Longreach Capital Pty Ltd v Valuer-General

Australian Postal Commission v Melbourne City Council (2005) 143 LGERA 218; Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259; CASES CITED: Commonwealth Custodial Services Ltd v Valuer-General of New South Wales [2006] NSWLEC 775 ; Krisgay Pty Limited v The Valuer-General [2007] NSWLEC 600; The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373

APPLICANT Mr I J Hemmings SOLICITORS Cheetham & Associates

RESPONDENT Mr J B Maston SOLICITORS Crown Solicitor's Office

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT Jagot J: A. Introduction 1 The applicant, Longreach Capital Pty Ltd (Longreach), owns land at Taralga Road, Goulburn, being lot 5 in DP 1078852, known as the former Kenmore Hospital site (the land). Longreach claimed that the Valuer-General's assessments of land value under s 6A of the Valuation of Land Act 1916 and s 125 of the Heritage Act 1977 were too high. The Court's powers on appeal are to (a) confirm or revoke the decision to which the appeal relates, (b) make a decision in place of the decision to which the appeal relates, or (c) remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision (s 40(1) of the Valuation of Land Act). Longreach has the onus of proving its case (s 40(2) of the Valuation of Land Act).

2 Section 6A(1) of the Valuation of Land Act identifies the meaning of "land value" as follows: 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.

3 Under the Valuation of Land Act (s 14B) land value is to be ascertained as at 1 July in the relevant valuation year (in this case, 1 July 2005).

4 Where land has been listed on the State Heritage Register maintained under the Heritage Act, s 125 of that Act requires that a heritage valuation of land be made whenever the land is valued for rating or taxing purposes. A "heritage valuation" is defined in s 123 of the Heritage Act as follows: heritage valuation , in relation to land, means a valuation of that land obtained by adding to or by deducting from a valuation for rating or taxing purposes of that land any allowance determined as a consequence of making the following assumptions with respect to that land, namely: (a) that that land may be used only for the purpose, if any, for which it was used at the relevant date, (b) that all improvements on that land as at the relevant date may be continued and maintained in order that the use of that land as referred to in paragraph (a) may be continued, and (c) that no improvements, other than those referred to in paragraph (b), may be made to or on that land.

5 The "relevant date" is also defined in s 123 and is agreed to be 11 January 2006 (being the date the heritage valuation was made).

6 The parties agreed that it was necessary to determine the land value under s 6A first and the allowance under s 123 second. They also agreed that, in the circumstances of this case, the allowance under s 123 would be by way of deduction from the land value. They disagreed about both the land value under s 6A and the allowance under s 123.

7 With respect to land value under s 6A, the parties disagreed about: (1) The materiality of the contract for sale between Longreach and the Health Administration Corporation executed in April 2003 and completed in July 2005 under which Longreach bought the land (and certain other land) for $3,000,000.

(2) The analysis of comparable sales to assist in resolving the land value of the land. 8 With respect to the heritage valuation as provided for in s 123 of the Heritage Act, the parties disagreed about: (1) The purpose(s) for which the land was used at the relevant date in accordance with the assumption in sub para (a) of the definition of heritage valuation.

(2) Whether the assumption in sub para (b) of the definition of heritage valuation required or permitted consideration of the cost of restoring the improvements on the land to a standard where they could be used for the purpose of a hospital.

(3) The effect of the assumption in sub para (c) of the definition of heritage valuation that no improvements may be made to the land other than improvements the subject of the assumption in sub para (b). 9 Acting Commissioner Miller assisted in the hearing of this appeal.

B. Undisputed facts 10 The land has an area of 73.34 hectares and is located on the northern outskirts of Goulburn opposite the racecourse. It fronts Taralga Road on its west, with the Wollondilly River forming its eastern boundary. From the late 1890's the land housed the Kenmore Hospital, the first purpose built complex for mental health care in rural NSW. Many of the early buildings are the work of the first Government Architect, W L Vernon. These buildings were identified in the listing on the State Heritage Register as representing "perhaps the finest 'corporate' architectural expression of the Edwardian (later Federation) Free style in Australia". The hospital included open space areas, sporting facilities and a farm complex, which played a significant part in the hospital's treatment ethic.

11 Changing views and treatment philosophies with respect to mental health meant that the land became surplus to the requirements of the Health Administration Corporation by the late 20th century. The Department of Public Works and Services took control of the land in 2000. In 2001 the Department called for expressions of interest to purchase the land for redevelopment, including adaptive re-uses of buildings on the land. In January 2002 the Department issued a selective call for detailed proposals to purchase the land. The call document described the land as the "former Kenmore Hospital Site". The call document disclosed that although the land had not been listed on the State Heritage Register (as was the case at the time) it was subject to a conservation management plan and contained buildings of heritage significance that most likely would have to be retained in any redevelopment. This conservation management plan divided the land into five precincts and made recommendations for adaptive re-use of each precinct.

12 The call document noted other features of the land (including the occupation of ward 5 by the Kenmore Hospital Museum and the Kenmore Theatre by the Argyle Theatre Group) indicating that the hospital use had effectively ceased by this time. The call document said that arrangements for continued occupation by these groups would be favourably considered. According to the call document three areas were to be retained by the Health Administration Corporation in freehold (requiring a subdivision of the former hospital site to enable the sale). It also noted that the State required short terms leases of various buildings to accommodate support, payroll and linen services until alternative space was arranged and long term residential leases of three of the cottages fronting Taralga Road.

13 An entity related to Longreach was successful in the call. On 4 April 2003 Longreach and the Health Administration Corporation entered into a contract for sale, the sale price being $3,000,000. The sale included the land and two lots on the opposite side of Taralga Road but excluded the three areas to be retained in freehold by the Health Administration Corporation. The special conditions included: - (i) a right of first refusal vested in Longreach should those three areas be sold within 10 years, (ii) the proposed leases back to the Health Administration Corporation at nominal rents, (iii) obligations on Longreach to use best endeavours to negotiate continued occupation by various community groups, and (iv) an inventory of assets sold as part of the property. The contract was also conditional on Longreach obtaining development consent to a master plan substantially in accordance with Longreach's proposals for adaptive re-use of the land submitted in response to the call.

14 Longreach prepared a draft Master Plan in December 2003 proposing subdivision of the land into five lots containing different precincts for development including living (or residential precincts), a community knowledge precinct, a community business precinct, a lifestyle and recreation precinct and landscape/open space areas. Longreach submitted a development application for this subdivision associated with the draft Master Plan in February 2004. This application was not approved until 1 August 2006 (after the base date of the valuation and the relevant date).

15 On 1 April 2005 the whole of the land was listed on the State Heritage Register as provided for in Pt 3A of the Heritage Act.

16 On 15 July 2005 the contract of sale was completed and transfer of the land to Longreach effected.

17 At all relevant times the land was zoned in part for residential purposes (38.4 hectares), part rural investigation (7.4 hectares) and part rural flood hazard (27.54 hectares). The residential zone is very flexible and would permit a wide range of uses with consent.

C. Evidence 18 Mr Davies and Mr Carroll, valuers, gave evidence for Longreach and the Valuer-General respectively. They both have extensive experience in valuing land, including in the local area. Mr Davies is also a health and building surveyor.

19 Mr Davies relied on the sale from the Health Administration Corporation to Longreach as the basis for his valuation under s 6A of the Valuation of Land Act. He described the circumstances and special conditions of the sale as "neutral". Mr Davies adjusted the sale price of $3,000,000 for the two properties on the opposite side of Taralga Road included within the sale (for which he allowed $456,000). He adjusted the balance of $2,543,500 upwards by 27% to reflect the market increases between the contract date and base date and made a further adjustment of 10% to account for the subdivision application lodged in 2004, giving an adjusted sale price for the land of $3,553,270. Mr Davies adopted $3,553,270 as the land value under s 6A of the Valuation of Land Act.

20 Mr Davies applied the assumptions in the definition of heritage valuation in s 123 of the Heritage Act as follows: (1) Under sub para (a) Mr Davies concluded that the land was used for the purpose of a hospital, being the Kenmore Psychiatric Hospital, which he described as a purpose built facility for the treatment of mentally ill and disabled people.

(2) Under sub para's (b) and (c) Mr Davies described the buildings as obsolete, generally in poor condition and having varying degrees of structural damage, incapable of any use for an economic return in their present condition. To enable their use for the purpose of a hospital to continue Mr Davies used costing guides and his expertise to estimate required expenditure in a minimum amount of $45,000,000. He said this would not be justified as the hospital use was obsolete. However, when this allowance was made, the land had a negative value. Accordingly, he concluded that the value under s 125 of the Heritage Act was nil, because the allowance required by s 123 substantially exceeded the land value under s 6A.

21 Mr Carroll considered the contract for sale from the Health Administration Corporation to Longreach immaterial to the land value under s 6A of the Valuation of Land Act, having regard to the circumstances and special conditions of the sale. He identified various sales of residential, rural and flood hazard land as comparable sales. Mr Carroll applied these sales to the land and assessed a land value of $7,860,000 in accordance with s 6A of the Valuation of Land Act (in fact, the land value should be $7,872,156 on Mr Carroll's calculations).

22 Mr Carroll applied the assumptions in the definition of heritage valuation in s 123 of the Heritage Act as follows: (1) Under sub para (a) Mr Carroll concluded that the land was used for the purpose of an en globo development site containing a series of buildings, the majority of which were to be retained and used in the future development of the property for uses ranging from residential to educational purposes as described in the draft Master Plan. He described the hospital use as abandoned long before the relevant date of 11 January 2006.

(2) Under sub para's (b) and (c) Mr Carroll considered that the physical condition of the buildings was not relevant. The buildings were generally intact. The required assumptions were only that the buildings may be continued and maintained so that the use identified under sub para (a) could continue and no other improvements could be made to the land. (3) Mr Carroll notionally divided the residentially zoned area into two parts of 12.8 hectares and 25.6 hectares respectively. The smaller area comprised that part of the land having a long frontage to Taralga Road. Although the least intensively developed, it accommodates a number of cottages, the former multi-storey nurses' home, a two storey dwelling used as offices, a building previously used as a kitchen, a gardener's shed, water tower, a war memorial and roadways. The larger area comprised the rear portion of the land on which the principal extensive hospital buildings are located. These buildings are institutional in character and, by reason of their number and density, offer the greatest opportunity for adaptive reuse. Three ward buildings in this area overlook the Wollondilly River. The other buildings are laid out in a broad "V" shape, facing north east towards rising land on the other side of the Wollondilly River and overlook a substantial area of open space, including a full sized oval. These buildings, in the main, are two storey and located comparatively close to each other, no doubt for ease of operation and administration.

(4) Having regard to the relative adaptability of the different buildings in the two areas, Mr Carroll allowed a deduction of 20% from the smaller area and 50% from the larger area. He made no allowance for the rural lands. This resulted in a heritage valuation of $4,920,000.

23 The extensive view of the land included inspection of the exterior and interior of a number of representative buildings, the surrounding area, and each of the comparable sales. D. Submissions Longreach's submissions

24 Longreach submitted that it was necessary to distinguish between the valuation under s 6A of the Valuation of Land Act and s 125 of the Heritage Act. The former concerned the value of the land assuming that no improvements had been made to it other than land improvements on the basis of the land's highest and best use. The latter required an allowance to be determined, agreed in this case to be by way of deduction from the land value. The result of the heritage valuation could not be understood as representative of market value in any way due to the artificiality of the required assumptions.

25 With respect to sub para (a) of the definition of heritage valuation, although the hospital use was obsolete, the purpose of that use continued until replaced by another use. No development had in fact been carried out on the land at the relevant date in connection with the draft Master Plan so that the hospital use had not been replaced by any new use for a different purpose. The steps taken to facilitate the future development of the land (such as the sale to Longreach, the preparation of the draft Master Plan, and the lodgement of the development application for subdivision) did not involve the actual carrying out of development on the land. Accordingly, the use for the hospital purpose subsisted, as it had not been replaced by any physical action on the land amounting to a use for a different purpose. Alternatively, the land was not used for any purpose at the relevant date.

26 Mr Carroll's description of use for a purpose of en globo development site as described in the draft Master Plan was not use for a purpose within the meaning of sub para (a) of the definition of heritage valuation. Use for a purpose invoked meanings familiar from town planning law. "En globo development site" was not a use of land for any town planning purpose. For example, a person could not obtain development consent to use land for the purpose of an en globo development site. Such a purpose, at its highest, involved a future use of the land, not a use for that purpose at the relevant date. For this land, the use may change as Longreach proceeds with its development. But as at 11 January 2006, Longreach had not done so. The Valuer-General's reliance on Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 was misplaced. Section 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 refers to the actual use of land, not use for a purpose. In that case land was actually used by a developer as stock-in-trade as part of its land bank. But that could not be the purpose of a use as referred to in the definition of heritage valuation. Moreover, the alleged purpose (en globo development site) would remove the distinction between land value under s 6A (which is to be determined by reference to the highest and best use of land) and the allowance required in a heritage valuation (which is to be determined on the basis of the assumptions in the definition of heritage valuation in s 123 of the Heritage Act).

27 The assumption required by sub para (b) of the definition of heritage valuation is that the improvements may be both continued and maintained to enable the use to continue. The words "continued and maintained" convey different meanings. A one-off capital cost to place a building in a condition where it may be used for the relevant purpose is within the scope of the assumption because that cost is necessary for the use to be continued and maintained. Costs of ongoing maintenance, however, would be excluded (Commonwealth Custodial Services Ltd v Valuer-General of New South Wales [2006] NSWLEC 775 at [41]). Mr Davies had made an allowance only for the up-front cost of placing the buildings in a condition where they could be used for the hospital purpose. This was a correct approach to the heritage valuation exercise. As that cost far exceeded any suggested land value in accordance with s 6A, the proper heritage valuation of the land was nil (see, by analogy, Australian Postal Commission v Melbourne City Council (2005) 143 LGERA 218).

28 Alternatively, Mr Carroll's land value assessment under s 6A was too high as he did not give sufficient weight to distinguishing features between the sales and the land, particularly in terms of size, location and lack of market demand. Mr Carroll's allowances for the heritage valuation of 20% and 50% over different parts of the residential area within the land were too low as he based them solely on the adaptability of the buildings. However, the land valuation under s 6A assumed the whole of the residential area had potential to be used for its highest and best use. In contrast, the heritage valuation assumed that there were no improvements other than those on the land at the relevant date. Hence, an allowance dictated by adaptability of the buildings alone necessarily would be too low.

29 The Valuer-General submitted that Mr Davies' approach to the land value under s 6A was flawed. The contract for sale could not be a reliable indicator of land value for numerous reasons. The sale included the land and buildings, subject to likely heritage restrictions obvious from the face of the call document. The sale included other land. It included chattels. It was conditional on a master plan being approved generally in accordance with Longreach's submission to the call document. It required the lease back of various buildings at nominal rents. The contract for sale bore no resemblance to a bona fide sale on reasonable terms and conditions disregarding all improvements as posited by s 6A of the Valuation of Land Act. Mr Carroll's approach to land value using comparable sales should be accepted for the reasons he gave.

30 Longreach's submissions about the assumptions required for a heritage valuation, reflecting Mr Davies' approach to that issue, were also flawed.

31 First, the words "used only for the purpose" in sub para (a) of the definition of heritage valuation must be construed in context. The context is a rating and taxing section of the Heritage Act (Div 6 of Pt 6 headed "Rating and Taxing") intended to ensure a fair burden of rates and taxes by reference to land value. It is for this reason that the definition of heritage valuation in s 123 contemplates that an allowance may be required either increasing or decreasing land value. The purpose of a use is merely its end or objective. The statutory provisions do not purport to confine the range of possible ends or objects. It follows that there is no reason to confine the meaning of use for a purpose at the relevant date as submitted by Longreach. Objective steps taken in connection with land may evidence use for a purpose. In this case the hospital use had been abandoned many years before the relevant date. As identified by Mr Carroll, before the relevant date: - (i) the hospital use had ceased, (ii) the land had become surplus to the requirements of the Health Administration Corporation, (iii) tenders had been invited for sale and redevelopment of the land, and (iv) Longreach (amongst other things) had bought the land for the purpose of redevelopment, prepared the draft Master Plan proposing the adaptive re-use of buildings and redevelopment of the land, prepared the development application for subdivision consistent with the draft Master Plan, lodged this application with the Council and completed the transfer of land to it for that purpose. Consistent with Mr Carroll's conclusions, and by analogy to the reasoning in Fitzpatrick Investments, these objective steps taken in connection with the land established its use at the relevant date as use for the purpose of an en globo development site containing a series of buildings, the majority of which were to be retained in the future development of the property for uses ranging from residential uses to educational purposes as described in the draft Master Plan.

32 Secondly, the improvements are relevant only for the purpose of making the required assumptions. The assumptions do not alter the fact that the valuation is of land hypothetically sold on the base date as vacant land (but for land improvements) as required by s 6A of the Valuation of Land Act. The definition of heritage valuation requires the valuer to accept that the hypothetical sale of the land on the base date is subject to the three nominated assumptions. Under those assumptions, the improvements on the land are relevant only in order that the use of the land at the relevant date may be continued. The cost of placing a building in a condition where it may be used for that purpose or maintaining the building in the future is irrelevant (Commonwealth Custodial Services at [41] and Krisgay Pty Limited v The Valuer-General [2007] NSWLEC 600 at [31] - [36] and [42]). Mr Davies' approach was thus contrary to law.

33 Thirdly, and for these reasons, Longreach had not discharged its onus of proof under s 40(2) of the Valuation of Land Act. If consideration of Mr Carroll's evidence were necessary then that evidence should be accepted for the reasons Mr Carroll gave. E. Conclusions 34 I do not accept Mr Davies' approach to land value under s 6A of the Valuation of Land Act. The sale price under the contract for sale cannot be adjusted on any reliable basis to reflect land value for the reasons identified by the Valuer-General. The contract involved a transfer of land and buildings in circumstances where the likely need to retain many buildings for heritage reasons had been clearly disclosed in the call document. This is the antithesis of the assumption required under s 6A. The contract, moreover, did not merely include the land. It included two lots on the opposite side of Taralga Road and a large number of chattels. The special conditions were unusual and undoubtedly affected the sale price, including the leaseback requirements, the rights of first refusal over other land if sold within 10 years and the requirement for the buyer to obtain approval to a master plan substantially in accordance with the response to the call document. Mr Davies' description of the contract conditions as "neutral" (so that the contract provided a reliable base from which to adjust the sale price to a deduced land value) was untenable.

35 Mr Carroll's approach to land value, by reference to comparable sales, was orthodox. As Longreach submitted, the land is much larger than any of the comparable sales and located further from the Goulburn centre than the sales of residential land relied on by Mr Carroll. However, it was also clear from the view that the land, with its gentle slope to a meandering river frontage, had a delightful ambience and aspect not shared by any of the residential sales. Mr Carroll fairly considered the differences between the land and the comparable sales, including size, location, and associated development risk. Mr Davies' specific comments about the sales not being directly comparable were not persuasive. Contrary to Mr Davies' opinion, the view disclosed that there would be little scope for the buyer of 134 Marys Mount Road to obtain significant benefits from the acquisition of that land in the context of their existing landholding. Mr Davies' suggestion that the proximity of the airport to the sale at 480 Windellama Road and its potential privatisation by the Council affected the sale price was speculative. Mr Carroll made appropriate adjustments to take into account the differences between the sales and the land. Those adjustments were reasonable in the circumstances, particularly taking into account the qualities of the land compared to the sales.

36 Longreach's submission that Mr Carroll treated the flood hazard land inconsistently with his exclusion of the flood affected land (4.1 hectares) from the developable area (and hence sale price) of 134 Marys Mount Road was not persuasive. That part of the land zoned flood hazard involved a broad area sweeping down to the river. This area is suitable for grazing and agricultural uses. In contrast, the overland flow path on the sale at 134 Marys Mount Road would be unlikely to be suitable for the accommodation of such grazing and agricultural uses. The sales of flood affected land relied on by Mr Carroll were markedly inferior to the land. In common with one of them (207 Braidwood Road) the land is close to a racecourse. Given the material superiority of the flood hazard area on the land compared to the sales, Mr Carroll's approach was reasonable despite the Council being the buyer in respect of both sales.

37 Accordingly, Mr Carroll's approach to the assessment of land value under s 6A of the Valuation of Land Act was sound and provided an appropriate valuation for rating or taxing purposes within the meaning of the definition of heritage valuation in s 123 of the Heritage Act.

38 With respect to sub para (a) of the definition of heritage valuation, the use of the land for the purpose of a hospital ceased many years before 11 January 2006. By that date Longreach owned the land. It acquired the land for the purpose of redevelopment. It had prepared a draft Master Plan and lodged a development application for subdivision to facilitate its redevelopment objectives. The development application for subdivision must have involved, as Mr Carroll said, survey work identifying (at the least) the lots into which the land was to be subdivided. Longreach had no intention of recommencing the long abandoned hospital use. For these reasons, sub para (a) of the definition of heritage valuation in s 123 of the Heritage Act cannot embrace the use of this land for the purpose of a hospital at the relevant date.

39 This finding gives rise to a difficulty for Longreach with respect to sub para (b) of the definition of heritage valuation. Longreach submitted in the alternative that the land was not used for any purpose at the relevant date. Further, that a purposive construction of the definition of heritage valuation requires the assumptions to operate in cases where there is no use of the land for any purpose at the relevant date consistent with the words "if any" in sub para (a). Mr Davies' evidence, however, involved costing the work required to restore the buildings on the land to a condition where they could be used for the obsolete hospital purpose. Once that purpose is put aside, Mr Davies' evidence did not provide a reliable basis for assessing Longreach's alternative case. Moreover, and as the Valuer-General submitted, the assumption in sub para (b) of the definition of heritage valuation refers to improvements only for the purpose of enabling the use in accordance with sub para (a) to continue. Mr Davies' approach involved deducting $45,000,000 from the assessed land value for the purpose of placing buildings in a condition where they would be suitable for a hospital use in circumstances where, first, that use was not in fact being carried out on the land at the relevant date and, secondly, no one at the relevant date had the slightest intention of carrying out such a use in the future. Mr Davies' evidence about the allowance should be rejected for these reasons.

40 Nevertheless, and as Longreach submitted, when determining whether it has discharged the onus under s 40(2) of the Valuation of Land Act the whole of the evidence must be considered. Accordingly, it is necessary to deal with the alternative submissions about Mr Carroll's allowance for the purpose of the heritage valuation. Before doing so, the following observations are appropriate having regard to the detailed submissions the parties made about the heritage valuation provisions. (1) The meaning of use of land for a purpose as it appears in the definition of heritage valuation in s 123 of the Heritage Act is a question of fact in the particular case.

(2) The purpose of a use is simply the end or the object of the use.

(3) Section 123 is part of a rating or taxing law. Although within the Heritage Act, it is not concerned with regulating permissible or prohibited development, when development consents may have commenced or lapsed, or whether an existing use has been abandoned or not. (4) There is no reason to confine the possible purposes of uses under s 123 to the list of definitions that appear in environmental planning instruments. First, those definitions involve nominate uses. Many instruments define permissible or prohibited development by reference to innominate purposes. Secondly, nothing in sub para (a) of the definition of heritage valuation suggests that the range of potential purposes should be confined to those capable of a neat label such as "dwelling, "school" or "restaurant". Thirdly, the idea that the purpose of a use within the meaning of sub para (a) of the definition of heritage valuation is confined to uses for which development consent could be obtained under the Environmental Planning and Assessment Act 1979 (the EPA Act) finds no support in Div 6 of Pt 6 of the Heritage Act. In any event, it would be incorrect to assume that development consent could not be obtained to carry out subdivision as the first stage of development for the overall purpose of the draft Master Plan (such as under s 80(4) of the EPA Act).

( 5 ) Fitzpatrick Investments concerned a statutory provision referring to "actual use" of land rather than the purpose for which the land was used at the relevant date. However, this difference does not indicate that sub para (a) of the definition of heritage valuation should be construed in manner that would necessarily exclude an actual use as found to have existed in Fitzpatrick Investments (that is, as a stock-in-trade or land bank for future development). The reasons given by Longreach in support of that submission were unconvincing. (6) In this case, Longreach had taken readily ascertainable and unequivocal steps in connection with the land consistent with its use for the purpose Mr Carroll identified. That use was not a mere subjective intention or desire for future use on Longreach's part but the purpose for which Longreach in fact used the land at the relevant date. Consistent with the definition of heritage valuation, the use must be assumed to remain en globo development site. Accordingly, identifying the use of the land for this purpose at the relevant date does not involve impermissible consideration of any additional potential of the land. The facts are different from those considered in Australian Postal Commission v Melbourne City Council . In that case the attempt to rely on the potential of the site was impermissible because the site had been used only for the purpose of a post office at the date of valuation. (7) Mr Carroll's conclusion about the factual assumption required by sub para (a) of the definition of heritage valuation did not conflate the land value under s 6A with the heritage valuation under s 123. Mr Carroll gave content to the assumption in sub para (a) consistent with the facts apparent from the evidence. Moreover, in assessing the allowance the assumptions in sub para's (b) and (c) of the definition of heritage valuation also have to be made, which bear no resemblance to the sales hypothesis in s 6A.

(8) To construe sub para (b) of the definition of heritage valuation as incorporating a one-off capital cost of restoring buildings to a condition where they can be used for the purpose identified in sub para (a) highlights the difficulty with Mr Davies' evidence and Longreach's submissions. The assumptions do not contemplate identifying uses abandoned long ago and the cost of building works to restore buildings to a standard at the relevant date to enable such abandoned uses to re-commence.

(9) In the context of sub para (b) of the definition of heritage valuation, "continued and maintained" should be understood as a composite phrase conveying the meaning that the improvements on the land at the relevant date may remain there and be maintained by the owner so that the use may be continued. Nothing in this assumption contemplates that the allowance should include the cost of any form of maintenance (whether as a one off capital or recurring cost). 41 The allowance by way of deduction required in this case must be the result of consideration of the factors informing the value of the land with all its potentialities for the purposes of s 6A, compared to the value of the land confined by the assumptions in the definition of heritage valuation in s 123. The land is large and is occupied by many buildings of many different characters. Of its nature, any particular allowance must involve matters of judgment, being both inherently contestable in nature and most likely "difficult to reduce to exact reasoning or to explain to others" (The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391).

42 The allowance with respect to the residential areas must take account of all the assumptions in the definition of heritage valuation, including the assumption in sub para (c) that no improvements other than those in sub para (b) may be made to or on the land. Accordingly, the adaptability or lack of adaptability of the improvements is a relevant matter but so too is the fact that the land must be assumed to be incapable of any other improvements when considering the capacity to continue to use the land as an en globo development site generally in accordance with the draft Master Plan.

43 Mr Carroll's analysis did not fully reflect the differences that the allowance must be intended to capture. First, although the smaller residential area (subject to Mr Carroll's allowance of 20%) is occupied by more conventional buildings than the larger area, there are fewer buildings and more open areas. Secondly, although less conventional and more institutional buildings occupy the larger area, those buildings are greater in number and density and have a pleasing ambience in terms of their relationship with each other, the open space areas and the river. Under s 6A, all of the land would have development potential including the open areas. Under the heritage valuation assumptions, the buildings are assumed to exist but no other buildings may be anticipated. In the circumstances Mr Carroll's distinction between the two parts of the land was not warranted.

44 Mr Carroll's allowance for the smaller area does not sufficiently account for the low intensity use of this part of the land compared with the larger area and the resulting severely restricted opportunities that must be assumed to be available for either development or rental income generation. The deduction of 20% does not fairly reflect the significant constraints the heritage assumptions impose on this land. Having regard to the number, nature and variety of the buildings on the land which may be assumed to continue in the heritage valuation, an allowance by deduction of 50% from the land value over the whole of the residential area fairly and reasonably reflects the requirements of the heritage valuation provisions.

45 Mr Carroll's approach to the rural land (namely, that the assumptions in the definition of heritage valuation do not justify any deduction from the land value) was sound. Accordingly, the allowance for that part of the land should be nil.

46 It is not necessary to deal with the evidence (such as there was) about the use of the nurses' home to house police cadets. The evidence about the steps taken to ensure that use could be carried out did not establish that it commenced before the relevant date. The valuation of the land, accordingly, is as follows: (1) Under s 6A of the Valuation of Land Act: Residentially zoned land 12.8 ha @$210,000 per ha $2,688,000 25.6 ha @ $200,000 per ha $5,120,000 Rural 1(b) Investigation 7.4 ha @ $20,000 per ha $148,000 Rural 1(d) Flood Hazard 27.54 ha @ $12,000 per ha $330,480 Sub Total $8,286,480 Less 5% in line discount $7,872,156 . (2) Under s 125 of the Heritage Act: Residentially zoned land 38.4 ha $7,808,000 x 50% $3,904,000 Rural lands - no heritage allowance Rural 1(b) Investigation 7.4 ha @ $20,000 per ha $148,000 Rural 1(d) Flood Hazard 27.54 ha @ $12,000 per ha $330,480 Sub Total $4,382,480 Less 5% in line discount $4,163,356 47 The orders of the Court are: (1) The appeal is upheld. (2) The value of the land is determined as: (a) $7,872,156 in accordance with s 6A of the Valuation of Land Act 1916; and (b) $4,163,356 in accordance with s 125 of the Heritage Act 1977. (3) The exhibits are returned.

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