Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QLC
  3. 2017
  4. Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2) - [2017] QLC 46

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2)[2017] QLC 46

Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2)[2017] QLC 46

LAND COURT OF QUEENSLAND

CITATION:

Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2) [2017] QLC 46

PARTIES:

Suncorp Metway Insurance Pty Limited

(appellant)

 

v

 

Valuer-General 

(respondent)

FILE NO/s:

LVA586-15

DIVISION:

General Division

PROCEEDING:

Appeal against valuation under the Land Valuation Act 2010

DELIVERED ON:

25 August 2017

DELIVERED AT:

Brisbane

HEARD ON:

18, 19, 20, 24, 26, 27 April 2017

Submissions closed 16 June 2017

HEARD AT:

Brisbane

MEMBER:

WA Isdale

ORDER/S:

  1. The appeal is allowed.
  2. The site value of Lot 2 on SP 140773, County of Stanley, Parish of Brisbane is determined in the amount of Thirteen Million One Hundred and Eighty Thousand Dollars ($13,180,000) as at date of valuation 1 October 2014.

CATCHWORDS:

REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – WHERE APPELLANT OBJECTS TO VALUATION – where highest and best use of the land is in dispute – where the site value is the basis of valuation – where there are significant constraints on the development potential of the land

Land Valuation Act 2010 (Qld) s 105(1), s 155, s 170

Property Law Act 1974 s 179

Australian Postal Commission v Melbourne City Council [2005] VSCA 295

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

Liat Nominees Pty Ltd v Chief Executive, Department of Lands (1996-1997) 16 QLCR 687

Wiki v Atlantis Relocations Pty Ltd [2004] NSWCA 174

APPEARANCES:

RJ Anderson QC (instructed by Otto Martiens Lawyers) for the appellant

DB Fraser QC and TW Quinn of Counsel (instructed by In-house Legal, Department of Natural Resources and Mines) for the respondent

  1. [1]
    This is an appeal under the Land Valuation Act 2010 (“the Act”) against the respondent’s valuation of the site upon which there are improvements operated as the Sofitel Hotel. It is located on Turbot Street and is above the Brisbane Central Railway Station.
  1. [2]
    When the dispute reached the Court, the respondent contended for a valuation of $34,500,000. The appellant argued that the site had no value or a nominal value, such as $1, or a site value of $13,180,000 if a certain development was possible as the highest and the best use of the site.

The appeal

  1. [3]
    The notice of appeal was filed on 14 December 2015. The particulars of the land which is the subject of the appeal was stated to be Property ID 1284749 which was described as Lot 2 on SP 140773, County of Stanley, Parish of Brisbane. The area was stated to be 7,432 m2. The address was listed as 249 Turbot Street, Brisbane. The respondent’s site valuation was shown as $39,500,000. The appellant’s estimate of the site valuation was $1. The date of valuation was 1October 2014.[1]
  1. [4]
    The appeal followed a decision on objection dated 18 November 2015. It stated that the “valuation was carried out correctly” and the valuation of $39,500,000 remained unaltered.[2]
  1. [5]
    The objection had been to the maintenance valuation made by the respondent. Notice of that had been given by a maintenance valuation notice.[3] This valuation may be used for local government rating and for state land tax.[4]
  1. [6]
    The maintenance valuation notice and the decision on objection both show the parish as North Brisbane and the word “subleased” appears as part of the real property description.
  1. [7]
    The Act provides, by section 105(1) that an owner may object to a valuation of the owner’s land.
  1. [8]
    Section 155 states that an objector may appeal to the Court against the decision made on the objection.[5]
  1. [9]
    The owner of Lot 2 is Queensland Rail. The definition of “owner” in the Act allows the appellant, as lessee, to be considered to be the owner for the purposes of the Act.[6]

What is to be valued?

  1. [10]
    The Act, by section 5, provides that the respondent “must decide the value of land” as provided for under the Act. In the case of non-rural land, the value will be its site value.[7]
  1. [11]
    In deciding the value of land, the respondent must take it to be granted in fee simple.[8]
  1. [12]
    In the schedule to the Act, land is defined as follows:
  1. (a)
    For a provision-
  1. (i)
    About a valuation or valuation notice – means the land the subject of the valuation or notice; or
  1. (ii)
    About an objection or valuation appeal – means the land subject of the valuation; and
  1. (b)
    May comprise-
  1. (i)
    1 or more lots or parcels; or
  1. (ii)
    A combination of lots and parcels.
  1. [13]
    The land that is the subject of the respondent’s valuation is Lot 2 on SP 140773.
  1. [14]
    According to the statement of Mr Meldon,[9] the valuation rolls[10] showed, at the time the valuation appealed against was made, the details of Property ID 1284749.[11] This shows information that had not changed since 2005 and had become inaccurate. He has now updated the record.[12] It now accords with the valuation that was made in that it refers to Lot 2 of SP 140773 with an area of 7,432 m2. It is described as “subleased.”
  1. [15]
    The appellant contends that this appeal is about Lot 2, a volumetric lot with a footprint of 7,432 m2. It has lower boundaries at the level described as Reduced Level (“RL”) 18.81 and RL23.69 and an upper boundary at RL118.81. These are elevations in meters. It became clear in the evidence that the volumetric lot was created to enclose the building already existing. It now operates as the Sofitel Hotel and sits within the volumetric lot which is over Central Railway Station.
  1. [16]
    What was being valued was not in dispute at the time of the valuation joint expert report dated 27 February 2017. Valuers Mr Grant Jackson for the appellant and Mr Benjamin Hart for the respondent confirmed that the subject land was “volumetric lot 2 on Survey Plan 140773 Brisbane City”.[13] They agreed that the lot was subject to numerous leases, sub-leases and easements.[14]
  1. [17]
    On 4 April 2017 the respondent’s solicitor sent a letter to the appellant’s solicitor. It became Exhibit 14. It is not disputed that the letter was pursuant to chapter 4, part 3, which provides for amending valuations in response to an appeal. It reduced the valuation to $34,500,000.
  1. [18]
    A reading of part 3, which is sections 160 to 163 of the Act, clarifies that it is about amending “the valuation to the valuation sought”[15] or amending it “other than to the valuation sought”[16]. The meaning of part 3 is clear from its terms. The valuation may be amended. The valuation is the monetary amount. Part 3 does not provide any mechanism to change what is being valued.  That is something able to be done in accordance with chapter 2, division 2, commencing with section 84. There is no suggestion that such a step was taken in this case. The letter explained the consequences of accepting or not accepting the amendment of the valuation. Those were the consequences set out in section 163.
  1. [19]
    The letter referred to Property ID 1284749 and the valuation date of 1 October 2014 although it used the date 1 October 2015 as well, apparently simply in error. It also referred to the property in question as “the land the subject of leases numbered J1195, J11952 and 7070674408.”[17] Apparently J1195 should have been J11951. This was also clearly an error and nothing turns on it; what was intended is obvious to all.
  1. [20]
    Although it was urged on behalf of the respondent that section 163, by referring to the land the subject of the leases, had the effect of defining what was valued and therefore the subject of the appeal, the Court cannot accept that the procedure utilised was capable of doing any more than altering the monetary amount of the valuation. What the respondent had valued remained unchanged.
  1. [21]
    The Court, the respondent submits, has jurisdiction under section 170(b) “to correctly make the valuation under this act.”[18] In order to understand this provision it is necessary to read all of it. Section 170 provides that:

The Land Court may-

  1. (a)
    Confirm the valuation appealed against; or
  1. (b)
    Reduce or increase the valuation to the amount it considers necessary to correctly make the valuation under this Act.             
  1. [22]
    The Court may vary the amount of the valuation to correct it. The court may not insert some new content into what was valued.
  1. [23]
    The respondent has not changed what was the subject of the valuation appealed against, and the Court may not do so under section 170 of the Act. The appeal therefore concerns volumetric Lot 2 on SP 140773.
  1. [24]
    On day 4 of the hearing, 24 April 2017, the respondent sought leave to file an updated statement of facts, matters and contentions in reply. There was no objection and leave was given. The amended statement became Exhibit 24.
  1. [25]
    Exhibit 24, relevantly, is in the following form:
  1. In response to paragraph 1 of the appellant’s contentions, that the subject is “an irregularly shaped volumetric lot of 7,432m2 suspended above Central Railway station”, the Respondent contends or asserts that this is broadly, but no precisely, correct.
  1. Further details of the subject property will be provided in the joint meeting process and reports of the valuation witnesses in the appeal and, as to location appear from the plans of expert surveyors and other expert reports relating to the subject. A more precise description of the land, the subjects of this appeal (the “property” or “subject” or “subject property”), is that it is the land described in property ID 1284749 which comprehends:
  1. (a)
    Land within Lot 2 on Plan No SP140773 and Land which is contained in what is now described as Lot 6 SP140772 and Lot 11 SP165989, being the land on the three Lots detailed above which is the subject of the leases to the Appellant from Queensland Rail Ltd CAN 132181090 identified as J11951, J11952 and lease 707974408;
  1. (b)
    Lease J11951 and J11952 commenced in 1984 and lease 707974408 commenced in 1996. The metes and bounds descriptions of each of the leases is set out in the QVAS Property Details Report for Property ID1284749, printed on 13 April 2017 at 14:30:22, a true copy of which is annexed hereto and marked “MM1”;
  1. (c)
    The approximate area of the Property is 7684m2 more or less.
  1. [26]
    This change purports to add to what has been valued and which has, up until then, been the subject of the appeal. The Court is, however, already dealing with an appeal and it is not possible at this stage to change the land that was valued in respect of which the appeal was brought. This is not affected by the letter which has already been referred to, however, it is effective to shift the sum of money, the valuation, to $34,500,000. What was valued, now at this amount, is Lot 2 on SP 140773.

The property description of the subject of the appeal

  1. [27]
    For the reasons which have been given, this is Lot 2 on SP 140773.
  1. [28]
    The subject is improved with the Sofitel Hotel, a 30 storey, 433 bed, five star hotel. Built over Central Railway Station, it opened in 1984 as the Sheraton Hotel. It has a gross floor area (“GFA”) of about 34,000 m2 and two levels of car parking. The main access is from Turbot Street, a one-way street.
  1. [29]
    Section 19 of the Act states that the site value is its expected realisation under a bona fide sale assuming that all of the non-site improvements had not been made.[19] As everything within Lot 2 is a non-site improvement, the lot is considered as if it was empty. A diagram of what the base of the lot would look like is to be found in the evidence of the respondent’s engineer, Mr Gould.[20] The ragged shape left at the base of the volumetric lot is clearly seen in a three-dimensional drawing.[21]
  1. [30]
    The site is elevated and has its most favourable outlook over ANZAC Square towards the GPO. It is otherwise situated over a very busy railway station and among plain government buildings dating from the 1970s.

The highest and best use of the land

  1. [31]
    The appellant’s valuer, Mr Jackson, sees the highest and best use of the site as being for residential purposes.[22] The appellant emphasises the practical restrictions on Lot 2’s potential due to its location above the train station, as well as the impact of the railway on the amenity of the area.[23] The Queensland Government’s Guide for development in a railway environment describes the restrictions.[24] The Department of Transport and Main Roads is a concurrence agency in regard to any development application, and the cost of developing will be influenced by the need to ensure safety. The engineering experts agree that current requirements, should they apply, would require strengthening of the substructure or new deflection walls to protect against collision with a train. This may affect the movement of passengers onto and off the trains.[25] There would need to be negotiation with Queensland Rail.[26]
  1. [32]
    The Guide states that the cost of developing in, below or above a railway corridor may be prohibitive due to the need to ensure that a dangerous goods incident or a fire can be allowed for.[27] This is very general advice but is certainly relevant and points to the difficulties inherent in building over a major operational railway station through which many people commute.
  1. [33]
    The respondent’s valuer, Mr Hart, relies on section 22 of the Act. It is in the following form:

22 Assumptions for existing uses

  1. (1)
    This section does not apply for a Land Act rental valuation.
  1. (2)
    In deciding land's site value, the following must be assumed (the existing use assumptions)—
  1. (a)
    the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, (each an existing use) on the valuation day;
  1. (b)
    improvements may be continued or made to the land to allow it to continue to be used for any existing use.
  1. (3)
    To remove any doubt, the following are declared for the existing use assumptions—
  1. (a)
    they do not prevent regard being had under section 17 to any other purpose for which the land might be used;
  1. (b)
    in deciding the site value, new non-site improvements may be hypothesised instead of non-site improvements actually used for an existing use.
  1. [34]
    Mr Hart was of the opinion that the highest and best use of the land was the present use.[28] Section 22 of the Act requires the assumption that the land may be used for its present purposes, but does not include an assumption that it would be financially viable. However, Mr Hart did consider that a hotel development would be financially feasible, given the demand for four and five star hotels.[29]
  1. [35]
    The joint report of the town planning experts, Mr Perkins for the appellant and Mr Ovenden for the respondent, considered the subject, Lot 2 on SP 140773 with a footprint of 7,432 m2.[30]
  1. [36]
    These two town planners point out that the volumetric lots are used to define existing building arrangements and do not typically function as vacant development sites.[31] The freehold of the subject land is owned by Queensland Rail Limited, so its written consent would be required for any development application.[32] The subject land overlies another volumetric lot and a standard lot[33] and has the following relevant characteristics:
  1. (a)
    It sits above one of the State’s main operational train stations and associated rail lines;
  1. (b)
    It has a highly irregular shape (no doubt configured to encompass existing development but with a range of mismatches between lot boundaries and building work at its lower levels);
  1. (c)
    The foundations of the hotel building are outside the boundaries of the volumetric lot;
  1. (d)
    It sits above two other lots which occupy the same horizontal area;
  1. (e)
    It requires beneficial easements over other land to enable use and access of the land;
  1. (f)
    As well as having a site area limit it also has lower and upper level limits as a result of it being a volumetric lot.[34]
  1. [37]
    The subject land had been created to fit around the building which is already there, so the development potential is limited by that framework. This framework includes an upper height limit that is simply an artefact of whatever building was built there, and so is an artificial but binding limitation.
  1. [38]
    The subject is above a major railway station which operates at a very considerable pace. The safety of the construction process and the requirements for construction in that area will be major considerations. The supporting structure is outside of the land and under the control of Queensland Rail.
  1. [39]
    The engineers were not able to say what the design life of the existing construction would be. Design life is not the ultimate life but the time when the first major maintenance would be expected.[35] Typically, it is 50 years.[36] The building here was leased for 75 years.[37] It was clear that before rebuilding, careful assessments would be done of the existing foundations.[38]
  1. [40]
    Access to the supporting structure, for the purpose of assessing it and for any new construction, would require the permission of Queensland Rail in this very busy area where there is a great deal of train and pedestrian traffic, and where safety would be the uppermost consideration.

The easements

  1. [41]
    There are four easements. They were taken into account by Mr Hart on the basis that a prudent purchaser would be aware of them. Mr Jackson applied section 16 of the Act which says that the land is to be considered as fee simple, and section 17(2) which provides that the expected realisation is on the basis of the land being unencumbered by, inter alia, any lease.[39]
  1. [42]
    Perusal of the easements[40] shows that each of them is for the benefit of sublease no. J96022T, which is the lease the operators of the hotel have from the appellant. Each easement contains an identical clause, 2.2, which provides that it will be automatically determined upon the determination of sublease J96022T.
  1. [43]
    For present purposes, the subject land must therefore be considered without the existence of these easements. It is not correct for Mr Hart to take them into account.[41]

Rights to support

  1. [44]
    The view taken by Mr Hart was that lease J11951, in clauses 3.1(a) and (b), contains rights to support so that a purchaser would consider that Queensland Rail was obliged to maintain the structural integrity of the building support columns.[42] In view of the requirement in section 17 of the Act to consider the land unencumbered, the leases must be considered not to exist. They cannot therefore provide any benefit or comfort to the prudent purchaser.
  1. [45]
    Mr Hart considered that as there was a 75 year lease, the structure’s design life should be assumed to be sufficient to allow that. However, as the lease is assumed not to exist, no assumptions or comfort can be taken from it, just as no right of support relying on the lease is capable of being considered. Mr Hart also relies on section 22(3) of the Act in this regard.[43]
  1. [46]
    In considering this, it is useful to look at the whole of section 22, which has already been set out.
  1. [47]
    Section 22 refers only to improvements on the subject land. In the case of the improvements that Mr Hart is considering, they would be off the subject land so section 22 provides no assistance.

The Property Law Act 1974

  1. [48]
    The respondent also relies on section 179 of the Property Law Act 1974 in relation to an obligation not to withdraw support.[44] Mr Hart says that this obligation eliminates the risk in relation to this aspect of development on the subject land.[45]
  1. [49]
    Section 179 of the Property Law Act 1974 is in the following form:

179 Right to support of land and buildings

For the benefit of all interests in other land which may be adversely affected by any breach of this section, there shall be attached to any land an obligation not to do anything on or below it that will withdraw support from any other land or from any building, structure or erection that has been placed on or below it.

  1. [50]
    As the subject land is considered to be an empty volumetric lot, there is no structure upon it and nothing in respect of which there is an obligation not to withdraw support from. Section 179 is concerned with doing positive acts that would withdraw support. It does not provide any obligation to provide support for something which does not yet exist so would be of no comfort to a purchaser.
  1. [51]
    An area of 520 m2 is restricted in height and access as it is below the elevated Turbot Street. The valuers agree that this area is less valuable than the bulk of the subject.

The respondent’s valuation of the leases

  1. [52]
    As has already been discussed, this is simply something different to the land the subject of the appeal. Mr Hart said that the existence of the lease to the appellant “is the initiating feature which require (sic) the property to receive a valuation for rating and taxing purposes.”[46] This is simply not so. Lot 2 is what was the subject of the valuation by the respondent. The leases do not have a ceiling like the subject land has and are a different area in the aggregate. Mr Hart proceeded on the conservative basis that, even though he was proceeding on a basis that did not have a height limitation, no more than what had already been built should be assumed to be a potential development. This would rule out, for instance, some very tall building, beyond the thirty storey building already there. As has been considered, however, this thought process, undoubtedly adopted as a conservative approach, is not fitted to the task required by the Act in the case of the subject land. It is irrelevant and it is not necessary to consider it further. The appellant is allowed to appeal because of the Act’s definition of “owner” in the schedule. This does not permit a reverse form of reasoning which would consider what the appellant has in the form of the leases, and to proceed that way, in reverse, to conclude what has been valued. This is a fundamental error which is fatal to the respondent’s valuation. This is easily tested as it leads back to something different to what was claimed by the respondent to have been valued, Lot 2. It is unnecessary to consider the respondent’s submissions about leases being considered to be land because, as has been explained, they are not the subject of this appeal; Lot 2 is.

Mr Jackson’s evidence – impartiality

  1. [53]
    It was submitted that Mr Jackson did not meet the standard expected of an expert witness in that he was not an impartial and independent expert. He had signed the notice of objection to valuation[47] and, it was submitted, was argumentative, non-responsive, offensive, an advocate, and that he had prevaricated and cavilled in the witness box.[48]
  1. [54]
    A number of cases were referred to in which Mr Jackson’s evidence was found to have been flawed.[49] It was stressed that his evidence should be assessed “in the first instance” without reliance on those earlier findings.[50]
  1. [55]
    It was pointed out that in this case, the Court had twice admonished Mr Jackson. That is quite so. I pointed out to Mr Jackson that it was not correct to argue with Counsel.[51] The next day, I found it necessary to repeat those sentiments and to urge him, and Counsel, “to remain cool, calm and collected.”[52]
  1. [56]
    For the Court to find it necessary to twice admonish the witness in this way lends support to the complaint made. It is noteworthy that an experienced witness, when once warned, would so disregard how he might be perceived that he would let the same thing happen again the next day.
  1. [57]
    As I said to Mr Jackson, “you need to be careful not to engage Counsel in an argument … because the Court is relying on you as an independent expert …”[53]
  1. [58]
    It was quite clear that Mr Jackson was being argumentative. He was respectful towards the Court but, the respondent submits, the damage is done.
  1. [59]
    It was clear that there were limited diplomatic relations between the legal representatives for the respondent and Mr Jackson, as indicated by the reference to cases in which his evidence has been criticised.
  1. [60]
    In the case of this Court, Mr Jackson’s evidence will be considered solely on the basis of the evidence in this case. It does have the deficiency which the respondent points to. Whatever the content of tension between a witness and Counsel or those they represent, the Court relies on the witness to perform their duty. I am satisfied that Mr Jackson was argumentative and seemed surprisingly slow to abandon that approach, even though it is difficult to see how this could assist those who have engaged him. It is an expectation of a professional that they will be cooly focused, even if putting some matters “on ice” is necessary to achieve that.
  1. [61]
    What is the Court to do? It would be unfair to the appellant to, in effect, penalise it for a lack of professionalism on the part of the expert it has engaged. It would be a last resort, suitable for the most extreme case, to disregard the evidence of this witness. The evidence may fail to persuade, but this should be due to the characteristics of the evidence, not to the person delivering it.[54]
  1. [62]
    The Court will not simply reject Mr Jackson’s evidence due to the criticism which has been justifiably made of it by the respondent. The evidence will be considered on its merits.

Mr Jackson’s valuation

  1. [63]
    Mr Jackson considered in evidence that the highest and best use of the subject was for residential use.[55] In doing so, he in effect closes off the appellant’s submission that the site is so compromised and unappealing that its value would be nothing or $1 or some similar notional amount. Mr Jackson’s evidence does provide support for a development which, in his opinion, results in a site value of $13,180,000.
  1. [64]
    The notion that this development would be achievable comes from Mr Latham, the engineer called by the appellant.[56] He postulated a two-tower development as being achievable from a structural engineering perspective.[57] He explained these two towers in his report[58] and, I note, goes on to consider, curiously, a third tower.[59] The two towers option is a very conservative one and a value based on it would be likely to be at the lower end of the highest and best use where developable area is not utilised to its potential.
  1. [65]
    Mr Gould, the engineer called by the respondent,[60] was in general agreement with the engineering aspects of the potential for three towers.[61]
  1. [66]
    Mr Jackson applies a rate of $5,000 per m2 to the volumetric land used for the two-tower development and $1,000 per m2 to that part of the land that is under Turbot Street, which he calls “subterranean.”[62]  He sees this as the highest and best use of the volumetric lot.[63] He sees the unused area as having “limited if any development potential.”[64] He assessed land unused in the two-tower scenario as having no value.

The rates per m2

  1. [67]
    I have referred to the rate per m2 adopted by Mr Jackson. This is critical to arriving at the value which he proposes. In a case such as the present, where the respondent has chosen to present evidence, it is available to the Court to be considered alongside that presented by the appellant in ascertaining whether the evidence before the Court proves some part of the appellant’s case.

The area of the footprint to be developed

  1. [68]
    Mr Jackson considered three potential scenarios.[65] Firstly, there is the reconstruction of a complete new concourse deck. This should be discarded as the cost would be prohibitive.[66] Secondly, there is the reconstruction of the concourse deck to support a development like the one that is already there.[67] This was also discarded on account of the cost leading to a negative site value.[68] The third scenario was to reconstruct part of the concourse to build two residential towers.[69] This, Mr Jackson said, would be the approach of a prudent purchaser.[70] It indicates a site value of $13,180,000.
  1. [69]
    The evidence on this point from the appellant stands against the appellant’s submission, in connection with which the Court was referred to the decision in Australian Postal Commission v Melbourne City Council.[71] There, the Court of Appeal considered that the value was nil because the cost of restoration to its condition prior to a fire was much greater than it would be worth. This was a property with heritage protection and the resulting limitations on redevelopment. Although in this case the site is restricted by its location and access and the nature of the land, the appellant’s own expert contends for the value of $13,180,000 for its highest and best use. It is clearly not worth nothing or some nominal amount when the whole of the appellant’s own case is considered.

The sales considered

  1. [70]
    Mr Hart has valued the wrong thing so his report suffers from that rather fundamental limitation due to the error which occurred. That is not to say that it is without some usefulness. His consideration of sales will be relevant to the correctness or otherwise of the rate per m2 adopted by Mr Jackson.

304 George Street

  1. [71]
    This sale, in May 2013, was used by Mr Jackson. It was formerly the Supreme and District Courts building. Mr Hart analysed it but did not apply it in his gross floor area analysis. Mr Jackson adopted the rate per m2 used by this Court in respect of this sale in Brisbane Square Pty Ltd v Valuer-General.[72] The respondent challenges the usefulness of this figure, $7,793, which was a consequence of a concession for the Valuer-General in that case,[73] rather than having been concluded from a contest of evidence. Its usefulness must be viewed in the light of its origin. The appellant submits that there is no reason to believe that it was not reasonable to do this.[74] It is noted that, in that case, Mr Hart agreed that the figure which led to the rate per m2 was a sound assessment,[75] which provides some support for the usefulness of the figure, although in a somewhat roundabout way.
  1. [72]
    Mr Jackson and Mr Hart differ in respect of Mr Jackson allowing for the value of the existing excavation of part of the site and for holding costs allowed for by Mr Hart. The better view is that, as there was no evidence of a delay in development caused by the need for demolition, there is no need for an allowance for holding costs.[76]
  1. [73]
    Mr Hart analysed this sale to $8,174 per m2 of land area and $417 per m2 of GFA. Mr Jackson analysed the sale to $7,767 per m2 of land area[77] and adopted the Valuer-General’s assessment as at the date of valuation, 1 October 2014, which reflected a rate of $7,793 per m2.[78]
  1. [74]
    Mr Hart did not make any allowance for the excavation, which was the underground car park covering 46% of the site.[79] He said that it had no value.[80] It was, however, used in the redevelopment.[81] It is appropriate to allow for it, as Mr Jackson did.
  1. [75]
    The Court accepts Mr Jackson’s analysis of the rate per m2 in preference to the analysis of Mr Hart, since it has made proper allowance for the excavation and as there was no delay, the holding costs allowed for by Mr Hart were not required.[82]

Comparability to the subject

  1. [76]
    The location of this sale is superior to that of the subject.[83] With multiple street frontages, it offers river views. It has a development ratio potentially four to five times superior to the subject and the potential of development up to 82 storeys.[84] It has vehicular access to two streets.[85]
  1. [77]
    The sale will have high-rise residential apartments, a five star hotel, an office tower and retail uses.[86] This higher potential must be borne in mind when making comparison with the subject, to which it is substantially superior.

111 Mary Street

  1. [78]
    This was known as the “Vision” sale. Mr Jackson relied on the sale of the 5,478m2 of land in July 2010. It runs through to Margaret Street where it is 222 Margaret Street. It sold for $38,000,000 and Mr Jackson analysed it to $5,253 per m2.[87] The previous owner had excavated the site to a depth of 22 metres and it was supported by temporary rock anchors, the life of which was expiring. The cost of repairing them was estimated to be $1,500,000 and the actual cost when the work was subsequently done by the purchasers was around $780,000. Mr Jackson allowed $1,500,000 for the rock anchors and $10,000,000 for the excavation, the actual cost of which was $24,500,000.
  1. [79]
    The use of this sale was heavily criticised. Mr Jackson considered that the best evidence he had was the sale of 304 George Street.[88] He went on to state that the only other large sale within the Brisbane CBD was this one at 111 Mary Street[89] and that the remaining sales evidence had more limited comparability.[90] This sale is one by a liquidator so it needs to be carefully scrutinised. The evidence is that it was marketed in accordance with industry practice and that a range of offers was received, from below $20,000,000 to over $30,000,000.[91] The marketing advisors worked on the matter and arrived at “an unconditional contract on commercial terms with appropriate guarantees for $38,000,000.”[92] The rock anchors turned out not to be a “major factor.”[93]
  1. [80]
    The sale by the liquidators, who are duty bound to act properly, upon examination, appears to be a sale at a proper market value so is not unusable on that basis.
  1. [81]
    The very large adjustment of $10,000,000 for the excavation, which apparently cost $24,500,000,[94] is the subject of criticism. The respondent refers to the decision of this Court in Liat Nominees Pty Ltd v Chief Executive, Department of Lands.[95] There an attempt to adjust the sale by adding holding costs to allow for the earlier dates of sales and to adjust for the costs and risk of rezoning was not accepted. The learned President said “It is well established that a valuer must accept the actual sale price of a property which he intends to use as the basis for the valuation of another property.”[96]
  1. [82]
    The evidence did not satisfactorily establish a firm basis for valuing the excavation. In cross-examination, Mr Jackson said that a valuer for the purchaser told him that $10,000,000 would be a fair allowance.[97] Exhibit 35, an email that was related to this issue, is not helpful as it refers to the “value” of the excavation and shoring as in the order of $25,000,000. This seems to be more likely to be the cost.
  1. [83]
    Mr Jackson accepted that he had, in another case, expressed the view that it would be erroneous to value an excavation based on its cost without market evidence. Here he relied on what the purchaser’s valuer told him had been allocated by the purchaser and that this valuer thought it was reasonable.
  1. [84]
    In view of the very large sum involved and its significant proportion when compared to the sale price, great caution is indicated. The lack of market evidence and the very tenuous evidence obtained in what passed for an investigation of the sale leave the Court unconvinced that the analysis performed could be relied upon. Exhibit 35, produced so as to strengthen the appearance of the analysis, achieves only the opposite.
  1. [85]
    The Court is not satisfied that the basis upon which Mr Hart rejected the sale, that it was a forced sale, is made out. The Court does not accept this sale as a reliable guide due to the unsatisfactory evidentiary basis for the large adjustment made in the analysis performed. This shortcoming does not extend to the adjustment for the rock anchors for which there was market evidence of the actual cost of remediation.[98] The size of the adjustment involving the excavation, and the tenuous basis for it, is sufficient to deem the analysis unreliable for present purposes.

111 Mary Street - volumetric

  1. [86]
    Mr Hart relied on the sale of the volumetric lot in September 2014 for $49,000,000.[99] It has a footprint area of 4,802m2, much smaller than the subject. This sale has superior development potential and can be built to RL135 metres and have a GFA of 41,143m2. Mr Hart analyses it to a value of $26,200,000 and $637 per m2 on a GFA basis. He considers that the subject would be worth $1,000 per m2 GFA, which is so far above this sale as to raise questions about how it could be said to be comparable.
  1. [87]
    This sale was improved with an excavation which he estimated, from an industry cost guidance publication, would have cost, when fees and contingencies were included, around $20,000,000.[100] The valuation as at 1 October 2014 had been through an objection process and the respondent had then valued it at $25,500,000.[101] Mr Hart properly came to his own view, even though it differed from the figure that the respondent had agreed to in the objection process.
  1. [88]
    Mr Hart agreed, eventually, that this was his best sale.[102] He attributed close to half of the sale to the value of the improvements.[103] The cost of the improvements was taken from the Rawlinsons cost guide.[104] He estimated the cost of development approval and used the industry standard 20% allowance for profit, intending to “err on the conservative side” with contingencies and profit.[105] The relatively large adjustment in proportion to the sale price, and the slim research on which it was based, makes for an unconvincing analysis of the sale. The CBRE site value assessment is $24,685,800 and a rate of $600 per m2.[106] This is before the Court. While consistent with Mr Hart’s figures, it is impossible to derive real confidence from it because its authors were not called to support it.

Comparability with the subject

  1. [89]
    The comparability regarding the sale used by Mr Jackson and the volumetric sale used by Mr Hart, both at this address, can be considered together. Compared to the subject, there was underground car parking available and a higher development potential. The sale is in an area which is more pleasant than the gritty area around Central Station. The evidence is that building over the station will be difficult and subject to what can be agreed with Queensland Rail. If the, albeit weak, evidence for a $637 per m2 rate on the GFA basis is accepted for this sale, it is altogether impossible to use that as a convincing basis for $1,000 per m2 being applied to the subject. It was considered by Mr Hart to be “primary evidence.”[107] As Mr Hart notes, the supporting columns and foundations are on another property.[108] He is of the opinion that it would have “similar issues” in dealing with an adjoining owner in order to facilitate development.[109] This is not convincing, as the adjoining owner of the subject is Queensland Rail with its very particular requirements, and the large flow of people and trains through and around Central Station.
  1. [90]
    Mr Hart was of the view that the subject should have a “significantly higher” GFA due to its better quality GFA, superior location and surrounding development, wider frontage and exposure, superior access, and views due to its superior location.[110]
  1. [91]
    The idea of superior quality of GFA is tied to what Mr Hart valued and, in the circumstances, does not survive. The subject’s location is over the unprepossessing Central Station and the surrounding development is 1970s government buildings, the Council carpark and similar construction. The best feature of the location is its outlook over ANZAC Square. The road frontage is to the one-way Turbot Street. It is not convincing that it could be valued at $1,000 per m2 GFA on the basis of this sale; because of the great gap between the figures, which strains comparability to the point of failure, and the unconvincing basis for the $637 per m2 GFA being ascribed to this sale. The analysis of this volumetric sale is no more useful than Mr Jackson’s analysis of the sale of the land at the same address.

65 Mary Street

  1. [92]
    This 922 m2 parcel of land sold in February 2014 for $7,300,000.[111] Only Mr Hart relies on it. He analyses it to $756 per m2 GFA. It has a development potential of 9,938 m2 GFA. The sale was conditional upon the purchaser obtaining a development approval.[112]
  1. [93]
    The site was developed for student accommodation.[113]

Comparability to the subject

  1. [94]
    Situated in Mary Street, close to the botanical gardens and the river, the sale appears to be in a more attractive precinct than the subject. Using Mr Hart’s analysis of $756 per m2 GFA for the sale, he asserts that the subject is significantly better. This is unconvincing due to the subject’s inferior location in a dated cluster of government buildings and the council car park.

127 Charlotte Street

  1. [95]
    Mr Hart relied on this sale in May 2010 for $9,090,908. With a land area of 911 m2 it had a GFA of 8,839m2. His analysed land area rate was $9567 per m2 and the GFA rate of $986 per m2.[114] It was sold with a development approval for a 27-storey residential building.[115] After the sale, approval was obtained for a 26-storey hotel/apartment building with 142 apartments.[116]

Comparability to the subject

  1. [96]
    Mr Hart sees the location, surrounding development, exposure, access and views of the subject as requiring a higher value per m2 GFA than this site.
  1. [97]
    As has been discussed, the subject is in a rather ordinary area with the deficiencies that have been considered. If anything, this sale is in a superior location. This development, comprising apartments, is different from the five star hotel considered by Mr Hart, so comparability in terms of use is not good.

30 Albert Street

  1. [98]
    Sold in December 2013 for $18,750,000, with a land area of 2,007 m2, Mr Hart analysed this to a land area rate of $9,936 per m2.[117] Mr Hart did not use a rate per m2 comparison due to the unconfirmed amount and quality of GFA at the sale date.[118]

Comparability to the subject

  1. [99]
    Mr Hart again sees the subject as in a superior location, which is not convincing due to this sale’s proximity to the botanical gardens and the river.

105/111 Margaret Street

  1. [100]
    The sale at 105 Margaret Street was in July 2011. The sale at number 111 was in November 2012 and was purchased by the adjoining owner of number 105.[119] Mr Hart views both sales as one transaction and analyses the two sales as if they were one site.[120] Mr Hart does not use a rate per m2 comparison as the GFA was unknown but he uses a rate per m2of land area.[121]

Comparability to the subject

Mr Hart sees this location as inferior to that of the subject, which the Court is unable to accept in view of the sale’s proximity to the botanical gardens and the river. Treating these two sales as if they were one is difficult to accept, in view of the elapsed time between them, and brings with it the added difficulty of there being an adjoining purchaser who might be more motivated than the ordinary prudent purchaser.

168 Wharf Street

  1. [101]
    This sale, in March 2014 for $7,500,000, was of 1,244 m2 with a development potential of 7,596m2.[122] During the 6 month settlement period, the purchaser obtained approval for a 15 storey, four star hotel.[123]
  1. [102]
    Mr Hart allowed for the demolition of the existing buildings, which was the purchaser’s intent.[124]

Comparability to the subject

  1. [103]
    This sale was analysed to show a rate of $977 per m2. It is within a radial 200 metres of the subject with inferior views, frontage, and exposure. Mr Hart considers it to be primary evidence of the value of the subject.[125]
  1. [104]
    Mr Hart states that the rate per m2 GFA of the subject should be higher due to its better quality of GFA, superior location, and better exposure, views and access.[126]
  1. [105]
    This sale supports the rate per m2 that Mr Hart applied to the subject.

Conclusion

  1. [106]
    In the circumstances of this case, the Court must try to find the correct valuation on the whole of the evidence. The appellant bears the onus of establishing the grounds of appeal which, essentially, are that the respondent’s valuation is not supported by the evidence of sales and does not reflect the physical characteristics of the land and the constraints on its use. It was also part of the appellant’s case that the valuation was based on incorrect principles of law and involved errors of fact.
  1. [107]
    As has been discussed, the valuation evidence presented for the respondent valued the wrong thing. Therefore, it must be that it involves incorrect principles of law and significant errors of fact as what was valued by the respondent and the subject of the appeal was different to what was valued for the hearing. The appeal must accordingly be allowed.
  1. [108]
    Under section 170(b) of the Act, the Court may reduce or increase the valuation to the amount it considers necessary to correctly make the valuation under this Act.
  1. [109]
    This is by far the more difficult task. As has been discussed, the valuation will not be nothing or a nominal amount. Mr Jackson’s evidence is that it has a site value of $13,180,000.
  1. [110]
    The Court’s examination of the sales has led to the Court accepting Mr Jackson’s analysis of the rate per m2 of the 304 George Street sale. The use of the 111 Mary Street sales by both valuers failed to produce information of sufficient reliability.
  1. [111]
    The sale at 65 Mary Street was seen by the Court as not supportive of the use which Mr Hart made of it.
  1. [112]
    The 30 Albert Street sale was in a location which the Court is unable to accept as inferior to the subject.
  1. [113]
    The 105/111 Margaret Street “sale” is a confection of two sales, which the Court is not convinced can be safely treated as one.
  1. [114]
    The sale at 168 Wharf Street, is very close to the subject and supports a four star hotel development. Its analysed GFA rate per m2 is $977, supportive of the rate Mr Hart applied to the subject.
  1. [115]
    The evidence relied upon by Mr Jackson has, when tested, been seen by the Court to be weaker than it appeared to him. Looking at all of the evidence together, the Court is not persuaded that Mr Jackson’s site valuation has been shown to be usefully and safely capable of correction by the Court. None of the evidence, when Mr Hart’s evidence is also considered, is substantial enough to allow the Court to confidently substitute another figure for the site value. Accordingly, Mr Jackson’s evidence is the best evidence before the Court.
  1. [116]
    The Court will therefore reduce the site valuation of the land the subject of this appeal to $13,180,000.

Orders:

  1. The appeal is allowed.
  1. The site value of Lot 2 on SP 140773, County of Stanley, Parish of Brisbane is determined in the amount of Thirteen Million One Hundred and Eighty Thousand Dollars ($13,180,000) as at date of valuation 1 October 2014.

WA ISDALE

MEMBER OF THE LAND COURT

Footnotes

[1]  Ex 1, vol 1, tab 1, page 2.

[2]  Ex 1, vol 1, tab 1, page 7.

[3]  Ex 1, vol 6A, page 1176.

[4] Land Valuation Act 2010 (Qld) s 6.

[5]  Ibid s 155.

[6]  Ibid sch 1.

[7]  Ibid s 7.

[8]  Ibid s 16.

[9]  Ex 17.

[10]  Ex 17, page 2.

[11]  Ex 17, page 3.

[12]  Ex 17, page 3 and ex MM3.

[13]  Ex 1, vol 6A, tab 2, page 1033, para 26(a).

[14]  Ex 1, vol 6A, tab 2, page 1033-1035.

[15] Land Valuation Act 2010 (Qld) s 161(1).

[16]  Ibid s 163(1).

[17]  Ex 14, page 1.

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

[19]  Ibid s 19.

[20]  Ex 1, vol 4, tab 3, page 441.

[21]  Ex 1, vol 2, tab 6, page 244.

[22]  Ex 1, vol 6A, tab 1, page 876, para 66.

[23]  Ex 1, vol 6A, tab 1, page 894, paras 91 to 92.

[24]  Ex 1, vol 7, tab 8.

[25]  Ex 1, vol 4, tab 4, page 453, para 7.7.2.

[26]  Ex 1, vol 4, tab 4, page 453, para 7.7.4.

[27]  Ex 1, vol 7, tab 8, page 1904.

[28]  Ex 1, vol 6A, tab 3, page 1086, para 78.

[29]  Ex 1, vol 6A, tab 3, page 1088, para 95.

[30]  Ex 1, vol 3, tab 1, page 254, para 12.

[31]  Ex 1, vol 3, tab 1, page 277, para 105.

[32]  Ex 1, vol 3, tab 1, page 277, para 107.

[33]  Ex 1, vol 3, tab 1, page 254, para 15.

[34]  Ex 1, vol 3, tab 1, page 277, para 104.

[35]  T 2-65, lines 31 to 34.

[36]  Ibid, line 34.

[37]  Ibid, line 14.

[38]  T 2-68, lines 8 to 9.

[39]  Ex 1, vol 6A, tab 2, page 1035, para 33.

[40]  Ex 1, vol 7, tabs 4 to 7.

[41]  Ex 1, vol 6A, tab 3, pages 1075 to 1077.

[42]  Ex 1, vol 6A, tab 3, page 1075, paras 28 to 29.

[43]  Ex 1, vol 6A, tab 3, page 1084, para 76.

[44]  Ex 1, vol 6A, tab 3, page 1075, para 34.

[45]  Ibid.

[46]  Ex 1, vol 6A, page 1073, para 17.

[47]  Ex 1, vol 6A, tab 3, page 1129.

[48]  Respondent’s outline of submissions (RS) pages 71 to74.

[49]  Ibid page 72, para 241.

[50]  Ibid.

[51]  T 4-80, line 24.

[52]  T 5-14, lines 1 to 4.

[53]  T 5-14, lines 1 to 4.

[54] Wiki v Atlantis Relocations Pty Ltd [2004] NSWCA 174 at [61].

[55]         Ex 1, vol 6A, tab 1, page 876, para 66.

[56]  T 2-59 and following.

[57]  Ex 1, vol 4, tab 5, page 472, para 2.2.1.

[58]  Ex 1, vol 4, tab 5, page 473.

[59]  Ex 1, vol 4, tab 5, page 474, para 2.3.4.

[60]  T 2-74 and following.

[61]  Ex 1, vol 4, tab 6, page 484, paras 5.1.7 to 5.1.9.

[62]  Ex 1, vol 6A, tab 1, page 894, para 93.

[63]  Ex 1, vol 6A, tab 1, page 895, para 94.

[64]  Ex 1, vol 6A, tab 1, page 895, para 95.

[65]  Ex 1, vol 6A, tab 1, page 889, para 75.

[66]  Ex 1, vol 6A, tab 1, page 890, para 78.

[67]  Ex 1, vol 6A, tab 1, page 889, para 75.

[68]  Ex 1, vol 6A, tab 1, page 891, para 79 to page 893, para 87.

[69]  Ex 1, vol 6A, tab 1, page 889, para 75.

[70]  Ex 1, vol 6A, tab 1, page 893, para 88 to page 895, para 98.

[71]  [2005] VSCA 295.

[72]  [2016] QLC 69.

[73]  Ibid [104].

[74]  Submissions of the Appellant (AS), page 35 para 69.

[75]  [2016] QLC 69 [101].

[76]  Ex 1, vol 6B, tab 5, page 1775, para 128.

[77]  Ex 1, vol 6B, tab 5, page 1775, para 126.

[78]  Ex 1, vol 6B, tab 5, page 1776, para 131.

[79]  Ex 1, vol 6A, tab 3, page 1100, para 152.

[80]  Ex 1, vol 6A, tab 3, page 1100, para 151.

[81]  Ex 1, vol 6B, tab 5, page 1775, para 129.

[82]  Ex 1, vol 6B, tab 5, page 1775, para 128.

[83]  Ex 1, vol 6B, tab 5, page 1776, paras 132 to 133.

[84]  Ex 1, vol 6B, tab 5, page 1776, para 134.

[85]  Ex 1, vol 6B, tab 5, page 1776, para 135.

[86]  Ex 1, vol 6B, tab 5, page 1777, para 137.

[87]  Ex 1, vol 6A, tab 1, page 879.

[88]  Ex 1, vol 6A, tab 1, page 889, para 70.

[89]  Ex 1, vol 6A, tab 1, page 889, para 71.

[90]  Ex 1, vol 6A, tab 1, page 889, para 72.

[91]  Ex 36.

[92]  Ex 36.

[93]  Ex 36.

[94]  Ex 35.

[95]  (1996-1997) 16 QLCR 687.

[96]  Ibid [706].

[97]  T 4-15, line 46 to T 4-16, line 25.

[98]  Ex 1, vol 6A, tab 1, page 879.

[99]  Ex 1, vol 6A, tab 3, page 1091.

[100]  Ex 1, vol 6A, tab 3, page 1091.

[101]  T 6-47, lines 4 to 30.

[102]  T 6-45, lines 10 to 33.

[103]  Ibid, lines 45 to 47.

[104]  T 6-46, line 11.

[105]  Ibid, lines 36 to 37.

[106]  Ex 1, vol 6B, tab 3, page 1640.

[107]  Ex 1, vol 6A, tab 3, page 1093, para 120.

[108]  Ex 1, vol 6A, tab 3, page 1093, para 117.

[109]  Ex 1, vol 6A, tab 3, page 1093, para 116.

[110]  Ex 1, vol 6A, tab 3, page 1093, para 122.

[111]  Ex 1, vol 6A, tab 3, page 1096.

[112]  T 6-62, lines 5 to 7.

[113]  Ibid, lines 36 to 37.

[114]  Ex 1, vol 6A, tab 3, page 1098.

[115]  Ex 1, vol 6A, tab 3, page 1098, para 142.

[116]  Ex 1, vol 6A, tab 3, page 1099, para 143.

[117]  Ex 1, vol 6A, tab 3, page 1104.

[118]  Ex 1, vol 6A, tab 3, page 1106, para 184.

[119]  Ex 1, vol 6A, tab 3, page 1108, para 191.

[120]  Ex 1, vol 6A, tab 3, page 1108, para 193.

[121]  Ex 1, vol 6A, tab 3, page 1109, para 195.

[122]  Ex 1, vol 6A, tab 3, page 1094.

[123]  Ex 1, vol 6A, tab 3, page 1094, para 124.

[124]  Ex 1, vol 6A, tab 3, page 1095, para 125.

[125]  Ex 1, vol 6A, tab 3, page 1095, para 130.

[126]  Ex 1, vol 6A, tab 3, page 1095, para 131.

Close

Editorial Notes

  • Published Case Name:

    Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2)

  • Shortened Case Name:

    Suncorp Metway Insurance Pty Ltd v Valuer-General (No. 2)

  • MNC:

    [2017] QLC 46

  • Court:

    QLC

  • Judge(s):

    Member Isdale

  • Date:

    25 Aug 2017

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Australian Postal Commission v Melbourne City Council [2005] VSCA 295
2 citations
Jump To
Cite 1 - [2005] VSCA 295
Cite 2 - [2005] VSCA 295
Brisbane Square Pty Ltd v Valuer-General [2016] QLC 69
4 citations
Jump To
Cite 1 - [2016] QLC 69
Cite 2 - [2016] QLC 69
Cite 3 - [2016] QLC 69
Cite 4 - [2016] QLC 69
Liat Nominees Pty Ltd v Chief Executive, Department of Lands (1997) 16 QLCR 687
1 citation
Jump To
Cite 1 - (1997) 16 QLCR 687
Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174
2 citations
Jump To
Cite 1 - [2004] NSWCA 174
Cite 2 - [2004] NSWCA 174

Cases Citing

Case NameFull CitationFrequency
Eastcote Pty Ltd v Valuer-General [2018] QLC 111 citation
ISPT Pty Ltd v Valuer-General [2018] QLC 64 citations
Suncorp Metway Insurance Pty Limited v Valuer-General (No. 3) [2017] QLC 533 citations
1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.