Comstar Investments pty Ltd v The Valuer-General [1990] QLC 234

lAND COURT, BRISBANE. 21st December, 1990. Re: An appeal against a detennination of the Valuer-General, Maroochy Shire. AV90-304 Comstar Investments pty Ltd v. The Valuer--General (Hearing at Maroochydore) DECISION As at 31st March, 1989, in the annual revaluation of Maroochy Shire the unimproved value of land described as Lot 3 on RP 164791, Parish of Mooloolah, County of Canning, containing an area of 6.2005 hectares, was determined by the Valuer-General in the sum of $1,500,000. The land is zoned "Local Shopping" and is partially developed with six large retail warehouse/showroom buildings serviced by an internal road system. It is located at Maud Street, Maroochydore, with frontages to Cane Street off Sugar Road, and Dalby Street. In the Notice of Appeal the appellant's estimate of unimproved value is $990,000 although at the hearing valuation evidence was led in the sum of $1,320,000. The grounds of appeal are as follows: (1) The Valuer-General's valuation was, and is, incorrect, excessive and unfair; (2) The Valuer-General fails to give any or any sufficient value to the improvements on his comparative sales; (3) The Valuer-General failed to give any or any sufficient weight to the fact that his comparative sales were unrealistic, being at the height of a temporary ''boom"; ( 4) The Valuer-General failed to give any or any sufficient weight to the fact that the purchases of his comparative sales were not fully informed and/ or were over-anxious; (5) The Valuer-General failed to give any or any sufficient consideration to car-parking contributions or other Council charges required before the land may be developed. [1990] QLC 234 -- 1 of 6 -- 2 Counsel for the appellant first called Mr C. Comino, Solicitor, and a director of the appellant company. Through him were produced financial returns from the development on the land for the financial years ending 30th June, 1986 through to 30th June, 1990, details of the development relative to buildings, occupancies and leasing arrangements, then the annual Valuer-General's valuations from 31st March, 1985, to the present relative date 31st March, 1989. Finally a graph had been prepared showing the disparity between the level of fairly static return from the development then the increasing level of assessed unimproved values in the period from 1986 to 1989. The information provided by Mr Camino indicated that, of the total area of land (6.2005 hectares), 2.845 hectares was developed with the existing complex. Mr Camino said that based on rent levels capable of being achieved it was not presently economical, nor was it at the relevant date, to extend the existing development. Valuation evidence for the appellant was given by Mr J.G. Southwell, a registered valuer in private practice on the Sunshine Coast. His research of market evidence to establish a value for the subject property revealed no sales of comparable property at or around the relevant date. He saw the subject land as being unique in the area due to its location, zoning and topography. He was, however, aware of a more recent contract of sale, which he had sighted, for the adjoining drive-in theatre site of 5.103 hectares. This property was zoned "Special Facilities" in accordance with its existing use, but his enquiries of the purchaser revealed that it was intended to obtain a commercial zoning on the site to establish a Home Maker Centre including large furniture, electrical and lighting retailers. Details he had obtained from the January 1990 dated contract were a purchase price of $1,300,000 on an unconditional cash basis, with deposit of 10% and a 12 month settlement. He said that OI!.. analysis of these advantageous terms the contract equated a purchase price in the order of $1,100,000 on a normal short term cash contract basis. His enquiries also revealed an indicated rezoning cost of $100,000, making the equivalent short term cash contract rezoned cost to the purchaser, as he saw -- 2 of 6 -- 3 it, in the order of $1,200,000 or $23.52 per square metre. He saw the economy as having slowed dramatically between March 1989 and January 1990, but he considered "that little value changes would have occurred in the immediate area". In comparison with the "drive-in" site there was a comparable area of about 5 hectares on the subject which he saw of equal value but then there was a further area of about 1.2 hectares being the long relatively narrow strip running from the main body through to Dalby Street which was low-lying and affected by various drainage and access disabilities. Mr Southwell saw this land, admittedly on an arbitrary basis, as being limited in value to about 50% of that of the main body. Consequently he valued the main 5 hectares at the level of value he bad deduced from the "drive-in" sale, i.e. $23.50 per square metre and then the balance 1.2 hectares at $12 per square metre rounding the total calculation to $1,320,000 as his total valuation. The valuation of the Valuer-General had been carried out by Mr T.S. Alexander, registered valuer. He agreed with Mr Southwell in that because of the size and zoning of the subject, there was no directly comparable sales evidence. At the time he had carried out the valuation he had no knowledge of the sale of the adjoining "drive-in" site, and although he had subsequently become aware, through a newspaper report, that a sale bad taken place, and he had noticed a rezoning application advertisement on the site, the details of the transaction were not yet recorded. The first detailed information he had was that provided in Mr Southwell's report but without the Contract of Sale being produced he could not confirm or deny that information. It was also common ground that a sale of a property referred to as the Uniting Church site was of no assistance, except that it would show a very high level of value for the commercial component within its compl~x zoning. Mr Alexander after consideration of the totality of the evidence in the locality decided that a basis for the subject was provided by sales of two large parcels as follows: -- 3 of 6 -- r (1) 4 3.229 hectares, School and Pikki Streets, zoned "Special Facilities - Retirement Village and Community Services" - sold 7th April, 1989 for $800,000 with some clearing to show an analysed unimproved value of $795,000 or $24.62 per square metre. This land is described as gently sloping requiring some filling. The following comparison was made by Mr Alexander between the sale and the subject: ff Smaller in size than the subject block. It has inferior visual access and does not front a main thoroughfare. Its zoning is inferior than the subject and because it was bought by the adjoining owner by tender it will have to be rezoned to commercial. Not considered as good as subject but is smaller." Quite some discussion took place regarding this sale and its comparability with the subject. The adjoining owner purchaser was seen by the appellant to disqualify this sale as being acceptable evidence of value, particularly as the purchaser's adjoining property was a major drive- in shopping centre and the land forms part of a current expansion program. While Mr Alexander sees it as a rear parcel in need of rezoning to establish its commercial value, the appellant sees it as having the ability to identify with the existing shopping centre which gives it far greater potential than the subject. (2) A 3.994 hectare site, Maroochydore Road, zoned "Residential A" and "Drainage Problem" - sold 29th March, 1989, for $610,000 with some structural improvements, analysed to show an unimproved value of $470,000 or $11.76 per square metre. Mr Alexander made the following comparison between the sale and the subject: The block has similar visual access from Maroochydore Road as the subject. It is smaller in size and it's zoning is inferior. Since the sale the block has been filled to an average depth of 1 metre. " Mr Alexander had made enquiries of the purchasers who informed him that the property required filling over about 3.5 hectares and this had cost $7.60 per cubic metre (which Mr Alexander thought was very competitive as he was workin_g on costs up to $10 per cubic metre). Further enquiry at Maroochy Shire Council was made to allow estimation of the costs in having this land rezoned to "Local Shopping". These basic costs when added to the purchase price showed a minimum equivalent rezoned cost to the purchasers of near $25 per square metre. The purchasers had not established a rezoning proposal but saw the land as having at least a multi-unit residential rezoning potential. -- 4 of 6 -- (' 5 Mr Alexander said that when he looked at the subject land, he took into consideration the inferior nature of the ''battleaxe handle", but saw that area as being capable of improvement to complement the overall site probably for carparking use. He would not be drawn on ascribing a separate value to that section of the land because his valuation was on an overall basis, at $24 per square metre. He agreed that any development of the handle section would be at significant cost but thought that Mr Southwell's valuation at 50% of the value of the main section was too low for this area of 1.2 hectares. He also pointed out that if a separate value was then to be provided to ~he main section of the property, that area would carry a significantly higher value than the overall pro rata application. He had not, however, addressed the question of value which he would ascribe to the main section. In summary, while I understand Mr Alexander's approach to the valuation, it must have been a difficult task in making broad comparisons with an awkwardly shaped parcel such as the subject where there are obviously two component sections, not to at least consider an apportionment of value. While Mr Alexander was firm in his opinion that the handle section was an integral part of the total property, I would not see it as unrealistic in the market place for the obviously more valuable and principal area to form the primary basis of any market value considerations. While Mr Alexander's evidence of value is far from ideal, I do not share in the criticism levelled at him for not having explored further the "drive-in" sale. Firstly, on Mr Southwell's evidence, the economy had slowed dramatically from the relevant date to the date of contract, and even if market values had not changed, evidence of that would be desirable. Secondly it would be unrealistic to expect the Valuer-General, as a general rule, to re-establish a basis on e.vidence which might be better suited to indicate a level of value for the subsequent annual revaluation. If the "drive-in" sale was to afford any assistance to the appellant, at least a certified copy of the Contract should have been produced. A closer examination of the details provided in the "drive- in" sale may, in any event, assist the Valuer-General's case. If the contract price was to -- 5 of 6 -- 6 be reduced to a short-term cash contract basis, then the rezoning costs added on, what further consideration should be given to the time delay and holding costs involved in achieving the desired and comparable rezoning? There is evidence before the Court that the rezoning procedure in Mr Alexander's Sale 1 took about one year, coincidentally the settlement period said to be provided in the unconditional "drive-in" Contract. It could well be that more detailed consideration of this Contract might provide a "rezoned" unit of value, somewhat higher than Mr Southwell's analysis. The basic sales evidence is a problem to both valuers. I am not convinced, however, that the appellant has carried the burden of proving the grounds of appeal as is required under Valuation 161(3) of the Valuation of Land Act of 1944 (as amended). The appeal is therefore dismissed and the determination of the Valuer-General affirmed. (R.E. Wenck) Member of the Land Court. -- 6 of 6 --