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Queensland Judgments
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YFG Shopping Centres Pty Ltd as Tte & Anor v Valuer-General; Shayher Alliance Pty Ltd as Tte v Valuer-General; Leda Commercial Properties Pty Ltd as Tte v Valuer-General; Lipoma Pty Ltd as Tte v Valuer-General; RG Property Three Pty Ltd as Tte v Valuer-General

 

[2020] QLC 10

LAND COURT OF QUEENSLAND

CITATION:

YFG Shopping Centres Pty Ltd as Tte & Anor v Valuer-General; Shayher Alliance Pty Ltd as Tte v Valuer-General; Leda Commercial Properties Pty Ltd as Tte v Valuer-General; Lipoma Pty Ltd as Tte v Valuer-General; RG Property Three Pty Ltd as Tte v Valuer-General [2020] QLC 10

PARTIES:

YFG Shopping Centres Pty Ltd as Tte

ABN 56 853 411 699

(appellant)

Trondage Enterprises Pty Ltd

ABN 92 067 120 370

(appellant)

v

Valuer-General

(respondent)

FILE NO:

LVA182-17

PARTIES:

Shayher Alliance Pty Ltd as Tte

ABN 96 113 268 198

(appellant)

 

v

Valuer-General

(respondent)

FILE NO:

LVA183-17

PARTIES:

Leda Commercial Properties Pty Ltd as Tte

ABN 70 092 070 766

(appellant)

 

v

Valuer-General

(respondent)

FILE NO:

LVA211-17

PARTIES:

Lipoma Pty Ltd as Tte

ABN 65 002 203 581

(appellant)

 

v

Valuer-General

(respondent)

FILE NO:

LVA212-17

PARTIES:

RG Property Three Pty Ltd as Tte

ABN 99 154 666 529

(appellant)

 

v

Valuer-General

(respondent)

FILE NO:

LVA013-18

DIVISION:

General Division

PROCEEDING:

Appeals against valuation under the Land Valuation Act 2010

DELIVERED ON:

5 March 2020

DELIVERED AT:

Brisbane

HEARD ON:

2, 3, 4 & 6 December 2019

HEARD AT:

Brisbane

MEMBER:

PG Stilgoe OAM

ORDERS:

  1. The appeal in respect of LVA182-17 is dismissed.
  1. The appeal in respect of LVA183-17 is dismissed.
  1. In respect of LVA211-17:

a. The appeal is allowed;

b. I determine that the site value is Forty-One Million, Two Hundred and Ninety-Two Thousand, Four Hundred and Eighty ($41,292,480) dollars.

  1. The appeal in respect of LVA212-17 is dismissed.
  1. In respect of LVA013-18:

a. The appeal is allowed;

b. I determine that the site value is Eleven Million, Seven Hundred and Sixteen Thousand and Seventy-Eight ($11,716,078) dollars.

  1. Any submission as to costs must be filed and served within 14 days of the publication of these reasons.

CATCHWORDS:

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – GENERALLY – where the Valuer-General valued a number of shopping centres – whether the Valuer-General’s valuations were excessive – whether the valuations were so obviously excessive that an error could be inferred

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – EVIDENCE – where both parties engaged expert valuers to give evidence – where the expert valuers produced a joint expert report (JER) – where the expert valuers gave concurrent evidence – where the experts considered the size of the sites, the site catchments and the position of the centres in the retail hierarchy to determine site value – Land Valuation Act 2010 (Qld) s 19(1) – whether the expert valuers could have regard to the shopping centres’ trading performance in their valuations

REAL PROPERTY – VALUATION OF LAND – METHODS OF VALUATION – COMPARABLE SALES – EVIDENCE OF COMPARABLE SALES – where some of the comparable sites had existing agreements for lease – where the expert valuers differed on how to treat the agreements for lease – where some of the sales evidence that was included in the joint expert report was then impugned in cross-examination by one of the expert valuers

Land Valuation Act 2010 s 19(1)

Best v The Housing Commission of New South Wales (1949) 17 LGR (NSW) 129, cited

Brewarrana Pty Ltd v Commissioner for Highways (No 2) (1973) 6 SASR 541, cited

Brisbane Square Pty Ltd v Valuer-General [2016] QLC 69, cited

BWP Management Limited v Valuer-General [2019] QLAC 4, applied

Caloundra Fisherman’s Wharf Pty Ltd v Chief Executive, Department of Lands [1996] QLC 150, cited

Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd [2009] QCA 399, followed

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, cited

Fenton Nominees Pty Ltd v Valuer-General (1981) 27 SASR 258, cited

Maurici v Chief Commissioner of State Revenue [2005] NSWLEC 20, cited

Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369, cited

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

Spencer v The Commonwealth (1907) 5 CLR 418, cited

Valuer-General v Body Corporate for ‘Tennyson Reach’ [2018] QLAC 7, cited

Western Australian Planning Commission v Arcus Shopfitters[2003] WASCA 295, cited

YFG Shopping Centres Pty Ltd as TTE & Trondage Enterprises Pty Ltd v Valuer-General; Shayher Alliance Pty Ltd as TTE v Valuer-General; Leda Commercial Properties Pty Ltd as TTE v Valuer-General; Lipoma Pty Ltd as TTE v Valuer-General [2018] QLC 37, applied

APPEARANCES:

G Beacham QC, with J Byrnes (instructed by Colin Biggers & Paisley) for the appellants

D O’Brien QC, with J Hastie (instructed by Corrs Chambers Westgarth) for the respondent

  1. [1]
    The Valuer-General has valued a number of shopping centres as at 1 October 2015. The owners of the centres objected to those valuations. The Valuer-General did not change its decisions on objection so the owners have appealed the objection decisions to this Court.
  1. [2]
    The owners in each case engaged Coen Ladewig as an expert valuer. The Valuer-General engaged Alastair Weir in the same capacity.
  1. [3]
    The grounds of appeal in each case are the same:
  1. the site values are not supported by property sales and are excessive having regard to comparable property sales;
  1. the site values do not reflect the physical and legal characteristics of the land and/or constraints on the use of the land;
  1. the site values do not achieve or preserve uniformity of value between the assessed site value and valuations of other comparable parcels; and
  1. the valuations:
  1. (a)
    are excessive
  1. (b)
    are not supported by sales evidence;
  1. (c)
    are based on fundamentally erroneous methodologies; and
  1. (d)
    fail to take account of factors which ought to be taken account of, including but not limited to those factors identified in grounds two and four.
  1. [4]
    It is important to remember that a valuation appeal is a two-step process.[1] The first step is to determine whether there is an error and the owners bear that onus.

General principles

  1. [5]
    The Valuer-General’s reasons for the objection decision are brief and the evidence before me did not address those reasons. In truth, the only ground on which I received evidence was that the valuations were excessive, having regard to comparable property sales.
  1. [6]
    In Fenton Nominees Pty Ltd v Valuer-General,[2] Wells J held that:

“…conformably with similar doctrine applicable to other appeals and reviews, an appellant will be entitled to succeed if he can show that the Valuer-General’s value is excessive to such an extent that it is explicable only on the ground that the Valuer-General has committed an error, although it is not possible precisely to identify the point at which the error occurred.”

  1. [7]
    That decision was the subject of comment by Debelle J in Players Pty Ltd v Corporation of the City of Adelaide,[3] where his Honour said:

“An appeal would not be allowed because of a mere difference in the opinion of the valuers. As His Honour said, there is no such thing as an ideally correct value. Two valuers may quite reasonably and without error form a different opinion as to value of the same parcel of land. […] An appellant might appeal on the ground that the assessed value is too high or too low. In my view, the court will not interfere unless the appellant demonstrates that the valuer whose assessment is subject to appeal has made some error of law; has acted on a wrong principle of valuation; has misapprehended, misused or excluded relevant material, in other words, has failed to have had regard to relevant factors or has had regard to irrelevant factors; has misapplied principle or has in some other way erred in discharging the task of the valuer. To adapt the observations of Jacobs J in Myer (SA) Stores Ltd v Valuer-General (supra), as a matter of practical reality the court will not be likely to interfere unless it is shown that the valuation is erroneous in principle or tainted by significant error or fact, or so obviously excessive that some such taint or error must be inferred.” (My emphasis.)

  1. [8]
    Because of the way the evidence was presented, I was not asked to decide whether the valuations are erroneous in principle or tainted by significant error or fact. The only basis on which these appeals were argued is that the valuations are excessive.
  1. [9]
    Neither party proceeded on the basis that the Valuer-General’s valuations had to be so obviously excessive that some such taint or error must be inferred. Counsel for the owners did not even address me on what “excessive” might mean, except to acknowledge that:
  1. It is more than $1 over the Valuer-General’s valuation (i.e. it is not a trivial amount). That is self-evident if the owners are required to prove that the valuations are “obviously excessive”;
  1. It depends on the circumstances of each case.
  1. [10]
    Counsel for the Valuer-General submitted that a valuation was not excessive if the two valuations contended for fell within a range of 10%.[4] Although the competing valuations are close to this margin, none, in fact, fall within that range.
  1. [11]
    I agree that whether or not a valuation is obviously excessive depends on the circumstances of each case.

The valuers’ evidence

  1. [12]
    The correct approach to valuation is to assign the subject land, by comparison, to its proper place in the scale of values disclosed by sales proved.[5] Using the market continuum method of valuation, the analysed sale rate for the subject site must be somewhere between the worst of the superior sites and the best of the inferior sites.
  1. [13]
    Mr Ladewig looked at the basket of sales and then scaled them according to the size of the site. General valuation principles[6] may assume that the larger the site the lower the price per square metre, however, if a larger area gives the potential for a larger centre, and therefore a greater return on investment, then in my view that must have an impact on the valuation.
  1. [14]
    Mr Ladewig did not explain how the size of the site affected his scaling of the value. In considering each comparable sale, Mr Ladewig said simply “…with the smaller size of the sale leading to a higher $rate/m2 given the economies of scale.”[7]
  1. [15]
    A failure to state the reasoning process by which an opinion was reached makes the opinion itself inadmissible.[8] I accept that there may be no mathematical formula to apply when scaling for size – for example x per cent less area means a reduction of y per cent in the rate per square metre – but I do think the Court is entitled to something more than “Well, I did the exercise and that’s what I think”.
  1. [16]
    McClure J in Western Australian Planning Commission v Arcus Shopfitters[9] had a similar view about the adequacy of a valuer’s reasoning:

“Further, there can be no requirement that a valuer quantify adjustments affecting value. […] However, as a matter of principle a valuer using the conventional approach should explain the steps in his reasoning and analysis from his basket of sales evidence to his opinion as to value. The correct principle is, in my view, that the valuer must reveal as far as possible the process of reasoning actually employed so as to enable the Court to evaluate the evidence and the expert’s conclusions.”

  1. [17]
    I think that a detailed explanation is even more important where, as Mr Ladewig does, the person giving that evidence always appears at the behest of the party appealing the valuation.
  1. [18]
    While there is some attraction in Mr Ladewig’s simple approach – i.e. that a vacant block of dirt is a vacant block of dirt – I do not accept that the size of a site is necessarily the dominant consideration. Mr Ladewig did not have regard to the retail hierarchy of shopping centres when determining the value of the subject properties.[10] Although he conceded that the catchment population was a fundamental parameter for shopping centre development,[11] Mr Ladewig did not accept that the census data for a suburb was a relevant consideration in determining value.[12]
  1. [19]
    By contrast, Mr Weir examined a number of features that the subject property and the comparable sales shared. Even though, as these reasons demonstrate, I have difficulty with some of Mr Weir’s assumptions, Mr Weir – importantly – examined the sites within the context of the retail hierarchy, something Mr Ladewig did not do. It seems to me that the exercise he outlined[13] – i.e. do a needs analysis based on the demographics of the catchment, decide what size retail the land can support, and where the site sits in the retail hierarchy – is a more nuanced approach to valuation and one which I generally prefer.

Three questions I have been asked to decide

  1. [20]
    The parties have identified three common issues in all the appeals. None of these factors is important to my determination unless and until the first step – an error in the Valuer -General’s valuation – has been established.

Value added by intangible improvements - agreements for lease

  1. [21]
    The valuers agreed that an existing agreement for lease would affect the price that a party might pay for a site and, therefore, affect the way in which that site would operate as a comparable sale. This issue was relevant in three comparable sales: Hope Island, Karalee and Delacombe.
  1. [22]
    Mr Ladewig adjusted the sales by reference to the purchaser’s view of the value of the agreement for lease; Mr Weir adjusted the sale by reference to an industry standard.
  1. [23]
    Hope Island is the highest of all the comparable sales and, on first blush, one would have thought it was so far outside the range of comparable sales that it was of little use. However, both valuers stated that Hope Island underpinned all of their assumptions.
  1. [24]
    The sale of Hope Island had the benefit of both a development approval and agreements for lease. Mr Lin, the director of the purchaser of Hope Island, in response to an email from Mr Ladewig, provided his recollection of the value he ascribed to the agreements for lease. Mr Lin stated that he would never have proceeded with the purchase had the development approval and agreements for lease not been in place. He stated that, if he had proceeded with the purchase in the absence of the development approval and agreements for lease, he would have paid $2 or $3 million less for the land.
  1. [25]
    Mr Ladewig adopted Mr Lin’s figures and discounted the sale price by 17.5%. Mr Weir ignored Mr Lin’s email and applied a figure of 7.5%, which, in his view, better reflected the industry standard value for existing agreements for lease. Mr Weir has asked me to accept that there is an industry standard for the value of agreements for lease, which, based on his long experience, he put somewhere between 5% and 10%. Mr Weir did not provide any factual basis to support the “industry standard”.
  1. [26]
    Under cross-examination,[14] it became clear that Mr Weir was applying the industry standard, if one exists, to make the sale one that conformed to the Spencer[15] test. It is clear from the transcript[16] that counsel for the Valuer-General took the same approach; that the Hope Island sale had to be converted to a sale that conformed to the Spencer test.
  1. [27]
    If there had been any doubt, the recent Land Appeal Court decision of BWP Management Limited v Valuer-General[17] clarified that a comparable sale should not be assessed according to the Spencer principle so that it becomes a sale at a price at the point a desirous purchaser and a not unwilling vendor come together. Rather, the valuers and the Court must take the sale as it is and adjust it according to its particular circumstances.
  1. [28]
    As Kingham P noted in YFG Shopping Centres,[18] the purpose of analysing a comparable sale is not to second-guess the prudence of the actual purchase. What is important is the value the purchaser assigned to the land at the date of the purchase. Whether the estimate is wrong is not material.
  1. [29]
    Further, as Scott M stated in Caloundra Fisherman’s Wharf Pty Ltd v Chief Executive, Department of Lands:[19]

“…it is not appropriate valuation practice to take a sale price that on the available evidence was arrived at on a certain basis and then to adjust that basis in a manner not apparently contemplated by those parties to the transaction.”

  1. [30]
    The correct approach for Mr Weir was not to “adjust” the Hope Island sale so that it reflected his assessment of the value of the agreements for lease. Instead, as was made clear in BWP,[20] Mr Weir should have accepted the Hope Island sale as it was and then considered whether, in light of his concerns, the sale was sufficiently comparable to be relied upon. That was the approach Mr Ladewig took when a number of hypothetical purchaser decisions were put to him;[21] if the purchaser assumptions were unrealistic, the sale was no longer a useful comparison.
  1. [31]
    Although the valuers agreed that Mr Lin was an inexperienced purchaser of retail property, Mr Weir didn’t squarely raise his concerns about Mr Lin’s figures until the valuers were in the witness box. The Valuer-General submits that, once the experts raise an issue, it is for the owners to call evidence to address that issue. While I agree with that submission in principle, it is difficult for a party to call evidence to address an issue that was first raised at the hearing. If the difference between Mr Lin’s assessment and the “industry standard” was so important to Mr Weir, he should have brought it to the parties’ attention much earlier, and no later than the joint expert report (JER).
  1. [32]
    The valuers had a similar difference of opinion about the purchaser information for Karalee. As with Hope Island, Mr Ladewig accepted the purchaser’s advice about the value to it of the agreements for lease. The Valuer-General again criticised that approach, saying that Mr Ladewig did not attempt to analyse the information to determine its cogency or reliability, given the information was produced more than four years after the sale. The Valuer-General also criticised Mr Ladewig’s assessment because he acted for the purchaser in relation to an objection against the value of the subject land. The Valuer-General submits that it can be inferred that the purchaser was alive to the relevance of the information given in this appeal as it may have related to its own objection.
  1. [33]
    Mr Weir did not impugn the Karalee figures in the valuers’ JER. In evidence, though, Mr Weir said that he thought the figures were “cooked”,[22] and should be treated “at least with extreme scepticism”.[23]
  1. [34]
    Once again, Mr Weir should have raised these issues in the JER so that the parties could have had the opportunity to call additional evidence if they thought the point was relevant, or to discount the sale as being not reliable.
  1. [35]
    The value to be given to agreements for lease was also relevant in the Delacombe sale. Mr Ladewig was criticised for applying the percentage discount he calculated for Hope Island and Karalee to Delacombe without any supporting evidence. Mr Ladewig explained his rationale for that exercise,[24] noting that different sales, with different price points and different risks, all resulted in a value for the agreements for lease of between 15% and 18%. This assessment is logical and no less valuable than Mr Weir’s approach of applying an “industry average” that is also unsupported by hard evidence, particularly where, in the case of Delacombe, Mr Weir also compared the sales and risk profiles to arrive at the value.[25]

Comparability of sales evidence and the retail hierarchy

  1. [36]
    The valuers agreed, in each case, that the highest and best use was “retail in line with its current use”. Nearly all of the comparable sales were sales of neighbourhood centres whereas the subject properties were sub-regional or regional centres.
  1. [37]
    The major difference between the valuers is that Mr Ladewig had no regard to the designation of the shopping centres in the retail hierarchy because he was looking at “a vacant block of dirt”.[26] In his view, the size of the sites was the determining factor and he therefore treated all of the subject properties as being just retail sites with a retail use.[27]
  1. [38]
    By contrast, Mr Weir assessed the subject sites by having regard to the size of the catchments of shopping centres of a different order of use. If the catchment was larger, Mr Weir ascribed a higher value. Further, Mr Weir took account of the fact that major regional shopping centres are able to charge substantially higher rents for specialty stores, that this factor drives higher values for such centres, and puts them in a completely different asset class. Mr Weir told the Court that the different asset class has a different market, being large institutional investors, who would “jump” at the chance to secure such a site.[28]
  1. [39]
    Mr Ladewig agreed that higher order shopping centres were able to charge higher rents for specialty stores. However, he did not think that this justified a higher value because he thought that the effect of the higher rent was offset by the increased risk in developing a major regional shopping centre.
  1. [40]
    In line with the Land Appeal Court’s comments in PT Limited & Westfield Management Ltd v Department of Natural Resources and Mines,[29] the potential the notionally vacant land has for a regional shopping centre should and must be taken into account. Mr Weir’s approach of considering the retail hierarchy is to be preferred.

The relevance of trading performance

  1. [41]
    Counsel for the owners submits that Mr Weir relied on the centres’ trading performance in determining valuation and that this is not the correct approach.
  1. [42]
    Section 19(1) of the Land Valuation Act 2010 (“LVA”) states that, if land is improved, its site value is its expected realisation under a bona fide sale assuming all non-site improvements for the land had not been made. A “non-site improvement” means work done, or material used, on the land other than a site improvement.[30] Therefore, when considering the unimproved value of land, a notional purchaser must assume that non-site improvements do not exist; that is, that the buildings do not exist. Logically, then, a valuer cannot have reference to the rent generated by the buildings which are deemed not to exist. That approach was confirmed by the Court in Brisbane Square Pty Ltd v Valuer-General.[31]
  1. [43]
    Although the Land Appeal Court in PT Limited[32] found that the potential for a regional shopping centre should be taken into account, the Court also found that the potential should not be treated as proved and effectively cost- and risk-free by reference to the past trading history of the site.[33] The Court of Appeal has noted that it is illogical to have regard to leases of tenancies in a shopping centre where the LVA provides that the improvements do not exist.[34]
  1. [44]
    Further, as counsel for the owners pointed out,[35] the hypothetical purchaser would not have access to the actual trading figures so they could form not part of the purchaser’s decision-making process.
  1. [45]
    Counsel for the Valuer-General submitted that Mr Weir did not factor the rental income into his valuation assessment, but simply used the rental income as a check against his valuation. Taking Mr Weir’s evidence as a whole, I find that interpretation unlikely. In my view, Mr Weir had significant regard to the income generated by each of the centres.[36] As counsel for the owners submits, looking at the actual trading performance treats that performance as evidence of how a bona fide purchaser might assess the potential of the vacant site.
  1. [46]
    Even Mr Weir’s use of the income generated as a check measure for his valuation causes me some concern; using the actual return on investment to justify a hypothetical unimproved value of the land is, in my view, to approach the valuation exercise from the end rather than the beginning.
  1. [47]
    It is also instructive that Mr Weir commented adversely on the built form of Capalaba Central, noting that the tenant mix was depressed because of the built form, and that as a result the rent was depressed and the value was lower.[37]

Discussion

LVA182-17 - Capalaba Park

  1. [48]
    The Valuer-General’s valuation for Capalaba Park was $21,000,000.[38]
  1. [49]
    The valuers’ assessment for Capalaba Park was:

 

 

 

Mr

Ladewig

Mr

Weir

 

GLAR

34,876

$/m2

Total

$/m2

Total

Unencumbered
site area

 

74,417

250

18,604,250

280

20,836,760

Easement area

20%

947

200

189,400

224

212,128

Pedestrian linkages

10%

216

225

48,600

252

54,432

Total

 

75,580

 

$18,800,000

 

$21,100,000

  1. [50]
    As the owner bears the onus of proof, I must look to Mr Ladewig’s evidence to see if the Valuer-General’s valuation is so obviously excessive that a taint or error must be inferred.
  1. [51]
    I have already expressed my concerns about Mr Ladewig’s evidence. In my view, Mr Ladewig does not establish that the valuation is obviously excessive. Mr Ladewig does not point to any error by the Valuer-General. His evidence, at its highest, simply gives me a different valuation for the site. That is not enough.
  1. [52]
    YFG has not satisfied its onus of proof. The appeal should be dismissed.

LVA183-17 - Capalaba Central

  1. [53]
    The valuation appealed against for Capalaba Central is $25,000,000. After receipt of the JER, the Valuer-General issued an amended valuation of $23,900,000.[39]
  1. [54]
    The valuers’ assessment in the JER was:

 

 

 

Mr

Ladewig

Mr

Weir

 

GLAR

41,837

$/m2

Total

$/m2

Total

Unencumbered
site area

 

85,059

225

19,138,275

250

21,264,750

Access
easement area

20%

4,800

180

864,000

200

960,000

Suspended car parking

$150

5,850

75

438,750

100

585,000

Other easements

10%

4,791

202.5

970,178

225

1,077,975

Total

 

100,500

 

$21,400,000

 

$23,900,000

  1. [55]
    The objection decision acknowledged the presence of the easements but the author decided that they had no impact on design or plot ratio and, therefore, no impact on value. The objection decision noted the limited frontage and exposure and the limited access and egress but considered they were fully reflected in the existing rate per square metre. The objection decision also noted that the flood hazard had no impact on design or plot ratio.
  1. [56]
    By contrast, both Mr Ladewig and Mr Weir discounted their valuations to account for the presence of the easements. They agreed on a total discount of 30%. They also discounted the valuation to account for the cost of suspended parking to accommodate the flood risk.
  1. [57]
    It is apparent that in issuing the amended valuation of $23,900,000 the Valuer-General acknowledged that the initial valuation did not take into account the effect of the easements, flood impact and design constraints. Because the amended valuation does take these matters into account, the exercise is now similar to the one in Capalaba Park.
  1. [58]
    Once again, although I accept that Mr Ladewig’s valuation is lower than that of the Valuer-General, I am not persuaded that the Valuer-General’s valuation is obviously excessive. The difference between the two valuations is close to what is an acceptable margin of error and, once again, Mr Ladewig’s analysis shows only that different valuers can have different views.
  1. [59]
    The appeal should be dismissed.

LVA212-17 - Victoria Point

  1. [60]
    The Valuer-General’s valuation is $21,000,000.[40]
  1. [61]
    The valuers’ comparison for Victoria Point is:

 

 

 

Mr

Ladewig

Mr

Weir

 

GLAR

26,937

$/m2

Total

$/m2

Total

Unencumbered
site area

 

70,632

225

15,892,200

250

17,658,000

Easement area
– drainage

20%

5,554

180

999,720

200

1,110,800

Suspended
slab area – eastern boundary

$150

2,165

75

162,375

100

216,500

Suspended
building area

$150

3,525

75

264,375

100

352,500

Other
easements

10%

4,219

203

854,348

225

949,275

Pedestrian and
vehicular access

10%

3,145

203

636,863

225

707,625

Total

 

89,240

 

18,800,000

 

21,000,000

  1. [62]
    As with Capalaba Park and Capalaba Central, it seems to me that contest between the valuers does not demonstrate error by the Valuer-General because it does not show that the Valuer-General’s valuation is obviously excessive. Further, the objection decision valuer noted that the site sold as vacant land in 1999 for $245/m2. It is unlikely that such a valuable site would have reduced in value over the ensuing15 years, as Mr Ladewig contends. Once again I am not satisfied that the owner has satisfied the onus of proof. The appeal should be dismissed.

LVA013-18 - Park Ridge

  1. [63]
    The Valuer-General valued Park Ridge at $15,600,000.[41]
  1. [64]
    The valuers’ assessments are:

 

 

 

Mr

Ladewig

Mr

Weir

 

GLAR

13,127

$/m2

Total

$/m2

Total

Unencumbered
site area

 

51,364

225

11,556,900

300

15,409,200

Easement area

10%

251

203

50,828

270

67,770

Batter banks
and lost area

$10

10,835

10

108,350

10

108,350

Total

 

62,450

 

$11,700,000

 

$15,600,000

  1. [65]
    The valuer in the objection decision[42] determined that the figure of $15,600,000 took into account the site’s internal easements. The author noted, however, that the owner’s agent failed to apply for a deduction for site works to which the owner would be entitled upon lodgement of the relevant documents.
  1. [66]
    The valuers agree that the value of the site works is $108,350. If I deduct this amount from the Valuer-General’s valuation, the result is $15,491,650. While the agent’s failure to lodge relevant documents is not the Valuer-General’s error, I accept that the valuation is wrong. The appeal should be allowed.
  1. [67]
    What, then, is the correct valuation?
  1. [68]
    The site sits in the Centre Core precinct under the local planning scheme. The surrounding area comprises a range of established rural residential dwellings and some legacy poultry farms.
  1. [69]
    The main difference between the valuers is that Mr Weir considers the site to be well above the range of a typical neighbourhood centre because it has the ability to tap into commuter traffic and it is adjacent to quite a significant area of future development land.
  1. [70]
    Mr Weir’s optimism about the site is based on a number of factors. Firstly, he points to the 40,000 cars that travel Beaudesert Road each day.[43] Secondly, Park Ridge is a major planned area for the Logan City Council, which estimates that it will have a population of approximately 30,000 by 2026.[44] Thirdly, this shopping centre is designated as the town centre for the Park Ridge development.[45] Mr Weir supported his view of the value by referring to the strong performance of the existing Woolworths.[46]
  1. [71]
    While Mr Ladewig conceded that the area has growth potential he pointed out the growth was not, as at the date of the valuation, guaranteed. While the Park Ridge Planning Report of 2010 projected a population of 30,000 by 2026, the actual growth as at the 2016 census was only 0.87%. Mr Ladewig pointed out that there were “a bunch” of legacy chicken farms in the area that were waiting to be rezoned into residential land and the timing of that would affect the growth of the area.[47] He agreed with Mr Weir that the site is easily accessible but said that it does not have good exposure to the highway.
  1. [72]
    I have already confirmed that it is not appropriate to look at actual revenue when undertaking a valuation. Therefore, Mr Weir’s reliance on the trading history of Woolworths leaves his valuation vulnerable. I am also not as optimistic as Mr Weir is about the growth potential of Park Ridge as at the date of valuation. The slow growth revealed in the census data, plus the fact that legacy chicken farms have still not been converted to residential sites leads me to share Mr Ladewig’s cautious approach.
  1. [73]
    Mr Ladewig, consistently with his approach in all appeals, looked at the basket of sales and then scaled them according to the size of the site. I have already commented that I consider this a simplistic approach. I remain of that view when I look at Mr Ladewig’s Park Ridge valuation.
  1. [74]
    I don’t understand why Mr Ladewig did not include Loganholme in his basket of relevant sales. According to Mr Weir,[48] although Loganholme is significantly smaller than Park Ridge, it shares a similar level of competition and similar population growth. It is in a higher socio-economic area but has slightly inferior access.
  1. [75]
    Mr Ladewig did include Meadowbrook in his basket of sales. It is also significantly smaller than Park Ridge, but has a higher growth rate and is in a better socio-economic demographic. By including Meadowbrook at $254/m2, Mr Ladewig’s low end of the range is very low. Scaling the sales according to size alone, and with no detailed explanation of how he applied the scaling, including Meadowbrook allowed Mr Ladewig to value Park Ridge at considerably less than Mr Weir did.
  1. [76]
    It is not my task to be a third valuer[49] and it is not appropriate for me to “split the difference” where I have doubts.[50] In this case, because of the overly robust approach Mr Weir adopted, I prefer the evidence of Mr Ladewig, despite my concerns.  The correct valuation should be $11,716,078.

LVA211-17 - Morayfield Supercentre

  1. [77]
    The Valuer-General valued this site at $45,000,000 but issued an amended valuation of $43,000,000 after the delivery of the valuers’ JER.[51]
  1. [78]
    The valuers’ analyses at the hearing are as follows:

 

 

 

Mr

Ladewig

Mr

Weir

 

GLAR

59,300

$/m2

Total

$/m2

Total

Unencumbered
site area

 

82,487

275

22,683,925

350

28,870,450

Easement area

10%

6,082

248

1,505,295

315

1,915,830

Flood impacted land – northern end

30%

23,058

$125

2,882,250

245

5,649,210

Suspended slab land – southern end

$150

13,574

$125

1,696,750

200

2,714,800

Balance flood
land – southern end

30%

15,899

$125

1,987,375

245

3,895,255

Total

 

141,100

 

$30,800,000

 

$43,000,000

  1. [79]
    The valuer undertaking the objection decision acknowledged that the site had flooding issues but determined[52] that these had no impact on design or plot ratio. The valuer also determined that the easements had no impact on the value, as they did not affect plot ratio or design.
  1. [80]
    Both Mr Weir and Mr Ladewig disagreed with that assessment and both applied discounts for the easements and strategies required to deal with flooding. No doubt that was the reason why the Valuer-General issued an amended valuation, based on Mr Weir’s assessment.
  1. [81]
    In this case, therefore, I am entitled to look at Mr Weir’s evidence to determine error. I note that the valuers disagree about:
  1. the rate per square metre for the unencumbered site area;
  1. the discount to be applied to the flood impacted land; and
  1. the discount to be applied to the suspended slab land.
  1. [82]
    The valuers accepted the cost of a suspended slab as a discount because it mitigates the impact of the flooding risk. In the JER both agreed that the cost of a suspended slab is $150/m2.[53]
  1. [83]
    Mr Weir applied a deduction of 30% for the flood affected area and $150/m2 for the area that requires a suspended slab. Mr Ladewig applied a discount of $150/m2 for the flooding impact over the whole of the land and for the suspended slab. Mr Ladewig’s discount of $150/m2 over the whole site equates to a discount in excess of 45%.
  1. [84]
    Mr Weir confirmed that his deduction of 30% was a subjective assessment and his only basis for that figure was his valuer’s experience.[54] He told the Court that he thought the 2011 and 2015 floods were historic and would not happen every five years.[55] He told the Court that he included a discount for a suspended slab where it existed but did not include it if no such slab had been built.[56] However, Mr Weir agreed that the most obvious way to mitigate potential flooding was through a suspended slab.[57]
  1. [85]
    By contrast, Mr Ladewig adopted an agreed mitigation strategy that had an agreed price. Even though the application of that agreed price represents a substantial discount, I am satisfied that Mr Ladewig’s approach is logical and transparent. For that reason, the Valuer-General’s valuation was in error and the appeal should be allowed.
  1. [86]
    I prefer Mr Weir’s assessment of the base rate of $350/m2 because, as I have noted earlier, Mr Ladewig failed to consider Morayfield’s place in the retail hierarchy.
  1. [87]
    Mr Ladewig noted that the site is large and within a highly competitive landscape. He stated that the site benefits from an extended catchment, although the catchment is shared with Westfield Northlakes to the south.
  1. [88]
    Mr Ladewig agreed that higher order shopping centres are able to charge higher rents for specialty stores. However, he did not think that this justified a higher value because he thought that the effect of the higher rent was offset by the increased risk of developing a large major regional shopping centre. In the end, he had no regard for where the site fell in the hierarchy of shopping centres.[58]
  1. [89]
    In addition, Mr Ladewig took no account of the centre’s catchment. Instead, he valued the site as if it were a neighbourhood centre[59] and the catchment was limited to the immediate locality, perhaps because he had not turned his mind to the issue:[60]

“MR O’BRIEN:   Yes.  Now, just going back to – you said that you didn’t have the experience to talk about catchments.  That’s – vis-à-vis Morayfield – is that the case in relation to all of the sales analysis that you’ve done here and in relation to the subject sales as well – subject sites?

MR LADEWIG:   I’ve said I don’t have the – I’m not a demographer.  I don’t have the experience to look at a primary and tertiary catchment, as well as all the competition in that catchment, and determine what is appropriate for that catchment.  I don’t have that skill set.  So I –

MR O’BRIEN:   Well –

MR LADEWIG:   What I’ve relied on is that SA2 data produced by ABS and which shows the different catchments and where they align.  And I’ve used that data accordingly and consistently.”

  1. [90]
    Mr Weir noted that the site is a higher order shopping centre of sufficient size to draw from a very wide catchment. Because of the size of the centre and its trading performance, Mr Weir considered the site superior to almost all of the listed sales evidence.
  1. [91]
    It is in considering Morayfield that I have the least confidence in Mr Ladewig’s approach that a vacant block of dirt is a vacant block of dirt. Mr Ladewig did not, as he should have, look at the retail hierarchy of shopping centres when he determined the value of the site.[61] Although he conceded that the catchment population was a fundamental parameter for shopping centre development,[62] Mr Ladewig did not accept that the census data for a suburb was a relevant consideration in determining value.[63]
  1. [92]
    Counsel for Leda submits that Morayfield can’t have a different class of buyer, because if it did, one would assume that Mr Weir would have said so in the JER.[64] Mr Weir may not have been explicit in the JER but he did comment that:[65]

“Morayfield is a high order shopping centre categorised as a Major Regional Centre by the Property Council of Australia. As such, it is of a size sufficient to draw from a very wide catchment. By virtue of its size and trading performance (refer Confidential section) it is considered to be superior to most of the listed sales evidence.”

  1. [93]
    I am satisfied that the different market for Morayfield is sufficiently identified.
  1. [94]
    The correct valuation is:

 

GLAR

59,300

 

 

Unencumbered
site area

 

82,487

350

28,870,450

Easement area

10%

6,082

315

1,915,830

Flood impacted land
– northern end

$150

23,058

200

4,611,600

Suspended
slab land

$150

 

13,574

200

2,714,800

Balance flood land
– southern end

$150

15,899

200

3,179,800

Total

 

141,100

 

$41,292,480

Orders

  1. The appeal in respect of LVA182-17 is dismissed.
  1. The appeal in respect of LVA183-17 is dismissed.
  1. In respect of LVA211-17:

a.The appeal is allowed;

b.I determine that the site value is Forty-One Million, Two Hundred and Ninety-Two Thousand, Four Hundred and Eighty ($41,292,480) dollars.

  1. The appeal in respect of LVA212-17 is dismissed.
  1. In respect of LVA013-18:

a.The appeal is allowed;

b.I determine that the site value is Eleven Million, Seven Hundred and Sixteen Thousand and Seventy-Eight ($11,716,078) dollars.

  1. Any submission as to costs must be filed and served within 14 days of the publication of these reasons.

PG STILGOE OAM

MEMBER OF THE LAND COURT

Footnotes

[1]Valuer-General v Body Corporate for ‘Tennyson Reach’ [2018] QLAC 7, 14 [50].

[2](1981) 27 SASR 258, 263-4.

[3][2001] SASC 369 [21].

[4]Submissions of the Respondent, 6 December 2019, 10 [39]-[40].

[5]Best v The Housing Commission of New South Wales (1949) 17 LGR (NSW) 129, 130.

[6]See Maurici v Chief Commissioner of State Revenue [2005] NSWLEC 20 [208]-[211].

[7]Ex 4, pages 17-9, 37-9, 69-71, 92-4, 113-4.

[8]Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 [37], [42].

[9][2003] WASCA 295 [71] - [72].

[10]T 3-24, lines 24 to 28, lines 32 to 38.

[11]T 3-28, lines 20 to 24.

[12]T 3-28, line 37 to T 3-29, line 2.

[13]T 3-18, line 40 to T 3-19, line 17.

[14]T 1-43, lines 19 to 26; T 1-44, lines 1 to 5; T 1-44, 38 to 44, T 1-93, lines 15 to 19; Restricted T 1-11, lines 11 to 13.

[15]Spencer v The Commonwealth (1907) 5 CLR 418.

[16]T 1-47, line 38 to T 1-50, line 5.

[17][2019] LAC 4 (“BWP”).

[18]YFG Shopping Centres Pty Ltd as TTE & Trondage Enterprises Pty Ltd v Valuer-General; Shayher Alliance Pty Ltd as TTE v Valuer-General; Leda Commercial Properties Pty Ltd as TTE v Valuer-General; Lipoma Pty Ltd as TTE v Valuer-General [2018] QLC 37.

[19][1996] QLC 150, 6.

[20][2019] LAC 4.

[21]T 1-74, lines 33 to 35.

[22]Restricted T 1-7, lines 20 to 28.

[23]Restricted T 1-10, line 24.

[24]T 1-84, lines 29 to 45.

[25]T 1-87, lines 13 to 16.

[26]T 3-126, lines 5-6.

[27]T 3-9, line 26 to T 3-10, line 4.

[28]T 3-120, lines 18 to 20; see also T 3-122, lines 14 to 16.

[29][2007] QLAC 77 [57] (“PT Limited”).

[30]LVA s 24(1).

[31][2016] QLC 69.

[32][2007] QLAC 77.

[33]Ibid [57].

[34]Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd [2009] QCA 399.

[35]T 1-22, lines 6 to 12.

[36]See, for example, T 3-56.

[37]Ex 4, page 41 [48]; T 3-56 lines 6 to 12; T 3-13, lines 1-23.

[38]Submissions of the Respondent, 6 December 2019, 1 [2].

[39]Ibid.

[40]Submissions of the Respondent, 6 December 2019, 2 [2].

[41]Ibid.

[42]Ex 1, pages 498-520.

[43]T 3-72, line 24.

[44]Ex 10, page 5.

[45]Ex 11.

[46]T 3-71, lines 30-32.

[47]T 3-77, lines 4-6.

[48]Ex 8.

[49]Brewarrana Pty Ltd v Commissioner for Highways (No 2) (1973) 6 SASR 541, 544-5.

[50]Ibid 578.

[51]Submissions of the Respondent, 6 December 2019, 2 [2].

[52]Ex 1, pages 375-84.

[53]Ex 4, page 126 [162].

[54]T 3-106, line 34; T 3-107, line 12.

[55]T 3-106, lines 43 to 47.

[56]T 3-106, lines 36 to 38; T 3-107, lines 37 to 42.

[57]T 3-109, lines 7 to 16.

[58]T 3-24, lines 24 to 26; T 3-9, lines 25 to 26.

[59]T 3, 127, lines 4 to 10.

[60]T 3-128, lines 32 to 46.

[61]T 3-24, lines 24 to 28, 32 to 38.

[62]T 3-28, lines 20 to 24.

[63]T 3-28, line 37 to T 3-29, line 2.

[64]T 4-19, lines 14 to 15.

[65]Ex 4, page 73 [75].

Close

Editorial Notes

  • Published Case Name:

    YFG Shopping Centres Pty Ltd as Tte & Anor v Valuer-General; Shayher Alliance Pty Ltd as Tte v Valuer-General; Leda Commercial Properties Pty Ltd as Tte v Valuer-General; Lipoma Pty Ltd as Tte v Valuer-General; RG Property Three Pty Ltd as Tte v Valuer-General

  • Shortened Case Name:

    YFG Shopping Centres Pty Ltd as Tte & Anor v Valuer-General; Shayher Alliance Pty Ltd as Tte v Valuer-General; Leda Commercial Properties Pty Ltd as Tte v Valuer-General; Lipoma Pty Ltd as Tte v Valuer-General; RG Property Three Pty Ltd as Tte v Valuer-General

  • MNC:

    [2020] QLC 10

  • Court:

    QLC

  • Judge(s):

    Member PG Stilgoe OAM

  • Date:

    05 Mar 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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