Currumbin Minerals Pty Ltd v Chief Executive, Department of Lands [1994] QLC 280

[1994] QLC 280 ,. LAND COURT BRISBANE 12 AUGUST 1994 Re: An appeal against a determination of unimproved value Shire of Albert - AV93-201 Currumbin Minerals Pty Ltd v. Chief Executive, Department of Lands (Hearing at Coolangatta) DECISION Land described as Lot 1 on Registered Plan 196129, Parish of Tallebudgera, containing 2.784 hectares, is situated at the corner of Currumbin Creek Road and Stewart Road, Currumbin Waters. As at 31st March, 1992, the Department of Lands assessed the unimproved value of that land in the amount of $850,000. The owner appealed against that valuation estimating the correct unimproved value to be $692,000. The grounds of appeal as set out in the notice are as follows: "1. The valuation does not take into account comparable values and sales. 2. The valuation does not take into account the limited use of the land, the large amount of marine mud on the site and the cost of dealing with the contamination on the site. 3. The valuation is out of relativity with the valuation of other properties in the area. 4. The valuation does not, in accordance with the principles required by law, value the unimproved value of the land." In the Town Planning Scheme for the Shire of Albert, the land is included within the "Light Industry" zone. Mr B.B. Kelaher, registered valuer, gave evidence for the appellant company. In his written report he explained the history of the site as follows: -- 1 of 11 -- 2 " Some years ago Currumbin Minerals Pty Ltd operated a mineral sands treatment plant on Currumbin Beach, Gold Coast. The building was unsightly, noisy and its use continually caused public protest - although it was operating legally under a mining lease. The State Government considered the matter and after lengthy negotiations arrived at agreement with Currumbin Minerals Pty Ltd to shift the plant to its present site - retreating entirely from Currumbin Beach. This agreement was confirmed by a special Act of Parliament giving Currumbin Minerals Pty Ltd the right to operate the plant on the subject site - not as an industrial undertaking but as a mine within the provisions of the Mining Act, which was both economic and secure so far as Currumbin Minerals Pty Ltd was concerned. The site covered about 3 ha's with a frontage to Currumbin Creek Road - a long narrow block where it was thought it would be well screened from the public. However, in 1989-90 the Main Roads department decided to resume about 1 ha on the north east side of the land ........ The effect of this was to expose the plant directly to the public - in fact the new road was so close to the building that the loading ramps on the building had to be re-constructed on the south eastern side of the building. This destroyed all privacy and exposed the operation to the public. Whilst warning signs and other measures to exclude and protect the public have been taken, there can be no question that the operation is now exposed to 'green' type protests - without the existing Act of Parliament there would be a danger of the operation being closed. The land itself is level with both streets but with about 2000 m 2 of swamp/marine mud on the north west corner, which is not capable of filling or compaction. This is screened from the highway to a degree by a number of trees." The Act of Parliament referred to by Mr Kelaher was the Currumbin Minerals Pty. Ltd. (Transfer of Treatment Plant) Act 1973, "enabling the carrying on of certain mining purposes by Currumbin Minerals Pty. Ltd. at a site not within the boundaries of a claim held by it, and for purposes connected therewith." Section 3 of the Act permitted "without prejudice to the claim ....... " the removal of the then existing treatment plant at Currumbin Creek, within the boundaries of the claim (Amalgamated Dredging Claim No. 43, Southport) to the original site of which the subject land formed part. Section 4(1) provided as follows: " Where the structure is removed and reconstructed as aforesaid, the carrying on by the company on the new site of the mining purposes of -- 2 of 11 -- 3 treating sand or ore or stacking or otherwise storing sand, ore or minerals shall be deemed to be a carrying on of such mining purposes within the boundaries of the claim." Mr Kelaher had been informed of the results of a geologist's investigation of the site as to its radioactive contamination and the estimated costs of decontaminating or remediating the site to allow its alternative use as zoned. He saw it as obvious that the land could not "be used economically and legally for anything but the present purpose". Mr Kelaher had been involved in an objection lodged by the company against a valuation of $780,000 as at 31st March, 1989. As a result of that objection, the valuation then had been reduced to $640,000. He felt that at that time, the site specific problems had been well ventilated and understood by the Valuer-General (as he was then) and the owner hi;id been prepared to accept that result. Although he held the opinion that nothing had changed in terms of value in the interim, he had rounded his valuation for the purpose of this appeal, to a pro-rata value of $25 per sq. metre, resulting in a total amount of $696,000. Mr Kelaher expressed the concern that there was no directly comparable sales evidence - "for the obvious reason - there are no mines in the South Coast area". Furthermore, except for two transactions, he knew of no sales in "the Currumbin area of Light Industry land of a size and nature that allows of reasonable comparison". The first of the exceptions was a sale of an area of 4.519 hectares, in November 1990, for $600,000 or about $13 per sq. metre. This sale land was about 200 metres from the subject land, was of poor physical nature requiring "major fill /drainage" before its subsequent development as an industrial subdivision. Mr Kelaher described this land as "inferior as industrial land". The second sale was, on his information, an area of 1.6051 hectares, to a -- 3 of 11 -- 4 purchaser associated with adjoining land, to show an unimproved value, on his analysis, of $45 per sq. metre. Mr Kelaher was well informed as to the circumstances surrounding the sale. It was of land directly opposite the subject land but not suffering the same physical disabilities. He described it as being capable of use immediately for industrial purposes. Although the sale had taken a long period to negotiate, at a price significantly less than the original asking price, Mr Kelaher viewed the sale to an adjoining owner with some reserve, although with the lack of evidence generally, he found it to be of some assistance. Mr Kelaher had known the subject land before its development with "considerable quantities of fill". In his evidence he described the land as "a swamp with a large quantity of marine mud". It had not been fully filled, and due to stockpiling operations, Mr Kelaher found it to be deceptive in separating the stockpiles from the purposely filled areas. In terms of the site development which had taken place he accepted the calculations contained in a report provided by Mr R. Jack, a consultant geologist, who had been familiar with the site for a long period but not before the filling operation had commenced. Mr Jack gave evidence for the appellant company. In a tendered report he described the land as having been "originally a low-lying swamp area largely below the present road level. Extensive sand and gravel filling has been used to raise the surface levels above the water table and allow access over most of the land". He estimated that the area occupied by buildings and main access roads to be about 8,000 sq. metres. This area had been first excavated to 2 metres, to remove unsuitable foundation material, then backfilled. He calculated that the 16,000 cubic metres of solid fill involved 20,000 loose (truck metres) which would have cost at the relevant date, not less than $6 per truck metre or $120,000. -- 4 of 11 -- 5 Excavation of the area was estimated as costing $48,000 and compaction $10,000, the total estimated cost of improving the 8,000 sq. metre building area amounting to $178,000. While Mr Jack felt that the site development for the area accommodating the buildings would have been riecessary for any form of industrial use, he agreed that the flooring constructed for the mining operation was of greater specification than normal because of the load-bearing capacity required for that use. In addition to the building area a further 12,000 sq. metres of the site had been filled to a depth of 1.5 metres solid, requiring 22,000 loose truck metres, for vehicular access and to allow use for mineral stockpiles and machinery storage areas. At $6 per truck metre, the improvement of this 12,000 sq. metres was calculated as costing at the relevant date $132,000. The total cost of site improvements (exclusive of interest or holding costs) was then estimated at $310,000. The unfilled area of the site was used for an ilmenite stockpile and the tailings pond area. Mr Jack believed that as at the date of hearing the use of the land for a mine treatment plant would have a life possibly less than five years. Mr Jack had also reported on the cost of the "decontamination and clean-up of the site" which will become necessary to allow alternative use. He divided the necessary operation into four sections and provided full details of the estimated costs involved. These are summarised as follows: (1) (2) (3) (4) Retreatment and disposal of radioactive sands after reprocessing of the ilmenite dump - Removal and dumping of all surface radioactive contaminated soils from the site - Cleaning, decontamination of buildings storage areas, disposal of contaminated sands - Refilling, recompaction and reconstruction of drainage on mine area - I $1,382,000 $1,083,000 $ 6,000 $ 142,000 $2,613 .000 -- 5 of 11 -- 6 Evidence for the Department of Lands was called through Mr AL. Nobes, registered valuer. He had not been the officer who had carried out the valuation. However, after investigating the matter he had formed the opinion that the Department's valuation was correct. In his tendered report he described the nature of the land as follows: " The eastern portion of the subject land which forms approximately fifty per centum (50%) of the total site is of level contour being at street level. The remainder of the site is below street level having a moderate undulating contour with some pondage being obvious. Drainage is fair." Mr Nobes described the use of the site as being for a sand mining plant which incorporates the storage of substantial amounts of raw materials. He supported the Department's valuation by the following calculation: Site value 27840m 2 @ $40.00 Less Fill 27840m 3 @ $9.50 Unimproved Capital Value Rounded to The level of value applied was based on two sales as follows: $1,113,600 $ 264,480 $ 849,120 $ 850,000 (1) Lots 5-8 on RP 810126 - 7066 sq. metes - zoned "Light Industry", sold .in May 1991, for $500,000, cleared and developed with filling (the filling valued at $100,500), analysed to show an unimproved value of $56.32 per sq. metre with an application at the date relevant to this matter of $53.77 per sq. metre. Mr Nobes compared the sale land with the subject land as follows: "Small parcel of land which forms a corner site. Comprises four (4) separate allotments. Site has required extensive filling to create a level contour. Does not enjoy the exposure of the subject land, being located on a local street. Is of smaller dimensions with comparable access however location is inferior." The land in this sale is said to form part of the land in Mr Kelaher's . first sale, subsequent to its filling and subdivisional development. (2) Part of Mr Kelaher's second sale, 1.514 hectares purchased for $640,000 (as part of the aggregation referred to by Mr Kelaher), -- 6 of 11 -- 7 analysed to show an unimproved value of $39.82 per sq. metre. Mr Nobes compared the sale land with the subject land as follows: "Large parcel of land within the immediate vicinity of the subject. Comprising three (3) separate allotments does not enjoy the same exposure or access as the subject. Provides a good indication of what sale prices larger, level allotments are achieving within the same location as subject." Mr Nobes expressed the opinion that a feature enhancing the value of the subject land in comparison with the sales evidence and as an industrial site, was the exposure provided by its prominent corner position. Contaminated Land Considerations While no formal evidence was provided to the Court as to the status of the classification of the land, it is assumed from the submissions made that the land is recorded in the Contaminated Sites Register, under the provisions of the Contaminated Land Act 1991. Both valuers and Mr Jack accepted that the land was included in that Register. It is the submission of the appellant company that the cost of decontaminating or remediation of the site was a matter to be considered in assessment of unimproved value. The use of the land for the mining purpose is tied to the Dredging Claim and Mr Jack infers that the life of the mining operation is relatively short term. Once the existing use ceases the permitted uses are controlled by the "Light Industry" zoning . The value of the land for such alternative use, based on values at the relevant date, is less than Mr Jack's estimate of the cost of remediation. Mr Kelaher's approach to the problem, as I understood it, was to recognise that the land at the relevant date of valuation had a value associated with its use for mining purposes. In the absence of sales of "mine" sites he took into consideration the level of value shown by the sales in the local "Light Industry" -- 7 of 11 -- 8 zone. I found Mr Kelaher's explanation as to how he adjusted an uncontaminated "Light Industry" zoned value on a filled basis to his valuation of the land as an unimproved mine site requiring filling at least to the extent suggested by Mr Jack, to be somewhat vague. Nevertheless he thought that $25 per sq. metre allowed "for all the disabilities" in comparison with the level of value of $45 per sq. metre shown by his analysis of the physically sound "Light Industry" zoned land across the road (his second sale). Mr Nobes's approach was clear. He valued the land based on its "Light Industry" zoning. He made no allowance for the land being registered as a contaminated site. The Department's submission was that while soever the use of the land causing the contaminated site classification continued, the land should be valued without having regard to the effect of the contamination. The submission went as far as to suggest that in the "environmental atmosphere" which currently exists, the ability to use the site for a purpose causing contamination, could be seen as an advantage in the marketplace. It is further submitted that the existence of contaminated site registration becomes relevant only when the existing use ceases. The valuation of land entered on the Contaminated Sites Register was recently considered by my learned colleague Mr Trickett in Logform Industries Pty Ltd v. Chief Executive,. Department of Lands, a decision handed down on 31st May, 1994. In that matter, which involved industrial land placed on the Contaminated Sites Register due to the likelihood of contamination through its use for manufacturing treated pine timber products, the submission for the chief executive was that s.12(1A) of the Valuation of Land Act 1944 (relevant as at 31st -- 8 of 11 -- 9 March, 1992 but since renumbered) must be applied. Mr Trickett, in a decision which is considered to be well reasoned, agreed with that submission. Section 12(1A) provided as follows: " 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) of this section had not been made." It seems to me that in this matter, it is reasonable and equitable that the land should be valued for statutory purposes on the assumption that it may be used and may continue to be used for the purposes of a mining operation. As I interpret s.12(1A) of the Act, it is not in this case, the present value of a wasting asset which is to be found. Instead "it shall be assumed that the land may be used, or may continue to be used" for the purposes of the mining operation. When that use ceases and a worsement has been occasioned to the land then the provisions of the Act allow for alteration of the valuation. Valuation Considerations Although it would appear from his verbal evidence that he has considered the life of the mining operation use as a matter affecting value, and I am unable to agree that s.12(1A) of the Act allows that concession, I find Mr Kelaher's approach in attempting to value the land based on its mining operation use rather than as "Light Industry" zoned land, to be correct. -- 9 of 11 -- 10 If it is found necessary to consider the level of value shown by sales- of land in the "Light Industry" zone, within which the subject land is situated, that is seen as no more than part of the valuation process, just as it might have been, for example, reasonable to consider levels of value in the "Heavy Industry" zone, if cogent comparison was considered able to be drawn. As I understand the submissions of the appellant company, the mining operation use would not have been permitted in the "Light Industry" zone had it not been for the enabling legislation. It is suggested that the use is of a hazardous nature which I interpret as being one which might be permitted, for example, in the "Heavy Industry" zone. In my opinion it would be wrong, in the circumstances of this matter, to ignore the existing use and value the land on the basis of the highest and best use being one permitted within the "Light Industry" zone. This was the approach of Mr Nobes. The land clearly is not capable of use for light industry until remediation is effected. Mr Nobes highlighted the positive feature of the exposure of the site for light industry use. The site is provided with good access and the road configuration subsequent to the resumption reduces adjacency to property of others, but it is Mr Kelaher's opinion that exposure to the general public of a site contaminated by the presence of radioactive material should be seen as a disability. That to me, is a logical conclusion, if the land is to be valued on the basis of that existing use. Mr Kelaher has taken into consideration the actual site development which has been effected, based on its existing use. Mr Nobes has valued the site based on its potential to be fully developed (by filling) for light industry use. Even if that was the correct approach, I am not convinced that his allowance of the equivalent of 1 metre of solid fill over the whole of the site, adequately recognises the -- 10 of 11 -- 11 physical nature of the land in its unimproved state. I make this observation, based on the depth of fill ascertained by Mr Jack's investigation as to that part of the site where there was no question of the need for filling to accommodate additional load-bearing requirements. In the end result, while he says he has considered in his assessment the expected life of the mining operation, I have formed the opinion that Mr Kelaher's opinion of value, if dissected, represents a fair estimate of the value of the land even on the assumption that the existing use may continue indefinitely. It seems that if Mr Nobes's opinion of value was discounted somewhat for the exposure aspect, then with adoption of a less conservative estimate of the quantity of fill required for total site development, the end valuation result would be little different to that arrived at by Mr Kelaher. I will therefore adopt without alteration Mr Kelaher's valuation. Finding The appeal is allowed, the valuation of the chief executive set aside and the ~nimproved value determined in the amount of $696,000. RE WENCK MEMBER OF THE LAND COURT -- 11 of 11 --