Berghofer v Chief Executive, Department of Natural Resources [2000] QLC 23

LAND COURT, BRISBANE 6 April 2000 Re: Appeal against Annual Valuation Valuation of Land Act 1944 Valuation Roll No: 200-26595 Local Government: Toowoomba City (AV99-1154). Clive J Berghofer v. Chief Executive, Department of Natural Resources (Hearing at Toowoomba) D E C I S I O N Background: This matter relates to a parcel at Priest Street, Rockville, and described as Lots 6 and 7 on RP 17244, Parish of Drayton. The subject land has an area of 4,046 square metres, and is located about 3km radially north of the Toowoomba Central Business District, and on the western edge of an industrial area along both sides of Gowrie Creek. The subject land is zoned as "Light Industry" under the Toowoomba Town Planning Scheme of 10 June 1989, and effective at the date of valuation of 1 October 1998. The key issues are the nature of the land and comparison of sales. Priest Street is bitumen sealed with concrete kerbing and channelling, and there is good access to the land. All normal utility services are available, and the subject land has a gentle slope (3 metres) from the road to the rear boundary, although the front part of the land is near level. The land has a frontage of 50 metres, and a depth of about 80 metres. There is direct access along Harth Street to Holberton Street, which is an arterial road. On 29 March 1999, the Chief Executive issued a valuation of the subject land at $97,000. Following an objection the Chief Executive amended the valuation to $85,000 on 27 July 1999. The appellant has now appealed that figure, claiming the unimproved value should more properly be $66,000. [2000] QLC 23 -- 1 of 6 -- 2 Mr Stephen Davis, a consulting Registered Valuer, appeared and gave evidence for the appellant. Mr Robert Vize, Counsel of Crown Law, appeared for the respondent, calling evidence from Steven James Doyle, the Departmental Registered Valuer responsible for determining the valuation. With the consent of both parties a view of the subject land and the sales was undertaken by the Court. The Evidence: (1) The Nature of the Land - The subject land is located opposite residential properties, and is about 200 metres east of a neighbourhood shopping centre at the corner of Harth and Holberton Streets. The subject land faces west, and is an inside lot. Both parties agree that its current use for Light Industrial purposes is its highest and best use. Mr Davis agrees that access to the subject land could occur either from North Street via Vanity Street, then left into Makepeace Street and then left into Priest Street; or from North Street via Holberton Street, and then right via Harth Street to Priest Street. However Mr Davis argues that movement of heavy laden trucks might have difficulty negotiating traffic roundabouts along Holberton Street. It is also agreed that there is a steeper gradient along Vanity Street, which would slow heavy laden trucks. Mr Doyle favours movement of heavy trucks via Holberton Street, a conclusion supported by the viewing of the locality. Another matter of difference between the parties is the general quality of the location of the industrial land surrounding the subject land, compared to similar industrial lands near Jones Road to the east of Gowrie Creek. Mr Davis sees the Jones Road area as a superior location, while Mr Doyle sees the Jones Road locality as inferior to the Priest Street locality. The significance of those opinions is discussed later in the comparison of sales. Following the view of the lands, I can accept that both locations are something less than top quality industrial land. Both locations exhibit a degree of underdevelopment, although the Priest Street location gives the appearance of more activity, perhaps influenced by its closer proximity to residential uses. The Jones Street location gives the impression of being perhaps at the rear of larger industrial parcels fronting North Street to the south. However there are industrial buildings on the south side of Jones Street, which demonstrate industrial activity. -- 2 of 6 -- 3 I believe that access to the subject land would be more direct from Holberton Street, and heavy trucks were seen to negotiate the roundabouts along Holberton Street without difficulty. On balance I believe that there is little to choose between the two locations, although Priest Street has a higher elevation, while Jones Street is nearer to Ruthven Street. However for the movement of heavy trucks to the subject land, I believe they are more likely to favour access via the arterial roads of North Street and Holberton Street. I see little impact of the neighbourhood shopping centre on the Priest Street locality for industrial purposes. (2) Comparison of Sales - The key difference between the parties lies in their analyses of the sales. To support his valuation Mr Davis provides the following sales of vacant Light Industrial lands:  Sale 1 - (18 Vanity Street, Rockville - Lot 24 on RP17244). This is a 4,047 square metre parcel, located about 400 metres north of the subject land. The sale has a width of 30 metres and a depth of 134 metres, and falls about 7 metres from the road towards the eastern boundary at the rear. The sale is surrounded by residential uses. Mr Davis sees this common sale with the respondent, as his most relevant sale. He sees it in the same location, with comparable slope, but slightly inferior to the subject land due to its greater slope. However he sees his Sale 1 as having more direct access via Vanity Street. The sale sold in June 1998 for $60,000, which after allowing for improvements was analysed at $58,000, ($14.33 per square metre).  Sale 2 - (41 Jones Street, North Toowoomba - Lot 4 on RP88875). This is a 4,712 square metre parcel, located about 0.8km east of the subject land. This is also a common sale with the respondent. Mr Davis saw this location as superior and more accessible. The sale is zoned as "Noxious Industry". Overall the sale is seen as superior to the subject land. The sale sold in March 1997 for $95,000, which after allowing for improvements was analysed at $90,000 ($19.10 per square metre). Mr Davis also refers to a sale at 222B North Street, Rockville, which was apparently located along North Street, near the junction with Vanity Street, and was improved with a shed. However the description provided was unable to be identified during the hearing, due to the subsequent resurvey of that parcel. Any comparisons -- 3 of 6 -- 4 with 222B North Street were therefore unable to be explored, and that sale now forms no part of this analysis. To support his determination Mr Doyle analyses the following sales:  Sale 1 - (18 Vanity Street, Rockville - Lot 24 on RP 17244). This is the same as Mr Davis' Sale 1, and has similar services, and access to a bitumen road with concrete kerbing and channelling. Mr Doyle sees that sale as inferior in all respects to the subject land, particularly the slope and narrower frontage. However as noted, Mr Doyle also saw the location as inferior to the Priest Street location. Mr Doyle analysed the sale at $56,000 ($13.80 per square metre), and applied it at $52,000 ($12.85 per square metre).  Sale 2 - (North Street, North Toowoomba - Lot 2 on RP 85760 and Lot 13 on RP 74819. This is an 8,772 square metre parcel, zoned as "Noxious Industry", and located about 1km east of the subject land. The sale fronts both North and Jones Streets, although the frontage to North Street is only 24 metres, while the Jones Street frontage is 53 metres. The sale has a depth of 196 metres. The sale is gently sloping from east to west across the lot. All services and access are similar, but the shape of the sale is inferior. The sale is seen as superior in location, land and size; and overall is seen as superior. The sale was sold in February 1998 for $202,500 ($23 per square metre), and was analysed at $147,000 ($16.75 per square metre), and applied at $132,000 ($15 per square metre).  Sale 3 - (41 Jones Street - Lot 4 on RP 88875). This is the same sale as Mr Davis' Sale 2, and has a frontage of 55 metres and a depth of 85 metres, and is seen as the most comparable. The sale was seen as superior in size, similar in land and shape, and inferior in location. Overall the sale is seen as inferior. The sale was analysed at $89,000 ($18.90 per square metre), and applied at $81,000 ($17.20 per square metre). In considering the common Sale 1 (18 Vanity Street), Mr Davis accepts that sale to have a narrower frontage, but argues that the "area" is most important to allow for a building and storage. He also argues that as a shed would be located towards the -- 4 of 6 -- 5 front of Sale 1, then the greater fall would not be very significant. Mr Doyle argues that the wider frontage and less slope ensure that the subject land is superior to Sale 1. Mr Davis accepts, all else being equal, that larger areas generally reflect a lower rate per square metre. However, due to the relatively small difference in area between Sale 2 and the subject (only 15%), Mr Davis sees the difference in size to be not significant, and he accordingly made no allowance for that purpose. In considering his Sale 2 (North Street) Mr Doyle sees that sale as not very comparable due to the larger size, better location and access. He believes that sale provides only a guide to demonstrate that larger areas reflect a lower rate per square metre. He also notes that sale has two street frontages, not common with the subject land. Mr Davis draws no comparison with Mr Doyle's Sale 2 for similar reasons. Mr Davis also notes that was a mortagee-in-possession, although it was advertised widely, and sold at auction. Mr Davis speculates that if the North Street location of Mr Doyle's Sale 2 was represented by a sale of area comparable to the subject land, then he would conclude a rate of $22.50 per square metre for that locality. Mr Davis also notes that the second frontage to North Street provides increased exposure to the busy arterial North Street. Decision: I note first that both valuers agree that the preferred method for determining unimproved value is by comparison of vacant or lightly improved sales. On that basis there is nothing to discredit Mr Doyle's method of valuation. The basic difference between the parties then lies in the valuers' comparison of those sales. If I consider then the use of Mr Doyle's Sale 2 (North Street), I note that it is much larger in size, and has two street frontages. Mr Doyle agrees that sale is not very comparable, and Mr Davis rejects its use in his analysis. On that basis I would agree that Sale 2 provides only limited assistance in this matter. The key really is the conclusions reached in respect of the common sales as follows: Sale Analysed Rate Comparison per m² 18 Vanity Street Mr Davis ($14.33) Slightly inferior 41 Jones Street Mr Davis ($19.10) Superior subject Mr Davis ($16.30) - -- 5 of 6 -- 6 18 Vanity Street Mr Doyle ($12.85) Inferior 41 Jones Street Mr Doyle ($17.20) Inferior subject Mr Doyle ($21.00) - While the analyses of 18 Vanity Street are reasonably consistent, there is some variation between the valuers in respect of the location of 41 Jones Street. Following the view of those localities, I believe the two areas are similar, and on that basis, I believe 41 Jones Street would be comparable. I have no evidence of the impact of the different zoning of the two key sales, and I must therefore conclude that the value of lands for Noxious Industry purposes and Light Industry purposes are comparable. If I then allow an analysed rate for 41 Jones Street at $18 per m², I can conclude that the subject land could have an unimproved value of $72,828 (say $73,000). An unimproved value of $73,000 would also support Mr Doyle's conclusion that the subject land is superior to Sale 1 on a site basis. Conclusion: Having considered the whole of the evidence I am persuaded that the appellant has partly proved his case. The unimproved value as determined by the Chief Executive is set aside, and the unimproved value of Lots 6 and 7 on RP 17244 is determined at Seventy-three thousand dollars ($73,000). (NG Divett) Member of the Land Court -- 6 of 6 --