Western Bakeries Pty Ltd v Chief Executive, Department of Natural Resources
[1997] QLC 11
•14 February 1997
|
BRISBANE
14 FEBRUARY 1997
Re: AV95-197 and 198 -
Appeals against unimproved valuations -
Valuation of Land Act 1944 -
Town of Roma
Western Bakeries Pty Ltd
v.
Chief Executive, Department of Natural Resources
(Hearing at Roma)
D E C I S I O N
As at 1 January 1995 the Department of Natural Resources, as it now is, assessed the unimproved value of two “Commercial” zoned lots in Roma as follows:
(1)(AV95-197) - Lot 2 on Registered Plan 66920 - 1,014 m² - situated corner of Bowen and Hawthorne Streets - unimproved valuation $62,000.
(2)(AV95-198) - Lot 11 on Registered Plan 836217 - 1,015 m² - Wyndham Street - unimproved valuation $49,000.
The appellant company through Mr R.E.O. Nugent who appeared at the hearing and conducted the case as the owner of the lands, appealed against the chief executive’s decision to value the lands in the above amounts. The grounds of appeal in each case were all-embracing but the thrust concentrated on the valuation being excessive because factors considered to be relevant had not been taken into account and that long-established relativity of valuations between the main street and a fringe commercial area had been significantly altered.
AV95-197
As it happened, Mr Nugent’s assumption that his purchase of the land relevant to this appeal (for $68,000 in October 1994) had influenced the valuation of at least that land, was proved to be correct. Indeed, as the evidence unfolded, that sale had been adopted as part of the basis for both valuations appealed against. It appears that this land had been subject of a previous purchase, when it had accommodated a dwelling. That purchaser had, as I understood the history of the land, from the examination of Mr Nugent, removed the dwelling and had the site rezoned to “Commercial”. There was no evidence put before the Court as to the earlier date of purchase or the price then paid, but Mr Nugent suggested that his purchase price was “top dollar” and would have been reasonable only if a specific proposal for its development had eventuated. He had been, it seems, negotiating for some time to secure a franchise for a “McDonalds” Restaurant. The negotiations did not come to fruition and, according to Mr Nugent, when he offered to sell the site to that organisation, he was informed it was of insufficient size by itself. The adjoining site was found to be unavailable for purchase. McDonalds Properties (Australia) Pty Ltd eventually purchased the diagonally opposite corner comprising a total area of 2,005 m² in April, 1996.
Mr Nugent believed that as a pure stand-alone commercial site, the valuation did not pay sufficient regard to parking restrictions on the Bowen Street frontage or a Council requirement for on-site car parking proportionate to the size of the floor area of any building development. He suggested that a pedestrian crossing serving a school opposite, was part of the problem, but again as I understood it, any development along Bowen Street which is now part of the main traffic route through Roma, would be similarly affected by parking restrictions.
Mr Nugent did not accept that the previously existing relativity between valuations should have been so significantly altered. He believed that sales in the main street (McDowall Street Business Centre) had been ignored and valuations unaltered in that street while Bowen Street had been increased based on “exorbitant” sales.
In his opinion the unimproved value of this land was at the relevant date $45,000.
The Department’s valuation was carried out by Mr R.E.D. Allison, registered valuer. He confirmed that previously existing relativity in the commercial area had been altered as a result of what he had interpreted as the demonstrated demand for land with Bowen Street location. He said that there was no sales evidence at the relevant date to show any change in the much higher level of values which had existed for McDowall Street properties.
He confirmed in his report that he had adopted the sale of the subject land as a basis for his valuation. In a schedule accompanying his valuation report it was disclosed that the sale to the appellant had been analysed to show an unimproved value of $66,800. He had applied the following valuation:
20.1168 m frontage @ $2,800/m $56,327
Plus
Corner influence @ 10% for 20 m
20 m @ $2,800/m x 10% $5,600
$61,927
Adopt $62,000
Then there was a sale of a 1,368 m² commercial vacant site on the western frontage of Wyndham Street, in the block between McDowall Street and Bowen Street, immediately to the south of the McDowall Street corner. That site had sold in December 1993 to show an analysed unimproved value of $109,150. That value had virtually been applied in full ($109,000) being $3,600/m frontage as at the relevant date valuation. In this matter, Mr Allison described the sale land as having superior location but with similar access and services to the land at the corner of Bowen and Hawthorne Streets. Mr Nugent however believed it was not capable of comparison due to the superiority of the location of the sale land.
Through Mr Allison was tendered a schedule titled “Additional Sales Bowen Street to Present Time”. Mr Allison saw the information subsequent to the relevant date of valuation as confirmation of the trend to increased demand in Bowen Street prior to the relevant date.
Contained in that schedule was information concerning a sale as at March 1994 of a corner commercial site of 1,002 m² on the southern side of Bowen Street, but with the longer frontage to the secondary Charles Street, for $73,000. Mr Allison stated that, at the time, that sale had been considered high, but then it resold for $75,000 in December 1994. Details of the resale had not been reported until after the relevant date valuation had been completed.
Had Mr Nugent’s purchase been a “one-off” sale then his evidence that the level of value had been influenced by his “specific proposal” may have carried persuasive weight. There was however, the evidence of the sale and resale of the site just mentioned, at the corner of Bowen and Charles Street, which indicates to me that rather than paying too high a price, Mr Nugent met the local market. If that is so, then there could be no better evidence as to the value of the subject land than the price paid by a purchaser who, regardless of his protestations, is seen as a prudent experienced operator in the local market and aware of the positive and negative features of the site. Mr Nugent’s relativity argument, or the extent of the increase in the valuation is not persuasive. It is not unrealistic that the Bowen Street lands should have become attractive for the accommodation of business premises exploiting the main road exposure provided by the thoroughfare through the town.
One of the reasons for regular valuations is to identify both changing levels of value and changing relativities, in order that the rating burden is fairly distributed. Mr Allison’s professional opinion in using Mr Nugent’s purchase as a reflection of the market, has, in my opinion, been vindicated and then further supported by evidence which was not available to him at the time at which he wrote the valuation.
The burden of proving the grounds of this appeal to show that the valuation was wrong has not been carried by the owner.
AV95-198
This land comprises an irregular shaped inside lot on the eastern frontage of Wyndham Street near the corner of Bowen Street and with rear access laneway surveyed to Bowen Street.
The factors which Mr Nugent saw as relevant in this matter included the commercial environment within which the subject property was located at the relevant date. It was his evidence that two adjacent premises to the south and two other shops to the north of the subject property were vacant and such vacancies would have indicated lack of commercial demand in an observant marketplace which, in his opinion, would have a depressing effect on market value. Further, due to the location of a drive-in shopping centre between Wyndham Street and Arthur Street to the west and northerly of Bowen Street, there were no street alignment shopfronts and no street generated commercial activity on the whole western frontage opposite the subject land. Further, in his opinion, no, or insufficient consideration had been given in the valuation to the limited kerbside parking availability in Wyndham Street which was being further reduced by Council tree-guard constructions planned at the relevant date of valuation and completed within the relevant valuation period.
Mr Nugent did not accept that there had been a 20% increase in value in the restricted local market since the previous valuation, nor that there had been the change in relativity of values compared with the main street (McDowall Street).
Mr Allison had used the same sales as in the previous matter. He described the first sale (corner Bowen and Hawthorne Streets) as being less valuable on a “per metre frontage” basis due to the location comparison. The second sale site was larger in area with wider street frontage but “slightly inferior” situation.
Mr Nugent disagreed with Mr Allison as to the sale property having inferior location. In his opinion that second sale site identified closely with the main street commercial area and was relatively more valuable. Mr Allison held the opinion that in Wyndham Street in this locality, the shopping centre development opposite the subject property had caused a shift of values southerly of the main street towards Bowen Street. He said that while there had been some sales evidence to support that contention at the time of the previous valuation, it was not sufficiently conclusive for a change in relativity to have been applied at that time. With hindsight, he now believed the previous valuation had erred on the side of conservatism. He had been aware of the vacancy situation as described by Mr Nugent but had carried out sufficient investigation not to be persuaded there was necessarily a lack of demand which would have at the date expressed itself in a lower valuation of the land.
Mr Allison’s valuation resulted from a series of calculations identifying the limited (11.17 m) street frontage, the effects of easement encumbrances, the benefit of rear access and the side lands attaching through the irregular shape to the rear of the effective street frontage.
On the evidence, Mr Nugent has created some doubt in my mind as to whether Mr Allison’s unit of value “per metre frontage” is not too high in comparison with his second sale, but then I am persuaded that the overall valuation is realistic in comparison with both sales, as a result of the value “per square metre” ($20) applied to 336 m² of unencumbered “side lands”.
On an area basis, the subject land with narrow frontage and a significant shape disability shows a unit of area value of less than $50 m², with easement encumbrances. The first sale showed near $56 m² for a regular corner lot of similar size but in an inferior location and the second sale showed near $80 m² for a larger regular shaped inside lot in, in Mr Allison’s disputed opinion, a “slightly inferior” location.
Mr Nugent is firmly of the opinion that Mr Allison should also have included a rental comparison component into his valuation considerations in an effort to establish correct relativity within the business centre. In theory, rental potential is not an unrealistic tool to check market relativity, provided of course, like premises are capable of comparison with precisely like premises. Of course, the task of the Department was to assess the unimproved value of the land, not improved value. For weight to be placed on Mr Nugent’s rental relativity argument, it would have been necessary for him to have at least carried out the task he criticised Mr Allison for not doing, and provided the Court with hard evidence for critical examination.
In the end result as the Land Appeal Court said in Fischer v. The Valuer-General (1983) 9 QLCR 44 at 46 -
“The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land” and further, still at 46, “Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence.”
Mr Nugent’s complaint as to the significance of the increase in the previous valuation is not an uncommon one, because of the revenue gathering implication, but again, as the Land Appeal Court said in Tow v. The Valuer-General (1978) 5 QLCR 378 at 381 -
“Subject to certain statutory requirements as to the onus of proof and the restriction of the appellants to the grounds of appeal specified in their notice of appeal, the duty of the Land Court and of this Court is to make determinations of unimproved value based on the evidence presented to it by the parties and conforming to the aforementioned statutory formula.
It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation. The Valuer-General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result.”
The evidence of Mr Allison was that in reality the increase may have been as large as it was because the subject land and its surrounding neighbours were probably valued too conservatively on the previous occasion.
In all the circumstances Mr Nugent has placed no substantive evidence before the Court which would allow the grounds of appeal to show that the valuation appealed against is wrong.
Summary of Findings
Both appeals are dismissed and the valuations of the chief executive affirmed.
RE WENCK
MEMBER OF THE LAND COURT
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