Comino & Ors v The Valuer:General [1991] QLC 225

( Re: Determination of unimproved values - City of Radcliffe · AV90-601, 602, 603 and 604. M. and s. Camino & Ors V. The Valuer:General DECISION LAND COURT, BRISBANE. 27th June, 1991. Four appeals have been lodged by landholders against the 31st March, 1989 relevant date valuation made by the respondent Valuer-General of their land within the Radcliffe Central Business District. Details are:- AV90-601 - Lots 475, 476, 495, 496 of Portion 193, parish of Radcliffe - 1619 m 2 - Appellants M. and S. Comino, B. Conomos and V. Stratigos and S. Castrisos - Valuer-General's valuation $970,00 - Appellants value $875,000. Situation 133 Radcliffe Parade. Zoning "General Business B". AV90-602 - Lot 3 on RP 54672, Parish of Redcliffe - 653 m 2 - appellants N.C.A., C.N.A., G.N.A. and P.N.A. Athousis - Valuer- General's valuation $390,000 - Appellants value $355,000. Situation 155 Redcliffe Parade. Zoning "Generaf Business B". AV90-603 - Lot 2 on RP 30409 and Lot 2 on RP 40132, Parish of Redcliffe - 976 m 2 - Appellants N. and C. Athousis and S. Camino as [1991] QLC 225 -- 1 of 9 -- r - Page 2 - trustees for Nicholas Athousis Family Trust - Valuer-General's valuation $425,000 - Appellants value $385,000. Situation 95 - 97 Redcliffe Parade. Zoning "General Business B": AV90-604 - Lot 18 on RP 212471,. Parish of Redcliffe - 742 m2 - Appellants N. and E. Tzimas - Valuer-General's valuation $220,000 - Appellants value $200,000. Situation 141 Sutton Street, Redcliffe. Zoning "General Business B". The valuation claimed by the respective appellants is the amount determined by this Court for the respective parcels as at the earlier relevant date of 31st March, 1988. The written decision of my learned colleague Mr Wenck was placed in evidence by the appellants. This has been examined and should be read along with my remarks in this decision. The valuations under appeal represent an increase of 10% over the 1988 relevant date Land Court determinations. Now as the evidence and submissions developed, it is apparent that this Court is to decide if the uniform valuation increase of 10% over the previous determinations of the unimproved value within the Central Business District is justified. It is Clifford William Allard, a registered practicing valuer, who contends on behalf of the appellants that the valuation of the respective sites should remain as earlier determined. He has provided the Court with a brief description of the nature of the land involved in each appeal parcel and there is no dispute between the parties in respect of this. Mr Allard comments that the assessment of unimproved value under the provisions of the Valuation of Land Act is most difficult in the absence of unimproved land sales at or about the relevant date, and there certainly in no issue to join with his opinion here. He says the analyses of improved sale is prone to error and in the sales of commercial properties in the majority of cases, value has been attuned to the investment value of .leases which enhance the freehold property. Mr Allard says that this situation -- 2 of 9 -- ( - Page 3 - was evidenced during the appeals before the Court in the March 1988 relevant date valuations. Mr Allard, who also furnished valuation evidence in the earlier cases, says that from his investigation _and 9bservation, little or no new development has occurred in the Radcliffe CBD between 31st March, 1988 and 31st March, 1989. Shop vaca_ncies were evident during this period, as is the case today. He says that- retail activity and expansion of retail trading is clearly shifting away from the older established Radcliffe CBD to major convenience shopping centres, primarily at Kippa-Ring. This was a strong contention of the appellants in the 1988 cases. Mr Allard's valuation of the subject parcels, in accordance with the Land Court determinations are:- AV90-601 - 133 Radcliffe Parade - $875,000 Radcliffe Parade frontage Sutton Street frontage AV90-602 - 155 Radcliffe Parade - $355,000 Radcliffe Parade frontage AV90-603 - 95-97 Redcliffe Parade - $385,000 Redcliffe Parade frontage Sutton Street frontage AV90-604 - 141 Sutton Street - $200,000 Sutton Street frontage $23,000/m $12,500/m $24,000/m $16,000/m $9,500/m $9,000/m Mr Allard has not been able to find sales of vacant land within the Radcliffe CBD. Notwithstanding, he is of the opinion that values did not show any upward movement . between 31st March, 1988 and 31st March, 1989 or for that matter into late 1989. He says there is a distinct lack of sales of any type of -- 3 of 9 -- - Page 4 - property within the Redcliffe CBD. He has however discovered one property sale which was sold in vacant possession and he says this sale is not complicated by influences caused by income streams, tenants and/or lease ter111s and conditions. It is situated at 99 Redcliffe Parade. Although the sale took place after the relevant date for the 1989 valuation, Mr Allard suggests that is within a time frame where - little or no growth or material change in values has occurred within the Radcliffe CBD. Mr Allard submits that further support for the view that there has been no change in values of properties in the CBD it is obtained by noting that the Valuer- General's assessments of unimproved values for the subject properties showed no change from 31st March, 1989 to 31st March, 1990. The sale property at 99 ·Redcliffe Parade is described as Lot 2 on RP 79063 and contains an area of 425 m2• It has-a frontage of 10.8127 metres to that Parade. It sold on 5th September, 1989 for $280,000 from Westpac Properties Limited to Noxgrove Pty Ltd and Others. Mr Allard analyses the sale to show an unimproved land value of $172,000 ($15,907 /m frontage) as follows:- Sale price Estimated replacement cost of building - 271 m2 at $400 Plus plans and supervision at 4% Rates Land Tax Interest on development costs for 6 mths at 13% per annum x 0.5 factor Depreciation at 25% Clearing Land plus interest on land Less interest on land for 9. mths at 13.5% Unimproved value $280,000 $108,400 $ 4,336 $ 3,000 $ 2,000 $ 3,664 $121,400 $ 30,350 $ 91,050 $ 500 $ 90,550 $189,450 $17,418 $172,032 ----- ----- -- 4 of 9 -- - Page 5 - It should noted that Mr Allard mistakenly subtracted the cost of clearing from his improvement value instead of adding it - a marginal error of some $1,000 results but this of not of great significance. Mr Allard has obtained advice from a firm of quantity surveyor (Northcrofts Pty Ltd) as to the replacement cost of the building at 99 Radcliffe Parade. His advice is that on the basis of shop development, a reasonable replacement cost is in the range of $375 to $425 per square metre and Mr Allard has adopted a replacement cost in the middle of this range. The firm's advice as to replacement cost of a building with the same floor area is higher if it was for office development or for bank development. Mr Allard comments that his rate of depr~ciation on the building at 25% is reasonable and is based on economic utility although consideration was given to the replacement cost of the building. His information is that the building is 26 years old. Mr Allard took the opportunity during the course of his evidence to distance himself from two improved property sales within the Radcliffe CBD since he says they are not useful for analysis to determine unimproved value. They are the sales of 105 Radcliffe Parade and 112 Sutton Street. He set out his reasons for not having regard to these sales in his tendered valuation report. It transpires that it is not necessary for me to consider these sales further, and the respondent Valuer-General also does not rely upon them. The author of the written advice from Northcrofts was Michael Newton Rudge Davies who is a quantity surveyor and director of that Company. He has inspected the premises at 99 Radcliffe Parade and provided the Court with his description of the type of building construction. It was formerly occupied as a bank -- 5 of 9 -- - Page 6 - building and is of good standard construction and finish. Mr Davies' idea of the replacement cost of $375/m2 to $425/m2 is for a basic building with no floor coverings or air-conditioning. A strong room which was in the building at sale date has been removed by the purchaser and new floor coverings laid. The valuations under appeal were made by registered valuer Gregory- Patrick Crowley who is in the employ of the Department of Lands. Mr Crowley's valuations read:- AV~1 - (133 Redcliffe Parade) 24.1 m frontage to Radcliffe Parade at $25,000 24.1 m frontage to Sutton Street at $13,750 Plus drainage easement over adjacent north side Property - 25% of 2.4 mat $25,500/m 25% of 2.4 metres at $13,750 Unimproved value adopted $970,000 AV90-602 (155 Redcliffe Parade) 9. 7 m frontage to Redcliffe Parade at $26,500 9.7 m frontage to Sutton Street at $13,750 Unimproved value adopted $390,000 AV90-603 (95-97 Redcliffe Parade) 12 m frontage to Radcliffe Parade at $17,600 4.5 m frontage to Radcliffe Parade at 17,600 depth factor 1.08 12 m frontage to Sutton Street at $10,550 Unimproved value adopted $425,000 $614,500 $331,375 $15,300 $8,250 $969,425 ----- ----- $257,050 $133,375 $390,425 ----- ----- $211,200 $ 85,536 $126,600 $423,336 ----- ----- -- 6 of 9 -- ( - Page 7 - AV00-604 (141 Sutton Street) 20 m frontage to Sutton-Street at $10,000 Depth factor 1.05 Rear access factor 1.05 Unimproved value adopted $220,000 $200,000 $ 10,000 $210,000 $ 10,500- $220,500 ----- ----- Now for each of his valuation assessments Mr Cowley has relied upon the following sales:- Sale No. 1 - Lot 2 on RP 83815, Parish of Redcliffe - 660 m2 - - Longmore to Absoloh and Lindeve Pty Ltd on 5th August, 1988 for $150,000 - analysed unimproved value $149,000 - applied unimproved value $14 f,000. Situation Redcliffe Parade - zoning "General Business B". The applied unimproved value reflects an unimproved value for the 17.98 m frontage of $7,400/m multiplied by a depth factor of 1.08. Sale No. 2 - Lot 3 on RP 702203, Parish of Redcliffe - 506 m 2 - Penson Nominees to Marksar Pty Ltd on 20th April, 1989 for $165,000 - analysed unimproved value $160,000 - applied unimproved value $154,000. Situation Sutton Street - zoning "General Business B". The applied unimproved value reflects a value for the 17.1 m frontage of $9, 150 multiplied by a depth factor of 0.94 plus 5% for side access. Mr Crowley comments that his Sale No. 1 land is a level commercial site located on the southern fringe of the CBD and points out that the sale demonstrates a 10% increase over the 1988 annual valuation of $128,000 for the site. Actually I see it as reflecting a 16% increase over the 1988 annual valuation but that the applied valuation for the 1989 relevant date valuation represents an increase of 10% increase over the 1988 valuation figure. As for his Sale No. 2 land, Mr Crowley says it is again in the southern part of the CBD. He again points out that it reflects an increase of 10% over the 1988 relevant date valuation of that sale site of $140,000. Again I see the sale as -- 7 of 9 -- - Page 8 - showing a 14% increase and it is the applied value which reflects an increase of 10%. Mr Crowley sets out in his tendered valuation document his idea of the comparison between the sale sites and each subject parcel. Mr Crowley submits that his sales evidence is the best available for .valuing the subject sites especially since they are lightly improved although it is- clear they are not situated in the core of the CBD. He confirmed the opinion of Mr Allard that sales of improved properties are not as reliable as valuation evidence as sales of lightly improved property. Mr Crowley offered some comment on Mr Allard's analysis of the sale at 99 Redcliffe Parade. He says that the structure on the site, being a bank building, is difficult to adapt to commercial use and he feels Mr Allard's depreciation rate of 25% is a little light. He has analysed the sale and had a floor area of 252 m2 against Mr Allard's 271 m2. He adopted a replacement cost of $500/m2 and a higher depreciation rate of 68% which, he suggests, reflects obsolescence in the building. His analysis results in a land value of $220,603. Now it transpired in evidence that Mr Crowley's Sale No. 1 was to an adjoining owner who had purchased shops on the cnr of Anzac Avenue and Redcliffe Parade. Mr Crowley does not consider any extra premium was paid for any adjoining owner influence although he did not discuss the circumstances of the sale with either the vendor or the purchaser. Mr Allard told the Court that he had excluded all sales which in his opinion were outside of the CBD and although the Valuer-General's sales are included within the same zoning as are the subject parcels, he considers them to be outside the CBD. He suggests all properties in Sutton Street south of Baker Street are outside the CBD. Both the Valuer-General's sales are so situated. -- 8 of 9 -- - Page 9 - This is somewhat a difficult case due to the absence of structurally vacant land sales in the heart of the CBD. I can nonetheless appreciate the manner in which Mr Crowley approached his task in revaluing thE;! CBD lands in that he relies upon the two sales in Sutton Street to come to the conclusion that CBD lands increased by some 10%. However it is the case that his sales are just not- comparable with the much higher valued sites in Radcliffe Parade, and there must, at least, be some doubt about his Sale No. 1 not reflecting some additional price for the adjoining owner factor. It could easily be that Mr Crowley's sales justify an increase of 10% in the valuation of the lesser valued properties in Radcliffe Parade and Sutton Street away from the core of the business centre. I have taken account of all the evidence and notwithstanding -the difficulties associated with analysing improved sales (99 Radcliffe Parade), I am left in considerable doubt that land values within the heart of the Redcliffe CBD such as the subject parcels increased in value by a factor of 10% during the period 31st March, 1988 to 31st March, 1989. I therefore propose to allow each appeal and determine each valuation in accordance with the decision of the Land Court for the 1988 valuations. It follows then that my determinations are - AV90-601 - Subdivisions 475, 476, 495 and 496 of Portion 193, Parish of Radcliffe - the determination of the Valuer-General is set aside and the unimproved value is determined in the sum of $875,000. AVS0-602 - Lot 3 on RP 54672, Parish of Radcliffe - the determination of the Valuer-General is set aside and the unimproved value is determined in the sum of $355,000. AV90-603 - Lot 2 on RP 30409 and Lot 2 on RP 40132, Parish of Radcliffe - the determination of the Valuer-General is set aside and the unimproved value is determined in the sum of $385,000. AV90-604 - Lot 18 on RP 212471, Parish of Redcliffe - the determination of the Valuer-General is set aside and the unimproved value is determined in the sum of $200,000. (C.H. Carter) Member of the Land Court. -- 9 of 9 --