Body Corporate for Golden Sands Community Title v Chief Executive, Department of Natural Resources [2000] QLC 29

LAND COURT, BRISBANE 6 April 2000 Re: Appeal against Annual Valuation – Valuation of Land Act 1944 – Valuation Roll No 129-13117/10000 – Local Government: GCCC-Gold Coast. (AV99-280). Body Corporate for Golden Sands Community Title v. Chief Executive, Department of Natural Resources (Hearing at Coolangatta) D E C I S I O N Background: This matter relates to a property at 3577 Main Beach Parade, Main Beach, Gold Coast, and described as Building Unit Plan 7933, Parish of Gilston. The subject land comprises a high-rise 17 storey building containing 65 unit residential titles known as "Golden Sands" under community titles, and is located on direct beachfront land about 2 kms east of the Southport CBD, and 2.5kms north of the Surfers Paradise CBD. The building was originally 66 units, but two of the original penthouses were subsequently converted into one large penthouse. The subject land has an area of 3503 square metres, and is zoned as "Residential Multi Unit" under the Gold Coast City Town Planning Scheme of 11 February 1994, and effective at the date of valuation of 1 October 1997. The key issues are the comparison of sales, impact of planning controls, the effect of the existing non-conforming use of the subject land, and the nature of existing improvements. On 2 March 1998, the Chief Executive issued a valuation of the subject land at $9.3 million. Following an objection the Chief Executive confirmed that unimproved value on 10 May 1999. The appellant has now appealed that figure, claiming the unimproved value should more properly be $6 million. Mr R Needham of Counsel, appeared for the appellant, calling evidence from Francis Robert Wilson, member of the committee of the body corporate, and an [2000] QLC 29 -- 1 of 21 -- 2 experienced property manager, and Paul Stephen Murphy, a registered valuer. Mr R Paterson, Principal Legal Officer, appeared for the respondent, calling evidence from Gregory Patrick Crowley, the Departmental Senior Valuer now accepting responsibility for the valuation. The Evidence: (1) The Nature of the Land – The subject land immediately adjoins the surf beach of Main Beach, and is sandy dune country. It is virtually the most northerly direct beachfront parcel of 23 ocean front lots to the south of the narrow coastal area known as The Spit. The subject land is rectangular with a frontage of about 74 metres to Main Beach Parade, and a depth to the surf beach of about 47 metres. There are uninterrupted ocean views to the north and east, and good views to the north-west and to the south. Main Beach Parade is bitumen-sealed with concrete kerbing and channelling, and good access is available. All normal utility services are available. The subject land is adjoined to its north by the Southport Spit tourist area, the Gold Coast Broadwater and Narrow Neck recreation areas. The immediate locality is seen as a prestige beachfront high to medium density residential area, near to Tedder Avenue café precinct. The subject land is also south- east of parkland and camping reserve, east of residential tower developments, and north of older low to medium rise residential development. (2) The Impact of Planning - Under the current category as "Residential Multi Unit Zone", the residential density and height control measures of the subject land are defined as D2 (02) – density and H3(H3) – height. Those are specified under section 4.6 of the scheme, and are designated on appropriate maps of the area. The maximum residential density of the subject land is shown as 02(02), and is defined under section 14.16.3 of the planning scheme, which is designed to facilitate orderly development, and to encourage diversity of accommodation types in the zone. Where the additional notation is shown (02), the residential density may be increased, subject to council consent, to a residential density not exceeding that density shown in the brackets. In the case of the subject land the maximum density for D2 category is 33 square metres for each single bedroom unit, 67 square metres for each 2-bedroom unit, or 100 square metres for any other residential unit. -- 2 of 21 -- 3 In respect of the maximum height of development under section 4.16.4, the purpose of that control mechanism is to ensure orderly development, and transitional building heights which complement groupings of buildings. The maximum height of any building is designated in brackets, and in the case of the subject land, is to a maximum of three storeys. The height of building upon lands to the west of the subject land, and between Main Beach Parade and the Pacific Highway, is to a maximum of 25 storeys. The maximum site coverage under section 14.16.8.1 is 40% of total area of the land. The general provisions of section 4.16.5 also include controls upon landscaped open space which stipulates areas to be provided at 22 square metres for each 1 bedroom unit, 35 square metres for each 2 bedroom unit, and 45 square metres for each unit of three or more bedrooms. Such open space areas are to generally to be distributed upon the premises such that at least 50% of the landscaped area is in one area. There are also controls upon the location and shape of high-rise buildings, which are designed to minimise the period of shadow intrusion upon adjoining areas (section 4.16.6). Of particular note in respect of lands with direct access to the beach, is the potential problem of "beach shadow" (section 4.16.6.2). The intensity of site development is also controlled by a plot ratio index (section 4.16.7), and building setbacks and site coverage (section 4.16.8). There are also constraints upon the development of land with direct ocean beach frontage such as the subject land (section 13.17.1.1), which require the construction of a suitable rock retaining wall for protection from erosion. All buildings are then required to be setback at least 8.1 metres from the leading edge of the top of the rock retaining wall. Provision is also included in section 13.18.1.1 where the foreshore sea wall line is located within any site fronting the ocean beach. In the event of any development of such lands, where the sea wall is within the site area, before any construction can commence, either dedication must occur of any area seaward of the toe of the rock wall as Public Beach, or special approval of Council needs to be sought for a re-alignment of the foreshore seawall line. In respect of the subject land it is argued by Mr Wilson that the foreshore sea wall line is 2.636 metres inside the property boundary at the northern end, and 1.553 metres outside the property boundary at the southern end (Appendix G). Based upon that evidence it is likely that there is no area of the subject land beyond the toe of the rock retaining wall, subject to the height of the rock boulder wall. However as Mr -- 3 of 21 -- 4 Wilson notes, the current ocean erosion protection wall does not fully comply with the Council's standards, and the setback of 8.1 metres required to tower buildings. He argues further that the wall could not be modified without demolition of the existing building. In that respect Mr Wilson relies upon a Council "Limited Planning Certificate" of 22 June 1993 (Appendix F). In that certificate the Council notes both the inadequacy of the construction of the existing boulder wall, and that the basement carpark seaward of the tower is not constructed to withstand scour to RL-3 metres. Such information is available to potential purchasers of the subject land, and provides a salutary warning. While Mr Crowley agrees with the current constraints of the existing Town Planning Scheme, he also notes the protection for the owners of Golden Sands, which is afforded by section 3.1 of the Local Government (Planning and Environment)Act 1990, current at the date of valuation. Under those provisions he argued that the existing lawful use of the premises as a 17-storey 65 unit residential tower, is afforded certain protection. Because that existing use exceeds any use under the current development controls, Mr Crowley argues that the current use is the highest and best use of the site. Mr Wilson acknowledges the provisions covering lawful non-conforming uses, noting also that those provisions of the Local Government (Planning and Environment) Act are also mirrored in section 15.3.1 of the Gold Coast Planning Scheme. In that scheme the period for lodgment of an application to re-establish a non-conforming use is extended from 6 months to 12 months since the date the use was discontinued (section 15.3.1.iii). However Mr Wilson argues that it was most unlikely that the Council would ever exercise its discretion to allow replacement of the current building to a height greater than three storeys. Mr Wilson bases that conclusion upon his opinion that a development proposal greater than three storeys would attract considerable public outcry, particular from residents in high-rise apartments west of the subject land. Mr Crowley by comparison argues that, because of the lawful non-conforming use protection mechanism, it would be reasonable for the owners of Golden Sands to anticipate a positive response from the Council, in the event of some dramatic destruction of the existing building. Mr Crowley argues that, as long as the same building envelope was retained, then a new replacement building to the same height and site coverage would be approved. -- 4 of 21 -- 5 However, Mr Crowley makes no allowance for any element of risk attendant to such a Council approval. Mr Wilson sees such a scenario as totally unrealistic, due, in his opinion, to the major contravention of Council's long-term planning policy for that area, and public expectations for reduced height buildings along that part of the ocean beach frontage. Mr Wilson sees the risk of getting Council approval, in the event of a major catastrophe, would be almost totally prohibitive for any potential purchaser to take into consideration in concluding a fair price for the property. (3) The Use of the Land – A key difference between the parties in this matter is the effect of the existing lawful use provisions as they impact the subject land. It is agreed that the Golden Sands building is of an older design, having been constructed at the time of the signing of the Building Units Plan 7933 in 1981. Because of its age the current building lacks some of the amenity and up-market attractiveness of newer constructed buildings in that locality. The current units have no en suites to the bedrooms, and their design and style are now outmoded. With changes to the current Australian Building Code there is now a more stringent requirement for larger dimensions of certain features, and stronger structural differences, both of which would have an impact upon the effective number of units that could be built within the current building envelope. Mr Murphy estimates that the current building of 17 storeys (plus a basement area of 2800 square metres), represents a gross floor area of 9435 square metres above ground level. In an attempt to quantify the total capital value of the building as it currently exists, Mr Murphy estimates $12,582,000. He bases that figure on costs to the building of $1200 per square metre, plus $450 per square metre for the basement area, after allowing for disposal of excavated sand material onto the adjoining beach. While Mr Murphy sought guidance on building costs from a recognised industry source (Rawlinsons), he appears to have made no specific allowance for depreciation of the building. It is his argument that, because of the known potential problems for redevelopment at more than three storeys, the owners maintain a high standard of maintenance at Golden Sands, with the objective of prolonging indefinitely its longevity. Mr Crowley argues that functional obsolescence is a key factor in depreciation, and the Golden Sands Units already exhibit a lesser level of service for residents, and little scope for upgrade. There is, for example, no indoor swimming pool, gymnasium, or large and spacious areas at ground level for vestibule, such as occur in the nearby La -- 5 of 21 -- 6 Sabbia Units, and compared by Mr Crowley. Golden Sands has a small external pool, a tennis court, and a small sauna and foyer. Both parties agree that any future development costs of a building would need to allow for a conforming sea wall if such a structure did not already exist. If a conforming sea wall did exist, it would be considered as an improvement under the Act, but in its current condition it would be seen as a worsenment. It is also agreed that the existing 17 storey building of Golden Sands is an existing lawful use of the subject land under Part 15 of the Scheme, and therefore an improvement to the land. However Mr Crowley argues that such a lawful use relates to the use of the land, not the structure itself, and is therefore to be seen as a benefit to the land. Both parties also agree that the higher the allowable building upon the subject land, the greater will be the number of units available to a developer. Mr Crowley accepts that the Golden Sands building was erected under the former planning regime, but argues that the current building of approximately 9,435 square metres represents a building capable of development under the existing D2 category. Based upon a gross floor area of 9435 square metres, each floor represents approximately 555 square metres, and each of the four units on each floor represents about 139 square metres. However the current D2 classification for 2-bedroom units stipulates a minimum of 67 square metres of net site area, while Golden Sands demonstrates only 53 square metres of net site area for each unit. The key difference between the parties in respect of the use of the land, lies in their different understandings of the impact of section 3(4) of the Valuation of Land Act. It is Mr Crowley's argument that the intentions of section 3(4) are that the right for an existing lawful use of the land, is inherent in the land. Accordingly, Mr Crowley understands that section 3(4) overrides the existing lawful use rights enshrined in Part 15 of the Town Plan, and the appellant would have the right, in certain circumstances, to replace that old building with a new building of the same size, height and gross floor area as now existing. Mr Crowley further argues that section 3(4) does not require that the current building needs to be continued, and he sees section 3(4) as providing some flexibility of design should a replacement building be contemplated (Transcript p.51). For example, Mr Crowley understands that there could be some flexibility in the size of the building footprint, resulting, say, in a wider building but of a lesser number of stories. It is that flexibility that he sees as inherent in the land use of the subject land, and for which he has allowed some premium in the rate per square metre. Mr -- 6 of 21 -- 7 Murphy declined to express an opinion on the impact of section 3(4) from a town planning perspective, but Mr Needham argues that section 3(4) must be interpreted from the total perspective of both limbs of that section. (4) The Methods of Valuation – In seeking comparison with sales of vacant lands in the locality, Mr Wilson argues that it is common practice for developers to assess the number of units capable of development on the land, rather than the per square metre area of the land. Mr Crowley contests that approach, arguing that marketing strategies can dictate a variety of unit types and sizes, and the more direct approach is to address sites on an area basis, as that compares more fairly the different features and overall potential of the lands. However it is agreed by both parties that either method can be used, as long as all impinging factors upon the use of the lands is fully considered. In simple terms that should mean comparing like-with-like properties. In his assessment of the unimproved value of the subject land, Mr Wilson sought direct comparison with the sale of an improved property; and then sought some comfort in that comparison with a check analysis of the redevelopment potential of the subject land. The analysis of the sale (The Blue House) is discussed later. In seeking his check method, Mr Wilson has assessed any redevelopment of the subject land to a maximum height of 3 storeys, and developed a plot ratio of 1.3306 and a plot yield of 4661 square metres. For ease of comparison with Mr Crowley's adoption of his Sale 2 (La Sabbia), Mr Wilson then allows an average floor area per unit of 210 square metres, (based on La Sabbia's standards), and concludes a total of 22 units for the subject land if it was redeveloped, or 7 units per floor. In seeking an assessment of the land price from the La Sabbia sale, he adopts the sale price of $17,647,000 for 97 units, giving a per unit land component of $181,928. His comparison then concludes a land value of Golden Sands by that method for 21 units @ $181,928, or $3,820,488. As a further check Mr Wilson analyses the sales of 10 existing units at Golden Sands during the period September 1996 to November 1997, concluding an average improved price per unit of $246,500. From that he adopts an average unit value of 127 square metres at $1299 (Exhibit 2 - Rawlinsons Appendix B1), or $165,000 for the improvements, leaving a land component per unit at $81,500. Based upon that figure he estimates a land component of Golden Sands at 66 units @ $81,500, or $5,379,000. Mr Crowley rejects either of the two check methods, arguing that it is inconsistent to adopt the current number of units (66) at Golden Sands, and then -- 7 of 21 -- 8 conclude a land value by extrapolating from the sale of La Sabbia. Mr Crowley also rejects comparisons of buildings at La Sabbia and Golden Sands because of the many variables between them. Mr Crowley rejects the development method, as he notes that Courts have consistently demonstrated that variations in that approach often lead to inconsistent results. He notes for example that if a depreciation factor for the aged building on Golden Sands was seen to be depreciated by, say, 50%, then the added value of the building could vary considerably. He also notes that units could vary between, say, 1, 2, and 3 bedrooms. Mr Murphy rejects the per square metre approach for comparisons, supporting Mr Wilson's suggested method on a per unit basis. Mr Murphy concludes that comparisons made between properties with a 30-storey capacity, and those with only a 3-storey capacity for development, are fraught with problems. However Mr Murphy concludes a rate of $190,636 per unit based upon new building costs, and deducts that figure from the older depreciated unimproved value of $260,000 per unit, deducted from his analysis of Mr Wilson's sales. Adopting $69,364 for the land value of each of the 66 units, provides, in Mr Murphy's opinion, an estimated value of the subject land at $4,620,000. (5) Comparison of Sales – In drawing comparisons with sales Mr Wilson relies upon a sale of an improved property at Woodroffe Avenue and Main Beach Parade – Lot 19 on RP893069. This is located only 100 metres south of the subject land, and has similar zoning, height restrictions, and is also direct beach frontage land. The sale is known locally as "The Blue House". The sale sold after an extensive period (6 months) on the market, has a sea wall to the beachfront, and a area of 963 square metres. The sale sold in December 1997 for $1,715,000, which after allowing for improvements of the existing well- maintained 2-storey timber dwelling ($65,000), was analysed by Mr Wilson at $1,650,000 ($1713.40 per square metre). Mr Wilson bases his estimate of the added value of the old dwelling upon an industry standard (Rawlinson) of $650 per square metre for 127.5 square metres or $82,875. To that figure Mr Wilson adds improvements of the 60 square metre fence at $9,000, and 20 metres of sea wall at $40,000. Allowing for the excellent maintenance of the improvements, Mr Wilson allows depreciation of about 50%, concluding a depreciated added value of $65,000. Mr Crowley argues that the existing improvements on "The Blue House" are a gross underuse of the land, and bring no -- 8 of 21 -- 9 added value to that sale. He argues the dwelling would really have a negative added value for removal, but does not quibble with Mr Wilson's estimate of $65,000. Mr Crowley rejects the use of that sale, however, noting from his discussions with the vendor, that the vendor was financially distressed at the time, and was forced to sell. Mr Crowley therefore rejects that sale as a bona fide sale within the definition of the Spencer test, although Mr Crowley did not check how long the property was on the market. Mr Wilson does not agree that the sale should be rejected, noting that exposure to the market over an extended period, would indicate that the price obtained represented market value at that time. It is agreed that "The Blue House" is prime real estate, in a much sought-after locality, which was in constant demand. Mr Murphy confirms that, in his opinion, because of the high exposure of "The Blue House", even in distressed circumstances, he feels there would be little discount from market value. Mr Murphy also notes that the respondent did not appear concerned with the nature of the sale of "The Blue House", when it applied the unimproved capital value to that property of $1,500,000, adopting their normal conservative approach to sales at 1 October 1997. However Mr Paterson notes that that applied value reflected a concessional valuation under section 17 of the Valuation of Land Act, and did not reflect its highest use for multi-units. In support of his valuation Mr Crowley provides the following sales of vacant, or lightly improved lands:  Sale 1 – (3565 Main Beach Parade – Lot 111 on RP835751) This is a parcel of 882 square metres located 35 metres south of the subject land, at the corner of Main Beach Parade and Beulah Lane, and is zoned "Residential Multi Unit" D2(D2)H3(H3), similar to the subject land. Services and access are comparable, and the sale also has direct beach access. At the time of sale there was an old timber and asbestos sheet dwelling which has since been removed. The most likely use is considered to be for a prestigious duplex development up to 3 storeys in height, and is seen as inferior to the subject land, due to its smaller size and less location with respect to views. The sale sold in November 1998 for $2,200,000, which after allowing for demolition of the dwelling, was analysed at $2,205,000 ($2,500 per square metre), and applied at $2,050,000 ($2,300 per square metre). -- 9 of 21 -- 10  Sale 2 – (74 Old Burleigh Road, Surfers Paradise – Lot 7 on SP103566) This is a 6912 square metre parcel zoned "Resort Residential 1" D2(D2)H30(HX), located 4.5 kms south of the subject land , and about 2 kms south of the Surfers Paradise CBD, and bordering Broadbeach. The sale is among a cluster of residential towers on the ocean front extending both north and south of the sale, which tend to partly obstruct views to the north and south. A 10 storey tower (Viscount Tower) immediately adjoins the sale to the south-east. The sale has a 66 metre direct ocean frontage, and is L-shaped. The existing old improvements were subsequently demolished, and a 30 storey 97 unit community title residential tower (La Sabbia) has now been constructed, at a developed density of 1 unit to 72 square metres, within the D2 allocation. The sale is seen as inferior on a pro rata basis, due to the prestige location of the subject land, and its better shape and views. The sale sold in January to July 1997 for $17,647,000, which after allowing for demolition of the old buildings was analysed at $17,647,000 ($2,553 per square metre) and applied at $16,000,000 ($2,313 per square metre).  Sale 3 – (5 Woodroffe Avenue, Main Beach – Lots 18, 19, 39 on M73844, Lot 43 on RP894823, Lot 20 on M73818 and Lot 216 and 217 on M7382). This is a 3690 square metre parcel zoned "Residential Multi Unit" D2(D2)H20(H25), located about 90 metres south-east of the subject land, on a non- beachfront site. Views in all directions are partly obstructed by other towers. The sale is a near-rectangular shape corner lot of 100 metres east-west and 37 metres north- south. At the date of sale there was an old fibro service station, shops and flats which were subsequently demolished, the costs of which being offset against holding charges. The site is suitable for a residential tower of up to 56 2-bedroom units. The sale is seen as inferior to the subject land due to its non-beachfront location, and the orientation of the exposure of the sale. The sale sold in April to May 1997 for $5,850,000, which was analysed at $5,850,000 ($1,585 per square metre), and was not applied by the respondent due to fragmentation. Mr Crowley argues that Sale 3 is supported by a number of sales in that locality. Those sales, he suggests, support a range of values for non-beachfront lands of between $1200 per square metre (a 1996 sale of Liberty Units), to $1500 per square metre (a -- 10 of 21 -- 11 1996 sale of Xanadu Units), and $1600 per square metre for another property between Breaker and Cronin Streets about the same time. Mr Crowley does not supply details of those further sales, but argues those analysed figures support that his Sale 3 is in line with that market. In further analysing his sales evidence, Mr Crowley argues that sales for larger residential multi-unit sites in that locality of Main Beach, generally remained static for the period October 1997 to October 1998. On that basis Mr Crowley believes that the late date of his Sale 1 in November 1998 is reasonable for comparison purposes. Mr Crowley also confirms that the sales evidence for smaller sites was active, and continued to rise in value. In explaining his reasoning further, Mr Crowley confirms that small sites in his opinion tended to represent the small 500 square metre parcels for duplexes, while the larger sites were represented of medium rise 3-storey to high-rise complexes. Mr Crowley also argues that the difference between beachfront, and land further removed from the beach, tends, from his wide experience of that market, to reflect a 60% differential in value. Mr Crowley notes that the sale of the "Blue House" compared to Mr Crowley's sales, indicated a difference of only 15%-20%, suggesting also that the "Blue House" sale was out of line. Mr Crowley notes that the different pro rata between his Sale 1 (beachfront land analysed at $2,500 per square metre) and his Sale 3 (land removed from the beach analysed at $1585 per square metre) supports his opinion of the differential for beachfront location (58%). Mr Crowley has used his Sale 3 only for the above purpose, and not in any direct comparison with the subject land. Mr Needham challenges Mr Crowley's limited use of his Sale 3 on that basis, noting its simplistic approach, in view of the capacity to build up to 25 storeys on Sale 3, while new buildings on the subject land would be limited to 3 storeys, a principle agreed to by Mr Crowley. Mr Crowley also agrees that the differing yield potential is likely to have been reflected in the price per square metre offered for the respective sales. Mr Crowley also confirms that in applying a rate of $2650 per square metre for the subject land, he had added a premium of 15% for the combined superior attributes of location, and the development on the land, compared to his Sale 1. He also confirms that his initial comparisons had considered the subject land as a potential 20-storey capability. However, he had not recast his valuation to reflect the current 17 storeys of the subject land, as he believes there would be little difference between the rate per square metre for a 20-storey development compared to the current existing 17 storeys -- 11 of 21 -- 12 of Golden Sands. However Mr Crowley confirms that a buyer may pay more for the additional yield of an extra 3 storeys. Decision: (i) The Use of the Land – I turn first to the use of the subject land, and note that the parties are divided on the highest and best use of the land for valuation purposes. It is agreed that the existing 17 storey building is a lawful non-conforming use, and as such has certain protections under section 15.3.1 of the Town Plan; and also the former section 3.1 of the Local Government (Planning and Environment) Act 1990, which states: "3.1(1) A lawful use made of premises, immediately prior to the day when a planning scheme or an amendment of a planning scheme commences to apply to the premises, is to continue to be a lawful use of the premises for so long as the premises are so used notwithstanding – (a) any provision of the planning scheme or amendment of the planning scheme to the contrary (other than a provision to which subsection (1A) applies); or (b) that the use is a prohibited use. (1A) For the purposes of subsection (1), a planning scheme includes those interim development control provisions approved under section 2.22. (2) A local government upon application being made to it in respect of a lawful use to which subsection (1)(b) applies, may consent – (a) to the use being changed to one which is, in the opinion of the local government, less injurious to the amenity of the area notwithstanding that the changed use may also be a prohibited use; or (b) to the modification, alteration or repair of the building or structure to which the use applies where those works would not increase the gross floor area for that use by more than 10% above the gross floor area for that use existing at the time when this subsection began to apply to that use; or (c) to the re-establishment of a use where the use has been discontinued (whether through the destruction of a building or structure or otherwise) and where application is made to the local government within 6 months (or such longer period as may be prescribed in the planning scheme) from the day the use is discontinued." -- 12 of 21 -- 13 The provisions of section 15.3.1 mirror section 3.1, but extend the period for lodgement of an application to 12 months. The only other variation of the Town Plan is in section 15.3.1.(i) where the wording has been amended to refer to a "prohibited development" rather than a "prohibited use". There is agreement that in the event of some major disaster from which the current use could not be continued, then the appellants would have the right to make an application to replace a similar building. However the appellant argues that it would be most unlikely for such an application to be approved beyond a height of 3 storeys. Mr Crowley believes that the appellants would have a good change of having such an application approved. However Mr Crowley has made no apparent adjustment for the risk attendant in such a Council decision in the appellant's favour. In that respect I note that both sections 3.1(2) of the Local Government (Planning and Environment) Act 1990, and section 15.3.1 of the Town Plan, both direct that the Council "may consent to" such an application. There is no mandatory direction in those legislations. In view of the above conclusions, the appellant believes that the most likely replacement building would be for a structure of 3 storeys; while the respondent seeks to compare sales on the basis of an ongoing use of 17 storeys. Mr Crowley's understanding is that the existing lawful non-conforming provisions refer to the use of the land, and as such is a condition attached to the land, rather than any direct relationship to the existing building itself. However that would seem to be contra to the actual intentions of the legislation, which stipulates that the "lawful use of premises" is the purpose of the Act. In the current matter the use of the land is for multi-unit residential purposes, and it is the actual building which does not conform to the existing planning regime. However I also note Mr Crowley's further conclusion that, in his opinion, section 3(4) of the Valuation of Land Act overrides, for the purposes of the valuation, section 15.3.1 of the Town Plan. In seeking to understand that conclusion, I note that in understanding the interpretation of section 3(4), guidance may be found in section 14A(1) of the Acts Interpretation Act 1954, which directs: "14A(1) In the interpretation of a provision of an Act, the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation." -- 13 of 21 -- 14 The purpose of the Valuation of Land Act 1944 is to determine the unimproved value of the subject land; and section 3(4) directs how that is to be achieved were an existing lawful non-conforming use exists as follows: "3(4) Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that – (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made." The two limbs of section 3(4) must be read in conjunction, as directed by the word "and", and it is not appropriate to address either sub-section (a) or (b) in isolation. As such it is both the use of the land, and the building which may be assumed to be continued for the purpose of the valuation. That inference, in my opinion, would indicate that it is not only the dimensions of the floor space provisions of the existing non-conforming building which must be considered, but also its nature and design. To assume that a new 17 storey building could be developed in the event of a disaster, to a comparable modern and far superior standard as "La Sabbia" units, would, in my opinion, stretch unreasonably the intentions of the legislation. That then leaves the conclusion of Mr Crowley that section 3(4) overrides section 15.3.1 of the Town Plan. I agree for the purposes of the valuation that section 3(4) directs that the existing use and structure must be accepted when determining the unimproved value. However I believe any future possible application to redevelop the subject land, for whatever reason, must, in my opinion, be considered in the light of section 15.3.1 of the Town Plan. Whether the Council approves, or approves with modification, such an application would be at the discretion of the Council. On one hand the Council must consider the lawful existing rights of the appellant as a lawful non-conforming use (section 15.3.1), and on the other the general rights of the wider community as expressed in the other provisions of the Town Plan. The decision to reduce a previous planning height from 17 storeys to only 3 storeys in the locality of the subject land is long-standing. It is not clear why -- 14 of 21 -- 15 such a planning control was amended at that time, but it may be presumed that such a change occurred only after a period of public exposure and comment. The reduced height limitation would appear to only relate to the 23 beachfront properties north of the narrow isthmus connecting Main Beach and Surfers Paradise. It may be, from the presence of the retaining sea wall, and the relatively narrow depth between Main Beach Parade and the beachfront, that the area was seen as particularly erosion sensitive. Whatever the reasons, the Council now has a firm policy which would appear to have limited most of the 23 beachfront properties in that locality to 3 storeys. The subject land would appear to be more the exception with its 17 storey tower. On that basis I believe there could be a real risk that approval to redevelop to 17 storeys would be approved, and Mr Crowley should have allowed for that risk in his determination. Indeed the need to consider the intentions of the local government in respect of a proposed rezoning of land was addressed by the Full Court of Queensland in JR and DM Stubberfield v. The Valuer-General (1988-89) 12 QLCR 328. In that matter Carter J discussed the meaning of the then section 12(1A) (now section 3(4), and explored the background to the introduction of that section into the Queensland Act. A full discussion is contained on pages 332 to 336. As noted by Carter J at page 335, the introduction of the section 6(2) in New South Wales, and section 12(1A) in Queensland, has had the consequence that former authorities found in Wunderlich Limited v. Valuer-General (1960) 5 LGRA 50, and Sonnerdale Limited v. Valuer-General (1953) 19 LGR(NSW) 211, can no longer be relied upon. The matter of the application of section 12(1A), now section 3(4), was also addressed in Wickham Properties Pty Ltd v. The Valuer-General (1990-91) 13 QLCR 4, at page 10. The learned Member (later President) found that the correct method was to value the land to the extent of site coverage then existing, and to a density not exceeding the maximum gross floor area permissible, including the potential to extend existing development. The problem in that matter lay with the understanding that, if the land was redeveloped, then the Council would require the surrender of a 5.4 metre strip of land across one of the road frontages. However that can be distinguished from the current matter in as much as the zoning in Wickham Properties allowed development to an extent exceeding the existing building. In the current matter that is not so. -- 15 of 21 -- 16 Since the introduction of the old section 12(1A), now section 3(4) lands are valued on the basis of their existing lawful non-conforming use. Any provisions of a new planning scheme must not ignore the former legal as-of-right provisions extant under the former legal scheme. That was directed by the Court of Appeal of the Queensland Supreme Court in Makucha v. Albert Shire Council and Another (1994) 85 LGERA 424, where Pincus JA said at page 431: "The Local Government (Planning and Environment) Act 1990 seems to provide a code by which the planning of an area may be effected, including procedural provisions of some importance such as appeal rights. It is by no means clear that use of alternative planning mechanisms, ignoring the Local Government (Planning and Environment) Act 1990, is an option available to local authorities. " The decision in Stubberfield that section 12(1A) had no direct application, can be distinguished in the current matter, as Carter J noted that section 12(1A) has no direct application in the case of a proposed scheme, or change to the scheme. In the current matter there is an existing town planning condition to the subject land which requires a maximum of only 3 storeys for a building. However the relevant findings of Carter J for the current matter, in my opinion, are found at page 340, where, speaking of the risks that may be involved in a change of zoning for the land, he said: "True it is that the land remains subject to the existing zoning at the date of valuation. That was therefore a relevant matter to be considered. It is also true that shortly before that date the local authority had published its intention to have a significant portion of the subject land changed from Residential to Public Open Space zoning. To my mind it is inconceivable that that fact would not have weighed upon the mind of the hypothetical purchaser who on the valuation date was considering the appropriate capital sum which he ought to pay to acquire the fee simple. Whether it would have in fact justified a sale at a different price on that account is not a question which is presently relevant. The valuer however was bound as a matter of principle to consider it rather than to ignore it as irrelevant." In the context of the current matter I believe Mr Crowley should have considered any risk entailed in seeking a redevelopment approval beyond the limit of 3 storeys. However in considering the highest and best use of the subject land, I am also reminded that guidance in respect of the value of improvements upon the land, and any costs of remediating the land, was given in Caltex Oil (Australia) Pty Ltd v. Chief Executive, Department of Lands [1996-97] 16 QLCR 435. In that matter the value of an old service station, on a site whose highest and best use was seen as for -- 16 of 21 -- 17 residential purposes, was seen by the Land Appeal Court not to be an improvement for its highest and best use for residential purposes. The Land Appeal Court went on to say also that the mere possibility of contamination of the site by leakage of petrol products would not necessarily be a worsenment to the land, as future development procedures may overcome any impacts (page 445). In considering the impact of a classification as a "probable site" for contamination, the Land Appeal Court drew attention to the element of risk of such an event impacting what a prudent purchaser may pay for the land, when it said at page 463: "We accept that prudent vendors and purchasers of land will 'inevitably and necessarily' examine the impact of statutory controls on land use before deciding what a particular block of land is worth in the marketplace and that the effect (if any) of a particular control is a question of fact. The effect of the classification on value is a matter to be determined on a case by case basis. " However the need for a notional purchaser to have to remove any structures which did not align with the highest and best use of the land, was noted by the learned Member who followed that Caltex principle in Paradise Springs Development Pty Ltd v. Chief Executive, Department of Lands (V95-372/375), 21 February 1997, unreported, at page 30. In the current matter in my opinion, there would appear to be two principles flowing from the Caltex decision. Firstly any prudent purchaser would make allowance for any risk of getting approval from Council to redevelop the subject land, for whatever reason. And secondly, if a highest and best use of the subject land was for anything other than its current use as a 17 storey residential unit building, then the current structure, and its attendant non-conforming sea wall, should not be considered as an improvement under section 3(1)(b) for the purposes of the valuation. As there was no evidence of any costs of demolition of the building to make way for a new redevelopment, I believe such a scenario is not one that I should consider in the current matter. (ii) The Method of Valuation – In the matter of the method of comparisons with other land sold, the parties diverge in respect of the most appropriate method of seeking comparisons. Mr Wilson and Mr Murphy favour the adoption of a per unit basis, while Mr Crowley -- 17 of 21 -- 18 uses the per square metre basis. In seeking guidance I note the findings in the Cairns Resort Investment Pty Ltd v. Valuer-General (AV91-3 and 321), 19 June 1992, unreported, where the learned Member said at page 20: "It seems to me that there is no principle which demands that valuation criteria must be reduced to any particular unit of comparison, whether it be 'per room' or 'per square metre of site area' or some other unit such as 'per square metre of permissible gross floor area'. It is a basic valuation principle however that when comparisons are being made 'like should be compared with like'. " I believe that principle is at the heart of the current matter. In my opinion either method of comparison would produce a reliable result, as long as like matters are considered. In adopting the two check methods by a redevelopment approach, I find I have some difficulty with accepting Mr Wilson's estimate of the value of the land. The first approach, adopting a maximum height of 3 storeys, and a new building of 22 units at the superior standard of construction similar to La Sabbia, also adopts a land component derived at the unit rate of $181,928 from the La Sabbia sale. That sale is for beachfront land, but has a height limit of 30 storeys. That comparison does not appear to meet the criteria of like with like. In the second approach of Mr Wilson he adopts a rate of $1,299 per square metre for the building costs as new from the Rawlinson figures for Brisbane (Appendix B1), and applies those costs to sales of units, which clearly have a level of obsolescence, and which would be something less than a current new value. Without allowing for some depreciation, the calculation would appear flawed in part, although the multiplication of the land value per unit by the current total of 66 units, would seem to allow for the existing as of right condition of use of the land. On balance I believe the preferred method would be on the basis of direct comparisons with sales of vacant or lightly improved parcels, making allowances for the differences in location, and yield potential, and for the existing non-conforming rights of the subject land. (iii) Comparison of Sales – Accepting then the principle that the highest and best use of the subject is its current use as a non-conforming 17 storey building, I seek comparisons with the sales provided. On the evidence before me the principal reason that I have for rejecting Mr Wilson's "Blue House" sale, is Mr Crowley opinion, based upon the vendor's advice -- 18 of 21 -- 19 that he was forced to sell due to financial pressures, and that the sale is out of line. In Mr Crowley's opinion that would also align with the usual 60% premium that appears between beachfront lands and lands further removed from the beach. However if we adopt the principle of "like with like", then it is not reasonable to compare beachfront lands with a yield restricted to 3 storeys, with other beachfront lands having a yield extending to 30 storeys. If I accept that the "Blue House" was reasonably marketed for 6 months, in what is generally seen as a very sought-after location, I could conclude that the vendor's expectations were beyond the market for those lands, with the 3 storey limitation. On that basis the unit rate of $1,713.40 per square metre might represent a fair market value for that locality and purpose. In seeking to consider all aspects of the sale of the "Blue House" I am aware that not every sale which has some unusual circumstances about the transaction, should be immediately rejected. Indeed that was found in respect of a mortgagee in possession sale in Mayne Property Development Pty Ltd v. Chief Executive, Department of Natural Resources [1996-97] 16 QLCR 709, at 717. The comparison with Mr Crowley's Sale 1 (882 square metres applied at $2,300 per square metre) in November 1998, may either represent a sale at a later period when the market in that locality had moved; or the higher rate for a smaller property in the same location. Any comparison with Mr Crowley's Sale 3 (3690 square metres analysed at $1,585 per square metre), is for purposes only of confirming the variation between beachfront land and lands further removed from the beach. However, Sale 3 also has a yield related to a building height to a maximum of 25 storeys. In view of the entirely different yields for Mr Crowley's Sales 1 and 3, and the difference in size of those locations, I get little assistance from the normal differentiation due to location near the beach. That tends to weaken the argument that the "Blue House" sale is out of line for that reason, and I place little weight upon Sale 3. I am aware that when comparing unimproved values, fairness and equity requires that the same process be applied to all parcels. That was argued in the Land Appeal Court in LR and MM Bignell v. Chief Executive, Department of Lands (V92- 65), 4 March 1996, unreported, at page 8. That principle was accepted by the Land Appeal Court in that matter, noting that any comparison on an applied value basis would be to the appellant's advantage. However in the current matter I do not have an applied value provided for Sale 3, and I must therefore seek to do the best I can in comparing Sale 3 to Sale 1. For that reason I have compared the analysed values. -- 19 of 21 -- 20 The comparison between Mr Crowley's Sales 1 and 2 are also for entirely different yields. Sale 1 (882 square metres) has a 3 storey building yield, while Sale 2 (6,912 square metres) has a 30 storey building yield. The following comparisons then appear: Sale Area Sale Rate UCV Comparison to subject land "Blue House" 963m² $1,713/m² $1,558/m² 3 storeys (beachfront s.17) 1 882m² $2,500/m² $2,300/m² 3 storeys (beachfront) 2 6912m² $2,553/m² $2,313/m² 30 storeys (beachfront) If I accept Mr Crowley's evidence that sales of large sites (both of 3 storey and high-rise) have not changed since 1998, then I could consider Sale 1, which is nearly a year after the relevant period. In that regard I note that precedents dictate that sales up to the date of issue are relevant to determining the valuation. (See WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, at 46; NR and PG Tow v. Valuer-General (1978) 5 QLCR 378; and KP and RD Weisenberger v. Valuer-General (1978) 5 QLCR 125). However, support for subsequent sales was also found in McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1, at 16; and also in Daandine Pastoral Company v. Commissioner of Land Tax (1943) 7 The Valuer 299. In that matter Williams J in the High Court of Australia said at page 304: "Values must be calculated in the light of circumstances which existed on the material date, in this case 30th June 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless." The use of later sales was also considered in RJ Scougall v. Chief Executive, Department of Natural Resources [1996-97] 16 QLCR 536, at 551 and 552. It is also noted that a subsequent event however cannot create an expectation which was not in existence at the relevant date. (Federal Commissioner of Taxation v. Harris (1980) 30 ALR 10 at 18). -- 20 of 21 -- 21 On the evidence before me I believe that the "Blue House" sale would appear to be low by comparison to Sale 1. If I then compare Sale 1 (882 square metres) with the subject land (3,503 square metres) I believe, ignoring any benefit that might accrue because of the current higher non-conforming use of the subject land, then I would expect a unit rate for the larger size of the subject land at something about the applied rate of $2,300 per square metre. That is based upon a similar adjustment for size adopting the two beachfront sites of Sale 2 (6,912 square metres at an analysed rate of $2,553 per square metre) and Sale 1 (882 square metres at an analysed rate of $2,500 per square metre). On that basis an applied rate for the subject land, ignoring its higher non-conforming use, would be about $2,300 per square metre. I am aware that section 3(4) valuations for annual valuation purposes are for a value at a point of time, which could vary under section 29, should a major change to the non-conforming use occur. However I believe the relative uniqueness of the subject land would be widely known, and a prudent buyer would weigh the impost of the non- conforming use heavily in his assessment of the value of the property. The final adjustment then becomes an allowance for the higher non-conforming use, less any risk in the eyes of a prudent purchaser, associated with bringing such a potential redevelopment to fruition. In the absence of any evidence to the contrary I could accept Mr Crowley's adjustment of 15% for that purpose, except that he would appear to have ignored the very real element of risk associated with getting a redevelopment approval beyond 3 storeys. Because of the relatively unique status of "Golden Sands" in that locality, I believe the risk would balance any current additional premium for the benefit of the non-conforming use. I will therefore allow an unimproved rate of $2,300 per square metre, or $8,056,900, say, $8,060,000 for the subject land. Conclusion: Having considered the whole of the evidence I am persuaded that the appellant has partly proved his case. The valuation of the Chief Executive is set aside, and the unimproved value of AV99-280-BUP7933 is determined at Eight million and sixty thousand dollars ($8,060,000). (NG Divett) Member of the Land Court -- 21 of 21 --