Tewantin Holdings Pty Ltd v Valuer-General
[2014] QLC 17
•9 May 2014
LAND COURT OF QUEENSLAND
CITATION: Tewantin Holdings Pty Ltd v Valuer-General [2014] QLC 17 PARTIES: Tewantin Holdings Pty Ltd
(appellant)v Valuer-General
(respondent)FILE NO: LVA352-12 DIVISION: General Division PROCEEDING: Appeal against valuation under the Land Valuation Act 2010 DELIVERED ON: 9 May 2014 DELIVERED AT: Brisbane HEARD AT: Gladstone HEARD ON:
28 and 29 October 2013
Submissions closed 22 November 2013MEMBER: PA Smith ORDER: 1. The appeal is allowed.
2. The site value of the subject land is fixed in the sum of Four Hundred and Forty-nine Thousand Dollars ($449,000) as at 1 October 2011.
CATCHWORDS: Practice and Procedure – onus of proof
Valuation – valuation methodology – assessment of disabilities – mathematical calculation of percentage adjustments
Valuation – site valuation – factors to be taken into account – method of calculation
Valuation – relativity – issues to be considered
Land Valuation Act 2010
Burnett v Department of Natural Resources and Water [2010] QLC 57
Donald Neil Meiers and Florence Myrtle Meiers v Valuer General [2012] QLC 0019
Fairfax v Department of Natural Resources and Mines [2005] QLC 11
Mio Art Pty Ltd & Ors v Brisbane City Council [2009] QLC 177
Spencer v The Commonwealth (1907) 5 CLR 418
Steers v Valuer-General [2012] QLC 12APPEARANCES: Mr A MacAdam of Counsel for the appellant
Mr SP Fynes-Clinton of Counsel, instructed by In House Legal of the Department of Natural Resources and Mines, for the respondent
Background
This decision relates to an appeal by Tewantin Holdings Pty Ltd (the appellant) against a valuation by the respondent, the Valuer-General, pursuant to the Land Valuation Act2010, (the LVA), which originally valued the appellant's property situated at 59 Goondoon Street, Gladstone (the subject land), in the sum of $500,000 as at 1 October 2011. The appellant contends for a valuation of $365,000.
Prior to the hearing, the respondent reduced the valuation contended for the subject land to $450,000 and it is that figure for which the respondent now contends.[1]
[1]Exhibit 4 page 10.
The subject land has received a site valuation pursuant to the provisions of the LVA.
The Subject Land
The subject land is described as Lot 8 on RP 618013, Parish of Gladstone, and contains an area of 899 m².
This part of Goondoon Street has long been accepted as being in the central business hub of Gladstone. It is within the Uptown Precinct within the City locality.
Goondoon Street is a fully paved bitumen road with concrete kerb and channelling, paved footpaths and marked carparking. The subject land is serviced by underground electricity, telephone, town water, sewerage, mail service and garbage collection.
Whilst the block can generally be described as being rectangular in shape, a key point of the appeal is that the rectangular shape is quite elongated. The frontage of the subject land is 9.155 m, while it has an average depth of 98.214 m.
The subject land benefits from having a dual street frontage. The subject land has a north-easterly/south-westerly orientation, with Goondoon Street comprising the north-easterly frontage of the block, and Central Lane the south-westerly frontage.
The subject land has a sloping topography, falling approximately 10 m from Goondoon Street, over the 98 m length of the property, to Central Lane.
The subject land has been improved by the construction of an office/retail building. This has involved alteration of the original unimproved lay of the land to allow for the construction of a single storey building fronting Goondoon Street, and by utilising the natural fall of the land, the building becomes two storey at the rear of the building. Site works associated with the construction of the building are considered only very minor in nature and not overly relevant by either party.
The balance of the subject land retains its natural fall and is used for carparking.
The subject land is zoned 760 Commercial Zone-City Locality-Uptown Precinct (G) under the Gladstone Town Planning Scheme which took effect on 29 December 2006.
As Ms Lentell points out in her report,[2] the subject land has four easements registered on the Title. Ms Lentell’s analysis of the easements has been accepted by the appellant. As Ms Lentell puts it:[3]
“These easements outline the dominant and servient tenements, their rights and responsibilities with regard to any building erected on the north-western and south-eastern boundaries, the maintenance of the building/s, the support and foundations of the building/s and any infrastructure laid under the building/s.
Easement A on RP608170 encroaches the adjoining Lot 7 on RP618430 to the north-west along the shared boundary and is 21.75m² in area benefitting the subject, Lot 8. Easement B on RP608170 is located along the same boundary however is situated inside the boundary, is the same area and burdens the land.
Easement C on RP608170 serves the same purpose as Easement B however is located on the opposing boundary to the south-east and is 21.72m² in area. Easement D is also 21.72m² in area and serves the same purpose as Easement A, however affecting the adjoining owner to the south-east.
The subject benefits from Easements A and D in that the exterior of any building constructed on the boundary can encroach onto the adjoining owners parcel a designated 1.1 links (or 22cms).
Easements B and C, provide an associated disadvantage and whilst considered in this instance as a somewhat minimal disadvantage, they are still registered impediments on the title and as such an allowance has been made in the valuation.”
[2]See Exh 4.
[3]See Exh 4, p 6.
The Hearing
The appellant was represented at the hearing by Mr MacAdam of Counsel and relied upon expert town planning evidence provided by Mr Bews.
The respondent was represented by Mr Fynes-Clinton of Counsel and relied upon the evidence of two expert witnesses, an expert town planner, Mr Venn, and an expert valuer, Mrs Lentell.
An inspection of the subject, surrounding land, and sale properties, in the presence of both parties, was undertaken and the hearing was held at Gladstone on 28 and 29 October 2013. Both parties provided written submissions to the Court following the hearing. Submissions closed on 22 November 2013.
The Valuation Process
It is the responsibility of the respondent to undertake regular valuations of not only the subject property, but all properties throughout Queensland. Those valuations are the basis for rating, land tax and related purposes.
I note with approval what his Honour Isdale said in Steers v Valuer-General:[4]
“[8]The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381:
‘Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.’
[9]This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”
[4][2012] QLC 12.
Market value is also a relevant feature to consider under the LVA. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines:[5]
“[11]The principles for determination of the ‘market value’ of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffith CJ at 432 and Isaacs J at 441).
[12]It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
‘Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but - as with other commodities - the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales.”
[5][2005] QLC 11.
In essence, the Spencer test[6] has been codified in s.18 of the LVA, which provides as follows:
[6]Spencer v The Commonwealth (1907) 5 CLR 418.
“18 What is a bona fide sale
(1) A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)—
(a)a willing, but not anxious, buyer and seller;
(b)a reasonable period within which to negotiate the sale;
(c)that the property was reasonably exposed to the market.
(2) For subsection (1), in considering whether terms and conditions are reasonable, regard must be had to—
(a)the land’s location and nature; and
(b)the state of the market for land of the same type.
(3) To remove any doubt, it is declared that if—
(a)there is a sale of the land in question; and
(b)the bona fide sale tests are complied with;
the sale is a bona fide sale.
(4) In this section—
land in question means land whose value is being decided.”
Importantly, the LVA casts the following duty on the appellant at the hearing in s.169(3):
“However, the appellant has the onus of proof for each of the grounds of appeal.”
It should also be noted that appeals under the LVA are to be determined on what is essentially the balance of probabilities.[7]
[7]See Donald Neil Meiers and Florence Myrtle Meiers v Valuer General [2012] QLC 19 at [27].
As previously indicated, the subject land has received a site valuation under the LVA. Section 19 of the LVA relevantly provides as follows:
“19 What is the site value of improved land
(1) If land is improved, its site value is its expected realisation under a bona fide sale assuming all non-site improvements for the land had not been made.
(2) However, the land’s site value is affected by any other relevant provisions of this chapter."
The LVA then goes on in s.23 to reveal what site improvements are:
"23 What are site improvements
(1) Site improvements, to land, means any of the following done to the land -
(a) clearing vegetation on the land;
(b) picking up and removing stones;
(c) improving soil fertility or soil structure;
(d) if the land was contaminated land as defined under the Environmental Protection Act 1994 -works to manage or remedy the contamination;
(e)restoring, rehabilitating or improving its surface by filling, grading or levelling, not being irrigation or conservation works;
(f)reclamation by draining or filling, including retaining walls and other works for the reclamation;
(g)underground drainage;
(h)any other works done to the land necessary to improve or prepare it for development.
(2) However, a thing done as mentioned in subsection (1) -
(a) is a site improvement only to the extent it increases the land’s value; and
(b) ceases to be a site improvement if the benefit was exhausted on the valuation day.
(3) Also, excavating the land for any of the following is not a site improvement -
(a) footings or foundations;
(b) underground building levels.
Example of an underground building level -
an underground car park
(4) In this section -
clearing vegetation on land -
(a) means removing, cutting down, ringbarking, pushing over, poisoning or destroying in any way, including by burning, flooding or draining; but
(b)does not include destroying standing vegetation by stock or lopping a tree."
Grounds of appeal
In its notice of appeal,[8] the appellant sets out eleven grounds of appeal as follows:
[8]Exhibit 1.
“1. The valuation is wrong and contrary to law.
2. The valuation is unreasonable and excessive.
3. The valuation has been made under mistake(s) of fact.
4. The valuation under mistake(s) of law.
5. In determining the valuation, the Valuer-General and/or his delegates has misdirected himself/herself as to the construction of the Land Valuation Act 2010 (Qld).
6. In determining the valuation, the Valuer-General and/or his delegate has failed to take into account facts that were relevant.
7. In determining the valuation, the Valuer-General and/or his delegate has taken into account facts that were irrelevant.
8. The valuation is not supported by property sales. In particular it is not supported by the sale of 130 Auckland Street, Gladstone City (Lot 1 on RP 603872) in that the sale property is:
· Larger,
· Is more regular in shape, and
· Can be developed more easily.
9. The valuation does not reflect the physical characteristics of the land and/or constraints on the use of the land, that is:
· the subject land is a long narrow block,
· only part of the subject land fronting Goondoon Street is capable of development,
and
· the rear of the subject land fronting Central Land in only capable of effective development by amalgamation with adjoining properties which has not been achievable.
10. The valuation fails to maintain existing relativities with other blocks in the Gladstone CBD (details of which have been supplied to the Valuer-General as part of the original objection, see attached) in that the valuations of larger and/or more regular parcels have not increased in value at all, or have increased by a lower percentage.
11. The reduction in valuation on objection from $510,000 to $500,000 to take account ‘of the previously unrecorded disability associated with the land’ is grossly inadequate.”
Further, the appellant relied on 13 valuations in support of its argument that the valuation of the subject block was out of relativity with other valuations. These valuations are as follows:[9]
[9]Exhibit 2.
“Current Gladstone Valuations
Lot & Plan No. Previous Valuation Current Valuation A. Lots 21-23 on RP801376 $2,400,000 $2,400,000 B. Lot 1 on RP 606012 & Lot 20 on RP 838148 $1,400,000 $1,650,000 C. Lot 243 on G 15341 & Lot 3 on RP 605403 $1,500,000 $1,750,000 D. Lots 225 & 226 on G 15341, Lot 24 on RP 603903 & Lots 1-2 on RP 614597 $3,500,000 $3,500,000 E. Lot 615 on G 15342 & Lot 14 on RP 603093 $600,000 $830,000 F. Lot 2 on RP 618428 $390,000 $510,000 G. Lot 6 on RP 618426 $485,000 $620,000 H. Lot 8 on RP 618013 $395,000 $510,000 I. Lot 9 on RP 618431 $430,000 $560,000 J. Lot 3 on RP 607085 $335,000 $440,000 K. Lot 5 on RP 606125 & Lot 3 on RP 617715 $495,000 $700,000 L. Lot 1 on RP 604170 $355,000 $460,000 M. Lot 1 on RP 603872 $295,000 $415,000
”
As can be seen, many of the grounds of appeal are written in generic format. Mr Fynes-Clinton for the respondent properly makes this point in his submissions.[10] Fundamentally, the grounds of appeal which are relevant are grounds 8, 9 and 10. These grounds can be further distilled into three distinct propositions:
(1)The valuation is not supported by the sale of 130 Auckland Street, Gladstone
(2)The valuation does not take into account the physical constraints of the long, narrow block
(3)The valuation is out of relativity with other valuations in the Gladstone CBD.
[10]Submissions 29 October 2013 para 22.
Before turning to examine each of the three propositions above, it is important to note an important concession made by the appellant. This is that if the subject land was of a more regular shape, of say 20 metre frontage by 45 metre depth, but still of the same overall area, then the site value as assessed by the respondent would be correct.[11]
[11]T 1 page 5 lines 15-22.
As Mr MacAdam put it for the appellant:[12]
“… So, your Honour, what we’re left, ultimately, in dispute – the principal thing in dispute is, what is the appropriate discount for the fact, because it is a very long, narrow block, there are extraordinary difficulties associated with facilitating parking on the site.”
[12]T 1 page 5 lines 32-35.
Town Planning Evidence
The town planning experts, Mr Bews and Mr Venn, assisted the Court by the provision of a well written report following a joint meeting they held.[13] That report clearly sets out the areas of agreement and disagreement as between them.
[13]Exh 3.
I found Mr Bews to be an honest, reliable witness who did not seek to embellish his evidence. He answered questions clearly and with as much simplicity as possible.
Mr Venn was a confident, assured expert witness who appeared to be very comfortable in providing expert evidence. He has extensive experience and clearly understands his material very well. He was quite particular to listen carefully to questions and understanding those questions before answering them.
Mr Bews and Mr Venn relevantly had the following to say in their joint expert report:[14]
[14]Exh 3 p 12.
“3.2 Site in Context – Surrounding Land Uses
(i)The subject land is located in the heart of Gladstone CBD and is predominantly surrounded by a mix of offices which present as single storey to Goondoon Street. Small shops and cafes are also located in proximity of the site. The offices on the south western side of Goondoon Street (including the site) include two storey or basement components fronting Central Lane, which essentially is the back of house / car parking area for existing businesses fronting Goondoon Street. The rear section of the site and adjoining premises generally have low levels of amenity which is typical of ‘back of house’ business activities.
The adjoining land uses include small scale retail, medical and office uses including Cavalier’s Mensware, Downing Teal and City Heart Medical Centre. In addition, new developments are currently being constructed opposite the subject site fronting Goondoon Street and between Goondoon and central on the corner of Roseberry Street.
3.3Carparking Provision for Change of Intensification of Existing Office use
(i)The existing office use currently is serviced by informal car parking arrangements. As part of the assessment of a development application over the site, Council would require the development proponent to demonstrate how its proposal provides sufficient car parking for the new proposed use and taking into account the car parking requirements of the existing use.
(ii)Based on the current approximate GFA of 295 m², the existing office land use would be required to provide about 10 car parking spaces.
(iii)In deciding a development application to change or intensify the use on the site, Council would need to exercise discretion to relax its car parking requirements. Council has approved some developments within the Gladstone CBD that do not comply with car parking requirements by requiring the applicant to pay a monetary contribution for the car parking shortfall.
…
3.5.2GB Development Concept
(i)GB’s concept provides for a maximum of 360m² GFA office development extension to the existing office building which currently has a GFA of approximately 295m². The proposed GFA has been determined based on the maximum number of carparks (12) that can be physically accommodated on the site. GB’s concept provides for the following:
a. The new office building comprises ground level carparking plus 2 storeys above. The proposal retains the existing office building.
b. Access if via Central Lane and provides parallel carparking with provision of a turning area for vehicles to turn around on site.
c. Based on a total GFA of 655m² (which includes the existing and new office buildings), a total of 21 carparks would be required in accordance with the Gladstone Plan. Significant relaxation of Council’s parking requirements (10 spaces) would be required in respect of the shortfall of carparking spaces and would require payment of a monetary contribution to Council in lieu.
d. The proposal complies with the relevant design parameters applicable to the Uptown Precinct including building height and site cover.
(ii)GB has also prepared a Plan of Comparative Development Potential – Assuming Uptown Precinct Parameters Z2150 PP01A which is included in Appendix G. This plan compares the development potential of two land parcels of similar area but different configurations. It provides a notional development concept over the Auckland Street land and the subject land, assuming both sites are located in the Uptown Precinct and subject to the same design parameters. GB’s plan shows a four level office development (including ground level carparking) of about 960m² GFA, with 32 carparking spaces proposed over the Auckland Street land which enjoys wide frontage. No carparking relaxations are proposed but could be sought to allow for a potentially greater development yield.
3.5.3JV Development Concept
(i)In formulating this notional concept, JV has had recourse to, and built upon, those indicative concepts put forward by GB in his report dated 12 July 2013. JV’s concept provides for the following:
a. A mixed use development consisting in form of a two level podium for retail/restruant/commercial office tenancy with five (5) level residential tower above;
b. The maximum building heights of 26 metres and the maximum podium height of 9.6m (from natural surface) are not exceed and nor is the dwelling unit per site area ratio or the site cover of tower and podium ratios provided for in Table 4-18.1 of Gladstone City Plan.
c. The tower is set back six (6) metres from the street frontage and residential units are to be one per floor of approximately 120 m² and accessed by a lift at the rear (2.om floor-to-floor height). Until will incorporate a balcony to the Goondoon Street frontage to take advantage of a view/aspect toward the Waterfront Precincy;
d. The podium is aligned with the street frontage and permits under-croft parking as necessary. Adequate height is attainable for the docking of an SRV under;
e. Vehicle access is from Central Street splits within the property boundary from a single access point and provides a one car queuing space. Parking provision takes advantage of the seven (7) metre fall from the rear of the existing building down to Central Street. Parking on both levels generally takes the form shown in GB’s notional plan of July 2013 but a reduced number is required and/or achievable. Eleven spaces are able to be provided for the podium development – the commercial space being reduced to 330m² and allowance has been made for this to project under the building and with two tandem spaces either side of the left well. The residential units require eight (8) spaces (5 for resident and 3 for visitor) which are readily accommodated on the lower level. Notably, parking on these levels is only partially subterranean and differs from underground parking in the manner typically employed on large developments such as that currently under construction opposite on Goondoon Street.
f. Development bonuses provided by Section 4.24 for the Uptown Precinct have not been invoked. Further, a conservative approach has been taken where it may have been possible to, not apply section 4.24, but also to achieve six (6) residential units at 2.7m floor-to-floor height.
(ii)JV’s vehicle accommodation scenario incorporates, and similarly to GB’s scenarios, a three point turn ability at the building end on each level; a two-way aisle/lane width minimum of 5.5 metres; and longitudinal car spaces of six (6) metres in length (refer Brisbane City Council TAPS Policy standards in regard to the latter two).
(iii)Importantly, it must be recognised that no development proposal for the subject site would be able to provide on-site servicing by Van, SRV or RCV to have it enter and leave the site in a forward direction.
(iv)In a circumstance such as this on a constrained site which offers limited opportunities, it is anticipated that the Council would take a reasoned approach to assessment being mindful that, if an economically sustainable level of development cannot be found, such a site could remain vacant or derelict which would not be in the city’s or community interest.
(v)It is stressed that JV does not necessarily reject GB’s concept of 655m2 GFA, 2 level office development, but, instead, offers this mixed use development scenaris (residential tower above office/retail at podium level) as one favoured by Gladstone City Plan in the Uptown Precinct. A potential market includes medium term accommodation for industrial/mining executives on a fixed term ‘tour of duty’ as well as for normal resident occupancy in a three bedroom city-based apartment – being reflective of sophisticated inner-city living environments of the future.”
The joint report goes on to further detail areas of agreement and disagreement between the town planners.
Clearly, both town planners agree that the subject land, as a site only, would be improved by the construction of a commercial building larger than that which currently exists on the site. Mr Venn believes that a mixed use of commercial and residential would be possible. Mr Bews allows for a further commercial only development, requiring fewer car spaces than Mr Venn, but both town planners agree that under either of their proposals, it would be necessary to obtain a relaxation from Council of carparking requirements.
I am satisfied form the town planning evidence that some form of reduction of carparking requirements by the Local Authority would in all likelihood be made to allow development of the site.
I agree with Mr Fynes-Clinton[15] that, in a valuation appeal, the Court does not concern itself with the precise details of what a local government or other planning authority would have approved to be built. As President MacDonald has explained:[16]
“It is not the function of this Court to decide whether the planning authority would approve a particular proposal. Rather it is the function of the Court to determine, having heard the relevant evidence, how the hypothetical prudent purchaser referred to in the judgments in Spencer would have viewed the potential financial return if a proposal were considered that included one or other of the proposed plans.”
[15]Respondent’s Submissions 29 October 2013 para 28.
[16]Mio Art Pty Ltd & Ors v Brisbane City Council [2009] QLC 177 at [12].
Although it is true that President MacDonald’s comments relate to a compulsory acquisition case and not a site valuation under the LVA, in my view the approach in Mio Art is correct for any matter where development potential is in issue.
As Mr Fynes-Clinton put it:[17]
“61. In substance, for purposes relevant to valuation, Mr Bews and Mr Venn are aligned. The detail of the differences between them as to where the outer limits of the planning potential lie are not relevant in a valuation appeal where the Court is not required to decide which particular proposal out of a range of possibilities would actually be approved. The hypothetical prudent purchaser of land under an unconditional contract does not know what is actually going to be approved. It knows or is taken to have considered and understood the potential and the variables or uncertainties which may affect the final outcome. It pays a price reflecting that potential. It does not pay a price assuming that potential has already been realised in a particular or final form.”
[17]Submissions 29 October 2013 para 61.
I agree.
Valuation Evidence
As already indicated, the only valuation evidence was given by Mrs Lentell who was called by the respondent. Mrs Lentell produced a valuation report, which became Exhibit 4.
Mrs Lentell was a very calm, assured witness. She gave clear answers to questions. When she received some probing questions from Mr MacAdam, she was careful to stay within her own knowledge.
For the purpose of her valuation, Mrs Lentell relied on three sales which she has helpfully summarised as follows:[18]
[18]Exh 4 p 8.
“
Property Address Analysed Sale Price Applied
ValueComparison Sale 1
130 Auckland St
Gladstone$449,410 or $444/m² $415,000 or
$410/m²Inferior on a rate
m²m basis.
Overall InferiorSale 2
Glenlyon St
Gladstone CBD$1,710,520 or
$496/m²$1,450,000
Or $420/m²Inferior on a rate
m² basis.
Overall SuperiorSale 3
4 Shaw St
New Auckland$483,735 or $222/m² $470,000 or
$215/m²Inferior on a rate
m² basis.
Overall InferiorSubject
59 Goondoon St
Gladstone CBD$450,000 or
$500/m²”
Having carefully considered all of Mrs Lentell’s evidence, I accept her comparative sales and her analysis that each sale property is inferior to the subject land.
Mrs Lentell summarised her report as follows:[19]
[19]Exh 4 p 10.
“VALUATION:
Commercial Rate per - $450,000 (Four Hundred and
Square Metre Value, Fifty Thousand Dollars)
plus Allowances899 m² @ $605/m² $543,895
plus 5% rear access $ 27,195
$571,090
less 10% narrow frontage $ 57,109
$513,981
less 2.5 easement $ 12,850
$501,131
less 10% depth ratio $ 50,113
$451,018ADOPT $450,000 (Four Hundred and Fifty Thousand Dollars)
(which reflects $500/m² overall)”
I now turn to examine the valuation evidence in light of the three distinct areas of objection.
The valuation is not supported by the sale of 130 Auckland Street, Gladstone
There are two distinct elements to this area of objection. The first of course relates to a direct comparison of the sale itself to the subject. The sale is Mrs Lentell’s Sale 1. I have already accepted her assessment of the sale relative to the subject land. There is no competing valuation evidence.
The second point relates to the rather intriguing notion of hypothetically translating the shape of the Sale 1 property, and thus the development that has been achieved on that site, to the subject.
The argument of the applicant is, in short, that if that is done, it becomes apparent that the site value attributed to the subject is not supported by Sale 1.
In her evidence, Mrs Lentell would not be moved in any degree at all to support the applicant’s contentions. Although she gave a number of reasons for rejecting the appellant’s contentions, her primary contention which she repeated a number of times, was that the Auckland Street property is in a different precinct to the subject land, with different developmental potential.[20]
[20]See T 1 p 46 l 27-28; p 48 l 1-3; p 54 l 26-27; and p 55 l 15-16.
Mrs Lentell has applied standard valuation methodology in her assessments of both the 130 Auckland Street property and the subject. I find no fault in her approach.
The valuation does not take into account the physical constraints of the long narrow block
Even a cursory view of her valuation report makes it clear that Mrs Lentell has taken into account the physical constraints of the long narrow block by way of a percentage reduction for the disability of the site in this regard.
The true complaint of the applicant is that the respondent has not allowed a large enough reduction for this disability.
During closing oral submissions and in his written submissions of 12 November 2013, Mr MacAdam went to some detail, using various mathematical calculations, in an attempt to show that Mrs Lentell’s reduction in light of the long, narrow shape of the subject was insufficient.
Apart from one aspect as to the nature of her calculations on page 10 of her report, Mr MacAdam’s calculations do not assist in the final determination of this matter.
Had Mrs Lentell conceded any of the points made by Mr MacAdam, he may have made some headway. Further, and more importantly, had the applicant called its own valuation evidence consistent with Mr MacAdam’s submissions, there would have been a clear context of valuation evidence. That also was not done.
Mr MacAdam’s calculations are, in the main, mere assertions unsupported by valuation evidence, and thus unable to be used in the manner for which he has contended to arrive at a site value under the provisions of the LVA.
The one aspect in which I agree with Mr MacAdam is in the manner in which Mrs Lentell has made her percentage adjustments to her starting valuation figure.
As Mr Fynes-Clinton put it in his report submissions:[21]
“2. Each of the allowances, self-evidently, relates to a different aspect or attribute of the subject property, and they must be separately identified (rather than simplistically ‘grossed up’ into a single feature), on order to expose the basis of the valuer’s reasoning, both for this case and for the assistance of valuers undertaking future statutory valuations of the subject property which will invariably involve some change to the 1 October 2011 valuation over time.
3. The more interesting question is whether the separately identified allowances should, once so identified and separately recorded, be mathematically grossed up before being applied as a single mathematical exercise to the valuation identified by application of comparable sales before making those adjustments.
4. The Respondent’s research has failed to identify any discussion of this issue in relevant authorities. On the basis that each such allowance reflects a particular aspect or attribute of the subject land as compared to the parcel considered as one ‘clean’ of any such adjustments, it is probably the better view that there should be a single mathematical exercise, unless it can be demonstrate that a particular allowance is made in respect of a property already ‘disabled’ (or enhanced) by earlier sequential consideration of the other factors.
5. The Respondent accepts that, at least in this case, each of the allowances is to be regarded as one reflecting a difference between the subject as actually valued and the subject without any disabilities or enhancements. The ultimate mathematical result of adopting that approach is a very minor difference between the valuation contended for of $450,000, and the produce of a single mathematical calculation which is $448,713, which would be rounded up in practical valuation terms to $449,000. Ultimately, the issue is not one of substance in terms of the discrepancy between the valuations contended for by the parties.”
[21]Reply submissions 21 November 2013 paras 2-5.
I agree with both Mr MacAdam and Mr Fynes-Clinton in this regard. In my view, it is not appropriate to do a line by line percentage adjustment as Mrs Lentell has done. Rather, all of the percentages should be taken into account, both those adding to the value and those taking from the value, to arrive at an overall percentage adjustment which is then applied to the starting figure.
In the case at hand, that results in an overall 17.5% reduction, which, on Mrs Lentell’s starting figure, results in a site value of $448,713.38, which is appropriately rounded to $449,000.
The valuation is out of relativity with other valuations in the Gladstone CBD
The appellant has attempted to argue that the valuation of the subject land does not fit with the relativity of other commercial blocks in the Gladstone CBD. Mrs Lentell disagreed that the valuation of the subject land was inconsistent with the specific blocks referred to by the appellant.
Although the appellant did go someway in raising some questions over appropriate relativities in the Gladstone CBD , the appellant did not go that extra step to establish that the values of other Gladstone CBD properties are correct, and that therefore the valuation from a relativity perspective of the subject land is incorrect.
As I pointed out in the case of Burnett v Department of Natural Resources and Water[22]
“[18] This is a difficulty often faced by appellants in VLA matters who rely on relativity as one of their grounds of appeal. It is not enough for an appellant to simply demonstrate that the value of the appeal block is out of kilter with other, nearby blocks. They need to go further to demonstrate that the values of those other blocks are correct, and that the value of the appeal block is incorrect. This is because it is the primary function of the Court to determine the unimproved value of the land subject to appeal. Changing an issued valuation simply because other valuations may be wrong would only tend to exacerbate the error. Of course, this is a generalised statement, and each case must be determined on its own facts.”
[22] [2010] QLC 57
Applying proper valuation principles and the use of sales which meet the Spencer test as codified by s.18 of the LVA, the appellant has not overcome the difficulties that I referred to in Burnett. Accordingly, the appellant is unable to overturn the respondent's valuation on the subject land on the basis of relativity with other Gladstone CBD properties.
Conclusions
In my view, Mrs Lentell has been substantially correct in her final valuation in support of the respondent’s figure of $450,000, save for the mathematical error relating to percentage adjustments.
I note Mr Fynes-Clinton’s submissions that the appeal should be technically allowed, but only in so far as it relates to a determination in the amount of $450,000 and not the amount of $500,000 as previously contended for by the respondents.
Although only minor in the scheme of things, in my view the mathematical error should also be taken into account in determining the final value.
In my view, the appeal should be allowed and the site valuation of the subject land as at 1 October 2011 should be fixed in the sum of $449,000.
ORDERS
1. The appeal is allowed.
2.The site value of the subject land is fixed in the sum of Four Hundred and Forty-nine Thousand Dollars ($449,000) as at 1 October 2011.
PA SMITH
MEMBER OF THE LAND COURT
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