Stay Developments Pty Ltd v Department of Natural Resources and Water
[2006] QLC 61
•27 September 2006
LAND COURT OF QUEENSLAND
CITATION: Stay Developments Pty Ltd v Department of Natural Resources and Water [2006] QLC 61 PARTIES: Stay Developments Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO.: AV2005/0231 DIVISION: Land Court of Queensland PROCEEDING: An appeal against a valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 27 September 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RS Jones ORDER: The appeal is dismissed.
CATCHWORDS: S.33 Valuation of Land Act 1944 – presumption of correctness - onus of proof – relativity or statutory valuations – comparable sales evidence. APPEARANCES: Mr DW Stay in person for the appellant
Mr M Heather Senior Legal Officer Department of Natural Resources and Water for the respondent
These proceedings concern an appeal by Stay Developments Pty Ltd (the appellant) against the unimproved value assigned to its land by the Chief Executive, Department of Natural Resources and Water (the respondent).
Background:
The subject land is located at 71 Osborne Road, Mitchelton, and is more properly described as Lots 56 and 57 on Registered Plan 18795, Parish of Enoggera, County of Stanley. The land is situated in a commercial/retail part of Mitchelton and is adjacent to the Brookside Shopping Centre. Access to the land is via Osborne Road which is a major connector road made up of a four-lane bitumen carriageway. All of the usual urban services and amenities are available to the land.
The land comprises an area of 1214 m² made up of two rectangular shaped allotments with a combined street frontage of 20 metres. At the date of valuation the land was designated Multi Purpose Centre 3 under the Brisbane City Council City Plan 2000. Consistent with that designation the land has been developed with a commercial office/retail building.
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 $565,000. In its Notice of Appeal, the appellant estimated the unimproved value of the land to be $300,000.
The appellant was represented by Mr D Stay, a director of the company. The respondent was legally represented by Mr M Heather, a senior legal officer employed by the respondent, and relied on the evidence of Mr R Bein, a registered real estate valuer also employed by the respondent. Mr Bein was not the valuer who first carried out the valuation appealed against but, after carrying out his own investigations, prepared a valuation report (Exhibit 5) which supported its application and correctness.
Issues in the appeal
As the subject land is "improved land" for the purposes of the Valuation of Land Act 1944 (VLA) s.3(1)(b) of that Act relevantly provides:
"3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(a)…
(b)in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist."
Pursuant to s.33 of the VLA, the valuation appealed against is deemed to be correct and therefore the appellant bears the burden of proving that it is wrong. In Brisbane City Council v The Valuer-General[1], Gibbs J, as he then was, in delivering the leading judgment of the High Court considered that the presumption in favour of the correctness of the statutory valuation may be rebutted where it can be shown that it was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method. Importantly, s.45(4) of the VLA further provides that the appeal is limited to the grounds of appeal stated in its notice of appeal. The burden of proving each and every ground of appeal relied on also rests with the appellant.
[1](1977-78) 140 CLR 41 at 56 – 57; see also Cominos and Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331 -332 (LAC).
The ground of appeal as identified in the notice of appeal filed on behalf of the appellant is very brief and states:
"The value per square metre is out of relativity with adjoining commercial properties of the same zoning."
Before dealing with this ground of appeal it is necessary to deal with some other matters raised by the appellant in his statement of evidence (Exhibit 3). The statement comprises of nine paragraphs which raise a number of facts and matters which are not, in my opinion, related to the relativity argument foreshadowed in the appellant's notice of appeal. These include the impact of easements and road widening (paragraph 5), exposure and access issues (paragraph 6), decreases in market rent (paragraph 7) and the problems associated with proximity to a nearby McDonalds outlet and parking (paragraph 9).
It is my opinion that the facts and matters raised in paragraphs 7 and 9 go beyond the limits prescribed by s.45(4) of the VLA and, accordingly are not able to be taken into account by me in determining this appeal. In respect of paragraphs 5 and 6 of Exhibit 3, I allowed Mr Stay to cross-examine Mr Bein about some of the matters raised therein. This was permitted not because they were matters fairly raised in the notice of appeal but because they might have tended to refute Mr Bein's positive assertions to the effect that the development potential of the land was not affected by any encumbrances and that there were no restrictions on land use apart from the "usual zoning restrictions". As it turned out, there was no evidence concerning or about any of the facts and matters raised by Mr Stay in paragraphs 5, 6, 7 and 9 of his statement which affected the validity of the valuation appealed against.
Essentially the real case for the appellant is that the rate per square metre of $465 applied to its land is manifestly too high and unsupportable when regard is had to the unimproved value attributed to the Brookside Shopping Centre and Brookside Hotel sites. The Brookside Shopping Centre site contains a total area of 11.14 ha and was valued for the purposes of the VLA at an overall rate of $135/m². The hotel site is about 2.38 ha in area and was valued at a rate of about $139/m²[2].
[2] Refer to correspondence from respondent to the affidavit dated 12 September 2006.
Mr Stay gave evidence on behalf of the appellant to the effect that the subject land ought to be valued at a rate per square metre just below that of the shopping centre site. According to Mr Stay a lower rate per square metre was necessary because the designation of the subject land (MP3) only allowed development to a height of 2 floors above ground level while the designation of the shopping centre site (MP2) allowed development up to 6 floors.
The respondent countered by asserting that no sensible comparison could be made between the values attributed to the two sites. In this context, Mr Heather asked Mr Stay if he was familiar with the "valuation principle" that, generally speaking, as a block gets larger in size its value on a square metre basis tends to reduce. Mr Stay rejected this proposition as one which was outdated and out of touch with current real estate trends and forces.
A problem with the so-called "valuation principle" put to Mr Stay by Mr Heather is the Brookside Hotel site. This site is more than four times smaller than the shopping centre site but there is no material difference in the rates per square metre applied to the respective sites by the respondent in assessing their unimproved value.
I accept Mr Bein's evidence to the effect that there would be more buyers in the market place for land the size of the subject and that they would be of a different character and have different financial capabilities to those interested in sites the size of the Brookside Shopping Centre site. However, it does not necessarily follow that in every case there will be a meaningful relationship between size and dollar rates per square metre. The value applied to the Brookside Hotel site tends to suggest that no such relationship might exist.
In the circumstances of this appeal where there is very little evidence on the topic, I find the valuation principle as stated by Mr Heather to be rather unconvincing. That of course does not mean that the appellant has shown that the valuation appealed against is wrong.
In reaching his conclusion about the unimproved value of the land Mr Bein had regard to two sales of commercial sites which occurred in late 2003. Neither of the sales are located in Mitchelton. One is located at Sunnybank and the other at Acacia Ridge. According to Mr Bein an analysis of theses sales reflected an analysed unimproved value of $585/m² for the Sunnybank site and $393/m² for the Acacia Ridge site.
Mr Stay's evidence was to the effect that no reliance could be placed on the sales. The sales were not inspected by Mr Stay and he produced no sales evidence in support of his estimate of value or which contradicted the valuation arrived at by Mr Bein. Nor was there any evidence to suggest that Mr Bein had incorrectly analysed the sales or had made some fundamental error in their application.
While I initially had some reservations about the ability to compare sales so far removed from the subject, those reservations were largely offset, not only by Mr Bein's professional opinion but also because there was no evidence led which would suggest that the price paid for commercial land in Sunnybank and Acacia Ridge differed materially from that being paid in Mitchelton provided that it was otherwise capable of meaningful comparison.
In the circumstances of this appeal I have reached the conclusion that the sales evidence relied on by Mr Bein is the most reliable evidence. Certainly more reliable than any comparison between the rate per square metre applied by the respondent to the subject land and the rates applied to vastly larger sties with different commercial potentialities.
For the above reasons, I have reached the conclusion and so find that the appellant has failed to prove that the valuation appealed against is wrong and ought be varied.
Accordingly, the appeal is dismissed.
Order
The appeal is dismissed.
RS JONES
MEMBER OF THE LAND COURT
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