Land Court of Queensland

LAND COURT OF QUEENSLAND CITATION: ING Management Limited v Department of Natural Resources, Mines and Water [2007] QLC 19 PARTIES: ING Management Limited (appellant) v. Chief Executive, Department of Natural Resources, Mines and Water (respondent) FILE NO.: AV2005/0807 DIVISION: Land Court of Queensland PROCEEDING: An appeal against the unimproved value of an improved commercial property in the Central Business District of Brisbane DELIVERED ON: 27 March 2007 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr JJ Trickett, President ORDER: The appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of Lot 28 on RP 170279, Parish of North Brisbane, (239 George Street) as at 1 October 2003 is determined at Eight Million, Four Hundred Thousand Dollars ($8,400,000). CATCHWORDS: Valuation – unimproved value – improved commercial CBD site – highest and best use – methods of valuation – direct comparison with sales – analyses of sales Valuation – statutory construction – unimproved value of improved land – method of valuation – relevance of sales – analyses of improved sales – comparability of sales for different purpose – Valuation of Land Act 1944 APPEARANCES: Mr R Traves SC and Mr R Anderson, for the appellant Mr T Quinn and Mr S Fynes-Clinton, for the respondent SOLICITORS Gadens Lawyers for the appellant Legal Services, Department of Natural Resources, Mines and Water for the respondent [1] This is an appeal by ING Management Ltd (the appellant) against the unimproved value applied to its improved commercial land by the Chief Executive, Department of Natural Resources, Mines and Water (the respondent) in an annual valuation made by the respondent as at 1 October 2003, under the provisions of the Valuation of Land Act 1944 (the Act). It is one of five appeals by various land owners against the valuations of commercial lands which were heard consecutively with the evidence in each case being the evidence in all others. Background [2] The appellant is the owner of land situated at 239 George Street, on the corner of George and Adelaide Streets, in the Brisbane Central Business District (the CBD). It also has frontage to Burnett Lane. The site has been developed with two separate but interconnected multiple-level high rise office buildings, known as 239 George Street (the Hitachi building) and 15 Adelaide Street. [3] 239 George Street is developed with a refurbished "A" grade office building completed in 1976, comprising basement car parking for 21 vehicles, lower ground floor tavern, ground floor retail and 28 levels of office accommodation. Total net lettable area is 25,126 square metres. It is interconnected with 15 Adelaide Street on four levels through fire stairs. [4] 15 Adelaide Street is developed with a refurbished "B" grade office building completed in 1982, comprising a basement tavern/nightclub, ground floor retail, four levels of parking for 141 vehicles and 14 levels of office accommodation. Total net lettable area is 10,729 square metres. [5] As at 1 October 2003, the respondent applied an unimproved value of $9,500,000 to the land. Following an unsuccessful objection against that valuation, the owner appealed to the Land Court, contending for an unimproved value of $7,600,000. [6] The grounds of appeal were as follows: "The respondent's valuation is excessive having regard to the following: 1. Ground 1 The appellant's assessment of the unimproved value of Lot 28 on RP 170279 (the land) is lower than the respondent's assessment of the unimproved value of the land. 2 Particulars 1.1 The appellant's assessment of the unimproved value of the land is $7,600,000. 1.2 The respondent's assessment of the unimproved value of the land is $9,500,000. 2. Ground 2 The appellant's assessment of the unimproved value of the land is supported by sales evidence. Particulars 2.1 The appellant's assessment of the unimproved value relies on sales of properties in Brisbane including but not limited to: (a) 175 Eagle Street Brisbane (Lot 10 on SP 151098); (b) 75 Eagle Street Brisbane (Lot 3 on SP 140664); and (c) 120 Edward Street Brisbane (Lot 5 on SP 135597). 3. Ground The appellant's assessment of unimproved value of the land has been made in accordance with the Valuation of Land Act, 1944. Particulars 3.1 The appellant has assessed the highest and best use of the land as being its existing use as a commercial property." [7] At the hearing, the appellant relied on the evidence of registered valuer, Mr G Jackson, who submitted valuation reports and gave oral evidence contending for an unimproved value of $7,600,000. [8] The respondent relied on the evidence of registered valuer, Mr M Denman, who did not attempt to support the respondent's issued valuation of $9,500,000, but sought to lead evidence to an unimproved value of $23,041,111 (amended to $19,227,907), made by the deduction approach under s.3(2) of the Act1. However, when that valuation was held to be inadmissible2, Mr Denman provided several alternative unimproved values made by comparison with various types of site sales: Dominant retail use sales $10,700,000; Dominant commercial use sales $14,000,000; Dominant residential use sales $8,900,000. [9] After undertaking these exercises, Mr Denman concluded that the highest and best use of the site was for dominant commercial use, that is, as used. 1 Ex 18, p 2 2 [2006] QLC 30 3 The subject land [10] The subject land is described as Lot 28 on RP 170279, Parish of North Brisbane, with an area of 2,544 m². It is regular in shape, with a frontage to Adelaide Street of 60.51 m and a frontage to George Street of 42.06 m. It also fronts Burnett Lane, a one-way thoroughfare from Albert Street, providing secondary vehicle and loading facilities. [11] The land is situated in the legal precinct, diagonally opposite the Law Courts and is surrounded by predominantly high-rise commercial buildings and retail outlets. From the George Street frontage, it has broken views of the Brisbane River and Southbank, although such views will be affected by the Brisbane Square development on the opposite side of George Street. [12] At the date of valuation, the property was designated as "Multiple-Purpose Centre MP1 – City Centre" under the Brisbane City Plan 2000. It is within the "Retail Heart" precinct of the City Centre Local Plan, which area is intended primarily as an intensive retail locality and which is largely affected by height restrictions. Development in this area is limited to 70 m AHD. [13] The designation allows a wide range of activities to be clustered together. The City Centre is the political, administrative, economic and social heart of Brisbane. [14] The preferred outcomes and strategies for the City Centre include a statement that high intensity offices and higher order retail activities are to be located in a compact City Centre linked by transport corridors to Major Centres. The City Centre is also to contain high intensity residential uses that promote the vitality of the centre and make best use of existing infrastructure. [15] The City Centre contains Queensland's largest office employment area. It is the only major high-rise area in the City and the Plan seeks to promote and support office development in the City Centre. However, both high-rise commercial and residential development are permitted in the area and residential development is encouraged, even as stand-alone projects or in combination, including some component of retail, throughout the City Centre. [16] At the relevant date, the CBD was dominated by commercial office accommodation, with the compact retail trading heart located on the Queen Street Mall. Mr Denman expressed the view that the CBD was undergoing a demographic shift to accommodate more residential development, which he regarded as part of a broader wave of urban renewal, including large-scale residential development within fringe CBD residential localities. 4 The relevant legislation [17] The valuation under appeal is the "unimproved value" of the land. The term is defined, depending whether the land is "unimproved land" or "improved land". Section 3 of the Act provides: "3 Meaning of unimproved value (1) For the purposes of this Act— unimproved value of land means— (a) in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and (b) in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist. (2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act. (3) … (4) Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that – (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made." [18] The subject land in this case is improved land so the provisions of s.3(1)(b) and (2) apply.

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