Dewar v Brisbane City Council [2003] QLC 32

LAND COURT OF QUEENSLAND CITATION: Dewar v Brisbane City Council [2003] QLC 32 PARTIES: Gregory John Dewar (applicant) v Brisbane City Council (respondent) FILE NO: VC2002/0812 DIVISION: Land Court of Queensland PROCEEDING: Appeal against a Categorisation under the City of Brisbane Act 1924 DELIVERED ON: 8 May 2003 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Dr NG Divett ORDER: The subject land should be Category 7 for the period commencing 1 July 2002. CATCHWORDS: Appeal by land holder – categorisation for differential rating – predominant use of the land – visual, spatial and economic aspects – impact of character housing restrictions – impact of parking restrictions – residential category determined – City of Brisbane Act. COUNSEL: Mr E Morzone SOLICITORS: Brisbane City Council Legal Practice APPEARANCES: Mr G Dewar for the appellant Mr E Morzone for the respondent -- 1 of 12 -- 2 Background: [1] This matter relates to an appeal by Mr Dewar (the appellant) against the categorisation of land by the Brisbane City Council (the respondent). The land is described as Lot 3 on RP 19730, Parish of Enoggera, and is located at 481 Milton Road, Auchenflower. The subject land has an area of 463 m² and is zoned as “Character Residential Area” under the City Plan 2000 of the Brisbane City Council. [2] The appeal relates to the categorisation of the subject land for the purpose of making and levying differential general rates for the quarter commencing 1 July 2002. The respondent determined that the appropriate category for the subject land was Category 2. The appellants argues that the land should be Category 7. [3] The primary land use codes reflect the predominant use for which the property is utilized, and also considerations in respect of the visual, spatial and economic aspects of the land. It is also noted that “area” is not the principal basis for determining the “predominant use”. [4] Gregory John Dewar appeared and gave evidence on his own behalf. Mr E Morzone of Counsel, instructed by the Brisbane City Council Legal Practice appeared for the respondent. 2. The Nature of the Land - [5] The subject land is located on the northern side of Milton Road, and is a rectangular parcel of width 10.2 metres and depth 45.4 metres. The land falls from Milton Road towards the rear. The land is developed with an old shop front on the Milton Road alignment, with an attached residential area at the rear of the shop front. There is a steep driveway along the eastern side of the shop front, passing underneath an open verandah to the eastern side of the residential area. There is also a paved parking area to the rear of the residential area. The shop front has exterior cladding of chamfer boards, and the residential area is fibro clad. [6] The subject land is located along busy Milton Road, and is in a separate catchment area to the main Auchenflower local shopping area further to the east towards the City. It is agreed that at the relevant date there was total parking restrictions along both sides of Milton Road between 7 am and 7 pm Monday to Friday. It is not contested that parking along Milton Road has been a problem for some time, and that situation has had wide publicity. [7] The nature of the shop front was clearly defined in photographs supplied to the Court (Exhibit 3). The shop front has plate glass windows towards Milton Road, and was -- 2 of 12 -- 3 previously used for commercial purposes. Mr Dewar concedes that there was an existing sign upon the front of the shop front at the relevant date. However he advises further that the sign was not in use as it reflected the business of the previous tenants, who had previously vacated the premises about late 2000. The premises has been vacant since that departure, except for occupation of the rear residential unit by a family member of Mr Dewar. That old sign has subsequently been painted over. [8] It is agreed that the old shop front occupies an area of 35 m², and the rear residential unit has an area of 100 m². The previous tenant fully occupied both the old shop front and the residential unit. Mr Dewar confirms that prior to the departure of the previous tenant, the old shop front had been used as a display area. [9] Across Milton Road Mr Dewar confirms that there are commercial buildings at 480, 478 and 476 Milton Road. He advises that 476 Milton Road is at the corner of Milton Road and Park Avenue, where traffic lights are located. The commercial premises at 476 Milton Road has subsequently been vacated. Immediately opposite the subject land are residential premises at 482, 484 and 486 Milton Road. The subject land is three lots removed from a side street (Markwell Street) which is regularly used for parking purposes by city commuters. The zoning of the land across Milton Road is for low medium density residential purposes. [10] The adjoining parcel to the west of the subject land at 483A Milton Road is a commercial shop front, used at the relevant period as a training centre. Mr Dewar advises that those tenants have also subsequently vacated that premises because of parking restrictions in Milton Road. That property also has a parking area towards the rear, similar to the subject land. Those tenants have subsequently moved to much larger premises further west on Milton Road. 3. The History of the Appeal - [11] Mr Dewar argues that the changes to the parking availability along Milton Road has been the major impact affecting the commercial viability of all properties fronting Milton Road in that locality. Prior to the introduction of complete parking restrictions along both sides of Milton Road by the respondent in about 2000, the subject property had been used successfully by a long standing commercial tenant. That tenant had an existing lease of the premises since 1986, with the right to continue occupation under the lease for a further 18 months. However Mr Dewar explains that subsequent to the parking restrictions coming into force, the tenant had been able to exercise his right to retire from the lease a few months later. -- 3 of 12 -- 4 [12] Mr Dewar attributes the decision to withdraw from the lease as a direct result of the parking disability then placed upon the land. He notes that the former tenant had competed as a successful business until that time, and gave as his reason for leaving that a lack of parking spaces was damaging their business operations. He notes that similar impacts have been experienced on other commercial properties in the Auchenflower centre, and all commercial properties on the northern side of Milton Road are now vacant, due to a lack of capacity to display goods at those centres. The parking restrictions were apparently linked to major redevelopment works along Coronation Drive. [13] Since the loss of the previous tenant Mr Dewar has sought consistently to advertise through agents. He advises that his preference had been to seek to replace the previous tenant arrangements, which had been leased at about $2,000 per month. He argues that his more realistic objective now was to rent the property either on a directly residential basis, or upon a mixed residential basis, where a tenant could operate a small business from their home. He argues that it is on that basis that he believes the correct category should be Category 7. [14] Mr Dewar notes that advice to the respondent from an agent (Exhibit 3, page 82), in respect of likely rental returns, indicate that estimates of $160 per week for purely residential purposes, or $200 per week for commercial purposes may be possible. He argues those declined rental levels from the former rate of $2,000 per month ($500 per week), reflects the impact of the parking limitations. [15] Mr Dewar advises that following the parking restrictions imposed by the respondent, he had developed the parking at the rear on the subject land. Apparently the previous tenant had tried to utilize that parking, but found access to the site unworkable. Mr Dewar notes that because of the limitations in area of the site, and difficulties in accessing under the verandah area, the rear parking experiment proved unsatisfactory. [16] In an attempt to gain some utilization of the premises, Mr Dewar’s adult son had personally occupied the residential unit area. Mr Dewar confirms that he is the sole registered owner of the property. His son had been in residence at the relevant period. 4. The Legislation – 4.1 The Land Use Codes - [17] The primary land use codes possibly relevant in this matter were outlined in the definitions of the Resolution of Rates and Charges of 1 July 2002 supplied in Exhibit 3, page 60 as follows:  Code 02 – single unit dwelling (dwelling house) -- 4 of 12 -- 5  Code 11 – single shop  Code 61 – mixed residential purposes  Code 70 – secondary residential purposes The primary land use codes reflect the predominant use for which the property is utilized, and also considerations in respect of the visual, spatial and economic aspects of the land. It is also noted that “area” is not the principal basis for determining the predominant use. [18] If I look first at Code 02 (single unit dwelling), I note that to satisfy that code the premises must, among others, represent the “principal place of residence of the owner”. Mr Dewar advises that his son did reside in the subject land, but that his personal place of residence as the sole owner was at 35 Blackbutt Place, Brookfield. I note that the meaning of “owner” under the City of Brisbane Act 1924 (s.2) relies upon the meaning under s.4 under the Local Government Act 1993. That defines an “owner” relevantly as a registered proprietor of freehold land. In the context of the subject land that is Mr Dewar personally. [19] If I then look at Code 11 I note that a “single shop” may also include attached accommodation, but the shop cannot be a restaurant, which is separately defined under Code 17. In placing the subject land into Category 2, the respondent has determined that the predominant use for which the land is used, or in the opinion of the Council could potentially be used, was for a commercial activity as a shop. [20] If I then look at Code 61, I note that Mixed Residential Purposes is taken to mean a definition contained in the Resolution of Rates and Charges 2002/2003, as approved by the Council as part of its budget provisions. Those latter provisions described Mixed Residential Purposes, as follows: “Mixed Residential Purposes: Residential premises from which an owner or occupier conducts a non-residential or commercial activity. This specifically does not include: (a) owners or occupiers who may work from home and are either self-employed or working from home for their employer either permanently or temporarily, unless any such activity: (i) involves the sale, manufacture or provision of goods or services on site; or (ii) is the place of employment of any other persons other than the owner or occupier; or (iii) involves the reception of customers to view, purchaser or consult on any such goods or services on site; -- 5 of 12 -- 6 the activity does not exceed the “assessment criteria” for differential rating Category 1 of Attachment A of the Land Use Codes for 2002/03. or (b) owners or occupy who are engaged in a hobby or pastime that does involve the sale, manufacture or provision of goods or services and/or the reception of customers to view, purchase or consult on any such goods or services on site, including low-key kerb-side sales and stalls, provided any such activity does not exceed the “assessment criteria” for differential rating Category 1 of Attachment A of the Land Use Codes for 2002/03. Any residential premises that exceeds the “assessment criteria” for differential rating Category 1 of Attachment A of the Land Use Codes for 2002/03 will be deemed to be mixed residential purposes.” 4.2 The Categorization Process [21] In defining the category into which the subject land is to be applied, I note that the category is defined in respect of its general criteria, and also its specific criteria. In each case the specific criteria as it relates to the subject land, is always subject to satisfying the relevant general criteria. In respect of Category 2 land the general criteria is defined as follows: “To meet this criterion the predominant use for which that land is presently utilised, or in the opinion of the Council could be potentially utilised by virtue of its improvements, must be – (a) for carrying out a commercial or industrial activity other than rural pursuits identified in Category 3 and located outside the boundaries of the CBD or, (b) for other than residential purposes, mixed residential purposes or secondary residential purposes. Where the land has erected a building or buildings used or intended for a use normally to that of a commercial or industrial usage, then the predominant use will be determined usage, then the predominant use will be determined by reference to the visual, spatial and economic aspects of the use.” The specific criteria under Category 2 is seen to be as a “shop”. [22] As noted previously the “predominant use” is a use, for which, in the opinion of the Council, the property is being used or could potentially be used, and that use is determined by its visual, spatial and economic aspects of that use. [23] The meaning of “residential purposes” is relevantly defined as: -- 6 of 12 -- 7 “Residential purposes. Land for which the predominant use is; (a) residential and; (b) where the land represents the principal place of residence of at least one person who constitutes the owners of the land and; (c) for the exclusive occupation by one family, and may include; (ii) premises where the owners may work from home either permanently or temporarily, unless any such activity meets the definition of mixed residential purposes specifically within this document.” [24] The meaning of “secondary residence” is defined relevantly as: “Secondary residence: A dwelling house or dwelling unit that is not the principal place of residence of at least one person who constitutes the owners, and may or may not be rented to at least another occupant, including a member of the owners’ family. This definition includes vacant display homes providing they are not being utilised as a sales or site office.” [25] If I then consider the requirements of Category 7 I find in respect of the subject land the general criteria is defined as: “To meet this criterion, the predominant use for which that land is presently utilised, or in the opinion of the Council could potentially be utilised by virtue of its improvements, must be mixed residential purposes or secondary residential purposes.” Subject to those general criteria the specific criteria are seen as: “Land to which the following land use codes apply – 61 Mixed Residential purposes 70 Secondary Residential purposes” where the land is predominantly used by residential purposes, and does not meet both the general and specific criteria of Category 2 or 5.” [26] In understanding the test for the “predominant use” of the non-residential component of the subject property I note that the three component attributes are defined as follows: “(a) Visual. The visual impact any non-residential activity may have on the amenity or character of the neighbouring area. In measuring this characteristic, consideration would be given, but not restricted to, attributes such as signage, provision of car parking, increased traffic volume and the degree to which the premises differs visually from its neighbouring properties because of its non-residential activity. -- 7 of 12 -- 8 (b) Spatial. The proportion of the total land or building area which is dedicated to the carrying out of a non-residential activity. (c) Economic. Where a portion of the property, regardless of visual or spatial aspects, is used for non-residential activity which forms a portion of the occupant’s income.” 4.3 Brisbane City Plan 2000 – [27] In seeking to understand the impact of the zoning of the subject land as Character Residential Area, I note that planning regime is designed primarily to accommodate pre- 1946 houses and architecture. All such lands are also included in the Demolition Control Precinct, which basically means that any buildings cannot be demolished or modified without the approval of the Council. As a result of those preservation requirements the current improvements and appearance of the subject land must be retained in its existing condition. The use of the building for either a Category 2 or 7 would be a lawful use under that plan. 5. The Use of the Land – [28] Mr Dewar argues that as a result of the inability for potential customers of a business to park in Milton Road, there is no capacity to display and sell goods from the premises. He argues that the presence of the former tenant’s sign upon the subject land was of a temporary nature, having since been painted over. In respect of the significance of a capacity to “display and sell goods” in Category 7 lands, Mr Dewar refers to the Criteria for determining Categorisation where non-residential activity co-exists with predominantly residential activity”. (Attachment A to Land Use Codes – Exhibit 3, page 67). [29] The main thrust of those criteria relate to whether land should be included in Category 1 (Residential) or Category 7 (Mixed Residential and Secondary Residential). In assessing whether an activity must be low key in its nature, size and employment, one criteria for both Category 1 and Category 7 is that “the activity does not involve the display of goods visible from outside the dwelling, with the exception of low key kerb-site sales and stalls. (Assessment Criteria 2). The inference is that if display of goods is visible from outside the dwelling then the land should not be in either Categories 1 or 7. Either category must also not involve the display of any signs, no larger than 0.6 m² in area. Mr Dewar agrees that the former shop front “display area” did require the subject land to be included within Category 2; but he is now argues that as a result of the lack of kerb-side parking in Milton Road that former display area has no significance. -- 8 of 12 -- 9 [30] Mr Dewar further argues that while the respondent Council may consider that a commercial operation may be operated from the subject premises, the evidence of the last two years of vacancy refutes that conclusion. He argues further that the economic rental appraised by the agent to the respondent, confirms that outcome. He notes that the only reasonable potential use now is for someone to have a small business without the need for the display and sale of goods. [31] However Mr Morzone refutes that conclusion, noting that the land cannot be included in Category 7 unless its predominant use is for residential purposes. He notes that is not the case with the subject land. He notes further that during the relevant period the vacant premises was advertised for rental to a third party, not the owner who is the registered proprietor. Mr Morzone argues that the purpose of Category 7 is to provide a concession to owner/occupiers rather than to third parties. However it is noted that Category 7 relates to land which is not owner/occupier, as long as its sole use is for residential purposes. [32] Mr Morzone summarizes the case for the respondent by arguing that there are really two tests for determining the categorisation. The first is that the land is predominantly used for residential purposes. The second test, in his opinion, is whether the premises can be used for a commercial activity. The predominant use of the land should then be determined on its visual, spatial and economic aspects. Mr Morzone argues that the evidence reveals that visually the building resembles a shop; however he agrees the spatial test favours residential use. He notes further that the best guide from an economic perspective lies in the agent’s estimate of potential rentals. He argues that on those figures the residential component does not dominant, and he argues that the impact of the shop is the dominating aspect. [33] Mr Morzone advises that if the “owner/occupation” requirement precludes Category 7; but the predominant use is seen to be residential; then the only option available for the Court is Category 6. However that is a catch-all provision, providing no financial benefit to the appellant in the form of rate relief. He notes that precedents have directed a further test for “dominance” in this matter; but argues that is not necessary in the light of the need for “owner/occupation” in Category 7. [34] Mr Dewar rejects that argument claiming that the subject land was the principal place of residence for his son, who is part of his family. He argues further that Category 7 also includes provision where the land is not occupied by the owner. Mr Dewar further argues that in its rejection of the objection the Council had relied upon its prime reason for Category 2 because of the capacity to display and sell goods. (Exhibit 3, page 24). -- 9 of 12 -- 10 Decision: [35] Under the City of Brisbane Act 1924 the respondent is charged under s.81 with establishing criteria and categories for the levying of rates. Where an owner is aggrieved by the categorisation, the appellant may then appeal to this Court (s.89), and the Court may either set aside the categorisation and include the land into a different category, or disallow the appeal. (S.91(1)). [36] On the evidence it is agreed that at the relevant date the front part of the premises were vacant, and has remained so until the hearing. However the question to be addressed is what was a “reasonable opinion” that could be drawn by the Council in exercising its discretion under its published criteria for determining the categorisation. The Land Use Codes – [37] In seeking to understand the “predominant use” of the subject land, I note that it is agreed that from a spatial perspective the residential aspect represents 74% of the total building area. From a visual perspective the appearance of the old “shop front” would convey an impression of a commercial nature, although even if the building was 100% used for residential purposes, which it could be under the zoning, then the same appearance would prevail. That is really the result of the “residential character” nature of the zoning. Because the external appearance cannot be changed, without special approval of the Council, it would be unfair to judge the use of the building predominantly on that basis alone. [38] While the purpose of the “Character Residential” zoning is aimed at preserving the older character of an area; as land use changes occur, the nexus between a conventional old shop appearance and its potential later use, may need a revision of the previous conceptions about appearance. On that basis in a “Character Residential area” I place lesser weight upon the visual appearance of the property. [39] The impact of visual aspects where heritage restrictions also restricted the alterations of a building, was considered by this Court in Trexmist Pty Ltd v Brisbane City Council (VC00-57), 18 July 2001, to be reported. That matter also considered the implications of the “dominant purpose” in identifying the category under which rate liability is to operate. I believe there is some direct analogy in that outcome to the current matter. [40] If I turn then to the economic factors I find that previously as a commercial use its return on investment reflected about $2,000 per month. In its current environment the return is now seen to fall between approximately $640 (residential) and $800 (commercial) per -- 10 of 12 -- 11 month. If one accepts that the commercial purpose at the relevant date was greater than the residential purpose, then the economic aspect would favour the commercial purpose. But the question to be answered is what level of commercial is now envisaged in 2002. Mr Dewar argues that the commercial activities are now likely to reflect only a small business as an adjunct to the residential occupation. On balance I believe that the predominant use at the relevant date could be concluded to be for residential use with some adjunct business activity associated with the residence. The Use of the Land – [41] In respect of Mr Dewar’s reliance upon his perceived lack of display area or potential sales on the subject land, I believe the current large plate glass window suggests that goods could be placed on display in that location. Indeed that was occurring in the adjoining “Fitness Centre” at the relevant date, which has similar window areas. However the whole purpose of displaying goods for commercial purposes rests upon the principle of passing customers. Much of that commercial viability rests upon passing traffic and ease of access to the display areas by potential customers. [42] With the current restrictions upon parking or stopping in Milton Road, the effectiveness of the possible display areas of the subject land must be questionable. The continued vacancy for an extended period of two years supports that conclusion. However that may also have been partly influenced by a lack of reality to the current market situation on the part of the owner, who is now accepting that he must accept a lesser return on the property. But on balance I believe that the commercial viability of the subject land has been impacted at the relevant date. The question is has it been reduced to a level where it is no longer commercially viable? The Categorisation – [43] In approaching this task I look first to the definition of “Mixed Residential” purposes, and note such purposes may be undertaken by either an owner or occupier. While it is argued by the respondent that the building was vacant at the relevant date, Mr Dewar advises that his son was in residence there at that time. However the “Mixed Residential Purposes” definition requires that either the owner or occupier should conduct a non-residential or commercial activity from the premises. That has not occurred. There was no evidence that Mr Dewar’s son used the premises other than for residential purposes. [44] I then turn to whether the general definition of “Residential Purposes” must be considered in the context of deciding whether the subject land could be considered as for “Mixed -- 11 of 12 -- 12 Residential Purposes” under Category 7. However I note that the definition of “Residential Purposes” is specifically designed to satisfy the requirements of Category 1, which provides a special concession to single owner occupied residences. I believe that more restricted understanding of residential purposes is not conditioning the meaning of “Mixed Residential Purposes”, hence the separate identification in the definitions. On that basis the subject land does not have to be the principal place of residence of the owner or his family. [45] I turn then to whether the subject land could be defined as the “Secondary Residence” of the owner (or his family). The specific criteria for that category is that the land is predominantly used for residential purposes, and does not meet the general and specific criteria of Category 2 or Category 5. The specific criteria is of course subject to the general criteria for that category. On that basis I believe that the meaning of residential purposes in the specific criteria should be taken to mean in the wider context of residential use, and not in the more restricted definition for Category 1 residential use. On that basis the subject land does satisfy the criteria for Category 7. As I have already noted the likely anticipated predominant use of the subject land, in my opinion, can reasonably be concluded to be for residential purposes. The matter of the existing plate glass windows at the street frontage would be overcome with appropriate window screening. [46] The specific criteria for Category 7 also relates to whether the land does not meet both the general and specific criteria of Categories 2 or 5. Category 5 relates specifically to properties within the Central Business District and obviously is not relevant. While the use of the subject land could be seen as a single shop, as noted, the predominant use of the general criteria of Category 2 is reasonably to have been concluded by the Council as for residential use. On that basis it does not fully satisfy the criteria for Category 2, and may be concluded to fall within Category 7. In the event that at some future time the parking restrictions vary, and a higher commercial use becomes viable, that would be a matter for reconsideration at that time. Conclusion: [47] Consideration the evidence as a whole, I determine that the subject land should be Category 7 for the period commencing 1 July 2002. NG DIVETT MEMBER OF THE LAND COURT -- 12 of 12 --