PT Limited & Anor v Department of Natural Resources and Mines - [2007] QLAC 77

LAND APPEAL COURT OF QUEENSLAND

CITATION:

PT Limited & Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 77

PARTIES:

PT Limited (ACN 000 454 666) and Westfield Management Limited (ACN 001 670 579)
Appellants

v

Chief Executive, Department of Natural Resources and Mines
Respondent

FILE NO/S:

LAC 2006/0804

DIVISION:

Land Appeal Court of Queensland

PROCEEDING:

Appeal

ORIGINATING COURT:

Land Court of Queensland

DELIVERED ON:

17 October 2007

DELIVERED AT:

Brisbane

JUDGE:

White J

MEMBERS:

Mr JJ Trickett, President of the Land Court
Mr RS Jones, Member of the Land Court

ORDER:

Appeal allowed. Set aside the order below. In lieu thereof order that the unimproved value of Lot 10 on Survey Plan 128115 in the Parish of Kedron County of Stanley being title reference 50358209 is determined at thirty‑four million dollars ($34,000,000)

CATCHWORDS:

Statutory Construction – Valuation of Land Act 1944 – s 3(1)(b) meaning of phrase "improvements did not exist". - Section 3(1)(b) meaning of term "improvements" includes "intangible improvements" as defined in s 6(5) – consistent meaning ordinarily given to words used consistently in legislation – intangible improvements – benefit of agreements for lease and development approvals.

Valuation – unimproved value of land – potential of land – highest and best use – regional shopping centre – rejection of so called Nathan formulation.

Valuation – limited sales evidence – best evidence of unimproved value – lightly improved sales – use of highly improved sales – reliability of other valuations.

Valuation Methodology – Treatment of Potential

Acts Interpretation Act 1954 (Qld), s 14B, s 32AA
Integrated Planning Act 1997 (Qld)
Land Court Act 2000 (Qld), s 55, s 56
Land Tax Assessment 1910-11 (Cth), s 3
Valuation of Land Act 1916 (NSW)
Valuation of Land Act 1944 (Qld), s 3(1), s 3(2), s 6(1), s 6(5), s 35A, s 45(1)
Valuation of Land Regulation 2003 (Qld), s 3

AMP Henderson Gobal Investors v Valuer-General (2004) 134 LGERA 426
AMP Society v Chief Executive (1995) 15 QLCR 344
Barnwell v Valuer-General (1989) 13 QLCR 13
Chief Executive, Department of Natural Resources v QNI Metals Pty Ltd (2002) 23 QLCR 261
Clough v Valuer-General (1981) 8 QLCR 70
Commissioner of Land Tax v Nathan (1913) 16 CLR 654
Craig Williamson Pty Ltd v Barrowcliff (1915) VLR 450
Department of Natural Resources v Body Corporate for Golden Sands Community Title (1999) 22 QLCR 170
Drysdale Bros & Co v Federal Commissioner of Taxation (1931) 46 CLR 308
Fisher v Valuer-General (1983) 9 QLCR 44
Grahn v Valuer-General (1992) 14 QLCR 327
Jowett v Federal Commissioner of Taxation (1926) 38 CLR 325
Lamb v Brisbane City Council [2007] QCA 149; 15 LGERA 100
Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409
MacDonald v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 231
McGeoch v Federal Commissioner of Land Tax (1929) 43 CLR 277
Maurici v Chief Commissioner of Revenue (NSW) [2005] 142 LGERA 315
Maurici v Chief Commissioner of Revenue (NSW) (2003) 212 CLR 111
Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines & Water [2007] QLC 0010
Queensland Club v Valuer-General (1991) 13 QLCR 207
Registrar of Titles (WA) v Franzon (1975) 132 CLR 611
Russell v Federal Commissioner of Taxation (1934) 50 CLR 182
Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50

Toohey’s Ltd v Valluer-General (1925) AC 439

APPEARANCES:

Mr S Doyle SC and Mr LF Kelly SC and Mr JM Horton of counsel for the appellants

Mr DB Fraser QC and Mr T Quinn and Mr B Codd of counsel for the respondent

SOLICITORS:

Mr R Bowie and Mrs A McDonnell – Minter Ellison Lawyers for the appellants

Mr J O’Rourke and Mrs L Hawkings‑Guy, Legal Services, Department of Natural Resources and Mines for the respondent

Background

PT Limited is the registered proprietor of certain land as trustee. Pursuant to s 45(1) of the Valuation of Land Act 1944 (“VLA”), it appealed against the assessment of the unimproved value attributed to its land by the respondent.

The subject land comprises of an area of 13.78 hectares, is located at 395 Hamilton Road, Chermside and was and is developed as a major regional shopping complex known as the Chermside Shopping Centre. As we understand it the second appellant, Westfield Management Limited, is the corporate entity responsible for the management of the shopping centre located on the land.

The physical characteristics of the land and of the shopping centre are set out in some detail in the reasons of the learned Member[1] and it is not considered necessary for the purposes of this appeal to repeat them here.
[1][2006] QLC 0068 at [8] – [16] hereinafter referred to as “Reasons at [ ]”.

In the proceedings below, the Court heard evidence concerning the unimproved value of the subject land and other land upon which another regional shopping centre is located, namely, the Pacific Fair Shopping Centre located at Broadbeach. However, while a separate appeal to this Court has been filed against the determination of the Land Court of the unimproved value of the Pacific Fair land, we are concerned here only with the appeal against the value of the land accommodating the Chermside Shopping Centre.

The approach of the respondent in valuing the land has an interesting history as recorded by the learned Member[2]:
[2]Reasons at [1] and [2].

"[1]… The statutory valuation was carried out as at 1 October 2002 which is the relevant date for the purpose of the appeal. Before me the respondent contended for a final valuation figure for the subject land of either $151,000,000 or $142,500,000 depending upon the disposal of a question of law. In contrast with these figures the 2003 valuation has been issued at $54,000,000. The appellant in its Notice of Appeal provided an estimate of the valuation of the subject land at $21,500,000.

[2]The valuation of the subject land issued in the amount of $120,000,000; a substantial increase over that of $25,500,000 which applied as at 1 October 2001. Following objection the valuation was reduced to $54,000,000 for reasons stated as, 'the valuation requires calculation by a different methodology'. That methodology was purported to rely on s.3(2) of the Act and paying regard to amendments which took effect on 2 June 2003 but which had retrospective effect with regard to the 2002 valuation. The appellant sought and received a statement of reasons pursuant to Judicial Review Act (1991) (Qld): a document that could at best be described as inadequate and at worst as misleading. Evidence was then led before me to a valuation of $116,000,000 or $125,000,000, then to $144,000,000 or $154,000,000 and finally to the amounts mentioned above."

The learned Member determined the unimproved value of the land as at 1 October 2002 in the amount of $112,000,000. This figure was arrived at by his purported application of s 3(1)(b) of the VLA, having concluded that the evidence of the parties concerning the valuation method prescribed by s 3(2) of that Act was too unreliable. There has been no appeal against this determination of the learned Member by the respondent. The appellant now contends the correct level of value is $20,500,000.

The Nature of the Appeal

The Land Court Act 2000 provides in s 56 that an appeal in the Land Appeal Court, must be decided on the evidence in the record of the proceeding. This Court is not bound by the rules of evidence and may inform itself as it considers appropriate. It must act according to equity and good conscience, the substantial merits of the case and without regard to legal technicalities, s 55.

This Court, like any other appellate Court whose jurisdiction is to hear appeals by way of a "rehearing", that is, on the record, has the power to draw inferences from primary facts, including facts found and facts not disputed which is as complete as that of the primary investigator.[3] However, this being an appeal involving the exercise of a discretionary judgment (which a valuation necessarily is) the determination of the learned Member should be disturbed only where it can shown sufficiently clearly that he acted on a wrong principle of law or that the valuation was otherwise erroneous.[4]
[3]Scrivener v DPP (2001) 125 A Crim R279 per McPherson JA referring to Warren v Coombes (1979) 142 CLR 531.
[4]Commonwealth v Reeve (1949) 78 CLR 410 at 423 per Dixon J; Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 at 164; Department of Natural Resources and Mines v Spender (2003) QLAC 86 at para [36].

The appellants do not challenge the learned Member’s failure to reach an assessment under s 3(2) of the VLA. Despite there being no appeal by the respondent, it was submitted on his behalf that this Court could make such an assessment by close analysis of the evidence. However, after considering the arguments of the parties, we refused to allow any submissions in support of a s 3(2) assessment.[5]
[5]Appeal transcript 163 - 164

The Issues in the Appeal

The determination appealed from was reached as the consequence of findings concerning three critical matters. First, the learned Member held that "intangible improvements" as defined in s 6(5) of the VLA had no application to the statutory valuation process prescribed under s 3(1)(b) of the Act. Second, he concluded that in valuing the subject land under s 3(1)(b), the successful trading history of the shopping centre on the land had to be brought into account. The consequence of this approach was to require the subject land to be treated as being essentially risk-free in its potential to realise its highest and best use as a regional shopping centre. This conclusion was the almost inevitable result not only of the construction of s 3(1)(b) of the VLA but also the analysis of the case law and, in particular, the application of the reasoning of the High Court in Commissioner of Land Tax v Nathan.[6]
[6](1913) 16 CLR 654; Reasons at [180] – [188].

The third matter arises as a consequence of the findings concerning the construction of s 3(1)(b) and the application of Nathan, namely, that the best evidence of the unimproved value of the subject land was the improved sale of that land as it was in 1996 as an established shopping centre.

The appellants have challenged each of these findings.

The Construction of s 3(1)(b) of the VLA

"Unimproved value" is defined in s 3 of the VLA which provides relevantly:

"3 (1) For the purposes of this Act –
‘unimproved value’ of land means –
(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; and

(b)in relation to improved 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, 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.

(2)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." (underlining added)

Pursuant to amendments to the VLA in 2003, which apply to this valuation, the concept of "intangible improvements" was introduced. In s 6(1) of the VLA, under the heading "Meaning of improvements", "intangible" improvements are included, and are defined in s 6(5):

"(5) In this section—
intangible improvements, in relation to land, include the benefit of —

(a) the following non-physical improvements to the land ‑

(i) a lease, 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" (underlining added)

Relevant to this appeal the Valuation of Land Regulation 2003 provides in s 3:

"Non-physical improvements that are intangible improvements—Act, s 6(5)
For section 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."

The 2003 amendments to the VLA provided in s 35A the means whereby a landowner may apply to the respondent to have the value of intangible improvements taken into consideration when he makes a valuation of land under the Act. Subsection (5) of s 35A provides that:

"The chief executive must not value intangible improvements at more than the percentage prescribed under a regulation of the improved value of the land."

For the purposes of s 35A(5), the Regulation prescribes a figure of 20 percent. The parties below and the learned Member referred to this as the value of the intangible improvements "cap".

The learned Member commenced his analysis of s 3(1)(b) with this observation[7]:
[7]Reasons at [203].

"… Without detailed analysis one would expect that the term 'improvements' where it appears in s.3(1)(b) is governed by the definition supplied by s.6(1) and extended by s.6(5). Detailed analysis, however, throws up a different understanding. …"

After undertaking this analysis of the provisions of the VLA and the extrinsic material to which he was referred, the learned Member concluded that where "improvements" appears in s 3(1)(b), it did not include or refer to intangible improvements. In other words, the 2003 amendments did not apply. He said: [8]

"The meaning that I have attributed to 'benefit' as that term is used in s 6(5) is such that if the definition of intangible improvements were to apply to s 3(1)(b) as the appellant suggests it should, then all of the benefits, for example, of leases must be assumed to not exist. That is, the land must be treated as bare land without any history of use as a shopping centre but subject, in some unexplained way, to the application of the cap provided for in s 35A(5). I do not accept that Parliament would have intended that unimproved value under s 3(1)(b) would be determined on the basis that the value, as it might have determined before the amendments would, having regard to the 20% cap, be reduced by an amount up to 20% of the improved value of the property whether that amount is to be taken into account as a figure or as some notionally removed element of value. I do not think that Parliament would have legislated such an outcome without a word having been expressed in the Explanatory Notes or in the Minister's second reading speech to that effect. In the result I conclude that the approach to valuation under s 3(1)(b) was not altered by the 2003 amendments. There is no need under s 3(1)(b) to consider improved value nor any intangible improvements which are part of that value."

[8]Reasons at [214].

We agree with the appellants that the learned Member erred in his construction of s 3(1)(b), a position accepted by the respondent in the course of Mr DB Fraser QC’s submissions on this issue. When regard is had to the words used in the legislation and their context it is not open to exclude from the meaning of "improvements", "intangible improvements" as defined in s 6(5). Had Parliament intended such a result it would have been a relatively simple matter to say so in either s 3 and/or s 6. The approach adopted by the learned Member is at odds with a fundamental canon of statutory interpretation, namely, to give the same meaning to the same word appearing in different parts of the legislation unless there is reason to do otherwise.[9] Here there is no such reason.
[9]Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at [618] per Mason J; Craig Williamson Pty Ltd v Barrowcliff (1915) VLR 450 at [452] per Hodges J; see also s 32AA Acts Interpretation Act 1954.

It appears to us that in reaching his conclusion the learned Member erroneously considered that in bringing into account intangible improvements for the purpose of the valuation exercise prescribed by s 3(1)(b) of the VLA, the cap imposed in s 35A(5) applied. That provision is concerned with valuing intangible improvements and while the cap may be relevant to a valuation contemplated by s 3(2), it is not relevant to a valuation contemplated by s 3(1)(b). That provision requires the valuer to treat all improvements, including intangible improvements, as if they did not exist as at the relevant date of valuation. To treat as non-existent any improvements relating to the land in question is an entirely different exercise from deducting the value of improvements relating to the land as is required by s 3(2).

Treating Potential As Certainty (The Nathan Point)

The second error, in carrying out the valuation exercise under s 3(1)(b) according to the appellants, occurred by equating the development potential of the land (assuming that the improvements on the land did not exist as at the relevant date) with a potential for development which was essentially risk free as proved by the actual historical use of the land as a successful regional shopping centre.

The learned Member concluded that as at the date of valuation the land ought be valued on the basis that there were essentially no risks associated with its development as a regional shopping centre. For example, the learned Member said:

"… The assemblage of the major tenants bestows on the land the essential characteristic which gives it its highest and best use. As the appellant put it, it is the 'yeast that makes it grow'. Without such tenants the land must simply be seen as being suitable for development as a regional shopping centre, but unproven. The securing of the major tenants is a barrier that must be overcome. Once overcome, the land may be said to be ripe for development as a regional shopping centre; that, is to have that highest and best use."[10]
[10]Reasons at [57]

and

"Where the highest and best use of a parcel of land has been demonstrated by its history including the use of improvements presently on the land, that use can be assumed to be capable of replication. There is no need to view the land as a greenfield site with the town planning designation and the topographic/locational attributes suited to a shopping centre but with unknown tenant interest. Such a site may have potential as a regional shopping centre but it will not be proven until the tenants come. It is not yet 'ripe'. But in the case of the subject property it is known that the tenants will come. It is known that the land is ripe for development as a regional shopping centre.” … (underlining added)[11]
and
“… In the case of Chermside the regional shopping centre that one would see on the subject land on 1 October 2002 had developed in stages over a number of years. In all of these circumstances the owner of the subject property at the relevant date would not expect any immediate competition for tenants. It is that history of use that affords the land a value that a speculative shopping centre site would not have. …" (underlining added)[12]

[11]Reasons at [180].

[12]Reasons at [188].

According to the learned Member, once the land has been developed so as to achieve its highest and best use, its "possibilities" have been "realised" and the risks associated with the development have been met and any benefit is merged with the value of the land.[13]
[13]Reasons at [777].

The appellants argue that once all of the improvements to the land have been notionally removed for the valuation contemplated by s 3(1)(b) the valuer must, while being alert to the fact that the highest and best use of the land is for a regional shopping centre, nonetheless bring into account the risks and costs associated with developing the now notionally vacant block of land. In his oral submissions, Mr Doyle SC, for the appellants put this proposition in the following terms.[14]

"… Once you make the assumption the improvements do not exist, if you are going to value the land as a shopping centre that involved identifying the costs of creating the shopping centre, allowing a risk and profit component for someone to carry out that, and what's left is the land value. …"

It should not therefore be assumed, so the argument went, that equivalent tenancies would readily be achieved or arranged.

[14]Appeal transcript 21 lines 50 – 60.

Having incorrectly determined that the term "improvements" in s 3(1)(b) did not include intangible improvements, the learned Member, largely relying on what was said in Nathan, included in his assessment of the unimproved value of the land a number of items which would otherwise be caught within the meaning of intangible improvements. Of particular importance to the appellants was the failure to exclude from the s 3(1)(b) valuation the benefits provided by the existence of agreements for leases with major retail tenants and of having development approvals in place. The existence of these important elements of a regional shopping centre go a long way to reducing the risks, time and costs associated with such a project.

Mr Doyle submitted that much of what was said about Nathan and the authorities thereafter largely involved a "false issue". That must be so given the amendments to the VLA in 2003. However, the reasoning of the learned Member and the case advanced by the respondent places significant weight on Nathan and the case law which followed. In fact, in the way in which this case was argued before this Court by the respondent, the failure of the learned Member to construe s 3(1)(b) correctly was in no way determinative, because the valuation appealed against was otherwise the product of the correct analysis and application of Nathan. In such circumstances we consider it necessary to deal fully with this aspect of the appeal.

Nathan was an appeal from Cooper CJ in the Supreme Court hearing an appeal against the Commissioner of Land Tax’s tax assessment based on the unimproved value of land then being used as a race course at Albion. His Honour had found that no tax was payable. The Land Tax Assessment Act1910-11 (Cth) provided that tax should be assessed on the unimproved value of the land which was defined as

"… The capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bonâ fide seller would require, assuming that the improvements (if any) thereon or appertaining thereto and made or acquired by the owner or his predecessor in title had not been made.”

There was no equivalent to the deduction method provided for in s 3(2) of the VLA.

The tax payer’s return stated that the land was sold in 1909 by the bank as mortgagee for £30,000 and less than three months later it was sold to the tax payer for £31,000 by an instalment contract. The tax payer claimed that the full improved value of the land was only £8,800. After deducting sums for fill, buildings and fences he fixed the unimproved value at £835. He did not explain the discrepancy with the purchase price.

The land had been used as a race course operated under licence from time to time by the Queensland Turf Club. Evidence about the value of the land was given by Mr Petrie, not a valuer, but someone who had known the land for over half a century from its original state and who had valued it “apart from any consideration of racing”. The High Court immediately rejected this evidence of value

"… because the amount which a seller would put upon it, and which a willing buyer would give, is its value for the best purpose to which it can in the circumstances be applied.”[15]

[15]At 658.

A valuer called by the tax payer discounted the land’s use as a race course because he considered that use to be dependent upon the promoter being able to gain and keep the goodwill of the Queensland Turf Club Committee together with an ability to please the public. He valued the land on the same basis as other vacant land he held in the area. That approach was rejected by the Court on the basis that the land would always be purchased as a race course. This was because the land, besides its physical adaptability to the purposes of a race course, had the benefit of the near certainty that whoever owned it would be licensed to operate it as a race course. Isaacs J, giving the judgment of the court, said[16]

"Such a virtual monopoly, so to speak running with the land, is a real enhancement of its value as a commodity, by increasing the price it will fetch. The expectation that the Queensland Turf Club will not act unjustly is a substantial consideration which may be reckoned upon.”

[16]At 659.

The Commissioner’s valuers had accepted the sale price of £31,000, considered its use as a race course its most profitable use and allowed generous deductions for improvements such as fill and buildings. It should be noted that the allowance for fill was some £3,000 more than that claimed by the tax payer. This led the court in McGeoch v Federal Commissioner of Land Tax[17] to observe that this amount was allowed as an improvement, inferentially, to bring it up from being “a swamp”. Isaacs J’s explanation in his dissent in McGeoch of Lord Dunedin’s mistaken analysis of this aspect of Nathan in Toohey’s Ltd v Valuer-General[18] is, with respect, not pursuasive. Isaacs J there considered Nathan to be overruled by Toohey’s. The majority did not and it is important to keep that in mind when considering what Nathan decided.
[17](1929) 43 CLR 277 at 292 per Knox CJ and Dixon J.
[18](1925) AC 439.

Returning to Nathan, the Court rejected any argument which would take the land in its primitive state, as recalled by Mr Petrie, as a starting point for the assessment of unimproved value and making a monetary deduction for every exertion made by man thereafter to bring it to its present improved value. The exercise, as the Court recognised, was one fraught with difficulty. The expression “value of improvements” in relation to land as defined in the relevant legislation meant “… the added value which the improvements give to the land at the date of valuation irrespective of the cost of the improvements.”[19] The learned Member and the respondent in this appeal placed great reliance on the following passage to conclude that the land was as good as risk free for a shopping centre

“In the first place, the ‘improved value’ is arrived at by taking into account as evidential, but not as ultimate facts, all existing and all past circumstances affecting the land, and these include its past and present use, as well as its present improvements. Improvements existing at the given time, and which are ‘thereon or appertaining thereto’ – meaning actually upon the land itself or legally incident to its enjoyment – are to be assumed as not made. But past improvements, no matter how much their presence or use has enhanced the price, are not to be deemed never to have been made; their prior existence and the effect of them are not to be ignored. So when the ‘improvements’ are still existing are to be ignored, nothing is said as to erasing the effect they or their use have had in bringing the land up to its present value.
The definition of the phrase ‘value of improvements”, is couched in the present tense. It is added value which the improvements give to the land at the date of valuation – not the value which they gave from their creation up to that date, nor the value which past improvements have given.”[20]

The learned Member called the first paragraph of the quotation the “Nathan formulation” and the second “the temporal aspect”.

[19]Land Tax Assessment Act 1910-11 s 3.

[20]At 662.

It is not insignificant that the passage commences with the words: "In the first place, 'the improved value' is arrived at by …". When Isaacs J used the phrase "present value" his Honour was referring to the present value of the land in its improved state. That after all, was the real point of difference between the parties. The Commissioner contended that the value of the improved land was £31,000 whereas the tax payer contended for a figure of only £8,800. When the relevant passage in Nathan is read, in the context of a concern with the concepts of improved value and value of improvements, it is largely uncontroversial. When assessing the present value of improved land the valuer does not ignore for the purposes of the legislation the effect that the improvements have on the land. Relevantly here that would mean when assessing the improved value of the shopping centre a valuer would take into account its trading and financial history.

It follows that we do not consider Nathan to be authority for the construction of s 3(1)(b) of the VLA contended for by the respondent and adopted by the learned Member.

The learned Member’s application of the Nathan formulation also led him to reject the appellants' submissions that for the purposes of s 3(1)(b) there was no material difference between the words "did not exist" and "had never been made"[21] and that the notional starting point for the valuation exercise required by s 3(1)(b) was to treat the land as if it were in its "natural state".[22] The Nathan formulation also appears to underpin the approach of the learned Member to his treatment of the highest and best use of the subject land. In this context it was found that for the purposes of s 3(1)(b), the trading history of the shopping centre located on the land had to be considered and brought into account. As a consequence, the land should be treated as being materially risk free insofar as regional shopping centre development was concerned. To put it another way, the learned Member considered that the trading history of the shopping centre proved the ripeness of the land for such development and removed any speculation about it.[23] The distinction between sites with potential as yet unproven for shopping centre development (greenfield sites) and those such as the subject, where the potential has been proved or realised, was also a major factor causing the learned Member to reject the so called "Telstra" sale.[24] The Telstra sale was one considered highly relevant by Mr Slater, the valuer called for the appellants, but rejected as unreliable evidence by the learned Member.
[21]Reasons at [96].
[22]Reasons [103].
[23]Reasons [180] – [188] and [249].
[24]Reasons [248], [249] and [273].

The respondent contends that notwithstanding the error made below concerning the construction of s 3(1)(b), the unimproved value as determined could still be justified because the learned Member correctly applied the principles enunciated in a number of cases, particularly in Nathan, MacDonald v Deputy Federal Commissioner of Land Tax,[25] Chief Executive, Department of Natural Resources v QNI Metals Pty Ltd[26] and AMP Society v Chief Executive.[27]
[25](1915) 20 CLR 231.
[26](2002) 23 QLCR 261 (LAC).
[27](1995) 15 QLCR 344 (LAC).

Relevantly, s 3(1)(b) of the VLA requires the valuer to assess the unimproved value of land on the assumption that "… at the time as at which the value is required to be ascertained … the improvements did not exist." The equivalent legislation under consideration in Nathan required the valuer to proceed upon the assumption that "… the improvements … had not been made." (underlining added)

In Toohey's the Privy Council was concerned to construe the NSW Valuation of Land Act 1916 in terms identical to those considered in Nathan. Lord Dunedin in delivering the opinion of the Judicial Committee, said in respect of the use of the words "had not been made",

"… Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non existent, but as if they never had existed … … What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it by the way of improvements; what would it fetch in the market? It will be observed that the value is not what has sometimes be designated by the expression ‘prairie value’.… The land must be taken as it exists at the date of the valuation."[28] (underlining added)

[28]At 443.

Their Lordships, considering the correct approach to such a valuation, observed:[29]

"Proceedings are begun by the taking of a figure for the subject as it stands as licensed premises. It is obvious that this figure is composed of three ingredients ; first, the bare land itself ; second, the buildings themselves constructed for and appropriate for licensed premises ; third, the enhanced value due to the fact that the land and buildings in question are not only suitable for licensed premises, but are in fact licensed premises.
When, however, the subtraction sum is entered upon it is only item 2 that is subtracted from the total figure ; the result being that item 3 is all included in the unimproved value. From this follows the extraordinary result that the land is enhanced by the value of a licence which could only be granted in connection with buildings – for a licence such as this cannot be granted to sell liquor without premises – in a calculation in which you are told to assume that no building is there."

[29]At 444.

One year after the decision in Toohey's, Rich J, sitting as a single judge hearing an appeal from a land tax assessment in Jowett v Federal Commissioner of Taxation[30] considered that prior decisions of the High Court such as Nathan[31] were "in line" with the subsequent decision of the Privy Council in Toohey's.[32]
[30](1926) 38 CLR 325.
[31]He mentioned Morrison v Federal Commissioner of Land Tax (1914) 17 CLR 498 and McDonald v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 231.
[32]At 331.

Two years after Jowett the High Court in McGeoch had to decide whether keeping land clear of prickly pear was an "improvement" within the meaning of the Land Tax Assessment Acts 1910-1924 and 1910-1926 (the issue decided by Rich J in Jowett). Knox CJ and Dixon J, who constituted the majority, concluded that keeping the land clear of prickly pear was an improvement consistent with the reasoning of Rich J in Jowett. Their Honours said[33]

"In our opinion this question is concluded by the decision in Toohey's Case. Applying that decision, the unimproved value of the land should - subject to any question that may arise out of the notice of objection given by the taxpayer - be ascertained by considering what the land would have sold for at the relevant date if the improvements including that which consisted in keeping the land free from prickly pear had not been made."

[33]At 292 – 293.

The Commissioner had accepted that the cost of "removal" of a prickly pear infestation was an improvement under the Act but the prevention of infestation costs (by digging up and destroying small patches of plants before infestation) was not.

For reasons considered by the learned Member[34], the Commonwealth legislated in an attempt to avoid the consequences of the decisions in Toohey's and McGeoch. In 1930 the land tax legislation was amended to require the unimproved value of land to be determined "assuming that, at the time as at which the value is required to be ascertained …, the improvements thereon did not exist." The Queensland Parliament followed suit with similar amendments to its land tax legislation.
[34]Reasons at [80] – [92].

After a consideration of the events leading up to the legislative amendments in 1930 the learned Member said:[35]

"The effect of the amendment to the definition of unimproved value in 1930 was to require the assumption that improvements did not exist as at the valuation date in contradistinction to the Toohey's formulation that improvements be deemed to have never been made. If the required assumption is not approached by way of the Nathan formulation; that is, by taking into account the effect that the existing improvements have had on the value of the land, the amended provision would be treated as ineffectual in overcoming the approach in Toohey's and McGeoch."

[35]Reasons at [97].

In our opinion, the learned Member fell into error in his approach to the construction of s 3(1)(b) by concluding, in effect, that the "Nathan formulation" had to be adopted otherwise the legislative intention to overcome Toohey's case could not be achieved. This conclusion was materially influenced by the extrinsic material to which he was referred. We respectfully consider that he gave too much weight to that material. The Court's task is to construe the language of the legislation, not the language of extrinsic material such as explanatory notes and/or parliamentary debates and speeches unless driven to do so by ambiguity.[36]
[36]Lamb v Brisbane City Council [2007] QCA 149 at [18]; 152 LGERA 100 at 37; Acts Interpretation Act 1954, s 14B.

In Drysdale Bros & Co. v Federal Commissioner of Taxation,[37] a case decided after the 1930 amendments, Evatt J in a separate judgment,[38] saw in respect of improvements of a "negative" or "destructive" or "invisible" character (such as cleared lands), no material distinction between the words "did not exist" and "had not been made" as in the previous provision.
[37](1931) 46 CLR 308.
[38]At 320 – 321.

Drysdale was decided in 1931 and in 1934 the High Court was again concerned with the Land Tax Assessment Act in Russellv Federal Commissioner of Taxation.[39] Starke J at first instance, after referring to a number of cases, including Toohey's, McGeoch and Drysdale, found[40] that the legislation required, notwithstanding the amendments to it, that improvements were to be treated not only as non existent but as if they never existed. His Honour appears to treat the words "had not been made", "non-existent" and "had never existed" interchangeably. On appeal the High Court proceeded on the basis of the correctness of those parts of his Honour's reasons without debate.[41] The respondent here submits that such an assumption cannot be elevated to an acceptance of Starke J's analysis. On this point the learned Member referred[42] to the reasoning of Evatt J in Drysdale but elected not to apply it and, in respect of Russell, said:[43]
[39](1934 ) 50 CLR 182.
[40]At 185.
[41]At 194.
[42]Reasons at [320] – [321].
[43]Reasons at [156] – [157].

"The case stated for the Full Bench assumed the correctness of the basis of his Honour's approach and the court said 'neither party had any complaint to make of the substantial correctness of this statement'. In the circumstances, Russell cannot be adopted as an authority which decided the question at issue between the parties before me."

But two members of the court had previously expressed similar views: Evatt J in Drysdale[44] and Rich J in Jowett.[45] It is not surprising that the court in Russell was content to proceed, without further discussion, on the basis of the correctness of Starke J's approach:

"As a consequence of the definitions of 'unimproved value' and 'value of improvements', substituted by the Land Tax Assessment Act (No. 2) 1930, 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 the supposed condition must be estimated. In the second, the land is to be considered in its actual improved condition … In his judgment Starke J formulated the issues which emerged from the requirements as follows … They are to be treated not only as non-existent, but as if they never existed."[46]

[44]At 320 - 321.

[45]At 330 - 331.

[46]At 194.

The learned Member was incorrect in rejecting the approach in Russell which plainly accepted Starke J's analysis based on Toohey's, McGeoch and Evatt J in Drysdale.

In 1958, legislation materially the same as that considered in Nathan and Toohey's came before the Privy Council in Tetzner v Colonial Sugar Refining Co Ltd[47] on an appeal from Fiji. In Tetzner, the valuer proceeded on the basis that the land was notionally vacant but located in its physical environment including schools, churches, hospitals and the like. The existence of a sugar mill on the land had had a positive influence over the development of services and amenities in the community within which it was located. The Supreme Court of Fiji, relying largely on Toohey’s, considered that the valuer erred in concluding that while the improvements had to be treated as if they never existed, any influence those improvements had on the surrounding community were not to be disregarded. The Privy Council rejected that approach pointing out that the legislation was concerned with improvements on or appertaining to the land and not with improvements effected off the land. Their Lordships observed:[48]

"What … is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer's computation. The land will be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it."

Their Lordships saw nothing remarkable about the use of the words used in Toohey’s that improvements had to be taken not only as being "non existent" but as if they "had never existed."[49]

[47][1958] AC 50.

[48]At 57.

[49]At 58.

A more recent case in this Court, Clough v Valuer General[50], was concerned with a dispute about what constituted improvements under the VLA as it then was. Section 12(1)(b) was in terms materially identical to s 3(1)(b). The taxpayer had sought to find some support in the judgments in Toohey’s and Tetzner for his argument that "improvements … appertaining thereto” meant that the surrounding roads and all other services must be taken into account, an exercise the Court roundly rejected. The Court said:[51]

"We think it beyond doubt that what has to be valued is the subject parcel of land viewed as if the improvements thereon, visible or invisible, never existed but that otherwise the parcel was situated in the community (and environment) with the amenities and facilities that had grown up around it as at date of valuation."

[50](1981) 8 QLCR 70.

[51]At 75.

A decade after Clough, this Court in Queensland Club v Valuer General[52] was again concerned with the construction of s 12. The Court was not apparently referred to its earlier decision in Clough. After reviewing a number of the authorities including Toohey’s, Tetzner and Nathan, the Court saw the terminology "did not exist", "had not been made" or "had never existed" as being language used to describe the exercise the valuer is to undertake under what is now prescribed by s 3(1)(b) and said:[53]

"We see this terminology as language necessary to describe the notional physical state of the land to be considered at a specific point in time, in this matter, 31^st March 1989. There should be no difficulty then with the proposition that the valuer is required by the assumption to ignore the improvements existing at the date of valuation. The valuer must simply say – 'as at this date, this land is in its unimproved condition'. The land is then identified as such in its existing environment within its relevant town planning zone. The language relevant to improvements is the necessary machinery to be used in making certain that the improvements are removed to reduce the land to the unimproved physical state.
In this case the valuer must put from the mind that as at 31^st March 1989, the fact that the Queensland Club existed, or ever existed, but for no other reason than to see the land in its virgin state but as zoned and in the existing environment. Once this scene has been set, the making of the valuation would indeed be conducted in a vacuum if any statutory restrictions (or advantages) attaching to the use of that land (no matter the historical happenings which created those restrictions or advantages, whether related to the local environment or confined within the boundaries of the particular site) and which had an effect on 'the capital sum which the fee simple of the land might be expected to realise if offered for sale', were to be ignored. If the valuation was conducted in such a vacuum the result would be plainly wrong." (underlining added)

[52](1991) 13 QLCR 207.

[53]At 221.

Here the learned Member thought that he was confronted with a "clear conflict" between Clough and Queensland Club.[54] It seems to us that this conflict revolved around the apparent "reliance" placed on Nathan by the Court in Queensland Club. As we understand his analysis, the learned Member concluded that when the Court said in Queensland Club that "…the notional physical state of the land (was to be considered) at a specific point in time …" he saw the "temporal aspect" as being directly relevant.[55] The temporal aspect of s 3(1)(b) is referred to in various parts of the learned Member's reasons but is conveniently summarised in these terms:[56]

" Following the amendment to the land tax legislation, the requirement became one of simply notionally removing as at the date for valuation those things that, at that time, satisfy the definition of being improvements. There is no need to undertake the trip back in time required by McGeoch and to obliterate the effect of present improvements on the assumption that they had never been made. It is in such circumstances that the Nathan formulation is particularly apt. It is reasoning of the High Court which, though impliedly disapproved of in Toohey's and McGeoch, was not undermined by the 1930 statutory amendments, but to the contrary was, with respect, reinforced by them.

The appellant's contention that the words 'did not exist' in s.3(1)(b) mean 'had never been made' disregards the temporal words in one other respect. The contention means, effectively, that improvements had never been made 'at the time as at which the value is required to be ascertained'. I cannot attribute to Parliament an intention to create such a clumsy test: that is, that something had never been made at a particular date. If something had never been made, that state of affairs applies to all dates."

[54]Reasons at [167].

[55]Reasons at [146] – [150].

[56]Reasons at [95] - [96].

With the utmost respect, we are of the opinion that too much has been read into what was said by the Court in the Queensland Club case. When the Court made reference[57] to a "specific point of time" it was doing no more than recognising that, for the purposes of the VLA, an unimproved value for the land in question has to be determined as at a specific date. We do not consider the judgment supports the application and adoption of a valuation exercise of the type defined by the learned Member as the "Nathan formulation". Such a conclusion is inconsistent with the exercise of requiring the valuer to "… put from the mind … the fact that the [Club] existed, or ever existed, … [and] to see the land in its virgin state …"[58]
[57]At 221.
[58]At 221.

The decisions of this Court in AMP and QNI relied on by the respondent do not provide any meaningful support for his position. AMP involved no criticism of the decision in Toohey's or endorsement of the Nathan formulation. Secondly, and more importantly, that case was decided before the 2003 amendments to the VLA. It is doubtful, if not unlikely, that counsel for the appellant in that case would have made the concession that the added value of tenants or rental guarantees were not improvements had s 6(5) of the VLA and the Valuation of Land Regulation 2003 been available to him.

QNI is relied on by the respondent as an example of a more recent decision of this Court which preferred the approach endorsed by Nathan to that proposed in Toohey's. In QNI the issue was whether, when the improvements on the land were notionally removed, the use of land as a nickel refinery remained its highest and best use.[59] The Court referred to Queensland Club and, more specifically, referred to part of the passage from Nathan relied on in this appeal by the respondent.[60] The Court concluded that those cases were authority for the proposition that for the purpose of the exercise required under s 3(1)(b), the valuer must put from his mind the improvements but, in determining the highest and best use of the notionally vacant or virgin site, the past use did not also have to be ignored. That is, consistently with the judgment in Queensland Club, that the valuation is not to be carried out in an information vacuum. That conclusion does not support the construction of s 3(1)(b) contended for by the respondent. In this context, we do not consider that there is any difficulty in reconciling our analysis of Nathan and the way in which it was applied in QNI.
[59]At [11].
[60]At [14].

The respondent also referred to the decision of the High Court in MacDonald v Deputy Commissioner for Land Tax (NSW).[61] We do not consider it necessary to deal in any detail with the facts in MacDonald. The passages in that case to which we were referred are quite uncontroversial. That is, in the circumstances of that case, it was not surprising that the additional certainty about water secured by the sinking of a bore was found not to be an improvement. The bore itself was an improvement but the knowledge of the water was not. The High Court said:[62]

"The additional certainty is not an improvement. Before the bore was sunk, no doubt the uncertainty of the presence of water left the land at a lower value; and when the presence of water was demonstrated the value of the land was increased. But in 1910 a buyer would have the knowledge that water was procurable, and the presence of water below the soil is a natural feature; it is part of the land unimproved, though the feature was previously unknown. Knowledge of a natural quality of the land does not make the quality artificial, and consequently, as the value is to be taken as at the date of valuation, the only 'improvement' within the meaning of the Act, relevant to the point, was the bore itself; and its value for taxation purposes is what it would cost in time and money to sink it." (underlining added)

[61](1915) 20 CLR 231.

[62]At 235.

This passage, referred to by the learned Member, does not support the respondent's position. In this appeal, the significant natural features or qualities of the subject land are its location within a potential customer catchment area sufficient to support a regional shopping centre and with the necessary infrastructure in place or reasonably available. That in itself however is not sufficient to make certain a successful regional shopping centre as the evidence revealed. We do not see how any meaningful comparison can be made between, on the one hand the relatively simple exercise of sinking a bore into naturally occurring, albeit underground, water with, on the other, the complexities associated with the development and maintenance of a successful regional shopping centre and it was not a comparison which the learned Member sought to draw.

From this review of the authorities it is clear that Nathan should not be considered authority for the construction of s 3(1)(b) contended for on behalf of the respondent and adopted by the learned Member in his application of the so described "Nathan formulation". Consistently with the approach adopted in Queensland Club and in Clough,[63] the valuation exercise required under s 3(1)(b) for the subject land requires the valuer to proceed on the basis that, as at 1 October 2002, the improvements (including intangible improvements) did not exist and had never existed. However, the land is to be otherwise valued having regard to the environment in which it does exist. Relevantly for the subject land, that would include the services and amenities available to the land, any favourable and unfavourable statutory and/or local government rights or restrictions and, of particular importance in this case, the demographic features likely to influence the ability to attract an appropriate customer base and mix of tenants. Any potential the notionally vacant land has for a regional shopping centre should and must be taken into account, but that potential should not be treated as proved and effectively cost and risk free by reference to the past trading history of the site. In this context it is important to note that the reference to statutory and/or local government rights should not be seen as a reference to development approvals (DA's), a matter which will be dealt with in more detail below.
[63]See also Department of Natural Resources v Body Corporate for Golden Sands Community Title (1999) 22 QLCR 170 at [5].

The application of the so called Nathan formulation to certain segments of the Queensland real estate market could result in quite extraordinary consequences. For example, an adjoining parcel of land, described as the Telstra land, has similar physical attributes and the same town planning zonings and/or designations. Assume then that that site is in fact vacant or lightly improved and with no tenancy difficulties. The Nathan formulation requires the subject land, in its notionally unimproved state, to be valued on the basis of a "proven" potential while the unimproved value of the Telstra site would be required to be assessed on the basis of it having potential, but as yet unrealised or unproven potential for retail, development. On the evidence before us, the difference in value would be significant.

Such anomalous results would not be restricted to retail sites. Assume two adjoining central business district commercial properties where the land component is materially physically the same and with the same town planning use designations. However, the first parcel is vacant but on the other a substantial well established and successful commercial building is constructed which fulfils its highest and best use potential. An application of the Nathan formulation, as we understand it, would require the first to be valued on the basis of an existing, but unproven highest and best use commercial potential, but the other to be valued on the basis of a proven highest and best use commercial potential. The best evidence of the unimproved value of the first parcel of land would be likely to be sales of vacant or lightly improved comparable sites with the same potential. However, that evidence would not be suitable to value the second parcel of land, as it would not be a true like with like comparison according to the respondent. In the second example, the valuer would probably be required to rely on the analysis of highly improved commercial property sales, likely to lead to much higher assessments of unimproved value.

These are not remote or merely theoretical examples. The application of the Nathan formulation could result in the situation where, in certain segments of the real estate market in Queensland, significantly different levels of unimproved value would be attributed to similar parcels of land within the same land group category. An example of this could be one level of value for land on which successful commercial buildings are located and another level of value for land which is materially the same and with the same potential for development, but which is vacant or lightly improved as at the relevant valuation date. Possibly other levels of value might result in cases where land has been developed to achieve its highest and best use but the development proved to be only a moderate or marginal success. It is unlikely in the absence of very clear language that Parliament would have intended this result.

Finally, even if the respondent's position concerning Nathan were correct, its relevance to the valuation process now contemplated by s 3(1)(b) must be greatly diminished. As the learned Member correctly concluded, any gap between the market value of the subject shopping centre as a going concern and the value of the land together with the value of the physical and tangible improvements on the land will, to a significant extent, be attributable to facts, matters or circumstances likely to fall within the meaning of intangible improvements for the purposes of the VLA.

Having regard to our findings concerning the proper construction of s 3(1)(b) and Nathan, we do not consider it necessary to consider the third point raised by Mr Doyle that there were risks that a successful mix of tenancies might not be achieved.

Leases and Agreements for Leases (AFLs) and Development Approvals (DAs)

In light of the above conclusions, the effect on the valuation appealed against must now be considered. The appellants argued that the learned Member erred by comparing the subject land to the sales evidence without first bringing into account intangible improvements. They contend that, as the benefits of leases and AFL's are intangible improvements for the purposes of the VLA, they must be treated as non existent when comparing the subject land to the relevant sales evidence. As the learned Member found,[64] the major benefit of securing tenants is that it significantly reduces the risks associated with the development of a major shopping centre. The removal of risk of course will play a significant part in determining how much a developer will be likely to pay for a site. The more risk associated with the development the less the prudent developer will be prepared to pay for the land and vice versa.
[64]Reasons at [494], [503].

For reasons discussed in detail below, the only market evidence we need be concerned about are the so called Telstra sale, the sale of the subject land in 1996 (the Chermside sale) and a valuation of a shopping centre in Burwood, Sydney.

According to the appellants, before the subject land can be compared to the market, it must notionally be stripped of the benefits that flow from it having, as at the date of valuation, an effectively secure tenant base. That is, it should not be treated as a site materially risk free insofar as the development of a major shopping centre is concerned. Therefore, when the Chermside sale and the Burwood shopping centre transaction are compared with the notionally unimproved subject land as at October 2002, the benefit of any leases and AFL's those properties had at their date of sale (or valuation) have to be accounted for, otherwise the respective sites could not be compared with the subject land on a truly "like with like" basis. We agree, provided that the benefits of leases and of AFL's can properly be described as intangible improvements for the purposes of s 6(5)(a) of the VLA and/or s 3(a) of the Valuation of Land Regulation 2003.

In the respondent's written submissions he contends that a lease or AFL may confer a benefit, but only in rather limited circumstances.[65] The examples given are the cost savings associated with not having to go to the trouble and expense of securing the lease or AFL and where the lease or AFL would secure for the landlord an above market rent. The learned Member appears to have rejected the latter example. The respondent referred to AMP and Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines and Water[66] in support. As already mentioned, care needs to be exercised in the application of AMP as it was decided before the introduction of the 2003 amendments. In Multiplex 240 Queen Street, the learned Member cited with approval a passage in AMP in support of his conclusion that an agreement for lease was not an improvement.[67] This conclusion was reached in the context of the appellant contending that an agreement for lease per se was an improvement pursuant to s 6(5) of the VLA.[68] In that case, the appellant's valuer had contended that the sale price should be discounted by 10% to allow for precommitments by major tenants and for development approval, but there was no probative evidence of the benefit of either of them. In Multiplex 240 Queen Street, the learned Member was careful to point out that s 6(5) included as an intangible improvement the "benefit" of the lease and not the actual lease itself, before reaching his conclusion[69] that it would be wrong to discount the relevant sale price because of the agreements for lease. However, in circumstances where there is probative evidence of the value of the benefit of AFLs, as there is in the present case, such value must be excluded.
[65]At [71].
[66][2007] QLC 0010.
[67]At [106].
[68]At [101].
[69]At [108].

Neither AMP nor Multiplex 240 Queen Street assists the respondent on this issue. Neither is authority for the proposition that the benefits of a lease or AFL should be limited to the extent contended for by the respondent. The full benefit of the intangible improvements has to be brought into account for the purposes of s 3(1)(b) and s 6(5).

The learned Member also found that the benefit flowing from a DA in the context of the present case would be an intangible improvement for the purposes of s 6(5).[70] But, as a consequence of his construction of s 3(1)(b), he did not bring that benefit into account when assessing the unimproved value of the land under that section. The appellants contend that not to do so was an error, a submission with which we agree, provided that the benefit which flows from a DA can properly be described as an intangible improvement for the purposes of the VLA. The appellants contend that the benefits derived from having a DA in place are savings in time and therefore costs. That is, even in circumstances where obtaining a DA is almost a certainty, it will still take time, up to 18 months, to obtain the actual approval from the relevant authority. With the DA in place that delay can be avoided and that is a matter any prudent purchaser/developer would take into account in determining the price it might be prepared to pay for the land.
[70]Reasons at [701].

The role and purpose of DAs were carefully considered by the learned Member. We consider it only necessary to repeat and adopt the following unchallenged characterisation:[71]

"A DA is therefore a permit or licence which allows the ongoing use of a regional shopping centre as long as the building is completed and put to shopping centre use before the expiry of the currency period (which may be extended – s 3.5.22) and it allows the use of the buildings to continue indefinitely. …"

Nonetheless the respondent does challenge the finding that the benefit of such an approval is an intangible improvement. That is said to be because a DA is an "instrument under statute" and is not acquired by the owner or its predecessor in title as is required by s 6(1) of the VLA. The second reason is that, pursuant to s 3(4) of the VLA there is, in any event, a statutory presumption that the subject land can continue to be lawfully used for the purpose to which it was being put as at the date of valuation.

[71]Reasons at [671].

We were referred to the decision of Maurici v Chief Commissioner of Revenue (NSW)[72] where Talbot ACJ of the Land and Environment Court of New South Wales concluded that the "development consent" in that case "… attaches to and runs with the land itself" and, as it could be said to form part of the land it was not an error not to treat it as an improvement for the purposes of the relevant valuation legislation.[73] Here we are not concerned whether or not the granting or existence of a consent is an improvement, but with whether the benefit which flows from the consent constitutes an intangible improvement. The learned Member in Multiplex 240 Queen Street held that the existence of a DA per se did not constitute an intangible improvement.[74]
[72][2005] 142 LGERA 315.
[73]At [20] – [21].
[74]At [102].

We do not agree with the respondent that the benefits which flow from a DA can be fairly compared to the benefits which might flow from a statutory right. As the learned Member observed, because a DA may be a creature of statute, in this case the Integrated Planning Act 1997, it is not in law or fact a statutory right. He said:[75]

"… A DA is not a right merely given by the process of statute, or which 'accrues' to the developer, but is a right whose form and content are moulded by what the applicant developer contributes to the process. It is quite different from a statutory right merely given."

We agree with that observation.

[75]Reasons at [664].

Turning to the respondent's second basis for rejecting the argument that a DA is an intangible improvement, namely the presumption of continuing use of the land, his written submissions articulate the argument in the following way:

"… Section 3(4) itself therefore requires an assumption, without the need to resort to any planning approvals which in fact exist, that the current land use may continue. Therefore, where the highest and best use involves the continuation of the existing use, the valuation of the land is one which can be made without any need to consider existing planning approvals for the land."[76]
[76]At [85]

Section 3(4) of the VLA provides:

"(4) Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that –
(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, at the date to which the valuation relates; and
(b)such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used;

but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made."

As the learned Member pointed out, correctly in our opinion, s 3(4) is a statutory mechanism which permits the assumption as prescribed to be treated as a matter of fact by the valuer in appropriate circumstances. In cases where the land being valued has all the necessary approvals authorising its highest and best use in place there is no need for the valuer to resort to the assumption prescribed in s 3(4). If, as a matter of fact, the evidence establishes that a DA produces in the landowner who holds it a quantifiable benefit, we do not see how the assumption prescribed in s 3(4) means that that benefit should be treated as being superfluous and otherwise irrelevant to the valuation exercise contemplated by s 3(1)(b). Accordingly, there is no reason why, as a matter or principle, a benefit conferred by a DA could not constitute an intangible improvement pursuant to s 6(5) of the VLA.

The Sales evidence

The respondent's valuer, Mr Denman, in carrying out his valuation on a direct comparison basis had regard to six sales and a 1997 valuation of a shopping centre located at Burwood, Sydney. All of the sales and the valuation involved significantly improved properties being used for shopping centres of varying size. In the case of the Burwood shopping centre, the original improvements were demolished in 1999 and a new centre constructed.

The learned Member concluded that the most reliable evidence of value was the Chermside sale in 1996. Some reliance was placed on the Burwood valuation. However, we think it is fair to say that the valuation of Burwood was not considered particularly probative by the learned Member who saw it as really only providing some comfort for the valuation figure he finally determined in the amount of $112,000,000.[77]
[77]Reasons at [430].

The Telstra sale was, according to Mr Slater (the appellants' valuer), the best evidence of value for the subject land. For reasons which are discussed in more detail below, Mr Denman rejected it as being unreliable evidence of value. The Telstra sale was rejected by the learned Member. That finding is challenged by the appellants. However there is no challenge to the findings leading to the rejection of all but the Chermside sale and the evidence concerning the Burwood valuation. Accordingly, the only transactions that need be considered on this appeal are the Telstra sale, the Chermside sale and the Burwood valuation.

The Telstra Sale

This sale occurred in November 2001 and adjoins the subject land. It was purchased by Westfield and also falls within the same Brisbane City Plan designation. There was unchallenged evidence by a town planner that the extension of the existing shopping centre to include the Telstra site was consistent with the relevant town planning designations. There was also evidence that the Telstra site, as at the date of sale, had potential for some retail development. The evidence was that this site was in fact purchased by Westfield for at least two reasons: in order to prevent a competitor from purchasing it and to accommodate future expansion of the existing centre.

Despite a number of characteristics and attributes which would suggest that this sale would provide probative evidence of value, it was rejected by the learned Member. A significant, if not the most significant reason he rejected this sale was because it failed the so called Nathan formulation test. That is, any comparison of this sale with the subject land would fail to have regard to the successful trading history of the shopping centre and would involve a comparison of a site with unproven (speculative) shopping centre potential with a site with proven potential.[78] According to the learned Member, such a comparison would offend the principle of comparing "like with like".[79] Mr Denman approached this sale in a similar way. It was his opinion that the sale was significantly inferior in terms of development potential. According to Mr Denman, the Telstra site was one with "unquantified future (shopping centre) development potential,"[80] while the subject land had a proven potential by reference to its past trading history.
[78]Reasons at [244] – [249].
[79]Reasons at [273].
[80]Ex 7, Part 8.3, pp 32-33

The learned Member erred in treating the subject land in its notionally unimproved state as being materially risk free insofar as regional shopping centre development was concerned. Thereafter, it was wrong for him to reject the Telstra sale because it could not be compared with the subject land in its unimproved state on a like with like basis. This sale provides the best evidence of the unimproved value of the subject land.

The Burwood Valuation and Chermside Sale

For the same reasons we consider the learned Member ought not to have rejected the Telstra sale, we also consider he erred in applying the Burwood valuation and Chermside sale in the way he did. For these transactions to be in any way useful to the valuation contemplated by s 3(1)(b) and before they could be appropriately compared to the subject land, it would be necessary to take account of those intangible improvements which fall within the meaning of that term in the VLA associated with the shopping centres operating on each of those sites.

As was pointed out by Mr Doyle, the evidence suggests that the proper treatment and assessment of the value of intangible improvements for the purposes of the VLA are matters of some controversy. Also of controversy is the ability to utilise the information about the Burwood shopping centre. This is particularly so when it is borne in mind that what Mr Denman was relying on was not a sale of land and improvements in the open market but merely a valuation carried out by another person. We respectfully agree with the observation in QNI that valuations, in the absence of their authors being called, are unlikely to be of much assistance. [81] They are little better than hearsay. On balance, we do not consider the evidence concerning the Burwood valuation provides probative evidence of value. It appears clear to us that the learned Member had regard to this transaction only because of his construction of s 3(1)(b) and the overall paucity of what he saw as reliable sales evidence once the Telstra sale had been rejected.
[81]At [22].

The learned Member identified a number of differences between the Burwood site and the subject land.[82] All of these differences are significant but especially in comparing a site located in the suburbs of Sydney with one located in the suburbs of Brisbane. Given our construction of s 3(1)(b) of the VLA, together with the other difficulties associated with the Burwood valuation, we have reached the conclusion that no weight should be given to the evidence concerning it.
[82]Reasons at [337] – [339] and [428] – [430].

The Calibration Method

Before proceeding to deal with the Telstra and Chermside sales it is necessary to deal briefly with this valuation check method adopted by Mr Denman. The method was described and carefully considered by the learned Member.[83] The usefulness and accuracy of this check method was roundly criticised by Mr Doyle and there is merit in that criticism. The calibration method might be of some assistance in a valuer's armoury for comparison purposes in a limited number of cases but is of no assistance on this appeal. Here the calibration methodology depends on the Burwood valuation being probative evidence of the unimproved value of the subject land as at 1 October 2002 and we do not believe it is.
[83]Reasons at [319] – [329].

The Chermside Sale

We now turn to the Chermside sale. As was the case with the valuation of the Burwood centre, the acceptance, analysis and application of this sale by the learned Member was a direct consequence of his construction of s 3(1)(b) and acceptance of the so called Nathan formulation.

Mr Denman records[84] that this "sale" involved three transactions which occurred between December 1996 and December 1999. PT Limited, one of the appellants in these appeals, was the purchaser. The major transaction occurred in December 1996, when Coles Myer entered into the sale of the then Chermside Shopping Centre as it then existed for $134,183,079. This sale involved 137,900 m² of land and a shopping centre with a gross leased area of some 39,000 m². Major tenants included Myer, Target and Coles Supermarkets. The sale was nearly six years prior to the date of valuation with significant improvements on the land. The sale involved a further complexity as it appears that the purchaser intended almost immediately to demolish and redevelop some 6,500 m² of the existing centre and to refurbish most of the balance area. Further, some income would be derived from part of the premises during redevelopment.
[84]Ex 7, p 40.

As was observed by the learned Member,[85] there is authority for the proposition that the best evidence of the unimproved value of any given parcel of land will usually be evidence of sales of vacant or lightly improved comparable land.[86] The reason for this is obvious. As the court in Clough[87] observed:

"… In applying such sales there is no room for error in analysing the value of improvements.
Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement."

[85]Reasons at [168] – [176].

[86]See for example Fischer v The Valuer General (1983) 9 QLCR 44 at [46] (LAC); Barnwell v The Valuer General (1989) 13 QLCR 13 at [17] (LAC); Grahn v The Valuer General (1992) 14 QLCR 327 at [328] (LAC).

[87]At 76 .

Regard need only be had to some of the evidence of the experts concerning this sale to realise just how difficult the task of the valuers was. Mr Denman placed a figure of $35,000,000[88] on the value of the improvements. Mr Higham, one of the experts called by the appellants, said the improvements had a value of $89,655,000.[89] The learned Member, quite properly in our opinion, rejected the evidence of Mr Denman.[90] He was not however prepared to accept Mr Higham's figure either.[91] Instead he arrived at a figure of $92,600,000 for the value of the "retained assets" which he said "… represents the value of the tenancies, the structures and the share of land associated with the retained assets."[92] Mr Higham had separately assessed the value of the retained leases and AFL's and the income of some tenancies at $15,790,000 and $5,685,256 respectively.
[88]Ex 7 p 43.
[89]Ex 13 p 119.
[90]Reasons at [346] - [353].
[91]Reasons at [365] – [399].
[92]Reasons at [373].

The appellants have failed to show that the learned Member was in error when he rejected Mr Higham's evidence on this issue. However, it is not possible for us sensibly to reconcile the evidence concerning this sale having regard to our findings about the proper construction of s 3(1)(b) and the application of Nathan. There are simply too many imponderable adjustments to be made. Accordingly, we have reached the conclusion that the Chermside sale provides no reliable evidence of the unimproved value of the subject land as at 1 October 2002.

Application of the Telstra Sale

Mr Slater considered this sale to be the best available evidence of the unimproved value of the subject land. Although Mr Denman addressed this sale in his reports he rejected it as he did not consider it to be sufficiently comparable to the subject land. The reasons for Mr Denman rejecting the sale need to be carefully considered. Mr Denman set out what he described as his "alternative minimum use value by direct comparison".[93] Relying upon the Telstra sale as a direct comparison with the subject land, Mr Denman provided two alternative unimproved values, $100,000,000 and $35,000,000. The first was based on a rate of $738 per m², on the assumption that the site could be developed for regional shopping centre purposes once the existing lease-back arrangements with Telstra had expired. The $100,000,000 is the product of a discounted cash flow analysis which showed a net income shortfall of over $62,000,000 over 11 years. In our view, this complex calculation contains far too many assumptions, any of which if wrong could lead to substantial error. It is clear that Mr Denman did not place much reliance on this method, as he agreed it was designed to show the lack of comparability of the Telstra site with the subject land.[94]
[93]Ex 7, pt 8.3, pp 32-33.
[94]T 3913, line 40.

Mr Denman's second alternative valuation of $35,000,000 was based on a direct comparison with the Telstra sale without adjustments. Mr Denman described this figure as the "floor to value". However, Mr Denman stated in his report[95] that because of the inferiority of the Telstra sale, he considered it to be a poor basis for comparison purposes. In his report,[96] Mr Denman said:

"The sale is considered significantly inferior in terms of development potential and as a site sale 'as is' represents the willing purchase of a site with unqualified future development potential". (underlining added)

[95]Ex 7, p 33.

[96]Ex 7, p 32.

In both of his reports and in oral testimony, Mr Denman made it clear that he, like the learned Member, did not consider the Telstra sale able to be compared with the subject land, because of the application of the Nathan formulation. That is, because the subject land had a proven history as a successful centre, it should be considered materially risk-free for such development. On the other hand, because the Telstra site had no such history, it had to be considered as a "greenfield" site, with more risk associated with it for such development. According to Mr Denman, it would not be a "like with like" comparison.

Mr Denman's treatment of the Telstra sale was based on an erroneous view of the law. As at 1 October 2002, the subject land should have been valued on the basis described above in para [57]. At the date of valuation, the potential for significant retail development on the Telstra site would, in our opinion, have been similar but not identical. However, as Messrs Slater and Denman both realised when analysing the Telstra sale and applying it to the subject land, regard must be had to the existing buildings and the leaseback arrangements. We note that in his further report, Mr Denman revised his earlier assessment of the Telstra sale from $35,000,000 to $38,000,000. The reasons for this change have no bearing on the matters discussed above.

Mr Slater, when analysing the Telstra sale, identified three specific uses for the site being retail, hardware and commercial. This, he said, was based on the uses contemplated by the purchaser and was reasonably consistent with the feasibility summary contained in the proposal to the Board of Westfield.[97] It is also not inconsistent with Mr Denman's assessment of the highest and best use of the land being for uses including mixed retail, commercial, hospitality or leisure.
[97]Ex 6, annex G.

In the circumstances of this appeal we accept Mr Slater's identification of the retail component of the Telstra land of 61,700 m² and his analysed value of that land in the amount of $389 per m².[98] On the basis that the retail component of the Telstra land was superior to the subject land in its notionally vacant state Mr Slater applied a rate of $350 per m² only for the subject land to arrive at a total "site improved value" of $48,230,000. From that amount Mr Slater then deducted his revised estimate of the worth of the site improvements on the land and associated interest, holding costs and design and development fees, to arrive at two estimates of the unimproved value being $19,000,000 and $21,500,000.[99]
[98]Ex 6B, p 2.
[99]Ex 6D.

Following our findings concerning the construction of s 3(1)(b) and the application of Nathan, we are of the opinion that Mr Slater's valuation approach is basically correct. However we take issue with Mr Slater in respect of two matters:

(i) the rate per m² he applied to the subject land; and

(ii) his estimate of the value of the siteworks associated with the land.

As to the first, we are of the opinion that overall the subject land is superior to the Telstra site insofar as intensive retail uses are concerned. The subject land has extensive frontage to Gympie Road, as well as to Hamilton Road and Banfield Street. The Telstra site's frontage to Gympie Road is much more limited. In this context, we agree with the finding of the learned Member that the subject land is superior to the sale in exposure and access, two significant benefits for commercial retail development.

Also, although s 3(1)(b) requires an assumption that the improvements did not exist, we are not required to ignore the fact that the environment of the subject land has the established infrastructure and services to support the development of a major shopping centre. On the other hand, the Telstra site, although having a highest and best use for commercial retail development, does not enjoy the advantages of the subject land to the same extent. In this regard, we also accept the findings of the learned Member to the effect that, as at the date of the Telstra sale, as a "stand alone" site, i.e., not merged with the existing centre, the highest and best use of the retail component of that land would probably have been for lower order forms of retail tenancies than would be achieved on the subject land. It seems to us that the Telstra site was not ripe for higher order regional shopping centre development, whereas the evidence indicates that as at 1 October 2002, the subject land in its unimproved state was ripe for such use.

Having regard to all of those circumstances, we are of the opinion that their respective values should reflect that superiority. Therefore, we propose to adopt an overall rate of $430 per m² for the site improved value of the subject land. That is 10% greater than the appellant's adjusted analysis of $389 per m² for the retail component of the Telstra sale. That results in a site improved value of $59,254,000.

As to the value of the site improvements on the subject land, the learned Member, after a detailed analysis of the evidence, arrived at a value for site improvements of $20,988,000. However, that analysis was for the purposes of comparison with Burwood in circumstances where the learned Member had found that it was not necessary to include the costs for piling, because he accepted Mr Denman's evidence that both the Chermside and Burwood sites would require piling as part of any shopping centre development.[100] However, the appellants submit that because of the physical differences between the Telstra site and the subject land, Mr Slater's allowance for piling and pile caps of $6,522,190 had to be included. The best evidence supports that submission.
[100]Reasons at [415] – [416].

The analysis carried out by the learned Member is also in error in that holding costs, including rates and land tax have been calculated on the basis of the land having an unimproved value of $112,000,000. That figure is wrong and, in any event, at the relevant time the statutory valuation in force was $20,500,000. Rates and land tax obligations should have been based on that figure. The learned Member's calculations must be adjusted to bring into account the costs of piling and capping and the adjustments to holding charges including rates and land tax and interest on land. Unfortunately, the evidence before us does not allow us to be more precise than to say that the final figure would be more than he arrived at and much closer to the figure derived from the "Recalculated" costings set out in the appellants' written submissions.[101] Doing the best that we can we adopt a figure of $25,000,000 for site improvements.
[101]At [194].

Therefore, adopting the site improved value for the subject land of $59,254,000 and deducting the adjusted value of site improvements of $25,000,000, we derive an unimproved value for the subject land of $34,254,000, which we round to $34,000,000 for practical purposes.

While we acknowledge that it may not always be desirable to place so much weight on only one sale, in the circumstances of this appeal we consider the Telstra sale to be the only reliable sales evidence available to us. In relying so heavily on this sale we are however comforted by the facts that the sale occurred at a date reasonably close to the relevant valuation date and involved land which effectively adjoins the subject. It is, generally speaking, physically comparable and enjoys the same statutory zoning and/or designations. The figure we have arrived at also has some support in the levels of value determined by Mr Denman relying on this sale in his alternate valuation approach. In saying this, we are mindful that Mr Denman did not approach and apply this sale in the same way as Mr Slater did as he considered, based on the Nathan formulation, that the sale was not truly comparable to the subject land, a view we have rejected.

Further, unlike the situation confronting the High Court in Maurici[102], there was no suggestion in this appeal that the sale price of the Telstra site was or might have been inflated in some way due to a scarcity of comparable vacant land. In fact our attention was drawn by counsel for the respondent to the observations by the learned Member to the effect that there was a "prospect" that the sale price might have been less than full market value. We were not taken to any probative evidence in support of that observation. In circumstances where the learned Member accepted that the sale was an "arms length" transaction and there was evidence of genuine negotiations between the purchaser and vendor,[103] there is no basis to proceed on the premise that the sale might have been at undervalue.
[102](2003) 212 CLR 111
[103]Ex 15, p 15.

There is also authority that in the circumstances in which the Court finds itself, a sale such as the Telstra sale should be adopted, with suitable adjustments made for the differences between sale and subject land. In AMP Henderson Global Investors v Valuer-General,[104] the Court of Appeal in New South Wales considered an appeal against the decision of the Land and Environment Court relating to the value of two parcels of land in the central business district of Sydney. That court had rejected all but one of the sales relied on by the parties' valuers, but finally rejected that sale because it concluded that the High Court in the first Maurici decision held that the use of one comparable sale is inadequate when adopting the comparable sales method of valuation. The Court of Appeal held that this was an erroneous understanding of Maurici and pointed out that if there be only one comparable sale and it is a sale of scarce vacant land, it should not be disregarded and the comparable sales method of valuation rejected. Obviously, adjustments will need to be made to the sale to eliminate its scarcity factor. There is nothing new in sales having to be adjusted in order to render them comparable. The Court referred with approval to the decision of Hope JA in Leichhardt Municipal Council v Seatainer Terminals Pty Ltd[105] - his Honour said:[106]

"However, probably more often, the lands the subject of the sales relied upon are in some way different from the land to be valued giving the latter land a higher or lower value than that to be deduced from the sales. The times of the sales in relation to the date of valuation may also have to be considered in the light of general movements in land prices. The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the Court which has the task of valuing the land from relying upon the sales as comparable in the relevant sense, nor from making by the Court or by valuers of adjustment which may be nothing more than the best guess that can be made."

[104](2004) 134 LGERA 426.

[105](1981) 48 LGRA 409.

[106]At 434.

In the present appeal, the proper construction of s 3(1)(b) and analysis of Nathan and the cases thereafter leads inevitably to the result that we have obtained. Clearly, the intention of the 2003 amendments to the VLA was to provide a means by which the value of intangible improvements is excluded from the unimproved value of major commercial undertakings, such as shopping centres, where otherwise the value of intangible improvements would form a substantial part.

Conclusion

In the result the appeal is allowed. The order below is set aside. In lieu thereof the unimproved value of Lot 10 on Survey Plan 128115 in the Parish of Kedron, County of Stanley being title reference 50358209, is determined at thirty-four million dollars ($34,000,000).

Some observations on unimproved value as a means for assessing land tax

We have found that s 3(1)(b) requires the assumption that the improvements (including intangible improvements) did not exist at the date of valuation. The 2003 amendments to the VLA apply equally to a valuation made under s 3(1)(b) and to a valuation made under s 3(2). In the present case, there was the sale of the relatively lightly improved Telstra land from which to derive the unimproved value of the subject land. However, we are conscious that sales of vacant or lightly improved land may not in the future be available to provide guidance as to the unimproved value of shopping centres or other major commercial undertakings. In such circumstances, it would be necessary for a valuer to undertake the exercise provided for in s 3(2) of the VLA, by first ascertaining the improved value of the land and then deducting the value of the improvements, whether visible, invisible or intangible, to arrive at the unimproved value of the land. The present case has demonstrated just how difficult and contentious such an exercise could be.

It is trite to say that the concept of unimproved value is an artifice when dealing with highly improved land. For the Chermside shopping centre that artificiality assumes almost ridiculous proportions. If unimproved value is to continue to form the basis for revenue raising, we are of the view that consideration should be given to devising a simpler process for arriving at unimproved value in cases such as these.

The respondent carries out unimproved valuations of most land in Queensland on an annual basis. If litigation of the cost and complexity of the present case is to be avoided in the future, we are of the view that it would be desirable if the VLA was to provide for a mechanism by which the unimproved value of major commercial enterprises could be assessed without the need for the difficult, lengthy and complex evidence of the kind which was adduced before the Court below.

Observations on the appeal procedure

We would like to conclude with some brief observations on the manner in which this appeal was conducted. At the appeal directions hearing the parties estimated that the record would consist of some 200 volumes. The hearing below had taken some 55 days. There were extensive reports from valuers and other experts. We regarded this volume of material as physically unmanageable and directed that the appeal be conducted electronically, that is, that the appeal record be entirely electronic with the parties making whatever arrangements were necessary between themselves to supply the court with the disk containing the appeal record. No paper record was prepared and filed. Some bulky spreadsheets were provided in paper copy to the court for ease of reading.

The Land Appeal Court is grateful to the Chief Justice of Queensland for making available the Banco Court at the Supreme Court for the hearing of the appeal and to the IT officers of that Court for their interest in and development of the equipment to enable this to occur smoothly.

This was the first time as we understand it, that any appeal either to the Land Appeal Court or Court of Appeal had been conducted in this way and it was, in our view, entirely successful.

The Deputy Registrar of the Land Court controlled the material showing on the monitors before each member of the Court on the Bench and at the Bar table. This ensured that everyone concerned was viewing the same document about which submissions or questions were being addressed. Those who wished on the Bench also had a computer to permit access to the Appeal Record independently as did the parties' representatives.

Much time was saved in not needing to take up the volume of the record physically – indeed if that were possible given so many volumes having been foreshadowed. But also much time was saved in having everyone on the same page. Many will have experienced the muddle and irritation which attends a reference wrongly heard by the Bench or the profession or when, for some other reason, not all are viewing the same page of the record.

Another practical consideration has been the saving in storage space after the hearing both in chambers and in the registry. The parties’ lawyers have been given the opportunity to contribute to the development of this process. Only they can estimate the costs savings of proceeding wholly electronically and without the need for a dedicated commercial information technology manager.

Further refinements will no doubt be made to this process but even as it was it proved of great assistance to the court.

WHITE J

JJ TRICKETT
PRESIDENT OF THE LAND COURT

RS JONES
MEMBER OF THE LAND COURT

CITATION:	PT Limited & Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 77
PARTIES:	PT Limited (ACN 000 454 666) and Westfield Management Limited (ACN 001 670 579) Appellants v Chief Executive, Department of Natural Resources and Mines Respondent
FILE NO/S:	LAC 2006/0804
DIVISION:	Land Appeal Court of Queensland
PROCEEDING:	Appeal
ORIGINATING COURT:	Land Court of Queensland
DELIVERED ON:	17 October 2007
DELIVERED AT:	Brisbane
JUDGE:	White J
MEMBERS:	Mr JJ Trickett, President of the Land Court Mr RS Jones, Member of the Land Court
ORDER:	Appeal allowed. Set aside the order below. In lieu thereof order that the unimproved value of Lot 10 on Survey Plan 128115 in the Parish of Kedron County of Stanley being title reference 50358209 is determined at thirty‑four million dollars ($34,000,000)
CATCHWORDS:	Statutory Construction – Valuation of Land Act 1944 – s 3(1)(b) meaning of phrase "improvements did not exist". - Section 3(1)(b) meaning of term "improvements" includes "intangible improvements" as defined in s 6(5) – consistent meaning ordinarily given to words used consistently in legislation – intangible improvements – benefit of agreements for lease and development approvals. Valuation – unimproved value of land – potential of land – highest and best use – regional shopping centre – rejection of so called Nathan formulation. Valuation – limited sales evidence – best evidence of unimproved value – lightly improved sales – use of highly improved sales – reliability of other valuations. Valuation Methodology – Treatment of Potential Acts Interpretation Act 1954 (Qld), s 14B, s 32AA Integrated Planning Act 1997 (Qld) Land Court Act 2000 (Qld), s 55, s 56 Land Tax Assessment 1910-11 (Cth), s 3 Valuation of Land Act 1916 (NSW) Valuation of Land Act 1944 (Qld), s 3(1), s 3(2), s 6(1), s 6(5), s 35A, s 45(1) Valuation of Land Regulation 2003 (Qld), s 3 AMP Henderson Gobal Investors v Valuer-General (2004) 134 LGERA 426 AMP Society v Chief Executive (1995) 15 QLCR 344 Barnwell v Valuer-General (1989) 13 QLCR 13 Chief Executive, Department of Natural Resources v QNI Metals Pty Ltd (2002) 23 QLCR 261 Clough v Valuer-General (1981) 8 QLCR 70 Commissioner of Land Tax v Nathan (1913) 16 CLR 654 Craig Williamson Pty Ltd v Barrowcliff (1915) VLR 450 Department of Natural Resources v Body Corporate for Golden Sands Community Title (1999) 22 QLCR 170 Drysdale Bros & Co v Federal Commissioner of Taxation (1931) 46 CLR 308 Fisher v Valuer-General (1983) 9 QLCR 44 Grahn v Valuer-General (1992) 14 QLCR 327 Jowett v Federal Commissioner of Taxation (1926) 38 CLR 325 Lamb v Brisbane City Council [2007] QCA 149; 15 LGERA 100 Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409 MacDonald v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 231 McGeoch v Federal Commissioner of Land Tax (1929) 43 CLR 277 Maurici v Chief Commissioner of Revenue (NSW) [2005] 142 LGERA 315 Maurici v Chief Commissioner of Revenue (NSW) (2003) 212 CLR 111 Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines & Water [2007] QLC 0010 Queensland Club v Valuer-General (1991) 13 QLCR 207 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 Russell v Federal Commissioner of Taxation (1934) 50 CLR 182 Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50 Toohey’s Ltd v Valluer-General (1925) AC 439
APPEARANCES:	Mr S Doyle SC and Mr LF Kelly SC and Mr JM Horton of counsel for the appellants Mr DB Fraser QC and Mr T Quinn and Mr B Codd of counsel for the respondent
SOLICITORS:	Mr R Bowie and Mrs A McDonnell – Minter Ellison Lawyers for the appellants Mr J O’Rourke and Mrs L Hawkings‑Guy, Legal Services, Department of Natural Resources and Mines for the respondent