Bricon Pty Ltd v Chief Executive, Department of Natural Resources [1997] QLC 15

LAND COURT BRISBANE 14 FEBRUARY 1997 Re: AV95-266 An appeal against an unimproved valuation - Valuation of Land Act 1944 (the Act) - Town of Roma Bricon Pty Ltd v. Chief Executive, Department of Natural Resources (Hearing at Roma) D E C I S I O N Freehold land described as Lot 359 on Registered Plan 225679, Parish of Roma, contains an area of 64.7067 ha. The land is surveyed with dimensions of about 3 km in length by a width of about 200 metres. The land remains zoned “Special Purposes”, reflecting its former use as a Commonwealth Rifle Range Reserve. That former use has caused the land to be listed on the Contaminated Land Register as a “probable” site. The land is used for the grazing of cattle. As at 1 January 1995, the Department of Natural Resources, as it now is, valued the land in the amount of $40,000. The owner, being disappointed with the chief executive’s decision on an objection to that valuation estimated the unimproved value to be $13,651. The appeal to the Court was on the grounds that the owner had been advised that the land could not be sold as it was deemed contaminated, and that the valuations of adjoining lands were as set out in the notice. My interpretation of the evidence given by Mr V. O’Brien, who represented the appellant company, was that the advice given him that the land could not be sold referred to an opinion that no-one would be interested in buying the land due to the “probable” contamination listing - rather than any legal restriction on the sale of such land. Mr O’Brien held the opinion that the land, as zoned, and with the listing on the Register, should be valued in accordance with its grazing use. He had received advice several years ago from an officer within the Department of Environment that the contamination issue was not of major concern to the Department, most likely its remediation involving the removal of a layer of soil from the rifle range butts, for local disposal. However, that officer had since left the Department and Mr O’Brien had found more recent information provided by other officers as to remediation “vague and incomplete”. He said that the land is “impossible to sell as Banks are refusing to lend to prospective buyers”. The land had in fact been offered for sale on the open [1997] QLC 15 -- 1 of 5 -- 2 market on the basis that the owner was seeking to obtain “expressions of interest”. It seems that the property was purchased by the company before the site was listed and before contamination of this nature was a public issue, for $61,000. It was Mr O’Brien’s evidence that a sale of the property would take place if the price to be received cleared debts of about $50,000. While that evidence might be seen to be some support for the valuation appealed against or an even higher valuation, the facts are that no sale has been achieved to this date at that price. It also seems that at the time of purchase the land was considered by the purchaser to have had potential for rezoning to allow some rural residential subdivisional development. Those subdivisional hopes had been disappointed. Mr R.E.D. Allison, registered valuer, had carried out the valuation appealed against. He had not found it a simple task and his evidence confirmed the extent of research which had been conducted. Had the land possessed no potential other than for the grazing of cattle and then in the absence of potential for any residential use, Mr Allison broadly agreed with Mr O’Brien that the valuation would have resulted in a relatively nominal amount. He suggested on that basis the valuation would have been $10,000. However, with the previous use discontinued, the existing zoning was seen to be inappropriate. Mr Allison described the nature of the land as follows: “The topography of the site consists of gently to moderately sloping country rising easterly from the western road frontage for the first one-third of the block to a well elevated hill offering good views over Roma and the surrounding countryside. From this hill the country falls in a series of undulations to the east.” In Mr Allison’s opinion, the land was physically suited for rezoning “to allow usage as a rural homesite”. Mr Allison had established that the Department of Environment would require a suitably qualified consultant’s report and any necessary remediation before the “probable” listing could be removed or altered. It was the potential for contamination through any leaching from spent lead projectiles which had brought about the “probable” listing. Although some evidence was given by Mr Allison as to the nature of spent projectiles observed on the site, there has been no expert investigation as to the likely cost of remediation necessary to remove or alter the listing. The cost of remediation would depend largely on the extent of lead content leached into the soil and would probably be minimal. By the same token, a high lead content would involve expensive remediation. From his specific inquiries of the Council Mr Allison was able to advise that if it could be shown (again through expert consultancy advice) that contamination, if any, was as might be expected, contained within the area of -- 2 of 5 -- 3 the butts where the spent projectiles had lodged, then a rezoning application would likely be successful, without remediation necessary. The Council would however seek to restrict the location of any proposed dwelling away from the butts area. There are three butts located on the site, all in the western road frontage third. The preferred homesite area was further to the east on the elevated ridge. It was Mr Allison’s evidence, based on two sales, that if the site had not been listed as a probable site on the Register, and if it had been rezoned, it would possess market value of $50,000. That assessment was not challenged although some discussion took place about the standard of access to the site. Mr Allison had considered the recent, and as yet unreported, judgment of the Land Appeal Court in Caltex Oil (Australia) Pty Ltd v. Chief Executive, Department of Lands. He felt he was justified in considering the higher potential approach to the valuation. In the Caltex matter, the Land Appeal Court had found that a site in use as a service station at the date of valuation, had, on the evidence higher and better use, if unimproved, as already zoned for residential use. That residential use value was adopted less the estimated cost of having the listing removed or altered, to allow the residential use to proceed. The problem Mr Allison faced in the subject matter was that there had been no investigation or expert evidence available for any cogent estimate to be made of the cost of remediation. The evidence from both parties in this matter is that the consultant’s investigation would cost about $5,000. Mr Allison had established that the rezoning cost would be $1,000. Deducting those amounts from the value of the land as rezoned, and with no “probable” listing, he accepted the resultant $44,000 represented the “maximum value that a purchaser could afford to pay for the land in its present state”. Even so, he recognised “that there will be risks involved in achieving the land’s potential and these will need to be taken into account in arriving at the valuation. There is a very remote possibility that the consultant may not be able to prove that the majority of the site is uncontaminated. Additionally there is a slight risk that the Roma Town Council would not approve a rezoning even though a consultant’s report revealed contamination was restricted to the stop butts.” Mr Allison concluded: “While the risks are real, I do not believe that they are significant and that the value of the land is much closer to the maximum than the minimum. Having regard to the available evidence, it is my opinion that the land in its present state is worth $40,000.” Counsel for the respondent chief executive, in this case as in other appeals heard during the same sittings, submitted that the Court had before it the evidence -- 3 of 5 -- 4 of an expert valuer and as the Land Appeal Court said in Qualischefki v. The Valuer-General (1979) 6 QLCR 167 at 172: “The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradistinction to jurisdiction conferred under the Land Act.” It was further submitted that, for the presumption of correctness of the chief executive’s valuation (s.33 of the Act) to be rebutted it would be necessary to show that, as in the decision of the High Court of Australia in Brisbane City Council v. The Valuer-General (1978) 140 CLR 41, at 56-7: (1)In making the valuation the chief executive acted upon a wrong principle, or made a serious error of fact; or (2)The valuation was made by a method fundamentally erroneous. It is true as is submitted by the respondent, that “the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer” (Qualischefki supra at 172). That clearly is not an impossible task however. The question of unimproved market value is a matter of fact. It is my opinion that Mr Allison has used correct methodology in considering the “top-down” approach. He has established the level at the top. He has also established the known criteria in descending one level. However, there is no substantive evidence to support his opinion as to the degree of descent necessary to reach the crucial next level. That is the level representing the unimproved market value of the land as it existed at the date of valuation - zoned “Special Purposes”. In effect, Mr Allison’s valuation allows a purchaser a risk factor of about 8.7% to achieve the rezoning. Then, the purchaser at best, would have land with highest and best use dominated by its residential use potential, yet still listed on the Contaminated Land Register as a “probable” site. As I see it, the risk which the purchaser faces is not limited to the matters considered and identified by Mr Allison. The question which must be asked is whether the land when rezoned and with that listing in place would possess the same value as it would if the listing was removed or suitably altered. An assumption that no market stigma would attach to the land under those circumstances, is one that I am unable to accept. Apart from the risk involved in a sale being effected at the equivalent market value, it would seem that holding -- 4 of 5 -- 5 costs over the period required first to obtain the consultant’s report and then the rezoning would be a consideration affecting market value. I have been persuaded on the evidence that the appellant has carried the burden of proving that through the “probable” contamination listing, the valuation is too high. The correct valuation, in my opinion, would remain closer to the top than the bottom levels of value suggested by Mr Allison, but would be found by increasing the risk factor effectively allowed by Mr Allison. Section 66(b) of the Act provides that the Land Court may: “Reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act.” (emphasis added) The valuation of the chief executive is set aside and the unimproved value determined in the amount of Thirty-four Thousand Dollars ($34,000). RE WENCK MEMBER OF THE LAND COURT -- 5 of 5 --