Land and Environment Court New South Wales Medium Neutral Citation: Peter Sleiman Property Investments Pty Ltd and Anor v Valuer-General of New South Wales (No 2) [2021] NSWLEC 47 Hearing dates: 27, 28 and 29 July, 15 September and 5 November 2020 Date of orders: 21 May 2021 Decision date: 21 May 2021 Jurisdiction: Class 3 Before: Robson J Decision: See orders at [241] Catchwords: VALUATION — Service station — Dispute regarding risk of contamination — Appropriate valuation methodology Legislation Cited: Burwood Development Control Plan 2013 Burwood Local Environmental Plan 2012 Contaminated Land Management Act 1997 (NSW) s 60 Environmental Planning and Assessment Act 1979 (NSW) ss 3.43, 3.45, 4.15 Protection of the Environment Operations Act 1997 (NSW) State Environmental Planning Policy No 55—Remediation of Land State Environmental Planning Policy No 65—Design Quality of Residential Apartment Development Valuation of Land Act 1916 (NSW) ss 6A, 37, 40 Cases Cited: 680-682 Kingsway Caringbah Pty Ltd v Sutherland Shire Council [2017] NSWLEC 99 Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575 Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; (1973) 32 LGRA 170 Bronzel v State Planning Authority (1979) 21 SASR 513; (1979) 44 LGRA 34 Challenger Listed Investments Limited v Valuer General (No 2) [2015] NSWLEC 60 Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365; (2007) 156 LGERA 186 Co-ordinated Resources Pty Ltd v Valuer General (1983) 27 the Valuer 779 Crompton v Commissioner of Highways (1973) 5 SASR 301; (1973) 32 LGRA 8 Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217 Graham Trilby Pty Ltd v Valuer-General [2011] NSWLEC 68 New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444 Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWLEC 18; (2018) 228 LGERA 407 Peter Sleiman Property Investments Pty Ltd v Valuer-General of New South Wales [2020] NSWLEC 123 Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508; (1977) 40 LGRA 151 River Bank Pty Ltd v The Commonwealth of Australia; Rumble v The Commonwealth of Australia (1974) 4 ALR 651 Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 Toohey's Ltd v the Valuer-General (1924) 25 SR (NSW) 75; [1925] AC 439 Trust Company of Australia Ltd v the Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 Universal Property Group Pty Ltd v Blacktown City Council [2020] NSWCA 106 Valuer-General of New South Wales v Oriental Bar Pty Limited [2016] NSWCA 48; (2016) 217 LGERA 1 Valuer-General v Fivex Pty Ltd [2015] NSWCA 53; (2015) 206 LGERA 450 Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; (1991) 73 LGRA 47 Texts Cited: NSW Department of Planning and Environment, Apartment Design Guide, July 2015 NSW Environment Protection Authority, Contaminated Sites: Sampling Design Guidelines (1995) NSW Environment Protection Authority, Guidelines for Assessing Service Station Sites (1994) Category: Principal judgment Parties: Peter Sleiman Property Investments Pty Ltd (First Applicant) Nabil Sleiman Property Investments Pty Ltd (Second Applicant) Valuer-General of New South Wales (Respondent) Representation: Counsel: R Lancaster SC with M Seymour (First and Second Applicants) R White (Respondent) Solicitors: CMM Quay Legal Group (First and Second Applicants) Crown Solicitor's Office of New South Wales (Respondent) File Number(s): 2018/00366200; 2018/00366212 Publication restriction: Nil Judgment 1. Peter Sleiman Property Investments Pty Ltd and Nabil Sleiman Property Investments Pty Ltd (the 'applicants'), bring two appeals pursuant to s 37(1) of the Valuation of Land Act 1916 (NSW) ('Valuation Act') against the determination by the Valuer-General of New South Wales (the 'Valuer-General') of objections to the valuations of a parcel of land located at 287 Liverpool Road, Strathfield (the 'Land'). 2. The applicants appeal the determination of objections and issued land values for the Land as at the base dates of 1 July 2016 and 1 July 2017 ('base dates'), when the Valuer-General valued the Land at $5,365,000 and $6,200,000 respectively. The applicants contend that these land values are too high, and submit that the appropriate land values at the base dates are instead $1,150,000 and $920,000 respectively. 3. The areas of dispute between the parties, and the issues to be determined by the Court in these appeals, concern: first, the material available at the base dates in relation to contamination of the Land (including the cost of remediation of any contamination) and the effect of the material on the statutory valuation task; second, the effect of the applicable planning controls on the likely achievable floor space where a mixed-use development is the highest and best use; third, the highest and best use of the Land at the base dates for the purposes of determining the land values; and fourth, the appropriate valuation methodology to be adopted to determine the land values. 4. The hearing of both appeals proceeded concurrently over five days. Mr R Lancaster of senior counsel, with Mr M Seymour of counsel, appeared for the applicants and Mr R White of counsel, appeared for the Valuer-General. 5. For the reasons that follow, I determine that the land values of the Land as at the base dates are $4,883,000 and $5,165,000 respectively. Background The Land 1. The Land comprises Lots A and B in DP 409923 and Lots 1 and 2 in DP 208597, within the local government area of Burwood. It is an irregularly shaped corner parcel occupying an area of 1,764.1m² on a prominent bend in Liverpool Road, Strathfield. There are two street frontages, with the primary frontage being approximately 60m to Liverpool Road. 2. At the base dates, the Land was occupied and operated as a service station by Woolworths Ltd, subject to a registered lease dated 15 December 2008 which commenced on 31 May 2008 and expires on 30 May 2023 subject to four, five-year options to renew. At the base dates, the Land was improved with a single-storey service station and underground storage tanks (also referred to as the underground petroleum storage system or 'UPSS') and related infrastructure for storing petroleum products. The Land has been used as a service station since the 1950s, with the existing improvements constructed in 2006 following the remediation, validation and redevelopment of the Land in 2005. 3. At the base dates, most of the Land was zoned "B2 Local Centre" under the Burwood Local Environmental Plan 2012 ('Burwood LEP'). This zoning provides for a broad range of commercial, retail and residential uses to be undertaken on the Land with development consent. A small part of the Land was zoned "R2 Low Density Residential". The land valuations subject to appeal 1. The Valuer-General undertook land valuations of the Land for the base dates, resulting in a land value of $5,600,000 at 1 July 2016 (being the '2016 base date') and a land value of $6,990,000 at 1 July 2017 (being the '2017 base date'). Objections to the land values for the base dates were lodged on the basis that the issued land values were too high. The objections were allowed, and the land values were reduced to $5,365,000 for the 2016 base date and $6,200,000 for the 2017 base date on 4 October 2018. 2. On 28 November 2018, the applicants filed appeals against the determinations of the objections, and the land values. The applicants contend that the land values for the Land remain too high. They seek a determination of land values for the Land at the base dates in accordance with the Valuation Act, and any other orders the Court sees fit. The applicants have the onus of proving that the Valuer-General's determinations of the objections to the land values are erroneous and too high: s 40(2) of the Valuation Act. These appeal proceedings 1. The parties provided written and gave oral submissions to the Court. The concurrent hearing of the appeals meant that the evidence tendered was accepted as evidence in each of the appeals. 2. The Court received extensive evidence in a Court Book of approximately 1,000 pages, including 8 individual expert reports and 4 joint expert reports. Each party called experts in the fields of contamination, town planning, and valuation. In relation to contamination, Ken Henderson and Tony Nakhoul gave evidence for the applicants and Colin McKay gave evidence for the Valuer-General (together, the 'contamination experts'); in relation to town planning, Peter Smith gave evidence for the applicants and David Haskew gave evidence for the Valuer-General (together, the 'town planning experts'); and, in relation to valuation, Grant Jackson gave evidence for the applicants and Derek Hill gave evidence for the Valuer-General (together, the 'valuers'). The Court also received expert evidence in relation to quantity surveying from Tony Sassine, retained by the applicants. 3. On the third day of the hearing, judgment was handed down in respect of objections taken by the Valuer-General to various paragraphs of the expert valuation report of Mr Jackson dated 21 April 2020: Peter Sleiman Property Investments Pty Ltd v Valuer-General of New South Wales [2020] NSWLEC 123. The statutory valuation task 1. These appeals concern the determination of land values for the Land at the base dates, and as such, focus on the application of s 6A of the Valuation Act. Section 6A relevantly provides: 6A Land value (1) The land value of land is 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 the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made. (2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that— (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used, but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made. … 1. The broader statutory framework relevant to these proceedings was conveniently summarised, in terms I respectfully adopt, by Sackville AJA in Valuer-General of New South Wales v Oriental Bar Pty Limited [2016] NSWCA 48; (2016) 217 LGERA 1 at [61]-[62], [64], [68]-[70] as follows: "[61] Subject to certain exceptions, the land value of each parcel of land in New South Wales is to be ascertained each year. The valuation is to be made as at 1 July in the valuing year in which the valuation takes place. The Valuer-General is empowered to value any parcel of land at any time. [62] Assessment of land value is to take place in accordance with s 6A(1) of the [Valuation Act]… … [64] Section 6A(2) of the [Valuation Act] was introduced by the Valuation of Land and Local Government (Amendment) Act 1959 (NSW) (1959 Act). The principal purpose of the provision, as Tobias JA explained in Commonwealth Custodial Services Ltd v Valuer-General [[2007] NSWCA 365; [(2007)] 156 LGERA 186 at [46]-[57]], is to ensure that land value should be determined having regard to the highest and best use of the land, including its use at the date to which the valuation relates. Section 6A(2) provides… … [68] The Valuer-General is required to give notice of each valuation of land to specified persons, including the owner of the freehold estate on the land. A person to whom the Valuer-General has given notice may lodge a written objection to the valuation. Section 34(1) specifies the only grounds on which objection may be taken under the [Valuation Act] to a valuation…. [69] The Valuer-General is required to consider an objection that has been duly made and either allow or disallow it. If the objection is disallowed in whole or in part, the Valuer-General must give reasons for doing so. [70] A person entitled to object to a valuation may appeal to the [Land and Environment Court] if dissatisfied with the Valuer-General's determination of the objection. Section 40(1) of the [Valuation Act] provides that on appeal the [Land and Environment Court] may do any one or more of the following: (a) confirm or revoke the decision to which the appeal relates, (b) make a decision in place of the decision to which the appeal relates, (c) remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision. On an appeal, the appellant has the onus of proving the appellant's case." (Some citations and emphases omitted.) 1. In undertaking the statutory valuation task and determining land values for the Land at each base date, the Court needs to consider a notional sale, whereby the Land is being hypothetically purchased for its highest and best use. As explained by Campbell JA in Trust Company of Australia Ltd v the Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 ('Trust Company') at [32]: "There is no explicit recognition in the Act of the concept of "highest and best use". However it is well established that that concept is to be used for the purpose of ascertaining the land value under the Act: Spicer v Valuer-General (1963) 10 LGRA 319 at 320. Section 6A(1) requires the postulation of a notional sale. It has been accepted that this notional sale is one that is assumed to take place in a market, and that the seller would conclude the sale for the highest price it could obtain in that market. As well, if there is some use of the property that is more beneficial than its present use, it is assumed that the potential purchasers in the market would include at least one who was prepared to pay more for the land by reason of the land being able to be used in that more beneficial way. In this way, the concept of highest and best use comes to be applied through the notional sale that section 6A requires to occur." (Some emphases omitted.) 1. In Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444 ('Olefines') at [16]-[17], Basten JA indicated that the phrase "highest and best use" refers to "the most financially rewarding use permitted within the boundaries of applicable legal regulation". His Honour noted that the highest and best use is not prescribed by s 6A of the Valuation Act, but is chosen from the existing (continuing) use (subject to certain assumptions) or the uses permissible by the relevant zoning, through the statutory valuation task in accordance with s 6A of the Valuation Act. 2. In this way, the notional sale occurs between a hypothetical willing purchaser and a not unwilling vendor: Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 ('Spencer') at 432. This means that a hypothetical "bona-fide seller", cognisant of land value (based upon the land's potential use or continuing use) would not part with the land for less than it is worth. Summary of submissions 1. Although both parties accept that the Land is to be valued in accordance with the strictures of s 6A of the Valuation Act, the parties differ in respect of the application of this section and the resulting determination of land values. 2. An initial summary of the differing positions adopted by the parties in relation to contamination, town planning, and valuation issues, as well as the parties' contentions in relation to the highest and best use of the Land at the base dates, provides an appropriate background to consider the extensive evidence and submissions received by the Court about these matters. Contamination 1. The applicants submit that the material that would have been available to the hypothetical parties transacting the notional sale at each of the base dates, in particular, the contents of a "Baseline Subsurface Contamination Investigation Report" (dated 21 December 2007) commissioned by Woolworths Ltd in 2007, prepared by Geo-Logix Pty Ltd ('Geo-Logix Report') which considers earlier reports including: "Site Audit Report, Former Mobile Service Station, 287 Liverpool Road, Enfield, NSW" (prepared in 2005 by ENVIRON Australia Pty Ltd) and "Environmental Baseline Lease Condition, Former Mobil Service Station, 287 Liverpool Road, Enfield, NSW" (prepared in 2007 by Geo-Logix Pty Ltd), indicates a level of contamination, or at least the risk of a level of contamination, of the Land. The applicants submit that this needs to be taken into account when considering the highest and best use of the Land (which the applicants contend is the continuation of the use of the Land as a service station) and therefore the resulting determination of land values. 2. Although the Valuer-General concedes that, if as a matter of fact the Land was contaminated at each of the base dates, this would be required to be taken into account in the resulting determination of land values, the Valuer-General submits that the applicants have not discharged their onus of proving this to be the case. The Valuer-General submits that the evidence of Mr McKay and Mr Henderson, regarding the material available at the base dates in relation to contamination of the Land, indicates that the Land was not significantly contaminated, if at all, at the base dates. Accordingly, the extent of contamination of the Land at the base dates was likely minimal. The Valuer-General further submits that the mere risk of contamination is insufficient to discharge the applicants' onus. Highest and best use of the Land 1. The applicants submit, with reference to the assumptions in s 6A(2) of the Valuation Act, that the highest and best use of the Land at the base dates is for a continuing use as a service station. The applicants reject the Valuer-General's position that the highest and best use of the Land at the base dates is as a mixed-use development, due to the high costs involved in redeveloping the Land given what the applicants contend is the level of contamination, or risk of the level of contamination (in the circumstances of the Land's use as a service station) and also the limits on achievable floor space in a mixed-use development, as discussed below. 2. The applicants submit that any valuation based on a proposal to redevelop the Land for a mixed-use development must take into account investigation and remediation obligations related to contamination under State Environmental Planning Policy No 55—Remediation of Land ('SEPP 55') (which applies by virtue of the Land's current use as a service station), and that the cost of remediation would be so significant (within the range of $2,000,000 to $7,000,000 dollars) that this precludes a mixed-use development being the highest and best use of the Land. In contrast, the applicants submit that the continuing use of the Land as a service station avoids triggering significant remediation costs associated with a change of use. 3. The Valuer-General submits that the applicants erroneously assume that, in undertaking the statutory valuation task under s 6A of the Valuation Act, the valuer can, and should, consider the history of the use of the Land as a service station when assessing the contamination of the Land, or risk of contamination of the Land, and the likely cost of remediation due to contamination of the Land. The Valuer-General submits that for the purposes of valuation, it must be assumed that the service station does not exist and has never been built. In the alternative, even if such matters could be taken into account, the Valuer-General submits that the hypothetical parties transacting the notional sale would, on the material available, conclude either that the Land was not significantly contaminated, or otherwise, that there was no risk of significant contamination. Accordingly, the Valuer-General submits that the costs of any remediation as a result of contamination would be low and within the range nominated by Mr McKay. As a result, the highest and best use of the Land at the base dates would be as a mixed-use development. Town planning 1. Notwithstanding their primary position regarding the highest and best use of the Land outlined above, the applicants submit that, having regard to the town planning evidence in relation to the likely gross floor space yield that could be achieved (the 'achievable floor space') in a mixed-use development on the Land, the achievable floor space would be limited to 2,818m². This is because the applicants contend that the planning controls applicable to a mixed use development within the two primary applicable planning instruments (being the NSW Department of Planning and Environment, Apartment Design Guide ('ADG') within State Environmental Planning Policy No 65—Design Quality of Residential Apartment Development ('SEPP 65') and Burwood Development Control Plan 2013 ('DCP')), are not inconsistent (and therefore would not trigger a primacy clause in favour of the ADG which would allow for greater achievable floor space). As a result, the planning controls within the DCP would operate to impose a 45-degree height plane on the building envelope for a mixed-use development (which represents a material reduction in achievable floor space and thus land values). The applicants characterise this as a further reason why a mixed-use development would not be the highest and best use of the Land at the base dates. 2. In contrast, the Valuer-General submits that where both the ADG and the DCP contain discrete planning controls that establish requirements in relation to matters such as separation distances between properties, there is inconsistency between the planning controls. The operation of a primacy clause in favour of the ADG means the less restrictive planning controls in the ADG prevail. This provides for greater achievable floor space of 3,529m² in a mixed-use development, thereby making the Land more valuable. Valuation 1. On the issue of the appropriate valuation, apart from the contentions about the highest and best use of the Land noted above, the applicants submit that the hypothetical development approach propounded by Mr Jackson ought to be preferred as a valuation methodology to the direct comparison approach adopted by Mr Hill. 2. The applicants criticise the direct comparison approach, first, because there are no truly comparable sales; and second, because of the nature and use of a number of inputs and adjustments to the sales Mr Hill identified as comparable. Moreover, the applicants contend that Mr Jackson's use of the hypothetical development approach takes into account the available evidence regarding contamination, while Mr Hill's direct comparison approach "radically underestimates" the effect of any contamination. In contrast, the Valuer-General submits that the direct comparison approach is the conventional valuation technique that should be preferred, and the applicants' use of the hypothetical development approach is flawed and suspect. Further, the Valuer-General criticises the number of inputs and deductions used in the hypothetical development approach and suggests that Mr Jackson has failed to provide reasoning supporting his chosen inputs and deductions. Contamination Evidence and submissions Mr Henderson and Mr Nakhoul's evidence 1. The applicants rely upon the evidence of Mr Henderson, an environmental scientist with experience in the assessment and remediation of contaminated sites; and Mr Nakhoul, a chemical engineer with experience in the preparation of cost estimates for environmental investigations and remediation. Mr Henderson provided evidence, based on the assumption that the improvements (other than land improvements) were not made, in relation to the risks and likely costs of a proposed mixed-use development (identified as residential development, shop top development, and commercial development); and development for the purpose of a service station. Mr Nakhoul considered the risks and likely costs identified by Mr Henderson and provided evidence of the quantum of costs. There was a significant degree of duplication and overlap in their respective reports. 2. Mr Henderson opined that if there was to be a change in use of the Land (for example, by undertaking a mixed-use development), the unimproved land could not be considered suitable until it was "investigated, remediated, validated and audited" as a result of the "potential risk of harm" to future users due to petroleum hydrocarbon storage and/or potential petroleum contamination of the Land. Mr Henderson adopted the cost estimates provided by Mr Nakhoul when considering the likely costs to make the Land suitable for undertaking a mixed-use development. 3. In relation to the continuing use of the Land as a service station, Mr Henderson analysed two scenarios: first, a scenario in which the Land is suitable without remediation where Mr Henderson provided costs of approximately $42,000 for ongoing monitoring; and second, a scenario in which remediation is required where Mr Henderson adopted the cost estimates provided by Mr Nakhoul for remediation where this was required. 4. In relation to the likely cost of remediation involved in making the Land suitable for a change in use, Mr Nakhoul, having considered and adopted Mr Henderson's assessment of the extent and risk of contamination of the Land, provided a range of costs (differentiated as "low range", "likely cost", and "high range cost"). Mr Nakhoul opined that the costs involved in investigation and remediation to undertake a mixed-use development could be in the range of $2,929,000 to $7,976,000. By comparison, Mr Nakhoul opined that the continuing use of the Land as a service station may involve costs (of investigation and remediation) of $42,000 if the Land was suitable for continued use as a service station and between $440,000 to $1,900,000 in addition to ongoing monitoring costs if the Land was unsuitable for continued use as a service station. Mr McKay's evidence 1. The Valuer-General relies upon the evidence of Mr McKay, an environmental scientist with expertise in contaminated site assessment and remediation, who was retained to consider "…the contamination on the [Land], if any, and the cost to remediate any such contamination having regard to the development proposed by [the applicants]". 2. Mr McKay opined that contamination of the Land is likely to be minimal as the Land was remediated in 2005; was suitable for residential use in 2007; and there is no evidence that the current use has caused contamination of the Land. Mr McKay came to this conclusion for the following reasons: 1. Although the Land had been used as a service station since the 1950s, the summary in the Geo-Logix Report of a site audit report being the "ENVIRON (2005) Site Audit Report, Former Mobil Service Station, 287 Liverpool Road, Enfield, ENVIRON Australia Pty Ltd, 2005" ('2005 SAR') indicated that the site auditor determined that the Land was suitable for the purpose of residential use with accessible soil, subject to compliance with an environmental management plan; 2. The regulatory environment that the Land has operated in since 2007 requires operators to take a proactive approach to managing environmental risk. Under the Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2008 (NSW) (the 'UPSS Regulation'), there is a requirement to monitor the surrounding groundwater every six months for contamination and to utilise a double skinned petroleum storage tank design which provides secondary containment for the UPSS; 3. Under s 60 of the Contaminated Land Management Act 1997 (NSW) ('CLM Act') there is a requirement to notify the NSW Environment Protection Authority ('EPA') if significant contamination has been identified. As there has been no such notification to the EPA, it is likely that no significant contamination has been detected; and 4. At each of the base dates, the Land was not individually listed as contaminated on the public registers maintained by the EPA that identify contaminated land. 1. Mr McKay concluded that the "information reviewed" (including the Geo-Logix Report, the 2005 SAR, and the evidence of the applicants' contamination experts) was "lacking in specific information on the contamination status of the [Land] and did not demonstrate a need for remediation for either the ongoing current use or for a commercial and/or residential development…". As a result, Mr McKay came to the following two conclusions about the use of the Land. 2. First, Mr McKay concluded that where the current use of the Land as a service station is continued there is no "demonstrated reason" why remediation would be required, and thus there would be no remediation costs (where he characterised ongoing monitoring as a general operational cost, not a remediation cost). 3. Second, Mr McKay noted that where the use of the Land is changed to residential development or mixed-use development, a process of investigation, remediation planning and validation would need to be undertaken. Any contamination of the Land would need to be considered during the development application process, however Mr McKay opined that the extent of contamination of the Land is "unlikely to be significant". 4. Mr McKay provided his estimate of remediation costs: first, through a critique of the costs nominated by Mr Nakhoul; and second, through his own recommended remediation cost estimates. Mr McKay adopted three potential cost scenarios at each of the base dates: first, where no contaminated soil is found (where the material demonstrates that remediation is not required, this cost would be considered a development cost during redevelopment) – approximately $240,000 (being 'scenario A'); second, where it is assumed there is some contaminated soil (up to 640m³) around the underground petroleum storage system – approximately $360,000 (being 'scenario B'); and third, where that contaminated soil (up to 640m³) is required to be disposed of offsite and virgin excavated natural material ('VENM') is required to be imported to replace soil and tank voids (which is considered by Mr McKay to be unlikely) – approximately $625,000 (being 'scenario C'). Joint reports 1. In their joint report which related to "site condition, risk of contamination and the need for remediation" dated 19 December 2019, Mr McKay and Mr Henderson agreed that: 1. Service station infrastructure has the potential to cause contamination of the Land until the UPSS is decommissioned; 2. That there is the potential for contamination migration at the Land within groundwater and/or soil vapour; 3. There is insufficient data available to provide "full knowledge" of the extent of contamination of the Land in relation to both the UPSS and other potential sources of contamination such as fill on the Land; 4. A change in use of the Land would require assessment of the potential for contamination with the framework for assessment provided in SEPP 55 and would involve a detailed site investigation; preparation of a remediation action plan; remediation work; site validation and most likely a site audit; and 5. The instructions provided to Mr Henderson and Mr McKay (their "briefs") were different and this had a bearing on their assessment of the risk of contamination and their opinion of what constitutes remediation, and consequentially, costs of remediating any contamination. 1. In their joint report, Mr Henderson and Mr McKay disagreed on: first, the extent to which the Geo-Logix Report could be relied upon and the extent to which the Geo-Logix Report represents the condition of the Land in 2007; second, the risk of contamination arising from the current UPSS; third, the risk of contamination presented by fill on the Land; fourth, the extent of any remediation required and whether bioremediation would be an option; and fifth, whether monitoring and maintenance for continuing use of the Land as a service station constitutes remediation. 2. Mr Henderson did not consider that the Geo-Logix Report was persuasive for the following reasons: first, the investigation was provided as a baseline and was not expressed to be a comprehensive environmental site assessment to assess potential for contamination (as required by the EPA, Contaminated Sites: Sampling Design Guidelines (1995)); second, while the Geo-Logix Report "summarised" the 2005 SAR which in turn referred to documents produced by IT Environmental (being Phase I and II Environmental Site Assessments ('ESAs'); a Post Phase II ESA; a Remedial Action Plan; Tank Excavation Assessment; and an Environmental Management Plan between 2003 and 2005), Mr Henderson did not have access to those reports and he could not verify the accuracy of the summary; third, only "petroleum hydrocarbon contaminants" (total petroleum hydrocarbons (TPH), benzene, toluene, ethylbenzene, and xylene (BTEX), polycyclic aromatic hydrocarbons (PAHs), volatile organic compounds (VOCs) and heavy metals) were investigated in circumstances where other contaminants (pesticides, polychlorinated biphenyls (PCBs) or asbestos) could exist on the Land but were not investigated; fourth, other potential sources of contamination such as "fill from unknown sources", were not targeted; fifth, as the Geo-Logix Report (and investigations referred to therein) were undertaken in 2007, the condition of the Land may have changed since then; sixth, the guideline criteria used in the analysis considered commercial/industrial land uses rather than residential land use; and seventh, the guidelines and regulations applicable to the Land have changed since 2007. 3. In contrast, Mr McKay considered that the Geo-Logix Report is persuasive and useful in understanding the condition of the Land in 2007. Mr McKay accepted that while the Geo-Logix Report is not a detailed site investigation and may have been limited to contaminants related to the UPSS, the 2005 SAR (which is a formal report of an audit) must have complied with the relevant guidelines at the time, and both the 2005 SAR and the "validation report" by IT Environmental were required to consider all potential contaminating activities, contaminants of concern, and pathways for exposure (including, for example, risk presented by fill) on the Land. Mr McKay came to the view that all contamination that "could" be present on the Land at the base dates "must have been imported during the construction of the current service station in 2007, or have arisen as a result of service station activities conducted between 2007 and the base dates". 4. In relation to the current use of the Land, Mr Henderson opined that the presence of the UPSS at the base dates presents an ongoing risk for contamination, as even UPSSs built with modern materials and equipped with monitoring processes can experience issues. Mr McKay opined that, while any UPSS represents a potential risk to the environment, the available evidence indicates that the current UPSS is not leaking and does not present an actual contamination concern. 5. It was agreed by Mr Henderson and Mr McKay that the Geo-Logix Report indicated there was between 1.5m and 2.5m of fill on the Land. Mr Henderson opined that there is a contamination "risk" arising from an average of 2m of fill placed across the Land; that asbestos may be present in the fill; and further, that natural soil could be contaminated by current and historical activities on the Land. Mr McKay opined that the risk of contamination of fill on the Land is relatively low and unlikely to be significantly different to risks expected on any development site in the inner west of Sydney. He provided a number of reasons for this opinion, including the results of the Geo-Logix Report and the 2005 SAR; the regulatory framework governing the importation of fill since 2005; and that the presence of fill on land in older areas of Sydney is not unexpected and a developer seeking to excavate for a basement would expect to classify and dispose of soil. Mr McKay explained that the mere presence of fill itself does not mean it must be contaminated (by reference to the CLM Act). 6. In the above circumstances, Mr Henderson and Mr McKay did not agree on the extent of the "clean-up" or the remediation that may be required. Mr Henderson opined that remediation costs for soil and groundwater need to be considered, and that historical and/or current sources of contamination may have an impact on the extent of contamination, waste classification, and the cost of remediation which would be required to address such a concern. Mr McKay considered that the Land only needs to be managed such that human health and the environment are protected and therefore the costs associated with waste classification and lawful disposal of fill is all that would be required. He further considered that a developer would have an option to design a building so that it does not require the removal of fill material. 7. Finally, Mr McKay and Mr Henderson disagreed as to whether bioremediation (which includes excavating contaminated soil and allowing the contaminant levels to degrade through oxygenation, by rotating the soil, aerating the soil or supplementing the soil with chemical compounds to aide contaminant breakdown) and onsite remediation of contamination was an option in respect of remediation of the Land. Mr Henderson opined that bioremediation is not likely to be adopted as it requires time to be undertaken successfully and as such would not be economically practical. Mr McKay opined that remediation should not be constrained to a "dig and dump" method, as this delivers an "improved site" that facilitates development rather than simply a remediated site. He considered that in certain circumstances, bioremediation remains a valid and frequently used technology. 8. Mr McKay and Mr Henderson agreed that certain regulatory activities must be undertaken for the continuing use of the Land as a service station, but they disagreed as to whether this constitutes a remediation cost or an operational cost. Mr Henderson considered that these activities are remediation as they are part of a contamination assessment, while Mr McKay considered that the monitoring and maintenance activities are an operational cost as they would otherwise be required under the Protection of the Environment Operations Act 1997 (NSW) ('POEO Act') in relation to continuing storage and distribution of fuel on the Land. 9. In their joint report in relation to the likely cost of remediation dated 19 December 2019, Mr Nakhoul and Mr McKay agreed, in the same terms as Mr Henderson and Mr McKay agreed in their joint report, that service station infrastructure had the potential to cause contamination; that there was insufficient data available to provide "full knowledge" of contamination of the Land; that a change in use of the Land would require assessment of the potential for contamination; and their instructions (their "briefs") were different. 10. Mr Nakhoul and Mr McKay disagreed, first, as to what, if any, remediation may be required; and second, as to the cost estimate for that remediation (largely as a result of differences in their briefs, perception of risk and liability, and definition of what actually constitutes remediation). 11. Mr Nakhoul opined that remediation includes all works necessary to comply with the requirements of the CLM Act, the POEO Act, SEPP 55 and any development approval by Burwood Council for any future development and that this includes waste classification and the removal of material from the Land. He noted that the level and extent of contamination would impact the cost of any remediation required to be undertaken (for example, if natural soil is impacted by residual contamination this would incur additional costs). 12. Mr McKay opined that remediation is what is required to address any contamination of the Land such that human health and the environment are protected, and that costs associated with waste classification and removal of material are properly considered a development cost. In this manner he excluded remediation "ancillary to … development", noting that a developer has the option to design their development so that it does not require removal of material from the Land. 13. Mr Nakhoul and Mr McKay identified the key differences in their cost estimates for remediation as follows: 1. Mr McKay excluded waste classification and disposal costs for bulk earthworks as a development cost; while Mr Nakhoul included them; 2. Mr McKay considered bioremediation to be a relevant technology; whereas Mr Nakhoul considered it to be economically impractical; 3. Mr McKay limited the scope of soil importation to tank voids and limited soil removal; while Mr Nakhoul extended the scope of soil importation to a worst-case scenario of replacing contaminated soil across the Land to a depth of six metres; 4. In a similar manner, Mr McKay excluded costs associated with disposal of soil that is not VENM; while Mr Nakhoul accounted for the potential for natural material on the Land not being classified as VENM and requiring disposal on that basis; 5. Mr Nakhoul considered waste classification across the Land; whereas Mr McKay limited consideration to specific soil in the footprint of the UPSS; 6. Mr McKay did not provide for the cost of remediating groundwater contamination on the basis that the evidence does not suggest groundwater contamination has occurred; whereas Mr Nakhoul provided for the cost of remediating groundwater contamination from the UPSS; 7. Mr McKay considered tank integrity testing and UPSS monitoring to be operational costs; whereas Mr Nakhoul included these costs in remediation costs. Submissions 1. The Valuer-General submits that Mr McKay's approach to the issue of contamination of the Land is to be preferred. In particular, it is the Valuer-General's position that the evidence demonstrates that the extent of contamination of the Land is likely minimal, and the hypothetical parties transacting the notional sale would consider only "limited remediation works" would be necessary. 2. The Valuer-General criticises Mr Nakhoul's estimated remediation costs as speculative, lacking in foundation and inflated, given the lack of material indicating that the Land was contaminated at the base dates. The Valuer-General specifically suggests that the assumption in Mr Nakhoul's costs that soil is contaminated across the whole of the Land to a depth of between two to six metres and would need to be removed from the Land and disposed of offsite, is unrealistic and unjustified given the material regarding known or potential contamination. The Valuer-General also takes issue with the costs assigned by Mr Nakhoul to groundwater remediation, in circumstances where Mr Nakhoul's firm has been undertaking groundwater monitoring at the Land and has not found any evidence of groundwater contamination. 3. The Valuer-General submits that the Court must assume that the hypothetical "bona-fide seller", as one of the hypothetical parties transacting the notional sale, would not part with the Land for less than it is worth, and the evidence demonstrates that a hypothetical "bona-fide seller" would not sell the Land for a value reflecting anything greater than a minor risk that the Land is contaminated and therefore would require very limited remediation. 4. In contrast, the applicants submit that the evidence does not support the assertion that the Land was not contaminated or was only minimally contaminated at the base dates. Rather, the applicants submit that, in accordance with Mr Henderson and Mr Nakhoul's evidence, the condition of the Land is such that it is likely that significant costs would be incurred in investigating and remediating contamination of the Land. 5. The applicants make the following criticisms of Mr McKay's evidence: 1. Mr McKay's instructions focused on the issue of contamination as something to be determined as an objective fact, rather than a source of information for valuers to take into account in terms of risk and likely remediation costs; 2. His approach was incorrect because it equated an asserted absence of proof of contamination with an absence of any "risk" of contamination, and ignored that an important consideration in the minds of the hypothetical parties transacting the notional sale of the Land at the base dates would have been the potential costs involved in redevelopment of the Land having regard to the Land's use as a service station; and 3. It was based upon limited material which was apt to distort the appropriate appreciation of any risk, noting that some primary material was not available; material relied upon was produced for a specific limited purpose; conclusions were contingent on compliance with environmental management plans and subsequent material had identified uncertainties with earlier material. 1. In these circumstances, the applicants submit that the Court would not accept Mr McKay's opinion: first, because the Geo-Logix Report identified several aspects of the Land that involved soil and groundwater contamination; second, Mr McKay's reliance on the summary of the 2005 SAR was misplaced; and third, in the contamination experts' joint report, Mr McKay confirmed his agreement that service station infrastructure has "a potential to cause site contamination" which could affect groundwater and agreed with Mr Henderson that the historical material "does not provide full knowledge of the extent of contamination on the site" and accepted that further investigation might uncover unknown contamination. The applicants also criticise Mr McKay's delineation between remediation costs and development costs. Consideration Scope of consideration 1. In simple terms, what the Court is considering in relation to contamination, as an aspect of the determination of the land values, is whether the material available to the hypothetical parties transacting the notional sale (pursuant to and in accordance with the requirements of s 6A of the Valuation Act) at each of the base dates indicated that the Land was contaminated and, if so, the likely cost of remediation of the Land that would be considered by the hypothetical parties transacting the notional sale. In this way, the presence and extent of contamination and the consequent cost of remediation of the Land, if any, impacts on the land values of the Land. 2. In considering this, there is a question of nicety as to what material is to be taken into account. In terms of evidence before the Court, although there was a sustained submission by the Valuer-General that the fact there was, and had been, a service station on the Land could not be taken into account, there was no discrete objection taken by the Valuer-General to the admission of material relating to, or prepared as a result of, earlier service station operations on the Land (in particular in relation to the Geo-Logix Report and its summary of the 2005 SAR) as evidence on this ground. In this circumstance, I have proceeded on the basis that to the extent that this evidence provides insight into the condition of the Land – which has formed the basis of the detailed expert evidence in relation to contamination (and consequential evidence in relation to cost of remediation) – it was material available to the hypothetical parties transacting the notional sale. Despite this, my factual findings in relation to contamination of the Land would likely remain the same whether or not the Geo-Logix Report was available, given the other evidence available, such as the fact that there had been no notification to the EPA of contamination of the Land. 3. There were also distinctions made in the evidence of the contamination experts and the submissions made by the parties between whether (and how) the hypothetical parties transacting the notional sale would consider: 1. The presence of contamination of the Land and the likelihood of, or risk of, the presence of contamination of the Land; and 2. The cost of remediation of the Land, and the cost to be attributed to the likelihood of, or risk of, remediation of the Land. 1. As outlined in Spencer at 441, the Court must suppose that both the hypothetical parties would be "perfectly acquainted with the land, and cognizant of all circumstances which might affect its value … including … the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property." This provides for a breadth and depth of consideration by the hypothetical parties transacting the notional sale which would extend to consideration of risk. As a result, I accept that, prima facie, evidence of actual contamination and the likelihood of, or risk of, contamination of the Land can be considered, as well as the cost of remediation and the cost of the likelihood of, or risk of, remediation of the Land. 2. However, this position is affected by the statutory assumptions in s 6A of the Valuation Act. While s 6A of the Valuation Act is discussed in detail in the assessment of the highest and best use of the Land below, I note the following in relation to the evidence of contamination. I accept that, pursuant to s 6A(1) of the Valuation Act, when valuing the Land on the basis that the highest and best use of the Land is assumed to be a mixed-use development, it is assumed that improvements on the Land had not been made. Therefore, the fact that there was, and had been, a service station on the Land must be disregarded. As a result, I do not consider the risk of contamination arising due to the use of the Land as a service station – rather, my consideration of risk is limited to that risk which arises as a result of the evidence of the condition of the Land. 3. In contrast, when valuing the Land on the basis that the highest and best use of the Land is its continuing use as a service station, pursuant to s 6A(2) of the Valuation Act, it is assumed that improvements may be continued or made to facilitate this continuing use. In these circumstances, the fact there was, and had been a service station on the Land can be considered. As a result, I consider the risk of contamination arising due to the use of the Land as a service station is to be considered. 4. However, the materiality of my findings on these distinctions is lessened by my factual findings in relation to contamination of the Land, to which I now turn. Result of consideration 1. For the reasons that follow, and to an extent based upon my acceptance of the submissions made on behalf of the Valuer-General, and the reasoning and the evidence of Mr McKay summarised above, I am satisfied that the evidence before the Court demonstrates that at each of the base dates, the material available to the hypothetical parties transacting the notional sale indicates the existence and extent of contamination was likely to be minimal, and the cost of remediation was likely to be relatively low. This finding remains consistent whether or not I have regard to the evidence that a service station was, and had been, on the Land, in relation to the highest and best use of the Land. 2. As the contamination experts called by the parties note, the "data" or information available about the extent of contamination does not provide "full knowledge" of the existence and extent of contamination at the base dates. However, I consider there was sufficient material that would have been available to, and informed, the hypothetical parties transacting the notional sale as to the condition of the Land. This material includes the following facts: 1. The 2005 SAR was prepared to provide an independent review on land use suitability and concluded that the Land was suitable for the purposes of "residential" land use albeit subject to compliance with the environmental management plan prepared by IT Environmental; 2. The Geo-Logix Report, albeit being a baseline subsurface contamination investigation of soil and groundwater for specific contaminants beneath the service station, indicates that no significant contamination was identified in 2007 (for the specific contaminants investigated) although levels of methyl tertiary butyl ether were present in groundwater; 3. Actual monitoring had been undertaken of groundwater with no evidence being provided of contamination; 4. There had been no notification to the EPA of contamination of the Land pursuant to s 60 of the CLM Act (and it follows that I accept the Valuer-General's submission, and find, accepting Mr McKay's evidence, that this indicates it is likely that no significant contamination had been detected); 5. At each of the base dates, the Land was not individually listed as contaminated on the public registers maintained by the EPA identifying contaminated land; 6. There was a 1.5m to 2.5m layer of fill on the Land, where the presence of fill imports a risk of contamination (including from heavy metals (including copper, lead, zinc, cadmium, chromium, nickel, arsenic and mercury), total recoverable hydrocarbons, benzene, toluene, ethylbenzene, xylene and naphthalene, PAHs, pesticides, PCBs and asbestos) (as was agreed by Mr Nakhoul and Mr McKay); and 7. The importation of any fill onto the Land since 2005 would have been governed by a regulatory framework, which lowers but does not preclude the risk of contaminated fill being present on the Land (in this respect, I accept the evidence of Mr McKay that any contamination risk due to fill would be of a similar profile to any other development site in the inner west of Sydney, and I accept his opinion that a developer seeking to excavate a basement would expect to classify and dispose of soil). 1. To the extent that the Court would have regard to the evidence that a service station was, and had been, on the Land, the following facts are also relevant: the Land was remediated and validated in 2005 to address its historical use as a service station; the current service station on the Land benefits from secondary containment mechanisms for the UPSS and is operating in a proactive regulatory environment that is designed to manage environmental risk; and that the regulatory environment requires testing to be undertaken, which has not indicated that the present UPSS is leaking. Considering the implications of these facts, I accept the opinion of Mr McKay that the evidence indicates contamination of the Land is likely to be minimal. 2. In addition to my findings above, I make the following specific comments about the material available to the hypothetical parties transacting the notional sale and the weight to be attributed thereto, where this was the subject of disagreement between the parties. 3. I accept that the Geo-Logix Report (in summarising the 2005 SAR) recorded that the site auditor undertaking the 2005 SAR considered the potential risks posed by residual conditions on the Land, and made a number of findings about the extent and existence of contaminants on the Land. I further accept that the Geo-Logix Report was undertaken for a specific, somewhat limited, purpose which impacted the investigations undertaken. I acknowledge and accept that, as noted by the applicants, some concern was expressed by the site auditor in relation to the direction of groundwater flow and the placement of groundwater monitoring wells in relation to former potential sources of contamination. However, I do not consider that these points weaken the other matters dealt with in the Geo-Logix Report and the 2005 SAR. 4. I find that the existence of the 2005 SAR, and its conclusion (as noted in the Geo-Logix Report) that in 2005 the Land was suitable for residential use, is likely to be, and would be seen to be, reliable information about the condition of the Land (even in circumstances where the 2005 SAR itself may not be discretely available). In this respect, Mr McKay and Mr Henderson accepted in their concurrent oral evidence that the relevant guidelines in 2005 required a site auditor to certify that the validation then undertaken complied with the then applicable EPA guidelines. Mr McKay also gave evidence that these guidelines were the "NSW EPA (1994) Guidelines for Assessing Service Station Sites, Contaminated Sites Section, Hazardous Substances Branch, NSW Environmental Protection Authority, 1994". In these circumstances, I consider that the material suggests that contamination of the Land was likely to be minimal. 5. Mr McKay opined that where there is no evidence of contamination of the Land and the risk of contamination of the Land is likely to be minimal. I consider this opinion to be persuasive. I am conscious that the applicants criticise Mr McKay's approach on the basis that it incorrectly equated an asserted absence of proof of actual contamination with an absence of any risk of contamination. I do not accept the applicants' position, as the absence of evidence of contamination where testing (albeit limited testing) has been undertaken informs the assessment of risk, and indicates that the risk or likelihood of contamination being present is minimal. 6. For the reasons above, I find that the hypothetical parties transacting the notional sale, properly advised (and "perfectly acquainted"), would consider the cost of the risk of contamination of the Land, but would conclude that this cost would be minimal. Given this, I do not accept the applicants' submissions that the likely remediation and development costs for a mixed-use development of the Land in the order of $2,929,000 to $7,976,000 would arise. In particular, I note: 1. This includes costs attributed to the removal of service station infrastructure and the UPSS, and the risk of contamination arising from the service station and UPSS, in circumstances where for the purposes of the valuations it must be assumed that improvements had not been made (noting that in oral submissions counsel for the applicants properly indicated that the applicants did not submit that costs attributed to the removal of improvements should be adopted by the Court); 2. The costs involved the suggested removal and safe disposal of soil to a depth of some metres (at a cost ranging from $1,844,680 to $5,803,321) – where I accept the Valuer-General's characterisation of this amount of soil as unjustified, considering the evidence about the condition of the Land; 3. Similarly, the costs involved the disposal of a significant amount of soil that cannot be classified as VENM – where I also consider these costs to be unsupported by the evidence about the condition of the Land; 4. The costs reflected the assumption, based on Mr Nakhoul's experience with service station sites, that the groundwater is contaminated and would require remediation (at a cost of $250,000 to $1,500,000), however again it must be assumed that improvements had not been made; and 5. In justifying some of his remediation costs, Mr Nakhoul indicated that he "need[ed] to present to the prospective purchaser the possibility of a worst case scenario". I do not consider that this represents an appropriate approach to the consideration of the risk of contamination in circumstances where the hypothetical parties transacting the notional sale includes the hypothetical "bona-fide seller" who would not part with the Land for less than it is worth, that is, would not be guided by the "worst case scenario". 1. As such, I consider that the position adopted by the hypothetical parties transacting the notional sale on the likely costs, and risk of the cost, to remediate the Land for a mixed-use development, would reflect the following: 1. The cost of an environmental site investigation; remediation action plan; site validation; site audit; and quantitative risk assessment. Both Mr McKay and Mr Nakhoul identified these costs as relevant, and there was some overlap in their opinions of the appropriate quantum of costs. Taking into consideration Mr McKay and Mr Nakhoul's views, I consider the amount of $135,000 would be attributed to these costs; 2. A cost attributable to the likely low remediation costs arising from the likely minimal existence and extent of contamination of the Land, based on my findings above. Based on my adoption of Mr McKay's evidence about contaminated fill, I consider that the hypothetical parties transacting the notional sale would cost for a low risk, but not no risk, of excavation and disposal of contaminated fill being required. In this respect, I consider the amount of $180,000 would be attributed to the risk of this cost; 3. A corollary cost attributable to waste classification associated with the excavation and disposal of contaminated fill. Mr McKay and Mr Nakhoul provided similar evidence in relation to prices for waste classification. Utilising these prices and assessing the risk of contaminated fill I consider the amount of $15,000 would be attributed to this cost. 1. I consider that the position of the hypothetical parties transacting the notional sale would exclude costs associated with the removal and remediation of the existing UPSS and service station infrastructure on the Land, as well as groundwater remediation costs, applying the assumption that the improvements triggering these costs had not been made. Doing the best I can on the evidence, I find the resulting amount of $330,000 would be attributed to contamination. I note that this amount is similar to, but constituted differently to, Mr McKay's scenario B. 2. In adopting this likely cost of remediation, I have considered the dispute between the parties in relation to the scope of remediation, the use of bioremediation and the delineation between "remediation" and "development" costs. Given my findings in relation to the extent and risk of contamination, I am comfortable that the impact of these disagreements would not be material. 3. However, I note for completeness that I have adopted Mr McKay's approach to the scope of remediation, in making an allowance directed at facilitating the ongoing use or the development of the Land (that is remediating to an acceptable level, not restoration to virgin condition). This is because I accept that the hypothetical parties transacting the notional sale would attribute costs in the context of facilitating the highest and best use of the Land, rather than seeking full restoration of the Land. 4. For the same reason, I reject Mr McKay's strict delineation between "remediation" and "development" costs in favour of Mr Nakhoul's more contextual approach, which I consider better reflects the approach of the hypothetical parties transacting the notional sale. In this way, whether or not remediation work is "ancillary" to a development is secondary to the primary question of whether the remediation work would be anticipated and costed by the hypothetical parties when transacting the notional sale on the basis of the highest and best use of the Land. 5. This approach also means that I do not take into account the use of bioremediation as a means of lowering the cost of remediation. Where the hypothetical parties are transacting the notional sale, they would be guided by the remediation required for the highest and best use of the Land, whether that be facilitating the ongoing use or the development of the Land. In this context, I do not consider it reasonable to adopt a lower likely cost of remediation based on the use of bioremediation. 6. Although not determinative given my ultimate findings in relation to the highest and best use set out below, when considering the continuing use of the Land as a service station, I do not accept the applicants' submission that likely investigation and remediation costs in the order of $440,000 to $1,900,000 may arise for the continuing use of the Land as a service station (if the Land was not suitable for continued use as a service station). I note that this amount includes costs attributed to the removal, disposal and replacement of "tanks" and groundwater remediation (in circumstances where it is assumed that service station improvements may be continued and therefore the continuing use does not trigger remediation costs such as this). 7. I accept that were the highest and best use of the Land is as a service station, the hypothetical parties transacting the notional sale would give more weight to the risk of contamination as a result of the use of the Land (for example, the contamination experts agree that the presence of the UPSS on the Land constitutes a risk of contamination, although they differ as to the magnitude of this risk). Importantly however, the hypothetical parties transacting the notional sale would have access to material relating to the operation of the service station, which would inform their position on risk. Having reviewed the evidence of this material, I consider that they would consider the existence and extent of contamination was likely to be minimal. I further note that where the highest and best use of the Land is continuing its use as a service station, it is common ground between the parties that the obligations in SEPP 55 are not triggered. 8. Finally, I accept the evidence of Mr McKay that while there is likely to be ongoing monitoring for contamination required if the Land continues its use as a service station, this constitutes an ongoing operation cost. I do not consider this to be a cost of remediation that would be factored in by the hypothetical parties transacting the notional sale of the Land. Town planning Evidence and submissions Mr Smith and Mr Haskew's evidence 1. The determination of the achievable floor space in a mixed-use development has consequences for the valuations of the Land. This issue involves the interaction between planning controls in the DCP and the ADG. Although extensive town planning evidence was called, the applicable planning controls were not in dispute between the parties, and the sole disagreement between the town planning experts relates to interpretation and the likely application by Burwood Council of one or both of these planning controls and the resulting achievable floor space. 2. The applicants rely on the evidence of Mr Smith, an architect and urban designer, who provided his opinion on the development potential of the Land and the urban design most likely achievable for a mixed-use development on the Land. The Valuer-General relies on the evidence of Mr Haskew, a town planner, who provided his opinion on town planning aspects of the Land having regard to the applicants' "proposed development". The town planning experts considered two building envelopes prepared by Mr Smith (one based on the operation of both the DCP and the ADG planning controls, and one based solely on the operation of the ADG planning controls). I note that in Mr Haskew's opinion, both the building envelopes prepared by Mr Smith understated the achievable floor space. 3. At the base dates, the Land was primarily zoned "B2 Local Centre" under the Burwood LEP and was part of the Enfield Local Centre under the DCP. The relevant planning control in the DCP is Control P3 (part of the Side and Rear Setbacks controls contained within cl 3.5.2) which provides that when a lot adjoins a residential zone containing a residential development, as is the case in relation to the Land, "buildings are not to exceed a 45 degree height plane projected over the site and commencing 1.8m above the rear or side boundary…". 4. At the base dates, the Land was also subject to planning controls within the ADG. The relevant control in the ADG is Objective 3F-1 which specifies (under the heading "Design criteria") minimum "separation distances from buildings to the side and rear boundaries". Under the heading "Design guidance", the ADG further provides that "[g]enerally one step in the built form as the height increases due to building separations is desirable. Additional steps should be careful not to cause a 'ziggurat' appearance". 5. In simple terms, the application of Control P3 in the DCP results in a more truncated building envelope (particularly at the upper levels of a development) in comparison to what would be allowable when a building envelope is solely regulated by Objective 3F-1 in the ADG. The difference between the town planning experts as to the application of the relevant planning controls results in a difference in achievable floor space, which then causes a difference in land values where a mixed-use development is determined to be the highest and best use of the Land. 6. The disagreement between the town planning experts only concerns the upper levels of a proposed mixed-use development on the Land, as it is agreed that up to 918m² of leasable retail/commercial space would be achievable on the ground floor level of a mixed-use development. 7. Mr Smith opined that taking into account the planning controls described above, the building envelope for a mixed-use development on the Land would need to comply with both Objective 3F-1 in the ADG and Control P3 in the DCP. He opined that any residential development above the retail/commercial level would be required to be set back 9m to the adjoining low-density residential uses. In these circumstances, Mr Smith identified that the achievable floor space for a mixed-use development on the Land at the base dates applying Objective 3F-1 in the ADG and Control P3 in the DCP would be 2,818m² (being the 'DCP-regulated building envelope'). 8. Conversely, Mr Haskew opined that the building envelope for a mixed-use development on the Land can disregard the more restrictive Control P3 in the DCP in favour of the planning controls in the ADG because Control P3 is in conflict with the ADG, and cl 6A in SEPP 65 gives primacy to the ADG over the DCP. As such, the application of the ADG planning controls means a larger achievable floor space ratio can be achieved by a mixed-use development on the Land, than would be achieved if Control P3 in the DCP was applied. Using Mr Smith's building envelopes, the achievable floor space if the ADG was applied would be 3,529m² (being the 'ADG-regulated building envelope'). 9. Clause 6A of SEPP 65 (under the heading "Development control plans cannot be inconsistent with Apartment Design Guide") provides that, in respect of certain matters identified in cl 6A(1) – including visual privacy; solar and daylight access; common circulation and spaces; apartment size and layout; ceiling heights; private open space and balconies; natural ventilation; and storage – the "objectives, design criteria and design guidance set out in Parts 3 and 4 of the [ADG]" prevail over provisions that specify requirements, standards or controls for the same matters in a development control plan (which have no effect). The town planning experts have differing views on the effect of clause 6A of SEPP 65. 10. Mr Haskew opined that the 45-degree height plane requirement in Control P3 was in the DCP before the ADG came into force. He considered the requirement for separation distances between buildings in Objective 3F-1 in the ADG to be inconsistent with Control P3, which also sets a measurable separation distance between adjoining boundaries. Further, the application of Control P3 would produce a "ziggurat" building form which Objective 3F-1 in the ADG specifically designates as an undesirable building form. Mr Haskew further considered that the reference to "visual privacy" in cl 6A(1) of SEPP 65 encompassed the requirement for separation distances between buildings provided by Objective 3F-1 in the ADG (which provides separation between windows and balconies "to ensure visual privacy is achieved"). As such, Mr Haskew considered that as there is a conflict between the ADG and the DCP planning controls, cl 6A of SEPP 65 directs that the ADG prevails over the DCP, and this provides for a larger building envelope for a mixed-use development on the Land. 11. Mr Smith did not accept that there is a conflict between the planning controls in the DCP and the ADG. Mr Smith opined that primacy should only be accorded to the ADG in respect of the specific matters listed in cl 6A(1) of SEPP 65 and these do not include building envelopes and setbacks (which are matters specifically dealt with in Pt 2B and Pt 2H of the ADG). In cross-examination, Mr Smith characterised cl 6A(1) of SEPP 65 as being principally directed to the amenity of the design and development on a specific site, rather than protection of the amenity of other sites. Submissions 1. The applicants submit that Mr Smith's opinion should be preferred as it properly identifies and characterises the specific concern of the DCP and the ADG planning controls and promotes the harmonious operation of the two planning instruments. In this respect, Mr Smith opines that the clear purpose of the DCP controls (particularly the 45-degree height plane in Control P3) can be discerned from the express objects of the relevant part of the DCP, which are to define urban form and minimise amenity impacts on adjoining properties. Mr Smith indicated that planning controls similar to Control P3 are regularly used at sites where there is a transition between low to high density which indicated to him that the purpose of the planning control is not meant to engage with visual privacy. 2. The applicants submit that Mr Haskew's view that Control P3 in the DCP (and the 45-degree height plane) relates to visual privacy should not be accepted because he accepted in cross-examination that the relevant part of the DCP does not refer to visual privacy as an objective. Further, they contend that Mr Haskew's opinion is less reliable in circumstances where he agreed that the express matters listed in cl 6A(1) of SEPP 65 related to the internal dimensions of proposed apartment buildings and at least some aspects of internal communal circulation space. 3. The applicants further submit that the better approach to interpreting the two planning instruments is to adopt the principle of harmonious operation. This would support an interpretation that cl 6A(2) of SEPP 65 is only intended to disallow such parts of a development control plan that are specific "requirements, standards or controls" in relation to a matter in cl 6A(1). Clause 6A(2) of SEPP 65 should not be used to render matters in a development control plan ineffective by expanding the list explicitly contained in cl 6A(1), noting that Mr Haskew accepted in cross-examination that a mixed-use development on the Land could comply with both sets of planning controls. 4. As a consequence, the applicants submit that where the highest and best use of the Land is as a mixed-use development, the relevant planning control limits the achievable floor space to 2,818m². They contend that this limit is a further reason (in addition to concerns relating to contamination) why a mixed-use development would not be the highest and best use of the Land at the base dates. 5. The Valuer-General submits that the applicants' reliance on the harmonious operation of the two planning instruments is unsupported by authority and contrary to previous decisions of the Court, which emphasise the primacy of the ADG planning controls over the DCP planning controls. 6. The Valuer-General also submits that even if the Court did not find that the primacy clause in SEPP 65 does not render Control P3 in the DCP of no effect, the Court would still not accept that the building envelope of a mixed-use development on the Land would be constrained by a rigid application of Control P3 in the DCP. In this respect, the Valuer-General relies on provisions of the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act') that provide for the flexible application of provisions of a development control plan, such that the consent authority "…is to be flexible in applying those provisions and allow reasonable alternative solutions that achieve the objects of those standards for dealing with that aspect of the development": s 4.15(3A)(b) EPA Act; 680-682 Kingsway Caringbah Pty Ltd v Sutherland Shire Council [2017] NSWLEC 99 at [111]. Consideration 1. Although not without some hesitation (as the essential question in these proceedings involves the valuation of land, and not a merit consideration of a defined development proposal), I consider that it is appropriate that the disagreement in relation to the likely interpretation and application of the planning controls and the resulting achievable floor space between the town planning experts should be resolved in the context of this valuation matter. This is because, as submitted by the applicants, the hypothetical parties transacting the notional sale would not simply accept the two differing opinions of Mr Smith and Mr Haskew as equally available with a legally sound basis. Rather, the hypothetical parties, given proper advice, would likely transact on the basis of a particular position that reflects how they thought (or were advised) Burwood Council would interpret the planning controls that govern the achievable floor space for the Land's use as a mixed-use development. Given this, for the reasons that follow, and, although not, on its own, determinative of the primary question before the Court, I consider that the applicants' position, based upon the evidence of Mr Smith in relation to the planning controls and resulting likely achievable floor space, is a more appropriate conclusion. 2. It is clear that cl 3.5.2 of the DCP contains discrete controls for the Enfield Local Centre (which includes the Land which is neatly located within the relatively small and restricted areas designated as the Enfield Local Centre providing almost site-specific provisions in relation to the Land). Under the heading "Side and Rear Setbacks", the objectives of the planning controls are expressly stated as: first, to define the urban form of development; and second, to minimise the amenity impact of development on adjoining properties. In these circumstances, Control P3 in the DCP sets out a 45-degree height plane for the building envelope. I consider that, as stated by Mr Smith, this height plane enables the expressed objectives by managing the built form transition from the higher proposed mixed-use development on the B2 Local Centre zoned land to the lower development on the adjoining R2 Low Density Residential zoned land. 3. Seen in this way, and although the matter is not without some nicety, Control P3 in the DCP does not relate to a matter to which the items listed in cl 6A(1) of SEPP 65 apply, because those items do not include built form, height planes or setbacks. I accept that the planning control Objective 3F-1 in the ADG (which is within Pt 3F Visual Privacy) relates to protection of external and internal visual privacy, as the design criteria are stated in terms requiring separation between "windows and balconies", and it is in that context that the numerical controls for separation between adjoining buildings is provided. In this context, I consider that the direction to avoid a "ziggurat" appearance in Objective 3F-1 in the ADG is simply ancillary to the protection of visual privacy, and does not result in inconsistency with Control P3 in the DCP. 4. Further, I find that the specific planning controls in the ADG which relate to "building envelopes" and "side and rear setbacks" are separately contained in Pts 2B and 2H respectively in the ADG. Given this, I do not accept the submission of the Valuer-General criticising the applicants for using the structure of SEPP 65 to support the view that the planning controls in the DCP that control building envelopes and setbacks should have full effect. 5. The Court has frequently been required to determine the interaction between differing planning controls and the hierarchical nature of environmental planning instruments and local policies (including development control plans, which are usually trumped by environmental planning instruments where there is conflict between them: s 3.43(5) of the EPA Act) is well understood. In Universal Property Group Pty Ltd v Blacktown City Council [2020] NSWCA 106 ('Universal Property'), Basten JA, although considering the interaction between two State environmental planning policies ('SEPPs') in the context of an appeal from a decision of this Court to refuse a development application, noted at [6]-[7] that: "…it is important to identify with precision the nature and scope of the supposed inconsistency. If it cannot be resolved as a matter of statutory construction, it will be necessary to ask whether the earlier provision was impliedly repealed by the later… … Claims of "actual contrariety" between provisions emanating from one legislative source should not be accepted unexamined. That is because there is a strong presumption that a legislative authority does not intend to contradict itself nor, particularly in modern times where legislation is drafted by highly skilled Parliamentary counsel with computer-based search facilities, is it likely that such a contradiction will arise through inadvertence." (citations omitted.) 1. In Universal Property at [13], Basten JA emphasised that the principle of harmonious operation gives "preference to a reasonable construction of a statutory instrument if the result is consistent with the operation of another, where a different interpretation would create inconsistency." Although his Honour was dealing with the interaction between two SEPPs, and in this circumstance, I am considering the interaction between a development control plan and a SEPP – and noting and taking into account that s 3.43(5) of the EPA Act provides that provisions of development control plans have no effect to the extent that they are inconsistent or incompatible with a provision in an environmental planning instrument (such as a SEPP) and that s 3.45(3) of the EPA Act provides that an environmental planning instrument (such as a SEPP) may exclude or modify a development control plan – I consider that the principle of harmonious operation supports my finding that there is no inconsistency between Control P3 in the DCP and the provisions contained in the ADG. 2. I consider that the two planning controls are "pointing at different aspects of the building" as submitted by the applicants, such that one is about shaping the form of building and the other is about ensuring privacy between active elements of building. I find that Control P3 in the DCP is not inconsistent with the provisions contained in the ADG, so as to be excluded by cl 6A of SEPP 65. 3. In the circumstances, I consider that the achievable floor space for a mixed-use development (if that was to be the highest and best use of the Land) at the base dates was, as submitted by the applicants, limited by the need to ensure compliance with the built form required by the 45-degree height plane under the DCP. Given this, the hypothetical parties transacting the notional sale of the Land would proceed on the basis that the achievable floor space within the DCP-regulated building envelope was the more appropriate conclusion. 4. I have considered the Valuer-General's submission that, should I find that the relevant planning controls in the DCP and the ADG are not inconsistent, the EPA Act provides for the flexible application of the planning controls in the DCP such that a larger achievable floor space than that nominated by the applicants may be possible. In the context of the statutory valuation task I am undertaking, I do not consider it likely that the hypothetical parties transacting the notional sale would proceed on the basis that planning controls governing a mixed-use development on the Land would be applied flexibly (at least in the absence of specific evidence that this was the practice of Burwood Council). 5. For completeness, I also note that the applicants referred to Burwood Council's approach to development consents for previous developments, some years prior to the base dates, in support of their position. While I have found that Control P3 in the DCP is not inconsistent with the planning controls in the ADG, I do not consider this submission persuasive where Burwood Council's approach pre-dates the planning controls in the ADG under consideration. 6. In the circumstances, I do not necessarily find, utilising what I consider to be the correct interpretation of the planning controls, that the achievable floor space for a mixed-use development on the Land with the DCP-regulated building envelope must be 2,818m². As noted above, while Mr Smith identified that the achievable floor space for a mixed-use development on the Land at the base dates with the DCP regulated building envelope was 2,818m², in Mr Haskew's opinion this understated the achievable floor space. However, in the absence of any alternative area for the achievable floor space being provided by Mr Haskew, I am content to adopt this achievable floor space going forward for the purposes of assessing the land values where a mixed-use development is the highest and best use of the Land. Highest and best use Evidence and submissions Mr Jackson and Mr Hill's evidence 1. Mr Jackson, valuer for the applicants, and Mr Hill, valuer for the Valuer-General, opined as to the highest and best use of the Land when giving their valuation evidence. Both valuers agreed that the determination of the highest and best use of the Land depends upon the extent of contamination of the Land and the remediation required and, where minimal remediation is required the highest and best use of the Land would be as a mixed-use development, however, if the level of remediation required reaches a point where the prospect of a mixed-use development is "impacted", the highest and best use of the Land would be its continuing use as a service station. 2. However, the valuers' differing views in relation to the contamination evidence, and how this evidence should be considered if the highest and best use of the Land is as a mixed-use development, meant that they disagreed as to the highest and best use of the Land at the base dates. 3. Mr Hill considered that in determining land value, section 6A(1) of the Valuation Act meant he was to assume that the improvements on the Land had not been made and "had never existed", and therefore the "concept" of a service station currently on the Land was to be disregarded. Despite this, he accepted the statutory valuation task should take into account necessary investigation costs triggered by the application of SEPP 55, and must have regard to contamination if it is present on the Land. Mr Hill considered and adopted the evidence of contamination of the Land set out by Mr McKay, and concluded that the hypothetical parties transacting the notional sale would consider the "factual evidence" that there is "little risk of contamination or remediation costs to the land". As a result, Mr Hill opined that the highest and best use was a mixed-use development. 4. Mr Jackson considered the potential risk and uncertainty surrounding the town planning and contamination evidence and opined that "there is significant risk associated with both the level of development permitted on the land and the cost of remediation required to facilitate that development" as a result of the Land having a long history of "petroleum use". Mr Jackson maintained that the highest and best use of the Land would be the continuing use of the Land as a service station. Submissions 1. The parties agree that both the continuing use of the Land as a service station, and the use of the Land as a mixed-used development, must be considered for the purposes of valuing the Land. However, the difference in the evidence of the valuers in relation to contamination and remediation is reflected in the positions of the parties as to the application of s 6A of the Valuation Act and the determination of the highest and best use of the Land. 2. The Valuer-General submits that, in accordance with Toohey's Ltd v the Valuer-General (1924) 25 SR (NSW) 75; [1925] AC 439 ('Toohey's'), s 6A(1) of the Valuation Act requires the assumption that the service station on the Land does not exist and has never been built (being an improvement upon the Land for the purposes of the Valuation Act). The Valuer-General submits that the effect of this assumption is that the statutory valuation task cannot be based on the risks associated with the notional sale of the Land on the basis that it is or was used as a service station. 3. The Valuer-General submits that the applicants cannot rely on Olefines, which can be distinguished from the present circumstances as the parties had agreed that the relevant land was contaminated and the Court of Appeal noted that a new use of the relevant land would likely require remediation of contamination at considerable cost. The Valuer-General submits that Olefines was "plainly fact sensitive and depends upon the extent of contamination of the land which was, in that case, significant." 4. Further, the Valuer-General submits that while in Olefines the Court of Appeal held that valuing land based on its continuing use meant that remediation costs could be disregarded, Olefines is not authority for the proposition that valuing land based on its zoning requires regard to be had to the cost of remediation. The Valuer-General rejects the suggestion: first, that real world improvements have a "notional existence"; and second, that the Court should consider the risk of contamination based on the use of the Land as a service station where the Land is being valued based on its potential for use as a mixed-use development (where the Valuer-General submits that a risk of contamination is not sufficient in any event). 5. Rather, the Valuer-General accepts that the cost of remediation of contamination can be taken into account, if, as a matter of fact, the Land is contaminated. This is because the actual condition of the Land at the time of the valuation must be taken into account: citing Toohey's at 77; Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; (1991) 73 LGRA 47 at 175; and Challenger Listed Investments Limited v Valuer General (No 2) [2015] NSWLEC 60 at [25]. Therefore, the question for the Court is characterised as whether or not, as a matter of fact, the Land is contaminated. The Valuer-General's position is that given there is no evidence of the Land being contaminated, a mixed-use development is the highest and best use of the Land. 6. The applicants submit that the Valuer-General's position of focusing on whether there is actual contamination "misdirect[s] … [the Court] from the task which is required, which is valuing under [s] 6A [of the Valuation Act], what price would be achieved if this property was offered for sale to the market": Tcpt, 27 July 2020, p 4(17-20). Instead, the applicants submit that the question is what price would be achieved if the Land was offered for sale on reasonable conditions, noting that a reasonable purchaser would not be limited to actual contamination but would consider the wider risk of contamination. 7. The applicants' position is that first, the condition of soil is one of the things about which the hypothetical purchaser is taken to have complete and full knowledge; and second, if the condition of soil has been altered by the use as a service station, this is a land improvement and so not required to be disregarded by the Valuation Act. The applicants suggest that this means that both actual contamination and the risk of contamination is to be taken into account. Given this, they contend that it is not possible to exclude the possibility, or the likelihood, of very significant costs being required to be spent on the remediation of contamination of the Land. The quantum of those costs means that any reasonable purchaser would not buy the Land for use as a mixed-use development, and the highest and best use of the Land is its continuing use as a service station. 8. The applicants make the following submissions in response to the Valuer-General's position on the assumptions to be made about the Land: first, the position fails to reflect the changes to the Valuation Act since Toohey's; second, the position is not supported by the statutory text; third, the position contradicts Olefines; and fourth, the Valuer-General's acceptance that SEPP 55 applies in relation to any change of use to a mixed-use development is inconsistent with its submission that the history of the Land is irrelevant: Tcpt, 5 November 2020, p 265(46-50)-266(1-2). 9. In this respect, the applicants submit that while Toohey's sets out the original principles, the current statute and associated case law suggests that "improvements as they exist in the real world have a notional existence" as they inform the way the Court considers the valuation: Tcpt, 27 July 2020, p 24(16-27). In particular, the applicants submit that Valuer-General v Fivex Pty Ltd [2015] NSWCA 53; (2015) 206 LGERA 450 ('Fivex') requires the assumptions in s 6A(2) of the Valuation Act to be made, and Olefines requires an understanding of the history of the Land to undertake the assumptions required in s 6A(2) of the Valuation Act in relation to the use of the Land. 10. Finally, the applicants submit that limits on the achievable floor space were also a reason why the highest and best use of the Land at the base dates was not as a mixed-use development. The evidence about achievable floor space, and my consideration and conclusions on this evidence, were dealt with in detail earlier in this judgment. I incorporate my finding on achievable floor space into my consideration of a mixed-use development on the Land when determining the highest and best use of the Land going forward. Consideration 1. The significant judicial consideration of s 6A of the Valuation Act is relevant to resolving the dispute between the parties about how the evidence should be considered when determining the highest and best use of the Land and the land values. Nonetheless, I note the importance of beginning any consideration of statutory construction with a consideration of the text: Fivex at [26]. 2. Section 6A(1) of the Valuation Act requires the consideration of a notional sale of the fee-simple of the land between hypothetical parties, which imports the concept of the highest and best use of the Land: Trust Company at [32]. Section 6A(1) specifically requires the assumption in the notional sale that "…the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made". In this way, section 6A(1) involves the valuation of land on the basis of the development potential of the relevant zoning, and implications arising from improvements on the land are disregarded. 3. Section 6A(2) is expressed as being "[n]otwithstanding anything in subsection (1)…", and requires the assumption that the land may be, or may continue to be, used for any purpose for which it was being, or could be, used, at the base date. A corollary assumption is that improvements may be continued, or made, on the land to enable it to be used in this way. As a result, section 6A(2) provides for the valuation of land on the assumption that the use of the land is to continue, and that "such improvements" as may be required to enable that use are allowed to be continued: Fivex at [46] per Leeming JA; Olefines at [18] per Basten JA, [49]-[51] per Leeming JA. 4. In Fivex, the Court of Appeal emphasised that the valuation assessment to be undertaken must include consideration of s 6A(2) of the Valuation Act, which is expressed in both mandatory and general language: at [27]-[28]. Section 6A(2) introduces "assumptions derived from circumstances in the real world which bear upon the artificial determination of "land value"": at [14]. Leeming JA's analysis in Fivex indicates that these assumptions must be considered "in addition" to the assumption in s 6A(1), and that s 6A(2) will prevail in the event of inconsistency with s 6A(1): at [27]-[29]. However, while the assumptions in s 6A(2) must be made (or at least considered), they may not be determinative or even material in the determination of the land value: at [31] and [34]. The approach adopted by the Court of Appeal in Fivex acknowledged, as the applicants submit, that there had been legislative change since Toohey's where a continuing use of land is considered. This legislative history is explained in: Trust Company; Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365; (2007) 156 LGERA 186. 5. It is clear from the text (and the judicial consideration) of s 6A of the Valuation Act that land can be valued on the basis of the existing (continuing) use of the land or on the basis of its development potential under the relevant zoning: Olefines at [17]. It is apt to note that these two approaches do not result in separate valuations – but are rather considered in the exercise of finding the price realised by a notional sale on reasonable terms and conditions, subject to certain "complex and qualified and contingent" assumptions resulting in a "single statutory valuation": Olefines at [37]-[38]. 6. In Olefines, the Court of Appeal considered an appeal from a first instance decision of this Court which found that where valuing land based on continuing use with improvements in situ (which constituted the highest and best use of the land) "it is inappropriate for remediation costs of the contaminated land to be taken into account in the valuation exercise": Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWLEC 18; (2018) 228 LGERA 407 at [137]. The Court of Appeal dismissed the appeal and held that when valuing land based on continuing use, there are prescribed assumptions in s 6A(2) that must be made, and the effect of those assumptions, put simply, is that the cost of remediation to continue that use is to be disregarded. As noted by Leeming JA at [51], there is "nothing in s 6A which requires notionally one to remove the actual improvements on the land, then remediate the land (and pay for the cost of doing so) so as to be able then lawfully to construct those same improvements on the land." 7. In considering the construction of s 6A of the Valuation Act and the approach to improvements, Leeming JA in Olefines at [39] noted that: "Subsection (1) values the land as if improvements had not been made. Contrary to this, subsection (2) values the land on the basis that certain improvements may be continued or made, albeit in limited circumstances, and subject to a proviso." Leeming JA suggested that inconsistency between subsections 6A(1) and (2) could be resolved by the assumption that the "improvements are assumed to be present merely for the purpose of permitting an unimproved land value to be calculated having regard to the purpose for which they were erected and for which they are required" (at [49]) but found that a conclusion on this issue was not necessary in that case. 8. Also, in Olefines, Basten JA at [17] considered the approach to contamination when valuing land based on the zoning as the highest and best use (noting this was an example provided in contrast to valuing land based on the continuing use), suggesting: "…For example, if the land were to be valued as zoned, the current use could not be continued and any new use might require a consent, a condition of which would likely be that the owner remediate the land, at considerable cost..." 1. I note that in Olefines it was agreed that the land was "significantly contaminated land" within the meaning of the CLM Act. I consider this factual circumstance to be material to the commentary of the Court of Appeal in Olefines discussed above. Given this, I accept the submission of the Valuer-General and do not consider that Olefines is authority for a proposition that a valuation based upon "the zoning" must always have regard to the cost of remediation. 2. The question before me regarding the application of s 6A of the Valuation Act has arisen in circumstances where there is no agreement between the parties as to whether the Land is contaminated, and if so, the likely cost of remediation. As set out earlier in this judgment, I have considered the evidence in relation to the existence and extent of contamination of the Land, and the likely cost of remediation, available to the hypothetical parties transacting the notional sale. I found that contamination was likely to be minimal and the cost of remediation was likely to be relatively low – both when valuing the Land on the basis that the highest and best use was as a mixed-use development, and when valuing the Land on the basis that the highest and best use was the continuing use of the Land as a service station. Given this factual finding, I consider that the highest and best use of the Land at the base dates was as a mixed-use development. My reasons for this conclusion follow. 3. The parties agree, and I accept, that where the Land is valued on the basis of an ability to continue its use as a service station, the application of s 6A(2) of the Valuation Act in relation to existing improvements and continuing use mean that SEPP 55 is not triggered and, even if the Land is contaminated at the base dates, there would be little to no cost of remediation for contamination: Fivex at [27]-[36]; Olefines at [18] per Basten JA, [49]-[51] per Leeming JA. 4. The parties further agree that where the Land is valued on the basis of its use as a mixed-use development, the Court must assume that a development consent would be required, and the provisions of SEPP 55 would require assessment of the potential for contamination of the Land, and the subsequent remediation of contamination, if any contamination is present. As it reflects the joint position of the parties, the Court, with some hesitation, proceeds on the basis that SEPP 55 applies to the undertaking of a mixed-use development on the Land. 5. As I understand the submissions made, a difference between the parties arises with the Valuer-General's submission that the mere triggering of a SEPP 55 assessment for contamination does not "inevitably" (as suggested by the applicants) mean that there are significant costs involved in attempting to achieve a change of use of the Land to a mixed-use development. Beyond the cost of compliance with a SEPP 55 assessment (in any event agreed to be between $110,000 to $180,000), the Valuer-General submits that the extent of any such costs depends upon the existence and extent of contamination at each base date. 6. I find that the cost of remediation of the Land for use as a mixed-use development is contingent on evidence otherwise available as to the condition of the Land, where this would include evidence of the actual condition and the risks in relation to the condition (as, accepting the submission of the applicants, the hypothetical parties are taken to have complete and full knowledge of the condition of the Land). As explicated at [62]-[65], I accept that the hypothetical parties transacting the notional sale would give consideration to any evidence of actual contamination and the likelihood of, or risk of, contamination of the Land, as well as the cost of remediation and the cost of the likelihood of, or risk of, remediation of the Land. 7. As a result, as a general principle, I accept the applicants' submission on the need to consider the wider risk of contamination (and reject the submission of the Valuer-General that the question for the Court is whether as a matter of fact the Land is contaminated, as the mere risk of contamination is insufficient). However, I note again that this position is subject to the statutory assumption required to be made under s 6A(1) of the Valuation Act, which impacts the specific risks of contamination that can be considered, by requiring that evidence of, and risks associated with, the service station improvements on the Land are not to be regarded. It follows that the hypothetical parties transacting the notional sale would not consider that there is any material risk of the Land being contaminated on the basis that the Land had been used, or was being used as a service station. 8. Other risks of contamination of the Land remain pertinent to the hypothetical parties transacting the notional sale (such as the presence of contaminated fill on the Land). My conclusion in relation to the highest and best use of the Land incorporates consideration of the risk associated with contaminated fill on the Land, noting that I accept Mr McKay's evidence that the risk of contaminated fill on the Land is relatively low and unlikely to be significantly different on any other development site in the inner west of Sydney. Given this, I reject the submission of the applicants that remediation of the Land may involve "very significant costs", such that this would preclude the notional sale of the Land for use as a mixed-use development. 9. On the evidence before the Court, I have found that the material available to the hypothetical parties transacting the notional sale, the scope of which reflects the assumption required by s 6A(1) of the Valuation Act, indicates the existence and extent of contamination was likely to be minimal, and the likely cost of remediation to be low (although not nothing, resulting in a small adjustment reflecting this risk as set out above). Given this, the hypothetical parties to the notional sale of the Land would consider that the highest and best use of the Land at the base dates was as a mixed-use development, and would transact on that basis and make some provision in their negotiations for the likelihood of some cost being incurred to address contamination. 10. For completeness, I accept that, as a matter of fact, the achievable floor space of a mixed-use development would be incorporated into the determination of highest and best use of the Land. I record that my finding in relation to the achievable floor space of a mixed-use development, although in favour of the applicants, does not make a material difference, in the circumstances, to my finding in relation to the highest and best use of the Land at the base dates. Valuation Valuation assessments 1. Before considering the valuation evidence in detail, it is convenient to note the valuers had differing views in relation to the appropriate inputs and assumptions to be adopted when undertaking the statutory valuation task (herein referred to as undertaking the 'valuation assessments') to determine the land values of the Land for the base dates. Key differences between Mr Jackson, for the applicants, and Mr Hill, for the Valuer General, included: the cost of remediation and the achievable floor space where the highest and best use of the Land is a mixed-use development; the determination of the highest and best use of the Land (which the valuers agreed depends upon the extent of contamination of the Land and the remediation required); and the valuation methodology utilised when undertaking the valuation assessments. 2. As a result of these differences, each valuer undertook a number of valuation assessments for the Land for the base dates, which reflected different permutations of the inputs and assumptions they adopted. 3. Although my findings in relation to the material available at the base dates in relation to both the likely cost of remediation and the achievable floor space, and consequently my determination of the highest and best use of the Land, are recorded above, it is appropriate initially to consider how the valuers approached their valuation assessments, and thereafter factor my earlier findings into my consideration of the appropriate land values at the base dates. Valuation methodologies 1. The valuers adopted two different valuation methodologies when undertaking their valuation assessments, and had differing views as to the appropriateness of using those methodologies. 2. The direct comparison approach utilises evidence of sales of properties with a comparable highest and best use as the land being valued to determine land value. It involves analysing the equated gross floor area ('GFA') rates (or other unitary value) of selected comparable sales, and then making adjustments to the rates for comparability to the land being valued. In this method, each comparable sale is adjusted to the land being valued for differing factors such as location of the land, the size of the land, the developable GFA, the shape and topography of the land as well as access and views. 3. The hypothetical development approach (also known as the residual method) assesses the value of a hypothetical completed property development (with the characteristics of the highest and best use) on the land, being its gross realisation. Thereafter the valuer works backwards through various deductions required to complete the development to arrive at the price that would be paid for the unimproved land, being the land value. Evidence and submissions Mr Jackson's valuation assessments 1. Mr Jackson undertook three valuation assessments to determine the land value of the Land, for each of the base dates. First, adopting the direct comparison approach, he considered comparable sales of mixed-use development sites in the locality of the Land. Second, adopting the hypothetical development approach, he considered two hypothetical completed mixed-use property developments on the Land (being the building envelopes prepared by Mr Smith). Third, adopting the hypothetical development approach, he valued the Land on the basis of the continuing use as a service station on the Land. The third valuation assessment undertaken by Mr Jackson reflects his preferred position. 2. In his direct comparison approach based upon use of the Land for a mixed-use development, Mr Jackson considered and analysed seven sales of development sites that were purchased to undertake mixed-use developments and having made adjustments for comparability, derived a rate per square metre which he applied to the achievable GFA of the Land (for each of the DCP-regulated and the ADG-regulated building envelopes prepared by Mr Smith) – which Mr Jackson refers to as the Peter Smith Development Outcome and David Haskew Development Outcome respectively). Relevantly, for each building envelope, and for each base date, Mr Jackson then deducted the cost of remediation, adopting the "low range" remediation costs estimated by Mr Nakhoul for shop top residential and commercial developments ($2,929,852 excl GST). 3. This valuation assessment resulted in the following land values being determined for a mixed-use development on the Land for the 2016 base date: 1. For the DCP-regulated building envelope, Mr Jackson derived a $1,500/m² GFA rate, determined the initial land value at $4,227,000, and deducted Mr Nakhoul's estimated remediation costs of $2,929,852, which resulted in a land value for the Land rounded to $1,297,000. 2. For the ADG-regulated building envelope, Mr Jackson derived a $1,600/m² GFA rate, determined the initial land value at $5,646,400, and deducted Mr Nakhoul's estimated remediation costs of $2,929,852, which resulted in a land value for the Land rounded to $2,720,000. 1. Similarly, for the 2017 base date the following land values were determined: 1. For the DCP-regulated building envelope, Mr Jackson derived a $1,600/m² GFA rate, determined the land value at $4,508,800, and deducted Mr Nakhoul's estimated remediation costs of $2,929,852, which resulted in a land value for the Land rounded to $1,580,000. 2. For the ADG-regulated building envelope, Mr Jackson derived a $1,700/m² GFA rate, determined the land value at $5,999,300, and deducted Mr Nakhoul's estimated remediation costs of $2,929,852, which resulted in a land value for the Land rounded to $3,070,000. 1. Mr Jackson noted that he did not make any additional allowance for risk associated with either the planning uncertainty or potential contamination in the above approach to valuation, as he did not believe it was "possible to make a risk allowance given the substantial variation and uncertainty of both the town planning and environmental experts". Rather, he considered that the better approach (his third approach considered below) was to undertake a valuation assessment with the highest and best use of the Land as the continuing use of the Land as a service station. 2. In his hypothetical development approach similarly based upon using the Land as a mixed-use development, Mr Jackson considered two hypothetical completed mixed-use property developments on the Land, which were the two building envelopes prepared by Mr Smith. These building envelopes provided 918m² of commercial/retail area on the ground level, with the DCP-regulated building envelope providing 20 residential apartments, and the ADG-regulated building envelope providing 28 residential apartments. 3. Mr Jackson then considered sales of completed residential apartments and retail/commercial premises in the locality of the Land to establish the gross realisation of the commercial and residential apartment elements of the building envelopes. He determined the gross realisation on the basis of: 1. The DCP-regulated building envelope, to be the sum of $21,772,500 (for the 2016 base date) and $22,027,000 (for the 2017 base date); and 2. The ADG-regulated building envelope, to be the sum of $26,436,998 (for the 2016 base date). 1. Mr Jackson then listed several deductions he made to the gross realisations. These included deductions for development costs, where Mr Jackson adopted the advice of Tony Sassine, a quantity surveyor retained for the applicants, who estimated construction and related costs for the building envelopes as follows: 1. For the DCP-regulated building envelope, the sum of $15,285,446 (incl. GST) for the 2016 base date and $15,787,706 (incl. GST) for the 2017 base date; and 2. For the ADG-regulated building envelope, the sum of $17,248,099 (incl. GST) for the 2016 base date and $17,814,850 (incl. GST) for the 2017 base date. 1. Mr Jackson also made deductions for selling costs; profit and risk; interest; purchase costs; and, more relevantly, remediation. 2. In making a deduction for remediation for the DCP-regulated building envelope, Mr Jackson provided four alternative deductions, being costs of mid-point remediation ($5,998,670); costs of minimum remediation ($3,222,837); costs of maximum remediation ($8,774,503); and no remediation cost ($0). Mr Jackson confirmed in cross-examination that these deductions were based on Mr Nakhoul's costings, and counsel for the applicants explained that they were selected by Mr Jackson representing an "impressionistic level" as a result of his "sensitivity analysis": Tcpt, 27 July 2020, p 20(49-50) and Tcpt, 15 September 2020, p 228(40-45). 3. Mr Jackson concluded that, using the hypothetical development approach, the cost of remediation of the Land for a mixed-use development with the DCP-regulated building envelope are so high that negative land values are determined. Specifically, the rounded land value was determined at between −$1,470,000 (excl GST) and −$6,490,000 (excl GST) depending on the extent of remediation for the 2016 base date, and between −$1,810,000 (excl GST) and −$6,840,000 (excl GST) depending on the extent of remediation for the 2017 base date. Where no remediation cost was accounted for, the rounded land values were determined at $1,410,000 (excl GST) for the 2016 base date and $1,110,000 (excl GST) for the 2017 base date. 4. Mr Jackson took a slightly different approach to the deduction of remediation costs for the ADG-regulated building envelope, by assuming a set remediation deduction of $600,000 (excl GST). This resulted in the determination of a rounded land value for the Land of $1,960,000 (excl GST) for the 2016 base date. 5. Mr Jackson's third (and preferred) valuation assessment adopted the hypothetical development approach based upon the continuing use of the Land as a service station (in cross-examination he noted that this valuation methodology was adopted because comparable sales of service station sites could not be located for the direct comparison approach: Tcpt, 15 September 2020, p 232(31-38). Mr Jackson analysed six sales of improved service stations in and around metropolitan Sydney, and calculated the capitalisation rate (yield) from the rental income for each of the service stations. He used this comparison to derive appropriate capitalisation rates for a hypothetical completed service station on the Land, of 5% for the 2016 base date and 4.75% for the 2017 base date. 6. Mr Jackson thereafter considered the rental income from the existing service station on the Land (being the existing lease to Woolworths Ltd, which he was satisfied is indicative of market levels) at the base dates. Using this and the capitalisation rates, he determined a "service station value" of $5,180,000 for the 2016 base date and $5,010,000 for the 2017 base date which he used as gross realisation values. 7. Mr Jackson then made several deductions to the gross realisations including development costs for a service station development of $3,155,027 for the 2016 base date and $3,258,697 for the 2017 base date; selling costs; profit and risk; interest; purchase costs; but notably excluding any remediation costs. Mr Jackson then determined the land value for the 2016 base date to be the sum of $1,150,000 (excl GST) and the land value for the 2017 base date to be the sum of $920,000 (excl GST). Mr Jackson explained that the lower land value at the 2017 base date was a result of the net rental income for the property being eroded as a result of increased land tax being payable for the Land. As noted at [2] above, these are the land values contended for by the applicants. Mr Hill's valuation assessments 1. Mr Hill undertook two valuation assessments to determine the land value of the Land for each of the base dates. The first valuation assessment, which is Mr Hill's preferred position, utilised the direct comparison approach to consider the use of the Land as a mixed-use development (based on Mr Hill's view that, on the available evidence, the highest and best use of the Land was for a mixed-use development). Mr Hill's second valuation assessment also utilised the direct comparison approach and considered the continuing use of the Land as a service station. 2. When undertaking his first valuation assessment, Mr Hill in a similar manner to Mr Jackson's first valuation assessment considered and analysed six comparable sales of development sites (three of those sales were also utilised by Mr Jackson) to derive rates per square metre of GFA for each base date, including undertaking adjustments for comparability. In Mr Hill's view, there were "numerous other development site sales transacting … within … the surrounding location…" which provided for comparisons to be made. Based upon his analysis of the six sales, Mr Hill derived a $2,250/m² GFA rate for the 2016 base date and a $2,350/m² GFA rate for the 2017 base date. 3. These rates reflected Mr Hill's preference for the position that the achievable floor area of a mixed-use development on the Land was 3,529m² (where he was aware there were differing views between the town planning experts as to whether the DCP-regulated or the ADG-regulated building envelope was to be preferred). Despite this, Mr Hill also adjusted his GFA rates for the ADG-regulated building envelope downward by 5% to derive GFA rates for an achievable floor area of 2,818m², being $2,140/m² for the 2016 base date and $2,235/m² for the 2017 base date. 4. Mr Hill then applied the derived GFA rates to the relevant building envelope for the Land to determine initial land values. These values were reduced by the cost of remediation, noting Mr Hill's estimated cost of remediation was significantly less than that adopted by Mr Jackson for his remediation deductions. In this respect, Mr Hill adopted Mr McKay's scenario A remediation costs ($236,800 and $241,400 for the 2016 and 2017 base dates respectively, which assumes that no contaminated soil is found on the Land and that works on the Land would be limited to addressing regulatory obligations to remove infrastructure, importation of VENM to fill voids, and conducting validation testing – based on there being no evidence of contamination of the Land) and then reduced this amount to exclude the costs Mr McKay had attributed to the removal of the UPSS infrastructure ($108,000), on the basis that "one is to assume that the building improvements on the [Land] had not been made and furthermore they had never existed". This resulted in Mr Hill deducting remediation costs of $128,800 for the 2016 base date and $133,400 for the 2017 base date. 5. As a result, Mr Hill's valuation assessment resulted in the following land values for a mixed-use development on the Land being determined for the 2016 base date: 1. For the DCP-regulated building envelope, with a $2,140/m² GFA rate, a land value rounded to $5,900,000; and 2. For the ADG-regulated building envelope, with a $2,250/m² GFA rate, a land value rounded to $7,810,000. 1. Similarly, for a mixed-use development on the Land for the 2017 base date, the following land values were determined: 1. For the DCP-regulated building envelope, with a $2,235/m² GFA rate, land value rounded to $6,165,000. 2. For the ADG-regulated building envelope, with a $2,350/m² GFA rate, land value rounded to $8,160,000; 1. Notwithstanding Mr Hill's evidence, the Valuer-General maintains the issued land value at $5,365,000 for the 2016 base date and $6,200,000 for the 2017 base date and does not contend for the higher values determined by Mr Hill. 2. Although not his preferred approach, Mr Hill undertook a second valuation assessment which again utilised the direct comparison approach and assumed the (continuing) use of the Land as a service station. This was undertaken on the basis that if the Court was to find that the Land was contaminated to such an extent that the remediation cost to undertake a mixed-use development was so significantly onerous, that the highest and best use of the Land would be the continuing use as a service station. 3. Mr Hill analysed four comparable sales which he characterised as for "automotive style" uses where the sites were purchased with the intention to undertake automotive aligned purposes (and a further sale of an industrial development site for checking purposes). Mr Hill deducted the added value of the improvements from the sale prices, to derive a land value as at each of the base dates. Mr Hill then derived a site rate per square metre for the comparable sales sites, which he adjusted for comparability with the Land. He determined a site rate per square metre of $1,950/m² for the 2016 base date and $2,050/m² for the 2017 base date respectively. 4. Mr Hill applied these site rates to the site area of the Land (being 1,764.1m²) and determined the land value at the 2016 base date to be $3,440,000 and the land value at the 2017 base date to be $3,615,000. Joint report 1. In the joint expert valuers' report dated 9 June 2020, Mr Jackson and Mr Hill considered their approaches to the valuation assessments, with a focus on their different allowances for remediation and the appropriate valuation methodology. 2. In relation to remediation, Mr Hill criticised the approach taken by Mr Jackson which focused on what a hypothetical purchaser may be prepared to pay and noted that the task for the Court (as valuer) was to weigh the evidence at hand to determine land values. Mr Hill opined that the evidence does not indicate that the Land was contaminated at the base dates, and so the Court would proceed on that basis. In contrast, Mr Jackson opined that a "prudent" approach to remediation costs for the Land would acknowledge the "considerable risk" of contamination of the Land, and therefore include remediation costs when undertaking a mixed-use development. Mr Jackson characterised Mr Hill's approach as adopting the "lowest cost estimate" from the range of costs provided. 3. In relation to valuation methodology, Mr Hill opined that the direct comparison approach which he adopted in his primary assessment was the most appropriate valuation methodology, as mixed-use and residential development site sales provide "primary evidence" of the actual market value paid for sites similar to the Land; and, further, that there were sufficient sales available to allow for a proper comparison. He considered that the hypothetical development approach adopted by Mr Jackson was best used as a secondary check method (or where there are no comparable sales for the direct comparison approach – which he states is not the case in these circumstances). The number of steps and mathematical adjustments required means the hypothetical development approach is vulnerable to slight differences in inputs having a "dramatic effect" on the resulting values. In this respect, Mr Hill suggested that Mr Jackson's land values that utilised the hypothetical development approach (without considering remediation costs) appeared "very conservative" in contrast to actual sales of sites. 4. In contrast, Mr Jackson opined that use of the hypothetical development approach was appropriate, as it brought a "greater level of accuracy" to the valuation assessments as it allowed for the input of the town planning and contamination experts to be incorporated. Mr Jackson noted that the Valuer-General's policy accepts that the hypothetical development approach is useful when valuing contaminated land. 5. While it is clear that the more significant differences between the valuers stem from the weight each attributed to contamination, the achievable floor space adopted, and preferred valuation methodology, there were also differences in the valuers' approach to comparable sales. In their joint report, the valuers agreed on the identity of seven comparable sales of land for mixed-use development (which included six of the sales identified in Mr Hill's individual report and four of the sales identified in Mr Jackson's individual report). Mr Hill and Mr Jackson outlined the specific adjustments they each made to the comparable sales (noting that some adjustments were updated as result of the joint conferencing process), and provided reasons for their differences. For convenience, a copy of their table detailing the seven sales and their respective adjustments from the joint report is 'Annexure 1' to this judgment. 6. At a high level, although there was agreement in relation to a number of adjustments, Mr Hill and Mr Jackson differ in relation to their analysis of: location (where Mr Jackson criticises Mr Hill's suburb-based approach in favour of a locality-based approach); corner/street frontage (where Mr Hill treats the Land's frontage to Liverpool Road as an advantage, while Mr Jackson considers this to be a disadvantage); and development consent (where Mr Jackson considers the 10% allowance made by Mr Hill inadequate, and prefers a 15% allowance). 7. The valuers also criticised each other's approach to their respective valuation assessments based on the continuing use of the Land as a service station where, as noted earlier, Mr Hill adopted a direct comparison approach, and Mr Jackson adopted a hypothetical development approach. Mr Jackson queried the comparability of the sales analysed by Mr Hill, and in particular, sites which had been purchased for "automotive style" uses. In response to Mr Jackson's analysis of "service station sales" in his hypothetical development approach, Mr Hill criticises the distance from the Land of the sales analysed by Mr Jackson on the basis that these were all well away from the Land with the closest sale being 9km away and three of Mr Jackson's sales being located as far as 30 to 40km from the Land. Submissions 1. The parties each made detailed submissions. In summary, the applicants submit that the Court should reject the evidence of Mr Hill entirely, and the Valuer-General submits that the approach of Mr Hill should be preferred. 2. The Valuer-General criticises Mr Jackson's preference for the hypothetical development approach in his valuation assessments, characterising it as "flawed". The Valuer-General submits that previous decisions of Australian courts, including this Court, indicate that valuations based upon the hypothetical development approach are "suspect". In support of its position that the hypothetical development approach does not properly determine land value, the Valuer-General highlights that Mr Jackson's valuation assessment of a mixed-use development with no remediation costs (noted at [160] above) suggests the use of the Land for a mixed-use development "is worth only marginally more than land which can only ever be used as a service station". The Valuer-General suggests this result "cannot be correct", indicating that Mr Jackson's approach is not sound. 3. In addition to the criticism of Mr Jackson's methodological approach, the Valuer-General also criticises the sheer number of inputs required to determine the gross realisation of a hypothetical mixed-used development, and then undertake the deductions to determine the land value (such as selling costs, interest rates purchase costs, profit and risk factor and inputs), and Mr Jackson's failure to provide reasoning to support the inputs he used in his valuation assessments – which the Valuer-General characterises as "entirely unjustified and unexplained". Finally, the Valuer-General suggests that in both methodological approaches utilised by Mr Jackson, the remediation costs adopted by Mr Jackson are well in excess of the possible or likely cost of remediation. 4. The applicants submit that Mr Jackson's valuation assessments should be preferred. The applicants note that Mr Jackson has carried out valuation assessments using the direct comparison approach (notwithstanding his concerns) and that this supports, as a check method, the findings in his valuation assessments using the hypothetical development approach. 5. The applicants criticise Mr Hill's use of the direct comparison approach when undertaking each of his valuation assessments, as they submit this methodology does not properly account for complex facts related to the likely cost of remediation of the Land and achievable floor space. The applicants raise the following issues: first, Mr Hill's preferred approach is predicated on a mixed-use development being the highest and best use of the Land, which they contest; second, the comparable sales do not have comparably high contamination, and consequently, remediation costs; third, the sales Mr Hill identified as comparable required significant inputs and adjustments; fourth, Mr Hill makes positive adjustments to his GFA rates when undertaking a valuation assessment of a smaller development footprint on the Land (such as a 5% upward adjustment of GFA rates for the DCP-regulated building envelope due to "economies of scale"), which the applicants submit results in a flawed assessment. 6. In addition, the applicants submit that Mr Hill "radically underestimates" the likely remediation costs in his valuation assessments, when adopting Mr McKay's "flawed" opinion that the Land is "totally uncontaminated". In particular, the applicants take issue with Mr Hill's approach of assuming that not only was the Land not contaminated, but that there was no risk of contamination. In contrast, the applicants contend that Mr Jackson's use of the hypothetical development approach takes into account the available evidence regarding contamination (and criticise Mr Hill's failure to engage with and utilise this methodology, in circumstances where Mr Jackson carried out a valuation assessment using the direct comparison approach notwithstanding his concerns in relation to the significant adjustments required by that approach). 7. The Valuer-General rejects this criticism and submits that there are "sufficient" comparable sales which can be utilised in a valuation assessment using the direct comparison approach. The Valuer-General also submits that the assessment process undertaken by Mr Hill is transparent and that his comparable sales produce a "much more robust and likely land value" than the hypothetical development approach utilised by Mr Jackson. The Valuer-General posits that in circumstances where the applicants' criticism focuses on the treatment of contamination in the assessment process, and the evidence indicates there is no contamination, the applicants' criticisms will "simply fall away". Consideration 1. I now consider the valuation evidence in the light of my findings above. First, I found that contamination of the Land was likely minimal at the base dates and that the hypothetical parties transacting the notional sale, properly advised, would consider the risk of contamination of the Land to be low, and the cost that would be attributed to this would not be substantial. This means that the preferred remediation costs adopted by Mr Jackson are in excess of the possible or likely cost of remediation, for the reasons advanced by Mr McKay. Second, I found that there is no inconsistency between Control P3 in the DCP and the provisions contained in the ADG, such that the DCP-regulated building envelope is to be adopted. Finally, in the circumstances and as a result of my findings, I concluded that the highest and best use of the Land at the base dates was as a mixed-use development. 2. These findings mean that several of the permutations considered by the valuers in their valuation assessments can be set aside. However, the appropriate valuation methodology remains outstanding. For the reasons that follow, I consider that the better methodology is the direct comparison approach based on comparable sales. 3. Mr Hill prefers the use of the direct comparison approach when determining the land values of the Land, and relies upon comparable sales to arrive at his valuation of the unimproved land value of the Land. I accept that this methodology is the conventional valuation technique: River Bank Pty Ltd v The Commonwealth of Australia; Rumble v The Commonwealth of Australia (1974) 4 ALR 651 at 653 (Stephen J); Graham Trilby Pty Ltd v Valuer-General [2011] NSWLEC 68 ('Graham Trilby') at [24] (Biscoe J); Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508; (1977) 40 LGRA 151 at 513 (Jacobs J); New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 at [84]. 4. I also accept, however, that other valuation methodologies can be utilised to determine land values where appropriate in the circumstances. As noted by Wells J in Bronzel v State Planning Authority (1979) 21 SASR 513; (1979) 44 LGRA 34 at 516, and cited by a number of courts since: "…it seems to me that if Spencer's case (Spencer v. The Commonwealth) is to keep its practical worth in this jurisdiction, this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind. I am of the opinion that the approach likely to result in the most direct and reliable resolution of the outstanding differences between the valuations is to consider the particular features of each valuation that are capable of yielding to adverse criticism." 1. In this respect, as identified by the applicants, the hypothetical development approach preferred by Mr Jackson has been accepted by the courts: Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575 at [286]-[289]. 2. Given this, the issue before the Court is the preferred valuation methodology to be used in the circumstances, considering the limitations of each valuation methodology. The parties set out, in extensive detail in both written and oral submissions, their respective criticisms of the valuation methodologies adopted by the valuers. 3. In Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217 Jagot J considered competing valuation assessment methodologies and stated at [27]: "…it is well recognised that, if comparable sales are available, direct comparison has repeatedly been identified as the "conventional valuation technique". The basis for this preference is obvious — if comparable sales are available then they represent direct evidence of the market's evaluation of all of the variables that a valuer must otherwise account for by a subjective opinionative process in the residual or hypothetical development approach. This proposition underscores why the fact that developers buying en globo parcels may routinely use a residual analysis to determine land value is an insufficient reason (at least considered in isolation) to disregard or place little, if any, weight on comparable sales." (References excluded.) 1. The Valuer-General points to judicial commentary suggesting that the hypothetical development approach should be used with caution, such as Co-ordinated Resources Pty Ltd v Valuer General (1983) 27 the Valuer 779, due to the number and impact of subjective assumptions required to be made. The Valuer-General submits that Mr Jackson's approach is susceptible to subjective assumptions and so the hypothetical development approach should not be relied upon. 2. The applicants reject this criticism on the basis that Mr Jackson provided evidence in support of his assumptions in the hypothetical development approach, and Mr Hill declined to criticise his assumptions. In contrast, the applicants criticise Mr Hill's preference for the direct comparison approach, suggesting that it also involves multiple subjective assumptions resulting in large adjustments, and that Mr Hill's process fails to account for the likely remediation costs when developing the Land and the constrained achievable floor space. 3. I accept that as a matter of general principle, the direct comparison approach is to be preferred where there are comparable sales available to undertake the analysis. Whether a sale is sufficiently comparable for the purpose of the valuation assessment is a question of fact and degree: Graham Trilby at [25]. I do not accept the applicants' criticism that the direct comparison approach does not account for the somewhat complex issues in these matters. I also accept the Valuer-General's criticism of the hypothetical development approach, noting Mr Hill's evidence that one of Mr Jackson's valuation assessments derived using the hypothetical development approach was that, on the assumption that first, the highest and best was for a mixed-use development; and second, that there was no contamination or remediation costs, the land value would be $1,410,000 (excl GST) for the 2016 base date in circumstances where this value appears to sit uncomfortably with other approaches and various sales that have been considered in the evidence. 4. Given my finding that a mixed-use development is the highest and best use of the Land, I have considered the seven sales identified in the joint report of the valuers, and the detailed material in relation to each sale, and find that they are comparable for the purposes of undertaking a valuation assessment. While I accept that there are areas of disagreement between the valuers as to the appropriate adjustments to be made to individual sales (and the extent to which the sales are more or less comparable), I find that there are sufficient comparable sales available for the purpose of using the direct comparison method. 5. Conscious of my findings in relation to contamination of the Land, I do not give weight to the criticism of the applicants that the sales are not comparable because they are not subject to high remediation costs. Further, as posited by the Valuer-General, the applicants' criticism that the direct comparison approach is not able to account for the risk of significant contamination and the cost of remediation of the Land to a large extent falls away in the face of my factual finding in relation to contamination of the Land. Moreover, in their respective valuation assessments utilising the direct comparison approach (although not Mr Jackson's preferred approach) both valuers adopted an approach where, having determined preliminary land values based on their respective adjustments, a discrete (although significantly different) deduction was made to account for each valuer's estimation of the cost of remediation. I adopt this approach. 6. As a result, I consider that the level of adjustment required to the comparable sales identified by the valuers, and later considered by the Court, is acceptable: Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541; (1973) 32 LGRA 170 at 551. In reaching this view, I take into account the following comments of Wells J in Crompton v Commissioner of Highways (1973) 5 SASR 301; (1973) 32 LGRA 8 at 317: "…ideally, the valuer should, in the first instance, look at the sales of land over a wide geographical and temporal range, and from these select those that appear potentially useful as a basis for comparison. Those selected should then be carefully analysed by reference to an extensive list of characteristics of land sales the compilation and assessment of which fall clearly within the province of the experts. Whether or not one or more of those sales is, and how it or they ought, to be compared with the subject land becomes then a matter of degree, and a final decision is reached, often by those same experts drawing a series of nice distinctions. Obviously, no two sales of land will be found to be the same, or even similar in all respects. Those that bear a close similarity to the assumed sale of the subject land will be more reliable than those whose similarity is less proximate and in respect of which adjustments or allowances must be made before they can be safely introduced into the valuation process. At a particular point it will be found that, in respect of the remaining available sales, the adjustments and allowances that would need to be made are of such a magnitude that it ceases to be safe or sound to treat them as sufficiently similar to the assumed sale of the subject land, and they must thenceforward be rejected." 1. I therefore find that the direct comparison approach preferred by Mr Hill (and also undertaken by Mr Jackson), subject to changes to various aspects to reflect factual matters determined earlier, should be adopted when undertaking valuation assessments of the Land with mixed-use development the highest and best use. 2. For completeness I note that the valuers provided evidence, and the parties made submissions, as to the valuation methodology to be used where the highest and best use of the Land was its continuing use as a service station. However, as I have found that the highest and best use of the Land is a mixed-use development, I do not further consider the position relating to the continuing use of the Land as a service station. Valuation determination 1. Given the powers of the Court in these appeals identified in s 40 of the Valuation Act, my findings above, and the detailed valuation evidence before the Court (and notwithstanding the various differences in relation to the valuation assessments undertaken by the valuers and inputs thereto), I consider it is appropriate that the Court determine land values for the Land at the base dates. As will be apparent, I consider that an adjustment to the issued land values at the base dates is appropriate. 2. I note the following key findings which I incorporate into my determination of the land values. The evidence before the Court demonstrates that at each of the base dates, the existence and extent of contamination of the Land was likely to be minimal and the risk of remediation being required is low (but certainly not valueless). I consider that the hypothetical parties would make some provision in their transaction to reflect the probability that some (or further) contamination – either by way of fill or otherwise – may have occurred on the Land. Given this, and doing the best I can, I have factored this into the makeup of the allowance in the amount of $330,000 for remediation costs, would be made by the hypothetical parties transacting the notional sale for reasons I have given. It follows that the highest and best use of the Land at the base dates is as a mixed-use development. I find that the alternative exercise of valuing the Land on the basis of the continuation of a service station use does not produce the most financially rewarding use and that exercise can therefore be disregarded. The achievable floor space for a mixed-use development on the Land is regulated by both Control P3 in the DCP and Objective 3F-1 in the ADG. Given this, the hypothetical parties transacting the notional sale would utilise an achievable floor space of 2,818m² for the purpose of assessing the land values. 3. I accept that the preferred valuation methodology of Mr Hill, being the direct comparison approach, should be adopted when valuing the Land. I find that the valuers, in their joint report, have identified sufficiently comparable sales. While I accept that there are a number of subjective assumptions and inputs which result in differing adjustments when applying the direct comparison approach, given the availability of comparable sales, and the fact that both the valuers have given evidence (albeit noting Mr Jackson's reservations in relation to the application of the direct comparison approach) in relation to their respective adjustments to the comparable sales, I am comfortable that there is sufficient evidence to appropriately inform the valuation assessments undertaken by the Court. 4. The valuation assessment by the Court detailed below occurs in the following manner. Having considered the evidence of both valuers, adopting their approach, and using the comparable sales they have both identified and analysed in their joint report, I have made findings in relation to discrete adjustments to the comparable sales, and determined an adjusted GFA rate for the Land for each of the base dates. My rate falls between the suggested GFA rates of each of Mr Jackson and Mr Hill. I have then determined an initial land value for each base date, by applying my adjusted GFA rate to my finding that the achievable floor space of a mixed-use development is 2,818m². Thereafter, similarly to the approach of each valuer, I deducted the sum of $330,000 from the initial land value, which I have found to be the appropriate amount that the hypothetical parties to the notional sale would attribute to any concern regarding contamination and remediation. I have adopted the same amount for each of the base dates. Comparable sales 1. In their joint report, both valuers adopted and analysed seven comparable sales selected on the assumption that the highest and best use of the Land was a mixed-use development (listed below): Sale No. 1 266-268 Liverpool Road, Enfield Sale No. 2 248-250 Liverpool Road, Burwood Sale No. 3 12 Coronation Parade, Enfield Sale No. 4 17 Wetherill Street, Croydon Sale No. 5 507-511 Liverpool Road, Strathfield Sale No. 6 459-463 Liverpool Road, Strathfield Sale No. 7 1 Lion Street and 402 Liverpool Road, Croydon 1. Five of the seven comparable sales are located upon Liverpool Road, the same road as the Land. Most are proximate to the Land and transacted close to the base dates. Having considered the detailed evidence and analysis regarding each sale as well as the photographic evidence (which I have viewed both electronically – which allows magnification – and in document form), accepting the evidence of Mr Hill, I consider that the most comparable sales are Sale No. 3, Sale No. 2 and Sale No. 1. 2. I have considered the various adjustments to the comparable sales made by each valuer to create equivalence with the Land detailed in 'Annexure 1' to this judgment. Adjustments which the valuers agreed upon (or maintained minor differences) including adjustments for size, shape, time, planning and views, do not require further consideration. As noted at [180] above, the more significant differences between the valuers related to adjustments for location (in relation to five of the sales), corner/street frontage (in relation to three of the sales) and the existence of development approval (in relation to five of the sales). 3. I consider the valuers' evidence below before noting my findings in relation to these discrete adjustments and then determining a resulting adjusted GFA rate for a mixed-use development on the Land. For completeness, I note that where the initial GFA rate (that is, before any adjustments are made in 'Annexure 1') for the comparable sales differed between valuers, I adopted a rate approximately halfway between the valuers' rates. Adjustments Location 1. The different adjustments made for location with Sale No. 3, Sale No. 4, Sale No. 5, Sale No. 6, and Sale No. 7 result from the valuers taking differing approaches when assessing locational attributes. Mr Hill utilised "suburb-based" sales data (by considering median property prices for residential units in suburbs) to guide his adjustments for location, and also had regard to the kind of development surrounding the comparable sale. 2. Mr Jackson determined his adjustments for location by considering sales and asking prices of apartments in developments in the locality (some of which are located on the site of the comparable sale) to identify locational advantage or disadvantage, and also had regard to the "busy main road location" of the Land compared to some of the comparable sales. He prepared and relied on a summary of the sales of apartments including sales of 15 apartments in the 31 apartment development at Sale No. 5; 11 apartments in the 16 apartment development at Sale No. 2; 15 apartments in the 15 apartment development at Sale No. 1; and the asking prices for 24 apartments in the development at Sale No. 6; 38 apartments in the development at Sale No. 7; and 55 apartments at a further development at 380-382 Liverpool Road, Ashfield. He opined that this analysis identifies locational advantage or disadvantage more accurately than the generalised suburban-based data relied upon by Mr Hill, and thus provides better evidence. 3. The valuers provided specific commentary in relation to their adjustments for location. Mr Jackson noted that Sale No. 3 is situated on a road which carries approximately half the volume of traffic of Liverpool Road, and further, the upper levels of the development at Sale No. 3 will have views of Sydney's CBD. As a result of the "obvious locational advantages" of Sale No. 3, he makes an adjustment of −15%. In comparison, Mr Hill noted that Sale No. 3 is in the suburb of Enfield while the Land is in the suburb of Strathfield which is regarded as a superior suburb to Enfield due to its more established residential location with prestige and heritage residential homes and access to transport hubs and schools. He also considered the low-rise residential development around the Land to be superior to the development mix around Sale No. 3. Mr Hill concluded that Sale No. 3 is inferior to the Land and as such adopts a +5% adjustment. 4. In relation to Sale No. 4, Mr Hill opined that there was little if any difference in locational attributes between this sale and the Land. Taking a conservative view, he agreed that Sale No. 4 is in a "slightly" superior suburb (and applied a −5% adjustment). He did not agree that the −15% adjustment for superior location by Mr Jackson was warranted. Mr Hill also opined that there is a difference in views able to be enjoyed in the respective developments, as Sale No. 4 is able to be developed to three levels whilst the Land is able to be developed to six levels. As a result, he makes a further "slight" adjustment of +5% for views. 5. Mr Hill adopted a +10% adjustment reflecting his view that Sale No. 5 is in an inferior location to the Land and justified his adjustment by noting that this sale is 1.78km south-west from the Land and close to the Enfield Intermodal Terminal and Strathfield South industrial area. Mr Jackson disagreed with this adjustment as he opined that the sale prices for apartments developed at Sale No. 5 are superior to the price being achieved for apartments in the immediate locality of the Land (where if the Land was in a superior location the price achieved for apartments at Sale No. 5 would be considerably less – but this is not the case). Rather, Mr Jackson opined that the sale is in a comparable location to the Land. 6. There is a significant (20%) difference between the valuers in relation to Sale No. 6. Mr Hill considered that Sale No. 6 is in a far inferior residential location to the Land, noting it is approximately 1.35km from the Land, is within a secondary retail location, directly adjoins Strathfield South Public School and is overlooked by surrounding multi-story developments. As a result, he adopts a +20% adjustment. Mr Jackson considered that no adjustment for location is necessary, and criticised Mr Hill's adjustment on the basis that Sale No. 6 is closer to the Land that Sale No. 5 – suggesting Mr Hill's adjustments in relation to Sale No. 6 (+20%) and Sale No. 5 (+10%) are inconsistent. 7. In relation to Sale No. 7, Mr Jackson adopted an adjustment of −15% because he considered that the irregular shape of the site and relatively small Liverpool Road frontage (in comparison to the overall site) allowed the site to be developed with only minimal retail/commercial space and a majority of (more profitable) residential apartments. In contrast, Mr Hill noted that Sale No. 7 is at Croydon, 2.25km from the Land and is surrounded by a service station, a mix of residential developments, and industrial-style and low-rise retail/commercial developments. He considered Croydon to be a slightly superior suburb in "value levels", but that there was little difference in locational attributes between Sale No. 7 and the Land. Taking a conservative approach, he made an adjustment of −5%. 8. Having considered the detailed material before the Court (including extensive photographic material), I generally prefer the evidence and adjustments for location in relation to each of the five sales made by Mr Jackson primarily for the reasons he has given. In particular, I consider that Mr Jackson's analysis of apartment sales and asking prices in the locality of the comparable sales provides a better guide to the effect of location than Mr Hill's preference for locational adjustment based primarily upon suburban location. Corner/street frontage 1. Different adjustments are made by the valuers for corner/street frontage for Sale No. 1 (10% difference); Sale No. 2 (10% difference); and Sale No. 6 (30% difference). Mr Jackson opined that these differences arise primarily because of Mr Hill's view that the 58m long arc frontage of the Land is beneficial in comparison to the frontage of these comparable sales. 2. Mr Hill identified the benefits of frontage as greater exposure and prominence, with more light and air access to units and/or verandas. As a result, Mr Hill made the following adjustments: 1. Sale No. 1 – Adjustment of +15% on the basis the sale has a single street frontage which is approximately half the length of the frontage of the Land (where the Land has the additional benefit of a splay frontage, a secondary street frontage, and is a corner allotment). 2. Sale No. 2 – Adjustment of +15% on the basis that the Land is a superior corner allotment with two street frontages, while the sale is an inside allotment, has a frontage which is approximately one third of the length of the frontage of the Land, and rear lane access. 3. Sale No. 6 – Adjustment of +30% on the basis that the sale has a frontage which is one third of the length of the frontage of the Land, and the sale is hampered by narrow access/egress from Liverpool Road (with construction access issues). A further adjustment of +5% was made to account for topography as the land falls away from the street to the rear in a northerly direction. 1. In contrast, Mr Jackson opined that a long frontage to a busy arterial road is not a positive attribute for apartment developments. Mr Jackson also maintained that Mr Hill's adjustments for corner/street frontage are inconsistent – criticising the difference between Mr Hill's +10% and +35% adjustments, in circumstances where the relevant comparable sales all have a street frontage and either rear laneway access, side laneway access or rear road frontage. Mr Jackson made +5% adjustment for all three comparable sales. Mr Jackson also suggested the magnitude of Mr Hill's adjustments are not supported by the sales evidence, as the GFA rates for comparable sales with corner frontages are not significantly different to the sales that Mr Hill has adjusted as a result of their inferior frontages. 2. I have considered the evidence (written and photographic) of the Land and the comparable sales that have been adjusted for corner location/street frontage. I accept that the Land is a corner allotment with two street frontages, the primary frontage having a length of 58m. 3. The relationship between the Land and Sale No. 1 is clearly depicted in the aerial photographs before the Court. I accept that Sale No. 1 is an inside allotment with a single street frontage and a rear access via a right of carriageway. I accept that the Land frontage is superior and prefer Mr Hill's adjustment of +15% to account for this. 4. I make a similar finding and prefer Mr Hill's adjustment of +15% in relation to Sale No. 2. Again, the aerial photography shows the relationship between the Land and the sale in terms of corner/street frontage (as well as the shape and distance between the Land and the sale). Sale No. 2 is an inside allotment with a rear lane access, compared to the Land which I accept is a superior two-street corner allotment. 5. Sale No. 6 is an inside allotment with a single street frontage of 20m with a narrow access. I accept Mr Hill's view that the sale is inferior, given the irregular land shape, street frontage of one third of that of the Land, with access issues (including construction access limitations caused by being located on a busier road with a narrow access/egress from Liverpool Road). I accept an adjustment of +30% would account for the sale's inferior characteristics as opined by Mr Hill. Development approval 1. The valuers differed in relation to the appropriate adjustment for the five comparable sales with development approval, being Sale No. 1, Sale No. 2, Sale No. 3, Sale No. 4, and Sale No. 6. Mr Hill allowed an adjustment of −10% for each of these sales, while Mr Jackson allowed an adjustment of −15%. 2. Mr Jackson considered that obtaining a development approval is time-consuming and expensive (incurring consultant fees and holding costs). In contrast, where there is a development approval in place at the time of sale, a purchaser knows the development outcome and the conditions of approval and therefore would purchase the land with greater certainty. His −15% adjustment assumes a total period of 18 months to obtain a development approval, including the retention of consultants (usually a planner, an architect, an urban designer, a traffic engineer, a structural engineer, and an environmental consultant), conferences with Burwood Council and the submission of a development application. Mr Jackson referred to the actual 20 months it took for Sale No. 5 to obtain development approval. 3. Mr Hill suggested that his adjustment of −10% for the benefit of a development approval has been established in many matters before the Court, including in matters of more complexity than the one now before the Court. He appeared to suggest this established a precedent for the adjustment for the benefit of a development approval. 4. Although the matter is not without some doubt, I prefer the −15% adjustment to the five sales adopted by Mr Jackson, for the reasons he has given. I consider his analysis of the time taken to obtain a development approval, and use of specific examples to support his adjustment, to be appropriate and persuasive. The current matter is indicative of the type of concerns that may delay development approval. Further, I do not consider that where an adjustment of −10% may have been adopted in previous matters before the Court, the Court could or should adopt this as a "precedent". Analysis using above findings 1. In addition to my consideration of the adjustments made by the valuers, and as noted above, although I have considered all the comparable sales, I consider that on the evidence available, Sale No. 3, Sale No. 2, and Sale No. 1, are the most comparable to the Land (as suggested by Mr Hill). Each sale is close (within 300m) to the Land, was transacted relatively close to the base dates and provides good comparable market evidence. As a result, I give these comparable sales more weight in my determination. 2. In relation to Sale No. 3, the primary difference between the valuers relates to location, where I have considered this above and accepted Mr Jackson's view that the sale is in a superior location and his proposed adjustment. Having noted my preference for the −15% adjustment for development approval (and noting that the only other difference between the valuers is in relation to time, where I adopt the 0% adjustment proposed by Mr Jackson), the appropriate total adjustment is −30% to this sale as suggested by Mr Jackson. This leads to an adjusted analysis of approximately $1,750/m² (for the 2016 base date) and adopting the valuers' agreed 5% adjustment for market movement between the base dates, $1,835/m² (for the 2017 base date). 3. In relation to Sale No. 2, given my preference for Mr Hill's adjustment of +15% to account for corner/street frontage, and my acceptance of Mr Jackson's −15% adjustment for development approval, the appropriate total adjustment is −27.5% which leads to an adjusted analysis of approximately $1,994/m² (for the 2016 base date) and $2,094/m² (for the 2017 base date). 4. In relation to Sale No. 1, I again prefer Mr Hill's adjustment of +15% to account for corner/street frontage, and my acceptance of Mr Jackson's adjustment of −15% for development approval. This leads to an appropriate total adjustment of 32.5% leading to an adjusted analysis of approximately $1,992/m² (for the 2016 base date) and $2,091/m² (for the 2017 base date). 5. I have also given consideration to the appropriate total adjustments for each of Sale No. 4, Sale No. 5, Sale No. 6, and Sale No. 7, and factor these into my determination. In summary, as noted above, I have accepted Mr Jackson's adjustment for location in relation to each of those sales, Mr Hill's adjustment for corner/street frontage in relation to Sale No. 6, and Mr Jackson's adjustment for development approval where relevant to the sale. 6. In addition, I have considered the minor differences in adjustments between the valuers and record my findings as follows: for Sale No. 4, I accept the position of Mr Hill in relation to adjustments for time (given the sale occurred in late 2017) and views (accepting his evidence about the difference in storeys that can be developed between the Land and the sale); for Sale No. 6, I accept the position of Mr Hill in relation to the adjustment for views (accepting his evidence of the impact of the surrounding development on the sale); and for Sale No. 7, I accept the position of Mr Hill in relation to adjustments for shape (accepting his evidence of greater irregularity) and views (accepting his evidence about the difference in storeys that can be developed between the Land and the sale), and Mr Jackson in relation to the adjustment for planning (accepting that there would be an impact on the basis of the difference in zoning between the Land and the sale). 7. Given this, I find the appropriate adjusted analysis across those sales is as follows: 1. In relation to Sale No. 4: $1,666/m² (for the 2016 base date) and $1,749/m² (for the 2017 base date); 2. In relation to Sale No. 5: $1,579/m² (for the 2016 base date) and $1,658/m² (for the 2017 base date); 3. In relation to Sale No. 6: $1,674/m² (for the 2016 base date) and $1,758/m² (for the 2017 base date); and 4. In relation to Sale No. 7: $1,926/m² (for the 2016 base date) and $2,022/m² (for the 2017 base date). 1. Taking all the above evidence into account, and doing the best I can, I find that the appropriate adjusted GFA rate for the Land for the 2016 base date is $1,850/m² and, adopting the valuers' agreed adjustment for market movement of 5%, the analysed GFA rate for the Land for the 2017 base date is $1,950/m². 2. Applying the above analysed GFA rate for the Land for the base dates to the 2,818m² achievable floor space, I find that the initial land values for the base dates is $5,213,300 and $5,495,100 respectively. Adopting the approach of the valuers, I then deduct the amount of $330,000 from the initial land values, as attributable to the likely risk of remediation. As a result, I determine the following land values, as rounded, for the respective base dates: 1. $4,883,000 at the 2016 base date; and 2. $5,165,000 at the 2017 base date. Conclusion 1. I find the land value for the Land at the 2016 base date to be $4,883,000; and I find the land value for the Land at the 2017 base date to be $5,165,000. Orders 1. Accordingly, the orders I make are as follows: In proceedings 2018/00366212: 1. Appeal allowed. 2. Pursuant to s 40(1)(b) of the Valuation of Land Act 1916 (NSW), determine the land value of land being Lots A and B in DP 409923 and Lots 1 and 2 in DP 208597 located at 287 Liverpool Road, Strathfield as at base date 1 July 2016 to be $4,883,000. In proceedings 2018/00366200: 1. Appeal allowed. 2. Pursuant to s 40(1)(b) of the Valuation of Land Act 1916 (NSW), determine the land value of land being Lots A and B in DP 409923 and Lots 1 and 2 in DP 208597 located at 287 Liverpool Road, Strathfield as at base date 1 July 2017 to be $5,165,000. ********** Annexure 1 (63629, pdf) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 May 2021