poole told us that his firm was commissioned by the Department to investigate, check and comment in general on development costs specific to the subject Lot 34, particularly by way of consideration of the site with and without specific development problems. The Department requested Mr Poole’s specific opinion on the developer’s engineers’ options to remove and replace 20,000 cubic metres of highly reactive clay on the site. The excavation and replacement of the quantity of the material has, as previously discussed, been abandoned by Mr Greenhalgh in this case, but the substituted quantity for replacement (17,400 cubic metres) falls not far short of the original estimate of 20,000 cubic metres. Mr Poole was asked to assess the cost of development of the land from its unimproved state to a condition suitable for commercial development, to identify and quantify the special difficulties of the site and to refer to external and internal works.
For the purpose of identifying the site-specific problems, Mr Poole assumes that the proposed use of the land is for a District Community Centre, including an hotel, a liquor barn, a service station, a fast food outlet, shops, and a supermarket together with other minor uses, and on-site car-parking areas.
Mr Poole describes Lot 34 as being low-lying and with drainage problems, but he says the development proposed for the land that does not include any residential uses so the impact of major natural disasters such as extreme precipitation events, will not have the high level of community or regulatory concern as would a residential development. He has had access to the report prepared by Mr Greenhalgh as presented to the Land Court in Appeal Refs: V95-568 to 570 and AV96-558, and which identifies differences in the cost of site development with and without specific development problems. Mr Poole says that Mr Greenhalgh’s report also identifies specific problems with the site as being poor sub-grade material requiring additional testing and additional excavation and extra pavement depths, drainage - trunk stormwater and associated costs, and the treatment of the reactive clays.
Mr Poole recognises that soil tests taken close to the subject land indicate a low CBR value, but this may be indicative of soils in the general area and not limited to Lot 34. His firm’s investigations show the soils are similar in low areas and stresses that Lot 34 soils should not be undervalued in relation to adjacent low sites for reasons of poor soils. Further, soil tests on Lot 34 should be taken.
Mr Poole informed the Court that in order to construct the main drainage system through the land and to allow box culverts to be constructed on their designed alignment, a temporary open drain channel was constructed to divert the channel to what appears to be its future preferred position. Mr Greenhalgh’s estimate of the cost of this operation is $122,564 (without interest). Mr Poole says it is questionable whether or not this cost of realignment is a legitimate inclusion in Mr Greenhalgh’s analysis because it benefits future design construction costs, related to site improvements rather than to a difficult site, and that this cost may not be applicable if the temporary open drain is ultimately piped or enclosed.
Mr Poole submits other options to the open channel works are available, such as temporary works to allow flow bypass during site construction such as a coffer dam and bypass pipe or pumping system, with the existing gully remaining in its general position or the construction of a coffer dam only combined with dry weather construction techniques to allow over-top through the site. But he believes the most acceptable option from a construction safety viewpoint is his first option; i.e. to leave the existing gully up-stream of the box culverts in its natural state and location, and construct a coffer dam across the valley, including overflow protection, to pump ponded water to a discharge point, to fast-track construction of the base of the culvert system, and to remove temporary works on the completion of the box culverts. Mr Poole believes these works would provide the developers with a lower cost alternative to the temporary open channel costs, and at a cost of $15,440.
Mr Poole is of the opinion that the original proposal put forward by Mr Greenhalgh to excavate 20,000 cubic metres of reactive clay “to establish usable foundations at a cost of $760,000 ($38 per cubic metre)” seems to be an extreme solution to the building foundation problems. He says alternative solutions can be found.
Mr Poole told us that reactive clays respond to changes in moisture content and heave and shrink accordingly, and that if the moisture content is kept constant by isolating the foundation material below the building from moisture penetration, then affects for reactive clay foundations can be minimised to the extent of little or no structural consequence. Alternatives to soil replacements suggested by Mr Greenhalgh are to replace a perimeter strip of reactive clay around the proposed building site with non-reactive clay cut-off, or the use of a concrete structural membrane. Other relatively low cost alternative foundation systems such as “waffle pad” are available, but Mr Poole, for the purpose of his analysis, assumes that a clay blanket and perimeter cut-off would be suitable. On the assumption that dimensions for a clay blanket would be 10,000 square metres x 300 millimetres deep with a cut-off trench 2 metres deep and 1 metre wide, Mr Poole’s cost estimate for this work is as follows:
Surface fill - 3,000m; @ $20/m; $60,000
Cut off trench @ $25/m; $20,000
Plastic membranes supplied & placed $ 2,000
Dewatering if required $ 1,500
$83,500
Contingencies, soil tests $ 8,000
Engineering fees $ 7,000
TOTAL ESTIMATED COST $98,500
Mr Poole says that this work will replace Mr Greenhalgh’s costing of $760,000 (adjusted in this case to $748,910), but stresses that his alternatives rely on a thorough site soil analysis, engineering design, and suitable replacement material availability close to the site.
Mr Poole commented in evidence that Mr Greenhalgh’s estimates for costs of roadworks and drainage (internal and external) involve his use of construction costs in the area at the time of his estimate. Mr Poole has only minor disagreement with Mr Greenhalgh’s estimates, and he sets out these disagreements within his tabulated report.
By way of comparison or contrast, Mr Poole provided the Court with a comparison between his firm’s costings for the development of the site compared with those supplied by Mr Greenhalgh. They are:
| Item | Greenhalgh | Poole |
| Temporary open channel | 106,699 (w/o fees) | 12,300 (w/o fees) |
| Drainage/roadworks | 954,800 | 902,050 |
| Reactive clays | Originally 760,000 (inc. fees) | 98,500 (inc. fees) |
| Total | 1,821,499 | 1,012,850 |
| Difference | 808,649 |
By way of overview, Mr Poole stresses that engineering alternatives were available to those proposed by Mr Greenhalgh and that these alternatives, which relate to the treatment of the open drain and the reactive clays (the presence of which has not been confirmed) represents the cost reduction in site works relating to specific problems of $808,649 without interest.
The valuations under appeal were made by Registered Departmental Valuer, Philip Christopher Smith, who describes original Lot 22 as land as being gently undulating forest country treed with bloodwoods and gums. Mr Smith confirms that there is a temporary open drain running from the western boundary to the Old North Road boundary and running parallel to the south-western boundary, and that part of the drainage work on the land has been completed along the south-west boundary including a major box culvert adjoining Lot 19 on RP 817556 and the subject property. Mr Smith has made his valuations as follows:
AV97-424 - Lot 22 - $65,750m5 @ $45/m5 $2,958,750
Less additional costs for development works
as per John Wilson & Partners’ Report $1,151,494
Calculated Unimproved Capital Value $1,807,256
Unimproved Value Adopted $1,800,000
AV97-491 - Lots 40,41,42 and 46
Lot 40 - 2006m5 $ 162,000
Lot 41 - 1951m5 $ 128,000
Lot 42 - 3560m5 $ 197,500
Lot 46 - 60,310m5 $1,560,000
$2,047,500
Unimproved value calculated - $2,047,500 less 10% bulk = $1,842,750
Unimproved value adopted - $1,840,000
AV97-491 - Lot 34 - 58,860m5 @ $45/m5 = $2,648,700
Less additional costs for development works
as per John Wilson & Partners’ report = $1,151,494
Calculated unimproved value = $1,497,206
Unimproved value adopted - $1,500,000
AV98-85 - Lot 46 - 60,310m5 @ $45/m5 = $2,713,950
Less additional costs for development works
as per John Wilson & Partners’ report = $1,151,494
Calculated unimproved value = $1,562,456
Unimproved value adopted - $1,560,000
AV 98-153 - Lot 46 (as for Ref AV98-85) -
Calculated unimproved value = $1,562,456
Unimproved value adopted - $1,560,000
As a basis for his valuation of Lots 22, 34 and 46, Mr Smith relies upon the analysis of three shopping centre land sales, and for his valuation of Lots 40, 41 and 42, Mr Smith also relies upon three sales, but I do not feel the need to refer to the latter sales as there is no issue between the parties as to the Departmental valuation of Lots 40, 41 and 42 (part AV97-491). Details of Mr Smith’s shopping centre site sales analyses are:
Sale No 1 - Lot 1 on RP 160614 - 3.267 hectares - JH Grant to Larblock Pty Ltd (Westfield) on 22 December 1995 for $2,240,000 - analysed unimproved value $2,235,000 ($68.40/m5) - situation 1611 Anzac Avenue, Kallangur - zoning “Central Business”.
Mr Smith describes the nature of this land as being fully cleared being elevated to the west sloping down to large drainage easements fronting Bray’s Road and the southern boundary. He confirms the land is well exposed to Anzac Avenue, which is the main road.
Mr Smith considers the sale property to be inferior in area and slightly superior in topography when compared with Lot 22 etc. The sale property was rezoned in August 1994 with a restriction condition in the approvals to develop 8,100 square metres net lettable area, which he says is similar to the long-term potential of the subject property. Overall Mr Smith says the sale land is superior to the subject land on a rate-per-square-metre basis due to the development status and exposure. It is to be observed that this is the same sale as Mr Kelaher’s Sale No 1.
Sale No 2 - Lot 962 on RP 892850 - 2.083 hectares - Leader Developments Pty Ltd to Fabcot Pty Ltd (Woolworths) on 9 October 1994, for $2,500,000 - analysed unimproved value $2,490,000 ($120 per m5) - situation Jagora Drive, Albany Creek - zoning “Local Business”.
Mr Smith describes this sale land as being a gently sloping site, falling from the south-west to the north-east where the land fronts to Old Northern Road. There is a large drainage easement running the length of the eastern boundary. Mr Smith says the land requires approximately 2 to 5 metres of cut and fill on the south-western boundary to create a developable site. He says this sale property is similar in access and topography and inferior in area when compared with the subject land. The sale property was essentially vacant land and has since been developed into a Woolworths supermarket and a mix of speciality shops totalling 5,000 square metres of net lettable area similar to that which can be developed on the subject land at the present time. Overall Mr Smith sees this sale land to be superior to the subject land on a rate-per-square-metre basis.
Sale No 3 - Lots 5 and 6 on RP 98956 - 2.026 hectares - PC and BF Bridgewater to Flipper Pty Ltd - company transfer to McDowall Village plus KF and JR Shepherd to McDowall Village on 21 July 1994 and 12 August 1994 with possession for Lot 6 not until December 1996 - sale price $1,250,000 plus rezoning and external works costs of $373,144 - analysed unimproved value $1,624,144 ($80.11/m5) - situation cnr Becket Road and Hamilton Road, McDowall - zoning “Future Urban”.
Mr Smith describes this sale land as sloping steeply down from the southern boundary to the northern boundary. To provide an adequate site for development, approximately 40,000 cubic metres of earth was shifted (cut and fill). Accordingly, Mr Smith says that an additional sum of approximately $500,000 was spent on site earthworks and drainage prior to development. He says that the sale property is inferior in area and topography and superior in access when compared with the subject land. The sale land has obtained approval for 5,000 square metres of gross floor area to be distributed between 2,500 square metres of supermarket and 2,500 square metres of specialty shops, similar in areas to what is able to be developed on the subject land. Mr Smith says that significant local opposition was encountered at the time of rezoning the sale land along with extensive costs associated with the development of the site, similar to the subject. Overall Mr Smith considers the sale land to be superior on a rate per square metre when compared with the subject land due to its smaller area and its superior location at the present time.
Mr Smith informed the Court that the allowance he has made of $1,151,494 for development works is based on Mr Poole’s engineering advice and is as follows:
Additional costs for temporary open channel
(allowed engineering, surveying, project
management & interest) $ 15,440
(1A) Additional costs of drainage & roadworks
(adjusted) $989,554
Amended costs relating to reactive clays $146,500 $1,151,494
It is to be noted that the cost relating to the treatment of reactive clays has been increased over and above Mr Poole’s estimate to largely accord with calculations made by Mr Greenhalgh of the costs using Mr Poole’s method of treatment.
During the course of the case the engineers who were called in evidence offered some views about their opposites’ options for developing the site. Mr Greenhalgh told us that there may have been some misunderstanding by Mr Poole as to what he meant when he said there was a temporary open channel on the land, and that may have not been the wording which allowed everyone to understand its full connotations. His costs associated with the open channel reflect the balance of the channel profile from the upstream end of what will ultimately be the extent of the box culvert construction. His interpretation of Mr Poole’s report is that he seems to have considered that the temporary open channel was temporary for the purposes of constructing part of the works. If this interpretation is correct, then Mr Greenhalgh stresses that that was not the case, and the channel would remain in its current form and position in the final development of the site, and it has been built in the ultimate position, both in plan and elevation, so it represents a cost to the site whether it be current or future.
Mr Greenhalgh commented that the costs allowed for by Mr Poole for the coffer dam type approach to stop trickle flows from causing any anguish during the construction of a concrete base for the structure being built on the subject land are costs which he has not even included in his assessment because they are so minor.
Mr Greenhalgh told us that Mr White, who he says is by far the most experienced geotechnical consultant that he would normally utilise, was very concerned with Mr Poole’s option for a cut-off blanket around the perimeter of the site to counter the reactive clays. This is so because Mr White is of the opinion that the option of using a clay cut-off wall would not necessarily address the issue of stopping the change in moisture content under the slab.
Mr Poole says that the subject land is not unusual in terms of its reactive clays and that there are many cases of lands with highly reactive clays having been developed for commercial purposes in south-east Queensland. He told us that the method of excavation and replacement of clays used by Mr Greenhalgh is one option, if the cost dictates so, but it is quite an unusual option because normally the costs are prohibitive. He says his option is actually limiting the predicted movements to levels which can be incorporated safely in an acceptable commercial foundation system.
Now it is contended by the appellants that the unimproved value of the subject land (Lots 22, 34 and 46) is affected by the control on the development of the site in accordance with the decision of the Planning and Environment Court. The site development is to proceed in three stages. Stage 1 is for a discount supermarket not exceeding 2,500 square metres and shops not exceeding 2,000 square metres, all of which will not commence trading prior to 1 November 1996. Stage 2 involves the extension of the discount supermarket by an additional 2,000 square metres which will not commence trading before the later of either 1 January 1999 or the date when 3,940 dwelling units have been completed within the primary catchment area in which the subject land is situated. Stage 3 provides for the development of further shops up to a total floor area of 2,500 square metres after the later of the two dates referred to in connection with Stage 2 to an area not greater than 1 square metre for every dwelling in excess of 3,940 dwelling units within the primary catchment area.
Now Mr Kelaher sees this development restriction as having quite a negative influence on the value of the subject land, and that it is especially a factor of influence leading him to conclude that the decision of the respondent Chief Executive to increase the unimproved value of the subject land as between 1 January 1996 and the 1 October 1996 relevant date was not justified. But Mr Smith is of the opposite view, and stresses that the wording of the decision of the Planning and Environment Court is that Stage 1 shops will not commence trading until 1 November 1996. Now I am satisfied that the appellants, should they have been desirous of commencing trading on 1 November 1996 (one month after the relevant date for four of the valuations under appeal (1 October 1996) and 11 months before the relevant date for one of the valuations under appeal (1 October 1997)) would clearly have been in a position to construct Stage 1 shopping on or before 1 October 1996 so that trading could commence on 1 November 1996. After all, the date of the Planning and Environment Court hearing was as far back as 31 March 1994.
I should say now that at least part of the engineering evidence was reconciled as between Mr Greenhalgh and Mr Poole during the case. It is agreed that additional costs of drainage and roadworks should be $989,554. It is agreed that the cost of Mr Poole’s option method to counteract the effect of reactive clays is $146,500. Here the agreement ends. But I do not feel the need to reconcile the divergent opinions of the engineers as to the most suitable method, and as a consequence the different costs of assessment of the overcosts for the development of the subject land. This is because of:-
(a) Section 3(1)(a) of the Valuation of Land Act 1944 defines unimproved value, in relation to unimproved land, as the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and
(b) the long-standing dictum of the High Court in Spencer v. The Commonwealth (1907) 5 CLR 418, where Isaacs J said of the hypothetical seller and buyer at p. 441:
“ We must further suppose both to be perfectly acquainted with the land and cognizant of all the circumstances which might affect its value. ” -
(p.17 in the learned President’s decision - Ref V95-568/570 and AV96-558).
But before considering the valuation evidence I might say that if I had found it necessary to make a finding as to the development over-cost for the subject land, I would favour Mr Greenhalgh’s estimate of $141,392 for the temporary open channel as being a necessary expenditure to comply with the requirements of the Pine Rivers Shire Council to provide for drainage of what has been described as the “Todds Gully catchment area” through the subject land. I agree with Mr Greenhalgh’s submission that Mr Poole’s cost estimate for the provision of a coffer dam ($15,440) is associated with the construction of the shopping centre and not really to be for major site drainage requirements.
In relation to the differing over-cost estimates for treatment of the reactive clays, I am uncertain on the evidence about which engineer’s estimate is to be preferred. But I do say that the assumed hypothetical fully-informed vendor and purchaser, being conscious of the widely divergent opinions (Mr Greenhalgh - $748,910; and Mr Poole (originally $98,500 but adjusted to $146,500)) would be influenced by each of the divergent opinions. Certainly the assumed hypothetical seller of the subject land (section 3(1)(a) of the Act) would seriously consider Mr Poole’s cost option if he was prepared to accept Mr Poole’s risk levels for the foundations of the building.
I now turn to the valuation evidence. There are problems for Mr Kelaher in supporting his valuation of the unencumbered land without specific difficulties of $40 per square metre. Clearly the most comparable sale relied upon by him is his Sale No 1 at 1611 Anzac Avenue, Kallangur. But he has analysed this sale to show an unimproved value of $61 per square metre and was decidedly uncertain as to the basis for this analysis. Certainly he indicated that he would have valued the clearing on the site at $16,335 ($5,000 per hectare) but when pressed he was unsure about at how much he valued cut and fill which he presumed to have been on the sale site. He simply said that the difference between the sale price ($68.56 per square metre) and his analysed unimproved value ($61,00 per square metre) was the allowance he had made for clearing and the balance allowance was for cut and fill. As opposed to this analysis, Mr Smith told us that he had made no allowance for cut and fill since his investigations revealed that there was no cut and fill on the site. I prefer Mr Smith’s analysis and this reflects an unimproved value only marginally in excess of Mr Kelaher’s, after allowing only for Mr Kelaher’s value of clearing. This, of course means that if Mr Kelaher’s opinion as to the unimproved value relativity between his Sale No. 1 ($61 m5) and the determination of the learned President ($40 m5) - which Mr Kelaher is prepared to accept as fair value for the subject land as sound land - is adopted by this Court, then it cannot be said that the unimproved value of the subject land as sound land as assessed by the Chief Executive in this Case ($45 m5) is not supported by Mr Smith’s analysis of his Sale No. 1 ($68.40 m5).
I also note that in Mr Kelaher’s tendered valuation report before the President, he stated that the only improvements on this sale land was clearing and fencing (Page 15 of Mr Kelaher’s Valuation Report - Exhibit 3).
It is submitted by the appellants in this case that the unimproved value of the subject land is fixed, as it were, at $40 per square metre as land without site-specific disabilities by the learned President’s decision. There can be no doubt that this is so as at the relevant date of 1 January 1996 since there has not been any challenge made to this determination by the respondent Chief Executive. But this does not mean that the Court cannot find for another value rate per square metre as at the subsequent relevant dates of 1 October 1996 and 1 October 1997. It is also strenuously argued by the appellants that there is no sales evidence presented by Mr Smith which could be relied upon to suggest the unimproved value of the subject land (before adjustment for engineering costs) should have increased from $40 per square metre as at 1 January 1996, to $45 per square metre as at 1 October 1996 and 1 October 1997. I cannot agree with this submission since Mr Smith’s Sale No 1, while not relied upon the Chief Executive in the former case in this Court, is not too remote in date from the relevant dates in this case to be simply cast aside. Both the valuers rely upon it and I propose to give considerable weight to it as a basis for my decision, which is that the unimproved value of $45 per square metre as assessed by Mr Smith is supported by not only both valuers’ Sales No 1 but by other sales evidence in the case. I also accept the submission by the respondent that the evidence of sales by Oakden Pty Ltd of Lot 32, Lot 41 and Lot 42 during the calendar year of 1996 to purchasers whose intention was to develop the sale sites with a McDonalds outlet, a Chinese restaurant and a service station constitute evidence which supports Mr Smith’s opinion that the unimproved values have increased since 1 January 1996.
On an overview of the submissions, and the sales evidence and the engineering evidence, upon which I have probably deliberated at too much length, I have come to the finding that the unimproved value of Lots 22, 34 and 46 as at the relevant dates of 1 October 1996 and 1 October 1997 is $20 per square metre.
Accordingly, each appeal is allowed, the determinations of the Chief Executive are set aside, and I make the following determinations:
Appeal Ref AV97-424 - The unimproved value of Lot 22 on RP 817556, Parish of Warner, is determined in the rounded-off sum of $1,300,000 (65,750 square metres @ $20 per square metre).
Appeal Ref AV97-491 - The unimproved value of Lots 40, 41, 42 and 46 on RP 910691, Parish of Warner, is determined as follows:
Lot 40 $ 162,000
Lot 41 $ 128,000
Lot 42 $ 197,500
Lot 46 $1,200,000 (60,310 square metres @ $20 per square metre)
(rounded off)
$1,687,500
Less
10% bulk $ 168,750
$1,518,750
I further round off this determination of unimproved value to $1,500,000.
Appeal Ref V97-492 - The unimproved value of Lot 34 on RP 907831, Parish of Warner, is determined in the rounded-off sum of $1,200,000 (58,560 square metres @ $20 per square metre).
Appeal Ref V98-85 - The unimproved value of Lot 46 on RP 910691, Parish of Warner, is determined in the rounded-off sum of $1,200,000 (60,310 square metres @ $20 per square metre).
Appeal Ref AV98-153 - The unimproved value of Lot 46 on RP 910691, Parish of Warner, is determined in the rounded-off sum of $1,200,000 (60,310 square metres @ $20 per square metre.
CH CARTER
MEMBER OF THE LAND COURT
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