Retire Wealthy Pty Ltd v Department of Natural Resources and Mines
[2005] QLC 52
•28 October 2005
LAND COURT OF QUEENSLAND
CITATION: Retire Wealthy Pty Ltd v Department of Natural Resources and Mines [2005] QLC 0052 PARTIES: Retire Wealthy Pty Ltd ATF Retire Wealthy Property Trust
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2005/0099 DIVISION: Land Court of Queensland PROCEEDING: Appeal against an annual valuation of land under the Valuation of Land Act1944. DELIVERED ON: 28 October 2005 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDER: The appeal is dismissed. CATCHWORDS: Appeal against an annual valuation of land under the Valuation of Land Act 1944. APPEARANCES: Mr C Kessels, Company Director, for the appellant
Mr M Heather (Senior Legal Officer), Department of Natural Resources and Mines, for the respondent
Background
This appeal concerns land located at 1131 Sandgate Road, Nundah, more properly described at Lots 30 and 31 on SP 150856, Parish of Toombul, County of Stanley. The land comprises a total area of 617 square metres and is located approximately 8 kilometres radially north east of the Brisbane Central Business District. Access to the land is not available directly from Sandgate Road but is available from Danby Lane which ends in a cul-de-sac. Danby Lane is a fully formed bitumen surface road with concrete kerbing and channelling. All of the usual urban services and amenities are available.
The land is of an irregular shape with a slight fall towards the rear and its frontage is slightly below the level of the street. Structures on the land comprise of a concrete block commercial building containing some 504 square meters of "clear span" warehouse space and 73 square metres of mezzanine office space. As at the relevant date of valuation, the land was located in the "MP 2 Multi-Purpose Centre (Major Centre) Area" classification under the Brisbane City Plan 2000.
The appellant has appealed the respondent's assessment of the unimproved value of the land determined as at 1 October 2003 (effective as at 30 June 2004) in the amount of $325,000. In its Notice of Appeal, the appellant estimated the unimproved value of the land to be $130,000.
The appellant was represented by Mr Kessels who described himself as being a director of "the trustee company", which I took to mean Retire Wealthy Pty Ltd. Mr Kessels gave evidence on behalf of the appellant[1] and called Mr Spence, a qualified and experienced quantity surveyor to also give evidence on behalf of the appellant.
[1] Ex 2; Mr Kessels statement of evidence.
The respondent was legally represented by Mr M. Heather, a senior legal officer employed by the respondent. The only witness called to give evidence on behalf of the respondent was Mr Buchanan,[2] a qualified and experienced real estate valuer who is also employed by the respondent.
[2] Ex 3; amended valuation report of Mr Buchanan.
At the commencement of proceedings Mr Heather took objection to parts of Mr Kessels' written statement referring to conversations which took place during a without prejudice objection hearing on 24 March 2005.[3] The objection was not opposed by Mr Kessels. In reaching the conclusions that I have in this judgment I have had no regard to those parts of Mr Kessel's witness statement that refer to privileged discussions and/or material.
[3] Transcript; T1-2: refer to s 43A of Valuation of Land Act 1944.
The Valuation of Land Act 1944
Section 13 of the Valuation of Land Act 1944 (the "VLA") requires the respondent to decide the unimproved value of the land to be valued. Section 3 of the Act provides:-
"3(1) For the purposes of this Act -
unimproved value of land means -
(a)in relation to unimproved 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; and
(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.
(2)However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this act."
Section 5 of the VLA deals with the meaning of the phrase "value of improvements" and provides:
"(1)The value of improvements means, in relation to land, the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act, irrespective of the cost of the improvements, including in such added value the value of any hotel licence the value of which has been included in the improved value.
(2) However, the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of a nature and efficiency equivalent to the existing improvements."
Pursuant to s.33 of the VLA, the appellant has the burden of proving that the valuation appealed against is wrong and, pursuant to s.45(4), the burden of proving every ground of appeal relied on. However, the presumption in favour of the correctness of the valuation may be rebutted where it can be shown that the valuations were based on a wrong principle and/or involved a serious error of fact and/or were made by a fundamentally erroneous method: Brisbane City Council v Valuer-General (1977-78) 140 CLR 41 at 56-57; G Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 AT 331-332 (LAC).
Issues in the Appeal:
By reference to the Grounds of Appeal attached to the Notice of Appeal[4] the substantive issues raised on behalf of the appellant were:
[4] Exhibit 1.
(i)Given that the subject land was sold at a public auction on 1 April 2003 there was no need to have regard to any other sales evidence.
(ii)The land was subject to a number of "disabilities" which had not been properly taken into account in the valuation process, particularly when comparing the subject land to the other land sales relied on by Mr Buchanan. These "disabilities" were described in the following terms:
"1. Irregular in shape.
2. Directly Adjoins the Railway Line.
3. Subject to vibration and noise when trains pass.
4. Main sewerage line at rear of the parcel of land.
5. Dead end road with only one road to exit on.
6. Less Elevated Position.
7. Not Comparable Quality.
8. Not Comparable Situation.
9. Difficult to enter and exit.
10. Subject to Heritage Place Regulatory Controls - Full code Assessable.
11. No Buffer Zone between Sandgate Road (six lanes of traffic).
12. More limited in what can be done."
(iii)The respondent had grossly undervalued the structures on the land when assessing its unimproved value.
At the end of the day I am satisfied that Mr Buchanan, adequately took into account all of the existing "disabilities" associated with or attaching to the land. I am also satisfied that the sales evidence relied on by Mr Buchanan, including that of the subject land, consisted of relevant sales which were appropriately analysed and applied in the valuation exercise.
As the hearing of this matter evolved it became reasonably clear to me that at the heart of the case for the appellant was the respondent's treatment of the building on the land in arriving at its unimproved value.
The evidence of the quantity surveyor was uncontroversial and to the effect that the depreciated replacement cost of the building in September 2005 would have been about $234,000 (exclusive of GST) and, in October 2003 about $243,500 (exclusive of GST). It was Mr Kessel's contention that, accepting the sale price of $370,000 (exclusive of GST) achieved at the public auction on 1 April 2003 to be the best evidence of market value as at October 2003 and then deducting the "value" of the building as an improvement to the land in the sum of $234,000, the unimproved value of the land must be about $136,000 in round figures.
Mr Buchanan agreed with Messrs Kessels and Spence to a certain extent. He was prepared to accept Mr Spence's estimate of the depreciated replacement cost of the building and that the sale of the subject land was a fair indication of market value of the property at the relevant date. Where Mr Buchanan and Mr Kessels parted company was in respect of the added value the building gave to the land.
As I understood Mr Kessels argument, it was his opinion that, given that the appellant purchased the land and building in a competitive auction environment to use for warehouse purposes - and that was the actual use to which the land and building was subsequently put after purchase - then the building should be given a value commensurate with that use. On the other hand, Mr Buchanan was of the firm view that, as the highest and best use of the land was for mixed residential and commercial purposes, the existing building had, in effect, only a nominal value indicative of the rental income that might be received while the approvals necessary to facilitate further development are achieved. According to Mr Buchanan, after bringing into account demolition costs, which would be necessary to facilitate residential/commercial development, the added value of the existing structure was only some $18,000. At page 2 of his report, Mr Buchanan's assessment of the highest and best use of the land was expressed in the following terms:
"The land is included in the 'MP2 Multi-purpose Centre (Major Centre)' Area classification of the Brisbane City Plan 2000, in effect as at 30/10/2000. 'Centres' are the major points of economic and community service delivery, employment, meeting places, higher density living and public transport interchange. MP2 (Major Centres) are the major concentrations of Centre Activities outside the City Centre.
More specifically the land is located in the Nundah Village Precinct, being part of the Toombul-Nundah Major Centre Local Plan. As such the maximum gross floor area development is 2 times the site area…
Highest and best use under the area classification is for mixed multi residential/commercial purposes with a maximum permissible GFA of 1234m2 over multiple storeys."
In my view, Mr Buchanan's opinion as to the highest and best use of the land as at 1 October 2003 is supported not only by the designation given to it under the Brisbane City Plan 2000 but also by what was in fact occurring to similarly designated land in close vicinity. Mr Buchanan's evidence on this topic was not seriously challenged.
In the circumstances of this appeal I find that the highest and best use for the land as at 1 October 2003 is that identified by Mr Buchanan. It follows that I also find that the best evidence supports the value given to the building on the land by Mr Buchanan. The approach adopted by Mr Kessels yields, in my view, a result which is unable to be supported in the light of the comparable sales evidence to which I was referred. In reaching this conclusion I have rejected the sale/purchase of the road closure land by the appellant for $50,000 as providing any probative evidence of the unimproved value of the subject land.
For the reasons canvassed above, I would dismiss the appeal and affirm the respondent's assessment of the unimproved value of the land.
Order
The appeal is dismissed.
R S JONES
MEMBER OF THE LAND COURT
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