Uniacke Pty Ltd v Chief Executive, Department of
[2002] QLC 61
•6 August 2002
LAND COURT OF QUEENSLAND
CITATION: Uniacke Pty Ltd v Chief Executive, Department of
Natural Resources and Mines [2002] QLC 61PARTIES: Uniacke Pty Ltd (appellant)
v
Chief Executive, Department of Natural Resources
and Mines
(respondent)
FILE NO/S: AV2000-0500 DIVISION: Land Court PROCEEDING: Appeal against an Annual Valuation DELIVERED ON: 6 August 2002 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Dr NG Divett, Member ORDER: 1. The appeal is dismissed, and the unimproved value of Lot 21 on RP 10790, Lot 2 on RP 151557, Lot 2 on RP 52220 and Lots 1 and 2 on RP 95337, as determined by the Chief Executive in the sum of $4,400,000 is affirmed.
CATCHWORDS:
1. Valuation – Valuation of particular properties – heritage-listed (under Council provisions) – considerations in assessing development proposal – restrictions can be on site as well as buildings – 20% allowance in circumstances. [36]
2. Valuation – Particular factors in valuation – zoning – parts of site cover 2 separate precincts (commercial and multi-unit residential) – permissible to use separate sales from either precinct as basis for different parts of site. [30-33]
3. Valuation – Particular factors in valuation – zoning – new Town Plan on display but not approved at date of valuation – permissible to consider contents of such plan in valuation. [35]
4. Valuation – Sales – use of sales – difficulties in use
of improved sales – methods in analysing improvements. [44-46] 5. Practice and Procedure – nature and role of Court – not an investigatory tribunal – must rely on evidence before it – cannot assume or investigate matters not provided by parties – onus on appellant to prove case – best done with expert valuation support. [37, 49]
COUNSEL: Mr R Baldwin for the appellant Mr W Isdale for the respondent SOLICITORS: David Price and Associates for the appellant Crown Solicitor, Crown Law for the respondent
Background:
[1] This matter relates to land at 11 Boundary Street, West End, and described as Lot 21 on RP 10790, Lot 2 on RP 151557, Lot 2 on RP 52220 and Lots 1 and 2 on RP 95337, Parish of South Brisbane. The subject land has an area of 2.5595 hectares, and is located about 1.5 kilometres south of the Brisbane CBD. The subject land has frontage to Boundary, Mollison and Wilson Streets, all of which are bitumen sealed with concrete kerbing and channeling, and each has bitumen sealed footpaths. All normal utility services are available, and the subject land is zoned “Special Development” under the Town Plan of the City of Brisbane 1987, effective at the date of valuation of 1 October 1999. The key issues are comparison of sales, relativity, impact of heritage restrictions and planning controls.
[2] On 27 March 2000 the Chief Executive issued a valuation of the subject land at $5,500,000. Following an objection the Chief Executive reduced that figure to $4,400,000 on 1 July 2000. The appellant has now appealed claiming the unimproved value should more properly be $2,800,000. Mr Baldwin of Counsel, instructed by David Price and Associates, appeared for the appellant, calling evidence from Frederick John Drake, the managing director of Uniacke Pty Ltd. Mr B Isdale of Crown Law appeared for the respondent, calling evidence from Arend Boudewyn Van Hees, the departmental registered valuer responsible for determining the valuation.
The Evidence:
The History of the Land –
[3] The subject land is irregular in shape with a north-easterly aspect, is above street level, and is level and well drained. The subject land is located in Boundary Street at the northern end of the main shopping area of West End, which is a popular inner city suburb of Brisbane now gaining prominence as a preferred inner residential location.
[4] The appellant company (Uniacke Pty Ltd) is a family owned company, of which Mr Drake and his wife are sole shareholders. They are also shareholders of the current major user of the subject land being Absoe Pty Ltd, operating as a supplier of business equipment and office furniture. Absoe Pty Ltd occupies 90% of the site.
[5] Mr Drake explains that his company had established its business in 1986 on a site opposite the subject land at 200 Melbourne Street. In 1995 the lease of that property had expired, and the owner of that land wished to develop that parcel, forcing Mr Drake to seek alternative accommodation. In 1996, in response to an Australian-wide advertising campaign, the appellant entered contract negotiations for the subject land, with final unconditional contract of sale in December 1997, and settlement of $5,500,000 in January 1998. Mr Drake argues that because of the pressures to relocate his business, and the suitability of the existing old buildings upon the land, he paid a “Special Value” for the subject land, above its normal value in the market place. He argues that the ongoing use of 90% of the existing buildings by his company demonstrates the special value to his company.
[6] Mr Drake advises that the existing development on the subject land represents its former use as an ice cream factory, reflected now in the heritage classification of the buildings upon the land. The original building now referred to as Factory 1 was built as an ice cream factory in 1928, and extended in 1936. Factory 2 was built as a dry goods warehouse in 1936, and is also to be preserved under the heritage restrictions.
[7] Mr Drake further explains that his town planning advice prior to buying the subject land was that, subject to an application to the Brisbane City Council (the Council), the existing buildings were likely to be acceptable for retail and industrial storage purposes. On planning advice a further application for consideration in principle for the construction of twenty-six units on that part of the subject land at its north-eastern corner in the car parking area fronting Mollison Street, and about 150 metres from the existing heritage buildings, was forwarded to the Council. Following the response from Council that an “overall concept plan” would be required in order to address the heritage issues, Mr Drake decided not to proceed at that time.
Heritage Impacts –
[8] Mr Drake argues that the heritage restrictions extend not only to the two existing factory buildings, but also to the whole site in view of the heritage classification of the site. He notes that the Council has listed the site as a place of “heritage significance” indicating that some planning constraints may even extend beyond the limits of the two buildings which are to be preserved. He draws that conclusion from the request by the Council for an overall concept plan for development upon the land. Because of uncertainty about the extent of impacts of heritage protection, Mr Drake argues that the overall value of the land must be reduced.
[9] Mr Drake further notes that recent indications in the new Local Area Plan (LAP) now operational under the new City Plan 2000, show how vistas surrounding heritage buildings are to be retained in order to preserve the visual landscape of the buildings. Mr Drake concedes that the LAP was subsequent to the relevant date of valuation, but argues that a recent case in Boundary Street near the old library has required a developer to modify his building in order to preserve the line of sight to the old building.
[10] Mr Isdale concedes that heritage restrictions were likely to require preservation of visual scenes of the old building. However he argues that what might, or might not occur, as a consequence of a development application to the Council, is a matter for consideration at that time, and not for consideration in the current matter. Until such an application is pursued Mr Isdale argues that the extent of additional heritage restrictions is really only a matter of conjecture. Mr Isdale concedes that doubt in the eyes of a prudent buyer would affect the level of value of the subject land in the market place, but he argues that such doubt in respect of the value should be considered in the light of s.33 of the Act, which directs that the current unimproved value is to be accepted as being correct, in the absence of evidence to the contrary.
[11] Mr Isdale argues that the appellant has provided no quantification of any level of doubt that might exist as a consequence of the potential uncertainty in respect of further heritage impacts. In the end Mr Baldwin advises that it was not intended to supply any further supporting documents to demonstrate the possible levels of impact from the heritage restrictions. Mr Isdale notes that precedent directs that this court is not an investigating tribunal, and must rely upon the evidence. (Qualischefski v The Valuer-General (1979) 6 QLCR 167, at 172.)
[12] Mr Van Hees has discussed the matter of possible heritage requirements with a Council officer (Mr Stafford). Mr Van Hees advises that Mr Stafford believes that, other than the two existing heritage buildings, there would be no further impediment anywhere else upon the site. Mr Van Hees further provides a draft concept plan prepared by Mr Stafford (Exhibit 3 – drawing number 2857.25). He notes that on the concept plan existing buildings have been shown for refurbishment or extensions, while other current car parking spaces are shown for proposed development. Mr Van Hees argues that the principles espoused in that concept plan indicate a considerable level of flexibility for redevelopment upon the site. Mr Van Hees further speculates that the existing old concrete administration building fronting Boundary Street could even be demolished for a new development in the higher valued precinct 7 area (discussed later).
[13] Mr Baldwin draws attention to the South Brisbane Development Control Plan of 1994, noting that the subject land is designated on that plan as property 57. He notes also that the adjoining West End Markets site across Mollison Street is identically listed on the Development Control Plan as property 48. Mr Van Hees is familiar with that West End Markets property, noting that during subsequent redevelopment the Council approved the partial demolishing of the existing heritage building, except for the front façade of that building. He argues that demonstrates the level of flexibility often taken by the Council on specific properties. However he agrees that such flexibility is always at the discretion of the Council, and cannot be determined until an application is made to the Council. Mr Van Hees also agrees that possible visual effects on the two existing heritage buildings will also be at the will of the Council.
[14] Mr Van Hees agrees that the existing heritage restrictions upon the two buildings is a major impediment to the further redevelopment of the subject land, but he argues that it is not one that cannot be overcome. In his assessment of the overall effect of those restrictions he has allowed a reduction in the value of the subject land of 20% for that purpose, reducing his valuation on objection from $5,500,000 to $4,400,000. Mr Van Hees believes that such a reduction reflects a generous recognition of those restrictions, however he does not clarify his reason for such a comparative quantification.
Planning Impacts –
[15] In determining his valuation Mr Van Hees has relied upon current planning controls impacting the subject land at the relevant date. He notes that the Development Control Plan of the South Brisbane Area of 15 July 1994 shows that part of the subject land fronting Boundary Street as included in Precinct 7 (West End Shopping Centre), while the balance of the land is included in Precinct 15 (Medium Rise Residential). (Exhibit 2). As noted by Mr Van Hees the extent of the boundary between Precinct 7 and Precinct 15 is about 40 metres from the Boundary Street alignment. Mr Van Hees has apportioned an area of about 1,560 m² in Precinct 7 and 2.4035 hectares in Precinct 15. Precinct 7 allows for permitted development for business/commercial use with a plot ratio of 1.0, which can be increased to 1.5 for mixed residential/business use. Precinct 15 allows for residential multi-unit use, under the guidelines for residential BR4 density of 60%, subject to meeting certain criteria of the Council. Both precincts form part of the City Frame Structure Plan.
[16] In calculating his apportionment in Precinct 7 Mr Van Hees advises that he has provided a very conservative estimate of the commercial shopping area at 1,560 m². He notes that he had allowed for a depth of only about 30 metres from Boundary Street to the rear of the existing administration building (transcript 31). I note that the Blinmap supplied in Exhibit 3 suggests a depth of Precinct 7 as about 40 metres from Boundary Street in line with the conclusion of Mr Van Hees. On that basis I accept the 1,560 m² in Precinct 7 does not overstate the impact of that precinct.
[17] In explaining his method of valuing the two different components of the subject lands covering Precincts 7 and 15, Mr Van Hees explains that was based upon the two different land uses allowable on both parcels. He argues that, in his opinion, it would be likely that the two different land uses could, if necessary, be subdivided into separate ownerships. However he argues that precedents in the courts have accepted that unsubdivided parcels may be separately valued where the use of that land has separate occupation.
[18] Mr Drake provides a statement in Exhibit 2 that the “Area Classification Map South Brisbane” dated 26 November 2001 depicts the whole of the subject land, including that area formerly in Precinct 7, as “low-medium density residential area”. However, as agreed, that later plan, as part of City Plan 2000, has no direct relevance in the current matter. However it may be a matter for consideration in any subsequent valuations. Any future proposal by the Council for a pedestrian walkway through the subject land is also a matter for consideration at a later time. Had the amended planning constraints been effective in the current matter, a valuation of the order of 25,595 m² x $135 per metre square or $3,455,000 might have been relevant.
| Relativity – | |
| [19] | Mr Baldwin draws support for the appellant’s estimate of the valuation of the subject land at $2,800,000, in relativity with the adjoining West End Market site across Mollison Street. He notes that site contains an old heritage listed building (the Tristrams building) and has an unimproved value of $2,650,000 at 1 October 1999. Mr Van Hees agrees with that allocated value, but notes that was for a 10,000 m² site entirely zoned within Precinct 7. Mr Van Hees notes that by comparison, while the subject land has only 1,560 m² in Precinct 7, it overall has more than twice the area of the West End Markets site. |
Comparison of sales –
[20] It is agreed by both parties that there is a paucity of directly comparable sales evidence, due to the very large area of the subject land in such an inner city location. It is noted that the appellant provides no sales of vacant or lightly improved lands in the locality, but places some reliance upon the sale of the subject land as an improved property, and also upon the sale of the improved West End Markets site.
[21] The West End Markets land sold in June 1997 for $4,100,000, with possession in March 1998. It is agreed that was a sale for development purposes, which is subsequently proceeding. However Mr Baldwin provides no specific analysis of that sale, or any allowance made for the heritage restrictions upon the “Tristrams” building. It is agreed that the unimproved value at 1 October 1999 was $2,650,000 for that about 10,000 m² site. However the Blinmap in Exhibit 3 shows that site as having an area of 1.214 hectares ($218 per square metre). Mr Van Hees rejects that sale because it was an old sale.
[22] Mr Baldwin also draws comparison with the sale of the subject land in December 1997, with settlement in January 1998 for $5,500,000. Mr Drake analyses that sale based upon rental values of buildings, concluding a land value of $2,000,000. Mr Van Hees notes that the sale was a highly improved sale with older style lettable buildings (14,000 m²) with an annual rental value of about $500,000. He concedes that the purpose built nature of the existing buildings, and their age, means that building efficiency is less than what might be achieved with rentable floor area. He argues that new lettable space in that location would be worth between $10,000,000 and $20,000,000, suggesting that the value of the sale of the subject land was mainly in the land component itself.
[23] However Mr Van Hees rejects that sale as he notes that sale was not contemporaneous with the current increases in the market, and he prefers to rely more upon recent sales evidence where the market is moving. He also rejects using sales of improved lands due to the difficulties of reliably assessing the added value of improvements on those parcels. Mr Baldwin argues that the West End Market sales should have at least been used as a check against the other sales evidence, as it was in closest proximity, is nearer to the size of the subject land, and it also has heritage restrictions. Mr Van Hees agrees that he considered that sale, but had rejected it because of its age.
[24] In support of his valuation Mr Van Hees provides the following sales of vacant land compared to Precinct 7 lands on the subject land:
Sale 1 – (164 Boundary Street, West End – Lot 7 on RP 216578). This is a 1,619 m² parcel zoned “Business” located about 350 metres south of the subject land. The sale is an inside parcel located in a mixture of residential, multi-unit and commercial properties, at about the southern end of the West End retail shopping centre. The sale was an adjoining owner sale, and was seen as being above the market level. The sale is seen as inferior to the subject land, due to access, size and location.
The sale sold in February 1999 for $1,350,000 ($834 per square metre), and was analysed at $1,365,000, and applied at $950,000 ($587 per square metre).
• Sale 2 – (81 Boundary Street, West End – Lot 1 on RP 53570). This is a corner location immediately opposite the subject land on the corner of Boundary and Mollison Streets. The sale has an area of 556 m², and has subsequently been developed as a Commonwealth Bank building. The sale is a smaller irregularly shaped corner parcel located at the date of sale at the West End round-about, which has subsequently been removed. Overall the sale is inferior to the subject land due to its smaller size, location and inferior access. The sale sold in September 1997 for $660,000 ($1,187 per square metre), and was analysed at $680,000, and applied at $590,000 ($1,061 per square metre).
[25] Mr Van Hees provides the following sales of vacant lands compared to Precinct 15 lands of the subject land:
Sale 3 – (30 to 36 Main Street, Kangaroo Point). This is a 9,372 m² parcel located about 1.5 kilometres north-east of the subject land, in the Kangaroo Point Development Control Plan area, which allows for gross floor area (GFA) of 1.25 times site areas for land greater than 3,000 m². The land has city and river views, and looks across park lands through mangroves to the river. The sale is restricted by height restriction in order to preserve the views of the Story Bridge, and has street frontages to McDonald, Bright and Main Streets. The sale is seen as overall superior to the subject land due to location.
The sale sold in May 1998 for $6,700,000 ($715 per square metre), and was analysed at $6,700,000, and applied at $6,700,000 ($715 per square metre).
• Sale 4 – (771 Logan Road, Holland Park – Lot 6 on RP 120287 and Lots 138, 139 and 143 and 144 on RP 12906). This is a 10,280 m² residential BR4 parcel located amongst multi-unit and residential property, well removed from the CBD. The sale is below street level and is flood prone land, with inferior shape, access and location. The sale is seen as inferior to the subject land due to access, size, shape, flooding and location. The sale sold in April 1998 for $1,050,000 ($102 per square metre), and was analysed at $1,050,000, and applied at $975,000 ($95 per square metre).
[26] In drawing comparisons with those sales Mr Van Hees sees his Sale 4 ($95 per square metre) at the very bottom end of the price range for multi-unit residential lands; while his Sale 3 ($715 per square metre) reflects a GFA of $572 per square metre, which is greatly superior to the 60% site coverage of the subject land. Mr Van Hees has concluded a rate of $135 per square metre for the residential lands.
[27] Mr Van Hees sees the value of the “Business” area of Precinct 7 for an area of 1,560 m² as valued at $770 per square metre; reflecting his comparisons with his Sale 1 ($587 per square metre) and Sale 2 ($1,061 per square metre). He agrees that generally the market place reveals that people pay a lesser rate per square metre for larger lots compared to smaller lots. He notes further that small lots of about 303 m² for coffee shops in Mollison Street have been purchased for about $560,000; but agrees that those small sites provide no basis for comparison with the larger area of about 25,000 m² of the subject land. He also agrees that on a direct proportional basis the smaller sales of 1,619 m² (Sale 1) and 556 m² (Sale 2) provides no simple comparison with the subject land, and neither of those sales had any heritage restrictions upon them.
[28] In drawing his comparisons Mr Van Hees concludes the following rates:
Use Area Rate Value Business 1,560 m² $770 per square metre $1,201,200 Residential 24,035 m² $135 per square metre $3,244,725
Total value $4,445,725
Say $4,400,000
[29] In concluding comparisons Mr Van Hees argues that there has been a substantial increase in the value of sales over the last three years in the West End area. On that basis he questions the use of the older sales of the subject land (December 1997) and the West End Markets site (June 1997). By that test of value Mr Van Hees’ Sale 2 (September 1997) – the Commonwealth Bank site – would also reflect a level of value prior to the change of the market in West End.
Decision:
Planning impacts –
[30] I turn first to Mr Van Hees’ method of seeking to value the subject land on an apportionment basis, according to the respective permitted land uses under Precincts 7 and 15 of the Development Control Plan. His reason for such apportionment lies in his acceptance of the different planning outcomes each planning precinct was likely to achieve. It is not contested that the business activities achievable under the zoning as Precinct 7 (West End shopping centre) were likely to reflect a higher rate per square metre than for those under Precinct 15 (medium rise residential). What is challenged is whether Mr Van Hees has acted appropriately in valuing the subject land on an apportioned basis, where part of the land falls in the two separate precincts.
[31] It is generally agreed that boundaries between planning areas (or precincts) usually coincides with surveyed boundaries. That occurs principally for the reason that it is thus simpler to be able to delineate such boundaries on the ground. However boundaries of planning areas (or precincts) are nothing more than an attempt to relate planning intentions to the physical world in which they are to be exercised. If that does not directly coincide with existing surveyed boundaries, then that does not negate the reality of the projected change of land use.
[32] In the current matter the current boundary between Precinct 7 and Precinct 15 is clearly a prolongation of the western boundary of the corner parcel at the corner of Boundary Street and Wilson Street (Lot 4 on RP 45711). There is therefore nothing within the planning controls of the Development Control Plan that would preclude the eastern part of the subject land within Precinct 7 from being developed as part of the West End shopping centre. On that basis Mr Van Hees’ conservative application of that area of 1,560 m² for values reflected in Precinct 7 is appropriate.
[33] The creation of relative values for different land uses finds its support in seeking to ascertain the highest and best use of the land, which is a factor governing the market value of the land. The task before Mr Van Hees was clearly outlined in Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410 where Jacobs J said at page 415:
“Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says – the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential. The first task of the valuer is to determine what that use is and then to value the land on that basis. It is not appropriate to determine the highest and best use by reference only to value.”
Heritage impacts -
[34] In seeking to understand the potential impacts of the heritage restrictions upon the subject land I note Mr Drake’s concern that the restrictions may extend to other areas of the subject land beyond the two “factory” buildings specifically designated. In that respect I note his experience with the recent development of a new building adjoining the old heritage Library building in West End. While I also note Mr Drake’s agreement that those more specific heritage provisions of the new City Plan 2000 are subsequent to the current relevant date of 1 October 1999, there was no evidence as to whether the draft Local Area Plan under the City Plan 2000 had been publicly circulated prior to its final adoption as the City Plan 2000 in October 2000.
[35] Had that draft plan been publicly available at 1 October 1999, then it may have been a matter for consideration by a prudent purchaser at that time. That was clarified in Stubberfield v Valuer General (1988-89) 12 QLCR 328, where in the Full Court of Queensland, Carter J said at page 340:
“Finally the statement in the judgment of the Land Court viz. ‘The Court cannot give prospective recognition to the new Town Plan’ is literally true but it if is intended to convey that an advertised new planning proposal which goes on display either before the date of valuation or within the period between that date and the date of the issue of the valuation notice must necessarily be ignored it is in error. Whether such a proposal will affect the value on the date of valuation is a matter of fact but it remains a relevant matter to be considered and there is no provision in the Valuation of Land Act either express or implied which requires or permits the Valuer-General to ignore it.”
However in the current matter there is no evidence that the later City Plan 2000 had any
relevance at 1 October 1999, and I will ignore it.[36] In the current matter however I note that section 22 of the Town Plan 1987 defines the intentions of the “heritage” classifications. That section establishes “heritage areas” (section 22.3) and “heritage buildings (section 22.4) and sets out the specific features of “heritage buildings” which are of significance. It is noted that the whole of some “heritage buildings” are of significance, while others are only identified for their frontage. The need for adjoining developments near “heritage buildings” to complement the significant features of the “heritage building’ is established in section 22.14; while possible setback requirements for higher development of a heritage frontage to a building is established in section 22.15. While those provisions do not establish any need for preserved areas for visual perception of the two heritage “factories” on the subject land, they provide some guidance as to what additional constraints may exist on the subject land.
[37] However in that respect I note that Mr Isdale has referred me to the findings of Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, where the Land Appeal Court said at page 172:
“Neither this court nor the Land Court in the subject jurisdiction may assume the role of an investigating Tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.”
[38] If I turn then to Mr Drake’s evidence, I note that his concern lies with the uncertainty that might surround the need to provide an “overall concept plan” for the entire site. However Mr Van Hees has obtained a draft “overall concept plan” from Mr Stafford, a senior Council officer, which would appear to present no major difficulties for future development. While such a conclusion might be applicable, I believe the only firm conclusion that I can accept was outlined by Mr Isdale where he argued that clarification of the Council’s requirements would only follow a formal application for development by the appellant. In the absence of any other estimate by the appellant of the impact of heritage restrictions on the value of the land, I will accept Mr Van Hees’ estimate of 20% reduction for that purpose.
Comparison of sales –
[39] Due to the lack of any in-depth analyses of either the sale of the subject land or the West End Market sale, I will first focus upon the sales of vacant lands supplied by Mr Van Hees. I note first that sales of vacant lands have been accepted by the courts as the preferred method of determining unimproved value of land. (see NR and PG Tow v Valuer-General (1978) 5 QLCR 378, at 381; R and MM Barnwell v Valuer General (1989) 13 QLCR 13 at 17; WM and TJ Fischer v Valuer General (1983) 9 QLCR 44, at 46; and also in PH Clough v Valuer-General (1981-82) 8 QLCR 70, at 76).
[40] If I look then at the comparisons of the portion of the subject land in Precinct 7 (1,560 m²), I note the following comparisons:
Sale Area Rate per square metre 1 1,619 m² $587 2 556 m² $1,061 Subject land 1,560 m² $770 I accept Mr Van Hees’ comment that the subject land is located at the superior end of the West End shopping centre, and has greater exposure than Sale 1. On that basis the rate of $770 per square metre for the subject land reflects those superior qualities. I note also that Sale 2 is much smaller than the portion of the subject land, which otherwise has similar exposures, location and access as Sale 2. The relative rate per square metre supports those conclusions. There is therefore no inconsistency in Mr Van Hees’ comparisons for “Business” purposes.
[41] If I then compare the “Residential” lands, I find similarly the relationship with Sales 3 and 4 also support Mr Van Hees’ conclusions. However, while I note that he has adopted the rate of $95 per square metre for his Sale 4 as the base level of value for such purposes, that parcel has an area of 10,280 m². By comparison the subject land has an apportioned area for “Residential” purposes of 24,035 m², a much larger site. I agree that the Holland Park location is perhaps a less attractive location for high density residential use than the subject land at West End, and that Sale 4 is virtually flood-prone land. However the question to be raised is whether the adopted rate of $135 per square metre appropriately reflects the value for that larger size of the subject land.
[42] For example if I compare the relative rates per square metre for 1,560 m² of Precinct 7 land in the subject land at $770 per square metre, and the adjoining West End Markets land, also Precinct 7 of area 12,140 m² at $218 per square metre, I find there is a substantial differential for size in that location.
[43] I turn then to the sale of the subject land and I accept Mr Van Hees’ advice that the sale reflects a market at December 1997, prior to the increases subsequently reflected in 1998 and 1999. However I also note that Sale 2 (the Commonwealth Bank site) occurred in September 1997 and, if that sale has relevance, then so also could the older sale of the subject land on the basis of age of that sale. However there is no detailed analysis of that sale which contains considerable improvements with added value. Without a detailed explanation of the analysis of the sale of the subject land by Mr Drake, I find it provides only some assistance to me in the matter.
[44] The problem with analyzing sales of improved properties lies in the complexity of assessing the added value of the improvements. For example, in the valuation of a highly improved rural property for conversion of tenure purposes, in Fitzgerald v Department of Lands (1965) 32CLLR 260, the Land Appeal Court found at page 261:
“Unimproved values obtained by analysing the sale of one highly improved area do not normally provide a safe basis upon which to make determinations of value of comparable land.”
[45] The matter of added value of improvements was also addressed in O’Brien Nominees Pty Ltd v Valuer-General (1979) 6 QLCR 280, where the Land Appeal Court said at page 285:
“It seems to us that the concept of ‘added value’ of improvements involves at least two methods of valuation, the appropriateness of which depends to a substantial degree on the economic conditions prevailing at the relevant time.
In times of normal, and above normal, prosperity the added value which improvements give to land generally exceeds their value deduced by the traditional method of replacement cost less depreciation. The ‘added value’ of the improvements in these circumstances is usually ascertained by the method of adding to their value ascertained by the traditional method, interest for half the period of time it would take to put the improvements on the land and for them to become fully productive – vide Kiddle’s case 27 C.L.R. 316.”
[46] In the matter of Kiddle v Deputy Federal Commissioner of Taxation (1920) 27 CLR 316, Knox CJ noted the complexity of determining the added value of improvements where he said at page 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.”
[47] In the current matter I have no detailed explanation of the method applied by Mr Drake, and I must treat that assessment of the value of the land with some caution.
[48] If I then consider the West End Market sale I note that, while that parcel is seen to reflect an unimproved value of $2,650,000 for an area of 12,140 m² ($218 per square metre), that site is all in Precinct 7 and capable of major “Business” development such as a Woolworths supermarket. By comparison the subject land, though predominantly for “Residential” development purposes, is twice the size of the West End Market sale. If I were to accept Mr Van Hees advice that he has allowed 20% for heritage restriction on the subject land, I could conclude a value without heritage restrictions of $5,500,000, or an overall rate of $215 per square metre for that site. However the West End market site also had heritage impacts, and if I allow a direct overall comparison, accepting comparable heritage impacts on either property, I could conclude an overall rate of $172 per square metre for the subject land, compared to $218 per metre square for the West End Market sale. On that basis there is nothing to discredit Mr Van Hees’ valuation.
| Summary: | |
[49] | In concluding this matter I am conscious that this court must rely only upon the evidence before it. As noted in Qualischefski (supra) it is not for the court to assume or investigate matters not provided by the parties. But precedents go beyond Qualischefski in that the legislation directs that in respect of an appeal the onus is upon the appellant to prove his case. Section 45(4) of the Valuation Land Act states that in respect of a notice of appeal against an annual valuation: |
“45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”
[50] The Act further directs that a valuation is deemed to be correct under s.33 unless it is proved to the contrary. Unless an appellant can prove that the Chief Executive has made an error, or followed a wrong principle, then the appeal must fail. That was established by the High Court of Australia in Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, where Gibbs J said at page 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 section 13(7) is rebutted.” Note Section 13(7) as it then was is now section 33.)
In the current matter there is no evidence that Mr Van Hees has not followed a correct
method, or made a serious error of fact.
Conclusion:
[51] Having considered the whole of the evidence I am not persuaded that the appellant has proved his case. The appeal is dismissed, and the unimproved value of Lot 21 on RP 10790, Lot 2 on RP 151557, Lot 2 on RP 52220 and Lots 1 and 2 on RP 95337, as determined by the Chief Executive in the sum of Four million, Four hundred thousand dollars ($4,400,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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