Land and Environment Court New South Wales Medium Neutral Citation: BSM Holdings Pty Ltd v Valuer-General of New South Wales; Omaya Investments Pty Ltd v Valuer-General of New South Wales [2024] NSWLEC 79 Hearing dates: 22, 23, 24, 26 April 2024, further written submissions 7, 13, 20 May 2024 Date of orders: 31 July 2024 Decision date: 31 July 2024 Jurisdiction: Class 3 Before: Pain J Decision: The Court orders: (1) In proceeding 2021/329948 (4 Clarence Street Strathfield) the appeal is upheld and the land valuation determined in the amount of $2,135,000. (2) In proceeding 2021/329950 (32 Cooper Street Strathfield) the appeal is upheld and the land value determined in the amount of $2,066,000. (3) In proceeding 2021/329949 (27 Cooper Street Strathfield) the appeal is dismissed. (4) In proceeding 2021/329951 (2 Leicester Avenue Strathfield) the appeal is dismissed. (5) In proceeding 2021/329952 (24 Leicester Avenue Strathfield) the appeal is upheld and the land value determined in the amount of $1,250,000. Catchwords: APPEAL – land valuation appeals – whether land values of multiple lots in Strathfield triangle too high – comparable sales selection in light of agreed valuation method – adjustment of comparable sales Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), s 7.11 Valuation of Land Act 1916 (NSW), ss 6A, 37, 40 Canada Bay Local Environmental Plan 2013 (NSW) State Environmental Planning Policy (Infrastructure) 2007 (NSW), cll 86, 87 Cases Cited: Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245 Capuano v Roads and Maritime Services [2018] NSWLEC 59 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 Leice Pty Ltd v City of Canada Bay Council [2021] NSWLEC 1627 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; [1955] HCA 13 Spencer v Commonwealth (1906) 5 CLR 418; [1907] HCA 82 The Trust Company Ltd v Minister Administering the Crown Lands Act 1989 (2012) 211 LGERA 158; [2012] NSWLEC 73 Texts Cited: A Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press) Macquarie Dictionary (online ed, accessed July 2024) Category: Principal judgment Parties: BSM Holdings Pty Ltd (Applicant, 2021/329948-49, 329951-52) Omaya Investments Pty Ltd (Applicant, 2021/329950) Valuer-General of New South Wales (Respondent) Representation: Counsel: T S Hale SC (Applicants) L Waterson (Respondent) Solicitors: C J Boyd Solicitors (Applicants) Crown Solicitor's Office (Respondent) File Number(s): 2021/329948, 2021/329949, 2021/329950, 2021/329951, 2021/329952 Valuation of Land Act 1916 (NSW) Planning controls Town planning evidence Achievable GFA Finding on GFA Development timing Finding on development timing Valuation evidence Step 1: Determine rate per m2 of GFA for residential flat building development on precincts 1 and 8 Valuers' comparable sales evidence Consideration of comparable sales a. Comparability of Mr Hill sale 1 within Strathfield triangle and sales 2-5 outside Strathfield triangle Finding – Mr Hill sales comparable b. Mr Garnsey sales 2, 3 and 6 comparable Appropriate adjustments of relevant comparable sales (i) Adjustments of Mr Hill sale 1 (ii) Adjustments of Mr Hill sales 2-5 (iii) Mr Garnsey sales 2, 3 and 6 adjustments Overall conclusion on adjustments of comparable sales Step 2: Multiply rate per m2 of GFA by achievable GFA for each relevant parcel Step 3: Further adjustments (i) Applicable discount rate for precinct 1 Finding (ii) Allowance for future Cooper Street realignment – precinct 8 Finding Overall conclusion Orders JUDGMENT 1. The Applicants have appealed under s 37 of the Valuation of Land Act 1916 (NSW) (VL Act) against the disallowance by the Valuer-General (VG) of objections to the determination for the 2019 valuation year of the land value of five parcels of land located in the area of Strathfield known as the 'Strathfield triangle' (collectively, the relevant parcels). The land value of each relevant parcel is to be assessed as at 1 July 2019 for the 2019 valuing year. I thank Acting Commissioner Davidson for his assistance in this matter. The Court went on a view of the relevant parcels and most of the comparable sales with the parties and experts. 2. The Applicants have the onus of proving their case, s 40(2) of the VL Act. Under s 40(1) the Court can confirm, revoke, make another decision or remit a matter to the VG. 3. The issued values and the parties' contentions as to the amount of the land values are as follows: 4 Clarence 32 Cooper 2 Leicester 27 Cooper Street (2021/329948 BSM Holdings) Street Avenue Street (2021/329950 Omaya Investments) (2021/329951 BSM Holdings) (2021/329949 BSM Holdings) Issued Land Value $2,470,000 $3,180,000 $3,300,000 $4,650,000 Applicants $970,000 $940,000 $2,280,000 $2,450,000 Valuer-General $2,490,000 $2,415,000 $4,885,000 $6,375,000 1. An appeal was also lodged in relation to 24 Leicester Avenue. The land value agreed by the valuers for 24 Leicester Avenue was $1,250,000, which is below the issued land value of $2,300,000. It is therefore agreed between the parties that the appropriate orders for proceeding 2021/329952 should be that the appeal is allowed and the land value be determined as the agreed amount. The order I make will reflect the agreement between the parties and the land value of 24 Leicester Avenue will not be subject to any further consideration. 2. The Applicants seek determinations of land value that are lower for four properties that remain in contention as identified in the above table. The VG seeks orders confirming the issued values for 4 Clarence Street, 2 Leicester Avenue and 27 Cooper Street which would mean these three appeals are dismissed. The VG seeks a determination for 32 Cooper Street that is lower than the issued value but higher than the amount sought by the Applicants. Valuation of Land Act 1916 (NSW) 1. Section 6A of the VL Act provides as follows: Part 1 Preliminary 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. (3) Notwithstanding anything in subsection (1), in determining the land value of any land, being land in relation to which, at the date to which the valuation relates, there was a water right— (a) the land value shall include the value of the right, and (b) it shall be assumed that the right shall continue to apply in relation to the land. (4) For the purpose of determining the value of a water right, the value of any water secured by, or referable to, that right is to be ignored. 1. The hypothetical, unencumbered fee simple of the land is to be valued, see Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; [1955] HCA 13 at 623 (Dixon CJ, McTiernan, Webb, Fullagar, Kitto JJ). Any improvements on the land being valued are not to be valued. 2. A bona-fide seller under s 6A(1) of the VL Act is aware of all matters affecting the market. The market is 'assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property', Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 (Kenny) at [50] (McHugh J). In Spencer v Commonwealth (1906) 5 CLR 418; [1907] HCA 82 (Spencer) Griffith CJ at 432 stated the value of land as at what point 'would a [purchaser] desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?'. Factors impacting land value include the land's situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood of a rise or fall in the amount which one would otherwise be willing to fix as the value of the property, Kenny at [49] citing Spencer at 441 (Isaacs J). Planning controls 1. The relevant parcels are all within an area known as the Strathfield triangle. The Canada Bay Local Environmental Plan 2013 (NSW) (CBLEP) and Strathfield Triangle Development Control Plan 2014 (STDCP) which commenced on 30 May 2014 are relevant controls. The City of Canada Bay Development Contributions Plan for the Strathfield Triangle 2014 (contributions plan) and the Strathfield Triangle Public Domain Plan 2014 (public domain plan) also apply to the relevant parcels. 2. The town planners agreed that under the CBLEP each of the relevant parcels is zoned R4 High Density Residential except for part of 27 Cooper Street which is zoned SP2 Infrastructure (Local Road). Part of Cooper Street is to be acquired by Canada Bay Council (the council) and realigned and used as a public road. The CBLEP establishes a minimum lot size of 1,500m2 for residential flat buildings. The area of each relevant parcel was agreed by the town planners to be 505.9m2 for 4 Clarence Street, 490.5m2 for 32 Cooper Street, 1,062m2 for 27 Cooper Street and 556.4m2 for 2 Leicester Avenue. The area of each relevant parcel falls below the threshold for residential flat buildings in the Strathfield triangle. 3. The STDCP contains detailed controls for various matters including height of buildings, setbacks and access arrangements. The amalgamation pattern at map 8 of the STDCP is relevant. Eight amalgamation precincts are identified. Under cl 3.7 of the STDCP redevelopment of land generally requires amalgamation with other parcels in the same precinct in accordance with the specified amalgamation pattern. 4. The parcels 4 Clarence Street and 32 Cooper Street are two of the eight lots in precinct 1. They do not share a boundary. The parcel 4 Clarence Street is at the north of the precinct and 32 Cooper Street is to the south. Their development potential is tied to their ability to be amalgamated with the other six lots, which are in different ownership. 5. The parcels 27 Cooper Street and 2 Leicester Avenue are both in precinct 8 which contains nine lots. The parcel 2 Leicester Avenue is a single lot. The parcel 27 Cooper Street contains four lots. The development of precinct 8 in the STDCP identifies the future realignment of Cooper Street. Only three of the lots in 27 Cooper Street are within precinct 8. The northern lot is zoned SP2 Infrastructure (Local Road) for the purposes of the realignment of Cooper Street. All the lots in precinct 8 are in the same ownership (or related entities). Part of the future development in the STDCP involves the creation of a road known as Leicester Lane running parallel with Leicester Avenue and behind numerous properties fronting Leicester Avenue. The following figure identifies much of the above information. Figure 5G – Amalgamation Strathfield triangle DCP prepared by BBC consulting planners for the Applicants 1. Generally the state of knowledge and the condition of the parcels and surrounding lots at 1 July 2019 are relevant. 2. Mr Chambers the Applicants' town planner stated that as at 1 July 2019 the council had not taken any action since the commencement of the STDCP in 2014 to implement infrastructure improvements or acquire land reserved for public purposes within the Strathfield triangle under planning documents in the STDCP, contributions plan and public domain plan. This was not in dispute between the parties. Town planning evidence 1. In the joint planners' report dated 15 March 2024 the town planners reached substantial agreement about the characteristics of the parcels. They agreed that the development potential of each of the relevant parcels is dependent upon the ability to be amalgamated with other lots within the precincts in the amalgamation pattern specified in the STDCP. Two remaining issues were: 1. The gross floor area (GFA) that the hypothetical vendor/purchaser as at 1 July 2019 would be advised could be achieved on precincts 1 and 8; and 2. In relation to precinct 8 allowance for time delay until the realigned Cooper Street would be acquired and constructed by the council, or some alternate form of permanent access would become available so as to enable precinct 8 to be developed. Achievable GFA 1. No floor space ratio (FSR) controls for land in the Strathfield triangle exist. The town planners differed as to how they calculated the achievable GFA on each of the relevant parcels. The town planners agreed that the achievable GFA could be determined using the 'site area apportionment method' whereby the achievable GFA for the whole of the precinct was determined which could then be apportioned based on the site area of the relevant parcels (the valuers' approach also). Their results were as follows: Property Haskew Estimated Precinct Average GFA Apportioned to Individual Properties Chambers Estimated Precinct GFA Apportioned to Individual Properties 4 Clarence Street 2,276.55m2 2,681.27m2 32 Cooper Street 2,207.2m2 2,597.53m2 27 Cooper Street 3,287.9m2 4,249.6m2 2 Leicester Avenue 3,060.2m2 3,258.01m2 1. The Applicants also provided the average GFA for 4 Clarence Street of 2,478.91m2, for 32 Cooper Street of 2,402.39m2, for 27 Cooper Street of 3,768.75m2 and for 2 Leicester Avenue of 3,159.11m2 based on the calculations of Mr Haskew the VG's town planner and Mr Chambers the Applicants' town planner. Mr Chambers 1. Mr Chambers derived his GFA from a report prepared in 2019 by architects retained by the council for the purpose of reviewing the Strathfield triangle planning controls (GSA report). He adopted the architects' FSR/GFA estimates for precincts 1 and 8 with some adjustments to precinct 8 as the architects considered a larger area for that precinct. The architects calculated GFA using a building efficiency ratio of 83%. 2. In his primary report dated October 2022 Mr Chambers stated his advice to the hypothetical purchaser would be to retain a skilled architect to work up a concept/sketch design to identify a potential development yield. Mr Chambers acknowledged that while the council was in the process of preparing a planning proposal to change the planning controls within the Strathfield triangle, as at 1 July 2019 no information regarding this review was publicly available. He opined that had a hypothetical purchaser made enquiries of the council as to the likelihood of and timeframe for a planning proposal they would have been advised that: * development activity in the Strathfield triangle has stagnated; * the existing controls are going to be reviewed; * an analysis of the Strathfield triangle is to be undertaken involving studies of land economics, urban design and traffic; * a report on progress prepared by council officers is likely to go to council by the end of the year; * if council resolves to support the planning proposal, council will need to seek a gateway determination to permit the planning proposal to be exhibited; * the process could take years; and * the planning proposal once prepared, and once exhibited post gateway determination may not proceed. 1. In his supplementary report dated June 2023 Mr Chambers reiterated his prior opinion that accurate estimation of GFA yield should be undertaken by a skilled architect. He noted that the GSA report estimated a 'reasonably realistic FSR potential' under the existing controls which created a benchmark to assess and quantify any potential changes to the controls. Mr Chambers opined that the hypothetical purchaser would have been able to discuss likely GFA/FSR yields with the council and it was likely the advice would have been consistent with the estimations in the GSA report which he applied. 2. I note that Mr Chambers was not cross-examined on GFA. Mr Haskew 1. Mr Haskew calculated building envelope areas (BEA) for the footprint of each level permitted by the STDCP. He calculated BEA by taking the 'Assumed Building Footprint' in map 6 of the STDCP and from that derived building envelopes having regard to the 'Height of Buildings Map' and STDCP building heights using geographic information system software. Mr Haskew then converted the BEA to GFA using the formula GFA=BEAx70% which is a 'rule of thumb' conversion rate set out in the relevant apartment design guide. 2. In the joint planners' report Mr Haskew acknowledged that 'architectural plans should be expected to be a more accurate method of predicting achievable GFA. This is primarily because in practice, it is frequently the case that compliant residential flat building designs can achieve better than 70% GFA efficiency'. Mr Haskew would 'advise a hypothetical prudent purchaser that his estimates are a worst case scenario and it is reasonably likely that careful architectural design could achieve a higher GFA efficiency'. Mr Haskew noted that he had not seen the 'architectural plans relied on by [Mr Chambers]'. [I note that during the hearing it was clarified that Mr Haskew's reference to 'architectural plans' was likely intended to mean the GSA report which did not contain such plans]. 3. In oral evidence, Mr Haskew confirmed that had the hypothetical purchaser sought his advice on 1 July 2019 as to the GFA that could be obtained for precincts 1 or 8 he would have carried out the same calculations as above in [23]. He stated that the hypothetical vendor/purchaser, if made aware that the council was undertaking a review of planning controls, would approach the council to inquire into how existing planning controls may change in the future. Mr Haskew confirmed that he had since been shown the GSA report used by Mr Chambers and believed the GSA report was to inform the council as to whether a planning control proposal was needed. Mr Haskew opined that whether the hypothetical vendor/purchaser would be informed of the contents of the GSA report would not depend on the discretion of an individual officer but on the council's consideration of confidentiality in the documents. Applicants' submissions 1. The Court would adopt the lesser of the two GFA values (Mr Haskew's values) as a vendor would be conscious of the uncertainty surrounding the potential GFA achievable and thus would take the conservative approach. In the event the Court does not accept this approach, an average of the two approaches should be adopted. 2. Mr Chambers' approach was that he would advise a hypothetical purchaser to retain skilled and experienced architects to work up a concept design to identify a potential development yield. That advice from an architect was not obtained. In his supplementary report Mr Chambers suggested another way to assess achievable GFA would be to ask the council whose advice would be consistent with the GSA report. However as at 1 July 2019 no information about the proposed planning controls was publicly available and the council officers were likely to have advised only in the most general of terms. Whether or not the council advice would include the information based upon the GSA report is a matter of speculation. 3. It should also be noted that in commenting on Mr Chambers' evidence above in [24], Mr Haskew was under the misapprehension that Mr Chambers' advice was based on architectural plans. The references by Mr Haskew to a 'worst case scenario' are not suggesting that his estimates are a worst case compared with Mr Chambers' estimates, but that his estimates 'are a worst case scenario and it is reasonably likely that careful architectural design could achieve a higher GFA efficiency' than the 70% GFA efficiency that he adopted. The analysis carried out by Mr Haskew who prepared a first-hand analysis using his own expertise is to be preferred. Valuer-General's submissions 1. Mr Chambers' achievable GFA for each relevant parcel should be adopted. The Applicants' primary position to adopt the lesser of the two values does not explain or justify why the hypothetical vendor, who must be assumed to be not anxious to sell, would opt to take a conservative approach based on Mr Haskew's 'worst case' planning scenario. The Applicants' primary and alternative positions do not pay attention to the whole of Mr Haskew's advice which includes his 'worst case' concession and the fact that Mr Chambers' advice is based on a report specifically undertaken for the Strathfield triangle. In reply, whether or not the GSA report was publicly available is beside the point given Mr Chambers' evidence that the advice provided by the council to a purchaser or vendor about development yields would likely have been consistent with the GSA report and that a concept design carried out by a skilled and experienced architect would have shown a similar FSR/GFA to the GSA report. Finding on GFA 1. At issue is consideration of what the prudent hypothetical vendor and purchaser would be advised for the potential GFA underpinning the valuation of the relevant parcels. Such parties can be assumed to undertake prudent inquiries on matters relevant to their assessment of land value. 2. Neither town planner had strong if any criticism of the other's methodology summarised above in the town planners' evidence. Mr Chambers' approach on behalf of the Applicants resulted in a higher GFA than Mr Haskew's approach on behalf of the VG, reflecting their different methodologies. The higher the GFA adopted the higher the ultimate land value that will be derived by the valuers. The prudent hypothetical purchaser who approached the council for advice as Mr Chambers did could be assumed to receive the GSA report, which applied an 83% building efficiency ratio. While not publicly available in the sense of being released to the public by the council, its provision to Mr Chambers suggests that it was not likely to be regarded as confidential as at 1 July 2019 so that prudent inquiries of the council would be likely to result in it being provided to a hypothetical vendor/purchaser. Given its greater accuracy that should be the basis for the GFA calculation used by the valuers. Accordingly I do not accept that Mr Chambers' approach is speculative and I consider it is likely to be that of the hypothetical vendor. 3. Regarding the Applicants' alternative position that an average of Mr Haskew and Mr Chambers' approaches should be adopted, the practice of averaging is generally regarded as unsound, see A Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press) at 153-154. I do not consider such an approach should be adopted. 4. Accordingly the GFA calculations of Mr Chambers should be applied by the valuers as the appropriate step in their calculation of land value. Development timing 1. The town planners were aware that the valuers assumed it would take 10 years to amalgamate precinct 1. The town planners agreed that public road access timing for the realignment of Cooper Street was relevant to development timing of precinct 8. Mr Garnsey the Applicants' valuer allowed an additional 5 years for public road access to be available in precinct 8. The town planners disagreed about the advice they would provide to a hypothetical prudent purchaser concerning the time which should be expected for public road access to occur for precinct 8. Mr Chambers 1. Mr Chambers supported Mr Garnsey's estimate of five years for road access. Mr Chambers noted Mr Garnsey's evidence that precinct 8 required new road access and no work had started on either Leicester Lane or the realignment of Cooper Street. The STDCP came into effect in May 2014 and nothing had happened since. No land had been acquired by the council to build the new section of Cooper Street and none of the land for Leicester Lane had been dedicated. Mr Chambers believed Mr Garnsey's timeframe seemed reasonable as it remained uncertain as at 1 July 2019 that these works would be undertaken in the foreseeable future. 2. In oral evidence Mr Chambers agreed that the realignment of Cooper Street is 'works in kind' under the contributions plan so that it is capable of being an offer by an applicant for development to provide road works in the SP2 Infrastructure (Local Road) zoned land as full or partial payment of s 7.11 contributions pursuant to the Environmental Planning and Assessment Act 1979 (NSW). Mr Chambers was asked whether, on the assumption that owners of the Cooper Street realignment would be entities associated with the purchaser of precinct 8, the purchaser could make an offer to the council to dedicate some or all the realignment and build some or all the road in lieu of s 7.11 contributions. Mr Chambers agreed that they could, but that they would not as it would not be appropriate because the contributions collected by the council fell far below the costs of works including the acquisition of Cooper Street and the developer of precinct 8 would expect to be fairly compensated for doing the work itself. Mr Chambers stated it would be highly unlikely that a developer would obtain development consent for precinct 8 unless the council acquired the land and completed the realignment of Cooper Street. 3. Mr Chambers was asked whether it would be possible for the developer to have something short of a full realignment, such as a driveway or temporary access road, rather than dedicate the whole of the land and build the whole realignment. Mr Chambers believed that while this was technically possible, he did not think it would be possible for the driveway to intersect with Leicester Avenue, a classified road. He could not foresee any road in that location other than a road which met the specifications in the public domain plan and the STDCP for an intersection. Mr Chambers stated he was aware of the development consent obtained by his client on precinct 8 in 2021 where the Court granted a development application (DA) on a temporary basis when there was not any access off the realigned Cooper Street, see Leice Pty Ltd v City of Canada Bay Council [2021] NSWLEC 1627 (Leice). Mr Haskew 1. Mr Haskew considered that no additional delay should be allowed for road access to precinct 8 as road access was to be provided by way of acquisition using s 7.11 contributions funding. Part of 27 Cooper Street in precinct 8 is zoned SP2 Infrastructure (Local Road) and the STDCP contemplated acquisition by the council to construct a new alignment of Cooper Street which would provide access to precinct 8. Mr Haskew considered that development consent for precinct 8 could not be reasonably withheld because the Cooper Street realignment had not yet been completed and the council would be obliged to deliver these public purpose works. 2. In oral evidence, Mr Haskew agreed that as at June 2019 the expectation would be that land listed for compulsory acquisition by the council for the realignment of Cooper Street would not be acquired in the next few years. Mr Haskew agreed that as at June 2019 the council had not sought dedication of land in lieu of s 7.11 contributions for laneway construction parallel to Leicester Avenue and the widening of Cooper Street. Mr Haskew believed this was because there were no development approvals triggering dedication of the land. He was not aware of any DAs being lodged prior to 2019. Mr Haskew agreed that given the lack of development in the Strathfield triangle he expected that the council's contributions fund in 2019 did not allow for all public purpose works to be constructed in that year. Asked if the council would not have the funds to pay the difference between the value of the land dedicated and the s 7.11 contributions in the event the land was more valuable than the contributions, Mr Haskew stated he was not able to provide his opinion without conducting further investigations. 3. Mr Haskew agreed that as at June 2019 there had been zero development within the Strathfield triangle since the adoption of the contributions plan and the STDCP. When pressed on whether as at June 2019 it would be anticipated that there would be any development in the Strathfield triangle in the near future, Mr Haskew stated that there was no evidence to the contrary and the planning controls allowed for development to occur. Applicants' submissions 1. The focus must be the state of knowledge of the assumed hypothetical parties as at 1 July 2019 and not subsequent events. The hypothetical vendor/purchaser would, in determining the purchase price for land in precinct 8, be cautious and assume a period of five years for access from the realigned Cooper Street to be available in addition to the agreed 10 years. 2. As at 1 July 2019, the STDCP had been in effect for five years. The council had done nothing in terms of the acquisition of land for the realigned Cooper Street or the other public domain works the subject of acquisition under the contributions plan. Nor had it done anything with respect to the public domain works for dedication in lieu of s 7.11 contributions. The hypothetical purchaser as at 1 July 2019 would have been aware of the decision in Al Maha Pty Ltd v Huajun Investments Pty Ltd (2018) 365 ALR 86; [2018] NSWCA 245. That decision, in relation to 38-42 Leicester Avenue Strathfield, established that there were significant commercial risks involved in purchasing land within the Strathfield triangle for the purpose of development upon the assumption that the council would carry out the public works required in the STDCP and the contributions plan. 3. The advice to the hypothetical vendor/purchaser would have been that it could not be known when the realigned Cooper Street would be acquired and developed by the council so as to permit development of the precinct in accordance with the STDCP, the contributions plan and the public domain plan nor could it be known what the prospects were of obtaining development of precinct 8 without the realigned Cooper Street. 4. The grant of development consent in 2021 in respect of precinct 8 in Leice is relevant only to the extent that it confirms a foresight. The difficulty and complications of temporary access are exemplified by, inter alia, condition 96 of that consent. The reference to this consent in cross-examination was subject to objection on the ground of relevance as it postdates the base date of 1 July 2019. In any event it would tend to support Mr Chambers' assessment and not Mr Haskew's because that consent when analysed is clearly impaired and largely uncommercial for the following reasons: 1. The consent provides for a 'temporary' access arrangement. The hypothetical buyer would have to allow for the fact that the completed building would only be accessible through a temporary driveway and that sometime in the future, the council may or may not acquire the land to extend Cooper Street; 2. That future acquisition and major disruption, the timing of which is entirely uncertain, would have to be factored in and recorded on title as some form of covenant; 3. The impacts of that future change upon the hypothetical development would be unknown, including whether there would be any future costs for the owners corporation of the building to bear; and 4. Therefore each apartment sold in that hypothetical development would have to disclose this to purchasers and each purchaser would no doubt discount their interest accordingly. 1. Evidence of future events is admissible to prove a foresight, Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 (Falconer) at 558B (Hope JA). In Falconer it was accepted that a prudent purchaser properly advised would have anticipated a significant rise in building costs, at 558F-G. In the present case, there is no evidence about any expectation of temporary or alternative access at the base date. This is not a case of hindsight to confirm a foresight. The submission by the VG that at 1 July 2019 a hypothetical vendor/purchaser of precinct 8 would likely have been told by the council about alternative access is pure speculation. 2. The VG led no evidence which directly countered Mr Chambers' oral evidence, which is compelling and should be accepted. Valuer-General's submissions 1. Mr Haskew's opinion is that there would be no delay in obtaining development consent on account of the realignment of Cooper Street. The new alignment of Cooper Street is to be constructed over land comprising part of 27 Cooper Street and the adjoining parcel to the east. The parcel to the east is also owned by a company associated with the Applicants. Thus, just as there is agreed to be no adjustment for delay in amalgamating precinct 8 because the purchaser will own all the parcels in the precinct following the hypothetical sale, neither is an adjustment warranted for delay in constructing the new alignment of Cooper Street as the purchaser will own or have access to all the parcels on which the new road is to be constructed. 2. Mr Chambers' oral evidence was that the precinct 8 consent granted in 2021 did not require access to be provided from the realigned Cooper Street but that temporary access from Cooper Street was approved. Although the consent was granted after 1 July 2019, it is evidence of what the hypothetical vendor/purchaser of precinct 8 would likely have been told by the council on the valuation date about alternative access. This directly relates to (and contradicts) Mr Chambers' expectation that alternative access would be highly unlikely. On either basis, the Court is able to have regard to the 2021 consent, see Falconer at 558B, Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 at [35]-[41]. 3. The evidence supports the conclusion that the vendor/purchaser of precinct 8 on 1 July 2019, having considered the issue of alternative access and after making enquiries to the council, would have expected that some form of alternative access to the realigned Cooper Street would likely be approved. The fact that entities associated with the Applicants owned the land for the Cooper Street realignment would provide flexibility for the purchaser to self-provide the alternative access. 4. In reply, Mr Garnsey agreed that a purchaser of precinct 8 would have considered whether there were any alternatives for access other than via the realigned Cooper Street. It strains credulity to suggest that the purchaser, having considered alternatives, would not have approached the council about them. Finding on development timing 1. At issue is whether Mr Garnsey's allowance of an additional five years for road access for precinct 8 is warranted based on the town planners' evidence. The same or related entities owned all the land in precinct 8 as at 1 July 2019. Given the lack of progress on medium density residential development in the Strathfield triangle for several years the Council did not have s 7.11 contribution funds to spend on public access being the realigned Cooper Street as provided in the STDCP. The prudent hypothetical purchaser would not assume the provision of public access. 2. Given the whole of the land in precinct 8 was in one ownership would the prudent hypothetical purchaser assume they had an ability to manage access on a temporary basis across part of precinct 8? The VG argues that such a prudent purchaser of the whole of precinct 8 would be likely to consider that alternative access arrangements would be able to be made in any DA lodged with the council. That foresight is confirmed by the Applicants' successful grant of development consent in 2021 in Leice for a medium residential development which includes temporary access arrangements across part of precinct 8. While after the relevant date of 1 July 2019, consideration of such matters is permissible if this confirms a foresight, rather than simply operating in hindsight, as held in Falconer at 558B. This was essentially acknowledged by Mr Garnsey in oral evidence when he agreed that a purchaser of precinct 8 would have considered the possibility of alternative access arrangements. The Applicants' submissions above in [44(a)]-[44(d)] that the consent conditions for its development consent were impaired and largely uncommercial appear to be counter intuitive given that the Applicants sought to obtain that development consent. The submissions are largely assertions in any event, and not obviously supported by the development consent conditions to which I was referred. 3. No allowance for development timing in relation to precinct 8 is warranted. Valuation evidence 1. In his primary report, Mr Garnsey accumulated sales of individual lots zoned R4 High Density Residential the same as the Strathfield triangle in an adjacent locality. Sale 1 is now excluded as not comparable. Sales 2-6 were purchased for amalgamation into development sites for residential flat buildings upon achieving 1,500m2 of total area. His analysed land values follow: 1) Sale 2 was adjusted from $2,350,000 to $2,250,00 by deducting $100,000 for the added value of the cottage. 1) Sale 3 was adjusted from $2,520,000 to $2,420,000 by deducting $100,000 for the added value of the cottage. 1) Sale 4 was adjusted from $2,660,000 to $2,560,000 by deducting $100,000 for the added value of the cottage. 1) Sale 5 was adjusted from $2,320,000 to $2,220,000 by deducting $100,000 for the added value of the cottage. 1) Sale 6 was adjusted from $2,700,000 to $2,600,000 by deducting $100,000 for the added value of the cottage. 1. The resultant rate of potential GFA for the sales, if amalgamated, ranged from $2,079/m2 to $2,619/m2. 2. Mr Garnsey was instructed to undertake his valuation of the relevant parcels based on the Applicants' town planner's opinion of the achievable GFA on an amalgamated precinct basis. Mr Garnsey adopted a GFA rate for the amalgamated parcels of $1,870/m2. This rate was then adjusted down by -15% reflecting lack of development consent, as this was the midpoint of a normal ‑10% to -20% range based on the likely complexity of achieving the development. He adopted an adjustment of -10% for the Strathfield triangle 'ghetto effect', reflecting the number of vacant fenced out lots, dilapidated dwellings, and rubbish in the streets with no clear timeline as to when the precinct will be developed. A further negative adjustment, for proximity to the railway, was applied reflecting his observation that developers apply a 'dealing with government' discount to sites adjoining infrastructure as concurrence from a government authority slows down and complicates the development process. Mr Garnsey applied an adjustment of -15% for precinct 1. With a total adjustment of -40% he derived a rate of $1,100/m2 for precinct 1. He applied an adjustment of -10% for precinct 8 for railway proximity. With a total adjustment of -35% he derived a rate of $1,200/m2 for precinct 8. 3. These rates were then applied to the GFA for each parcel (based on total GFA of the precincts divided by the site area of the individual parcel as a percentage of the total site area). The relevant parcels in precinct 1 were then further adjusted by 10% per annum (pa) for 10 years to reflect the agreed timeframe required to achieve amalgamated ownership of this precinct. The relevant parcels in precinct 8 were discounted by 10% pa for five years to reflect the time required to achieve the realignment of Cooper Street. 4. In his primary report Mr Hill accumulated sales zoned R4 High Density Residential under the CBLEP, B2 Local Centre under the Burwood Local Environmental Plan 2012 (BLEP) and B4 Mixed Use under the BLEP, Strathfield Local Environmental Plan 2012 (SLEP) and Auburn Local Environmental Plan 2010 (ALEP) purchased for development of residential flat buildings or mixed use residential, all currently under development or completed except for Sale 1. Mr Hill then analysed land values as follows: 1) Sale 1, zoned R4 High Density Residential under the CBLEP, was adjusted from $11,010,000 to $10,755,000 to account for a delayed settlement. 2) Sale 2, zoned B2 Local Centre under the BLEP, was adjusted from $4,900,000 to $4,505,000 by adding a demolition cost of $50,000 and deducting the added value of an existing DA by $245,000, reflecting 5% of sale price. 3) Sale 3, zoned B4 Mixed Use under the BLEP, was adjusted from $31,500,000 to $31,400,000 by adding a demolition cost of $260,000 and deducting the added value of rental for 6 months of $360,000. 4) Sale 4, zoned B4 Mixed Use under the SLEP, was adjusted from $13,200,000 to $12,185,000 by adding a demolition cost of $302,700 and deducting the added value of an existing DA by $1,320,000, reflecting 10% of sale price. 5) Sale 5, zoned B4 Mixed Use under the ALEP, was adjusted from $24,000,000 to $23,000,000 by adding a demolition cost of $200,000 and deducting the added value of an existing DA by $1,200,000, reflecting 5% of sale price. 1. The resultant rate of potential GFA for the sales ranged from $1,610/m2 to $1,821/m2 for sales 1, 2, 4 and 5 with sale 3 standing out with a rate of $3,307/m2. 2. Mr Hill then adjusted the analysed rates for location, size, shape, access and views by comparing them directly to both precinct 1 and precinct 8, selecting an appropriate GFA rate from the range resulting from those adjustments. From this, Mr Hill adopted a GFA rate of $1,915/m2 for the parcels in precinct 1 and $2,000/m2 for the parcels in precinct 8. These rates were then applied to the GFA for each parcel as advised by the VG's town planner based on the contribution of individual parcels to the development potential of each precinct based on the planning controls (ultimately a different approach was taken by the town planners in the lead up to the hearing). 3. The relevant parcels in precinct 1 were then further adjusted by 7.5% pa for 10 years to reflect the time required to achieve an amalgamated ownership of this precinct. The land values of the relevant parcels in precinct 8 were discounted by 25% to reflect the overall risk in the amalgamation of the parcels with adjoining land and achieving DA approval on the total amalgamation pattern. Mr Hill opined 'the hypothetical vendor of the subject land therefore could not expect to achieve, nor would the adjoining owner be expected to pay, full value for this land parcel and that a discount must apply'. 4. The valuers agreed in joint conferencing that the operative assumptions for determining the land value of the land are those in s 6A(1) of the VL Act. The valuers agreed that the highest and best use of each individual parcel was as part of a residential flat building development following the amalgamation of the precinct in which they were located. The agreed method was as follows: 1. Step 1: determine a rate per m2 of GFA for residential flat building development on the whole of the relevant precinct (i.e. either precinct 1 or precinct 8) as if that precinct were an amalgamated parcel, by analysing and adjusting comparable sales; 2. Step 2: multiply this rate by the appropriate achievable GFA for the relevant parcel determined as a proportion of the precinct GFA referrable to the land area of each relevant parcel; 3. Step 3: make further adjustments to this amount including an adjustment to account for delay in achieving amalgamation of the relevant precinct (based on an estimated time for amalgamation to occur and discount rate). 1. The town planners' respective calculations were much closer when the site apportionment method was used. Mr Garnsey adopted the GFA calculations of the VG's town planner Mr Haskew, while Mr Hill adopted the GFA calculations of the Applicants' town planner in the joint planners' report. 2. Mr Garnsey maintained his adjustment to sales for ghetto effect and proximity to the railway. He added adjustments for location, size, shape, access, and views, consistent with Mr Hill, while abandoning his adjustment for lack of development consent. He explained he altered his analysis and adjustments to homogenise the valuers' adjustment table as much as possible. While this increased his adjustments to between -50% and -60% for his sales, his adopted GFA rate remained the same. His adjustments for time to amalgamate precinct 1 and achieve the realignment of Cooper Street for precinct 8 remained the same. 3. Mr Hill maintained his adjustment for location, size, shape, access, and views. He addressed Mr Garnsey's adjustments for ghetto effect and proximity to railway and applied no adjustment for these. His adopted GFA rate remained the same. His adjustments for time to amalgamate precinct 1 and for risk of amalgamation in precinct 8 remained the same. 4. While agreeing on the method to be used, there was dispute between the valuers broadly as follows: 1. Step 1: identification of comparable sales: 1. the comparability of Mr Hill's sales; 2. the comparability of Mr Garnsey's sales; 3. the appropriate adjustments to be made to the relevant comparable sales; 1. Step 2: the appropriate achievable GFA (determined by the town planners' evidence considered earlier); and 2. Step 3: firstly, the appropriate overall discount rate and, secondly, the discount period if any for public road access of realigned Cooper Street in precinct 8. Step 1: Determine rate per m2 of GFA for residential flat building development on precincts 1 and 8 Valuers' comparable sales evidence 1. The valuers selected, analysed and adjusted their comparable sales in both their primary reports and in the joint valuers' report dated 26 March 2024. No common sales were selected by the valuers. Mr Garnsey's sales 1. Following joint reporting Mr Garnsey calculated the analysed GFA of each comparable sale and then made adjustments to apply it to the parcels in each precinct as set out previously. 2. Sale 2 at 1 Derowie Street Homebush was purchased with a contract date of 5 May 2017 for $2,350,000. It had an area of 481m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,082.25m2 (based on a FSR of 2.25:1). It was purchased by a related entity to that which purchased 3 and 5 Derowie Avenue and the adjoining properties at 3, 4 and 6 Kanoona Avenue, resulting in a total of six lots in the same ownership. DA 2016/134 was lodged on 17 August 2016 and determined on 15 November 2016 for the erection of a five storey residential flat building on the property at 1-5 Derowie Avenue. The DA has not been progressed as was evident on the view. 3. Sale 3 at 8 Kanoona Avenue Homebush was purchased with a contract date of 14 March 2017 for $2,520,000. It had an area of 462m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 924m2 (based on a FSR of 2:1). Sale 6 at 12 Kanoona Avenue Homebush was purchased with a contract date of 11 March 2016 for $2,700,000. It had an area of 583m2 and was zoned R4 High Density Residential with a potential GFA identified as 1,166m2 (based on a FSR of 2:1). Sales 3 and 6 were the subject of DA 2016/124.1, together with 10 Kanoona Avenue, for demolition of the existing structures and construction of a seven storey residential flat building. The DA was lodged on 15 September 2016 and approved on 1 February 2017. On 17 May 2023, DA 2023/60 was lodged for the demolition of existing structures, lot consolidation and construction of a residential flat building with a 90 place childcare centre on the ground floor. Since the new DA was lodged, 12 Kanoona Avenue has sold. 4. Sale 4 at 5 Hillcrest Street Homebush was purchased with a contract date of 17 February 2017 for $2,660,000. It had an area of 441m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,102.5m2. Sale 5 at 7 Hillcrest Street Homebush was purchased with a contract date of 16 December 2016 for $2,320,000. It had an area of 441m2 and was zoned R4 High Density Residential under the CBLEP with a potential GFA identified as 1,102.5m2. Sales 4 and 5 are adjoining properties purchased by a related entity to the owner of the adjoining 3 Hillcrest Avenue. The combined areas of the three properties may be insufficient to achieve the minimum 1,500m2 for residential flat development. No DA has been sought for such development since the purchase of these properties. 5. Sales 2-6 were selected as they were near the Strathfield triangle and were all zoned R4 High Density Residential under the CBLEP, the same as the relevant parcels. All sales were of smaller lots which required future amalgamation with next door sites to enable development as residential apartment buildings. Some sales were relied on because the VG's contractor had referred to these in the review of the Applicants' objection. 6. The analysed GFA rate for each sale was adjusted (noting different analysis by each valuer depending on his approach to valuing houses on the sale lots). Mr Garnsey deducted $100,000 for houses adding value to a lot as these potentially provided an income stream. (Mr Hill made no adjustment for houses). 7. I find below that Mr Garnsey's sales 2, 3 and 6 are comparable and therefore only refer to these here. For precinct 1 Mr Garnsey made adjustments for location (nil), size (-35%), shape (-10%), access (nil for sale 2 or 5% for sales 3 and 6), views (10%), ghetto effect (-10%) and railway proximity (-15%). His total adjustments were -60% for sale 2, -55% for sale 3 and -55% for sale 6. Mr Garnsey's adjusted GFA rate was $1100/m2 for precinct 1. 8. Similar adjustments were made in relation to precinct 8 except for railway proximity (-10%). Mr Garnsey's total adjustments were -55% for sale 2, -50% for sale 3 and -50% for sale 6. His adjusted GFA rate was $1200/m2 for precinct 8. Mr Hill's sales 1. In his primary report, Mr Hill relied upon five sales. Sale 1 at 38-42 Leicester Avenue Strathfield located in the Strathfield triangle was purchased with a contract date of 30 June 2015 for $11,010,000. Leicester Avenue is categorised as a main road for the purposes of the Roads Act 1993 (NSW) and is a very busy street. Sale 1 had a developable GFA of 5,905.8m2 and was zoned R4 High Density Residential under the CBLEP with a maximum height of 25m. DA 2016/0429 was lodged on 1 November 2016 for demolition of the existing structures and construction of an eight storey residential flat building. The application was subsequently refused by the council and ultimately the NSW Court of Appeal arising from difficulties in achieving access over neighbouring land. Consequently, the development has not proceeded. 2. Sale 2 at 319-329 Liverpool Road Strathfield was purchased in separate transactions with contract dates of 18 February 2019 and 8 March 2019 for $4,900,000. It had an area of 1,220.3m2 and was zoned B2 Local Centre under the BLEP with a developable GFA of 2,689.6m2 and a maximum height of 20m. Half the site (319-323 Liverpool Road) was sold with existing DA 2018/48.1. An amendment was lodged and approved after the sale dates for demolition of existing improvements and the construction of a six storey mixed use development which was being built when seen on the view. 3. Sale 3 at 15-19 Clarence Street Burwood was purchased with a contract date of 24 April 2019 for $31,500,000. It had an area of 3,165m2 and was zoned B4 Mixed Use under the BLEP with a developable GFA of 9,495m2 and a maximum height of 30m. DA 26/2019 was lodged on 18 March 2019 for demolition of existing improvements and construction of a part nine, part 10 storey residential flat building which has occurred. 4. Sale 4 at 218 Parramatta Road Homebush was purchased with a contract date of 28 February 2018 for $13,200,000. It had an area of 3,027m2 and was zoned B4 Mixed Use under the SLEP with a developable GFA of 7,567.5m2 and a maximum height of 20m. The property was sold with DA 2016/96 lodged on 22 December 2016 for demolition of the existing structures and construction of a six storey mixed use development which has occurred. 5. Sale 5 at 18-24 Railway Street Lidcombe was purchased with a contract date of 6 October 2017 for $24,000,000. It had an area of 2,284m2 and was zoned B4 Mixed Use under ALEP with a developable GFA of 11,420m2 and a maximum height of 32m. DA 423/2016 was lodged on 30 September 2016 and approved on 20 March 2018 after the settlement date of 7 December 2017. The DA approved the demolition of existing structures and construction of an 11 storey mixed use building which has occurred. 6. The five sales relied upon by Mr Hill were selected as they were residential unit site sales purchased as ready to be utilised for that use being amalgamated sites. Mr Hill considered his sale 1 to be the best evidence as it was in the Strathfield triangle. 7. For precinct 1 Mr Hill made adjustments for location (5% for sale 1, 10% sales 2 and 5, -20% sale 3 and 15% for sale 4), size (-15% for sale 1, -20% for sale 2 and -10% sales 3-5), shape (nil for sales 1, 3-5, 10% for sale 2), access (5% for sales 1, 3, 10% for sale 2 and -5% for sales 4 and 5), views (10% for sales 1, 2 and 4, -10% sale 3 and nil for sale 5). He made no adjustments for ghetto effect and railway proximity. His total adjustments were 5% for sale 1, 20% for sale 2, -35% for sale 3, 10% for sale 4 and -5% for sale 5. Mr Hills's adjusted GFA rate was $1915/m2 for precinct 1. 8. Similar adjustments were made in relation to precinct 8 for location, size, shape, ghetto and railway proximity. He made different adjustments for access (10% for sales 1 and 3, 15% for sale 2, nil for sale 4 and -10% for sale 5), and views (10% for sales 1, 2 and 5, -5% for sale 3 and 15% for sale 4). His total adjustments were 10% for sale 1, 25% for sale 2, ‑25% for sale 3, 20% for sale 4 and nil for sale 5. Mr Hills's adjusted GFA rate was $2000/m2 for precinct 8. Mr Garnsey on Mr Hill's sales 1. Mr Garnsey engaged with the sales relied upon by Mr Hill in the joint valuers' report to the extent of adjusting those sales under the headings as agreed by the valuers. He accepted Mr Hill's analysed land values as at the 2019 valuing year, applying his own adjustments. Mr Garnsey considered there were no reliable sale transactions relevant to the base date of 1 July 2019 within the Strathfield triangle which would assist the Court. Mr Garnsey did not consider Mr Hill's sale 1 to be appropriate for determining the land value of the relevant parcels. Mr Garnsey considered Mr Hill's sales 2-5 to be appropriate for determining the land value of the relevant parcels. He did caution they were all in a different zone to the Strathfield triangle. Mr Garnsey's total adjustments for precinct 1 were sale 1 (-35%), sale 2 (-25%), sale 3 (-60%), sale 4 (-30%), sale 5 (-20%). Similar adjustments were made for precinct 8 except for railway proximity resulting in total adjustments for sale 1 (-30%), sale 2 (-20%), sale 3 (-55%), sale 4 (-25%), sale 5 (-20%). 2. As adjusted precinct 1 showed a GFA rate by Mr Garnsey of $1,127-$1,323/m2. Precinct 8 showed a GFA rate of $1,208-$1,611/m2. Mr Hill on Mr Garnsey's sales 1. Mr Hill engaged with sales 2, 3, and 6 selected by Mr Garnsey, determining his own analysed land value as at the 2019 valuing year (not deducting $100,000 for house value) and applying his own adjustments to the relevant parcels. 2. Mr Hill did not consider Mr Garnsey's sale 2 to be a preferred sale as the property sold with development consent for erection of a residential flat building on 1 (sale property), 3 and 5 Derowie Street, which has not been acted on in the 7.5 years since being approved in November 2016. Residential houses remain on the land. 3. Mr Hill did not consider Mr Garnsey's sales 3 and 6 to be preferred sales evidence. These properties were the subject of a DA in 2016, lodged prior to sale 3 and after sale 6, followed by another DA lodged in 2023. The parcel 12 Kanoona Avenue (sale 6) has since been transferred to another party. 4. Mr Hill did not consider Mr Garnsey's sales 4 and 5 to be comparable, opining they were residential cottage sales not considered comparable for multilevel residential use. Since they transacted in December 2016 and February 2017 there has been no activity to suggest the properties were purchased for residential unit development. 5. For precinct 1 Mr Hill's total adjustment across Mr Garnsey's sales 2, 3 and 6 was -5%. His adopted GFA rate range was $2,063-$2,591/m2. For precinct 8 Mr Hill's total adjustment across Mr Garnsey's sales 2, 3 and 6 was also -5%. His adopted GFA rate range was $2,063‑$2,591/m2. The higher values are partly due to Mr Hill not deducting $100,000 for house value and not making any adjustment for ghetto effect or railway proximity which would have resulted in a substantially lesser rate. Oral evidence 1. In oral evidence, it was put to Mr Garnsey that his sales were parts of future amalgamated parcels. Mr Garnsey agreed. It was also put to Mr Garnsey that because his sales were parts of future amalgamated parcels that Mr Hill's sales were 'an inherently more reliable starting point to determine the value of the amalgamated [precinct] 1 and [precinct] 8' and that because his adjustments to Mr Hill's sales were of a 'significantly lower magnitude' than those he applied to his own sales Mr Garnsey's own sales were 'an inherently more unreliable starting point'. Mr Garnsey agreed with both contentions. 2. Mr Garnsey stated his sales should be relied on as they are the 'same sort of product' as the precincts, including because they are near the Strathfield triangle, have similar zoning and are in a similar situation of being consolidated for development in an R4 High Density Residential zone. Sales in the Homebush area have been used previously by valuers as benchmarks to apply to the Strathfield triangle. 3. When asked about the significance of his sale 2, as an example, Mr Garnsey responded he focused on sales more temporal to 1 July 2019. 4. Mr Garnsey selected sales which were more reflective of the current situation of the parcels in the Strathfield triangle. He then adjusted them to reflect the size difference between the sales and the amalgamated precincts as if ready to develop as envisaged by step 1 of the valuation exercise agreed by the valuers. 5. Mr Hill agreed that sale 1 was his main sale. It was put to him that that the purchaser assumed that access could be obtained to the site for the purpose of development to which Mr Hill agreed. It was further put that the assumption that access could be obtained to the site for the purpose of redevelopment would not be reflected in the price as at 1 July 2019 to which Mr Hill agreed. He confirmed, however, that in his view the price paid for sale 1 reflected what a developer would pay on the assumption that they would have no access problems. It was also put to Mr Hill that the sale price would only be considered excessive in hindsight, after the access issues arose, to which Mr Hill agreed. Mr Hill opined it was a good sale because the purchase was made on the assumption that there were no access problems, and the block could be developed in line with the apartment design guide. Applicants' submissions 1. The submission that Mr Garnsey's sales are not truly comparable should be rejected based on the principles in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 (Maurici). Given Mr Garnsey's sales were parts of future amalgamated parcels and Mr Hill's sales were of actual amalgamated parcels, Mr Garnsey was only referring to Mr Hill's sales as a starting point. These circumstances are in a very different category to Maurici where the valuer relied on sales of vacant land and ignored reasonably contemporaneous sales of comparable improved land contrary to s 6A of the VL Act. 2. The valuation methodology adopted by Mr Hill and accepted by Mr Garnsey is not to value the lots by direct comparison with comparable sales. The first step was to determine a rate per m2 on the whole of the two amalgamated precincts as if each of those precincts were an amalgamated parcel. This was the starting point from which the adjustments were to be made. The comparable sales of both Mr Hill and Mr Garnsey establish an assumed state of amalgamation and readiness for development which did not accord with the true circumstances of precinct 1 as at 1 July 2019, which at that point had not been amalgamated and was not capable of being developed for the highest and best use. 3. Mr Garnsey considered that his sales 2-6 were more reliable than Mr Hill's sales 2-5. It was also clearly to be inferred that Mr Garnsey's sales 2-6 were acquired for amalgamation and development as residential flat buildings. Mr Garnsey's sales 2-6 are more comparable to the actual circumstances of the relevant parcels as at the base date than Mr Hill's sales 2-5, having regard to the zoning of the relevant parcels and their locality. 4. Mr Hill's comparable sales 1-5 were capable of being developed without any further amalgamation. In that sense they were not sales that were comparable to the relevant parcels. Consistently with the chosen methodology they were sales to establish an assumed state of affairs for the purpose of the valuation modelling. 5. On the basis that Mr Garnsey's sales are of greater assistance than Mr Hill's sales 2-5 there can be no basis for the submission that Mr Garnsey has ignored a principle of the assessment of value or did not proceed rationally, as the terms are used in Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 and set out with apparent approval in Maurici at [18]. Valuer-General's submissions 1. As the Applicants emphasised, Mr Garnsey's sales were all properties purchased as sites 'to be amalgamated' and which, due to their small size, were unable to be developed with residential flat buildings on a stand-alone basis i.e. without amalgamation. Mr Garnsey agreed in oral evidence that his sales were in essence 'parts of a future amalgamated parcel'. ln contrast, like precincts 1 and 8, Mr Hill's sales were all part of larger parcels capable of, and purchased for, development as residential flat buildings without further amalgamation. This is accepted by the Applicants and Mr Garnsey. Sale 1 is the most comparable sale selected by Mr Hill. 2. Importantly, Mr Garnsey accepted in oral evidence that Mr Hill's sales were an inherently more reliable starting point to determine the value of precincts 1 and 8. Conversely, he also accepted that his sales were an inherently more unreliable starting point compared to Mr Hill's sales which was reflected in the large total adjustments (either -55% or ‑60%) he made from his sales. The large nature of these adjustments demonstrates their lack of comparability, see The Trust Company Ltd v Minister Administering the Crown Lands Act 1989 (2012) 211 LGERA 158; [2012] NSWLEC 73 at [99], Capuano v Roads and Maritime Services [2018] NSWLEC 59 at [32]. Consideration of comparable sales 1. In Maurici, McHugh, Gummow, Kirby, Hayne and Callinan JJ commented at [18] that 'sales to be treated as comparable sales need to be truly comparable'. The identification of comparable sales is informed by the agreed valuation methodology adopted by the valuers, steps 1-3 set out in [62] above. The first step is to consider each precinct as an amalgamated parcel and the comparable sales are to assist in that scenario. a. Comparability of Mr Hill sale 1 within Strathfield triangle and sales 2-5 outside Strathfield triangle 1. Mr Hill considered his sale 1 as the most comparable sale for step 1. It is located in the Strathfield triangle and was a sale in June 2015 of an amalgamated precinct intended to be developed for residential apartments. He identified it as a property that was marketed properly and purchased by a developer for multi storey residential development. In oral evidence, he considered it to be a good sale because it was purchased on the assumption there were no access problems and that the entirety of the precinct could be developed in line with the apartment design guide for the Strathfield triangle. 2. Mr Garnsey in the joint valuers' report considered Mr Hill's sale 1 should be treated with caution due to events which occurred after the purchase in June 2015. A DA was refused by the council in November 2016, and by the Court in July 2019. Mr Garnsey from discussions with the Applicants and a review of court cases believed the consent was refused in part as the owner of the adjoining land did not consent to access over that land, which was zoned RE1 Public Recreation and would provide for the future creation of Leicester Lane. Mr Garnsey was further advised by the Applicants that the purchase was made on the assumption that access was to be provided by the council through the acquisition of the adjoining land. This had not occurred likely because no s 7.11 contributions in the Strathfield triangle had been received due to stalled development of this area. 3. In oral evidence, Mr Garnsey accepted that the sale price was paid for sale 1 assuming there were no access difficulties. He also conceded that for the purpose of step 1, which was to determine the GFA rate that would be paid at a point in time when there is no impediment to developing the whole of the precinct, it would be the perfect sale. 4. Mr Hill's sales 2-5 provided support to his analysis of sale 1, accepting they had different zoning. In oral evidence Mr Garnsey accepted these sales were comparable, albeit noting they had different zoning. Finding – Mr Hill sales comparable 1. The VG submitted there is no basis to treat sale 1 with caution. The purchase price was struck before any access difficulties crystallised and thus Mr Garnsey accepted in oral evidence that it reflected the market value of a site in the Strathfield triangle with no access difficulties. He also accepted that the sale price was only 'excessive' in hindsight. Accordingly, the sale is a reliable guide to the value of the precincts. I agree but the same observation also applies to Mr Garnsey's sales 2, 3 and 6, as discussed below. Both valuers confirm sale 1 occurred on the assumption that access was available and that the inability to develop, due to lack of access, was a fact only revealed in hindsight. For those reasons, and due to the location within the Strathfield triangle, I consider it is highly suitable for use as a comparable sale. 2. Mr Hill's sales 2-5 outside the Strathfield triangle are for amalgamated blocks which have been developed since purchase for residential apartment buildings with some mixed use. While they are in different zoned areas, that zoning permits the type of development also permitted within the Strathfield triangle. They are generally close to the Strathfield triangle and can also be considered as generally comparable, providing support to the application of sale 1. 3. Mr Hill's sales are all properties purchased as development sites that have commenced or been completed since the sale occurred, other than his sale 1. They are suitable for comparison to precincts 1 and 8 envisaged by step 1 of the agreed valuation approach. b. Mr Garnsey sales 2, 3 and 6 comparable 1. Mr Garnsey's sales 2, 3 and 6 provide useful comparability if considered as making up part of amalgamated parcels permitted by the development approvals of which they form a part rather than as individual parcels, as he intended. This is consistent with the agreed valuation approach for the relevant parcels. Mr Garnsey's sales 2, 3 and 6 are located close to the Strathfield triangle in Homebush with the same zoning. They are smaller sites purchased with the intention to develop, evidenced by adjoining ownerships and DAs made prior to sale 2 and subsequent to sales 3 and 6. That the developments have not progressed does not prevent reliance on them, in the same way that Mr Hill's sale 1 has also not progressed. The initial intention of the purchaser makes them suitable for comparison if considered as a part of the overall GFA of a development site. The total GFA for those potential development sites was identified in evidence as 3,000m2 for sales 3 and 6, and 3,375m2 for sale 2. Mr Garnsey made a large size adjustment of -35% to render the sales comparable to the larger precincts. The site areas for each potential amalgamated development site would exceed the minimum area of 1,500m2 required to permit a residential flat building. This falls between the GFA of Mr Hill's sales 1 (5,905.8m2) and 2 (2,689.6m2) confirming the comparability of Mr Garnsey's three sales. 2. Contrary to the VG's submission, Mr Garnsey's agreement in cross‑examination that Mr Hill's amalgamated parcels were more comparable given the agreed methodology does not completely remove the relevance of Mr Garnsey's sales. As the Applicants submitted, they do reflect the circumstance of the relevant parcels, are close by with the same zoning and can be considered as purchased with the intention they would amalgamate with next door lots, the reason for their selection by Mr Garnsey. 3. Mr Garnsey's analysed land value for his sales, arrived at by deducting the added value of the cottages still standing, is appropriate given their continuing use. Mr Garnsey's sales 2, 3 and 6 are able to be applied as relevant comparable sales. Appropriate adjustments of relevant comparable sales 1. Both valuers adjusted the various sales to account for differences between the sales and the precincts. The level of total adjustments differed for precinct 1 and precinct 8. Mr Hill adjusted for location, size, shape, access and views. In addition, Mr Garnsey adjusted for 'ghetto effect' and railway proximity to varying degrees for both precincts. (i) Adjustments of Mr Hill sale 1 1. The analysed land value adopted by Mr Hill for sale 1 is accepted as the appropriate starting point. Mr Garnsey did not provide an alternate analysed land value for Mr Hill's sales. As sale 1 is presented by Mr Hill as the most comparable sale the adjustments made for that will be considered first. No adjustment was made for 'ghetto effect' for that sale by Mr Garnsey. Location 1. Mr Hill applied an adjustment of 5% for location. In oral evidence he opined the sale location to be slightly inferior due to its proximity to Paramatta Road and frontage to a busy thoroughfare Leicester Avenue. He considered that precincts 1 and 8 would be more pleasant to live in than the location of the sale. 2. Mr Garnsey applied no adjustment for location. In oral evidence he opined he did not consider the locations of precincts 1 and 8 to be quieter compared to the sale location due to the noise impact of Cooper Street and the railway corridor. He did concede there would be more traffic on Leicester Avenue than on Cooper Street and that Mr Hill's adjustment was appropriate for a resident who would rather be on Cooper Street than Leicester Avenue. Finding 1. I find Mr Hill's argument more persuasive. While precinct 8 also has frontage to Leicester Avenue, it was noticeable during the view of the relevant parcels and sale 1 that the relevant parcels, once developed, would be more pleasant locations to live than the sale property. Sale 1 faces directly onto Leicester Avenue which is very busy. I accept Mr Hill's location adjustment of 5% for both precincts. Size 1. Mr Hill applied an adjustment of -15% for size. In his primary report and in oral evidence he opined that the developable GFA of the two precincts being larger than the sale warranted a lower GFA rate due to economies of scale. He did not explain precisely how that was calculated. 2. Mr Garnsey applied an adjustment of -20% for size. He did not explain how this was calculated in the joint valuers' report or in oral evidence but appeared to adopt a similar rationale to Mr Hill. Finding 1. The valuers agreed the adjustment for size was subjective, Mr Hill adding the importance of consistency in applying adjustment for size. Neither adjustment was more compelling than the other and as this was Mr Hill's sale, I will adopt his adjustment for size of -15%. Shape 1. Mr Hill made no adjustment for shape for either precinct. He considered the amalgamation patterns of the precincts did not affect their development potential. In oral evidence he added that the precincts were quite large, and that the hypothetical developer would be able to undertake a development quite readily and easily and not be confined or disturbed by the land shape. 2. Mr Garnsey applied an adjustment for shape of -10% for both precincts. In oral evidence, he referred to the irregular shapes of the lots in the precincts as not rectangular and stated that in his experience sites that have an irregular shape will attract higher construction costs than sites with a regular rectangular building. Mr Garnsey also referred to the Applicants describing to him solar access being problematic in the triangle due to the precinct shapes. Mr Garnsey conceded he was not an expert on solar access and did not have the expert advice of a quantity surveyor. Finding 1. Precinct 1 is an irregularly shaped site in the sense that it is not rectangular. It is a large site. Precinct 8 while irregular is less so and is an even larger site. Both valuers essentially rely on their experience in forming their opinions about whether additional costs for developing on irregular sites should be factored in. I accept that there may be additional cost issues when developing such irregular sites, more so for precinct 1 than for precinct 8. I will accept the opinion of Mr Garnsey that -10% adjustment for precinct 1 is warranted. I consider the adjustment for precinct 8 should be -5%, reflecting that it is not as irregular as precinct 1 and is a larger site than precinct 1. Access 1. Mr Hill applied an adjustment of 5% for precinct 1 and an adjustment of 10% for precinct 8. In oral evidence, Mr Hill described precinct 8 as an island block which he considered superior to both sale 1 and precinct 1. Both valuers agreed precinct 1 had two street frontages. Mr Hill considered precinct 8 had three usable frontages and good vehicular access from the realigned Cooper Street. The existing Cooper Street will become a bicycle and pedestrian thoroughfare, creating an island block separated from all other properties. Mr Hill referenced light access and good vehicle access becoming available from the Cooper Street realignment. 2. Mr Garnsey applied an adjustment of 5% for access for both precincts. In oral evidence, he opined that precinct 8 will have two street frontages due to the realignment of Cooper Street, but only one access off the realigned Cooper Street would exist as no access would be permitted off Leicester Avenue. He referred to the redundant part of Cooper Street becoming vacant land which may be incorporated into precinct 8. Finding 1. The valuers agreed on a 5% adjustment for access to precinct 1 which is accepted. 2. The land currently occupied by Cooper Street was considered by both valuers when explaining their individual adjustments for access to precinct 8. Mr Hill applies a level of amenity provided by multiple frontages along with access for development. Mr Garnsey limited his adjustment to the vehicular access available from one street only. The valuers disagreed on the future use of the existing Cooper Street but both scenarios put forward by the valuers would add value to precinct 8. 3. I prefer the approach of Mr Hill. Access can have a broad definition. The amenity adopted by Mr Hill included adjustments for features not covered by other sale adjustments. The future use of the existing Cooper Street either as a bicycle and pedestrian path or added in some way to the amalgamation area of precinct 8 should be considered. Accordingly the appropriate adjustment for precinct 8 is 10%. Views 1. Mr Hill applied an adjustment of 10% for views for both precincts. He considered the views of sale 1 to be limited as future development is restricted to seven storeys, lower than that of the two precincts. Views would be limited by surrounding multi storey development which is only available to the south and east over the residential houses along Leicester Avenue. 2. Mr Garnsey applied an adjustment of 5% for views for both precincts. In oral evidence, he agreed that both precincts 1 and 8 will have unobstructed views to the west due to their height. He conceded the adjustment for views between sale 1 and the two precincts could be between 5% and 10%. Finding 1. Mr Hill's adjustment of 10% was based on the precincts having views less constrained by surrounding development and enhanced due to the greater permissible height. Mr Garnsey agreed that the views afforded to the precincts is superior to sale 1 due to the height achievable and agreed the adjustment lies between 5% and 10%. Based on the above, I accept Mr Hill's adjustment of 10%. Railway proximity 1. Mr Garnsey made an adjustment on the basis of both precincts being adjacent to a railway of -15% for precinct 1 and -10% for precinct 8. The adjustment reflected his opinion that building near a railway (within 25m) requires concurrence from Transport for New South Wales (TfNSW) under the State Environmental Planning Policy (Infrastructure) 2007 (NSW) (Infrastructure SEPP). He based his adjustment on his experience in valuing development sites adjoining rail corridors and quantity surveyors placing a heavy loading on estimated development costs. In oral evidence he opined that in his experience there is a loading on construction costs, sometimes up to 30%, for development sites abutting railway lines. No evidence was provided to support his opinion as it was considered commercial in confidence. His general observation was that developers apply a 'dealing with government' discount to sites adjoining infrastructure due to concurrence slowing and complicating the development process. 2. Mr Hill considered the process of gaining DA approval for a large scale development requires consent from various authorities and the 25m zone adjoining the railway affects only a small portion of the western boundaries of both precincts, the impact being negated by the general building setbacks in the design requirements of the STDCP. In his view such an adjustment is considered when adjusting for location. He based his locational adjustments on his own experience and a review of suburb comparison median unit sales from Realestate.com. In cross-examination Mr Hill agreed that he did not have experience dealing with railway authorities. When asked about cll 86 and 87 of the Infrastructure LEPP he did not consider any adjustment was warranted. Parties' submissions 1. The Applicants submitted that the parcels in precinct 1 and precinct 8 are adjacent to the railway. It was common ground that as at 1 July 2019, cll 86 and 87 of the Infrastructure SEPP would apply to development on those precincts. Mr Hill's evidence that there would be no impact from cll 86 and 87 of the Infrastructure SEPP should be rejected. It is noted that Mr Hill admitted in cross-examination that he had little experience in dealing with the application of cll 86 and 87. 2. The VG submitted that Mr Garnsey gave no explanation of the basis for the railway adjustment in his primary report. His reasoning first appeared in the joint valuers' report. Mr Garnsey agreed with Mr Hill that it would take around 12-18 months to obtain a consent for the development of precincts 1 and 8. This would involve liaison with many third parties which would be undertaken in parallel and any delay in obtaining concurrence would only arise if the time taken extended beyond that period. Insofar as the adjustment was based on an increase in costs, the lack of supporting detail means the Court would not be persuaded that the adjustment is warranted. In the alternative, for the same reasons, the Court would considerably reduce the magnitude of Mr Garnsey's adjustments of -10% and -15%. Finding 1. The VG did not dispute concurrence was required. There were two elements to the adjustment made by Mr Garnsey, increased cost of development and time delay. The cost evidence of Mr Garnsey was generic with no detail provided on estimated construction costs. Mr Garnsey and Mr Hill agreed that it would take 12-18 months to obtain consent for these types of projects and would involve liaison with many authorities and inquiries with each authority would be undertaken in parallel. As the VG submitted, delay in concurrence from TfNSW would only require adjustment if the delay extended beyond a 12-18 month period. 2. Clause 86 of the Infrastructure SEPP refers to development that involves the penetration of land to a depth of at least 2m below existing ground level on land within 25m (measured horizontally) of a rail corridor. The clause requires that a consent authority must not grant consent to such development without the concurrence of the chief executive officer of the rail authority of the rail corridor. It also requires that written notice to TfNSW must be given within seven days of a DA being lodged. Subclause (5) states the consent authority may grant development consent after 21 days has passed since notice is given and the chief executive officer has not granted or refused to grant concurrence. Both parties referenced the conditional development approval granted in Leice for precinct 8. It is noted in that judgment at [17] that the concurrence from the railway authority took some 12 months from notification to concur. 3. While observing that the information before the Court suggests different timeframes for obtaining concurrence from TfNSW, I am satisfied the 12-18 month timeframe for making enquiries with a range of government authorities would be highly likely to include concurrence being obtained from the rail authority and would not further delay consideration of any DA by the consent authority. I do accept that achieving that concurrence may require additional works and therefore cost that would not otherwise be required resulting in an adjustment to most of the sales evidence. In the absence of any evidence of what works may be required, I will allow an adjustment of -5% for both precincts on that basis. Application of Mr Hill sale 1 1. Mr Hill's adjustments have been generally accepted, with some additional adjustments for shape and railway, resulting in a total adjustment of -10% for precinct 1 and 0% for precinct 8. This results in a GFA of $1,639/m2 for precinct 1 and $1,821/m2 for precinct 8. (ii) Adjustments of Mr Hill sales 2-5 1. I will now consider what adjustments are appropriate for Mr Hill's sales 2-5. Location 1. The valuers made different adjustments to Mr Hill's sales 2-5 for location for both precinct 1 and precinct 8. 2. Mr Hill applied adjustments of 10% for sales 2 and 5, and 15% for sale 4 when compared to the precincts, opining that the Strathfield triangle is a preferred residential location. He applied an adjustment of -20% for sale 3 as he considered sale 3 to be in a preferred residential location when compared to the precincts. 3. Mr Garnsey applied adjustments of 5% for sale 2 and 10% for sales 4 and 5, while applying an adjustment of -10% for sale 3. He did not adjust for location in his primary report and did not explain his adjustment in the joint valuers' report. No additional evidence in relation to the location of these sales was presented in oral evidence. Finding 1. Mr Hill provided a rationale for his adjustments for location applicable to his sales 2-5 based on residential desirability, consistent with his approach for sale 1. Mr Garnsey did not explain his adjustments for location for sales 2‑5. As Mr Hill's adjustments appear reasonable I will accept Mr Hill's adjustments as appropriate. Size 1. Mr Hill applied adjustments for size of -20% for sale 2 and -10% for sales 3-5 when compared to both precincts. As for sale 1, Mr Hill considered the developable GFA of the two precincts to be larger than the sales, warranting a lower GFA rate due to economies of scale. 2. Mr Garnsey applied adjustments of -25% for sale 2 and -15% for sales 3-5 consistently when compared to both precincts. Finding 1. In oral evidence the valuers agreed the size adjustment was subjective, Mr Hill confirming the importance of consistency. Mr Garnsey's sale 2 and Mr Hill's sale 2 are broadly similar in size and should therefore have a similar adjustment made. I will adopt an adjustment for size of -25% consistent with Mr Garnsey's adjustment. Mr Hill's adjustment of -10% for sales 3 and 5 is accepted as appropriate. For sale 4 I will adopt an adjustment of -12.5% reflecting its size falling between sale 1 and sale 3. These adjustments are made for both precincts. Shape 1. Mr Hill made no adjustment for shape for both precincts except for sale 2 where he applied an adjustment for shape of 10% for both precincts. He considered the boomerang shape of the sale 2 land did affect development potential compared to the precincts. 2. Mr Garnsey applied an adjustment for shape of -10% for both precincts except for sale 2 where he made no adjustment for shape for both precincts. He provided no rationale for shape adjustments in the joint valuers' report. The same oral evidence referred to above in [122]-[123] in relation to sale 1 applies here. Finding 1. As found in relation to sale 1, when considering the assumed building footprints provided in annexure A of the joint planners' report, I prefer the opinion of Mr Garnsey in relation to precinct 1. The dimensions of the building footprint presented would be considered as potentially challenging compared to a regular shaped building that may not be overcome by the area of the site in the eyes of a hypothetical purchaser. Some allowance on this basis is necessary. In relation to precinct 8, the building footprint on a large site would appear to present less challenge to a hypothetical party than precinct 1. I accept a -10% adjustment made by Mr Garnsey for sales 3-5 as regular blocks for precinct 1 and adopt a -5% adjustment for precinct 8 for the same sales. No adjustment is made for sale 2. Access 1. Similar to sale 1, the valuers agreed on the adjustment for access for precinct 1. I will accept their adjustments of 10% for sale 2, 5% for sale 3, and -5% for sales 4 and 5. 2. When applying adjustments for precinct 8 Mr Hill made an adjustment for sale 2 to 15% and for sale 3 to 10%. I note that his adjustment for sale 5 was increased to -10% incorrectly. Sale 5 was altered from -5% to no adjustment. The difference in the adjustments between the precincts was not fully explained in his primary report or the joint valuers' report. Mr Garnsey's adjustments were consistent with those he applied for precinct 1. Finding 1. The land currently occupied by Cooper Street has been considered by both valuers when explaining their individual adjustments for access. As already considered above the view of Mr Hill includes a level of amenity provided by frontages along with access for development. Mr Garnsey limited his adjustment to vehicular access that would be available from one street only. For the same reasons as for sale 1 above in [151] I adopt Mr Hill's adjustments. I note that the adjustment made by Mr Hill for sale 5 appears to be an error, deducting a further -5% to the adjustment applied to precinct 1 rather than adding 5% consistent with the approach for the other four sales. I will make no adjustment consistent with the above reasoning. Views 1. Mr Garnsey and Mr Hill were consistent in their adjustment of sales 2-5 for views compared to precinct 8. They applied an adjustment of -5% for sale 3 and adjustments of 10% for sales 2 and 5 and an adjustment of 15% for sale 4. I will accept the adjustments for view applicable to precinct 8 as agreed. 2. Mr Hill made adjustments for precinct 1 of 10% for sales 2 and 4 and an adjustment of -10% for sale 3 while making no adjustment for sale 5. Mr Hill linked the adjustment for views with development heights permitted for the sale properties compared to that permitted for the individual amalgamation patterns of precincts 1 and 8. This approach was maintained in oral evidence. 3. Mr Garnsey made an adjustment for views compared to precinct 1 of 10% for sales 2 and 5, and 15% for sale 4 with an adjustment of -5% for sale 3. He did not explain his view adjustments in the joint valuers' report. In oral evidence his answers were restricted to sale 1. Finding 1. Mr Hill provided an explanation for his adjustments for views for precinct 1 which was lacking for Mr Garnsey's adjustments. I will accept the adjustments made by Mr Hill for precinct 1. Ghetto effect 1. Mr Garnsey made a -10% adjustment to the four sales all located outside the Strathfield triangle for both precincts, reflecting what he referred to as the 'Strathfield triangle ghetto effect'. In the joint valuers' report, he explained the ghetto effect as follows: "At the time of my inspection, which I acknowledge is after the relevant date of 1 July 2019, the number of vacant fenced out sites, dilapidated dwellings and rubbish in the streets with no clear timeline as to when the precinct will be developed as no developments are underway, in my opinion warrants a discount for this factor." 1. Mr Hill stated that precinct 1 is surrounded by a mixture of residential houses and several multi storey mixed use and residential unit developments while precinct 8 looks out to residential housing. It was his view that neither precinct looked into nor adjoined a 'ghetto'. Finding 1. I prefer the view of Mr Hill that no such adjustment is warranted. The Macquarie Dictionary (online ed, accessed July 2024) defines a ghetto as 'an area of a city in which a minority group lives in conditions of poverty, overcrowding and social repression'. This is not a definition which reflects an area awaiting development in the Strathfield triangle that had been stalled for multiple reasons. Step 1 of the agreed valuation approach is based on the assumption of amalgamated precincts ready to develop. An adjustment based on 'no clear timeline as to when the precinct will be developed' is not warranted. Railway proximity 1. The effect of proximity to the railway line was considered above in relation to sale 1 and the adjustments adopted of -5% for precincts 1 and 8 are also adopted for sales 2-4 of Mr Hill. Neither valuer adjusted for railway proximity for sale 5 which I adopt. Application of Mr Hill sales 2-5 1. Accepting a certain level of subjectivity is warranted in adjusting for location and size, these sales are accepted as providing support to the GFA rates resulting from the analysis of sale 1. (iii) Mr Garnsey sales 2, 3 and 6 adjustments 1. I will now consider the appropriate adjustments for Mr Garnsey's sales 2, 3 and 6. Location 1. The valuers made different adjustments to Mr Garnsey's sales 2, 3 and 6 for location for precinct 1 and precinct 8. 2. Mr Garnsey made no adjustment for all three sales for location in his primary report. No additional evidence in relation to the location of these sales was presented in oral evidence and there was no explanation in his written evidence. Mr Hill applied adjustments of 5% for all three sales, opining the Strathfield triangle is a preferred residential location. Finding 1. Mr Hill provided a rationale for his adjustments for location based on residential desirability, consistent with his approach for his sales. Mr Garnsey did not explain his nil adjustment for location. I will accept Mr Hill's adjustments. Size 1. Mr Garnsey applied adjustments of -35% for all three sales when compared to precincts 1 and 8 reflecting the much smaller size of these sales compared to precincts 1 and 8. 2. Mr Hill applied adjustments for size of -20% for all three sales when compared to both precincts. Consistent with his approach in relation to his sales Mr Hill considered the larger developable GFA of the two precincts warranted a lower GFA rate due to the economies of scale, although he did not explain how that was calculated. Finding 1. As explained above in [111], [148], the analysis of Mr Garnsey's sales should be treated consistently with the adopted valuation approach step 1 as part of a larger development parcel for comparison with the precincts. I will adopt a -25% adjustment consistent with the agreed valuation methodology in step 1. Shape 1. Mr Garnsey applied an adjustment for shape of -10% for both precincts. He did not explain his adjustment in the joint valuers' report or in oral evidence other than as set out for Mr Hill's sale 1 above in [123]. 2. Mr Hill made no adjustment for shape for both precincts. His rationale on shape generally is set out above in [122], [149]. 3. For the reasons set out above in [124], [151] for shape adjustments made to Mr Hill's sales, I accept -10% adjustment made by Mr Garnsey for precinct 1 and adopt a -5% adjustment for precinct 8. Access 1. Mr Garnsey made no adjustment for access for sale 2 and 5% for sales 3 and 6 for both precincts. Mr Hill made no adjustment for all three sales adjusted in relation to both precincts. Finding 1. No clear rationale for the adjustment for access for the three Garnsey sales is provided by either valuer. I consider access for these sale properties to be similar to that of the relevant parcels in precinct 1, suggesting nil adjustment made by Mr Hill to Mr Garnsey's three sales is appropriate for precinct 1. I will adopt Mr Garnsey's 5% adjustment of his sales for precinct 8 as the access for precinct 8 is superior to Mr Garnsey's sales. Views 1. Mr Garnsey and Mr Hill both adjusted the three sales by 10% for views and this adjustment is accepted. Ghetto effect 1. Mr Garnsey made a -10% adjustment to the three sales located outside the Strathfield triangle for 'ghetto effect'. For the reasons set out above in [161], the adjustment of sales for ghetto effect is not accepted. Railway proximity 1. The effect of proximity to the railway was considered above in relation to Mr Hill's sale 1 in [139] and the adjustments of -5% for precincts 1 and 8 were adopted for sales 1-4. For the same reasons the same adjustments are also adopted for the three sales of Mr Garnsey. Application of Mr Garnsey sales 2, 3 and 6 1. The rates of GFA for precinct 1 derived from the sales relied upon by Mr Garnsey are $1,559/m2 for sale 2, $1,673/m2 for sale 6 and $1,964/m2 for sale 3 when adjusted. The GFA rates for precinct 8 are $1,767/m2 for sale 2, $1,896/m2 for sale 6 and $2,226/m2 for sale 3 when adjusted. 2. Mr Garnsey's sales 2 and 6 provide general support for Mr Hill's sale 1 after all sales are adjusted as set out above. Sale 3 appears to be well outside the possible range. Overall conclusion on adjustments of comparable sales 1. Based on the foregoing, the adjustment of sales applied to precinct 1 resulted as follows: 1. Mr Hill's sale 1 had a total adjustment of -10% and the derived rate of $1,639/m2. 2. Mr Hill's sale 2 had nil adjustment and the derived rate of $1,675/m2. 3. Mr Hill's sale 3 had a total adjustment of -50% and the derived rate of $1,654/m2. 4. Mr Hill's sale 4 had a total adjustment of -7.5% and the derived rate of $1,489/m2. 5. Mr Hill's sale 5 had a total adjustment of -15% and the derived rate of $1,712/m2. 6. Mr Garnsey's sale 2 had a total adjustment of -25% and the derived rate of $1,559/m2. 7. Mr Garnsey's sale 3 had a total adjustment of -25% and the derived rate of $1,964/m2. 8. Mr Garnsey's sale 6 had a total adjustment of -25% and the derived rate of $1,673/m2. 1. Mr Hill's sale 1 is in the Strathfield triangle and is subject to the same development controls as precinct 1, making the adjustment of this sale less subjective than the other sales. Sale 1 is the best comparable sale for precinct 1 and is adequately supported by Mr Hill's sales 2 and 5, and Mr Garnsey's sales 2 and 6. 2. The adjustment of sales applied to precinct 8 resulted as follows: 1. Mr Hill's sale 1 had nil adjustment and the derived rate of $1,821/m2. 2. Mr Hill's sale 2 had a total adjustment of 5% and the derived rate of $1,759/m2. 3. Mr Hill's sale 3 had a total adjustment of -35% and the derived rate of $2,150/m2. 4. Mr Hill's sale 4 had a total adjustment of 7.5% and the derived rate of $1,731/m2. 5. Mr Hill's sale 5 had a total adjustment of 5% and the derived rate of $2,115/m2. 6. Mr Garnsey's sale 2 had a total adjustment of -15% and the derived rate of $1,767/m2. 7. Mr Garnsey's sale 3 had a total adjustment of -15% and the derived rate of $2,226/m2. 8. Mr Garnsey's sale 6 had a total adjustment of -15% and the derived rate of $1,896/m2. 1. Mr Hill's sale 1 in the Strathfield triangle is subject to the same development controls as precinct 8, making the adjustment of this sale less subjective than the other sales. Mr Hill's sales 1, 2, 4 and 5 required the least total adjustment. The adjusted rate for Hill sale 1 is below the midpoint of the adjusted rates for those sales. Mr Garnsey's sales 2 and 6 also provide support for that rate. 2. Based on the foregoing a rate of $1,639/m2 of GFA is adopted for precinct 1. A rate of $1,821/m2 of GFA is adopted for precinct 8. Step 2: Multiply rate per m2 of GFA by achievable GFA for each relevant parcel 1. As set out above in [17] there was agreement between the town planners that the achievable GFA for each of the relevant parcels could be determined and then apportioned based on the site area of the relevant parcels as a proportion of the site area of the whole of the precinct. 2. In adopting the agreed approach apportioning GFA for the relevant parcels as a proportion of the whole of the precincts' GFA Mr Garnsey adopted the method used by Mr Haskew while Mr Hill adopted the method used by Mr Chambers. I have found above in [33] that the GFA calculation of Mr Chambers should be applied, as Mr Hill did. The hypothetical vendor should be assumed at 1 July 2019 as likely to receive the advice from the council which Mr Chambers did. The applicable GFA figures are: Precinct 1 4 Clarence Street GFA 2,681.27m2 GFA rate $1,639 Resulting Land Value $4,397,283 32 Cooper Street GFA 2,597.53m2 GFA rate $1,639 Resulting Land Value $4,257,352 Precinct 8 27 Cooper Street GFA 4,249.6m2 GFA rate $1,821 Resulting Land Value $7,738,522 2 Leicester Avenue GFA 3,258.01m2 GFA rate $1,821 Resulting Land Value $5,932,836 Step 3: Further adjustments 1. The valuers agreed additional adjustments for step three of the valuation methodology such as a discount rate for the agreed period of 10 years to develop precinct 1 for the valuation date of 1 July 2019 was appropriate. The valuers disagreed (i) the appropriate discount rate to apply for 10 years for precinct 1 and (ii) the appropriate allowance if any for the time assumed to be taken for the Cooper Street realignment in precinct 8. (i) Applicable discount rate for precinct 1 1. The valuers agreed that for precinct 1 a time delay of 10 years to allow for the consolidation of the entirety of that precinct is appropriate. The valuers applied a different discount rate to reflect the amount the hypothetical purchaser would pay in 2019 knowing they would not be able to develop and obtain a return for 10 years. 2. Mr Garnsey adopted a discount rate for the agreed 10 years of 10% pa. His reasoning was based on his experience of development sites having a real discount range of 10% to 20% and the lower end should apply to the amalgamation risk. Mr Garnsey did not refer to specific development sites. In oral evidence, he justified the 10% rate as reflective of developer margins pricing in reward and risk. He stated a developer expects a return between 10% and 20%. He detailed a number of risks associated with undertaking a development. He stated 'the range is obviously higher when you haven't got a development approval and then it moves down through the process when you get a DA down towards 10% at the end.' In his view a developer would seek a minimum of 10% pa, the lower end of the reward and risk margin they would expect for undertaking a development elsewhere. 3. Mr Hill adopted a discount rate for the agreed 10 years of 7.5% pa which he considered more than reasonable due to subdued financial markets for investment and borrowing at the time, reflected in the Reserve Bank of Australia cash rate falling to 1% and borrowings for homeowners of real estate falling to 5% pa. 4. The Applicants submitted that Mr Hill's adoption of the bank rate of 7.5% did not reflect the investment opportunity foregone. That the bank rate would safely match guaranteed funds on deposit cannot reflect the risk allowance of a highly speculative investment like property development. 5. The VG submitted Mr Garnsey's reasoning did not identify any specific development sites and was based generally on his experience. Finding 1. I do not accept Mr Garnsey's discount rate of 10%. His rate reflects the profit and risk margin a developer applies as a percentage of the total development cost, including land purchase, when undertaking a development. That amount is then deducted along with all development costs to determine how much to pay for the land. The land values as determined in steps 1 and 2 of the agreed methodology considered sales which already reflected this profit and risk margin. At best this discount rate would be considered a double dip. If a developer sought this return they would seek out sites ready for development such as the five sale properties identified by Mr Hill. 2. I prefer Mr Hills' discount rate of 7.5% as it better reflects a return that would be expected for holding the land as a passive investment until the time when the precinct is amalgamated and the development can proceed. The hypothetical purchaser could be an entity hoping to be the ultimate developer or a land banker/investor seeking a windfall in 10 years' time that will reflect a reasonable return for that period. Mr Hill's rate of 7.5% pa would be considered a high return for a passive investment in 2019 and it does factor in a suitable level of risk. (ii) Allowance for future Cooper Street realignment – precinct 8 1. The valuers agreed that no discount was required to reflect the timeframe to amalgamate precinct 8 as the Applicants and associated entities own all the parcels within the precinct. Both valuers agreed a discount for risk of not getting public road access was applicable for the precinct. 2. Mr Garnsey applied an additional discount rate of 10% pa over a further 5 years, based on the same reasoning used in relation to precinct 1, to reflect a timeframe to allow the council to acquire the land to construct the east-west realignment of Cooper Street, to enable the development of precinct 8 to proceed. 3. Mr Hill applied a flat 25% discount of the market value of the land reflecting an overall risk in the amalgamation of the subject and adjoining lands and achieving DA approval on the total amalgamation pattern. Applicants' submission 1. In relation to precinct 8, as at 1 July 2019 access from the realigned Cooper Street would not be seen by the hypothetical purchaser as being available for five years and it was unlikely there would be any alternate means of access. Mr Hill assumed that the hypothetical purchaser would consider there would be no delay to any access and adopted no discount. That development consent has subsequently been granted to the Applicants for the whole of precinct 8 allowing for temporary access is irrelevant as that occurred after 1 July 2019. Valuer-General's submission 1. Mr Hill's opinion was that alternative access should be assumed to be available without delay. Mr Chambers' evidence was that the precinct 8 consent granted in 2021 did not require access to be provided from the realigned Cooper Street as temporary access from Cooper Street was approved. The fact that entities associated with the Applicants owned the realignment land would provide flexibility for the purchaser to provide alternative access. On this basis Mr Garnsey's adjustment should be rejected. 2. While not making any adjustment for delay on account of the realigned Cooper Street, Mr Hill nevertheless made an adjustment of -25% of the market value of the land to account for the perceived bargaining power of the likely purchaser of the relevant parcels in precinct 8 (being an entity associated with the Applicants) in relation to the hypothetical vendor. That adjustment, which is favourable to the Applicants, should be adopted. Finding 1. Precinct 8 which is inclusive of the land to be acquired for the realignment of Cooper Street is already in one ownership. The precinct has a wide frontage to existing Cooper Street facilitating development access. These factors combined afforded a prospective developer the ability to seek approval for development on the basis of temporary access. Such access was not available to the purchaser of sale 1 as their frontage was to a classified road and the owner of the adjoining land refused access. Mr Garnsey's approach is rejected. 2. Mr Hill applied a flat 25% discount for market value for perceived bargaining power the hypothetical purchaser would have over the hypothetical vendor. Such an approach does not reflect a transaction between two parties willing to trade but not anxious. It also does not consider the actual situation of the relevant parcels as at 1 July 2019. The parcel 27 Cooper Street includes the land to be acquired by the council for the Cooper Street realignment. It is likely the purchaser would seek to control that land. It is unlikely the council would allow fragmentation of the site in any DA. 3. In 2019 there was little risk that development consent for precinct 8 would be refused due to lack of access as temporary access was achievable. A discount is appropriate to reflect that initial access would be temporary and require alteration after the Cooper Street realignment is achieved. Mr Hill's discount rate is probably overly generous to the Applicants but I nevertheless adopt it given his extensive experience as a valuer. The issued land values of the two relevant parcels in precinct 8 are confirmed as not being too high if a 25% discount of the land value is applied. Overall conclusion 1. The parties also made submissions about the operation of the onus of proof in s 40(2) of the VL Act. The VG submitted that the Applicants had failed to discharge their onus because Mr Garnsey admitted in oral evidence that Mr Hill's sales were more comparable than his so that the Applicants failed to discharge their onus regardless of Mr Hill's evidence. As the evidence I have accepted includes finding that some of Mr Garnsey's sales are comparable the basis for that submission falls away. It is unnecessary to resolve the parties' submissions on the operation of s 40(2) of the VL Act in the circumstances as they evolved during the hearing and in light of the valuation evidence I have accepted and applied. 2. The application of the appropriate adjustment rate results in the following land values applicable for 1 July 2019 for the relevant parcels as follows: Precinct 1 4 Clarence Street Land Value $4,397,283 Years 10 Discount % over 10 years 7.5% Calculation $2,133,535 Adopted Land Value $2,135,000 (rounded) 1. The issued land value of $2,470,000 is too high in appeal 2021/329948 and the land value should have been $2,135,000 at the relevant valuation date of 1 July 2019. 32 Cooper Street Land Value $4,257,352 Years 10 Discount % over 10 years 7.5% Calculation $2,065,641 Adopted Land Value $2,066,000 (rounded) 1. The issued land value of $3,180,000 in appeal 2021/329950 is too high and the land value should have been $2,066,000 at 1 July 2019. Precinct 8 27 Cooper Street Land Value $7,738,522 -25% discount for development risk Calculation $5,803,891 Adopted Land Value $5,803,900 (rounded) 1. The land value of $5,803,891 is higher than the issued land value. The issued land value of $4,650,000 is not too high and it is confirmed, meaning that appeal 2021/329949 should be dismissed. 2 Leicester Avenue Land Value $5,932,836 -25% for development risk Calculation $4,449,627 Adopted Land Value $4,450,000 (rounded) 1. The land value of $4,449,627 is higher than the issued land value. The issued land value of $3,300,000 is not too high and it is confirmed, meaning that appeal 2021/329951 should be dismissed. 2. No submissions on costs have been made. The appropriate order at this stage in relation to costs if any will be discussed with the parties. Orders 1. The Court orders: 1. In proceeding 2021/329948 (4 Clarence Street Strathfield) the appeal is upheld and the land valuation determined in the amount of $2,135,000. 2. In proceeding 2021/329950 (32 Cooper Street Strathfield) the appeal is upheld and the land value determined in the amount of $2,066,000. 3. In proceeding 2021/329949 (27 Cooper Street Strathfield) the appeal is dismissed. 4. In proceeding 2021/329951 (2 Leicester Avenue Strathfield) the appeal is dismissed. 5. In proceeding 2021/329952 (24 Leicester Avenue Strathfield) the appeal is upheld and the land value determined in the amount of $1,250,000. ********** 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: 01 August 2024