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

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 and Southbank, although such views will be affected by the 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 . 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. In Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines and Water [2007] QLC 10 (the 240 Queen Street case), I explained in some detail how the relevant provisions of the Act had been judicially interpreted, including the line of authority to the effect that the best basis for the assessment of unimproved value is by comparison with sales of vacant or lightly improved land. However, where there are no such sales, it is necessary to have regard to improved sales and ascertain the unimproved value of improved land by comparison with unimproved values deduced from the analyses of sales of comparable improved land. [19] The method of valuation prescribed in s.3(2) of the Act sets the minimum figure for the unimproved value, as the valuation arrived at under s.3(1)(b) "… shall in no case be less than …" the valuation arrived at under s.3(2). Both Mr Denman and Mr Jackson made 5 valuations under s.3(2), but for the reasons in my decision on preliminary points relating to the CBD appeals, I held that the evidence of the valuations made under s.3(2) of the Act was not admissible in these cases.3 [20] In the 240 Queen Street case, I discussed what was referred to as "Mr Denman's theory" that for successfully developed income earning properties, such as the CBD appeal lands, the unimproved value of such land should be arrived at by deducting the value of improvements from the improved value of the property itself (the deduction method), or by comparison with unimproved values derived from sales of similar improved land. Only by such methods, according to the theory, could the true unimproved value of such properties be ascertained.4 [21] However, for the reasons explained in that decision, I found that I could have no confidence in the analyses of the improved sales by either Mr Jackson or Mr Denman, as the evidence in that regard was unreliable. Therefore, Mr Denman's theory was irrelevant to that case and I had to rely on the site sales.5 The valuers' methodology Mr Jackson's approach [22] Mr Jackson asserted that the highest and best use of the subject land was for commercial office development, with ground floor retail, that is, as used. He therefore relied primarily on commercial site sales to arrive at his contended unimproved value of $7,600,000. [23] However, he also undertook the analyses of three improved commercial sales but only, he said, for the purpose of establishing whether a scarcity premium had been paid for the commercial site sales. [24] Mr Jackson also had regard to three sales of residential development sites. However, he regarded the residential sales as not relevant to the unimproved value of the subject land because of their location and the difficulty of comparing the development densities approved or proposed for the sales and the unknown development density which could be achieved on the subject land. [25] In addition, Mr Jackson rejected the residential sales because he regarded the commercial and residential markets as separate and distinct and the residential sales would be relevant only if the subject land had potential for residential development. He refused to consider that there was any such potential, because of his interpretation of the Land Appeal Court decision in Department of Natural Resources and Mines v QNI Metals Pty Ltd [2002]

3 Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources and Mines [2006] QLC 30 4 [2007] QLC 10 at [34] to [43] 5 [2007] QLC 10 at [155] 6 QLAC 71, which he interpreted to establish the proposition that for land to have a higher and better use than its present use, it must be demonstrated that the land would have an unimproved value higher than the value for its present use, plus the cost of demolishing the structures on that land. In the case of the subject land that could not be demonstrated. [26] However, in the 240 Queen Street case, I expressed the view that Mr Jackson's interpretation of QNI Metals is mistaken.6 Therefore, the decision in the QNI Metals case does not prevent regard being had to the residential sales and they should be considered as part of the overall sales pattern in the CBD. I will consider those sales and the other site sales later in these reasons. Mr Denman's approach [27] Mr Denman adopted two methods of valuation, the deduction approach under s.3(2) of the Act and by direct comparison with unimproved values derived from site sales. When his s.3(2) valuation was ruled inadmissible, Mr Denman reverted to the direct comparison method. [28] The designation of Multi-Purpose Centre MP1 – City Centre, under the planning scheme, allows the subject land to be developed for retail, commercial, residential or a mixture of those uses. Mr Denman reasoned that in assessing the value of the subject land as if it was unimproved land, regard should be had to what a prudent purchaser would pay for each of those uses as there would be competition for available sites for development for each such use. Retail use sales [29] Mr Denman referred to two site sales, the dominant use of which he considered to be retail. The first of those sales was the property situated at 226 Queen Street, with an area of 5,378 m². According to Mr Denman, that property sold in December 1997 for $51,000,000, which he analysed to $9,438 per m² and resold in January 2000 for $59,250,000, which he analysed to $11,783 per m². [30] Mr Jackson explained the sale was part of a complex transaction related to a subsequent purchase of adjoining lots for the construction in two stages of the development known as Queen's Plaza, a large retail development of up to six storeys with frontage to the Queen Street Mall. In cross-examination, it emerged that Mr Denman knew little detail about the overall transaction and he agreed that his analysis of the sale was unreliable.7 [31] Mr Denman's second retail sale was the property referred to as 175 Albert Street, which is an accumulation of sites acquired between 2001 and 2005 by the Queensland Investment Corporation (QIC) on the corner of Albert and Elizabeth Streets. That sale was discussed

6 [2007] QLC 10, [51] to [59] 7 T 720 7 in the 240 Queen Street case, but rejected because of the circumstances of the transactions and because the sale was an unsafe comparison.8 [32] However, even if the sale did provide a basis for the assessment of the retail unimproved value of the subject land, Mr Denman considered the sale to be superior on a pro rata basis because of its corner location and its closeness to the Mall and its superior development potential. Notwithstanding the potential of the subject land for greater retail use than as presently developed, Mr Denman's assessment of the dominant retail use at $4,200 per m², or $10,700,000, was less than his assessment of the dominant commercial use. The commercial site sales [33] Mr Denman arrived at a dominant commercial use unimproved value of $5,200 per m², or $13,200,000, by comparison with three commercial site sales. Those same three sales formed the basis for his assessment of the unimproved value in the 240 Queen Street case. In that case, I rejected the sales of 120 Edward Street and 70 Queen Street for the reasons set out in that decision.9 His remaining sale was 6 Queen Street in June 2003, which was also the primary sale referred to by Mr Jackson. [34] Mr Jackson's other commercial site sales were: 175 Eagle Street (parent parcel) in October 2000; 75 Eagle Street (Riparian) in December 1998; and 120 Edward Street in May 1998. [35] Mr Jackson also relied on those four sales in the 240 Queen Street case and while I considered that those sales were relevant in establishing the unimproved values for earlier years, they have little relevance in the present cases.10 [36] As in the 240 Queen Street case, the only relevant commercial site sale was the sale common to both valuers, 6 Queen Street. That was the sale of 7,348 m² in June 2003 for $28,028,000, from Suncorp Metway to Brisbane Square Pty Ltd. Both valuers placed substantial reliance on that sale despite its somewhat unusual circumstances, but adopted different approaches to its analysis. [37] In the 240 Queen Street case, I examined their different approaches and considered the respondent's criticism of the sale before determining that the sale should not be disregarded.11 I found that the sale was relevant, but difficult to compare directly with the land at 240 Queen Street, because of their different attributes.

8 [2007] QLC 10 at [80], [81] 9 [2007] QLC 10 at [85] to [87] 10 [2007] QLC 10 at [187] to [203] 11 [2007] QLC 10 at [128] 8 The improved commercial sales [38] In addition to the commercial site sales, Mr Jackson analysed three improved commercial sales in the CBD, deducting the added value of improvements to derive the unimproved value of each. However, he said that he did so only to establish whether there was any scarcity premium paid by the purchasers of the commercial site sales in accordance with the decision of the High Court in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111. From his analyses of those sales, he was satisfied that no scarcity premium had been paid for the commercial site sales. However, how he came to that conclusion was not explained, but in the absence of any evidence to the contrary, I accept that there was no scarcity premium in those site sales. [39] Mr Denman analysed the sales of three improved properties which showed considerably higher unimproved values than the commercial site sales. This difference he described as a "discrepancy" between the two. As explained in the 240 Queen Street case, he attributed the difference between the unimproved values from the site sales and the unimproved values derived from the improved sales to his theory that where land is successfully used for its highest and best use, the analysis of an improved sale of that land provides a more reliable guide to the unimproved value of that land. Under his theory, sales of vacant or lightly improved land do not truly identify the value of the land component of such improved land, because there will be an erroneously lower level of unimproved value in the vacant or lightly improved sales, which have never been put to their unfulfilled development potential and associated risks. Therefore, the theory goes, the unimproved values derived from sales of successfully improved properties will include the "imbedded value" of the profit and risk component and will always be higher than unimproved values derived from vacant or lightly improved land. [40] In this case, unlike the 240 Queen Street case, there was no sale of the subject land. Both valuers had relied on a valuation undertaken by Urbis Pty Ltd for asset and trust reporting purposes as at 1 January 2003, for $92,000,000, as the improved value for their respective s.3(2) valuations. While the evidence of the s.3(2) valuations was held to be inadmissible in these cases,12 the respondent contended that the deduction method could have been undertaken under s.3(1)(b) and such evidence should be admissible. However, in the absence of a sale of the subject land, the deduction method would have suffered from the same defects that caused the s.3(2) evidence to be rendered inadmissible. I therefore

12 [2006] QLC 30 9 ruled that it was inadmissible, as such a contention was seeking to advance the s.3(2) argument in a different form.13 [41] Furthermore, Mr Jackson relied on the 2003 insurance reinstatement cost assessment by quantity surveyors, Napier and Blakeley Pty Ltd, as the starting point for the assessment for the value of tangible improvements. Mr Denman adopted his own assessment of replacement cost. He thought that the Napier and Blakeley assessment was excessive compared with other CBD properties because, as he put it, "a prudent purchaser would not rebuild in the same form …", but would rebuild in a "contemporary fashion". He stated that his assessment is on the basis of depreciated "new equivalent" cost rather than "replacement" cost.14 [42] As has been mentioned in previous cases, a valuer cannot rely on the professional report of another professional, without that person being called to give evidence as to his or her opinion.15 The fact that both valuers in this case adopted the Urbis valuation does not make it acceptable. The valuers who made that valuation were not called to give evidence. Similarly, Mr Jackson cannot simply adopt the insurance reinstatement cost assessment because the reasoning of the quantity surveyor who made that assessment was not able to be tested. Without evidence from the experts who made those valuation and cost assessment reports, they are of no weight. [43] On the other hand, the exercise conducted by Mr Denman is simply beyond his expertise. Mr Denman was accorded the status of an expert witness because of his training, skill and experience in valuing land. The exercise he has purported to undertake is one for an expert quantity surveyor, not a valuer. [44] Therefore, in my view, even if it was admissible, evidence of the deduction method of valuation under s.3(1)(b) in this case, would be of no utility. However, Mr Denman made some attempt to rely on the analyses of improved sales in accordance with his theory, to arrive at the unimproved value of the subject land. Although he placed no reliance upon them, Mr Jackson also analysed improved sales. [45] Mr Jackson analysed three improved sales: 324 Queen Street, 260 Queen Street and 145 Eagle Street. Mr Denman also analysed the sale of 324 Queen Street, as well as the sales of 240 Queen Street and 157A Ann Street. Mr Denman later provided an analysis of the sale for 260 Queen Street. [46] The following table summarising the valuers' analyses of three of those commercial sales appeared at para [145] of the 240 Queen Street case:

13 T 912 14 Ex 16, p 24 15 Perpetual Trustee Co Ltd v DNRMW [2006] QLC 17; 240 Queen Street case [2007] QLC 10 10 Sale Date of Sale Sale Price Mr Jackson's Mr Denman's analysis analysis

240 Queen Street December 2003 $116,439,300 $8,084,000 $33,877,632 ($3,801 per m²) ($15,927 per m²) 260 Queen Street December 2002 $24,000,000 $5,347,000 $8,648,000 ($3,863 per m²) ($6,249 per m²) 324 Queen Street June 2001 $77,260,000 $6,646,000 $17,082,170 ($3,650 per m²) ($9,386 per m²)16 (Mr Denman adopted a sale price of $80,000,000 for the sale of 324 Queen Street). [47] For the reasons explained in that case, I can have no confidence in the valuers' analyses of those improved sales. [48] Mr Jackson did not analyse the sale of 157A Ann Street, as it was "an entirely different location within the Brisbane CBD and affords no comparability".17 Mr Denman did not analyse the sale of 145 Eagle Street, but criticised Mr Jackson's analysis. From the evidence in respect of both of those sales, I can have no more confidence in their analyses than in the three sales scheduled above. [49] As part of his alternative valuation, Mr Denman undertook an exercise based on the possible highest and best use of the subject land for residential purposes, utilising four residential development site sales. (i) 333 Ann Street, area 1,563 m², in September 2002, for $5,272,727, or $3,373 per m². According to Mr Denman, development approval was obtained in early 2002 for a 41- level mixed hotel and residential development, but the site is affected by an Energex substation and a heritage-listed façade. Overall he regarded the sale as slightly inferior to the subject land on a pro rata basis. (ii) 89 Charlotte Street (Festival Towers), area 2,744 m², in January 2003, for $13,250,000. When Mr Denman added $442,000 for the cost of demolition, he analysed the sale to $4,990 per m². Overall he considered the sale to be superior to the subject land on a pro rata basis. (iii) 420 Queen Street (Aurora), area 3,099 m², in August 2001, for $12,000,000. When Mr Denman added $439,985 for demolition, he analysed the sale to $4,031 per m². He considered this sale to have superior view corridors and development intensity, but inferior location. (iv) 21 Mary Street, area 908 m², in April 2001, for $4,000,000. When Mr Denman added $200,000 for the cost of demolition, he analysed the sale to $4,626 per m². He

16 Ex 53, p 22 17 Ex 10, p 18 11 commented that this was one of the first sales to indicate a booming market for residential development in the CBD. Overall he regarded the sale as superior to the subject land on a pro rata basis. [50] From those residential sales, Mr Denman concluded that if the highest and best use of the land was residential, it should be valued at $3,500 per m², or $8,900,000 (rounded). That was lower than the unimproved value of $14,000,000 which he arrived at on a commercial highest and best use. [51] Mr Jackson's approach to the residential sales was different. From the commencement of these cases, Mr Jackson contended that the highest and best use of each of the appeal properties was commercial, with ground-floor retail. He rejected any suggestion of residential potential and regarded the residential sales as irrelevant. [52] However, despite that opinion, in the present case he did consider three sales of sites for residential development, including the sale of Aurora at 420 Queen Street. After adjusting the sale price for deferred settlement, he analysed that sale to $3,284 per m². The other two sales referred to by Mr Jackson, but not considered by Mr Denman, were:  400 George Street, area 5,098 m², for $15,000,000, in August 2003. Mr Jackson adjusted that sale price for deferred settlement and analysed the sale to $2,789 per m². This was the site of the proposed "The Georgian" development which was abandoned and the site then sold by the joint venturers, Devine and Urban Properties to Ross Nielson Properties. Mr Denman challenged that sale on the basis that it was never settled and parts of it subsequently sold separately to different purchasers in September 2004. He noted that part (388 George Street) had later been on-sold for commercial office development, with no residential development proposed. Mr Jackson explained that the transaction he relied on was one in which Ross Nielson Properties gained control of the land via an option and sold the 388 George Street part prior to settlement.

 45 Eagle Street, area 4,206 m², for $16,000,000 in January 2004. This site was improved with a two-storey retail complex and two levels of basement parking, part of which was used by the adjoining Waterfront Place. It was purchased by the Stockland Property Group, the owner of the adjoining Waterfront Place, for future residential development. Mr Jackson analysed the sale by deducting the present value of existing leases and basement carparks and adding the cost of demolition to the structures to show an unimproved value of $2,675 per m².

[53] Mr Denman criticised Mr Jackson's analysis of that sale, suggesting instead alternative analyses reflecting $4,042 per m² and $4,422 per m², of which Mr Jackson in turn was critical. [54] Although that sale is close to the date of valuation, I find it to be of no assistance. The extent of improvements on the site and the complexities of the sale make the analysis of it to unimproved unsafe. It suffers from similar difficulties to those which pervaded the valuers' analyses of the improved sales.

12 [55] Although in this case the residential sales indicated to Mr Denman a level of value for the subject land which was less than the level of value indicated by the commercial site sales, he regarded the residential sales as important indicators of value for properties in the CBD. [56] In the 240 Queen Street case, I accepted the "theory of merged markets", that at the date of valuation, purchasers of development sites in the CBD, whether for commercial or residential purposes, were competing in the same market.18 While all properties in the CBD formed part of one market, that did not mean that developers would pay the same price for each site regardless of the type of development that was proposed. Clearly, some sites would have attributes which would dictate commercial development, while other sites would have attributes which would better suit residential development and some sites might be suitable for either development, or perhaps mixed development. [57] Mr Jackson did not accept that the residential sales were suitable as a basis for commercial sites. His arguments against the use of residential sale can be summarised as follows: Residential sales reflect a rate per m² ranging from $2,675 to $3,284, the variance occurring because of the location and level of density and aspect able to be achieved. Each developed site will enjoy views and aspect over the Brisbane River and/or the Botanical Gardens. The difficulty in applying these sales to the subject land is the level of density achievable on the sales, varying from 47 levels to proposed 80 levels, compared with the unknown level of residential density able to be achieved on the subject land. The valuers' conclusions [58] Mr Jackson relied on the commercial site sales for his contended unimproved value of $7,600,000. His preferred sales showed a range of $2,841 per m² for 120 Edward Street in May 1998, to $3,893 per m² for 79 Eagle Street (Riparian) in December 1998. However the closest sale in situation and date was 6 Queen Street, in June 2003, which showed $3,467 per m², which he considered to be superior to the subject land because of its four street frontages and its views over the Brisbane River which cannot be built out. From those sales he adopted $3,000 per m² for the subject land. [59] Mr Denman's deduction method of valuation was rejected for the reasons given previously. After considering the sales for the alternative highest and best uses, he adopted his assessment of the commercial highest and best use at $14,000,000, which was higher than the others. From his analysis of the commercial site sales, he reasoned that

18 [2007] QLC 10 at [161] and following 13 they ranged from $3,293 per m² to $5,705 per m² on a site area basis, and from $382 per m² to $479 per m² on a net lettable area basis. For the subject land he adopted: Site area: 2,544 m² at $5,200 per m² = $13,200,000 (rounded) NLA: 36,901 m² at $400 per m² = $14,800,000 (rounded) Mid-point $14,000,000 [60] In the 240 Queen Street case, I found that of the commercial sales, only the sale of 6 Queen Street was relevant, but difficult to compare directly with that land, because of their respective attributes. The sale is more relevant to the subject land, being directly opposite, however, it is still difficult to compare directly. Both valuers placed considerable reliance on that sale, despite the criticism of it by counsel for the respondent. As explained in the 240 Queen Street case, I preferred Mr Jackson's approach to that sale, although not his adjustment for agreements for lease and development approval. Mr Jackson's analysed unimproved value over the whole site was $3,467 per m². [61] He did not think that the net lettable area analysis was a reliable method in the CBD because of the differing scale of development, densities and height, as well as the assumptions as to optimum development which must be made.19 In this case, even Mr Denman recognised its inconsistencies.20 [62] In the 240 Queen Street case, I dealt with the question of whether the residential sales were relevant to the valuation of the commercial lands and found that they were, as the markets for development sites had merged even further than they had in 2001 and 2002, of which there had been evidence in the Perpetual Trustee Company case.21 The most recent residential sales [63] In the present cases, there was evidence that residential sales in the CBD, close to the date of valuation, reflected unimproved values ranging from $4,300 per m² to $5,000 per m². Those sales included 64 Mary Street (M on Mary) in January 2003, at $4,260 per m², 89 Charlotte Street (Festival Towers) in January 2003 at $4,990 per m² and 131 Mary Street (Vision Tower) in March 2004 at $4,382 per m².22 [64] In George Street, but further from the Queen Street Mall than the subject land, was the sale of 400 George Street in August 2003, analysed by Mr Jackson at $2,789 per m², or $2,942 per m², if there had been no adjustment for deferred settlement. However, that site is much larger than the subject land.

19 Ex 10, p 17 20 T 1083 - 1085 21 [2006] QLC 17 at [126] 22 Ex 89, p 37 14 [65] Mr Denman challenged that sale because of its circumstances. It seems that it was on- sold as two parcels in December 2004, for $15,985,000. However, Mr Jackson was fully aware of those circumstances and still accepted it as evidence of value. [66] It seems to me that those later residential sales demonstrate the range of rates per m² that was being paid for sites with appropriate residential attributes, but the evidence indicates that the market for well-located commercial land was higher. Based on the later residential sales, plus the sale of 6 Queen Street, I found that the prime commercial site at 240 Queen Street had an unimproved value of $6,300 per m² as at 1 October 2003.23 [67] It is common ground that the subject land is not in such a prime commercial location. It is situated along George Street from the less-trafficked end of the Queen Street Mall, on the corner of George and Adelaide Streets and, although surrounded by commercial buildings, in what might be termed the legal and administrative precinct, rather than the prime commercial precinct. At the date of valuation, the site for the Brisbane Square development on the opposite side of George Street had just been purchased. It was also common ground that the most significant sale is 6 Queen Street.24 Mr Denman regarded it as so significant that he revised his contended unimproved value for the subject land from $14,000,000 to $12,800,000, as a consequence of adjusting the sale price for GST.25 [68] In his original analysis of the sale, Mr Denman added the cost of demolition of the old Trittons building of $500,000 to the sale price. Mr Jackson did not allow any demolition cost in his analysis of the sale. However, there is evidence that the building at 40 Queen Street (part of the sale land) was not demolished by the purchaser.26 The demolition cost of $500,000 was not established by evidence, but it was not challenged. If that demolition cost is added to the ex-GST sale price of $25,480,000, the result is a rate of $3,536 per m². [69] The valuers were in agreement that the sale is superior to the subject land. However, it is also substantially larger at 7,348 m², compared with the subject land at 2,544 m², nearly three times the size. Although there was no evidence of what allowance should be made for such a size difference in the rates per m², I am of the view that some allowance should be made, offsetting to some extent the superiority in the rate per m² of the sale land. The Statutory Presumption of Correctness [70] In the 240 Queen Street case, I considered the effect of s.33 of the Act. In this case, the valuation made by the respondent of $9,500,000 is deemed to be correct until proved

23 [2007] QLC 10 24 T 1039 25 T 1711 26 Ex 17, Annex 15 otherwise. For reasons similar to those in the 240 Queen Street case, I find that the evidence in this case has proved the respondent's valuation not to be correct. The statutory presumption has therefore been rebutted. Conclusion [71] I have come to the conclusion that $5,031 per m² adopted by Mr Denman for the valuation of the subject land is excessive, while the rate of $3,000 per m² adopted by Mr Jackson is somewhat too low. Having regard to the whole of the evidence, I am of the opinion that the rate of $3,300 per m² should be determined for the subject land as at 1 October 2003. That equates to $8,400,000 (rounded). 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).

JJ TRICKETT PRESIDENT

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