ISPT Pty Ltd v Valuer-General[2018] QLC 6

LAND COURT OF QUEENSLAND

1. [1]
   This is a decision in respect of two appeals brought against a decision on an objection against valuations delivered by the Valuer-General. The appeals are brought pursuant to the Land Valuation Act 2010 by the appellants ISPT Pty Ltd and ISPT Custodians Pty Ltd (hereafter referred to as “ISPT”)

2. [2]
   The first of the appeals is appeal number LVA023-17 which is in respect of land located at 345 Queen Street Brisbane and described as Lot 5 on Plan RP200298 Property ID 1226810 and which has an area of 2,979 m². I shall refer to it as the Queen Street land.

3. [3]
   The second appeal is appeal number LVA025-17 which is in respect of land located at 100 Creek Street Brisbane bearing the real property description of Lot 30 on RP145982 and a Property ID of 1228031, having an area of 1,722 m². I shall refer to this as the Creek Street land.

4. [4]
   It is agreed that because the Valuers engaged by each party to this appeal seek to rely upon the same comparable sales, that these two appeals will be heard and determined together.

The statutory background

5. [5]
   As indicated above these appeals were brought pursuant to the provisions of the Land Valuation Act 2010 (LVA) and in particular pursuant to sections 155 and 157.

6. [6]
   The LVA sets out the process for the hearing of valuation appeals and in particular provides that the hearing of the appeal must be limited to the grounds stated in the valuation appeal notice. It further provides that the appellant has the onus of proof for each of the grounds of appeal.

7. [7]
   Pursuant to section 170 of the LVA, this Court has the power to either “confirm the valuation appealed against or reduce or increase the valuation to an amount it considers necessary to correctly make the valuation”^[1] required pursuant to the LVA.

8. [8]
   In the context of non-rural land, section 7 of the LVA provides that the value of non-rural land (which is the case in these appeals) is its site value.

9. [9]
   Site value is defined in Chapter 2, Part 2, Division 3, Subdivision 2 at section 19 which provides

What is the site value of improved land

1. (1)
   If land is improved, its site value is its expected realisation under a bona

fide sale assuming all non-site improvements for the land had not been made.

10. [10]
    ‘Expected realisation’ and ‘bona fide sale’ are defined in section 17 and 18 of the LVA.

345 Queen Street land

11. [11]
    On 14 December 2016, the respondent sent to the appellant a decision in respect of an objection to a valuation of the Queen Street land.

12. [12]
    As at 1 October 2015 the Valuer-General had applied a valuation of $51,500,000 effective from 30 June 2016. The reason for the decision on objection was said to be that “[w]hen compared to similar properties, the delegate decided a change in the valuation should be made.”^[2] The valuation was amended to $49,500,000.

13. [13]
    From that decision the appellant has appealed to this Court, identifying in its notice of appeal, LVA023-17, the following eight grounds of appeal:

“1. Given the location of the subject property within an established office precinct for the Brisbane CBD, the highest and best use of the land is for commercial office development. The need to provide substantial commercial office accommodation in the Brisbane CBD is consistent with the current use of the site, and the Brisbane City Council's stated objectives in the City Plan, including that the overall outcomes for the City Centre neighbourhood plan area that are:

1. (a)
   compact, high density building forms are contained by the city loop of the Brisbane River, Spring Hill, and Roma Street Parklands; and

2. (b)
   the City Centre is further developed in its role as Queensland's principal commercial and administration centre, and as an important national and international business city.

2. Development of the land for student or residential accommodation purposes does not represent its highest and best use.
3. The Appellant's assessment of the site value of the land at $38,000,000 (the Appellant's assessment of site value) has been made in accordance with the Land Valuation Act 2010 (Qld) (LVA), ordinary valuation principles, and otherwise according to law.
4. The following matters do not support the issued valuation, and instead support the Appellant's assessment of site value:

1. (a)
   the constraints on the use of the land for residential purposes due to the location of the land in the commercial precinct of the Brisbane CBD;

2. (b)
   the fact that development immediately surrounding the subject land comprises mostly high rise commercial office buildings;

3. (c)
   any high rise tower constructed on the land would achieve compromised views and aspect;

4. (d)
   the Queensland economy was experiencing recessionary conditions as at the valuation date, and the Appellant's assessment of site value has regard to the prevailing market conditions as at the date of valuation;

5. (e)
   the office and retail leasing and sales markets continued to deteriorate between 1 October 2014 and the date of valuation, 1 October 2015.

5. The following sales do not support the issued valuation, and instead support the Appellant's assessment of site value:

Residential site sales evidence

1. (a)
   97 Elizabeth Street,   July 2015  $28,000,000
   Brisbane
2. (b)
   80 Ann Street and 89  December 2015  $63,000,000

       Turbot Street, Brisbane 

3. (c)
   38 Wharf Street,   April 2015  $14,000,000
   Brisbane 

4. (d)
   443 Queen Street,   July 2014  $49,000,000
   Brisbane 

5. (e)
   240 Margaret Street,   July 2014  $30,000,000
   Brisbane

6. (f)
   30 Albert Street, Brisbane July 2014  $35,000,000

Commercial site sales evidence:

7. (g)
   55 Elizabeth Street,   February 2011   $24,000,000
   Brisbane 

8. (h)
   304 George Street,   May 2013   $63,000,000
   Brisbane 

9. (i)
   Vision Site, 111 Mary  July 2010   $38,000,000
   Street and 222 Margaret
   Street, Brisbane    

6. The Respondent's assessment of the site value of the land is not in accordance with the LVA, and is thereby contrary to law and erroneous.
7. Further, the Respondent's assessment of the site value of the land and each individual site in the Brisbane CBD using the following valuation methodology (the solely residential approach):

1. (a)
   development of a residential tower or towers on each individual site represents the highest and best use of each site;

2. (b)
   the only relevant comparable sales are residential sales; and

3. (c)
   only a small number of selective residential sales have been used for the purpose of 'comparable sales',

is not in accordance with the LVA, and is thereby contrary to law and erroneous.

8. The solely residential approach is not in accordance with the LVA, and is thereby contrary to law and erroneous for the following reasons:

1. (a)
   the solely residential approach is not a rational way of proceeding: the hypothetical valuation of all Brisbane CBD sites as residential use does not recognise that the Brisbane CBD contains a mixture of uses including commercial, residential, retail, judicial and government uses, with employment uses intended to dominate;
2. (b)
   the solely residential approach ignores the paradox that as more land is developed for residential purposes there would be less demand for residential land sites;

3. (c)
   the solely residential approach ignores the fact that whilst section 19 of the LVA is intended to apply to each valuation made under the LVA, section 19 also has statutory operation in relation to all valuations (that is, all pieces of land to be valued);

4. (d)
   it is considered that the solely residential approach has proceeded on the basis of only a selective number of residential sales being used for the purpose of comparable sales, and the comparable sales used are for a different use to that considered to be the highest and best use of the land;

5. (e)
   the solely residential approach is inconsistent with the principles set out by the High Court in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111.”^[3]

14. [14]
    In its notice of appeal, the appellant contends that the correct valuation of the subject land is $38,000,000.^[4]

The 100 Creek Street land

15. [15]
    In respect of the land located at 100 Creek Street, the Valuer-General on the 14 December 2016, sent to the appellant a decision in respect of an objection to a valuation of that land, allowing the objection and amending the valuation as at 1 October 2015 (effective from 30 June 2016) from $30,500,000 to $28,000,000.

16. [16]
    The reasoning in respect of the 100 Creek Street land is in identical terms to the reasoning underlying the amendment of the value of the land located at Queen Street.

The appeals generally

17. [17]
    The appellant appealed in respect of the Creek Street land and, save for paragraph three of the grounds of appeal which states “[t]he Appellant’s assessment of the site value of the land at $$20,680,000 (sic) (the Appellant’s assessment of site value) has been made in accordance with the Land Valuation Act 2010 (Qld) (LVA), ordinary valuation principals, and otherwise according to law”,^[5] is in identical terms to the grounds of appeal in respect of the Queen Street land.^[6]

18. [18]
    In its notice of appeal (LVA25-17) the appellant contends for a valuation of $20,680,000.

19. [19]
    Directions hearings were conducted and as a consequence of orders made, each of the parties identified an economist and a valuer as their expert witnesses. Subsequently it was agreed between the parties that there was no issue between the economist witnesses and accordingly, this appeal proceeded on the basis of expert evidence from two valuers, Mr Grant Jackson for the appellant and Mr Benjamin Hart for the respondent.

20. [20]
    The respondent provided (ultimately) an amended reply to the matters raised by the appellant in its grounds of appeal in each of the respective appeals.

21. [21]
    The respondent’s amended reply in each of the appeals was in the following identical terms:

“1. The assessment of site value of 345 Queen Street, Brisbane as at 1/10/2015 made on behalf of the Respondent of $49,500,000 [LVA025-17 states:100 Creek Street, Brisbane as at 1/10/2015 made on behalf of the respondent of $28,000,000] is duly made according to Chapter 2, Part 2, Division 3, Subdivision 2 (Site value of improved land) of the Land Valuation Act 2010 by direct comparison to and taking into account sales of the properties described in the following schedule.

2. Schedule of comparable sales to 345 Queen Street, Brisbane 4000

[LVA025-17 states: 100 Creek Street, Brisbane 4000]

3. The Respondent relies upon comparable sales evidence close to the date of valuation within the Brisbane CBD.
4. The Respondent in determining the issued site value has had regard to the highest and best use of the subject property in accordance with the Brisbane City Plan 2014 and the City Centre Neighbourhood Plan.
5. The Valuer-General contends that the highest and best use for the site as at 1 October 2015 was mixed-use development with retail uses at below-ground, ground and podium levels and with a commercial tower above, configured in accordance with the planning scheme. A purchaser would also have in mind the flexibility of the planning scheme and available alternative uses to accommodate market shifts which may occur in the future. The market included purchasers for land banking purposes..
6. The Valuer-General joins issue with the Appellant on its grounds of appeal.”^[7]

22. [22]
    Pursuant to an amended order made on 16 November 2017, the parties, on the 20 November 2017, filed in the Court a joint expert report in each of the appeals compiled by the two valuers.

23. [23]
    In each appeal the parties have engaged the same valuers to provide expert evidence to the Court. Those two valuers have relied upon exactly the same comparable sales in reaching their respective views as to the appropriate valuation.

24. [24]
    The two valuer’s reports are in pretty much identical terms save that in respect of the Queen Street land, Mr Jackson comes to the view that the land should be valued at $43,195,000, and the valuation applied by Mr Hart is $49,500,000.^[8]

25. [25]
    In respect of the Creek Street land, Mr Jackson is of the view that the land is valued at $23,245,000, and Mr Hart is of the view that it is valued at $28,000,000.^[9]

26. [26]
    It is convenient to refer to the concise description of the existing improvements on each of the subject lots provided by the valuers in their joint reports.

27. [27]
    In respect of 345 Queen Street, the valuers described the improvements in these terms: “The property, known as Central Plaza One, comprises a 36 storey commercial office building including a six storey wing named St George Annex and four levels of basement parking for 270 vehicles. The Net Lettable Area of the building is approximately 40,760 square metres” (sic).^[10]

28. [28]
    In respect of the 100 Creek Street land the valuers described the existing improvements in the following way:

“The subject is improved with a 25-storey commercial office building with 2 basement levels of parking for 80 cars. The building was constructed in 1977 and has a net lettable area of approximately 21,700m2. The typical floor plate size range from 650m2 to 886m2 (sic).

In 2008, the building underwent another major refurbishment including the upgrading the office space to A-grade quality, reconfiguring the ground floor and creating a new laneway style retail precinct on the south-west boundary of the building. This area has become known as Gresham Lane and extends over the adjoining property connecting Adelaide and Queen Streets and allowing pedestrians access from Queen Street. It is not a designated road reserve or laneway but reflective of the existing improvements and the high volumes of pedestrian traffic and movement around the subject land.” ^[11]

29. [29]
    In the joint reports the valuers had regard to identical sales evidence, namely the five sales referred to by the respondent in its amended reply in each appeal, and most of the sales referred to by the appellant in its grounds of appeal, save that reference to the sale of 80 Ann Street and 89 Turbot Street in December 2015, and the sale of the Vision site at 111 Mary Street and 222 Margaret Street in July 2010, have fallen by the wayside. However, an additional sale of land located at 62 Ann Street Brisbane has been included in the sales evidence.

30. [30]
    That sale of 62 Ann Street with an area of 5,480 m² occurred in December 2015 at a sale price of $63,000,000.

31. [31]
    It is useful to refer to the tabular presentation of the sales evidence contained within the joint expert report which succinctly displays the analysis done by each of the valuers. That table is as follows: ^[12]

32. [32]
    There was agreement between the valuers as to the analysis of sales in respect of:

1. 62 Ann Street, Brisbane

2. 443 Queen Street, Brisbane

3. 240 Margaret Street, Brisbane

4. 30 Albert Street, Brisbane.

33. [33]
    With respect to the sale at 97 Elizabeth Street, the only difference between the valuers related to an allowance for infrastructure concession in the sum of $3,158,200.

34. [34]
    In respect of the sale of the property at 38 Wharf Street, the only two matters of difference between the valuers was with respect to the allowance for infrastructure concession in the amount of $1,674,320, and adjoining owner synergies in the sum of $1,500,000.

35. [35]
    With respect to the sale of the property at 55 Elizabeth Street, the only difference between the valuers was with respect to the allowance for the benefit of development approval and lease pre-commitment works in the sum of $1,200,000.

36. [36]
    With respect to the 304 George Street property, the difference between the valuers was only with respect to an allowance for the existing excavation of the site for the sum of $900,000, and an item allowed for site holding costs in the amount of $2,309,280.

37. [37]
    Counsel for the parties was requested by me to provide the Court with a list of agreed issues, that request was complied with and the following were identified as the agreed issues between the parties:

“1. Is an adjustment required for student accommodation “Infrastructure Concession” in a proper analysis of the sales of:

• 97 Elizabeth Street
• 38 Wharf Street

2. In a proper analysis of the sale of 55 Elizabeth Street is an adjustment required:

• for the Development Approval
• for the prospective tenancy of the ATO

3. In a proper analysis of the sale of 304 George Street is an adjustment required:

• for the existing excavation of the site
• for the site holding costs

4. Are the following sales to be taken into account in the valuation of the appeal properties is at 1 October 2015:

• 62 Ann Street
• 443 Queen Street
• 240 Margaret Street
• 30 Albert Street
• 55 Elizabeth Street
• 304 George Street

5. How are the sales properly compared with the appeal properties in order to arrive at their valuations.
6. Are site values of the sale properties to be taken into account in determining the valuations of the appeal properties.”^[13]

Identifying the highest and best use

38. [38]
    In the notice of the annexed grounds of appeal in each of the notices of appeal, the appellant identified the highest and best use of the land as being for commercial office development.

39. [39]
    In its reply dated 3 April 2017, in each of the appeals the respondent did not identify what it contended was the highest and best use, simply saying:

“4. The Respondent in determining the issued site value has had regard to the highest and best use of the subject property in accordance with the Brisbane City Plan 2014 and the City Centre Neighbourhood Plan”^[14]

40. [40]
    Subsequently in an amended reply the respondent nominated a highest and best use of commercial with retail use at below ground, ground and podium levels in the following terms:

“The Valuer-General contends that the highest and best use for the site as at 1 October 2015 was mixed-use development with retail users at below ground, ground and podium levels and with a commercial tower above, configured in accordance with the planning scheme. A purchaser would also have in mind the flexibility of the planning scheme and available alternative uses to accommodate market shifts which may occur in the future. The market included purchasers for land banking purposes.”(sic)^[15]

41. [41]
    By the time the valuers completed their joint reports in each appeal, there was agreement between the valuers that the highest and best use was for commercial office use in respect of the 100 Creek Street property,^[16] and a commercial office tower with retail development at ground level in respect of the 345 Queen Street property.^[17]

Is an adjustment required for student accommodation “infrastructure concession” in an analysis of:  

• 97 Elisabeth Street
• 38 Wharf Street.

42. [42]
    In their joint expert reports each of the valuers gave consideration to the sales of the land located at 97 Elizabeth Street and at 38 Wharf Street.

43. [43]
    The land at 97 Elizabeth Street with an area of 1,808 m² sold for $28,000,000 in July 2015.

44. [44]
    Mr Jackson analysed that sale to a per m²  rate of $13,393.

45. [45]
    Mr Hart analysed it to a figure of $15,138 per m².

46. [46]
    It had a site value as at 1 October 2015 of $13,260 m².

47. [47]
    The land at 38 Wharf Street sold with an area of 911 m² in April 2015 for $14,000,000.^[18]

48. [48]
    Mr Jackson analysed that sale to a rate of $11,795 m² whereas Mr Hart analysed that sale to a figure of $15,280 m².

49. [49]
    As at 1 October 2015 the 38 Wharf Street land had a site value of $13,172 per m^2.

50. [50]
    The difference between the two valuers and their analysed rates is explained by Mr Jackson in his report where he says:

“The three sales in 2015 where (sic) purchased predominantly for development for student accommodation. As part of an initiative by Brisbane City Council, generous concessions were provided to developers to acquire sites and develop student accommodation. As a result of this incentive two sites at 97 Elizabeth Street and 38 Wharf Street were purchased for development with student accommodation.

In my analysis of these sales I have had regard to enquires made with the purchasers and the intentions they had for the site. I have also established their views regarding the incentives provided for the development of student accommodation and how this was considered in their purchase of the site.

My analysis of the two sales at 97 Elizabeth Street and 38 Wharf Street takes account of the benefits received by the purchaser of each site. …

These sales reflect a range of analysis of $9,987/m² to $13,393/m².  38 Wharf Street is a corner site and the other two sales are inside sites but with two street frontages.

Each of the sales reflect a highest and best use different to the subject site which is suited to commercial development. Therefore, in the comparison process it is import to recognise the different nature of each sale property to the subject.

Within the Brisbane CBD the zoning allows sites to be utilised for a variety of purposes. The most common forms of development found in the Brisbane CBD could be broadly defined as commercial office, retail, residential apartments, hotels and student accommodation. It is also acknowledged there are various mixed used developments comprising elements of the above forms of development but generally with a dominant use.

Therefore, subject to market conditions, there can be various purchasers competing for the same site but with a view to undertake a differing form of development. Some sites are obviously more suited to specific forms of development and in in those instances, it is less likely that other potential users may compete directly to purchase the land.

In comparing the sales evidence in 2015 to the subject property, it is logical in my opinion to conclude that if there were any demand for commercial office development, those buyers would have paid a lesser amount for those sites which have sold. If that were not the case, it is logical to conclude that commercial office developers would have paid a higher price and secured the sites.” ^[19]

51. [51]
    It is clear that Mr Jackson’s approach relies upon the thinking of a prospective purchaser in respect of the 97 Elizabeth Street and 38 Wharf Street lots of land.

52. [52]
    Mr Hart for the respondent views the matter somewhat differently. Mr Hart said:

“The infrastructure charges on developments in the Brisbane CBD are a matter for the Brisbane City Council (BCC) and the Queensland Urban Utilities (QUU). The reduction in infrastructure charges is part of a stimulus program by them that seeks to encourage new developments that provide accommodation for tertiary or higher education students. It is available for development approvals that take affect between 1 July 2014 and 30 June 2017 on sites supporting medium or high density residential development located within four kilometres radius of the GPO.

Although the purchaser estimated the potential infrastructure charges of their proposed development before buying the site and lodging a development application, it is not appropriate to adjust the sale price to reflect any potential reduction in infrastructure charges unless the charges have been paid for by the vendor. The vendor only has infrastructure credits to sell that relate to the existing buildings that are to be demolished. The vendor had no interest in the proposed development.

No adjustment to the sale price is necessary as the terms and conditions reflect the usual terms and conditions of the bona fide sale. The sale was marketed and negotiated by experienced agents and the evidence indicates the sale was bona fide.”^[20]

53. [53]
    During cross-examination where Mr Quinn for the respondent and Mr Jackson seemed to be at cross purposes, I asked Mr Jackson:

“I think what Mr Quinn is saying - correct me if I am wrong, Mr Quinn - is that when you purchase the land, you don’t get any concession from the Brisbane City Council; you simply purchase the land. It is when you develop and build a building that you get the concession for the infrastructure charges. Is that the point you making, Mr Quinn?

MR QUINN: Yes your Honour.

HIS HONOUR: You don’t disagree with that, Mr Jackson?---No I agree with that, yes.”^[21]

54. [54]
    Mr Quinn in his submissions at the end of the hearing seized upon that approach by Mr Jackson to criticize his evidence.

55. [55]
    Mr Quinn began by raising the criticism that Mr Jackson’s report, or at least his component of the joint expert report, did not constitute a “speaking valuation”^[22] as that term is commonly understood between valuers. This means that it should be clear on the face of an expert report, how any analysis was done and, how particular financial figures were reached.

56. [56]
    In his submission Mr Quinn submitted as follows:

“3. His component was not a “speaking valuation”, a feature highlighted by the perceived need to expand upon it in evidence-in-Chief, contrary to an express order of the Court – 22 September 2017, Order 7.

4. There are some egregious examples:

• Assertion of an adjustment of $1,500,000 in relation to the 38 Wharf Street sale, one of his key sales, supported by only 3 words “Adjoining Owner synergies”, a wholly inadequate basis upon which to adjust in such a novel way. The inadequacy was both as to quantum and rationale;
• Mr Jackson gave no reference in the JER to the source material relied upon by him, such as it was, even though the e-mail is (sic) concerned were obviously the property of his own firm;
• Similarly, his references to claimed Infrastructure Concession amounts, was obviously by reference to documents which he did not identity in the JER.

5. Mr Jackson made no attempt to redress the obvious imbalance between his broad-brush approach and the more detailed effort made by Mr Hart in the JER, notwithstanding the interval between provision of the JER and the commencement of the hearing.”^[23]

57. [57]
    I am satisfied there is something in the criticisms raised by Mr Quinn. That criticism could however equally be applied to Mr Hart in his part of the joint reports.

58. [58]
    In each of the expert reports the information regarding the allowance concessions is boldly expressed by Mr Jackson as figure $3,158,200 in respect of 97 Elizabeth Street and $1,674,320 in respect of 38 Wharf Street. No indication is given in the joint report as to how those figures were arrived at.

59. [59]
    The position seems to have been clarified by a series of emails between m3 Property (Mr Jackson’s firm) and Savills, occurring between August and September 2016.^[24]

60. [60]
    In that series of emails one of Mr Jackson’s associates wrote to an officer of the company Student One, which was at that time developing the student accommodation in Brisbane, asking for details as to whether the infrastructure charges concessions which were offered by the Brisbane City Council were considered when determining the price paid for the site.^[25]

61. [61]
    That enquiry generated a response from Student One advising that a valuer from Savills proposed to reply to the email enquiry.^[26]

62. [62]
    In the reply the valuer from Savills confirmed that infrastructure credits were considered in the sale and advanced a figure of $1,674,320 in respect of the 38 Wharf Street site, and $4,048,960 in respect of the 97 Elizabeth Street site.^[27] That figure ultimately was reduced to the $3,158,200 contained in the joint expert reports.^[28]

63. [63]
    Mr Jackson explained that that figure was taken from the document provided to him but prepared by some unidentified member of the firm Urbis.^[29]

64. [64]
    It was further clarified in cross-examination that that calculation seemed to have been done by a town planner not a valuer. The identity of that person was never revealed to the Court nor was the basis for the figure contained in that Savills document revealed.^[30]

65. [65]
    It is difficult to see how any proper weight can be given to figures of such magnitude when no proper explanation for their generation has been given to the Court.

66. [66]
    Accordingly, I have come to the view that no adjustment should be allowed for the student accommodation infrastructure concession in the way in which Mr Jackson contends it should.

67. [67]
    In any event, and by way of further comfort to my view in that regard, I accept the proposition advanced by Mr Hart that the infrastructure concession may have been something which was influential upon the purchaser which had no relevance to the vendor.

In a proper analysis of the sale of 55 Elizabeth Street is an adjustment required for:

• The development approval
• For the perspective tenancy of the ATO

68. [68]
    As revealed by reference to the table quoted above, the property of 55 Elizabeth Street sold in February 2011 for $24,000,000 with an area of 1,998 m^2.

69. [69]
    The valuers agree as to the relevance of the sale, but disagree as to whether an allowance should be made for the benefit of a development approval and lease pre-commitment works for the sum of $1,200,000 as contended by Mr Jackson.

70. [70]
    It can be seen that, that sale occurred several years prior to the relevant date of valuation in this appeal, but it is relied upon by Mr Hart as the most recent example leading up to the date of valuation of a commercial office development site being sold in the CBD.

71. [71]
    Mr Hart analysed the 55 Elizabeth Street sale to $11,179 m² whereas Mr Jackson analyses a figure of $10,578 m².^[31]   The difference was the allowance of $1,200,000 for the benefit of a development approval and lease pre-commitment works. The basis for that allowance did not appear in the joint expert reports save that the commentary prepared by Mr Hart for the respondent noted the following observations:

“The amount that has been estimated by Mr Jackson at 5% of the overall sale price of $24,000,000, based on purchaser acquiring an option to purchase the property. (sic) It has not been estimated by either parties to the agreement.”^[32]

72. [72]
    Mr Hart’s reason for rejecting the allowance of $1,200,000 is that, in his view, the facts and circumstances do not support the adjustment to the sale price. This is because the vendor and purchaser entered into a put and call option agreement which generated equal advantage to both of them with no particular enticement apparent to the vendor to accept the delay in such a way as might have justified some premium being paid.^[33] Mr Hart did not rely upon the 55 Elizabeth Street sale in any event.

73. [73]
    As was the case for the other figures contended for by Mr Jackson there is no real evidence as to how the figure was calculated.

74. [74]
    In evidence-in-chief Mr Jackson was asked:

“What I want to ask Mr Jackson is this: the amount you’ve allowed is five percent of the purchase price?--- Correct.

Is there a particular science behind that?---No. It was seen as the minimal allowance that one could make, and it was just reflecting the benefits that the purchaser obtained.”^[34]

75. [75]
    Those sorts of observations are entirely unhelpful, and on the basis of the evidence used by Mr Jackson, I would be unwilling to make any adjustment to the 55 Elizabeth Street sale if weight would be placed upon it. Fortunately, it appears that neither side places any weight on it save that Mr Jackson says it has some contextual relevance.^[35]

Is an adjustment required in any proper analysis of the sale of 304 George Street:

• The existing excavation of the site
• Site holding costs

76. [76]
    The valuers agree that the sale of 304 George Street Brisbane with an area of 7892 m²  in March 2013 for a price of $63,000,000, was relevant to this appeal.

77. [77]
    Mr Jackson analysed it to a figure of $7,767 m² whereas Mr Hart’s analysis arrives at a figure of $8,174 m^2.

78. [78]
    The difference between the two valuers relates to an allowance for existing excavation of the site for a figure of $900,000 and site holding costs at a figure of $2,309,280.

79. [79]
    The valuers agreed on the costs of the various elements of the sales analysis including the demolition costs, the existing excavation, and the infrastructure credits that relate to the existing buildings and basement area at the time of the sale.

80. [80]
    Mr Jackson relies upon those figures, however Mr Hart places no reliance upon them at all.

81. [81]
    The holding costs figure, which was agreed but disputed as to relevance, was $2,308,280, and the figure for the excavation was agreed at $900,000 but disputed with respect to relevance. The site is a well-known one with four street frontages and was previously the Supreme and District Courts building site.

82. [82]
    As Counsel for the appellant pointed out in his written submissions, Mr Jackson does not give the sale particular weight but does include it for context as a sale, partially at least, for commercial development.^[36]

83. [83]
    The land at 304 George Street has been the subject of consideration by this Court on previous occasions.^[37]

84. [84]
    In the Brisbane Square^[38] judgment the flowing appears:

“After the sale, the Valuer-General assessed the site value of 304 George Street at $61,500,000. During evidence Mr Hart agreed that was a sound assessment. Given that evidence the Valuer-General conceded that the assessed site value should be used in valuing Brisbane square. Incidentally, the assessed site value and Mr Gasiewski’s adjusted sale price are the same: $61,500,000.”^[39]

85. [85]
    That concession by Mr Hart as to the analysed price of $61,500,000 had the learned President in the Brisbane Square case calculate a m² rate of $7,793,00 which is not altogether different from the $7,767 m² value developed by Mr Jackson.^[40]

86. [86]
    In the Suncorp^[41] decision, the learned Member dealing with almost an identical dispute between Mr Jackson and Mr Hart in the context of 304 George Street, concluded “[t]he 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.”^[42]

87. [87]
    As Counsel for the appellant points out, I am not bound by those previous decisions. However, I do find them persuasive where, as Mr Anderson points out, “no different evidence is brought in this appeal so as to doubt the exercise that has already been undertaken.”^[43]

88. [88]
    In any event, the sale occurred more than two years prior to the date of valuation and that effluxion of time is relevant notwithstanding the dearth of comparable sales. That shortage of comparable sales does demonstrate some sluggishness in the market for commercial premises as at 1 October 2015.

89. [89]
    Under cross-examination by Mr Quinn of Counsel, Mr Jackson confirmed that the 304 George Street sale was, in any event, “pretty limited”^[44] in relevance.

90. [90]
    As to the $900,000 dollar figure relating to the excavation, Mr Jackson acknowledges that was not a figure he himself calculated, and that figure was not supported by any evidence as to how it was calculated.

91. [91]
    Mr Jackson said “it was just something which was discussed between Mr Hart and I and has been the subject of previous proceedings.”^[45]

Which of the following sales are to be taken into account in the valuation of the appeal property as of 1 October 2015:

• 62 Ann Street
• 443 Queen Street
• 240 Margaret Street
• 30 Albert Street
• 55 Elizabeth Street
• 304 George Street.

92. [92]
    62 Ann Street Brisbane with an area of 5,480 m² sold in December 2015 for $63,000,000. There is agreement between the valuers as to the analysed value per m² at a figure of $9,987 m^2. That can be compared to the site value as of October 2015 of $9,127 m² a difference of about 8.6 percent. The 62 Ann Street property is approximately three times the size of 100 Creek Street, and just under twice the size of 345 Queen Street.^[46]

93. [93]
    Notwithstanding those differences in size, I am satisfied that, that land is relevant to the valuation exercise which this Court must undertake.

94. [94]
    The Land at 443 Queen Street with an area of 2,183 m² sold in July 2014 for $49,000,000.

95. [95]
    The valuers agree the analysis of that land at $20,094 m² reflects a higher per m² than the site value as October 2015 of $17,865 m². I am satisfied that given the date of that sale it has some relevance to this appeal.

Is the sale of the property of 62 Ann Street to be taken into account in the valuation of the appeal properties and if so, how?

96. [96]
    The site at 62 Ann Street with an area of 5480 m² sold in December 2015 for $63,000,000.

97. [97]
    Mr Jackson and Mr Hart both analysed it to a figure of $9, 987 per m² in a context where the site value calculated to $9,127 per m².

98. [98]
    The sale at 62 Ann Street and the sales 97 Elizabeth Street, and 38 Wharf Street, were all predominantly for development of student accommodation.

99. [99]
    Mr Jackson expresses the following view about the sale at 62 Ann Street:

“The remaining sale at 62 Ann Street was purchased with an existing commercial building under a short term lease. The site had future development potential and an application has been made subsequently to develop the Turbot Street frontage with student accommodation and the Ann Street frontage with a commercial office tower subject to leasing pre-commitments from prospective tenants.”^[47] 

100. [100]
     Further with respect to the 62 Ann Street site sale, Mr Jackson further says “No allowance for the benefit of developing student accommodation was considered for 62 Ann Street as the decision to develop student accommodation on part of the site was an event subsequent to the date of sale.”^[48]

101. [101]
     Mr Hart, in the expression of his views, describes 62 Ann Street as “an inferior location for both residential and commercial office development in comparison with subject. It is located outside the established commercial office precinct surrounding the Brisbane GPO and the Eagle Street office and dinning precinct.”^[49]

102. [102]
     He goes on to point out that, that sale involved a lot nearly double the size of the subject land, and thereby a property that could support the development of more than one building.^[50]

103. [103]
     On that basis Mr Hart says given the large difference in size and the availability of sales of a similar size, and the land area comparison approach, the sale of the land at 62 Ann Street is of limited assistance to assess the site value of the subject.

104. [104]
     Mr Jackson adopts a similar view as to the inferiority of the 62 Ann Street land to the subject.

105. [105]
     Further, with respect to the role of the ‘incentivisation’ by the Brisbane City Council and Queensland Urban Utility for the purchase of land for the purpose of student accommodation,^[51]  Mr Jackson, upon Mr Quinn pointing out to him that the purchaser of 62 Ann Street had a background as a developer of student accommodation, confirmed that each of the three 2015 sales were for people who are entering the market in Brisbane for the purpose of student accommodation. Mr Jackson agreed with that proposition.^[52]

106. [106]
     Those sales occurred in context, acknowledged by both of the valuers, wherein the Brisbane City Council was giving concessions to developers to acquire sites and develop student accommodations.

With respect to 443 Queen Street, is it a sale which should be taken into account in the valuation of the appeal properties and if so, how?

107. [107]
     443 Queen Street with an area of 2,183 m² sold in July 2014 for $49,000,000,

108. [108]
     The valuers agreed with an analysed value of $20,094 m² contemplated against a site value of $17,865 m^2.

109. [109]
     The agreement reached between the valuers reflected the various elements of the sale including the demolition costs, the income and infrastructure credits in relation to existing buildings including the retention of the basement.

110. [110]
     The comparison sales were at 30 Albert Street and 240 Margaret Street.

111. [111]
     Mr Hart contends that each of those sales exhibited attributes more suited to multi-residential developments compared to the location of the subject property.^[53] Mr Jackson does not express a contrary view.^[54]

112. [112]
     Mr Hart echoes similar sentiments about the property at 443 Queen Street.^[55]

113. [113]
     Mr Hart does however distinguish the sale of the land at 443 Queen Street in the following terms:

“Sale No.5 has a smaller land size and the shape is irregular and presents some inefficacies in terms of development outcomes in comparison to the subject. The size, shape and dimensions are all considered to be inferior in comparison with the subject.

In comparison with sale No.5, the subject has the potential to achieve a greater amount of GFA, a higher development density and building height, larger and more efficient basement areas and larger ground, podium and tower level floor plates.”

Other considerations

Sale No.5 is impacted by various constrains not found at the subject. Its topography, riparian frontage and flooding risk impact on the construction of foundations and basement levels.

Sale No.5 is impacted by various town planning constrains not found at the subject. They include a heritage listed wall located on the site, the requirements to address and demonstrate protection of numerous significant views and vistas of the adjoining heritage listed Customs House, the Story Bridge and the Kangaroo Point Cliffs. The site is also impacted by a significant landscape tree that is subject to a vegetation protection order. These constraints carry some risk and impact on the redevelopment and an allowance has been considered to reflect these constraints when making a comparison with the subject.”^[56]

114. [114]
     Mr Jackson’s report is silent as to those matters.

In respect of 240 Margaret Street Brisbane, is it a sale which should be taken into account in the valuation of the appeal properties and if so, how?

115. [115]
     240 Margaret Street with and area of 1,715 m² sold in July 2014 for $30,000,000.

116. [116]
     Each of the valuers analysed that selling price to a value of $17,400 m². The analysed site value as at 1 October 2015 was $13,994 m².

117. [117]
     As Mr Jackson points out, 240 Margaret Street is located in a preferred residential part of the CBD one block from the botanical garden centre with views, and within walking distance of the Brisbane River.^[57]

118. [118]
     Mr Jackson places little weight on this sale for the purposes of this appeal.^[58]

In respect to 30 Albert Street Brisbane, is it a sale which should be taken into account in the valuation of the appeal properties and if so, how?

119. [119]
     30 Albert Street with an area of 2,007 m² sold in July 2014 for $35,000,000.

120. [120]
     Each of the valuers analyses that sale to a figure of $17,411 m².

121. [121]
     Analysis of the site value as at 1 October 2015 yield a rate of $15,944 m².

122. [122]
     In respect of each of 443 Queen Street 240 Margaret Street and 30 Albert Street, Mr Jackson utilises analysis of sales of residential apartments within the Brisbane CBD between December 2010 and June 2017.

123. [123]
     He observes in the joint expert report

“All the sales in 2014 reflect a specific use of residential apartment development at a time in the market where there was demand for this form of development. By 1 October 2015, the level of demand for residential apartment development had slowed considerably. This is evidenced in the detail analysis undertaken by independent advisors Urbis and other research consultants in respect of the Brisbane CBD apartment market.”^[59]

124. [124]
     Mr Jackson also refers to analysis of the CBD residential market carried out by Place Advisory.^[60]

125. [125]
     With respect to that analysis, Mr Jackson points to the limited supply of residential apartments available for sale in the Brisbane CBD in 2014.^[61]

126. [126]
     Mr Jackson points out that with the construction of various residential developments in the Brisbane CBD apartment market had quickly reached an oversupply situation.^[62]

127. [127]
     Mr Jackson says:

“I believe it is evident in the analysis of the sales evidence that prices paid for residential apartments sites reflected a considerable premium compared to the sales in 2015 in closer proximity to the date of valuation. The 2014 sales reflect a range of analysis of $17,400 m² to $20,094 m^2. This range of analysis is substantially higher than 2015 sales evidence and reflective of the lack of demand for residential apartment development sites post 2014.

Given the significant variance from the sales analysis in 2014 to 2015, I have placed little weight on these sales and relied upon the sales in 2015 close to the date of valuation.”^[63] 

128. [128]
     What Mr Jackson did not do was to provide the Court with any analysis of the link or relationship between the prices paid for residential apartments sites compared to the prices paid for commercial development sites which it was agreed between the valuers is the highest and best use to which the appeal land sites could be put.^[64]

Is the sale of the property at 55 Elizabeth Street to be taken into account in the valuation of the appeal properties and if so, how?

129. [129]
     The land at 55 Elizabeth Street with an area of 1,998 m² sold in February 2011 for $24,000,000.

130. [130]
     Mr Jackson analysed that sale to $10,578 m² whereas Mr Hart’s analysis produced a figure of $11,179 m².

131. [131]
     The analysed site value as at 1 October 2015 was $14,014 m².

132. [132]
     The disagreement between the valuers with respect to that lot related to an allowance for the benefit of the development approval and lease pre-commitment works in the sums of $1,200,000.

133. [133]
     In respect of that sale, Mr Jackson says that while it sold sometime prior to the date of valuation (i.e. four years), it constitutes the most recent example leading up to the date of valuation of a commercial office development site.^[65]

134. [134]
     The disputed figure of $1,200,000 relates to what Mr Jackson sees as the added value of development approval and pre-commitment by the Australian Tax Office as a potential tenant.

135. [135]
     The amount that was estimated by Mr Jackson at 5% of the overall sale price of $24,000,000 but was not a figure estimated nor apparently taken into account by either of the parties to the sale agreement which was in the form of a put and call option agreement. Mr Hart is of the view that facts and circumstances do not support any adjustment because in his view, there was equal advantage to both of vendor and purchaser and not particular enticement of the vendor to accept the delay.^[66]

136. [136]
     Mr Hart says no premium would nor should have been paid.

137. [137]
     In the joint expect report Mr Hart makes a number of points about sale number 7 including:

• Is an allegedly inferior location in comparison with the land the subject of this appeal being located outside the established commercial office precinct surrounding the Brisbane GPO and the Eagle Street office and dinning precinct.
• It is impacted by a burdening easement for vehicle access so that in comparison to the subject lands a minor allowance should be considered to reflect that constraint.
• The sale is five years before the date of valuation.
• The CBD market had undergone significant change in market movement by the time of the valuation date making this sale i.e. 55 Elizabeth Street of limited assistance.^[67]

138. [138]
     With respect to a comparison between the 55 Elizabeth Street sale and the sale of the land at 97 Elizabeth Street in July 2015, Mr Hart says that the market had moved. Mr Hart says “[b]oth are located in the same street within 50 meters from each other and have a similar land size. Sale No. 7 [55 Elizabeth Street] has a superior shape and street frontage but has a lower analysed sale rate than sale No. 2 [97 Elizabeth Street].”^[68]

139. [139]
     Mr Hart expresses the view that “The sale ($18.75m) and re-sale ($35m) of 30 Albert Street (Sale No. 4) in 2014 clearly demonstrates the impact on the CBD market from foreign developers seeking to acquire re-development sites.”^[69] Mr Hart also says, but provides no evidence to support the view, that that trend of increasing prices was also evidenced in the CBD fringe area.^[70]

140. [140]
     The fact that 55 Elizabeth Street sold in February 2011 more than four years before the subject land’s date of valuation, makes it difficult, in my opinion, to place much weight on it.

141. [141]
     Mr Jackson concurs with the view saying “[l]ook, it’s an old sale, so it’s limited weight. The key reason that sale is referred to is it’s the only sale of a commercial site in the CBD – this is in 2011, and leading up to the date of valuation of 1 October ‘15 there’s been no other site purchased for commercial development.”^[71] 

142. [142]
     Mr Hart gives it no weight at all.

143. [143]
     Amongst the factors leading Mr Hart to give the 2011 sale no weight was that the transaction involved a put and call option deed entered into in November 2010. Mr Hart says:

“As evidenced by the redevelopment site sales evidenced that occurred in 2014 and 2015, the CBD market has undergone significant change and market movement. Because of this and the availability of sales evidence closer to the date of valuation, Sale No. 7 is of limited assistance to access the site value of the subject.”^[72]

144. [144]
     This is acknowledged by Mr Jackson who says he gives it some weight and says:

“So we can discard it?‑‑‑Well, I – I put it in – I – I wouldn’t say totally discard it but I readily acknowledge the – the date of the sale and I – as I said earlier, I put it on the basis that it is the only commercial sale consistent with the highest and best use of the subject properties that’s occurred in the four years leading up to the date of valuation.  So I – I accept wholly, your Honour, that it’s a date sale.  I – no issue at all.  But I just thought, given it’s the only commercial sale, it was worthy of comes consideration but I ‑ ‑ ‑“^[73]

How the sales are properly compared with the appeal properties in order to arrive at their valuation.

145. [145]
     The parties, postulating on this particular issue, seem to me to be premised upon an assumption that all of the sales identified by the two valuers provide some comparison that will assist in arriving at a proper value for each of the sites the subject of this appeal.

146. [146]
     I am not satisfied that that assumption is soundly based.

147. [147]
     I am satisfied that the 304 George Street property is of limited utility to the valuation exercise necessary to resolve this appeal. I believe I have sufficiently set out my reasoning in the observation above in that regard.

148. [148]
     As to the sales in 2014 namely: 443 Queen Street, 240 Margaret Street and 30 Albert Street, I agree with the submissions made by Mr Anderson of Queens Counsel for the appellant. In his written submissions Mr Anderson said as Follows:

“24. It is evident they were sales in a different market for a different use, severely limiting their comparability. Mr Jackson has given them little weight (Ex14, paragraph 53) for that reason. He does not discard them, as Mr Hart does in relation to the three sales at 55 Elizabeth Street, 304 George Street and 62 Ann Streets (see his reference to each of those sales in paragraphs 146, 153 and 165 of Ex. 14) but it is clear they do not feature high in the exercise.

25. It is equally clear that the sales are of limited comparability. Mr Jackson’s evidence was that they were sales into the peak of the residential market – a market that no longer existed with the same level of excitement at the date of valuation. His evidence is supported by market research conducted by Place Advisory and which appears in the tables on page 44 of Ex.14 (page 9 of that document). Strangely, it (the distortion in the residential market) appears also to be the position of Mr Hart who (as developed further elsewhere in these submissions) cites as a reason for the conservative downwards adjustment of his first arrived at site value for each subject, “continuing market demand for redevelopment sites in the Brisbane CBD driven by offshore investors” Which he explained in oral evidence to be reflected “in those residential sales in 2014”(T2-31/15), prompting him to refer to the sale at 30 Albert Street for example, as evidencing a ‘massive increase’ (T2-31/15).

26. In this respect also it remains particularly curious that, as noted above, the Valuer General can maintain a position that the same five sales that supported the valuation when the subjects were considered highest and best use residential, can support the same valuation despite the change to highest and best use commercial. The sales readily enough support a higher figure for a residential highest and best use, but to say they support the same value at a different use is something else.”^[74]

149. [149]
     Similarly the sale in February 2011 of 55 Elizabeth Street is at a time so distant (and the formation of the contract at an even more distant time) as to, in my view, preclude any substantial reliance upon it. I accept that it was a sale of a commercial site for a commercial purpose, and that analysis by either valuer produced a value per m² lower than either of the figures contended for in the current appeal. There is insufficient evidence before me to satisfy me that the market deteriorated between that time and the relevant date for the purpose of these valuations. In any event I note that the site value for 55 Elizabeth Street analysed to a figure of $14,014 m² seems to lie fairly in the middle of the current values per m² contended for by the valuers in this appeal.

150. [150]
     Considerable time and effort was spent in the analysis of 304 George Street. However, at the end of the day, the valuers appear to agree that little or no weight should be given to it because it is effectively a sale for a mixed use development which occurred two years prior to the date of valuation relevant to these appeals.

151. [151]
     The three 2015 sales were predominately for student accommodation. This is quite a different use for sites that were discrete and not in any way similar to the sites the subject of these appeals. The three 2015 sales were not in that part of the CBD which has the cachet of being in what is called colloquially referred to as the ‘golden triangle’.

152. [152]
     Mr Jackson applied a premium for the 2015 sales to achieve a figure of $13,500 m² in respect of the 100 Creek Street land, and a figure of $14,500 m² in respect of the 345 Queen Street land.

153. [153]
     In coming to that view however Mr Jackson acknowledges:

“Each of the sales reflect a highest and best use different to the subject site which is suited to commercial development. Therefore, in the comparison process it is import to recognise the different nature of each sale property to the subject.

Within the Brisbane CBD the zoning allows sites to be utilised for a variety of purposes. The most common forms of development found in the Brisbane CBD could be broadly defined as commercial office, retail, residential apartments, hotels and student accommodation. It is also acknowledged that there are various mixed use developments comprising elements of the above forms of development but generally with a dominant use.”^[75] 

154. [154]
     In respect of each of the appeals Mr Jackson goes on to say:

“In comparing the sales evidenced in 2015 to the subject property, it is logical in my opinion to conclude that if were any demand for commercial office development, those buyers would have paid a lesser amount for those sites which have sold. If that was not case the case, it is logical to conclude that commercial office developers would have paid a higher price and secured the sites.”^[76]

155. [155]
     For his part, with respect to the 2015 sales, Mr Hart says that the subject land in each of the current appeals should sit above the analysed rate for the three 2015 sales due to its superior location and surrounding development, its size, shape and dimensions, its Street address, and its frontage and topography.^[77]

156. [156]
     Additionally with respect to 100 Creek Street, Mr Hart points to the benefit of a light and air easement over an adjoining property.^[78]

157. [157]
     Applying his analysis to each of the lots the subject of this appeal, Mr Hart comes to the view that 100 Creek should be analysed at $18,500 m².^[79]

158. [158]
     Similarly with respect to 345 Queen Street, Mr Hart considers that the subject land should be valued at $19,000 m^{2. [80]}

159. [159]
     A consequence of these views is that in each case a figure of $16,300 m² in respect of 100 Creek Street and $16,600 m² in respect of 345 Queen Street can be seen to be conservative.

160. [160]
     For completeness I should recognise that the task of the appellant was made somewhat more difficult by having to address a contention that the highest and best use of the land was for residential purposes. Subsequently, by the time the appeal came on for hearing the Valuer-General was contending that the highest and best use of each of the lots was for commercial developments.^[81]

161. [161]
     Accordingly while I find that the appellant has failed to discharge the onus placed upon it with respect to changing the valuation of each of the lots of land, the appellant was successful with respect to grounds 1, 2, and 7 of the grounds of appeal. However, the appellant has failed to satisfy me that the valuation attaching to each of the lots, having regard to the now agreed highest and best use for commercial development was incorrect.

162. [162]
     The conclusion I have reached was made more difficult by a number of matters including:

• There was no real evidence of the basis upon which the original valuation was made in each case;
• There was an almost complete absence of comparable sales upon which to assess the site value of the subject lots;
• There was no compelling evidence which properly established any link between sales of land with highest and best use for residential (student accommodation) and the valuation of land for commercial / commercial use with retail at ground level.
• The joint reports in each appeal were not speaking reports which made clear the basis upon which the various analyses were conducted.

163. [163]
     In all of the circumstances I prefer the approach taken by Mr Hart, and find that the appellant has failed to discharge the onus of proof placed upon it by section 169 of the LVA.

164. [164]
     Accordingly the appeals must be dismissed.

ORDERS: 

1. In appeal LVA023-17 in respect of land located at 345 Queen Street Brisbane and described as Lot 5 on Plan RP200298 and Property ID 1226810, the appeal is dismissed.

2. In appeal LVA025-17 in respect of land located at 100 Creek Street Brisbane and described as Lot 30 on RP145982 and Property ID of 1228031, the appeal is dismissed.

WL COCHRANE

MEMBER OF THE LAND COURT