Small v Chief Executive, Department of Natural Resources
[1999] QLC 30
•16 April 1999
LAND COURT,
[1999] QLC 30
BRISBANE
16 April 1999
Re: Appeal against Annual Valuation
Valuation of Land Act 1944
Valuation Roll No: 12993/68500
Local Government: GCCC-Gold Coast
(AV97-309)
William RB Small
v.
Chief Executive, Department of Natural Resources
(Hearings at Brisbane and Coolangatta)
D E C I S I O N
Background:
This matter relates to a property located at 31 Freyburg Street, Sorrento, Gold Coast, and described as Lot 2 on RP 163791, Parish of Nerang. The matter was heard concurrently with separate valuations of two properties at Via Roma Street and St Peters Place, Isle of Capri, Gold Coast (Capri Commercial Centre Pty Ltd – AV97-308 and AV97-244), reported separately. The subject land is located about 3 kms south-east of the Benowa Gardens Shopping Centre, and about 5kms south-west of central Surfers Paradise. The subject has an area of 2.789 hectares, and is zoned “Residential Dwelling House” under the City of Gold Coast Planning Scheme of 11 February 1994, and effective at the date of valuation of 1 October 1996. The key issues are the nature of the land, the value of the developed site, the value of improvements, and the comparison of sales.
On 10 March 1997 the Chief Executive, Department of Natural Resources, issued a valuation of the subject at $3,000,000. Following an objection the Chief Executive amended that figure, and on 4 August 1997, issued a revised valuation at $1,750,000. The appellant has now appealed that figure claiming the unimproved value should more properly be $990,000.
Mr R Needham of Counsel (instructed by Collas Moro, Solicitors), appeared for the appellant, calling evidence from Mr SV Coote, a civil engineer, Mr P Small, a registered valuer, and Mr BM Pluthero, a retired licensed surveyor.
Mr R Paterson, Principal Legal Officer, appeared for the respondent, calling evidence from Mr C Dodd, a civil engineer, and Mr D Treston, the Departmental registered valuer responsible for determining the valuation.
The Evidence:
(1)The Nature of the Land –
The subject is located in what is agreed to be one of the most prestigious localities on the Gold Coast, and is surrounded by similar high-quality homes, in a most pleasant living environment. The subject has a narrow 10-metre wide frontage to Freyburg Street, but is fan-shaped, and has direct frontage of 245 metres to the Nerang River, with a south-easterly aspect to water. Access to Freyburg Street is good, and Freyburg Street is part bitumen sealed, and part decorative paving, with concrete kerbing and channelling, and is tree-lined with an attractive street appeal. Services available include water, power, telephone and sewerage. The site is generally level with a gentle slope down to the revetment wall along the Nerang River.
There is an elevated house pad (7,593m²) which was built towards the middle of the site, where a substantial dwelling has been constructed. The land has been valued under section 17 of the Valuation of Land Act as used exclusively for the purpose of a single dwelling house.
There is agreement about the existing finished levels of the site, which is extensively landscaped with many large trees and shrubs. It is also agreed that the current site provides exceptional privacy, because of its location and size, but the parties disagree about the balance of cost benefits that attach to such size and location. Mr Needham argues that such privacy comes at a significant cost due to the very large size of the subject, and the extensive frontage to the Nerang River. He notes on-going costs for excess water ($13,000 per year), and property maintenance ($25,000 per year) as a consequence, which, he argues, greatly exceeds comparable costs borne by other prestigious property owners, usually on areas 4,000m² to 8,000m².
Mr Needham argues that the very large area of the subject, should be seen more as some detriment to the owner, rather as some additional benefit. Mr Treston disagrees with that view, noting that the subject is almost unique in that area, as a single residence upon such large and totally private riverfrontage lands. Mr Needham argues that the rarity of the subject reflects more that purchasers do not seek such large parcels, where the additional benefits of ownership are outweighed by the costs of maintaining the land.
(2)The Value of Improvements –
(i) The Volume of Fill -
Both valuers have adopted a method of determining the value of the land as a developed site, from which they have then deducted the value of improvements to arrive at the unimproved value of the land. In seeking to determine the value of improvements involved in obtaining a level building site, the valuers differed not only in the quantities of materials required, but also in the method by which those improvements are obtained.
In providing his estimate of the volume of fill needed, Mr Coote initially relied upon information provided from oblique aerial photography, probable flood levels, photographs of the site by the appellant, and personal memories of the appellant. Assuming an approximate mean level of the original land surface prior to filling, Mr Coote adopted an average reduced level of 0.5m Australian Height Datum (AHD) for the subject. Based upon that figure he estimates the filling needed to bring the land to the current general level of 4.2m(AHD), to which he then added a further 1 metre for additional filling over the building pad.
Mr Coote’s preliminary estimate of fill needed was 100,000m³ (solid) material, after appropriate compaction of the loose fill obtained. He provided no estimate of the compaction levels applied, but based his rates for filling materials and the rock walls upon average rates on the Gold Coast for such works. Any disposal of vegetation materials offsite was also allowed for in his calculations.
In estimating the natural surface of the subject prior to filling, Mr Dodd sought evidence from the Departmental records of the respondent. Part of those records included notations on the Plan of Survey (RP163791) which created the separate title for the subject. Evidence was provided of traverse marks placed prior to that survey, which had then been incorporated into RP 163791 at the date of survey in August 1978. Those marks represented a control traverse that had been used to identify the high water mark along the Nerang River. The marks were old concrete blocks, shown on RP 163791, at depths below the then surface level of the subject land at from 1.5 metres (Station 6) to 2.6 metres (Station 9). Station 9 was located close to where the dwelling is now constructed.
The same traverse stations were also noted as being used on an older plan of survey WD3367 in April 1968, to define the original bank of the river, and the new high-water mark of the subject land after the initial filling. Following major flooding in 1974 the appellant raised the building pad a further 1 metre to ensure the dwelling was clear of flood levels that he had observed during the major floods. The dwelling was erected in 1979.
Using a more recent topographic contour survey of the building site (August 1997), Mr Dodd has plotted ground levels coincident with the old Station 9 on Plan RP163791, and assessed it to be at reduced level 4.23m(AHD). Noting that Plan RP163791 shows that concrete block at Station 9 to be 2.6 metres deep, Mr Dodd concludes that the reduced level of the old concrete block would have been at reduced level 1.63m(AHD). However that old concrete block was not located on the later contour survey.
In noting the original placement of Station 9 on RP 163791 (old Station 23 on WD3367), the original surveyor’s field records of that survey showed that the concrete block at Station 23 was placed 0.15 metres below the natural surface level. By that record the natural surface level would have been at a reduced level of 1.78m(AHD). It has been the practice for many years for surveyors to place reference marks 0.15 metres below the surface in order to minimise disturbance of the marks.
Mr Dodd therefore concludes that there appears to be 2.45 metres of fill above the natural surface at the old Station 9. As Station 9 was nearer the river, and assuming that the land rose gently from the river, Mr Dodd concludes an average depth of fill of 2.5 metres, allowing for some irregularities in the natural surface. Based upon that depth he concludes a volume of 70,000 cubic metres for the general site, plus a further 5,000 cubic metres to raise the house pad, giving a total of 75,000 cubic metres of solid fill.
In support of that conclusion the respondent provides further evidence of an old plan of a survey of levels (March 1980) for the land to the west of the subject, prior to its development into a canal estate. An examination of selected spot levels just west of the western side of the subject land, indicates levels of 1.25m to 1.78m(AHD), which appears to support Mr Dodd’s concluded level for the subject land.
Finally the appellant sought evidence of the natural surface level in a plan of survey undertaken by Mr Pluthero in February 1960. An initial search of survey records of the site had failed to disclose any previous information. However, Mr Pluthero, who had retired some years ago, was able to resurrect the old plan, which conclusively established the original levels at an average cut and fill level of 1.4 metres based on the original State datum used in 1960. Advice was also given that in order to convert those levels to AHD, it is necessary to subtract a further 0.14 metres, giving an average reduced level of the subject land, prior to filling, at 1.26 metres (AHD).
There was also considerable discussion in respect of the extent of regular flooding over the site prior to filling, the existence of a large bunded drainage ponding area in a lower area of the centre of the subject, the extent of saltwater couch grass, scattered patches of trees, and exposed sand patches on the subject. While that all added to the general picture of a history of low flooded land prior to filling, the most conclusive evidence was the levels supplied by Mr Pluthero.
If I adopt the average level of the subject at reduced level 1.26m(AHD), and deduct that from the current level of 4.23m(AHD), I obtain an average depth of fill of 2.97 metres (say 3 metres). That determines a volume of fill at 27,890 square metres x 3 (or 83,670m³), plus the house pad at 5000m³, giving a total fill required at 88,670m³, say 89,000m³.
(ii)Costs of filling the site –
There is a major difference between the parties in respect of the costs of supplying and consolidating the filling of the site. Both engineers agree that the most cost-efficient method of obtaining fill to the site would be by sand pumping from the Nerang River. Both also agree that such method was originally adopted by the appellant, when he developed the site about 20-30 years ago.
However, Mr Coote argues that under the existing environmental constraints imposed by the Merrimac Flood Plain Study of the Nerang River, it was most unlikely that approval could be obtained to dredge from the river. Based upon that conclusion, he provides two alternative proposals for obtaining the required filling in addition to other general costs applicable under any method of filling adopted.
(a)by trucking in the fill –
· 100 000m³ x $12 per m³ = $1,200,000
· re-instating Freyburg Street = $ 18,000
= $1,218,000
(b)by excavating a lake within the subject area (about 7 metres deep)
· earthworks 36,473m³ @ $5.80 = $ 211,543
· bridge = $ 288,000
· tidal exchange system = $ 29,600
· revetments = $ 360,000
· liming of fill prior to placement = $ 41,100
$ 930,243
In considering further his alternative approach of excavating fill from the subject, Mr Coote notes environmental problems also associated with acid sulphate soils, downstream impacts, and maintenance of water quality in the lake. Mr Coote argues that problems involved in filling the flood plain would preclude, in his opinion, any major sandpumping proposal. Because of the loss of site area as a consequence of excavating the internal lake area, Mr Coote argues that the preferred method of filling would be by trucking in the material.
In his estimate of the method of filling of the site Mr Dodd concludes that both sandpumping and importing of solid fill would have been prohibited by policies and regulations of both the State Government and the Council. As he was required to undertake a retrospective hypothetical exercise only for determining the unimproved value of the land, Mr Dodd concludes that the most logical procedure, in that circumstance, would be to adopt the most cost-effective approach to obtaining the fill material.
Based upon industry figures on the Gold Coast of $4.50 per cubic metre for sandpumping, and $12 per cubic metre for imported fill, Mr Dodd elected to adopt the former method for his exercise. While there was mention of compaction allowed across the general area, Mr Dodd did note that there had been no requirement for pre-loading of the building pad. He allowed a construction period by that method of six months. As an alternative approach to either of his former methods, Mr Coote provides two other methods of importing fill to the site by barge at a cost of $17 per cubic metre; or by dredging from the river at $6 per cubic metre.
Another difference between the parties is the matter of the extent of special environmental studies and monitoring which may be required in order to avoid contamination from acid sulphate soil, which on exposure to the air become highly acidic. Certainly such requirements are now an accepted part of engineering practice where filling is required for reclamation purposes. Mr Coote provides separate additional estimates of cost for environmental purposes as follows:
1. if importing fill by truck = $ 38,500
2. if developing an internal lake = $ 65,295
3. if importing fill by barge = $ 38,500
4. if dredging from the river = $117,000
Because of the hypothetical nature of the exercise Mr Dodd provides no estimate of costs for any environmental studies or monitoring. His conclusion was that, because it must be accepted that the site is capable of being filled as part of the hypothetical exercise to determine the unimproved value, then it is reasonable to assume that sufficient hydraulic and environmental information would previously have existed for that authority to have been approved. Based upon such an authority to fill being approved, Mr Dodd has adopted environmental construction standards applicable at 1 October 1996. These are as follows:
· clearing of site (including silt fences) = $ 20,985
· stripping topsoil (100mm @ $2.50m³) = $ 6,625
· re-spreading the topsoil ($2.50m³) = $ 6,625
· grassing = $ 7,950
Mr Coote supplies similar rates as follows:
· clearing of site (including sediment fences)= $ 52,000
· stripping topsoil (200mm @ $2.80m³) = $ 14,840
· re-spreading topsoil ($2.50m³) = $ 13,250
· grassing = $ 7,950
· contingencies 5% = $ 55,350
However, it is Mr Needham’s contention that, while the hypothetical exercise assumes that an approval exists to fill the site, it is reasonable also to allow for any costs that would be involved in getting that approval, and in carrying out the work. Mr Dodd agrees that if commencing from a notional state of unimproved land, then some contingencies should apply. A further difference between the parties is the estimated time required for the development of the improvements. Mr Coote notes that originally the appellant had filled the site gradually over a period of two years (1967-1969). At that time a small sandpumping dredge had slowly worked its way around the site, returning to recapture further material from the river as it accumulated over the period. During this process a machine (dozer) continually spread the material at the discharge point on the site, in order to ensure smooth and steady gradient, thus allowing any fine acid sulphate soils to return unobstructed back into the river. Any residual acid sulphate soils remaining on site are then treated with lime to neutralise the acids.
Mr Coote agrees that the time could vary between 6 months and 2 years for the environmental studies, and he has adopted an average of 12 months for that stage. He then allows three to four months to fill the site by trucking in the material, but agrees that it could take two years if filled by a small dredge, and a shorter period if a larger dredge is used. However, because of the need to relocate a larger dredge, in order to allow for materials to build up again in the river, any larger dredge must also allow for additional relocation costs. Mr Dodd has allowed only for six months using a larger dredge.
The following relative costs for different dredges were supplied by Mr Dodd:
Costs 150mm dredge line 300mm dredge line Location costs $8,000 ($0.11/m³) $10,000 ($0.13/m³) Costs of pumping $2.25 to $2.75/m³ $2.25/m³ Spreading material $0.75/m³ $0.75/m³ Royalty $0.03/m³ $0.03/m³ Construction of bunds $1.00/m³ Adopt $4.50/m³ Adopt $4.50/m³ Smaller dredges will tend to have operating costs of an additional 30% on the costs of pumping.
There was some discussion about how the royalty costs to the State were assessed; and there was some apparent conflict in advice supplied by certain officers of different Government departments. Mr Dodd sought information from the Department of Environment (DOE) in respect of a possible dredging permit. The DOE officer sought guidance from the Harbours Act 1955. His advice was that the necessary fee was $330 per month, which had been assessed by the Department of Environment and Heritage as an optional alternative proposal to paying a unit rate of $1.04 per cubic metre. Because of the most cost-effective nature, Mr Dodd had elected to adopt $330 per month royalty fee in his calculation. The DOE advice also suggested that, as the material was being obtained from the Nerang River, and not from open waters, there was some confusion about whether any permit was needed at all.
Mr Coote by comparison sought guidance from the Legislation, which establishes that if one is reclaiming land, then there is a choice for the appellant to pay a fee of $330 per month. However, he argues that if land is not being reclaimed, then the royalty fee is $1.04 per cubic metre or $250 per month, whichever is the greater amount. Mr Dodd agrees that the filling in this exercise was not for reclamation purposes (Transcript page 129), and Mr Needham argues that the correct approach would be to adopt the published Government Fees. If the royalty fee of $1.04 is applicable, rather than 3 cents used by Mr Dodd, then Mr Dodd’s rate for sandpumping would be $5.51, which is closer to Mr Coote’s unit rate of $6 for that approach. There is also difference between the engineers in respect of the extent of vegetation-clearing of the original site, and the depth needed to remove the topsoil. Mr Coote has adopted a depth of 200mm of topsoil, based upon other developments he has undertaken for the appellant at Benowa, upon his assessment of the original surface level, and the need and difficulty of removing mangrove roots. Mr Dodd has adopted a depth of only 100mm of topsoil, as he believes that it would be unnecessary to remove a greater depth of topsoil, when that soil would then need to be returned to the site, predominantly for gardens and lawns. Mr Dodd bases his conclusion on his understanding of the original nature of the site at reduced level 1.78m(AHD).
Mr Dodd agrees that if the site had been at the level of 0.5m(AHD), as assumed by Mr Coote, then the removal of at least 200mm of topsoil would have been necessary in view of the impact of regular tidal inundation (Transcript page 110). In view of the now-agreed natural surface level at 1.26m(AHD), some compromise between 100mm and 200mm would appear appropriate. I will adopt 150mm depth for stripping and replacing the topsoil. A similar compromise would also appear appropriate for the difference between the engineers in respect of the cost of clearing and disposing appropriately of the old vegetation. Their estimates of the sediment fences and re-grassing of the site are consistent.
(iii)The Value of the Rock Retaining Wall –
In arriving at the replacement cost of the rock retaining wall along the 245 metre frontage to the Nerang River, the following rates have been adopted:
Mr Dodds Mr Coote Rock retaining wall (245m) $500 per metre $430 per metre Concrete piers & capping - $ 70 per metre TOTAL COST $122,500 $117,450 Mr Coote argues that the wall currently has a build-up of sand at its base, by virtue of its location on the convex curve of the Nerang River. Unlike rock walls on the opposite concave shape of the river, where there are signs of damage and wear to the walls, the subject wall shows no signs of deterioration. Mr Coote sees the on-going life of the subject wall to be at least another 100 years. Mr Coote agrees that concrete piers and capping could suffer damage as a result of saltwater intrusion, and rusting of any internal steel re-inforcing. In those circumstances, he argues, that some depreciation might be applicable. However, in respect of the rock wall and piers surrounding the subject land, Mr Dodd also agrees that, except for very high velocity flood waters, the rock wall shows no sign of deterioration. Mr Coote also gave evidence that with a concrete retaining wall it would be appropriate to design for a life of some 50-100 years. However, because of the nature of the rock material, he believes the rock wall on the subject has a much longer life expectancy. The current wall has been in existence for nearly 40 years, and Mr Coote believes that the concrete piers, well behind the rock wall, are probably unreinforced, and therefore unlikely to be affected by salt intrusion. He concedes that there could be some depreciation, but argues it would be minimal. Any need to repair or replace a concrete pier would have no effect on the rock wall.
Mr Treston, as a valuer, sees that the rock wall has already existed for about 40 years of its life expectancy, and accordingly, must have suffered some depreciation. He has applied a depreciation factor of 25% in arriving at its added value to the site. Mr Treston notes that there were similar old rock walls in the Gold Coast area which have been replaced after 20 years. He argues all structural improvements depreciate, except for hard filling which tends to appreciate with age. In applying his added value of the rock wall Mr Treston has concluded a value of 245 metres at $600 per metre (including professional fees) = $147,000, less depreciation 25%, giving an added value of $110,250. To this he adds interest paid (3 months) during construction ($2,169), arriving at an existing value of $112,419.
Directions for allowing appropriate interest on loss of earnings foregone in the developing of improvements is found in Kiddle v. Deputy Federal Commissioner of Taxation (1920) 27 CLR 316, at page 320; and also in the Land Appeal Court decision in Appeals for Conversion Purposes – Townsville (1978) 5 QLCR 314, at pages 331/336.
(iv)The Site Value –
The method adopted by both Mr Small and Mr Treston is to compare the developed site with the comparable sales of lands purchased for a single residential dwelling. As noted previously the subject can only be compared with a very small percentage (perhaps 1%) of residential properties in the top end of the market on the Gold Coast. The major difficulty confronting each valuer is that both agree that the subject is superior to other sales in the area. Mr Small provides the following sales of prestige residential lands:
· Sale 1 – (277-279 Monaco Street, Broadbeach Waters – Part of Lot 1 on RP 198651 and Lot 32 on RP 223568).
This is a sale (Statham to Unknown) of a parcel of 2,800m², with a north-west aspect to water, which is cleared, filled and levelled. The sale sold in May 1998 for $1,200,000.
· Sale 2 – (277-283 Monaco Street, Broadbeach Waters – Lot 1 on RP 198651 and Lot 32 on RP 223568)
This is a sale (Lindsay to Statham) of a parcel of 5,306m², being the area from which Sale 1 was subdivided. The sale was sold in September 1993 for $1,800,000, which is seen as representing two $900,000 homesites.
· Sale 3 – (14 Riverbend Avenue, Carrara – Lot 1 on RP 226638)
This is a sale (Tobin to Grimley) of a parcel of 5,312m², which is a filled level site with a north-east aspect to water, opposite the old Carrarra market area. It has further subdivisional potential, and sold in December 1997 for $1,000,000.
· Sale 4 – (1 McMillan Court, Southport – Lots 3 and 4 on RP 217863)
This is a sale (Franhem Pty Ltd to Phillips), of a parcel of 6698m², which has access to two streets and an easterly aspect to water. There was an existing 20 year old dwelling of no added value on the site, which could be subdivided into two luxury homesites at $850,000 each. The sale sold in May 1992 for $1,700,000.
· Sale 5 – (17 Marseille Court, Sorrento – Lots 2 and 3 on RP 201081)
This is a sale (Redpath to Boscorp) of a parcel of 8,051m², which is cleared, filled and levelled, and has an easterly aspect to water. The sale was purchased by a builder who intended to develop an 8-lot subdivision, but has since resold the two lots separately. (Lot 2 – 3683m² and Lot 3 – 4368m²). The combined parcel was sold in June 1996 for $2,100,000, giving two building sites of $1,050,000 each.
In support of his valuation Mr Treston provided the following sales:
· Sale 1 – (17 Marseille Court, Sorrento – Lots 2 and 3 on RP 201081)
This is the same as Mr Small’s Sale 5, and adjoins the subject to the north-east. Access to the sale is good via Marseille Court which is a cul-de-sac. The sale has a combined frontage to the Nerang River of 108 metres, and is inferior to the subject. The sale sold in July 1996 for $2,100,000, which after allowing for improvements was analysed at $1,884,374, and applied at $1,750,000.
· Sale 2 – (279-281 Monaco Street, Broadbeach Waters – Lot 1 on RP 198651 and Lot 32 on RP 223568).
This is the same as Mr Small’s Sale 2 which sold in September 1993 for $1,800,000. The sale is in an exclusive residential area and has a frontage of 67 metres to the Nerang River. After allowing for improvements, the sale was analysed at $1,784,800, and applied at $1,500,000.
There is no record of major fill to that site. A further sale of part was recently sold for $1,200,000 (Mr Small’s Sale 1), and the remainder is being developed as a prestige residence for Mr Statham’s son. The sale is seen as comparable with the subject, but the subject has a larger area.
· Sale 3 – (57-63 The Corso, Isle of Capri – Lot 436, 437, 439 and 440 on RP 100142).
This is an aggregation of area 2,195 square metres of four sales of adjoining parcels accumulated by the one purchaser (Spong) between July 1991 and June 1996, for a combined total of $2,190,000 ($2,160,000 plus $30,000 demolition of home). The sales are located 2 kms south-east of the Bundall Post Office, and 2.3 kms south-west of central Surfers Paradise. The four parcels were acquired for the erection of a prestige dwelling for Mr Spong, and have a combined 52 metre frontage to Adam’s Basin, and a north-easterly aspect to water. The sale has 2 metres of fill and was acquired as a developed site with the four existing dwellings being demolished to make way for a dwelling, tennis court and lagoon-style swimming pool. Overall the sale is seen as inferior to the subject on a site basis as, while it has a better location, it has an area less than 10% of the subject site.
After allowing for improvements the sale was analysed at $2,146,045, and applied at $1,600,000.
· Sale 4 - (1, 3 and 7 Cannes Avenue, Surfers Paradise – Lots 2 and 3 on RP 161148 and Lot 173 on WD2336).
This is an area of 1660 square metres, and is located 1.6 kms south of central Surfers Paradise, 500 metres from the Ocean Beach, and adjoins a park on its northern boundary. The sale is zoned “Residential Multi Unit” and has a combined frontage of 44 metres to the Nerang River and a north-westerly aspect to water. An old block of flats and a dwelling were subsequently demolished to make way for a prestige dwelling upon the site. The sale is inferior to the subject, although it has a better location but is impacted by noise and traffic from surrounding multi-unit accommodation.
The sale sold as two parcels in October 1994 and May 1995 for a combined total of $1,525,000, which after allowing for improvements was analysed at $1,515,600, and applied at $1,200,000.
In seeking comparison with the subject, Mr Small sees his sales 2, 3 and 4 as the most relevant, but agrees that all of those are inferior to the subject. In keeping with his conclusion that purchasers of prestige homes appear to prefer sites of area between 4,000 square metres to 8,000 square metres, upon which they can comfortably establish a large dwelling, tennis court, swimming pool and leisure facilities, Mr Small sees his sales 2, 4 and 5 as being more in line of sales for two homesites. He argues that such flexibility is not available to the appellants as the subject land has such a restricted access to Freyburg Street (only 10 metres wide).
In respect of the potential to further subdivide the subject land, Mr Small notes that marketing in January 1998 for similar large prestige homesites at Lot 1 on RP 192918 – “Bartinon” on 8,959 square metres, and more recently for the late Arthur Earle’s home at Riverview Parade “Riverbend” on 2.137 hectares, the latter with 250 metre frontage to Nerang River, have both advertised that approval to subdivide part of those lands was available. Mr Small also supplies letters from leading real estate agents who specialise in prestige properties expressing opinions that the optimum size property for such purposes was between 4,000 and 8,000 square metres.
The real estate agents also referred to improved properties at:· “Bartinon” – 20 Marseille Court, Sorrento – Sold April 1994 for $2.825,000.
· 1 McMillan Court, Southport – Asking price $3,500,000.
· 5 McMillan Court, Southport – Sold February 1996 for $3,250,000.
· 72 Riverview Parade, Nerang – Passed in in July 1998 at $940,000.
In seeking some appraisal of the subject land, the agents suggest that the value of the subject as an improved developed site would be within the range of $1,500,000 to $2,500,000. They further speculate that if any potential purchaser was to purchase the property for $2,500,000, and then refurbish the dwelling at a cost of say $1,500,000, the $4,000,000 outlaid would be beyond anything so far sold on the Gold Coast.
However, merely to discount the unsubstantiated opinions expressed by the agents, Mr Treston notes that a recent search of Departmental records disclosed the sale of an improved residential property at Southern Cross Drive, Cronin Island, in January 1997 for $6,553,000 (Exhibit 19). While there was no detailed analysis of that sale, it was noted that the sale had an area of 2,318 square metres and was transferred apparently between two Japanese off-shore owners.
In seeking some understanding of that sale, Mr Needham draws comparison with a similar property near the Arthur Earle property at Nerang which was purchased as a corporate headquarters facility for the Nissan Motor Corporation. He also notes that the sale at Southern Cross Drive was apparently from Mr Yokayama, the head of the Daikyo Motor Corporation, and he concludes that sale to be more of the corporate headquarters facilities, rather than a single private residence. Mr Treston does not contest that view.
In summarising the opinions expressed, Mr Treston argues that there is a healthy, but restricted, market for very expensive residential parcels on the Gold Coast. He agrees that there is some resistance to purchasing single residential sites of the size of the subject, but argues, in his opinion, that relates more to whether the potential buyer has the necessary resources to achieve the top price for the land. However, Mr Treston confirms that his knowledge of buyer expectations in the market for this type of property, was obtained mostly from discussions with agents after the sale had occurred. He also disagrees that people who can afford to purchase the dearest land, are necessarily dissuaded by the high cost of maintaining the property. His estimate of $2,500,000 for the subject was based entirely upon his judgment of what someone would be prepared to pay in order to obtain this relatively unique parcel.
Mr Needham argues that it would be difficult to find much of a difference in price paid for waterfront lots of frontage 150 metres and 180 metres. Mr Treston agrees that such large waterfrontage would not be the only factor that would influence the price paid, but argues that there are very few residential lots with a frontage of 250 metres, and as such, that adds to the uniqueness of the subject.
In seeking comparison with his Sale 4, Mr Treston disagrees that the different zoning distinguishes that sale. He agrees that, as the purchaser bought to build a single residence, he would have had to compete with potential multi-unit buyers to get the land. However, he argues, that was what a prestige homesite in that area would cost. He agrees that the four consecutive purchases as part of his Sale 3 involve adjoining owners, but argues that any special loading for that reason has been allowed for in his comparison. Mr Paterson sought support for the use of Mr Treston’s Sale 3 in the findings of Fenton Nominees Pty Ltd v. Valuer-General (1981-82) 47 LGRA 71. In the end Mr Small estimates the site value of the subject at $2,000,000, and Mr Treston at $2,500,000.
Decision:
(1)The Site Value –
I turn first to the matter of the determination of a developed site value for the subject. There is no disagreement that the subject provides excellent privacy but there is argument about how potential purchasers might perceive the costs associated with achieving that level of privacy. The method of direct comparison of sales of comparable lands has been adopted, which is the preferred method of the courts. (See Brewarrana Pty Ltd v. Commissioner of Highways SA (1973-1976) 32 LGRA 170, at 180; and Jowett v. Federal Commissioner of Taxation [1926] 38 CLR 325, at 329). In defining site values any invisible improvements which have merged with the land, such as the filling and revetment walls, are included in the site values adopted.
There is no doubt that the subject land is a prime prestigious lot, in a very select area of the Gold Coast, and is one of a very few private residential homesites of this calibre. While the subject is not unique in this regard, there are very few prestige properties of vacant lands from which to draw comparison. Both valuers agree that the only comparable sales available are all inferior to the subject parcel. This then poses the problem of seeking comparison with other less valuable properties, while the subject perhaps sets the upper benchmark for lands of this nature. Where a property is verging on such selective characteristics, the market for that land is likely to vary from normal market expectations.
It is therefore perhaps imprudent to extrapolate the inferior market trends to encompass the premium land parcels, and we must turn to the judgment of other experienced people who operate in this area, and upon whose judgment we would rely upon. Mr Small and Mr Treston both acknowledge that they have used their professional experience to estimate the additional premium that might attach to the subject, beyond the levels achieved by the adopted sales. In so doing both valuers have followed the principle supported by the Land Appeal Court in the majority decision in King Ranch Pastoral Company Pty Ltd v. The Valuer-General 35 CLLR 255 at 259, where the Court found:
“In not attempting to do this, Mr Walker adopted a method of valuing based on knowledge and experience rather than one lacking precedent and authority.”
This was further clarified in the wording of the minority decision of that case where the learned Member noted at page 262:
“In Bingham v. Cumberland County Council (1954) 20 LGR 1 at pages 18 and 19, Sugarman J says ‘In the absence of sufficient guidance to be had from sales, the valuer may find himself in a position resembling that to which Lord Romer referred in the Raja case (1939) AC at pp. 312 and 313, in which he will have no market value to guide him, and he will have to ascertain as best he may from the material before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land.’ The valuer in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant.”
In arriving at the appropriate site value, I also seek guidance from the decision of the Land Appeal Court in H and E Grahn v. The Valuer-General (AV89-246/247) 13 December 1990, unreported, at page 5:
“A proper valuation calls for an exercise in balancing all the respective advantages and disadvantages inherent in or pertaining to a lot.”
The sales evidence indicates the levels to which prudent purchasers, with appropriate capital to invest, will extend themselves in order to obtain such properties. However the recent failures to achieve the reserves on the “Arthur Earle” property at Nerang, and the “Bartinon” property at 20 Marseille Court, Sorrento, demonstrate that discerning buyers are both scarce and hardnosed in their dealings. On that basis I have some understanding of Mr Small’s conclusion that it is easy to over-estimate the additional features of the subject.
However, I believe that the acquisition of scarce or extremely valuable items, including property, is also likely to demonstrate the overall principle of supply and demand. While a direct analogy with the acquisition of works of art may not be able to be demonstrated by sales evidence, I see no reason why those who can afford the best, will not extend themselves. Such is the experience with other features evident on the Gold Coast, including expensive assets of the rich such as motor vessels. Indeed from memory the former owner of “Bartinon” also once owned perhaps the most expensive motor vessel in the State.
While it is not a matter for this Court to speculate upon the additional premium which might apply to the subject land, I note that in drawing comparison with those expensive sales, the valuers have applied the following premiums for the subject:
Sale Mr Small
($2,000,000)Mr Treston
($2,500,000)Small - Sale 1 ($1,200,000) + 67% --- Sale 2 ($1,800,000) + 11% +39% Sale 3 ($1,000,000) + 100% ---- Sale 4 ($1,700,000) + 18% ---- Sale 5 ($2,100,000) – 5% +19% Treston - Sale 3 ($2,190,000) --- +14% Sale 4 ($1,525,000) --- +64%
In seeking to place some weight upon the sales, I note that Mr Treston’s Sale 3 involves certain levels of adjoining owner influence. While I accept that sales to an adjoining owner are often viewed with some caution, there is no hard principle that such sales must always be rejected. Indeed in considering successive purchases from adjoining owners in acquiring a property for a Target Variety Store in Mt Gambia, in Fenton Nominees (supra), Wells J said at page 81:
“The sort of situation in which a purchase by an adjoining owner becomes suspect is where the purchaser is induced or forced to acquire the land, by unconditional contract, once and for all, to gain some obvious commercial advantage, or to escape some threatened commercial disadvantage. In such a case, the central hope or threat turns him into an anxious purchaser.
The situation obtaining in the present case is different from that sort of case in important respects. The developer attaches an importance to each succeeding purchase because it represents an advance towards an ultimate goal; it is of only incidental importance that the allotment purchased happens to adjoin another allotment previously purchased by the same developer. ”
In his analysis of his Sale 3, Mr Treston has made due allowance for any potential loading, and I see no reason to reject that sale, although I would tend to give it less weight. In seeking some commonality between the valuers I note that there are two common sales (Small sales 2 and 5). The only difference between the professional judgment of the valuers lies in the quantum of the premiums they have applied for the subject. In seeking to balance the quantums of the site value of the subject, I am conscious of precedent in respect of giving any benefit of doubt to the appellants in these matters. (See Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited and Others (1946-47) 74 CLR 358, at 373.)
The key to applying any discretion on this matter of site value needs to consider Mr Needham’s comment that the additional area of the subject should really be seen as a disability, rather than as a special asset. In that respect I have some support for Mr Treston’s argument that such additional area provides a level of privacy not available to surrounding parcels. To then conclude that the subject would have a value less than his Sale 5 at $2,100,000 (for a single large site) would appear inconsistent.
I have no evidence that there was any potential to further subdivide the subject land, indeed evidence was accepted that no potential for subdivision existed. However, if the additional open space surrounding the residence was indeed a detriment, I believe there may have been some scope for alleviating that detriment by subdividing part of the land utilising a shared easement access to Freyburg Street. Such accesses do occur, and the special nature of that locality may encourage a suitable buyer. Such speculation, however, adds little to this matter as Mr Treston was required by section 17 of the Act to treat the land as a single residential site. However, the thought does tend to encourage me to believe that the site value of the subject should be something more than Sale 5 at $2,100,000. In the end I will allow $2,200,000.
(2)The Added Value of Improvements –
(i)Volume of Fill –
In assessing the nature of filling I accept the evidence of Mr Pluthero and determine a total volume of 89,000 cubic metres of solid fill required. I note that both parties have made allowance for compaction of the fill material, basing their calculations upon the volume of material transported to the site by various methods. I note that Mr Dodd notes that either sand pumping or importing solid fill material “provides a compacted structural fill situation suitable for immediate building construction” (Exhibit 9).
(ii)The Method of Filling –
Another issue in this matter is the method by which the hypothetical filling of the site should be approached. There is no argument that, under present day environmental requirements, sand pumping of the material was unlikely to be approved. There is also no argument that sand pumping is the most cost effective method of achieving the project. The appellant argues that as the filling would currently not be approved by sand pumping, then any exercise to estimate the added value that the fill brings to the site, must be made in the light of what would currently be possible.
In seeking to understand the intentions of the Legislation in this matter, I note that the meaning of “unimproved value” is established in section 3 of the Valuation of Land Act, which states:
“3.(1)(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. ”
In seeking to understand the meaning of “the value of improvements” I turn to section 5 and note:
“5.(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. ”
Guidance in interpreting those directions is also found in the findings of the Privy Council in Tooheys Limited v. Valuer-General [1925] AC 439, where their Lordships said at page 443:
“Now, what he has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed. It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceeds by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure. What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvement, what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression ‘prairie value’. The land must be taken as it exists at the date of the valuation. ”
If I then assume that the filling upon the land “never had existed”, then it is also a reasonable assumption to assume that the owner would be required to take all such steps as would be required in order to fill the site as at the date of the valuation. By that logic Mr Needham’s conclusions that the fill would therefore need to be trucked into the site has some support.
I note also that in determining any rate for filling it is appropriate to allow the cost applicable to the whole development scheme, rather than selectively adopting any costs associated with only part of that project. That principle was established by the Land Appeal Court in Alfred Grant Estates (Surfers Paradise) Pty Ltd v. Valuer-General (1966) 33 CLLR 1, at page 7; and later followed in AMP Society v. Chief Executive, Department of Lands (AV93-333), 20 May 1994, unreported at page 15.
I note also that in assessing the added value of the improvements they should “in no case exceed the amount that should reasonably be involved in affecting” those improvements. And also the improvements so assessed should be of a “nature and efficiency equivalent to the existing improvements”. (Section 5(2)). There are two words in those statements to which I will address my attention.
Before examining those words, I note that an understanding of the complex hypothetical task confronting the valuers in determining unimproved value of an improved parcel, was succinctly expressed by the Land Appeal Court in PH Clough v. The Valuer-General (1981-82) 8 QLCR 70 at page 75:
“We think it beyond doubt that what has to be valued is the subject parcel of land viewed as if the improvements thereon, visible or invisible, never existed but that otherwise the parcel was situated in the community (and environment) with the amenities and facilities that had grown up around it as at date of valuation. ”
A further understanding of that task was also addressed in Caltex Oil (Aust) Pty Ltd v. Chief Executive, Department of Lands [1994-95] 15 QLCR 206, where the learned Member considered the impact of contamination upon unimproved value. While that decision was over-turned on appeal by the Land Appeal Court ((1996-97) 16 QLCR 345), the discussion on how unimproved value should be assessed was not disturbed.
The matter of added value of the improvements was also addressed by the Land Appeal Court in O’Brien Nominee Pty Ltd v. Valuer-General (1979) 6 QLCR 280, where it said at page 285:
“It is clear that the value which the improvements give to the land, subject to the above proviso, is to be ascertained irrespective of the cost, as at the relevant date, of making them.”
The Land Appeal Court had followed guidance in that matter in the decision of the High Court of Australia in The Australian Estates and Mortgage Company Limited v. The Commissioner of Land Tax (1931) 1 “The Valuer”, 1 July 1931, at page 247, per Rich J. The Land Appeal Court went on further to note in O’Brien at page 287:
“The test of ‘added value’ of improvements is, as the term implies the value
added or given to the land by the actual and existing improvements. ”The common thread in all of those references is that it is the actual improvements which must be assessed, and not any other hypothetical, or potential improvements. However, those precedents remain silent in respect of the method to be adopted in ensuring the improvements to the land are put in place.
Before proceeding to probe the intentions of the method adopted in seeking unimproved value, I note that the difficulty confronting the appellants in seeking to fill the site is mostly related to the difficulty of obtaining permits to fill land on the Nerang River Flood Plain. Mr Paterson extends such difficulties also to trucking-in the fill (transcript page 287).
In the exercise before me I note that I am to view the subject in its unimproved state, but surrounded fully with all facilities extant at the date of valuation. The inference from that is that any fill upon the site would be an intrusion into the flood plain and against the policy of Council, whether it occurred by sand pumping or importing by truck. On that basis the difficulty would appear to be not how could the site be filled, but rather whether it could be filled at all.
On the basis that the exercise before me is to determine, retrospectively, the unimproved value of the subject, I must also assume that permission has been given for the site to be filled ignoring the current constraints upon the rest of the Flood Plain. Not to do so would be a nonsense, and in contravention of the Legislation.
I turn then to the meaning of the words “reasonably” and “efficiency”. I note that the use of “reasonably” was examined by the President of this Court in State Government Insurance Office (Qld) v. Valuer-General (1980-81) 7 QLCR 171, at page 187. In that matter the filling and removal of mud for a reclaimed site for a regional drive-in shopping centre at Canelands, Mackay, had been undertaken in a most costly manner. The original contractor for supplying the fill by importing by truck, had financial difficulties, and subcontracted the filling at a cost well above the initial estimates. The respondent had adopted the site value of the developed site, and deducted his estimates of the cost of improvements, a method similar to the current matter.
In the end the President was unable to adopt either of the approaches taken by the valuers for either party, and made adjustments to their estimates as he saw fit in accordance with the evidence. The President saw the extraction and replacement of all of the mud as reasonable at the original estimates rate, and for sand filling to be based upon previous contours and finish levels. The President also noted “that the cost of making the improvements was incurred round about the relevant date of valuation” (page 187). In the current matter a delay of nearly 40 years has occurred. That matter also can be distinguished as it dealt with a review of the actual method used to obtain the filling, and was not conditioned by any subsequent change of policy impacting the environmental issues.
In seeking to understand how added values may be seen as “reasonably involved” in effecting the improvements (section 5(2)), I note that such use of the word associated with the word ‘involved’, may be seen to reflect some assessment of the diligence needed to execute the improvements. In considering the use of the expression “reasonable diligence” I note that has been taken to refer to “doing of that which, under ordinary circumstances, and having regard to expense and difficulty, can be reasonably required” (See “Words and Phrases Legally Defined”, 3rd Edition, Butterworths, Volume 4, page 15).
Another use of the word could be in the term “reasonably necessary” to effect the improvements. The use of the words “reasonably necessary” for the satisfactory development or use of a cleared area within the meaning of the Housing Act 1957, was seen to be one of fact and not one of planning policy. (See Coleen Properties v. Minister of Housing and Local Government [1971] 1 WLR 433; and also “Stroud’s Judicial Dictionary” 4th Edition, Volume 4, page 2274).
The words “nature and efficiency” are used in the Act to condition the improvements being valued, which are to be compared with the existing improvements currently in place. The words are also taken to infer that the improvements are fit for the purpose for which they are made. (“Stroud’s Judicial Dictionary” page 879). In that context “efficient” can be taken to mean “safe in achieving the result which is intended” (per Hodson LJ in Payne v. Weldless Steel Tube Co [1955] 3 WLR 771).
An analysis of those meanings in the current matter could be interpreted to mean that any added value of improvements to the subject land (the filling) should be seen as undertaken in a manner which takes regard of the expense of doing it in a way normally used for that purpose, it should be executed according to the facts surrounding the land at the time, and in a safe manner in order to achieve the desired result. In normal circumstances that would involve sand pumping from the river, adopting all care and attention required for such an enterprise.
While I have no precedent to direct me as to whether the formerly used method of sand pumping should be disregarded in the light of current Council restrictions, my understanding of the processes required to determine unimproved value in these circumstances, suggests that it would not be prudent to do so.
However, in deciding to adopt the respondent’s method of sand pumping, I have certain reservations about his calculations. Firstly I believe it is not correct to assume that there would be no additional cost involved associated with the fill as a consequence of the new environmental standards, and also the appropriate royalty payments to apply. Secondly, I believe the period adopted for the filling, should make due provision for any need for further sedimentation to occur in the river.
In considering the matter of whether allowance should be made for the costs of environmental investigation, I believe that, if I am to compare the added value of the filling improvements against the finished site value of the subject land, as at the date of valuation of 1 October 1996, then it would be consistent to ensure that conformity with current engineering standards should also be required.
Certainly the unit cost rates supplied for the pumping of the sand are provided on the basis of utilising more modern technology, with all of its efficiencies. But such progress in technology has also been accompanied by a parallel interest in protecting the physical environment. It would be unreasonable to take the advantages of one side of the technology progress, without balancing that by the additional costs of currently achieving the objective.
The need to marry the method of operation with the available technology of the time was also adopted in the matter of Appeals against determinations (21) – Shire of Millmerran v. Valuer-General (V83-916), 18 October 1984, unreported, to which I was directed by Mr Paterson. In that matter the learned Member considered the method to be adopted when considering the added value of clearing land for its use as improved irrigable land for cultivation.
The Member was more concerned with the development period, than with how the work was to be done at that time, however his words have application to the current issue in two respects. Firstly they direct how a prudent developer should undertake the task of preparing the land, and secondly, that any time involved should be based upon the most cost-effective method, rather than to be based merely on how the task was originally undertaken. I believe the words speak for themselves where the learned Member said at page 12:
“The next matter for consideration is that of the development period applicable to the sales. In considering this question one must envisage the respective blocks as being unimproved and having come to a conclusion of their physical state in that condition, assess the time it would take for a prudent farmer with the money available to bring the property to a state where it is fully productive. The hypothesis must exclude personal managerial idiosyncrasies, slovenly or faulty development and the step by step development for one or other uses which has occurred over the years since these lands were alienated. That is to say the test envisages the development of the block to its developed state at sale from an unimproved state by the use of such technology, machinery and expertise as is available at cost to the farmer at the relevant date. It follows that evidence of what has in fact occurred over a period of many years in the development of a block can be misleading. ”
In considering then my second reservation in respect of the respondent’s use of sand pumping, I note that he provides two alternative approaches using sand dredges of varying size. Because of the size of the project it would be inappropriate to allow for the very large efficiencies per cubic metre associated with much larger dredges. On the figures supplied, I believe either a 150mm or a 300mm dredge line would be appropriate, as both appear to operate at a comparable rate per cubic metre. Based upon a reassessment of the most likely State royalty charges of $1.04 per cubic metre, where there is no reclamation of land, I will accept the unit rate of $6 per cubic metre for the sand pumping.
In seeking guidance on royalty payments due to the Crown, I note that any works undertaken upon tidal waters shall not proceed without the sanction of the Governor in Council under section 86(2) of the Harbours Act 1955. Such provision was maintained by sections 233(1) and 236(1) and (6) of the Transport Infrastructure Act 1994, and covers materials defined in section 67 of the Harbours Act 1955 to include rock, stone, shingle, gravel, sand and other materials. Section 67(2)(a) of the Harbours Act 1955 was subsequently replaced by the Marine Land Dredging ByLaws 1987, which were gazetted by the Governor in Council on 19 December 1987 (at page 1696). The schedule of fees payable for a dredging permit under those ByLaws are as follows:
· application fees where volume of dredging material exceeds 10,000m³ = $300
· application fees where dredging is removed for sale only = $100
· fees payable on removal of dredging material exceeding 30,000m³ = $100/week
· fees payable on removal of dredging material for sale = $0.77 per m³ or $250 per month whichever is the greater.
I am also advised that it is not clear whether the rates applied in the Marine Land Dredging ByLaws (1987) have been amended since 1987, but for a comparable service under the Gold Coast Waterways Authority Act (subsequently repealed in 1990), the fee payable on all materials removed was $0.98 per m³. Without evidence to the contrary I believe that the fee for sale of dredging material in 1987 at $0.77 per m³ may well have increased beyond a rate of $0.98 per m³ in 1990, and in fact is likely to be at the rate of $1.04 per m³ as supplied in evidence by Mr Coote.
The matter then to be addressed is whether the fees payable should be on the basis of the sale of the dredging material, or for the private removal purposes of the appellant. I note that both valuers agree that the filling was not used for the purpose of reclaiming land from the seabed. I note also that section 67 of the Harbours Act 1955 refers to the “removal” of materials from any foreshore or under the sea, while section 91(2) of that Act refers to the “reclaim” of any land from the sea or under the waters of any navigable river. It is agreed for the purposes of this current matter that the materials were removed from below the surface of the Nerang River by dredging, and used to fill the existing land of the subject, without further reclamation.
I note that the wording of the Marine Land Dredging ByLaw 1987 refers to “dredging material for sale”. If I refer to “Stroud’s Judicial Dictionary” (supra) at page 2426, I see that a “sale” generally implies an exchange for money. I note also that a sale implies that there should be one who sells and another who buys. (King v. England 33 LJQB 145). The inference from that guidance is that the dredging of river materials for sale would involve some commercial situation where the dredger of the materials actually supplies the materials to a second person for a fee.
The only differentiation in the Marine Land Dredging Bylaw 1987 is to be found in section 8 (Conditions of Dredging Permits). In that section permits and payments are separated into dredging for reclamation purposes under section 8(a)(i); and dredging for sale under section 8(a)(ii). As it is agreed that the filling was not for the purpose of reclamation, then it must be for the purposes of sale.
In the normal course of dredging operations a contractor generally hires out his equipment on the basis of shifting/dredging certain volumes of material. On that basis, in my opinion, the contractor is “selling” the dredged material to the client, and the royalty payments due in such circumstances would relate to the “removal for sale”. On that basis I accept the royalty payment of $1.04 as applicable in this matter.
I note also that if a smaller dredge was to be contemplated, then unit rates of about $7.80 per cubic metre (30% increase) would apply. However, to counterbalance that increased rate where continuous dredging with the smaller dredge could be adopted, I believe the larger dredges would need to be relocated several times during the operation. The time to complete the operation would appear to vary between six months for the larger dredge (Mr Dodd) and 2 years for a smaller dredge (Mr Coote). In the end I will allow the six months of operating time, but interspersed during that time I believe two periods of time will be needed to be allowed for the sedimentation of fresh fill to occur. On that basis a further two relocations of the dredge ($20,000) would be necessary.
In the matter of whether to allow for any contingencies, which is a normal engineering approach when estimating the cost of a project, I note that it is the cost of replacing the actual improvements which must be determined O’Brien Nominee Pty Ltd (supra). On that basis I see no need for a further deduction for contingencies, as the land has already been filled, and there should be no unknown factors that would warrant any additional provision for uncertainty.
Guidance in this matter may also be found in Alfred Grant Estates (supra) where the Land Appeal Court said at page 8:
“Accordingly, we think the cost of filling and top-dressing the appeal land should be based on actual cost which in this case showed no variation between the date when the work was done and the relevant date. ”
I see a difference also between the determination of the added value of improvements upon an existing fully developed site, such as the subject land, and the methodology adopted in determining the added value of improvements in a hypothetical subdivision, where there is reasonable justification for including an amount for the profit and risk factor, because of uncertainties in the development. With the latter there would be reason to allow for contingencies, in the former I believe it is not appropriate.
(iii)The Value of the Rock Wall –
The only difference between the parties on this issue is whether it is appropriate to allow for any depreciation of the rock wall. Mr Treston has allowed 25%, and Mr Coote believes the wall currently has an indefinite life. While there was evidence of erosion on the concave bank of the Nerang River opposite the subject, and also further downstream near the Capri Commercial Centre at the Isle of Capri, there was no such evidence on the subject land. On the evidence before me I make no allowance for depreciation at this time. I would agree with Mr Treston that interest paid during the construction of the rock wall should also be allowed, and I will adopt his rate of 7.87% for three months based upon the undepreciated cost of 245 metres @ $500 per metre = $122,500, or $2,410 for interest foregone.
(3)The Valuation Determination –
Site value fully developed $ 2,200,000
Less –· Clearing plus silt fences = $ 36,492
· Remove topsoil (150mm @ $2.80/m³) = $ 11,714
· Respread topsoil (150mm @ $2.50/m³) = $ 9,938
· Grassing = $ 7,950
· Rock revetment wall = $122,500
· Interest at 7.87% for 3 months = $ 3,710
· Filling 89,000m³ @ $6/m³ = $534,000
· Plus two relocations of dredge = $ 20,000
· Interest at 7.87% for 6 months = $ 21,800
· Environmental studies,
Management and Monitoring = $117,000
· Professional fees
(10% on $742,594) = $ 74,259
Sub-Total = $ 959,363
$ 1,240,637
Adopt $1,240,000
In deciding to approach the filling on a sand pumping basis I am conscious of the appellant’s concerns. While I am against his conclusion in this matter, if I was obliged to re-assess my approach, I would provide a separate estimate of the added value involved in the method as follows:
Site value $ 2,200,000
Less –· Clearing, removal and
Respreading top soil, grassing,
Rock wall and interest,
Environmental studies,
Management and monitoring
(as previously) = $ 309,304· Filling 89,000m³ @ $12/m³ = $1,068,000
· Interest at 7.87% for 2 months = $ 14,008
· Re-instate Freyburg Street = $ 18,000
· Professional Fees
(10% on $1,395,304) = $ 139,530
Sub-Total = $ 1,548,842Unimproved Value = $ 651,158
Adopt $650,000
Summary:
Having considered the evidence before me I believe that the appellant has proved that the respondent has made some errors of fact which would impact the valuation, and the presumption of section 33 of the Act is disturbed. (See Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41 at 56).
Conclusion:
Having examined all of the evidence I am persuaded that the appellant has partly proved his case. The unimproved value as determined by the Chief Executive is set aside, and the unimproved value of Lot 2 on RP 163791 is determined at $1,240,000.
(NG Divett)
Member of the Land Court
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