Land and Environment Court of New South Wales CITATION : Purrazzo v Valuer-General [2009] NSWLEC 1132 APPLICANTS A & N Purrazzo PARTIES : RESPONDENT Valuer-General FILE NUMBER(S) : 31021 of 2008 CORAM: Moore SC KEY ISSUES: VALUATION OF LAND :- LEGISLATION CITED: Valuation of Land Act 1916 DATES OF HEARING: 24 and 27 March 2009 DATE OF JUDGMENT: 30 April 2009 APPLICANTS Ms F Berglund, barrister INSTRUCTED BY Lapaine Pomare & Forster LEGAL REPRESENTATIVES: RESPONDENT Ms A Pearman, barrister INSTRUCTED BY NSW Crown Solicitor JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES MOORE SC 30 April 2009 08/31021 A & N Purrazzo v Valuer-General JUDGMENT 1 SENIOR COMMISSIONER: The intersection of Ramsay and Dalhousie Streets at Haberfield is the hub of the suburb's shopping centre. How the values of various commercial premises in these two streets relate to each other is the matter requiring consideration and evaluation in these proceedings. 2 90A Ramsay Street (the site) comprises a single retail tenancy with a frontage of ~15 m to which is appended, on the eastern side, a driveway some 2 m wide. This driveway is augmented by a strip ~1 m wide attached to the property next to the east. The premises on the site are single-storey and are currently leased to the TAB and operate as retail betting outlet. 3 The site shares the same zoning with the four sales that are in evidence as comparable sales for valuation purposes. All have a floor space ratio entitlement of 1.8:1 under Ashfield Council's Local Environmental Plan. 4 These proceedings arise out the site's owners' objection to the Valuer-General's valuation of the site at the base date of 1 July 2007. The Valuer-General proposed a value of $1,050,000.00 whilst the owners of the site propose a value of $600,000.00. 5 A subsidiary issue arises as to how driveway element of the site should be valued – given that it is accepted, by both sides, that existence of a right of carriageway over the driveway to the benefit of other premises to the rear of the site curtails the value of the portion of the site comprising the driveway. There is, however, a dispute between the parties about the extent that this affects the value of that strip. 6 During the course of the hearing, there was an element of uncertainty about the area of the site that contained the built premises and which, it is agreed between Mr Brook and Mr Veris, the valuers for the applicant and the Valuer-General, respectively, should be regarded as being the primary and developable area of the site. 7 As a consequence, prior to the closing submissions from Ms Berglund, counsel for the applicant, and Ms Pearman, counsel for the Valuer-General, agreed figures for the total area of the site and the built area of the premises on the site were provided and were the basis for those submissions. This agreement was that, of the total area of the site of 158 sq m, 143.26 sq m was the developable area with the balance forming the area affected by the right of way. The impact of the right of way is dealt with later in this decision. 8 Mr Veris provided, in hard copy and in electronic form, a table setting out all of the relevant elements for each of the sales that he had analysed in the preparation of his valuation report. I have adopted the methodology he has applied, which is a conventional valuation methodology, in my consideration of the issues between the expert valuers in these proceedings. I have used his electronic spreadsheet to perform the calculations to give effect to the conclusions which are discussed below. 9 The appeal is brought pursuant to the Valuation of Land Act 1916. The Act, by s 40(2), expressly provides that an applicant in such proceedings must discharge the onus of proof that the Valuer-General's valuation should be disturbed. 10 In this instance, the agreed area calculations provided now divide the site into the built area and the driveway/right of way residual. When these are applied to the valuation rates per square metre adopted by Mr Veris to support the Valuer-General's valuation (acknowledging, as agreed, that there will need to be at least some discount applied to the valuation of the portion of the site that is the driveway), this leads to the position that, on Mr Veris's own figures, there was likely to be a downward adjustment of the statutory value. 11 Whether that downward adjustment is to be a minor one, as is the submission for the Valuer-General, or a dramatic one, as submitted for the applicant, will be dealt with later in this decision. It is sufficient, for the present, to note that it is agreed between the parties that the outcome of the appeal is that the appeal was likely to be upheld and that a lower valuation should be substituted for that originally proposed by the Valuer-General as at the base date. 12 Mr Veris contends that there are four relevant comparable sales upon which I should reach the conclusion to uphold the statutory valuation, subject to some minor adjustment only. 13 Mr Brook, on the other hand, undertook an analysis of only three of these sales (and did not undertake an analysis of the fourth because of what he said was the late provision of information to him which brought this sale into calculation). He concluded that a markedly different outcome was to be reached on his analysis of the three sales he considered. 14 It is convenient to note the four sales that I need to consider in the context of the valuation analysis undertaken to Mr Veris and, separately, by Mr Brook and the commentary that each of them has given concerning the relevance of each sale and the adjustment factors that they have applied to each of the sales. 15 I have marked the four sales in red on the diagram appearing below and the site subject of this appeal is marked in aqua on that diagram. 16 The premises that are the subject of the comparable sales analyses are 75 and 71 Dalhousie Street and 96 and 103 Ramsay Street. There are disputes between the valuers about the merits of a number of adjustment factors that Mr Veris has applied and, with respect to them, whether all Mr Veris's adjustments were required. In the case of one of the four (shape), Mr Brook asserts that such an adjustment is not appropriate. 17 There is also a dispute between the valuers, as each of the comparable sales is for an improved property, as to what sum should be deducted to take account for the present improvements on each property to reach an undeveloped land value, at the time of the sale, for those four comparable sales. 18 It is common ground, as I understand the position, that the most comparable sale, and hence the one upon which I should place more reliance, is the sale of the 75 Dalhousie Street. Somewhat close but nonetheless of modestly lesser importance, I also understood to be agreed, is the sale of 71 Dalhousie Street. The consequence of this, as set out in Mr Veris's calculations, was that when he reached an adopted ajusted rate per square metre for each of the 71 and 75 Dalhousie Street properties, the overall adopted rate which he has concluded is appropriate to be applied to the site is slightly but only slightly greater than the average of these two deduced values per square metre. For the reasons that follow, I have adopted this broad approach but, for those reasons, reach a somewhat different result to that reached, in the final analysis, by Mr Veris. 19 With respect to 96 and 103 Ramsay Street, it is my understanding that, although a degree of reliance was placed on the first of these by both valuers and on the second by Mr Veris, these two sales represented the extremes of property typology within this shopping centre. 20 96 Ramsay Street is in a landmark – perhaps the landmark – building in this shopping centre. It is a prominent and highly visible art deco building on the corner of the intersection of Ramsay and Dalhousie Streets. At the other end of the scale, the premises at 103 Ramsay Street are almost at the outer eastern edge of the shopping centre and are considerably narrower than the site. These premises represent the lower value end of the spectrum within the comparable sales. 21 After what was observed in the course of the site view and my consideration of the written and oral evidence of both the experts, I have concluded that I do not need to undertake a detailed critique of the analysis of the adjusted valuations for 96 or 103 Ramsay Street as they are sufficiently different from the site and the two other comparable sales merely to provide comfort that the conclusion which I have reached is not radically out of kilter with the deduced values for those other comparable sites. 22 Before turning to the adjustment factors used by Mr Veris and the position taken with respect to each of them by Mr Brook, it is necessary to consider and determine the undeveloped land value for each comparable sale site. Mr Veris and Mr Brook have each used a different method is to determine what amount should be removed from the sale price, in each instance, to reflect the improvements which are located on each of the comparable sales sites. 23 Mr Veris has used Rawlinsons Building Cost Guide, a widely recognised building industry construction costs guide for this purpose and, in simple terms, has applied the costs contained in that guide, in each case, to derive a cost of reproducing the improvements and has, then, deducted this from the relevant sale price to give an undeveloped land value. No internal inspections were undertaken, as I understand it. 24 Mr Brook, on the other hand, arranged for a builder, Mr Ward, to measure the three sites that Mr Brook, relies on as comparable sales. Mr Ward gave a cost estimate for rebuilding each of the buildings exactly as they are at present. Mr Brook then deducted this amount from the sale price. Mr Brook also deducted, in two instances, what might generally be described as a "heritage premium". I am satisfied that, given that Mr Ward's calculations are based on reconstructing the buildings in exactly the same form as they are at present, any heritage premium deduction is inappropriate. I understand that this was accepted behalf of the applicant but, even if it were not, in my view it constitutes an element of double dipping and should be set aside. 25 Mr Brook did not have this process undertaken for the fourth sale – being that at 103 Ramsay Street where he had not undertaken such an analysis. 26 Mr Veris's analysis used the Rawlinsons 2007 edition (page 14 of Exhibit 1) thus making allowance for any variation in construction costs between the relevant base date and the date of preparation of his valuation report. 27 Although Mr Ward's calculations were made in February 2009, each of his four reports (there being one for each comparable sale analysed by Mr Brook and one for the site) also makes allowance for any construction cost movements after the relevant base date by certifying that "All rates used have been determined as at JUNE 2007, as instructed". 28 Given that there are substantial differences between the resulting undeveloped land values depending on which approach is taken and, given the extent of the variations (up to $500,000 in one instance), I have some diffidence in reaching a view as to which set of figures I should accept. 29 It would have been possible for the applicant to have sought leave to call Mr Ward to explain the differences and justify his figures but this was not done. As a consequence, I consider that it is appropriate to use the Valuer-General's figures on the basis that, on this element, the applicant has not discharged the onus imposed by the statute. 30 Although, in general terms, I have concluded that the applicant has prima facie discharged the statutory onus on the broad issue, this question of undeveloped land value is, almost, a separate issue within the proceedings. I am not comfortable, without some adequate explanation for the differences, to take figures that I know, from the terms of Mr Ward's various reports, reflect higher reconstruction costs. 31 However, the applicants are not disadvantaged by this determination as the undeveloped land values advanced by Mr Veris are more favourable to the applicants (although after application of the adjustments proposed by Mr Veris the resultant calculations he makes results in the valuation that is the subject of the appeal) than those proposed by Mr Ward. 32 Before returning to a consideration of the analysis that the valuers have made of the various sales and the disagreements between them about the appropriate adjustments to render them comparable, it is appropriate to note that Mr Veris suggests that there are four relevant adjustment factors to be considered. These are: o the movement in the local market over the time between the relevant sale and the base date; o the relative attractiveness of the location of each sale property to the site; o the area each sale property; and o the shape of the each sale property. 33 Mr Brook does not accept that there should be any adjustments made for the shape of each comparable property. He accepts that each of the other three adjustment factors is appropriately applied (although he differs from Mr Veris about that numerical value should be applied for each of those factors in each of the sales). Mr Brook's evidence was also difficult to understand concerning way he interpreted the market movement in the vicinity over the period 2006 to 2007 in deriving his adjustments for time. 34 Before turning to consideration of the other adjustments for each sale property and seeking to derive an adjusted and, therefore, comparable rate per square metre from each of the sale properties, it is appropriate to consider, in more general terms, two further aspects of the evidence. Time 35 As to time, I understood during the course of the inspection of the site and the four comparable sales relied upon by Mr Veris, that Mr Veris and Mr Brook had each agreed that the total market movement during 2006 to 2007 was of the order of 10% and 10% was an appropriate figure to be used over the whole of that period. I also understood that they had agreed that the rate of increase, over that financial year, was sufficiently uniform that I should apply it as if on a straight-line graph basis resulting in approximately 2.5% per quarter over that 12-month period. 36 However, Mr Brook, in his evidence in court, described the movement in this local market as being one that was "falling" at the end of the relevant time period. He expressly used the word "falling" in this context. However, for one of the comparable sale properties, 71 Dalhousie Street, he has applied an upward adjustment of 1% during the final quarter of the financial year. This is simply mathematically inconsistent with the market "falling" (as was his oral evidence). 37 Despite being questioned about this apparent inconsistency, he was unable to give a coherent and convincing explanation as to why there could be an increase in value at a time when the market was "falling". Although, in submissions, Ms Berglund attempted valiantly to explain the inconsistency and invited me to be in concluded that Mr Brook had really meant to say that the rate of increase in the market had declined at this time, her submission is, ultimately, inconsistent with what Mr Brook expressly said and to which he adhered when questioned. As a consequence, I found his evidence on the time adjustments to be entirely unsatisfactory. 38 As a further consequence, with respect to this element of the adjustments, I accept that I should treat the market as having increased 10% over the relevant financial year and that I should treat that increase as having occurred in a generally uniform fashion. 39 Although I have therefore adopted the adjustments set out in the evidence of Mr Veris on this point, because of the internal inconsistencies with Mr Brook's positions, I do not consider that the inconsistency carried over to the remainder of Mr Brook's evidence. His evidence, on the other three adjustment factors, was given without any internal contradiction and, therefore, I need to consider, in detail, the differences between the evidence of Mr Veris and Mr Brook on the other three adjustment factors. Shape 40 I turn now to consider the question of whether there should be some adjustment made, or not, as a consequence of the shape of the site compared to the other properties that are used as comparable sales. The basic dispute between the valuers is whether or not such an adjustment should be made. Mr Brook contends, for reasons discussed below, that there should be no adjustment for shape made with respect to any of the comparable sales whether they have a narrow frontage to the street or a wider frontage, as is the case with 96 Ramsay Street. 41 Essentially, Mr Veris says that a longer street frontage necessarily results in increased valuations compared to any site of a similar area but with a narrower street frontage. He puts this proposition on the basis that, provided the additional length of frontage is sufficient to enable it, it may well be possible for a property with a longer frontage but lesser depth to be subdivided into more than one retail tenancy. This cannot occur if there is a narrow frontage amenable to use as a single storefront only as any attempt to subdivide this would not leave sufficient display frontage to be realistically possible. 42 With respect to the site, Mr Veris invites me to assume that there could be two (or perhaps three) shallow retail businesses established akin to those that are located nearby on the western side of Dalhousie Street. Mr Veris produced information concerning sales in Norton Street, Leichhardt which he said supported this proposition by showing that, for premises of similar areas, higher rental returns were able to be achieved for the premises with the wider frontage which had been capable of subdivision into a number of separate retail tenancies. It was Mr Veris's evidence that these figures confirmed his professional experience that this was the case. 43 Mr Brook, on the other hand, said that retail premises should be regarded as being in bands relating to the site area and that where premises had generally consistently the same size, it was reasonable to expect that they would achieve the same value. If one site had a frontage that would permit the subdivision into a number of tenancies, the effect of this would merely be that the total amount of rent achieved across such number of tenancies would add to a total equivalent to the amount that would be achieved from a single tenancy for that property. Mr Brook expressed this opinion, as I understand it, based on his experience as a valuer, but he did not provide any independent information, of the nature provided by Mr Veris, in support of his opinion. 44 As I understood it, Mr Veris did not ask me to accept that the rates for adjustment for area should be adopted from the Norton Street information, merely that they establish the proposition he was putting. Although Mr Brook questioned the relevance of the Leichhardt sales, I do accept that they provide sufficient indicator that there is likely to be an increase in value where more than one retail tenancy can be created on a site because of its wide street frontage when compared to a similar sized site the street frontage of which is only amenable to a single tenancy. 45 As Mr Brook's evidence on this issue that there should be no adjustment for whatsoever shape is founded on a proposition that I do not accept, I am left with Mr Veris's uncontradicted expert evidence on this point. As a consequence, having considered the opinions which Mr Veris has expressed concerning the possibility of creation of two or three retail tenancies across the frontage of the site (similar to what we observed in Dalhousie Street), I do not consider that his adjustments for shape are unreasonable and I adopt them. Ramsay Street v Dalhousie Street 46 The area where there is the most vigorous disagreement between Mr Veris and Mr Brook concerns to the adjustments that should be made to the sales in Dalhousie Street to render them comparable with the site. The disagreement arises in a fundamental fashion and concerns the simple proposition as to which of the two streets in this shopping centre should be regarded as superior as a retail location compared to the other. 47 It is Mr Veris's position that Ramsay Street is superior to Dalhousie Street and, as a consequence, his adjustments for the properties at 75 and 71 Dalhousie Street to be rendered comparable with the site, in his view, require a positive adjustment for this to occur. 48 Mr Brook, on the other hand, is of the view Dalhousie Street is superior to Ramsay Street and, as a consequence, his adjustments for the properties at 75 and 71 Dalhousie Street to be rendered comparable with the site, in his view, requires a negative adjustment for this to occur. 49 It is necessary to resolve this fundamental difference between the two valuers before proceeding to continue and assess what might be the appropriate adjustment to make in light desirability hierarchy adopted. 50 However, it is also my understanding that, if I accept (as I do for the reasons outlined below) that Ramsay Street is the superior location to Dalhousie Street, Mr Brook' adjustment factor is not rendered entirely irrelevant as I can still use his analysis of the comparative attraction between the two streets to consider whether I accept Mr Veris's adjustment factor reflecting his view of the extent that Dalhousie Street is superior to Ramsay Street. 51 In this context, I commence by noting that the retail development on Ramsay Street is more extensive than that on Dalhousie Street in that the ratio of retail properties on Ramsay Street, in either direction to the east or west of the intersection with Dalhousie Street would appear to be 2 to 3 times the extent of that development on Dalhousie Street in the direction of the two comparable sales under consideration. 52 The reasons advanced by Mr Brook for his strong preference for Dalhousie Street to be regarded as significantly superior to the site were set out in his valuation report. Mr Brook said this in his report: The corner of Ramsay Street and Dalhousie Street is the absolute centre of the township and less than 50 m from these two properties. Adjoining these two properties is: -- + The Council car park in a retail sector crying out for parking. + The Post Office known as the prime retail attraction in any suburban centre. + Haberfield's major pharmacy. Five of Haberfield's main restaurants with the restaurant at No. 73 between the two properties seating 400 and doing resets at least 3-4 nights a week according to the chef with whom I spoke. The shops from Dalhousie Street corner running both North and South from the intersection up and down Ramsay Street are small lightly attended shops with the exception of IAG which is 50 m North West of the Dalhousie Street intersection. In other words the townships main draw cards are in Dalhousie Street and North West of Ramsay Street being the opposite direction to the subject. The location of 71 and 75 Dalhousie is prime as opposed to the subject site. 53 Mr Veris, on the other hand, contends that Ramsay Street is a superior retail location compared to Dalhousie Street. In his valuation report, he commented, in this regard: The Haberfield shopping centre comprises 69 commercial property, with 60 of those positioned on Ramsay St the main shopping street and major thoroughfare, whilst the remaining nine establishments located on Dalhousie St which runs at an intersection of Ramsay St. Haberfield unlike other shopping centres of its size in the general vicinity of this locality with the possible exception of Norton St at nearby Leichhardt, has a large proportion of it shops used as either restaurants, cafes, delicatessen and Italian specialty stores for both local and neighbouring clientele. As with most centres, the Haberfield shopping centre has a hierarchical structure centred on the most favourable position long Ramsay Street and peaking in terms of values and rental returns at the intersection of Dalhousie St. Controversially, Dalhousie St quickly turns from commercial to residential uses and is generally considered the secondary/fringe location of the centre. 54 In support of these broad contentions, Mr Veris provided rental information based on an annual gross rate per square metre for the NLA of premises in Ramsay Street and Dalhousie Street for leases that commenced at approximately the same time in 2008. These rental figures support the proposition that he advances that Ramsay Street is superior to Dalhousie Street as a commercial location. Mr Brook provided no such detailed information. 55 Some considerable assistance in resolving this difference in opinion is also obtained from what was observed during the course of the site view. Further assistance is also available from a consideration of the nature of the road hierarchy in the vicinity. 56 From the site view, it was obvious that there was an eclectic range of differing enterprises arrayed along the Ramsay Street of the shopping centre. It was my impression that the pedestrian traffic along Ramsay Street, although I did not take a formal count in any sense, was somewhat greater than that in Dalhousie Street. The site also has the benefit of being located adjacent to a bus stop serving a number of government bus routes which, as we observed during the course of view, had, at least at that time of the day, comparatively frequently stopping buses. This also provides the advantage of additional exposure to this site and to this side of Ramsay Street compared to Dalhousie Street. A similar bus stop and bus traffic pattern appeared to apply to the northern side of Ramsay Street. These make a significant contribution to the activity levels along this street compared to Dalhousie Street. 57 Further, Ramsay Street appeared to be the preferred location for a number of the major service providers, other than the Post Office, such as the supermarket and real estate agents (but not all of them). In addition, Ramsay Street forms part of the major through traffic scheme linking suburbs to test with matters further to the east. Dalhousie Street, although a major access and egress route for the suburb, in my view, lacks this greater significance of through traffic and, hence, for shopfronts, exposure to potential customers in such through traffic. 58 Although both Dalhousie Street properties are close to a council car park, there are two other council car parks serving this shopping centre. I have no evidence that would suggest that usage of those parking facilities is directed primarily toward businesses on Dalhousie Street. Indeed, the fact that one of the car parking areas is to the western end of the Ramsay Street element of the shopping centre and another is to the north on the portion of Dalhousie Street where there are comparatively few businesses located could actually lead to the conclusion that those parking areas service businesses in Ramsay Street exclusively (in the case of the more western parking area) or simply provide a convenient place to park to access either element of this shopping centre (in the case of the more northern parking area). 59 Whilst there might well be some increased attractiveness of the two Dalhousie Street properties as a consequence of the nearby council car park, that may merely be a reflection of the nature of the activities carried on that site rather than an inherent preference for that site over others and certainly not for that street over Ramsay Street. 60 I consider that the conclusions able to be drawn from what was observed during the course of the site inspection, when coupled with the matters concerning the road hierarchy and parking availability, reinforce the views expressed by Mr Veris and support the inference he says should be drawn from the rental evidence he provided. As a consequence, I except his evidence on this general point in preference to the views expressed by Mr Brook. As a consequence, I accept that Ramsay Street is a superior location to Dalhousie Street. 61 However, having reached that conclusion, I do not automatically accept that the adjustment factors for location proposed by Mr Veris should be applied to the 71 or 75 Dalhousie Street properties. 62 Although I have not accepted Mr Brook's views that Dalhousie Street should be regarded as the superior location, nonetheless, his views do have considerable relevance in my consideration of the extent of the comparable attractiveness of the two Dalhousie Street properties when at determining what adjustment factor should be applied to them to have regard to the fact that they are in less attractive locations, as I have now found, then the site. 63 In this regard, the immediate proximity of the car park to which Mr Brook made written and oral reference, is a factor to which Mr Veris has given insufficient weight in his assessment of the relevant adjustment factors for location. Mr Brook and Mr Veris both agree that 71 Dalhousie Street is less attractively located than 75 Dalhousie Street for a variety of reasons including that it is further from the intersection of Ramsay and Dalhousie Streets. Their agreed reasons for the comparative position between these two properties are accepted by me as appropriate. 64 Mr Brook's comments quoted above, although not accepted as a basis for accepting that Dalhousie Street is more attractive than Ramsay Street, they nonetheless provide a basis for understanding that, in an absolute sense, Dalhousie Street is still an attractive business location. 65 As a consequence, in my assessment, a proper reflection of the adjustment for location to take into account the comparable activity levels on the two streets together with the benefit of the proximity of the council car park is half of the adjustment factor applied by Mr Veris to each of the Dalhousie Street properties. As a consequence, in substitution for his adjustment factors of 10% for location for 75 Dalhousie Street and 20% for location for 71 Dalhousie Street, I adopt location adjustment factors of 5% and 10%, respectively. Site area 66 The site area of 75 Dalhousie Street is virtually identical with the developable area of the site. Neither value proposes any adjustment for area as a consequence of this. This is obviously appropriate. 71 Dalhousie Street, on the other hand, is approximately one and two-thirds times the size of the site. 67 It is well accepted in valuation theory that a larger property will have a lower rate per square metre than a smaller property in a similar location if they are otherwise comparable. The reason for this is that there is an initial valuation component that arises as a consequence of the existence of the allotment and the potential development right attaching to it and the additional size of the allotment merely adds a lesser degree of incremental value to that right. 68 As earlier noted, Mr Brook considered that retail premises should be regarded as being in bands relating to the site area and that, as a consequence, he proposes only a 5% adjustment for area for 71 Dalhousie Street. As I have earlier rejected, for reasons discussed, this proposition as a basis the considering the shape of a site, I similarly reject it as a basis for considering the area of the site as it is contrary to proper valuation theory as I understand it. 69 As a consequence, I have no detailed basis upon which I could reject the figure proposed by Mr Veris – given the significant variation between the two experts on this point. Whilst my intuition might be that the 45% adjustment he proposes in this regard is modestly high, I have no rational basis upon which I could reduce it to any lower number. As a consequence, I adopt his adjustment figure of 45% for 71 Dalhousie Street. The right of way 70 I now turn to the value of the laneway and the discount that should be given to it from the rate per square metre which I have concluded is appropriate to be applied to that portion of the site upon which the premises occupying it are currently erected. As noted earlier, the permitted floor space ratio for development of the site under the relevant local environmental plan is 1.8:1 as a maximum calculated on the total area of the whole of the site. 71 The parties have agreed that the era of the site excluding the driveway is 143.26 sq m. The total area of the site is 158 sq m. Applying the floor space ratio to the total area gives a development potential of 284.4 sq m. As it was also agreed that a two-storey building could be erected over the whole of the developable area of the site, that would give a maximum development potential, if 100% coverage of that developable area were permitted, of approximately 286.5 sq m. 72 Thus there is no numerical development potential lost as a consequence of the driveway and the right of carriageway over it. 73 At present the premises erected on the sides are single-storey, Consideration of the streetscape in the vicinity makes it clear that, in a planning context, a two-storey building would be acceptable in that streetscape as the maximum development potential for the site. 74 However, to achieve the maximum development potential area of 284.4 sq m would require a building of undistinguished boxlike design that, in itself, would not maximise the value of the site. As a consequence, although a strict numerical calculation of any discount based on the development potential would not require any reduction in the value, I am satisfied that some discount should be allowed to account for this. 75 Although the valuers both addressed the issue of how I should consider the driveway, neither of them proposed a specific basis that would permit me to put a percentage on any discount I should apply. The broad propositions that they put were that, for Mr Veris, the discount should be comparatively modest whilst, from Mr Brook, the discount should be somewhere of the order of 75%. As a consequence, I am obliged to make my own independent assessment without any relevant detailed expert opinion basis to assist me. 76 In my view, the limitation on the design capability of the site to achieve the maximum floor space ratio caused by the inability to build on that portion of the site over which there is a right of way should provide a 5% discount on the otherwise deduced rate per square metre for the whole of the site or, in terms of the portion of the site that is subject to the right of way, a discount of approximately 50% of the value of the land that is affected by that right of way. 77 In reaching this conclusion, I have also taken into account the fact that some form of access to the site would be permissible over the right of way and that that, in itself, is an element of the value of the site. The applicant has certainly not demonstrated to me that such access is not permitted over that right of way. 78 For the reasons which I set out above, there is an appropriate basis, having regard to the development potential and the design limitations that would flow from it, to apply a 5% overall discount on the basis which I have set out earlier. Conclusion 79 It follows that the application of the adjustment factors I have determined are appropriate leads to deduced adjusted values for the site of $7,000 per sq m (rounded from $7,029) derived from 75 Dalhousie Street and $5,800 per sq m (rounded from $5,843) derived from 71 Dalhousie Street. Applying the approach adopted by Mr Veris, whose approach I have generally preferred for the reasons set out, I have concluded that the appropriate rate should be slightly above the average of these two rates and have adopted Mr Veris's $50 per sq m increment as appropriate. The rate to be applied to the site, as the first step, therefore, is $6,450 per sq m. This results in a preliminary value for the site of $1,019,100. 80 However, to this amount, a discount of 5% should be applied because of the right of way's impact on the development potential of the site for the reasons discussed above. This results in an overall value for the site of $968,145 – rounded to $968,000. Orders 81 As a consequence all the foregoing, the orders of the Court therefore are: 1. The appeal is upheld; 2. Pursuant to s 40(1)(b) of the Valuation of Land Act 1916 the value of the site at the base date of 1 July 2007 is determined as being $968,000.00 in lieu of the Valuer-General's valuation of $1,050,000.00; and 3. The exhibits are returned. Tim Moore Senior Commissioner 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.