VAE Railway Systems Pty Ltd v Chief Executive, Department of Lands
[1996] QLC 15
•21 February 1996
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BRISBANE
21 FEBRUARY 1996
Re:Appeals against Unimproved Valuations -
Valuation of Land Act 1944
Local Authority: Mackay City Council
(V95-434 and 435)
VAE Railway Systems Pty Ltd
v.
Chief Executive, Department of Lands
(Hearing at Mackay)
D E C I S I O N
The Department of Lands has carried out unimproved valuations of land described as part of Lot 2 on RP 704672, Parish of Howard, containing 1,440 m2 as at 30 June 1993 and then 1st January, 1995, in the amounts of $23,000 and $28,000 respectively. The land is leased from Queensland Transport (the Commissioner for Railways) and forms part of a railway line adjoining Nebo Road. No surveyed road access is available, access being obtained through adjoining property fronting McLennan Street.
The lessee appellant company uses the land as part of a railway siding in association with the adjoining land as a heavy industrial complex. The valuations appealed against resulted from objections against the original valuations. The company contends for valuations of $11,500 and $14,000 at the respective dates. The grounds of appeal refer to the land being contaminated railway land, its shape restricting its use to that of a railway siding (constructed at the appellant's expense). The land was said to be partly swampy with no proper drainage in its unimproved state. The value of the land was seen as being relative to the rental under the agreement to lease which was "only $300" per annum.
Mr S. Dalrymple, the financial controller of the appellant company appeared at the hearing. He assumed the land would be seen to be contaminated as a result of its past maintenance for railway purposes but had no knowledge whether it was in fact classified under the Contaminated Land Act as a contaminated site. The company's main complaint was that the use of the land was for the loading of company products acquired through tender by Queensland Rail on to Queensland Rail carriages. He saw the rental as reflecting that limited use and the appellant company was concerned as to the rating burden which applied to land with what was seen as possessing nominal value only. There was no scientific method adopted in estimation of the valuation contended for - 50% of the applied valuation being seen as a more realistic and nominal type valuation.
Mr Dalrymple was able to produce the "Agreement for Lease" and drew attention to several restrictions and in particular that contained in Clause 1.15 -"The lessee shall not use or permit suffer or allow to be used the demised premises for any purpose other than for the loading of steel and rail track components consigned by rail transport without the consent in writing of the lessor first had and obtained. The consent of the lessor shall be in the absolute discretion of the lessor and any such consent may be upon such terms and conditions as the lessor shall think fit including such increase (if any) in the rent hereby reserved as the lessor shall determine."
Section 14(5)(c) of the Valuation of Land Act provides as follows:
"In making, under this part, the valuation of the unimproved value of any land in a lease from Queensland Railways, the unimproved value of that land shall be determined having regard to and making proper allowance for any restriction or limitation of use having regard to the purpose and conditions to which that lease is subject."
Mr R.M. Bein, was the valuer who carried out the valuations appealed against. He saw the land as being capable of providing valuable use to the adjoining land, providing it with access to a railway siding. However, while in the practical sense the leased land was held in conjunction with that adjoining land, the registered ownership of the adjoining land was associated rather than common to that of the lease. For that reason, separate valuations were necessary under the Act. As a separate entity the leased land had shape and access problems. The land is zoned "Public Purposes" because it was railway land. In terms of the Act, it was accepted that the existing use could continue. That use was of an industrial nature. For that reason Mr Bein had adopted a basis of valuation obtained from sales of industrial lands in the locality. Those sales indicated a range of values from $100 down to $50 per m2 for industrial sites ranging from 800 m2 to 2,100 m2 - in the period relevant to the 1993 valuation. These values were for sound industrial land with no shape or access problems. Then in the same general period two large industrial sites of about 4,000 m2 with poor easement access and inferior location had sold for about $12 per m2. Doing the best he could in considering and making comparisons with the subject land as a separate entity, Mr Bein had formed the opinion that a valuation of about $16 per m2 would be a fair assessment of its market value as at 1993. Industrial values had shown an increase in the period between the relevant dates of valuation, as indicated by further sales - the details of which Mr Bein provided. On his interpretation of the market, he applied a valuation of $19.50 per m2 at the later date.
Mr Bein had not sighted the agreement to lease until it was produced at the hearing. He had assumed that the lessee would have been permitted to use the land for industrial purposes restricted only by its obvious situation, shape and lack of surveyed road access. While Mr Bein saw the existing use as being the appropriate industrial use, he agreed that Clause 1.15 of the Agreement for Lease could be seen as a specific further restriction, although one capable of being removed with the lessor's consent. For that reason and because it was not a matter of which he had previously been aware, he suggested that some further discounting of the valuation might be appropriate, because of the uncertainty as to the extent of use potential which might exist in marketplace considerations. Mr Bein offered the opinion that a reduction in the order of $2,000 in the earlier valuation and $3,000 in the later valuation would fully recognise the effect of any restrictive clauses within the Agreement for Lease.
Mr Dalrymple submitted that there must be serious doubt that a site with the disabilities of the subject land would fetch the level of value still suggested by Mr Bein, if it was offered in the open marketplace.
While this in effect is a theoretical exercise and the only likely demand might be expected for its amalgamation with adjoining land, Mr Bein has provided the only acceptable evidence as to the worth of industrial land. I am satisfied that his valuation as tendered resulted from his professional valuation considerations as to matters which would then deleteriously affect the value of the particular site.
His verbal evidence then as to the effect on that already discounted value, due to matters to be considered under section 14(5)(c) of the Act was of assistance to the Court in determining this matter.
I accept Mr Bein's evidence overall but to do so means that the appeals should be allowed and the unimproved value of the land determined in the amount of $21,000 as at 30th June 1993 and $25,000 as at 1st January 1995.
RE WENCK
MEMBER OF THE LAND COURT
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