BWP Management Ltd v Valuer-General (No 2) [2018] QLC 30

LAND COURT OF QUEENSLAND CITATION: BWP Management Ltd v Valuer-General (No 2) [2018] QLC 30 PARTIES: BWP Management Ltd (appellant) v Valuer-General (respondent) FILE NO: LVA037-16 DIVISION: General Division PROCEEDING: Appeal against valuation under the Land Valuation Act 2010 DELIVERED ON: 28 September 2018 DELIVERED AT: Brisbane HEARD ON: 7 & 8 December 2017 Submissions closed 6 February 2018 HEARD AT: Brisbane MEMBER: PA Smith ORDERs: 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. CATCHWORDS: REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellant objects to valuation – where the site value is the basis of valuation – consideration of other bulky goods sites including those distant to the locality of the subject – where comparable sales locations are removed from the subject – where sales have a different highest and best use to the subject – where sales are described as not directly comparable – where sales are described as secondary evidence – where there are site and development costs – where expert opinion adjustment is required PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – GROUNDS OF APPEAL – where -- 1 of 63 -- 2 respondent alleges the appellant has not met the onus of proof – balance of probabilities REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – Bona fide sale – s 18 – Spencer test – whether property was reasonably exposed to the market – how much a hypothetical prudent purchaser would pay for a sale site improved REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – site improved land – whether an uplift is allowable to raise an unimproved site to a site level equivalence so as to be comparable to the site value of the subject – where there are site work costs – whether site works are site improvements within the meaning of s 23 – whether site works are non-site improvements within the meaning of s 24 EVIDENCE – GENERAL PRINCIPLES – RULING AND FINDINGS – where quantity surveying evidence is required to quantify site works – where quantity surveying evidence is uncontested EVIDENCE – GENERAL PRINCIPLES – RULING AND FINDINGS – where valuation experts gave concurrent evidence – whether expert evidence from valuation experts can be relied upon – where a valuer gave conflicting expert evidence in like circumstances including the same sale, valuation date and bulky goods use in a JER for a different valuation appeal – impact on expert evidence in current case Land Valuation Act 2010 s 18, s 19, s 23, s 24, s 169(3) BG & AK Wilson v Chief Executive, Department of Lands (1994-5) 15 QLCR 63, applied Body Corporate for Wendall Court & Anor v Valuer-General [2015] QLC 16, cited Brisbane City Council v Mio Art Pty Ltd & Anor [2012] 2 Qd R 1, followed BWP Management Limited v Valuer-General [2017] QLC 56, cited Fairfax v Department of Natural Resources and Mines [2005] QLC 11, applied GPT Re Limited v Valuer-General [2018] QLC 9, cited Leichhardt Municipal Council v Seatainer Terminals Pty Ltd & Anor (1981) 48 LGRA 409, applied Liat Nominees Pty Ltd v Chief Executive, Department of Lands [1996] QLC 160, followed Macarthur Central Shopping Centre Pty Ltd as TTE v Valuer General (No. 2) (2016) QLC 80, applied Meiers v Valuer-General [2012] QLC 19, applied -- 2 of 63 -- 3 Nimmo v Department of Natural Resources and Mines (2005) 26 QLCR 66, applied Secretary of State for Foreign Affairs v Charles Pilling & Co (1901) AC 373, followed Spencer v The Commonwealth of Australia (1907) 5 CLR 418, followed Steers v Valuer-General [2012] QLC 12, applied Wellington as Tte for the OR & R Wellington Superfund ABN 81 576 722 911 and the OR & R Partnership ABN 84 165 075 135 v Blackwood Exploration Pty Ltd [2018] QLC 12, applied APPEARANCES: DD Purcell for the appellant JP Hastie (instructed by Crown Law) for the respondent Background The appellant, BWP Management Ltd (BWP), has appealed against the respondent, Valuer-General’s decision on objection as a consequence of which BWP’s land situated at 65-85 Browns Plains Road, Browns Plains, Queensland received a site valuation as at 1 October 2014 of $8,450,000. Although BWP contends in its Notice of Appeal1 for a site valuation of $6,200,000, the final position adopted by BWP is $7,050,000.2 The subject land Lot 1 on SP 195265 is subject to a number of commercial leases and easements with a total burdened area of 56 m2. The easement area makes up 0.0018 per cent of the subject sites gross area. It is agreed by the parties and their respective valuers that the subject land has a total land area of 30,750 m2 and an unencumbered area of 30,694 m2.3 The existing development on the site is a single level Bunnings warehouse. Water, sewerage, telecommunications and electricity are available to the site. 1 Ex 2. 2 BWP’s Submissions, page 1. 3 Ex 6, page 7–9. -- 3 of 63 -- 4 The hearing Although originally set to be heard in November 2017, a successful application by the Valuer-General delayed this hearing for a short period. The hearing of this matter commenced on 7 December 2017 and finished on 8 December 2017. Upon conclusion of the hearing I allowed time for both parties to file written submissions. The production of written submissions closed upon BWP’s reply on 6 February 2018. BWP was represented by Mr Purcell of Counsel on a direct brief. The Valuer-General was represented by Mr Hastie of Counsel, instructed by Crown law. A total of three experts gave oral evidence at the hearing. Expert valuation evidence was given by Mr Coen Ladewig, called by BWP, and Mr Allister Elliott, called by the Valuer-General. The oral evidence of both valuation experts was given concurrently. The Valuer-General also relied upon the quantity surveying evidence of Mr Malcolm Davidson. I was impressed with both Counsel’s adaptability in relation to their valuation experts providing concurrent evidence given that neither had been involved in concurrent evidence before these proceedings. I have taken all evidence and submissions submitted by both parties into account. In these reasons I refer to the salient points but not all the evidence and submissions that I considered in making my decision. The valuation process It is the responsibility of the Valuer-General pursuant to the provisions of the Land Valuation Act 2010 (LVA) to undertake valuations of all properties throughout Queensland. Those valuations are the basis for rating and land tax and related purposes. I note with approval what his Honour Member Isdale said in Steers v Valuer-General: “[8] The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) -- 4 of 63 -- 5 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381: ‘Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.’ [9] This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”4 Market value is a relevant feature to consider under the LVA. As then President Trickett said in Fairfax v Department of Natural Resources and Mines: “[11] The principles for determination of the ‘market value’ of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffith CJ at 432 and Isaacs J at 441). [12] It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that: ‘Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but - as with other commodities - the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales.’”5 4 [2012] QLC 12. 5 [2005] QLC 11. -- 5 of 63 -- 6 The concept of a bona fide sale in the Spencer test6 has in essence been codified in s 18 of the LVA. As the question of what is, or is not, a bona fide sale has been raised as an issue in this appeal, it is essential to closely consider the specific provisions of the LVA. Section 16 of the LVA provides that, for deciding the value of land, all land is taken to be granted in fee simple; that is, freehold. Section 17 then goes on to provide as follows: 17 What is the land’s expected realisation (1) The expected realisation of land under a bona fide sale is the capital sum that its unencumbered estate in fee simple might be expected to realise if that estate were negotiated for sale as a bona fide sale. (2) In this section— unencumbered means unencumbered by any lease, agreement for lease, mortgage or other charge. Bona fide sale is then described in s 18 of the LVA: 18 What is a bona fide sale (1) A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)— (a) a willing, but not anxious, buyer and seller; (b) a reasonable period within which to negotiate the sale; (c) that the property was reasonably exposed to the market. (2) For subsection (1), in considering whether terms and conditions are reasonable, regard must be had to— (a) the land’s location and nature; and (b) the state of the market for land of the same type. (3) To remove any doubt, it is declared that if— (a) there is a sale of the land in question; and (b) the bona fide sale tests are complied with; the sale is a bona fide sale. (4) In this section— land in question means land whose value is being decided. As indicated, the subject land in this matter has received a site value under the LVA. An important aspect of site value, depending on the circumstances of the particular matter, is the question of what are site improvements. Section 19 of the LVA provide as follows: 19 What is the value of improved land 6 Spencer v The Commonwealth of Australia (1907) 5 CLR 418. -- 6 of 63 -- 7 (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. (2) However, the land’s site value is affected by any other relevant provisions of this chapter. Various statutory assumptions for existing uses are set out in s 22: 22 Assumptions for existing uses (1) This section does not apply for a Land Act rental valuation. (2) In deciding land’s site value, the following must be assumed (the existing use assumptions) — (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, (each an existing use) on the valuation day; (b) improvements may be continued or made to the land to allow it to continue to be used for any existing use. (3) To remove any doubt, the following are declared for the existing use assumptions— (a) they do not prevent regard being had under section 17 to any other purpose for which the land might be used; (b) in deciding the site value, new non-site improvements may be hypothesised instead of non-site improvements actually used for an existing use. The provisions of s 23 of the LVA are of importance in determining certain aspects of this appeal. The section provides as follows: 23 What are site improvements (1) Site improvements, to land, means any of the following done to the land— (a) clearing vegetation on the land; (b) picking up and removing stones; (c) improving soil fertility or soil structure; (d) if the land was contaminated land as defined under the Environmental Protection Act 1994 –works to manage or remedy the contamination; (e) restoring, rehabilitating or improving its surface by filling, grading or levelling, not being irrigation or conservation works; (f) reclamation by draining or filling, including retaining walls and other works for the reclamation; (g) underground drainage; (h) any other works done to the land necessary to improve or prepare it for development. (2) However, a thing done as mentioned in subsection (1)— (a) is a site improvement only to the extent it increases the land’s value; and (b) ceases to be site improvement if the benefit was exhausted on the valuation day. (3) Also, excavating the land for any of the following is not a site improvement— (a) footing or foundations; (b) underground building levels. -- 7 of 63 -- 8 Example of an underground building level- an underground car park (4) In this section— clearing vegetation on land— (a) means removing, cutting down, ringbarking, pushing over, poisoning or destroying in any way, including by burning, flooding or draining; but (b) does not include destroying standing vegetation by stock or lopping a tree. Other sections of the LVA are also relevant. Section 169(1) provides that the appeal is by way of rehearing. Further, section 169(3) places the onus of proof for each of the grounds of appeal on the appellant, BWP. Importantly, it should be noted that appeals under the LVA are to be determined on what is essentially the balance of probabilities.7 Summary positions of the parties Both BWP and the Valuer-General have provided extensive written and oral submissions to support their assertions. The following paragraphs are adopted from BWP’s closing submissions, outlining a “summary of the Appellant’s case”.8 BWP says the determination of the site value of the land as at 1 October 2014 ultimately turns on the utility of the properly analysed sales evidence. BWP argues that although the Valuer-General’s valuer, Mr Elliott, relies on six sales in support of the $8,450,000 issued valuation, other than the rather generic “taking into consideration the subject property’s characteristics, and differences in locational attributes and utility”, BWP considers Mr Elliott’s evidence fails to disclose any reasoned opinion or discernible exercise in evaluative judgment as to the application of that comparable sales evidence in valuing the subject at a level supporting the issued valuation. In light of the sales evidence argued to support the issued valuation, BWP contends that Mr Elliott relies upon four sales in the greater south-east Queensland region, substantially removed from the subject land due to what can only be perceived as limited sales of comparable vacant or lightly improved land allowing a bulky goods retail development in the locality. In doing so, BWP submits that Mr Elliott was required to make substantial 7 Meiers v Valuer-General [2012] QLC 19 [27]. 8 BWP’s Submissions, page 3, paragraph 15–25. -- 8 of 63 -- 9 compromise in comparability to the subject in the form of inferior zoning, non- comparable uses, locational differentials, size and development potential. BWP contends that the Valuer-General’s Sales 4 and 5, being the Northlakes and Maroochydore sales, at their highest, provide only secondary sales evidence of the site value of the subject given their location and distance from the subject. As BWP puts it, the best evidence of the site value of the subject land is properly derived from the analysis of comparable sales in the general locality of the subject. BWP alleges that the market for land for “bulky goods retail” uses is not an “ideal market” in an economic sense across the greater south-east Queensland region. As such, BWP contends that, without considered and proper adjustment, such sales are not comparable on a like for like basis. In BWP’s submission, the significant degree of subjective adjustment necessary to allow a like for like comparison of those sales to the subject, unable to be objectively tested by the Court, limits the confidence the Court can place upon them and the inferences drawn from such analysis, rendering the analysis inutile. BWP says that the Valuer-General’s Sale 2 at 2 Mavis Court, Ormeau, is plainly not directly comparable to the subject as it provides no probative evidence of the site value of the land. Further, BWP submits that such sale should be disregarded in light of the town planning evidence and Mr Elliott’s properly made concessions. BWP contends that the Valuer-General’s Sale 1 at 1-3 Newheath Drive, Arundel, is similarly affected due to it being sold as an industrial zoned site, at an industrial rate. BWP says Mr Elliott has failed to properly analyse such sale to allow a like for like comparison to the subject, thereby precluding its utility in deriving a site value on a direct comparison approach. In doing so, BWP contends that Mr Elliott has erred in applying an industrial rate to a bulk goods use. BWP notes that the sale is some 42.6 km removed from the subject which adds an additional layer of subjective uncertainty, suffering from the same deficiency as Sales 4 and 5 in that regard. On that premise, BWP submits that Sale 1 provides no probative evidence of the site value of the land and similarly ought to be rejected. In BWP’s submission, of the six sales relied upon by the Valuer-General in support of its issued valuation, only the two remaining sales, properly analysed, provide any -- 9 of 63 -- 10 evidentiary basis upon which inferences can be drawn as to the site value of the subject land. These are the common sale and the Valuer-General’s Sale 3 at 1 Main Street, Springfield. BWP submits that Mr Ladewig adopted a conventional approach in determining the site value of the subject by analysing comparable sales of vacant or lightly improved land in the locality of the subject. This approach avoids the need for substantial subjective adjustments to Mr Ladewig’s sales analysis. He then ranks those sales based upon their analysed rate/m2 and statutory value applied by the Valuer-General to produce a range before making appropriate adjustments having regard to his opinion as to inferiority or superiority of those sales to determine the appropriate applied unencumbered rate of $235/m2 for the subject having regard to those sales.9 BWP submits that, properly analysed, the sales evidence comfortably supports Mr Ladewig’s valuation of the subject at $7,050,000 as at 1 October 2014. As with BWP’s summary outlined in the aforementioned paragraphs, the following paragraphs are adapted from the Valuer-General’s “Summary of the Submissions of the Respondent”. The Valuer-General confirms that the issued valuation of the subject land was $8,450,000 and that BWP contends that the value of the subject land should be $7,050,000. The relevant date of the issued valuation is 1 October 2014 which took effect for rating and land tax purposes on 30 June 2015. The Valuer-General submits that BWP has failed to discharge its onus under s 169(3) of the LVA and, consequently, the appeal ought to be dismissed or, alternatively, the issued value ought to be confirmed. As the Valuer-General puts it, this submission is so because: “(a) only two of the sales relied up by Appellant, being the two common sales of Compton Road, Underwood and Main Street, Springfield represent good comparators to the Subject Land; (b) the Logandowns Drive, Meadowbrook sale relied upon by Appellant is not a bona fide sale because it was in the nature of a joint venture and, in any event, has a different highest and best use from the Subject Land; (c) the Glasson Drive, Bethania sale relied upon by Appellant is significantly inferior to the Subject Land, particularly in terms of location, exposure and ripeness for development, it was a sale 9 Ex 12, pages 102–4. -- 10 of 63 -- 11 which sold below market value and, accordingly, does not represent a reliable comparator to the Subject Land; (d) Mr Ladewig’s analysis of each of the sales he relies upon, including the two common sales, fails to have appropriate regard to the costs of site and development works and inappropriately makes adjustments and allowances without sufficient evidentiary basis; (e) Mr Ladewig fails, in applying the sales to the Subject Land, to have appropriate regard to the comparability of each of the sales and, in particular, overlooks the advantages which the Subject Land enjoys in terms of its location; and (f) Mr Ladewig has had insufficient regard to the evidence of Mr Malcolm Davidson, the quantity surveyor called by the Respondent and fails to grasp the artificial nature of the statutory valuation exercise whereby it is necessary to compare sales on a like-for-like basis with a notionally vacant but site improved subject.”10 The Valuer-General submits that Mr Elliott’s evidence, on the other hand, supports the issued valuation. The Valuer-General says that Mr Elliott has had appropriate regard to the views of Mr Davidson about the necessary site and development works for each of the sales and then considers a range of sales with the same highest and best use as the subject land to provide this Court with clear guidance about the appropriateness of the issued valuation. The Valuer-General further says that, where Mr Elliott has made adjustments or allowances to the sales he has considered, he has, unlike Mr Ladewig, only done so where there was a clear evidentiary basis to do so. The Valuer-General also mentions that Mr Elliott’s portfolio of sales includes a number of sites which have the same highest and best use as the subject land. These sales were the Underwood, Springfield, North Lakes and Maroochydore sites. Once regard is had to this portfolio of sales, the Valuer-General submits that they comfortably support the issued valuation. The Valuer-General accepts that Mr Elliott also considered two sales (Mavis Court, Ormeau and Newheath Drive, Arundel) that have a different highest and best use to the subject land. Although these sales were sold on the basis of their highest and best use being industrial and that the sale prices reflected that use, the Valuer-General asserts that these sales, which were vacant and unimproved sites: “(a) provide the Court with some guidance about the market parameters for the sale of vacant and unimproved land generally, notwithstanding that the sales have a different highest and best use to the Subject Land; and (b) even if the Court does not find that the sales are of any particular assistance, their inclusion in Mr Elliott’s analysis do not preclude the Court from accepting Mr Elliott’s views about the value of the 10 Ibid, page 2. -- 11 of 63 -- 12 Subject Land having regard to the portfolio of sales upon which Mr Elliott’s opinion about the value of the Subject Land depends.”11 The Valuer-General, relying on the above premises, submits that, taking into account all of the evidence and its submissions, the Court ought to dismiss the appeal and/or confirm the issued valuation. Quantity surveying evidence The quantity surveying evidence was provided to the Court by Mr Malcolm Davidson, called by the Valuer-General. Mr Davidson prepared a quantity surveyor’s report in November 2017 which is Exhibit 10. Mr Davidson Mr Davidson is a chartered quantity surveyor with over 35 years’ experience in the property and construction industry. He is a Director of Turner Townsend Pty Ltd and is the Gold Coast Manager of that firm. Mr Davidson has experience in the UK/Middle East/Australia/USA and India. Mr Davidson is also a Professional Member of the Royal Institution of Chartered Surveyors and an Associate of the Australian Institute of Quantity Surveyors. Mr Davidson has extensive experience as an expert witness before a number of courts. I was impressed by Mr Davidson as an expert witness. He clearly sought to assist the Court with his evidence and understood the role of an expert not to promote the position of any party. He did not seek to deceive or confuse the Court. I find Mr Davidson’s expert evidence to be reliable. Mr Davidson’s report provides his indicative estimate of site works required at the following sales to bring them to a site improved state comparable to the subject site: “(a) 2 Mavis Court, Ormeau (Lot 1 on SP 180216); (b) 115 Compton Road, Underwood (Lot 2 on SP 145157); (c) 53-91 Dalton Drive & 93 Dalton Drive Maroochydore (Lot 1 on SP202103 and Lot 7 on SP 239529); (d) 111, 56 & 85 North Lakes Drive, North Lakes (Lot 64, 957 & 958 on SP 248892); (e) 6-16 Logandowns Drive & 14-16 Nestor Drive, Meadowbrook (Lot 2 on RP 900915, Lot 4 on RP 856129 and Lot 3 on RP 895237); and 11 Summary Submissions of the Valuer-General filed 31 January 2018, page 3. -- 12 of 63 -- 13 (f) 1 Main Street, Springfield (Lot 771 on SP 266512).”12 Mr Davidson notes in his report that he physically inspected Mavis Court, Compton Road and North Lakes Drive but did not inspect the other three sites. In his report, Mr Davidson provides a summary of the costs for site works and other development costs for those six sales as follows: “(a) 2 Mavis Court - $250,000 at 7 October 2014; (b) 115 Compton Road - $1,750,000 at 2 June 2014; (c) 51-91 & 93 Dalton Drive - $930,000 at 5 November 2015; (d) 111, 56 & 85 North Lakes Drive - $1,760,000 at March 2014; (e) 6-16 Logandowns & 14-16 Nestor Drive - $1,000,000 at March 2013; and (f) 1 Main Street - $1,670,000 at 6 August 2014.”13 Mr Davidson also details his costings for each site supported by material in annexures to his report. The details of each site are set out in brief below. (a) 2 Mavis Court 2 Mavis Court has a site area of 15,660 m2. Below is my synopsis of Mr Davidson’s allowances for 2 Mavis Court: (a) Eastern Service Road allowance for the construction of a raised concrete median island including road widening, tapers, signage and line markings to the satisfaction of the Chief Executive Officer; (b) Allowance for a culvert to channel stormwater under the cross over as it is currently an overland flow path; (c) Minor road work allowances for constructing on-street car parking bays on Mavis Court including signage and line marking to the satisfaction of the Chief Executive Officer; (d) Over excavation allowance for a volume of 184 m3 of detention for stormwater detention basins; and (e) Allowance for services connection.14 (b) 115 Compton Road The Compton Road sale has a site area of 37,240 m2. When determining the site works and other development costs Mr Davidson took into consideration an allowance for alterations to a signalised intersection and a new footpath. 12 Ex 10, paragraph 1.4. 13 Ex 10, paragraph 6. 14 Taken from Ex 10, paragraph 5.2. -- 13 of 63 -- 14 (c) 53-91 & 93 Dalton Drive The site area for this sale is 43,456 m2. Mr Davidson made an allowance for alterations to the signalised intersection. (d) 111, 56 & 85 North Lakes Drive The overall area of this sale is 64,880 m2. Mr Davidson made allowances for alterations to the junction at North Lakes Drive and Prospect Street including new signalisation. Importantly, Mr Davidson also made an allowance for a cost penalty for a suspended slab construction over a cast on ground slab.15 (e) 6-16 Logan Downs Drive & 14-16 Nestor Drive This sale has a site area of 30,520 m2. For this sale, Mr Davidson has made allowances for service connections to water and sewerage. (f) 1 Main Street This sale has an area of 37,110 m2. In summary, Mr Davidson made the following allowances for this site: (a) Crossovers, footpath and external roadworks including road widening and signalisation; (b) The need for a shaker grid and temporary site drainage; and (c) Services connection allowance. Analysis of the Quantity Surveying evidence An important aspect of the quantity surveying evidence of Mr Davidson relates to the issue of comparing the subject as notionally vacant but site improved and the sales also on a site improved basis. Mr Davidson gave significant oral evidence on this aspect: “And you don’t make any adjustment for any efficiencies gained with respect to the numerous works that would be undergoing on the site at the same time as those earthworks would be undertaken in terms of mobilisation, engineering and demobilisation?---I’m not sure there would be other works until the earthwork is done. That’s all the - - -?---Until the earthworks are done, I don’t think there would be any other works done - - - 15 Ex 10, paragraph 5.5.2 -- 14 of 63 -- 15 Well, you might have works relating to, for instance, acoustic fencing, which requires engineering, mobilisation and demobilisation works - - -?---I don’t - - - - - - you’d accept that?---I don’t think the – the acoustic fencing would go up until the end of the project. Okay. But you’re not a civil engineer, are you, and you’re not a project manager in terms of understanding or putting in place when those works may or may be undertaken?---I have experience and understanding of when those works do happen. Yes. Okay. So your evidence to the court is that no works would be undertaken at or about the same time as those earthworks which would allow any efficiencies to be gained in terms of those mobilisation costs?---I think the first thing happens is the sediment fences goes up which allows construction of the earthworks. There would be an earthworks management plan. There would be various construction management plans that would have to be done relating specifically to the earthworks and that’s what that money is to – to cover. Okay. And do they relate to site works, I’m presuming?---They’re on site, yes. [indistinct] works. Okay. Sediment control fencing for the site perimeter, can you indicate to the court if they were site works or development costs?---They are specifically required for any earthworks on site to stop erosion getting into the stormwater off site. So you’ve put up a – a sediment fence to prevent the – the dust and the silt that’s on site during earthworks escaping from the site effectively. Okay. I appreciate what they are. My question is, I suppose – and just to streamline things. I’m not trying to be obtuse. Is it a site work or a development cost?---It relates to site – it’s a – it’s a – an item that’s required for site works to occur. Okay. So it’s a – we can – establishing site works?---It’s related to site works. Yes. Okay. And that would have to occur in terms of any site required to undertake any earthworks?---Yes. Would it be required in respect of any other types of works on the site in terms of civil works, engineering works, construction or otherwise?---Engineering works or construction. Construction?---Of – of what? I think - - - Of the building on site, for instance?---I don’t believe so. You don’t believe so. Allowance for temporary drainage, shaker grid, etcetera, at item 9?---Yes. Would it be a site work or development cost?---Again, it’s – it’s work which occurs on site - - - -- 15 of 63 -- 16 Yep?--- - - - and is required as a consequence of what’s happening on site. In terms of your site works analysis, you’re not by any means suggesting that these are site improvements?---They’re not site improvements. No. Yeah?---They’re – they’re – they’re effectively taken away at the end of the project. They are things that have to happen, but, at the end of the job, they’re gone and you see no benefit for them…”16 There is clear logic in Mr Davidson’s opinion that the items which he has referred to are not in themselves “site improvements” but are necessary actions which must take place in order for the site improvements to occur. Embedded in this is a question of law which I deal with later in this decision. BWP contends that such periphery or ancillary works are not site improvements as defined in s 23 of the LVA and, even if they were, they do not increase the value of the land as required by s 23(2) and therefore ought not be taken into account in the valuation exercise.17 I cannot agree. Section 23(1) would become nonsensible if the various activities listed therein had some, but not other, of their component parts disregarded. As far as increasing the value of the land as a consequence of the site improvements is concerned, it is the result of the site improvements that has to be considered. The activity is either a site improvement or it is not a site improvement. The question can be asked: is the value of the land increased because the land is cleared?18 If yes, all of the costs of clearing, including peripheral and ancillary costs, are to be considered. Likewise, is the value of the land increased because the land has been levelled?19 Again, if yes, all of the costs of levelling, including peripheral and ancillary costs, are to be considered including engineering, mobilisation and demobilisation. Importantly, however, any form of simple mathematical equation as to determining the impact that those costs have on the valuation process must not occur. A further step is required. As BWP correctly submitted in its reply submissions, it is not the cost given by quantity surveying evidence on a dollar for dollar basis but how the market would perceive that cost; what the market would consider in terms of building up that sale to be site improved for comparative purposes; and how much a 16 T 1-29 line 15–30 and line 45. 17 BWP’s Reply Submissions, paragraph 12. 18 Land Valuation Act 2010 s 23(1)(a). 19 Ibid s 23(1)(e). -- 16 of 63 -- 17 hypothetical prudent purchaser would pay for that sale, site improved.20 Accordingly, expert valuation evidence must also be considered. Before turning in detail to that valuation evidence, it is necessary to understand that there are two component parts of the quantity surveying evidence on which the valuers differ. First, there are what have been referred to as “the earthwork allowances”. These include cost allowances for engineering and mobilisation; sediment control fencing; temporary site works; and shaker grids. Mr Elliott took into account such allowances set out by Mr Davidson while Mr Ladewig did not. The other component part relates to what are called “the percentage allowances”. These include cost allowances made by Mr Davidson for preliminaries; margin; contingency; and professional fees. Again, Mr Elliott took into account such allowances while Mr Ladewig did not. I agree with Mr Elliott that the allowances should be taken into account. However, the extent to which they should be taken into account with respect to each sale depends, in each case, on the circumstances of that sale in the mind of a hypothetical prudent purchaser. I will now consider in detail the valuation evidence presented in this matter. The valuation evidence This Court has had the opportunity to hear valuation evidence from two highly-skilled registered valuers, Mr Coen Ladewig and Mr Allister Elliott. Together, Mr Ladewig and Mr Elliott prepared a JER in May 2016, marked as Exhibit 6. Their updated JER dated 17 November 2017 is Exhibit 12; Exhibits 7 and 47 are Mr Ladewig’s Statements of Evidence; and Exhibit 8 is Mr Elliott’s Statement of Evidence. There were substantial areas of agreement between Mr Ladewig and Mr Elliott. Mr Ladewig Mr Ladewig has been employed at Savills Valuations Pty Ltd for over 10 years. The majority of valuations he has prepared focus on South-East Queensland and vary from 20 BWP’s Reply Submissions, paragraph 14. -- 17 of 63 -- 18 large regional shopping centres to CBD land and small commercial, retail, industrial and residential properties. In addition, Mr Ladewig is an Associate of the Australian Property Institute.21 I was generally impressed with Mr Ladewig as an expert witness. Overall, he mostly handled himself well during some difficult questioning in the concurrent evidence part of the hearing. He clearly understood that his role is to assist the Court and not represent the views of those who have retained him. Mr Ladewig did however suffer a loss of credibility due to his inconsistent approach to the Valuer-General’s Sales 4 and 5 compared to the position he adopted in a JER for different proceedings but for the same time period; the same sale; and the same concept of comparable sales evidence. Mr Elliott Mr Elliott has approximately 23 years of experience. He has been employed as a Senior Valuer with the State Valuation Service, Department of Natural Resources and Mines, based at Robina on the Gold Coast, for the past 6 years. In his current role, Mr Elliott has been responsible for various valuations for statutory and state land administrative purposes. This has involved various types of valuations including industrial, showroom, retail, prestige residential and low to mid-rise mixed use development sites.22 I was quite impressed with Mr Elliott as an expert witness. During difficult questioning in concurrent evidence, Mr Elliott handled himself very well. It was clear that Mr Elliott understood that his duty is to assist the Court and not represent the views of the respondent who is his employer. He was also prepared to make concessions and change his opinion when confronted with changed circumstances, such as his falling from reliance on his Sale 2. Overall assessment of Mr Ladewig and Mr Elliott Although it is somewhat difficult to separate the two valuers, I prefer the evidence of Mr Elliott over that of Mr Ladewig. One determinative factor in reaching this conclusion was Mr Ladewig’s insistence during the second day of concurrent 21 Ex 7, paragraph 2.5–2.6. 22 Ex 8, page 3. -- 18 of 63 -- 19 evidence that, in his opinion, his Sale 1 is not only a good sale; it is not even in any doubt.23 For my part, I find the sale certainly questionable at best. Throughout the hearing, Mr Ladewig’s Sale 1 had significant questions raised about whether it could properly be classified as a bona fide sale in light of it appearing to be part of a joint venture. I have already mentioned another aspect which troubles me, which is Mr Ladewig’s inconsistent approach to the Valuer-General’s Sales 4 and 5 compared to the position he adopted in a JER for different proceedings. Another specific difficulty I have with Mr Ladewig’s evidence is his classification of the common sale as only slightly inferior to the subject. I will deal with Sale 1 and other points where I have difficulties with Mr Ladewig’s evidence later in my reasons. Although I overall accept Mr Elliott’s evidence, in those circumstances where Mr Ladewig has expressed an opinion and Mr Elliott has not, I accept Mr Ladewig’s evidence. Despite my overall favourable approach to Mr Elliott’s evidence, there are certain issues in which, on balance, I prefer the evidence of Mr Ladewig over that of Mr Elliott, such as Mr Elliott’s Sale 2. I will deal with points where I have difficulties with Mr Elliott’s evidence later in my reasons. The valuers considerations of the subject site Both Mr Elliott and Mr Ladewig agree that the highest and best use of the subject site as at the date of valuation is its existing use as a large format retail/bulky goods retail.24 The existing development on the site is a single level Bunnings warehouse. The valuers agree that the site falls below the Brown Plains Road frontage and along the Commerce Drive frontage to the southern boundary and that approximately 755 m2 (2.45%) of the site is made up of batter banks due to its topography.25 There are boulder retaining walls located along the Brown Plains Road alignment within the landscaped buffer areas. Mr Elliott’s opinion is that the site is near level in 23 T 2-54, L18-24; T2-55 L 33- T2-56 L 17; T2-59 L 30-35. 24 Ex 12, page 14, paragraph 119. 25 Ibid paragraph 122. -- 19 of 63 -- 20 topography and that the existence of retaining walls has no impact on the achieved site coverage or car parking requirements for the existing use. Ingress and egress is available to the site only from Commerce Road as Brown Plans Road does not provide any access. Both experts agree that the site has good exposure to both Brown Plains Road and Commerce Drive when at the subject.26 In Mr Elliott’s opinion the subject property has good exposure to both east and west bound traffic along Brown Plains Road. However, Mr Ladewig’s opinion is that exposure is limited when approaching the site from both directions.27 In regard to the surrounding development and exposure the experts have this to say: “Surrounding the development is commercial/retail development fronting Browns Plains Road and Commerce Drive. Grand Plaza provides a Coles, Woolworths, Target, Big W and Kmart and is positioned to the west of the subject. The Browns Plains Hotel, office works, Woolworths, Masters and fast food outlets are also located to the north west of the subject. Additional Bulky Good’s Retail is positioned directly to the east with a spot light and Good Guys outlet and Village Square to the South with a Super butcher, JB Hi Fi, Far Pavilions and Harvey Norman. Service industry and residential is within the greater area”.28 Valuation approach Both experts note that during 2013 and 2014 vacant retail land was stable.29 The experts adopt the “site value approach” as required by s 7 of the LVA for non- rural land valuations. The valuation methodology adopted by both valuers is a direct comparison on a $rate/m2 of site area with vacant and lightly improved sales, in fee simple, with existing use rights and accounting for any encumbrances. Mr Elliott makes adjustments to unimproved sales for works required to be done before a comparison of those sales can be made with the site improved subject site.30 26 Ibid paragraph 130. 27 Ibid, paragraph 131–2. 28 Ibid, paragraph 129. 29 Ibid, paragraph 136. 30 Ibid, paragraph 142. -- 20 of 63 -- 21 Common sales evidence Sale 2 BWP – Sale 6 VG – 115 Compton Road, Underwood This is a common sale relied upon by each valuer. The valuers provided two summaries of the details of the sale of 115 Compton Road, Underwood, in Exhibit 82 together with a summary of the view of each valuer comparing that sale to the subject. The summaries are as follows: Both expert opinions differ in relation to the rate per square metre for this comparable sale. Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 6 103-115 Compton Road, Underwood 4119 02/06/2014 $7,000,000 3.724Ha $188/m2 3.112Ha $290/m2 Bulky Retail Masters AE Similar size and proximity to subject; inferior surrounding development (No Grand Plaza adjacent); Required impact assessable (MCU); Inferior roadway; Inferior shape; Inferior on a rate/m2 basis CL Superior access; Comparable location; Comparable use; Comparable size; Lower passing traffic Sale No. Address Sale Date Sale Price Area (𝐦𝟐) Analysed Site Value Applied Site Value 01/10/2014 Use 2 115 Compton Rd, Underwood Jun- 14 $7,000,000 37,240 m2 $7,050,000 $227/m2 (unencumber ed rate) $7,000,000 $225/m2 (unencumbered rate) Masters Bulky Good Retail CL Superior access; Comparable location; Comparable use; Comparable size; Lower passing traffic AE Similar size and proximity to subject; Inferior surrounding development (No Grand Plaza adjacent); Required impact assessable (MCU); Inferior roadway; Inferior shape; Inferior on a rate/m2 basis -- 21 of 63 -- 22 Mr Ladewig considers this site to be slightly inferior given the surrounding amenity and applies a rate of $227/m2. 31 In Mr Ladewig’s opinion, this sale has not been analysed correctly by Mr Elliott to compare it with the subject on a like for like basis. Mr Ladewig considers this to be a well-located site with superior access, a good level of exposure to four lanes of traffic along Compton Road, a good level of supporting amenity including two Bunnings properties and is comparable in terms of location, useable size and retail use. An overview of Mr Ladewig’s analysis of this sale includes: “(a) Allowance made for a premium associated with Master’s wanting to be within 1 km of 2 separate Bunnings properties; (b) Rawlinsons and the Urbis report considered in preparing work costings; (c) No allowance for potential planning risk given the knowledge of the 2015 Logan Planning Scheme, councils support of and the nature of the development; (d) Located approximately 7.6 km from the subject; (e) Well located with superior access, good exposure to 4 lanes of traffic along Compton Road and a good level of supporting amenity including the 2 Bunnings properties; (f) Is comparable in location, useable size and retail use; (g) This sale was sold via a tender process through Blue Commercial Gary O’Shea; and (h) Overall slightly inferior than the subject given the surrounding amenity.”32 Mr Elliott’s analysis reflects an unimproved rate of $235/m2. In his opinion, a site value is expected to be considerably more than this rate having regard to the additional development requirements to lift the sale from an unimproved to a site improved state. Mr Elliott relies on the costings in the reports of Mr Davidson to take the unimproved value of the sale to a site value.33 Mr Elliott is of the opinion that an appropriate site rate is $290/m2. Mr Elliott’s analysis provides that the sale is similar in size and inferior in terms of location and catchment, shape and topography and exposure to lower order roadway. In summary, Mr Elliott’s response to Mr Ladewig’s analysis provides: (a) There is no empirical evidence to justify Agency/Covenant allowance by Mr Ladewig; 31 Ibid, paragraph 199–212. 32 Ibid, pages 31–5. 33 Ibid, page 87. -- 22 of 63 -- 23 (b) Site still requires significant costs to develop to a fully developed site basis; (c) Valuer-General site value analysed to $296/m2, whereas Mr Ladewig’s is to $229/m2; (d) Valuer-General analysis is considered the best evidence in determining the value of the subject; (e) The sale is inferior surrounding development given subject adjoins a regional shopping centre and commercial hub in contrast to lower order land uses adjoining the sale property; (f) The sale is inferior internally given the subject is a corner site and inferior on a net rate/m2 basis.34 Mr Elliott disagrees with Mr Ladewig’s discount of $356,432 for “Buyer Profile and Agency” saying that there is no evidence or justification supporting Mr Ladewig’s approach.35 He points out that the land was purchased by Masters, the end user. It is clear that the most important point of difference between the two valuers relates to Mr Elliott’s opinion that the unimproved sale needs to be raised to a site improved value for proper comparison purposes. The evidence of Mr Davidson in this regard becomes crucial. In Mr Davidson’s view, the cost of site works and related development works for the sale property “is in the order of $1,750,000”.36 He provided a detailed breakdown of these costs in Appendix D7 to Exhibit 10 as follows: 34 Taken from Ex 12, page 35, paragraphs 213–222. 35 Ex 12, paragraph 213. 36 Ex 10, paragraph 5.3.8 -- 23 of 63 -- 24 The first observation to make is that the table set out above has clearly come into existence following detailed considerations by Mr Davidson as evidenced by the contents of his report, including the appendices. I am confident that the figures have not simply been “plucked out of the air” by Mr Davidson but have come about as a result of reasoned opinion based on factual information detailed in his report. It is important to note that the valuers do not disagree on all of the points in Mr Davidson’s table. For instance, neither valuer has included in their valuation analysis -- 24 of 63 -- 25 for this sale items 15 and 27, and other items have been included by both.37 The points of difference between the valuers in applying Mr Davidson’s table can be boiled down to three useful areas: allowances for the Perrin Drive extension; the detention tank; and the flow on effect to preliminaries, margin, contingency and professional fees. Mr Davidson’s expert opinion on these three areas in dispute has not been challenged by any contrary expert quantity surveying evidence. As I have already indicated, I accept his evidence. However, that does not mean that his conclusions necessarily apply from a LVA perspective for comparable sale purposes in applying a site value to the subject. As a legal principle, for comparable sales purposes, it is necessary, as far as it is possible, to compare “apples with apples”. It is of course well accepted that valuation is not an exact science.38 Opinions as to valuation can differ. However, as a matter of principle dating back to Spencer, in valuing unimproved land, comparable sales should be, as far as possible, unimproved or only lightly improved (clearing; fencing, or improvements to be demolished etc). Applying like logic, site improved land should be valued taking into account, as far as possible, site improved sales. Where, as here, the sale was unimproved/lightly improved, it comes down to an analysis of the evidence, including not only expert quantity surveying and valuation evidence, but also evidence from the buyer and seller as to what was in their respective minds at the time of sale. That evidence, however, must then be considered objectively, not subjectively. The situation is perhaps best explained by way of an example. Say there were two identical blocks of land, both unimproved. Site improvements for both would include a degree of levelling and clearing. On one block, the purchaser may intend to construct a 5 storey unit apartment building with basement parking. On the other block, a different purchaser may intend to build an aged care facility with ground- level parking. 37 Ex 12, paragraph 198. 38 BG & AK Wilson v Chief Executive, Department of Lands (1994-5) 15 QLCR 63 [70]; Nimmo v Department of Natural Resources and Mines (2005) 26 QLCR 66 [14]. -- 25 of 63 -- 26 In the case of the unit development, major excavation works would be undertaken in building the units and underground carpark. Applying Mr Ladewig’s logic in the case at hand, such works would not be site improvements but part of the building works. While I have no doubt that there would still be some works that would be classified under s 23 of the LVA as site improvements (such as draining; filling; at least some of the underground drainage, etc), the great bulk of the works would not be (such as footings; foundations; underground carpark etc). The situation however could be quite different for the aged care facility. Accepting the nature of the evidence given by Mr Davidson, there may be a clear distinction in those works undertaken to prepare the site for development, and therefore s 23 site improvements, and the actual building works. This is consistent with Mr Elliott’s logic in the present case. As a matter of legal reasoning and, of course, subject to other evidence which may be given in the hypothetical examples, my view is that a proper interpretation of s 23 of the LVA would demand an acceptance of the logic of Mr Ladewig in the units example, and the logic of Mr Elliott in the aged care facility example. In short, the circumstances of different cases, even where there may appear to be similarities, may, on the evidence of each case, lead to quite different outcomes under s 23. Returning to the case at hand and the Compton Road sale, subject to a specific qualification regarding evidence provided by Mr Ladewig as to the purchaser’s intentions for the sale property, it is my opinion that this sale should be viewed in an analogous manner to my hypothetical aged care facility example. This is particularly so in light of Mr Davidson’s evidence, which I have accepted. Put simply, subject to a consideration of the purchaser’s intentions for the sale property, the allowances for the Perrin Drive extension; the detention tank; and the flow on affect to preliminaries, margin, contingency and professional fees, are works undertaken to prepare the site for development, separate and distinct from the building works, and are site improvements for the purposes of s 23 of the LVA. I now turn to the very important evidence given by Mr Ladewig as to the purchaser’s intentions for the Compton Road property. -- 26 of 63 -- 27 Exhibit 51 is two emails passing between Mr Ladewig and a Mr Williams. The first email is from Mr Ladewig to Mr Williams. It was sent on 29 November 2017 at 5:52 pm and the body of the email was as follows: “Hi Huw, Thanks for taking my call today. As discussed I am after some additional information in regards to the Hydrox Purchase at 115 Compton Road Underwood. Firstly can you please confirm that you were involved with the acquisition of the site and your capacity at Hydrox. In regards to the Extension of Perrin Drive, did you believe that all works involved with the extension of Perrin Drive were going to be creditable or did you believe you had to build the road at your own cost? Also, did you know of any additional requirements beyond that of standard retention for stormwater for this property when you purchased the site? I am specifically asking if you considered it was going to be necessary to build a $742,000 detention tank on top of the standard stormwater retention when you purchased this site. Any questions please call me directly on the numbers below. Kind regards, Coen” The other part of Exhibit 51 is the reply sent by Mr Williams to Mr Ladewig on 6 December 2017 at 8:41 am. It stated: “Hi Coen, I can confirm I was involved with the acquisition for Hydrox. I believed that the extension of the road was creditable works. I had only made an allowance for the standard detention basin that would be required for the proposed development. I had not anticipated that I would need to make an extra allowance. Also - I would expect that if the subject site was conditioned to increase the capacity of the detention basin this would be either an unreasonable condition or creditable works. Please note that this is from memory and I don’t have access to any of the due diligence materials or feasibility studies. Regards, Huw Williams Development Manager Vicinity Centres” Exhibit 51 was a document which both Mr Purcell and Mr Hastie wished to put into evidence (no doubt for different reasons) and so no objection was made to this Exhibit -- 27 of 63 -- 28 being tendered.39 During questioning of both valuation experts regarding their opinions in light of Exhibit 51, I indicated my concern as to the probative value to be gained from questions about the Exhibit;40 that I would have to determine what weight could be given to the document;41 and the difficulty I saw of “speculation on top of hearsay”.42 It is important at this point to make some detailed comment about Exhibit 51 and the weight, if any, that I give to it. Mr Williams’ reply email came into existence, as detailed above, on 6 December 2017; the day before the hearing of this matter commenced. The email by Mr Ladewig was made on 29 November 2017; after the date that the hearing was originally scheduled to start on 6 November 2017 but for the application on 1 November 2017 by the Valuer-General to postpone the hearing.43 The delay to the hearing came about because of the Valuer-General’s desire to have additional material provided by Mr Davidson which subsequently required a further JER by the valuers, it is very important to note that costings by Mr Davidson relating to the allowances for the Perrin Drive extension; the detention tank; and the flow on affect to preliminaries, margin, contingency and professional fees with respect to the Compton Road sale were clearly included in his original report, Exhibit 5.44 Despite some subsequent alterations to some of the figures in Exhibit 10 in this regard, the crucial point is that the site improved position sought to be made by the Valuer- General with respect to the Compton Road sale was clearly known by BWP and Mr Ladewig from many months earlier in 2017.45 Put simply, Mr Ladewig had many many months in which to obtain the information contained in Exhibit 51. Had Exhibit 51 come into existence even a matter of weeks earlier than it did, it could have formed part of the second JER discussions between Mr Ladewig and Mr Elliott which gave rise to Exhibit 12, their second JER. 39 T 1-166 line 39 to T 1-167 line 27. 40 T 1-184 line 7. 41 T 1-184 line 11. 42 T 1-185 lines 1 to 2. 43 See BWP Management Limited v Valuer-General [2017] QLC 56. 44 Ex 5, pages 2–3 and Appendix K pages 1–2. 45 The exact timing in which the appellant and Mr Ladewig received Mr Davidson’s first report is not clear from the material, although it would appear to be some time around when the report was made on 24 February 2017, the review by the President on 21 April 2017, and the mediation of the matter on 31 July 2017. -- 28 of 63 -- 29 Perhaps more concerning, Mr Ladewig conceded during the concurrent evidence that, as regards the Perrin Drive extension being creditable works, the email from Mr Williams “confirmed what I initially thought”, stating that it was actually his view before the email,46 yet he did not include what he thought was creditable works in the second JER.47 Not only that, he also conceded that he did not state any reason why he did not think it necessary to make an adjustment for the Perrin Drive extensions.48 In this context, to say that Mr Ladewig’s discussions with Mr Williams as set out in Exhibit 51 came into existence very late in the process is a gross understatement. It must be noted that both Mr Elliott and Mr Ladewig gave evidence of the difficulty that they have dealing with some purchasers because purchasers do not like to talk to them and do not return their enquiries.49 Further, Mr Ladewig gave evidence that he had “been trying to get hold of this purchaser since this court case started”.50 Even so, there must be some limit to which the Court can take into account what is, but for s 7 of the Land Court Act 2000, clearly inadmissible hearsay evidence. Of course, applying s 7, I am still required to determine what weight to give such evidence. It is a normal occurrence before this Court for valuation JER’s and individual expert valuation reports to contain hearsay – and often, a great deal of hearsay. The process however works, not just because of s 7, but moreso because the valuers, during the JER process, are generally aware of the enquiries that each have made. In this process, if the valuers have concerns they have ample opportunity to not only raise those concerns orally with the other valuer and, if not sufficiently explained, to make direct written comment in the JER, but also to make their own enquiries in response either during the JER process or prior to producing any subsequent individual report. Thus understood, the process is fair to both parties and the key criteria for expert evidence – not to represent the views of their client but to assist the Court – can be achieved. The contents of Exhibit 51 were not the subject of critical evaluation as part of the second JER process. Mr Ladewig did not raise his concerns in relation to the site improved position sought to be made by the Valuer-General with respect to the 46 T 1-167 lines 40 and 41. 47 T 1-168 lines 6 to 9. 48 T 1-168 lines 11 to 18. 49 T 1-176 lines 1 to 7. 50 T 1-176 lines 12 and 13. -- 29 of 63 -- 30 Compton Road sale, either in the second JER report or in his second individual report, Exhibit 47. Put simply, Exhibit 51 contains too little, too late. That of itself is sufficient for me to give little, if any, weight to it. The difficulties with Exhibit 51 however do not stop there. Mr Williams casts doubt on his own recollections by indicating in Exhibit 51 that his responses are from memory and that he did not have access to any of the due diligence material or feasibility studies. It should be noted that Mr Williams was being asked to recall events from approximately three and a half years earlier, the sale having occurred in June 2014. Further, Mr Williams’ evidence regarding creditable amounts for the Perrin Drive extension works was directly contradicted by Mr Elliott. Some time was taken up at the hearing in going to actions occurring subsequent to the sale such as a Planning and Environment Court appeal and what was to be read into that regarding creditable evidence. This, of course, is not relevant; what is relevant is what occurred up to and at the sale, and how that is to be viewed, by the hypothetical prudent purchaser and vendor, in reaching a value for the land at a valuation date. As the Court of Appeal clearly found in Mio Art, evidence later in time after a sale or acquisition confirming a forethought is not relevant to ascertaining value of land at a set date earlier than the subsequent knowledge or event(s).51 There is another difficulty with Exhibit 51. Mr Ladewig introduced in his email the concept of a “standard stormwater retention”. Mr Williams, in his reply, picked up on Mr Ladewig’s reference. However, Mr Davidson’s evidence was that there is no such thing as a standard stormwater retention or a “one size fits all” detention tank.52 Further, Mr Ladewig, during the concurrent evidence, said that he did not know what a standard detention basin is.53 In short, there is nothing in Exhibit 51 to alter my view that the allowances for the Perrin Drive extension; the detention tank; and the flow on effect to preliminaries, margin, contingency and professional fees, are works undertaken to prepare the site for development, separate and distinct from the building works, and are site improvements for the purposes of s 23 of the LVA. 51 Brisbane City Council v Mio Art Pty Ltd & Anor [2012] 2 Qd R 1 [78]–[81]. 52 T 1-18 line 45 to T 1-19 line 5 to T1-45 lines 7 to 30. 53 T 1-211 line 5. -- 30 of 63 -- 31 There are 3 final matters to deal with before moving on from the Compton Road sale. The first relates to Mr Ladewig’s evidence as to letting up and agency costs, and that Hydrox, the Compton Road purchaser, would pay a premium as they were an owner/occupier and would therefore save leasing and agency costs. Mr Ladewig’s evidence in this regard is of note: “MR HASTIE: Okay. Just staying on this letting-up and agency issue, Mr Ladewig, your - - - MR LADEWIG: Yes, sir. MR HASTIE: Your assumption that Hydrox would pay effectively a premium for the site, is it essentially predicated on the notion that they’d be an owner-occupier and would thereby save leasing and agency costs? Is that correct? MR LADEWIG: Yeah, that’s how I treated the benefit. Yes. MR HASTIE: So it stems, doesn’t it, from the fact that, in your opinion, Hydrox was intending to occupy the site itself? MR LADEWIG: Correct. Yes. MR HASTIE: And then, as a consequence, they save money on account of leasing and agency? MR LADEWIG: Yes. Correct. MR HASTIE: Now, you don’t, however, have any evidence, do you, that Hydrox paid a premium for this site - - - MR LADEWIG: No. MR HASTIE: - - - on that account? MR LADEWIG: No, I don’t. Correct. MR HASTIE: And there’s certainly nothing before the court to that effect? MR LADEWIG: In this instance, no, for this sale. MR HASTIE: No. MR LADEWIG: No, there’s not. Correct. MR HASTIE: And, in fact, it’s not something that you asked Mr Hugh Williams in your very interesting email to him, was it? MR LADEWIG: No. I’ll – I might go back to him. MR HASTIE: Excuse me, your Honour. HIS HONOUR: It’s getting late; it’s all right. -- 31 of 63 -- 32 MR HASTIE: So, really, this adjustment is simply based on your view as a valuer that Hydrox - - - MR LADEWIG: My opinion. Correct. MR HASTIE: - - - would have paid a premium? MR LADEWIG: My opinion. Correct.”54 In like manner, Mr Ladewig was of the view that buyers such as Hydrox, to secure market share, may pay more than the rest of the market for a site.55 Mr Ladewig was of the view that both the payment of an extra amount of money to secure market share and the payment of a premium as owner/occupier, were particularly relevant for purchases by tender. BWP has not directed my attention to any authorities in support of these contentions. Further, such evidence is at odds with what then President Trickett noted in the case of Liat Nominees Pty Ltd v Chief Executive, Department of Lands: “In my opinion, the Fenton Nominees case is not authority for the making of such adjustments to sale prices. It is well established that a valuer must accept the actual sale price of a property which he intends to use as the basis for the valuation of another property. As Pike J. of the NSW Land and Valuation Court said in re Collins (1936) Vol IV The Valuer 156: "You cannot take a sale at a price, and say, 'That was the sale price, but in my opinion it is not the correct price; I am going to alter the price paid by this particular purchaser'. If that is done in the analysis of sales, one might just as well reject the whole of those sales, and simply say what is the witnesses' opinion of the land to be valued."”56 I note that Liat was specifically referred to, and followed, by then President MacDonald in Body Corporate for Wendall Court & Anor v Valuer-General.57 I concur. The second point to consider is that the key question, as already discussed, is an objective analysis of what was in the mind of the hypothetical prudent purchaser and 54 T 1-193 line 7 to T1-194 line 14. 55 T 1-190 lines 10 to 18. 56 [1996] QLC 160, 12. 57 [2015] QLC 16 [95]. -- 32 of 63 -- 33 vendor and, not the subjective view of either or both of those parties, although same may help inform the objective approach and will certainly be vital in determining issues such as compliance with s 18 of the LVA and the Spencer test. In other words, a buyer such as Hydrox may be so keen to obtain a site which gives it an opportunity for market share that that sale fails to meet the Spencer test/s 18 as the purchaser was overanxious to secure the site. Accordingly, it would not be a matter of adjusting the purchase price because of a premium paid for market share, but rather such sale would be rejected from analysis for failure to meet the requirements of s 18 LVA/Spencer. The next point to consider is the location of the Compton Road sale compared to that of the subject. In this regard, I find the aerial photography and other evidence goes much further to support the views expressed by Mr Elliott than those of Mr Ladewig. The subject had significant development around it at the relevant valuation date, including a Grand Plaza, while the sale, at the date of the sale, was in a more emerging area of development. I reject Mr Ladewig’s finding of slightly inferior on this basis, and prefer Mr Elliott’s opinion of this sale being inferior to the subject in this regard. Taking all factors into account, I accept the opinion expressed by Mr Elliott as to the analysed site value of the Compton Road sale uplifting it to a site improved sale, and his analysis that the sale is inferior to the subject. BWP’s sales evidence Sale 1 – Logandowns Drive & 14-16 Nestor Drive, Meadowbrook The valuers provided a summary of the details of BWP’s Sale 1 in Exhibit 82, together with a summary of the view of each valuer comparing that sale to the subject. The summary is as follows: Sale No. Address Sale Date Sale Price Area (𝐦𝟐) Analysed Site Value Applied Site Value 01/10/2014 Use 1 6-16 Logandowns Dr & 14-16 Nestor Dr, Meadowbrook Mar- 13 $7,500,000 30,532 m2 $7,800,000 $257/m2 (unencumber ed rate) $7,500,000 $225/m2 (unencumbered rate) Woolworths Anchor Shopping Centre -- 33 of 63 -- 34 As this is BWP’s sale, it is appropriate to begin with Mr Ladewig’s evidence. In summary, Mr Ladewig made the following points in the second JER in relation to this sale: (a) Added value of $209,508 for the purchaser’s stated premium paid and value in the development approval (DA), although no exact value was provided by the purchaser; (b) DA considerations allowed for in valuation due to the potential time taken to achieve approval; (c) The $751,565 allocated for works are estimated having regard to Rawlinsons and the owner’s interview notes; (d) Approximately 9 km east from the subject site; (e) Well located with superior access, good exposure to 6 lanes of traffic along Loganlea Road and a good level of supporting amenity including the Hospital and Tafe; (f) Sold with approval that was slightly altered to increase the supermarkets ground floor area; (g) Is comparable in location and size, though is slightly superior in retail use; and (h) Overall superior use.58 Mr Elliott on the other hand considers this sale to have not been bona fide or in accordance with the Spencer test/s 18. Mr Elliott describes this sale as being a joint venture in which the land was transacted, with construction to be undertaken on a cost only basis by the purchaser. Mr Elliott says the vendor intended to buy back the completed project at cost (net of any development profit), with the purchaser in place as the anchor tenant upon completion and the vendor having the first right of refusal to purchase the end product with an income stream in place.59 Mr Elliott disagrees with Mr Ladewig’s discount of $327,975 for Buyer Profile and Agency and suggests there is no evidence or justification supporting Mr Ladewig’s approach.60 Mr Elliott also disagrees with the development approval (DA) holding discount of $209,508 and the professional fee discount of $75,000 included by Mr Ladewig.61 Mr Elliott considers that the DA in place at the settlement date of 22 March 2013, was subsequently amended by the purchaser with final approval not 58 Taken from Ex 12, paragraphs 144–62. 59 Ex 12, paragraph 163. 60 Ibid, paragraph 164. 61 Ibid, paragraph 165. CL Slightly superior use; Superior access; Comparable location; Comparable size; Lower passing traffic AE Not a fully ripe site; Part neighbourhood shopping centre H&BU not bulky goods; Bona fide sale?; Inferior road network; Inferior surrounding development; If a bona fide sale, slightly inferior -- 34 of 63 -- 35 being achieved until 6 months later. Mr Elliott suggests this negates Mr Ladewig’s need to add value for land holding.62 Mr Elliott says that Mr Ladewig’s analysis includes land holding costs to the exclusion of statutory costs for site works over a three month period and that the statutory costs incurred by the purchaser should be added.63 Mr Elliott further criticises Mr Ladewig’s analysis, saying he failed to acknowledge a number of underlying issues in adopting this sale as reliable evidence.64 One of the issues not addressed by Mr Ladewig as put forward by Mr Elliott includes that a portion of the site to the north did not have a highest and best use of neighbourhood shopping centre and was not ripe for development. Mr Elliott is of the opinion that the undeveloped state of the northern part of the sale supports the premise that commercial development was unviable and an inferior use at the date of valuation.65 A summary of Mr Elliott’s evidence for this sale is as follows: (a) The development did not commence until 2014; (b) No evidence suggests the purchaser paid a benefit for the existing DA; (c) The sale was an off-market transaction, the sale price may have been higher had it been offered to the open market; (d) The price paid for the sale was significantly below similar retail sites within the Logan and Gold Coast localities as at the valuation date; (e) This was a sale in prior revaluation period; (f) Approximately one-third of the site was not ripe for development and of an inferior, commercial use; (g) This sale is not considered a relevant sale for comparison purposes as the intended land use and density of development differ to the subject.66 The first point for the Court to consider is whether or not the Meadowbrook sale meets the Spencer test/s 18 of the LVA. In short, was it a bona fide sale? Whether or not this sale was a joint venture and accordingly, whether or not it meets the s 18 LVA bona fide test, was an issue which took up some time during the concurrent evidence of the valuers and, consequentially, the respective legal submissions of the parties. 62 Ibid, paragraph 166. 63 Ibid, paragraph 169. 64 Ibid, paragraph 170. 65 Ibid, paragraph 172. 66 Taken from Ex 12, pages 23–5. -- 35 of 63 -- 36 I have been invited at the very least to make observations, or indeed actual findings, as to the characterisation of the sale as either a joint venture or not. This is not something which I consider it appropriate to do. To begin with, issues regarding this sale are subject to Supreme Court action.67 It would not be appropriate for this Court to make any determination in that regard with the matter currently before the Supreme Court68 in circumstances where only very limited evidence has been supplied to this Court, primarily via Exhibit 57 and the valuers. No evidence has been received directly from any of the parties to the Supreme Court proceedings. What is relevant is to consider the sale and the minds of the parties as at the date of sale; that is, how the sale was viewed at that time. During the concurrent evidence and in submissions, points were made about events which occurred subsequent to the sale, such as the fact that the vendor’s nominee did go on to repurchase the property in reliance on the buyback provisions in the original sale contract.69 I must again stress that this court cannot take into account later events as confirming a forethought – the Mio Art principle – the task is to objectively view the sale as at the date of sale, not influenced by events which later transpired. There is of course clear evidence as to what the parties intended at the time of BWP’s Sale 1. This evidence is the actual contract of sale which forms part of Exhibit 57. Clause 42 of the contract contains clause 42.1 which stated that the purchaser granted to the vendor a first right to purchase the property following completion of the purchaser’s proposed shopping centre development on the land subject to terms and conditions which were set out at (a) to (g). The dispute between the parties in this matter revolves around those conditions and, in particular, whether the original vendor had an unconditional, absolute right to buy back the property from the purchaser.70 Put simply, was the buy-back provision a factor which influenced the original sale price of BWP’s Sale 1, thus rendering the sale unreliable? There is other evidence to which I should refer, which is Exhibits 55 and 56. Exhibit 55 is a file note made by a Mr Schultz from Savills Valuations of discussions he had 67 T 2-52 lines 34 to 37; T 2-53 lines 6 to 10. 68 See a recent decision of Member Cochrane in Wellington as Tte for the OR & R Wellington Superfund ABN 81 576 722 911 and the OR & R Partnership ABN 84 165 075 135 v Blackwood Exploration Pty Ltd [2018] QLC 12. 69 T 2-56 lines 19 to 22. 70 See, for instance, Valuer-General’s Submissions paragraphs 93–8. -- 36 of 63 -- 37 with a representative of the purchaser, a Mr Sheehan, on 30 July 2015. The file note says, in part, “very firm price if not above market”. Mr Ladewig did not talk to Mr Sheehan himself. Exhibit 56 is a file note made by a Mr Hurman from the State Valuation Service which includes discussions he had with a representative of the vendor, a Mr Hoare, on 23 July 2013. Just as Mr Ladewig did not talk to Mr Sheehan himself, Mr Elliott did not talk to Mr Hurman himself. Exhibit 56 includes the following “Land One happy with the purchase price and believes at market level”. Mr Elliott explained his view that this sale does not meet the Spencer test this way during the concurrent evidence: “So to break things down, LandOne is the owner of the site. They’re quite prepared to sell the site at, what I consider, a pretty reasonable, at the lower end of an acceptable range, to Fabcot, who will construct the building, show all costs involved – costs only, and sell the actual finished product back to the vendor, LandOne, for the original sale price of the land plus costs only of the build. They – so the vendor actually gets a completed working neighbourhood shopping centre, complete with Woolworths, who signs a long-term lease, and – and that they bring also through the construction the completion of those specialties, so it’s a – an income producing solid property – neighbourhood shopping centre, on return back to them. So what I’m saying is, that doesn’t meet the Spencer test in that, if I was the vendor, having a – if it is a guaranteed buyback, that could be why – why they may have – we may hear that they had some – a grievance as to the process after the fact. But effectively, I might be more prepared to offer the – the property up at seven and a half, to get a $30 million property back that might be worth 33 or five, risk free. Also, reduce stamp duty on the finished product in that instance as well, because you pay stamp duty on – it actually transacted back for around 29 million. If it sold at market, with all development profit, etcetera, it might have been 33 million, which you pay stamp duty on a higher amount. So it’s a win/win for all parties in that – in that instance. Or more of a win for the vendor I – I might say, to buy back the completed product. So Woolworths going in – all they were doing was building the shopping centre, signing a lease up and then flicking the – the completed centre back to the vendor.”71 Mr Ladewig’s view of the sale was quite different. He gave the following evidence: “MR HASTIE: But, look, can I suggest this to you: that the existence of this clause, whatever construction that’s ultimately adopted, creates sufficient uncertainty about this sale that it makes it unreliable. MR LADEWIG: I agree with that for the sale of the end product, not the initial purchase of the land. MR HASTIE: No. But can I suggest this to you: that the initial sale was governed by this – the terms of this contract. Do you accept that? 71 T 2-39 line 35 to T 2-40 line 9. -- 37 of 63 -- 38 MR LADEWIG: Yes, I accept that. Yes. MR HASTIE: And I would suggest to you, then, that having regard to the terms upon which the original sale occurred, there’s sufficient uncertainty and lack of clarity about what the rights of the parties were and what the intentions of the parties were as at the date of sale that it makes it unreliable to place too much reliance upon it. MR LADEWIG: I – I disagree.”72 After further evidence on this aspect, the question was then put to the valuers as to their conclusions on the sale: “MR PURCELL: In fairness to you both then, is there any evidence to suggest that this wasn’t a bona fide sale, though, apart from what we’re now speculating was in – sorry, withdraw that. Is there any evidence to you that points to the fact that that 1.7 million land component wasn’t bona fide? MR LADEWIG: No.”73 I noted at the time that Mr Ladewig gave this answer, just how emphatic he was in saying “no”. He left me in no doubt that he was absolutely convinced as to his opinion that the sale was bona fide. I was surprised when Mr Ladewig gave his evidence at just how adamant he was as regards the bona fides of the sale taking into account the buy-back provisions of the contract. I remain surprised. I do not share his optimism, and it troubles me that he did not at, T 2-59 line 35, even raise any worries or concerns as to the bona fides of the sale. For his part, although Mr Elliott maintained his view that the sale was not bona fide, he also went on to assess the sale and draw attention to difficulties that he had with other aspects of the sale. On the evidence before me, I have doubts as to the bona fides of Sale 1 taking into account the buy-back provisions of the contract. I also favour the approach taken by Mr Elliott regarding his other concerns in circumstances where those concerns raise similar matters as to those which I have already dealt with for the common sale. However, for reasons which resemble an “elephant in the courtroom”, it is not necessary for me to make any definitive findings 72 T 2-54 lines 6 to 24. 73 T 2-59 lines 30 to 35. -- 38 of 63 -- 39 on either the buy-back point or other concerns raised by Mr Elliott. On the clear evidence, BWP’s Sale 1 does not meet the statutory test of bona fide sale as set out in s 18 of the LVA. There are a number of key elements to the statutory test of a bona fide sale. For current purposes, the important element is found in s 18(1)(c) which states that the property was reasonably exposed to the market. In normal circumstances, a property will be found to have been reasonably exposed to the market when the property was, by one way or another, advertised as being for sale. That does not necessarily mean that the vendor engaged a real estate agent who marketed the property. The vendor could market a property themselves sufficiently widely to comply with s 18(1)(c). Importantly, however, it is a requirement that the property is reasonably exposed to the market. At paragraph 160 of Exhibit 12, the JER states: “Purchased off market with Woolworth already involved with the site as potential tenant”. In case there is any doubt, Exhibit 55 states that the sale was “off market in a direct sale” and Exhibit 56 states that: “The sale price of $7.5m was determined based on an estimated net income figure. No other negotiations took place. Coles or no other parties were contacted and the property was not put to the market.” Both valuers seem to have been of the opinion that there were no other ready purchasers for the site given that Coles already had a store operating in the catchment area. That, however, is not the point of s 18(1)(c) of the LVA. It is simply an unknown as to whether or not some purchaser other than the purchaser of Sale 1 may have been interested in the property. The property was not put to market. Perhaps if it had been marketed the property would have caught the interest of another shopping centre developer. Perhaps Aldi or another supermarket would have shown interest. We will never know and it is quite improper to speculate. The simple fact is that the property was not put to market. It does not, therefore, meet the requirements of s 18(1) of the LVA and is not a bona fide sale. -- 39 of 63 -- 40 For completeness, I should note the precursor words in s 18(1). They set out that a bona fide sale is a sale on reasonable terms and conditions “that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)”. Subdivisions (a) (willing but not anxious buyer and seller), (b) (reasonable period to negotiate the sale) and (c) as referred to above, then follow. Section 18(2) deals with considerations as to factors to have regard to, in determining whether terms and conditions are reasonable. Section 18(3) then goes on to provide that, to remove any doubt, if there is a sale of land in question and the bona fide sale tests are complied with, the sale is bona fide. It is not the case that valuers can simply assume (relying on the word “assuming” in s 18(1)) that the bona fide sale test has been complied with because, for instance, they consider the sale price reasonable, and leave it there. Where the facts clearly show that any or all of s 18(1)(a), (b) or (c) do not apply, the sale cannot be a bona fide sale for the purposes of s 18. This is the case even if the Spencer test may have allowed, in certain circumstances, a different outcome. The specific, clear wording of s 18 in this regard must prevail. Sale 3 – 13-15 Glasson Drive, Bethania Turning once again to Exhibit 82, the valuers provided a summary of the details of BWP’s Sale 3 together with a summary of the view of each valuer comparing that sale to the subject. The summary is as follows: Sale No. Address Sale Date Sale Price Area (𝐦𝟐) Analysed Site Value Applied Site Value 01/10/2014 Use 3 13 – 15 Glasson Dr, Bethania Apr- 14 $4,000,000 37,950 m2 $3,800,000 $142/m2 (unencumber ed rate) $4,000,000 $145/m2 (unencumbered rate) Multiple Bulky goods retail CL Comparable access; Comparable use; Inferior location; Lower passing traffic; Economies of scale AE Inferior shape, zoning, access, topography, exposure, surrounding development, catchment; Inferior in all regards; Not worthy of any meaningful analysis or comparison to subject -- 40 of 63 -- 41 A synopsis of Mr Ladewig’s analysis of this sale provides: (a) Works allowance made having regard to Rawlinsons; (b) Access easement maintenance noted with limited concern; (c) No allowance made for potential planning risks due to knowledge of the 2015 Logan Planning Scheme and surrounding development being a Bunnings and Aldi; (d) Approximately 11.8 km from the subject site; (e) Limited exposure to 6 lanes of traffic along Logan River Road and moderate level of supporting amenity including Aldi and Bunnings; (f) Somewhat comparable useable size and comparable retail use; (g) Sold via tender process through Blue Commercial Gary O’She and the site value was reduced following the sale from $6,500,000; and (h) Overall an inferior sale, given location and exposure.74 Mr Elliott responded to Mr Ladewig’s analysis in the following way: (a) The price paid is significantly below the comparable sites within Logan and Gold Coast localities as at date of valuation; (b) This sale is an inferior location and catchment area; (c) Industrially zoned at date of purchase at Industry 2 (low impact – warehouse and manufacturing); (d) Significant batter bank to rear limiting exposure and no access and extremely limited exposure to the main road frontage (Logan River Road); (e) The responsibility for the burdening road easement is seen as detrimental due to the ongoing upkeep and capital requirement; (f) This site is substantially smaller in terms of the usable area and would not accommodate a use similar to the subject; (g) The contract of purchase was subject to the purchase executing a deed of covenant that it will not sell or lease any part of the land to a hardware seller other than Bunnings. The purchase also agreed not to construct any building or structure above a height of 48.0 AHD which would impact exposure; (h) SVS analysed a net rate of $173/m2 based on the usable area of 21,269 m2, whereas Mr Ladewig’s is at $145/m2; (i) This is not a reliable or relevant sales comparison for the subject property with a different lower order and highest and best use; and (j) Site is far inferior to the subject on a net rate/m2 basis.75 Before examining the above in any detail, there is an evidentiary point which has been raised by both parties. It again raises a topic I have already dealt with – hearsay material gathered by valuers as part of the factual matrix on which they base their expert opinion. The file notes in question are both from the State Valuation Service and were made by valuers other than Mr Elliott. They are Exhibits 65 and 66. Exhibit 74 Ex 12, page 42–3. 75 Ibid, page 43–4. -- 41 of 63 -- 42 65 contains notes of discussions with representatives of the vendor and purchaser, and Exhibit 66 contains notes of discussions with the vendor’s agent. At paragraph 120 of its submissions, the Valuer-General concedes that Exhibits 65 and 66 are in the nature of documentary hearsay, and that the Court must be careful in accepting such evidence. The Valuer-General goes on to submit that the Court is able to have confidence in the evidence as there are a number of discrete sources which corroborate each other. In its reply submissions, BWP notes that those Exhibits are hearsay and goes on to particularly challenge Exhibit 66 (the notes of discussions with the vendors agent) as providing no probative evidence of the facts set out therein because it is a third parties’ interpretation of the actions of the vendor and purchaser, and so should be afforded little, if any weight. Interestingly, Exhibit 67 is a file note tendered by BWP containing notes of discussions between a valuer at Savills (who is not Mr Ladewig) and the same representative of the purchaser as referred to in Exhibit 65. The existence of such a file note simply reinforces my earlier comments about the standard approach valuers take to making their enquiries about sales, which inevitably involves hearsay. There is no last-minute surprise contained in anything set out in Exhibits 65, 66 or 67. The “facts” expressed in them were clearly expressed and relied on, certainly in different ways, by both Mr Elliott and Mr Ladewig in the JER process as shown through Exhibit 12. Both Mr Elliott and Mr Ladewig had ample opportunity themselves to make their own enquiries if they were concerned as to the accuracy of anything contained in the file notes. I repeat and rely upon my earlier comments set out in paragraph 113 of these reasons. When Exhibits 65, 66 and 67 are read together, the relatively clear impression of the underlying facts of this sale is gained. This impression is only strengthened by reference to the JER76 and the oral testimony of Mr Elliott and Mr Ladewig. 76 Ex 12. -- 42 of 63 -- 43 What I take to be the underlying factual evidence regarding this sale is the following. The sale was the final piece of land to be disposed of by the vendor in a small development that it had undertaken. The vendor was keen to conclude the project and move on and was therefore seeking an unconditional sale without conditions. The site is a rather difficult one in that a considerable amount of land is taken up by extensive batter walls. The sale has only very limited exposure and was sold with a height restriction on building. At the time of the sale as an industrial based site, it would be impact assessable should a purchaser require a zoning change to allow bulky goods/retail use. Importantly, at the time of the sale there was a new draft town plan in existence which included a proposal for a change in zoning of the land to mixed use development which, if it eventuated, would allow for the purchaser to construct its proposed bulky goods/car wash/small shopping centre/convenience on a code assessable basis rather than impact assessable as at the date of sale. I note in particular that it is recorded that the purchaser was aware of the draft town plan and that, in light of that draft plan, “we took a punt”. Using more valuation acceptable terminology, I accept this as meaning that the purchaser undertook a risk assessment as to the likelihood of a change in zoning occurring in the future and took that risk into account in determining an appropriate purchase price for the property. When the underlying facts are understood in this way, in my view, Mr Elliott has correctly taken into account the existing zoning at the date of purchase and the risks associated with the current zoning requiring the purchaser to undertake a rezoning on an impact assessable basis should it wish to proceed with the mixed use style of development in circumstances where the draft town plan did not come into existence, at least within a timeline to allow the development to proceed within the purchaser’s wishes. On the other hand, Mr Ladewig did not take appropriate account of the risks associated with the industrial zoning at the time of sale and the impact that such zoning had on prospective purchasers. I consider the assessed rate per square metre undertaken by Mr Ladewig does not properly reflect the risks associated with the zoning issue, nor does it properly take into account as fully as it should have, the other difficulties with the site, in particular the very limited exposure and the inferior location and catchment area. There is also the limiting factor contained in the sale of the restriction to a height of 48.0 AHD for any building or structure on the site. As Mr Elliott has properly taken the factors just -- 43 of 63 -- 44 referred to into account in arriving at his rate per square metre of $173/m2 based on the useable area of 21,269 m2, I accept his figure. However, I do not go so far as Mr Elliott to say that this is not a reliable or relevant sales comparison for the subject property. I agree with Mr Ladewig that this sale, when properly assessed at $173/m2 for 21,269 m2, provides a comparator for the subject property of a sale which, while significantly inferior to the subject, still represents a site of enough comparability by way of size, date of sale and relatively nearby location of a large, vacant block ready if not yet quite ripe for development. Certainly, not a great amount of weight can be placed on this sale, but it does represent a comparator to the subject to which some attention can be given. That concludes BWP’s sales, although I note that Mr Ladewig has also relied on the Valuer-General’s Sale 3, except with his own analysis. I will now consider each of the Valuer-General’s sales in order. Valuer-General’s sales evidence Sale 1 – 1-3 Newheath Drive, Arundel Again, in Exhibit 82, the valuers provided a summary of the details of the Valuer- General’s Sale 1 together with a summary of the view of each valuer comparing that sale to the subject. The summary is as follows: In summary, Mr Elliott’s analysis of this site provided: (a) This site was sold as an industrial zoned site at an industrial rate; (b) There was no DA at the date of sale; (c) Impact assessable MCU requiring additional cost and risk; Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 1 1-3 Newheath Drive, Arundel, Qld 4214 05/05/2014 $14,871,990 4.4389Ha $335/m2 4.2448Ha $351/m2 Car Sales Yard & Service Centre AE Superior exposure although difficult access from M1; Inferior surrounding development and catchment; Inferior zoning as valued; Superior shape; Conservative analysis on sale with additional cost of works and holding costs required; Superior overall on a net/m2 basis CL High exposure to M1; Superior access; Alternative use; Inferior location; Economies of scale -- 44 of 63 -- 45 (d) This site has an inferior town planning designation; (e) This is a larger site with M1 exposure, although, difficult access of the motorway; (f) An analysed net rate of $351/m2 (before time and holding and cost of impact assessable DA and additional site works yet to be undertaken); and (g) This is a superior site to the subject on a net rate/m2 basis.77 In response, Mr Ladewig considers that the site has not been analysed on a “like with like” basis. He says there has been no allowance made for:  Upgrades to Kingston Drive, including lights, kerbing and channelling;  Site works off site along Kingston Drive;  Site works for the subject;  Risk involved with an impact assessable development application.78 Mr Ladewig is also critical that Mr Elliott has given a ‘nil value’ to the batterbanks; the site is within a different local council; has different underlying zoning; and has a different end use than the subject. Mr Ladewig is of the opinion that this site has superior exposure to the M1 and superior access, as well as being a larger site. His opinion is that the sale is not a good comparison to the subject.79 Responding to Mr Ladewig’s comments, Mr Elliott says that the allowances Mr Ladewig identifies as not being included would only serve to increase the analysed rate for comparison purposes which “confirms the Departments conservative approach to valuation of the subject”.80 In a number of respects this sale has similar attributes to BWP’s Sale 3, except the opposing sides are mounting opposite arguments. Like BWP’s Sale 3, this sale was zoned for industrial use as at the date of sale. This time however, Mr Elliott says that this sale can be relied upon while Mr Ladewig says that it cannot because of its lack of proper comparability to the subject for factors which include its industrial use zoning. There is an important distinction between this sale and BWP’s Sale 3. While the proposed use by the purchaser of BWP’s Sale 3 was comparable to that of the subject, 77 Ex 12, page 46–7. 78 Ibid, page 51. 79 Ibid, page 51. 80 Ibid, page 51. -- 45 of 63 -- 46 the proposed use by the purchaser of this sale is not. The land which was vacant at the time of sale was intended for use by the purchaser as a car sales yard and service centre. Whilst I was satisfied that some limited use could be made of BWP’s Sale 3, partly because of the similar proposed end use but with significant adjustments required to take into account various inferior aspects and the risks associated with rezoning, I cannot derive even that low level of comfort from this sale. It is true that both valuers accept, as a general statement, that industrial land is of a lower value than bulky goods/retail land. However, that is merely a statement of generalities. The site of Sale 1 has, it is agreed between the valuers, a farer superior location and close proximity to the major M1 motorway. There is simply insufficient evidence before me to make a comparator between a much larger industrial site with a significantly superior location and the subject bulky goods site. Mr Elliott properly conceded during the concurrent evidence that significant adjustments had to be made to the sale price for this sale in order to get it anywhere near being comparable to the subject. There are enough concerns regarding this site to question its proper comparability to the subject, particularly in circumstances where there are other sales available which are clearly more comparable than this sale. I note that this sale is located some distance from the subject. Before concluding my analysis of this sale, I note the various submissions of the parties regarding what adjustments, if any, should be made to this sale to take into account roadworks required for development; the cost of a DA; and costs to uplift the unimproved state of the site to that of a site improved sale in accordance with s 23 of the LVA. Unfortunately, for this sale I did not have the benefit of evidence from Mr Davidson as to the analysis of any such costs. Given my doubts as to the comparability of this sale to the subject, absent evidence as to the analysis of other costs associated with this sale, I do not consider it appropriate to consider this sale further. -- 46 of 63 -- 47 Sale 2 – 2 Mavis Court, Ormeau Turning once again to Exhibit 82, the valuers provided a summary of the details of the Valuer-General’s Sale 2 together with a summary of the view of each valuer comparing that sale to the subject. The summary is as follows: In the JER, Mr Elliott analyses this site as being level, irregular in shape and as having inferior underlying zoning and exposure. His conclusion is that this site is in an inferior location, with inferior passing traffic and surrounding catchment but superior to the subject on a rate per square metre of net site area, predominantly due to a smaller land area.81 A synopsis of Mr Ladewig’s comments on this sale in the JER are as follows:  The sale has not been analysed to compare with the subject on a like with like basis;  No allowance has been made for: (i) upgrades needed to Eastern Service Road, including road widening, median island, kerbing, channelling and footpaths; (ii) upgrades needed to Mavis Court, including footpaths and construction of on street parking; (iii) site works for the subject; (iv) the risk associated with an impact assessable development application  This site is located 21.4 km south east of the subject, within a different local council, with different zoning and a different end use, has inferior exposure and is a smaller site with economies of scale relevant;  Purchaser was reported as being “anxious”; 81 Ibid, page 53. Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 2 2 Mavis Court, Ormeau, Qld 4208 07/10/2014 $5,500,000 1.566Ha $351/m2 1.566Ha $396/m2 Service Station & Fast Food AE Inferior exposure; Inferior road network; Inferior shape; Inferior surrounding development; Inferior zoning at date of sale; Superior to subject on rate/m2 basis predominately due to size CL Questionable Spencer test; Superior access; Alternate use; Inferior location; Lower passing traffic; Economies of scale -- 47 of 63 -- 48  This site has comparable access with service station use as appose to a bulky goods use and does not provide a good comparison to the subject.82 In response, Mr Elliott again comments that any allowance made as suggested by Mr Ladewig would have the effect of increasing the analysed rate for comparison purposes and demonstrates the Departments conservative approach to the valuation of the subject.83 In its submissions BWP refers to various parts of Mr Elliott’s evidence in the transcript and says that it is not necessary to give any substantive consideration to this sale due to Mr Elliott’s concession that the sale ought to be disregarded because it is not directly comparable to the subject.84 The Valuer-General in its submissions acknowledges the concessions made by Mr Elliott but goes on to attempt to still make something out of this sale because the sale was “if not inferior at least comparable to the Subject Land, in terms of value”.85 It is appropriate to look at precisely what Mr Elliott had to say about this sale during the concurrent evidence. I will turn to the final questions put to Mr Elliott regarding this sale: “MR HASTIE: Can you explain to the court, then, having regard to the fact that you seem to have accepted that its highest and best use is for a service station, and you seem to have accepted the fact that the price paid reflected its industrial use – can you tell the court why you included it in your analysis, given the subject land, you accept, has a highest and best use for bulky goods? Can you explain what your reasoning was there? MR ELLIOTT: Well, I suppose it has been bought for a higher use and, once again, that higher use, I think, is, if not inferior, then at least comparable to the – the subject highest and best use but, once again, they’re not – you can’t – as we’ve just found out, you can’t use this sale directly to provide a bulky goods under the town planning. MR HASTIE: All right. Thank you. Nothing further. MR PURCELL: All right. Just to avoid any doubt as to the utility of this sale in terms of its use in the direct comparison approach you’ve adopted, do you now accept that it provides absolutely – is of absolutely no relevance or no assistance in terms of deriving the value of the subject property? 82 Ibid, page 60–1. 83 Ibid, page 61. 84 BWP Written Submissions paragraph 92. 85 Valuer-General’s Submissions paragraph 167. -- 48 of 63 -- 49 MR ELLIOTT: It – well, it gives me more of an indication of the base industrial rate. MR PURCELL: Well, that’s quite something different again. MR ELLIOTT: Yeah, I know. That’s right. That’s right. And it’s – that site doesn’t go to a bulky goods use, so it’s not directly comparison or comparable.”86 (emphasis added) The evidence of Mr Elliott, particularly at T 2-154 lines 36 to 37 in bold, amounts to a total falling from that sale as any form of comparator to the subject. Given Mr Elliott’s absolutely clear oral evidence, I disregard this sale from any further consideration. Sale 3 – 1 Main Street, Springfield Central Turning again to Exhibit 82 and the valuers summary of the Valuer-General’s Sale 3 together with a summary of the view of each valuer comparing that sale to the subject as follows: Although this is one of the Valuer-General’s sales, it is a sale which is also relied upon by Mr Ladewig, except with his own analysis. 86 T 2-154 lines 11 to 37. 87 See Valuer-General’s Submissions paragraph 133; T 2-186 lines 15 to 20. Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 3 1 Main Street, Springfield Central 4300 10/09/2014 $8,568,215 3.711Ha $231/m2 3.711Ha $291/m2 Reduced by Mr Elliott during oral evidence to $285/m2 87 Bulky Retail - Bunnings AE Greenfield location although close to regional shopping centre; Inferior surrounding development; Inferior catchment; Superior 3 street frontage; Inferior overall on a rate/m2 basis CL Highway exposure to Centenary Highway; Superior location; Superior access; Comparable use; Economies of scale -- 49 of 63 -- 50 Mr Elliot ultimately provided an analysed site rate of $285/m2 and considered it to be an inferior site on a rate per square metre basis. In summary, Mr Ladewig provides the following in relation to this site:  The sale has not been analysed correctly to compare with the subject on a like with like basis;  This was an off market sale transaction between Bunnings and the Vendor. The sale was not known to the market at the date of valuation;  No allowances were made for the delayed settlement with original put and call entered into in early 2013, for settlement of the site after construction of the Bunnings warehouse or for the lost area due to the batterbanks;  This site is within a different local council with different underlying zoning;  Is superior in location and exposure to the Centenary Highway with superior access;  There is a good level of supporting amenity including Springfield office tower, a data centre, Southern Cross University and Medical precinct and the Orion Shopping centre including an Aldi, Woolworths, Coles, departments stores and specialities;  Is superior to the subject site.88 Both the Valuer-General and BWP went into detailed submissions as to why their respective submissions with respect to this sale should be accepted. However, it would appear that, just like BWP’s Sale 1, both valuers and their legal representatives overlooked a crucial piece of evidence. At paragraph 306 of the JER Exhibit 12, Mr Ladewig states: “Off market sale between Bunnings and Vendor”. It should be noted that precisely the same words appear at paragraph 279 of the first JER, Exhibit 6. Mr Elliott did not respond to the paragraph in either of the JER’s or in his individual report, Exhibit 8. If the sale was anything other than off market, Mr Elliott had ample opportunity to so advise. I am satisfied that the property was not put to the market. Accordingly, despite the level of agreement between Mr Elliott and Mr Ladewig regarding their respective analysis’ of the sale, the position is identical to that which I found with respect to BWP’s Sale 1. As the property was not put to market, it does not, therefore, meet the 88 Ex 12, page 66–7. -- 50 of 63 -- 51 requirements of s 18(1) of the LVA and not a bona fide sale. Accordingly, it is unnecessary to consider this sale further. This sale, although relied on by both valuers, must be ignored. Sale 4 – 53-91 Dalton Road, Maroochydore In Exhibit 82, the valuers summary of the details of the Valuer-General’s Sale 4 together with a summary of the view of each valuer comparing that sale to the subject is as follows: Mr Elliott considers this site to be superior to the subject, in a superior location, within a superior growth area and catchment. It has a larger net area than the subject and the purchaser’s intended use is the same as the subject.89 Mr Ladewig is of the opinion that this sale has not been analysed correctly to compare with the subject on a like with like basis. Mr Ladewig says that the purchase of this site was within the Principal Centre CBD Zone Precinct 8 and it is within a different local council with different underlying zoning than the subject. Mr Ladewig’s conclusion is that overall the site is superior, specifically in terms of location, exposure and access.90 BWP contends that both this sale and the Valuer-General’s Sale 5, at their highest, provide only secondary sales evidence of the site value of the subject given their 89 Ibid, page 69. 90 Ibid, page 77. Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 4 53-91 Dalton Road, Maroochydore 4558 10/09/2014 $13,000,000 4.346Ha $299/m2 4.074Ha $347/m2 Bulky Retail - Masters AE Superior topography; Superior shape. Superior overall location and socio economic profile; Superior on a rate/m2 basis; Also a corner site. CL Superior location; Superior access; Comparable use; Lower passing traffic; Economies of scale -- 51 of 63 -- 52 locational differential and distance from the subject.91 Sale 4 is over 100 kilometres from the subject and is located in what the local authority for that area planned at the time of sale to be strategically developed as the CBD of Maroochydore for the region. Interestingly, BWP notes that Mr Elliott analysed the sale at $347 per m2 net site rate and Mr Ladewig to $332 per m2 which is a differential in analysis of only $15 per m2; a difference of well under 10%. As BWP puts it, the real difference between the valuers is not the analysis of the sale but rather its application and utility as a comparable sale.92 There is support for what BWP submits in the oral evidence: “MR ELLIOTT: The – these developers are in a national and statewide market. They look at every available site to look at every catchment, and hope to satisfy any catchment that would warrant their large-format retail. So they would be well versed with dealing with different locations and different - - - MR PURCELL: Well – sorry, yeah. MR ELLIOTT: Yeah. MR PURCELL: I’d suggest to you, though, that those types of factors come plain with the consideration of a hypothetical prudent purchaser in mind as to what they would pay for a site in that region. You’d accept that? MR ELLIOTT: Makes sense that, yeah, a purchaser would fully inform themselves. MR PURCELL: Indeed. MR ELLIOTT: Yeah. MR PURCELL: And what I’m suggesting to you is that the Maroochydore region is subject to a number of quite different considerations than an outer suburb in Brisbane, such as the subject. They’re not the same considerations, are they? There’s a number of factors into play. MR ELLIOTT: Well, a house in Hawthorn is not the same as a house in Kedron. There’s factors that some into play there. That’s just - - - MR PURCELL: Indeed. MR ELLIOTT: Yeah, exactly. MR PURCELL: So what I’m asking, then, how can you make a proper like- for-like comparison between the subject and a development – a sale, sorry, 108 kilometres away in a different shire that’s subject to different economic 91 BWP Written Submissions paragraph 18. 92 BWP Written Submissions paragraph 116. -- 52 of 63 -- 53 factors, which drive what a hypothetical prudent purchaser would pay for that land? MR ELLIOTT: I don’t – I don’t see any problem in that. It’s the same use, same end product. It’s a larger site, with all things being equal, should show a lower rate, so the actual rate paid reflects that this location is of a superior nature to the subject. MR PURCELL: Are you – well MR ELLIOTT: It – it points to evidence. Surely, it’s a logical comparison. MR PURCELL: Well, let’s have a look at, for instance, a comparative mark in terms of residential. This is a hypothetical. MR ELLIOTT: Okay. MR PURCELL: You’re not going to achieve the same levels of hypothetical value in a site in Maroochydore for a residential level than you would in outer suburban area in Brisbane; is that correct? MR ELLIOTT: Depends on which outer area you’re talking about. MR PURCELL: Indeed, and that’s precisely --- MR ELLIOTT: Yeah. MR PURCELL: - - - my point, though, because they’re all subject to different types of considerations. You’d accept that? MR ELLIOTT: Exactly. MR PURCELL: Okay. MR ELLIOTT: That’s why there’s a range of sales that you’ve got to take into consideration. MR PURCELL: Mr Ladewig - - - MR LADEWIG: Yes, sir. MR PURCELL: - - - in fairness to you, why have you disregarded this sale for comparative uses? MR LADEWIG: The location, it’s significantly removed from the subject. It’s – yes, I agree, it does have a comparable use, absolutely. We’ve both analysed this site. The area was originally contended to be a hub – a health precinct, I think, from memory. This is one of the main connection roads going into that, so this is actually quite a significant location in Maroochydore. I thought it was – like, I just found that there was more comparable better evidence closer to the subject. MR PURCELL: Okay. And in fairness, Mr - - - MR ELLIOTT: Like – well, my response to be – that would be like Glasson Drive. That’s – that’s just as big a jump in terms of a like-for-like -- 53 of 63 -- 54 comparison, in terms of coming from 138 to – to 65 versus 350 to 300. So - - - MR PURCELL: Okay. Putting – all other things being equal, you’d accept that the best type of evidence for a property would be other properties in the immediate vicinity, subject to proper - - - MR ELLIOTT: If they were – if they were of a comparable nature - - - MR PURCELL: Precisely right. MR ELLIOTT: - - - that would be preferable. There is – in my opinion, there is not the perfect sale in close proximity. Once again, who was the purchaser of this property? This is - - - MR LADEWIG: Masters. MR ELLIOTT: - - - Masters, who at the time were scouring sites all over Australia. So they’re taking in all those different considerations in determining their purchase prices, all different councils, all different cost structures, etcetera. They’re fairly - - - MR PURCELL: Precisely right. MR ELLIOTT: Yeah – fairly prudent. MR PURCELL: But there's no evidence before the court, is there, to suggest that Masters was paying, notwithstanding all that, the same rate for each of those sites and each of those different local government areas, is there? MR ELLIOTT: No, of course. No.”93 The questioning regarding the comparability of this sale continued: “MR PURCELL: And so to allow a proper like for like comparison to the subject, in terms of different area within that region, they had to make a subjective adjustment to make that like to like comparison? Is that correct? MR ELLIOTT: Well, it’s obviously subjective, because every market petition has their own subjectivity to bring to it, because no one’s got perfect information, no one knows the exact demographics, the exact market sentiment of the day, week, month that might change on a daily basis. MR PURCELL: Where, in the report, Mr Elliott, have you mentioned that you’ve made any such adjustment to allow that comparison to be made? MR ELLIOTT: No. I wouldn’t make – I wouldn’t make individual percentage adjustments like saying I’ll allow 2.8 per cent reduction because there’s a little truncation at the backend of that site, there’s a one metre fall over 55 metres, therefore I need .86 per cent reduction. It’s what a market participant would make adjustments in their own mind, and as digesting the weight of evidence in front of them, and weight of market parameters. MR PURCELL: Yes. 93 T 2-193 line 40 to T 2-196 line 14. -- 54 of 63 -- 55 MR ELLIOTT: So it’s not a science where we’re going to list out .8 of 15 as to how we arrived at $320. As I said, we’re almost getting a bit too pedantic in terms of most of our analysis, in terms of getting away from what market participants actually think about. MR PURCELL: I appreciate that. Where, in your report, have you evidenced any consideration of those issues, or those elements, in terms of determining the appropriate comparability of this sale to the subject? MR ELLIOTT: I haven’t, and I probably wouldn’t in any other report, I wouldn’t have thought.”94 BWP in its submissions relies on the above evidence to support its contention that “the Maroochydore property market is a completely different beast from that in Browns Plains given the above economic factors, differing planning intent, levels of development, different price structures and different market phases. Accordingly, the Respondent’s Sale 4 could therefore be used for a limited purpose only, if any.”95 BWP goes on to submit that the differences between Sale 4 and the subject are so great that the sale does not provide a proper basis upon which the Court can assess the value of the subject. There is of course judicial support for what BWP contends. A good place to start is in Spencer where Isaacs J quoted from the Privy Council decision in Secretary of State for Foreign Affairs v Charles Pilling & Co (1901) AC 373 at page 391: “It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork ; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at.”96 The same quote was relied upon by Hope JA (with whom Mahoney JA agreed) in Leichhardt Municipal Council v Seatainer Terminals Pty Ltd & Anor.97 Hope JA also made other important observations about comparable sales: “TheoreticalIy a comparable sale may be of the very land to be valued, as where, for example, a contract for its sale was entered into on the very day 94 T 2-207 lines 6 to 37. 95 BWP Written Submissions paragraph 124. 96 (1907) 5 CLR 418, 442–3. 97 (1981) 48 LGRA 409, 436. -- 55 of 63 -- 56 upon which it was to be valued. This would be a most unusual situation, but often evidence is available of sales of very similar land close in point of time to the date of valuation. However, probably more often, the lands the subject of the sales relied upon are in some way different from the land to be valued, giving the latter land a higher or lower value than that to be deduced from the sales. The times of the sales in relation to the date of valuation may also have to be considered in the light of general movements in land prices. The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the court which has the task of valuing the land from relying upon the sales as comparable in the relevant sense, nor from the making by the court or by valuers of adjustments which may be nothing more than the best guess that can be made… There was evidence which allowed a finding that land reclaimed and compacted as had been the land the subject of the A.P.M. sale would be suitable for a container terminal site, given a deepwater frontage and suitable access and other services and facilities. The A.P.M. land did not have a deepwater frontage; it was situated in Botany Bay rather than Sydney Harbour; and it did not have the suitable and adequate access, services and facilities which the Sydney Harbour lands had. Whether the differences between land a sale of which is to be relied upon and the land to be valued are so great that the land the subject of the sale cannot be regarded as comparable is a question of fact and degree. The differences may be so great that a court may be constrained to hold that the land is in no sense comparable, and that the adjustments which have to be made are so great that the sale can provide no evidence of the value to be determined, and no basis upon which that value can be assessed. In the present case the essential question seems to me to be whether a sale of flat industrial land adjacent to land being constructed as a dock at Botany Bay, and which, if it had a deepwater frontage, would be suitable as a container terminal site, can be considered sufficiently comparable to provide a basis upon which to determine the value of a site directly suitable for that purpose at Sydney Harbour. In my opinion it cannot be said that the conclusion that the sale was comparable was not reasonably open or possible on the evidence. The presence of a deepwater frontage would obviously have added value to the A.P.M. land, but I do not think that the difference or advantage was of such a magnitude as to prevent the value of the land from providing an adequate basis, with proper adjustments, for the valuation of the subject lands. As well as the absence of a deepwater frontage, the terms of the A.P.M. transaction, zoning considerations, the location of the land, the industrial environment, the access, services and facilities, and other matters had to be considered in determining the issue. I do not consider it necessary to describe and to deal with each of these matters in detail. It is sufficient to say that I do not think that in the circumstances of the case any of these matters precluded Ash J., from concluding, as had Mr Feltham, that the sale of the A.P.M. land was sufficiently comparable to enable him to make use of it as a basis for his valuations. The question then arises whether any error of law was made in relation to the adjustments required to reach the value of the subject lands…”98 98 Ibid, 434–5. -- 56 of 63 -- 57 Hope JA went on to find that the sale in question was properly adjusted and could accordingly be relied upon as comparable. I agree with this observation. President Kingham also considered the concept of comparable sales in Macarthur Central Shopping Centre Pty Ltd as TTE v Valuer General (No. 2) where her Honour made the following observations: “It is well established that analysis of comparable sales, preferably of vacant or lightly improved land, is the preferred method for determining market value. The comparable sales method necessarily involves some element of subjective judgment in comparing the comparable sale to the subject site. The greater the differences between the properties, the greater the reliance on evaluative judgment and the less confidence the Court can have in inferences drawn from the analysis.”99 (citations omitted) Without doubt, the oral evidence quoted above, read in light of the authorities, casts significant doubt as to whether Sale 4 can properly be relied upon by Mr Elliott as a comparable sale to the subject. The evidence of Mr Ladewig that Sale 4 is in a different market and not comparable seems compelling. However, other evidence provided during the concurrent evidence relating to this sale greatly muddies the waters. What became Exhibit 78 was shown to both valuers and detailed questioning was had of Mr Ladewig regarding that Exhibit, which is a JER in other Land Court proceedings.100 The valuers in that JER were Mr von Lossberg for the Valuer- General and Mr Ladewig for the appellant. The relevant valuation date under consideration was 1 October 2014. The subject land was utilised as bulky retail (the Cannon Hills Bunnings). Mr Ladewig’s sale 1 in that JER was 111, 56 and 85 North Lakes Drive, North Lakes (which is Mr Elliott’s Sale 5 in these proceedings). Mr von Lossberg noted that the sale was 26 km north of the Brisbane CBD in a different local government area, that the sale was subject to location risk, market risk, and town planning risk and, further, that the subject property zoning in 2014 allowed for a wider range of uses than the sale zoning including townhouses, row houses, villas, apartments, short-term accommodation, retirement village and residential care.101 Essentially, Mr von Lossberg raised much the same issues as Mr Ladewig has raised against Sale 4 in the case at hand. 99 (2016) QLC 80 [11]. 100 LVA071-16. 101 Ex 78, paragraphs 73–5. -- 57 of 63 -- 58 The trouble for Mr Ladewig is that he mounted effectively the reverse comparability argument in the LVA071-16 appeal to what he has said in the current appeal for the same valuation period. Further, the very sale that he relied upon in LVA071-16 is a sale that Mr Elliott relies on in the current matter (Sale 5) and Mr Ladewig does not. I will deal with Sale 5 directly after concluding my analysis of Sale 4. Mr Ladewig had this to say in the JER with respect to the 111, 56 and 85 North Lakes Drive, North Lakes sale: “66. Superior location being in an established retail precinct adjourning a Westfiled shopping centre. 67. Comparable use being bulky retail. 68. Similar buying profile being regionally traded. 69. Comparable access 70. Good exposure to passing traffic within the precinct, however no exposure to the Bruce Highway. 71. A larger parcel of land with economies of scale relevant overall. 72. Overall considered a good comparison to the subject applied at between $216/m2 unencumbered.”102 Some of Mr Ladewig’s oral evidence in the current proceedings was telling. For instance, the following: “MR HASTIE: Can I suggest to you that these bulky-good sites really are in the nature of a regionally-traded asset? Do you agree with that? MR LADEWIG: Like, potentially to a point. Yes, I agree with that to – to an extent. MR HASTIE: And doesn’t that mean, Mr Ladewig, that, realistically, notwithstanding differences in the locations of these sites, they can be comparable, notwithstanding them being significant distances apart? MR LADEWIG: In my opinion, the Sunshine Coast is a lot different to Brisbane and is a lot different to the Gold Coast. MR HASTIE: What about North Lakes? MR LADEWIG: North Lakes again would be different to Brisbane, yes.”103 It was at this point that Mr Ladewig was shown what became Exhibit 78. Mr Ladewig attempted to explain the apparent inconsistency in his evidence in the two JER’s: 102 Ex 78. 103 T 2-200 lines 7 to 22. -- 58 of 63 -- 59 “MR LADEWIG: Yes. I’m confused. I thought it was superior. I thought it was a means of comparison. I had limited sales evidence. I used North Lakes, from memory, I used Compton Road, from memory, and I can't remember what else I used, but they were two bulky goods assets that I used. MR HASTIE: But you agreed both sales, notwithstanding the difference in local government area, and the locational differences, you nonetheless accepted, in that report, that they could be guides to the value of the subject site. MR LADEWIG: Yes. And - I did. Correct. MR HASTIE: So why do you now say that the North Lakes site is too far away to be a useful comparator to the subject site in these proceedings? MR LADEWIG: I consider North Lakes as a secondary sale. I think that there is better evidence closer to the subject. MR HASTIE: Closer to the subject. But you would accept – but you must then accept that this – the mere fact that North Lakes is some distance from the subject site doesn’t exclude it from being a comparator properly analysed. MR LADEWIG: I consider it secondary evidence if I have closer, better sales. MR HASTIE: But what I’m asking you to accept is that the mere fact that it is some distance from the subject site doesn’t render it inutile for the purposes of the comparison, does it? MR LADEWIG: It makes the comparison more difficult, but I don’t think it renders it – sorry, what was the word you used? MR HASTIE: Without – renders it difficult. MR LADEWIG: Yes. MR HASTIE: I think we’re on the same page. You would accept that the North Lakes site can be used as a comparison. You might accept that there are better sites, but its locational difference doesn’t render it of no use. MR LADEWIG: Yes. Correct. I don’t think it has no use. It – it becomes more difficult to compare to the subject. MR HASTIE: And, nevertheless, you considered it to be a good comparator to the subject land in – for the Bunnings site in Cannon Hill? MR LADEWIG: I did consider it a comparison. Yes. MR HASTIE: But you don’t think it’s a good comparison to the Bunnings site in Browns Plains? MR LADEWIG: Correct. I think there is better localised evidence.”104 104 T 2-202 line 25 to T2-203 line 27. -- 59 of 63 -- 60 The Valuer-General submitted that Mr Ladewig’s own evidence in the other JER supports Mr Elliott’s view that the current Sale 4, whilst some distance from the subject, can still provide a reliable indicator of value, with these properties being in the nature of regionally traded assets. The Valuer-General made the same observations regarding Sale 5. I agree. The subject and Sales 4 and 5 have the same bulky goods use. That is a sound commencing point for a comparative analysis with the subject. Just as Mr Ladewig did in the JER for LVA071-16, adjustments need to be made to reflect the differences in the locality. That is a task which a valuer can properly do and express their opinion on, as both Mr Elliott in this matter and Mr Ladewig in the other JER have shown. I accept Mr Elliott’s evidence with respect to Sale 4. Sale 5 – 111, 56 & 85 Northlakes Drive, Northlakes The valuers provided a summary of the details of the Valuer-General’s Sale 5 together with a summary of the view of each valuer comparing that sale to the subject in Exhibit 82 as follows: I note that there is clearly a typographical error on the face of the date inputted by Mr Elliott where he refers to the sale date as 17/3/1014. To remove any doubt, the date for Sale 5 should refer to 17 March 2014. This sale is of course the sale that Mr Ladewig relied on in the JER for LVA071-16 discussed in the analysis of Sale 4 above. Sale No Location Date Sale Price (Ex GST) Gross Area/Rate Net Area/Rate Use 5 Northlakes Drive, Northlakes 4509 17/03/1014 $19,528,880 6.488Ha $301/m2 6.488Ha $282/m2 Bulky Retail - Multiple AE Superior location although still developing; Similar surrounding development – Westfield North Lakes. Inferior topography; Similar use; Inferior overall given larger land area CL Superior location; Superior access; Comparable use; Lower passing traffic; Economies of scale -- 60 of 63 -- 61 Mr Elliott is of the opinion that Sale 5 is in a superior location to the subject in the current matter, although it has inferior exposure as it is not located on a major arterial road. He concludes that the site is inferior to the subject on a rate per square metre basis. Mr Elliott notes that this is a staged development, with the site not fully ripe for development at the date of sale.105 Mr Ladewig provides the following in response to Mr Elliott’s analysis:  The sale has not been analysed correctly to compare with the subject on a like with like basis;  No allowance has been made for site works/cost penalties considered necessary by Mr Elliot in “sale comments” to make a like with like comparison;  This site was developed by Stockland with generally level building platforms;  The site was sold and marketed within different local council and has different underlying zoning and has good exposure and is superior in location and access;  There is a good level of supporting amenity including Westfield Northlakes, car yards, Ikea, Costco, Bunnings, offices with Service Industry and general residential to the greater area;  Overall, this site is superior, however, the larger size leads to a lower rate per square metre.106 Given my reasoning with respect to Sale 4 and the interweaving similar submissions of the parties with respect to Sale 5 as Sale 4, it is unnecessary to undertake further analysis of Sale 5 except for one aspect in which the evidence is markedly different. That relates to an allowance that Mr Elliott made for the cost of a suspended slab in order to uplift it so as to achieve a like for like comparison with the subject, in the same manner in which he uplifted the common sale (115 Compton Road) relying on Mr Davidson’s evidence. I accepted the uplift that Mr Elliott made in the common sale relying on Mr Davidson’s evidence. In that analysis, I was satisfied that the evidence allowed for an adjustment to be made, consistent with s 23 of the LVA. However, I do not accept that such reasoning flows to Sale 5 as regards the particular facts of the proposed uplift of a suspended slab. I do not consider that the uplift of a suspended slab meets the s 23 definition of site improvements. A suspended slab would be a non-site 105 Ex 12, page 79. 106 Ibid, page 84–5. -- 61 of 63 -- 62 improvement constructed on the site improved land, much in the same way that I found in GPT Re Limited v Valuer-General107 that the construction of the river wall in that case formed part of the building and was a non-site improvement that had to be removed to bring the land back to site improved pursuant to ss 19, 23 and 24 of the LVA. As I noted in GPT: “[256] As I have just stressed regarding s 23(1), there is absolutely no doubt on the facts as found in this matter that the river wall was constructed as part of the building project for the 123 Eagle Street tower. It forms an integral part of the building. The building would be unable to stand but for the existence of the river wall as part of its footings and foundations and underground building levels. [257] It is nonsensical to contemplate even a hypothetical situation where the non-site improvements are removed in circumstances where that is only part of the developed building and where the river wall is an essential element of that development. [258] Each case must be decided on its own facts. In this case, the facts in my view are absolutely clear. The coffer dam was the integral part of the reclamation done to the land. The river wall is an integral part of the building developed on the land. It follows that the river wall, as I have defined, it must not be included as a site improvement in the valuation of 123 Eagle Street.” I must of course note that GPT was delivered after the submissions closed in this matter and thus the parties did not have the opportunity to consider same in the case at hand; nor have I asked the parties to make further submissions in light of the decision in GPT. I simply refer to GPT as an assistant in explaining my reasoning process in this case: were my references to GPT removed, my reasoning in the current case would not change. Further, even if I am wrong as to my decision that Sale 5 should not be uplifted by a suspended slab for like for like comparison purposes with the subject, my overall decision with respect to the disposition of the appeal in the matter at hand would not have changed. Removal of the suspended slab allowance only results in a reduction of approximately $13 per m2 in Mr Elliott’s analysis of Sale 5, which is rather insignificant in the overall scheme of things in the analysis of all the sales to the subject. For the reasoning set out with respect to Sale 4, I accept Mr Elliott’s analysis of Sale 5, subject to the removal of his allowance of $864,000 for the uplift of Sale 5 by the suspended slab, which causes a reduction in Mr Elliott’s applied rate for Sale 5 by $13 m2 from $282 m2 to $269 m2. 107 [2018] QLC 9. -- 62 of 63 -- 63 Determination Having carefully considered all of the evidence in this matter, and having provided my analysis of the evidence relating to each of the sales, the outcome of this appeal is clear. Apart from Mr Elliott’s Sales 1, 2 and 3 (and of course for Sale 3 I was equally critical of Mr Ladewig), I have overwhelmingly accepted the valuation evidence and opinion of Mr Elliott as to the analysis of the comparable sales in this matter. My findings with respect to Mr Ladewig’s evidence are such that BWP has failed to provide sufficient evidence to shift the balance of probabilities in this case to its position as to the value of the subject land as at 1 October 2014.108 It follows that the appeal must be dismissed, and the valuation appealed against confirmed.109 Orders 1. The appeal is dismissed. 2. The valuation appealed against is confirmed. PA SMITH MEMBER OF THE LAND COURT 108 Land Valuation Act 2010 s 169(3). 109 Ibid s 170(a). -- 63 of 63 --