The Land Court's decision in Heatham Pty Ltd as Trustee v Valuer-General  QLC 26 concerned an appeal against the Valuer General's value of the Appellant's land at 429 Fairfield Road, Yeronga. The landowner argued that the value was not supported by comparable sales and was excessive. The landowner further contended that the best use of the land was for residential purposes as a four storey residential development with underground car parking, contrary to the Valuer General's valuation.
The Court found that both the landowner's valuer and the Valuer-General erred in their valuation method. In particular, the Court found significant errors in the approach used by the landowner's valuer whose evidence was based on a false assumption that the highest and best use of the land was as a residential development.
The Court found that the assumption of the landowner's valuer was contrary to the relevant planning scheme, being the Brisbane City Plan 2014, as the planning scheme allowed a code assessable mixed use development in a district centre.
The Court ultimately held that the landowner failed to discharge its onus of proof with respect to any of its grounds of appeal. The Court ordered that the appeal be dismissed and that the valuation appealed against be confirmed.
Highest and best use of the land
The Valuer-General valued the land at $3,800,000 whereas the landowner argued that the valuation should be $3,000,000. The Valuer-General contended that the highest and best use of the land was as a code assessable mixed use development in a district centre. The landowner's valuer contended that the highest and best use of the land was as residential land.
The Valuer-General claimed that the landowner had failed to discharge its onus of proof under section 169(3) of the Land Valuation Act 2000 on the basis that the landowner's valuer had not followed the method claimed to have been applied, and had provided insufficient evidence to support the claim that a residential development was the highest and best use of the land.
Landowner's valuation report
The Court held that the landowner's valuer had inconsistently valued the comparable sales. The Court found that out of the four sales contained in the report, only one applied the direct comparison approach. The comparable sales relied upon by the landowner were as follows:
- Landowner's Sale One - Sale one was identified by the Court as the best comparable sale. It was located at 295 Fairfield Road, Yeronga. It was sold on 14 August 2014 for $4,500,000. The Valuer-General valued the land at $3,800,000 on 1 October 2014. The landowner's valuer valued the site at $5,000,000. This price was established by taking into account the costs associated with decontamination, flood mitigation, and infrastructure credits. The landowner's valuer relied upon a figure of $373 per square metre by dividing the sale price by the total useable area.
- Landowner's Sale Two - Sale two was land situated at 586 Sherwood Road, Sherwood. It was sold for $510,000 in November 2013 and was zoned for a medium density residential use. The Court noted that the landowner's valuer did not take into account the age of the sale, being 11 months before the valuation date. The sale price equated to a rate per square metre of $630. The landowner's valuer however applied $654 per square metre as the purchaser of the land had improved the land by developing a four storey, 12 unit development. The Court found fault in this approach as it did not relate to the sale of the land, and therefore the price of $654 per square metre should not have been considered. The price was not reflective of the initial sale of the land and was analysed on the applied value.
- Landowner's Sale Three - The Court found again that the landowner's valuer did not apply the alleged valuation method of direct comparison. It was established by the Court that the land should have been valued at a figure of $315 per square metre. The landowner's valuer valued the land on its sale price and did not take into account improvements made and the loss of land. Furthermore, no allowance was made for the fact that parts of the analysed land were categorised under the Brisbane City Plan 2014 as having high ecological significance.
- Landowner's Sale Four - The landowner's valuer valued the land on the basis of its applied value. The error in this approach was that the sale price which the landowner's valuer utilised was not for the entire property, rather a 7/8 interest in the land. This approach was rejected by the court as it was deemed unreasonable.
Valuer-General's valuation report
The Valuer-General provided five comparable sales. These sales were subject to criticism by the landowner's valuer and also the Court.
- Valuer-General's Sale One - The first comparable sale was located at 60 Shottery Street, Yeronga. The land was sold on 24 March 2015. This land was the Valuer-General's primary sale as it was close to the subject land and had the same zoning. The landowner's valuer however had concerns about the valuation date. The valuation of the subject land was 1 October 2014. The landowner's valuer asserted that the sale date of this land was significantly after the valuation date of 1 October 2014 and therefore could not be used as a comparable sale.
- Valuer-General's Sale Two - Sale two consisted of three houses located at 15, 17 and 221 Yeronga Road, Yeronga. These properties were bought on 12 July 2013 and demolished to obtain an area of 1,169m². This area was zoned medium low density. The landowner's valuer argued that this land was an unsuitable comparison due its earlier sale date, and because it was considerably smaller and possessed a different zoning. The Court also noted that the valuation did not allow for demolition costs or infrastructure charges credit.
- Valuer-General's Sale Three - The land used for this comparison also did not take into account associated demolition costs or infrastructure charges credits. The land was located at 902-906 Logan Road, Holland Park West. It was smaller than the subject land, being 2,430m², and possessed uninterrupted city views.
- Valuer-General's Sale Four - Sale four, located at 90 Waldheim Street, Annerley, was sold for $4,200,000 on 13 May 2015. The landowner's valuer had concerns about the settlement date, sale price including GST, and that, again, there was no allowance made for demolition costs or infrastructure charges credits associated with the land.
- Valuer-General's Sale Five - Sale five sold for $3,100,000 on 28 November 2011. It was included in the emerging community zone and was located at 587 Barrack Road, Cannon Hill. The landowner's valuer argued that the lot required a retaining structure and therefore required an adjustment to the price to account for that. The landowner's valuer highlighted that the Valuer-General failed to do this.
The Court found that there were significant weaknesses to the Valuer-General's evidence. The Valuer-General's sales matrix lacked information such as infrastructure charges credits and demolition costs. The Court also noted that the Valuer-General's report was inadequate and not sufficient. The adequacy of the Valuer-General's report was not however a question for the Court to decide and thus had no impact on the outcome of the appeal.
The principal error in the landowner's case was that the highest and best use of the land was as a four storey residential development. The Court referred to Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1987-86) LGRA 410 as having analogous circumstances being that a value was tainted by error in applying an incorrect principle to establish the highest and best use of the land. The Court noted in that case that "the first task of the valuer is to determine what [the land] use is and then to value the land on [that] basis". In the subject appeal, the Court found that the landowners' valuer had not correctly executed these tasks.
The Court noted that under the Brisbane City Plan 2014 the zoning for the subject land allowed for mixed uses comprising retail, commercial, residential, offices, administrative and health services, community, and small scale entertainment and recreational facilities capable of servicing a district. The subject land was a retail space which included a shopping centre and child care facility with underground car parking. Contrary to the planning scheme, the landowner's valuer argued that there was limited demand in the area for a mixed use development. During cross examination the landowner's valuer did not offer any evidence to support that claim. The Court could therefore not find that the highest and best use of the subject land was residential development. The Court did however find that there is a demand for mixed use development due to the relevant planning scheme. The Court ultimately found that the landowner had failed to discharge its onus of proof on any of its grounds of appeal. The appeal was dismissed and the valuation appealed against was confirmed.
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