Demfire Pty Ltd as Trustee for the Windsor Development Trust v The Valuer-General [1991] QLC 217

Re: Appeal against Annual Valuation of the Valuer-General - City of Brisbane. AV91-743. LAND COURT, BRISBANE 18th December, 1991 Demfire Pt y Ltd as Trustee for the Windsor Develo pment Trust V. The Valuer-General DECISION This is an appeal against the valuation of the Valuer-General of the unimproved value of Lot 7 on RP 223902, parish of Enoggera, containing 1.698 hectares. In the revaluation of the lands in the City of Brisbane as at 31st March, 1989 (effective 30th June, 1990), the Valuer-General valued this land at $4,100,000 but amended this to $3,200,000 on objection. The company has exercised the right of appeal to the Land Court and in the Notice of Appeal contends to a value of $1,350,000. The subject land is situated at 190 Lutwyche Road and the corner of Newmarket Road and Rosemount Terrace, Windsor, and has erected upon it a newly developed retail warehouse development known as the Windsor Centre. It is zoned 'Light Industry' except for an area of about 485 square metres in the north- east corner which is zoned 'Business' under the relevant Town Plan. The owners have received a consent to use the land for the development of the retail warehouse building with a net lettable area of 9,544 square metres in seven separate tenancy areas. From the evidence I glean that the subject land originally comprised several smaller subdivisions on part of a well elevated rocky knoll with an easterly aspect to Lutwyche Road and a southerly aspect to Newmarket Road. Over the years it has been used as a quarry involving quarrying of the solid rock material to [1991] QLC 217 -- 1 of 8 -- 2 the majority of the site and down to a considerable depth below the existing road level. Quarrying was eventually abandoned and the then owners, the Brisbane City Council, undertook a program of filling the excavation. A good deal of this fill was with suspect material and it was necessary to provide pier and beam construction for sound foundations and rock anchors to the rock face on the western alignment of the holding for the present building upon the land. Evidence was given by Mr R.B. Tilby, a quantity surveyor of Rider Hunt, reporting on the work which his firm was instructed to do for the appellant company which was to express an opinion on certain matters assuming the subject land was in its original natural state as at the relevant date. He was required to assess the volume of material to be excavated, to assess the cost and time required to excavate that material and an assessment of the additional costs due to construction on the fill site. In a written report he makes the assessment of the volume of material to be excavated and assesses the cost and time for excavation and disposal of site. His first calculation is on the basis that the cost is to include cartage to industrial tip and including tipping fees, the quantity of 44,000 cubic metres at $36 per cubic metre - $1,584,000. His second assessment is on the assumption that there would be no tipping fees involved when the cost would reduce to $27 per cubic metre or $1,188,000. His third calculation assumes that cartage will be paid for by some other party in need of fill and his assessment is $18 per cubic metre or $792,000. His report says that there has been no pricing on the alternatives of selling the excavated rock as he had received advice that the quantity would be too small for a commercial quarry and too large for distribution to landscape gardeners and landscape material suppliers. He assesses the time to complete the work at 44 weeks and explains his reason for such time. He also completed an assessment of additional costs due to construction on a fill site at $200,000. -- 2 of 8 -- 3 Valuation evidence was given by Mr L.B. Johnston who describes the land, its situation, roads and access, services and amenities. He says that the majority of the site had been filled with suspect material and it was necessary to provide pier and beam construction for sound foundations. It was also necessary to provide rock anchors to the rock face on the western alignment of the holding. The cost of pier and beam foundations has been estimated at $130,000 and rock anchors at $50,000 for a total cost of $180,000. He makes reference to the sales of six parcels of land which he considers assisted him in arriving at an unimproved value of the subject land. These sales occurred between February 1988 and September 1989. Having considered the sales, Mr Johnston formed the opinion that a rate per square metre of $170 is an appropriate unimproved value for the subject land as a sound site. This is mainly due to his consideration of the Big Top sale as a prime sale for comparison. This gives a figure of $2,886,660. His approach is to value the site in its original state with surrounding developments in existence at the relevant date and then he deducts the cost of excavation of rock and overburden to bring the land back to its original state. He has adopted the estimate of Mr Tilby based on the premise that the material could be dumped without tipping fees at $1,188,000 to which he adds $146,215 for interest, a total of $1,334,215 from which he derives his unimproved value of the land at $1,552,000. He says in this exercise the cost of pier and beam and securing the rock face in the sum of $180,000 has not been considered. He does a check valuation working back from the capital value of the development as at 31st March, 1989, capitalising the net income at 11 percent and arrives at a land value a little less than the value for which he contends, but his basis of valuation is on sales. The valuation for the Valuer-General was done by valuer, Mr G.W. -- 3 of 8 -- 4 Lindberg, whose approach differs from that of Mr Johnston. He says that he approached his task viewing the subject land which had once been quarried to a substantial depth below road level. The owners, the Brisbane City Council, subsequently filled the land in the early 1980s with soil removed from Breakfast Creek and Enoggera Creek during flood mitigation works. This had the effect of bringing the land up to the level of Lutwyche Road and Newmarket Road. He then valued the parcel at $200 per square metre based on sales for a total of $3,396,000. He deducted the sum of $200,000 for the cost of some additional filling, special footings and site preparation costs to arrive at his final valuation of $3,200,000 as a rounded off figure. As a basis for such valuation he has had regard to four sales, three of which occurred in late 1988 and the other in May 1989. The first matter to be resolved is to decide which valuation approach is correct. Mr Paterson, Counsel for the Valuer-General submits that Mr Lindberg is correct in viewing the land as it stood at the date of valuation as an abandoned quarry albeit land that had been filled to street level by the Brisbane City Council but that otherwise any other improvements on the land were to be disregarded. Mr Lindberg has made an allowance of $200,000 for additional filling, footings, etc., and there seems no dispute between the parties that this is an appropriate allowance if the method is correct. Mr Paterson refers me to a decision of the Land Appeal Court - R.J.C. and I.A. Hawse v. The Valuer-General (V88-235) (1988-89) 12 Q.L.C.R. 223 and particularly to the statement at page 228 - In the subject case, prior to its alienation, worsement in the form of quarrying operations occurred. The subject land, therefore, must be valued in such worsened state and condition. In general, the unimproved value for statutory purposes cannot be higher than the market value of the fee simple in its worsened condition at the relevant date. Ra vnbird v. The Valuer-General - Land Appeal Court - (1980-81) 7 Q.L.C.R. 106 at p. 109. -- 4 of 8 -- 5 As a matter of law we agree with the approach below that the subject land in the final determination must be valued in its unimproved quarried state and condition. The text book or classical approach would be to apply a sale of similarly quarried land more or less comparable in all other relevant aspects. In the absence of such a sale it seems to us that the most appropriate commencing point is to arrive at the unimproved value of the subject site assuming it was notionally restored to its natural (pre-quarry) street level state and then to deduct all relevant allowances for improvements necessary to achieve the level site as well as for any disabilities which would othe,wise affect the market value of the quarried site. • He submits that the approach made by Mr Lindberg is the correct one and should be adopted. It is the submission of Mr Ure, Counsel for the appellant, that the Valuer-General is wrong in the methodology adopted. The Act requires the Valuer- General to determine an unimproved value which, in relation to improved land, means the capital sum which the fee simple of the land might be expected to realise if offered for sale ........ assuming that.. ....... the improvements did not exist (section 12 (1) (b). It is his submission that the removal of the rock is an improvement which falls squarely within the definition as an invisible improvement carried out by a predecessor in title who was Bowser and Lever as the registered proprietors of the land which they quarried. Mr Ure refers me to a decision of the Full Court of the Supreme Court of New South Wales in Harris v. The Municipal Council of Sydney (1914) 14 S.R. (NSW) 273. This dealt with an appeal from a decision of Murray D.C.J. assessing the unimproved capital value of certain land in Miller and Harris Streets, Pyrmont. Many years ago the land had been a quarry and an immense body of stone had been removed from it, running from 6 feet deep in the front to some 30 or 40 feet in the back. The present surface of the ground was about the level of the street and in some places below it; but although portion woutd have to be filled in again, it was admitted that the general result of the removal of the stone was to improve the land for building purposes for which it was now required. The Court below found -- 5 of 8 -- 6 that the work done had in part improved the land and in part deteriorated its value but the improvement greatly preponderated. At page 276, Ferguson J. said - This land has admittedly been made fit for building purposes by levelling or quarrying, so that br1ngs it within the definition of unimproved value which the statute required to be applied. I think it is quite immaterial what the intention of the person who carried out that levelling or quarrying was, if in fact the result has been to make the land fit for building purposes. • I have considered the arguments advanced by Counsel for the appellant and for the Valuer-General. I note the distinction between the facts in the Hawse case and the subject case. What must be looked at is a parcel of land in its unimproved state. The judgment states that the Hawse land had been quarried prior to alienation. Worsement had occurred and it was proper to take such worsement into account on the facts in that case. tn the subject case the evidence establishes that when the land was alienated it was a rocky knoll, a predecessor in title improved the land by removing the rock to street level. I find that this is an invisible improvement within the meaning of the Act and it is proper to make allowance for such improvement in arriving at what a prudent person would pay for this parcel of land at the relevant date as a site on which buildings could be erected. Having decided upon this amount, Mr Johnston is correct in saying it is inappropriate to make any allowance for additional cost of piers and beams used for the building now upon the land but rendered necessary because of further quarrying below street level and restoration with suspect fill. Evidence was given by Mr R. W.J. Tucker, a director of the appellant company, who speaks of the company's interest in the subject land since late 1986 and negotiations to acquire the land as a motel site which were not successful and of the long process which followed, leading up to the approval for the present development and the tenancies. Mr Tucker also speaks of the acquisition by Hatshield Pty Ltd, another company of which he is a director, purchasing in May 1989 a 6, 168 square metre parcel of 'General Industry' zoned land located at the -- 6 of 8 -- 7 corner of Sandgate Road and Pritchard Road, Virginia, for $1,133,000 and some circumstances surrounding negotiations up to the time of entering the contract. Both valuers mentioned this sale in the schedule of sales attached to their valuations. Mr Lindberg notes that, while the purchase price was shown as $1,133,000, recent enquiries reveal that another contract for an amount of $367,000 was concluded for the sale of a business operating on that land which was subsequently closed and the plant and equipment disposed of. In his evidence Mr Tucker says that this business was a fruit and vegetable business which was carried on for some time and subsequently the plant and equipment of the business were sold but there is no evidence of the price realised in the sale. I note that the sale was slightly after the relevant date but in all .the circumstances I do not derive any real assistance from the 9nalysis of the sale with the conclusions of its value as a basic sale varying so much between the parties. Some of the sales which have been used by Mr Johnston as a basis of valuation are remote in time. I accept the evidence given by Mr Lindberg that there was a rising market through from 1987 up to the relevant date. Some of the sales are of much smaller areas and to which the Valuer-General has applied different rates per square metre because of size and it is difficult to transpose those rates to the subject with its area of 1.698 square metres. The best comparison is with Big Top Shopping Centre, located at 1290 Logan Road, Mt Gravatt, which has a larger area of 2.52 hectares and sold in November 1988 for $4,000,030 and to which the Valuer-General has applied a valuation of $150 per square metre. Both valuers have used it as a basis of valuation and I have done . the same. As requested, I have viewed the subject land and this sale and I find that overall it is inferior to the subject land. It is below road level with Logan Road at this point being a split-level road, ingress and egress is to and from the outbound lane of -- 7 of 8 -- ( 8 Logan Road and generally I find it would attract a lower rate per square metre than the subject land if it was of the same area. Doing the best I can with the evidence, I am unable to find that a rate of $170 per square metre for the subject land as a level site is supported by the relevant sales evidence and I propose to adopt a rate of $190 per square metre for the subject land. This gives a figure of $3,226,200 from which I deduct the claimed amount for rock removal of $1,334,250 and I will determine the unimproved value of the subject land to the rounded figure of $1,890,000. Accordingly, the appeal is allowed, the valuation of the Valuer-General is set aside and the unimproved value of the subject land is determined at One million, eight hundred and ninety thousand dollars ($1,890,000). (D.J. Barry) President of the Land Court -- 8 of 8 --