Burnett Lane Properties Pty Ltd v The Valuer-General [1991] QLC 214

Re: Appeal against Annual Valuation of the Valuer-General - City of Brisbane. AV91-269. Burnett Lane Pro perties Pty Ltd V. The Valuer-General DECISION LAND COURT, BRISBANE 18th December, 1991 This is an appeal against the Annual Valuation of the Valuer-General of the unimproved value of Lot 7 on RP 158151, parish of Oxley, containing 3,025 square metres. In the revaluation of the lands in the City of Brisbane as at 31st March, 1990, the Valuer-General has valued this parcel at $160,000 ($53 per square metre). An objection to the valuation was disallowed and the company has exercised its right of appeal to the Land Court and contends to a value of $97,500 ($32.23 per square metre). The land is situated at 20 Blivest Street, Oxley. It is zoned Light Industry under the relevant Town Plan and has erected upon it a concrete block warehouse-workshop building and offices. Blivest Street is an industrial standard cul-de-sac with full width bitumen road and concrete kerbing and channelling. It is relatively level and this has been created by cut and fill. There is an easement over the land for drainage purposes in favour of the Brisbane City Council encumbering an area of 154 square metres. Evidence was given by Mr R.W. Cameron, the Director and Secretary of the appellant company, who has also had a lifetime experience in the real estate industry. He says that the subject land was purchased on 2nd February, 1990, for [1991] QLC 214 -- 1 of 6 -- 2 $588,500 just a short time before the relevant date. It was an arms length sale. He says there does not appear to be any comparable unimproved sales in close proximity to the subject property and he considers that the unimproved value of the land can best be obtained by deducting the value of the improvements from the sale price. He says the improvements were valued on 8th August, 1990, by Mr A.J. Wightman, valuer, on a replacement basis for insurance purposes at $639,000. This included an amount for $10,000 for demolition and removal of debris and deducting this amount, leaves a value of $629,000. He says allowance should be made for depreciation and obsolescence which he estimates at 20% or $125,800 which gives him a present value of the improvements of $503,200 which · he deducts from the purchase price to arrive at an unimproved value of $85,300. He believes the property was purchased at an advantageous price due principally to certain provisions in the existing agreement for lease which included non-payment of Land Tax by the lessee. In the initial negotiations with the vendor, they were advised that the lessee paid all outgoings but when this was proved incorrect a reduction in the purchase price of $11,500 was made. If this is adjusted back, one arrives at an unimproved value of $96,800. Mr Cameron has also done an exercise of capitalising the net rent which shows an unimproved value of $97,500 and this is the figure which he submits should be adopted. Valuation evidence was given by valuer, Mr Andrew J. Wightman, who is the Manager of the Valuation and Consultancy Division in the firm of Cameron Bros., Real Property Consultants, Auctioneers and Valuers. He tenders a copy of his valuation of 8th August, 1990, done for the purpose of ascertaining a current re- -- 2 of 6 -- 3 instatement value of the building for insurance purposes. He tenders a further valuation for the purposes of this appeal. He records therein the valuation of this land as at 31st March, 1989, (effective 30th June, 1990) with $142,000 and this was increased to $160,000 as at 31st March, 1990, to take effect on 30th June, 1991. He says that he has made an estimate of the unimproved value at the rate of $32,23 per square metre by comparing the subject property to comparable sales to arrive at an unimproved value of $97,500. He makes reference to four sales including that of the subject land. His first is a sale in November 1989 of a 6,728 square metre parcel at Collinsvale Street, Rocklea, which shows $55.74 per sq.m. and to which the Valuer-General has applied $38.64 per square metre in the revaluation. He says this is a larger site in a prime location with direct access to Ipswich Road and is within a quality industrial estate. It has now been developed and he says it is superior to the subject property in all aspects. His second sale in April 1990 is of a 8,779 square metre parcel at Ashover Road, Rocklea, which sold for $53.54 per sq.m. and to which the Valuer-General has applied a value of $23.07 per sq.m. in the revaluation. His comments on this block as to comparability are the same as for the Collinsvale Street property. The third sale is at Neon Street, Sumner Park, where a 2,005 square metre parcel sold in October 1990 for $140,000 or $69.33 per sq.m. and to which the Valuer-General has applied a value of $46.88 per sq.m. He says this is a smaller allotment within a quality industrial estate with good access to the Western Freeway and is superior in all aspects. His final sale is the subject itself where he deducts improvements of $491,000 to give a land value of $97,500 or $32.23 per sq.m. which is the figure for which he contends. -- 3 of 6 -- 4 Evidence for the Valuer-General was given by valuer, Mr P.O. Grennan, who has relied on sales of vacant lands to arrive at his valuation. His first sale is of a parcel of 2022 square metres of General Industry zoned land located in Fienta Street which is in reasonable proximity to the subject land. Fienta Street runs into Boundary Road and thence by Kimberley Road to Ipswich Road. This sold in October 1989 for $140,000 and analysed to give an unimproved land value of $68 per sq.m. and he has applied $62 per sq.m. to the parcel in the revaluation. He says it has frontage to a half width industrial standard bitumen road with concrete kerbing and channelling and a concrete footpath, it is above street level, it requires about 750 mm average cut and fill. It has since purchase been levelled and developed with a warehouse. He says it is inferior to the subject in total value due to size and more remote location. His second sale is of a parcel of 3915 square metres of General Industry zoned land at 40 Machinery Road, Darra. This sold in May 1989 for $270,000 to show an analysed unimproved land value of $69 per sq.m. and he has applied $65 per sq.m. in the revaluation. He says it has frontage to a full width bitumen industrial standard road with concrete kerbing and channelling and concrete footpaths. It is above street level on a gentle sloping ridge generally falling to the south-west. It has limited exposure to Ipswich Road, obscured mainly by trees in the road reserve and a high voltage power line tower on adjoining land. It has since been developed with a warehouse building and levelled an average of 500 mm. He says it is marginally superior pro rata to the subject land, it is further out of town but has limited main road exposure and slightly better unimproved topography. His fourth safe is some distance away at 14 Counihan Road, Seventeen Mile Rocks, where a 2023 square metre parcel of -- 4 of 6 -- 5 General Industry land sold in November 1989 for $150,000. This shows an unimproved value of $70 per square metre and he has applied a rate of $64 per sq.m. to the parcel in the revaluation. He says it fronts a full width bitumen industrial standard road, concrete kerbing and channelling, is of low elevation and slightly above street level at about RL 9 metres AHO. It is well drained under normal conditions but flooded in 1974 to RL 13.5 metres (055). Post Wivenhoe predicted flood level is RL 10.3 metres (0100). He considers it is inferior in total value at $130,000 due to its size and flooding potential. Mr Grennan says that of his sales the one in Fienta Street is the most comparable, being located fairly close to the subject land and he would have placed a value of $56 per sq;m. on that parcel if it was the same size as the subject land. He comments that the first two sales used by the Valuer-General are better located with sale 2 having some flooding problems but having regard to the substantial area of each of these, these sales support his value of $53 per sq.m. for the subject lands. He says the valuations at Sumner Park are at a lower level based on sales in that particular area. Mr Grennan says that the analysis of the sale of the subject undertaken here leaves only 17% of the purchase price for the land component of the sale and he considers that this is far too low. He did not consider analysing the sale of the subject land, it is a difficult exercise and almost an impossible task in undertaking annual valuations. There are so many imponderables particularly in an older building in endeavouring to arrive at the added value which that building gives to the land. He says buildings at the relevant date are usually constructed as purpose built buildings which attract higher rentals. He says that while there is a -- 5 of 6 -- , l \ ...,J 6 difference in the zoning between the subject and his sales, he has been unable to find any difference in sale prices by virtue of the zoning because the whole area is really now a warehouse area. On the whole of the evidence on the use to which the building is being put, I am in agreement with Mr Grennan that it would be a most difficult exercise to analyse the sale and arrive at "the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of the Act irrespective of the cost of the improvements". I do not follow really how Mr Wightman has used his valuation of the improvements on the land for insurance purposes in arriving at his value of $97,500 ($32.23 per sq.m.) nor can I find that his sales, particularly at Rocklea, support the value contended for. The sale closest to the subject land is Mr Grennan's sale at Fienta Street and on all of the sales evidence I am satisfied that no prudent vendor would at the date of valuation have been prepared to accept the sum of $32.23 per sq.m. for the subject land in its unimproved state. In the result I find that the appellant has failed to discharge the onus to show that the Valuer-General has erred in the valuation and the appeal fails. Accordingly, the appeal is dismissed and the valuation of the Valuer- General is affirmed. (D.J. Barry) President of the Land Court -- 6 of 6 --