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The Trust Company Limited v Valuer-General; El Camino Priority I Pty Ltd v Valuer-General; Body Corporate for “Admiralty Quays” CTS 24592 v Valuer-General

 

[2020] QLC 38

LAND COURT OF QUEENSLAND

CITATION:

The Trust Company Limited v Valuer-General; El Camino Priority I Pty Ltd v Valuer-General; Body Corporate for “Admiralty Quays” CTS 24592 v Valuer-General [2020] QLC 38

PARTIES:

The Trust Company Limited

ACN 004 027 749

(appellant)

 

v

 

Valuer-General

(respondent)

FILE NO:

LVA017-18

PARTIES:

El Camino Priority I Pty Ltd

ACN 603 473 918

(appellant)

 

v

 

Valuer-General

(respondent)

 

FILE NO:

LVA064-18

PARTIES:

Body Corporate for “Admiralty Quays” CTS 24592

(appellant)

 

v

 

Valuer-General

(respondent)

 

FILE NOs:

LVA066-18

LVA069-18

DIVISION:

General Division

PROCEEDING:

Appeals under s 155 of the Land Valuation Act 2010 against valuation decisions

DELIVERED ON:

13 November 2020

DELIVERED AT:

Brisbane

HEARD ON:

10, 11, 12, 13, 16 March 2020; 5, 6, 7, 8 May 2020; 16, 17 September 2020

HEARD AT:

Brisbane

MEMBER:

WA Isdale

ORDERS:

  1. Appeal LVA017-18 is allowed.
  1. The valuation of 307 Queen Street, Brisbane, Lot 34 on RP 146754 as at 1 October 2016 is Twenty-Two Million Dollars ($22,000,000).
  1. Appeal LVA064-18 is allowed.
  1. The valuation of 38 Wharf Street, Brisbane, Lot 11 on B118227 at 1 October 2016 is Eleven Million, Seven Hundred and Seventy-Four Thousand, Three Hundred and Twenty Dollars ($11,774,320).
  1. Appeal LVA066-18 is allowed.
  1. The valuation of 32 Macrossan Street, Brisbane, Lots 1-173 on BUP 106738 and common property of the Admiralty Quays Community Title Scheme 24592 at 1 October 2015 is Thirty Million, Six Hundred Thousand Dollars ($30,600,000).
  1. Appeal LVA069-18 is allowed.
  1. The valuation of 32 Macrossan Street, Brisbane, Lots 1-173 on BUP 106738 and common property of the Admiralty Quays Community Title Scheme 24592 at 1 October 2016 is Twenty-Six Million Dollars ($26,000,000).

CATCHWORDS:

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellant objects to valuation – where subject is located within Brisbane CBD – where site value is the basis of valuation – where the highest and best use of the subject is agreed as commercial office tower – where the extent of that use is not agreed - where the comparable sales were improved sites – where the comparability of sales is in dispute – where adjustment of sales analysis for infrastructure credits is in dispute.

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellant objects to valuation – where subject is located within Brisbane CBD – where site value is the basis of valuation – where the highest and best use of the subject is agreed as student accommodation – where the extent of that use is not agreed - where town planning experts disagree scale of development achievable on subject site –

where the comparable sales were improved sites – where infrastructure concessions relating to development of student accommodation on the subject site are a relevant consideration.

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellant objects to valuation – where subject is located within Brisbane CBD – where site value is the basis of valuation – where the highest and best use of the subject is high-rise residential – where the extent of that use is not agreed – where the comparable sales were improved sites – where the potential retention of siteworks on a comparable sale was in dispute – where consecutive valuation years were the subject of appeals – whether there was market movement between the valuation years.

Land Valuation Act 2010, ch 4

Valuer-General v Body Corporate for Tennyson Reach Community Title Scheme 39925 [2018] QLAC 7, cited

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

Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, cited

PH Clough v Valuer-General (1981-82) 8 QLCR 70, cited

Macarthur Central Shopping Centre Pty Ltd as TTE v Valuer-General (No. 2) (2016) QLCR 443, cited

Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410, cited

Brisbane Square Pty Ltd v Valuer-General (2016) 37 QLCR 385, cited

Bell v Brisbane City Council [2018] QCA 84, cited

Heatham Pty Ltd as TTE v Valuer-General [2017] QLC 26, cited

WM George Pty Ltd as Trustee for WM George Trust and Ors v Chief Executive, Department of Natural Resources [2000] QLC 31, cited

APPEARANCES:

RN Traves QC and KM Riedel instructed by Colin Biggers and Paisley for the appellants

DP O’Brien QC and JP Hastie instructed by Clayton Utz for the respondent

Background

  1. [1]
    The respondent has routinely valued lands in the city of Brisbane. The appellants, not satisfied with the valuation, objected under the Land Valuation Act 2010, the Act. Remaining dissatisfied with the decisions on their objections, the appellants have appealed to the Court.
  1. [2]
    The decisions on objection were as follows:
  1. 307 Queen Street, Brisbane, valued at $27,000,000 at 1 October 2016;
  1. 38 Wharf Street, Brisbane, valued at $12,000,000 as at 1 October 2016;
  1. 32 Macrossan Street, Brisbane, valued at $42,000,000 as at 1 October 2015;
  1. The same site, 32 Macrossan Street, valued at $42,000,000 as at 1 October 2016.
  1. [3]
    At the hearing, the respondent abandoned these valuations and instead contended for the following figures:
  1. 307 Queen Street, Brisbane, valued at $30,000,000 at 1 October 2016;
  1. 38 Wharf Street, Brisbane, valued at $14,000,000 as at 1 October 2016;
  1. 32 Macrossan Street, Brisbane, valued at $47,700,000 as at 1 October 2015;
  1. The same site, 32 Macrossan Street, valued at $47,700,000 as at 1 October 2016.
  1. [4]
    The respondent concedes that the decisions on objection were in error. The result is that the Court must allow all of the appeals.
  1. [5]
    In accordance with the decision of the Land Appeal Court in Valuer-General v Body Corporate for Tennyson Reach Community Title Scheme 39925, the first step in the two-step process has been satisfied. The valuations being incorrect, the second step is to find the correct valuation.[1] Section 170(b) of the Act requires the valuation to be adjusted by the Court “to correctly make the valuation.”[2]
  1. [6]
    The appellants contend the valuations should be as follows:
  1. 307 Queen Street, Brisbane, valued at $22,000,000 at 1 October 2016;
  1. 38 Wharf Street, Brisbane, valued at $10,100,000 as at 1 October 2016;
  1. 32 Macrossan Street, Brisbane, valued at $30,600,000 as at 1 October 2015;
  1. The same site, 32 Macrossan Street, valued at $26,000,000 as at 1 October 2016.
  1. [7]
    At the request of the parties, the appeals were heard together on the basis that the outcomes will be influential in a significant number of other appeals which have been lodged. These appeals are “test cases.” This does not affect how the Court deals with them. The Court’s task is set by s 170(b) of the Act. In order to do so, it will address the matters germane to that task in the appeals now being considered. The matters requiring resolution for the Court to complete its task may vary from the totality of those that vex the parties.
  1. [8]
    The differences in the valuations contended for range up to well over $20,000,000 between the valuation opinions of the valuers called by the parties.

The Act

  1. [9]
    The Act provides that the land is to be valued as a site. It provides the necessary definitions to guide the valuation process, which will value the land as if it was arrived at by the bona fide sale of the fee simple of the land, unencumbered, on the valuation date.[3]

The test

  1. [10]
    The applicable test was described by Griffith CJ in Spencer v the Commonwealth in the following words:

“In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”[4]

  1. [11]
    In the same case, Isaacs J said:

“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”[5]

  1. [12]
    In Hans and Else Grahn v Valuer-General, the Land Appeal Court considered the previous Act. That Court’s comments in that case are equally applicable to the matters considered under the current Act. The Court said:

“The decision of the High Court of Australia in Brisbane City Council v The Valuer-General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v The Valuer-General ((1989 13 QLCR 13) are authority for the following propositions:

(a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 16 and cases cited in it).

(b) The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fisher v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).

(e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WM and TJ Fischer v The Valuer General (1983) 9 QLCR 44, at p. 46).

(f) If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it)[6]. (citations in original)

  1. [13]
    In the present case, both valuers have found it necessary to have recourse to improved sales, attempting to analyse them to arrive at an estimate of the site value. This is fraught with difficulty and allows considerable scope for uncertainty and disagreement.
  1. [14]
    The Land Appeal Court referred to this in PH Clough v Valuer-General, where the Court said:

“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at the unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements.

Because there is less room for difference of opinion as to the 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.

In Tooheys’ case and Jowett’s case the method of ascertaining the improved value of the subject property and deducting the value of the improvements therefrom was adversely criticized. Whilst in some cases it may be appropriate to adopt the method, it seems to us that in the majority of cases it introduces additional items to value each of which can be the subject of a difference of opinion and thus increase not only the work load of the valuer and the Courts but also the difficulties and uncertainties of arriving at a reasonably correct unimproved value.”[7]

  1. [15]
    The learned President of this Court has said:

“It is well established that analysis of comparable sales, preferably of vacant or lightly improved land, is the preferred method for determining market value. The comparable sales method necessarily involves some element of subjective judgment in comparing the comparable sale to the subject site. The greater the differences between the properties, the greater the reliance on evaluative judgment and the less confidence the Court can have in inferences drawn from the analysis.”[8] (citations omitted)

The issues

  1. [16]
    As directed by the Court, the parties provided an agreed list of the matters not in dispute and those that were. In the course of the hearing, these matters resolved into, in the case of each of the appeals, the following:
  1. [17]

The Trust Company Limited (LVA017-18)

v

Valuer-General

The parties agree that the following facts or matters are not in dispute and therefore proof of them is not required. 

  1.  The real property description; land area (including net lettable area and plot ratio); easements, encumbrances and interests; nature of the land, location and adjacent roads; surrounding development, in relation to 307 Queen Street, Brisbane (Queen Street Site) as at 1 October 2016 (LVA017-18).
  1.  The parties agree that the decision on objection for 307 Queen Street is incorrect, that the appeal should be allowed and that the Court should proceed to determine the correct value of the land.
  1.  The parties agree that the analysed value of:

a. Sale 3, 30 Albert Street, Brisbane is $17,563/m2.

b. Sale 4, 240 Margaret Street, Brisbane is $17,293/m2.

c. Sale 8, 62 Mary Street, Brisbane is $9,718/m2.

The following is a list of the real and substantial issues of fact and law in dispute between the parties in this matter. 

Highest and best use

  1.  The parties agree that office, with basement parking and ground floor retail, is the highest and best use of the subject land. There is a dispute about the extent of that use.

What are the relevant sales?

  1.  The Valuation Joint Expert Report (Exhibit 7) includes a table on page 51 which identifies the sales relied upon by Mr Crawford, the appellant’s valuer and Mr Pinder, the respondent’s valuer.

6.  Mr Crawford relies on the commercial sales of 55 Elizabeth Street and 62 Mary Street. Mr Pinder does not rely on either of those sales. Mr Pinder relies on the student accommodation sales of 38 Wharf Street and 97 Elizabeth Street, the residential sales of 30 Albert Street, 240 Margaret Street and 443 Queen Street and 366-380 Queen Street. Mr Crawford does not rely on any of the sales relied upon by Mr Pinder.

7.  There is a dispute between the parties as to the sales to be applied, their utility and as to the manner of their application.

What is the proper analysis of the relevant sales?

62 Mary Street

8. 62 Mary Street is a sale relied upon by Mr Crawford. The parties agree that the rate per square metre for the sale of 62 Mary Street is $9,718 /m2.

55 Elizabeth Street

9. 55 Elizabeth Street is a sale relied upon by Mr Crawford.

  1.   Mr Crawford's analysis of the sale commences at page 116 of Exhibit. 7. Mr Pinder’s analysis of the sale commences at page 119 of Exhibit 7. In respect of the analysis of the sale, the issues are:

a. the adjustment to be made, if any, for the added value of any development approvals. The Appellant says that an adjustment of $983,201.00 should be made. The Respondent says that no adjustment should be made; and

b. the adjustment to be made for infrastructure charges, having regard to the period for which they ought to be deferred. The Appellant says that this period should be 18 months, resulting in an adjustment of $564,567.00. The Respondent says that this period should be six months, resulting in an adjustment of $612,428.00.

38 Wharf Street

11. Mr Pinder relies on the sale of 38 Wharf Street.

  1.  The issues in respect of the proper analysis of 38 Wharf Street are set out in the Updated List of Issues for the 38 Wharf Street appeal.

97 Elizabeth Street

13. Mr Pinder relies on the sale of 97 Elizabeth Street.

14. The issues in respect of the proper analysis of 97 Elizabeth Street are set out in the Updated List of Issues for the 38 Wharf Street appeal.

30 Albert Street

15. Mr Pinder relies on the sale of 30 Albert Street.

16. The analysed value of 30 Albert Street is agreed between the parties at $17,563/m2.

240 Margaret Street

17. Mr Pinder relies on the sale of 240 Margaret Street.

18. The analysed value of 240 Margaret Street is agreed between the parties at $17,293 /m2.

 

443 Queen Street

19. Mr Pinder relies on the sale of 443 Queen Street.

20. The issues in respect of the proper analysis of 443 Queen Street are set out in the Updated List of Issues for the 32 Macrossan Street appeal.

366-380 Queen Street

21. Mr Pinder relies on the sales comprising 366-380 Queen Street. The extent of that reliance, and the extent to which the Respondent is entitled to rely on the sale in view of the JER, is a matter of dispute.

22. Mr Pinder’s analysis of the sale commences at page 142 of Exhibit 7.

23. Mr Crawford regarded the sale, in all of the circumstances, as unreliable and did not analyse the sale. The Appellant contends that the sale is unreliable.

The application of the sales

24. The parties are in dispute about the utility of the sale of 55 Elizabeth Street.

Mr Crawford examined the commercial office market between the date of the sale and the valuation date and concluded, based upon his analysis, that the market had been. and was such. that reliance could be placed upon the sale. Mr Pinder did not conduct a like examination of the commercial office market. Mr Pinder disagreed that the sale could be relied upon.

25. The parties therefore disagree about the utility of the sale of 55 Elizabeth Street.

26. The manner in which Mr Crawford applied the sale of 55 Elizabeth Street to the Queen Street Site is at page 152 of Exhibit 7.

27. The other sale applied by Mr Crawford was 62 Mary Street, a commercial sale. The parties are agreed that the analysed rate for the 62 Mary Street sale is $9,718/m2. Mr Pinder did not use the sale.

28. The manner in which Mr Crawford applied the sale of 62 Mary Street to the Queen Street Site is at page 151 of Exhibit 7.

29. The parties are in disagreement about the utility of the 62 Mary Street sale.

  1.  The parties are in disagreement about the utility of the 366-380 Queen Street sale.
  1.  The valuers adopt different approaches when applying the sales to the value of the Queen Street Site at the valuation date. Mr Crawford adopted an approach of identifying the adjustments made for each of the sales. Mr Pinder’s approach was more descriptive. There is an issue as to whether Mr Pinder’s approach adequately identifies his process of comparison between the sales and the Queen Street Site.
  1.  The sales upon which Mr Pinder relies are set out above. The parties are in dispute as to whether the sales are suitable for the purposes of comparison to the Queen Street Site and also as to the process of comparison adopted by Mr Pinder.
  1. [18]

El Camino Priority I Pty Ltd (LVA064-18)

v

Valuer-General

 

The parties agree that the following facts or matters are not in dispute and therefore proof of them is not required.

 

  1. The real property description; land area (including gross lettable area and plot ratio); easements, encumbrances and interests; nature of the land, location and adjacent roads; surrounding development, in relation to 38 Wharf Street, Brisbane (Wharf Street Site) as at 1 October 2016 (LVA064-18).
  2. The decision on objection for the Wharf Street Site is incorrect. The appeal should be allowed and the Court should proceed to determine the correct value of the subject land.
  3. The best evidence of value is the 2015 sale of the Wharf Street Site (Subject Sale).
  4. The analysed value of:
    1. Sale 3, 30 Albert Street, Brisbane is $17,563/m2.
    2. Sale 4, 240 Margaret Street, Brisbane is $17,293/m2.
    3. Sale 5, 466 Ann Street, Brisbane is $7,595/m2.
    4. Sale 12, 13-17 Manning Street, South Brisbane is $6,849/m2.
  5. The sales other than the Subject Sale are only of secondary importance.

 

Highest and best use

 

  1. The parties agree that the highest and best use of the Wharf Street Site is its current use.

The following is a list of the real and substantial issues of fact and law in dispute between the parties in this matter.

What is the proper analysis of the relevant sales?

38 Wharf Street

  1. The parties are in dispute as to what adjustment, if any, should be made in respect of:
    1. infrastructure concessions. The Appellant says that an adjustment of $1,674,320.00 (deferred by 27 months to result in a figure of $1,599,102.00) is required. The Respondent says that no adjustment is required; and
    2. the delayed settlement. The Appellant says that an adjustment of $157,448.00 is required, on account of the delayed settlement of 136 days. The Respondent says that there should be no adjustment.

97 Elizabeth Street

  1. The parties are in dispute as to what adjustment, if any, should be made in respect of:
    1. infrastructure concessions. The Appellant says that an adjustment of $4,048,960.00 is required, deferred by three years to result in a figure of $3,950,018.00. The Respondent says that there should be no adjustment; and
    2. the value of the infrastructure credits to be applied. Mr Crawford allowed the retail infrastructure credit at a rate of $180.00/m2. Mr Pinder allowed the retail infrastructure credits at a rate of $140.00/m2.

Other sales

  1. The sales of 38 Wharf Street and 97 Elizabeth Street are sales for the purposes of student accommodation.
  2. The parties agree on the analyses of the sales in paragraph 3 hereof, to which one or other, or both, of the valuers make reference in the table on page 51 of the Joint Valuation Report (Exhibit 7).
  3. Of the other sales to which reference is made:
    1. The issues in dispute about 443 Queen Street are set out in the 32 Macrossan Street Updated List of Issues;
    2. It is unnecessary to resolve the issues between the parties as to the proper analysis of 62 Ann Street in order to determine this appeal;
    3. The issues in dispute about 421 Brunswick Street are set out in the 32 Macrossan Street Updated List of Issues;
    4. It is unnecessary to resolve the issues between the parties as to the proper analysis of 13-17 Manning Street in order to determine this appeal, and in any event, its analysed value has been agreed upon;
    5. There is a dispute as to whether the sale of 366-380 Queen Street is reliable evidence of value for any of the subject properties.

The application of the sales

  1. The valuers adopt different approaches when applying the sales to the value of the Wharf Street Site at the valuation date. Mr Crawford adopted an approach of identifying the adjustments made for each of the sales. Mr Pinder’s approach was more descriptive. There is an issue as to whether Mr Pinder’s approach adequately identifies his process of comparison between the sales and the Wharf Street Site.
  2. In respect of the application of the sale of the Wharf Street Site, there is an issue between the parties as to what adjustment, if any, is required for market movement/delay in development. Further, the Appellant does not accept the process of reasoning followed by Mr Pinder at pages 168 and 169 of Exhibit 7.
  3. In respect of the application of 97 Elizabeth Street to the Wharf Street Site, the valuers disagree about the adjustments made by Mr Crawford and identified on page 160 and about the process of reasoning adopted by Mr Pinder commencing at page 169 of Exhibit 7.
  4. The valuers have applied a number of other sales to the Wharf Street Site. The parties disagree about the method by which the valuers have applied the other sales, and the reasoning of the valuers will be the subject of submissions going to the persuasiveness of their approaches and evidence generally.
  5. However, for the purposes of determining this appeal, the parties agree that the most useful sale is the Subject Sale and that the value of the Wharf Street Site can be ascertained by the proper analysis of that sale and its proper application to the subject on the valuation date, seen in the context of the other sales.
  6. The parties agree that of those other sales, the sale of 97 Elizabeth Street, being a sale for the purposes of student accommodation, is of better utility than the remaining sales.
  1. [19]

Body Corporate for 'Admiralty Quays' CTS 24592

v

Valuer-General

 

The parties agree that the following facts or matters are not in dispute and therefore proof of them is not required.

  1. The real property description; land area; easements, encumbrances and interests; nature of the land, location and adjacent roads; surrounding development, in relation to 32 Macrossan Street, Brisbane (Macrossan Street Site) as at 1 October 2016 (LVA069-18) and as at 1 October 2015 (LVA066-18).
  2. The decisions on objection for the Macrossan Street Site are incorrect and the appeals should be allowed. The Court should proceed to determine the correct value of the Macrossan Street Site on each of the valuation dates.
  3. The analysed value of:
    1. Sale 3, 30 Albert Street, Brisbane is $17,563/m2.
    2. Sale 4, 240 Margaret Street, Brisbane is $17,293/m2.
    3. Sale 5, 466 Ann Street, Brisbane is $7,595/m2.
    4. Sale 8, 62 Mary Street, Brisbane is $9,718/m2.
    5. Sale 12, 13-17 Manning Street, South Brisbane is $6,849/m2.
  4. The valuers agree that the sale of 443 Queen Street, Brisbane is the most relevant sale for the purpose of assessing the site value of the Macrossan Street Site. The valuers do not agree about the proper analysis of the sale of 443 Queen Street, Brisbane.

The following is a list of the real and substantial issues of fact and law in dispute between the parties in this matter.

What was the highest and best use of the Macrossan Street Site on 1 October 2015 and 1 October 2016?

  1. The parties agree that residential high rise is the nature of the highest and best use but do not agree about the extent of that use. The Appellant contends that the existing use is the highest and best use. The Respondent contends that the highest and best use is something more extensive.
  2. To the extent that the potential use of the land will affect its value, the Court will need to determine the advice which the hypothetical purchaser would have received on the valuation dates concerning the extent of development which would be permitted. This will involve the consideration of risk, to varying degrees depending on the intensity of the development contemplated, and the effect of that risk on the value of the land.
  3. The issue of highest and best use will involve the Court considering the differences in opinion between the parties' town planning experts, Messrs Buckley and Ovenden.

What is the relevant sales evidence?

  1. The Valuation Joint Expert Report (Exhibit 7) includes a table on page 51 which identifies the sales relied upon by Mr Crawford and Mr Pinder.
  2. The valuers agree that the sale of 443 Queen Street, Brisbane is by far the most relevant sale.
  3. Mr Crawford found support for his valuation of the Macrossan Street Site in the sale of 421 Brunswick Street, although he gave evidence that its relative importance was far less than 443 Queen Street. Mr Pinder did not rely on the sale of 421 Brunswick Street.
  4. On page 51 of Exhibit 7 the valuers have each identified additional sales which they consider to be of some relevance.
  5. The Appellant's position is that while the sales of 38 Wharf Street, 97 Elizabeth Street, 30 Albert Street, 466 Ann Street, 62 Ann Street and 13-17 Manning Street provide context to the values adopted by Mr Crawford, their relative importance is far outweighed by the sale of 443 Queen Street. The Appellant contends that the sales of 240 Margaret Street and 366-380 Queen Street are not relevant to the assessment of the value of the Macrossan Street Site.
  6. The Respondent agrees that the primary sale is 443 Queen Street and the other sales are only of secondary importance.
  7. There is a dispute between the parties as to the sales which are of relevance to the Macrossan Street Site on each of the valuation dates, although that dispute involves sales of lesser importance. There is agreement between the parties that the proper application of the sale of 443 Queen Street to the Macrossan Street Site, viewed in the context of the other sales, should effectively determine the outcome of the appeals in respect of each valuation date.

What is the proper analysis of the relevant sales?

443 Queen Street

  1. In respect of the 443 Queen Street sale, the parties are in dispute as to the adjustment (if any) to be made in respect of:
    1. the added value (if any) of the structural improvements (i.e. retained works); and
    2. demolition costs in relation to the building existing on the site at the date of the sale. The Appellant says that an adjustment of $1,381,800.00 is required. The Respondent says that an adjustment of $1,568,000.00 is required.

421 Brunswick Street

  1. Mr Crawford considered the sale of 421 Brunswick Street to be relevant and his analysis of the sale commences at page 120 of Exhibit 7. Mr Pinder did not analyse the sale. The Respondent has not accepted the analysis of Mr Crawford and consequently the parties are in dispute as to whether Mr Crawford’s analysis of the sale of 421 Brunswick Street is correct.

Other sales

  1. In view of the above, it is not necessary to determine the disputes about the particular analyses of the other sales of potential relevance.
  2. It will be noted that the Appellant and the Respondent have agreed on the values of the other residential sales:
    1. 30 Albert Street, at $17,563/m2;
    2. 240 Margaret Street, at $17,293/m2; and
    3. 13-17 Manning Street, at $6,849/m2.

How should the sales be applied?

Should any adjustment be made for market movement?

  1. There is a dispute between the parties as to whether, in respect of the valuation of the Macrossan Street Site on 1 October 2016 (although not on 1 October 2015), the sales should be adjusted in their application to the Macrossan Street Site by reason of movement in the residential high rise market.

The application of the sales otherwise

  1. There is a dispute as to the proper application of the sales.
  2. The valuers adopt different approaches when applying the sales to the value of the Macrossan Street Site at the valuation dates. Mr Crawford adopted an approach of identifying the adjustments made for each of the sales. Mr Pinder’s approach was more descriptive.
  3. There is an issue between the parties as to whether Mr Pinder’s approach adequately or correctly identifies the process of application of the sales to the Macrossan Street Site.
  4. There is an issue between the parties as to the manner in which Mr Crawford has applied the sales, by reference to Mr Crawford’s identified adjustments from each of the sales to the Macrossan Street Site.
  5. The parties considered attempting to list here all of the issues the subject of disagreement as to the application of the sales. The exercise became cumbersome and uninformative. The parties have, subject to the direction the Court, proceeded on the basis that those matters are better dealt with in submissions.
  1. [20]
    Schedule of the valuers’ sales as analysed:

 

Sale No.

Address

Sale Date

Sale Price

Land Area

Mr Crawford

Mr Pinder

1

38 Wharf Street, Brisbane City

28.04.2015

$14,000,000

911

$13,520/m2

$15,348/m2

2

97 Elizabeth Street, Brisbane City

20.07.2015

$28,000,000

1,810

$13,853/m2

$15,800/m2

3

30 Albert Street, Brisbane City

03.07.2014

$35,000,000

2,007

$17,563/m2

 

Now agreed

$17,563/m2

4

240 Margaret Street, Brisbane City

31.07.2014

$30,000,000

1,715

$17,293/m2

 

Now agreed

$17,293/m2

5

466 Ann Street, Brisbane City

01.06.2015

$3,700,000

486

$7,595/m2

 

Now agreed

$7,595/m2

6

443 Queen Street, Brisbane City

17.07.2014

$49,000,000

2,183

$18,782/m213

$22,820/m2

7

62 Ann Street Brisbane City

24.12.2015

$63,000,000

5,478/

2,731

$7,287/m2

$9,886/m2

8

62 Mary Street, Brisbane City

12.06.2014

$7,640,000

761

$9,718/m2

 

Now agreed

$9,718/m2

9

55 Elizabeth Street, Brisbane City

28.02.2011

$24,000,000

1,998

$10,591/m2

$11,060/m2

10

421

Brunswick Street, Fortitude Valley

23.12.2015

$35,050,000

4,497

$6,338/m2

NA

12

13-17

Manning Street, South Brisbane

24.05.2017

$13,000,000

1,890

$6,849/m2

 

Now agreed

$6,849/m2

13

366-380

Queen Street, Brisbane City

26.05.2017

& 02.06.2017

$53,750,000

2,152

NA

$24,164/m2

  1. [21]
    In the cases of the sales where, in the course of the hearing, the parties reached agreement on the analysed rate per m2, there is no need to consider that aspect further. The sale which has been numbered 11 is no longer relied upon by the appellant and does not need to be considered. Sales 10 and 13 were only analysed by one valuer so there is no competing analysis of them. Sales 1, 2, 6, 7 and 9 are the subject of disagreement and will be considered seriatim.

 

Sale 1

  1. [22]
    It is agreed that the best evidence of the value of 38 Wharf Street (LVA064-18) as at 1 October 2016 is the sale of that property on 20 April 2015. The sale of the subject has obvious advantages as it need not be compared to some other land but the presence of improvements provides scope for differences of opinion when analysing the sale back to a rate per m2.
  1. [23]
    This sale settled on 11 September 2015.[9] After the contract was entered into, a development application was lodged for a 41-storey student accommodation building.[10] On 22 October 2015 approval for that impact-assessable development was given.[11] This current use of the land is agreed to be the highest and best use.[12]
  1. [24]
    The valuers disagreed about the need to make an allowance for concessions on infrastructure charges in relation to the development with high-rise student accommodation, which is what occurred. They also disagreed about the need to make an allowance for the period between contract and settlement.

The infrastructure concessions

  1. [25]
    Queensland Urban Utilities and the Brisbane City Council were, at the relevant time, offering some concessions.
  1. [26]
    Mr Crawford and Mr Pinder agreed on the allowance for infrastructure credits. That was $132,660. It is in respect of the concessions where they disagree. Mr Crawford arrived at a figure of $1,674,320.[13]
  1. [27]
    The figure was adjusted using the weighted bond rate to account for the benefit being available on completion of the development. This produced a figure of $1,599,102.[14]
  1. [28]
    Mr Pinder did not contend for a different figure.[15] The dispute was whether the amount should be deducted or not.
  1. [29]
    Both valuers agreed that the concessions were an incentive to develop student accommodation and were valuable to the purchaser.[16] Mr Pinder disagreed that it should be extracted from the purchase price.[17]
  1. [30]
    Mr Pinder provided reasons for not making this allowance.[18] He was not willing to accept that the purchaser’s financial model[19] is able to be treated as a calculation of the purchase price. Also, in his opinion, a purchaser would not pay for the full value of the concessions when they could not be certain that their plans would be able to be realised. He was additionally of the view that a purchaser who intended to claim the concessions would only need to pay $1 more than any purchaser intending another use.[20]
  1. [31]
    The purchaser did consider the infrastructure concessions.[21] It was considered in the context of the purchase. Mr Pinder did not propose any reduced allowance; he did not allow anything for the concession. He agreed that his conceptualisation would need to change if there were more than one competing purchaser for student accommodation purposes.[22] Mr Pinder’s rationale was invalidated by his concession that there was strong interest in this property by developers of student accommodation.[23]
  1. [32]
    Mr Pinder’s view that there should not be any allowance for a concession, as the vender doesn’t have it to sell, is not persuasive. The availability of the concession was known and there was a competitive market for this site. The concession was a factor or, in the words of Isaacs J in Spencer v The Commonwealth, a circumstance that would affect its value, advantageously.[24]
  1. [33]
    The Court accepts that it would be correct to make this allowance, as Mr Crawford did.

 

The allowance for the settlement period

  1. [34]
    Mr Pinder saw the settlement period, 136 days, as not requiring adjustment as the contract was one on reasonable terms and conditions. Section 17(1) of the Act describes the expected realisation of land in a way consistent with Spencer v The Commonwealth.[25] In effect, it is considered as if it was a cash transaction on the date of valuation. If, as occurred here, settlement was delayed for a significant period, it would be correct to make an adjustment for that, as Mr Crawford did.
  1. [35]
    The Court accepts Mr Crawford’s analysis of Sale 1.

Sale 2

  1. [36]
    Located at 97 Elizabeth Street, this property was bought by the same purchaser as Sale 1, also for student accommodation. This 1810m2 block sold on 20 July 2015. On 11 December 2015 the purchaser applied for development approval for a 27-storey student-accommodation building. This was approved on 29 March 2016.[26]
  1. [37]
    The essential differences between the valuers in respect of this sale were, like the last sale, infrastructure charge concessions and, consequently, the calculation of the allowance as it relates to area and time. Exhibit 40 also contained the purchaser’s calculations in respect of this transaction.
  1. [38]
    Mr Crawford’s analysis proceeded on the basis that the purchaser allowed $4,200,000 for infrastructure costs.[27] Making an adjustment to allow for 3 years passing, before the concession could be realised,[28] resulted in an allowance of $3,950,018.[29]
  1. [39]
    Mr Crawford notes that the resulting analysed site value of $25,074,296 compares to the site value applied by the Valuer-General as at 1 October 2015. That site value was $24,000,000. He points out that the analysis he has made sits comfortably with that.[30] This is simply an observation and not part of his valuation, and the Court does not rely on it for present purposes; nor does Mr Crawford.
  1. [40]
    The considerations for the Court in relation to this sale are the same as those for Sale 1, and the Court resolves them in the same way.
  1. [41]
    The Court accepts Mr Crawford’s analysis of Sale 2.

Sale 6

  1. [42]
    Located at 443 Queen Street, this site has river frontage. It is north of Customs House and around 220 metres from the 32 Macrossan Street, “Admiralty Quays” land.[31] It has about a 66 m frontage to Queen Street and, being on the river, views across to Kangaroo Point, the Story Bridge and along the river.[32]
  1. [43]
    After the purchase, the purchaser applied for approval to develop the site with a 47-storey residential tower with 355m2 of retail space.[33]
  1. [44]
    The primary disagreements between the valuers in respect of their analysis of this sale were the allowances for existing structural elements that were retained from previous development and re-used in the new development, and demolition costs. These disagreements caused the rate per m2 to differ by around $4,000 between the valuers’ estimates.
  1. [45]
    The extent of demolition of the previous improvements is shown in Ex 25. The purchaser retained the existing works used for basement car parking and, most importantly, holding back the Brisbane River, a task of fundamental importance to developing this site and one likely to be costly. The existing works were already doing this, something which a prudent purchaser would be cognisant of.
  1. [46]
    The appellant contended that the value of the retained works should be allowed for, while the respondent disagreed. Mr Crawford had a discussion with the purchaser which confirmed that the basement construction works already on the site were retained. Mr Pinder was under the impression that this had not occurred. The Court accepts the evidence of Mr Crawford as it was based on a conversation with the purchaser. Mr Crawford allowed $7.05 million for this, being the cost of a new structure to fulfil the same purpose. The purchaser had stated that keeping the structures in fact retained was always intended by them.[34] It is obvious that the structures had value to the purchaser.
  1. [47]
    The question is not the cost of those structures but what value they represent to a prudent purchaser. Mr Crawford allowed for the full estimated cost of a new structure.[35] Mr Pinder adopted the figure used by Mr Crawford, $7,050,000 in his calculations.[36]
  1. [48]
    From his starting figure, Mr Crawford made allowances to adjust the cost to the date of purchase and for some of the existing construction that was in fact demolished. He also made adjustments for preliminaries and profit.
  1. [49]
    When Mr Pinder was asked about his 50% allowance for depreciation of the existing structural works, the following exchange is recorded in the transcript:

“MR TRAVES:   Where did you get this depreciation rate from? 

 

MR PINDER:   It’s very subjective, as I said.

 

MR TRAVES:   It’s a complete guess.

 

MR PINDER:   It’s a best guess, yes.”[37]

 

  1. [50]
    Mr Crawford was of the view that the structure was still fully serviceable and just as good as it was when it was built.[38] He noted that “it was deemed to be suitable for the new building that was built on top of it.”[39]
  1. [51]
    Mr Pinder allowed 50% depreciation;[40] Mr Crawford has given reasons for his treatment of this aspect of the site value. Mr Pinder has made a large allowance based on the age and smaller size of the previous building, which implicitly involves the age of the retained works, as well as the works necessary “to get around it.”[41] It is not explained why 50% would be the correct allowance, save that it was “a best guess.”[42]
  1. [52]
    While there were reasons given for not making a determination in respect of the age and utility of the structural works, there was no basis shown for arriving at a depreciation rate of 50%. That being so, the Court is left with no evidence on the estimated life of the structures in relation to the new building beyond what Mr Crawford said or any extra costs of working them into the new scheme.[43] There is not a sufficient basis for the Court to either accept Mr Pinder’s evidence or to arrive at some other figure for depreciation if there were to be such an allowance.
  1. [53]
    The Court must accept the best evidence on this point, that provided by Mr Crawford.
  1. [54]
    Mr Crawford allowed for time saved in construction by the use of the existing structural works. Mr Pinder was of the view that there was no time saving.[44] Mr Pinder relied on a series of photographs, Ex 36, to show progress with the works over time. Properly understood, the photographs show the time it took to do what is depicted on their respective dates. They do not assist in determining that there was no time saving due to retaining the existing structures actually retained. Mr Crawford did not accept that the photographs were of assistance here.[45]
  1. [55]
    The allowance for the cost of demolition of the existing improvements was different between the valuers. Mr Pinder allowed $1,568,000[46] and Mr Crawford $1,381,800.[47]
  1. [56]
    The difference in allowance is due to the differing opinions in regard to what would be demolished. The basement levels were retained, as without them, the “sea wall” keeping the river back would have collapsed.[48] As has already been discussed, complete demolition of the existing structure was not what a prudent purchaser would contemplate.
  1. [57]
    The Court must accept Mr Crawford’s analysis of the demolition costs. His analysis of the sale is accordingly accepted.

 

 

Sale 7

  1. [58]
    The valuers proceeded differently in analysing this sale of 62 Ann Street. The land has an 8-storey office building fronting Ann Street and was, effectively, unused on the portion facing Turbot Street.
  1. [59]
    Mr Pinder analysed the whole site; Mr Crawford only analysed the Turbot Street portion.[49] On the Ann Street frontage stood the Primary Industries Department building. Facing Turbot Street is an older structure with heritage protection.
  1. [60]
    Mr Pinder was satisfied that the site was not purchased with an intention to redevelop it immediately but rather after the existing State Government tenancy ended.[50] Mr Crawford proceeded on the basis that, as the building was leased when purchased, it should be treated as an investment property on the Ann Street side and a development site in relation to the portion fronting Turbot Street.
  1. [61]
    Mr Crawford was of the view that the decision to demolish the existing building only crystallised when a tenancy of 40,000m2 by Suncorp in a new building was secured.[51]
  1. [62]
    On 23 November 2016 there was a pre-lodgement meeting at which the purchaser discussed developing student accommodation on the Turbot Street frontage. Minutes of the meeting indicate that the Ann Street building was intended to continue to operate until the student accommodation was built.[52]
  1. [63]
    The evidence better reflects the conclusion adopted by Mr Crawford that the decision to redevelop the entire site was only made once the opportunity to lease a large floor-plate office building to Suncorp presented to make it viable.
  1. [64]
    Accordingly, the approach adopted by Mr Crawford is to be preferred in analysing this sale; the Court accepts his analysis.

Sale 9

  1. [65]
    The appellant relies on this sale, at 55 Elizabeth Street, the respondent does not.[53]
  1. [66]
    The valuers are in disagreement about what, if any, value the improvements add to the site and the time period over which infrastructure charges should be adjusted.
  1. [67]
    Mr Crawford allowed $983,201 for the added value of development approvals.[54] Mr Pinder did not consider this aspect. He conceded that it would be an error not to consider the added value of development approvals.[55] Mr Pinder did not use this sale as a primary comparison due to its age.[56] The sale occurred on 28 February 2011.
  1. [68]
    Mr Crawford’s evidence is not opposed by a contrary opinion in regard to the added value of development approvals. The Court accepts Mr Crawford’s evidence in relation to this.
  1. [69]
    Mr Crawford allowed for an 18-month deferral of the payment of infrastructure charges.[57] Mr Pinder used a 6-month period.[58]
  1. [70]
    Mr Crawford used the 18 months because the charges are not payable until practical completion of the development.[59] Mr Pinder’s view was that no adjustment was necessary as he believed that the sale was on “reasonable terms.”[60]
  1. [71]
    The Court is inclined to the view that it would be preferable to accept the approach used by Mr Crawford as it reflects the actual sale more accurately than does reliance on it being within a range of parameters which might be characterised as “reasonable.”[61]
  1. [72]
    The Court accepts Mr Crawford’s analysis of this sale.

Sale 10

  1. [73]
    Only Mr Crawford relied on this sale. Mr Pinder did not analyse it. Mr Crawford considered two possible scenarios, that it was bought for immediate, or deferred, development. In the meantime, it could continue to be used as a shopping centre.[62]
  1. [74]
    Mr Crawford’s analysis of this sale is not opposed by a competing analysis so the Court accepts it for present purposes.

Sale 13

  1. [75]
    Mr Crawford rejected this sale on the basis that there was a premium paid for it.[63] Three adjoining properties were sold by three vendors. The sales occurred after the date of valuation and were off-market.
  1. [76]
    Mr Pinder’s analysis is not opposed by a competing analysis so the Court accepts it.
  1. [77]
    There was evidence that the sale was influenced by the purchaser’s perception that it would allow it to produce a development which it could lease to Suncorp which would be likely to take 40,000m2 of floor space.[64]
  1. [78]
    Mr Crawford did not place any reliance on this sale and Mr Pinder only used it as a check on his valuation made on the basis of other sales. It does not figure prominently in the valuation process, so it will not be useful to consider it in the context of actually making a valuation as distinct from referring to it only as a check on a valuation already made.

Another sale

  1. [79]
    Mr Pinder raised the sale of 28 Elizabeth Street at the completion of the valuers’ joint expert report.[65] He did not rely on this sale[66] so it is not necessary to consider it.

307 Queen Street – lot 34 on RP146754 – area 1672m2 with frontage to Creek Street, Edison Lane and Queen Street.

  1. [80]
    The first task of the valuer is to determine the highest and best use of the land.[67] It is then valued on the basis of that use. Mr Crawford was of the view that the existing state of development, two basement levels, ground level and 25 levels of office space above, was the highest and best use.[68]
  1. [81]
    The site area limits the potential development to what is known as a B-grade building.[69]
  1. [82]
    Mr Pinder had a different view. While he agreed that the highest and best use was for an office building, in line with the present use,[70] he was of the view that there was no reason why a development could not push for an impact-assessable level of development, for instance making use of transferable site areas (TSAs) to support such a development.[71]
  1. [83]
    The Court asked Mr Pinder to define TSAs:

 

“ISDALE M:   Mr Pinder, just for the record, can you define TSA, so it goes on the transcript.

 

MR PINDER:   Yes.  The transferrable (sic) site area.  So you’re basically buying the right to develop some area of land from, typically, heritage property, that you can then apply to your own, to allow a greater level of development.”[72]

  1. [84]
    Mr Pinder was of the opinion that this site, which had, in the view of Mr Crawford, a highest and best use for a B-grade building,[73] would have potential for a more valuable use as the location for an A-grade building. The definitions of these categories need not be considered beyond noting that use for an A-grade building as part of the potential of the land would increase its value.[74]
  1. [85]
    Mr Pinder said that the market for commercial office development was not buoyant as at 1 October 2016.[75] He also said that the value of the land had the potential to go up and down, depending on the availability of TSAs[76]
  1. [86]
    In relation to whether they were something that forms part of the market, he said:

 

“MR PINDER:   I don’t think TSA is normally something that’s put to the market.  You generally go out and see who has got spare.”[77]

 

  1. [87]
    He did not think that the Valuer-General needed to assess the availability of TSAs on the market.[78]
  1. [88]
    Mr Pinder’s view that the highest and best use of the land could include potential for acquiring TSAs and using that to attempt to develop and A-grade building, while TSAs are not normally part of the market, and not shown to have been in the case of this sale, is not sustainable. The Court is unable to accept this opinion as it is based on an assumption not shown to be justified. To accept it would be to value this site on a basis not shown to be a proper reflection of the market. Mr Crawford’s evidence should be accepted on this point as it is not weakened by this assumption.
  1. [89]
    The valuers disagreed about the market conditions. Mr Pinder did not disagree with the facts collected by Mr Crawford;[79] they showed very high vacancy rates and low absorption rates around the valuation date.[80] From a vendor’s point of view, the commercial-office leasing market was worsening between 2011 and 2016.[81]
  1. [90]
    Mr Pinder referred to the increase in capital values in support of his opinion,[82] but he did not rely on that for his valuation.[83] Mr Crawford had pointed out that the graph of this said nothing about occupancy of the buildings and that the value increases if there are tenants.[84]
  1. [91]
    The Court accepts the market movement calculations of Mr Crawford. Based on the same data initially, Mr Pinder sees the market conditions differently due to data made unhelpful since capital appreciation is documented without any disclosed consideration of the occupancy of the buildings referred to in order to derive the graph in exhibit 7 [194].
  1. [92]
    To value this site, Mr Pinder used sales where the highest and best uses were different to this site. The sale of 366, 370 and 380 Queen Street was used in only a secondary way, as a check method. In view of what the Court is about to say regarding Mr Pinder’s valuation approach, it is unnecessary to consider this sale.
  1. [93]
    Mr Pinder’s approach was to treat the sales he used as comparable on the basis that they, and the subject site, were all development sites, effectively achieving commonality. This allowed them to be directly applied without any adjustment to reflect any differing highest and best use. This approach disregards the availability of a relevant particular, the disclosed highest and best use as revealed by the individual consideration of each sale. The approach used by Mr Crawford is to be preferred as in accordance with principle. He has considered the highest and best use with particularity and done so where such particularity is able to be achieved on the evidence. Mr Pinder’s approach fails to adhere to the fundamental requirement to first identify the highest and best use. He also proceeded inconsistently with principle when he theorised that development potential could include TSAs when there was no demonstrated market presence of them.

Conclusion on valuation of 307 Queen Street

  1. [94]
    The failure to first find the highest and best use of the land, to the extent which the evidence allows, invalidates Mr Pinder’s valuation as everything else depends on this starting point. For this reason, the Court is unable to accept Mr Pinder’s valuation and prefers the valuation method and conclusions of Mr Crawford as the most reliable evidence before it and the evidence on which it should make the required findings.
  1. [95]
    Although unnecessary to do so in view of the finding just made, Mr Crawford’s valuation will be considered in order to ensure that the Court can safely rely on it to be the source of the correct, rather than simply another, valuation.
  1. [96]
    The valuers found agreement that the rate of $9,718m2 was correct for the 62 Mary Street sale. Mr Crawford made allowances for location, town planning, size, better than code development and for a heritage restriction.[85] Although a sale to an adjoining owner, Mr Pinder agreed that it could still be used.[86]
  1. [97]
    The other sale used by Mr Crawford to value this site was at 55 Elizabeth Street. It was sold for a commercial high-rise building. The sale is somewhat dated, having taken place on 28 February 2011. This requires careful consideration to be sure that it is a useful comparison sale. Mr Crawford allowed for the location, above code level of development and its’ heritage status.[87] Mr Pinder did not say that the market had moved upwards between this sale and the valuation date.[88]
  1. [98]
    Mr Crawford’s valuation is made in accord with principle and explains how it was arrived at. The Court accepts it.
  1. [99]
    The site value of 307 Queen Street at 1 October 2016 is $22,000,000.

38 Wharf Street – Lot 11 on B118227 – area 911m2

  1. [100]
    In the case of this site, the valuers agreed that the highest and best use was for student accommodation in line with the present development.[89] Considering that the market was then in an oversupply situation, Mr Crawford allowed for the development to be held back for 4 years.[90] Mr Pinder accepted that there was possibly an oversupply situation[91] but would not say that there was a very high level of supply.[92] He said that it may well be that the hypothetical purchaser may not develop the site immediately.[93]
  1. [101]
    Mr Pinder said that a 4-year period between purchase and development would not be out of the ordinary.[94]
  1. [102]
    Mr Crawford investigated the student accommodation market in forming his opinion. Mr Pinder did not independently assess the market,[95] which he thought unnecessary.[96]
  1. [103]
    There is no competing analysis of the student accommodation market and no reason has been shown to not accept Mr Crawford’s assessment in this matter. The Court accepts Mr Crawford’s views on the student accommodation market conditions.
  1. [104]
    The best sale was agreed to be the 2015 sale of the subject property.[97] Mr Crawford allowed for his estimate of 4 years before the market could absorb more student accommodation.[98] Mr Pinder was of the view that there was no need to make any adjustment for this.[99] He did not address this specifically in his report, however.[100] This will be further considered below.

Infrastructure concessions

  1. [105]
    The appellant contends that the infrastructure concessions should not be considered to add value as they do not form part of the fee simple and are an intangible that the prudent purchaser would not be confident of being able to realise.
  1. [106]
    The concessions cannot form part of the fee simple as there are qualifications setting out what must be done to receive them; owning the fee simple is not enough. The concessions will, however, be attractive to a purchaser.
  1. [107]
    Mr Crawford and Mr Pinder agreed that a purchaser would have 274 days in which to obtain development approval.[101] Mr Crawford was of the view that the time period was too short for a purchaser to pay for the benefit of the concessions as there would be too great a risk that they would not be able to be claimed.[102] Mr Pinder thought there would be sufficient time to get a development approval.[103]
  1. [108]
    If the concessions were not available, the purchaser would have paid less.
  1. [109]
    It was suggested on behalf of the respondent that section 22 of the Act which, for present purposes, allows it to be assumed that the existing use of the land may be continued, ought to be considered to have the result that there was no need for the purchaser to have any doubts about obtaining development approval. Such an assumption would result in a saving of considerable time, 274 days in this case.
  1. [110]
    Mr Crawford’s calculations, from which he concluded that a purchaser would not pay for the benefit of infrastructure concessions because there was insufficient time to realise them, depended on his understanding that construction had to commence by 30 June 2017.[104] This was incorrect. The relevant condition was that development approval had to take effect between 1 July 2014 and 30 June 2017.[105] The Court accepts that the better view is that the approval would take effect when granted and accepts Mr Pinder’s view that 274 days (9 months) was sufficient for this.
  1. [111]
    The result is that, at the valuation date, a prudent purchaser would have regard to the availability of these concessions. Mr Crawford accepted this.[106]
  1. [112]
    This finding makes it unnecessary to consider the disagreement between the parties concerning the application and interpretation of Section 22 of the Act. The factual situation that has been found to exist resolves the matter of the correct valuation approach to this site. It remains to resolve the difference between the valuers concerning the state of the market for student accommodation development sites, plus how to allow for the availability of infrastructure concessions.
  1. [113]
    Mr Crawford’s view of the extent of saturation of this market was formed in light of the number of beds in developments in this market. These are set out in a table. It is noteworthy that the table includes the development on this site, with its 753 beds. For present purposes, this is assumed to be a site, not a large development, so this large number of beds should not have been included in this consideration. Mr Crawford explained that his opinion was not affected by this inclusion in the table.[107] The Court accepts his evidence.
  1. [114]
    It is necessary to make an allowance for the availability of the infrastructure concessions. Mr Pinder explained in Ex 7 at page 196 [957] that, in determining the value of 38 Wharf Street, the allowance “would need to be added back on.” The Court accepts this opinion. The allowance is to be found at page 57 [239] of Ex 7 and is $1,674,320.
  1. [115]
    Accordingly, the correct site value of 38 Wharf Street at 1 October 2016 will be reached by increasing the value of $10,100,000 arrived at by Mr Crawford by $1,674,320. The site value is therefore $11,774,320.

32 Macrossan Street – Lots 1-173 on BUP 106738 and common property of the Admiralty Quays Community Title Scheme 24592 – area 2,651m2 with frontage to Macrossan Street and the Riverwalk on the Brisbane River

  1. [116]
    There are appeals in relation to the 1 October 2015 and 1 October 2016 valuation dates for this site. The Court proceeds in view of the orders made in Exhibit 1, section 170 of the Act, and the manner in which the parties conducted the appeals.
  1. [117]
    Mr Crawford was of the opinion that the values of this site were $30,600,000 for the 2015 date and $26,000,000 for the 2016 valuation date. Mr Pinder valued the site at $47,700,000 for both years.
  1. [118]
    The highest and best use of this site was in dispute. The appellants contend that it is the use as at the dates of the valuations, while the respondent’s case is that a higher level of development would be realistic.
  1. [119]
    There was a difference of opinion between the town planners who gave evidence, Mr Buckley, on behalf of the appellants, and Mr Ovenden, for the respondent.
  1. [120]
    In such a case:

“It is not the function of this Court to decide the planning outcome on a hypothetical case. In assessing the site value, the Court must consider the level of uncertainty about the possible planning outcome and determine the likely impact of that uncertainty on the mind of the hypothetical prudent purchaser.” (citations omitted)[108]

  1. [121]
    Mr Ovenden, in the town planning experts’ joint report, was of the view that there were strong prospects of obtaining a development outcome greater than the code limit of eight stories above a podium.[109]
  1. [122]
    The planners were aware of a sewerage easement in favour of the Brisbane City Council that burdens the land.
  1. [123]
    The valuers were aware that under Section 22 of the Act, they must assume that the site may continue to be used for its existing use, and the improvements on it may be continued or made to allow the use to continue.
  1. [124]
    The existing development comprises seven levels of parking and storage. The foyer includes parking space, and there is a further level of parking above the foyer. There are then 31 levels of accommodation above that.[110]
  1. [125]
    Mr Buckley was taken to task as he had raised for the first time when giving oral evidence, his opinion that development above the current height had no chance of gaining approval.[111] This view is not found in his contributions to the joint report and, therefore, was not provided to either of the valuers.
  1. [126]
    Although irregular and productive of inconvenience and certainly not to be encouraged, this did not result in an adjournment of the hearing. The respondent rightly criticises the occurrence of this late introduction of significant evidence, inconsistent with the report that Mr Buckley co-authored.
  1. [127]
    Mr Ovenden was of the view that there was no evident reason why a development of unlimited height, subject to site cover and the aircraft limitation height, could not be achieved on this site.[112]
  1. [128]
    The decision of the Court of Appeal in Bell v Brisbane City Council was the subject of argument and submissions.[113]
  1. [129]
    Decided well after the dates of valuation, this decision is not helpful for present purposes, even if it represents confirmation of what was known at the valuation dates. The reason for this is that given by the learned President and quoted above at [120], this Court must determine the level of uncertainty in the mind of the hypothetical purchaser.
  1. [130]
    The strongly contrasting town planning advice would cause a prudent purchaser to lack confidence in the advice that, effectively, the sky is the limit, and to be most concerned that it might be that the current height is the realistic limit of what could be achieved, consonant with the level of risk attributable to a prudent purchaser rather than a rash one.
  1. [131]
    The Court accepts that, accordingly, the correct valuation approach is that adopted by Mr Crawford and that Mr Pinder’s approach, based on an incorrect assessment of the highest and best use of the site, must be rejected.
  1. [132]
    The Court therefore accepts the 2015 valuation arrived at by Mr Crawford for this site. At 1 October 2015, the 32 Macrossan Street site was valued at $30,600,000. At 1 October 2016, it was valued at $26,000,000 by Mr Crawford. This requires further consideration.
  1. [133]
    The determination of the highest and best use with the greatest accuracy possible is the critical starting point for the valuation. The resolution of this has shown that Mr Crawford’s approach was soundly based and that it would not be open to the Court to accept the approach put forward on behalf of the respondent. The error in the valuation approach occurred at the outset and affects everything that occurs after it.[114] The evidence allows for an examination of the basis for the reduction in value at 1 October 2016, so that will be considered to test the validity of Mr Crawford’s conclusion which required the reduced value in that year.
  1. [134]
    Mr Pinder treated all of these central business district sites as development sites, an extremely broad category, so he did not need to look at market movement for residential sites.
  1. [135]
    Only Mr Crawford undertook a market analysis. Although his conclusion of the number of units in the market was blemished, but not invalidated by including the 753 beds in the 38 Wharf Street project, as has been discussed, there is no useful contrary evidence.
  1. [136]
    Mr Crawford’s evidence was that there was an increase in supply in this market and a drop in demand.[115] Considering all the factors then operating, he said that the market dried up through 2016 and, by the fourth quarter, had “gone.”[116]
  1. [137]
    Mr Crawford made an allowance of 1.5% per month for the market movement.[117] His evidence was that this was a conservative allowance.[118] This was 18% over the one year from 1 October 2015 to 1 October 2016.[119]
  1. [138]
    The basis for Mr Crawford’s 18% reduction was broad and fully disclosed, as well as not being contradicted by a competing body of evidence. The error which has been referred to is not shown to be such as would invalidate the conclusion drawn on the broad basis relied on. The Court accepts Mr Crawford’s opinion in relation to the market movement between 1 October 2015 and 1 October 2016.
  1. [139]
    Accordingly, the Court finds that the value of the 32 Macrossan Street site on 1 October 2016 is the figure arrived at by Mr Crawford, $26,000,000.

Concerning the evidence

  1. [140]
    The Court has dealt with the evidence put before it in its final form. As has already been referred to, a change to the town planning evidence might have, but fortunately did not, result in a delay due to the need to adjourn the hearing. It would be far preferable if expert witnesses could arrive at their opinions in time for them to be incorporated into the process of readying a case for trial. The valuers prepare their joint report on the basis of the reports of the experts on whose opinion they depend for the purpose of arriving at their opinions.
  1. [141]
    The Court has not disadvantaged the litigants before it due to difficulties caused by their witnesses.
  1. [142]
    The evidence of the valuers was of critical importance in these appeals, of course.
  1. [143]
    It became apparent early in the evidence of the valuers that there were many errors in the spread sheet, exhibit 20. The Court drew attention to the errors which appeared to be significant as it observed them.[120] They were corrected. This occurred repeatedly in the valuation evidence.
  1. [144]
    Exhibit 7, the valuers’ joint expert report, contained a large number of errors, over 280,[121] that the parties, urged by the Court, corrected.
  1. [145]
    The errors in this critical report made it capable of being understood in ways not intended by the parties. One example will suffice. In exhibit 7 on page 16 [54] “…would simple ignore…” was corrected to “…would not simply ignore…”.
  1. [146]
    The parties were represented by solicitors, counsel and Queen’s counsel. The Court raised the presence of obvious errors. Many are not obvious. The Court made it clear that it would need to rely on the report and how desirable it would be if the errors were all corrected. It has accepted that they have been corrected and the appeals have been decided on the basis of the evidence which the parties have chosen to rely upon.
  1. [147]
    While it is surprising that the legal teams on both sides did not have the errors corrected before the hearing, or apparently notice them, primary responsibility must however rest with the authors for the accuracy of their report.
  1. [148]
    The report is a joint one, so the Court is able to reasonably expect that both authors have read all of the report, not just their contributions.
  1. [149]
    Carefully reading the report before submitting it would have saved the Court time, which is provided at public expense.
  1. [150]
    As Member Scott said:

“Clerical errors are common companions in intellectual pursuits. The number and type of errors and omissions to which I have referred went, however, beyond the acceptable in my view: to a point where the level of intellectual rigor that was applied in the preparation of the documents became a matter of concern to me.”[122]

  1. [151]
    Experts preparing a joint expert report in conclave may nonetheless have someone read it to help them to find any errors.

 

Orders

  1. Appeal LVA017-18 is allowed.

 

  1. The valuation of 307 Queen Street, Brisbane, Lot 34 on RP 146754 as at 1 October 2016 is Twenty-Two Million Dollars ($22,000,000).

 

  1. Appeal LVA064-18 is allowed.

 

  1. The valuation of 38 Wharf Street, Brisbane, Lot 11 on B118227 at 1 October 2016 is Eleven Million, Seven Hundred and Seventy-Four Thousand, Three Hundred and Twenty Dollars ($11,774,320).

 

  1. Appeal LVA066-18 is allowed.

 

  1. The valuation of 32 Macrossan Street, Brisbane, Lots 1-173 on BUP 106738 and common property of the Admiralty Quays Community Title Scheme 24592 at 1 October 2015 is Thirty Million, Six Hundred Thousand Dollars ($30,600,000).

 

  1. Appeal LVA069-18 is allowed.

 

  1. The valuation of 32 Macrossan Street, Brisbane, Lots 1-173 on BUP 106738 and common property of the Admiralty Quays Community Title Scheme 24592 at 1 October 2016 is Twenty-Six Million Dollars ($26,000,000).

 

 

 

 

Footnotes

[1]  [2018] QLAC 7 [50].

[2]  Land Valuation Act 2010 (Qld) s 170(b)

[3]  Land Valuation Act 2010 (Qld) s 7 – s 25.

[4]  (1907) 5 CLR 418, 432.

[5]  Ibid, 441.

[6]  (1992-93) 14 QLCR 327, 328-9.

[7]  (1981-82) 8 QLCR 70, 76.

[8]  Macarthur Central Shopping Centre Pty Ltd as TTE v Valuer-General (No. 2) (2016) QLCR 443, 446-447.

[9]  Ex 7 [231].

[10]  Ex7 [233], [234] [247], Ex 20.

[11]  Ex 7 [247], Ex 20.

[12]  Ex 7 [55], [58].

[13]  T 8-14 line 27.

[14]  T8-15 lines 5 to 9.

[15]  T8-49 lines 1 to 5, T8-49 lines 21 to 26.

[16]  T8-54 lines 7 to 16, T8-54 lines 34 to 42.

[17]  T8-54 lines 18 to 21.

[18]  Ex 7 p 189 [925] – [931].

[19]  Ex 40.

[20]  T8-23 lines 24 to 34.

[21]  Ex 40, Ex 7 p 58 [240]-[242].

[22]  T8-23 lines 16 to 40.

[23]  T8-23 line 42 to T8-24 line 21.

[24]  (1907) 5 CLR 418, 441.

[25]  (1907) 5 CLR 418.

[26]  Ex 7 p 65 [247]-[277].

[27]  Ex 7 p 62 [265].

[28]  Ex 7 p 62 [264].

[29]  Ex 7 p 64 [271].

[30]  Ex 7 p 64 [272].

[31]  T 7-6 line 42 to T7-7 line 4.

[32]  Ex 7 p 88 [376]-[379].

[33]  Ex 7 p93 [393].

[34]  Ex 7 p 87 [373].

[35]  Ex 7 [368].

[36]  Ex 35.

[37]  T 6-21 lines 7 to 13

[38]  T 6-22 lines 20 to 31.

[39]  T 6-22 lines 35 to 36.

[40]  Ex 35.

[41]  T 6-21 lines 15 to 26.

[42]  T 6-21 line 13.

[43]  T 6-21 lines 20 to 26.

[44]  T 6-70 lines 25 to 26.

[45]  T6-72 lines 41 to T 6-73 line 4.

[46]  Ex 7 p 97 [419].

[47]  Ex 34.

[48]  Ex 24.

[49]  Ex 7 p 98 [421]; p 102 [440].

[50]  Ex 7 p 105 [456],[460].

[51]  Ex 7 p102 [444].

[52]  Ex 7 p 98 [422]; p 99 [423][424][425].

[53]  Ex 7 p 51 [229].

[54]  Ex 7 p 118 [529].

[55]  T 9-70 lines 26 to 33.

[56]  T 9-70 lines 21 to 28.

[57]  Ex 7 p 118 [529].

[58]  Ex 7 p 119 [534].

[59]  Ex 7 p 117 [525].

[60]  Ex 7 p 119 [536].

[61]  T 4-61 lines 32 to 45.

[62]  T 4-61 lines 32 to 45.

[63]  Ex 7 p 141 [646]

[64]  T7-52 lines 16 to 20.

[65]  Ex 7 p 148 [693].

[66]  T 2-17 lines 14 to 25.

[67]  Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410, 415 per Jacobs J.

[68]  Ex 7 p 16 [50].

[69]  Ex 7 p 16 [49].

[70]  Ex 7 p 16 [53].

[71]  Ex 7 p 16 [54].

[72]  T8-126 lines 1 to 6.

[73]  T 8-124 lines 5 to 10.

[74]  A building with a 1,000m2 floor plate area is a requirement for “A” grade T 8-128 lines 18 to 22.

[75]  T 8-130 lines 26 to 29.

[76]  T 8 -127 lines 1 to 5.

[77]  T 8-126 lines 31 to 32.

[78]  T 8-127 lines 19 to 24.

[79]  T 9-21 lines 21 to 25.

[80]  T9-21 lines 33 to 40.

[81]  T 9-22 lines 30 to 35.

[82]  Ex 7 p 43-44 [194].

[83]  T9-29 lines 43 to 44.

[84]  T9-29 lines 11 to 15.

[85]  Ex 7 151 [711].

[86]  T 9-59 line 12.

[87]  Ex 7 p 152 [718].

[88]  T9-25 line 9 to 42; T9-22 line 40 to T9-23 line 5.

[89]  Ex 7 p 17 [55], [58].

[90]  Ex 7 p 34 [128].

[91]  T7-102 line 5.

[92]  T7-101 line 35.

[93]  Ex 7 p 41 [181].

[94]  T7-103 lines 36 to 37.

[95]  T7 -108 lines 28 to 32.

[96]  T7-108 lines 40 to 43.

[97]  T7-108 lines 8 to 14; Ex 7 p 159 [768]; Ex 7 p 168 [804].

[98]  T 7-112 lines 1 to 4.

[99]  Ex 7 p 169 [812].

[100]  Ex 7 p 34 [126]; T7-109 lines 12 to 34.

[101]  T 8-57 lines 19 to 41.

[102]  T8-57 lines 19 to 20.

[103]  T8-56 line 36.

[104]  T8-57 lines 43 to 46.

[105]  Agreed Court Bundle – Tab 25; T8-60 lines 43 to T8-61 line 30.

[106]  T8-73 lines 46 to 47.

[107]  Ex 7 p 32 [119]; T7-82 lines 12 to 36.

[108]  Brisbane Square Pty Ltd v Valuer-General (2016) 37 QLCR 385, 398 [92].

[109]  Ex 6 p 20 [89].

[110]  Ex 7 p 17 [63].

[111]  T1-45 lines 26 to 35.

[112]  Ex 6 p 21 [90].

[113]  [2018] QCA 84.

[114]  Heatham Pty Ltd as TTE v Valuer-General [2017] QLC 26 [65].

[115]  T 7-21 line 42 to T 7-22 line 3; T 7-23 lines 13 to 14.

[116]  T 2-51 lines 40-47; Ex 7 p 26 [101].

[117]  T 3-33 lines 43-46.

[118]  T 4-14 lines 28-29.

[119]  T 4-14 lines 36 to 40.

[120]  For example, see T5-33 line 36 to T5-35 line 14.

[121]  Ex 50.

[122]  WM George Pty Ltd as Trustee for WM George Trust and Ors v Chief Executive, Department of Natural Resources [2000] QLC 31 [12].

Close

Editorial Notes

  • Published Case Name:

    The Trust Company Limited v Valuer-General; El Camino Priority I Pty Ltd v Valuer-General; Body Corporate for “Admiralty Quays” CTS 24592 v Valuer-General

  • Shortened Case Name:

    The Trust Company Limited v Valuer-General; El Camino Priority I Pty Ltd v Valuer-General; Body Corporate for “Admiralty Quays” CTS 24592 v Valuer-General

  • MNC:

    [2020] QLC 38

  • Court:

    QLC

  • Judge(s):

    WA Isdale

  • Date:

    13 Nov 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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