Bewa Holdings No 3 Pty Ltd v Chief Executive, Department of Lands [1996] QLC 43

LAND COURT BRISBANE 23 APRIL 1996 Re: AV94-292 An appeal against an unimproved valuation - Valuation of Land Act 1994 - Local Authority: Logan Amount of valuation appealed against: $58,500 Appellant's estimate of unimproved value: $40,000 Date of Valuation: 30 June 1993 Bewa Holdings No 3 Pty Ltd v. Chief Executive, Department of Lands D E C I S I O N The property to which this appeal relates is described as Lot 11, RP 208459, Parish of Mitchell, County of Stanley, containing an area of 1,110 m2. It is located about 1 km from the Browns Plains Road Post Office at a near right-angled bend in Elliott Court, which runs to the south off Johnson Road. The land has the configuration of a corner lot. Elliott Court terminates as the head of a cul-de-sac adjacent to the western boundary of the land. It is bitumen sealed with concrete kerbing and channelling and provides good access to the land. Electricity, water, sewerage and telephone services are available. The land is vacant and zoned "Service Industry". It is physically sound, slightly raised above street level, with an easy fall to the south-west corner. Mr W.J. Crothers was the registered valuer who appeared before the Court in defence of the Department's valuation, although he was not the valuer who had been responsible for the initial assessment. Mr Crothers had inspected the land and investigated the specific sales which he considered relevant. A valuation report was tendered through him. The valuation was based on the following calculation: 1,110 m2 @ $50.00/m² = $55,500 + 5% corner = $ 2,775 $58,275 ADOPT $58,500 That valuation was said to have been made "having regard to all land sales of similar zoning in Logan City" but with particular reference to two sales, brief details of which are: (1)Lot 9 on Registered Plan 208459, 1,529 m2, 27.4.92, $75,000, analysed to show an unimproved value of $73,500 with an applied value of $72,000. The land is rectangular in shape with the exception of a dog leg western boundary and an irregular southern boundary forming the cul-de-sac. The land adjoins the subject but is larger in area, is [1996] QLC 43 -- 1 of 4 -- 2 inferior in shape and depth, has access restricted to one frontage and is encumbered by a drainage easement. (2)Lot 23 on Registered Plan 807943 in Tradelink road, 1,548 m2, 3.12.93, $110,000, analysed to show an unimproved value of $105,000 with an applied valuation of $90,000. this is a rectangular shaped inside block lying below road level and falling to the south- eastern boundary. In Mr Crothers' comparison with the subject land he found that the access was restricted to one frontage, the land was encumbered by a drainage easement but is located in a superior industrial developed estate. He described the sale land as "slightly superior in unit value to the subject". The appellant company's case was conducted by Mr T. Matthews, registered valuer. With his knowledge of the unsuccessful efforts to sell the land, together with his knowledge of the locality and, after his sales research and a conference with the Department's representatives, Mr Matthews had formed the opinion that the correct valuation was $45,000 rather than the estimate stated in the Notice of Appeal. He had understood at the time he conducted his valuation, that the date of valuation was 1 February 1994, but accepted at the hearing that the correct date was 30 June 1993. That did not alter his opinion of value because he felt a slow market had prevailed in the relevant period. Mr Matthews advised the Court that the land had been on the market for over 12 months and "not one offer has been received". While the asking price was revealed during cross-examination, as having been originally $75,000 then reduced to $70,000, he felt that the fact that the price was negotiable was a relevant consideration as was the lack of any inquiry. Mr Matthews saw Elliott Court as an unattractive "back street" location being a small industrial estate which had not been fully developed in its nine years' existence. He saw low-lying land in the vicinity as detracting from the location as did the class of industrial development which was mostly small engineering businesses and a bus depot. Mr Matthews agreed that the subject land itself was physically sound although still requiring some earthworks to allow building construction. He did not agree that the corner position was an advantage. In his opinion the inferior location would not attract the type of development or use which required two-street frontage traffic exposure. Additionally because of the already small size of the land it was disadvantaged because of the effect of building setback requirements from both street frontages. In Mr Matthews' opinion the "Tradelink" Estate in which the land in Mr Crothers' Sale 2 was located, was the one successful industrial estate in the locality and was so superior, in terms of the nature of surrounding development and the market demand, as not to be comparable with the subject land. He agreed that the best evidence of value, had there been any, would have been provided by sales of industrial land in the Johnson Road /Elliott Court locality. His investigations and his discussion with Departmental officers, had apparently not revealed the existence of Mr Crothers' Sale 1, of the immediately adjoining site, admittedly well before the valuation date. He had found that vacant land sales in Enterprise Way, although of superior location, provided the best available evidence of value for the subject land. Enterprise Way is accessed from and runs parallel to Browns Plains Road easterly of Beaudesert Road and in a -- 2 of 4 -- 3 more active location. Nevertheless Enterprise Way was described by Mr Matthews as an industrial estate which had failed as evidenced by "lack of good development". He provided details of sales of three lots and a resale of one: Lot 19 of 2,069 m2 (29.8.94) showing $44.46 per m2 then 1.11.94 for $48.33 per m2; Lot 20 of 1,838 m2 (28.9.94) showing $53.31 per m²; Lot 23 of 1,872 m2 (7.11.94) for $72.11 per m². He stated that each of these lots are "similar in shape and contour" and for that reason the sale of Lot 23 was "out of proportion". He said, "The average of the other three sales" was $48 per m² and as he considered the sale lands to be far superior, adopted a value of $40 per m² for the subject. Mr Crothers agreed that the Tradelink Estate although geographically close to Elliott Court was superior in terms of its access being from Beaudesert Road and the type of development which the estate had attracted. However, he maintained the opinion that the degree of superiority at that relevant date was reflected by the two sales he had selected, one from the Tradelink Estate and the other of land adjacent to the subject. Both of these sales were of similar area, encumbered by drainage easements and with single street frontage. The land adjacent to the subject had a shape disability in comparison. Both sales, in his opinion, while some distance apart, in time, were still within the period relevant to the valuation. While Mr Matthews is actively engaged in marketing real estate and saw the location of the subject land as significantly detracting from its market appeal and saleability, I gained the impression from his evidence that he had concentrated too heavily on considerations of market conditions which existed closer to the date of the hearing than the date of valuation. He had in fact adopted February 1994 as the relevant date, rather than June 1993. His only sales evidence was obtained from larger lots in Enterprise Way and well after the valuation date. It seems logical that although that location may not be highly regarded, more recent commercial activity in that general area could well have commenced to favourably influence the level of value and its considered superiority. Apart from the averaging of sales being against valuation principle, it would not properly recognise the full effect of an increasing trend in value. The resale of one lot, for example, showed an increase in a three months' period in the later half of 1994 of near 10%, when market conditions were otherwise seen to be slow. The sale of Lot 23 had been discarded because it showed a much higher level of value also in November 1994. It was Mr Crothers evidence that the Enterprise Way sale lands were fairly steeply sloping towards a gully adjacent to the rear and not physically comparable to the subject land. One aspect of this case which is of concern to me is the possibility that, on the evidence, a valuation relativity inequity exists between the Elliott Court lands and the Tradelink Estate lands, at least with this relevant date valuation. It is observed that the Elliott Court sale for example which showed on analysis an unimproved value of $48 per m2 had a valuation of $47 -- 3 of 4 -- 4 per m2 applied. The sale land in Tradelink Estate showed an analysed unimproved value of $67.82 per m2 while the applied valuation to that block was $58. per m2. While relativity is not accepted as an issue which should influence my reasoning in this matter, a complaint was raised about the further increased level of the Department's valuation of the subject land at a more recent date. Again, while the later date valuation is not an issue to be dealt with here, the valuation evidence indicates significance difference now exists between the worth of industrial land in Tradelink Estate and Elliott Court. Relativity is one issue which may need to be considered closely in later valuations. In the meantime, it seems to me that to ignore the earlier sale of the larger and inferior site adjacent to the subject land, would, in the absence of sound reasoning, be a departure from correct valuation principle. I have not been convinced on the evidence placed before the Court that the Department's assessment of unimproved value of the subject land, at the relevant date, has been proved wrong. The appeal is therefore disallowed and the valuation of the chief executive affirmed. RE Wenck MEMBER OF THE LAND COURT -- 4 of 4 --