Chemprod Nominees Proprietary Limited v Minister for Land [1991] QLC 271

11, f' -.t.· .....,. •• ,.,,_., •. ,,.. ."'_," ,~... f~~-~ ',. •· ~' i' ;i :¾ l • t' , ~~."~\\,;.~ 't. I :.--~..-.,h..-.,•, ,._,.,, .. ,,.,,~,f-~!'l/t;,;.·..,.,.-,.,.,,,____,,.;; LAND COURT, BRISBANE 30th April, 1991 IN THE MATTER OF the determination of the unimproved value of the land contained in Perpetual Town Lease 06/2887 (NCL) for the purpose of conversion of the tenure of the selection to a freeholding tenure. Lessee: Chemprod Nominees Proprietary Limited. DECISION On 20th March, 1990, Chemprod Nominees Proprietary Limited made application to the Honourable The Minister for Lands to convert the tenure of PTL 06/2887(NCL), Brisbane District, described as Lot 4 on Plan S182121, Parish of Nerang, Town of Southport, containing an area of 3869 square metres, to freeholding tenure in accordance with the provisions of Section 191 of the Land Act 1962-1990. For such purpose the Crown contends to an unimproved value of the land of $285,000. The lessee company contended to a value of $140,000 but led evidence before the Court to a value of $1,000. Evidence was given by Mr LC. Fried, a director of the lessee company, who says that the subject land is located at Industrial Avenue, Molendinar, and is like a plateau. It is situated on a high level and three sides slope down towards the street or towards the next door neighbour. Because of this a certain amount of the area is completely useless and he tenders photographs in support of his conclusion. The building erected upon the subject land by the lessee is in close proximity to the southern boundary. He says that there is an area along this boundary which is completely useless. The boundary is 96 metres in length and there is a steep embankment, which is about 5 metres wide, going up to the building. There are other areas of embankment. He says that once the useless [1991] QLC 271 -- 1 of 7 -- 2 areas are deducted from the total area of the land the useful area would only be about 3107 square metres from the total area of 3869 square metres. Consideration has been given to the problem of soil erosion on the steep embankment. He says because the building is very close to the edge of the embankment, sooner or later an owner would have to spend a significant amount of money to overcome the erosion problem. The adjoining owner has already erected a small besser block retaining wall along the boundary because the wash from the slope is coming on to his driveway. Mr Fried has recently consulted engineers who say that the only practical way to overcome the problem is to put up a retaining wall. These engineers, Len Powell and Associates, have given certain advice and a quotation has been obtained from a Mr Allan Davis for the erection of a Homes Crib wall 96 metres x 6 metres high. In the result the approximate amount involved in this work would be $181,700. Mr Fried says that in the first instance a comparison was made with the amount paid by other owners in this industrial estate for freeholding in arriving at the figure of $140,000 for the subject land but as they will have to spend another $181,700 for a wall, he concludes that the land has no commercial value as they would have to pay more for it than it was worth. In the result he believes a token amount of $1,000 is the appropriate value to be applied. Mr Fried makes reference to the values which have been applied to other allotments in this industrial estate. His first example is the adjoining property of Hermanns and Johnson Pty Ltd at 18 Industrial Avenue. There are comparable problems and comparable usage and this was converted as at 1st April, 1983, for $64,000. He calculates a 7% annual inflation to arrive at $126,200 as its value at the relevant date. Mr Scott Thompson, the owner of the land (3107 square metres) at 19 Enterprise Street converted that parcel as at 19th May, 1990, for $179,000. -- 2 of 7 -- 3 He criticises the sales which have been used by the Crown as a basis of valuation. He says one is in Manufacture Drive, Ernest; the other at Spall Street, Carrara. They are different in location, in zoning and in land use. They have a potential higher application for the land. In cross-examination, Mr Fried says that the company has held this land for about 10 years after it had been developed by the Crown and the embankments which now exist have been in place during the whole of the period. Erosion has been a continuous thing but they did not take much notice of it until now. The besser block wall which he has referred to was erected by the adjoining lessee about a year or two years ago. He says this was done when that owner was sealing his driveway. As to the wall, he envisages it would be up to the level of the building floor and this would make the land between the boundary and the building more valuable in the marketplace. He says that he has contacted several estate agents to enquire into the value of the land in the Molendinar industrial estate and he has been told that it varies somewhere between $50 to $100 per square metre depending on the quality of the land, location and potential use. He acknowledges that the Crown has estimated the value at $78 per square metre as a vacant parcel of land with certain stabilisation work done to the banks and this is the price he could expect to receive from the land as at the relevant date. He says that there are no buyers for such land at the present time. He was cross-examined on his reasons for considering the basic sales used by the Crown as being an unsuitable basis of value because they are zoned Light Industry but concedes that land in that zoning and land in the General Industry zone have many similar as of right uses and that in certain circumstances the General Industry zoning has some advantages over land in the other zone. -- 3 of 7 -- 4 Evidence for the Crown was given by Land Inspector, Mr R.B. Perkins, who has relied on sales to support the value contended for. He uses a sale of a 3235 square metre parcel of Light Industry zoned land at Manufacture Drive, Ernest. This sale occurred on 18th September, 1989 and shows a land value of $91.19 per square metre. His other sale is of a 3108 square metre parcel of Light Industry zoned land at Spall Street, Carrara, on 7th June, 1989, showing $70.14 per square metre. Having regard to the sales, Mr Perkins says he believes the valuation of the subject land on a fully developed pro rata basis is $78 per square metre. He considers the subject to be fully developed but acknowledges that the southern batter bank requires some form of stabilisation and he has made an allowance of $17,000 to cover the cost of this work, deducting this from the fully developed value of the site results in a value of $285,000 for the subject land in its prescribed state at the date of application for conversion. He says that he was advised of the disadvantages of the site including the wasteland and water problems associated with the batter banks and he has taken these problems into account in his valuation. In his evidence Mr Perkins says that while the sales have a different zoning to the subject land this is only a very minor factor in sales in the Gold Coast market. There is not a lot of General Industry zoned land available. Most of it has already been developed but his investigations have shown a comparable level of value for lands in both zones. All of the as of right uses which can be carried on in the Light Industry zone can be carried out on the land in the General Industry zone. The major difference is that one could effect commercial premises in the Light Industry zone which is prohibited in the General Industry zone but the sale lands are remote and are not suited to office accommodation. The subject land has the -- 4 of 7 -- 5 advantage of being better located than his sales. In dealing with the question of erosion Mr Perkins has given this consideration and is of opinion that the best way to prevent erosion is by stabilisation which is a method of laying reinforcing mesh over the existing slope of the bank and then spraying concrete over it. It results in a concrete slab running down the slope. This method is used under bridges and results in the land being very stable. It is cost efficient and has been done on one of the properties which has been referred to by Mr Fried in his evidence. He does not consider it would be prudent to expend the amount advanced by Mr Fried for a retaining wall although a retaining wall would increase the size of the overall site. However, every industrial site in this area has wasteland, whether it be from batter banks or from landscaping. The Council requires up to 12 percent of a site to be used in landscaping and batter banks come into this area of unusable lands. Mr Perkins tendered a schedule of valuations which he has carried out in this industrial estate to show the relativity which he has applied in the area. He refers particularly to a 3864 square metre parcel at 26 Industrial Avenue which he valued for rental purposes on 1st April, 1990, at $85 per square metre. He says all of the valuations in the schedule are for the parcels of land on a fully developed basis with allowance for costs incurred or which might need to be incurred to fully develop the site. As to the values placed on adjoining properties referred to by Mr Fried, Mr Perkins says the valuation of the property at 18 Industrial Avenue was $64.000 on 1st April, 1983, which is too remote in time to assist in arriving at a value at 20th March, 1990 as the market had moved considerably over the period of time involved. The property at 19 Enterprise Street was a Special Lease -- 5 of 7 -- 6 conversion and the date of instructions to undertake the valuation was in November, 1989, when the market was still moving up. That property was valued at $72 per square metre with an allowance for works done which included a concrete spraying of the banks and other work which gave a fully developed value at $224,000 reduced to $179,000 after the allowance. It is a smaller parcel of 3107 square metres and there are matters which he expresses in his evidence which makes him conclude that it is inferior in that it is set lower than the road and has parkland along one of its boundaries which is seen as a disadvantage for security purposes. Mr Perkins says that at the relevant date the industrial market was still performing very strongly with sale prices continuing to rise until about August, 1990. Activities since have been slow but there is no evidence of a drop in the marketplace so far as sale prices are concerned. In cross-examination he was asked of the potential use of the land in the Molendinar Industrial Estate with the prospect of strata title developments. He agrees that no such developments have occurred here but this estate was developed about 15 years ago and also part of the estate is still leasehold land and strata title is not permitted under the conditions of the lease. He believes that as buildings become more obsolete a change could occur. He does not believe it would be prudent to erect a retaining wall as suggested by Mr Fried because of the cost. He says that the land has remained in its present developed state for some 12 years and his method of dealing with the bank would be the prudent approach. Under the provisions of Section 192(2) of the Land Act, the unimproved value of this land "shall be the amount which in the opinion of the Court experienced persons would be willing to pay for an estate in fee simple in the -- 6 of 7 -- 7 land ..... assuming the land was in the prescribed state and was offered for sale on such reasonable terms and conditions as a bona fide seller would require". Section 141 defines the expression "prescribed state" as meaning in relation to land on which the Crown has outlayed monies in the construction of improvements or the performance of development work before it ceased to be Crown land which monies have not been repaid to the Crown by any lessee and are not being so repaid by the current lessee, the state of the land as improved and developed when it ceased to be Crown land. While the Act refers to the willing experienced buyer it must be remembered that there must be a bona fide seller offering to sell on reasonable terms and conditions. I am satisfied on the evidence that no prudent vendor would be prepared to accept the sum of $1,000 for this parcel of land at the relevant date in the prescribed state. He would look to the marketplace to see what other properties were selling for at that time in the same way that Mr Perkins has looked at sales to reach his conclusion on the appropriate value. The prudent purchaser would make allowance for the works envisaged by Mr Perkins and allowed for in his valuation for the batter bank. He would not entertain the retaining wall proposal. The sales evidence advanced by Mr Perkins supports the value contended for and there are no grounds for making any variation to that valuation. Accordingly, for the purpose of conversion of the tenure of Perpetual Town Lease No 06/2887 (NCL) to freeholding tenure, the unimproved value of the land is determined at $285,000. (D.J. Barry) President of the Land Court -- 7 of 7 --