Century No. 6 Pty Ltd v Chief Executive, Department of Lands [1994] QLC 237

-------·------ ' UBRAR'i COPY Re: Appeal against Annual Valuation Valuation of Land Act 1944 Shire of Whitsunday (AV93-416) Century No. 6 Pty Ltd V. Chief Executive, Department of Lands (Hearing at Proserpine) DECISION LAND COURT BRISBANE 8TH APRIL 1994. Century No. 6 Pty Ltd is the owner of land described as Lots 8 and 9 on Registered Plan 734596, Parish of Dryander, County of Herbert, containing an area of 13.96 hectares. As at 31st March, 1992, the Valuer General valued this land at $610,000. Following an objection by the owners, the valuation was reduced to $500,000. Century No. 6 Pty Ltd then appealed to the Land Court through Valuers, Messrs Conroy & Associates, of Airlie Beach. This is one of a number of appeals in the Shire of Whitsunday. I have made some general comments on these cases in the decision in respect of Appeal AV93-411, which it is unnecessary to repeat. Mr Bevan Conroy, registered valuer of the abovementioned firm, appeared and gave evidence on behalf of the appellant. Mr Conroy tendered a report and valuation in which he said that the subject property is situated in Shute Harbour Road, Cannonvale, approximately 5 kilometres west of the Airlie Beach Post Office. Part of the land has been developed as a caravan park and the balance is vacant land. Access to the land is from Shute Harbour Road, a dual-lane bitumen [1994] QLC 237 -- 1 of 12 -- 2 sealed road without kerbing and channelling. Telephone, electricity, town water and a weekly cleansing service are available. However, the property is not sewered. Mr Conroy describes the land as an irregular shaped allotment with frontage of 200 metres to Shute Harbour Road and a depth through its centre of approximately 340 metres. Waite Creek forms the eastern boundary and the northern boundary fronts a mangrove esplanade to Pioneer Bay. The land is generally even, with a gentle fall to its northern boundary. Approximately 50 per cent of the site, the northern half, is subject to ponding in wet seasons and tidal influence. There are no sea views from the property. Lot 8 is zoned "Rural Residential" and Lot 9 is zoned "Rural A (Pastoral)". The use for caravan park purposes is a consent use under the zoning . Mr Conroy estimates that the caravan park occupies approximately 1.5 hectares of the site. Of the balance area, he said that it has no potential for higher use in the immediate future. Mr Conroy valued the land as follows: 1. 5 hectares @ $125,000 per hectare 12.459 hectares @ $10,000 per hectare Adopt $187,500 $124,590 $312,090 $310,000 As a basis for his valuation, Mr Conroy has referred to seven sales zoned variously "Residential A", "Residential B" and "Industrial". Mr Conroy said the caravan park is known as the Pioneer Caravan Park, with 50 van sites, amenities block, manager's office, etc. He describes it as a fairly low market caravan park, with septic rather than sewerage and no bitumen -- 2 of 12 -- 3 roads through the park. He said it is at the lower end of the scale of caravan parks of which there are about seven on the Whitsunday coast. It is one of only two parks that take long-term permanent tenants and this park is the only one that permits pets. He said it is not a very attractive park. Mr Conroy went on to say that the owners of this land have made a number of applications to the Council to rezone the land to either "Residential A" or "Residential B" . These applications have mostly been approved, but the approvals in principle have lapsed after 12 months as the conditions imposed for the rezoning have not been complied with. Mr Conroy read the conditions which were imposed on the rezoning application dated May 1981 and another dated November 1986. The 1981 application required contribution of $2,500 per unit and the developer then had to provide access from Shute Harbour Road, which was to be upgraded and designed to comply with Council and Main Roads Department requirements. Parking areas had to be provided within the park and access and parking areas were to be bitumen paved. Sewerage was to be provided and sewer connection by means of an internal pump station and rising main. Usual financial guarantees for the development were required. The 1986 application required much the same things, the payment of $80,000 for headworks, provision of sewerage, provision of sealed internal roads, sealed car parks, visitors' car-parking bays, stormwater drainage, landscape plans and sewerage pump out stations. Mr Conroy said that because of the cost, none of the approvals in principle had been proceeded with and none of the conditions had been fulfilled. Mr Conroy saw the highest and best use of the land as a caravan park. -- 3 of 12 -- 4 He had valued the 1.5 hectares by reference to "Residential B" sales. While use as a caravan park is not an as of right use under "Residential B" zoning, it is a consent use. As for the balance area which he had valued at $10,000 per hectare, Mr Conroy saw its highest and best use as rural land. He said the cost of transforming this land from "Rural A" to land of a higher use is quite steep and he believes that it is prohibitive, particularly given the market at the date of valuation. Mr Conroy thought that a prudent purchaser would hold the land knowing that at some time in the future the caravan park could be redeveloped to a much higher standard than at present. It is the first caravan park on the western approach to Airlie Beach and has potential in the future for redevelopment for caravan park purposes. He could not see any other use for the site as he did not think it was an ideal "Residential B" unit development site. He felt that a prudent purchaser would pay $10,000 per hectare for the balance land and hold it against the time when it would be economic to develop. Mr Conroy admitted that he had no sales to support the $10,000 per hectare. The only sales he could draw upon were his larger "Residential A" and "Residential B" sites and try to make something of this evidence. He admitted that he had not attempted to do an exercise of deferring the value of the land for some years because the market was so unpredictable. He thought that development could occur in perhaps five years or perhaps more, and the uncertainty of the time of development would alter the valuation considerably. At the moment Mr Conroy thought that a purchaser seeking earlier development would be more prudent to buy sound land rather than the subject, -- 4 of 12 -- 5 as there was better sound land available. Any development of the subject land would require filling, draining and sewerage connection and the Council would be likely to require that the existing infrastructure be upgraded. His approach had therefore been to look at what sales were available and try to make allowances for the differences and the problems associated with the subject property. Mr Conroy's seven sales are as follows: Sale No. 1, with an area of 7.326 hectares, sold in May 1991 for $325,000 or $44,350 per hectare. Mr Conroy thought that this sale was zoned "Residential 8" but later it emerged it was zoned "Residential A" at the date of sale. It is a sloping, heavily timbered site with good sea views and all Council services. Sale No. 2, with an area of 3.967 hectares, sold in October 1991 for $410,000 or $103,350 per hectare. This sale is situated in Shute Harbour Road, Jubilee Pocket, and is a sloping site with good sea views and all Council services. It was zoned "Residential 8". Sale No. 3, with an area of 1,561 sq. metres, sold in January 1992 for $205,000 which analysed to show $178,500 or $115 per sq. metre. This property is zoned "Industrial", situated at Abel Point, Airlie Beach, and is a partially filled site with frontage to the esplanade to Pioneer Bay with good sea views. Sale No. 4, with an area of 18.93 hectares, sold in May 1992 for $420,000 and shows $22,220 per hectare. This property is situated in Shute Harbour Road, Cannonvale, and is zoned "Residential A". It is an in globo parcel, being the balance of the Harbour View Residential Estate. The site has been fully subdivided since sale and is level for half of its depth, then rising gently to the rear boundary. There are good sea views from the higher slopes. Sale No. 5 is situated in Coyne Road, Cannonvale, and has an area of 12.81 hectares. This property sold in August 1992 for $230,000 and analysed to show $18,000 per hectare. It was zoned "Residential A" at the date of sale. It is an undulating to gently sloping site for approximately 75 per cent of its depth, then rising steeply to its rear boundary. It has a bitumen road and Council services to its boundary. Sale No. 6, with an area of 11.35 hectares sold in September 1992 for $425,000. This property is situated in Carlo Drive, Cannonvale, is zoned "Industrial" and is a level site with no problems. It shows $37,500 per hectare. -- 5 of 12 -- 6 Sale No. 7 is situated in Erromango Drive, Jubilee Pocket, is zoned "Residential A" and has an area of 10.07 hectares. This property sold in December 1992 for $450,000 and analysed to show $44,700 per hectare. It is an in globo parcel, being the balance of Erromango Stage 3 Estate. It is a sloping, heavily timbered site with fair sea views. it has been further subdivided since sale. Mr Conroy said that Sale No . 1, although an earlier sale, provided him with some basis. He also found Sale No. 4 to be of assistance. He said that the other sales probably do not really assist him a great deal. Sale No. 5 was zoned "Residential A" when purchased and was rezoned to "Park Residential. It was of some assistance and, likewise, Sale No. 7, zoned "Residential A" and approved for subdivision. The other sales are either zoned "Industrial" or "Residential B" and show a much higher rate per hectare, so they were included for the sake of completeness. Sales 1, 4, 5 and 7 show a range between $18,000 and $44,700 per hectare, a fairly wide range of values and quite a wide scope as a basis of valuation. Under cross-examination, Mr Conroy admitted that his area of 1.5 hectares for the developed part of the block was an estimate only, based on his inspection and discussions with the manager. He is of the opinion that it is certainly less than 2 hectares. Also he admitted that his estimate that 50 per cent of the site is subject to ponding and tidal influence was based on his observation and was not measured. Mr Conroy said that he had no doubt that the problems of the site could be alleviated, but he said there is no point in paying the cost of rezoning and development if the property is worth less than the cost of development. He readily concedes that the property has potential in the long term, but saw that as at least five years away. He said there was a lot of land to be developed in Airlie -- 6 of 12 -- 7 Beach and the Town of Whitsunday before the back area of the subject land. Mr Conroy said that if the subject land was rezoned, Sale 4 would probably be the most comparable. If roads were developed and the low land filled, it would have a value of around the Sale 4 figure, but it has no sea views, so he thought that it would be worth round $21,000 per hectare. However, the cost of rezoning would be so great that he did not think an owner of this property would consider rezoning at the date of valuation. He went on to say if the land was going to be rezoned, 1986 would have been the year because it was leading up to the boom in the Whitsundays in 1987 to 1989. If the property had such potential, the 1986 rezoning approval would have been carried through to · completion. Mr S J Whitfield, registered valuer employed by the Department of Lands, gave evidence on behalf of the respondent. In his tendered report, Mr Whitfield described the land somewhat differently to Mr Conroy: "The land is level to gently sloping and is situated between Shute Harbour Road and mangroves bordering Pioneer Bay. Approximately 4 hectares of the aggregation is subject to drainage problems such as flooding and ponding." He valued it thus: 11.96 hectares @ $26,000 per hectare Less risk of rezoning and allowance for flooding, say 20 per cent Plus area occupied by caravan park activity, 2 hectares @ $130,000 Adopt $310,960 $62.190 $248,770 $260,000 $508,770 $500,000 -- 7 of 12 -- 8 Mr Whitfield admitted that his area of 2 hectares occupied by the caravan park was also an estimate, but he had consulted aerial photographs and the previous departmental records, as he had done in arriving at his estimate of 4 hectares of the subject land which is subject to drainage problems. He thought that Mr Conroy's estimate of 50 per cent was excessive. However, if there was a larger area than his 4 hectares, he would not have adjusted his rate per hectare but would have made a larger percentage allowance. In support of his valuation, Mr Whitfield relied on three sales. The first of these is also Mr Conroy's Sale No. 5. While it showed an analysed unimproved value of $230,000 or $17,950 per hectare, it had to be valued under Section 11 (9) of the Valuation of Land Act as a single unit dwelling site, and an unimproved value of $106,000 was applied in the 1992 valuation. Mr Whitfield describes this land as an elevated parcel with good views, whereas the subject land is reasonably level without views. Being situated on a busy road, the subject land enjoys high exposure to passing traffic, whereas the sale is somewhat isolated on the fringe of residential development. He comments that the sale had no legal access at the date of sale and the purchaser relied on being able to secure access across Crown land after the sale was completed. This cost $50,000. Overall he considers the sale inferior to the balance area of the subject land. Mr Whitfield's Sale No. 2 is Mr Conroy's Sale No. 7. Although it analysed to $420,000, or $41,700 per hectare, he had applied an unimproved value of $350,000 in the 1992 valuation. Mr Whitfield comments that the sale land adjoins residential development, is well drained but does not have main road -- 8 of 12 -- 9 exposure. Both sale and subject properties are located on the outskirts of residential subdivision some distance from shopping and educational facilities. Overall he considers the sale property superior to the balance area of the subject land. Mr Whitfield's Sale No. 3 is Mr Conroy's Sale No. 1 which analysed to show an unimproved value of $320,000 or $43,700 per hectare. However, in the 1992 valuation Mr Whitfield applied an unimproved value of $256,000 or $35,000 per hectare. He describes the sale property as gentle to easy sloping with a gully running almost the length of the block. It has no views and is situated much closer to Airlie Beach and close to two shopping centres, schools and the TAFE College. Overall he considers it superior to the balance area of the subject land. Mr Whitfield said he approached the valuation in this way as he considered there was very little risk in getting rezoning in principle to "Residential A". However, he did admit that complying with the rezoning conditions may be expensive. His approach was that if the balance area of the subject land was rezoned "Residential A", it would have a valuation of $26,000 per hectare. He considers that this is supported by the sales. He admitted that while the subject land has access to a beach esplanade, that beach frontage is really a mangrove swamp which cannot be used, nor can access be gained to water from it. He agreed the benefit was negligible. Under cross-examination, Mr Whitfield was questioned closely about the relationship of $26,000 applied to that area of the subject land and the analysis of the three sales. He considered that Sale No. 1 was inferior to the subject -- 9 of 12 -- 10 land, even though part of it had sea views. It was inferior, he said, because the access was inferior and uncertain at the date of sale. He thought that his relativity was correct with the valuations applied to Sales 2 and 3. Mr Whitfield went on to say that at the date of valuation he thought that the subject land had as much chance of being developed as the sales. However, now with the amount of land on the market, it would not be developed for at least two years. There were already six subdivisions in the Whitsundays being undertaken and sold at the date of valuation. He admitted that he did not carry out a development exercise in arriving at his valuation, nor was he aware of Council requirements to rezone the subject land to "Residential A". However, he was aware that sewerage would have to be connected and internal roads would have to be upgraded. He considered that his allowance of $62,000 for the flooding factor and the rezoning risk was sufficient. In this case there is some difference of opinion between the two valuers. They disagree about the different areas comprising the subject land, they disagree about its potential and they disagree about the cost of development. In fact, they see the subject land with quite different eyes. While Mr Whitfield takes a somewhat optimistic view, Mr Conroy does not see its potential being developed in the next few years. Mr Conroy has conceded that his estimate of 1½ hectares of land occupied by the caravan park may be a little conservative and might be closer to 2 hectares. In the absence of any better evidence, I intend to adopt 2 hectares. He has also conceded that his valuation of $125,000 per hectare for this area could just as easily be $130,000 and I intend to adopt that latter figure. -- 10 of 12 -- 11 As for the balance area, after careful consideration of the evidence given by both valuers, I have come to the conclusion that the $10,000 per hectare adopted by Mr Conroy is too conservative. On the other hand, I think that the valuation of $26,000 adopted by Mr Whitfield, if the land was zoned "Residential A", is excessive. The answer lies somewhere in between. While providing by no means an ideal basis, the sales that do assist to indicate an unimproved value of between $18,000 and $22,000 per hectare for land which, on the evidence, I find to be superior to the subject land. The sales were all rezoned, although there is some doubt about what payments had been made to Council at that stage and whether those lands were capable of immediate development without further payment. The state of the evidence on this point is by no means conclusive. However, I think the approach taken by Mr Whitfield is fraught with difficulty. He values the balance land at $26,000 per hectare and makes an allowance of 20 per cent for both "the risk of rezoning and the drainage problems". This amounts to only $62,000. I· think that the evidence clearly indicates that the cost of rezoning alone would be much greater than this, to say nothing of the cost of filling and draining the subject land. Therefore, I prefer an approach of adopting a per hectare figure for the balance land as is. The problem is just what a prudent purchaser would pay for the land as at the date of valuation. After considering the evidence carefully, I have come to the conclusion that a prudent purchaser would pay something less than the $18,000 per hectare disclosed by Sale No. 1. In the absence of any better evidence, I intend to adopt a figure of $16,000 for the undeveloped land on the -- 11 of 12 -- 12 subject property. As a result of my findings, the calculation becomes: 2 hectares @ $130,000 a hectare $260,000 $ 191 ,360 $451,360 11.96 hectares @ $16,000 a hectare Adopt $450,000 Accordingly, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Four Hundred and Fifty Thousand Dollars ($450,000). J J TRICKETT MEMBER OF THE LAND COURT -- 12 of 12 --