Land Court of Queensland

LAND COURT OF QUEENSLAND CITATION: ING Office Custodian Pty Limited v Department of Natural Resources, Mines and Water [2007] QLC 39 PARTIES: ING Office Custodian Pty Limited (appellant) v. Chief Executive, Department of Natural Resources, Mines and Water (respondent) FILE NO: AV2005/0806 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: 10 May 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 1 on Registered Plan 122127, Parish of North Brisbane (140 Creek Street), is determined at Fifteen Million Five Hundred Thousand Dollars ($15,500,000). CATCHWORDS: Valuation - unimproved value - Central Business District improved commercial site - highest and best use - methods of valuation - direct comparison with sales - analyses of sales Valuation – statutory construction - Valuation of Land Act 1944 – unimproved value of improved land – method of valuation – relevance of sales – analyses of improved sales – comparability of sales for different purposes – heritage restriction on development 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 Office Custodian Pty Limited (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), as at 1 October 2003, under the provisions of the Valuation of Land Act 1944 (the Act). It is one of five appeals against such valuations by commercial landowners which were heard consecutively, with the evidence in each case being the evidence in the others. Decisions have previously been delivered in respect of three of those cases: Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines and Water1, ING Management Limited v Department of Natural Resources, Mines and Water2 and Multiplex 324 Queen Street Landowner Pty Ltd & Anor v Department of Natural Resources, Mines and Water3. Many of the issues between the parties have been dealt with in those cases and the reasons for the decision in the present case should be read in conjunction with the reasons for decisions in those cases. Background [2] The appellants are the owners of land situated at the intersection of Adelaide, Creek and Ann Streets, bounded by Anzac Square on the south-west, with an area of 5,471 m². The site has a frontage to Adelaide Street of 66.788 metres, a frontage to Creek Street of 82.061 metres and a frontage to Ann Street of 66.522 metres. It is developed with three substantial commercial office buildings, linked by a common glass atrium: Terrica Place (140 Creek Street) is located on the corner of Creek Street and Adelaide Street, comprising 25 levels of office accommodation, first floor foyer, ground floor retail and five basement levels. The building was built in 1995. Ann Street Tower (295 Ann Street) is located on the corner of Ann Street and Creek Street, comprising 16 levels of commercial office accommodation, with ground floor retailing on Creek Street. The building was completed in 1974. Anzac Building – Australian Government Offices (232 Adelaide Street) fronting Adelaide Street and Anzac Square, comprising a heritage listed seven level commercial office building, incorporating basement, ground level and six levels of office accommodation, with two rooftop residential units. The building was constructed in 1936/37. 1 [2007] QLC 10 (the 240 Queen Street case). 2 [2007] QLC 19 (the 239 George Street case). 3 [2007] QLC 36 (the 324 Queen Street case). 2 [3] As at 1 October 2003, the respondent assessed the unimproved value of the subject land at $16,500,000. After unsuccessfully objecting to the respondent against that valuation, the appellant appealed to the Land Court, contending for an unimproved value of $12,375,000. [4] The appellant's grounds of appeal read 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 1 on RP 122127 (the 'land') is lower than the respondent's assessment of the unimproved value of the land. Particulars 1.1 The appellant's assessment of the unimproved value of the land is $12,375,000. 1.2 The respondent's assessment of the unimproved value of the land is $16,500,000. 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 of the land 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 3 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. 4. Ground 4 In assessing the unimproved value of the land the appellant has noted that the Anzac Building located at 232 Adelaide as constructed on the land is included on the Queensland Heritage Register and the Register for National Estate." Those grounds were similar to the grounds in the other four appeals. [5] At the hearing, the appellant relied upon the evidence of registered valuer, Mr G Jackson, who produced valuation reports and gave oral evidence contending for a valuation of $11,950,000. [6] The respondent relied on the evidence of registered valuer, Mr M Denman. Originally the respondent was to rely on the evidence of registered valuer, Mr A Kirby. However, when Mr Kirby became seriously ill, Mr Denman, who had worked with Mr Kirby, took over Mr Kirby's responsibilities and gave evidence in this case. Mr Denman explained that he had reviewed Mr Kirby's valuation and his preparation for these cases and 3 accepted much of his work, but on occasions he had taken a somewhat different view. This led to differences in some of the sales analyses and other figures in the respondent's documentary evidence. Both Mr Denman and Mr Kirby had in turn taken over the responsibility for these cases from the original valuer, Mr Ian Smith, who also was ill. [7] Mr Denman produced valuation reports and gave oral evidence contending for valuations of either $31,500,000 or $20,000,000, depending upon how s.3 of the Act is to be interpreted. [8] The respondent had intended to lead evidence to an unimproved value made by what has been termed the "deduction approach" under s.3(2) of the Act. However, in my decision on preliminary issues in these cases, I held that evidence of valuations made under s.3(2) was inadmissible.4 [9] Mr Jackson had prepared a valuation made under s.3(2) of the Act before the evidence of valuations made by such method was ruled to be inadmissible. However, he would not have relied on that valuation, as it resulted in an unimproved value of $5,050,000, much lower than his contended unimproved value of $11,950,000. The Subject Land [10] The land, the valuation of which is the subject of this appeal, is situated just outside the "Golden Triangle", an area bounded by Edward, Adelaide, Margaret and Wharf Streets, which is the long established prime commercial office location in the CBD. The land is regular in shape, but falls from the Ann Street frontage to the Adelaide Street frontage, which has necessitated excavation to accommodate the office towers on the land. It is surrounded by a mixture of high rise commercial development, with the open space Anzac Square on its south-western boundary and Central Railway Station, opposite the Ann Street frontage. [11] According to Mr Denman, the CBD is undergoing a demographic shift to accommodate more residential development, which he regarded as a broader wave of urban renewal, including large scale residential development within fringe CBD residential localities. At the date of valuation, the subject land was designated "Multi-Purpose Centre (MP1- City Centre) under the Brisbane City Plan 2000, which allows for a wide range of activities to be clustered together. [12] The preferred outcomes and strategies for the City Centre include the location of high intensity offices and higher order retail activities in a compact City Centre, linked by 4 Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources, Mines and Water [2006] QLC 30. 4 public transport to Major Centres. However, 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. [13] Before considering the evidence in this case, I will refer briefly to the legislation relevant to the determination of the valuation. Relevant Legislation [14] The valuation under appeal is the "unimproved value" of the land. That term is defined for both "unimproved land" and "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.

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