Pejama Pty Ltd v Department of Natural Resources and Water
[2006] QLC 59
•27 September 2006
LAND COURT OF QUEENSLAND
CITATION: Pejama Pty Ltd v Department of Natural Resources and Water [2006] QLC 59 PARTIES: Pejama Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO.: AV2005/0236 DIVISION: Land Court of Queensland PROCEEDING: An appeal against valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 27 September 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RS Jones ORDER: The appeal is dismissed.
CATCHWORDS: S.33 Valuation of Land Act 1944 – presumption of correctness of statutory valuation – onus of proof – comparable sales evidence – weight afforded to valuation reports where author not called to give evidence. APPEARANCES: Mr D Stay in person for the appellant
Mr M Heather, Senior Legal Officer, Department of Natural Resources and Water for the respondent
These proceedings concern an appeal by Pejama Pty Ltd (the appellant) against the unimproved value assigned to its land by the Chief Executive, Department of Natural Resources and Water (the respondent), pursuant to the Valuation of Land Act 1944 (VLA).
Background:
The subject land is located at 467 Enoggera Road Alderley and is more properly described as Lot 9 on Registered Plan 225465, Parish of Enoggera, County of Stanley. The land is located approximately 5 to 6 kms to the west of the Brisbane Central Business District on the fringe of the Alderley/Enoggera retail and commercial neighbourhood precinct. The site enjoys relatively good exposure to inbound traffic. All the usual urban services and amenities are available to the land.
The land is of an irregular shape containing an area of 1870 m². The irregular shape of the land is, to some extent, as a result of it being bounded by three streets, Wakefield Street, Frederick Street and Enoggera Road. The main entry point to the land is via Frederick Street.
At the relevant date of valuation the land was designed Multi Purpose Centre 3 under the Brisbane City Council City Plan 2000. Consistent with that designation the land has been developed with a commercial office building although, according to Mr Bein, the real estate valuer called on behalf of the respondent, the building appeared to have a high level of "economic obsolescence".
The appellant has appealed the respondent's assessment of the unimproved value of the land as at 1 October 2003 in the sum of $725,000 and contended in its notice of appeal that the unimproved value of the land was $400,000.
The appellant was represented by Mr D Stay, a director of the company. The respondent was legally represented by Mr M Heather, a senior legal officer employed by the respondent and relied on the evidence of Mr R Bein, a registered real estate valuer also employed by the respondent. Mr Bein was not the valuer originally responsible for determining the unimproved value of the land but, after carrying out his own investigations, formed the view that the assessment was a reasonable one.
Issues in the appeal
As the subject land is "improved land" for the purposes of the VLA s.3(1)(b) of that Act relevantly provides:
"3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(a)…
(b)in relation to improved land – 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, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist."
Section 33 of the VLA effectively deems the valuation appealed against to be correct requiring the appellant to prove it wrong. This statutory presumption of correctness may be rebutted where it can be shown that the valuation was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method.[1] Section 45(4) of the VLA also states that the burden of proving each and every ground of appeal relied upon rests with the appellant.
[1]See Brisbane City Council v Valuer General (1977-78) 149 CLR at 56 – 57; GCominos and Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331 -332 (LAC).
In this case the grounds of appeal state:
"These values do not reflect the lack of tenants. This building is empty. A commercial property is valued on its leases and income."
The main argument advanced on behalf of the appellant was that the significant increase in the unimproved value of the land from $485,000 as at 1 October 2002 to $725,000 as at 1 October 2003 was excessive and not able to be justified. In support of this argument the appellant pointed out that, at or about the relevant date, it had lost a major tenant of the building on the land. The appellant also relied on a valuation prepared by a real estate valuer employed by DTZ Australia (Brisbane) Pty Ltd (Exhibit 4). The date of this valuation is 4 June 2002.
I will deal with the DTZ valuation first. The evidence of Mr Stay was to the effect that this valuation, after deducting the value attributed to the improvements and allowing for the costs of removal of debris and clearing, supported an unimproved value of the land of about $270,000. The letter from the Commonwealth Bank, which accompanied Exhibit 4, identified that the valuation was for mortgage purposes. The author of the report was not called. Recently, the Land Appeal Court in Department of Natural Resources and Mines v QNI Metals Pty Ltd & Anor[2] observed that valuation reports of the type embodied in Exhibit 4 will rarely be of assistance unless the author of the report is called to give evidence in support of it. I respectfully agree with those observations and would only add that in my opinion the concerns raised by the court in QNI are even more pertinent when aspects of the report have been criticised or otherwise put in question. In this appeal Mr Bein gave evidence that there had been an increase in the value of commercial land between 2001 and the relevant date. It was also Mr Bein's opinion, as I understood his evidence, that the valuation may have failed to adequately take into account any obsolescence and depreciation associated with the buildings on the land. In the circumstances of this appeal I do not consider that Exhibit 4 provides any reliable evidence of the unimproved value of the subject land.
[2] (2002) 23 QLCR 261 at 266.8 – 267.
Turning next to the evidence concerning the increase and rate of increase in the unimproved value of the land it is now well established that even a large increase over and above the previous assessment of the unimproved value of the land is not of itself relevant provided that the new valuation is supported by bona fide sales evidence.[3]
[3] See for example: Tow v Valuer General (1978) 5 QLCR 378 at 381 (LAC).
In this appeal, Mr Bein relied on the evidence of two sales to support his valuation. The appellant provided no probative sales evidence to support its estimate of the unimproved value or which otherwise tended to contradict the conclusions reached by Mr Bein. The appellant did however attack the reliability of the sales evidence relied on by Mr Bein.
Mr Bein's Sale 1 is located at Wynnum Road Morningside, which is some distance from the subject and on the other side of the Brisbane River. Mr Stay was not familiar with this sale and had not been to Morningside for about ten years. It was Mr Bein's opinion that this sale was superior to the subject in most respects but still capable of being sensibly compared to the subject. It was also Mr Bein's opinion that this sale and the subject were located in similar commercial investment environments. None of this evidence was seriously challenged.
Mr Bein's Sale 2 is located on Enoggera Road, close to but on the opposite side of the road to the subject. In cross-examination Mr Bein conceded that this sale was significantly superior to the subject and that it most probably involved an over anxious purchaser who "probably paid a bit too much for it". Mr Bein was of the opinion that he had made sufficient adjustment for any imprudence on the part of the purchaser when he analysed this sale and applied it not only to the subject land but also to the sale site itself. In this context, Mr Bein's analysis of this sale revealed an analysed unimproved value of $801/m², however the applied unimproved value assigned to the Sale 1 site and the subject land on a rate per square metre basis was $565/m² and $450/m² respectively.
While I have some reservations about the reliability of his Sale 2 I accept that the valuation appealed against is sufficiently supported by Mr Bein's Sale 1. There was no evidence that Mr Bein had incorrectly analysed the sale or had made an error when applying it to the subject land.
Given Mr Bein's unchallenged evidence about the shift in the market for land with commercial investment potential between 2002 and 2003, I do not consider the sales relied on by him in assessing the unimproved value of the land as at 1 October 2002 to be of any relevance in this appeal. In respect of this matter I should point out that it was Mr Stay and not Mr Bein who sought to draw a degree of comfort from some of those sales.
Having regard to the matters addressed above I have reached the conclusion that the best evidence of the unimproved value of the subject land was that provided by Mr Bein. I also find that the appellant has failed to prove that the valuation under appeal is wrong and needs to be varied.
Accordingly, I find that the appeal must be dismissed.
In writing this decision it became reasonably clear that when valuing the land Mr Bein had applied the wrong land area and that if the correct area was applied the effect might be to increase the unimproved value of the land.[4] Notwithstanding this, in the circumstances of this appeal the only order I intend to make is that the appeal be dismissed.
[4] See Exhibit 3, page 4.
Order
The appeal is dismissed.
RS JONES
MEMBER OF THE LAND COURT
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