C & V Engineering Co Pty Ltd as Trustee for the Pizzolato Settlement v Department of Planning Industry and Environment - Valuer General of NSW; CV Property Holdings Pty Ltd as Trustee for the Mascot Property Trust v Department of Planning Industry and Environment - Valuer General of NSW

1. On appeal the Court can confirm, revoke, make a decision in place of the Valuer-General's decision or remit the matter to the Valuer-General for consideration under s 40(1) of the VL Act. To the extent that the Respondent's valuer Mr Hill has derived a value greater than the issued value of the Valuer‑General, the Respondent does not contend for that higher value. It seeks confirmation of the issued value for each property.
2. The Court went on a view of the properties and most of the comparable sales relied on by the valuers in the presence of the parties and their representatives on the first day of hearing.

Highest and best use of land

1. The value of land is identified in s 6A(1) of the VL Act as: 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. The hypothetical, unencumbered fee simple of the land is to be valued, Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610 at 623 (Dixon CJ, McTiernan, Webb, Fullagar, Kitto JJ). Any improvements on the land being valued are not valued. The existing structures on the land are therefore to be disregarded.
3. A principal issue to be resolved in considering the hypothetical market is what is the highest and best use of the two properties. Numerous cases identify that the notional sale underpinning valuation for the purpose of the VL Act should be undertaken on the basis of the highest and best use of the land. The definition adopted by the valuers in their joint report is 'the use of the property that maximizes its potential which is physically possible, legally permissible, and financially feasible' in accordance with the Australian Property Institute definition. This is consistent with cases such as Limina Holdings Pty Ltd v Valuer General of New South Wales [2019] NSWLEC 110 at [91] (Sheahan J), Commonwealth Custodial Services Ltd as Trustee for the Burwood Trust Fund; Trust Company of Australia Ltd v Valuer-General (2006) 148 LGERA 38; [2006] NSWLEC 400 at [13]-[15], [22] (Biscoe J), Alexandria Landfill Pty Ltd v Roads and Maritime Services; Boiling Pty Ltd v Roads and Maritime Services (No 6) [2019] NSWLEC 98 at [479] (Sheahan J).
4. 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). The value of land is articulated in Spencer v The Commonwealth of Australia (1906) 5 CLR 418; [1907] HCA 82 (Spencer) at 432 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?' (Griffith CJ). 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).
5. In order to address the highest and best use, the parties engaged a range of experts requiring the assessment of architectural, structural engineering, town planning and valuation evidence to determine if both properties should be valued on the basis of mixed use (Applicants) or boarding house use (Respondent).
6. There are differences in the town planning experts' opinions about whether mixed use or boarding house use is the highest and best use in terms of what use a hypothetical purchaser and a hypothetical seller would consider likely to obtain development consent. These opinions in turn were each separately adopted by the valuers who reached different conclusions about the highest and best use to be valued.
7. Physical characteristics of each property affects what can be built due to proximity to the Mascot Towers and also affects the selection of the highest and best use. The parties agree that the proximity of the properties to Mascot Towers means that development which requires basement parking is very expensive to carry out because the usual (secant piling) method of construction cannot be used. Rather a diaphragm wall construction method is needed which is much more expensive to construct. This circumstance affects the selection of the highest and best use for the smaller John Street property in particular as I discuss below in [61]-[62] in the context of the structural engineering evidence.

Quantity surveyors

1. The quantity surveyors (QS) called by the parties agreed that for John Street in accordance with Rawlinsons Australian Construction Handbook (37th ed, 2019) (Rawlinsons): 1. The secant piling basement construction is valued at $5,171,988.75; 2. The diaphragm wall option is valued at $9,515,322.73; and 3. The difference between the secant piling basement and diaphragm wall option is $4,343,333.98.
2. The QS have agreed for Church Avenue that in accordance with Rawlinsons: 1. The secant piling basement construction is valued at $6,118,182.00; 2. The diaphragm wall option is valued at $13,338,106.89; and 3. The difference between the secant piling basement and diaphragm wall option is $7,219,924.89.
3. The QS allowed a 2.5% contingency in their calculations for the costs of the diaphragm wall construction (being $232,081.04 for John Street and $325,319.68 for Church Avenue).

Planning Controls

1. Both properties are zoned B4 Mixed Use under the Botany Bay Local Environmental Plan 2013 (BLEP). The maximum permissible floor space ratio (FSR) is 3.2:1 and maximum building height is 44m.
2. Relevant planning controls in relation to boarding houses referred to in the evidence are cll 29, 30 of the Environmental Planning Policy (Affordable Rental Housing) 2009 (ARH SEPP). Clause 29 is framed as standards that, if complied with, are matters that cannot be used as grounds for refusal. The standards include a specified minimum provision of car parking. A variation of requirements in this clause would not necessitate a clause 4.6 variation approval. Clause 30 of the ARH SEPP specifies standards, including for the provision of bicycle and motorcycle parking which, if not complied with, require a clause 4.6 variation approval.
3. Clause 29(1)(c) of the ARH SEPP permits existing maximum FSR for any form of residential accommodation permitted on land an additional 20% of the existing maximum FSR if the existing maximum FSR is greater than 2.5:1. In the case of the properties (which are subject to a maximum FSR of 3.2:1 under the BLEP) a boarding house proposal under the ARH SEPP would be subject to a maximum FSR of 3.84:1.

Architects

1. In a lengthy process the architects Mr Smith called by the Applicants and Mr Debello called by the Respondent were asked to prepare building schemes for mixed use and boarding house development on both properties compliant with planning controls under the ARH SEPP, State Environmental Planning Policy (Infrastructure) 2007, State Environmental Planning Policy No 55 - Remediation of Land 1988, State Environmental Planning Policy No 65 - Design Quality of Residential Apartment Development 2002, BLEP and the Botany Bay Development Control Plan 2013 (BDCP). A premise of the mixed use schemes was that a multi-level basement car park was required.
2. In his individual report dated 3 June 2022 Mr Smith was asked to prepare a scheme for each of Church Avenue and John Street with concept drawings and associated GFA calculations on a level-by-level basis. The instructions did not specify whether Mr Smith was to produce schemes for mixed use or boarding house development. Mr Smith produced a scheme for compliant mixed use development for each property. The John Street scheme (SK000) had 4 levels of parking (3 and a half levels of basement and a split basement level) with an achievable FSR of 3.2:1. The Church Avenue scheme (SK010) had 2 levels of basement parking with an achievable FSR of 3.03:1.
3. In his individual report dated 5 July 2022 Mr Debello was instructed to prepare schemes for both properties for mixed use and boarding house development. Mr Debello produced two compliant mixed use development schemes, scheme 1(1)(a) for Church Avenue with 2 basement levels and ground level car parking with an achievable FSR of 3.18:1 and scheme 1(1)(b) for John Street with 5 levels of basement car parking with an achievable FSR of 3.51:1 within height restrictions. [I note the comparative table below in [35] states the achievable FSR for scheme 1(1)(b) is 3.55:1]. He prepared two compliant schemes for boarding house development, scheme 3(1)(a) for Church Avenue with an achievable FSR of 3.84:1 and scheme 3(1)(b) for John Street with an achievable FSR of 3.79:1. Neither of the boarding house schemes had car parking as Mr Debello assumed this was not required by the ARH SEPP or BDCP.
4. In their first joint report dated 28 July 2022 the architects agreed regarding mixed use development on John Street that each of their schemes (schemes SK000 and 1(1)(b)) were compatible with respect to FSR, number of units and parking requirements.
5. Regarding mixed use development on Church Avenue the architects took different approaches in their schemes (schemes SK010 and 1(1)(a)) to managing overshadowing onto the adjoining Peak Towers site on the 22 John Street side. Mr Debello accepted that the Peak Towers development achieved its 70% solar access compliance on its own and did not rely on Church Avenue for solar access. Mr Smith's scheme provided for greater upper-level setbacks to the south of the Church Avenue tower to provide solar access to the lower apartments of Peak Towers as irrespective of the 70% compliance apartments would lose solar access and the development application (DA) assessment would need to take that into consideration.
6. In the first joint report Mr Smith introduced a new scheme for boarding house development on Church Avenue not previously included in his individual report (this was later refined to scheme SK030, see below in [29(2)]). This was a preliminary scheme with below ground car parking and achievable maximum FSR plus bonus floor space. The first joint report noted that both architects agreed that for all schemes 'further design development to address requirements of the stakeholders and achieve DA [development application] can address all issues above without being detrimental to the potential FSR yield'.
7. Mr Smith did not prepare boarding house schemes for John Street and Church Avenue apart from the preliminary design (above in [26]). For the same reasons above he believed the overshadowing impacts of Mr Debello's boarding house schemes for John Street and Church Avenue (schemes 3(1)(a) and 3(1)(b)) on Peak Towers may be considered unreasonable by the relevant council. The architects would each use different design approaches addressing orientation, separation and courtyard placement.

Supplementary individual and joint reports (boarding house)

1. In his supplementary report dated 5 April 2023 Mr Smith was instructed to consider additional development options for boarding house use fully compliant with cll 29 and 30 of the ARH SEPP on Church Avenue and John Street. He was asked to assume car parking was required for all development options and in preparing proposals to consider wholly above and wholly below ground parking. Mr Smith considered the individual and joint reports of the structural engineers and as a result he did not provide a full depth basement in any of his schemes.
2. Mr Smith prepared three additional development options: 1. Boarding house development on John Street with above ground parking (no car parking) compliant with cl 30 for motorcycles per the ARH SEPP and an achievable FSR of 3.84:1 (SK020). This scheme did not provide basement car parking due to costs identified in the QS report and because the structural engineers advised that only one level of basement would be possible. Above ground car parking would not be approved due to site constraints. 2. Boarding house development on Church Avenue with above ground and partial basement parking compliant with cl 29 for cars, and cl 30 for motorcycles and bicycles per the ARH SEPP (SK030); and 3. Boarding house development on Church Avenue with above ground parking compliant with cl 29 for cars and cl 30 for motorcycles and bicycles per the ARH SEPP and an achievable FSR of 3.84:1 (SK060).
3. In his supplementary report dated 10 March 2023 Mr Debello was instructed to review parking provision for mixed use and boarding house schemes based on compliance with cll 29 and 30 of the ARH SEPP. Mr Debello was asked to assume for boarding house development on John Street that no car parking was viable. He was asked to assume for boarding house development on Church Avenue that only above ground car parking was viable. Mr Debello was not instructed to consider the structural engineers' reports and noted that the engineers were not consulted in the preparation of his report.
4. Mr Debello produced four additional schemes: 1. Boarding house development on Church Avenue with above ground parking compliant with cl 29 for cars and cl 30 for motorcycles and bicycles per the ARH SEPP and an achievable FSR of 2.65:1 (scheme 3(2)(a)); 2. Boarding house development on John Street with above ground parking compliant with cl 29 for cars and cl 30 for motorcycles and bicycles per the ARH SEPP (scheme 3(2)(b)). [Both architects agreed this scheme was not feasible as the physical constraints of the building did not allow for above ground car parking. Mr Debello's instructions were to disregard basement car parking]; 3. Boarding house development on Church Avenue with above ground parking (no car parking) compliant with cl 30 for motorcycles and bicycles per the ARH SEPP and an achievable FSR of 3.84:1 (scheme 3(3)(a)); and 4. Boarding house development on John Street with above ground parking (no car parking) compliant with cl 30 for motorcycles and bicycles per the ARH SEPP and an achievable FSR of 3.71:1 (scheme 3(3)(b)).
5. In the supplementary joint report dated 15 May 2023 the architects repeated their agreement above in [26] that further refinements to designs would take place over the design development process for a DA without being detrimental to FSR yield.
6. The architects agreed regarding John Street as a boarding house development that: 1. Mr Debello's scheme 3(3)(b) and Mr Smith's scheme SK020 only complied with cl 30 of the ARH SEPP (i.e. they do not comply with cl 29); 2. Above ground car parking cannot be accommodated on John Street due to physical constraints of the property; 3. The only option available to accommodate car parking on John Street would be in a basement, but both architects disregarded the possibility of a basement on John Street in their supplementary designs; 4. Motorcycle and bicycle parking can be accommodated as shown in Mr Debello's scheme 3(3)(b). Scheme SK020 does not show bicycle parking although it is feasible to include; 5. A boarding house development can achieve the maximum FSR available for the property; and 6. Both schemes (schemes 3(3)(b) and SK020) are compatible with respect to FSR, number of units, and compliance with parking requirements. [The town planners had different opinions on the planning risk for the schemes not compliant with car parking requirements.]
7. The architects agreed regarding Church Avenue as a boarding house development that: 1. Mr Debello's scheme 3(1)(a) provides for bicycle parking only. Mr Smith was not requested to prepare a matching scheme; 2. Mr Debello's scheme 3(2)(a) and Mr Smith's schemes SK030 and SK060 comply with cll 29 and 30 of the ARH SEPP; 3. Mr Debello's scheme 3(3)(a) complies with cl 30 of the ARH SEPP only (i.e. does not comply with cl 29). Mr Smith was not asked to prepare a matching scheme; 4. GFA is displaced on the lower levels to accommodate above ground parking for cars, motorcycles and bicycles; 5. Whether the resulting development achieves the maximum GFA depends on the location and form of towers above; 6. Mr Debello referenced Mr Smith's original scheme SK010 (Church Avenue mixed use proposal) in relation to the effect that scheme SK030 may have on overshadowing on John Street and the adjacent Peak Towers noting that scheme SK030 is further south than the original scheme; and 7. Mr Smith did review overshadowing and noted that scheme SK030 has generally a similar overshadowing result on Peak Towers as the comparison original scheme SK010. Also boarding house development overshadowing to adjacent properties would be assessed on merit rather than specified criteria as is the case of a residential flat building.
8. The schemes ultimately identified as relevant to the Court's consideration were set out in a useful table attached to the Respondent's submissions which was not disputed, see below:
9. I note that the FSR for SK060 and SK020 according to Mr Smith is 3.84:1, the maximum permitted. The FSR column shows the FSR for Mr Debello's schemes.
10. As voiced by me in the course of the hearing, the provision of such detailed architectural evidence was highly unusual and not a course that should generally occur in matters of this kind, where the existence of a market for the highest and best use is being assessed and not whether a particular development is likely to be considered achievable by the hypothetical parties. The valuers did not ask for such material to be prepared. I was informed that the Applicants sought orders that evidence of this nature be prepared. The reason was said to be the unusual nature of the properties because of the impact of Mascot Towers, which required a greater understanding of the achievable GFA. Accepting for present purposes that some evidence to address this may have been necessary, the outcome in the conduct of this matter has been that the other expert disciplines exclusively focussed on the likelihood (planning risk) of these specific schemes obtaining development consent. As identified below in [47] detailed material of this kind was similar or greater than a hypothetical purchaser would obtain according to the town planners.
11. A further unsatisfactory issue was that the architects did not receive identical instructions so that one architect initially provided only mixed use development schemes for the Applicants, while the Respondent's architect prepared both mixed use and boarding house schemes. Eventually the architects engaged with both possible uses but this process was time consuming and no doubt costly. The architects' first joint report was dated 28 July 2022 and the architects' supplementary joint report was dated 15 May 2023. The Court was not referred to much of the material prepared by the architects.

Town planners

1. The town planners were asked to consider the various schemes prepared by the architects as summarised above in [35] and to give their opinion on how they would advise a hypothetical developer about the planning risk of these gaining development consent. The planning evidence in particular presented more as a merits assessment in a Class 1 appeal, as I further identify below.
2. The parties did not refer to the individual reports of the town planners which set out largely agreed matters such as planning controls. In their first joint report dated 28 October 2022 the town planners agreed that both Church Avenue and John Street were constrained by the adjoining Peak Towers development to the west, which presented as a blank wall to match with and raised issues of solar access and privacy.
3. The town planners agreed that the highest and best use for the properties developed individually would be either mixed use or boarding house development. They acknowledged that the schemes prepared by the architects were conceptual being to confirm the development potential of the two properties and that refinement would be needed if they were to proceed to the DA stage.
4. Regarding the development potential of mixed use development for John Street the town planners agreed that a competent DA would obtain approval for a mixed use scheme that achieved the FSR of 3.2:1 over 9 storeys. Based on the architects' first joint report the town planners expected that at least four levels of basement car parking would be required. The town planners disagreed as to whether there was potential for a mixed use development on John Street to exceed the maximum FSR.
5. Regarding the development potential of boarding house development for John Street the town planners agreed that a competent DA would obtain approval for a boarding house scheme that achieved an FSR of 3.84:1 over 12 storeys.
6. The town planners disagreed on the prospects of obtaining approval for a boarding house with no car parking for both John Street and Church Avenue. The town planners assumed that if car parking was required it would generate the need for approximately 60 spaces on John Street and approximately 126 spaces on Church Avenue excluding staff parking. Mr Grech town planner called by the Respondent believed a competent boarding house DA with comprehensive justification would have 'reasonable prospects' of being approved with no car parking. He referred to 6-8 John Street Mascot a nearby 7-12 storey boarding house owned by Iglu with no parking for motor vehicles including motorcycles. Mr Grech provided ten further examples of boarding house developments owned by Iglu with no car parking (five in Chippendale and Redfern, one in Chatswood and four in other states). Further justification included the close proximity of John Street and Church Avenue to Mascot train station, bus services and cycleways, the potential of a green travel plan to support the DA as occurred at 6-8 John Street and the avoidance of additional traffic congestion. Ms Horder town planner called by the Applicants believed an informed purchaser would place a 'high risk' of gaining development approval for a boarding house with no car parking on the properties. She noted the boarding house development at 6-8 John Street Mascot was approved under specific circumstances which may not be able to be replicated by a purchaser other than Iglu.
7. Regarding the development potential of mixed use development for Church Avenue the town planners agreed that a competent DA would obtain approval with a mixed use scheme that achieved an FSR of at least 3.04:1 over 13 storeys with 2 basement levels for car parking. Based on opposing views in the architects' first joint report regarding achievable FSR and external solar access impacts, the town planners disagreed as to whether there was potential for a mixed use development on Church Avenue to achieve the maximum FSR of up to 3.18:1 over 12 storeys.
8. Regarding the development potential of a boarding house development for Church Avenue the town planners agreed that a competent DA would obtain approval for a boarding house scheme that achieved an FSR of 3.84:1 being the base FSR under the BLEP plus the bonus achievable through the application of the ARH SEPP. The town planners disagreed as to whether a boarding house could be achieved on Church Avenue without any provision for car parking, see reasoning above in [44].
9. In their supplementary joint report dated 5 June 2023 the town planners considered the likelihood of obtaining development consent for several boarding house schemes prepared by the architects. For Church Avenue the schemes were 3(1)(a), 3(2)(a), 3(3)(a), SK030, SK060 and, for John Street, schemes 3(1)(b), 3(3)(b) and SK020. The town planners noted the architectural schemes for boarding house use for John Street were generally prepared on the basis that no on-site car parking was provided due to feasibility concerns. The town planners agreed that the level of information provided via the architects was similar or greater than that which a hypothetical purchaser might consider necessary.
10. The town planners' supplementary joint report addressed five areas. Firstly, the applicable parking controls for each property were agreed. Secondly, in relation to prospects of approval of a boarding house development without motorcycle parking, the town planners agreed a clause 4.6 objection could be prepared that provided the required justification. The town planners agreed there were risks a clause 4.6 objection might not be upheld and consent granted. They disagreed on the degree of risk of obtaining planning approval for a boarding house without motorcycle parking on the properties.
11. Thirdly, in relation to prospects of approval of a boarding house development without car parking, the town planners agreed that no clause 4.6 variation would be needed if the required amount of car parking was not provided on the properties individually. A proposed boarding house with no car parking would be assessed on its merits. The town planners disagreed on the degree of risk of obtaining planning approval for a development that did not provide sufficient car parking. Mr Grech considered there were reasonable prospects of obtaining development consent. Ms Horder considered the absence of parking could be a ground to refuse development consent and that car parking requirements would be similarly scrutinised as a clause 4.6 objection. The boarding house at 6-8 John Street was approved 14 months after the valuation date. A student housing proposal with no car parking (like 6-8 John Street) is likely to attract conditions of consent including a positive covenant on title restricting the development to student accommodation, compliance with a green travel plan and ineligibility for occupants to participate in on-street resident parking schemes. There is a risk the relevant council may have an alternate view and refuse an application on the basis of insufficient parking.
12. Fourthly, concerning prospects of approval of a boarding house development with compliant car parking, motorcycle and bicycle parking, the town planners agreed the architects' schemes would not be refused on the grounds of parking (schemes 3(2)(a), SK060, SK030).
13. Fifthly, the overall prospects of obtaining development consent for schemes with above ground car parking was disagreed. Ms Horder considered that a DA for any of the schemes with 3-4 storeys of above ground parking (schemes 3(2)(a), SK030, SK060) would be unlikely to obtain development consent having regard to the creation of blank walls, streetscape/active street frontages, overshadowing and acoustic impact. Mr Grech considered that competently prepared DAs would likely be able to address the above considerations to the satisfaction of the relevant council as they are resolvable concerns. The schemes put forward by the architects are not fully resolved architectural schemes to DA standard and could be refined to address the issues identified, as set out in several paragraphs of the supplementary joint report.
14. Sixthly, the town planners agreed that a developer would have expected to pay development contributions for all development schemes prepared by the architects including boarding houses. Generally contributions under s 7.11 of the Environmental Planning and Assessment Act 1979 (NSW) for boarding houses were greater than for mixed use developments and varied across different local government areas ($18,000 per room in the subject area, much less at about $9,500-$9,800 in City of Sydney and Inner West council areas). The town planners disagreed about the implications of much higher contributions for a boarding house than mixed use in assessing highest and best use. Mr Grech considered these would be considered reasonable when determining financial feasibility for a boarding house development given its built form. Ms Horder considered the implications would be considered by a hypothetical developer. The planners disagreed whether the developer of 6-8 John Street as a boarding house was likely to obtain a reduction of contributions.

A. Would hypothetical parties expect that a basement car park can be built on John Street? - structural engineering evidence

1. The parties disagreed about the consequences of the structural engineering evidence in relation to the smaller John Street property. An issue arising from the engineering evidence which affects identification of the highest and best use is how difficult it would be to build a mixed use development with basement car parking on John Street. If a prudent hypothetical purchaser would consider it is unlikely that a 4-5 level basement can be built to support a mixed use development, the highest and best use of John Street is more likely to be a boarding house which does not require basement parking.

Mr Bitar

1. In his individual report dated 14 November 2022 the Applicants' engineer Mr Bitar was instructed to provide his opinion on the basement construction and design requirements for both properties taking into consideration the architectural schemes for the properties. Mr Bitar prepared a basement design for each of the properties with reasons for the selection of a shoring system, shoring depth and other key matters. Mr Bitar proposed a design for Church Avenue with 2 basement levels and John Street with 6 basement levels and bulk excavations of the properties in the order of 7-20m below the existing ground level. Mr Bitar opined the diaphragm wall/top-down construction for basement construction was most appropriate for both properties.

Mr Appleyard

1. In his report dated 12 December 2022 the Respondent's engineer Mr Appleyard was asked to provide advice for a hypothetical purchaser regarding any structural engineering matters taking into account the parties' architectural and town planning reports (this did not include supplementary reports). Mr Appleyard advised that the hypothetical purchaser would be mindful of the information in the public domain concerning recent legal actions associated with the adjacent Peak Towers development and the associated allegations of damage caused to Mascot Towers. The properties may be anticipated to present similar difficulties during basement excavations such as a high water table and unstable soil conditions.
2. Mr Appleyard advised that a boarding house development involving nil or minimal car parking could be constructed on either property. While mixed use development was technically feasible for each property, a mixed use development would be almost impossible to construct on John Street alone. Contrary to Mr Bitar, Mr Appleyard believed a basement with six levels for a mixed use development on John Street was counter intuitive for such a small site. This did not apply to boarding houses. Mr Appleyard believed adoption of the diaphragm wall/top-down construction for basement construction on John Street would not be viable as the site area requirements in order to construct diaphragm walls was considerable and the location of the necessary substantial machinery would not be feasible.
3. In their joint report dated 20 January 2023 the structural engineers came to the following points of agreement: 5.1 Points of Agreement The Structural Engineering Experts agree that: (a) Diaphragm wall construction will be essential for all Basements on all sites, either individually or as an amalgamated composite site. (b) Since temporary anchors will not be permitted, Top-down construction needs to be adopted for all sites. (c) Mr Bitar agrees with Mr Appleyard that diaphragm wall construction on the John Street site individually will present significant constructability problems and may not be achievable on this site, due to the small site area and the substantial plant and equipment required to install a concrete diaphragm shoring wall. (d) Taking account of the practical limitations noted in item (c) above for the installation of a diaphragm wall to the John Street Site, this would most likely limit the construction of a full depth basement on this individual site. (e) Careful management of groundwater will be essential, with careful attention being paid to drawdown during construction, monitoring protocols and tanking of all constructed Basements. …

Applicants' submissions

1. The engineers agreed that diaphragm wall construction on John Street individually would present significant constructability problems and may not be achievable on this property. Mr Appleyard in chief considered that such a basement construction on John Street was not viable. The meaning of viable in Mr Appleyard's report is unclear. Mr Bitar in the joint report did not consider that basement construction was impossible and prepared designs with basements for both properties.
2. The structural engineering evidence does not suggest that a basement construction on John Street is not physically possible. The joint report must be read in light of the engineers' individual reports. Mr Bitar considered as instructed the construction of a six level basement on John Street. He identified the proposed shoring solution with more detailed prescriptions on methodology for a diaphragm wall construction. Mr Appleyard considered Mr Bitar's proposals stating that such an approach is not viable for John Street. His position was modified in the joint report to 'may not be achievable'. The full depth basement construction on John Street will be difficult not impossible and expensive in light of the QS reports.

Respondent's submissions

1. The structural engineering evidence makes clear that a basement construction on John Street is not feasible from an engineering perspective. This rules out mixed use development as the highest and best use on that property.

Hypothetical parties would be likely to assume no basement car parking feasible on John Street

1. In considering John Street Mr Appleyard stated that the construction of a full depth basement was not viable. Not viable in a structural engineering report suggests that the building of a basement car park is not viable in a structural engineering sense. Mr Appleyard's evidence could have been interrogated by the Applicants during the hearing if the meaning of 'viable' was unclear as was submitted in closing. This opportunity was not taken. Mr Appleyard's opinion was not changed in the joint report. Rather Mr Bitar agreed with Mr Appleyard that building a basement on John Street has significant constructability problems and may not be achievable on that property. Mr Appleyard's opinion is accepted that building a basement on John Street is not viable.
2. Even if the Applicants' submission relying on Mr Bitar's evidence is accepted, that a full depth basement construction on John Street will be difficult but not impossible and expensive, it is highly likely that a potential developer would consider other permissible uses on John Street which do not require a basement, namely a boarding house.
3. My final consideration of highest and best use will also be informed by the town planning evidence on planning risk and the valuers' consideration of all risks.

Valuers

1. The valuers agreed the appropriate valuation method was a direct comparison of comparable sales analysed by a rate per m2 of GFA and application of these sales to the subject properties through the making of various adjustments. The process of accumulation of comparable sales, analysis of these, adjustment to the subject land and application of sales has been identified in numerous cases, see Tenstat v Valuer-General; Woolworths Ltd v Valuer-General [2012] NSWLEC 1361 at [35]-[43], Capuano v Roads and Maritime Services [2018] NSWLEC 59 at [13]‑[19] cited in Warwick Farm Central Pty Ltd v Valuer-General [2024] NSWLEC 25 at [40].
2. The valuers agreed on a definition of highest and best use (see above in [10]). The valuers reviewed the conflicting planning evidence and applied it differently. In doing so the valuers disagreed about the highest and best use for both properties. The valuers agreed that a purchaser would likely be a developer but disagreed about the level of risk such a developer might apply to gaining approval for a boarding house in particular. The level of risk applied by Mr Field the Applicants' valuer was such that he discounted such a use entirely.

Mr Field (mixed use)

1. Mr Field adopted as the highest and best use mixed use development with basement car parking and disregarded a boarding house use for both properties. Mr Field did not consider any of the boarding house sales identified by Mr Hill. In his individual report he stated that Mr Grech's evidence that the approval of a boarding house with no on‑site car parking for Church Avenue and John Street had 'reasonable prospects' of approval was ambiguous. He preferred the evidence of Ms Horder that there was a 'high risk' of gaining development approval. Mr Field emphasised that he assumed the purchaser would be a prudent buyer. Such a purchaser who is risk adverse would consider there was unacceptable uncertainty the relevant council would approve a proposed boarding house development without adequate parking.

Church Avenue

1. Mr Field analysed three sales: 13B Church Avenue (sale 1), 18A John Street and 27 Church Avenue (sale 2) and 6-8 John Street (sale 3) which Mr Field treated as mixed use development sales. I note that sales 1 and 3 combined were relied on by Mr Hill as boarding house sales.
2. In the valuers' joint report Mr Field explained that from the three sales he derived a range of $2,009-$2,711/m2 of GFA. Mr Field adopted the midpoint of $2329/m2 for Church Avenue. When multiplied by the agreed GFA area of 7116.84m2 he derived a value of $16,575,120. After basement construction costs of $7,219,925 were deducted the value was rounded to $9,350,000.

John Street

1. Considering the same three sales with adjustments to apply to John Street for mixed use Mr Field derived a range of $2,070-$2,577/m2 of GFA in the valuers' joint report. He adopted the midpoint of $2331/m2. Multiplied by the agreed GFA area of 2279.68m2 a value of $5,313,934 was derived. Deducting basement construction costs of $4,343,334 resulted in a rounded value of $970,000.

Mr Hill (mixed use and boarding house)

1. Mr Hill considered the various development schemes of the architects and the town planning evidence. Mr Hill considered both properties had reasonable prospects of achieving boarding house approval without car parking. Mr Hill took into consideration Mr Debello's compliant boarding house schemes without car parking, the evidence of Mr Grech that there were reasonable prospects of those schemes gaining approval, numerous examples of such developments being approved with no parking and the proximity of the properties to public transport. Mr Hill considered Ms Horder was misconceived in attributing weight to the fact that the developer of a nearby boarding house was Iglu as one of the reasons the site was approved. The council did not control who owned the land and a site may be sold to another owner post DA.

Church Avenue

1. For Church Avenue Mr Hill considered the highest and best use was a boarding house being scheme 3(2)(a) as it provided the appropriate level of parking for cars, motorcycles and bicycles, satisfied clauses 29 and 30 of the ARH SEPP and did not require a clause 4.6 variation approval to be obtained. Mr Hill also provided a land value based on mixed use.
2. Mr Hill had regard to eight mixed use and boarding house sales including two mixed use sales considered by Mr Field.

Mixed use sales

1. Considering the mixed use scheme (1)(1)(a), Mr Hill analysed four sales zoned B4 at 18A John Street and 27 Church Avenue Mascot (sale 1), 6-8 John Street Mascot (sale 2), 573 Gardeners Road Mascot (sale 3) and 551‑559 Gardeners Road Mascot (sale 4).
2. From these sales Mr Hill derived a range of $2,457-$3,054/m2 of GFA from which he adopted with adjustments in joint conferencing a rate of $2,550/m2. After deducting basement construction costs of $7,220,000 and other adjustments he derived a land value of $10,530,000 for scheme (1)(1)(a).
3. Mr Hill's calculation was as follows:

Boarding house sales

1. Mr Hill relied on four sales purchased for boarding house and/or student accommodation, 6-8 John Street and 13B Church Avenue Mascot (sale 5), 80‑88 Regent St Redfern (sale 6), 202-210 Elizabeth Street Surry Hills (sale 7) and 442 Parramatta Road Petersham (sale 8).
2. Mr Hill made various adjustments of location, size, shape, access and views to these sales to derive a range of $2,736‑$3,161/m2 of GFA further adjusted in joint conferencing and adopted a rate of $2,750/m2. The boarding house scheme 3(2)(a) was initially valued at $14,680,000. The GFA rate was adjusted to $2,700/m2 and the value revised down to $14,410,000 in the valuers' joint report.
3. Mr Hill's calculation was as follows:
4. Mr Hill also valued scheme 3(3)(a) at $17,875,000 based on a GFA rate of $2,600/m2. He adopted scheme 3(2)(a) as an appropriately conservative choice of land value and allowed a 10% adjustment for planning risk. In Mr Hill's opinion scheme 3(2)(a) carried less planning risk because it contained car parking in comparison to scheme 3(3)(a) which had no car parking and a slightly higher planning risk which he adjusted by 20%.
5. I note Mr Hill also valued scheme 3(1)(a) at $14,300,000 based on a GFA rate of 2,600/m2. The valuation of this scheme was not further discussed in the valuers' evidence and it is not necessary to address this any further.

John Street

1. For John Street Mr Hill considered the highest and best use was boarding house. He considered scheme 3(3)(b) an appropriate scheme which provided for motorcycle parking and bicycles, not car parking, and satisfied clause 30 without requiring a clause 4.6 variation in relation to car parking.
2. Considering the same four sales above in [73] Mr Hill made various adjustments to these sales to derive a range of $2,867-$3,736/m2 of GFA with further adjustments in joint conferencing and adopted a rate of $2,850/m2 arriving at a value of $6,000,000. His calculation of value was as follows:
3. In his individual report Mr Hill did not value any scheme for mixed use development for John Street as he believed the property was unable to accommodate basement or above ground car parking. In the valuers' joint report he assessed the highest and best use of Mr Field, a mixed use development for John Street with 2 basement levels of car parking. Mr Hill derived a GFA rate of 3,055/m2. After deducting basement excavation costs of $4,343,334 he arrived at a land value of $2,590,000.

Choice and characterisation of sales

1. Mr Field agreed he did not and should have referred to the supplementary joint report of the town planners (where the town planners agreed that boarding house development with compliant car parking, motorcycle and bicycle parking would not be refused on the grounds of parking) in his individual written report. He stated his position was the same namely that a boarding house use should not be considered. Asked why he did not consider boarding house sales as part of the relevant market when ascertaining the highest and best use for the properties given the town planners had agreed that boarding house schemes 3(2)(a), SK060 and SK030 put forward as compliant schemes by the architects would not be refused on the grounds of parking, Mr Field stated that it was entirely acceptable to put forward sales only for mixed use development.
2. Mr Field was asked whether it was appropriate to rely on two of his comparable sales (6-8 John Street and 13B Church Avenue) as mixed use rather than boarding house sales as the evidence of Mr Hill was that they were bought for development for boarding house use. Mr Field considered development as a boarding house only became known after the date of the sales. He maintained that as these sites were sold with mixed use DAs that was the relevant information as of the date of sale.
3. Mr Hill identified that the sales were in April, May 2019 before 1 July 2019 (the valuation date). An experienced operator of student accommodation Iglu purchased both properties, so the market knew who the purchaser was. Pre and post sale date adjustments are common. [I consider Mr Hill's approach is orthodox.]

Highest and best use for Church Avenue

1. Mr Field stated that one of the reasons he rejected boarding house use even with car parking was Ms Horder's evidence that scheme 3(2)(a) was highly unlikely to be approved by a consent authority. He agreed this was not included in his report.
2. Mr Field was asked about his opinion based on criticism of Mr Grech's statement that a competent boarding house DA with comprehensive justification would have reasonable prospects of being approved with no on‑site car parking. Mr Field considered reasonable prospects was ambiguous because it could mean no more than a 51% likelihood. Mr Field stated that it was unlikely that a prudent purchaser would be willing to pay a significant premium for a boarding house sale based on a concept akin to a speculative punt or gamble and Mr Hill's opinion was speculative.
3. Mr Field was asked why any concerns regarding scheme 3(2)(a) could not have been adjusted for risk or refined at the DA stage rather than disregarding the permissible land use entirely. Mr Field agreed that issues about blank articulated walls, shadow diagrams, design of above ground car parking and podium height could be refined at the DA stage, acknowledging the town planners' statement that the level of detail in the architects' plan was greater than a hypothetical purchaser would generally have.

Highest and best use for John Street

1. Mr Field was questioned on his opinion that mixed use was the highest and best use for John Street. Mr Field was asked why he did not think a land use with reasonable prospects such as boarding house use was more likely to be granted approval than land use with purportedly significant constructability problems (i.e. mixed use). Mr Field stated the level of risk related to boarding house use was unacceptable to a prudent purchaser and reiterated that the term reasonable prospects was ambiguous.
2. Mr Field was asked about adjustments he made to his comparable sales for the mixed use development of John Street in relation to 'access' and 'engineering' given the property's constructability issues. It was put to Mr Field that considering the engineering advice no amount of adjustment would render the mixed use development on John Street viable. While he disagreed, Mr Field conceded more than a -5% adjustment was required for engineering. He was not able to specify how much more while giving oral evidence.

Highest and best use for Church Avenue

1. Mr Hill was asked about his option for highest and best use for Church Avenue, scheme 3(2)(a) a boarding house with four above ground levels for car parking. Mr Hill identified in the valuers' joint report that the residential development to the east of the properties has one level podium and Peak Towers has two levels with private open space as seen on the view. Mr Hill did not agree a four level podium would overwhelm that private open space because there is a difference in ground level between the properties and changes could be made to prevent overshadowing. He was not aware of any four level podium development in the area. The use of podium levels is not novel. Mr Hill agreed all above ground car parking in the local area is for mixed use developments and not boarding houses.
2. Mr Hill was asked about the likelihood of approval of above ground parking for boarding house use and how he formed the opinion that this had less risk given he only considered advice from town planners and architects regarding boarding house use with no car parking. He considered the architectural and planning evidence in relation to no car parking supported his opinion that a less risky option (providing car parking) was achievable.
3. Mr Hill was questioned about his adoption as the highest and best use for Church Avenue of scheme 3(2)(a), when he valued scheme 3(3)(a) a boarding house with no car parking at a much greater rate of $17,875,000. Mr Hill agreed the reason for selecting scheme 3(2)(a) over the higher value scheme 3(3)(a) was because he believed there was greater planning risk associated with a boarding house development with no car parking. He did not accept the risk of planning approval for scheme 3(3)(a) was so great that it should be ignored.
4. Mr Hill accepted that the risk of obtaining approval for a mixed use development on Church Avenue was low.
5. Mr Hill confirmed a purchaser would be willing to pay $4,000,000 more on the assumption they would obtain boarding house approval as opposed to the lower value mixed use option on Church Avenue. Building a basement on the property is expensive and the market shows that what is being paid for boarding houses without car parking is greater than mixed use sales.
6. Mr Hill was asked that if the highest and best use of Church Avenue was scheme 3(2)(a) whether the adjustment of 10% he made for planning risk was too low given he allowed a -12.5% adjustment for the lack of a mixed use DA in relation to 18A John Street and 27 Church Avenue. He responded that the comparable sales at 6-8 John Street and 80-88 Regent Street Redfern were sold without a DA for a boarding house which show there is minimal planning risk. He allowed 10% to reflect the town planners' evidence in relation to obtaining approval for three podium above ground car parking.
7. Asked why he had made no adjustment for s 7.11 contributions Mr Hill stated that such contributions were encapsulated in the sale price and the analysed GFA rates by purchasers in the prospective locations. The boarding house market is separate from the mixed use market.

Highest and best use for John Street

1. Mr Hill maintained the appropriateness of the adjustments he made for planning risk of 20% for scheme 3(3)(b).

Adjustments

1. Both valuers were asked to explain their differences in adjustments for size, access and contingency made in relation to comparable sales for the mixed use development scenario for Church Avenue.
2. Mr Field conceded for 13B Church Avenue that the adjustment for size should be 0% the same as Mr Hill, not 5% as he had allowed. The valuers agreed there was a subjective element to the size adjustment.
3. In relation to 6-8 John Street access was adjusted by Mr Hill as 0% to reflect that the property had only one street access. Mr Field adjusted by -5% to take into account the width of the respective properties as he considered this was relevant to ease of development. Mr Hill was not aware of evidence that building width affects building costs and would not make such an adjustment. According to Mr Hill an adjustment for frontage already takes into account width. The valuers agreed on the frontage adjustment.
4. Contingency was addressed differently by the valuers, as examined in oral evidence. Mr Hill did not make a contingency adjustment for each comparable sale but made adjustments in his valuation calculations of the various development schemes. Mr Hill made adjustment for additional financial risk over a six month period (holding costs) of $215,000 and $250,000 variously. Additional professional costs of $180,500 were also allowed (2.5% on QS figures for professional costs). Mr Field allowed a -5% adjustment for each sale. The valuers (and parties) agreed to disagree.

Applicants' submissions

1. The highest and best use of Church Avenue and John Street is mixed use development. That a use is permissible in a zone does not render it the highest and best use. That is the start of the necessary analysis, Molesworth AJ in Olefines Pty Ltd v Valuer-General of New South Wales (2018) 228 LGERA 407; [2018] NSWLEC 18 at [118]. The highest and best use is a matter of valuation judgment which Mr Field has executed in rejecting a lawful use, being boarding house use, based on planning risk on both properties.
2. This is not a Class 1 development appeal and so the question of which town planner was 'correct' does not arise. In the context of this Class 3 appeal the question is the extent to which the various risks identified by the town planners translated into a reduction in value by the valuers.
3. There is a high risk that the relevant council would not grant consent for a boarding house on Church Avenue in the form proposed by Mr Debello, scheme 3(2)(a), so that this use does not conform to the highest and best use. The town planners agreed that there would be a risk to a council being satisfied so as to allow above ground parking on Church Avenue as in scheme 3(2)(a) but disagreed as to the degree of that risk. Ms Horder had regard to the issues arising from such a scheme being the creation of blank walls, streetscape/active street frontages, overshadowing and acoustic impact. Ms Horder identified the risk as high due to problems including blank unarticulated walls, that above ground car parking is discouraged, that the four storey podium to all boundaries is inconsistent with the built form, and the long enclosed pathway is a poor design. This caused her to conclude that a grant of development consent for this scheme was unlikely. Consequently the realistic highest and best use for Church Avenue is mixed use development.
4. The planning risk applied to boarding house use for John Street is even higher. The scheme adopted by Mr Hill as the highest and best use, scheme 3(3)(b), provides no car parking and thus does not satisfy cl 29 of the ARH SEPP. Ms Horder in particular identified there was a high risk that a boarding house development application could be refused on the basis of insufficient car parking, see above in [44] and [49].
5. Mr Hill allowed 20% planning risk for scheme 3(3)(b) on John Street. The planning risk of obtaining approval for a boarding house use with no basement should be much greater than 20%, at least 60-80% which suggests this use is speculative. Mr Field's adoption of mixed use is reasonable.

Respondent's submissions

1. Under s 6A(1) of the VL Act the sale of land is 'on such reasonable terms and conditions as a bona-fide seller would require…'. Such a seller is aware of all matters affecting the market, Kenny at [49]-[50] (McHugh J) and is taken to be aware of who is in the market place, what sort of developments the market is pursuing and what is being paid in the market place for the various possible uses within the market. The evidence shows that a mixed use developer would be aware of the substantial basement costs and pay more for a boarding house which does not require a basement. A vendor will not give away their land at a value below market expectation. The hypothetical parties are assumed to be aware of the inherent features of the land, here the water table issues which blighted Mascot Towers. That feature results in this case in the highest and best use being a boarding house given the substantial costs associated with building a basement car park on both properties.
2. Mr Hill's evidence is that a boarding house developer will pay more in the market than a mixed use developer as the boarding house developer can be confident that approval for a boarding house will be obtained with or without car parking. Mr Field has not engaged with half of the market in not considering a boarding house use.
3. Mr Hill's sale 5 (6-8 John Street and 13B Church Avenue) two doors away provides no car parking or motorcycle parking and required a clause 4.6 variation. It was approved with a 'green travel plan' and provides a good example of what could occur on both properties. The hypothetical purchaser would expect there would be reasonable prospects of the council approving a boarding house, even if it does not provide car parking.
4. Mr Hill's evidence that the highest and best use is boarding house on both properties would be accepted by the Court for the following reasons: 1. a boarding house use is permissible pursuant to the land use table in the BLEP; 2. a boarding house use is agreed by the town planners in their first joint report to be one of two possible highest and best uses; 3. a boarding house use can comply with all mandatory planning controls, ARH SEPP cll 29 and 30; 4. a boarding house use does not require a costly basement build; 5. a boarding house use is well supported by Mr Hill's sales evidence, in particular sale 5 which required a clause 4.6 variation; 6. a boarding house use was even more likely to be approved on the properties than sale 5 with a green travel plan given the properties' even more proximate location to the train station and bus interchange and for which a DA could be granted with no clause 4.6 required; 7. both sales 5 and 6 demonstrate that the market in the valuing year preferred boarding house over mixed use developments. Mr Hill's uncontroverted evidence showed that both sales at the time of purchase had approved DAs for a mixed use development but were in fact purchased for a boarding house use and both were subsequently approved for and built as boarding houses; 8. boarding house use has been approved without car parking on numerous other sites as demonstrated by Mr Grech above in [44] and Mr Hill's sales 5-8; 9. Mr Hill's analysis of the sales evidence shows the market was paying a little more for boarding house use than for mixed use. Mr Hill showed a GFA rate range for John Street of $2,614/m2-$2,926/m2 for mixed use development with basement car parking in comparison to boarding house development with no parking which showed a GFA rate range of $2,825/m2-$3,202/m2; 10. Mr Hill has undertaken a thorough analysis of the market, both the mixed use and boarding house use to determine the market the 'bona‑fide seller' is operating within, s 6A(1) VL Act; and 11. Mr Hill's evidence is uncontroverted.
5. There were a number of problems with Mr Field's evidence including his complete failure to engage with a boarding house use despite recognition by the town planners that it was a permissible use, failure to refer to the supplementary town planners' joint report in his written evidence (Mr Field's oral evidence that he did take this material into account should not be accepted), very limited reference to architectural evidence most of which was not referred to in his written report, his continued scepticism of Mr Grech's use of the term reasonable prospects despite this being common parlance among town planners, his lack of engagement with Mr Hill's evidence on boarding house use, and reliance on Ms Horder's concerns over one of multiple 'concept schemes' which both town planners agreed could be refined before reaching the DA stage. Mr Field was an unreliable witness because of these failures.

Consideration of highest and best use

1. The identification of the highest and best use to be assumed for the valuation of land underpins s 6A(1) of the VL Act. Relevant principles are identified above in [9]-[11]. I emphasise that the hypothetical participants in the market are assumed to be fully informed and the valuers adopted the definition that the assumed use is to be physically possible, legally permissible and financially feasible.

A) Assessment by valuers of risks informing highest and best use

1. The non-valuation evidence obtained was for the purpose of informing the valuers about matters such as physical feasibility of different forms of development in the structural engineers' evidence. The architects' and town planners' evidence informed assessment of the planning risk of achieving different forms of development.
2. The architects provided a number of schemes they considered were compliant or acceptably non-compliant with all the regulatory controls applicable for boarding house and mixed use on both properties as summarised in the table in [35] above. Four schemes for Church Avenue and three schemes for John Street, the FSR achieved and whether the boarding house schemes complied with cll 29 and 30 of the ARH SEPP are identified. Whether a clause 4.6 application is necessary is also identified. In their first joint report the architects agreed the permissible FSR for mixed use was achievable. There was a large measure of agreement between them on what was achievable in relation to compliant or partially compliant boarding house schemes on both properties in their supplementary joint report, in relation to John Street as set out above in [33] and for Church Avenue above in [34]. They agreed a boarding house scheme without car parking could achieve the maximum FSR available on John Street. Regarding Church Avenue they agreed that whether the maximum GFA would be achievable in their respective schemes depended on the location and form of towers and proposed different means of addressing overshadowing of Peak Towers next door. In particular schemes 3(2)(a), SK030, SK060 boarding house for Church Avenue complied with clauses 29, 30 and did not require a clause 4.6 application, with Mr Smith's scheme SK060 achieving the maximum FSR. John Street boarding house scheme 3(3)(b), SK020 did not satisfy clause 29, satisfied clause 30 and therefore did not require a clause 4.6 application.
3. The architects' conceptual schemes were prepared on the basis they were generally compliant with various planning instruments or likely to be achievable. The architects agreed these schemes would be the subject of more refined DAs. Their evidence demonstrates that at the conceptual level schemes can be prepared which are likely to satisfy the relevant planning controls and this would inform the hypothetical parties. The effect of this evidence was that there were compliant mixed use and boarding house schemes to consider by the valuers.
4. The town planners agreed that mixed use development and boarding house developments were permissible uses with development consent under the relevant planning controls on both properties. The town planners considered the architects' schemes. Mr Grech's description of certain boarding house schemes without car parking (schemes 3(1)(a), 3(3)(a) for Church Avenue, schemes 3(1)(b), 3(3)(b), SK020 for John Street) as having reasonable prospects is an expression of common planning parlance which suggests a likelihood that approval would be obtained. Mr Grech referred to 6-8 John Street, located two doors away from John Street, developed as a boarding house following the sale in 2019 as a good example of what is feasible and referred to a number of other boarding house examples nearby in Sydney and in other states.
5. The town planners' supplementary joint report considered boarding house use only on both properties and the planning risk of various schemes based on the amount of car parking and other parking provided. The town planners agreed that a DA for a boarding house with no car parking would not require a clause 4.6 variation and would be assessed on the merits. In relation to planning risk and no car parking being provided for a boarding house development on both properties Ms Horder considered there was a high risk that approval would not be obtained.
6. The reservations expressed by Ms Horder, being the risk of obtaining development consent for a boarding house with three levels of above ground parking on Church Avenue (schemes 3(2)(a), SK030, SK060), reflects an unsatisfactory focus on individual development schemes as the matters she raised were reminiscent of merits considerations once a final DA had been lodged. Such schemes could be further refined were they to be the subject of a DA as the architects and town planners also agreed. All of the issues identified by Ms Horder of blank walls, impact on streetscape, overshadowing and acoustic impact could be addressed in a DA in my view.
7. The structural engineering evidence considered above in [54]-[57] suggests that for John Street the highest and best use likely to be considered by a knowledgeable hypothetical developer was as a boarding house. While not as decisive in the case of Church Avenue the difficulty and cost of implementing a basement on that property would also likely be in the mind of a hypothetical developer so that a boarding house use would be within contemplation.
8. The valuers' consideration of the non-valuation evidence informs how they formed different views on the highest and best use.
9. Mr Field considered only mixed use as the highest and best use because of his view of the town planning evidence in particular considering the high risk identified by Ms Horder. Mr Field's opinion that the expression used by Mr Grech of reasonable prospects in relation to the approval of a boarding house with no parking was ambiguous should have been explored by the Applicants, such as by calling the town planners to give the opportunity to Mr Grech to provide clarification in oral evidence. The Applicants did not do so. Use of that expression by town planners is common parlance.
10. Further, Mr Field's written evidence did not refer to the town planners' supplementary joint report which dealt with the planning risk of obtaining approval for boarding house development with and without car parking inter alia. Most of the architectural evidence was also not referred to by Mr Field in his written reports. In oral evidence Mr Field stated that he had taken this material into account. That was not apparent from his written evidence, nor from the conclusions he drew in relation to planning risk concerning boarding house use. Given that Mr Field agreed in cross-examination that the issues identified by Ms Horder concerning blank articulated walls, shadow diagrams, above ground carparking and podium height could be refined at the DA stage his rejection of a boarding house use as the highest and best use does not appear reasonable.
11. In relation to the structural engineering evidence, Mr Field made an adjustment of -5% to reflect constructability risk on John Street which is clearly inadequate, as he accepted in oral evidence. In any event I have found above that the structural engineering evidence supports a boarding house use on John Street.
12. Mr Hill undertook a comprehensive overview of the architectural schemes presented in evidence and took into account Mr Debello's schemes for boarding house without car parking. Mr Hill reviewed the town planning advice and referred to the structural engineers' advice in his written report. Mr Hill's approach, accepting Mr Grech's opinion of reasonable prospects as meaning that the prospects of obtaining planning approval for a boarding house without car parking on John Street and Church Avenue so that scheme 3(2)(a) with car parking was less risky, is reasonable.
13. I consider planning risk below and summarise the Applicant's argument in [158] and [160] that the amount allowed for planning risk by Mr Hill for both properties should be much greater than 10% for Church Avenue and 20% for John Street and consequently the boarding house scenario is so risky that it amounts to speculation. Based on the evidence considered above I do not accept the Applicants' submissions for John Street in particular that Mr Hill's approach is so speculative in the context of planning risk that a boarding house use should be discounted entirely.
14. In undertaking a valuation exercise the appropriate response to the architectural, structural engineering and town planning evidence was to consider that a boarding house use on both properties was feasible with some adjustment to be made for planning risk inter alia. The boarding house use should not have been discounted completely as Mr Field did.

b) Boarding house market more valuable than mixed use market

1. Another basis to support boarding house use as the highest and best use is if it is more valuable as a development proposition than mixed use. The valuers applied the same valuation methodology of comparing sales of comparable properties identified by them to arrive at a rate per m2 of GFA which they adjusted to apply to the properties. Mr Field considered only sales of comparable mixed use sites while Mr Hill considered both mixed use and boarding house sales.
2. The value of mixed use and boarding house use can be compared to determine if the market value for one was higher at the valuation date than the other. The highest and best use of a boarding house use for both properties is supported by the greater value obtained in that market compared to the mixed use market as identified in Mr Hill's evidence.
3. The limited mixed use sales relied on by Mr Field and the (overlapping and also different) mixed use sales relied on by Mr Hill are identified above in their evidence. For Church Avenue, Mr Field derived a value for mixed use development of $9,300,000, relying effectively on one sale (sale 2, 18A John Street and 27 Church Avenue Mascot) as the other two sales (sales 1, 3 of connected properties 13B Church Avenue and 6-8 John Street) should be considered boarding house sales for the reasons given by Mr Hill (noting Mr Hill did adjust 6-8 John Street on a mixed use basis). The market knew the purchaser of both sites was a boarding house developer and that was what the sites were ultimately used for. Mr Hill's consideration of sales 1 and 3 as boarding house sales is appropriate. Mr Hill derived a mixed use value of $10,530,000 for Church Avenue relying on four sales of mixed use sites.
4. For a mixed use value for John Street Mr Field arrived at $970,000 and Mr Hill arrived at $2,590,000.
5. The boarding house values derived by Mr Hill for Church Avenue for architectural schemes 3(1)(a), 3(2)(a) and 3(3)(a) each amounted to over $14,000,000. The value derived for John Street considering scheme 3(3)(b) was $6,000,000.
6. Subject to my findings below on adjustments this demonstrates the value of a boarding house use was more valuable than for mixed use on both properties in 2019.

C. GFA rate - adjustments of comparable sales for mixed use

1. The areas of adjustment as reflected in the valuers' adjustment tables in the joint report were as follows: the value benefit of sales having DA approval; demolition costs; market movements; location; size; frontage; access; views; structural engineering; contamination; shadowing; contingency; and stigma.
2. Tables showing the various adjustments of comparable sales are annexed to this judgment at Annexure A (Church Avenue and John Street based on mixed use sales).
3. I note that Mr Hill's mixed use sales 3 and 4 (in Gardeners Road) were not included in these tables as Mr Field did not rely on them. Most adjustments were agreed. The valuers had some differences in some adjustments of their respective mixed use sales in relation to size, access, shadowing and contingency and did not agree whether adjustment should be made at all for shadowing and contingency.

Size

1. In relation to size, in oral evidence the valuers agreed this was a subjective assessment. The differences in relation to Church Avenue were relatively small in any event comparing 5% (Mr Hill) with 3% (Mr Field) for 18A John St and 27 Church Avenue and -10% (Mr Hill) and -5% (Mr Field) for 6-8 John Street. Mr Field agreed that the adjustment for size for 13B Church Avenue should be 0% (the same as Mr Hill). In relation to John Street, adjustments for size did not vary greatly or at all for two sales (6-8 John Street, 13B Church Avenue). Mr Field adjusted 18A John Street and 27 Church Avenue by 10% and Mr Hill by 20%. No particular criticism was made of either figure. Little change in the rate arises from these differences and I do not need to consider these further.

Contingency

1. In relation to an adjustment for contingency, Mr Field adjusted each comparable mixed use sale by -5% to allow for basement car parking options potentially required for both properties.
2. Mr Hill allowed for different costs separately as an overall percentage adjustment for holding costs and extra professional fees in, for example, scheme 1(1)(a) of $395,500 ($215,000 holding costs, $180,500 for professional fees).
3. The Applicants submitted that while there were differences in methodology between them the valuers ultimately reached similar conclusions. For example Mr Field's -5% equated to about $500,000 whereas Mr Hill allowed $395,500 in total for scheme 1(1)(a).
4. The Respondent submitted contingency costs had already been considered by the QS in their diaphragm wall costing for basement car parking allowing a 2.5% contingency. As the QS allowed a contingency, no further allowance on that basis should be made and Mr Field was 'double dipping' in making such an allowance.
5. Given the QS have already made the relevant adjustment the basis for Mr Field making the same adjustment again is not apparent. I do not consider further adjustment on that basis is warranted. Further, I would not make a separate adjustment of each of the comparable sales as Mr Field has done under contingency as a matter of practice. Mr Hill's approach of applying an amount separately based on actual predicted costs is a preferable valuation method.

Shadowing

1. Mr Field considered the potential solar access and overshadowing issues raised in the architects' joint report and the town planners' joint report as an appropriate adjustment for both properties. Mr Field believed this would reflect a diminution in value for both properties and made a nominal adjustment of ‑3% to the comparable sales to reflect this.
2. Mr Hill did not consider this adjustment to be appropriate. The schemes prepared by the architects satisfied the objectives of the Apartment Design Guides regarding solar access.
3. I agree with the Respondent's submission that shadowing is not a regularly seen or accepted adjustment by valuers in respect of comparable sales. Shadowing is commonly the subject of a DA assessment rather than valuation assessment. No adjustment on this basis is warranted.

Access

1. The valuers made the same adjustments for the comparable sales for access for Church Avenue except for 6-8 John Street, where Mr Field adjusted by -5% and Mr Hill made no adjustments. For John Street the same difference in adjustments was made for 6-8 John Street. Additional difference in adjustment for 13B Church Avenue was made by Mr Field. The overall differences were minor and need not be further considered as the overall rate is not substantially impacted.
2. In conclusion, it is unnecessary to determine precisely the outcome of these differences in adjustments. Generally Mr Hill's adjustments are accepted. These adjustments are not substantial enough to demonstrate that the mixed use sales would be close to a boarding house value of over $14,000,000 according to Mr Hill.
3. I do not accept the Applicants' argument that the outcome that both properties derive a greater value as boarding houses than sites which have a subterranean issue fails a reality check. Mr Hill's evidence was not shaken, was cogent and demonstrates that at the relevant date the separate boarding house market was more valuable than the mixed use market.
4. The further point made by the Applicants that a boarding house developer would also be mindful of the subterranean issues can be noted. That risk is considered in the planning risk of achieving development consent for a boarding house without a basement, which I consider below.

D. GFA rates - adjustments of comparable sales for boarding house use

1. The Applicants submitted that if the highest and best use for Church Avenue is a boarding house Mr Hill's GFA rate of $2,700/m2 compared to $2,550/m2 for mixed use is very high. The Court should adopt a lower rate. If the highest and best use for John Street is as a boarding house, the GFA rate used by Mr Hill for John Street (schemes 3(1)(b), 3(3)(b)) of $2,850/m2 is higher than the rate used for Church Avenue of $2,700/m2 in scheme 3(2)(a) which is also too high.
2. Mr Hill adjusted four boarding house sales, 6-8 John Street and 13B Church Avenue Mascot (sale 5), 80-88 Regent Street Redfern (sale 6), 202-210 Elizabeth Street Surry Hills (sale 7) and 442 Parramatta Road Petersham (sale 8). He considered these sales comparable in accordance with usual factors (no adjustment was made for engineering, contamination, shadowing and contingency). No adjustment for market movement was made reflecting that the dates of sale were in and around 1 July 2019. Mr Field did not engage with these sales. Consequently Mr Hill's adjustments of boarding house sales are largely uncontested and are annexed to this judgment at Annexure B.
3. Regarding Church Avenue, Mr Hill's adjustments for sales 6, 7, 8 are large. The closest sale and the one showing least adjustment is nearby 6-8 John Street and 13B Church Avenue Mascot. That sale as adjusted showed a GFA rate of $2690/m2. The other sales required substantial adjustment, in the case of sale 7 of -54.5%, overall providing a range of $2,540/m2-$2,706/m2 which the selected rate is within. Mr Hill's adopted GFA rate of $2,700/m2 appears to be appropriate.
4. Turning to John Street, Mr Hill's adjustments for sales 6, 7, 8 are once again large. The least adjustment is made for 6-8 John Street and 13B Church Avenue Mascot which is two doors away from the subject property, deriving a GFA rate of $2,825m2. The other adjustments of sales provide a possible higher range of $3,154/m2-$3,202/m2. The adoption by Mr Hill of $2800/m2 appears appropriate given that range.
5. I consider Mr Hill provided adequate justification for his derived rates which he applied to the various schemes for boarding houses on the properties.
6. Consistent with my finding above in [143] Mr Hill's approach of not making a contingency adjustment for the comparable sales is appropriate.
7. Two other adjustments made by Mr Hill to the properties based on the above rates need to be considered in light of the parties' submissions.

Adjustment for planning risk

1. Mr Hill allowed a 10% risk for gaining approval for upper level podium parking on Church Avenue for scheme 3(2)(a) which according to the Applicants is substantially too low having regard to the planning risks identified by the town planners particularly Ms Horder. Adjustments for comparable sales for mixed use development consents have been allowed by Mr Hill at 12.5% (see Mr Hill's sale 1, 18A John Street and 27 Church Avenue Mascot) when it is clear those uses are less controversial from a planning perspective than the boarding house scheme. An adjustment for planning risk of 30-40% is warranted.
2. The Respondent submitted a 10% adjustment for Church Avenue is supportable given: 1. boarding house is a permissible use; 2. above ground parking can be compliant with the controls; 3. ground and above ground parking has been approved on other developments within proximity to Church Avenue; and 4. there are a large number of developments approved for student accommodation and boarding house use without car parking including two doors away from John Street.
3. The Applicants submitted that the adjustment of 20% for planning risk for scheme 3(3)(b) is patently inadequate given the planning risks identified for John Street. If the planning risk for boarding house development on Church Avenue should be 30‑40% then the risk here, being double, should be 60-80%. A risk of that magnitude leads to the result that the boarding house scenario should be rejected for John Street on the basis that it is not a realistic highest and best use, but rather a speculative one.
4. The Respondent submitted that Mr Hill's opinion should be accepted. Even if the risk of 20% were to be doubled to 40% resulting in a land value of $4,500,000 rather than $6,000,000 as assessed by Mr Hill the issued land value of $4,390,000 for John Street would remain supported.
5. Turning to my consideration of planning risk, I consider that for Church Avenue a planning risk of 10% for the identified schemes is appropriate. Even if increased to reflect a greater potential challenge of gaining development consent for a boarding house with above ground car parking to 20% with a consequent reduction in value no issue arises. Given that the Respondent does not seek the determination of value in a different amount to the issued value, such an increased amount for the planning risk for Church Avenue would not have such a substantial impact on the value of Church Avenue to disturb the order sought by the Respondent.
6. I do not accept that 20% for planning risk for John Street is patently inadequate given the town planning evidence of Mr Grech which Mr Hill accepted nor that this is speculative. As the Respondent identified even if doubled to 40% resulting in a land value of $4,500,000 that amount is still in excess of the issued amount of $4,390,000. I do not consider increasing the identified planning risk is warranted.

Section 7.11 contribution adjustment

1. Mr Grech in his evidence noted differences in boarding house contribution rates between different council areas compared to the subject area (former City of Botany Bay) at $18,000 per room and City of Sydney and Inner West at approximately $9,500-$9,800 per room. Ms Horder considered that such contributions would be in the mind of a hypothetical purchaser.
2. Mr Hill made no allowance for s 7.11 contributions. His view was that as the mixed use and boarding house markets are separate such matters were known to the purchasers of boarding houses in particular and therefore already factored into the sale prices paid for the comparable properties. His views were not changed in his oral evidence.
3. According to the Applicants, an adjustment for s 7.11 contributions should have been made by Mr Hill on two bases. Firstly to reflect differences between boarding house and mixed use rates. Secondly to differentiate between the local government areas where different comparable sales Mr Hill considered in Redfern and Elizabeth Street Sydney were located, as rates for the City of Sydney were substantially lower than for the City of Botany Bay.
4. Mr Hill's opinion is based on his experience as a valuer in the relevant local government areas of over 30 years. I do not consider an adjustment for s 7.11 contributions of the comparable sales or the subject properties is warranted in light of his evidence that the two markets are separate, and that the hypothetical knowledgeable buyer will factor in such contributions to the purchase price, reflecting the anticipated rate of return that can be expected from a boarding house use.

Conclusion

1. To apply my findings on adjustment of comparable sales to the properties identified and applied by Mr Hill, his adjustments are accepted as reasonable on the evidence. Consequently that Mr Hill derived a greater value for both properties based on the boarding house sales compared to the mixed use sales confirms that the highest and best use for Church Avenue and John Street is a boarding house use as valued by Mr Hill.
2. The Respondent has established the boarding house values it contends for on Church Avenue and John Street. These amounts are substantially greater than the issued values. The Respondent seeks orders that the issued values be confirmed. It is appropriate that such orders be made.

Costs

1. As no submissions on costs have been made by the parties these will be reserved.

Orders

1. The Court orders in matter number 2021/175742 (23-25 Church Avenue Mascot) that: 1. The appeal brought pursuant to s 37(1) of the Valuation of Land Act 1916 (NSW) is dismissed. 2. The land value of 23-25 Church Avenue Mascot is confirmed as $14,070,000. 3. Costs reserved.
2. The Court orders in matter number 2021/175754 (16-18 John Street Mascot) that: 1. The appeal brought pursuant to s 37(1) of the Valuation of Land Act 1916 (NSW) is dismissed. 2. The land value of 16-18 John Street Mascot is confirmed as $4,390,000. 3. Costs reserved.

ANNEXURE A ANNEXURE B 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: 03 June 2024

1. In his individual report Mr Hill did not value any scheme for mixed use development for John Street as he believed the property was unable to accommodate basement or above ground car parking. In the valuers' joint report he assessed the highest and best use of Mr Field, a mixed use development for John Street with 2 basement levels of car parking. Mr Hill derived a GFA rate of 3,055/m2. After deducting basement excavation costs of $4,343,334 he arrived at a land value of $2,590,000.

1. Mr Field agreed he did not and should have referred to the supplementary joint report of the town planners (where the town planners agreed that boarding house development with compliant car parking, motorcycle and bicycle parking would not be refused on the grounds of parking) in his individual written report. He stated his position was the same namely that a boarding house use should not be considered. Asked why he did not consider boarding house sales as part of the relevant market when ascertaining the highest and best use for the properties given the town planners had agreed that boarding house schemes 3(2)(a), SK060 and SK030 put forward as compliant schemes by the architects would not be refused on the grounds of parking, Mr Field stated that it was entirely acceptable to put forward sales only for mixed use development.
2. Mr Field was asked whether it was appropriate to rely on two of his comparable sales (6-8 John Street and 13B Church Avenue) as mixed use rather than boarding house sales as the evidence of Mr Hill was that they were bought for development for boarding house use. Mr Field considered development as a boarding house only became known after the date of the sales. He maintained that as these sites were sold with mixed use DAs that was the relevant information as of the date of sale.
3. Mr Hill identified that the sales were in April, May 2019 before 1 July 2019 (the valuation date). An experienced operator of student accommodation Iglu purchased both properties, so the market knew who the purchaser was. Pre and post sale date adjustments are common. [I consider Mr Hill's approach is orthodox.]

1. Mr Field stated that one of the reasons he rejected boarding house use even with car parking was Ms Horder's evidence that scheme 3(2)(a) was highly unlikely to be approved by a consent authority. He agreed this was not included in his report.
2. Mr Field was asked about his opinion based on criticism of Mr Grech's statement that a competent boarding house DA with comprehensive justification would have reasonable prospects of being approved with no on‑site car parking. Mr Field considered reasonable prospects was ambiguous because it could mean no more than a 51% likelihood. Mr Field stated that it was unlikely that a prudent purchaser would be willing to pay a significant premium for a boarding house sale based on a concept akin to a speculative punt or gamble and Mr Hill's opinion was speculative.
3. Mr Field was asked why any concerns regarding scheme 3(2)(a) could not have been adjusted for risk or refined at the DA stage rather than disregarding the permissible land use entirely. Mr Field agreed that issues about blank articulated walls, shadow diagrams, design of above ground car parking and podium height could be refined at the DA stage, acknowledging the town planners' statement that the level of detail in the architects' plan was greater than a hypothetical purchaser would generally have.

1. Mr Field was questioned on his opinion that mixed use was the highest and best use for John Street. Mr Field was asked why he did not think a land use with reasonable prospects such as boarding house use was more likely to be granted approval than land use with purportedly significant constructability problems (i.e. mixed use). Mr Field stated the level of risk related to boarding house use was unacceptable to a prudent purchaser and reiterated that the term reasonable prospects was ambiguous.
2. Mr Field was asked about adjustments he made to his comparable sales for the mixed use development of John Street in relation to 'access' and 'engineering' given the property's constructability issues. It was put to Mr Field that considering the engineering advice no amount of adjustment would render the mixed use development on John Street viable. While he disagreed, Mr Field conceded more than a -5% adjustment was required for engineering. He was not able to specify how much more while giving oral evidence.

1. Mr Hill was asked about his option for highest and best use for Church Avenue, scheme 3(2)(a) a boarding house with four above ground levels for car parking. Mr Hill identified in the valuers' joint report that the residential development to the east of the properties has one level podium and Peak Towers has two levels with private open space as seen on the view. Mr Hill did not agree a four level podium would overwhelm that private open space because there is a difference in ground level between the properties and changes could be made to prevent overshadowing. He was not aware of any four level podium development in the area. The use of podium levels is not novel. Mr Hill agreed all above ground car parking in the local area is for mixed use developments and not boarding houses.
2. Mr Hill was asked about the likelihood of approval of above ground parking for boarding house use and how he formed the opinion that this had less risk given he only considered advice from town planners and architects regarding boarding house use with no car parking. He considered the architectural and planning evidence in relation to no car parking supported his opinion that a less risky option (providing car parking) was achievable.
3. Mr Hill was questioned about his adoption as the highest and best use for Church Avenue of scheme 3(2)(a), when he valued scheme 3(3)(a) a boarding house with no car parking at a much greater rate of $17,875,000. Mr Hill agreed the reason for selecting scheme 3(2)(a) over the higher value scheme 3(3)(a) was because he believed there was greater planning risk associated with a boarding house development with no car parking. He did not accept the risk of planning approval for scheme 3(3)(a) was so great that it should be ignored.
4. Mr Hill accepted that the risk of obtaining approval for a mixed use development on Church Avenue was low.
5. Mr Hill confirmed a purchaser would be willing to pay $4,000,000 more on the assumption they would obtain boarding house approval as opposed to the lower value mixed use option on Church Avenue. Building a basement on the property is expensive and the market shows that what is being paid for boarding houses without car parking is greater than mixed use sales.
6. Mr Hill was asked that if the highest and best use of Church Avenue was scheme 3(2)(a) whether the adjustment of 10% he made for planning risk was too low given he allowed a -12.5% adjustment for the lack of a mixed use DA in relation to 18A John Street and 27 Church Avenue. He responded that the comparable sales at 6-8 John Street and 80-88 Regent Street Redfern were sold without a DA for a boarding house which show there is minimal planning risk. He allowed 10% to reflect the town planners' evidence in relation to obtaining approval for three podium above ground car parking.
7. Asked why he had made no adjustment for s 7.11 contributions Mr Hill stated that such contributions were encapsulated in the sale price and the analysed GFA rates by purchasers in the prospective locations. The boarding house market is separate from the mixed use market.

1. Mr Hill maintained the appropriateness of the adjustments he made for planning risk of 20% for scheme 3(3)(b).

1. Both valuers were asked to explain their differences in adjustments for size, access and contingency made in relation to comparable sales for the mixed use development scenario for Church Avenue.
2. Mr Field conceded for 13B Church Avenue that the adjustment for size should be 0% the same as Mr Hill, not 5% as he had allowed. The valuers agreed there was a subjective element to the size adjustment.
3. In relation to 6-8 John Street access was adjusted by Mr Hill as 0% to reflect that the property had only one street access. Mr Field adjusted by -5% to take into account the width of the respective properties as he considered this was relevant to ease of development. Mr Hill was not aware of evidence that building width affects building costs and would not make such an adjustment. According to Mr Hill an adjustment for frontage already takes into account width. The valuers agreed on the frontage adjustment.
4. Contingency was addressed differently by the valuers, as examined in oral evidence. Mr Hill did not make a contingency adjustment for each comparable sale but made adjustments in his valuation calculations of the various development schemes. Mr Hill made adjustment for additional financial risk over a six month period (holding costs) of $215,000 and $250,000 variously. Additional professional costs of $180,500 were also allowed (2.5% on QS figures for professional costs). Mr Field allowed a -5% adjustment for each sale. The valuers (and parties) agreed to disagree.

1. The highest and best use of Church Avenue and John Street is mixed use development. That a use is permissible in a zone does not render it the highest and best use. That is the start of the necessary analysis, Molesworth AJ in Olefines Pty Ltd v Valuer-General of New South Wales (2018) 228 LGERA 407; [2018] NSWLEC 18 at [118]. The highest and best use is a matter of valuation judgment which Mr Field has executed in rejecting a lawful use, being boarding house use, based on planning risk on both properties.
2. This is not a Class 1 development appeal and so the question of which town planner was 'correct' does not arise. In the context of this Class 3 appeal the question is the extent to which the various risks identified by the town planners translated into a reduction in value by the valuers.
3. There is a high risk that the relevant council would not grant consent for a boarding house on Church Avenue in the form proposed by Mr Debello, scheme 3(2)(a), so that this use does not conform to the highest and best use. The town planners agreed that there would be a risk to a council being satisfied so as to allow above ground parking on Church Avenue as in scheme 3(2)(a) but disagreed as to the degree of that risk. Ms Horder had regard to the issues arising from such a scheme being the creation of blank walls, streetscape/active street frontages, overshadowing and acoustic impact. Ms Horder identified the risk as high due to problems including blank unarticulated walls, that above ground car parking is discouraged, that the four storey podium to all boundaries is inconsistent with the built form, and the long enclosed pathway is a poor design. This caused her to conclude that a grant of development consent for this scheme was unlikely. Consequently the realistic highest and best use for Church Avenue is mixed use development.
4. The planning risk applied to boarding house use for John Street is even higher. The scheme adopted by Mr Hill as the highest and best use, scheme 3(3)(b), provides no car parking and thus does not satisfy cl 29 of the ARH SEPP. Ms Horder in particular identified there was a high risk that a boarding house development application could be refused on the basis of insufficient car parking, see above in [44] and [49].
5. Mr Hill allowed 20% planning risk for scheme 3(3)(b) on John Street. The planning risk of obtaining approval for a boarding house use with no basement should be much greater than 20%, at least 60-80% which suggests this use is speculative. Mr Field's adoption of mixed use is reasonable.

1. Under s 6A(1) of the VL Act the sale of land is 'on such reasonable terms and conditions as a bona-fide seller would require...'. Such a seller is aware of all matters affecting the market, Kenny at [49]-[50] (McHugh J) and is taken to be aware of who is in the market place, what sort of developments the market is pursuing and what is being paid in the market place for the various possible uses within the market. The evidence shows that a mixed use developer would be aware of the substantial basement costs and pay more for a boarding house which does not require a basement. A vendor will not give away their land at a value below market expectation. The hypothetical parties are assumed to be aware of the inherent features of the land, here the water table issues which blighted Mascot Towers. That feature results in this case in the highest and best use being a boarding house given the substantial costs associated with building a basement car park on both properties.
2. Mr Hill's evidence is that a boarding house developer will pay more in the market than a mixed use developer as the boarding house developer can be confident that approval for a boarding house will be obtained with or without car parking. Mr Field has not engaged with half of the market in not considering a boarding house use.
3. Mr Hill's sale 5 (6-8 John Street and 13B Church Avenue) two doors away provides no car parking or motorcycle parking and required a clause 4.6 variation. It was approved with a 'green travel plan' and provides a good example of what could occur on both properties. The hypothetical purchaser would expect there would be reasonable prospects of the council approving a boarding house, even if it does not provide car parking.
4. Mr Hill's evidence that the highest and best use is boarding house on both properties would be accepted by the Court for the following reasons:

(1) a boarding house use is permissible pursuant to the land use table in the BLEP;

(2) a boarding house use is agreed by the town planners in their first joint report to be one of two possible highest and best uses;

(3) a boarding house use can comply with all mandatory planning controls, ARH SEPP cll 29 and 30;

(4) a boarding house use does not require a costly basement build;

(5) a boarding house use is well supported by Mr Hill's sales evidence, in particular sale 5 which required a clause 4.6 variation;

(6) a boarding house use was even more likely to be approved on the properties than sale 5 with a green travel plan given the properties' even more proximate location to the train station and bus interchange and for which a DA could be granted with no clause 4.6 required;

(7) both sales 5 and 6 demonstrate that the market in the valuing year preferred boarding house over mixed use developments. Mr Hill's uncontroverted evidence showed that both sales at the time of purchase had approved DAs for a mixed use development but were in fact purchased for a boarding house use and both were subsequently approved for and built as boarding houses;

(8) boarding house use has been approved without car parking on numerous other sites as demonstrated by Mr Grech above in [44] and Mr Hill's sales 5-8;

(9) Mr Hill's analysis of the sales evidence shows the market was paying a little more for boarding house use than for mixed use. Mr Hill showed a GFA rate range for John Street of $2,614/m2-$2,926/m2 for mixed use development with basement car parking in comparison to boarding house development with no parking which showed a GFA rate range of $2,825/m2-$3,202/m2;

(10) Mr Hill has undertaken a thorough analysis of the market, both the mixed use and boarding house use to determine the market the 'bona‑fide seller' is operating within, s 6A(1) VL Act; and

(11) Mr Hill's evidence is uncontroverted.

1. There were a number of problems with Mr Field's evidence including his complete failure to engage with a boarding house use despite recognition by the town planners that it was a permissible use, failure to refer to the supplementary town planners' joint report in his written evidence (Mr Field's oral evidence that he did take this material into account should not be accepted), very limited reference to architectural evidence most of which was not referred to in his written report, his continued scepticism of Mr Grech's use of the term reasonable prospects despite this being common parlance among town planners, his lack of engagement with Mr Hill's evidence on boarding house use, and reliance on Ms Horder's concerns over one of multiple 'concept schemes' which both town planners agreed could be refined before reaching the DA stage. Mr Field was an unreliable witness because of these failures.

1. The identification of the highest and best use to be assumed for the valuation of land underpins s 6A(1) of the VL Act. Relevant principles are identified above in [9]-[11]. I emphasise that the hypothetical participants in the market are assumed to be fully informed and the valuers adopted the definition that the assumed use is to be physically possible, legally permissible and financially feasible.

A) Assessment by valuers of risks informing highest and best use

1. The non-valuation evidence obtained was for the purpose of informing the valuers about matters such as physical feasibility of different forms of development in the structural engineers' evidence. The architects' and town planners' evidence informed assessment of the planning risk of achieving different forms of development.
2. The architects provided a number of schemes they considered were compliant or acceptably non-compliant with all the regulatory controls applicable for boarding house and mixed use on both properties as summarised in the table in [35] above. Four schemes for Church Avenue and three schemes for John Street, the FSR achieved and whether the boarding house schemes complied with cll 29 and 30 of the ARH SEPP are identified. Whether a clause 4.6 application is necessary is also identified. In their first joint report the architects agreed the permissible FSR for mixed use was achievable. There was a large measure of agreement between them on what was achievable in relation to compliant or partially compliant boarding house schemes on both properties in their supplementary joint report, in relation to John Street as set out above in [33] and for Church Avenue above in [34]. They agreed a boarding house scheme without car parking could achieve the maximum FSR available on John Street. Regarding Church Avenue they agreed that whether the maximum GFA would be achievable in their respective schemes depended on the location and form of towers and proposed different means of addressing overshadowing of Peak Towers next door. In particular schemes 3(2)(a), SK030, SK060 boarding house for Church Avenue complied with clauses 29, 30 and did not require a clause 4.6 application, with Mr Smith's scheme SK060 achieving the maximum FSR. John Street boarding house scheme 3(3)(b), SK020 did not satisfy clause 29, satisfied clause 30 and therefore did not require a clause 4.6 application.
3. The architects' conceptual schemes were prepared on the basis they were generally compliant with various planning instruments or likely to be achievable. The architects agreed these schemes would be the subject of more refined DAs. Their evidence demonstrates that at the conceptual level schemes can be prepared which are likely to satisfy the relevant planning controls and this would inform the hypothetical parties. The effect of this evidence was that there were compliant mixed use and boarding house schemes to consider by the valuers.
4. The town planners agreed that mixed use development and boarding house developments were permissible uses with development consent under the relevant planning controls on both properties. The town planners considered the architects' schemes. Mr Grech's description of certain boarding house schemes without car parking (schemes 3(1)(a), 3(3)(a) for Church Avenue, schemes 3(1)(b), 3(3)(b), SK020 for John Street) as having reasonable prospects is an expression of common planning parlance which suggests a likelihood that approval would be obtained. Mr Grech referred to 6-8 John Street, located two doors away from John Street, developed as a boarding house following the sale in 2019 as a good example of what is feasible and referred to a number of other boarding house examples nearby in Sydney and in other states.
5. The town planners' supplementary joint report considered boarding house use only on both properties and the planning risk of various schemes based on the amount of car parking and other parking provided. The town planners agreed that a DA for a boarding house with no car parking would not require a clause 4.6 variation and would be assessed on the merits. In relation to planning risk and no car parking being provided for a boarding house development on both properties Ms Horder considered there was a high risk that approval would not be obtained.
6. The reservations expressed by Ms Horder, being the risk of obtaining development consent for a boarding house with three levels of above ground parking on Church Avenue (schemes 3(2)(a), SK030, SK060), reflects an unsatisfactory focus on individual development schemes as the matters she raised were reminiscent of merits considerations once a final DA had been lodged. Such schemes could be further refined were they to be the subject of a DA as the architects and town planners also agreed. All of the issues identified by Ms Horder of blank walls, impact on streetscape, overshadowing and acoustic impact could be addressed in a DA in my view.
7. The structural engineering evidence considered above in [54]-[57] suggests that for John Street the highest and best use likely to be considered by a knowledgeable hypothetical developer was as a boarding house. While not as decisive in the case of Church Avenue the difficulty and cost of implementing a basement on that property would also likely be in the mind of a hypothetical developer so that a boarding house use would be within contemplation.
8. The valuers' consideration of the non-valuation evidence informs how they formed different views on the highest and best use.
9. Mr Field considered only mixed use as the highest and best use because of his view of the town planning evidence in particular considering the high risk identified by Ms Horder. Mr Field's opinion that the expression used by Mr Grech of reasonable prospects in relation to the approval of a boarding house with no parking was ambiguous should have been explored by the Applicants, such as by calling the town planners to give the opportunity to Mr Grech to provide clarification in oral evidence. The Applicants did not do so. Use of that expression by town planners is common parlance.
10. Further, Mr Field's written evidence did not refer to the town planners' supplementary joint report which dealt with the planning risk of obtaining approval for boarding house development with and without car parking inter alia. Most of the architectural evidence was also not referred to by Mr Field in his written reports. In oral evidence Mr Field stated that he had taken this material into account. That was not apparent from his written evidence, nor from the conclusions he drew in relation to planning risk concerning boarding house use. Given that Mr Field agreed in cross-examination that the issues identified by Ms Horder concerning blank articulated walls, shadow diagrams, above ground carparking and podium height could be refined at the DA stage his rejection of a boarding house use as the highest and best use does not appear reasonable.
11. In relation to the structural engineering evidence, Mr Field made an adjustment of -5% to reflect constructability risk on John Street which is clearly inadequate, as he accepted in oral evidence. In any event I have found above that the structural engineering evidence supports a boarding house use on John Street.
12. Mr Hill undertook a comprehensive overview of the architectural schemes presented in evidence and took into account Mr Debello's schemes for boarding house without car parking. Mr Hill reviewed the town planning advice and referred to the structural engineers' advice in his written report. Mr Hill's approach, accepting Mr Grech's opinion of reasonable prospects as meaning that the prospects of obtaining planning approval for a boarding house without car parking on John Street and Church Avenue so that scheme 3(2)(a) with car parking was less risky, is reasonable.
13. I consider planning risk below and summarise the Applicant's argument in [158] and [160] that the amount allowed for planning risk by Mr Hill for both properties should be much greater than 10% for Church Avenue and 20% for John Street and consequently the boarding house scenario is so risky that it amounts to speculation. Based on the evidence considered above I do not accept the Applicants' submissions for John Street in particular that Mr Hill's approach is so speculative in the context of planning risk that a boarding house use should be discounted entirely.
14. In undertaking a valuation exercise the appropriate response to the architectural, structural engineering and town planning evidence was to consider that a boarding house use on both properties was feasible with some adjustment to be made for planning risk inter alia. The boarding house use should not have been discounted completely as Mr Field did.

b) Boarding house market more valuable than mixed use market

1. Another basis to support boarding house use as the highest and best use is if it is more valuable as a development proposition than mixed use. The valuers applied the same valuation methodology of comparing sales of comparable properties identified by them to arrive at a rate per m2 of GFA which they adjusted to apply to the properties. Mr Field considered only sales of comparable mixed use sites while Mr Hill considered both mixed use and boarding house sales.
2. The value of mixed use and boarding house use can be compared to determine if the market value for one was higher at the valuation date than the other. The highest and best use of a boarding house use for both properties is supported by the greater value obtained in that market compared to the mixed use market as identified in Mr Hill's evidence.
3. The limited mixed use sales relied on by Mr Field and the (overlapping and also different) mixed use sales relied on by Mr Hill are identified above in their evidence. For Church Avenue, Mr Field derived a value for mixed use development of $9,300,000, relying effectively on one sale (sale 2, 18A John Street and 27 Church Avenue Mascot) as the other two sales (sales 1, 3 of connected properties 13B Church Avenue and 6-8 John Street) should be considered boarding house sales for the reasons given by Mr Hill (noting Mr Hill did adjust 6-8 John Street on a mixed use basis). The market knew the purchaser of both sites was a boarding house developer and that was what the sites were ultimately used for. Mr Hill's consideration of sales 1 and 3 as boarding house sales is appropriate. Mr Hill derived a mixed use value of $10,530,000 for Church Avenue relying on four sales of mixed use sites.
4. For a mixed use value for John Street Mr Field arrived at $970,000 and Mr Hill arrived at $2,590,000.
5. The boarding house values derived by Mr Hill for Church Avenue for architectural schemes 3(1)(a), 3(2)(a) and 3(3)(a) each amounted to over $14,000,000. The value derived for John Street considering scheme 3(3)(b) was $6,000,000.
6. Subject to my findings below on adjustments this demonstrates the value of a boarding house use was more valuable than for mixed use on both properties in 2019.

C. GFA rate - adjustments of comparable sales for mixed use

1. The areas of adjustment as reflected in the valuers' adjustment tables in the joint report were as follows:

the value benefit of sales having DA approval;

demolition costs;

market movements;

location;

size;

frontage;

access;

views;

structural engineering;

contamination;

shadowing;

contingency; and

stigma.

1. Tables showing the various adjustments of comparable sales are annexed to this judgment at Annexure A (Church Avenue and John Street based on mixed use sales).
2. I note that Mr Hill's mixed use sales 3 and 4 (in Gardeners Road) were not included in these tables as Mr Field did not rely on them. Most adjustments were agreed. The valuers had some differences in some adjustments of their respective mixed use sales in relation to size, access, shadowing and contingency and did not agree whether adjustment should be made at all for shadowing and contingency.

1. In relation to size, in oral evidence the valuers agreed this was a subjective assessment. The differences in relation to Church Avenue were relatively small in any event comparing 5% (Mr Hill) with 3% (Mr Field) for 18A John St and 27 Church Avenue and -10% (Mr Hill) and -5% (Mr Field) for 6-8 John Street. Mr Field agreed that the adjustment for size for 13B Church Avenue should be 0% (the same as Mr Hill). In relation to John Street, adjustments for size did not vary greatly or at all for two sales (6-8 John Street, 13B Church Avenue). Mr Field adjusted 18A John Street and 27 Church Avenue by 10% and Mr Hill by 20%. No particular criticism was made of either figure. Little change in the rate arises from these differences and I do not need to consider these further.

1. In relation to an adjustment for contingency, Mr Field adjusted each comparable mixed use sale by -5% to allow for basement car parking options potentially required for both properties.
2. Mr Hill allowed for different costs separately as an overall percentage adjustment for holding costs and extra professional fees in, for example, scheme 1(1)(a) of $395,500 ($215,000 holding costs, $180,500 for professional fees).
3. The Applicants submitted that while there were differences in methodology between them the valuers ultimately reached similar conclusions. For example Mr Field's -5% equated to about $500,000 whereas Mr Hill allowed $395,500 in total for scheme 1(1)(a).
4. The Respondent submitted contingency costs had already been considered by the QS in their diaphragm wall costing for basement car parking allowing a 2.5% contingency. As the QS allowed a contingency, no further allowance on that basis should be made and Mr Field was 'double dipping' in making such an allowance.
5. Given the QS have already made the relevant adjustment the basis for Mr Field making the same adjustment again is not apparent. I do not consider further adjustment on that basis is warranted. Further, I would not make a separate adjustment of each of the comparable sales as Mr Field has done under contingency as a matter of practice. Mr Hill's approach of applying an amount separately based on actual predicted costs is a preferable valuation method.

1. Mr Field considered the potential solar access and overshadowing issues raised in the architects' joint report and the town planners' joint report as an appropriate adjustment for both properties. Mr Field believed this would reflect a diminution in value for both properties and made a nominal adjustment of ‑3% to the comparable sales to reflect this.
2. Mr Hill did not consider this adjustment to be appropriate. The schemes prepared by the architects satisfied the objectives of the Apartment Design Guides regarding solar access.
3. I agree with the Respondent's submission that shadowing is not a regularly seen or accepted adjustment by valuers in respect of comparable sales. Shadowing is commonly the subject of a DA assessment rather than valuation assessment. No adjustment on this basis is warranted.

1. The valuers made the same adjustments for the comparable sales for access for Church Avenue except for 6-8 John Street, where Mr Field adjusted by -5% and Mr Hill made no adjustments. For John Street the same difference in adjustments was made for 6-8 John Street. Additional difference in adjustment for 13B Church Avenue was made by Mr Field. The overall differences were minor and need not be further considered as the overall rate is not substantially impacted.
2. In conclusion, it is unnecessary to determine precisely the outcome of these differences in adjustments. Generally Mr Hill's adjustments are accepted. These adjustments are not substantial enough to demonstrate that the mixed use sales would be close to a boarding house value of over $14,000,000 according to Mr Hill.
3. I do not accept the Applicants' argument that the outcome that both properties derive a greater value as boarding houses than sites which have a subterranean issue fails a reality check. Mr Hill's evidence was not shaken, was cogent and demonstrates that at the relevant date the separate boarding house market was more valuable than the mixed use market.
4. The further point made by the Applicants that a boarding house developer would also be mindful of the subterranean issues can be noted. That risk is considered in the planning risk of achieving development consent for a boarding house without a basement, which I consider below.

D. GFA rates - adjustments of comparable sales for boarding house use

1. The Applicants submitted that if the highest and best use for Church Avenue is a boarding house Mr Hill's GFA rate of $2,700/m2 compared to $2,550/m2 for mixed use is very high. The Court should adopt a lower rate. If the highest and best use for John Street is as a boarding house, the GFA rate used by Mr Hill for John Street (schemes 3(1)(b), 3(3)(b)) of $2,850/m2 is higher than the rate used for Church Avenue of $2,700/m2 in scheme 3(2)(a) which is also too high.
2. Mr Hill adjusted four boarding house sales, 6-8 John Street and 13B Church Avenue Mascot (sale 5), 80-88 Regent Street Redfern (sale 6), 202-210 Elizabeth Street Surry Hills (sale 7) and 442 Parramatta Road Petersham (sale 8). He considered these sales comparable in accordance with usual factors (no adjustment was made for engineering, contamination, shadowing and contingency). No adjustment for market movement was made reflecting that the dates of sale were in and around 1 July 2019. Mr Field did not engage with these sales. Consequently Mr Hill's adjustments of boarding house sales are largely uncontested and are annexed to this judgment at Annexure B.
3. Regarding Church Avenue, Mr Hill's adjustments for sales 6, 7, 8 are large. The closest sale and the one showing least adjustment is nearby 6-8 John Street and 13B Church Avenue Mascot. That sale as adjusted showed a GFA rate of $2690/m2. The other sales required substantial adjustment, in the case of sale 7 of -54.5%, overall providing a range of $2,540/m2-$2,706/m2 which the selected rate is within. Mr Hill's adopted GFA rate of $2,700/m2 appears to be appropriate.
4. Turning to John Street, Mr Hill's adjustments for sales 6, 7, 8 are once again large. The least adjustment is made for 6-8 John Street and 13B Church Avenue Mascot which is two doors away from the subject property, deriving a GFA rate of $2,825m2. The other adjustments of sales provide a possible higher range of $3,154/m2-$3,202/m2. The adoption by Mr Hill of $2800/m2 appears appropriate given that range.
5. I consider Mr Hill provided adequate justification for his derived rates which he applied to the various schemes for boarding houses on the properties.
6. Consistent with my finding above in [143] Mr Hill's approach of not making a contingency adjustment for the comparable sales is appropriate.
7. Two other adjustments made by Mr Hill to the properties based on the above rates need to be considered in light of the parties' submissions.

1. Mr Hill allowed a 10% risk for gaining approval for upper level podium parking on Church Avenue for scheme 3(2)(a) which according to the Applicants is substantially too low having regard to the planning risks identified by the town planners particularly Ms Horder. Adjustments for comparable sales for mixed use development consents have been allowed by Mr Hill at 12.5% (see Mr Hill's sale 1, 18A John Street and 27 Church Avenue Mascot) when it is clear those uses are less controversial from a planning perspective than the boarding house scheme. An adjustment for planning risk of 30-40% is warranted.
2. The Respondent submitted a 10% adjustment for Church Avenue is supportable given:

(a) boarding house is a permissible use;

(b) above ground parking can be compliant with the controls;

(c) ground and above ground parking has been approved on other developments within proximity to Church Avenue; and

(d) there are a large number of developments approved for student accommodation and boarding house use without car parking including two doors away from John Street.

1. The Applicants submitted that the adjustment of 20% for planning risk for scheme 3(3)(b) is patently inadequate given the planning risks identified for John Street. If the planning risk for boarding house development on Church Avenue should be 30‑40% then the risk here, being double, should be 60-80%. A risk of that magnitude leads to the result that the boarding house scenario should be rejected for John Street on the basis that it is not a realistic highest and best use, but rather a speculative one.
2. The Respondent submitted that Mr Hill's opinion should be accepted. Even if the risk of 20% were to be doubled to 40% resulting in a land value of $4,500,000 rather than $6,000,000 as assessed by Mr Hill the issued land value of $4,390,000 for John Street would remain supported.
3. Turning to my consideration of planning risk, I consider that for Church Avenue a planning risk of 10% for the identified schemes is appropriate. Even if increased to reflect a greater potential challenge of gaining development consent for a boarding house with above ground car parking to 20% with a consequent reduction in value no issue arises. Given that the Respondent does not seek the determination of value in a different amount to the issued value, such an increased amount for the planning risk for Church Avenue would not have such a substantial impact on the value of Church Avenue to disturb the order sought by the Respondent.
4. I do not accept that 20% for planning risk for John Street is patently inadequate given the town planning evidence of Mr Grech which Mr Hill accepted nor that this is speculative. As the Respondent identified even if doubled to 40% resulting in a land value of $4,500,000 that amount is still in excess of the issued amount of $4,390,000. I do not consider increasing the identified planning risk is warranted.

1. Mr Grech in his evidence noted differences in boarding house contribution rates between different council areas compared to the subject area (former City of Botany Bay) at $18,000 per room and City of Sydney and Inner West at approximately $9,500-$9,800 per room. Ms Horder considered that such contributions would be in the mind of a hypothetical purchaser.
2. Mr Hill made no allowance for s 7.11 contributions. His view was that as the mixed use and boarding house markets are separate such matters were known to the purchasers of boarding houses in particular and therefore already factored into the sale prices paid for the comparable properties. His views were not changed in his oral evidence.
3. According to the Applicants, an adjustment for s 7.11 contributions should have been made by Mr Hill on two bases. Firstly to reflect differences between boarding house and mixed use rates. Secondly to differentiate between the local government areas where different comparable sales Mr Hill considered in Redfern and Elizabeth Street Sydney were located, as rates for the City of Sydney were substantially lower than for the City of Botany Bay.
4. Mr Hill's opinion is based on his experience as a valuer in the relevant local government areas of over 30 years. I do not consider an adjustment for s 7.11 contributions of the comparable sales or the subject properties is warranted in light of his evidence that the two markets are separate, and that the hypothetical knowledgeable buyer will factor in such contributions to the purchase price, reflecting the anticipated rate of return that can be expected from a boarding house use.

1. To apply my findings on adjustment of comparable sales to the properties identified and applied by Mr Hill, his adjustments are accepted as reasonable on the evidence. Consequently that Mr Hill derived a greater value for both properties based on the boarding house sales compared to the mixed use sales confirms that the highest and best use for Church Avenue and John Street is a boarding house use as valued by Mr Hill.
2. The Respondent has established the boarding house values it contends for on Church Avenue and John Street. These amounts are substantially greater than the issued values. The Respondent seeks orders that the issued values be confirmed. It is appropriate that such orders be made.

1. As no submissions on costs have been made by the parties these will be reserved.

1. The Court orders in matter number 2021/175742 (23-25 Church Avenue Mascot) that:

(1) The appeal brought pursuant to s 37(1) of the Valuation of Land Act 1916 (NSW) is dismissed.

(2) The land value of 23-25 Church Avenue Mascot is confirmed as $14,070,000.

(3) Costs reserved.

1. The Court orders in matter number 2021/175754 (16-18 John Street Mascot) that:

(1) The appeal brought pursuant to s 37(1) of the Valuation of Land Act 1916 (NSW) is dismissed.

(2) The land value of 16-18 John Street Mascot is confirmed as $4,390,000.

(3) Costs reserved.

ANNEXURE A

ANNEXURE B