Vybiral v Chief Executive, Department of Lands

[1994] QLC 15

[1994] QLC 15

 

  LAND COURT

BRISBANE

20th May, 1994

Re:     Determination of Third Period Rent for
  SL 26/45705, Innisfail District, and

Determination of unimproved value of
  SL 26/45705.
  Reference: V93-288.

P. and K.A. Vybiral
  v.
  Chief Executive, Department of Lands

D E C I S I O N

The above matters came before the Court in Innisfail on 20th April, 1994, for hearing and determination.  Fuller particulars are:-

reDetermination of Rent - SL 26/45705 - Lot 320 on Plan NR 800921, Parish of Johnstone - 5104m² - Date of Commencement of Third Period of lease 1.8.92 - Chief Executive Recommendation of Rent $2700 per annum (3% of Prescribed State Valuation of $90,000 - Unimproved Capital Value $88,000 plus clearing $2,000).

reDetermination of Unimproved Value - SL 26/45705 - Lot 320 on Plan NR 800921, Parish of Johnstone - 5104m² - Relevant date of valuation 31.3.92 - Chief Executive unimproved value $88,000 ($17.25 per m²).

As can be observed, each matter relates to the same Special Lease which is situated in Clifford Road about 3 kms north-west from the Innisfail Post Office.  The land is zoned "General Industry" under the provisions of the Johnstone Local Government Town Planning Scheme.  It is utilised as an improved industrial site and forms part of the Innisfail Industrial Estate which was a project funded by the Queensland Government.  Erected on the land is a large steel frame manufacturing warehouse with a masonry block office to the street frontage.
           Called in evidence by the appellants was Registered Valuer Kevin Francis Malone who is a director of the firm formerly known as Baillieu Knight Frank.  Mr Malone values the land at $65,000 ($13 per m²) as at the relevant date of 31st March, 1992, and adopts the same unimproved value for the assessment of rent.  The appellants do not contest that a value of $2,000 should be added to the unimproved value of the land for rental assessment purposes.  Accordingly, if the rent is to be assessed at 3% of the value of the leased land in its prescribed state as at the date of the commencement of the third period of the lease (1st August, 1992) then the resultant rent based on Mr Malone's valuation is calculated to be $2,010 per annum.
           Mr Malone says the subject land is a level regularly shaped site adjoined to the north and south by various other industrial-type users comprising mainly manufacturing and engineering type businesses.  The Industrial Estate was developed about 15 years ago and comprises 13 large industrial lots and 2 smaller lots.  Of the 13 large lots, Mr Malone says 6 are still vacant and have been so since the Estate was first subdivided.  Opposite the subject land in Clifford Road is existing cane land.
           Mr Malone told the Court that the State of the Innisfail industrial market at the relevant dates for the valuation limited the amount of sales evidence which could be used as a basis for valuation.  There were no sales of unimproved properties during 1991 and Mr Malone's enquiries revealed only 3 reasonably heavily improved property sales.  These sales have been analysed and used by Mr Malone to value the subject land.  His searches did not disclose details of a sale of vacant land in Laurie Street, Innisfail, which the respondent Chief Executive introduced as a basis of valuation.  More details about this sale later.
           Brief details of Mr Malone's analysed sales are -

Sale No 1 - Lot 18 on Plan 128161 - 1012m² - sold on 6.2.91 for $150,000 - situation 39 Station Street.  Analysed unimproved value $40 per m².

This is a regular shaped site filled and developed with an industrial shed by a local builder.  Mr Malone considers this sale property to be superior to the subject land and points out that it is a much smaller site.

Sale No 2 - Lot 1 on Plan 27614 - 1214m² - sold on 29.5.92 for $80,000 - analysed unimproved value $40 per m² - situation Palmerston Highway.

Mr Malone describes this site to be regularly shaped with a highway frontage.  It was purchased by an owner/occupier and again Mr Malone sees it to be superior to the subject land and stresses that it is also a much smaller site. The sale took place just after the relevant date for valuation.

Sale No 3 - Lot 312 on Plan NR 7400 - 1530m² - sold on 30.11.92 for $155,000 - analysed unimproved value $22 per m² - situation Clifford Street.

This again is a regularly shaped site again purchased by an owner/occupier.  Again Mr Malone sees it as being superior to the subject land and once again refers to its much smaller size.  It is to be noted that this is a post relevant date sale.

Mr Malone sees the sale in Clifford Street (No 3) to be the most comparable of the sales notwithstanding that it is after relevant date sale.
           Mr Malone told us that the 6 remaining vacant lots in the Industrial Estate were put to tender by the Department of Building Industry and Regional Development in September 1993 and attracted tenders significantly less than the upset prices.  Lot 345 on NR 7400 which adjoins Lot 312 on Plan NR 7400 (Mr Malone's Sale No 3) had a reserve price of $70,000 and the highest tender was $21,100 with a tender of $16,000 from an adjoining land owner.  Lot 327 with an area of 4400m² had a reserve price of $90,000 - highest tender $65,000.  Lot 328 also with an area of 4400m² had a reserve price of $90,000 - tenders received were $31,050 and $65,500.  Lot 343 containing 3696m² had a reserve of $85,000.  There was only one tender for $23,050.  Mr Malone says none of the tender prices were accepted by the Department.
           Mr Malone has had discussions with Mr Herb Collins from Williams Estate which owns a large parcel of industrial land on the southern outskirts of Innisfail.  Mr Collins has been unable to obtain expressions of interest for a small industrial subdivision over the last four years.  The asking prices are $90,000 for a 3000m² site ($30 per m²). 
           The Chief Executive's recommendation as to rent and unimproved value was made by Departmental Registered Valuer Stephen Allan Cross who told us that he has had regard to all sales of industrially zoned and/or developed land within Innisfail.  Of this evidence, Mr Cross sees the most comparable to be -

Lot 18 on RP 128161 - 1012m² - De Brincat to Parakus on 6.2.91 for $150,000 - analysed unimproved value $55,000 ($54.35 per m² filled and levelled) - applied unimproved value $50,000 ($49.40 per m²).  Situation 39 Station Street - zoning "Light Industry".

It is to be noted that this is Mr Malone's Sale No 1.  But Mr Cross sees the sale property to be inferior to the subject land due to the much larger size of the latter, this notwithstanding that the sale property is better located.  Mr Cross sees this sale to be the best evidence available within the prime industrial area of Innisfail.

Lot 8 on RP 713521 - 1012m² - De Bricat to Department of Administrative Services in October 1991 for $55,000 ($54.35 per m²) - analysed unimproved value $53,500 ($52.90 per m²) - applied unimproved value $39,000 ($38.50 per m²).  Situation Laurie Street - zoning "Light Industry".

Mr Cross sees the subject land to be superior in access, location and size to this sale land.  He told us that the analysed unimproved value was not applied in full in the 31.3.92 relevant date valuation since it was considered that the sale price was slightly high.

Lot 1 on RP 727614 - 1214m² - CTD Plumbing Supply Pty Ltd to Davenport on 27.5.92 for $80,000 - analysed unimproved value $54,000 ($44.50 per m²) - applied unimproved value $34,000 ($28 per m²) - situation Palmerston Highway - zoning "Light Industry".

This is Mr Malone's Sale No 2.

Mr Cross sees this sale property to be in a marginally superior position to the subject land as it fronts the highway but it is much smaller and as a result inferior as a site.  Mr Cross points out that it is situated in an 80 km speed zone.

Mr Cross is familiar with the attempts made by the Department to sell the lots in the industrial estate by tender but he feels this evidence should not be taken into account since it is a post relevant date event.  In addition, he says that more recent offers for lots in the estate have come much closer to the reserve prices.
           Now these cases are really straightforward valuation contests.  The basic sales evidence for industrial lots in Innisfail is not ideal since the best evidence appears to be the sale of Lot 18 in Station Street, which was a heavily improved sale.  But there is not a great deal of difference in  the valuers' analyses of the sale.  Mr Cross deduces a value of $55,000 for the land filled and levelled.  Mr Malone deduces a value of $56,540 on the same basis.  But Mr Malone appears to have erred in comparing Sale No 1 land with the subject land on an unimproved basis; i.e. without the filling, since the subject land did not require filling.
           I agree with Mr Cross that the evidence about the unsuccessful tenders is of no weight in determining the unimproved value of the subject land.  They are tantamount to inconclusive offers to buy and sell and it is well recognised that such offers are not evidence as to value - vide McDonald v. Deputy Commissioner of Land Tax - (1915) 20 C.L.R. 231. These remarks also apply to the unsuccessful attempt by Mr Collins to sell industrial land to the south of Innisfail.
           These cases really turn on what is an adequate allowance for the differing sizes of lots when valuing the subject land in relation to sales evidence.  I feel that Mr Malone has made a much greater allowance for size than can be justified.  This, coupled with the matter of filling which has already been discussed, means that his valuation of the subject land should be considerably adjusted upwards.

Doing the best I can and taking into account the evidence about the depressed state of the industrial land market in Innisfail, I propose to determine the unimproved value of the subject land in the sum of eighty thousand dollars ($80,000).
The provisions of the Land Act of 1962 applicable at the relevant time in this case in so far as they relate to the determination of rent for Special Leases does not require that the rent be assessed at the rate of 3% of unimproved value. Nonetheless there has been no suggestion in this case that a rent fixed at 3% of unimproved value is excessive or unreasonable. I propose then to follow the evidence on the point. I make the following determinations:-

Re Rental Determination - The rent to be charged for SL 26/45705 during the third period of the lease is determined in  the sum of $2460 per annum being 3% of a prescribed state valuation of $82,000 ($80,000 unimproved value plus $2000 for clearing).

Re Determination of unimproved value - The appeal is allowed, the determination by the Chief Executive is set aside and the unimproved value of SL 26/45705 being Lot 320 on Plan NR 800921, parish of Johnstone, is determined in the rounded off sum of eighty thousand dollars ($80,000) ($15.50 per m²).

Member of the Land Court