Westenra Pty Ltd

[1995] QLC 26

[1995] QLC 26

 

  LAND COURT

BRISBANE

28 APRIL 1995

Re:     Application to freehold -
  Determination of purchasing price
  Special Lease 06/100090

Lessee:  Westenra Pty Ltd

DECISION

This is a reference to the Court under s.207 of the Land Act 1962 for the determination of the purchasing price (to freehold) of the land contained in Special Lease 06/100090.
           The application was received by the Minister on 30 July 1993 which date by virtue of the provisions of s.207 of the Act becomes the date as at which the price is to be ascertained.  The section further prescribes that in ascertaining value the purchasing price is the amount which in the Court's opinion

"   experienced persons would be willing to pay for an estate in fee simple in the           land if it was offered for sale on the reasonable terms and conditions a bona          fide seller would require      "

In the subject case the Minister determined the value at $112,000. Being dissatisfied with that sum the lessee had the matter referred to Court. In the hearing of the matter evidence was led through Mr SRS Montgomery, registered valuer in the employ of the Department of Lands, to a sum of $110,000. The lessee through Mr KG Batten, director, prefers a value of $94,000 or at the most $100,000. These sums were the unimproved values applied to the subject land for rating and taxing purposes under the provisions of the Valuation of Land Act 1944 as at 31 March 1993 and 30 June 1993 respectively. It may be observed that the relevant date for ascertaining the purchasing price for freeholding is one month later.
           The subject land which is described as Lot 6 on Plan WD6598 containing an area of 2229m² is situated in Supply Court and within the Gold Coast Crown Industrial Estate.  The lease was taken up by Westenra Pty Ltd and developed in accordance with the conditions.  Having satisfied those conditions the lessee became entitled to apply for a freehold title.  It is the submission of Mr Batten that in the circumstances a conservative approach should be taken to the valuation.  He is prepared to accept the rating value applied by the Department as at 30 June 1993.  In his evidence he referred to some sales which it is accepted were made under financial duress or by DBIRD and therefore do not conform with the test of value required by the Act. 
Mr Montgomery in his evidence dealt with sales on normal market transactions as well as offers and acceptances by lessees of Ministerial determinations for freeholding purposes. He contended for a value of $110,000. He does not resile from the decisions made by the Department on the value of the subject land for rating and taxing purposes. His case is based on principles found in re - Determination of unimproved value for freeholding purposes - GHPL 10/3109-10 (Charleville District) (1990-91) 13 QLCR 236. In that case in dealing with the sort of hiatus raised in this case the Court at pp.238/9 said:

"Under the Land Act, (the Act which prescribes the principles for making this determination), the Court is required to ascertain a value which in its opinion experienced persons would be willing to pay for an estate in fee simple in the land, assuming that the land was in an unimproved state and were offered for sale on such reasonable terms and conditions as a bona fide seller would require (s.141).  When valuing the land under the Valuation of Land Act as one unit, the test is similar (s.12).  One, however, (the latter), is for rating and taxing purposes and the other (the former) is for the purpose of alienation of the land in fee simple.  Dixon J, as he then was, in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Co. of SA Ltd (1946/47) 74 C.L.R. 358 drew a distinction between the ascertainment of a value for taxing purposes and the ascertainment of a value for compensation purposes, notwithstanding that the test of value in both instances was the same. This is what he said at pages 373/374:

`...I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases.  In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax.  While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test.  In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.'

It is the submission of the Crown that the alienation of the fee simple is akin to the converse of a resumption and that the vendor (the Crown) is entitled to have the benefit of the more liberal estimate spoken of by Dixon J.  I find that there is force in this submission.  The sale of the fee simple, relatively speaking, is an alienation once and for all and thus has more affinity with the attitude the Court takes to resolve compensation than it does with the attitude the Court takes in ascertaining value for rating and taxing purposes.  "

The application of these principles is evident in the subject case.  Mr Montgomery referred to four sales for purposes of direct comparison.  Briefly these were -

S1 - Smith Street Estate - 1741m² - $54 per m².

S2 - Jennings Estate - 2580m² - $58 per m².

S3 - Jennings Estate - 1594m² - $63 per m².

S4 - Jennings Estate - 3230m² - $56.50 per m².

The subject lot which has an area of 2229m² is valued in a developed state ex structures at $55 per m² or $122,595 from which an allowance is made for ground works of $12,038.75 leaving an unimproved land value of $110,000 in round figures.  That much appears reasonable on the evidence.  Mr Montgomery supports his opinion with settled transactions for freeholding purposes which on a fully developed basis ex structures reflect values ranging from $60 to $65 per m² - four of these cases are within the subject industrial estate.
           In distinguishing the value applied for rating purposes as at 30 June 1993 he said that the Department takes a conservative approach in applying sales evidence for rating purposes whereas with freeholding applications the Department adopts a more liberal approach to the market.  In fact he seemed to be of the opinion that the value applied to the subject land is not up with the top bracket of the sales evidence.
           When the evidence is put side by side the attitude taken to the valuation in my opinion is in conformity with a reasonable application of the principles contained in the case cited.
           Accordingly the unimproved value of the subject land for the purpose of conversion of the tenure to a freeholding tenure is determined in the sum of $110,000.

President of the Land Court