Trust Company of Australia Ltd v Department of Natural Resources and Mines
[2005] QLC 22
•15 April 2005
LAND COURT OF QUEENSLAND
CITATION: Trust Company of Australia Ltd v Department of Natural Resources and Mines [2005] QLC 0022 PARTIES: Trust Company of Australia Ltd
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILES NO.: AV2002/0490, V2002/0846-0847, AV2003/0345-0347 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 15 April 2005 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Dr NG Divett ORDER: The valuations as determined by the Chief Executive are set aside, and the following unimproved values are determined for both 1 October 2001 and 1 October 2002 in the sums of:
· 448 Nudgee Road (AV2002/0846 and AV2003/0346) at $4,207,000
· 420 Nudgee Road (AV2002/0490 and AV2003/0345) at $1,304,000
· East-West Arterial Road (AV2002/0847 and AV2003/0347) at $785,000.
CATCHWORDS: Practice and Procedure – Appeals – adequacy of grounds – specificity of ground examined – meaning of specific intention concluded.
Practice and Procedure – appeals – meaning of contrary to law – application to s.3(2) of the Valuation of Land Act identified.
Practice and Procedure – appeals – nature of appeals considered – development of Court regulations examined.
Valuation – factors in valuation methods – development costs – interest foregone – interest rates considered – long term rate applied.
Valuation – statutory valuation – onus of proof – Omission of development interest – whether a fundamental error considered – principle to be followed – error found to be a valuation detail.
Valuation – unimproved value – analysis of sales – use of improved sales – whether scarcity factor exists.APPEARANCES: Mr KW Rose (Solicitor) for the appellant
Mr LW Bowden (Barrister) for the respondentSOLICITORS Gadens Lawyers for the appellant
Department of Natural Resources and Mines
Background:
These six matters relate to lands at 448 and 420 Nudgee Road, and East-West Arterial Road, Hendra, and are described as:
· 448 Nudgee Road – Lots 5 to 7 on RP 207206, Lot 1 on RP 55962 and Lot 2 on RP 34494
· 420 Nudgee Road – Lots 6 and 7 on RP 33757
· East-West Arterial Road – Lot 2 on RP 207207.
The three subject properties have areas of 10.0809 hectares (448 Nudgee Road); 4.046 hectares (420 Nudgee Road); and 2.557 hectares (East-West Arterial Road) and are located in the Hendra Industrial precinct about 7.5 kilometres north of the Brisbane CBD. The three parcels are zoned as General Industry under the Brisbane City Plan 2000 of 30 October 2000, effective at the two consecutive dates of valuation at 1 October 2001 and 1 October 2002. The key issues are the nature of the lands, access to the lands, comparison of sales, relativity, impact of planning, development costs, impact of filling and method of valuation.
On 24 February 2002 the Chief Executive issued valuations of the subject lands at 1 October 2001 for:
· 448 Nudgee Road - $5,210,000 (AV2002/0846)
· 420 Nudgee Road - $2,500,000 (AV2002/0490)
· East-West Arterial Road - $1,405,000 (AV2002/0847)
Following objections the Chief Executive revised those figures on 29 October 2002 to:
· 448 Nudgee Road – $4,400,000 (AV2002/0846)
· East-West Arterial Road - $1,300,000 (AV2002/0847)
The Chief Executive also revised the unimproved value of 420 Nudgee Road on 30 June 2002 to $1,880,000 (AV2002/0490). The appellant then appealed those figures claiming the unimproved values should more properly be:
· 448 Nudgee Road - $3,500,000
· 420 Nudgee Road - $1,400,000
· East-West Arterial Road - $770,000
On 31 October 2002 the Chief Executive further revised the unimproved value of 420 Nudgee Road under s.68 to $1,530,000, which is the figure now appealed against.
On 24 February 2003 the Chief Executive issued further valuations of the subject lands at 1 October 2002 for:
· 448 Nudgee Road - $4,400,000
· 420 Nudgee Road - $1,530,000
· East-West Arterial Road - $!,300,000
Following further objections the Chief Executive confirmed those figures on 1 July 2003. The appellant then appealed those later valuations, claiming the appropriate values should remain at:
· 448 Nudgee Road - $3,500,000
· 420 Nudgee Road - $1,400,000
· East-West Arterial Road - $770,000
At the hearing on 20 September 2004 the following evidence was led for unimproved values for both periods:
Site Appellant Respondent 448 Nudgee Road $3,530,000 ($35 per m²) $4,790,000 ($47 per m²) 420 Nudgee Road $1,050,000 ($26 per m²) $1,400,000 ($35 per m²) East-West Arterial Road $840,000 ($33 per m²) $1,780,000 ($70 per m²).
Mr RW Rose of Gadens Lawyers, appeared for the appellant, calling evidence from Grant Andrew Jackson, a registered valuer. Mr LW Bowden of Counsel appeared for the respondent, calling evidence from Andrew Trevor Brown, the departmental registered valuer now accepting responsibility for the valuations. The original valuations had been determined by another registered valuer, who through ill health, was unable to defend the original valuations. With the agreement of both parties all six matters were heard concurrently. It was also generally agreed that there had been no movement in the market place between the two relevant dates, and the same sales evidence was relevant to both periods.
History of the appeals –
Mr Rose advises that these matters have been the subject of some concern to the appellants. He notes that Mr Jackson's initial valuation report (Exhibit 9) had been lodged with the department in April 2003. It had appeared that there was no major differences between the valuers, such that it had been optimistically hoped for a mediated type settlement, without the need to proceed to formal court hearing. However it was noted that on 25 July 2003 the respondent advised the court registrar that it did not wish for a preliminary conference before the Court, and the matter had then proceeded to hearing.
When the 1 October 2001 matters were apparently first considered for hearing, the valuer (Mr Anthony) who had determined the valuations, and the subsequent amendments, prepared valuation reports on 2 June 2003 (Exhibits 15, 16 and 17), which were lodged with the Court on 2 June 2003. While those reports were not the subject of examination in these matters, they reveal Mr Anthony's approach to the matters. Mr Anthony was a very experienced registered valuer who had handled those industrial matters for many years. It would appear that Mr Anthony had intended to defend his valuations, both for 1 October 2001 and 1 October 2002, until his ill health prevented him from so doing.
While Mr Rose accepts that the matter of any previous without prejudice discussions between the parties was excluded from evidence under s.43A of the Valuation of Land Act, he sought further clarification of the actual outcomes of those discussions, other than the formal notice of 29 October 2002, under s.54(1). He notes that notice referred only to a greater allowance for known disabilities, and the need to vary the previous applied values in comparison with similar properties. However Mr Brown was unable to provide copies of the outcome of the conferences, which had unfortunately been removed from Mr Anthony's personal computer when he ceased his duties with the department.
As a consequence of Mr Anthony's belated withdrawal from these matters, Mr Brown had then been instructed to prepare his valuation reports for the Court. Unfortunately Mr Brown was not advised of the presence of Mr Jackson's earlier reports on the valuations, and had to prepare his reports without reference to Mr Jackson's conclusions. However he had the benefit of discussions with Mr Anthony, and also a sales schedule that had been used by Mr Anthony. On the basis of that advice, Mr Brown had then drawn his own professional judgments, and prepared his reports (Exhibits 14, 18 to 22). Mr Brown was instructed to prepare his valuation reports about two weeks prior to exchanging those reports on 7 September 2004, with the matter proceeding to hearing on 20 September 2004.
Grounds of appeal –
The appellant argues in each case that the assessment of unimproved value:
(1) is too high
(2) is not supported by comparable sales evidence of other similar properties
(3) does not have sufficient regard to the development potential of the land and the conditions surrounding such development, and
(4) has not been made in accordance with the Valuation of Land Act 1944 (as amended), and is contrary to law and is erroneous.
Mr Bowden argues that only grounds (2) and (3) are specifically defined as required by s.45(4) of the Act, in respect of the onus of proof required by an owner/appellant. He submits that grounds (1) and (4) are not valid in as much as they do not define the basis of the appeal, but are couched only in the general expression that the valuations are wrong in law or fact.
To support those conclusions Mr Bowden refers to guidance in The Law and Practice of the District Courts of Queensland, 2nd edition 1983, IM Wylie, at 405. In that respect I note first that the need for specificity in the terms of a ground of appeal was seen as essential in Burton & Ors v Mackay & Ors [1953], Q.W.N. 30, where Macrossan J found in the Full Court of Queensland that the magistrate who decided the case had in fact had sufficient specific evidence of the extent of hardship incurred. Mansfield SPJ (later CJ) also found that the grounds of appeal had in fact been specific as required by the statute, and also rejected the application to review the decision below on the grounds of lack of specific details in the grounds of appeal.
A similar need for specific details in a ground of appeal was found in Smith v Smith (1950) QSR 113, where Townley J found at 121:
"Ground 6 of the auditory review complains 'that evidence was wrongly admitted.' The evidence alleged to be wrongly admitted was not particularized. Section 211 provide that 'Every order to review shall state in specific terms the grounds. …' We think that ground 6 is not set out in specific terms. Where a ground is taken in the order to review that evidence was wrongly admitted or rejected, the evidence, the admission or rejection of which is complained of, should be sufficiently identified. Cf Williams as agent for Finney Isles & Co. Ltd. v Manteit and Malouf; Ex parte Manteit ([1949] St. R. Qd. 249)."
In the matter of Finney Isles & Co. Ltd. v Manteit and Malouf (supra), the Full Court rejected an application to review an order to quit premises, as it found that the magistrate had correctly interpreted the notice to quit as being specific in its grounds relied upon as constituting "hardship" for the appellant Finney Isles & Co. Ltd. Macrossan CJ found at 260:
"I think that the exclusion of a trading company from premises which it owns and which it desires to use for the purposes of its trading is a monetary hardship."
The matter of a sole ground of appeal "that a valuation is excessive" was also considered by the Member, later President of this Court, in Brooker & Ors v The Valuer-General (1966) 33 CLLR 159. In that matter the appellant had only supplied that single ground of appeal, and had accidentally included in his notice of appeal two unimproved values, being the original value determined by the Valuer-General, and the revised value following an objection. The appellant had intended to lead to a lower figure, but inadvertently noted the revised figure of the Valuer-General. The solicitor for the respondent argued that the respondent had no case to answer, and that the matter should be struck out.
In finding that the Court had power to allow the appellant to lead to a lower figure than that shown on the notice of appeal, the Member agreed that the Court had no power to amend the ground of appeal, which was statutory by nature. However in that matter he found that the Land Court rule 18, as it then was, allowed the Court to make amendments as follows:
"The Land Court may allow all such amendments as are necessary for determining the real question in dispute between the parties upon such terms as to costs or otherwise as the court thinks fit."
That rule is no longer current in the Court Rules, however in the current matter there is no need to amend any values on the notice of appeal as noted in paragraph [16]. I note also that even had there been some lack of clarity about the meaning of the wording "the valuation is too high", then there would have been power for the Court to remedy any such defect under s.59(1) of the Act. In the current circumstances that has not been seen as necessary in this matter. I note that the use of that provision (formerly section 21(3c)) was also adopted in Baldwin v Valuer-General (1978) 5 QLCR 41, at 46. I also note that had the respondent in the current matter seen the need for further clarity in ground 4, particularly in respect of the words "contrary to law", there would have been scope for the respondent to seek further and better particulars of the opposite party's pleadings under the Uniform Civil Procedure Rule 161. That had not occurred.
I turn then to the meaning of "specific" in its amplification of the understanding of the grounds of appeal in this matter. I note that "specific" is taken to mean, among others, the distinct formulation of the grounds as it relates to the unimproved values. The word is also referred to as a quantity or amount when referring to a number or figure (Concise Oxford Dictionary, 7th edition, Clarendon Press, 1982). If I look then at the appellant's ground 1, I note that it argues that the determined unimproved values are "too high". While that may be taken as lacking in specific quantum when read in isolation, seen in conjunction with the appellant's opinion of the appropriate value it has clarity. I find that ground 1 is not lacking in specific intention, and should therefore not be rejected as a legitimate ground of appeal.
If I turn then to ground 4, I find that reliance upon the term "contrary to law" was found to be not specific (Finney Isles & Co. Ltd. v Manteit & Anor (supra). In that matter Macrossan CJ said at 258:
"In my opinion a statement that the order was contrary to law is not a compliance with the provisions of this section. It is necessary to state in what respect or respects the order is contrary to law."
However in that matter the respondent (Manteit) had merely noted that it was contrary to law, but had not referred specifically to the law which he argues it had contravened.
The findings of Finney Isles & Co. Ltd. v Manteit & Anor was also considered by the Full Court of Queensland in Scanlan v Swan (1984) 1 QdR 21. In that matter the respondent (Swan) had been convicted for failing to attend upon an order from the Commissioner of Taxation to provide certain information. The respondent argued in his appeal to the Full Court, that the conviction was contrary to law in view of a just cause or excuse which involved possible self-incrimination. Campbell CJ noted in Scanlan v Swan at 24:
"In Finney Isles & Co. Ltd. v Manteit & Ors (1949) St.R.Qd. 249, Macrossan C.J. (with whose reasons Mansfield S.P.J. and Stanley J. agreed) said, at p.258:
'In my opinion, the statement that the order was contrary to law was not compliance with the provisions of this section. It is necessary to state in what respect or respect of the order is contrary to law.'"
In Scanlan v Swan, Campbell CJ found that in the hearing before the magistrate, the agent for the respondent (Swan) had admitted, among others, the validity of the notice (p.24). The court found that "there is no ground of appeal which raises the invalidity of the notice and, by reason of s.211, this argument must fail" (p.25). Section 211 of the Justices Act provides that every order to review shall state in specific terms the grounds upon which it is sought to serve the conviction or order or warrant. I note that lack of specificity was found where a conviction for doing something "contrary to the bylaws" was bad for uncertainty. (Cotterill v Lempriere, 24 QBD 634).
In the current matter the appellant has quite specifically identified the appropriate legislation, and in Mr Jackson's report directs concern at the lack of compliance with s.3(2) of the Act. As noted by Mr Rose, compliance with s.3(2) of the Act is compulsory, as it notes when determining unimproved values:
"Section 3(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."
It is Mr Jackson's argument that Mr Brown has failed to analyse the implications of s.3(2) in this matter.
Now I also note that an "appeal" to the Court, which is referred to specifically in the legislation by that name, is really an "application in first instance", rather than appeal against a previous decision of the Court. The "appeal" in the Valuation of Land Act is really an application to the court against an administrative decision by the Chief Executive. There are no pleadings in this Court, and considerations by this Court in respect of the grounds of appeal may be partly distinguished on the basis of that differentiation.
The lack of pleadings in this Court needs to be seen in the perspective of the history of the Court. Originally the Land Court developed on the basis of reasonable informality between the Crown (the State) and its lessees. As the nature of legal matters evolved over time, the need for more detailed regulation of the Court, and the legislation upon which it adjudicates, has increased such that the Court now enshrines much of the Uniform Civil Procedures, which are applicable to the wider Courts system. The Land Court, and the Land Appeal Court, are agreed to be courts of full judicial standing.
However, while this Court is not bound as stringently to the rules of pleadings, the rules of this Court have a similar objective in as much as they ensure that too much license in a pleading (or ground of appeal) may lead to trial by ambush. (Australian Civil Procedures, BC Cairns, 3rd edition, p.104). Currently Land Court Rule 23 has the same objective. It should also be noted that the rules governing this Court have been amended over recent time, particularly in respect of the matter of "discovery". While discovery (or disclosure) of documents is now a procedure, regularly pursued in this Court under Chapter 7 of the Uniform Civil Procedures Rules 1999, that was not the situation as recently as 1992 in Cox v Commissioner of Water Resources (1992-93) 14 QLCR 304, per the Land Appeal Court at 326.
However, in my opinion, a ground of appeal "contrary to law" against a valuation by the Chief Executive would be a legitimate ground, say where it was then argued that the Chief Executive had in fact ignored a direction, or misinterpreted the meaning of a provision of the Act. For example, had the Chief Executive misinterpreted the directions of s.3(4) of the Act in respect of whether a parcel of land containing a lawful non-conforming use, would be a legitimate reference to "contrary to law". That was noted in Maurici v Chief Commissioner of State Revenue and Anor [2002] 212 CLR 111, where the High Court noted that a valuation will frequently involve an application of legal principles, and constitute a question of law. (Melwood Units Pty Ltd v Commissioner of Main Roads (1978) 5 QLCR 145, per Lord Russell of Killowen at 149.
In the current matter the reason for ground 4 and its reference to "contrary to law", is specifically directed to the appellant's argument that s.3(2) of the Act is a mandatory provision, which must be undertaken as part of the exercise of determining the unimproved value of the land. Mr Jackson argues that because there is some uncertainty about whether a "scarcity" factor was evident in the limited sales of vacant lands in the area, then consideration of other sales of more improved lands would be a necessary method of evaluation in those circumstances.
While not specifically on point in this matter, I note the general discussion in respect of the nature of an appeal in Meyering v Northern Territory of Australia (1987) 62 LGRA 160, per Muirhead J at 162. That decision concluded that an appeal to the Supreme Court from the Northern Territory Land Acquisition Tribunal was in fact an "appeal de novo". Now that may be contrasted with the decision of the High Court in Zuvela v Cosmarnan Concrete Pty Ltd (1997) 17 ALJR 29, at 30, where the Court followed the principle outlined in Warren v Coombes & Anor (1979) 142 CLR 531, at 542 to 543, that a Court of Appeal should not overturn the decision of the lower court unless the trial judge was found to be wrong, or may have overlooked certain material facts.
A similar opinion to that end was expressed in an appeal to the Land Appeal Court for a "hearing de novo" rather than a hearing normally conducted on the record. In a separate minority decision in Bignell v Chief Executive, Department of Lands [1994-95] 15 QLCR 528, Fryberg J at 541, dealt with a request for a rehearing under s.64(2) of the Valuation of Land Act, on the basis of s.44(13)(a) of the Land Act 1962. That involved considerations of whether to admit further evidence which had not previously been given. Fryberg J noted at 542:
"… It is true that until the 1994 amendments an appeal to this court was conducted as a hearing de novo. That occurred because of the terms of the Land Act 1962, not because of s.64(2) of the Valuation of Land Act 1944. … Although the 1994 amendments repealed the explicit provision in s.44(13) of the Land Act 1962 for proceedings under that section to be by way of rehearing, they did not prohibit further evidence being adduced at the appeal. If further evidence is to be adduced, the appeal cannot be an appeal in the next strict sense. It must still be an appeal by way of rehearing. The intention of the amendment was to convert the nature of the appeal from a rehearing de novo to a rehearing normally conducted on the record. …"
The rule now applied in the Land Appeal Court is that appeals are heard on the record, and are not "de novo" by nature. Clearly the rules of the courts are modifying over time.
In summarising the above, I believe that the Ground of Appeal 4, in respect of the Chief Executive's valuation as being "contrary to law", is a legitimate ground of appeal, as it relates to the further explanation by the appellant in respect of s.3(2) of the Act.
The nature of the land –
The three subject lands are located strategically near the intersection of Nudgee Road and East-West Arterial Road, and close by (about 200 metres) to the Gateway Arterial Road. 448 Nudgee Road is currently developed with several warehouses and a canteen, and a Coles/Myers depot occupies the corner of Nudgee Road and East-West Arterial Road, and also has frontage to Hedley Avenue to its south. 420 Nudgee Road has frontage to Hedley Avenue to the north and Nudgee Road to the east, and is currently developed with 10 warehouses and associated service roads. The East-West Arterial site is currently vacant, and is used for container storage purposes, and has frontage only to the East-West Arterial Road to the south. Mr Brown concedes that site has drainage problems, but he has valued it on an unimproved basis. 448 and 420 Nudgee Road are generally regularly shaped, and the East-West Arterial site is slightly irregular, and backs on to the lands adjoining Schulz Canal to the north.
Nudgee Road, East-West Arterial Road and Hedley Avenue are all bitumen sealed with concrete kerbing and channelling, and all urban utility services are available. There are traffic lights which allow safe turning capacity at Nudgee Road and the East-West Arterial Road, and also at Nudgee Road and Hedley Avenue. Access to 448 and 420 Nudgee Road sites are very good, but there is no vehicle access to 448 Nudgee Road from the East-West Arterial Road to the north. Lots 6 and 7 of that site only have access to Hedley Avenue. Access to the East-West Arterial site is by left turning for eastbound traffic along the East-West Arterial Road, and also via a right turning lane across a median strip for westbound traffic as discussed later.
All three parcels have good exposure to passing traffic, with 448 Nudgee Road being the prime location at the intersection of Nudgee Road and East-West Arterial Road. 448 and 420 Nudgee Road sites are level filled sites, with the filling on those sites developed many years, prior to the current environmental concerns with types of acceptable fill and compaction processes. As a consequence of those older methods, which would now be questionable, the owner of 448 Nudgee Road a few years ago rebuilt warehouse 31 upon the old concrete slab, thus avoiding upgrading the fill below. The old filling on the East-West Arterial site is also of poor quality, and would need rectification during further development.
Mr Jackson argues that access to the East-West Arterial site is an impending problem, particularly in respect of right turning westbound traffic. He provides correspondence of 25 November 2003 from the Department of Main Roads (Exhibit 12), in respect of a request from the appellant's agent to upgrade the current right turning traffic arrangements to that site. The agent had sought approval for additional traffic lights at that right turning lane, in order to ensure safer turning for heavy vehicles. Apparently there had been a previous agreement with that Authority on 26 March 1985 to provide the right turning lane. However the Main Roads Department now advises that the earlier agreement did not guarantee permanent ongoing access rights, and in fact future traffic planning for the East-West Arterial Road would most likely require the closure of the median strip as part of the future grade separation of Nudgee Road and the East-West Arterial Road. The request for further traffic signals was likely to be refused.
Should the current right turning lane for access to the East-West Arterial site be removed, it was agreed that access for westbound traffic would be severely degraded to poor, requiring possible major deviations via Toombul and Sandgate Roads. Access to the site from eastbound traffic would not be a problem. However a major part of heavy duty industrial traffic is generated from the airport or the Port Authority to the east. Mr Jackson argues, that while the East-West Arterial site would be an acceptable industrial site for development, the potential future access problems for westbound traffic is a major concern to prudent potential buyers, and some allowance for that disability should be made.
Mr Brown concedes that removal of that turning lane would be a problem, but argues that the East-West Arterial site has good exposure to traffic both easterly and westerly along that route. He further notes that as the advice from the Main Roads Department occurred after the relevant dates of 1 October 2001 and 1 October 2002, then it would not be advice that he needed to consider in the current valuation. He concedes that it could be a matter of consideration in future valuations. On the current facts at the relevant dates, Mr Brown sees that access as reasonable.
To support his assessment that exposure to the East-West Arterial site is good, he notes a current major pylon advertising sign, which is currently erected on that site (Exhibit 3 – photograph). However he agrees with Mr Rose that the annual rental of about $5,500 per annum for that sign would not be a major issue in determining the market value of the land. But Mr Brown notes also that the large signage upon the Coles/Myer depot on 448 Nudgee Road, indicates the market value that users see in the strategic location of those three industrial properties. Mr Brown argues that market evidence demonstrates that exposure to passing traffic is a matter that weighs significantly in the minds of purchasers, in addition to location of course. To demonstrate the importance of exposure, Mr Brown provides examples of major signs on warehouse buildings in the area (Exhibits 3 and 23).
Mr Brown further agrees that the East-West Arterial site is impacted detrimentally by the Schulz Canal drainage area to its rear. He concedes that there is a virtual low lying drainage area in the middle of that site that leads to the external drain (Exhibit 22 – Appendix 1, page 7), but argues that he has allowed for that in his valuation. He argues also that there is a concrete batching plant on the adjoining Lot 6 to the west of the subject land, and heavy concrete trucks enter that site close by to the access point to the East-West Arterial site.
Impact of filling –
There is some agreement about the relative quantum of filling upon the subject lands, but minor differences about the appropriate allowance to make for that filling. Mr Jackson provides advice on costs of filling for the East-West Arterial site from quantity surveyors WT Partnerships at $15.30 per cubic metre for supply and placement of the filling, including $6.50 per cubic metre for spreading and compacting the filling in layers (Exhibit 14). Based upon an estimated quantum of 70,000 cubic metres, the quantity surveyors estimate costs (including GST) were:
· June 2003 - $17.30 per cubic metre or $1,190,000
· June 2001 -$15.30 per cubic metre or $1,071,000
That estimate was based upon an assessment of costs by Hyder Consultants for the quantities at $1,050,000, and refers to filling obtained from local sites.
To support his calculations, Mr Brown has relied upon reports provided for the East-West Arterial site by Hyder Consultants Pty Ltd, geo-technical soils engineers (Exhibit 21 – Appendix 1 and 2), and also Douglas Partners, geo-technical experts. Those reports adopt the quantum of 70,000 cubic metres at $15 per cubic metre, or $1,050,000. Mr Brown also refers to Rawlinsons Australian Construction Handbook 2001 (Exhibit 24), which indicates filling of compacted decomposed granite at $16.20 per cubic metre from local sites, and other general industry advice from industrial experts. On that basis he concludes a rate of $15 per cubic metre as appropriate for the relevant dates.
In determining the quantum of filling upon the subject lands, I have the following calculations (Exhibits 9, 11, 19 and 22):
Site Mr Jackson at $15.30 per cubic metre Mr Brown at $15 per cubic metre Fill Cost Fill Cost 448 Nudgee Road 360,000 cubic metres $5,508,000 362,912 cubic metres
$5,443,686 420 Nudgee Road 230,000 cubic
metres$3,519,000 159,544 cubic metres $2,393,160
East-West Arterial 70,000 cubic metres
$1,071,000 69,039 cubic metres $1,035,585
On the 420 Nudgee Road site, Mr Brown has followed Mr Anthony's assessment of that site (Exhibit 15, page 3), as comprising 36,260 square metres of filling to a depth of 4.4 metres, giving a total volume of acceptable filling at 159,544 cubic metres, at $15 per cubic metre, or a deduction for that filling of $2,393,160. Mr Brown relies upon a departmental standard rate determined mainly for South Brisbane areas. He then determines the balance area of that site of 4,200 square metres as poorly fill land, which he then assesses at a reduced rate per square metre for the land, as discussed later in paragraph [122], having allowed for the rectification needed because of the poor filling.
Mr Jackson by comparison also uses the Hyder Consulting report, for the determined volumes, and the WT Partnership rates per cubic metre (Exhibit 14). In his later report (Exhibit 10), he details the following amended costs of filling and compaction:
Site Rate per cubic metre Volume Cost 448 Nudgee Road $15.30 342,800 cubic metres
$5,244,851 420 Nudgee Road $15.30 173,404 cubic metres $2,653,708
East-West Arterial $15.30 67,415 cubic metres
$1,031,448
To those costs he adds further costs of interest foregone and holding costs (discussed later in [51]). It is noted that the Hyder Consulting report has adopted an area for 420 Nudgee Road of 53,000 cubic metres, whereas in fact that area is only 40,460 square metres. A check of the Hyder Consulting calculations indicates for an area of 53,000 square metres, and an average depth of fill of 4.4 metres, a volume of fill of 233,200 square metres, at a fill rate of $15 per square metre, or total cost of $3,498,000. If the correct area of 40,460 square metres was applied to the same conclusions, there would be a volume of fill of 178,024 cubic metres at a cost of $2,670,360.
As the Hyder Consulting report was based upon limited information and certain assumptions, I will accept the actual volume of 70,000 cubic metres determined for the East-West Arterial site as a result of the WT Partnerships report (Exhibit 14), but modify that estimate of filling by the advice of the Douglas Partners report for the East-West Arterial site that some of the older uncontrolled filling included fibro sheets, brick and concrete and other poorer fill material (Exhibit 19 - Appendix 2, page 8). On that basis I will also modify Mr Brown's volume of 69,000 cubic metres for the East-West Arterial site (see paragraph [124]).
In respect of the estimate of filling on 448 Nudgee Road, I will also accept Mr Brown's generous volume of filling of 363,000 cubic metres, although I note that some of that filling was also likely to be of poorer quality, as it was of similar age to the other sites, which was also evidenced by the owner's decision to rebuild on the old concrete warehouse base, rather than risk further filling rectification.
If I consider then the volumes estimated by both valuers for the 420 Nudgee Road site, in my opinion, Mr Anthony and Mr Brown would appear to have estimated the level and quality of filling on that site with a higher level of precision. The estimate of 4,200 square metres of "poor fill" would suggest greater reliance for the calculations, and I will adopt 160,000 cubic metres for that site.
I turn then to the appropriate rate for acquiring the filling at the relevant dates from local sources. As the rates per cubic metre are relatively volume sensitive, but as the three quantities are each substantial in nature, I believe that the rates at June 2001 would be conservative when applied at the relevant dates of 1 October 2001 and 1 October 2002. I note for instance that WT Partnerships indicates an increase rate of $17.00 per cubic metre at June 2003. Clearly the appropriate rate at the relevant dates should be at least $15.30 per cubic metre, which itself conservatively compares to the Rawlinsons rate of $16.20 per cubic metre. I will adopt $15.30 per cubic metre.
Impact of planning –
While it is agreed about the current land use category of each subject land, there is some variation of opinion about the relative market potential between general industry and light industry lands. That varying potential would appear to have some bearing upon the weight applied to the comparable sales evidence, where light industry land uses may have some application.
Mr Jackson argues that developments in a light industry use tend to be slightly higher in aesthetic environmental appearance than a general industry area. Those higher uses tend to include office and showroom components, and generally have a higher standard of amenity. However he concedes that while industry activities may be generally equivalent in the two types of use, one advantage of the general industry usage is that activities can often occur on a 24 hour basis. To demonstrate that point, extracts from the Brisbane City Plan 2000 were provided (Exhibit 13).
An examination of the planning documents reveals several differences which may impact the market value of the two types of industrial land. The minimum size lots in general industry land use are 2,000 square metres, while light industry can be developed down to 1,000 square metres. Rear parcels have similar differences, and the minimum lot size for community title developments is 1,000 square metres (or five lots per hectare) for general industry; and 600 square metres (or ten lots per hectare) for light industry.
The Nundah District local plan, which adjoins the subject lands, provides some guidance in respect of the level of environmental amenity required in the industrial areas of that local plan. As later discussed, Mr Jackson's sale at 629 Nudgee Road falls within the Nudgee Road Industrial Precinct of that local area plan. However all other sales, and the subject lands, fall in the industrial areas to the south, or north-east of that local area plan. The Nudgee Road Precinct is intended for low intensity/service industry uses, which are required to have minimal impact upon adjacent residential uses.
In the industrial area land uses, other than the minimal areas mentioned in paragraph [47], there is little differentiation between general and light industry uses. The intent of light industry developments is for light industrial and warehouses that have low environmental impacts (Exhibit 13, page 37); while general industry is intended for a wide range of industries and complementary activities that need high standards of amenity and environmental standards (Exhibit 13, page 46). In respect of light industrial warehouses, an impact assessment is required for development of warehouses where the new building is equal to or greater than 8.5 metres in height, or where there is a gross floor area equal to or greater than 2,500 square metres. On general industry lands, impact assessments are only required for warehouses, where dangerous goods are stored which exceed those permitted in Schedule 2 of that Chapter 3 of the plan.
On balance the most likely difference between those two land use classifications, lies in the greater capacity for more intense development in the light industry areas. Mr Jackson offers an opinion that because of that increased potential for greater development, the unimproved value of light industry lands tends to be higher. However he concedes that the type of general higher amenity development suggested by himself, has also been developed upon lands adjoining the East-West Arterial site to the east. That land is also categorised as general industry uses. On that understanding I believe that the difference in planning land uses has little major impact upon the values in that locality.
Development interest –
Before examining the two methods of valuation adopted, I turn first to the matter of whether allowances should be made for interest foregone on development and land costs. Whether that should, or should not, have been allowed, is a matter for consideration in the actual valuation processes. Mr Jackson has allowed for such interest lost, while Mr Brown inadvertently omitted such calculations from his reports, due to the short time interval to prepare his reports as noted in paragraph [8].
A belated request by Mr Brown to amend his reports to include interest foregone, was resisted by the appellant on the basis that it would have an impact upon the reliability of the respondent's valuations, and hence the level of onus falling upon the appellant to prove his cases. Mr Brown concedes that interest matters should have been allowed for, and that his valuations are therefore inaccurate in respect of that matter. However he disagrees with the interest rate adopted by Mr Jackson. Mr Bowden argues that accidental omission of considerations of interest foregone is not a major matter, but one more of detail, and it should not fundamentally demonstrate that the respondent has acted on a wrong principle, or made a fundamental error. However he conceded that Mr Brown's reports do contain that error.
If I turn then to the interest rates applied to Mr Jackson, I find that he has applied a commercial interest rate of 8% in these matters. Mr Jackson argues that such a commercial rate would reflect the reality of risks associated with such development projects. While he agrees that in compensation matters before this Court it has been established that a rate commensurate with the long term bond rate is used, Mr Jackson argues that on annual valuation matters, it would be more appropriate to reflect the rate that applies to the situation. He argues that the 8% commercial rate reflects the level of risk associated with such type of developments for rating and taxing purposes. He argues that the opportunity costs would be at commercial rates, and not bond rate, as that would demonstrate the "Executor Trustee" principle which should be applied in such matters.
Mr Brown argues that had he not accidentally omitted an interest rate component, then departmental policy, and court precedent, dictate the use of the appropriate long-term bond rate, which he argues would be 5.66% at the relevant dates. Mr Bowden suggests that there was no evidence that the owners would need to borrow at the commercial rate, and the use of the investment rate of 5.66% would be appropriate in those circumstances.
If I consider then the circumstances of an annual valuation, I note guidance of s.3(1) of the Act which directs that, where an existing site is improved, then the unimproved value of the land must be determined, assuming that the improvements do not exist. That theoretical exercise was examined in the matter of Consolidated Investments v Commissioner of Main Roads (1968) 35 CLLR 109, where the learned Member, Mr Dodds, noted at 125:
"In the exercise under consideration we are not concerned with what interest the hypothetical prudent purchaser has to pay to somebody else for the money to enable him to purchase the land. As I have already stated, he cannot charge the vendor with this interest. … The hypothetical prudent purchaser is envisaged as purchasing the land as at resumption date and on that date committing himself to the development of the land – subdividing and selling it in such subdivisions. So that on the resumption date he pays out the purchase money and estimates his costs of subdivision and his realisation period. … But if, instead of purchasing the land and embarking on the project he were to invest the money for the period he could find plenty of safe investments which would yield him a satisfactory return. He is clearly entitled to recoup himself for this certain interest he could earn with his money. It is something quite distinct from profit and risk rate."
The matter of an appropriate interest rate was also considered in Commissioner for Railways v G and M Core Pty Ltd (1976) 3 QLCR 342, where the Land Appeal Court said at 349:
"… we believe that any interest ordered to be paid upon the amount of compensation determined by the Court is solely for the purpose of ensuring that the dispossessed owner receives an amount when the compensation is paid equal to that he would have accumulated at that date, if such had been paid to him on the day the land was taken and he had then invested it with the caution to be expected of the well known prudent person. We consider that the interest which may be awarded has no relationship to any change in the worth of money after the acquisition took place. The authorities with which we are aware, such as The Commonwealth v Milledge (1953-54) 90 C.L.R. 157, hold that a court cannot award a higher sum than its value in terms of money at the date of taking, and we are of the opinion it would be mere and improper subterfuge to try to get around such authorities by meddling with the interest rate."
Now while that consideration of "interest" was directed at the additional compensation accruing to an owner from the date at which the land had been resumed, it demonstrates the caution of the courts not to exceed the appropriate interest rate applicable in the market place. The use of a long-term bond rate has been adopted to avoid major fluctuations in interest rates, which could vary between periods of inflation or deflation, possibly to the disadvantage of the owner. By adopting a long-term prospective, it is seen as providing an investment scenario into which a prudent investor might direct the compensation remuneration, which often is delayed for some periods until the court determines a fair recompense to the owner. The use of such an official bond interest rate also provides an egalitarian consideration for the investment skills of the potential prudent investor.
While the time for which to apply such development interest has normally been adopted as representing half the development period, and in fact that is not disputed in this matter, it could occur that such a scenario may not always be applicable. The use of half the period of development has grown from the early decisions in respect of tree clearing and other developments of land.
However there could be circumstances, such as with the filling of certain lands, where the further development of building improvements could not occur until the land is fully filled to site level. The key issue is the progressive commitment of development funds which tends to be averaged out over the development period. But that is not an issue in this matter for my consideration, and I will accept an interest period for half the estimated development periods. Based upon the Hyder Consulting advice of four months to fill 230,000 cubic metres, I conclude development periods of 6.2 months (448 Nudgee Road), 2.8 months (420 Nudgee Road), and 1.2 months (East-West Arterial Road.
While I note that Mr Jackson's concern is to differentiate matters relating to compensation for loss of property, from matters dealing with public indebtedness for revenue purposes, I find that that court precedents have applied a consistent policy to both types of litigation. In the matter for example of Kiddle & Anor v Deputy Federal Commissioner of Taxation (1919) 27 CLR 316, the High Court established clear directions when determining the unimproved value of land for land tax purposes. Knox CJ said at 320:
"The question to be solved in ascertaining the value of improvements for the purpose of arriving at the unimproved value is what part of the improved value of the land is attributable to the improvements to be valued. Presumably, a purchaser of the land, if he considered this question at all, would determine that the amount to be attributed to value of improvements would be equal to the amount which he gained or saved by reason of the improvements having been made, he being thereby relieved from the necessity of making them. This amount would be found by ascertaining the amount which it would cost to make the improvements in question at the relevant date, including a proper allowance for loss of interest on all outlay during the period which must elapse before such outlay became fully productive, and by deducting from the sum so ascertained a proper allowance for depreciation or partial exhaustion of the improvements."
That direction establishes that when considering the theoretical task of determining the added value of the improvements, it is the 'loss of interest" on the capital outlays that needs to be determined. On that basis I agree with Mr Brown that it is the long-term (10 year) bond rate which the prudent owner would have taken advantage of, had not the owner's capital being committed to the development of the improvements. From official records of such investment rates (Reserve Bank of Australia bulletins) I note that Mr Brown would appear to have determined his appropriate rate of 5.66% by adoption of departmental scales. However if I apply the Reserve Bank records, I find an average of 5.85% for the period October 2001 to September 2002.
I also note that for the years 2001 and 2002 this Court has consistently adopted an interest rate of 5.75% (rounded to the nearest 0.25%) for a similar investment scenario for compensation matters. I do not believe that any analysis of the relevant sales applicable in this matter would be applied at such an interest rate less than that applied for compensation matters, and I will apply 5.85% in this matter.
Onus of proof
I consider then the appellant's submission that as Mr Brown has made an error in his valuations by omitting any reference to the loss of development interests, then the burden of proof, normally falling to the appellant, should be expunged. I note that omission is now accepted by Mr Brown as an oversight, and both valuers agree that development interest is a relevant factor for consideration. However I note Mr Bowden's submission that such oversight does not amount to a fundamental erroneous determination, and that the onus of proof continues to lie with the appellant.
To support the appellant's argument, I note guidance by Gibbs J in the High Court matter of Brisbane City Council v The Valuer-General for the State of Queensland (1977-78) 140 CLR 41, where he said at 56:
"… In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s.13(7) is rebutted. It is true that the Valuer-General might by coincidence reach the right result by a wrong process of reasoning, but I cannot attribute to the legislation the capricious intention that a valuation shown to have been erroneously made should be presumed correct simply because by mere chance the Valuer-General may have hit on the right figure. … In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted."
Mr Rose argues that the valuation method adopted by Mr Brown is fundamentally erroneous.
However I am also referred to guidance in Emerald Quarry Industries Pty Ltd v Commissioner of Highways (1979) 142 CLR 351, per Gibbs J, where he said at 355:
"An appellant who seeks to disturb the assessment of compensation made by a court in a case of compulsory acquisition will not succeed merely by showing that one of the valuations on which the assessment was based contained some errors, particularly when it has not been shown either precisely what effect those errors had on the valuation, or that the errors were repeated by the court in making the assessment."
In that matter the method of valuation used by the valuer (Mr Cox) was seen to be fundamentally sound, but it was not free from errors. Mr Cox had amortised the adjusted value of the purchase price paid instead of the capital sum likely to be paid by a hypothetical purchaser; and had also divided the sum to be amortised over a number of years. The principle to be applied when some errors were involved in valuations, follows guidance in The Commonwealth v Reeve (1949) 78 CLR 410. In that matter the decision of the High Court in Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited & Ors (1946-47) 74 CLR 358, was noted where in the High Court Dixon J said at 367:
"The rule thus laid down is almost indispensable to the administration of justice in compensation cases. For the estimation of a money sum is usually so much as a result of judgment and sound discretion and so little a product of analytical reasoning, that, were it otherwise, every appeal would mean an assessment of compensation de novo without any assignment of error in the reasoning or conclusions of the court appealed from."
That principle was also followed in Merivale Motel Investments Pty Ltd v Brisbane Exposition and South Bank Redevelopment Authority (1988) 2 QdR 562, at 463. On that guidance I find that Mr Brown's error in omitting the loss of interest was not a fundamental error of law, but more a matter of valuation detail, and I find that the onus of proof continues to lie with the appellant under ss.33 and 45(4) of the Act.
Comparison of sales –
To support his estimates of value, Mr Jackson has provided the following sales of lightly improved or vacant lands:
· Sale 1 – (441 Nudgee Road, Hendra – Lot 7 on SP 107065). This is an industrial parcel of area 34,310 square metres located just south of the subject lands, between Nudgee Road and the Gateway Arterial Road. The sale is within a modern recently developed industrial estate known as The Airport Gateway Industrial Estate, and has been filled and fully serviced. The sale is in a light industrial land use area, and is suitable for modern office/warehouse and service industry and showrooms. The sale overall is seen as superior to the subject lands because of its frontage and exposure to the motorway. However Mr Jackson sees the location of 441 Nudgee Road as slightly inferior to 448 Nudgee Road. The sale sold in September 2002 for $3,900,000, and was analysed at a site value of $113 per square metre. This is a common sale with Mr Brown.
· Sale 2 – (615 Nudgee Road, Nundah – Lot 1 on SP 143614). This is a 6,505 square metre industrial parcel located about 1 kilometre north of the subject lands, between Nudgee Road and the Gateway Arterial Road. The sale was filled and fully serviced, and has good exposure to both Nudgee Road and the motorway. The sale is in a light industry area, which is seen as superior to the general industry uses of the subject land. The sale sold in September 2002 for $1,000,000, and was analysed at $154 per square metre for site area.
· Sale 3 – (629 Nudgee Road, Nundah). This was a 25,190 square metre parcel which includes the subsequent Sale 2 at 615 Nudgee Road. Sale 3 has a triangular shape, and has subsequently been subdivided into seven separate parcels and is zoned as light industry. The sale has significant frontage to both Nudgee Road and The Gateway Arterial Road. Advice from the purchaser and the agent was that the purchaser had expended a further $650,000 on various site works, and fees to further develop the site for subdivision. The locality of the sale is slightly inferior to the subject lands, but the sale is seen as having superior access and exposure and subdivisional potential. The sale sold in February 2002 for $1,700,000, and after allowing for the further $650,000 of development costs, was analysed at $93 per square metre of site area, and $67 per square metre of site value with the partial filling in place.
· Sale 4 – (441 Nudgee Road, Hendra and 33 Navigator Place, Hendra – Lots 6 and 7 on RP 107065). This is a 39,600 square metre parcel comprising Lot 6 (5,356 square metres) and Lot 7 (34,310 square metres) and located just south of the subject land, between Nudgee Road and the Gateway Arterial Road, with good exposure to both roads. The sale sold in September 1998 for $4,070,000, and has been analysed on a site basis overall at $103 per square metre. The two separate site parcels were analysed at $150 per square metre (Lot 6) and $95 per square metre (Lot 7). The rate of $150 per square metre for Lot 6 was based upon several sales within that parcel close to the time of sale. Both lots are zoned as light industry.
· Sale 5 – (485 Nudgee Road, Hendra). This was a 100,600 square metre parcel comprising the original land holding later subdivided into Sale 4 and surrounding Lots. The sale had frontage to Nudgee Road, East-West Arterial Road and the Gateway Arterial Road, and had extensive exposure to all three roads. The sale was partly filled at the date of sale, but required further drainage and filling at about $3,000,000. The sale sold in May 1997 for $3,100,000, and after allowing for filling, reflected a site value of $6,100,000 ($61 per square metre). The sale is immediately opposite the subject lands, and has better exposure and greater subdivisional potential (Exhibit 5).
· Sale 6 – (110 Lamington Avenue, Eagle Farm). This is a 142,900 square metre general industry parcel located as part of the former old Brisbane Airport at Eagle Farm, several kilometres south-east of the subject lands. This site was purchased as a motor auction sales yard, and has excellent exposure to the Gateway Arterial Motorway, and also excellent access by traffic lights along Lamington Avenue. At the date of sale there was unspecified hard standing areas which were beneficial to the car auction business of the purchaser. In his analysis of that sale, Mr Jackson has provided a generous analysed value of $42 per square metre, ignoring the benefits of the hard standing areas. The sale is seen as inferior in terms of access to the subject lands, but with superior exposure. Because of the impact of the hard standing areas, the sale was only analysed as a site value at $42 per square metre. The sale sold in July 1998 for $6,010,000.
· Sale 7 – (900 Nudgee Road, Banyo). This is a 20,181 square metre site located about 2.5 kilometres north of the subject lands, in an inferior industrial locality. The sale is rectangular in shape, and has an overhead power line easement restriction upon the land. However Mr Jackson sees no problems in those easements for the purchaser, as they relate to the SEQEB site next door. The sale was purchased by the adjoining owner, Queensland Electricity Transmission Corporation, after an extended period of about 2 years on offer in the market place. The sale is seen as inferior due to location and exposure, and it was on the Environmental Protection Authorities (EPA) register as a contaminated property. The sale sold as an after date sale in February 2002 for $1,550,000, and was analysed at a site value of $77 per square metre. Mr Jackson only uses that sale cautiously due to the adjoining owner influence.
To further support his estimates of the value of the subject lands, Mr Jackson also provides the following improved sales:
· Sale 1 – (370 Nudgee Road, Hendra – Lot 1 on RP 197326). This is a 38,560 square metre improved site with a large industrial development of three buildings of lettable area of 22,696 square metres, which was returning $1,400,000 per annum at the time of sale. The sale sold in April 2001 for $10,350,000, which after allowing for the added value of the improvements plus income at $6,860,000 (66% of the sale price), was analysed at $76 per square metre for a site value.
· Sale 2 – (889 Nudgee Road, Banyo). This is a 35,400 square metre sale of two separate lots at the intersection of Nudgee and Raubers Road. At the time of sale the purchaser received a gross income of $500,000 per annum from several buildings leased to six separate tenants. The sale sold in December 2001 for $3,650,000, and after allowing for investment potential, and the added value of the improvements at a total value of $1,800,000 (50% of sale price), was analysed at site value of $53 per square metre).
· Sale 3 – (535 Nudgee Road, Hendra – Bridgestone Tyre Property). This was a 14,460 square metre parcel located about 200 metres north of the subject lands. The sale has two industrial warehouses, has an extensive frontage to Nudgee Road and also the Gateway Arterial Road to the rear, and has good exposure. The sale sold in March 1999 for $1,500,000, and after allowing $385,000 (26% of sale price) for the existing buildings, gave an analysed site value of $77 per square metre. He argues that location is slightly inferior to 448 Nudgee Road, the subject land.
Mr Jackson sees his Sale 3 (629 Nudgee Road) as his most useful sale, as it is within close proximity to the subject lands, and falls about midway between the two relevant periods. It also is of a comparable size to the subject lands. He also draws support from the common Sale 1 (441 Nudgee Road), which is also close by, with excellent frontage and exposure, while being developed as slightly superior as light industry lands. In his analysed rates for his Sale 3 (629 Nudgee Road), Mr Jackson argues that sale requires little adjustment for comparisons with the subject lands at his analysed rate of $67 per square metre (unimproved) and $93 per square metre (site value).
In his analysis of his Sale 3 (441 Nudgee Road and 33 Navigator Place), Mr Jackson explains that his adjustment for size of those two parcels is reflected in the differing rates of $150 per square metre (Lot 6) and $95 per square metre (Lot 7) from which he concludes an overall rate of $103 per square metre for the combined parcel. He advises that the smaller 33 Navigator Place later sold for $165 per square metre, which supports his estimate of $150 per square metre for that parcel. Both valuers agree that the market place reflects a discount for the larger size of parcels, compared to smaller parcels. While he accepts that his Sale 5 (485 Nudgee Road) is an older sale, it has excellent subdivision potential and a discount for size should also be allowed for that larger parcel.
If I look also at the sale of 615 Nudgee Road and 629 Nudgee Road, I note that 615 Nudgee Road is a sale of part of the earlier 629 Nudgee Road site. The analysed size rates for those parcels reflect:
Parcel Area Rate Date 615 Nudgee Road 6,505 square metres $154 per square metre
September 2002 629 Nudgee Road 25,190 square metres $99 per square metre
February 2002
While the allowance for size has been applied appropriately in that situation, the relative adjusted level of values for 629 Nudgee Road ($95 per square metre) compared to 441 Nudgee Road ($125 per square metre) draws attention to the potential use of those sites. Mr Brown notes in paragraph [108], if the highest and best use of 629 Nudgee Road and 441 Nudgee Road are seen as comparable, then it would be logical to conclude that the smaller 629 Nudgee Road site would have a site value greater than the $125 per square metre for 441 Nudgee Road. That it has not been analysed that way, could suggest either an incorrect analysis of that sale, or else a lesser highest and best use of that site.
As noted in paragraph [93], I have accepted Mr Jackson's advice that remediation costs were $650,000. If I also accept Mr Brown's opinion that exposure of 629 Nudgee Road site was superior to the 441 Nudgee Road site, (paragraph [103]), then I am led to the conclusion that other disabilities on 629 Nudgee Road make the highest and best use of that site inferior to 441 Nudgee Road. Clearly the triangular shape and major easement restrictions upon 629 Nudgee Road have influenced the market to pay less for that site (Exhibit 8).
If I then consider separately the comparisons with the two key sales, I find in respect of 441 Nudgee Road that location is similar to each subject land, while access is superior at Lots 5, 6 and 7 (448 Nudgee Road) and Lots 6 and 7 (420 Nudgee Road), but inferior at the East-West Arterial site. In respect of exposure all subject lands are inferior to the 441 Nudgee Road sale; while all the subject parcels except Lot 6 of 448 Nudgee Road have superior frontage and shape to the sale. On balance overall both valuers see 441 Nudgee Road as superior to each subject land as noted in paragraph [101]. However I note that those comparisons were concluded based upon analysed rates for 441 Nudgee Road of $125 per square metre (Mr Brown) and $113 per square metre (Mr Jackson). If I adopt Mr Jackson's comparisons to allow for the restrictions of the buffer areas (see paragraph [122]), then I could conclude his estimates for the subject lands at:
448 Nudgee Road (Lot 5) - $122 per square metre
(Lot 6) - $100 per square metre
(Lot 7) - $88 per square metre
420 Nudgee Road (Lot 6 ) - $110 per square metre
(Lot 7) - $100 per square metre
East-West Arterial Road - $83 per square metre
If I make similar adjustments to Mr Jackson's comparisons with 629 Nudgee Road, I could conclude rates for the subject lands based upon $99 per square metre, rather than $93 per square metre as follows:
448 Nudgee Road (Lot 5) - $117 per square metre
(Lot 6) - $96 per square metre
(Lot 7) - $85 per square metre
420 Nudgee Road (Lot 6 ) - $106 per square metre
(Lot 7) - $96 per square metre
East-West Arterial Road - $80 per square metre
Considering the above possibilities, and allowing that the buffer/easement areas would be a restriction upon a site area approach based upon the gross area of both the two key sales, I will adopt the following site rates for the subject lands:
448 Nudgee Road (Lot 5) - $115 per square metre
(Lot 6) - $100 per square metre
(Lot 7) - $88 per square metre
420 Nudgee Road (Lot 6) - $110 per square metre
(Lot 7) - $95 per square metre
East-West Arterial Road - $83 per square metre
Method of calculation
Adopting the site values above, I can determine the unimproved land values of the subject lands as follows:
· 448 Nudgee Road -
(Lot 5) 36,639 square metres
@ $115 per square metre = $4,213,485
(Lot 6) 22,900 square metres
@ $100 per square metre = $2,290,000
(Lot 7) 41,270 square metres
@ $88 per square metre = $3,631,760
Total Site value = $10,135,245
Total filling 100,809m² by 3.6
metres depth = 362,912 cubic metres
Say 360,000 cubic metres)
Less 360,000 cubic metres of
filling at $15.30 per cubic metre = $5,508,000
Less interest on $5,508,000 x
5.85% x 3.1 months (para [59]) = $83,240
Gross land value = $4,544,005
Less interest on land value
at 5.85% x $4,600,393 x 3.1 months = $68,671
Gross unimproved value = $4,475,334
Less 2% bulk allowance per lot = $268,520
Net unimproved value = $4,206,814
Say $4,207,000 ($41.73 per square metre)
· 420 Nudgee Road -
(Lot 6) 20,230 square metres
@ $110 per square metre = $2,225,300
(Lot 7) 16,030 square metres
@ $95 per square metre = $1,522,850
Total filled value = $3,748,150
Plus 4,200 square metres of poor
filling area at $20 per square metre = $84,000
Total site value = $3,832,150
Total filling 36,260 square metres x
4.4 metres depth = 159,544 cubic metres
Say 160,000 cubic metres
Less 160,000 cubic metres
x $15.30 per cubic metre = $2,448,000
Less interest on $2,448,000
x 5.85% by 1.4 months (para [59]) = $16,708
Gross land value = $1,367,442
Less interest on gross land value
$1,367,442 x 5.85% x 1.4 months = $9,333
Net unimproved value = $1,358,109
Less 2% bulk allowance per lot = $54,324
Net unimproved value = $1,303,785
Say $1,304,000 ($32.23 per square metre)
· East-West Arterial Road -
Site value (Lot 2)= 25,570 square
metres x $83 per square metre = $2,122,310Total filling = 25,570 square metres
by 3.4 metres depth = 86,938 cubic metres
(say 87,000 cubic metres)
Less 87,000 cubic metres of filling
@ $15.30 per cubic metre = $1,331,100
Less interest on $1,331,100
at 5.85% x 0.6 months (para [59]) = $3,893
Gross land value = $787,317
Less interest on gross land value
5.85% on $787,317 for 0.6 months = $2,303
Net unimproved value = $785,014
Say $785,000 ($30.70 per square metre)
The relevant period for "interest deferred" are based upon estimated times for fillings of the 420 Nudgee Road site provided by Geotechnical Experts (see paragraph [38] and [59]), and also Mr Jackson.
In applying a "bulk allowance" for the multiple parcels in each subject land, Mr Brown has followed the practice long adopted by the respondent department. That was noted in Burns Philp & Co Ltd v Valuer-General (1974) 1 QLCR 161, where the Land Appeal Court said at 166:
"It is apparently a practice in the Valuer-General's Department when several parcels are included in one valuation to make an allowance for 'bulk or multiple holding'. Often this is made at the rate of 2½ % per allotment or subdivision. As we understand the practice this is an acknowledgment that larger areas generally command a lesser overall unit value than smaller areas. We see no reason as presently advised to disallow this practice but the quantum thereof is one calling for discretion according to the circumstances of individual cases. The basis of the allowance cannot be a rule of thumb of 2½ % for each allotment included in the parcel. Logical and practical considerations require that a maximum limit be applied to the bulk allowance percentage, otherwise increasingly large numbers of allotments would result in inordinately low unimproved values until when 40 allotments are included the absurd position of a nil value would result."
In noting that discretion should be applied in such matters, I am aware that a "bulk allowance" of 1% was allowed in Alma Investments Pty Ltd v Chief Executive, Department of Natural Resources and Mines (V00/372 & Ors) 22 June 2001, unreported; and also at 1.5% in Buluarte v Chief Executive, Department of Natural Resources (AV99-281), 20 June 2000, unreported. In the Buluarte matter the appellant (Oxenford) had argued for a "bulk allowance" of 2.5%, also linking that allowance rate to ongoing holding charges for rates and land tax (p.10). But those extra charges for loss of interest had separately been allowed for in the method of hypothetical development proposed by the appellant. In the end both bulk allowances were seen in the context of the experience of the market place. In the current matter, the only evidence of an appropriate bulk allowance is supplied by Mr Brown, and I have adopted 2% as appropriate.
Relativity –
If I then compare those rates per square metre to the parcel at 400 Nudgee Road at the amended rate of $30 per square metre, I find the following:
Parcel Area Rate 448 Nudgee Road 100,809 square metres $41.73 per square metre
420 Nudgee Road 40,460 square metres $32.20 per square metre
East-West Arterial Road
25,570 square metres $30.70 per square metre 400 Nudgee Road 80,940 square metres $30 per square metre
I believe those rates are not inconsistent, considering the better location, access and exposure of the subject lands.
Conclusion:
Having considered the whole of the evidence, I am persuaded that the appellant has partly proved his case. The valuations as determined by the Chief Executive are set aside, and the following unimproved values are determined for both 1 October 2001 and 1 October 2002 in the sums of:
· 448 Nudgee Road (AV2002/0846 and AV2003/0346) at $4,207,000
· 420 Nudgee Road (AV2002/0490 and AV2003/0345) at $1,304,000
· East-West Arterial Road (AV2002/0847 and AV2003/0347) at $785,000.
NG DIVETT
MEMBER OF THE LAND COURT
0
6
0