Re Ivanair Pty Ltd
[1997] QLC 97
•27 June 1997
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BRISBANE
27 JUNE 1997
Re: Determination of unimproved value
for conversion of tenure purposes -
SL 06/48429, Brisbane District -
Lessee: Ivanair Pty Ltd
D E C I S I O N
Consequent upon an application from Ivanair Pty Ltd on 3 April 1995 to convert the tenure of SL 06/48429, Brisbane District, to freeholding tenure, the Chief Executive, Department of Natural Resources advised the lessee of an unimproved value of $150,000 ($30 per m²) for that purpose. The lease is more particularly described as Lot 772 on SL 8611, Parish of Redcliffe and contains an area of 5,003 m². It is situated on the corner of Old Gympie Road and Helium Street, Narangba, within the Narangba Industrial Estate. The land is zoned “General Industry” under the provisions of the Caboolture Shire Council Town Planning Scheme which was gazetted on 12 March 1988. Erected upon the leased land are industrial buildings used for the purpose of the manufacture of roller doors.
Frederich Karl Werle, who is a director of Ivanair Pty Ltd and a builder by occupation, conducted the case for the lessee company and furnished evidence in support of the company’s furnished estimate of an unimproved value of $100,060, although he fairly concedes that perhaps the unimproved value of the lease is not quite as low as his submitted figure. The principal basis for Mr Werle’s contention that the Chief Executive’s valuation of $150,000 is excessive is that the valuation fails to take sufficiently into account the physical characteristics of the leased land and that the Caboolture Shire Council does not permit access directly from Old Gympie Road to the site, this negating some of the benefit of the site being located adjacent to that road. As a consequence access to the site and any development thereon has to be to the Helium Street frontage. Further, Mr Werle points out that visual exposure of the subject land development from traffic utilising Old Gympie Road is only available to northbound vehicles as the vision from the southbound traffic is obscured by a steep embankment necessarily constructed on the western boundary of the property as part of its site development. In addition Mr Werle says there is tree vegetation along and within the Old Gympie Road reserve which he suggests restricts the visual exposure of the subject property to the roof line of the buildings.
Mr Werle informed the Court that the subject land in its natural state had what he calls a severe fall of 15 metres from its rear (northern) boundary to the Helium Street (southern) frontage and a further less severe cross fall from the western side to the eastern side. This topography presented particular difficulties for developing the land in that substantial excavation and fill was necessary and the lessee was required to expend in excess of $43,000 in the construction of retaining walls and other earthworks after clearing the land of heavy timber vegetation. Mr Werle contends that it was simply not possible to batter the slopes of the land prior to the construction of the industrial buildings. He tendered in evidence a site plan showing the building layout on the lease, together with the extent of excavation, fill and compaction, and the location of a concrete block retaining wall to collect stormwater from properties above and on Old Gympie Road. Mr Werle says the batter walls which were required to retain the cut had to be stabilised with concrete spray due to heavy erosion.
Mr Werle placed in evidence a copy of details of the costs of $43,000 for the extensive earthworks and the retaining walls which he says were necessary for the development of his lease. They are summarised as:
1.First site cut and fill - 1986 $13,000
2.Second site cut and fill $30
Retaining Walls -
No. 1 - concrete block construction - 1986 $4,040
No. 2 - concrete block construction - 1993 $3,200
No. 3 - concrete block construction - 1995 $4,505
No. 4 - sleeper construction - 1992 $80
No. 5 - concrete block - 1994 $2,180
No. 6 - solid concrete construction - 1995 $15,925$42,960
Mr Werle told us that he attended a conference with officers in the employ of the Chief Executive in an endeavour to resolve the question of the unimproved value but this was unsuccessful. He says that at the conference he was not referred by the Chief Executive to any of the sales upon which the valuation of $150,000 is based. He has apparently since been appraised of this material and verbally commented upon each of the Chief Executive’s sales and has produced a series of photographs depicting the topography of the subject and the sale sites. I find it convenient to outline Mr Werle’s comments on these sales when discussing the Chief Executive’s case. But before so doing, I should say that Mr Werle does not consider the corner position with the two street frontages seemingly enjoyed by the subject lease to be an advantage as the site topography, with subsequent site development, does not allow for any greater access flexibility as it is restricted to the Helium Street frontage.
Mr Werle has directed the Court’s attention to the sales of sites additional to those relied upon by the Chief Executive. These are, together with his comments:
Lot 768, Helium Street, Narangba - sold in July 1993 for $97,200 ($9 per m²).
This sale is too remote from the relevant date (3 April 1995) on a rising market to be of assistance in determining the unimproved value of the subject land. No further comment on Mr Werle’s evidence in respect of this sale is warranted.
Lot 744, Sodium Street, Narangba - 6430 m² - sold in June 1994 by the Crown (the Department of Business, Industry and Regional Development) for $105,000 ($16.33 per m²).
Mr Werle points out that Lot 744 is in the same estate as is the subject land, and located one very short block further from Old Gympie Road. He considers Lot 744 to be physically a vastly superior allotment as it is a near level site requiring no earthworks prior to development with a cross fall of only 1½ metres.
Lot 6, Andrew Campbell Drive, Narangba - 4118 m² - sold on 26 July 1994 for $100,000 ($24.28 per m²).
Mr Werle says this is a property in another industrial estate in Narangba situated some distance from Old Gympie Road. Council zoning permits for residential development as well as light industrial use. Mr Werle considers the topography of this site to be superior to that of the subject land, with the fall being only 2 metres from the road to the property then with a gradual fall of 2½ metres over the whole allotment.
Called in evidence by the Chief Executive was registered valuer Jason Edward Eaton who is in his employ. Mr Eaton was not responsible for the original valuation made on behalf of the Chief Executive, but has made a detailed inspection of the subject land and agrees with the valuation in the sum of $150,000.
Mr Eaton describes the topography of the subject site as being, in its unimproved state, rising steeply from Helium Street to the rear boundary. He confirms that the development works carried out on the land comprise a reasonable amount of cut and fill with landscaped retaining walls.
The primary sale relied upon for the Chief Executive’s determination of unimproved value of the subject land is that of Lot 112 on CP 867909 (No. 1) comprising 7507 m² on 27 June 1994 by the Crown to RL and AO Marsellos for $150,140 ($20 per m²) - situation 112 Krypton Street, Narangba - zoning “Special Industry”.
Mr Eaton describes Lot 112 as being a larger site than is the subject land, situated in an inferior location and with similar topography. Because of its larger size, Mr Eaton says that the sale price reflects a lower value per m² than has been applied to the subject land, but a similar total money value. Mr Eaton comments that the sale site is directly comparable with the subject land but points out that the subject land has superior exposure. In addition, Mr Eaton claims that the zoning of the subject land is more favourable than the “Special Industrial (Noxious and Hazardous)” zoning of the sale land as there are more “as of right” uses in the “General Industry” zone. Mr Eaton says that the original topography of Lot 112 is very similar to that of the subject land, and that it is not as depicted in Mr Werle’s tendered photograph of it.
Mr Werle suggests Lot 112 has some similarity with the subject land in that overall the fall of the land is similar at about 15 metres, but he points out that this fall occurs over the south-east corner to the north-west corner and is spread over a distance roughly twice that of the subject land, causing much less severe difficulties and expense in carrying out the site development works. Further, Mr Werle suggests that Lot 112 is a corner block with the advantages of access to both roadways to which it has frontage.
Other sales relied upon by Mr Eaton to support his valuation of the subject land, together with the comments by the witnesses thereupon, are:
Sale No. 2 - Lot 6 on RP 14399 - 4117 m² - GW Barke & Anor to Wigmore Pty Ltd on 22 July 1994 for $100,000 ($24.28 per m²) - situation 20 Andrew Campbell Drive, Narangba - zoning “Light Industry”.
Mr Eaton points out that this is a smaller site than is the subject land, and is situated in an inferior location being in an isolated pocket. It has similar topography. The original Chief Executive valuer suggested that Lot 6 has superior zoning to the subject land but Mr Eaton says that the “Light Industrial” zoning is slightly superior to the “General Industry” zoning in the marketplace. Mr Eaton suggests that Lot 6 is overall inferior to the subject land, and he feels that photographs of the site tendered by Mr Werle show the site in its developed state, not in its original state in which, he says, the land had a cross slope from the western corner to the eastern corner of about 7½ metres.
Sale No. 3 - Lot 69 on CP 867910 - 4810 m² - Minister for Industrial Development (DBIRD) to Armstrong, Hamcor Pty Ltd on 20 September 1995 for $168,350 - analysed unimproved value $34.38 per m² - situation 69 Magnesium Crescent, Deception Bay - zoning “General Industry”.
Mr Eaton says that this sale land is of similar size and zoning as is the subject land, but contends that it is in an inferior location with slightly superior topography as it originally had a gentle cross slope from the north-west corner to the south-east corner with a fall of about 5 metres, although there is a jump-up from the road of 3 to 4 metres. Mr Eaton regards Lot 69 to be overall slightly superior to the subject land both on the reflected unimproved value per m² and total unimproved value ($165,350).
Mr Werle concedes that Lot 69 is similar in size to the subject land but regards it as having vastly superior topography with a rise in the ground level of 2.5 metres from the roadway for only a short distance with the balance being completely flat. He concedes that Lot 69 is inferior in location in comparison with the subject land, but any such negative effect is more than offset by its better topography and what he perceives to be its superior zoning, but I accept that it has the same zoning as has the subject land.
Sale No. 4 - Lot 87 on CP 867910 - 4739 m² - Minister for Industrial Development (DBIRD) to Grajan Pty Ltd on 3 September 1996 for $165,900 - analysed unimproved value $34.37 per m² - situation 87 Potassium Street, Deception Bay - zoning “General Industry”.
Mr Eaton confirms that this site is of similar size and zoning as is the subject land, but he says it is in an inferior location with slightly superior topography. Mr Eaton is of the opinion that overall Lot 87 has a slightly higher unimproved value per m² and total unimproved value ($162,900). He believes the market as between the relevant date for the valuation of the subject land (1995) and the date of this sale to have been reasonably stable.
Mr Werle describes Lot 87 as being completely flat with no fall at all. As such, he says it has vastly superior topography to that of the subject land.
Sale No. 5 - Lot 790 on SL 10825 - 3297 m² - Crown to Clark, Fernando and Langfield on 19 October 1995 for $100,000 - analysed unimproved value $29.42 per m² - situation Boron Street, Narangba - zoning “General Industry”.
Mr Eaton compares Lot 790 with the subject land as having similar zoning, comparable topography, inferior location and size and overall similar in unimproved value per m² and inferior in total value. Mr Eaton does not see Lot 790 as being a level site in its original condition and says this is borne out by Mr Werle’s photographs of the site which show an original embankment in the background. He says there was a cross slope from north to south of 7½ to 12 metres which has since been levelled out. Further Mr Eaton says that the location of Lot 790 is inferior due to it not having the exposure of properties with a frontage to Old Gympie Road.
Mr Werle believes that Lot 790 is in an only slightly inferior location compared with the subject land as it is a greater distance from Old Gympie Road, but says the original topography is in no way comparable with the subject land as there is only a rise of 1.5 metres from the roadway and the property is then virtually flat to the rear boundary.
Mr Eaton was called upon to comment in evidence upon the sales evidence introduced by Mr Werle. I do not include his remarks in respect of the sale of Lot 768 Helium Street as it is, as aforementioned, an early sale and not of use in these proceedings.
Mr Eaton knows Lot 744, Sodium Street, and says that it is clear that earthworks have been carried out on this site as there is a 2½ to 3 metre retaining wall on the north-eastern boundary of the land, and on the southern boundary there is cut to the adjoining property of 1 metre in front of a fall of 4 to 5 metres. Mr Eaton says that this sale by DBIRD would have been of the site in its unimproved (undeveloped) state and that the earthworks are not part of the sale price.
Mr Eaton considers the subject land’s frontage to Old Gympie Road as being a distinct advantage from an exposure point of view, but this is not utilised in the development of the subject site. He says one can see the subject building through the trees from the road, and that there always was the potential to develop the site with different types of structures which would be able to benefit more from the visual exposure to Old Gympie Road.
I am satisfied that the sales evidence relied upon in this case by the Chief Executive, prima facie, supports an unimproved value of $150,000 for the subject land save for the evidence of Mr Werle as to the development costs incurred by the lessee company in developing the site. Certainly I agree with Mr Eaton that site development costs such as those involved in the cut and fill and the provision of retaining walls, where necessary, vary considerably with the notions of developers as to what represents the best, or notionally the most economic means of developing sites. But I am concerned on the evidence of Mr Werle, and on the photograph evidence of the subject site development works, that an unimproved value of $150,000 adequately reflects what appears to me to be the unavoidable, and more expensive site development costs for the subject land in comparison with the sale sites. I adopt the evidence of Mr Werle that the only means of realising the potential of the subject site was to develop to Helium Street, since access is only available to that street. On this basis, the development of the site seems to involve unusually high site development costs, although I indicate that I have taken into consideration Mr Eaton’s evidence that many, if not all, of the photographs of the comparison sites put in evidence by Mr Werle do not reflect the sale sites in their unimproved (undeveloped) state.
I cannot make an allowance of $43,000 as being the actual cost of site development against the unimproved value of $150,000 as determined by the Chief Executive. To do so would result in an unrealistically low determination of unimproved value in relation to the available sales evidence. I further indicate that I am not influenced in this decision by the sales made by DBIRD in view of the evidence of Mr Eaton that these sales, for some reason, normally reflect unimproved values lower than sales by other vendors in an otherwise equal property sales environment. Mr Eaton says in particular that the Crown sales realise higher prices than are reflected by the DBIRD sales.
In the end, I find that the unimproved value of the subject land is fairly and properly assessed by making an allowance of $15,000 for the “added value” of the site development works.
Accordingly, I determine the unimproved value of Special Lease 06/48429, Brisbane District, for the purpose of conversion to freeholding tenure in the sum of One Hundred and Thirty-five Thousand Dollars ($135,000).
CH CARTER
MEMBER OF THE LAND COURT
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