Chief Executive, Department of Natural Resources and Mines v Kent Street Pty Ltd [2009] QCA 399 (2009) 171 LGERA 365; (2009) 30 QLCR 291

SUPREME COURT OF QUEENSLAND CITATION: Chief Executive, Department of Natural Resources and Mines v Kent Street P/L [2009] QCA 399 PARTIES: CHIEF EXECUTIVE, DEPARTMENT OF NATURAL RESOURCES AND MINES (appellant) v KENT STREET PTY LTD ACN 006 794 654 (respondent) FILE NO/S: Appeal No 610 of 2009 LAC No 33 of 2007 DIVISION: Court of Appeal PROCEEDING: Appeal from the Land Appeal Court ORIGINATING COURT: Land Appeal Court DELIVERED ON: 22 December 2009 DELIVERED AT: Brisbane HEARING DATE: 2 September 2009 JUDGE: McMurdo P, Keane JA and P Lyons J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. The appeal is dismissed. 2. The parties have leave to make submissions as to the appropriate costs order. 3. The submissions are to be no longer than as directed by Practice Direction No 1 of 2005 para 37A. 4. The appellant's submissions are to be filed and served by the end of January 2010. 5. The respondent's submissions are to be filed and served by the end of the first week of February 2010. 6. The appellant has leave to file and serve reply submissions by the end of the second week of February 2010. CATCHWORDS: REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – METHODS OF ASSESSING – where appellant valued subject land including major regional shopping complex, which was reduced following objection – where Land Court ("LC") valued land on appeal – where Land Appeal Court ("LAC") set aside LC valuation – where unimproved value of land determined by Land Appeal Court ("LAC") under s 3(1)(b) Valuation of Land Act 1944 (Qld) -- 1 of 56 -- 2 ("the Act") – where LAC concluded correct exercise was to value subject land as notionally vacant site, but that past trading history as super regional shopping complex was matter of valuation evidence – where LAC heard appeal in instant case after another appeal against valuation determination ("Chermside matter") – where expert valuer assessed differential between site improved value of land in Chermside matter, which was comparable site, and subject land in instant matter – where LC in instant matter applied differential to subject land to determine site improved value, and rejected Telstra sale as reliable evidence of value of land in Chermside matter – where LAC rejected LC's approach, and concluded Telstra sale was best evidence of value of land in Chermside matter – where LAC adopted its determination of site improved value of land in Chermside matter – where LAC deducted value attributed to site improvements from site improved value of subject land to determine unimproved value – where appellants argued that unimproved value of land under s 3(1)(b) was improved value less value of "improvements" as defined in s 6 of the Act – where effect of appellant's submissions that only difference between improved value and unimproved value of improved land was cost of construction of "improvements" – whether LAC erred in law Acts Interpretation Act 1954 (Qld), s 14B Land Court Act 2000 (Qld), s 55, s 56 Valuation of Land Act 1944 (Qld), s 3(1)(b), s 3(2), s 3(2A), s 3(2B), s 3(2C), s 5, s 64, s 66, s 67, s 101A Valuation of Land Regulation 2003 (Qld), s 3 Ainger v Coffs Harbour City Council [2005] NSWCA 424, cited Aik Hoe & Co Ltd v Superintendent of Lands and Surveys, First Division [1969] 1 AC 1, considered Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 260 ALR 1; [2009] HCA 41, applied Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41; [1978] HCA 40, considered Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24, cited Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd (1977) 139 CLR 449; [1977] HCA 38, cited Commissioner of Land Tax v Nathan (1913) 16 CLR 654; [1913] HCA 28, considered Commonwealth Custodial Services Ltd v Valuer-General (2007) 156 LGERA 186; [2007] NSWCA 365, considered Corporation of City of Adelaide v City of Port Adelaide Enfield (2000) 110 LGERA 153; [2000] SASC 271, cited Fisher v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 242; [1915] HCA 54, considered -- 2 of 56 -- 3 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, cited ISPT Pty Ltd v City of Melbourne (Land Valuation) [2007] VCAT 652, cited ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447; [2008] VSCA 180, cited H A Bachrach Pty Ltd v Caboolture Shire Council (1992) 80 LGERA 230; [1993] QPLR 33, cited Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378, cited Kelly v Western Australian Planning Commission [2006] WASC 208, cited Kiddle v Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316; [1920] HCA 17, considered Lamb v Brisbane City Council & Anor [2007] 2 Qd R 538; 100; [2007] QCA 149, cited Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8, considered McDonald v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 231; [1915] HCA 84, considered Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, cited Morrison v Federal Commissioner of Land Tax (1914) 17 CLR 498; [1914] HCA 10, cited Pledge v Roads and Traffic Authority (2004) 78 ALJR 572; [2004] HCA 13, applied PT Limited v Department of Natural Resources and Mines [2006] QLC 68, considered Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216; [1990] HCA 52, cited Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; [1955] HCA 13, considered Shire of Esk (1972) 39 QCLLR 130, not followed Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, cited Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82, cited Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1, cited The Commonwealth v Reeve (1949) 78 CLR 410; [1949] HCA 22, cited Toohey's, Ld v The Valuer-General [1925] AC 439, cited Townsville City Council v Chief Executive, Department of Main Roads [2006] 1 Qd R 77; [2005] QCA 226, cited Trust Co of Australia Ltd & Anor v Valuer-General (2008) 101 SASR 110; [2008] SASC 169, cited Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160; [1982] HCA 46, considered Webster v Director-General, Department of Lands [1996] 2 Qd R 318; [1995] QCA 63, considered -- 3 of 56 -- 4 COUNSEL: D F Jackson QC, D B Fraser QC and T W Quinn for the appellant S Doyle SC, R Traves SC and J Horton for the respondent SOLICITORS: Crown Law for the appellant Minter Ellison for the respondent [1] McMURDO P: This appeal is from a decision of the Land Appeal Court under the Valuation of Land Act 1944 (Qld) and is brought as of right under s 65 of that Act, alleging that the decision "is erroneous in point of law". For the reasons given by P Lyons J, the appellant has not demonstrated any error of law on the part of the Land Appeal Court. The appeal must be dismissed with costs. [2] KEANE JA: The reasons of P Lyons J set out the circumstances of this litigation, the relevant legislative provisions and the arguments of the parties. I gratefully adopt his Honour's comprehensive statement of these matters. I also agree with the reasons given by his Honour for dismissing the appeal. Because of the importance of the issues involved in this appeal, I wish to state, as briefly as possible for the sake of coherence, the reasons for my conclusion that the appeal to this Court cannot be sustained by reliance upon the 2008 amendments to the Valuation of Land Act 1944 (Qld) ("the Act"). [3] On behalf of the Chief Executive, it was submitted to this Court that the Land Appeal Court failed to give effect to the 2008 amendments to the Act. It was said that the intention of the legislature was clear that those amendments should have retrospective effect to sustain the decision of the Land Court member and that the courts should not be astute, as the Land Appeal Court was said to have been, to deny effect to the intention of the legislature. [4] In my respectful opinion, it should be clearly understood that the appeal to this Court must fail, not because of any unwillingness on the part of the Land Appeal Court or this Court to give effect to the will of Parliament, but because the 2008 amendments to the Act were distinctly, and it would seem advisedly, not apt to reverse the outcome which properly resulted from the litigation before the Land Court member and the Land Appeal Court. Section 3(2) of the Act [5] The first point which must be clearly understood is that it is not open to this Court to give effect to the submission made on behalf of the Chief Executive that s 3(2) of the Act, informed by the 2008 amendments, can be invoked to support the decision of the Land Court member in respect of s 3(1)(b) of the Act. The argument presented to this Court on behalf of the Chief Executive had no grounding in the forensic contest actually conducted by the parties before the Land Court member and the Land Appeal Court. [6] The Land Court member rejected the possibility of making an assessment under s 3(2) which would set a floor under any valuation pursuant to s 3(1)(b) of the Act. The Land Court member reached that decision because the evidence which had been adduced did not permit such an assessment to be made.1 The 2008 amendments did 1 Kent Street Pty Ltd & Ors v Department of Natural Resources and Mines [2007] QLC 11 at [225]. -- 4 of 56 -- 5 not purport to provide a cure for a defect in the Chief Executive's case insofar as that defect consisted of the evidentiary deficit which led to this aspect of the Land Court member's decision. [7] The submissions made in this Court on behalf of the Chief Executive paid scant regard to the Land Court member's rejection of the Chief Executive's case under s 3(2) on the evidence, to the absence of an appeal to the Land Appeal Court from this rejection, and to the limitations on this Court's ability to give effect to the submission which sought to invoke s 3(2) of the Act. [8] Even if one were to accept that, as a matter of law, the 2008 amendments meant that s 3(2) of the Act fixed an irreducible minimum unimproved value of the subject land, the Land Court member did not carry out an exercise of capitalising the net income of the shopping centre derived from the leases which are in fact in place (by reference to a capitalisation rate which reflects the relatively risk free maintainability of this net income for the future), and deducting from that sum the value of the physical improvements on the land. The Land Court member did not decline to carry out this exercise because of the state of the law at the time of the Land Court member's decision; rather, the Land Court member was unable to perform such an exercise because of the state of the evidence put before the Land Court member by the parties. Whatever the reason, however, the important point is that the Land Court member did not perform this exercise. [9] Neither side sought to challenge this aspect of the decision of the Land Court member on the appeal to the Land Appeal Court. It might have been open to the Chief Executive, in the respondent's appeal to the Land Appeal Court, to adduce further evidence pursuant to s 56 of the Act by the Land Appeal Court. In this way the Chief Executive might have sought to cure the deficiencies in the evidence before the Land Court member so as to support an assessment under s 3(2) of the Act. The fact is, however, that no attempt was made to do this. [10] The upshot of the forensic contest between the parties was that the Land Court member decided that the evidence presented to it did not permit the application of s 3(2). There was no appeal against that decision to the Land Appeal Court. The Land Appeal Court did not make any error in failing to carry out an exercise involving the application of s 3(2): it was simply not asked to do so. This Court has no power to receive further evidence on questions of fact: this Court's powers under s 65 of the Act are limited to the correction of errors of law by the Land Appeal Court in this respect. This Court is not able to reach a different result from that reached by the Land Appeal Court in this respect. It should be clearly understood that this stems, not from an unwillingness by any court to give full effect to the 2008 amendments, but from the state of the evidence presented to the Land Court member and the unchallenged factual findings made by the Land Court member on the basis of that evidence. Section 3(1)(b) of the Act [11] The second point I wish to make relates to the proposition advanced on behalf of the Chief Executive that the Land Appeal Court erred in law in holding that the Land Court member itself erred in holding that the valuation required by s 3(1)(b) of the Act could not, as a matter of law, be assisted by a reference to the sale of the Telstra -- 5 of 56 -- 6 land as a comparator. In my respectful opinion, the Chief Executive's proposition is not sustained by the 2008 amendments. [12] Section 3(1)(b) of the Act does not purport to prescribe the methodology whereby the notional sale which it contemplates is to be imagined. Much less does s 3(1)(b) purport to provide mandatory instruction as to the kinds of sales which are impermissible comparators in cases where the methodology which is deployed involves a process of induction or deduction from comparable sales. [13] The issue involved in s 3(1)(b) of the Act is cast in broad terms: what is the unimproved value of the subject land? The terms in which this provision is cast do not, on their face, invite a legal analysis of the subsidiary questions addressed by the Land Court member in order to determine whether a sale can be regarded as comparable for the purposes of the assessment required by s 3(1)(b). That was not changed by the 2008 amendments to the Act. [14] The choice of the most compelling evidence in relation to the resolution of the broad question posed by s 3(1)(b) of the Act is a matter of fact for determination by the Land Court member and, on appeal, by the Land Appeal Court as the specialist tribunals in this field. This Court's supervision of the Land Appeal Court's functions is confined to questions of law. Even accepting that questions of valuation principle may be characterised as questions of law, this Court's function does not extend to correcting the impression formed, as a matter of fact and degree, by the Land Appeal Court as to the extent to which a sale is a useful indicator of the unimproved value of the subject land. [15] The Act, even as amended in 2008, is not as closely prescriptive of the intellectual processes which may lawfully be brought to bear in carrying out the valuation which s 3(1)(b) requires as the Chief Executive would have it. In Commonwealth Custodial Services Ltd v Valuer-General2 Spigelman CJ, with whom Santow JA agreed, said: "… There are a number of different ways in which the task of approaching valuation can be undertaken, each of which is perfectly rational. More than one means may be adopted for the purpose of checking the value arrived at by any other means. This Court should be very slow to interpret legislation so as to exclude a rational mode of valuing land, particularly in view of the difficulties that may attend any single mode of valuation." [16] None of the 2008 amendments purports to constrain the choice of methodologies which are otherwise rationally available for the purposes of s 3(1)(b) of the Act. None of the 2008 amendments purport to require a process of capitalisation of net maintainable earnings of the subject land as improved and leased and the deduction from that value as so imagined of the value or replacement cost of the physical improvements which produce those earnings. [17] In light of the arguments advanced on behalf of the Chief Executive, the feature of s 3(2A), s 3(2B) and s 3(2C) of the Act which first catches the eye is that they contain no instruction at all in relation to selection of comparators where induction or deduction from comparable sales is the valuation methodology being applied for the purposes of s 3(1)(b) of the Act. There is no statutory instruction which 2 (2007) 156 LGERA 186 at 189. -- 6 of 56 -- 7 purports to limit the choice of comparators to sales of land which has been fully leased and which is at the same stage of development as the subject land. One may accept that the rational application of the process of deduction or induction from comparable sales requires a comparison of like with like, but the Act, even as amended in 2008, leaves the choice of comparators to the assessment of expert opinion rather than to the application of statutory prescription. I am unable to discern an intention on the part of the legislature to confine, as a matter of law, the relevant comparison to sales of successfully developed and fully leased regional shopping centres. Other possible comparators may afford a greater degree of assistance in carrying out the task required by s 3(1)(b). Whether that is so is a question of impression and degree for assessment informed by expert opinion. [18] Section 3(2C) of the Act is evidently intended to extinguish the authority of the decision of the Privy Council in Toohey's, Ld v Valuer-General3 insofar as that decision supported the proposition that s 3(1)(b) of the Act must be applied so that improvements "are to be taken, not only as non-existent, but as if they never had existed."4 But s 3(2C) does not take the further step of confining the intellectual processes which may be deployed for the purposes of s 3(1)(b) and s 3(2) of the Act by insisting upon the adoption of the assumption that the physical improvements on the subject land exist for all purposes save the addition of their value or replacement cost to the improved value of the land. [19] In my respectful opinion, in conformity with the view of Spigelman CJ set out above, this Court should not interpret s 3(2C) as if it were intended to exclude, as one rational method of valuing the subject land, reference to a recent sale of otherwise comparable land simply because that land happens to be lightly improved or indeed unimproved. [20] I respectfully agree with the Land Appeal Court that the Land Court member erred in narrowing the pool of possible comparators with the subject land on the basis that binding authority required it, as a matter of law, to have regard only to sales where components for risk and profit on the sale of fully developed and fully leased property were reflected in the sale price of the comparator. And the Land Appeal Court rightly concluded that the 2008 amendments to the Act do not retrospectively cure that error on the part of the Land Court member. [21] The submissions advanced in relation to s 3(1)(b) on behalf of the Chief Executive in this Court must be rejected because they do not recognise that the 2008 amendments do not purport to constrain the intellectual processes which may rationally be brought to bear upon the exercise required by s 3(1)(b) by proscribing reliance upon a sale of otherwise comparable unimproved land on the ground that sale cannot be expected to reflect the monetary value of the profit and risk component of the price payable on a sale of fully developed and leased land. [22] There is a further point to be made here in relation to the 2008 amendments. In the recent decision of the High Court in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue,5 a case concerned with the value of interests in land for stamp duty purposes, the reasons of Hayne, Heydon, Crennan and Kiefel JJ deprecated an 3 [1925] AC 439. 4 [1925] AC 439 at 443. See also Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 at 165. 5 (2009) 260 ALR 1 at [52]. -- 7 of 56 -- 8 approach to statutory construction which was "not based on the text, but on an inference that it would not apply because it would be surprising" if the legislature intended to sever from the value of an interest in land something which contributed to its value on a sale. [23] To the extent that the Chief Executive invites this Court to act upon the inference that it would be "surprising" if the legislature intended to sever from the unimproved value of the land the contribution to the value of the land on a sale referable to risk and profits, there are three reasons to reject that invitation. The first reason to reject the Chief Executive's argument is that suggested by the High Court in Alcan (NT) Alumina, ie that such inferences drawn from an appreciation of governmental policy are a less reliable guide to legislative intention than the statutory text. The second reason to reject the Chief Executive's argument is that, in truth, there is little that is "surprising" about the conclusion that the legislature did indeed intend to exclude from the unimproved value of the land on a sale the contribution to that value which derives from the existence, even for a moment in time, of improvements which the definition of unimproved value excludes. The third reason is that, as the legislative history of the 2008 amendments recounted by P Lyons J shows, the legislature actually adverted to the possibility of enacting a statutory text which would have expressed a contrary intention and deliberately chose not to do so. [24] For these reasons, I am unable to conclude that the 2008 amendments were apt retrospectively to sustain the approach of the Land Court member. [25] P LYONS J: The Land Appeal Court determined the unimproved value as at 1 October 2002 of the site of the Pacific Fair Shopping Centre (respectively, Pacific Fair site, and Pacific Fair) at $47,490,000. The unimproved value was determined under s 3(1)(b) of the Valuation of Land Act 1944 (VLA). The appellant has appealed against that determination. The notice of appeal contains some 33 grounds. The grounds of appeal raise issues concerning the proper construction of the VLA, as well as other matters, some of which relate to the valuation approach taken by the Land Appeal Court. Background [26] The Pacific Fair site has an area of 16.64 hectares. It is located at 2 Hooker Boulevard, Broadbeach, on the Gold Coast. Pacific Fair is described as a major regional shopping centre or a major regional shopping complex. As at 1 October 2002 (the valuation date), redevelopment of Pacific Fair was approaching completion. On completion, the shopping centre would then have a gross letable area of 102,180 square metres. Tenants included Myer, Target, Kmart and Coles, with a large number of specialty stores and other tenants. The presence of a Myer Department Store results in Pacific Fair being described as a major regional shopping centre. At the valuation date, the presence of another department store, Daimaru, had the result that it was sometimes referred to as a super regional shopping centre. [27] The respondents, taken together, are the owners and managers of Pacific Fair and the Pacific Fair site. [28] The valuation of the Pacific Fair site which was initially issued by the appellant was in an amount of $180 million. Following objection, this was reduced to -- 8 of 56 -- 9 $90 million. The respondents appealed to the Land Court against that valuation. In the Land Court, the appellant contended for various values, the highest being $255 million. The Land Court member determined the value of the Pacific Fair site at 1 October 2002 to be $128,200,000. On appeal by the present respondents to the Land Appeal Court, this was reduced to the figure mentioned previously. [29] The appeal to the Land Court was heard together with an appeal in respect of the valuation as at 1 October 2002 for the site of the Chermside Shopping Centre (respectively, the Chermside site and Chermside), another major regional shopping centre. The Land Court’s decision in relation to the Chermside site was delivered in advance of the decision in relation to the Pacific Fair site, with the reasons for judgment for the latter decision being substantially dependant on the reasons for judgment for the Chermside site. The Chermside decision of the Land Court was the subject of a successful appeal to the Land Appeal Court. The outcome of this appeal was influential in the Land Appeal Court’s determination of the Pacific Fair appeal. Some consideration of each of these decisions will be necessary in the present appeal. [30] The VLA was amended by the Valuation of Land Amendment Act 2003 (Act No 35 of 2003) which commenced on 2 June 2003 (the 2003 Amendments). The version of the VLA which was applied by the Land Court member was the version as amended by this Act (the VLA as amended by the 2003 Amendments will be referred to as VLA 2003). This was the case in both the Chermside hearing in the Land Court and the Pacific Fair hearing in that Court. It appears to have been common ground in both matters, and has at no time been the subject of challenge, that the Land Court in each case was required to apply VLA 2003.6 There is no reason in this appeal to doubt the correctness of that approach. [31] A limit on the amount at which the unimproved valuation of land might be determined is to be found in s 3(2) of the VLA (qualified by s 5). Evidence was led in the Land Court for the purpose of carrying out an exercise under s 3(2), but the Land Court member rejected that evidence.7 There was no challenge in the Land Appeal Court to the Land Court member’s findings about the exercises carried out under s 3(2), nor his failure to rely on this provision for the ultimate determination of unimproved value, for either site.8 The valuations which were in issue in the Land Appeal Court, and the value determined by that Court, were determined under s 3(1)(b). [32] The appeal to the Land Appeal Court in respect of the Chermside site, like both proceedings in the Land Court, was determined under VLA 2003. However, amendments were made to the VLA in 2008 (the 2008 Amendments), which were applied in the Pacific Fair appeal to the Land Appeal Court (the VLA as amended by the 2008 Amendments will be referred to as VLA 2008). 6 See the decision in the present case in the Land Court, Kent Street Pty Ltd & Ors v Department of Natural Resources and Mines [2007] QLC 11 (Pacific Fair LC) at [28] and PT Limited v Department of Natural Resources and Mines [2006] QLC 68 (Chermside LC) at [30]. 7 Pacific Fair LC at [225]. 8 In the appellant’s Outline of Submissions in Reply dated 17 June 2009 (AOSR), there is a submission that the exercise carried out by the Land Court member “meets…the requirement in s.3(2) as to the minimum level of value to be arrived at in the case of improved land”: see [6]-[9]. It is plain, however, that the Land Court member’s determination was made under s 3(1)(b), and did not conform to the provisions of s 3(2). -- 9 of 56 -- 10 [33] Section 101A of VLA 2008 makes effective, if less than the unimproved value otherwise determined under the VLA 2008, a value called the “indexed value”, for the imposition of statutory charges. The indexed value for the Pacific Fair site (issued on 17 June 2008) was $47,800,000 (slightly more than the value determined by the Land Appeal Court).9 The Minister’s Second Reading speech for the 2008 amendments stated that this value (described there as “the formula based approach”) was to apply to the Pacific Fair site from 30 June 2003.10 There has been debate between the parties, including by written submissions received after the hearing, as to whether success in the appeal will have any practical consequence. The respondents object to the late raising of some issues by the appellant. It will only be necessary to determine this debate if the appellant is successful on the appeal; and in the circumstances, it is otherwise undesirable to do so. [34] Before considering the proceedings in the Land Court and the Land Appeal Court in respect of Chermside and Pacific Fair, it is convenient to refer to provisions of the VLA relating to valuations, objections and appeals to the Land Court and Land Appeal Court. Annual valuations, objections and appeals under VLA [35] Under s 37 of the VLA, the Chief Executive is required to make annually a valuation of all land in an area (though in certain circumstances that must be deferred).11 Under s 41A, after making an annual valuation, the Chief Executive is required to give notice of it to each owner of land in the area. Section 42 then gives each owner a right to object to the valuation. The Chief Executive must, under s 43, consider each objection, and issue a notice of the Chief Executive’s decision. An owner who has objected against a valuation may, if dissatisfied with the decision on the objection, appeal to the Land Court under s 45 (though the conferral of the right to appeal seems to be repeated in s 55). [36] The appeal to the Land Court is regulated by provisions of the VLA. Section 67 of the VLA makes the provisions of the Land Court Act 2000 (LC Act) apply to an appeal to the Land Court. [37] Section 64 of the VLA provides a right to appeal to the Land Appeal Court against a decision of the Land Court in relation to an objection. The appeal is stated to be by way of a hearing. Again, s 67 of the VLA makes the LC Act applicable to such an appeal. [38] The following provisions of the LC Act are relevant to appeals to the Land Appeal Court12:- "55 Land Appeal Court to be guided by equity and good conscience In the exercise of its jurisdiction, the Land Appeal Court— 9 Pacific Fair LAC at [18]-[21]. 10 Hansard, 26 February 2008, 335. 11 This summary is based on a Reprint No 4E of the VLA, in force on 16 May 2003. These provisions have not been materially altered since 1 October 2002. 12 These provisions have not been amended since their introduction in 2000. -- 10 of 56 -- 11 (a) is not bound by the rules of evidence and may inform itself in the way it considers appropriate; and (b) must act according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms or the practice of other courts. 56 Evidence admissible on appeal (1) An appeal in the Land Appeal Court must be decided on the evidence on the record of the proceeding in which the decision appealed against was made. (2) However, the court may admit new evidence if— (a) the court is satisfied admission of further evidence is necessary to avoid grave injustice; and (b) the party applying to have further evidence admitted gives the court an adequate reason for the evidence not previously being given; and (c) application to have further evidence admitted is made before the hearing of the appeal.” [39] It is unnecessary in this appeal to determine the precise relationship between the right of appeal to the Land Appeal Court by way of rehearing, under s 64 of the Land Appeal Court; and the provisions of s 55 and s 56 of the LC Act. However, effect must be given to s 55; and that may have the consequence that the scope conferred on the Land Appeal Court to review a decision of the Land Court is wider than it would be without this section.13 [40] The powers of the Land Court and of the Land Appeal Court, on the determination of an appeal arising out of an objection to a valuation, are set out in s 66 of the VLA. They include the power to reduce or increase the amount of the valuation to the extent necessary to determine it correctly in accordance with the VLA. [41] The right to appeal to this Court is conferred by s 66 of the VLA. The only grounds permitted are that the decision of the Land Appeal Court is erroneous in point of law, or is in excess of jurisdiction. The provisions of the LC Act are made applicable to such an appeal. While s 76 of the LC Act gives this Court the power to make a range of orders, that power should be considered in the context of the limited grounds of appeal. Valuation of Land Act after 2003 amendments [42] The VLA 2003 included the following provisions: “3 Meaning of ‘unimproved value’ (1) For the purposes of this Act— ‘unimproved value’ of land means— (a) in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable 13 Cf Townsville City Council & Anor v Chief Executive, Department of Main Roads [2006] 1 Qd R 77 at [38]-[43]. -- 11 of 56 -- 12 terms and conditions as a bona fide seller would require; and (b) in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist. (2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act.” “6 Meaning of improvements (1) “Improvements” means, in relation to land, improvements thereon or appertaining thereto, whether visible, invisible or intangible, and made or acquired by the owner or the owner’s predecessor in title, and includes all such destruction of suckers and seedlings as is incidental to the destruction of timber, and also includes the destruction of other vegetable growths and of animal pests on the land to the extent to which such destruction retains its utility, but does not include the destruction by any person of any such growths or pests which are allowed to establish themselves on the land during the ownership, except to the extent (if at all) to which it restores wholly or partly so much of the utility of a previous improvement in the nature of the destruction of such growths or pests as is, by the subsequent provisions of this definition, deemed to have been lost, and any improvement consisting of the destruction of such growths or pests, by whomsoever the same may be effected, shall be deemed to have lost its utility to the extent to which, after it has been made, other growths or pests (as the case may be) are allowed to establish themselves on the land. … (5) In this section— “intangible improvements”, in relation to land, include the benefit of— (a) the following non-physical improvements to the land— (i) a lease, licence or other right; (ii) the goodwill associated with the purpose for which the land is being used; and (b) other non-physical improvements prescribed under a regulation.” (emphasis added) [43] The critical provision for the determination of the unimproved value for the Pacific Fair site is s 3(1). Its application made it necessary to determine whether the land in question is “unimproved land” or “improved land”. Neither term is defined in the -- 12 of 56 -- 13 VLA. However, it is apparent that land is improved land for the purpose of s 3(1), if it can be said in relation to it that at the valuation date, “improvements … exist”. To determine whether improvements exist, recourse must be had to s 6(1), the primary part of which defines improvements to mean, in relation to the land, “improvements thereon or appertaining thereto…”. It is commonly recognised that an improvement is something which would “ improve the value of land, and make it saleable at a higher price”.14 [44] The definition found in s 6(1) made it clear that what were identified as “intangible” improvements were to be regarded as improvements for the purposes of the VLA. Intangible improvements were defined in s 6(5) to include non-physical improvements prescribed under a regulation. Regulation 3 of the Valuation of Land Regulations 2003 was as follows: “3 Non-physical improvements that are intangible improvements—Act, s 6(5) For section 6(5) of the Act, definition “intangible improvements”, paragraph (b), the following non-physical improvements are prescribed— (a) risk management procedures in place for a development on the land, including, for example, procedures dealing with the following— (i) capturing and retaining a share of the market; (ii) turnover of tenants; (iii) establishing a stable and quality mix of tenants; (b) market advantages resulting from the business skills of the owner or manager of a development on the land; (c) market advantages of a brand name used for a development on the land.” [45] It has at all times been common ground in each of the proceedings that, for the purposes of s 3(1) of the VLA, the Chermside site was improved land, and the Pacific Fair site was improved land. Chermside determination in the Land Court [46] The evidence before the Land Court included evidence from valuers directed at a determination of the unimproved value of the Chermside site under s 3(1)(b) of VLA 2003. Mr Slater was called on behalf of the owners of the Chermside site; and Mr Denman on behalf of the present appellant. Each relied upon a comparison between the Chermside site, and land which had been the subject of sale transactions. [47] Before evaluating the evidence of the valuers, the Land Court member considered the effect of s 3(1)(b) of the VLA. He noted that the 2003 amendments of the VLA had introduced into the definition of improvements in s 6, references to intangible improvements. It will be apparent from an examination of s 6(5) of the VLA 2003 that the benefit of leases (as well as the benefit of other rights and the benefit of goodwill associated with the use of land) was an improvement under s 6. Nevertheless, the Land Court member came to the view that benefits of this kind were not improvements for the purposes of s 3(1)(b).15 The present appellant 14 Morrison v Federal Commissioner of Land Tax (1914) 17 CLR 498 at 504, per Griffith CJ. 15 See Chermside LC at [203]-[214]. -- 13 of 56 -- 14 accepted in subsequent proceedings that he was wrong to do so.16 In the present appeal, the appellant has not sought to adopt a different position. [48] The Land Court member identified the principal difference between the position of the present appellant and the owner of the Chermside site with reference to the unimproved value of the site, as being in the treatment of improvements for the purpose of identifying the state of the site to be assumed for the purpose of determining its unimproved value. He noted that the present appellant’s valuations “proceeded on the basis that it was ‘improvements’ only that had to be notionally removed from the land, leaving whatever value remained in the land for the fact that the highest and best use of the land had, by the valuation date, reached fruition by the development, tenanting and operation of the shopping centre”.17 On the other hand, the owner’s position was that, subject to one exception, the valuation had to be carried out on the assumption that no shopping centre had ever been developed and occupied on the land. The exception was that the improvements on the land could be taken into account in determining the highest and best use of the land; as could the fact that a shopping centre had successfully operated on the land.18 That difference seems to have led the Land Court member to consider that an important question for him to determine was whether under s 3(1)(b) of the VLA, the land should be treated as if the improvements on it had never been made; or whether they must simply be assumed not to exist at the date of valuation. The member’s resolution of that question underlay his identification of the highest and best use of the Chermside site.19 [49] Part of the Land Court member’s answer to the question was derived from an analysis of a number of authorities, including Commissioner of Land Tax v Nathan.20 To a significant extent, his reasoning also relied upon the presence of the words “the improvements did not exist” in s 3(1)(b), to be contrasted with for example, the expression “assuming that the improvements (if any) thereon or appertaining thereto … had not been made”, found in other generally analogous statutory provisions. The Land Court member considered that the expression found in s 3(1)(b) had what he described as a “temporal aspect”, the effect of which was a requirement of “simply notionally removing as at the date for valuation those things that, at that time, satisfy the definition of being improvements”.21 [50] In the course of considering the question, the Land Court member discussed a submission made by the owner that the highest and best use of land is to be determined having regard to existing improvements; but the unimproved value is then to be determined on the basis that the improvements had never been made, so that the risk of carrying out the development is to be taken into account. He appears to have rejected that submission. In part that rejection appears to be based on a view to which the member came that land could not have a highest and best use as a regional shopping centre until tenants described as “major tenants” had been secured.22 16 Chermside LAC at [18]. 17 Chermside LC at [40]. 18 Chermside LC at [41]. 19 Chermside LC at [58]. 20 (1913) 16 CLR 654. 21 Chermside LC at [95]. 22 Chermside LC at [109]-[111] and [55]-[57]; see also [185]. -- 14 of 56 -- 15 [51] In the course of this exercise, the Land Court member referred to a submission by the owner that the unimproved value of land is to be determined by reference to the test found in Spencer v The Commonwealth,23 which makes it necessary to recognise that no hypothetical prudent purchaser would pay a price for an unimproved site which includes what would otherwise be a profit and risk allowance. In the context of s 3(1)(b) the Land Court member rejected that submission.24 [52] Another conclusion which the Land Court member reached was that “… any improvements are to be treated as not existing as at the date of valuation, but not as having never been made. The value that improvements which existed before and at the date of valuation and their use have brought to the land can be a relevant consideration in valuing the land … [s]ection 3(1)(b) requires that the effect the improvements have had on the land prior to the moment of valuation is relevant to the value of the land. What is not relevant is the enhancement in value which the improvements add at the moment of valuation”.25 The effect of that conclusion is to be understood by reference to the way in which the Land Court member dealt with submissions made by the owner. The conclusion was reached without regard to the 2003 amendments to the VLA, which, as has been mentioned, the member concluded did not alter the approach to be taken to a determination of unimproved value under s 3(1)(b).26 [53] The Land Court member also rejected the view that the time required for the development of a major shopping centre should be taken into account in determining the unimproved value of the site. He considered that his approach to the determination of unimproved value made it unnecessary to take into account the time after reopening to establish stable and optimal trading conditions.27 [54] The Land Court member then went on to consider Mr Slater’s valuation in some detail. He noted that Mr Slater treated the development approval as an intangible improvement. Consistent with his views of the 2003 Amendments, the member rejected any allowance for it (by way of deduction from the unimproved value) in the determination of the unimproved value of the land.28 [55] He then considered the sales evidence relied upon by Mr Slater, and rejected Mr Slater’s adoption of the sale of land adjoining the Chermside site (the Telstra sale).29 [56] The Land Court member then considered the valuation evidence of Mr Denman. [57] It is convenient at this point to make reference to a previous sale of the Chermside site. The sale occurred in December 1996. The total sale price was $134,183,079. The sale included some additional adjacent land suitable for development. Two additional small sites were purchased in 1998 and 1999 for a total of $1,940,000. At the time of the purchase, the shopping centre had a gross lettable area of a little 23 (1907) 5 CLR 418. 24 Chermside LC at [162]-[163]. 25 Chermside LC at [201]. 26 See in particular Chermside LC at [214]. 27 Chermside LC at [220]-[222]. 28 Chermside LC at [231]-[242]. 29 Chermside LC at [244]-[274]. -- 15 of 56 -- 16 over 39,000 square metres.30 It was intended to redevelop the shopping centre by demolishing a part of it, and constructing an extension, while retaining the balance. [58] The Chermside site was redeveloped between 1998 and 2000, increasing the gross lettable area of the shopping centre to 78,471 square metres. That was more than the purchaser had intended at the time of the purchase in 1996. The gross lettable area of that part of the shopping centre which was to be retained in the redevelopment, and was intended to continue trading, was some 32,576 square metres. The sale was analysed by Mr Denman as showing a site improved value (that is, the value of bare land, with earthworks and some other related works carried out to enable development to proceed) of $121,500,000. [59] Mr Denman reached this figure by adopting an estimate of the value of the retained improvements which the Land Court member rejected.31 The Land Court member then proceeded to adopt a capitalisation rate which he would apply, to calculate the value of that part of the shopping centre which was intended to be retained. For this purpose, he adopted a net rental figure from the evidence of another witness, Mr Higham. That calculation led him to conclude that the value of the part of the shopping centre to be retained during the redevelopment was $92,600,000. The capitalisation rate adopted by the Land Court member reflected the effect of disruption during the redevelopment, and he identified the value of that effect, reflected in his adopted figure, at $9,600,000. [60] The Land Court member then carried out an exercise by which he apportioned the total site area between the part of the shopping centre to be retained, and the proposed extension to the shopping centre. The Land Court member then deducted the value which he had previously adopted for that part of the centre to be retained from the total purchase price of all of the land (including the cost of the demolition of part of the shopping centre purchased in 1996). He then used the result to identify a rate per square metre for that part of the site which he associated with the proposed extension of the shopping centre.32 He also apportioned the value of the site to the proposed gross lettable area of the extended shopping centre, giving him a rate per square metre of gross lettable area. [61] The Land Court member then proceeded to apply this rate to the determination of the unimproved value of the Chermside site. He considered that no adjustment needed to be made for the fact that the sale had occurred some six years previously.33 He considered that the capitalisation rate utilised in his analysis of the sale reflected the disadvantage of carrying out redevelopment, and as a result he considered that the rate he adopted should be increased. [62] The extension which was subsequently carried out was larger than had been anticipated when the land was purchased in 1996. For that reason, too, he considered that the rate per square metre of gross lettable area, when applied to the proposed extension, should be increased. The application of the rate per square metre of gross lettable area to the shopping centre as actually extended resulted in a value of $117,651,570, or $853.79 per square metre of land. The Land Court member then adopted a value of $112,000,000 for the Chermside site, which 30 Chermside LC at [341]. 31 Chermside LC at [344]-[355]. 32 Chermside LC at [372]-[374]. 33 Chermside LC at [408]. -- 16 of 56 -- 17 apparently reflected the adjustment he saw appropriate because the property as sold was subject to the effect of disruption while the proposed extension was carried out; and because, although the sale was effected with a particular extension in mind, at the time of the sale the site had the potential for a larger extension.34 The fact that at the time of the sale, there were agreements for lease with major tenants of the proposed extension made the property at that date slightly inferior to the property at valuation date, when the agreements for lease were replaced by leases and the centre was fully tenanted; but this was not seen as requiring some adjustment in the application of the Chermside sale.35 [63] I have identified the Land Court member’s approach in some detail because it shows that the figure adopted by him was, to a significant extent, the result of his own analysis of the sale, rather than the adoption of valuation opinion of any of the witnesses. I also note that the result would appear to produce a site improved value rather than an unimproved value. However, the Land Court member justified this on the basis that the extension required some further site improvements.36 [64] The Land Court member then noted that, taking account of his analysis of the cost of site improvements for the Chermside site, some limited support could be obtained for the value he had derived from what he referred to as a sale of the Burwood Shopping Centre in Sydney (the evidence was in fact based on a valuation of that centre).37 [65] The balance of his judgment was concerned with the evidence relating to the exercise to be carried out under s 3(2) of the VLA. Chermside appeal to Land Appeal Court [66] As has been noted, the Land Appeal Court held that the Land Court member erred in his determination of the unimproved value of the Chermside site under s 3(1)(b) because he took the view that the definition of “improvements” which, by virtue of s 6 of VLA 2003 extended to intangible improvements, did not apply to s 3(1)(b). [67] However, the present appellant’s case in the Chermside appeal to the Land Appeal Court was that the correct result had been reached, because the process undertaken by the Land Court member correctly applied s 3(1)(b) in the light of the decision of the High Court in Nathan, with the consequence that it was correct to treat a shopping centre development of the unimproved site as being “materially risk free.” The Land Appeal Court extensively analysed a number of authorities, and identified some which were inconsistent with the Land Court member’s reasoning based on Nathan. Accordingly the present appellant’s contention was rejected.38 [68] The Land Appeal Court then considered submissions about the way leases were to be treated in determining the unimproved value of land. It held that they were “intangible improvements”, account of which had to be taken in identifying and 34 The member’s application of the 1996 sale of the Chermside site is to be found at Chermside LC at [408] and [410]. 35 Chermside LC at [409]. 36 Chermside LC at [411]. 37 Chermside LC at [428]-[430]; the value of Burwood there referred to is that derived from an adjustment to a 1997 valuation, with the addition of the cost of some other land: at [288]-[291]. 38 See Chermside LAC at [20]-[57]. -- 17 of 56 -- 18 applying evidence based on other sales.39 It also held that the benefit of a development approval could be an intangible improvement under s 6 of VLA 2003.40 [69] The Land Appeal Court then reviewed the sales evidence. It considered that the application of the 1996 sale of Chermside involved “too many imponderable adjustments,”41 and accordingly rejected it. It applied the Telstra sale.42 Pacific Fair determination in the Land Court [70] After identifying features of the Pacific Fair site and the history of its development, the Land Court member noted the approaches of the parties, and adopted conclusions based on the Chermside decision.43 For the Pacific Fair hearing, the present respondent called Mr Brett to give valuation evidence, and the present appellant called Mr Montgomery to give such evidence. The Land Court member did not adopt Mr Montgomery’s evidence.44 He then said:45 “Given the conclusions I have drawn on the sales evidence and Mr Montgomery’s valuation method, I will rely on the value relationship between Chermside and Pacific Fair in striking a valuation figure for the latter property on a site improved basis … The value of the Chermside land has already been determined in the Chermside decision. The process I am adopting is that of comparing the Chermside land, at its determined value, with the subject property. The evidence leads me to the view that, in this respect, Mr Brett’s opinion should guide me in terms of the measure of relativity whilst the rank ordering of value in that respect is agreed with by Mr Montgomery. The relativity of values was something to which Mr Brett’s (sic) specifically put his mind and which he supported with some points of comparison.” (emphasis added) [71] The Land Court member then commenced with the unimproved value of the Chermside site which he had determined in the Chermside case, at $112,000,000. To this he added an amount of $20,988,000 to identify the site improved value for Chermside. That resulted in a rate per square metre of land of $965, reflecting the site improved value of the Chermside site. The Land Court member then adopted Mr Brett’s differential, which valued Pacific Fair at 2.85 per cent higher on a per square metre basis than Chermside,. The exercise resulted in a rate per square metre of land for Pacific Fair of $992.50, and a site improved value for the Pacific Fair site of $165,152,000 (rounded to $165,000,000).46 The Land Court member then determined the cost of the site improvements; and determined the unimproved value of the Pacific Fair site by deducting those costs. In doing so he made allowance for interest on construction cost, land holding costs, and rates and land tax, in the period required to carry out site improvements. That resulted in a figure of $128,200,000, 39 Chermside LAC at [63]-[67]. 40 Chermside LAC at [73]. 41 Chermside LAC at [88]. 42 Chermside LAC at [77]-[79], [89]-[98]. 43 Pacific Fair LC at [34]-[36]. 44 See, for example, Pacific Fair LC at [65]. 45 Pacific Fair LC at [68]. 46 Pacific Fair LC at [69]. -- 18 of 56 -- 19 which the Land Court member adopted as the unimproved value of the Pacific Fair site.47 [72] The balance of the Land Court member’s decision is concerned with exercises carried out under s 3(2) of the VLA, which the Land Court member rejected.48 Pacific Fair appeal to Land Appeal Court [73] As has previously been mentioned, by the time this appeal came on for hearing, the 2008 Amendments had come into force. Further, the Land Appeal Court had allowed the Chermside appeal; and the Land Appeal Court had itself determined that the unimproved value of the Chermside site as at 1 October 2002 was $34,000,000. It will be apparent from s 66 of the VLA that the Land Appeal Court’s determination of the unimproved value of the Chermside site became the unimproved value of that site for the purposes of the VLA. [74] In determining the appeal for the Pacific Fair site, the Land Appeal Court noted that in the Chermside case, the Land Court member had excluded from consideration the provisions relating to intangible improvement found in s 6, for the purpose of determining unimproved value under s 3(1)(b) of the VLA. Secondly, he had approached the exercise of determining the unimproved value of that site on the assumption that any risks associated with the development of the shopping centre had been met, resulting in a benefit which merged with the (unimproved) value of the land.49 [75] The Land Appeal Court identified three reasons for its decision to allow the appeal against the determination of the unimproved value for the Chermside site by the Land Court member. The first was his treatment of intangible improvements. The second was described as an error in interpreting and applying the principles enunciated in Nathan’s case in determining unimproved value under s 3(1)(b). The third error, said to flow from the first two errors, was a conclusion that the Telstra sale was not reliable evidence of the unimproved value of the Chermside site. In the Chermside appeal, the Land Appeal Court considered that that sale was in fact the best evidence of the unimproved value of the Chermside site.50 [76] The Land Appeal Court then considered the effect of the 2008 amendments to the VLA. It noted in particular the present appellant’s contention that leases and the trading history of the shopping centre have to be brought into account, with the consequence that the unimproved value under s 3(1)(b) was, in effect, the improved value of the land (including any added value resulting from the leases), less the value of the improvements (essentially determined by reference to their replacement costs).51 Indeed, a very literal approach to the construction of the relevant provisions of VLA 2008 appears to have been contended for by the present appellant.52 47 Pacific Fair LC at [117]. 48 Pacific Fair LC at [225]. 49 Pacific Fair LAC at [25]. 50 Pacific Fair LAC at [26]. 51 Pacific Fair LAC at [53]. 52 See, for example, Pacific Fair LAC at [58]. -- 19 of 56 -- 20 [77] The Land Appeal Court rejected the construction for which the present appellant contended.53 It concluded that the valuation should proceed on the basis that if the improvements are to be assumed as not in existence when the unimproved value is to be determined, so too must it be assumed that leases of premises contained within the improvements do not exist at that time.54 The Land Appeal Court also rejected the Land Court member’s view that land did not have a highest and best use as a major regional shopping centre unless major tenants had been secured.55 This finding has not been challenged.56 [78] The Land Appeal Court concluded that the exercise which had to be carried out was to value the notionally vacant Pacific Fair site, being mindful that, up until 1 October 2002, it accommodated a successful super regional shopping centre; and that it was a matter of valuation evidence to identify how the past trading history would affect the value of the land.57 It took the view that the evidence produced by the parties did not support a conclusion that knowledge of past trading history would have materially affected the unimproved value of the Pacific Fair site, and that the valuation determined by the Land Court member could not be maintained.58 [79] The Land Appeal Court held that once the present appellant’s construction of s 3(1)(b) of the VLA was rejected, there was no reason in principle why the Telstra sale should not be considered the best evidence of value for the Chermside land.59 The Land Appeal Court then adopted its determination of the site improved value of the Chermside site, increasing this by 2.85 per cent in accordance with the approach of Mr Brett adopted by the Land Court member. It took the view that the value added by development approvals was part of the unimproved value of the land, by virtue of s 3(2B)(b) of VLA 2008. These considerations resulted in the adoption of a site improved value for the Pacific Fair site (including the value of development approvals) of $77,490,000.60 The Land Appeal Court then considered issues raised by the parties in relation to the cost of site improvements. It adopted a figure of $30,000,000 to be deducted by reason of site improvements, resulting in the determination of the unimproved value of the Pacific Fair site at $47,490,000.61 [80] A matter of considerable significance in deciding whether the Land Appeal Court erred in law in its determination of the unimproved value of the Pacific Fair site is its approach to the provisions of s 3 of the VLA 2008. Much of the present appellant’s appeal focuses on this matter. 53 Pacific Fair LAC at [71]. 54 Pacific Fair LAC at [72]; see also [88]. 55 Pacific Fair LAC at [121], [125]. 56 The Land Court member’s finding to this effect in the Chermside case could only be correct if the hypothetical prudent purchaser would not pay more for the land on the basis that it could be developed for a regional shopping centre than such a purchaser would pay on the basis of some other potential development. That is a remarkable conclusion for the Chermside site, particularly in view of its planning scheme designation (see Chermside LC at [15]-[16]; see also Pacific Fair LC at [20]- [22]), and the member’s conclusion as to the right to develop the site for a regional shopping centre, to be assumed by virtue of s 3(4) of the VLA. It does not seem consistent with an orthodox application of the principles relating to identification of the highest and best use of land: see for example ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447 at [40]-[42]. 57 Pacific Fair LAC at [128]. 58 Pacific Fair LAC at [138]-[139]. 59 Pacific Fair LAC at [148]. 60 See Pacific Fair LAC at [145]-[159]. 61 See Pacific Fair LAC at [194]-[197]. -- 20 of 56 -- 21 Unimproved value under VLA 2008 [81] The critical provisions are found in s 3, which after the 2008 amendments, were in the following terms: “3 Meaning of unimproved value (1) For the purposes of this Act— unimproved value of land means— (a) in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and (b) in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist. (2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act. (2A) The assumption mentioned in subsection (1), definition unimproved value, paragraph (b) is limited to the notional removal of the improvements only as at the time of valuation. (2B) For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with— (a) a local planning instrument; or (b) a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land. (2C) Nothing in subsection (1) or (2) requires an assumption, in relation to improved land, that the improvements have never been made. (3) In addition, the restrictions and limitations in any deed of grant or certificate of title in respect of any racecourse shall be disregarded in ascertaining the unimproved value of the land of the racecourse concerned. (4) Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that— -- 21 of 56 -- 22 (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made.” [82] Reference must be made to some other matters potentially relevant to the effect of s 3. [83] The first such matter is a consequence of provisions found in s 101. They are as follows: “101 Non-commencement of legislation (1) The Valuation of Land Amendment Act 2003 No. 35 is taken to have never commenced. (2) Subsection (1)— (a) does not apply for the purpose of a legal proceeding decided before the commencement of this section; and (b) otherwise applies for all purposes, including an objection or decision made, or legal proceeding (including an appeal from a legal proceeding mentioned in paragraph (a)) started but not decided, before the commencement of this section.” [84] The effect of these provisions was that the appeal to the Land Appeal Court had to be determined on the basis that s 6(5) and the inclusion of the reference to intangible improvements in the definition of improvements in s 6(1) had never commenced. [85] Another such matter is the history of the passage through Parliament of the 2008 amendments of the VLA. Significantly, when the Bill was first presented, the clause proposing amendments to s 3 of the VLA included the following: “5 Amendment of s 3 (Meaning of unimproved value) (1) Section 3— insert— … ‘(2B) For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with— (a) the making or use of an improvement to the land; or (b) a local planning instrument; or -- 22 of 56 -- 23 (c) a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land. … (2) Section 3(4)— insert— ‘(c) there is no risk in realising the use of the land, or continuing the use of the land, for any purpose for which it is being used at the date to which the valuation relates;’.” (emphasis added) [86] The Explanatory Notes for that Bill included the following: “Clarify the definition of unimproved value: The definition of “unimproved value of land” in relation to improved land is proposed to be changed in order to clarify that the approach taken by the High Court in the Nathan case is established as the law in relation to valuations done under the VOL Act. These amendments will do this by confirming that: • The assumption required to be adopted in determining the unimproved value of improved land does not extend to mean that the history of the use of the subject land is ignored; • The unimproved value of land includes any increase in the value that results from: • the making or use of an improvement; or • a local planning instrument; or • a development approval, or other approval or authority other than a hotel licence, relating to the land or an improvement on the land; • There is no requirement to make an assumption that the improvements have never been made; • The chief executive disregards any risk in realising the current use of the subject land.” (emphasis added) [87] However, the Bill itself was the subject of amendments. The amendments removed proposed subsection (2B)(a) and proposed subsection (4)(c) of s 3. The Explanatory Notes for the amendments included the following: “Objectives of the Amendments The objectives are as follows: 1 To clarify that invisible improvements related to the value of the business that is conducted on the land are not to be included in the unimproved value of land. • The Property Council of Australia (PCA), Shopping Centre Council of Australia (SCCA) and Australian Property Institute (API) have raised concerns about the potential for the proposed amendments effectively moving invisible improvements related to the business conducted on the land, from improvements, which are -- 23 of 56 -- 24 not included in the unimproved value, to the unimproved value of the land. This is not intended, but could possibly be interpreted as such with the present wording of the amendment. … 3 Remove the amendment to section 3(4) that stated that there is no risk in realising the use of the land or continuing the use of the land for any purpose for which it is being used. This will preserve the existing interpretation and application of section 3(4) • The PCA, SCCA and API are concerned that with the inclusion of the amendment to section 3(4), the department could value land based on an existing use when there is evidence that there is a risk associated with continuing this use.” [88] This history reveals that, at one point, consideration was given to requiring that the unimproved value of land include any increase in the value of the land as a result of the making or use of an improvement of the land, and requiring, for the determination of the unimproved value of land, that it should be assumed that there is no risk in realising the use of the land, or continuing its use, for any purpose for which it being used at the valuation date; but a deliberate decision was subsequently made to omit both requirements. [89] Against that background, it is convenient to consider the contentions of the parties as to the correct construction of s 3. [90] The appellant contends that, on the proper construction of s 3 of VLA 2008, the unimproved value of improved land is to be calculated as if improvements, as defined in s 6 of VLA 2008, were not in existence at the time when the land is to be valued; but that no other assumption affecting the land is to be made.62 Thus, the “established suitability” of the land for the purposes for which it is actually being used is to be taken into account; as is the fact that valuable leases have been granted in respect of it. The appellant relies for its contention on other provisions in VLA 2008, principally in s 3. The difference between the improved value of land and its unimproved value is confined to “the aspect of value attributable to the actual existence of the physical improvements.63 [91] It contends that, as a consequence, the Land Appeal Court made a number of errors of law in determining the unimproved value of the Pacific Fair site. I would summarise them as follows (recognising that at times more then one of these points are dealt with together in some of the appellant’s submissions):- (a) The valuation adopted by the Land Appeal Court did not allow for the previous successful development of Pacific Fair as a regional shopping centre;64 62 The appellant’s outline of argument of 24 February 2009 (AOA) at [26]. 63 AOA at [30]. 64 AOA at [31]. -- 24 of 56 -- 25 (b) The Land Appeal Court’s valuation erroneously reflected some element of risk in the development of the Pacific Fair Shopping Centre;65 (c) The Land Appeal Court’s determination of the unimproved value of the Pacific Fair site erroneously made some allowance for a profit element associated with the carrying out of the development;66 (d) The Land Appeal Court erroneously considered that in determining the unimproved value of the Pacific Fair site, an allowance should be made for the time that would be taken to redevelop a shopping centre on the land;67 (e) The Land Appeal Court’s determination of the unimproved value of the Pacific Fair site erroneously proceeded on the assumption that the existing leases do not exist;68 (f) The Land Appeal Court erroneously relied on the Telstra sale, when no analysis had been done to relate the value derived from that sale to the use of land for a regional shopping centre, and where there had been a finding in the Land Court that the Telstra sale “was not for a retail use”;69 (g) The Land Appeal Court directly applied its valuation decision for Chermside, not taking into account the changes in the legislation resulting from the 2008 amendments;70 (h) The Land Appeal Court erroneously interpreted the relevant provisions of VLA 2008 as requiring an assumption that improvements have never existed, resulting in its adoption of the Telstra sale, and its rejection of the Land Court member’s analysis of the Chermside sale;71 (i) The Land Appeal Court failed to take into account, in construing s 3, the effect of s 3(2C) of VLA 2008. [92] The appellant’s submissions also include criticisms of the use made by the Land Appeal Court of extrinsic material in construing s 3; of its consideration of s 3(2); and of its treatment of a number of authorities. [93] While the appellant did not summarise the effect of the construction of s 3 of the VLA for which it contends on this appeal in this way, it would appear that the only difference between the improved value of improved land and its unimproved value, is the cost of the construction of the improvements. [94] The respondents submit that on the proper construction of VLA 2008, the unimproved value of the Pacific Fair site is to be determined as if the leases do not 65 AOA at [39], [43] and [55]. 66 AOA at [43]. 67 AOA at [56]. 68 AOA at [31], [35], [36], and [55]. 69 AOA at [32]. 70 AOA at [33] and [92]. 71 AOA at [34]. -- 25 of 56 -- 26 exist at the date of valuation.72 They also contend that the Land Appeal Court did not exclude from its consideration the fact that the Pacific Fair site had been successfully developed as a regional shopping centre.73 They controvert a number of the other submissions made by the appellants. [95] There are obvious and significant difficulties in determining the correct construction of s 3 of VLA 2008. For example, a literal reading of the section would mean that for the purpose of the exercise required by s 3(1)(b), which involves a hypothetical sales transaction, the assumption to be made (under s 3(2A)) is that the improvements are notionally removed “only as at the time of” that transaction. That approach appears to be reflected in the submission recorded by the Land Appeal Court, previously referred to,74 which includes the proposition that immediately after the valuation date, the shopping centre is “back in the form it was immediately before the valuation date, including leases and tenants.” On that reading, the prudent vendor and prudent purchaser would be taken to know those things. It is very difficult to imagine that, in those circumstances, there would be any real difference between unimproved value and improved value, the possible difference reflecting some dispute about whether rent might be payable on the day of valuation; yet improved value and unimproved value are each separately defined. Equally, it is difficult to see how there would be any scope for the operation of s 3(2). In my view, these considerations tell strongly against a reading of s 3 of VLA 2008 which would mean that, for the purpose of the exercise to be carried out under s 3(1)(b), it is to be assumed that, immediately after the valuation date, the improvements have been restored. [96] There are other features of s 3 of VLA 2008 which I consider to be significant in resolving the controversy between the parties. [97] The first feature which in my view is important is the fact that s 3(1)(b) requires reference to a hypothetical sale. Such a transaction would involve both a vendor and a purchaser. A purchaser would not be prepared to pay an amount for land which, together with the actual costs of improvements, would equate to the value of the improved site. It is therefore not consistent with s 3(1)(b) to say that the only difference between the improved value of a site and its unimproved value will be the cost of the improvements. [98] The second feature of s 3 of VLA 2008 which seems to me to confirm this view is that the section contained both s 3(1)(b) and s 3(2). There are significant differences between these provisions, which are discussed later. If s 3(1)(b) were intended to require the same exercise as s 3(2), it is difficult to see why both provisions were retained. [99] It follows that I do not accept the contention of the appellant that on the proper construction of VLA 2008, the determination of unimproved value of land under s 3(1)(b) requires an assumption that the improvements do not exist at the time when the land is to be valued, but also requires that no other assumption affecting the land is to be made; or perhaps more accurately, I do not accept the consequences which the appellant would attribute to that assumption. 72 The respondent’s outline of submissions filed 30 April 2009 (ROS) at [18]-[40]. 73 ROS at [41]-[45]. 74 Pacific Fair LAC at [58]. -- 26 of 56 -- 27 [100] I also consider that assistance in construing VLA 2008 is to be obtained from the history of the passage of the 2008 Amendments; and from the Explanatory Notes. [101] In Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd75 Barwick CJ said:76 “…whilst I am quite clear that no relevant assistance can be obtained from speeches in the legislature, even from the second reading speech of the Minster introducing the Bill, I can see the possibility of relevant profit in knowing the changes which take place in the Bill between its introduction and its passage. These, unlike the speeches, result from action of the legislature itself. But changes may well be classified as travaux préparatoires to which heed is paid in other systems of law. However, authorities of long standing would not allow of this possible advantage being taken.” [102] Obviously, the underlying legal context in which statutes are interpreted has changed significantly since 1977. The Acts Interpretation Act 1954 (Qld) now permits reference to “extrinsic material” if a statutory provision is ambiguous or obscure.77 Extrinsic material is defined simply to mean “relevant material not forming part of the Act concerned.” The definition identifies a number of matters to be included, amongst them Explanatory Notes and material in the Votes and Proceedings of the Legislative Assembly or in any official record of debates in the Legislative Assembly. It seems to me that the original Bill, together with the amendments to it, for the 2008 Amendments, as well as the Explanatory Notes, constitute extrinsic material. [103] Reference to them is of value, in the present case for a quite specific reason. Construing a statute is intended to identify the intention of the legislature. There is, in this case, a not insignificant analogy between that task and the task of construing a contract, to identify the intention of the parties to it. In Codelfa Construction Pty Ltd v State Rail Authority of NSW78 Mason J, while stating the general rule that in the construction of a contract it is the presumed intention of the parties, to be determined objectively, rather then their actual subjective intention, which is to be identified, went on to say,79 “There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in the contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal. After all, the court is interpreting the contract which the parties have made and in that exercise the court takes into account what reasonable men in that situation would have intended to convey by the words chosen. But is it right to carry that exercise to the point of placing on the words of the contract a meaning which the parties have united in rejecting? It is possible that 75 (1977) 139 CLR 449. 76 (1977) 139 CLR 449 at 457. 77 See Acts Interpretation Act 1954 (Qld), s 14B. 78 (1982) 149 CLR 337. 79 (1982) 149 CLR 337 at 352-353. -- 27 of 56 -- 28 evidence of mutual intention, if amounting to concurrence, is receivable so as to negative an inference sought to be drawn from surrounding circumstances.” [104] Where a formulation of a statutory provision has been proposed, and then changed, or abandoned in favour of a different formulation, and that course of events sheds light on the intended meaning of the provision adopted by the Legislature, it seems to me difficult to say that it is not relevant to the construction of the provision as adopted. When that course of events is recorded in material which is extrinsic materials for the purposes of the Acts Interpretation Act, it seems to me that the court can have regard to it in determining the construction of the provision. [105] The original Bill, if adopted, would have required the unimproved value of land to include any increase in the value of the land that had happened in connection with the making or use of an improvement to the land. It would also have required an assumption to be made, when determining the unimproved value of any land, that there is no risk in realising the use of the land, or continuing the use of the land, for any purpose for which it is being used at the date to which the valuation relates. The Explanatory Notes do not suggest that the decision to omit provisions having that effect was because the effect was achieved by other provisions of the Bill. [106] The decision to omit these provisions is, in my view, of considerable significance, in determining whether VLA 2008 has the effect for which the appellant contends. The changes to the Bill make it clear that it was the intention of the legislature that benefits conferred by a local planning instrument or a development approval would affect the unimproved value of land; but that an increase in the value of the land that has happened in connection with the making or use of an improvement to it is not required to be included in the unimproved value of that land. Nor is it necessary to assume that there is no risk in realising or continuing its current use. [107] In my view, these changes have a significant effect on whatever support the appellant might otherwise have drawn from the Explanatory Notes or the Bill as originally drafted. [108] I turn then to a consideration of the errors of law for which the appellant contends, which I have attempted to summarise earlier. [109] It is convenient to deal together with those relating to an allowance for profit to the developer, and risk, associated with the development of a regional shopping centre. [110] It seems to me inevitable from the fact that s 3(1)(b) requires consideration of a hypothetical sale that some allowance for profit is to be recognised. That would follow from the fact that such a transaction posits a purchaser, for otherwise no sum would be realised from the sale. Someone purchasing an unimproved site because of its development potential would not be prepared to carry out the development without the expectation of some profit from doing so. Equally, that person is likely to make some allowance for risk; or at least the legislature has chosen not to exclude such risk from a consideration of those responsible for the determination of the unimproved value of the land. [111] It seems to me that a consideration of the profit to be achieved from the development of the land can not be properly achieved, without making allowance -- 28 of 56 -- 29 for the time that it would take for a development to occur. Inevitably there would be holding costs incurred in that time which would affect the profit. [112] In considering these matters, the Land Appeal Court was required by s 3(2A) of the VLA to assume the notional removal of the improvements, only on the date of valuation. It was therefore required to assume their existence prior to that time. In my view, that meant that what was described as the trading history of the shopping centre was to be considered. As mentioned, the Land Appeal Court considered evidence about the significance of that history, and formed the view that a knowledge of the trading history would not have a material effect on the unimproved value of the land. That is a conclusion of fact, and does not involve an error of law. [113] It may be accepted that the existing leases add significant value to the developed shopping centre. However, there are considerations which in my view lead to the conclusion that the statute did not require that their effect on value be taken into account in determining the unimproved valued of the Pacific Fair site. [114] The first consideration is that a necessary assumption is that at the time at which the unimproved value is to be determined, the improvements which are in fact on the land, do not exist. [115] Leases of tenancies of a shopping centre are not simply leases of defined volumes of space. They are leases of parts of a building. Without the building itself, it is extremely difficult to conceive of leases of shopping centre tenancies. The right of exclusive possession of a volume of space, absent a building, is virtually meaningless. Shopping centre leases commonly regulate the use to be made of the leased space, which are nonsensical in the absence of a building. The whole purpose of the lease is to provide a right of occupation in a structure, related to other parts of the structure including carparking, malls and access ways, stairwells and lifts, and, significantly, other occupied parts of the building. Even in the hypothetical context created by s 3(1)(b) and the balance of s 3, it would be extremely artificial to associate leases of tenancies in a shopping centre with land where the improvements do not exist. [116] Beyond that, it seems to me that the value which leases bring to a shopping centre are part of the value of the land that has happened in connection with the making or use of improvements to the land. A choice was made not to require the inclusion of this aspect of value in the unimproved value of land. [117] Finally, leasing out, and maintaining leases of, a shopping centre form part of the risk of realising the use of land suited for shopping centre development, and continuing that use. Since a decision was made not to require the assumption that there is no risk in doing these things when determining the unimproved value of the land, it would be strange to interpret the section as requiring the unimproved value to be determined on the basis that the leases in fact existed. [118] There are then a number of criticisms by the appellant of the reliance of the Land Appeal Court on the Telstra sale. These submissions are expanded on subsequently in the appellant’s written submissions, and are discussed later in these reasons. [119] The appellant criticises the Land Appeal Court for applying directly the value it determined in the Chermside appeal decided before the 2008 Amendments to the -- 29 of 56 -- 30 VLA80 and for not taking into account the trading history of the site. It is clear from a perusal of the reasons of the Land Appeal Court that in determining the unimproved value of the Pacific Fair site it took into account the changes in the legislation. For example, it expressly gave effect to s 3(2B)(b) by bringing into account the value added by development approvals.81 It also gave effect to the 2008 Amendments by taking into account the “past trading history” of Pacific Fair.82 It did not value Pacific Fair by assuming it to be a “greenfield” site. It follows that it cannot be said that the Land Appeal Court interpreted VLA 2008 as requiring an assumption that the improvements on the Pacific Fair site never existed. [120] The Land Appeal Court was plainly conscious of, and had regard to, s 3(2C) of VLA 2008.83 Whether it supported the appellant’s construction of VLA 2008 was the subject of specific consideration.84 The appellant’s contentions on this issue are not made out. [121] In view of the reliance placed by the appellant on a number of authorities for its contentions that the Land Appeal Court erred in law in determining the unimproved value of the Pacific Fair site, I propose to make brief reference to some of them. However, it is generally difficult to derive a great deal of assistance from them. They deal with legislative provisions which in a number of instances are expressed differently to the relevant provisions of VLA 2008, or appear in different statutory settings. Further, VLA 2008 is revealed by the history of the 2008 amendments to reflect a compromise position between that taken in the original Bill, and the views of those whose representations led to some changes in it. In those circumstances, it is difficult to do more then to attempt to interpret the relevant provisions in the statutory context in which they are found, and by reference to what can be gleaned from the intention of those responsible for the adoption of the 2008 amendments. Nathan’s case [122] This case is relied upon by the appellant for the proposition that in determining the unimproved value of land under the statute as it then stood, past improvements are “not to be deemed never to have been made.”85 VLA 2008 is to similar effect. [123] However, the appellant also relies on Nathan’s case in support of its submission that the Land Appeal Court erred because it did not assume the existence of the leases of tenancies in Pacific Fair, when determining the unimproved value.86 That is not a question with which Nathan dealt. In my view the assumptions to be made are best identified by reference to the language of the relevant provisions of VLA 2008 together with the extrinsic material to which I have referred. McDonald’s case [124] The appellant relies on McDonald v Deputy Federal Commissioner of Land Tax (NSW)87 for the proposition that no allowance for risk should be made in 80 AOA at [33]. 81 Pacific Fair LAC at [152]-[159]. 82 Pacific Fair LAC at [121]-[138]. 83 Pacific Fair LAC at [29], [58], [59], [61]. 84 Pacific Fair LAC at [63]. 85 Commissioner of Land Tax v Nathan (1913) 16 CLR 654 at 662. 86 AOA at [52]. 87 (1915) 20 CLR 231. -- 30 of 56 -- 31 determining the unimproved value of land.88 McDonald was concerned with the unimproved value of a grazing property. A bore had been sunk, which established the presence of water. The benefit which the presence of water brought to the land was held to be part of its unimproved value, and not an improvement. It was “one of the surrounding circumstances” and “one of (the land’s) characteristics.”89 In my view, McDonald said nothing about whether the risk associated with developing a regional shopping centre is to be taken into account when determining the unimproved value of land suited for such development. It seems to me there is a significant difference between any risk associated with the location of a natural feature of the land itself, such as the presence of water beneath the surface, and the risk of carrying out development on the land. Even if these views were wrong, the decision reflected in the amendments to the 2008 Bill would demonstrate a different current intention on the part of the legislature. Webster’s case [125] The appellant relies on Webster v Director-General, Department of Lands90 for a similar proposition, and for the proposition that the time required for carrying out development was not to be taken into account in determining the unimproved value of land.91 What was in issue in that case was whether a water works licence under the Water Resources Act 1989 (Qld) was an improvement; or whether the benefit of it formed part of the unimproved value of land. The court applied McDonald, drawing an analogy between the location of water underground, and the exercise of a riparian right. The benefit to value of off-site works was held not to reflect an improvement to the land itself, and accordingly formed part of the unimproved value of the land, a view consistent with long standing authority.92 No occasion arose to consider the question of risk associated with development on the land itself, or the time taken to carry it out. It would appear, however, that had the benefit of the licence been associated with an improvement to the land itself, that would not have formed part of the unimproved value of the land.93 Fisher’s case [126] The appellant relied on Fisher v Deputy Federal Commissioner of Land Tax (NSW)94 for the proposition that no more is to be done in determining the unimproved value of improved land then to imagine that the improvements are non- existent.95 The case is also relied on for the proposition that “the development premium” (which appears to be a reference to, at least, profit and risk elements previously referred to) should not be taken into account in attempting to identify what would be realised in the sale posited by s 3(1)(b). The passage from Fisher relied upon by the appellant is as follows:96 “Then this has to be reduced to unimproved value. All you have to do is to make an allowance, by way of deduction, for the absence of 88 AOA at [44]-[48]. 89 (1915) 20 CLR 231 at 235. 90 [1996] 2 Qd R 318. 91 AOA at [46] and [57]. 92 For example Tetzner v Colonial Sugar Refinery Co Ltd [1958] AC 50. 93 See page 324/5-15. 94 (1915) 20 CLR 242. 95 AOA at [51]. 96 (1915) 20 CLR 242 at 253. -- 31 of 56 -- 32 the internal characteristics of improvements. Imagine they are non- existent in fact, but take care to displace nothing else.” [127] Like many statements from reasons for judgment, this passage needs to be looked at in context. In Fisher’s case, the court was concerned with the assessment of the unimproved value of a pastoral property, considered to be improved. The only practical way to determine that was to work from its improved value. The question which the Court asked, shortly after the passage cited, was as follows:97 “How much of the total improved value is to be attributed to the improvements which have been taken into account in fixing that value?” [128] The answer given was that in the case of simple structures, the cost was sufficient, if the structure was new; and if not, some allowance for depreciation should be made. It was then said:98 “But in the case of clearing, or consolidation of soil, it is different. Time and opportunity are not so easily calculable, but they have a pecuniary value.” [129] While the Court also referred to developed property as a “money-making machine”99, their Honours took as the test what a practical man would take into account as “a fair business allowance”, when moving from improved value to unimproved value, the exercise being described as “a business question in each case, and dependent in different cases on variable circumstances.”100 [130] If anything, the approach taken in Fisher would support the position of the respondents. [131] There are some other matters raised by the appellant which now will be considered. Section 3(2) of the VLA [132] The appellant relies on this provision in various contexts. For example, the appellant seems to suggest that it is relevant to the construction and application of s 3(1)(b).101 To similar effect, the appellant relies on this provision as showing error by the Land Appeal Court in referring to the decision of the High Court in Valuer- General v Fenton Nominees Pty Ltd.102 The effect of the passage cited by the Land Appeal Court from Fenton Nominees was that for the determination of unimproved value under a provision in terms “not too dissimilar” to s 3(1)(b) of the VLA, it was not permissible simply to take the value of the site in its improved state, and subtract the value of the improvements. [133] A comparison of s 3 (1)(b) and s 3(2) indicates that they require the carrying out of quite different exercises and perform quite different functions. The former requires consideration of a notional sale of the land, based on the assumption that at the time 97 (1915) 20 CLR 242 at 253. 98 (1915) 20 CLR 242 at 253. 99 (1915) 20 CLR 242 at 253 and 254. 100 (1915) 20 CLR 242 at 254. 101 AOA at [26]-[29]; AOSR at [12]-[13]. 102 (1982) 150 CLR 160; see Pacific Fair LAC at [64]. -- 32 of 56 -- 33 of that sale, the improvements did not exist. That exercise identifies, it seems to me directly, the unimproved value of improved land, as defined in s 3(1)(b). [134] Section 3(2) however, is not intended to define the meaning of the term “unimproved value” for the purpose of the VLA. Rather it identifies a lower limit or “floor” on the figure derived by the application of the definition of s 3(1)(b). The exercise that s 3(2) calls for is the “deduction method”, described in Fenton Nominees. The operation of s 3(2) is qualified by ss 4 and 5. Part of the task to be carried out under s 3(2) is the ascertainment of the improved value, defined in s 4. The application of that definition requires a very different exercise from that identified in s 3(1)(b), something which the appellant’s submissions do not seem to recognise.103 Section 5, although in the form of a definition, then has the effect of regulating the treatment of improvements in the exercise called for by s 3(2). [135] When s 3(1)(b) and s 3(2) are considered together and in context, it seems very unlikely that the legislature intended the exercise to be carried out under s 3(1)(b) to be the same as that to be carried out under s 3(2). If they are intended to be different exercises, it is difficult to see how a consideration of the exercise called for by s 3(2) provides assistance in an understanding of the exercise to be carried out under s 3(1)(b). The fee simple [136] The respondents have argued that because s 3(1)(b) requires the determination of the value of the fee simple, that carried with it the notion that it was to be assumed that the leases of the tenancies in the shopping centre did not exist. The appellant contended for the contrary, relying on a decision of the Supreme Court of South Australia, Trust Co of Australia Ltd & Anor v Valuer-General.104 The Land Appeal Court preferred the submission of the present respondents, relying on a decision of the High Court in Royal Sydney Golf Club v Federal Commissioner of Taxation.105 The appellant makes submissions about this matter, presumably to suggest error of law on the part of the Land Appeal Court. [137] To understand the effect of the decision in Trust Co of Australia Ltd, it is necessary to identify the statutory provision which was being applied. What had to be determined was the “capital value” of land, defined in s 5(1) of the Valuation of Land Act 1971 (SA) to mean “the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale…”106 [138] The Land Appeal Court pointed out that Bleby J (with whom other members of the Court agreed) had noted that it was common ground that the land was to be taken to be improved for the purpose of determining its value.107 The Court then went on to conclude that if the leases added value to the “improved” land their existence could be taken into account in determining the capital value under s 5(1) of the South Australian statute. [139] On the other hand, in Royal Sydney Golf Club, the High Court was considering a definition of “unimproved value” found in the Land Tax Assessment Act 1910 (Cth), which is very similar to that found in s 3(1)(b) of the VLA. It adopted an 103 AOSR at [22], [23], [25]. 104 [2008] SASC 169. 105 (1955) 91 CLR 610. 106 See Trust Co of Australia Ltd & Anor v Valuer-General [2008] SASC 169 at [11]. 107 Trust Co of Australia Ltd & Anor v Valuer-General [2008] SASC 169 at [15]. -- 33 of 56 -- 34 interpretation of that legislation, which required, for the assessment of the unimproved value of an estate in fee simple, that the land should be taken as “unencumbered and subject to no condition restricting the use or enjoyment of the land.”108 [140] Since neither case was concerned with legislation which is identical to VLA 2008, it seems to me that neither case can be considered to have determined any question that had to be decided by the Land Appeal Court in relation to the Pacific Fair site. Nor does it seem to me that the Land Appeal Court’s preference for the approach taken in Royal Sydney Golf Club has resulted in any error of law. Given the terms of the South Australian statutory provision, it seems to me that Trust Co of Australia Ltd does not demonstrate error by the Land Appeal Court in its approach to the application s 3(1)(b) of VLA 2008. Use of extrinsic material [141] The appellant submits that it is inappropriate to find ambiguity in VLA 2008 by reference to the extrinsic material.109 As I have indicated, an examination of s 3 of VLA 2008 raises sufficient doubt about its meaning to warrant recourse to extrinsic material. [142] The appellant then submits that the Explanatory Notes to the amendments to the Bill use the expression “invisible improvements” to identify what the changes to the Bill were concerned with; and contrasts these with “intangible improvements” dealt with in the 2003 amendments.110 The submissions relate invisible improvements to improvements such as pastoral improvements, drainage, reclamation and filling.111 The implication seems to be that the changes to the Bill were not relevant to non-physical factors affecting the value of shopping centres; or at least were limited to factors which, in the past, have been recognised as invisible improvements. [143] Debates of this kind make it more difficult to derive the assistance in construing statutory provisions which is intended by the Acts Interpretation Act. After all, the task that faces the court is to construe the statute, not the extrinsic material.112 It will be apparent that I am of the view that greater assistance in construing s 3 of VLA 2008 is to be derived from the changes to the Bill, than from the contents of the Explanatory Notes. Having said that, it seems to me that these considerations do not lead to the construction for which the appellant contends. [144] In the Explanatory Notes, invisible improvements were related to “the business conducted on the land”. More generally, the Bill was plainly directed to highly developed properties, particularly large regional shopping centres. In that context it is unlikely that when the Explanatory Notes referred to “invisible improvements” they were referring to improvements such as pastoral improvements, drainage, reclamation and filling. For large regional shopping centres, pastoral improvements are irrelevant; and drainage, reclamation and filling are unlikely to be related to any business currently conducted on the shopping centre site. 108 Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610 at 622-623. 109 AOA at [91]. 110 AOA at [78]-[83]; see also AOSR at [50]. 111 AOA at [81]. 112 See Lamb & Anor v Brisbane City Council (2007) 152 LGERA 100 at [37], cited in Pacific Fair LAC at [52]. -- 34 of 56 -- 35 [145] The appellant also submits that the references to “the value of the business that is conducted on the land” and to “the business conducted on the land” in the Explanatory Notes relating to the Bill, could not refer to the interests of the owner of the shopping centre, particularly one who has engaged a manager.113 [146] Given the identity of the bodies who raised the concerns that led to the changes in the Bill, it seems to me likely that the changes were intended to be for the benefit of shopping centre owners. It seems by no means inappropriate to describe the commercial activities associated with owning a large operating shopping centre as a business, including when a manager has been engaged. Even in statutes, the word “business” is notorious for taking its colour and its content from its surroundings.114 Indeed the VLA envisages the owner as the person directly affected by the determination of the unimproved value,115 rather than a manager, or even a tenant carrying on business in rented premises on land. That rather suggests that the amendments to the Bill were concerned with “invisible improvements” related to the business activities of the owner of the land, rather than any such improvements associated with some other business carried out on the land. [147] In my view, the Land Appeal Court did not err in law in the use it made of extrinsic material to construe VLA 2008. Conclusion on construction of VLA [148] Neither a consideration of the authorities relied upon by the appellant, or the other topics which have been discussed, lead me to take a different view to that resulting from an analysis of its provision, considered with the extrinsic material which was discussed earlier. I then turn to a number of other matters raised by the appellant. Treatment of Telstra Sale [149] Challenges to the reliance placed by the Land Appeal Court on this sale were raised both in the notice of appeal116 and the appellant’s written submissions.117 The errors of law which the appellant seeks to assert are not clearly identified, but seem to be as follows: (a) The Land Appeal Court erred in law in relying on the Telstra sale because it was a single sale, and not a truly comparable sale for the purpose of the valuation of the Pacific Fair site;118 (b) Use of the Telstra sale was irrational;119 (c) The Land Appeal Court relied upon the Telstra sale, when there was no evidence sufficient in law to enable it to do so;120 (d) The Land Appeal Court acted on what it wrongly considered to be a finding of the Land Court member relating to the Telstra sale; 113 AOA at [83], [93]-[98]; [102]-[103]. 114 See Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 at 226. 115 See ss 41A, 42, 45, 46, 55; and see the definition of “owner” in s 7. 116 Grounds 19-25. 117 AOA at [104]-[130]. 118 Ground of appeal 22; AOA at [107]. 119 AOA at [106]. 120 Ground of appeal 22; AOA at [105], [114]. -- 35 of 56 -- 36 (e) The Land Appeal Court’s approach in the Pacific Fair case, where trading history had to be considered, was inconsistent with its approach in the Chermside case, where it rejected the previous sale of the Chermside site, because it was a site with proven potential; yet it relied on its determination of the value for the Chermside site in determining the Pacific Fair appeal;121 (f) The Land Appeal Court took into account the trading history of Pacific Fair, not at the valuation date, but at some time in 2008, contrary to the VLA;122 (g) The Land Appeal Court took into account irrelevant considerations;123 (h) The adoption of the 2.85 per cent differential between the Chermside site and the Pacific Fair site was the result of error and without evidentiary basis;124 (i) There was no evidentiary basis for the application by the Land Appeal Court of the Telstra sale to determine the value of the Chermside site, and in particular, the adoption by it of a 10 per cent differential in the rate per square metre;125 (j) The Land Appeal Court failed to take account of the appellant’s submissions concerning the Telstra sale;126 (k) The Land Appeal Court failed to accord due weight to the findings made by the Land Court;127 (l) In a number of respects, the Land Appeal Court failed to provide adequate reasons for its conclusions. [150] In Maurici v Chief Commissioner of State Revenue128 the High Court held that it was a principle of the assessment of value that sales to be relied upon for the determination of value must be “truly comparable”. The appellant submits that the Land Appeal Court has breached this principle, by its reliance on the Telstra sale. A related principle, also referred to by the High Court,129 is that the sales evidence must be sufficient in volume. The appellant submits that here the Land Appeal Court erred by relying on a single sale. [151] While a sale must be comparable before it can provide evidence of value, the two properties need not be identical. Nor need the sale occur at or about the date of valuation. Whether a sale may be regarded as comparable will depend upon a number of factors. Likewise, its application may require a recognition of differences between the sale property and the property to be valued, and the 121 AOA at [120]-[124]. 122 AOA at [119]. 123 Ground of appeal 24; AOA at [110(d)], [117]. 124 AOA at [126]-[130]. 125 AOA at [130]. 126 Ground of appeal 23. 127 Ground of appeal 19(b), 21, 25, 26. 128 (2003) 212 CLR 111 at [18]. 129 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 at [18]. -- 36 of 56 -- 37 recognition of the circumstances of the sale. In Aik Hoe & Co Ltd v Superintendent of Lands and Surveys, First Division130 their Lordships said: “In the search for evidence to show the market price of a given property on a given date, there may be a continuous spectrum of cases varying from contemporaneous sales of precisely similar properties (unlikely to be found in many cases) to sales at different dates of properties differing greatly in nature and development. Where, as here, much of the evidence is of the latter kind, it is not only proper but necessary, if the comparison is to be relevant, to take account of the different potentialities of development which would seem important to a purchaser where what he is offered is a property of a scale considerably larger from those whose sale price is known: and this is nonetheless the case though the sale prices of these small units may themselves take account of their industrial or development potentiality.” [152] As was observed in ISPT Pty Ltd v City of Melbourne (Land Valuation),131 “… there will be gradations of comparability: from identical to irrelevant. As this scale of comparability approaches the irrelevant end, there will be many sales that offer so little assistance that they ought be disregarded. Further, there will be circumstances where there is a sale or sales that are strongly comparable; in which case there will be no need to closely analyse other sales, even though these may be comparable in some way.” [153] In Maurici, the Court was considering a valuation of a developed parcel of land in a long developed residential suburb of Sydney, where there were very few, vacant, parcels of residential land. The purpose of the valuation was to determine the “land value” of the parcel, which requires an assumption that improvements (with some exceptions generally relating to the treatment of the land itself) did not exist.132 Four sales had been relied upon for the assessment, all of vacant land, the market for which was distorted by the scarcity of vacant land in the suburb. Sales of improved land, which the High Court held could be used to determine the land value, were disregarded.133 It is obvious that sales of land which was improved could be regarded as truly comparable sales, for determining the land value of land. [154] In my view, whether a sale is truly comparable will depend upon whether the circumstances of the sale, and the similarity of land to which it related to the land to be valued, provide a sufficient basis for the determination of value. That decision will involve questions of judgment. The existence of sufficient factors of comparison is generally a question of fact, not law. The Land Appeal Court expressly identified points of comparison for its use of the Telstra sale to determine the unimproved value of the Chermside site.134 There is no reason to think that the Land Appeal Court erred in law in the Chermside appeal, in considering the Telstra 130 [1969] 1 AC 1 at 18; cited in Brown, Land Acquisition (5th ed) at 221. 131 [2007] VCAT 652 at [51]: an application for leave to appeal to the Court of Appeal on a question of law was refused: ISPT v Melbourne City Council (2008) 20 VR 447. 132 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 at [12], [15]. 133 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 at [19]. 134 Chermside LAC at [77]-[78]. -- 37 of 56 -- 38 sale to be truly comparable, for determining the value of the Chermside site. Save for a dispute about the differential, there has been no serious suggestion that the Chermside site and the Pacific Fair site were not sufficiently comparable to enable the unimproved value for the Pacific Fair site to be derived from the unimproved value of the Chermside site. [155] I turn then to a consideration of the question whether there was a sufficient volume of sales. This is a surprising issue for the appellant to raise. The appellant wishes to restore the determination of the Land Court member. That was in fact based on a single sale, the 1996 sale of the Chermside regional centre. If the principle has been breached by the Land Appeal Court, it would seem that it has also been breached by the Land Court member. [156] The fact that the Land Appeal Court applied the Telstra sale to determine the value of the Chermside site, does not mean that the sales evidence was not sufficient in volume. What volume of sales is sufficient will depend on the facts and circumstances of each case. In the Chermside case, the Land Appeal Court reviewed the available evidence. It chose not to apply the evidence relating to the Burwood shopping centre, to a significant extent because the evidence was of a valuation, not a sale, of that centre. It also considered that there were a number of significant differences between this centre and Chermside, not the least being their different locations.135 The Land Appeal Court then considered the Chermside sale, and noted a number of difficulties with its application, concluding that there were too many imponderable adjustments to be made for it to provide reliable evidence of the unimproved value of the Chermside site at the valuation date.136 It also considered the Telstra sale to be comparable, and to be the best available evidence.137 The Land Appeal Court then made adjustments to reflect the differences between the two properties.138 It then specifically referred to the difficulties associated with reliance on a single sale, and identified a number of factual reasons why it considered that course was appropriate for the determination of the value of Chermside.139 In the Pacific Fair appeal, after considering the effect of the changes in the VLA, the Land Appeal Court considered the applicability of its findings in Chermside, and specifically reconsidered its approach to the evidence relating to other properties, concluding that, with some adjustments, its findings in Chermside were applicable.140 Save to the extent that it was influenced by its construction of VLA 2008, this line of reasoning was the product of a series of factual findings, in which the Land Appeal Court gave proper effect to valuation principles. In my view, reference to the principle that the sales must be sufficient in volume does not demonstrate any error of law on the part of the Land Appeal Court. [157] The submission that there was no evidence sufficient in law to enable the Land Appeal Court to rely on the Telstra sale, and the submission that it was irrational of the Land Appeal Court to do so, ultimately amount to a submission that this sale could not provide any evidence of the value of the Chermside site. The Land Appeal Court identified a number of features which formed a basis for comparing 135 Chermside LAC at [81]-[82]. 136 Chermside LAC at [85]-[88]. 137 Chermside LAC at [77]-[79]. 138 Chermside LAC at [89]-[101]. 139 Chermside LAC at [102]. 140 See in particular Pacific Fair LAC at [149]. -- 38 of 56 -- 39 the properties and applying the sale.141 A valuer, Mr Slater, considered it provided evidence of the value of the Chermside site. In those circumstances, these submissions are not made out. [158] The next matter to be considered is the suggested mistake by the Land Appeal Court about a finding of the Land Court. It will be recalled that the Land Appeal Court determined the unimproved value of the Pacific Fair site by reference to the unimproved value determined for the Chermside site; and that in determining the unimproved value of the Chermside site, the Land Appeal Court had regarded the Telstra sale as the best available evidence. [159] In that context, reference was made by the appellant to a passage from the Land Appeal Court’s Chermside decision relating to what were referred to as findings by the Land Court member about the forms of retail tenancies that might be achieved on the Telstra site.142 It is then submitted that when the Land Court member’s reasons are examined, it is apparent that the Land Appeal Court, in its Chermside decision, misapprehended the effect of the member’s decision. [160] With respect, it appears to me correct to say that the Land Court member did not in fact find that the Telstra site, or a part of it, had at the time of the sale a highest and best use for some lower order form of retail development. [161] It becomes necessary to consider how the Land Appeal Court, in deciding the Chermside appeal, dealt with the Telstra sale; and then to examine how the Land Appeal Court dealt with this sale in determining the unimproved value of the Pacific Fair site. [162] The passage from the Land Appeal Court’s Chermside decision forms part of a consideration of the application of the Telstra sale. The Land Appeal Court first noted that Mr Slater, a valuer, considered this sale to be the best available evidence of the unimproved value of the Chermside site.143 It then noted that Mr Slater, in analysing the sale, identified three specific uses for the site, one of which was retail, and which he said was consistent with the feasibility summary contained in a proposal made to the Westfield Board, in relation to the purchase of the Telstra site.144 The Land Appeal Court then accepted his identification of the retail component of the Telstra site. However, it did not accept Mr Slater’s view that, on a rate per square metre basis, the value of the Telstra site was greater than the value of the Chermside site.145 It considered that the Telstra site did not enjoy the advantages of a highest and best use for retail development to the same extent as the Chermside site.146 [163] The passages from the Land Court’s judgment which the present appellant relies upon to demonstrate the error, in fact reveal that Mr Slater was the source of the view that some lesser retail use than a regional shopping centre could take place on the Telstra site.147 The attribution of the view about the highest and best use of the Telstra site to the Land Court member, whose views in a number of instances were not accepted by the Land Appeal Court, rather than to Mr Slater, whose evidence 141 Chermside LAC at [77]. 142 Chermside LAC at [97]. 143 Chermside LAC at [89]. 144 Chermside LAC at [93]. 145 Chermside LAC at [94]-[96]. 146 Chermside LAC at [97]. 147 See, for example, Chermside LC at [255]. -- 39 of 56 -- 40 was generally treated with favour, does not seem to me to be of great significance. It seems to me that the Land Appeal Court had formed its own view of the relativities between the two sites, without reliance on the findings of the Land Court member. [164] Beyond that, in the Pacific Fair appeal to the Land Appeal Court, the present appellant contested the relevance of the Telstra sale. Its submissions were not accepted. In that exercise, the attribution to the Land Court member rather than Mr Slater of a view about the highest and best use of part of the Telstra site did not appear to gain any prominence.148 [165] In those circumstances, it seems to me that the appellant fails to establish that this matter gives rise to an error of law in the Land Appeal Court’s Pacific Fair decision. [166] Reference is then made149 to the Land Appeal Court’s rejection in the Chermside appeal of the “Nathan formulation”, apparently with a view to showing inconsistency between that approach, and the approach adopted by the Land Appeal Court in the Pacific Fair appeal. In essence, that approach involves the deduction of the costs of improvements from the improved value of the site, with potentially differing results depending on the extent to which a development has proven to be successful. This approach, rejected in the Chermside appeal, would reflect the trading history of the site. In the Pacific Fair appeal, the Land Appeal Court accepted the relevance of the trading history of the site under VLA 2008.150 The submission seems to suggest that the Land Appeal Court accordingly erred in applying the site value it determined for the Chermside site, to determine the value of Pacific Fair. However, before deciding to apply the site value from Chermside, the Land Appeal Court considered evidence about the trading history and concluded that trading history ultimately had little effect on unimproved value, because the effect would diminish over the time to be allowed for redevelopment.151 The conclusion which the Land Appeal Court reached was a conclusion resulting from that Court’s analysis of the evidence. The submission does not point to any error of law in reaching it. [167] There is then a submission that the effect of the approach taken by the Land Appeal Court was to determine “the value of the trading history for Pacific Fair” in 2008 rather than 2002. This submission again does not reflect the reasons of the Land Appeal Court. The Court was clearly considering the effect at the valuation date of the trading history. It has taken the view that at that date, the hypothetical purchaser would take into account the time required to carry out development. [168] It is also said that in dealing with the relevance of the Telstra sale, the Land Appeal Court took into account an irrelevant consideration, namely, that some of the matters raised before it in the Pacific Fair appeal were not raised in the Chermside appeal.152 The submissions do not explain why this was irrelevant. The fact that some matters of fact were raised in the Pacific Fair appeal but not in the Chermside appeal may have reflected their apparent lack of strength. In any event, they seem to have been given some consideration, because, of them, the Land Appeal Court 148 Pacific Fair LAC at [147]-[150]. 149 AOA at [121]. 150 See, for example, Pacific Fair LAC at [128]. 151 Pacific Fair LAC at [133], [136], [138]. 152 AOA at [110(d)]; see Pacific Fair LAC at [150]. -- 40 of 56 -- 41 said,153 “None of the factual matters raised convince us that [the Telstra sale] would not still be considered the best evidence of value or that this Court misapplied the sale in deciding the Chermside appeal”. Further, the comment of the Land Appeal Court on which the appellant relies is but one part of one of a number of reasons for the reliance by that Court on the Telstra sale. There is no reason to think that its omission could have materially affected the decision.154 [169] There is then a submission that the Land Appeal Court erred in relying on the relativity between the Chermside site and the Pacific Fair site, reflected in the 2.85 per cent mark up of the rate per square metre for Chermside. The criticism seems to be that that relativity depended upon factors resulting from the operation of the shopping centres on each site.155 The error which the appellant appears to be asserting is that if the unimproved value was to be determined on the assumption that the improvements do not exist, then the relativity of site improved values (from which the unimproved value is to be derived) should not rely on the consequences of development; or alternatively, that it was inconsistent for the Land Appeal Court to take the view that the leases should be assumed not to exist at the date of valuation, but then to use a relativity figure related to the consequences of leasing. [170] No more reliable method of determining the relativity of the two sites is identified by the appellant. I do not think that it is inherently illogical, in the absence of better evidence, to make reference to the matters identified, to determine their relativity. The value of each site, as a site improved site, is related to its potential for development. Where in each case the consequences of the realisation of that potential are known, it does not seem illogical to use that knowledge to establish the relationship between the site values. [171] The allegation that there was no evidentiary basis for the application of this rate makes it necessary to focus attention on the Land Appeal Court. The composition of that Court includes two members of the Land Court.156 The Land Court is a specialist tribunal,157 whose members have historically been persons with valuation expertise, or lawyers, usually with considerable experience in dealing with matters of valuation, and whose work in that Court justifies recognition of their specialist expertise.158 In fact, one of the members who constituted the Land Appeal Court has specialist valuation expertise, as well as legal qualifications. It seems to me that the Land Appeal Court is itself a specialist court, with the capacity to form its own views about matters related to value, and employ its own expertise in coming to its conclusions.159 That this is its intended function is apparent from s 66 of the VLA, which requires the Land Appeal Court, when an appeal is successful, to adjust the valuation “to the extent necessary in its opinion” to determine the value correctly in accordance with the VLA. Accordingly, once satisfied that an appeal should be allowed, the Land Appeal Court was entitled to form a judgment about the relativity 153 Pacific Fair LAC at [150]. 154 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40; cited in H A Bachrach Pty Ltd v Caboolture Shire Council (1992) 80 LGERA 230 at 237. 155 AOA at [128]. 156 Land Court Act 2000 (Qld), s 58. 157 See Land Court Act 2000 (Qld), s 4(1). 158 See ISPT Pty Ltd v Melbourne City Council (2008) 20 VLR 447 at [23]. 159 Cf ISPT Pty Ltd v Melbourne City Council (2008) 20 VLR 447 at [17]-[18]; Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1 at 11. -- 41 of 56 -- 42 of the Pacific Fair site to the Chermside site; or to adopt, as it did, the relativity which the Land Court member had applied. [172] Moreover, once it is recognised that the considerations which accounted for the relativity inherent in the rates per square metre can be relied upon for this purpose, it cannot be said that there was no evidentiary basis for the approach taken by the Land Appeal Court. [173] The appellant also submits that the Land Appeal Court, in applying the Telstra sale to the determination of the value of the Chermside site did not act on valuation evidence, but adopted its own judgment; and in particular there was no evidence in which it could increase the rate per square metre by 10 per cent.160 [174] It should be noted that in determining the value of the Chermside site, the Land Appeal Court did not disregard the evidence of Mr Slater. It took the view that his application required adjustment because of factors which it identified.161 In my view, that does not involve acting on a basis not found in the evidence. It represents a conclusion of fact. It is a course which a judge would be entitled to follow in determining the value of land.162 The Land Appeal Court, as a specialist tribunal, was also entitled to follow that course. [175] A ground of appeal is that the Land Appeal Court did not consider and address the appellant’s submissions to that Court concerning the Telstra sale. The principal submission seems to have been that the sale was an inappropriate basis for determining the value of the Pacific Fair site.163 The Land Appeal Court’s reasons show that this was considered and addressed. Indeed, they record that the appellant’s submissions on this topic were considered by it.164 The appellant has not established the contrary, and this ground fails. [176] The issues relating to the weight to be given to the findings of the Land Court, and the adequacy of the Land Appeal Court’s reasons, will be discussed later. Derivation of unimproved value from site improved value [177] Having found the site-improved value of the Pacific Fair site, the Land Court proceeded to determine the unimproved value. This required a number of adjustments. Two of the adjustments, relating to the time to be allowed for the carrying out of the works to achieve a site-improved state, and the interest rate to be used, are the subject of a ground of appeal165 and submission by the appellant.166 160 AOA at [130]. 161 Chermside LAC at [94]-[98]. In this context, reference may be made to a factual dispute between the parties as to whether Mr Slater in fact regarded the subject site (presumably, the Chermside site) as “ripe” for development for a regional shopping centre: see AOSR at [43]. Because of the view taken by the Land Appeal Court, this debate is of no consequence: see Chermside LAC at [97]. 162 Kelly v Western Australian Planning Commission [2006] WASC 208 at [158]; Corporation of City of Adelaide v City of Port Adelaide Enfield (2000) 110 LGERA 153 at 170; both cases are referred in Hyam, The Law Affecting Valuation of Land in Australia (4thed), 555. The latter decision was varied on appeal: [2001] SASC 207, but it is a notable feature that the appellate court itself determined the relevant value, by consideration of an analysis of sales evidence, rather than by adopting the evidence of a particular valuer about the value of the land: see [52]-[56]. 163 AOA at [127]. 164 Pacific Fair LAC at [147]-[150]. 165 Ground 27. 166 AOA at [131]-[139]; see also Appellant’s Outline of Submissions in Reply (AOSR) at [85]-[88]; see also CA Transcript 1-49 to 1-54. -- 42 of 56 -- 43 [178] In essence, the appellant alleges three errors, namely: (a) The Land Appeal Court erred in dealing with these matters, as they were not raised by the grounds of appeal; (b) The Land Appeal Court erred in law in allowing for a period to secure leases; (c) The Land Appeal Court erred in not applying the risk-free interest rate. [179] I shall deal with these matters in turn. Grounds of appeal to Land Appeal Court [180] The appellant’s submissions demonstrate that the issue unfolded in the course of submissions to the Land Appeal Court. Initially, the respondents adopted adjustments made by the Land Court member in working from the site improved value of the Pacific Fair site, to its unimproved value. The present appellant then contended there was an error in the approach of the Land Court member, namely, that rates and land tax should have been calculated on the statutory valuation in force at the time, and not on the basis adopted by the Land Court member. The present appellant submitted that adjustments should be made to the Land Court member’s calculations, reducing them from $36,804,234 to about $24,456,000.167 The present respondent then took issue with a number of matters in relation to adjustments to achieve an unimproved value for the Pacific Fair site. The parties have not identified the total effect of the adjustments for which the present respondents contended in the Land Appeal Court, but they seem to range up to $34,000,000 approximately.168 [181] The appellant’s contentions based on the grounds of appeal to the Land Appeal Court rely on s 56 of the VLA. It, and some related provisions, are as follows:169 “56 How to start an appeal (1) An appeal shall be instituted by filing in the Land Court registry a notice of appeal. (2) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated, and the burden of proving any and every such ground shall be upon the owner. (3) Such notice shall also state the amount which in the opinion of the appellant should be the valuation of the subject land. (4) The appellant shall serve a copy of the notice of appeal on the chief executive not later than 7 days after the notice is filed in the Land Court registry.” 167 Pacific Fair LAC at [160]-[163]. 168 This may be inferred for the fact that the present respondents contended for a site improved value of $73,592,064, and an unimproved value of either $39,400,000 or $46,700,000 for that site: See Pacific Fair LAC at [145] and [8]. 169 These provisions are taken from reprint 7, in force at the time of the hearing in the Land Appeal Court. -- 43 of 56 -- 44 “58 Defect in notice of appeal—action of registrar (1) Where it appears to the registrar of the Land Court that a notice of appeal filed in the registry does not comply in all respects with the requirements of section 56 or is otherwise defective in a material particular, the registrar shall issue or cause to be issued to the appellant a requisition specifying the noncompliance or defect and requiring the appellant to comply in all respects with the requirements of section 56 or remedy the defect, as the case may be, by filing in the registry within 21 days of the date of the requisition an answer to it so that the requirements of section 56 are satisfied or the defect is remedied, as the case may be. (2) Upon an appellant complying with the requirements of the requisition to the satisfaction of the registrar within the prescribed time of 21 days as aforesaid, the answer to the requisition shall be read as one with the notice of appeal and the material constituting the answer shall for all purposes be taken to have been supplied with and to have formed part of the notice of appeal on the day such notice was filed in the Land Court registry. (3) If the appellant does not fully comply with the requirements of the requisition to the satisfaction of the registrar within the prescribed time, the Land Court shall not proceed to hear and determine the appeal unless it is satisfied that the notice of appeal as first filed complied in all respects with the requirements of section 56 and was not defective in any material particular or that, where in its opinion a requisition was properly issued, the requirements of the requisition have been complied with to the extent that, taking such compliance into consideration in conjunction with the notice of appeal as first filed, the requirements of section 56 have been complied with and there is no defect in any material particular. (4) The registrar shall furnish to the chief executive a copy of a requisition to an appellant and of any answer thereto by the appellant. (5) In any case where— (a) a notice of appeal is filed in the Land Court registry but not within the time prescribed by section 55(2); and (b) it appears to the registrar of the Land Court that the notice so filed does not comply in all respects with the requirements of section 56 or is otherwise defective in a material particular; the notification of the registrar to the owner pursuant to section 57 and the requisition to the owner pursuant to this section shall be issued together. -- 44 of 56 -- 45 (6) This section applies subject to the provisions of this Act relating to the circumstances in which an appeal does not lie.” “59 Defect in notice of appeal—action of Land Court (1) Where on the hearing of an appeal it appears to the Land Court that a notice of appeal does not comply in all respects with the requirements of section 56 or is otherwise defective in a material particular, the court shall require the appellant to furnish it within 7 days with particulars the absence of which constitute the failure to comply with the requirements of section 56 or the defect in a material particular. (2) If the appellant there and then satisfies the requirements of the Land Court or so satisfies them within the prescribed period of 7 days, the court shall make such order as to an adjournment or the continuation of the hearing of the appeal as it thinks fit having regard to the circumstances. (3) If the appellant fails to satisfy the requirements of the Land Court under this section within the prescribed period of 7 days, the court shall strike out the appeal. (4) Subsection (1) is applicable in any case— (a) where the registrar has not issued to the appellant a requisition pursuant to section 58 or, though the registrar issued such a requisition, it was incorrect or incomplete; and (b) notwithstanding that the registrar, pursuant to section 58, issued or caused to be issued to the appellant a requisition that was complied with to the satisfaction of the registrar within the prescribed time of 21 days.” (emphasis added) [182] The respondents submit that the grounds of appeal were sufficiently broad to permit argument on the adjustments; and that it was necessary for the court to consider the value of the site works, in order properly to determine the unimproved value of the land.170 In their oral submissions, they submitted that the matter was litigated in the Land Appeal Court; and that at worst they should have amended their notice of appeal.171 [183] It is noteworthy that the correctness of the Land Court member’s adjustments to derive the unimproved value of the site from its site improved value was raised by the present appellant, who was the respondent in the appeal. It is difficult to see that, once the present appellant (who was the respondent in the Land Appeal Court) had put in issue the correctness of the adjustments made by the Land Court member to the site improved value, the present respondents could not litigate that issue. 170 Respondent's Rejoinder Submissions at [87]. 171 Court of Appeal Transcript 2-36. -- 45 of 56 -- 46 [184] More significantly, s 56 applies to an appeal to the Land Court. It does not apply to an appeal to the Land Appeal Court. For such an appeal, the LC Act and the Land Court Rules 2000 apply.172 There has been no suggestion that they contain a limitation relating to an appeal to the Land Appeal Court analogous to that found in s 56(2) of the VLA. [185] The Land Appeal Court took the view that the objection based on the absence of grounds of appeal was “not strenuously pressed” and considered the grounds of appeal to have been sufficiently broad to raise the matters. [186] In my opinion, the Land Appeal Court was not in error in taking its own view of the adjustments to be made to move from the site improved value to the unimproved value of the Pacific Fair site, even though these were not raised in the grounds of appeal. Time to secure leases [187] In deriving the unimproved value of the Pacific Fair site from its site improved value, the Land Appeal Court assumed a period of eight and a half months as part of the period prior to the commencement of site works, attributable to securing leases in the notionally proposed shopping centre.173 [188] The appellant contends that this approach is “illogical and contrary to principle”. [189] The submission that the approach is illogical appears to be founded on the Land Appeal Court’s finding, said to be that “leases were to be disregarded in arriving at the unimproved value”.174 That description does not accurately reflect the Land Appeal Court’s decision. The Land Appeal Court, in effect, held that it was to be assumed that at the date of valuation, leases did not exist.175 That does not mean that they are to be disregarded for all purposes. The consequence of the fact that they do not exist at the date of valuation is that, if a developer would not proceed to carry out the site improvements unless leases were in some fashion secured, then that might have some effect on when work on the site improvements might commence. I do not consider that, in this respect, the conclusion of the Land Court was illogical. [190] The appellant also submits that, if a prudent purchaser would be prepared to pay a substantial amount of money to purchase the unimproved site, without leases, then it would be illogical to assume that the purchaser would seek to secure releases before commencing site works. It should be noted that the appellant does not submit there was no evidence to support the Land Appeal Court’s approach. This submission is simply one about a finding of fact, and does not give rise to an error of law. [191] The appellant also submits that the allowance of time for securing leases is inconsistent with the view that the Pacific site, notionally unimproved, was ready for immediate development as a regional shopping centre. Again, in my view, this simply raises a question of the factual conclusion to be drawn from the evidence before the Land Appeal Court. It does not give rise to an issue of law. 172 See s 67(1) of the VLA. 173 Pacific Fair LAC at [189]. 174 AOA at [134]. 175 Pacific Fair LAC at [72]. -- 46 of 56 -- 47 [192] In my view, the Land Appeal Court has not committed any error of law in relation to allowing a period of eight and a half months for securing leases. Interest rate [193] In determining the unimproved value of the Pacific Fair site from its site improved value, the Land Appeal Court adopted a rate of seven per cent to determine the amount of interest to be taken into account in connection with the carrying out of site improvements. The Land Appeal Court did this on the basis that there was evidence that typically development for significant projects like shopping centres is fully funded by borrowing.176 The Land Appeal Court accordingly has treated the interest as part of the cost of bringing the notionally unimproved Pacific Fair site to a site improved state; so that in deriving the unimproved value from site improved value, the interest was to be deducted. [194] The appellant contends that this involves an error of law. It bases its submission on the following passage from the judgment of Knox CJ (sitting at first instance) in Kiddle v Deputy Federal Commissioner of Land Tax:177 “This amount would be found by ascertaining the amount which it would cost to make the improvements in question at the relevant date, including a proper allowance for loss of interest on all outlay during the period which must elapse before such outlay became fully productive … .” [195] His Honour was required to determine the unimproved value of improved pastoral land, which had been cleared. He considered that, on the evidence available, this was to be determined by identifying the improved value of the land, and deducting from it the value of the improvements.178 The passage which has been quoted related to the determination of the value of the improvements. [196] The passage was applied by a Land Court member in Shire of Esk.179 In that case, the member took the view that the effect of the decision in Kiddle was that the allowance for interest had nothing to do with borrowing money to effect improvements, but with the loss of the earning power of the money necessarily outlaid in buying an improved property.180 [197] The passage quoted from Kiddle assumes that the cost of the timber treatment and other improvements were otherwise to be met from the purchaser’s own funds. If that were not so, the purchaser would not have suffered a potential loss of interest on money outlaid during the period before the outlay became fully productive. [198] The reference to “This amount” which commences the passage from Kiddle set out above can, in my view, be only understood by reference to what precedes it, which is as follows:181 “The question to be solved in ascertaining the value of improvements for the purpose of arriving at the unimproved value is what part of the improved value of the land is attributable to the improvements to 176 Pacific Fair LAC at [176]. 177 (1920) 27 CLR 316 at 320. 178 (1920) 27 CLR 316 at 319. 179 (1972) 39 QCLLR 130. 180 Shire of Esk (1972) 39 QCLLR 130 at 135. 181 Kiddle v Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316 at 320. -- 47 of 56 -- 48 be valued. Presumably, a purchaser of the land, if he considered this question at all, would determine that the amount to be attributed to value of improvements would be equal to the amount which he gained or saved by reason of the improvements having been made, he being thereby relieved from the necessity of making them.” (emphasis added) [199] In my view, the principle which Knox CJ formulated is set out in the passage just quoted, and the passage relied upon by the appellant can not be properly understood without reference to it. In circumstances where a purchaser was likely to meet the cost of improvements by borrowing, then the amount which he has gained or saved by purchasing the improved property would include the savings in interest costs which the purchaser would otherwise have had to pay. In my view, the Land Appeal Court’s approach is consistent with Kiddle. [200] The Land Appeal Court was not bound by the decision in Shire of Esk. It was free to determine (as it did) that the decision in that case was wrong.182 [201] In my view, there is no error in law on the part of the Land Appeal Court, in its selection of an interest rate in determining the unimproved value of the Pacific Fair site. Development Approval [202] As mentioned, the Land Appeal Court recognised that under VLA 2008, the unimproved value is to reflect the benefit of a development approval. It did so for the Pacific Fair site, by allowing a figure of $3,900,000, which was attributed to the avoidance of delays which would otherwise have occurred to allow for the time necessary to obtain development approvals. [203] The appellant submits that this fails to give full effect to the benefit of the development approval. That is because the existence of the approval removes the risks associated with an application for it; and the need to comply with conditions for external works, and to pay headworks contributions, and the need to expend funds on experts’ services is avoided. The appellant refers to evidence of the direct cost of obtaining a development approval in the sum of $400,000,183 and other evidence that the cost of obtaining development approval would be between $478,000 and $498,000.184 [204] It must be said that the appellant’s submissions on this topic were somewhat elliptical. They did not seek to relate the evidence associated with a number of these matters, to the determination of value by the Land Appeal Court. [205] The present appellant refers to paragraphs 61 to 70 of its written outline in the Land Appeal Court. The appellant there recognised that Mr Brett’s analysis of the Telstra sale included some allowances for obtaining a development approval, though these were said to be inadequate.185 It is apparent from Mr Brett’s report that the analysis included, as part of the site improved value, allowances for external works, headworks charges, and the cost of obtaining a development approval. They were accordingly reflected in his site improved rate per square metre of $378 for the retail 182 Pacific Fair LAC at [167], [168] and [170]. 183 AOA at [142]. 184 AOA at [143]. 185 Appellant’s submissions in Land Appeal Court at [63]. -- 48 of 56 -- 49 component of the Telstra site.186 In the Land Appeal Court, the appellant submitted that Mr Brett’s approach to the development approval was the same as Mr Slater’s.187 Mr Slater’s site improved value for the retail component of the Telstra site resulted in a rate of $389 per square metre, a little higher than Mr Brett’s. It was this figure which provided the basis for the rate applied by the Land Appeal Court in Chermside,188 which in turn formed the basis of the Land Appeal Court’s determination for the Pacific Fair site.189 The present appellant’s submissions in the Land Appeal Court did not identify a figure for which the present appellant then contended. It is by no means clear, therefore, that the site improved value adopted by the Land Appeal Court did not reflect the cost of the development approval, external works, and infrastructure contributions. The adjustments made by the Land Appeal Court to arrive at the unimproved value did not alter this situation.190 [206] The Land Appeal Court made an additional adjustment of $3,900,000 for the value of the development approval. It recognised that this “might not be entirely complete” in dealing with the additional value associated with a development approval, noting particularly that risk might not be accounted for.191 This appears shortly after a reference to the present appellant’s written submissions on this issue. These matters rather suggest that the Land Appeal Court considered that other benefits associated with the existence of a development approval were reflected in its determination. [207] Having regard to these matters, I am of the view that the appellant has not established that the Land Appeal Court erred in law in failing to include the value of the development approval in the unimproved value for the Pacific Fair site. Nature of appeal to Land Appeal Court [208] The appellant refers to the fact that the appeal to the Land Appeal Court from the Land Court was an appeal by way of rehearing, and cites Fox v Percy192 and CSR Ltd v Della Maddalena193 in support of its contention that the Land Appeal Court erred in law in its treatment of the findings of the Land Court, and specifically in its adoption of the Telstra sale, which was rejected as a comparable sale by the Land Court. [209] The appellant also submits that the determination of the unimproved value by the Land Court was a decision which was discretionary in nature, again citing authority;194 and submits that the Land Appeal Court has substituted its own conclusions as to what was the best evidence of value, apparently as demonstrating that it erred in law. [210] These submissions are rather broadly expressed, and in my view fail to recognise the context in which the Land Appeal Court was deciding the Pacific Fair Appeal. 186 Ex 103P, 13-14. 187 Appellant’s submissions in Land Appeal Court at [64]. 188 Chermside LAC at [98]; see also [101]. 189 Pacific Fair LAC at [145], [146], [158], [159]. 190 Pacific Fair LAC at [194]-[195]. 191 Pacific Fair LAC at [158]. 192 (2003) 214 CLR 118 at 125-126. 193 (2006) 80 ALJR 458 at [23] and [180]. 194 Particularly The Commonwealth v Reeve (1949) 78 CLR 410 at 423; Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 at 164. -- 49 of 56 -- 50 [211] I have previously described the process in which the Land Appeal Court member determined the value for the Pacific Fair site. His determination was, in effect, derivative, being based upon his determination for the Chermside site. However, by the time that the Land Appeal Court heard the Pacific Fair appeal, the Land Court member’s determination of the value of the Chermside site had been overturned, by an earlier decision of the Land Appeal Court. The Land Appeal Court’s Chermside decision, therefore, authoritatively determined the value of the Chermside site; and plainly deprived the Land Court member’s determination of the authority which it might otherwise have enjoyed. It also had the effect, it seems to me, of at least throwing into question, findings made by the Land Court member in his Chermside decision. [212] Moreover, when the Land Court heard the Pacific Fair appeal, the law had been changed; and indeed VLA 2008 expressly stated that some of the changes applied to legal proceedings, including appeals, not decided at the time of its introduction.195 Since the legislation had framed the question for determination in different terms of those applied by the Land Court member, and the appeal to the Land Appeal Court was an appeal by way of rehearing, it is difficult to see that either of the Land Court member’s decisions could be said to enjoy the status which decisions at first instance normally enjoy. [213] In Fox v Percy, the High Court considered the provisions of the Supreme Court Act 1970 (NSW) regulating appeals from the New South Wales District Court to the Court of Appeal. Those provisions state that the appeal is by way of rehearing, and set out in some detail the powers and duties of the appeal court.196 The High Court then considered the tensions between, on the one hand, the duty of an appeal court required to conduct a rehearing, and on the other the traditional recognition of the advantages enjoyed by a court at first instance. The passage quoted in the present appellant’s submissions reflect the latter consideration. However, their Honours went on to make the following statement:197 “Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge’s reasons. Appellate courts are not excused from the task of ‘weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect.’”198 [214] Callinan J said the following;199 “Statements made by appellate judges about findings of fact by trial judges repeatedly emphasise the advantages attaching to an opportunity to hear and see witnesses. They tend to understate or even overlook that appellate courts enjoy advantages as well: for example, the collective knowledge and experience of no fewer than 195 See s 101 of VLA 2008. 196 Fox v Percy (2003) 214 CLR 118 at [21]. 197 Fox v Percy (2003) 214 CLR 118 at [25]. 198 See the further observations in Fox v Percy (2003) 214 CLR 118 at [28]-[31]. 199 Fox v Percy (2003) 214 CLR 118 at [142]. -- 50 of 56 -- 51 three judges armed with an organised and complete record of the proceedings, and the opportunity to take an independent overview of the proceedings below, in a different atmosphere from, and a less urgent setting than the trial.” [215] Both of these passages are recognised in Della Maddalena.200 The passages from the joint judgment in Fox were applied subsequently in Pledge v Roads and Traffic Authority.201 [216] As previously suggested, a review of the statutory provisions regulating an appeal to the Land Appeal Court may well give that court greater freedom in reviewing a decision of the Land Court. In that context, its constitution, including a judge of this court and two members of the specialist tribunal, is not without significance. [217] In neither the Chermside case nor the Pacific Fair case did the Land Court member’s decision depend on his assessment of the credibility of a witness. Nor did it appear to reflect a view of the particular skill or competence of any particular witness, whose evidence he adopted. Rather, as I have sought to show earlier, his decision was a result of an exercise which he carried out, having regard to the evidence before him. His conclusions about the Telstra sale, and for that matter, the earlier sale of the Chermside regional shopping centre, resulted from his own analysis of facts which, at least generally, were not in dispute. In those circumstances, it is difficult to see why the Land Appeal Court was not in at least as good a position as the Land Court member to form its own views about the utility of the sales evidence. [218] Beyond that, it is clear that the Land Court member’s analysis and adoption of particular pieces of evidence were significantly influenced by his view of the effect of the VLA. Once the Land Appeal Court held that that view was erroneous, there was additional reason for it to perform its appellate duty to consider the unimproved value of the Pacific Fair site afresh. That reason was increased by the fact that the legislation which the Land Appeal Court had to apply was not the same as that considered by the Land Court member. [219] In so far as the Land Court member’s valuation might be described as being a judgment which is discretionary in nature, it is well recognised that when such a judgment proceeds on a basis which is wrong in law, it will be reviewed. In my view, that approach has the effect that when, on appeal, it is necessary to apply a different law, it is necessary for the appellate court itself to make the necessary judgment required by the changed law. [220] In my view, therefore, the Land Appeal Court did not err in law in failing to apply the constraints applicable to an appeal involving a discretionary judgment. Nor did it err in law by failing to give due weight to the findings of the Land Court member. Presumption of correctness [221] Under s 33 of the VLA, a valuation made under the Act by the Chief Executive is deemed to be correct until proved otherwise upon objection or appeal, or until altered or further altered. [222] The appellant submits the Land Appeal Court has not addressed this provision. The section was also relied upon generally;202 in relation to the issue concerning the 200 CSR Ltd v Della Maddalena (2006) 80 ALJR 458 at [23]; [180]. 201 (2004) 78 ALJR 572 at [43]; see also [2], [3], and [6]. 202 AOA at [160], [161]. -- 51 of 56 -- 52 value to be attributed to the development approval;203 and in relation to the orders sought by the appellant in the appeal to this court.204 [223] An earlier version of s 33 was considered in Brisbane City Council v Valuer-General (Qld).205 Gibbs J (as his Honour then was) said, in respect of that provision;206 “However, I accept that in s. 13 (7) [the word “valuation”] at least includes the amount of the valuation, and that there is a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct. The question then is whether a court on appeal is bound to accept the Valuer-General's figure as correct unless it is positively established that the true value is lower, or whether it is enough to show that the value was reached as the result of an error in principle. In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s. 13 (7) is rebutted. It is true that the Valuer-General might by coincidence reach the right result by a wrong process of reasoning, but I cannot attribute to the legislature the capricious intention that a valuation shown to have been erroneously made should be presumed correct simply because by mere chance the Valuer-General may have hit on the right figure.”207 [224] The decision was applied in Hendricks v Valuer-General.208 The section is not directed to the protection of individual findings made on an appeal to the Land Court. In any event, the findings to which the appellant refers are findings made in the Chermside appeal to the Land Court, which were overturned on the Chermside appeal to the Land Appeal Court. The effect of the section, assuming it applies to a decision made on an appeal, is to create a presumption that the value determined by the Land Appeal Court for the Chermside site is correct, until proven otherwise. Its consequence would be that the onus is on the appellant in respect of the Pacific Fair appeal to the Land Appeal Court, to establish that the Land Appeal Court’s Chermside determination was in error. It does not support the submission made by the appellant in this appeal. Sufficiency of reasons for judgment [225] There appear in a number of places in the appellant’s written outline of argument, submissions to the effect that the Land Appeal Court erred in failing sufficiently to provide reasons for its decision. The submission is made principally about the adoption of the Telstra sale by the Land Appeal Court, in view of the findings made by the Land Court member about that sale, the appellant’s submissions, and the evidence.209 However, the submission is also made with respect to the adoption by the Land Appeal Court of the adjustment of the site-improved value of the Chermside site, to arrive at a site-improved value of the Pacific Fair site;210 the 203 Court of Appeal Transcript 1-57 to 1-58. 204 Court of Appeal Transcript 1-61 to 1-62; AOA at [160]. 205 (1978) 140 CLR 41. 206 Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41 at 56. 207 The other members of the court agreed: Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41 at 61. 208 (1983) 52 LGRA 56 at 60 (per Macrossan J with whom the other members of the court agreed), 63. 209 AOA at [110(a), (c)], [115]. 210 AOA at [130]. -- 52 of 56 -- 53 determination of the effect of the development approval on the unimproved value;211 and s 33 of the VLA.212 [226] It is well established that a failure by a court to comply with its duty to give reasons for its decision is an error of law.213 However, as was stated by Mahoney JA in Soulemezis v Dudley (Holdings) Pty Ltd,214 there is no formula, the application of which, in each case, will identify what reasons a judge is required to provide. In that case McHugh JA (as his Honour then was) noted that the scope of the duty is different, in a case where a right of appeal is given only in respect of a question of law, from a case where there is a full appeal.215 [227] In Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd216 Mahoney JA said; “But…the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need be elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.” [228] In Ainger v Coffs Harbour City Council,217 it was said that while a judge at first instance is not obliged to spell out every detail of his or her process of reasoning, the judge is obliged to expose the reasons relied upon for resolving a point critical to the contest between the parties. [229] In submissions some reliance was placed on Camden v McKenzie.218 That was a case where there was a full right of appeal; and the issue was whether the requirement to provide reasons had been breached because, in respect of evidence important to the determination of the matter, there had been a failure to refer to the evidence, and to set out the material findings of fact, giving the reasons for the findings and stating the basis on which one body of evidence had been preferred over a competing body of evidence.219 Of these requirements Keane JA said:220 “As a general rule, observance of these requirements is necessary to demonstrate that litigation has been determined fairly and rationally.” [230] The Land Appeal Court’s reasons in the Pacific Fair appeal referred to the provisions of VLA 2003 and made brief reference to its reasons for overturning the Land Court member’s determination of unimproved value for the Chermside site, 211 AOA at [141]. 212 AOA at [159]. 213 See, for example, King Ranch Australia Pty Ltd v Cardwell Shire Council [1985] 2 Qd R 182. 214 [1987] 10 NSWLR 247 at 273. 215 Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247 at 280-281. The propositions to which I have referred from Soulemezis were adopted by this court in Holtz Hill Quarry Pty Ltd v Gold Coast City Council & Others [2000] QCA 268 at [26]-[28]. 216 [1983] 3 NSWLR 378 at 386. 217 [2005] NSWCA 424 at [48]; referred to at AOA at [116]. 218 [2008] 1 Qd R 39 at [29] ff. 219 [2008] 1 Qd R 39 at [30]. 220 [2008] 1 Qd R 39 at [31]. -- 53 of 56 -- 54 under VLA 2003.221 The Land Appeal Court then noted the changes to the legislation.222 It then noted the approach of the Land Court member to the application of s 3(1)(b) of VLA 2003,223 and the submission of the present appellant that that decision was consistent with VLA 2008.224 It then considered, at considerable length, the effect of VLA 2008 and its application, including the construction relied upon by the present appellant, in support of the submission that the Land Court member’s Chermside determination was consistent with VLA 2008. That led it to conclude that the present appellant’s construction of s 3(1)(b) could not be accepted, and that the valuation determined by the Land Court member should not be reinstated.225 [231] It is against that background that the Land Appeal Court considered the Telstra sale. It is apparent from its reasons that, to a significant extent, it considered that the Land Court member’s approach to this sale depended upon his approach to the construction and application of the VLA.226 It made reference to its Chermside decision, where it had dealt with the Telstra Sale at some length.227 In its Chermside decision, after identifying the date of the sale, the location of the land, its town planning status, evidence that it had potential for retail development, and the purchaser’s reasons for purchasing the land, the Land Appeal Court stated reasons for its view that the Land Court member erred in rejecting the Telstra sale. It then considered the valuation evidence, giving reasons for rejecting the valuation evidence of Mr Denman (which, on the ultimate question of the applicability of the Telstra sale, were related to the rejection of it by the Land Court member).228 The reasoning process by which the Land Appeal Court came to apply the Telstra sale in the Chermside case, and thereafter in the Pacific Fair case, is, in my view, apparent from the Court’s reasons. [232] Ultimately, the point which was critical to this issue was the approach to be taken to s 3(1)(b), dealt with in some detail in the reasons for judgment of the Land Appeal Court. That was then identified in those reasons as the first ground for rejecting the present appellant’s submission that the Telstra sale was irrelevant. The Land Appeal Court’s reasons, though briefly stated, were then exposed. The appellant makes specific mention of the findings of the Land Court member in the Chermside decision; but one would expect these findings to be dealt with in the Chermside appeal to the Land Appeal Court. There was no appeal against that decision. In its Chermside decision, the Land Appeal Court explained in some detail its reasons for the adoption and application of the Telstra sale. If in this appeal, it is necessary to deal with the question whether those reasons are adequate, the judgment delivered in that case seems to me adequately to expose the Land Appeal Court’s reasons for the approach which it there took. [233] In the Pacific Fair case, the Land Appeal Court noted that there was no challenge by either party to the use by the Land Court member of the 2.85 per cent differential.229 In my view, that is a sufficient statement of its reasons for the approach that it took. 221 Pacific Fair LAC at [22]-[26]. 222 Pacific Fair LAC at [28]-[36] 223 Pacific Fair LAC at [41]. 224 Pacific Fair LAC at [42]. 225 Pacific Fair LAC at [139]. 226 See, for example, Pacific Fair LAC at [148]. 227 Chermside LAC at [77]-[79] and [89]-[104]. 228 Chermside LAC at [91]-[92]. 229 Pacific Fair LAC at [14], [145]. -- 54 of 56 -- 55 [234] The appellant submits that, in dealing with the added value resulting from the existence of a development approval for the Pacific Fair site, the Land Appeal Court failed to provide reasons relating to risk, headworks charges, the costs of external works, and the cost of obtaining the development approval. I have set out earlier the way the issue relating to the value of the development approval was approached by the parties in the Land Appeal Court. In the present appeal, the appellant has not sought to establish that, before the Land Appeal Court, he contended that considerations relating to risks, headworks charges, the costs of external works, and the cost of obtaining the development approval should result in an adjustment greater than $3,900,000. For that reason alone, it seems to me that the Land Appeal Court was not required to provide reasons for not increasing the amount it allowed, by reference to these matters. However, the Land Appeal Court noted that Mr Brett’s evidence might not take into account all relevant matters, risk being expressly referred to, but said that it was the best available evidence of the value of a development approval in the eyes of a prudent purchaser.230 It seems to me that this sufficiently exposes the Land Appeal Court’s reasoning. [235] In my view there are a number of reasons why the Land Appeal Court did not err in law by not expressly making reference to s 33 of the VLA. It is plain that the Court had extensively reconsidered the correct approach to determining the unimproved value of the Pacific Fair site. It did so against the background of significant legislative changes, made subsequent to the determination of the Land Court member. The Land Appeal Court had also determined that the Land Court member had erred in the construction of the legislation which he applied. All of these things are apparent from the judgment of the Land Appeal Court. As I have mentioned, if s 33 operates in respect of a decision on appeal, its effect was to create a presumption that the determination of the value of the Chermside site by the Land Appeal Court was correct; which also meant that the determination by the Land Court member for the Pacific Fair site proceeded on a wrong basis. The role which s 33 plays in all of these circumstances could not have been of significance to the outcome of the appeal, and did not need to be expressly discussed. [236] In my view, the appellant has not demonstrated that the Land Appeal Court has erred in law by failing to provide adequate reasons for its decision. Section 101A [237] It does not seem necessary in these proceedings to decide whether statutory charges will be determined on the basis of the unimproved value assessed by the Land Appeal Court, or otherwise to deal with this section. Conclusion [238] The appellant has not demonstrated that the Land Appeal Court has wrongly construed, or that it has acted on a wrong construction of, VLA 2008. In particular, the appellant has not demonstrated that, in relying on the site improved value that the Land Appeal Court had earlier derived for the Chermside site, that Court proceeded contrary to VLA 2008. The appellant has advanced a miscellany of other points, some of which are, on analysis, of a factual nature, and some of which fail to recognise the scope of the powers of the Land Appeal Court on an appeal to it. In context, I consider the reasons of the Land Appeal Court to be adequate. The appellant’s grounds of appeal are not made out. 230 Pacific Fair LAC at [158]. -- 55 of 56 -- 56 [239] In my view, the appeal should be dismissed. The appellant should pay the respondents’ costs, to be assessed on the standard basis. -- 56 of 56 --