F A Pidgeon & Son Pty Ltd v Valuer-General; 310 Ann Street Nominees Pty Ltd v Valuer-General (No 2)
[2019] QLC 25
•31 May 2019
LAND COURT OF QUEENSLAND
CITATION: F A Pidgeon & Son Pty Ltd v Valuer-General; 310 Ann Street Nominees Pty Ltd v Valuer-General (No 2) [2019] QLC 25* PARTIES: F A Pidgeon & Son Pty Ltd ACN 009 710 810 (appellant) v Valuer-General (respondent) FILE NO: LVA075-17 PARTIES: 310 Ann Street Nominees Pty Ltd ACN 152 245 933 (appellant) v Valuer-General (respondent) FILE NOs: LVA073-17 LVA074-17 DIVISION: General Division PROCEEDING: Appeals against valuations under the Land Valuation Act 2010 DELIVERED ON: 31 May 2019 DELIVERED AT: Brisbane HEARD ON: 4, 5, 6, 10, 11 & 12 July 2018; 5, 6 & 7 September 2018 and 18 February 2019. HEARD AT: Brisbane MEMBER: PA Smith ORDERS: As regards LVA075-17, 300 Ann Street, Brisbane: 1. The appeal is allowed.
1
*Pursuant to the Land Court Rules 2000, rule 21 (Power to correct mistakes), this is a corrected decision, issued on 11
August 2021, and replaces the original decision issued on 31 May 2019.
2. The site value of 300 Ann Street, Brisbane as at 1
October 2015, is determined in the sum of Ten
Million, Six Hundred and Eighty-Five Thousand
Dollars ($10,685,000).
3. Should either party seek any order as to costs, that
party must provide written notice of its intention
to do so by 2.30pm on Friday, 31 May 2019, to the
other party and to the Court.
4. In the event that either or both parties seek costs,
the parties are to make oral submissions as to costs
at a time to be arranged after 2.30pm on Friday,
31 May 2019.
As regards LVA073-17, 310 Ann Street, Brisbane
(freehold plus leasehold):
1. The appeal is allowed.
2. The site value of 310 Ann Street, Brisbane
(freehold plus leasehold) as at 1 October 2015, is
determined in the sum of Twenty-Two Million,
and Twenty-Three Thousand Dollars
($22,023,000).
3. Should either party seek any order as to costs, that
party must provide written notice of its intention
to do so by 2.30pm on Friday, 31 May 2019, to the
other party and to the Court.
4. In the event that either or both parties seek costs,
the parties are to make oral submissions as to costs
at a time to be arranged after 2.30pm on Friday,
31 May 2019.
As regards LVA074-17, 310 Ann Street, Brisbane
(freehold only):
1. The appeal is allowed.
2. The site value of 310 Ann Street, Brisbane
(freehold only) as at 1 October 2015, is determined
in the sum of Twenty-One Million, One Hundred
and Fifty Thousand Dollars ($21,150,000).
3. Should either party seek any order as to costs, that
party must provide written notice of its intention
to do so by 2.30pm on Friday, 31 May 2019, to the
other party and to the Court.
4. In the event that either or both parties seek costs,
the parties are to make oral submissions as to costs
at a time to be arranged after 2.30pm on Friday,
31 May 2019.
CATCHWORDS: REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellants object to valuation – where subjects are located within Brisbane CBD – where site value is the basis of valuation – where the highest and best use of the subjects are agreed as commercial office towers – where some
comparable sale locations are in a different locality to the
subject – where sales have a different highest and best use to the subject – where sales are described as secondary evidence – where infrastructure concessions relating to student
accommodation sales are a consideration – where it is contended that there is a “merged market” – where expert
opinion adjustment is required – where the issue of bona fide
sales under s 18 of the LVA is a relevant consideration
REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where expert evidence presented is heavily criticised by parties –
where the appellants called lay witness from the Valuer-
General’s Department – where a student accommodation
developer gave evidence on the state of the market
REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where
it is contended an expert did not base expert opinion on facts
– where the respondent submits the appellants should not be
able to call witnesses from the Valuer-General’s Department because land valuation appeals are a hearing de novo – where
the appellants submit the commercial office market was
stagnant between 2010 and October 2015
Land Valuation Act 2010, s 16, s 17, s 18, s 19, s 22, s 169, s
170Australian Executor Trustees Ltd v Propell National Valuers
(WA) Pty Ltd [2011] FCA 522, applied
Brewarrana Pty Ltd v Commissioner for Highways (No 2)
(1973) 32 LGRA 170; 6 SASR 541, applied
BWP Management Ltd v Valuer-General (No 2) [2018] QLC
30, applied
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011]HCA 21, followed
F A Pidgeon & Son Pty Ltd v Valuer-General; 310 Ann Street
Nominees Pty Ltd v Valuer-General [2018] QLC 27, cited
Fairfax v Department of Natural Resources and Mines
[2005] QLC 11, applied
GPT Re Limited (as responsible entity) & Anor v Department
of Natural Resources and Water [2009] QLC 78, applied
GPT RE Limited v Valuer-General (No 2) [2018] QLC 9,
applied
Lacey v Attorney-General for the State of Queensland (2011)242 CLR 573, cited
Liat Nominees Pty Ltd v Chief Executive, Department of
Lands [1996] QLC 160, followed
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR
705, followedMeiers v Valuer-General [2012] QLC 19, applied
Multiplex 240 Queen Street Landowner Pty Ltd v Department
of Natural Resources, Mines and Water [2007] QLC 10;
(2007) 28 QLCR 20, considered
Spencer v The Commonwealth of Australia (1907) 5 CLR
418, followedSteers v Valuer-General [2012] QLC 12, applied
Valuer-General v Body Corporate for ‘Tennyson Reach’
Community Titles Scheme 39925 [2018] QLAC 7, followed
YFG Shopping Centres Pty Ltd as TTE & ors v Valuer-
General [2018] QLC 37, cited
APPEARANCES: R Traves QC with S McCarthy (instructed by Otto Martiens)
for the appellants
S Fynes-Clinton (instructed by In-house Legal, Departmentof Natural Resources, Mines and Energy) for the respondent
The property descriptions and interrelationship are a little complex so I will refer to
the detail of their descriptions. File LVA075-17, in which F A Pidgeon and Son Pty
Ltd is the appellant, relates to property described as Lot 3 on RP 211213 located at
300 Ann Street, Brisbane City.
The appeal for 300 Ann Street relates to the decision on objection dated 25 January
2017 which resulted in a decrease of the site value from $12 million to $11.5 million
as at 1 October 2015.[1] The appellants contend by their notice of appeal for a site value
of $8.7 million as at 1 October 2015.[2] The appellants ultimately contended for a site
vale of $9,290,000.[3]
[1] Ex 1 page 110.
[2] Ibid page 88.
[3] Appellants’ written submissions, [327].
The other two files considered in this decision are files LVA073-17 and LVA074-17.
Lot 2 on RP 124155 and a leasehold property known as Lot 1 on Crown Plan AP
3495 relate to file LVA073-17. LVA074-17 relates only to the freehold lot described
as Lot 2 on RP 124155. Both the freehold and leasehold lots are collectively referred
to as 310 Ann Street, Brisbane City or 36 Wickham Terrace, Brisbane City,
throughout the evidence in these appeals. I will refer to them collectively as 310 Ann
Street. The appellant for both 310 Ann Street appeals is 310 Ann Street Nominees
Pty Ltd.
The appeal for 310 Ann Street, LVA073-17, relates to the decision on objection dated
25 January 2017 which resulted in a decrease of the site value from $31 million to
$26 million as at 1 October 2015.[4] The appellant contends by its Notice of Appeal for
a site value of $16,780,000 as at 1 October 2015.[5] The appellant ultimately contended
for a site vale of $19,200,000, made up of $18,460,000 for the freehold lot plus
$740,000 for the leashold lot.[6]
[4] Ex 1 page 62.
[5] Ibid page 38.
[6] Appellants’ written submissions, [326].
The appeal for 310 Ann Street, LVA074-17, relates to the decision on objection dated
25 January 2017 which resulted in a decrease of the site value from $30 million to
$25 million as at 1 October 2015.[7] The appellant contends by its notice of appeal for a site value of $16,360,000 as at 1 October 2015.[8] The appellant ultimately contended
for a site vale of $18,460,000.[9]
The subjects
[7] Ex 1 page 86.
[8] Ibid page 64.
[9] Appellants’ written submissions, [326].
300 Ann Street
This land is situated within the “uptown”, but nevertheless fringe, precinct of the
Brisbane CBD. It is an established secondary commercial precinct of the CBD and is
surrounded by a number of commercial office towers. The subject land is in within
350 radial metres of the Brisbane GPO, within 400 radial metres of the Queen Street
Mall, and within 200 radial metres of the Brisbane Central train station.
The subject land is situated on the corner of Ann Street and Creek Street. The site is
improved with a 16-level building which was completed in 1988. It comprises ground
floor retail space, three levels of above-ground parking for 98 cars, and 12 floors of
B-Grade office accommodation. Two of the car parking levels extend 594 m² over an
adjoining parcel of leasehold land. The total net lettable area is 6,900 m².
The area of the land is 1,050 m2. In their joint expert report (Exhibit 4), the valuers
agreed that this subject property has an irregular land shape; 35.973 metres of Ann
Street frontage; no assigned flood level development restrictions; vehicular and
pedestrian access via Ann Street; and is burdened by three easements.[10]
[10] Ex 4, [11]–[12].
The valuers describe easements impacting the subject land in the following way:
“Easement No. 601270330. Burdening Easement A (7.6m * 0.95m = 7m²),
B (16.2m * 0.65m = 11m²) & C (4.264m * 0.65m = 3m²) to Lot 4 RP223387
for the purpose of right of way.”[11]
[11] Ibid [12].
The highest and best use of the land is for a commercial office tower at the level and
in the form of development currently (that is, as at 28 March 2018) erected on the
land. This is due to the impact of the adjoining rail infrastructure. The subject land is
well suited to commercial office use due to its location and surrounding development,
its size, shape and dimensions, its street frontage, its vehicular and pedestrian access
and exposure, natural light and views.
310 Ann Street
LVA073-17 concerns Property ID 1228060, comprising a freehold property known
as Lot 2 on RP 124155 and a leasehold property known as Lot 1 on Crown Plan AP
3495. LVA074-17 only concerns Property ID 40142341, comprising the freehold lot
described as Lot 2 on RP 124155 (that is, the same freehold property as in LVA073-
17)[12].
[12] Appellants’ written submissions, [282].
Lot 2 on RP 124155 is 2,257 m2. The image below is taken from paragraph 15 of
Exhibit 3. The pink shaded area shows Lot 2. It is important to note that Lot 1 (in
white bordering the top left hand corner of Lot 2) is not part of Lot 2 and is a different
Lot 1 to that further described below for 310 Ann Street.
Lot 1 on Crown Plan AP 3495 is 520 m2. The image below is also taken from
paragraph 15 of Exhibit 3. The area marked in yellow shows the leasehold property
on Lot 1. The interconnections between Lot 1, Wickham Terrace, and Turbot Street
should be noted, as the plan depicts at its bottom. The land in pink is not only Lot 2,
but wrongly includes in pink the Lot 1 in white in the above diagram.
Collectively, the subject land for 310 Ann Street is situated on the fringe of the
Brisbane CBD between Ann Street and Turbot Street. It is predominantly a
commercial precinct, of a secondary nature within the CBD with a number of
commercial office towers.
At the date of valuation, the property comprised a 21-storey B-grade office building
which was under refurbishment. Upon completion of the refurbishment the building
was upgraded to an A-grade standard office building. The refurbishment included a
building façade replacement, internal base building refurbishment, and building
services upgrade. Three levels of above-ground carparking are provided within the
building. The building has a net lettable area of approximately 18,400 m².
The property adjoins a State Heritage Place and a Local Heritage Place (270 Ann
Street – All Saints Anglican Church). The subject land is in within 350 radial metres
of the Brisbane GPO, within 400 radial metres of the Queen Street Mall, and within
200 radial metres from the Brisbane Central train station.
The valuers were in agreement that the land is irregular in shape; has a 43.01 metre
Ann Street frontage and a 36.79 metre Wickham Street frontage; pedestrian access
from Ann Street; vehicular access from Wickham Terrace via leasehold Lot 1; is
without imposed flood level restrictions on development; has a cross fall from north
to south of approximately 8 metres; and is burdened by two easements:
Easement number 601730533. Burdening Easement A (220 m2) in Strata on
RP 852844 for railway purposes; and
Easement number 702093662. Burdening Easement (457 m2) on RP 893936
for the purposes of right of way (railway tunnel purposes).[13]
[13] Ex 3, [16].
The below image shows both easements burdening 310 Ann Street.
The highest and best use of the land is for a 21-storey commercial office tower
consistent with the existing development on the land as at 28 March 2018. This
highest and best use takes account of the impact of rail corridor. The subject land is
well suited to commercial office use due to its location and surrounding development,
its size, shape and dimension, its street frontage, its vehicular and pedestrian access,
exposure, and natural light and views.
The hearing
At some stage during the case management of these files, files LVA071-17 to
LVA076-17 were ordered to remain as separate cases but be heard together. Two of
these files, namely, LVA071-17 and LVA076-17, were settled on the first day of
hearing.
The other four files, however, remained joined, and the evidence in one matter would
be the evidence in the others, to the extent relevant. The hearing of these four appeals
together significantly hindered progress both during the hearing and in my judgment writing process. Without doubt, LVA073-17, 074-17, and 075-17, being 300 Ann
Street and 310 Ann Street, were very easy to hear together given their close proximity
and the same comparable sales. The same cannot be said about LVA072-17 however.
In that matter, the appellant primarily relied upon an entirely different sale not in the
CBD. Although the other sales from the other matters were also considered, save for
Sale 8, there were some particular points of difference for LVA072-17. This resulted
in the hearing, and the submissions, being more complicated than necessary. With the
benefit of hindsight, it would have been better for these files to have been case
managed so that the evidence for 300 and 310 Ann Street was heard first, followed
by the evidence for LVA072-17 (with the evidence for 300 and 310 Ann Street as
relevant being evidence in LVA072-17) with separate submissions. To hopefully
increase the clarity of my decisions, I have decided to separate LVA072-17 and write
my decision for that matter standalone to the rest.
The hearing of these matters, including time for oral submissions, took up a total of
10 days. Due to the underestimation by the parties of the time it would take them to
conduct these appeals, these matters were partly heard over a six-day period from 4
July 2018. The remainder was then heard for three days starting 5 September 2018.
The parties then prepared written submissions which were supported by oral
submissions on 18 February 2019.
A total of four witnesses gave evidence at the hearing of these three appeals. Two of
those were experts who gave opinion evidence in the area of valuation. The other two
were lay witnesses called by the appellants.
For completeness, a general application was made by the Valuer-General on the
seventh day of hearing to have two subpoenas set aside. My ex tempore decision is
available and explains my reasons for dismissing the Valuer-General’s application in
this regard.[14]
[14] F A Pidgeon & Son Pty Ltd v Valuer-General; 310 Ann Street Nominees Pty Ltd v Valuer-General
Mr Grant Jackson was called as an expert valuer for the appellants, and Mr Benjamin
Hart for the respondent. Mr Jackson and Mr Hart gave their oral evidence
concurrently. The evidence of the expert valuers took a total of five days, at least.
The evidence of the valuers was interrupted on two occasions so that the subpoenaed
lay witnesses could give their evidence to the Court.
On day seven of the hearing, Mr Stephen Cross was called by the appellants by way
of subpoena. Mr Cross was the delegate of the Valuer-General who actually made the
decision on objection against which these appeals have been brought.
Another person from the Valuer-General’s Office, Mr Denis Wall, the officer within
the Department which makes recommendations about what should be done with
objections and what objection decisions should be made, was also subpoenaed to give
evidence by the appellants. Subsequent to the evidence of Mr Cross, though, the
appellants decided that it was not necessary to call Mr Wall to the stand.[15]
[15] T8-11, lines 26 to 29.
The second lay person to give evidence to this Court was Mr Timothy Weston. Mr
Weston was represented by Mr Allan Lonergan from Colin, Biggers, and Paisley
Lawyers. Mr Weston gave evidence regarding confidential aspects of spreadsheets
put before the Court. Due to the confidential nature of some of the exhibits put to him,
those cannot be disclosed.
The valuation process
It is the responsibility of the respondent, pursuant to the provisions of the LVA, to
undertake valuations of all properties throughout Queensland. Those valuations are
the basis for rating and land tax and related purposes.
In an appeal against the Valuer-General’s decision on objection (valuation appeal),
an appellant bears the onus of proof for each of the grounds of appeal articulated in
the appellant’s notice of appeal.[16] If the appellant meets the onus of proof, the task
for this Court is to either confirm the valuation of the Valuer-General, or make the
correct valuation under the LVA by reducing or increasing the Valuer-General’s
valuation subject of the appeal.[17] There is a recent Land Appeal Court decision on
this point.
[16] Land Valuation Act 2010, s 169(3)
[17] Ibid s 170.
In Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme
39925[18](Tennyson Reach) the Land Appeal Court considered the interaction between
ss 169(3) and 170 of the LVA. The Land Appeal Court was unanimous in its
conclusion that the appellant had to satisfy the onus of proof, based on all of the
evidence before the Court, before consideration was given to s 170. As her Honour
Justice Dalton put it:
“If the Body Corporate did not satisfy that onus, its appeal should have been
dismissed. Section 170(b) of the LVA did not change that position. It did not mean that the Member was compelled to make a valuation in circumstances
where the appellant before him had not satisfied its onus of proof.”[19]
[18] [2018] QLAC 7.
[19] Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925 [2018]
Similarly in Tennyson Reach, I had this to say (his Honour Member Cochrane
concurring):
“As I understand the operation of the LVA, the Court has a duty to undertake
a two-step process in considering an appeal. The first step is to determine whether or not the evidence in its totality supports the case put by an appellant that the issued valuation is in error, on the balance of probabilities, so that the onus of proof is discharged. If the onus of proof is discharged, the second phase of the evaluation to be undertaken by the Court comes into play. That is, what is the correct valuation of the subject land? The Court can only get to a consideration as to the correct valuation of the subject land and thus, s 170(b) of the LVA, in circumstances where the onus of proof has been
discharged.”[20]
[20] Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925 [2018]
Returning to my evaluation of the valuation process, once the appellant has
discharged the onus of proof, consideration is then to be given to s 170 of the LVA.
How is this Court to make a proper determination? In this regard, I note with approval
what his Honour Member Isdale said in Steers v Valuer-General:
“[8]
The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381:
‘Courts of the highest authority have laid down
that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious
parties.’
[9] This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular
multiplier and not some other one should be applied.”[21]
[21] [2012] QLC 12.
Market value is a relevant feature to consider under the LVA. As then President
Trickett said in Fairfax v Department of Natural Resources and Mines:
“[11] The principles for determination of the ‘market value’ of
land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property.
(See Griffith CJ at 432 and Isaacs J at 441).
[12] It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
‘Land in my opinion differs in no way from any
other commodity. It certainly is more difficult to ascertain the market value of it but - as with other commodities - the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is
evidenced by sales.’”[22]
[22] [2005] QLC 11.
The concept of a bona fide sale in the Spencer test[23] has, in essence, been codified in
s 18 of the LVA. As the question of what is, or is not, a bona fide sale has been raised
as an issue in this appeal, it is essential to closely consider the specific provisions of
the LVA.
[23] Spencer v The Commonwealth of Australia (1907) 5 CLR 418.
Section 16 of the LVA provides that, for deciding the value of land, all land is taken
to be granted in fee simple; that is, freehold. Section 17 then goes on to provide as
follows:
17 What is the land’s expected realisation
(1)
The expected realisation of land under a bona fide sale is the capital sum that its unencumbered estate in fee simple might be expected to realise if that estate were negotiated for sale as a bona fide sale.
(2) In this section—
unencumbered means unencumbered by any lease, agreement for lease,
mortgage or other charge.
Bona fide sale is then described in s 18 of the LVA:
18 What is a bona fide sale
(1) A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following
(the bona fide sale tests)—
(a) a willing, but not anxious, buyer and seller;
(b) a reasonable period within which to negotiate the sale;
(c) that the property was reasonably exposed to the market.(2) For subsection (1), in considering whether terms and conditions are
reasonable, regard must be had to—
(a) the land’s location and nature; and
(b) the state of the market for land of the same type.
(3) To remove any doubt, it is declared that if—
(a) there is a sale of the land in question; and (b) the bona fide sale tests are complied with; the sale is a bona fide sale.
(4) In this section—
land in question means land whose value is being decided.
Section 19 of the LVA provides as follows:
19 What is the value of improved land
(1) If land is improved, its site value is its expected realisation under a bona fide sale assuming all non-site improvements for the land had not been made.
(2) However, the land’s site value is affected by any other relevant provisions of this chapter.
Various statutory assumptions for existing uses are set out in s 22:
22 Assumptions for existing uses
(1) This section does not apply for a Land Act rental valuation.
(2) In deciding land’s site value, the following must be assumed (the existing use assumptions) —
(a)
the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, (each an existing use) on the valuation day;
(b)
improvements may be continued or made to the land to allow it to continue to be used for any existing use.
(3) To remove any doubt, the following are declared for the existing use assumptions—
(a) they do not prevent regard being had under section 17 to any other purpose for which the land might be used; (b) in deciding the site value, new non-site improvements may be hypothesised instead of non-site improvements actually used for an existing use.
Other sections of the LVA are also relevant. Section 169(1) provides that an appeal
is by way of rehearing. Further, s 169(3) places the onus of proof for each of the
grounds of appeal on the appellants. Importantly, it should be noted that appeals under
the LVA are to be determined on what is essentially the balance of probabilities.[24]
[24] Meiers v Valuer-General [2012] QLC 19, [27].
Submissions of the parties
Both the appellants and the respondent filed extensive written submissions to support
their cases. The parties also had the benefit a full day of oral submissions to
supplement their written submissions.
The substance of the appellants’ appeals are that the respondent’s assessment of the
site value for the subject parcels of land is excessive, not in accordance with the LVA,
and thus, contrary to law and erroneous because it is not supported by comparable
sales evidence. The appellants submit that if the Court considers that site value
assessed is in accordance with the LVA, then the value arrived at is not supported by
comparable sales evidence.
The appellants did not provide a summary of their position that can easily be
transferred to my determinations. Therefore, the appellants’ positions are extracted
and/or summarised where relevant.
At a glance through this decision, it may appear that more focus has been given to the
appellants’ submissions rather than those of the respondent. I assure the parties that
this is not the case. The process of summarising the respondent’s submissions was
made easier because of the summary that it provided. It should be noted though that
I have referred throughout these reasons to the body of the respondent’s submissions.
The details of the appellants’ submissions are indeed longer, not only because of the
absence of a summary, but also because their overall submissions are approximately
three times the length of the respondent’s submissions. I confirm that I have read all
of the submissions of the parties extensively.
Although they came second in time, I will set out the respondent’s summary of their
submissions first, and then deal with the appellants’ submissions as well as
considering more details of the respondent’s substantive submissions.
The following paragraphs have been taken from pages 5 to 7 of the respondent’s
written submissions (the summary of the respondent’s position in these appeals) to
which I have added the respondent’s paragraphs 11 and 12:
“11.
The competing valuations are still some way apart. The controversies that underly the final differences between the contended figures, and that the Court will need to resolve for the purpose of deciding these two appeals, are primarily (if not wholly) controversies between the valuers. For introductory purposes, it is sufficient to identify those controversies as:
(a)
selection of the sales to be used as comparable sales, including, in particular, whether CBD/CCNP properties which were purchased with an intent at the time that they be developed for purposes other than as a commercial office tower may be relied upon (or given material weight) in deriving a site value for the appeal sites;
(b)
whether a sale at 55 Elizabeth Street, which was purchased with the intent (subsequently carried out) of commercial office tower development may be relied upon (or given material weight) as a comparable sale in circumstances where the sale took place nearly 5 years before the valuation date;
(c)
the proper analysis of sales at 38 Wharf Street and 97 Elizabeth Street, relied upon by both valuers, in terms of whether the sale prices require adjustment for what Mr
Jackson describes as a “premium” paid by the purchaser to
the vendor in each case, equal in value to a reduction in Brisbane City Council infrastructure charges available developers of student accommodation, that the being the
purchaser’s intended use in each case.
12. Apart from those specific matters, the divergence in valuation opinion also involves, as would be expected, differing views as to comparison of the sales to the subject, in terms of the usual attributes of size, shape, dimension, aspect, easements, `location, frontage, development potential and, for one comparable sale (62 Ann Street), heritage restrictions applying to the sale but not the subjects.
13. The Respondent’s ultimate submission that all three appeals
should be dismissed is underlain by the following premises which
the Respondent submits to reflect the evidence and the applicable law:
(a) for land within the Brisbane CBD it is incorrect to assert, a priori, that identifying the highest and best use (“HBU”) at a
given point in time excludes or renders of very little weight sales within the CBD where the use intended by the purchaser was different from the HBU identified for the subjects;
(b) that is because, for land covered by the City Centre neighbourhood plan (“CCNP”), CP2014 provides that a
diverse mix of “Centre activities”, including residential,
commercial, retail, services and entertainment are code assessable8 and anticipated to co-exist in close proximity to each other;
(c) that is not to say that some parcels within the CBD are not inherently more attractive for one particular form of code assessable development as compared to others, but it is to assert firmly and fundamentally that: (i) it is the advantageous qualities enjoyed by particular parcels, rather than the particular type of development as such, which will lead to a higher price being paid for that land relative to other parcels in the CBD;
(ii) it is part of the task and professional expertise of a valuer to adjust for such advantages (or relative disadvantages) when applying sales to the subject;
(d) in that planning context, Mr Hart has acted in accordance with proper principle in: (i) having regard to a basket of sales within the Brisbane CBD area, all of which had the same code assessable
use rights as the properties subject to appeal and were, broadly, of comparable size and shape;
(ii) analysing those sales to establish a range of site values reflecting the CBD sales evidence;
(iii)assessing the appeal properties as overall inferior or superior to the sales comprised in that range, and assessing a value for each appeal property which puts it at an appropriate point within that range;
(e) to the extent that Mr Jackson asserts that it is only properties purchased with a specific intent for commercial office
development that are of any reliable assistance in valuing 300 and 310 Ann Street, that assertion is contrary to
contemporary principle;(f) Mr Jackson’s assertion that a “premium” was paid for the purchase of 38 Wharf Street and 97 Elizabeth Street is not
supported by the evidence – vehement assertion is not enough
if the evidence relied upon is not objectively probative of
the assertion(g) the 55 Elizabeth Street sale is far too dated to provide reliable evidence for the purposes of the 300 and 310 Ann Street appeals; …[25] [25] (h) relates only to the LVA072-17.
(i) if the foregoing premises are accepted, Mr Hart’s valuations,
derived by applying his comparable sales to the respective appeal sites, have a sound basis in fact and principle which Mr
Jackson’s valuations do not;
(j) Mr Hart’s evidence should therefore be preferred over that of Mr Jackson in relation to the matters upon which they are in substantial disagreement, and that will necessarily lead to Mr
Hart’s valuation opinions is being preferred to those of Mr
Jackson.
14. If the Respondent can satisfy the Court that these premises are correct, it must logically follow that the Appellants have in each case failed to discharge their onus, and that all 4 appeals must be
dismissed.”
In relation to 13(f), above, the appellants’ reply submissions outline why the
appellants contend that the respondent’s premise is invalid and does not explain the
effect of the evidence.[26] The appellants go on to say:
[26] Appellants’ reply submissions, [89].
“(a) the concessions were known to the market, including: (i) the vendor; and
(ii) the student accommodation developers;
(b) Mr Jackson’s enquiries of the vendor’s agent reveal that the selling agent was well aware of the interest from student accommodation developers and attempted to secure the benefit of those concessions for the vendor;
(c) the purchase price is an input into the financial feasibility models which represent the highest price that a purchaser can afford to spend on the land in order to secure a site which: (i) is suitable for student accommodation; and
(ii) once developed, can deliver to the purchaser their desired net return on the investment taking into account all costs, including the infrastructure charges;
(d) it is the ability to develop the site and achieve the desired net return on the investment which: (i) is the desired financial benefit the purchaser obtains from the transaction; and
(ii) the governing consideration for a purchaser in determining whether to purchase the land; and
(e) the availability of the concessions drove purchasers for student accommodation sites to pay more for, in order to secure, those parcels of land which were suitable for student accommodation and enabled the purchasers to achieve their desired net return on investment, than would a developer intending a commercial or other use.”[27]
[27] Ibid [94].
The respondent outlines a useful summary of the applicable law relevant to LVA
matters in paragraphs 16 to 20 of its submissions.
In its reply submissions, the appellants make the broad contention that the
respondent’s submissions “lack proper foundation or are contrary to the evidence”.[28]
The appellants provide an example of why this is so in paragraph 4 of its submissions, which need not be repeated for the purposes of this decision as it relates to LVA072-
17.
[28] Ibid [4].
The appellants saw fit, in their reply, to respond to nearly all points made by the
respondent in its paragraph 13 as outlined in [49] of this judgment. Responding to
those points, the appellants relevantly say the following:
“(13)(a)
The submission rest on a false premise. The Appellants do not assert that a different highest and best use between a sale and subject property renders the sale, a priori, incapable of comparison to the subject. Rather, the point is that an approach which assumes that a purchaser will pay the same for a site irrespective of use is prone to lead to error. Mr Jackson did not disregard sales for other uses, but had regard to the individual parcels, their attributes and features, and the evidence regarding the intentions of the purchaser.
(13)(b)
This proposition is accepted, as far as it goes. However, it does not go very far to say that the scheme contemplates a
variety of uses – so do most schemes, and most zones. (13)(c)
The Respondent accepts that some parcels within the CBD are more attractive for one form of development than another and, implicitly, that developers for different purposes will pay more, or less, for the same parcel. The relationship between use, and price, is conceded by the
Respondent. Moreover, some “advantageous qualities enjoyed by particular parcels” are more important to one type of use, over another. Thus, it is not the particular features of a site which determine its value regardless of use. Rather, the evidence shows that it is the particular features of a site which make it of greater or lesser value for purchasers intending one use or another. As Mr Hart conceded in cross examination the price paid for a purchaser intending a particular use does not demonstrate what a would be purchaser intending for a different use would pay for the same site (see: T4-94 L 29-35; T4-48 L 1-5; T4-49 L 21-33).
(13)(d)
As we submit in our primary submission, it misunderstands and misuses the planning scheme to regard sales as necessarily comparable merely because they fall within the same permissive planning scheme. Mr Jackson did not
categorise the sales as “just CBD sales.” He, unlike Mr Hart, had regard to the factors of each sale which determine its reliability as a comparator; of which use is merely one.
Mr Hart’s comparison of his “range” of sales in the CBD produced unsustainably high levels of value and required an opaque process of adjustment to reach his contended for
Site Values. Mr Jackson’s preferable approach was to reveal his process of reasoning in the overall level of adjustments required in comparing sales properties to the subjects.
(13)(e)
Mr Jackson asserts no such thing. Rather, the point is that sales for the same use provide a more reliable indicator of
value than do sales for different uses. Mr Jackson’s proposition is consistent with the contemporary principle referred to by the Respondent. In ISPT v Melbourne City Council (2008) 20 VR 447, the Court of Appeal emphasised that whether the highest and best use should be regarded as a single use or a broad range of uses will always be a question of fact. Mr Jackson recognised that
the constrained highest and best use of the subject – an agreed fact – for low rise commercial development did not
permit a reliable inference of value to be drawn from high rise residential sales, in a different part of the CBD, struck for record prices for that use. Indeed, there is unchallenged evidence that residential development in any form is not viable at 300/310 Ann Street.
(13)(f) Mr Jackson’s clarified his evidence regarding what he meant by the purchaser paying a premium for the student accommodation sites: the advantage for someone wishing to develop student accommodation afforded by the concessions is that they are able to pay more (sic) the site than a purchaser intending a different use for which valuable development cost concessions are unavailable. The purchaser receives a financial benefit in that it is able to secure a site suitable for its intended form of development which, once developed, will yield its desired rate of return. Moreover, the evidence shows that the market was aware of the fact of the concessions. Naturally, limited supply of suitable sites for that particular use and increased demand inevitably increased the price of land for a particular use, in circumstances where the developers could as a result of the concessions secure land suitable to generate the net return rate which was a precondition of transacting to purchase the land.
Mr Jackson’s evidence is hardly “vehement assertion” (a phrase more aptly applied to aspects of the Respondent’s submissions, see for example footnote 121). Mr Jackson’s evidence was supported by the evidence of Mr Weston, and common sense. On the other hand, the absurdity in the contention that the benefit of an incentive (by way of a concession) to a purchaser be passed in whole to the vendor (and yet still remain an incentive) is not dealt with in the
Respondent’s submission. (13)(g)
For the reasons set out in our primary submissions and dealt with below, the Court can place weight on the sale because the market for commercial office development was stagnant, and indeed, may have worsened, between
2011 and 1 October 2015.” (emphasis in original)
Submissions regarding the valuation evidence
The appellants are critical of Mr Hart in their submissions, particularly in relation to
the methodology he adopted to complete his valuation and sales analyses. The
appellants consider Mr Hart’s analyses to be incorrect due to his lack of consideration of a particular use for each parcel of land. It is the appellants’ submission that Mr
Hart’s comparisons were unreliable from the start which in turn impacted his entire
analysis for the two subject properties on Ann Street.[29]
[29] Appellant’s written submissions, [230].
The respondent submits that the Counsel for the appellants has gone so far as to
criticise Mr Hart’s valuation evidence as failing to comply with the rules of expert
evidence by not exposing his reasoning regarding the application of the sales to the
subject in each appeal. The respondent submits that the appellants’ Counsel, is
“patently incorrect to make that accusation”.[30] Furthermore, the respondent alleges
that Mr Jackson’s approach shows his conclusions but does not “enlighten the reader
with any obvious explanation as to his reasoning for adopting those percentage
figures”. (emphasis in original)
[30] Respondent’s written submissions, [158].
The respondent goes on to provide that the application of comparable sales to a
property is inherently subjective, evaluative, and incapable of mathematical
expression. The respondent considers Mr Jackson’s “percentage adjustment”
approach to be a way to beguile the Court into finding his approach is more rigorous
or objectively testable than Mr Hart’s approach.[31] The respondent says Mr Jackson
effectively acknowledged this during oral evidence[32] and that it would be “an error
of law for the Court to be so beguiled”.[33]
[31] Ibid [159].
[32] Ibid [160] citing T 8-135, line 6 to T 8-136, line 4.
[33] Ibid [159].
The respondent cites authorities in this regard.[34] The cases are:
[34] Ibid [160]–[161].
(1) FCT v St Helen’s Farm Pty Ltd (1981) 146 CLR 338, 381 (Mason J): “As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as
well as the literal sense.” (2) Mario Piraino Pty Ltd v Roads Corporation (1990) 76 LGRA 263
(Gobbo J):“By contrast detailed adjustments of unit rates derived from comparable sales were used by the other valuers. Often there were as many as six or seven different percentage adjustments for such matters as time, size, shape, location, freeway exposure, planning permission and services. All of those adjustments were matters of judgment. Very few of them were capable of meaningful support by analysis of sales evidence. The whole structure of percentage adjustments had an illusory air of certainty and reliability about it. It could, of course, be said that one might be better able to challenge the weight placed on particular factors. But it also meant that they provoked long questioning about the percentage rates adopted and alleged inconsistencies in analysis of other sales.
The detailed percentage adjustment analysis method, sometimes but not always accompanied by supporting analyses themselves founded on like adjustments, is a relatively new phenomenon in valuation practice in this Court. It was not the method adopted by the experienced valuers of yesteryear such as Mr Burnham or Mr Pelton who once they had analysed the sale to a unit rate, such as land clear of improvements, then gave a reasoned explanation of the factors of similarity and dissimilarity and why in the light of
those factors they settled upon their valuation figures.”
The respondent says it is a material flaw in Mr Jackson’s comparisons that no
allowances are made for differences between the sales and the appeal properties for
shape and dimension. The respondent says this is a general observation but provides
the following example to support its point:
“…97 Elizabeth Street is, relatively, a very long narrow block, with 20 metre
street frontages and 90 metre depth. Both Ann Street sites have a much more regular shape and have accommodated development of a size and shape
which simply could not be carried out on 97 Elizabeth Street.”[35]
[35] Respondent’s written submissions, [162].
In its reply, the appellants submit that the respondent has mischaracterised the
difference between the valuers and the appellants’ submissions in its description of
the appellants’ position regarding the evidence of Mr Hart’s approach and any
contrast to Mr Jackson’s “percentage adjustment approach”.[36]
[36] Appellants’ reply submissions, [165].
The appellants go on to say that there were a number of reasons why they characterise
Mr Hart’s approach as unreliable, including his proposition that a purchaser pays the
same for the land the subject of the sales he relied on, whatever the use.[37]
[37] Ibid [166].
In response to the respondent’s submissions regarding what it describes as the
“percentage adjustment” approach, the appellants say that submission is unfair
because the opposite was put to Mr Jackson during cross-examination by the respondent. The appellants point to day eight of the transcript where Counsel for the
respondent suggested to Mr Jackson that the percentages applied were “nothing more
than a way of representing your professional but ultimately evaluative opinion about
the differences between the properties and that there is no mathematical formula
which produces those figures?”.[38]
[38] Ibid [167] citing T 8-135, lines 7 to 11.
The appellants point to Mr Hart’s acceptance that Mr Jackson’s approach is a useful
and not unusual one which illuminated his process of reasoning. The appellants ask
the rhetorical question of “what error of law would there be in finding, on all of the
evidence, that Mr Jackson’s approach was more forthcoming than that of Mr
Hart?”.[39]
[39] Ibid [168].
Mr Hart did agree that Mr Jackson’s evidence presented in table form does illuminate
his reasoning and that the use of tables to present valuation evidence has “some
utility” and is not unusual. Mr Hart did go on to say, in effect, that there are some
limitations in the way Mr Jackson has approached his task by way of percentages. Mr
Hart acknowledges this approach is different to his own. The exchange between Mr
Traves QC and Mr Hart was as follows:
“MR TRAVES: …This is, can I suggest to you, a very useful table because
it does illuminate Mr Jackson’s reasoning.
MR HART: It does illuminate, yes, I agree.
MR TRAVES: And it’s very useful for that reason, can I suggest to you?
MR HART: It’s – it has some use, yes. It’s useful.
MR TRAVES: And it’s far from being unusual, can I suggest to you, that
valuers should, either through a table form or through the description in their reports, that they should attempt to identify, and as far as possible, articulate the extent of their adjustments for various important factors?
MR HART: It has some utility.
MR TRAVES: In fact – and it’s far from unusual - - -
MR HART: - - - I think.
MR TRAVES: - - - that they should seek to do so?
MR HART: I don’t – yeah, it’s not unusual, but - - -
MR TRAVES: So can I suggest there’s nothing unusual about Mr Jackson
trying to articulate his thoughts in relation to the value; nothing unusualabout that?
MR HART: No, it’s not unusual. It’s what needs to be done.
MR TRAVES: And can I suggest to you that it’s a point of very marked
contrast with your approach?
MR HART: Oh, well, I believe I’ve adopted the – a traditional approach
where I’ve identified the various aspects of comparison and made – and put
them in writing.
MR TRAVES: Apart from the allowance which you make as a conservative
adjustment, and putting aside, for example, the different treatments you’ve
given to easements, but just looking at all of the other broader factors to which you refer, can you point to one example in these four appeals where you have actually articulated the extent of the adjustment?
MR HART: No.
MR TRAVES: All right. Have you heard of the expression ‘speaking valuation’?
MR HART: Yes, I have.
MR TRAVES: Can I suggest to you respectfully that your valuation does
not speak in the same way as Mr Jackson’s speaks, as an exposure of yours
or his reasoning?
MR HART: I would disagree with that because I don’t necessarily know what those – each of those elements refer to when it says ‘size’, because something like shape and dimensions isn’t mentioned. The adoption of just
five or 10 per cent, in round numbers, again is – you know, has its limitations,
but, you know – so I think it’s a different approach. I agree.”[40][40] T 9-44, line 14.
The appellants say it is not the individual percentage adjustments that require
attention, but the overall adjustment arrived at by Mr Jackson’s evaluative process of
reasoning. In the appellants’ submission, Mr Jackson’s reasoning appears on the face
of the JERs.[41]
[41] Appellants’ reply submissions, [170].
The below table outlines the valuers’ positions with respect to the sales, as well as
identifying the way in which the sales are referred to in this judgment. The sale
numbers were amended during the course of the hearing so that they would be referred
to consistently throughout all appeals.
The respondent says that the valuation evidence of Mr Jackson is fundamentally
flawed by reason of:
(a) Mr Jackson’s incorrect analysis of the sales 38 Wharf Street and 97 Elizabeth Street; and
(b) Mr Jackson’s reliance, without sufficient justification, on the sale of 55 Elizabeth Street which took place, in effect, nearly 5 years prior to the date of
valuation.[42]
[42] Respondent’s written submissions, [172].
In relation to (a), the appellants’ reply submits that those sales are not so markedly
different to preclude any reliance upon them. The appellants suggest those two sales
can be contrasted to the 2014 residential sales, which are markedly different so as to
be incompatible with the highest and best use of the Ann Street properties.[43]
[43] Appellant’s reply submissions, [73].
Further, in relation to Sale 2, the appellants submit:
“Mr Jackson’s evidence confirmed that the sale is of limited utility in
comparing to the subject properties not only because of their different use
but for a ‘whole host of reasons’ including the configuration of the site not
lending itself to commercial development and the level of adjustment required to compare it to the subject. Mr Jackson described the sale as
‘secondary’ but given it was a 2015 sale he attempted to make some use of
it (T8-173 L 22-29).”[44] (emphasis in original)
[44] Appellants’ reply submissions, [76].
Regarding point (b), above, in relation to Sale 5 (55 Elizabeth Street), overall, the
appellants’ submissions go to the state of the market at the time between February
2011 and the date of valuation and what is referred to as a “secondary location”. These
submissions are considered by me further in my decision under the heading
“Residential apartment market issue”.
The appellants, also, in their reply, identify what they calls an “important concession”
by the respondent in relation to sales requiring a lower adjustment to move from the
analysed sale price to an inferred value for the subject being preferable to sales which
require a greater level of adjustment.[45]
[45] Ibid [39].
For Sales 1 and 2, the appellants say that infrastructure concessions available to
developers of student accommodation in the Brisbane CBD adds value to a purchaser
and are therefore, relevant to adjustments in value. Adjustments made to Sales 1 and
2 by the appellants’ valuer were not because the purchasers of those sales “paid a
premium to market”. “It was made because purchasers of a property with a highest
and best use of student accommodation had the benefit of the highly valuable
concessions which purchasers of developments with different highest and best uses
did not”.[46]
[46] Appellants’ written submissions, [90].
The respondent recognises, in its submissions, that infrastructure credits are not
owned by a vendor, nor able to be sold by the vendor, but clarifies its position that
that is not decisive of itself “because a premium is only paid where there is some
particular motivation for the purchaser which is idiosyncratic to that purchaser.”[47]
[47] Respondent’s written submissions, [93] (emphasis in original).
In this case, the respondent emphasises that the concessions:
“(a) did not in any sense attach to or run with the land; (b) were not pre-paid by the vendor; and (c) depended entirely on the purchaser’s own choice to undertake a particular form of development within a particular time frame”[48] (emphasis in original) [48] Ibid [93].
In response to the Valuer-General’s submission, the appellants say the respondent has
misunderstood Mr Jackson’s evidence and overlooks important evidence in these
appeals regarding the effect of infrastructure credits on the market for student
accommodation development sites in the CBD.[49] Further, the appellants say it would
be absurd if, “as [the respondent] says, the benefit of the concession is all passed to
the vendor, then it can only be passed to the vendor by an increase in the purchase
[49] Appellants’ reply submissions, [87]–[88].
price… And, if all the benefit is passed to the vendor, then that must be the full value
of the concession.”[50]
[50] Ibid [97].
The appellants comment upon the respondent misunderstanding or mischaracterising
the evidence of Mr Jackson on numerous occasions in their reply submissions.[51] The
appellants’ submission regarding the concessions point is neatly summarised is its
reply at paragraphs 110 and 111:
“The point is a consequence of fundamental market dynamics: limited supply
and increased demand inevitably increased the price of land for a particular use, in circumstances where the developers could as a result of the concessions secure land suitable to generate the net return rate which was a precondition of transacting to purchase the land. The value obtained by the purchaser is securing the site the development of which will secure the desired return on investment.
It must be borne in mind that the student accommodation developers are not land bankers. The sites are purchased for a purpose, which is to develop the land into a viable business and then, after a period of time, sell the business. It is therefore artificial to speak of the benefit of the concessions being lost to the purchaser. The benefit is the site which can
be developed and then sold for the desired rate of return.”
[51] Ibid [70]; [88]; [96]; [104]; [108];
I consider and make findings regarding the issue of the infrastructure credits in detail
under the heading “Infrastructure credits for student accommodation”.
Specific submissions regarding 310 Ann Street
The parties both agreed, for the purposes of these appeals, that the highest and best
use of 310 Ann Street is a 21-storey commercial office tower consistent with
development on the land as at 28 March 2018.[52]
[52] Appellants’ written submissions, [285].
The appellants’ observations regarding this subject can be summarised as follows:
(a)
the existence of the rail corridor beneath the property is a significant point of difference to other sales in evidence.[53]
(b)
the property lacks flexibility in the use of its frontage to Wickham Terrace due to the freehold lot obtaining street frontage to Wickham Terrace via the leasehold lot.[54]
(c)
the respondent seems to contend that regardless of the highest and best use of the subject, the land value is the same.[55]
(d)
the subject is located in a secondary location as a commercial development in the Brisbane CBD; it is on the periphery of the western side of the CBD.[56]
(e)
it has relatively poor amenity as a commercial location; is located between two busy arterial roads; and has relatively poor pedestrian access.[57]
[53] Ibid [283].
[54] Appellants’ written submissions, [284].
[55] Ibid [285].
[56] Ibid [286].
[57] Ibid [286].
The appellants submit it is a rather surprising result that Mr Hart achieved the same
figure of $25,000,000 in Exhibit 3[58] as did the Valuer-General in making its decision
[58] Joint Expert Report – 310 Ann Street, Brisbane (36 Wickham Terrace).
on objection, despite the assumptions markedly changing.[59] In this regard, the
[59] Appellants’ written submissions, [287].
appellants note the following:
(a) no highest and best use was identified for the decision on objection; (b) the only constraints on development when the decision on objection was made were imposed by the planning scheme; (c) the site penalties associated with the railway corridors had not been brought to account for the decision on objection;[60] (d) the parties now have an agreed highest and best use – that being, commercial high rise of the nature and size of the existing
development; and(e) allowances have now been made for site penalty costs.[61] [60] Ibid [288].
[61] Ibid [289].
The appellants go on to observe that the objection decision applied a rate of
$12,000/m2, whereas Mr Hart started with $12,600/m2, resulting in the same figure
as the decision maker, notwithstanding the changes.[62] The appellants submit this
clearly cannot be correct.
[62] Ibid [290].
The appellants contend that Mr Jackson’s opinion is that the agreement as to highest
and best use, together with the identification of engineering costs relating to the
railway, should have led to a significant correction downward of the assessment of
site value.[63] The appellants conducted an exercise in [292] of their submissions and
submit that exercise illustrates that Mr Jackson’s opinion in this regard is correct.
[63] Ibid [293].
In applying the sale properties to this subject, the Valuer-General makes clear its
reliance on Mr Hart’s evidence regarding comparability in Exhibit 3; his subsequent
allowances for the impact of the rail corridor; the burden of the railway easements; and the site penalty costs for additional works during construction due to the existence
of the railway.[64]
[64] Respondent’s written submissions, [165].
The respondent points out the agreed figure for site penalty costs for the existence of
the railway as $1,371,000. The respondent also emphasises that the issue of the
allowances made for the impact of the rail corridor are a distinct and separate issue to
the burden of the railway easements preventing substantial development above the
railway lines.[65]
[65] Ibid [165].
The respondent’s submissions for 310 Ann Street make clear that the respondent
relies upon Sales 1, 2, 6, and 7.[66]
[66] Ibid [167].
Submissions relating to 300 Ann Street
For 300 Ann Street, the highest and best use was agreed to be a commercial office
tower at the level, and in the form, of development as existed at 28 March 2018.[67]
[67] Appellants’ written submissions, [317] citing Ex 4 at [26]-[27].
In regard to the agreed highest and best use of this subject, the appellants point out
that that agreement is the respondent’s third position on highest and best use. The first
being when the respondent made its decision on objection without the identification
of a highest and best use; the second, when the respondent assessed site value for the
subject based on its highest and best use being residential, with ground level retail;
and third, the agreed position. This leads the appellants to the submission that, in the
respondents view, highest and best use does not have impact on site value.[68]
[68] Ibid [317].
The submissions of the appellants relating to 300 Ann Street include:
(a) Based on Mr Jackson’s opinion, this property is at the bottom range of commercial office space in the Brisbane CBD – Eage Street,
Creek Street, Queen street, Adelaide Street, George Street, and
Elizabeth Street being superior commercial office locations.[69](b) This property is located adjacent to a four-lane main road, making it a very busy, dusty, and noisy location.[70] (c) Mr Hart agreed that there is not direct vehicular or pedestrian access from Creek Street.[71] (d) Mr Jackson’s adjustments for 310 Ann Street apply equally to 300 [69] Ibid [318].
[70] Ibid [318].
[71] Ibid [319] citing T6-85 line 20-23.
Ann Street and therefore the appellants’ submissions regarding 310
Ann Street also apply to 300 Ann Steet.[72]
[72] Ibid [322].
(e) There is a large difference between the valuers regarding the deduction for the burdened area of this subject – the appellants
[73] Appellants’ written submissions, [323].
[74] Ibid [324].
submit that the space above 310 Ann Street can be used, whereas
the burdened area on 300 Ann Street can not be.[73](f) The considerations concerning 300 Ann Street and 310 Ann Street are very similar.[74]
In the respondent’s submission, quite different from the appellants, the easements
burdening this subject are not so significant so as to inhibit the development potential,
convenience, or the cost of development.[75] The respondent goes on to submit that Mr
Jackson’s reduction of 77% is not supported by evidence and is excessive in
comparison to the unburdened rate.[76] In the respondent’s submission, it is excessive
particularly in light of Mr Jackson’s deduction of only 25% for 310 Ann Street where
the “railway easements run through a substantial part of the property and effectively
[75] Respondent’s written submissions, [168].
[76] Ibid [168].
prevent both basement car parking and building work of any substance, both below
and above ground.”[77]
[77] Ibid.
In its reply submissions, the appellants respond to the respondent’s contention that
Mr Jackson’s reduction of 77% is excessive in the following way:
“207. …it would be surprising if an easement burdening the land did not inhibit development potential and costs. Indeed, as Mr Jackson observed, the only possible use of the space burdened by the easement was support columns for the benefit of the adjoining owner, Queensland Rail (T9-87 L 1-12).
… 209. Mr Hart’s basis for adopting a 25% reduction assumes that the easement burdening 300 Ann Street is the same as that burdening 310 Ann Street. He was asked to explain his rationale for adopting
25% and said ‘…it’s the same percentage discount as the agreed percentage discount on the 310 Ann Street easements. So that’s been – that’s – that’s been a guide in terms of my adoption of a similar – same discount to – to – to these – to these – to these easements’ (T9-86 L 4 – 7).
210. Mr Hart’s view is unsound. As Mr Jackson explained, the easements burdening 310 Ann Street are less onerous because they permit construction of an office development above the area burdened by the easements thus using that space for commercial purposes (T9-86 L 15-17). Accordingly, that space has value. By
contrast, the easement burdening 300 Ann Street ‘…are to the benefit of someone else for – for columns of which they’re effectively – apart from support in part for someone else are useless for the commercial benefit. So they’re – they’re – they’re not the
same and they shouldn’t be treated the same’ (T9-86 L 17-20).” (citations in original)
The appellants say in their reply that there is “no logical gap or sequitur in [Mr
Jackson’s] evidence: he has explained, cogently, while some sales for different uses
may be of more use than others. The criticisms which follow in the Respondent’s
submissions again proceed on a false premise.”
The submissions of the parties relating specifically to the sales presented is
considered in my analyses of the valuation evidence later in this decision.
The parties’ initial observations regarding the sales and their application to the subjects
The appellants emphasise as a notable point, in their submissions, that the evidence
of Mr Jackson that the subjects are unsuitable for residential high rise development is
unchallenged. Thereby concluding, that the “basket of sales” approach (which
includes residential sales of very high magnitude) is unreliable”. The appellants in
their submissions emphasise the difficulty in comparing sales which have different
uses.
The respondent, though, considers there to be a mixed market and therefore relies
upon residential sales in its submissions and supports Mr Hart’s use of such sales to
determine the value of the subjects. I consider submissions relating to the
mixed/merged market in my reasons below under the heading “Residential apartment
market issue”.
The appellants contend the preferable starting place to be with Sale 6, 62 Ann Street;
that other sales corroborate the proper application of Sale 6; that Sale 8 needs to be
applied with caution together with the secondary evidence of the commercial market;
and that Sale 8 and Sale 1 provide some use when properly analysed.
The appellants submit, specifically, that Sale 1 is affected by the concessions issue
and therefore, is only of secondary utility in comparing to the subject. The appellants rely upon evidence from confidential exhibits, Mr Weston, and Mr Jackson to support
its contention of adjustments to Sales 1 and 2.[78]
[78] Appellants’ written submissions, [95].
The appellants note that Sale 1 has difficulties due to its different use. The appellants
go on to say the following regarding the application of this sale:
“Of the other sales, 38 Wharf Street is of some corroborative utility. It must
be recognised, at the outset, that the sale presents difficulties because of the different use. There is no evidence that a commercial purchaser would have paid a similar price for that land as the purchaser did for student accommodation purposes. On the other hand there is good reason to think it would not have done so: a developer of land for student high rise accommodation was the highest bidder; the majority of the expressions of interest were from developers of student high rise accommodation; the state of the commercial market was relatively poor and there had not by the valuation date been a commercial sale in the CBD for four years; the anecdotal evidence that student accommodation developers were paying 20% more than even residential developers; the existence of generous concessions on infrastructure charges for the developers of high rise student accommodation, which had sparked a proliferation of development of that nature. Moreover, the Valuer General in the exercise of its statutory function had reduced the value of that parcel to
$13,172/m2; that was similar to (although lower than) Mr Jackson’s analysis of $13,441/m2 and Mr Hart agreed that the re-issued valuation
was reasonable. In all of those circumstances, doing the best one can, it is not unreasonable for the purposes of the appeal to move from the basis
that a commercial purchaser would have paid not more than $13,441/m2
for that land (indeed, there is a strong argument that a commercial purchaser would have paid less). Mr Jackson reasons a 30% adjustment from 38 Wharf Street to 310 Ann Street, and the Respondent an
adjustment in the order of 20%. If Mr Jackson’s adjustment of 30% is
adopted, a figure of $9,408/m2 is achieved; if the Respondent’s adjustment of 20% is made to the analysed rate of $13,441/m2, then the figure is $10,752/m2.”[79]
[79] Appellants’ written submissions, [306].
The respondent is of the opinion that the premium applied by Mr Jackson for Sale 1
is not made out on the evidence.[80] In the respondent’s opinion, Mr Hart is correct in
making adjustments for size for this sale, given the subject is much larger than the
sale, giving the subject more flexibility to construct an office building with larger
floor plates than possible on the sale, utilising areas above the railway line for open
space and access.[81]
[80] Respondent’s written submissions, [13].
[81] Ibid [167](a).
The respondent goes on to criticise Mr Jackson’s adjustments of 10% for locality and
corner/street frontage, contending that there is no basis to say that the sale is inferior
from these perspectives.[82]
[82] Ibid.
The appellants submit Sale 2 is also affected by the concessions issue and therefore,
this sale is only of secondary utility in comparing to the subject.[83]
[83] Appellants’ written submissions, [309]–[310].
In its written submissions, the following can be deciphered from the appellants’
position:
[84] Ibid [312]–[313].
[85] Ibid [313].
(a) The development potential of the land is significantly higher than the subject and has superior street frontage than the subject.[84] (b) The important question regarding street frontage is how it can be used; for this sale the frontage may be used in the form of a walk-through retail arcade. This option does not exist for the subject due to its location and the presence of the railway.[85]
The respondent says there is no objective basis upon which it can be determined that
Sale 2 is in a materially superior location for commercial office development,
particularly where:
“most of the commercial development in the CBD (including in and around
the Golden Triangle) is well separated from the Queen Street Mall and major retail development - if being close to the Mall and other non-commercial activities was an important locational factor for commercial office
development, one would have expected Brisbane’s concentration of
commercial office development to be very close to the Mall and the heart of
the City generally, but the facts are that it is not”[86]
[86] Respondent’s written submissions, [167](b).
The respondent also says that Mr Jacksons adjustment of 5% for street frontage is
wholly unsustainable where the subject (310 Ann Street) has street frontages to Ann
Street and Wickham Terrace.
In paragraph 103 of the appellants’ submissions, the appellants list the reasons for Mr
Jackson’s decision not to rely on Sales 3 to 5 as follows:
“103.
Mr Jackson considered the sales, but determined not to rely on them. He set out his reasons in Exhibit 3 at paragraph 197 (Record page 981). They were:
(a) Each sale is in a vastly different area of the Brisbane CBD;
(b)
Each sale has a highest and best use of residential apartment development, incompatible with the agreed highest and best use of the subject property;
(c)
One sale (443 Queen Street) is situated on the Brisbane River with uninterrupted views and aspect;
(d)
Each sale has received approval for high rise development (up to 80 storeys) compared to the low rise nature of the subject property;
(e)
Two sales (30 Albert Street & 240 Margaret Street) are situated within a recognised residential precinct of the Brisbane CBD in close proximity to the Botanical Gardens and Brisbane River;
(f)
All the sales sold in 2014 in a market which was conducive to residential apartment development which differs from October 2015;
(g)
Ann Street is predominantly a commercial precinct with Ann and Turbot Streets being high traffic volume arterial roads through the CBD compared with the quieter and more pleasant environment for residential development in Albert and Margaret Streets and overlooking the Brisbane River in Queen Street;
(h) Based on Mr Jackson’s enquiries with an experienced real estate agent in selling and marketing residential apartments in the
Brisbane CBD, it is not viable or feasible to consider residential
apartment development in Ann Street – see Annexure 13.”
The respondent, in its submissions, jumps from Sale 2 to Sale 6, those being Mr
Jackson’s sales.
On the evidence of Mr Jackson, the development potential of Sale 6 has not been
impacted by the heritage issues associated with the site so as to affect comparability
with the subject properties.[87] The valuers agreed that at the valuation date, Sale 6
would lend itself to a commercial use based on its large size and lack of residential
development in the CBD.
[87] Appellants’ written submissions, [134]–[135].
The appellants’ submit that Mr Jackson’s evidence is important in relation to Sale 6
for a number of reasons and that these reasons make the sale a useful comparator:
(1) The sale occurred in the same street as the subject, albeit, in a superior part of that street;
(2) The sale has two street frontages and size and therefore good
flexibility;
(3) It is being developed consistent with the commercial highest and best use of the subject; and
(4) It sold only two months after the date of valuation.[88]
[88] Appellants’ written submissions, [298].
The appellants criticise Mr Hart’s consideration of this sale as being “opaque by
comparison and unconvincing”. The appellants say there is no reason why Mr
Jackson’s quantification of the adjustments should not be accepted as Mr Hart did not attempt to quantify any of the adjustments nor did he challenge Mr Jackson’s
figures.[89]
[89] Ibid [300].
The appellants point to substantial areas of agreement between the two experts
regarding Sale 6 during their oral evidence:
“301. That said, and notwithstanding Mr Hart’s reluctance in Exhibit 3 to apply the sale, again, in oral evidence, he substantially agreed with Mr Jackson. Mr Hart agreed that it is reasonable to make use of Sale 6 in considering the Site Value of the properties with
commercial highest and best use (T6-10 line 44 – T6-11 line 3). He agreed it was reasonable to compare 62 Ann Street given its commercial potential with 310 Ann Street and that he had done that
(T6-10 L44 – T6-11 L3). He was of the view that 62 Ann Street was very suitable for high rise commercial development (T5-126 L12). He also agreed that, at the valuation date, its predominant use would lend itself to a commercial use (T6-11 line 30; see also Jackson at T6-12 L13-23, and T6-13 and 6-14, where Mr Jackson refers to other commercial development in the area). The reasons for that include that the site
is relatively large (T6-11 line 35 – 45), the relative lack of residential development in that precinct of the CBD (T6-12 line 1- 9), and that at the date of valuation, the precinct was predominantly commercial in nature (T6-13 line 30). Mr Jackson gave like evidence at T6-12.
302.
Having agreed as to the utility of the sale, the evidence of Mr Jackson and Mr Hart was not far apart on its proper application to the subject. The Appellant maintains the correctness of Mr
Jackson’s opinion as to the value of the subject at $9,500/m2. But, as we will seek to demonstrate, so far as the application of 62 Ann
Street is concerned the valuers are not far apart.303.
Mr Jackson had identified five issues as requiring small adjustment (see 12 Exhibit 3 p 1082): size (5%), location (-5%), corner/street frontage (-5%), development potential (-10%) and heritage (5%), resulting in a (-10%) adjustment in total to the subject. Mr Hart did not express a view in Exhibit 3 as to the extent of these adjustments. However, in his oral evidence he agreed the sale was capable of sensible comparison (T9-46 L1-5). Further, the following may be
gleaned from Mr Hart’s evidence:
(a) Both valuers agreed there should be an adjustment for size. In Mr Jackson’s opinion, because the sale property comprises five
separate lots on two separate street frontages, the discount for size is less than it otherwise would be (Exhibit 4 at [102]). Mr Jackson
allowed 5%. Mr Hart said that “on the fly”, he would allow 10-
15% difference for size, which Mr Jackson said was a bit excessive for the reasons he had given (Hart T9-41 L9-10; Jackson T9-41 L15). Mr Hart said that this adjustment was not something to which he had given considered attention (Hart T9- 41 L47- T9-42 L2). However, he had had every opportunity to do
so. For arguments sake, and taking into account Mr Jackson’s
more considered evidence in this respect than Mr Hart, and Mr
Hart’s willingness to countenance 10%, allow 10%.
(b)
As to location, Mr Jackson believed the location of 62 Ann Street to be superior to 310 Ann Street (T9-43 line). Mr Hart agreed that 62 Ann Street is a better commercial location than 310 Ann Street (T9-43 L 37). In the absence of another estimate from Mr Hart, allow the -5% adjustment for location that Mr Jackson allowed (a conservative allowance, it is submitted, given the superiority of location for 62 Ann Street and the existence of the railway line).
(c) As to corner/street frontage, Mr Hart gave no evidence disputing
Mr Jackson’s adjustment. It is reasonable to conclude that 62 Ann
Street’s level, two street frontage is superior to 310 Ann Street.
Mr Hart was of the view that the subject’s frontage to Creek Street
was not as good as it would be for a flat parcel (T6-85 L11), so
allow Mr Jackson’s -5% adjustment.
(d) Development potential, allow the -10% that Mr Jackson allowed and that Mr Hart allowed in respect of development potential at paragraphs 332 of Exhibit 3 and 38 of Exhibit 4, and in respect of 375 Turbot Street in comparison to Barry Parade. This is entirely sensible: the same considerations apply, and there are no use or height constraints on 62 Ann Street as are agreed for 310 Ann Street. In Mr Jackson’s opinion, the development potential of the
sale property is significantly greater than the agreed highest and
best use of the subject, being a ‘…relatively low rise commercial
development (20 storeys)…’ (Exhibit 4 at [105]). The superior
development potential is demonstrated by the 36 storey student accommodation approval on the Turbot Street frontage of the sale property and a subsequent approval for a 32 storey office tower on the Ann Street frontage of the sale property (Exhibit 4 at [106]).
(e) Mr Hart said Mr Jackson’s allowance of 5% for the heritage issue was ‘a bit light on’ (T9-53 L1), but offers no further figure. In Mr
Jackson’s opinion, the heritage considerations associated with the
Turbot Street frontage do not significantly diminish the development potential of the land (Exhibit 4 at [103]). He notes the sale property is not affected, like the subject property, by complications associated with development over and adjacent to a railway line (Exhibit 4 at [104]). Mr Hart agreed that there were
‘…certainly ways and means around dealing…’ with the heritage
portion of the sale property (T9-39 line 45). He agreed such ways and means had been demonstrated by subsequent development application on the property while still achieving a very significant level of development (T9-40 line 5). For arguments sake, make an allowance generous to Mr Hart of 10%. This would leave no net total adjustment applying the analysed rate for 62 Ann Street of $9987/m2, rounded to $10,000/m2. This figure is at irreconcilable
A major point of difference between the valuers regarding Sale 8 was centred on the
age of the sale, as my detailing of the submissions of the parties earlier in these
reasons shows. In short, Mr Jackson says that the commercial office market in the
Brisbane CBD was flat from late 2010/early 2011 to the date of valuation of 1 October
2015. Because of the lack of market movement and also because there were no other
CBD sales for commercial office purposes, Mr Jackson says that Sale 8 may be relied
upon. Mr Hart, on the other hand, is of the opinion that, not only is the sale dated, in
his opinion in the years following the sale, leading up to the valuation date, there was
strong growth in the Brisbane CBD market principally caused by overseas investors.
As regards Mr Hart’s opinion, I have already rejected his reliance on the merged
market theory. As at the valuation date, the Brisbane CBD market was made up of
many component parts depending upon the use to which a site could be put. As I have
found, there was a strong student accommodation market. After 2010, the evidence
also shows that there was a rise in the residential apartment market. Accordingly, I
reject Mr Hart’s opinion where he sought to compare Sale 8 to a rising apartment
market.
Due to the market being made up of a number of different component parts operating
quite distinctly, thus rendering the merged market theory not applicable for 1 October
2015 site valuations in the CBD, the question must be asked as to whether or not the
commercial office market had moved between November 2010 and October 2015.
Mr Jackson was subject to quite an amount of questioning as regards his opinion of a
flat commercial office market over the five year period. Taking a broad overview of
the evidence he provided, I am satisfied that his opinion stood up well. I generally
accept his opinion, derived from a number of sources. Mr Jackson’s factual evidence
included tables from the Property Council of Australia (PCA) for both the total market
and A Grade space in the Brisbane CBD which detailed the vacancy factor in the
CBD market over the five year period; the take up of supply of office accommodation
during that timespan; and supply additions at both points in time.
The appellants and the respondent, in their submissions, had a very different view as
to what I should make of Mr Jackson’s evidence and the resulting conclusions he
drew from that evidence. I have briefly touched on those submissions earlier in these
reasons and, in an endeavour not to make this decision so long as to be unreadable, I
will not repeat those submissions here. Something, however, needs to be said as to
the conclusions I draw from those submissions.
The respondent has warned that the Court should exercise great caution before
embarking upon an exercise which seeks to ascertain market movement without the
benefit of relevant market sales. I certainly agree. However, in circumstances where
there is an absence of sales, it may be acceptable for the Court to take just such an
approach. The appellants refer to the approach in such circumstances to be
“orthodox”.
It is important to note the case of Australian Executor Trustees Ltd v Propell National
Valuers (WA) Pty Ltd.[145] In that case, Justice Barker stated at paragraph 126:
“Where, however, very comparable sales evidence is not available, as the
valuers agree is the case here, it is necessary to look further afield for sales evidence and describe the different attributes those different broadly but relevant properties have in order to measure the value of the subject property against those sales. There can be a preliminary debate about what properties are broadly comparable for this purpose. Some other properties may, in the particular land and property context, be in such different locations, or be so much larger in size or have been so improved, or have such other attributes or detriments, that a recent sale of those other properties may provide no
reasonable guidance to the value of the subject property and a ‘weighting’ of
their value by comparison to the subject property may be difficult in the extreme. The sales evidence may also be sufficiently old in a volatile market
as not to be reliable and so should not be used to this end.” (citations omitted)
[145] [2011] FCA 522.
I also note that during his oral evidence, Mr Hart accepted that it was reasonable to
consider secondary evidence in order to reach conclusions about the state of markets
over time.
I accept the caution that the respondent’s submissions call for. I also accept that, as
the respondent strongly puts it, a prospective purchaser of land suitable for
commercial development in the CBD in 2015 would, as part of their risk assessment,
make an evaluation as to what was happening in the commercial office market at that
time and, in particular, take into account any actual construction of commercial
developments that were either underway or committed to.
The facts of this case clearly show what information was available to a prospective
purchaser of a site for commercial development in 2015:
“(a) 180 Ann Street (52% committed with major tenants included the
Commonwealth Bank and Tatts Group);(b)
480 Queen Street (85% committed with major tenants including Herbert Smith Freehills, PwC, BHP Billiton, The Executive Centre, HWL Ebsworth, DLA Piper, and Allens);
(c) 1 William Street (100% committed by the Queensland State Government);
[146] Summary from tables in Ex 3 [184].
(d) 36 Wickham Terrace (0% committed); and (e) 300 George Street (0% committed).”[146]
I do not accept the respondent’s conclusion that the paragraph above demonstrates a
strong demand for commercial development sites in the CBD in 2015. Quite to the
contrary, I accept the opinion of Mr Jackson that the introduction of that amount of new commercial development over the coming years would act as a disincentive to
any prospective purchaser of same in 2015.[147]
[147] See, for instance, the first two lines of Ex 3 [184].
I need also consider the criticism made of Mr Jackson for not treating Sale 6 as a
commercial sale as part of his analysis of the commercial market from 2010 to 2015.
To begin with, Sale 6 speaks for itself as being, at the time of purchase, for student
accommodation, at least, insofar as the Turbot Street part of the site is concerned,
with no definitive plans for the Ann Street part of the sale at that time. Clearly, Sale
6 was considered, at the time of purchase, suitable for a mixed development.
However, even if Sale 6 were to be classified as purely commercial, the appellants in
their reply submissions noted, on the basis of the respondent’s proposition that Sale
6 be used for market evaluation purposes as a commercial sale, that “the evidence
suggests that in February 2011 a purchaser for a commercial use paid $10,578/m2
(55 Elizabeth Street) whereas in December 2015, shortly after the date of valuation,
a purchaser of a site suitable for commercial development paid only $9,987/m2 (62
Ann Street). Thus, the analysis that the Respondent suggests would tend to show that
the market for commercial development was stagnant between February 2011 and
the date of valuation.”[148] Although the appellants have not taken into account for
their exercise comparability points of similarity and difference between Sale 6 and
Sale 8, as a broad example considering general commercial market movement, I
accept the force of the appellants’ contention.
[148] Appellants’ reply submissions, [147].
I am satisfied that the PCA statistics and market evidence regarding rental and
incentive levels demonstrates that the office market conditions leading up to and at 1
October 2015 were at least stagnant if not inferior to November 2010. I agree that
there was limited, if any, demand for commercial office development sites leading up
to October 2015, which is a compelling reason why there were no sites purchased for
commercial development.
Accordingly, I find that the commercial office market overall had little movement
between 29 November 2010 and 1 October 2015, which means that Sale 8 may be
relied upon for comparison purposes with the subject, despite the passage of almost
five years.
There is one remaining aspect of Sale 8 to deal with. That relates to the discount that
Mr Jackson says should be made for comparison purposes to the subject for Sale 8 on
the basis of the purchaser having a high level of certainty relating to both a DA and a
whole of building tenant. The allowance that Mr Jackson makes is 5%, which is
relatively minor.
Although Mr Jackson certainly produced some evidence as to the state of comfort that
the purchaser had in November 2010, questioning during the concurrent evidence also
raised in my mind some doubts in this regard. As the adjustment that Mr Jackson
seeks is only minor, and given the state of the evidence, I am not prepared to find, in
this specific respect, that Sale 8 is superior to the subject.
Overall, I find that Sale 8 is comparable to the subject. However, I also accept that,
due to the age of the sale, care must be taken when comparing it to the subject.
Conclusions regarding 310 Ann Street
My analysis above has effectively found as unreliable for the purposes of comparison
with the subject Sales 1, 2, 3, 4, 5, and 7. That only leaves Sales 6 and 8.
As regards Sale 6, which has an agreed analysed sale price of $9,987/m², I have found
such sale to be inferior, not in a minor way, to the subject. I have found Sale 8, which
has an agreed analysed price of $11,179/m², to be comparable to the subject, but that
the sale must be considered with caution as it is quite dated.
It is unfortunate that I have found it necessary to not rely upon 6 of the sales for
comparison purposes with 310 Ann Street. There is, however, some other evidence
before me which, while certainly not as good as sales evidence, does give some
guidance as to value as both valuers have pointed out. The LVA site value of Sale 6
as at 1 October 2015 was $9,127/m². I note that such site value resulted from Land
Court orders made with the consent of the parties to a particular appeal relating to
that year’s valuation of that block.
I also note that the LVA site value of Sale 8 as at 1 October 2015 was $14,014/m².
I must also mention that there was agreement between the valuers that the site cost
penalty (railway line) should result in a reduction for the subject of $1,371,000. I
thank the valuers for their agreement in this regard.
A final point is that, in the manner in which I have reached my conclusions, I have
not properly taken into account to a point included in the valuation evidence of Mr
Hart in Exhibit 3. Before doing his final calculations, Mr Hart stated as follows at
paragraph 332:
“A further 10% adjustment has been applied to rate the impact of the rail
corridor on the building height and GFA of the HBU development.”
I agree with Mr Hart that it is correct and proper for the 10% adjustment to be made.
It is also consistent with the factual evidence pertaining to 310 Ann Street and, by
comparison, Sales 6 and 8. I commend Mr Hart for his approach in this regard.
Determination for 310 Ann Street
Having considered the evidence and the submissions of the parties, my first task for
310 Ann Street is to determine whether or not the evidence in its totality supports the
case put by the appellants that the issued valuation is in error, on the balance of
probabilities, so that the onus of proof is discharged.
In my view, the appellants have, on the balance of probabilities, established that the
issued valuation for 310 Ann Street is in error. It is unnecessary for me to repeat the
body of evidence that leads me to this conclusion. Without derogating from any of
the conclusions that I have made in this decision, in short, the appellants have
demonstrated that the site values contended for by the Valuer-General are excessive
and erroneous. The errors include the reliance upon the merged market theory and
placing emphasis on sales which are not properly comparable to the subject.
Having found that the onus of proof has been satisfied, I am of course required, on
the evidence before me, to arrive at a site value for both appeals for 310 Ann Street.
My task has not been made any easier by some of the difficulties that I have with
aspects of the evidence and opinions of both valuers.
I specifically find, for the reasons already stated, Sale 6 to be of the greatest use in
determining a site value for 310 Ann Street, even though part of the reason for the
purchase was student accommodation for part of the site. Sale 8 is used as a guide for
the bottom end for LVA site valuation purposes, given the caution with which I use
that sale. This means that the valuation for the unburdened part of the subject cannot
be below $10,061/m² (after allowing Mr Hart’s 10% discount for the subject to rate
the impact of the rail corridor on the building height and GFA of the highest and best
use (HBU) development as compared to the agreed analysed rate for Sale 8 of
$11,179/m²).
Turning my attention to Sale 6, the starting point is the analysed rate of $9,987/m². I
have found such rate to be inferior, not in a minor way, to the subject. I consider an
allowance of 20% appropriate to make Sale 6 properly comparable for site valuation
purposes to the unburdened part of the subject. This results in an unburdened rate for
the subject of $11,984/m². From that amount must be deducted the 10% of Mr Hart’s
to rate the impact of the rail corridor on the building height and GFA of the HBU
development. This results in an unburdened rate for the subject of $10,786/m².
Doing the best that I can, I determine the site value of 310 Ann Street as at 1 October
2015 to be as follows:
Site Value Assessment – Freehold Lot
Freehold Land – 1,580m2 @ $10,786/m2 $17,041,880 Unburdened Easement – 677m2 @ $8,090/m2 $5,476,930 Railway Tunnel (25%) Less Site Cost $1,371,000 Penalty (Railway Line)
Site Value$21,147,810 Rounded to $21,150,000 Site Value Assessment - Leasehold Lot
Leasehold Area (15%): 520m2 @ $1,678/m2 $872,560
Rounded to $873,000
It follows that for appeal file LVA073-17, 310 Ann Street (freehold plus leasehold),
I determine the site value as at 1 October 2015 to be $22,023,000.
It follows that for appeal file LVA074-17, 310 Ann Street (freehold only), I determine
the site value as at 1 October 2015 to be $21,150,000.
Conclusions regarding 300 Ann Street
The parties are in general agreement, but for one aspect, that the findings for 310 Ann
Street apply to 300 Ann Street. There are of course differences to the attributes of 300 Ann Street compared to 310 Ann Street. However, given the manner in which I have
determined the comparability of each of the sales to 310 Ann Street, resulting in the
only sales that are of use being Sales 6 and 8, and taking into account the only minor
differences for comparability purposes of those sales to the subject, 300 Ann Street,
I consider it unnecessary to give further consideration to those sales.
The one aspect on which there is a difference between the valuers for 300 Ann Street
is, in the scheme of things (as acknowledged by both parties), very minor from a
valuation perspective. This relates to the adjustment to the unburdened rate which
needs to be made for the railway easement land. Although the valuers are far apart
(Mr Jackson’s 77% compared to Mr Hart’s 25%), the area of land for the easement is
only 21 m².
Mr Hart’s rationale in applying a 25% deduction for the burdened area was that the
same percentage discount was agreed for the burdened area of 310 Ann Street.[149] Mr
Jackson noted that the easements above 310 Ann Street permit development above
those easements, meaning that that space can be used for a commercial purpose and
has value. In contrast, Mr Jackson notes that the easements on 300 Ann Street are for
supporting columns, such that no commercial use can be made of that space.[150] Mr
Jackson therefore applied a 77% discount in respect of the burdened area on 300 Ann
Street.
[149] T 9-86, line 4 to 7.
[150] T 9-86, line 15 to 33.
The respondent considers Mr Jackson’s opinion excessive. The appellants say that
Mr Hart’s opinion is not appropriate given the factual differences between 300 Ann
Street and 310 Ann Street in this regard.
I am satisfied that there are differences in the easements impacting 300 Ann Street
compared to 310 Ann Street. I am not, however, satisfied that Mr Jackson has
established any satisfactory reason for arriving at 77%. Given the small amount of
area involved, and the resultant minor impact on the site valuation for 300 Ann Street,
I have decided to effectively split the difference of opinion between Mr Hart and Mr
Jackson as neither opinion has been well made out. I accordingly set the rate at 50%.
I must also again mention that there was agreement between the valuers that the site
cost penalty (railway line) should result in a reduction for the subject of $527,000
(rounded, but for a difference of $1,000). I thank the valuers for their agreement in
this regard.
A final point is that, in the manner in which I have reached my conclusions, I have
not properly taken into account this point included in the valuation evidence of Mr
Hart in Exhibit 4. Before doing his final calculations, Mr Hart stated as follows at
paragraph 338:
“A 10% adjustment has been applied to rate for the adjoining rail corridor
and its impact on the development potential of the site.”
I agree with Mr Hart that it is correct and proper for the 10% adjustment to be made.
It is also consistent with the factual evidence pertaining to 300 Ann Street and Sales
6 and 8. I commend Mr Hart for his approach in this regard.
Determination for 300 Ann Street
Having considered the evidence and the submissions of the parties, my first task for
300 Ann Street is to determine whether or not the evidence in its totality supports the
case put by the appellants that the issued valuation is in error, on the balance of
probabilities, so that the onus of proof is discharged.
In my view, the appellants have, on the balance of probabilities, established that the
issued valuation for 300 Ann Street is in error. It is unnecessary for me to repeat the
body of evidence that leads me to this conclusion. Without derogating from any of
the conclusions that I have made in this decision, in short, the appellants have
demonstrated that the site values contended for by the Valuer-General are excessive
and erroneous. The errors include the reliance upon the merged market theory, and
placing emphasis on sales which are not properly comparable to the subject.
Having found that the onus of proof has been satisfied, I am of course required to
arrive at a site value for 300 Ann Street, doing the best that I can on the evidence
before me. My task has not been made any easier by some of the difficulties that I
have with aspects of the evidence and opinions of both valuers.
I specifically find, for the reasons already stated, Sale 6 to be of the greatest use in
determining a site value for 300 Ann Street, even though part of the reason for the purchase was student accommodation for part of the site. Sale 8 is used as a guide for
the bottom end for LVA site valuation purposes, given the caution with which I use
that sale. This means that the valuation for the unburdened part of the subject cannot
be below $10,061/m² (after allowing Mr Hart’s 10% discount for the subject
adjoining rail corridor and its impact on the development potential of the site as
compared to the agreed analysed rate for Sale 8 of $11,179/m²).
Turning my attention to Sale 6, the starting point is the analysed rate of $9,987/m². I
have found such rate to be inferior, not in a minor way, to the subject. I consider an
allowance of 20% appropriate to make Sale 6 properly comparable for site valuation
purposes to the unburdened part of the subject. This results in an unburdened rate for
the subject of $11,984/m². From that amount must be deducted the 10% of Mr Hart’s
to account for the adjoining rail corridor and its impact on the development potential
of the site. This results in an unburdened rate for the subject of $10,786/m².
Doing the best that I can, I determine the site value of 300 Ann Street as at 1 October
2015 to be as follows:
Site Value Assessment – Freehold Lot
Freehold Land – 1,029m2 @ $10,786/m2 $11,098,794 Unburdened Easement – 21m2 @ $5,393/m2 $113,253 Railway Tunnel (50%) Less Site Cost $527,000 Penalty (Railway Line)
Site Value$10,685,047 Rounded to $10,685,000
It follows that for appeal file LVA075-17, 300 Ann Street, I determine the site value
as that 1 October 2015 to be $10,685,000.
| Costs | |
| [346] | I make the following observations regarding costs. Subject to anything the parties |
| may wish to submit on the issue of costs, having regard to all of the evidence before | |
| me in these matters, and also having regard to the conduct of the parties, I am of the | |
| strong view that there has been nothing in the cases or submissions as put by either | |
| side apt to enliven the costs provisions of the LVA. | |
| [347] | I appreciate, of course, that I am yet to hear from the parties as to any submissions |
| they may wish to make with respect to costs. As this decision is being delivered at | |
| 12.30pm on 31 May 2019, which importantly for me is my retirement day, I will | |
| allow the parties until 2.30pm today to formally advise the Court, in writing, if either | |
| of them seeks any order as to costs. | |
| [348] | If any party intends to seek an order for costs, if possible, I will hear from the parties |
| by way of oral submissions later in the afternoon of 31 May 2019 and thereafter | |
| deliver ex tempore reasons. However, if the parties are able to convince me that they | |
| require additional time to make their submissions, I will give the matter further | |
| consideration. | |
| Orders |
As regards LVA075-17, 300 Ann Street, Brisbane:
1. The appeal is allowed.
2. The site value of 300 Ann Street, Brisbane as at 1 October 2015, is
determined in the sum of Ten Million, Six Hundred and Eighty-Five
Thousand Dollars ($10,685,000).
3. Should either party seek any order as to costs, that party must provide
written notice of its intention to do so by 2.30pm on Friday, 31 May 2019,
to the other party and to the Court.
4. In the event that either or both parties seek costs, the parties are to make
oral submissions as to costs at a time to be arranged after 2.30pm on
Friday, 31 May 2019.
As regards LVA073-17, 310 Ann Street, Brisbane (freehold plus leasehold):
1. The appeal is allowed.
2. The site value of 310 Ann Street, Brisbane (freehold plus leasehold) as at 1
October 2015, is determined in the sum of Twenty-Two Million, and
Twenty-Three Thousand Dollars ($22,023,000).
3. Should either party seek any order as to costs, that party must provide
written notice of its intention to do so by 2.30pm on Friday, 31 May 2019,
to the other party and to the Court.
4. In the event that either or both parties seek costs, the parties are to make
oral submissions as to costs at a time to be arranged after 2.30pm on
Friday, 31 May 2019.
As regards LVA074-17, 310 Ann Street, Brisbane (freehold only):
1. The appeal is allowed.
2. The site value of 310 Ann Street, Brisbane (freehold only) as at 1 October
2015, is determined in the sum of Twenty-One Million, One Hundred and
Fifty Thousand Dollars ($21,150,000).
3. Should either party seek any order as to costs, that party must provide
written notice of its intention to do so by 2.30pm on Friday, 31 May 2019,
to the other party and to the Court.
4. In the event that either or both parties seek costs, the parties are to make
oral submissions as to costs at a time to be arranged after 2.30pm on
Friday, 31 May 2019.
PA SMITH
MEMBER OF THE LAND COURT
Background
These are appeals against decisions on objection relating to site valuations under the
Land Valuation Act 2010 (LVA).
[2018] QLC 27.
QLAC 7, [32].
QLAC 7, [50].
[66].
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