Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines and Water
[2006] QLC 30
•16 May 2006
LAND COURT OF QUEENSLAND
CITATION: Multiplex 240 Queen Street Landowner Pty Ltd & Anor v Department of Natural Resources, Mines and Water [2006] QLC 30 PARTIES: Multiplex 240 Queen Street Landowner Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)and ING Management Ltd
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NOS: AV2005/0805 and AV2005/0807 DIVISION: Land Court of Queensland PROCEEDING: Applications for determination of preliminary points in appeals against annual valuations of Central Business District lands. DELIVERED ON: 16 May 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr JJ Trickett, President ORDERS: 1. The valuation of intangible improvements is to be taken into consideration in making the valuations of the subject lands and is to be excluded from the unimproved values.
2. The evidence of the valuations made under s.3(2) of the Valuation of Land Act 1944 is not admissible in these cases.
CATCHWORDS: Unimproved value – interpretation of s.35A – whether the value of intangible improvements is to be taken into consideration where no s.35A application made – Valuation of Land Act 1944 s.35A.
Unimproved value – admissibility of valuations made under s.3(2) – valuations made under s.3(1)(b) – whether Chief Executive must make valuations under both provisions and apply the higher of those valuations – grounds of appeal – relativity – Valuation of Land Act 1944 ss.3, 28, 29, 33.
APPEARANCES: Mr R Traves SC and Mr R Anderson, for the appellants
Mr T Quinn and Mr S Fynes-Clinton, for the respondentSOLICITORS: Gadens Lawyers for the appellants
Legal Services, Department of Natural Resources, Mines and Water, for the respondent
These are applications concerning two related matters in appeals by two landowners of highly improved parcels of land in the Central Business District of Brisbane (the CBD) against the unimproved values applied to those lands by the respondent under the Valuation of Land Act 1944 (the VLA).
Background
In appeal AV2005/0805, the appellant is the owner of land situated at 240 Queen Street, upon which has been constructed a 26 level commercial office building, tenanted largely by the Commonwealth Bank. In appeal AV2005/0807, the appellant is the owner of land situated at 239 George Street, which has been developed with two separate but interconnected multi-level high-rise buildings.
As at 1 October 2003, the respondent had determined the unimproved of the land at 240 Queen Street at $15,000,000 and the land at 239 George Street at $9,500,000. Both landowners objected against those valuations and subsequently appealed to the Land Court against the respondent's decisions upon their objections. The landowners stated that their opinions of the unimproved values at the date of valuation were $12,860,000 and $7,600,000 respectively. Those amounts and the grounds of each appeal were based upon the valuation advice of Mr G Jackson, a registered valuer.
During interlocutory proceedings prior to the hearing, the respondent advised that he would be leading evidence to valuations of $43,000,000 for 240 Queen Street and $23,000,000 (later amended to $19,227,907) for 239 George Street, based on valuation reports of registered valuer, Mr M Denman.
By agreement, appeal AV2005/0805, the appeal against the unimproved value of 240 Queen Street was heard first. The respondent submitted that a preliminary question of law be determined as to whether or not in that matter the evidence of the value of intangible improvements is admissible. This depends upon the interpretation of s.35A of the VLA.
Then during the hearing, the appellant objected to the admissibility of evidence of the unimproved value of $43,000,000 made under s.3(2) of the VLA, on the grounds that such a valuation is irrelevant to defend an appeal against an unimproved value of $15,000,000.
These two issues although distinct are interrelated and the outcomes will affect the hearing of the other appeals in the CBD. Before considering them, it is first necessary to consider in some detail the legislative framework of the VLA.
The Valuation of Land Act 1944
Under s.37 of the VLA the Chief Executive must make annually a valuation of all land in a local government area. A valuation of each parcel of land is to be its unimproved value: s.13. "Unimproved value" is defined in s.3(1) to mean:
"(a) in relation to unimproved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require;"
The definition of "unimproved value of improved land" in s.3(1)(b) is the same, with the addition of the following words, "…assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist." Therefore, the unimproved value of improved land is the value of the land component only, excluding the value of any improvements.
There is a proviso in s.3(2) which states:
"However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act."
The definition of "improvements" in s.6, refers to improvements on or appertaining to the land, "whether visible, invisible or intangible." "Intangible improvements" is defined in s.6(5) to include the benefit of –
"(a) the following non-physical improvements to the land –
(i) a lease or licence or other right;
(ii) the goodwill associated with the purpose for which the land is being used;
and(b) other non-physical improvements prescribed under a regulation."
Regulation 3 of the Valuation of Land Regulation 2003 provides as follows:
"Non-physical improvements that are intangible improvements – Act s.6(5)
For s.6(5) of the Act, definition "intangible improvements", paragraph (b), the following non-physical improvements are prescribed –
(a) risk management procedures in place for a development on the land, including, for example, procedures dealing with the following –
(i) capturing and retaining a share of the market;
(ii) turnover of tenants;
(iii) establishing a stable and quality mix of tenants;(b) market advantages resulting from the business skills of the owner or manager of a development on the land;
(c) market advantages of a brand name used for a development on the land."
Under s.35A(1) of the VLA, a landowner may apply to the Chief Executive to have the value of intangible improvements to the land taken into consideration (i.e. excluded from the unimproved value) by the Chief Executive in making the valuation of the land. However, the application must state the market value of the land and improvements from the owner's financial records, the type of intangible improvements, including an assessment by the owner of the value of each of the intangible improvements.
Subsection (4) of s.35A provides:
"The chief executive is required to take the value of intangible improvements into consideration in making a valuation only if –
(a) an application has been made under this section;
and
(b) the chief executive has received any information requested under subsection (3)."Subsection (5) limits the value of intangible improvements to a percentage of the improved value of the land. The regulation relevant at the time prescribed a limit of 20%.
The unimproved values of land made under the VLA are used for the assessment of land tax, for local government rating and for rentals under the Land Act 1994, where so required by the various Acts: s.72. The Chief Executive is required to fix a date from which a valuation or alteration of a valuation has effect (s.20(1)), unless the date of effect is fixed under another section of the Act. Once a valuation has been made, or altered, by the Chief Executive, that valuation is "…deemed to be correct until proved otherwise on objection or appeal or until altered or further altered." (s.33)
After an annual valuation notice has been issued to an owner of land, the Chief Executive is prohibited from altering that valuation during the period in which that valuation is to come into force: s.28. However, paragraphs (a) to (m) of s.28(1) provide for circumstances in which the Chief Executive may alter a valuation during that period. Particularly relevant to the present matters is paragraph (h) which provides:
"(h) unless the valuation is affected by error or omission which the chief executive considers it necessary to correct, other than an error of law or mistake of fact that may be corrected under section 28A".
Section 28A is not relevant to the present matters.
Every alteration to a valuation made under s.28 is deemed to be a valuation and the provisions of the VLA about notices of valuation, objections and appeals apply: s.29(3).
The Facts
The following facts were established through the evidence of the two valuers, Mr Denman and Mr Jackson.
The owner of 240 Queen Street had not made a s.35A application to the respondent to have the value of intangible improvements taken into consideration. However, the owner of 239 George Street had made such an application. The evidence from both valuers was that the valuations appealed against excluded the value of intangible improvements. Whether or not s.35A applications had been made, the Chief Executive had taken the value of intangible improvements into consideration and excluded that value from the valuations of all lands in the CBD for the annual valuations made in 2003 and 2004.
The valuer who undertook the annual valuations for the respondent in both 2003 and 2004, was not called to give evidence. However, there was no dispute that those valuations and those of the other properties in the CBD, were valued under the provisions of s.3(1)(b) of the Act. In other words, those unimproved values were arrived at by a process of direct comparison with sales of unimproved land or, probably more likely, by comparison with the unimproved values derived from improved sales, after the valuation of improvements had been deducted from the sale prices of those properties.
None of the valuations in the CBD, including the valuations of the subject lands, were made under the provisions of s.3(2), by first determining the improved value of the property and then deducting the value of improvements to arrive at the unimproved value. There is evidence that in making the annual valuations for the subsequent year as at 1 October 2004, the respondent again valued the CBD lands by a similar method under s.3(1)(b), not under s.3(2). The unimproved value of 240 Queen Street remained at $15,000,000. There is evidence that with perhaps a few exceptions, all 2003 unimproved values for the CBD area which had been reduced on objection were increased in 2004 to the 2003 figures prior to objection. According to Mr Jackson, who has many clients among the CBD landowners, objections which have been lodged against the 2004 valuations are awaiting the respondent's decisions.
Mr Denman gave evidence that he was not the valuer responsible for the 2003 or the 2004 valuations on behalf of the respondent. He had been asked to provide valuation advice for the purpose of giving evidence in respect of these appeals. The valuation of $43,000,000 for 240 Queen Street now contended for by the respondent, is the result of that advice, having been made by Mr Denman under the provisions of s.3(2) of the Act. He had also carried out a valuation under s.3(1)(b), but that was lower than his s.3(2) valuation.
Mr Jackson gave evidence that he had represented approximately 30 CBD landowners who had objected against the 2003 valuations of their lands. Of those, seven had lodged appeals to the Land Court. Subsequently, one of those appeals had been dismissed by the Court for want of jurisdiction and another appeal had been withdrawn. However, in the five remaining appeals, the two presently before the Court and three others where the respondent is relying upon the valuation advice of registered valuer, Mr A Kirby, the respondent intends to lead evidence to and contend for substantially higher valuations made under s.3(2).
Mr Jackson said that only in respect of the appeal properties had the respondent advised that he intended to contend for increased valuations. Mr Denman confirmed that there had been no general adjustment to the valuations of the properties in the CBD.
The Submissions by the Parties – The Admissibility of the Section 3(2) Evidence
In support of the application opposing the admissibility of evidence of the unimproved value of $43,000,000 for 240 Queen Street, senior counsel for the appellants submitted that such a valuation was irrelevant, as it was nearly three times the valuation appealed against and made by a different methodology. While he conceded that the respondent is entitled to lead evidence to a higher figure in defending the valuation appealed against, to be admissible, such evidence must be relevant.
It was argued that the evidence admissible on the appeal is limited to the subject matter of that appeal. Here there is an appeal against one valuation, but the respondent is proposing to run a case for an entirely different valuation. If such evidence was admitted, it was submitted, the appellant could be successful on every ground of appeal yet lose the case, because the respondent's evidence is beyond the grounds of appeal.
In addition or in the alternative, senior counsel submitted that when a landowner has appealed against a valuation, the Chief Executive has an implied power to defend that valuation, but it is beyond that power to contend for a different valuation, made on a different basis. To do so, it was argued, is to use the appeal process for a purpose other than that for which the power was granted. It is not a proper purpose to advance a valuation which is different and higher, which was not subject to issue, alteration or amendment. The Court ought not to countenance such an abuse of process.
On the other hand, counsel for the respondent contended that he was entitled to lead evidence to a higher figure; such evidence is admissible because it was in respect of a valuation which was required to be made under the Act and to demonstrate that the valuation appealed against is not excessive. He argued that the respondent is not confined to the method of valuation adopted in making the valuation under appeal.
The Submissions on Section 35A
I turn now to the submissions in respect of the application as to the proper construction of s.35A of the Act, in circumstances where a landowner has not made an application to have the valuation of intangible improvements taken into consideration. This matter and the question of the admissibility of the s.3(2) evidence are distinct but related issues. While the valuation appealed against of $15,000,000 did not include the value of intangible improvements, the valuation now contended for by the respondent of $43,000,000 made under s.3(2), includes approximately $10,000,000 as the value of intangible improvements.
The respondent submits that the purpose and effect of s.35A is to give the owners of large retail or commercial premises a choice as to whether they wish to have the value of intangible improvements taken into consideration, that is, excluded from the unimproved value. An application under s.35A would necessarily involve disclosure of financial information which the owner would otherwise be entitled to keep private, but would result in a lower unimproved value. However, if the owner does not choose to make such an application, the respondent contends that the statutory scheme requires that the value of intangible improvements is not taken into consideration and excluded from the unimproved value.
The respondent argues that if a landowner did not make a s.35A application, that owner loses the right to raise the matter on appeal. The unimproved value is, in such a case, the improved value of the property less the value of tangible improvements only. The appellant, it is argued, is entitled to attack the improved value and the value of tangible improvements as assessed by the respondent, but not the value of intangible improvements.
The appellants argue that the plain meaning of s.35A(4) is that the respondent shall be required to take into consideration the value of intangible improvements only if application is made under s.35A(1). That is, the respondent has the power to take into account the value of intangible improvements even though an application was not made. However, the respondent must do so if an application is made.
The respondent concedes that is the literal interpretation of s.35A(4), but argues that such an interpretation would be wrong, because it would be practically impossible to make such a valuation without detailed commercial information specific to a particular owner. Such an interpretation, it was submitted, would lead to an absurdity and it would therefore be permissible to have regard to extrinsic material, in particular, to the Explanatory Notes to the Valuation of Land Amendment Bill 2003, to understand what was the intention of Parliament.
Ruling on the Interpretation of s.35A
In my view, the words of s.35A(4) are clear and unambiguous and should be given their ordinary and natural meaning. There is no need to have resort to extrinsic material such as the Explanatory Notes. In my view, the subsection means that if an application is made, the respondent must take the value of intangible improvements into consideration. However, where there is no application, the respondent may take the value of intangible improvements into consideration, although not required to do so.
It has been established that in valuing the CBD properties, the respondent excluded the value of intangible improvements from the unimproved value in all cases, regardless of whether or not the owner of a property had made a s.35A(1) application. In the two subject cases, one owner had made an application while the other had not. However, the value of intangible improvements was excluded in both cases. Clearly the respondent did not consider that in the absence of a s.35A(1) application, he was prohibited from taking into consideration the value of intangible improvements.
The proposition now being put by the respondent means that in all cases, such as 240 Queen Street where no s.35A(1) application had been made, the valuations are wrong, as the value of intangible improvements should not have been excluded. I cannot accept such a proposition. Certainly by applying the literal interpretation of s.35A(4), in cases where no application had been made, it was open to the respondent to elect whether or not to take the value of intangible improvements into consideration.
The respondent has excluded the value of intangible improvements in the case of 240 Queen Street and on the evidence, in every valuation in the CBD. However, it is now submitted, in effect, that the respondent ignored a mandatory requirement where no application had been made.
There is no evidence as to why the respondent adopted that course in 2003. Mr Denman was not the valuer responsible for either the 2003 or 2004 valuations. The valuer who made those valuations presumably was acting on the delegated authority from the respondent to make such a decision. There may well have been very good reasons to do so and some come readily to mind. However, it is futile to speculate. The point is that in accordance with the literal interpretation of s.35A(4), it was open to the respondent to take the value of intangible improvements into consideration in the 2003 valuations.
Therefore, in my view, it is not now open to the respondent to contend that the value of intangible improvements should not be taken into consideration in arriving at the unimproved value of properties such as 240 Queen Street, where no s.35A(1) application was made.
I return now to the other issue concerning the admissibility of the evidence of the $43,000,000 valuation made under s.3(2) of the Act.
The Admissibility of the s.3(2) Evidence
In opposing the appellant's application, the respondent relies upon the decision of the Land Court in AMP Life Limited & Anor v Department of Natural Resources and Mines [2002] QLC 099. That case concerned the valuations of two large shopping centres, Garden City and Pacific Fair, the owners of which had appealed against the valuations applied to their lands. In both instances, the respondent sought to lead evidence to much higher valuations than those appealed against. The appellants applied for orders from the Court that the respondent be precluded from pursuing the higher valuations unless valuation notices were issued for the higher valuations under s.28 of the Act.
The Land Court dismissed the applications, finding at [60]:
"… there is no prohibition in the Act that I can find that limits either party to any particular valuation evidence or method."
Significantly for the present matters, the Court added:
"Such limitations, if they arise at all, would arise as a consequence of the management of a particular case by the Court."
There are similarities in the facts of the AMP case and those of the present matters. However, in that case the issue concerned the right of the respondent to lead evidence to higher valuations, whereas the present issue relates to admissibility. In the AMP case, the Land Court was careful to distinguish between the right to lead such evidence and its admissibility, stating at [73] and [74]:
"[73] Having dealt with and decided the issue of the applications, it does not follow that I should also decide the question of admissibility of the higher valuation reports at this stage. Generally speaking, questions of admissibility turn on the question of relevance. … ."
[74] That broad issue of value is, however, confined to the grounds of appeal relied upon by the appellant and the evidence adduced in support of those grounds, including the value finally contended for. The question of relevance is best determined in that context …"
I was referred to two later cases where the Land Court followed the findings in the AMP case. In Department of Natural Resources and Mines v ISPT Pty Ltd [2003] QLC 0074, after referring to the AMP case, the Land Court concluded at [39] that the Chief Executive is not confined on appeal to the same method of valuation as adopted when the valuation originally issued. In Pfeffer v Department of Natural Resources and Mines [2005] QLC 0059, the Court referred to the AMP case with approval in finding at [12] that there is no statutory prohibition which prevents the respondent from contending on appeal for a valuation figure higher or lower than the one originally assessed, objected to and appealed against.
With respect, I agree with those conclusions, but in the AMP case the issue was different. Here it is admissibility, the very issue which the Court in the AMP case expressly declined to decide.
The respondent submitted that further support for the admissibility of the s.3(2) valuations in the present cases could be found in the decision of the High Court in the Deputy Federal Commissioner of Taxation v Gold Estates of Australia (1903) Ltd (1934) 51 CLR 509, where it was said at 514:
"It is apparent that a valuation made in the ordinary course of routine administration is unlikely to have received the same consideration and care as had been bestowed by the witnesses called at the hearing upon the estimates to which they deposed. Those estimates had been made after thorough inspections and a full examination of all the comparable sales that could be discovered. All the materials upon which they formed their opinions were laid before the Court, and the reasoning upon which they proceeded was explained."
That passage was cited by the Land Court in the AMP case, where the Court referred to the fact that annual valuations are struck by the use of mass appraisal techniques and refinement of the valuation figure will often be justified. In the ISPT case, the Court referred to that observation and extended it to the valuation methodology at [39]:
"In the same way, the valuation methodology adopted may be refined or altered when a detailed valuation is undertaken."
The respondent contends that evidence of the s.3(2) valuations cannot be excluded because they are an intrinsic part of the valuation process whereby s.3(1)(b) is linked to s.3(2), one being a "check" on the other. Consideration must be given to both methods when determining the unimproved value of improved land.
Undoubtedly, both methods must be considered. When considering a similar legislative scheme in the Land Tax Amendment Act 1910 – 1930, in Russell v Federal Commissioner of Taxation (1933) 50 CLR 182, the High Court said at 194:
"…two different methods of ascertaining the unimproved value of land are prescribed. The higher of the amounts produced by the two methods must be used in the assessment. In the first, the supposition is required that the improvements on or appertaining to the land do not exist and the sum it might be expected to realise in that supposed condition must be estimated. In the second, the land is to be considered in its actual improved condition and the sum it might in that condition be expected to realise is to be estimated and taken as a base from which the value of the improvements is to be deducted."
The respondent also relied on the decision of the Full Court of the Supreme Court of Queensland in Dunlop Rubber Australia Limited v Valuer-General [1957] St R Qd 189. In that case, evidence was given by both parties of the unimproved value of the land, but no evidence was given by either of them as to the value of the improvements. Therefore, it was contended that without knowing the improved value of the land and the value of improvements, the trial judge could not determine that the unimproved value of the land as determined by the Valuer-General was less than the improved value less the value of improvements.
In explaining the function of the Court in those circumstances, the Full Court said at 193:
"It is the Valuer-General who was required to make a valuation of the land. It is his function to determine its unimproved value and to decide whether, by whatever method he fixes this value, in any particular case, the figure at which he has arrived infringes the proviso to s.12(1). The function of the Supreme Court on appeal is limited to affirming, reducing or increasing the valuation appealed against, that is the valuation which the Valuer-General is required to make by s.11. If there were evidence before the Supreme Court on which to base a finding as to the facts dealt with by the proviso, it would be the duty of the court to find facts, and if they justified it, to apply the proviso. To do otherwise would not be to act judicially in accordance with s.21(3). But where there is no evidence placed before the court by the parties calling for the application of the proviso, the court's duty is limited to dealing with the evidence before it, and it should ignore the proviso."
In the present case, the respondent contends that the Court would not be acting judicially if it did not consider the valuation based on s.3(2), which he now contends should be the unimproved value of the land.
However, this argument seems to me to ignore the evidence in this case, that the valuations were not made in that way. The valuer who made the original valuations did so under the provisions of s.3(1)(b). As stated in Dunlop Rubber, it was his function (as delegate for the respondent) to determine the unimproved value and decide whether that figure infringed the proviso in s.3(2). It was that valuer's duty to consider both s.3(1)(b) and s.3(2). I am not prepared to accept, on the state of the evidence, that the valuer, exercising the power delegated by the respondent, did not do so, at least in some manner and concluded that the s.3(1)(b) valuation should be applied. For 240 Queen Street that was $15,000,000. Subsequently, Mr Denman arrived at a s.3(2) valuation of $43,000,000, a much higher valuation, by a different valuer, upon which the respondent now relies. However, unlike the $15,000,000 valuation, that valuation does not have the statutory presumption of correctness under s.33.
For the mass appraisal of the land in the CBD, it would be unrealistic to expect that the valuer would have carried out s.3(2) valuations for each property. That would have been a task which would have been beyond the resources of the respondent. What is more likely is that the valuer would have analysed sales of some improved properties and of all unimproved or lightly improved properties, drawing his conclusions from that evidence.
There is no dispute between the parties that the valuations of all the CBD lands were made under s.3(1)(b). Objections were lodged by some of the owners. Those objections were either dismissed or reduced to some extent. In no instance known to the two valuers was a valuation substantially increased, or such action even suggested.
However, there were seven appeals lodged, now reduced to five. In respect of each of those five appeals, the respondent now proposes to lead evidence to significantly higher valuations made by a different valuer under s.3(2). No other valuation in the CBD has been so altered, or even proposed to be altered. The valuations of the other properties remain as issued or as reduced on objection.
The respondent has since undertaken further annual valuations of the area, with a date of valuation of 1 October 2004. Those valuations were again made under s.3(1)(b) and the evidence is that they remained much the same as issued for the 2003 valuation.
Clearly, the respondent had the opportunity to adjust the CBD valuations in 2004 if he considered that was necessary. He did not do so.
The valuer who undertook the 2003 and 2004 valuations and who could have explained how those circumstances had arisen, was not called to give evidence. The reason was not explained. Instead, the respondent has sought valuation advice from two other valuers, Mr Kirby for three of them, and Mr Denman for the two present appeals.
Mr Denman has undertaken valuations specifically for these appeals. He concludes that the respondent's valuations are wrong. His s.3(2) valuations are higher than his s.3(1)(b) valuations and much higher than the valuations under appeal. Therefore, the respondent contends, the s.3(2) valuations should be received in evidence and adopted by the Court.
The respondent has not altered the valuations under appeal or any of the CBD valuations under the provisions of s.28 of the Act. If he had done so, the appellants (and all owners of properties where valuations had been altered), would have had the opportunity to object and appeal against those increased valuations. Those adjusted valuations would also have had the statutory presumption of correctness under s.33.
However, the respondent was not obliged to alter the valuations under s.28, for the reasons explained in the AMP case at [41]. As also explained in that case, there is no prohibition on the respondent leading evidence to a figure different from the valuation appealed against, either higher or lower. That is different, however, to the question of whether that valuation evidence is relevant.
Counsel for the respondent submitted that instead of altering the balance of the CBD valuations under s.28, the respondent may prefer to await the outcome of the Court's decisions on the appealed valuations before deciding what action to take. However, if the respondent should be successful in persuading the Court to determine the valuations at or near the contended figures, while it may be legally possible for him to alter the other CBD valuations, that would have practical and fiscal consequences.
The appellants have submitted that the evidence relating to the valuations made under s.3(2) are inadmissible because they are irrelevant; they are so much higher than the valuations appealed against and made under a different methodology. It is also submitted that the approach adopted by the respondent is an abuse of process of the Court.
The respondent submits that the valuations are relevant; they are valuations made under s.3(2) which are higher than the respondent's s.3(1)(b) valuations; if they are correctly made, the Act requires them to be the valuations as at the relevant date and the Court should so determine them. If for no other reason, the respondent submits, the valuations are relevant to demonstrate that the valuations appealed against are not excessive.
Ruling as to Admissibility
After considering these submissions, I have concluded that the s.3(2) valuations made by Mr Denman are inadmissible, as they are irrelevant. In the case of 240 Queen Street, for example, a valuation of $43,000,000 is irrelevant to defend the valuation of $15,000,000 under appeal. It is, in reality, not evidence defending that valuation, or to fine-tune or refine it, but an attempt to run a case for a totally different valuation, made under a different methodology, by a different valuer.
The respondent contends, in effect, that he now considers the $15,000,000 valuation to be wrong, but instead of altering the valuation under s.28(1)(h), he leads evidence to $43,000,000 and asks the Court to determine it. In my view, that is not evidence which is relevant in the appeal. It is relevant only to a new case which the respondent now seeks to advance.
The situation here is not unlike that in Dunlop Rubber. In that case there was evidence of the valuation made under the predecessor of s.3(1)(b) and no evidence of a s.3(2) type proviso valuation. However, the Full Court held that it was the function of the Valuer-General to decide whether the valuation arrived at infringed the proviso now contained in s.3(2). In that case it was held that in the absence of evidence before the Court calling for the exercise of the proviso, the function of the Court on appeal was limited to affirming, reducing or increasing the valuation appealed against. Similarly, here there is no evidence as to how the respondent's delegate considered the proviso. However, in the absence of evidence to the contrary, it must be assumed that he did so, before applying the s.3(1)(b) valuation. Therefore, having ruled that the s.3(2) evidence is inadmissible, this Court is in the same position as the Full Court in Dunlop Rubber. I will therefore consider these cases on the evidence of the valuations made by the respondent under s.3(1)(b).
The Sale of 240 Queen Street
Included in Mr Denman's evidence is his analysis of the sale of the subject property, 240 Queen Street, which took place on 5 December 2003 for $128,000,000, but which the parties agreed should be adjusted to $116,439,300. The property is improved with a 26-level commercial office tower and Mr Denman analysed the sale to show a land value of $33,877,632.
Counsel for the respondent submitted that there is no difference between the s.3(2) exercise and the analysis of the sale of the subject property under s.3(1)(b). Mr Denman's analysis of the sale differs from his s.3(2) exercise of $43,040,889, only in that the s.3(2) figure includes the value of intangible improvements of nearly $10,000,000. It was contended that the s.3(2) evidence should be admitted, because it will be admitted in any event in the analysis of the sale.
However, I accept the submissions of senior counsel for the appellants that the analysis of a sale under s.3(1)(b) is different to a s.3(2) exercise. While in this case there may be similarity in the two approaches, the analysis of the sale of the subject land after the date of valuation and (seemingly) not relied on by the original valuer, may well be relevant to support the valuation of $15,000,000, arrived at from other evidence. However, evidence of the analysis of that highly improved sale alone would not be sufficient for the Court to determine a valuation more than double the valuation appealed against.
Mr Jackson also analysed that sale to arrive at a land value of $8,084,000, which is less than his contended valuation of $12,230,000, made under s.3(1)(b). Therefore, in my view, the analysis of the sale is an issue between the parties and evidence of it is relevant. While such evidence is admissible, the weight to be attributed to it is another matter. The uncertainty and unreliability of the analysis of such an extensively improved sale were explained in Perpetual Trustee Co. Ltd v Department of Natural Resources, Mines and Water [2006] QLC 0017. However, evidence of a valuation of $43,000,000, made by a different approach, in substitution for a valuation of $15,000,000 is not relevant and is not admissible.
Matters of Concern
Finally, there are other aspects of the approach adopted by the respondent which caused me concern. The evidence has established that only in respect of the five remaining appeals in the CBD does the respondent propose to lead evidence of greatly increased unimproved values made under s.3(2). If the respondent was successful in persuading the Court to adopt those values, there is no doubt that they would be very substantially higher than the unimproved values applied to other similar properties. Yet when senior counsel for the appellants raised the issue of relativity, counsel for the respondent objected on the basis that relativity was not an issue covered by the grounds of appeal.
It is well established that the appellants are limited to the grounds of appeal stated in their notices of appeal to the Land Court: Franklin v The Valuer General (1978) 5 QLCR 181. However, the appellant in 240 Queen Street framed those grounds of appeal when appealing against an unimproved value of $15,000,000, made under s.3(1)(b), not against a valuation of $43,000,000 made under s.3(2). There may well be other grounds, such as relativity, which would have been included if the appellant knew it was to contest such a valuation. However, if the appellant was to be limited to its grounds of appeal, it would be prevented from raising such issues.
The situation would be different if the respondent had elected to alter the valuations under s.28(1)(h). The landowners would then have had the right of objection and appeal and the opportunity to frame grounds of appeal appropriate to the altered valuations.
In addition, it is of concern that the only landowners in the CBD who are facing such substantial valuation increases are those who have appealed. Where landowners have not appealed, or have withdrawn their appeals, they are not facing such increases. Therefore, the approach that has been adopted by the respondent in these cases must, to say the least, act as a disincentive for landowners to appeal, or if they have appealed, from pursuing their appeals.
In the course of Mr Denman's evidence it emerged that the respondent Chief Executive has not personally authorised this approach and may not have any personal knowledge of it. It had been adopted, in the two subject cases, by Mr Denman as an officer delegated by the respondent, together with Mr Kirby, as advised by the respondent's legal team. The approach seems to have been discussed with more senior officers, but their approval has been neither sought nor received.
This approach seems to me to be against the purpose of the Valuation of Land Act, which is stated to be "An Act to make better provision for determining the valuation of land for rating and taxing purposes and for matters incidental thereto or consequent thereon."
Section 7 of the Land Court Act 2000 states:
"In the exercise of its jurisdiction, the Land Court –
(a) is not bound by the rules of evidence and may inform itself in the way it considers appropriate; and
(b) must Act according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms or the practice of other courts."Clearly, the Court should not decide these cases in a vacuum. It seems to me that the very purpose of the Act and the provisions of s.7 allow the Court in exercising its jurisdiction to consider the circumstances discussed here.
Senior counsel for the appellants has submitted that the approach adopted by the respondent amounts to an abuse of process. Without going that far, I am of the opinion that it is not an approach which this Court should condone. To do so would be unfair. I am therefore reinforced in my view that the s.3(2) evidence in these cases is inadmissible.
Orders:
1.The valuation of intangible improvements is to be taken into consideration in making the valuations of the subject lands and is to be excluded from the unimproved values.
2.The evidence of the valuations made under s.3(2) of the Valuation of Land Act 1944 is not admissible in these cases.
J J TRICKETT
PRESIDENT OF THE LAND COURT
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