A.C.F. and Shirleys Ltd v The Valuer-General [1990] QLC 156

Re: Determination of unimproved value - CTty of Brisbane. AV89-45 AC.F, and Shirleys Ltd v. The Valuer-General DECISION LAND COURT, BRISBANE. 10th August, 1990. The above named company has appealed against the determination by the Valuer-General of an unimproved value of $2,150,000 for Portion 637 (leased from P.O.B.A 290687 to 260692) and Portions 820, 870, 1032 and Lot 1 on RP 167498 and Portion 547 - NCL (F)/ 536 parish of Toombul containing an area of 14.69 hectares. This land is situated in Tingira and Sautter Streets, Pinkenba and has a frontage to the Brisbane River. It is utilised by the appellant company for a fertilizer works with associated wharf facilities. It is zoned "Noxious Industry" under the provisions of the City of Brisbane Town Planning Scheme. The date as at which the unimproved value is to be found is 31st March, 1988. Practicing Registered Valuer, Rodney Louis Brett, values the land at $1,315,000, whilst James Thomas Houghton, who is a Registered Valuer in the respondent's employ, values it in the amended sum of $1,850,000. Mr Brett describes the site in its improved state as being a near level [1990] QLC 156 -- 1 of 9 -- - Page 2 - property of regular dimensions with the Brisbane River extending along its southern boundary where there is access from the land to an adjoining deep water berth facility. He says that historically the land was filled with 78,810 cubic metres of imported solid fill. His valuation reads:- Improved value - 14.69 ha @ $165,000 per ha Less - Value of fill ($13.00/cubic metre) $1,025,000 Interest on costs @ 14% for half development period of 4 months $ 23,900 Interest on purchase price @ 14% for 4 months $ 61.350 $2,423,850 $1,110,250 $1,313,600 ===== Unimproved value adopted $1,315,000 As for his allowance for the value of fill, Mr Brett relies upon the advice of Sidney Herbert Williams, a Civil Engineer and Director of the engineering firm Cardno and Davies. Mr Williams was not called to give evidence in this case, but did so in an earlier case - Austral-Pacific Fertilizers Limited v. The Valuer-General (AV89-142). Mr Brett relies for his assessment of the improved value of $165,000 per hectare upon two sales. One is that of the adjoining "Waterfront Activity" zoned site with an area of 5.706 hectares (Portion 455, parish of Toombul) which sold to Gardner Smith Pty Ltd on 25th July, 1986 for $1,060,000. He says that a railway reserve of 3566 square metres, which traversed the site and effectively severed the majority of the land from access to the Brisbane River, was purchased by Gardner Smith Pty Ltd shortly afterwards for $71,320. Mr Brett accordingly regards the sale to have been of a total area of 6.063 hectares for a price of $1,131,320. There were certain structural improvements on the site which are valued by Mr Brett at $136,500. He accordingly adduces a filled land value from the sale of $995,000 or $164,000 per hectare. Mr Brett, in valuing the subject land, points out that it is much larger than -- 2 of 9 -- - Page 3 - is the Gardner Smith site, and that the sale predates the relevant date for valuation (31st March, 1988) by about 1.75 years on a rising market. However, he reiterates that it adjoins the subject land and for this reason he feels it must be of weight as basic sales evidence. It is one of the very few Brisbane River front land sales. It was put to public tender and later sold privately. The berth site of the sale land is not fully dredged. Mr Brett is privy to some information which suggests there is some underwater rock at the berthsite, but the Port of Brisbane Authority knows nothing about that. He says that purchasing company Gardner Smith Pty Ltd indicated that there were no difficulties in establishing a berthing facility at the site. Mr Brett also relies upon the sale of the Old Quarantine Station site on the southside of and with a frontage to the Brisbane River. It is described as Allotments 1 to 11 of Section 15, and Portions 518, 488, 489 and 490, parish of Tingalpa, containing an area of 23.839 hectares. This land sold to the Minister for Industrial Development on 30th June, 1987 for $2,650,000 or $111,160 per hectare. This land is zoned "Special Uses (Quarantine)" and Mr Brett told us that it is close to industrial areas more sparsely developed than is Pinkenba. He sees the sale property as being quite inferior to the subject land as a filled site. In addition the subject land has the advantage of rail access and wharf facilities and a deep water berth. The subject land is also much smaller than is the sale site. Mr Houghton values the land as follows: 14.69 ha @ $180,000 per ha Less- Allowance for filling 78,810 cubic metres@ $10 per cubic metre Unimproved value adopted $1,850,000 I note fill volume is agreed. $2,644,200 $ 788.1 00 $1,856,100 ====== -- 3 of 9 -- - Page 4 - Mr Houghton also relies upon the sale of the Old Quarantine Station site. He describes its situation as being isolated and points out that it has a much smaller and shallower river frontage than does the subject land. It is divided by a drainage channel with about two-thirds of its area (about 16 hectares) being low lying and with foundation difficulties due to soft clay subsoils. The higher land on the sale property is not suitable for cut and fill. By way of comparison, Mr Houghton says the subject land is a regularly shaped parcel in a much better position at the eastern end of the extensively developed Hamilton lands. It has wide street frontages and the advantage of a long river frontage to deep water, rail access and in its filled state higher overall elevation than the Quarantine Station site. Mr Houghton suggests that the subject land, in its filled state, is far superior to the sale land and that his valuation at $180,000 per hectare reflects this superiority. Mr Houghton had scheduled two further sales of "General Industry" zoned sites. One reflects a land value of $432,000 per hectare - the other $252,500 per hectare. He suggests that neither of these sales are as comparable as is the Quarantine Station site. Mr Houghton has also had regard to the determination by this Court of a filled land value of $120,000 per hectare for the Gibson Island site as at a relevant date of 30th June, 1985. This is a large parcel of 56.19 hectares which he says is less favourably situated than is the subject land - vide Austral-Pacific Fertilizers v. The Valuer-General (V87-1028). Mr Houghton befo:ves his allowance of $10 per cubic metre for filling cost is supported by information provided to him by Jennifer Ann McMillan, an Engineer with the Transport Department (Road Division). This is in respect of the placement of fill for the construction of an interchange on the Gateway Arterial Road and Airport Drive in September to November, 1989. The total volume of fill was 85,795 cubic metres of compacted fill (or 146,000 cubic metres of loose fill) and was placed on the site by contractor Seymour Whyte. This material was imported to the site from the southside of the Brisbane River via the Gateway Bridge. Scheduled contract was $8.36 -- 4 of 9 -- - Page 5 - per cubic metre, including supply, delivery, placement and compaction to Main Roads Department requirements. On good days some 3900 cubic metres was placed daily on the site. Mr Houghton suggests that if 3000 cubic metres was placed on site on average days, then the placement of the material would have taken 26 working days or about 5 weeks; For what it is worth, I have some doubt about his calculations being correct as they seem to relate to solid volume fill estimates. Should they have related to loose fill volumes, the period involved at 3000 cubic metres per day would appear to be 48 working days or about 10 weeks. But little if anything, turns on this except that it could lead to a conclusion that the period during which interest was allowed by Mr Brett for filling the subject site (16 weeks for almost the same quantity of fill) could be excessive. But much depends upon the availability of material at any particular time, and especially at 31st March, 1988. Mr Houghton told us that on 9th October, 1989 he inspected a site in Kingsford Smith Drive, Hamilton which was being developed by Dobson & Corry, Industrial and Commercial Developers. The site area was 3849 square metres. The site foreman advised him that the development required 4500 tonnes of first quality shale which was imported to the site. Approximately 1.8 tonnes of fill compacted to 1 cubic metre, and the fill material was purchased from Pine Mountain Quarry. The cost per tonne was $4 to $5 delivered to the site. The material was compacted, and the compacted value of 2600 cubic metres was $9 per cubic metre delivered, plus $1.52 per cubic metre for compaction - or $10.52 per compacted cubic metre. Now in re: Austral-Pacific Fertilizers Ltd v. The Valuer-General (AV89-142) Mr Williams said he had some filling cost figures for a job at Eagle Farm with materials obtained from Pine Mountain overburden in late 1989. The contract rate for 13,000 cubic metres in place, solid value, was $17 per cubic metre. Again, he says that in August, 1989, 50,000 cubic metres of solid fill in place at Pinkenba costs $12.50 per cubic metre. This fill came from very small construction sites, and Mr Williams believes it is about as low as -- 5 of 9 -- - Page 6 - a cost as any he could ever get. Again, in March 1988, an estimator gave him a price of $16.60 per cubic metre for about 50,000 cubic metres, solid fill in place, compacted and finished off, for the Pinkenba area for material again from Pine Mountain Quarry. Mr Houghton has enquired into the history of the Gardner Smith sale. This land was once owned by Phillips Oil Company and he confirmed that it was on the market for a considerable period of time. He regards the strip of Crown land (Railway Reserve) as having been a problem for the site. It legally separated the bulk of the land from the waterfront. A firm known as Mineral Deposits leased the land from Phillips Oil. They were rock and quarrying contractors and while loading barges at the then old wharf on the site, dropped rocks overboard and this made the berthing of vessels dangerous. Mr Houghton's enquiries suggest that the purchasing company Gardner Smith paid $116,360 to remove the rock from the berth site. Mr Houghton's information is that the strip of Crown land was not acquired by Gardner Smith in 1986 but at a much later point of time. He referred to evidence in re: Bulk Grains Queensland v. The Valuer- General (V87-817) where it was suggested that the transaction securing this Crown land had not been finalized by the hearing of that matter on 5th May, 1988. For all these reasons, Mr Houghton does not rely on the Gardner Smith sale, and to use his words he "threw it out". The first task I have is to find an appropriate filled value for the subject land. Both valuers agree that it is considerably superior to the Old Quarantine Station site (the common sale). It is the extent of the superiority which has to be gauged. The evidence on the point leads me to find that Mr Houghton is nearer the mark in what might be regarded in valuation terms as a narrow margin of divergence. The subject site has all the advantages - it is filled and levelled as opposed to the uneven terrain and low lying nature of much of the Quarantine Station site. It has relatively long river frontage and deep water berth facilities - the sale land has a narrow river frontage and shallow water berthing capacity. It is much better located than the sale land, has rail access and -- 6 of 9 -- - Page 7 - is better serviced by road systems. In addition it is considerably smaller and regard must be had to the maxim that the smaller the area the greater the value per unit area. In addition, it seems the Gardner Smith sale, although not relied upon at all by Mr Houghton, would, prima fade, support a higher value for the subject land than that applied by Mr Brett, if only on the basis that he did not know that Gardner Smith spent $116,360 removing rock from the berth site after sale date. Since Mr Brett was prepared to use this sale as basic evidence, then it can be assumed that the purchasing company was a prudent and informed purchaser. However, an outlay of $116,360 to remedy the defect at the berth site increases the reflected filled land value by nearly $20,000 per hectare, or about 10%. If this factor is transposed into Mr Brett's analysis of that sale, then his applied filled value would exceed Mr Houghton's rate of $180,000 per hectare. I adopt Mr Houghton's assessment as to the filled land value. I now turn to the question of filling costs. I am persuaded on the evidence of the respondent Valuer-General to adopt a cost of $10 per cubic metre. Mr Houghton was quite specific as to his enquiries and upon the location of his comparison filled sites and technically I must be more influenced by this evidence, especially as Mr Williams was not called in this case, with the result that the record does not really contain any evidence from him. I note in the record of the Gibson Island appeal - Austral-Pacific Fertilizers Ltd v. The Valuer-General (AV89-142) - that no, or no concerted cross examination was made of Mr Williams as to his evidence on imported solid fill costs on the northern side of the Brisbane River, no doubt as a legacy of imported solid fill cost not being an issue in that case. I would have expected that Mr William's would have been called in this case, especially as the difference in fill costs reflected, in the end result, a difference in unimproved value of a sum in the order of $236,000. In these circumstances, I find that an allowance of $10 per cubic metre for the agreed volume of solid fill is appropriate. The remaining matter is to consider whether any allowance for loss of interest -- 7 of 9 -- - Page 8 - during an appropriate filling period is warran!ed. Now I agree with Mr Houghton that in practical terms, if the site was unfilled, it could be expected that a purchaser of it would not, in normal circumstances, fill the whole site before the construction of structural improvements. It well may be that this particular appellant company would have, or did, do so but its requirement was for the erection of a major Fertilizer works with associated wharf facilities. But when the task is to determine unimproved value, ownership is to be disregarded along with any improvements on the land (including fill) in accordance with the provisions of Section 12 (1) (b) of the Valuation of Land Act 1944 - 1987. One could surely look at the development of the adjoining Gardner Smith land as an example. Mr Brett says that it is a filled site, but erected on the site is only a 600 square metre office block, 3 older style timber framed offices and storage buildings, and a front gatehouse, all with a residual value of $136,500. Whilst I do not have any direct evidence on the point, it would indeed be surprising to find that the whole of the Gardner Smith site would be, of necessity, filled to provide for the erection of these buildings. Now this is not to say that it would prove uneconomic to fill the whole of either the subject land or the Gardner Smtih site - there is no evidence as to that. It only goes to the period capital is outlayed for development. It is to be noted however, that the Gardner Smith site was once owned by Phillips Oil Company and no doubt it was totally filled once again to suit their requirements for its use. Certainly, if access to a supply of fill material such as that which was available for the interchange on the Gateway Arterial Road was possible at about the relevant date, then, if a particular developer was of the mind to fill the whole site, at worst it would seem to have possibly taken only about 2½ months in lieu of Mr Brett's advice from Mr Williams as to the period of 4 months. I am with the respondent Valuer-General on the point and make no interest allowance deductions. It remains then to formalise my determination. The appeal is allowed, the determination of Valuer-General is set aside, and the unimproved value of Portion 637 -- 8 of 9 -- - Page 9 - (leased from P.O.B.A 290687 to 260692) and Portions 820, 870, 1032 and Lot 1 on RP 167498 and Portion 547 - NCL (F)/ 536 parish of Toombul is determined in the sum of $1,850,000. (C.H. Carter) Member of the I ;md Court. -- 9 of 9 --