Naburn Pty Ltd v Valuer General

The proceedings 7One of the properties located at the cul-de-sac end of the southern section of Ocean Road is 41 Ocean Road (the valuation site). The valuation site is owned by Naburn Pty Ltd (the company), the applicant in these proceedings. The company has objected to the statutory valuations determined by the Valuer General for the base dates 1 July 2011 and 1 July 2012 for the valuation site. For 2011, the Valuer General determined that the land value for the valuation site should be $6.96 million and that determined for 2012 was also $6.96 million. The company contended that those values should be $4.35 to $4.75 million and $4.5 million respectively. The company's objections to the two land value determinations were not accepted by the Valuer General and, as is its right, the company has appealed to the Court pursuant to s 37 of the Valuation of Land Act 1916 (the Act) against the rejection of those objections. 8The terms of s 40 of the Act contain two significant elements relevant in these appeals. First, the section sets out the powers of the Court in disposing of the appeal and, second, it expressly allocates the onus of proof, on the civil standard, to an appellant in such proceedings. The terms of the section are: 40 Powers of Land and Environment Court on appeal (1) On an appeal, the Land and Environment Court may do any one or more of the following: (a) confirm or revoke the decision to which the appeal relates, (b) make a decision in place of the decision to which the appeal relates, (c) remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision. (2) On an appeal, the appellant has the onus of proving the appellant's case.

Issues in the proceedings 9In addition to the conventional valuation issues (using what are said by the valuers for the parties to be comparable sales for each relevant time period to be analysed to derive a valuation rate to be applied to the valuation site - whether on a per square metre basis or on a whole allotment basis is a matter subject to discussion later inn this judgment), there is also the necessity to have regard to the costs of excavation on one of the comparable sales sites. This arises because of the provisions of s 6A of the Act, a provision in the following terms: 6A Land value (1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made. (2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that: (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used, but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made. (3) .................... (4) .................... 10The element of this provision requiring land improvements to be taken into account when determining value but excluding all other improvements is the element that engages the necessity to consider excavation costs. The relevant element of the term "land improvements" is defined as: Land improvements means: (a) ...................., (b) ...................., (c) ...................., (d) ...................., (d1) without limiting paragraph (d), any excavation, filling, grading or levelling of land (otherwise than for the purpose of irrigation or conservation) that is associated with: (i) the erection of any building or structure, or (ii) the carrying out of any work, or (iii) ...................., (e) ...................., and (f) .................... 11As a consequence, in addition to valuation evidence from Mr Webster for the Valuer General and Mr Wotton for the company, evidence was also given by Mr Gerahty, a director of the company, and Mr Mills, a builder who had contracted the excavation works necessary for the construction of the new dwelling on the valuation property. Mr Mills also gave evidence concerning excavation costs on an adjacent allotment (40 Ocean Road). Mr Martin, a quantity surveyor, gave evidence on these excavation costs on behalf of the Valuer General.

The site inspection 12As earlier noted, the valuation evidence was based on the conventional approach of selecting a range of properties that had sold during time periods proximate to the two base dates and which properties were located, in the opinion of the valuers, sufficiently proximately to the valuation site to be able to be compared with it. Each of these sales (there being a slightly different selection of sales by each valuer and for each base date year) was then analysed by each valuer with each of them making what he considered to be appropriate adjustments necessary to render each such sale properly comparable with the valuation site on a rate per square metre of land value. By the commencement of the hearing, the valuers, between them, had settled upon nine sites for the purposes of their comparison analyses. These sites were: Address 1/7/2011 1/7/2011 1/7/2012 1/7/2012 Mr Webster Mr Wotton Mr Webster Mr Wotton 6 Ocean Road X X 13A Ocean Road X X 20 Ocean Road X X 21 Ocean Road X X 39 Ocean Road X X 40 Ocean Road X X 12 Florida Road X X X 28 The Strand, Whale Beach X X X 161 Whale Beach Road, Whale Beach X

13We commenced by inspecting the valuation property. The inspection comprised an examination of the false walling at the lowest level set off from the retaining concrete of the excavation that had been undertaken to create the space for the lowest level. 14We also climbed to the top of the rear of this steeply sloping allotment to a terraced area at its top. The stairway to this terrace was at approximately the mid-point across the allotment and rose past a series of landscaped garden beds retained by what appeared to be railway sleeper style hardwood retaining structures. The terrace at the top of these stairs was adjacent to the rear, southwestern boundary of the property. The view from this location was a virtually interrupted one to the beach and beyond and encompassed a complete view of the Barrenjoey Headland. 15Although two substantial Norfolk Island Pine trees grow within the view outlook from the valuation site at/near the turning circle at the head of the Ocean Road cul-de-sac, their presence in the extensive and expansive panoramic views that would be available from all locations on this allotment if it were to be notionally vacant (as is required to be taken to be the position by s 6A of the Act) would cause negligible adverse impact. 16We then inspected, from outside each of the sites, all the remaining comparable sales other than 161 Whale Beach Road, Whale Beach.

Introduction 17As earlier noted, s 6A(1) of the Act reads as follows: (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. 18I have always understood this to mean that, for the purposes of undertaking a comparable sales analysis, it is necessary that the hypothetical purchaser of a site being valued should also be a potential hypothetical purchaser for the site being used for comparative analysis purposes. 19Thus, whilst it might be technically possible to take a vacant allotment of land in the outer western suburbs of Sydney and analyse it by making multiple, significantly large adjustments, to derive some theoretical rate per square metre to be applied to a vacant block of land in Sydney's inner western suburbs, there is no reasonable likelihood, whatsoever, that the purchaser of the first hypothetical allotment is likely to consider purchasing the second hypothetical allotment - as that hypothetical purchaser will not be interested in purchasing in both such distinctly different markets. 20The same question, that is would the hypothetical purchaser of the valuation site in these proceedings be a hypothetical purchaser for each of the comparison sale sites listed earlier, arises here for consideration. 21During the course of the site inspection, I raised with Mr Gerard, barrister for the company, and Mr Waterson, barrister for the Valuer General, my concerns that it was at least possible that a number of the sales relied upon by the valuers for comparability purposes might be sales that, if the same hypothetical buyer test were to be applied, were not truly comparable for the purpose of the analysis necessary for these proceedings. I indicated that I proposed to have the valuers address that matter, as a preliminary point, at the commencement of their in court evidence. 22As the site inspection unfolded, it subsequently appeared to me that it was appropriate that I raise that matter with the valuers rather than leaving counsel to put them on notice of my concern. I did this, particularly, with respect to the reliance on 161 Whale Beach Road, an elevated, ocean reserve fronting dwelling on a cliff top allotment some 700 m to the south of the beach at Whale Beach and some 2 km south of the valuation site. 23I indicated to Mr Wotton (who relied upon the sale at this address for portion of his comparison evidence) that I had very grave reservations about the appropriateness, particularly, of that sale for comparison purposes. 24I also indicated that I considered that there was a potentially respectable argument (about which I was not then to be taken as expressing any tentative opinion) that, within Palm Beach itself, there might well be three separate Ocean Road markets with those markets being coincident with the sections of Ocean Road I have earlier described. 25I also indicated that I accepted that it might be the case that 28 The Strand at Whale Beach, being an ocean frontage property facing a car park might well be physically similar to several of the Palm Beach sales but I was concerned as to whether or not Whale Beach was also a different market to that for Palm Beach. 26I indicated to the valuers that I proposed to ask them to address this broad market definition issue as a preliminary matter to their valuation evidence. 27Resolution of this threshold issue of what are, in fact, comparable sales to which a hypothetical buyer of the valuation site might be a potential buyer in the same market is critical to defining which of the comparable sales dealt with in each of the Statements of Evidence of the valuers and in their Joint Valuation Report and Supplementary Joint Valuation Report are relevant in the proceedings. 28Although, at the pre-trial mention, the full day of the first day of the hearing had tentatively being allocated to the site inspection because of the number of properties to be inspected and the travelling time to and from Palm Beach, this allowance proved, in reality, to be radically pessimistic and the site inspection was concluded before 11am after a physical inspection of each of the comparison sale sites with the parties (except for 161 Whale Beach Road which was the subject of a drive-by inspection by me alone - with the concurrence of the parties to this occurring). 29As a consequence, we commenced in court at 2pm on the first afternoon and, after the tendering of documents and short openings from each counsel, commenced the evidence with the valuers addressing the question of whether or not there was more than one market segment involved in the sales they had selected for their valuation analysis.

General discussion on comparability 30Before turning to a discussion of the individual properties whose sale is relied upon by either or both of the valuers for comparison analysis purposes, it is appropriate to make some observations about the broad approach taken by each of the valuers to their consideration of the question raised of market identification for the purposes of s 6A of the Act. 31Mr Wotton took the position that there was one fundamental distinction to be drawn in identifying the potential type of purchaser that might be seeking to enter the market for a property at Palm Beach (or either Whale Beach property). The distinction he drew was between those who would wish to build a new dwelling (on a knock down and rebuild process, there being a scarcity of any relevant vacant land) or those who wished to purchase an existing dwelling and were prepared to undertake, if necessary, a significant and extensive refurbishment of it. 32In addition to this primary delineation, he expressed the view that there was likely to be a differential between those potential purchasers who were prepared to contemplate a steep site (with the likelihood of more expansive views) and those potential purchasers who would prefer a flatter site with less potential view opportunity. Into this latter category, he suggested it would be appropriate to fit those who were elderly or less mobile as one subgroup and, as second subgroup, families who would wish to have access to a level area of outdoor space as a play area for children. 33He did not accept that there was likely to be any significant socio-economic discrimination to be taken into account as a relevant factor in assessing whether there were market segments of sufficient difference within the locality to warrant a distinction being made between them for the purposes of considering whether or not to exclude properties as being appropriate for a s 6A comparison purpose. 34On the other hand, Mr Webster took, as I understood his evidence on these issues, a significantly different stance. Whilst he agreed that elements of that which was advanced by Mr Wotton, he did not accept that those propositions played as significant a role as had been suggested. Mr Webster did, in addition, suggest that there were significant market differentials of a socio-economic basis that should be added to and assessed in conjunction with other factors such as elevation/slope and the resultant access to views. He nominated locations at the most northern of the three elements of Ocean Road I have earlier described as being part of an "entry level market" for Palm Beach beachfront properties whilst those at the most southern of the three sectors should be regarded as comprising the premium element of the Palm Beach beachfront market. 35He also expressed the view, if I understood him correctly, that those who were sufficiently affluent to contemplate purchasing in the premium end of the Palm Beach locality were also likely to be prepared to wait until a desirable property was placed on the market rather than purchasing a more modest or less desirable property elsewhere in that locality.

The Palm Beach sales - general 36I now turn to consider whether or not the sales relied upon within Palm Beach itself should be regarded as being within a homogenous market where each property might be contemplated as a valid alternative to any other of the properties when a hypothetical s 6A purchaser was seeking to buy in Palm Beach. 37I am unable to accept that such a proposition is valid. 38For the reasons that are set out in the following discussion, I am of the view that, within Ocean Road, itself, there are four sufficiently different market segments that a distinction should be drawn between the three of those segments engaged by the valuers' analyses for the purposes of these proceedings. 39It is appropriate to describe each of the comparable sales located in the Palm Beach precinct but to do so from north to south as this will facilitate an understanding of the subsequent discussion of market segmentation along Ocean Road. The following discussion concerning each of these properties pays, at this stage, no regard to whether each property was regarded by either or both valuers as being relevantly comparable or whether the property was selected for analysis in the 2011 base date year, the 2012 base date year or both.

The northern section of Ocean Road 40The most northern of the properties is located at 6 Ocean Road. A substantial new dwelling has been erected on the building pad available close to but a little set back from the Ocean Road frontage. The balance of this allotment rises steeply toward the west with a series of near vertical sandstone outcrops being able to be observed from our viewing point across Ocean Road. 41Although there is some form of shelter structure built further up the allotment than the flat building pad upon which the dwelling has been erected, I have no evidence of the use of or access to this structure. It was clear, however, that the steepness of the slope of the rear portion of the allotment behind the building pad when coupled with the extensive sandstone outcrops rendered the bulk of this allotment of limited utility. 42The outlook from the building location is virtually due east across Ocean Road, the flat grassed frontal dune area behind the beach and thence across the beach to the ocean. 43On either side of this allotment is located a similar residential allotment with a generally similarly located building pad at, broadly, a common setback from Ocean Road. As a consequence, in addition to the direct frontage views to the east, the views that are enjoyed from the usable portion of this allotment to the northeast and southeast should be regarded as being constrained to at least some extent by the built form on the adjacent allotments on either side. 44To the extent, as later discussed, views of Barrenjoey Headland are regarded as important and iconic in a Palm Beach context, such views as might be had of the headland from 6 Ocean Road would be both limited and oblique. 45There are two further observations to be made about this site. The first is that the building pad is, effectively, at grade and there did not appear to be any element of the building pad utilising portion of the steeply sloping western element of the site (there being no evidence as to the extent, if any, of excavation for the creation of the building pad). 46The final observation to be made about this site is that the portion of Ocean Road addressed by its frontage is part of the major thoroughfare that comprises the primary access/egress for Palm Beach. It is thus reasonable to assume that it will have a significantly higher passing traffic impact, both in creating difficulties in entering or exiting the site and for adverse acoustic impacts on any dwelling on the site. 47The sale of 6 Ocean Road was for a knock down and rebuild project. 48The next property to the south is 13A Ocean Road. Like 6 Ocean Road, it is in the most northern of the three sections of Ocean Road earlier described. It is, effectively, on the corner of Ocean Road and Palm Beach Road and directly opposite the angled, created intersection in Ocean Road that acts to prevent Ocean Road being a continuous, linear thoroughfare. The sale of this property was for refurbishment purposes. 49This property has a smaller building pad than that available on 6 Ocean Road and this building pad has been partially excavated, sometime in the past, from the slope behind the dwelling currently erected on this property. This property also rises very steeply to the west immediately behind the building pad. The bottom portion of the slope has a shotcrete retaining element that was able to be viewed through the tangle of vegetation trailing down the slope. 50The upper portions of the slope were partially covered by weedy vegetation and other portions were of exposed earth. There did not appear to be the same extent (if any) of sandstone outcrop as was present on 6 Ocean Road. 51The topography of this element of the escarpment and the proximity of the escarpment to the road at this point means that the building pad on this allotment is smaller than that on 6 Ocean Road resulting not only in a significant constraint on the size of dwelling able to be constructed but also significantly reducing the available front setback of such a dwelling to the road proper. 52Because of the proximity to the intersection, the constraints on access to this property are even greater than those on 6 Ocean Road. Whilst the negative impact of vehicle noise would be equivalent to that further to the north, because of the angling of the intersection, this property also suffers from direct night time headlight glare from vehicles travelling north on the southern section of Ocean Road turning north at the angled intersection. 53The outlook from 13A Ocean Road is, because of the slight curve in the escarpment as Ocean Road approaches Palm Beach Road, a very slight extent less directly to the east than that of 6 Ocean Road. The fact that the building pad on this site is also partially excavated into the slope behind will also render the ability to achieve oblique views to Barrenjoey Headland more constrained. On the other hand, the land immediately to the north is undeveloped at its Ocean Road frontage and it is thus also possible that the northeastern views will be impacted in the future. The views from 13A Ocean Road to the east and the angled but nonetheless expansive views to the southeast (opened up as a consequence of the angled intersection) are likely to be modestly superior to those of 6 Ocean Road. 54The location and topography of these two sites combine to make them significantly less desirable than the valuation site. Although the valuation site is steep, is not as steep as either of these sites with neither of these sites being amenable to the same landscaping treatment that has been able to be achieved on the valuation site. In addition, although there is apparently a structure on 6 Ocean Road part way up the slope, the sandstone outcropping on that site and the near verticality of 13A Ocean Road effectively means that the rear portion of either of those allotments is incapable of use - in contradistinction to the very attractive aspect and views available from the platform that has been created adjacent to the rear boundary of the valuation site. 55Mr Webster described the properties at 6 and 13A Ocean Road as "entry level" beachfront properties in Palm Beach. Although both valuers undertook a comparative analysis process in order to derive analysed values capable of application to the valuation property, the differences in the starting market prices disclosed by the sales of these two properties together with a dispassionate consideration of the significantly less desirable attributes of each of these properties compared to the valuation site mean that, in my opinion, it is not possible to conclude that a hypothetical purchaser of either of these properties would also be a hypothetical purchaser of the valuation site. 56For that reason, I do not consider it appropriate to pay regard to either 6 or 13A Ocean Road for the purposes of discharging my responsibilities as the judicial valuer in these proceedings.

The middle section of Ocean Road 57In the next segment of Ocean Road, to the south of Palm Beach Road, the topography is characterised by either a flat frontage to Ocean Road or a slight dip to the west - for 20 Ocean Road, the former position obtains whilst the latter applies to 21 Ocean Road. Both of these allotments then rise gently toward the west. The building pad on each of these allotments has been located toward the rear in order to take advantage of the gentle rise to maximise such views as may be able to be obtained from these allotments. The consequence of this is that the private open space for each dwelling pad is located between the dwelling pad and the street frontage to Ocean Road. 58Each of these allotments has on it a substantial dwelling and each falls within the market characterisation of Mr Wotton of a property bought for the purposes of refurbishment rather than rebuilding. 59Although the portion of Ocean Road to which these properties have their frontage would not be as heavily trafficked as the more northern section, nonetheless it will be busier than the southern section where the valuation site is located. However, because of the substantial setback available to the desirable building pad, traffic noise would not be an issue for either of these properties. 60There are three significant impacts on the outlook from these properties. Those impacts are:

• The necessity to fence at the Ocean Road frontage for privacy reasons;
• The row of substantial Norfolk Island Pine trees growing along the western side of this section of Ocean Road; and
• The 50 m long art deco, heritage listed changing/toilet block on the eastern side of Ocean Road. 61The first two of these three factors impact to the same extent on both of these properties.

The need to fence for privacy purposes 62Accepting, as I do, the valuation evidence that such properties are likely to be desirable for potential purchasers with families seeking playing space, such fencing means that such outlook as is potentially able to be achieved from the lowest level of a dwelling on either of these sites will be, in effect, eliminated by that fencing need.

The Norfolk Island Pines 63Although, in themselves, these trees are an attractive vegetative element in the landscape nonetheless they effect a more than minor degree of obstruction of the ocean views able to be obtained to the east from either of these properties. The impact of these trees is much greater than the two Norfolk Island Pines in the vicinity of the valuation site.

The ablution block 64Finally, this structure has a major impact on the outlook from 20 Ocean Road as this property is located directly to the west of this structure. The height of the roofline of the central built portion together with the brick wall structure of the remainder means that there is no effective possibility within any building envelope likely to be permitted on the building pad for this property to achieve any ocean views toward the east. Any views that are able to be obtained from an upper level of a dwelling on this site will, necessarily, be oblique ones to the northeast and southeast and filtered by the Norfolk Island Pines. It was Mr Webster's oral evidence that, in discussions with the selling agent for this property, the presence of the ablution block in the outlook from this property was a significant detriment that had turned a number of prospective purchasers from further considering this property. 65Whilst 21 Ocean Road is not entirely directly to the west of the ablution block, the ablution block spans approximately half the frontage of this property. It also extends significantly to the north, as noted, across the frontage of 20 Ocean Road. The effect of the ablution block on views from the upper level of an available building envelope on the building pad on 21 Ocean Road would be to eliminate half of the direct views to the east and have a significant impact on (if not effectively eliminating) any views in a northeasterly direction. Although oblique views to the southeast will be available and partial views available directly to the east, there is no comparability, in any realistic fashion, of the views from this property when compared to the unconstrained views available from the valuation site, views which not only have this dimensional attribute but which also encompass the full length of the beach to the north and the whole of the Barrenjoey Headland. 66For these reasons, I do not consider that either of 20 or 21 Ocean Road could be regarded as being relevantly comparable sales to the valuation site as I consider them to be in a different market.

Market definition factors 67I accept two of the propositions put by the valuers as being facets of the definition of a particular segment of the Palm Beach property market. These are, in my summarised interpretation:

• Sites that are redevelopment sites are likely to be attractive to a different type of buyer to those with an existing dwelling capable of refurbishment (but I do not accept that this is an absolute proposition); and
• Comparatively flat allotments are also likely to appeal to a different class of buyer compared to those prepared to embrace a steeper allotment with a greater opportunity to harvest such views as may be available.

Conclusion on Palm Beach market segments 68Although, to some extent, it was suggested that the steepness of both 6 and 13A Ocean Road enhanced their comparability to the valuation site, I am unable to accept that proposition. Although the valuation site is comparatively steep, it is not so steep as to prevent it being enhanced with landscaped terracing and the creation of a useful open space platform near the rear boundary capable of use for entertainment or passive recreation whilst enjoying the panoramic views to the north and northeast. Neither 6 or 13A Ocean Road appeared capable of such treatment, this being in part because of the rocky outcrops on 6 Ocean Road when coupled the steepness of its landform whilst, for 13A Ocean Road, its sloping element was much closer to the vertical than the slope of the valuation site. 69The combination of the fit of 20 and 21 Ocean Road as appealing to a flattish land and dwelling refurbishment interested hypothetical purchaser when coupled with the starkly less attractive outlook opportunities for either of these properties when compared to the countervailing attributes, in each respect, of the valuation site cause me to conclude that neither of these properties, either, could be regarded as appropriate to be incorporated into a comparative sales analysis for the purpose of deriving a land value for the valuation site in either of the base date years. 70I have therefore concluded that the only relevant Palm Beach sales are those in the southern section of Ocean Road.

The Whale Beach sales 71With respect to the 161 Whale Beach property, Mr Webster had not relied on it for comparison purposes because he did not consider it was a properly comparable sale. He reached this conclusion on the basis of the distinctly different topographic features of the site and its location (as earlier noted, this property is some 700 m south of Whale Beach. Its location is approximately 2 km from the valuation site). This property has a rear (northward toward its views) boundary to a cliff top reserve with no beach below and no obvious access to the oceanside rock platform at the foot of the cliffs. 72In his oral evidence, in court and during the course of the site inspection, Mr Wotton indicated that he did not place prime reliance on 161 Whale Beach Road but had used it as a check measure for his other analyses. 73With respect to this property, I agree with Mr Webster for the reasons he gave that this property could not be regarded as comparable as a potential purchaser of it would not be a potential purchaser of the valuation site. The topography, location and lack of direct beach access render it completely irrelevant, in my view, in these proceedings. 74Although, during the course of the site inspection, I indicated that I saw some potentiality that the second Whale Beach property, at 28 The Strand (it being across the car park from the beach at Whale Beach), might be regarded as being within the same potential s 6A market, after hearing the in court evidence of the valuers on this preliminary topic of market identification, I have concluded that this property, too, should be excluded from further consideration. 75Whilst Mr Webster was of the view that a potential purchaser might identify this property as, in effect, a second-best option if no Palm Beach precinct property were to be available, the differences between this property and the valuation site are significant. They are sufficiently so, in my opinion, as to warrant the exclusion of this second Whale Beach property from further consideration. The reasons for this are not only the significantly different social cachet that attaches to Palm Beach (it being the agreed position of the valuers that Palm Beach is the premier beach attraction suburb and thus, on my interpretation, effectively the pinnacle of the market) but also because the Whale Beach property was a lower one with limited views toward the ocean (these only being available from the upper level), is in close proximity to a busy and heavily trafficked car park and, to a far lesser extent, the property was an existing dwelling capable of utilisation (whether or not some degree of refurbishment was required).

Conclusion on the comparable sales scope 76I am satisfied that there is a distinct premium end beachfront market comprising only the small cluster of privately held properties at the southern end of Ocean Road. It follows, therefore, that I have concluded that the cluster of properties at the southern end of Ocean Road (39, 40 and 41 Ocean Road and 12 Florida Road) fall within a different and particular market within the Palm Beach locality and that the four sales further to the north at (from north to south) 6, 13A, 20 and 21 Ocean Road should be excluded from comparison analysis in these proceedings. For the reasons set out above, both Whale Beach properties should also be excluded.

The appropriate comparable sales matrix 77As a result of my conclusions that 6, 13A, 20 and 21 Ocean Road Palm Beach together with both Whale Beach properties, 28 The Strand and 161 Whale Beach Road, should be excluded from a proper comparative sales analysis matrix, it is necessary to revise this table to reflect my determinations as to what were or were not relevantly comparable sales. The revised matrix appears below: Address 1/7/2011 1/7/2011 1/7/2012 1/7/2012 Mr Webster Mr Wotton Mr Webster Mr Wotton 39 Ocean Road X X 40 Ocean Road X X 12 Florida Road X X X

78Although the exclusions have had the effect of significantly reducing the number of sales available in each base date year for the purposes of comparative analysis, such a comparative analysis process, in this more limited scope, still remains a valid valuation methodology, even in circumstances where there is only a single comparable sale available for this purpose (Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 112 CLR 111; (2003) 195 ALR 236 and (2003) 77 ALJR 727).

Presentation of the adjustment data 79Mr Webster and Mr Wotton were requested to prepare a spreadsheet that set out, in combined form, the totality of both of their analyses for each of the 2011 and 2012 base date years. They prepared spreadsheets for this data on two separate bases. 80The first spreadsheet was prepared on the basis of deriving an analysed dollar value per square metre from the comparable sales considered by them with that rate per square metre to be applied to the area of the valuation site to derive a value for that site. 81The second spreadsheet was prepared on the basis of a similar analytic process being applied on a whole allotment basis rather than on a rate per square metre basis. 82In addition to these spreadsheets being tendered (Exhibit D), a copy of them was also provided electronically to facilitate my calculations after reaching conclusions concerning the various analysis components where the valuers had proposed different adjustment values be utilised in the spreadsheets.

The appropriate calculation basis 83As noted above, the valuers prepared their spread sheet analyses on two separate bases. The first was using a methodology to derive an analysed rate per square metre from the comparable sales with that rate to be applied to the area of the valuation site to calculate a deduced land value for the valuation site and, second, one based on a broadly similar process of analysis but on a per allotment basis. Mr Webster and Mr Wotton agreed that each of the alternatives was a valid methodology. 84Whilst they both expressed a preference for the per allotment methodology, I am satisfied that I should approach my task as a judicial valuer in these proceedings by using the rate per square metre basis. 85Neither Mr Webster or Mr Wotton gave any compelling reason for preferring the per allotment approach and it is my experience of valuation matters over more than a decade that the approach taken, conventionally, by the Court and by valuers giving evidence in Class 3 matters (whether resumption compensation or statutory valuation proceedings), there has been a very high preponderance (if not near exclusive adoption) of utilisation of the rate per square metre methodology. For this reason, although accepting that both methodologies are valid, I have elected to base my conclusions by consideration of and determinations about the various elements set out by the valuers in their rate per square metre analysis spread sheet.

12 Florida Road 86Although this property has12 Florida Road as its formal address, it is in fact a property that functionally presents as having an Ocean Road frontage. This property is one allotment removed from the valuation site, to its southeast. There are two aspects of this property that warrant being noted in addition to consideration of the adjustment factors that are potentially common across all comparable sales. These two matters arise from access to this property. The first relates to the theoretical access from Florida Road whilst the second relates to the functional access from Ocean Road actually utilised by occupants of this property. 87First, this property, as is indicated by its nominal address, has a frontage to Florida Road. That frontage comprises a nominal entrance point to an axe handle leading to the main body of the allotment upon which the present dwelling is erected. Although, in purely plan terms, this axe handle is designed to provide access to Florida Road, it is not actually utilised for this purpose. Mr Webster and Mr Wotton agree that it is not feasible to do so because of the topographic constraints of this allotment. As a consequence, Mr Webster proposed a notional adjustment to the land area of this allotment for the purposes of the property analysis process. This resulted in a smaller nominal area for this property being used in the analysis process than the actual area of this allotment. Mr Wotton concurred in Mr Webster's approach in doing this and accepted Mr Webster's revised, nominal land area. Mr Webster's annotation on the adjustment spreadsheet setting out his calculation for the derivation of the nominal area applied to 12 Florida Road is in the following terms: Practical building area estimated as 1,009sq. mtrs. Plus remaining steeply sloping section of approx. 420 sq. mtrs @ 10% = 42sq. mtrs. Equivalent to 1,051 sq. mtrs. Refer to J.E.R. [Joint Expert Report] 88The second idiosyncratic aspect to 12 Florida Road arises from its functional access. There are three properties to the south-east of the valuation site that are accessed by a shared driveway leading from the turning circle at the cul-de-sac head of the southern end of Ocean Road. The middle of these properties is 12 Florida Road. During the course of the site inspection at the time of viewing 12 Florida Road, I indicated to the valuers that I proposed to have them address the question of whether or not any adjustment was appropriate to be made in the analysis process to account for the fact that 12 Florida Road was the only property that had a shared driveway private access rather than a direct street frontage. 89During the course of the oral evidence, the valuers were asked to address this issue as it had not been identified as an adjustment factor in their spreadsheet analysis or in their written evidence. Mr Webster indicated that, on reflection, an adjustment was appropriate as this would reflect the shared nature of the access and the fact that, as it was not a formal street frontage access, there was a risk that the driveway would be blocked - particularly during periods of high parking demand on summer weekends. He proposed that an adjustment of 5% would be appropriate to reflect this. 90Mr Wotton accepted that there was inferior access as a consequence of the shared driveway and did not reject the concern expressed by Mr Webster about the prospect of access being blocked on summer weekends. However, Mr Wotton adopted the position that there was no need for an adjustment to be made for this factor as the detrimental aspect associated with the shared driveway was offset by the increased privacy value afforded by it to each of the three properties served by the driveway. This proposition that there was some potentiality for adjustment for privacy or lack of it (in this case privacy as an offset to an access adjustment) had not been raised by Mr Wotton at any earlier time in his written or oral evidence. 91I am unable to accept Mr Wotton's proposition that no adjustment for access should be made for 12 Florida Road. His suggestion that privacy should act as an offset, in the context of his oral evidence on this point, was unconvincing and had all the hallmarks of grasping for a reason to avoid having to make a concession (even though only a minor concession) adverse to the interests of his client. He was unable to explain why this privacy aspect now discovered for this site was inapplicable to any other site to which he had had regard for comparability purposes. 92As a consequence, I adopt the 5% adjustment proposed by Mr Webster for access with this being a negative comparative factor for Florida Road in comparison to the valuation site.

Adjusting for frontage and views? 93One of the areas in dispute between the valuers was whether or not there was a necessity to make separate and significantly differential adjustments for the width of the frontage of those sites I have identified as being appropriately comparable and the views that can be enjoyed from them. 94Mr Webster proposes that separate adjustments should be made for these two factors and suggests that, for frontage, a mathematical ratio based on the width of the frontage should be adopted. It was his evidence that this was a factor that contributed to the width of dwelling able to be erected on a site and thus take advantage of the views that were available from it. Mr Wotton, on the other hand, adopted the position that frontage and views were merely aspects of the same broad attribute of the site. Mr Gerard, in his closing submissions on behalf of the company and during his cross-examination of Mr Webster suggested that, by proposing two separate adjustments, Mr Webster was, in effect, double counting for the same attribute. 95Mr Webster, in his early oral evidence, explained that, for 39 and 40 Ocean Road, the comparatively narrow frontages meant that the rooms that were able to be constructed within the building envelope for which approval had been given necessarily resulted in the stacking of rooms, one behind the other, on the various levels of the development. This, he opined, resulted in some rooms having, at best, what he called corridor views to the ocean. This resulted in a significantly smaller proportion of the rooms on those sites being able to enjoy the expansive view to the southeast, east and northeast of that site when compared to the width of frontage available on both 41 Ocean Road and 12 Florida Road (where the width of each allotment permitted achievement of broadly similar floor space at each level but with a wider, shallower built form thus increasing the ability to take advantage of the view that was available). 96In partial response to this proposition, Mr Wotton's evidence was that there would be a degree of additional ability for the built form on these two sites to access the view available from each of them as a consequence of the fact that they approved development consents for those sites (development consents that were in existence at the time of the sale of each of those sites) permitted four levels to be constructed on each of them in contrast to the three levels that were available on the valuation site, a limitation on the valuation site arising because of it more closely following the slope of the land rather than having the extent of excavation on either 39 or 40 Ocean Road. 97I am satisfied that these two positions are not mutually exclusive. It seems to me that the broad hypothesis advanced by Mr Webster is correct but that, in the context of assessing how that should be considered in a comparable sales analysis with 39 and 40 Ocean Road, the additional level available on those two sites acts as a leavening factor to the extent of the adjustment that is necessary. 98The precise adjustments in favour of the valuation site are dealt with later in my consideration of the numerical adjustment factors. 99I now turn to the question of adjustment for views. It is the inclusion of this adjustment, in addition to the adjustment for frontage that leads Mr Webster to be accused of double counting. I do not consider that this accusation has a proper foundation. I have reached that conclusion because, as I understood the nature of the evidence he gave on this point, there is a distinct difference between the two broad concepts. 100Frontage, in the way Mr Webster analyses it, relates to the ability of a site to take advantage of the views that are available from that site. His proposed adjustments for views relate to the quality of the view available to be enjoyed from a particular site, a distinct and different assessment to the capacity to take advantage of such a view. 101In this regard, Mr Webster drew a distinction between the more northerly orientation of the valuation site and its ability to view the entirety of the Barrenjoey Headland when compared (as he was asked to do in cross-examination) with the view from 6 Ocean Road - a view that was unconstrained to the east toward the ocean but had more oblique views to the north-east, a view that only partially encompassed Barrenjoey Headland at its eastern end. As I understood him, there were similar constraints on 6 Ocean Road in its views to the southeast. 102Whilst this view quality comparison by Mr Webster arose in the context of the valuation site and a site I have excluded as not appropriately comparable, nonetheless the broad principle of his analysis is valid. The validity of this qualitative analysis of the nature of the views able to be enjoyed is entirely consistent with the approach, in a planning context, adopted by the Commissioners of the Court in the planning principle published by Roseth SC in the decision in Tenacity v Warringah Shire Council [2004] NSWLEC 140 - a planning principle whose validity has recently been reaffirmed by the Commissioners (as discussed in Stamford Property Services Pty Limited v Council of the City of Sydney [2014] NSWLEC 1206). 103This broad proposition was, by necessary inference, confirmed by Mr Webster in his acknowledgement that 12 Florida Road, by virtue of its greater elevation when compared to the valuation site had a qualitatively better view requiring an adjustment to be made to compensate for this. Mr Wotton made no such comparative adjustment of this nature and this, in my view, is redolent of the flaw in his approach on these two adjustment factors and his inability to distinguish between the two distinct aspects for which Mr Webster has adjusted. 104As a consequence, I accept Mr Webster's proposition that separate adjustments for views and frontage are appropriate in the particular and confined circumstances of this tight cluster of relevant comparable sales.

The costs of land improvements on 40 Ocean Road 105The present configuration of the allotments on 39 and 40 Ocean Road is a comparatively recent boundary arrangement. The current configuration is of two comparatively narrow allotments, narrower at the Ocean Road frontage than at the rear but both being roughly equal in size and both addressing Ocean Road. This configuration is as a result of a consolidation and re-subdivision that took place in 2007. The re-subdivision and the granting of development consents for a four (4) level townhouse style residence on each of the resulting allotments occurred following proceedings in the Court (Deaton v Pittwater Council [2007] NSWLEC 876 - Deaton 1 - discussed in more detail later). 106The previous allotment configuration had had a front and rear allotment with the rear allotment being a battleaxe block. 107At the time of the site inspection, both of these allotments in their current configuration had been substantially excavated in order to facilitate construction of the approved dwellings. However, despite the excavation, it was possible to understand the land form that had previously existed. The original 39 and 40 Ocean Road had had a landform that sloped from the boundary with 41 Ocean Road down to the north to the boundary with the council reserve. 108There is also a portion of 39 Ocean Road, at its northern boundary and adjacent to the council reserve to its north, that has a right of carriageway over it to service the dwelling to the rear of these two allotments. The driveway over the right of carriageway was observed during the course of the site inspection. Neither Mr Wotton or Mr Webster suggested that this driveway provided any influence on the valuation of 39 Ocean Road and there is, therefore, no need to refer to it further. 109There had also been a significant cross slope from the south eastern corner of the aggregate land parcel toward Ocean Road. The resultant excavation works that have been undertaken (which fall within the definition of land improvements under the Act) has created a single amphitheatre-like excavation that, with modest setbacks from each of the outer boundaries of the aggregated site effectively encompasses the totality of the two allotments. The walls of the excavation have been shotcreted and, for the portion of the walls able to be observed during the site inspection, a number of rock anchor heads could be seen with these rock anchors providing additional stability to the walls of the excavation.

The decisions of Commissioner Bly 110Although reference was made during the course of the hearing to the proceedings before Bly C (the proceedings in Deaton 1 being described as controversial and approvals given in the face of considerable resident opposition), I was not referred to the specific terms of the decision to grant the three approvals. The decision is, of course, a matter of the public record. After I had reserved my decision, I accessed a copy of Bly C's decision on Caselaw. After reading the decision, I concluded that it would be appropriate to advise counsel for each party that I considered the terms of the decision potentially provided some insights into how I should treat the competing positions of Mr Mills and Mr Martin on architect's fees for the excavation and, more generally, on the question of the extent to which some portion of the cost of excavation of 40 Ocean Road should be regarded as contributing to the value of that allotment. As a result of this conclusion, I arranged for the Registry to send an email to Mr Gerard and Mr Waterson. This email was in the following terms: "Senior Commissioner Moore has asked me to advise you that he has now read a copy of the decision given in 2007 by Commissioner Bly granting consent to three development applications concerning 39 and 40 Ocean Road. These development applications were, first, for the consolidation, excavation and re-subdivision of the two allotments and, second and third, approval of development applications for dwellings on each of the resultant subdivided allotments. The Senior Commissioner considers that the terms of Commissioner Bly's decision potentially provide insights into two matters that are relevant in these proceedings. They are: (a)Resolving the dispute between Mr Mills and Mr Martin as to what quantum of architect's fees should be ascribed to the excavation costs for 40 Ocean Road; and (b)More generally, on the extent (if any, this being contested between the valuers) to which the extent of the excavation on 40 Ocean Road, as a land improvement to that re-subdivided allotment, should be regarded as contributing to the value of that allotment. The Senior Commissioner has asked me to advise you that if either of you wishes to make any written submissions concerning Commissioner Bly's decision, the following timetable is to apply: (a)Any submissions from Mr Waterson are to be emailed to the Court for the attention of Senior Commissioner Moore and provided to Mr Gerard by the close of business on Friday 17 October; and (b)Any submissions by Mr Gerard (whether or not Mr Waterson has made any submissions) are to be emailed to the Court for the attention of Senior Commissioner Moore and provided to Mr Waterson by the close of business on Wednesday 22 October. 111In response to my email, I received a court communication from Mr Waterson's instructing solicitor, Mr Rowe, seeking further information about the matters I potentially considered arose from Bly C's decision. Although a little concerned that providing any commentary might put me in the position of causing the parties to consider I had reached any conclusion, even a tentative one, based on Bly C's decision, I had the matter listed for a further mention. 112After doing so, I considered it appropriate to provide a copy of Bly C's 2007 decision. In accessing it, I discovered that the Commissioner had also dealt, in 2008, with a further application concerning 39 and 40 Ocean Road. These second proceedings (Deaton v Pittwater Council [2008] NSWLEC 1370 - Deaton 2) concerned an application made after the excavation works approved in the earlier proceedings had been undertaken and after partial construction of basement elements on the site. These second proceedings concerned an application to replace the two approved dwellings with a number of apartments pursuant to the State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004. This appeal was dismissed. 113At the further mention in these proceedings, I provided the parties with a copy of each of Bly C's decisions and, going as far as I considered was appropriate, indicated that there were two matters that appeared to warrant further consideration arising out of the two decisions. The first, discussed by Bly C in Deaton 1, was the fact that there were three separate applications with the first application being for demolition of existing structures on the two properties, consolidation, excavation and re-subdivision of the two properties with the second and third applications being for the two dwellings sought to be approved on the reconfigured allotment. 114The second matter to which I drew attention was the statement, in Deaton 2, where Bly C indicated that the first proceedings had been consent orders. Whether or not this was the case in a strict sense was a matter of which I was not aware as I had not sought to access the orders in the first proceedings. However, it is clear from the first decision, that, after modification of the dwelling proposals compared to what had originally been the subject of the applications to the Council, the Council no longer raised any merit issues with respect to those dwellings. 115At the mention, I set a revised timetable for submissions. I subsequently received written submissions on behalf of the respondent and, in reply to them, additional submissions on behalf of the company. 116In effect, the brief supplementary submissions on behalf of the respondent adopted the position that a fair reading of Bly C's two decisions should lead me to the conclusion that, as a matter of practicality, the land improvements on 39 and 40 Ocean Road had been undertaken with the second development (Seniors Living) in mind rather than as an integrated part of the first development proposal. 117On the other hand, the additional submissions on behalf of the company, in summary, put the position that neither of these decisions, at their highest, provided any assistance in my consideration of how I should approach the issues associated with the land improvements on 30 or 40 Ocean Road. In addition, without there being any objection to me doing so by the respondent (this having been canvassed with the respondent's legal representatives), I have had regard to the supplementary material that was provided with the company's submissions, this material comprising the orders and conditions of consent arising from the three applications determined by the first decision. A fair reading of these, together with the decision, in my view leads to the conclusion that all three development applications in the first proceedings were inextricably interlinked and, although necessarily dealt with by appeals as three development applications made to and refused by the council, they constituted a single functionally indivisible package - each element of which was necessary to support and inform the other two. The consequence of this finding is discussed, further, in my consideration of the contest between Mr Mills and Mr Martin over the appropriate allowance to be made for architect's fees.

The nature of the land improvements 118For the purposes of the valuation analysis, the value (if any - and as opposed to the cost) of these land improvements is to be added as part of the process of deriving a rate per square metre from either of these sites for application to 41 Ocean Road. Before turning to such evidence as I have that might assist in this regard, it is appropriate to note that the extent of the excavation within the footprint of 40 Ocean Road necessary to create its portion of the amphitheatre would, as a consequence of the slope of the combined allotments as earlier described, have been greater than that for the creation of the 39 Ocean Road portion of the amphitheatre. 119The elements of the shotcrete and rock anchor retaining features following the boundary with 41 Ocean Road are higher than those along the corresponding boundary with the council reserve for 39 Ocean Road. Similarly, the height of the retaining structures at the rear of 40 Ocean Road is greater than that for 39 Ocean Road as a result of the cross fall at the rear of the site. 120There are, self-evidently, two consequences of this. The first is that the volume of material required to be removed to create the portion of the amphitheatre within 40 Ocean Road will have been greater (and, equally self-evidently, more than marginally greater) than the volume removed from 39 Ocean Road whilst the extent of the retaining structures were more extensive (and hence more expensive) than those on 39 Ocean Road. 121There are two matters that require to be considered in the valuation exercise arising from these excavation and retaining works. The first is to consider what value might be able to be ascribed to the works from such evidence as I have and, secondly, of the cost of those works, what should be regarded as their value in the sense of contributing to the value of the resulting allotment. There are a number of preliminary points that need to be made before turning to the detail of this analysis. They are:

• First, there is a contest between the parties as to what the figure should be ascribed as being the notional cost of the excavation and retaining works at 40 Ocean Road;
• Second, I have no evidence of any type that would permit me to ascribe a cost to the excavation works at 39 Ocean Road; and
• Third, whilst the valuers agree that cost does not equal value and that value will be a smaller amount than cost, there is a vigorous contest between the valuers as to what value, if any, should be attributed (for 40 Ocean Road) for the excavation and retaining works. 122Before turning to consider the competing evidence seeking to establish a cost to be ascribed to these works on 40 Ocean Road, it is appropriate to note that it would appear self-evident that these works would have been carried out as a single project for both allotments but, in light of the evidence concerning 40 Ocean Road and the total absence of evidence on this point concerning 39 Ocean Road, I consider that there is nothing to be taken from this conclusion. 123As earlier noted, evidence concerning excavation costs for 40 Ocean Road was given by Mr Mills, a builder, on behalf of the company, and by Mr Martin, a quantity surveyor, on behalf of the Valuer General. Their evidence was directed to reconstructing an assessment of the costs that would have been incurred in the excavation of 40 Ocean Road as there is no evidence of the actual cost involved. Before turning to the differences between them, there are two aspects of this evidence that should be noted. One relates to methodology whilst the other relates to outcomes. 124First, Mr Martin has undertaken a conventional quantity analysis approach whilst Mr Mills has, amongst other things, sought a quotation from a company named Matthews Contracting, an excavation and earthworks company, to give him a retrospective notional quotation for significant elements of the material upon which he has relied. Mathews Contracting is a firm known to Mr Mills and used by him on other projects and I have no reason to question the general approach of either this retrospective quotation or of Mr Mills' overall evidence. Indeed, despite the fact that Mr Waterson directed questions at Mr Gerahty, a director of the company, and Mr Mills concerning Mr Mills' past and ongoing economic relationships with the company, Mr Waterson made no submission that I should regard the answers given as reflecting on the evidentiary credit of Mr Mills and I draw no such inference. 125The second matter, coming from the joint conferencing process between Mr Martin and Mr Mills, was a substantial measure of agreement on a wide range of costs to be attributed in deriving an overall cost for the excavation of 40 Ocean Road. It is not necessary to set out the various elements that made up those agreed costs, it is sufficient to note that the agreed elements totalled $646,473. 126There were five matters about which Mr Martin and Mr Mills were unable to agree. These related to the allowances to be made for the following items:
• Architect's fees;
• Machine downtime;
• Site set up supervision and labour;
• Cost of piers; and
• Shotcrete walls 127The total of the contested amounts (Exhibit B, tab 14, folios 540 and 541) were $934,468 (Mr Mills) or $470,885 (Mr Martin).

Architect's fees 128Mr Mills proposed that an allowance for architect's fees should be made of $177,778 based on the proposition that it would be necessary for the architect to be involved in a total design project, as a single integrated package, for 40 Ocean Road. Mr Martin, on the other hand, considered that it would be only necessary for an architect to be involved in a discrete process for what he described as the bulk earthworks. Mr Martin proposed an allowance of $66,000 for these fees. Each of them gave short reasons in the joint expert report for the differences in their positions and gave oral evidence concerning this matter in court. 129I have earlier indicated the process that I went through to seek submissions concerning the decisions by Bly C and the conclusion I had reached after consideration of them. As a result of that earlier analysis I have set out concerning the decisions of Bly C, it is appropriate to adopt the amount proposed by Mr Mills of $177,778 for this item.

Machine downtime 130Mr Mills and Mr Martin did not agree on whether or not an allowance should be made for machine downtime during the course of the excavation process. This arose as a consequence of their different reading of elements of the notional quotation from Mathews Contracting in which that company indicated that an allowance of $28,000 was made for periods when the machinery that was to be utilised for the purposes of the excavation would be unable to be so utilised. 131It was Mr Martin's view that such cost as might be involved was something that was already built into other cost elements within the notional quotation. On the other hand, it was Mr Mills' evidence that there would be periods when the machine would not be able to be utilised but would be left on site because doing so with a downtime charge would be both cheaper than the cost of putting the machine on a float for removal from the site to another job and returning it when required and also guaranteed that the machine would remain available on the site rather than the risk of it being removed and utilised elsewhere on another job that might require an operational commitment of longer than the downtime required at 40 Ocean Road. If this were to occur because a downtime allowance was not being factored in, this could add to the delay (and by implication cost) of the excavation on the Ocean Road site. 132I am unable to accept Mr Martin's proposition on this point. First, the downtime is expressly set out as an allowance in the notional quotation and it is, therefore, not reasonable to assume that it is otherwise subsumed by another item in the same quotation. Second, Mr Mills' evidence concerning the practicality of arrangements for this and that this was what he considered to be a reasonable functional practice is an entirely cogent explanation based on his practical experience. 133I have therefore concluded that the contested amount of $14,560 under this heading should be allowed as an item in determining the overall allowance for the cost of the land improvements.

Site set up supervision and labour 134Mr Mills made an allowance of $75,422 for a site supervisor (at a level a little more senior than a foreman) and three labourers to be available throughout the excavation process. This was because he suggested that there needed to be constant supervision at that level together with the availability of the general labour to do site works such as marking out for the excavation. 135Mr Martin, on the other hand, expressed the view that such an allowance was excessive and that such supervision as was required did not necessitate fulltime attendance at the site. He questioned the need for any labour as being required during excavation other than that of those persons working for the excavation contractor. 136As is not unusual in such disputes of fine detail, I am satisfied that the answer, in this instance, lies somewhere between the two positions. First, I am unpersuaded by Mr Mills' suggestion that permanent, senior supervision would be required of an experienced excavation contractor particularly one whose reputability and competence was the subject of Mr Mills' favourable opinion (both expressed directly and by necessary implication from the terms of his evidence). I do accept, on this point, Mr Martin's position that a degree of itinerant supervision, perhaps of several hours per day, might be needed from such a higher level supervisor for problem-solving and more general site managerial reasons. 137I am also unable to accept the proposition that attendance by three full-time labourers in addition to the employees of the excavation contractor would be required to be in attendance at the site throughout the excavation process. Whilst there might be some general site labouring required, I consider that, apart from a supervision allowance, after the site was handed over to the excavators, such labouring requirement would be minor. 138I am unable to see any rational basis from the evidence upon which I could make an allowance for this point. In light of the provisions of s 40(2) of the Act, I am satisfied that I am obliged to accept Mr Martin's evidence on this disputed sum. I therefore determine that the appropriate allowance to be made on this basis is $27,900.

Concrete piers 139The next matter in dispute between Mr Mills and Mr Martin, as a cost element to be attributed to the land improvements on 40 Ocean Road, is the cost of the concrete piers. The Joint Quantity Surveyors' Report makes it clear that Mr Martin and Mr Mills are in agreement about the quantity of materials required for these piers but disagree about the rate to be applied to that work. Mr Martin bases his estimate on a combination of his longstanding experience as a quantity surveyor; reference to Rawlinsons Cost Guide, a reputable guide to costs in the building and construction industry, regularly used in that industry for pricing and other analysis purposes; and a conversation he had with a firm known as Frankipile, a firm he described in his oral evidence as being a firm that operated throughout Australia. Mr Mills, on the other hand, records in the joint report: Mr Mills has forwarded the name and contact details of Matthews Excavations, a local company that carried out the work next door to a high standard. Mr Mills finds it hard to understand why Mr Martin has not spoken to Matthews or other local piling companies to get a better understanding of the true value of this element of the work on a steep, poor access site so far from concrete plants and tips. 140There is obviously a genuine disagreement on this point. However, the response recorded from Mr Mills in the joint report sits uncomfortably, in my mind, with the burden placed on the applicant by s 40(2) of the Act. In the event of such a dispute, the evidentiary burden lies on the company to persuade me on the basis of the evidence given on its behalf and the submissions as to how I should regard that evidence. In this instance, I do not have any satisfactory basis to discriminate between the positions adopted by Mr Martin and Mr Mills and, therefore, I consider I am obliged (as with the issue of site setup costs) to accept Mr Martin's position of an allowance of $219,368.

The shotcrete walls 141The final area of dispute between Mr Mills and Mr Martin concerns the shotcrete walls. Their Joint Report records Mr Mills saying that: Mr Mills identifies that the shotcrete walls would cost $146,000 and comments that this is based on 292 square metres of shotcrete wall. This is based on costs provided by Mathews contracting who carried out the work next door. 142In response, Mr Martin said in the Joint Report: Mr Mills identifies that the shotcrete walls would cost $146,000 and comments that this is based on 292 square metres of shotcrete wall. No further details were provided for me to check this total. Mr Martin has arrived at a total of $67,245 of which he considers fair and reasonable, based on the measurement of detailed quantities included in items 10, 11, 12, 13, 14 and 15 on page 1 of two of Mr Martin's cost estimate. 143In this instance, in distinction to the position with respect to the concrete piers, Mr Mills has provided an appropriate functional basis of a comparison with the costs actually incurred for similar work undertaken on the valuation site. Indeed, during the course of the site inspection in the underneath area of the valuation site, we were able to see for ourselves the nature of the shotcreting work that had been carried out on that site. I am, therefore, prepared to accept Mr Mills' allowance of $146,000 for the shotcreted walls.

The total of the land improvement allowances 144As consequence of my determination of these contested issues, the total land improvement costs (subject to two further adjustments as discussed in the next paragraph) are determined by me to be $585,606. 145Two further adjustments required to be made to this total, they being sequential adjustments. In the first instance, a builder's margin of 12.5% needs to be applied to the total derived from my determinations of contested amounts. Once that margin has been added, GST of 10% needs to be applied in further addition to it. The result of these calculations is that the total allowance for the contested amounts comes to $ 724,687 (rounded). 146This amount needs to be added to the agreed elements (including builder's margin and GST) - the total of which is set out at paragraph 124. 147This means that the total cost of the land improvements for 40 Ocean Road as determined by me is $1,371,160.

Preference for Mr Webster's evidence 148There are three reasons why I have concluded that, where each of the expert valuers has expressed an opinion and there is no discernible reason for delineating between them, I consider it appropriate to prefer the evidence of Mr Webster over that of Mr Wotton. The basis for these is set out at the appropriate point in the later discussion. Although this preference is not an absolute one (as there is at least one instance where I have concluded that Mr Wotton's position is to be preferred and others where, although I do not accept Mr Wotton's position, I have, nonetheless, considered it appropriate to adopt a variation on Mr Webster's position), as a matter of generality I have adopted this course. These are the three reasons for doing so:

• First, as discussed in the context of whether or not an adjustment for access could be made for 12 Florida Road, it appeared to me that Mr Wotton was blurring his proper role and inclining toward advocacy rather than impartiality in his evidence;
• Second, as I have explained in some detail in my analysis leading to the conclusion that there should be separate adjustments for views and frontage, Mr Wotton did not appear to understand the distinction between the two concepts in this specific context - thus giving rise to concern as to the extent that I could have confidence in his evidence; and
• Finally, the reliance (although subsequently considerably resiled from) by Mr Wotton on the sale at 161 Whale Beach Road as he initial pressed as a sale relevant when, in its context compared to any of the other sales relied on by him or by Mr Webster (in either of the valuation years) this sale was clearly a significant outlier at best and, more probably, an aberration. 149In making this judgement call on the preference of evidence, I am not questioning Mr Wotton's professional competence, I am merely outlining the reasons why I am satisfied I can have a greater degree of confidence in the reliability, in this case, of the evidence given by Mr Webster.

The sales analysis adjustments 150Having explained why I accept that the approach taken by Mr Webster of making separate adjustments for the frontage of a site in this general location, a location where each of the three comparable sales that I have accepted are relevant all share, to a greater or lesser extent, the iconic views enjoyed from the valuation site, I now turn to consideration of each of the specific adjustment factors where there is a difference between Mr Wotton and Mr Webster as to the percentage adjustment appropriate in each instance. 151To assist in understanding that which follows, I have reproduced at the conclusion of this judgment an image of the joint expert report spreadsheet of the valuers, after deletion of all sales that I have held are not to be regarded as comparable and with the changes to the adjustment factors that I have made for the reasons that follow. In that image, the changes that have been made by me are highlighted by yellow fill at each relevant location. I now turn to the specific adjustment factors where there is disagreement between the experts and where I have also concluded some change is warranted to the adjustment adopted by Mr Webster. I have taken Mr Webster's calculations for the general reasons that I have set out above for preferring his evidence to that of Mr Wotton.

The frontage adjustment for 39 Ocean Road 152I have earlier set out, in my discussion of why separate adjustments for frontage and views are warranted, my agreement with Mr Webster's proposition that the width of a frontage is a relevant factor. I also set out why I considered that, in calculating the adjustment factor for a frontage width, regard needed to be had, in addition, to the number of levels of development capable of being accommodated behind that frontage. This consideration is necessary, for the reasons earlier explained, to have regard to the elements of a putative development capable of enjoying the views able to be obtained from a development behind any given frontage. For the reasons explained, this is a distinct and separate adjustment from any qualitative adjustment for the nature of the views able to be so enjoyed. As a consequence, accepting Mr Webster's starting point 60% adjustment for 39 Ocean Road as appropriate, it is necessary to recalibrate that adjustment, in my opinion, downward by 25% to make proper allowance for the fact that this site is able to be developed over four levels, compared to the three level development able to be achieved on the valuation site. As a consequence, this adjustment factor should be reduced from 60% to 45%. 153In adopting that number, I am conscious of the fact that, as a matter of general valuation practice, adjustments of greater than 30% or so, as a single factor adjustment) need to be approached with considerable caution. In this instance, because of the iconic nature of the views able to be enjoyed from these locations and the fact that these sites are, I have found, within a very small and precisely defined market segment, it is appropriate to accept that significantly large adjustments need to be made for the two combination elements (frontage and view quality) that define this small market segment.

The frontage adjustment for 40 Ocean Road 154The same reasons and calculation process applies for the frontage adjustment revision to Mr Webster's adjustment factor for 40 Ocean Road as discussed above for 39 Ocean Road. The consequence of this is that in lieu of an adjustment of 50% for frontage for 40 Ocean Road, I have adopted an adjustment of 37.5% for this location.

Land area calculation for 12 Florida Road 155As earlier discussed, in the initial spreadsheet calculations undertaken by Mr Wotton and Mr Webster, Mr Wotton based his derivation of a rate per square metre for 12 Florida Road by adopting the overall land area of the allotment, including the totality of the access handle to Florida Road. Mr Webster, on the other hand, did a notional land area adjustment for this site by taking the area of the generally rectangular functional element of the allotment and adding to it only 10% of the access handle to Florida Road, to take account of the effective complete lack of functional utility of the access handle as anything other than unusable landscaped space.

Access 156There are three elements of the adjustments to 12 Florida Road that require specific consideration. The first of them, an adjustment in favour of the valuation site of 5% is necessary as a recognition of the superior access it enjoys when compared to the shared driveway and potential access blockage for 12 Florida Road when compared to the direct street access available to the valuation site. For this reason I have included a further column, marked in yellow, in the spreadsheet with the heading 'access' to incorporate this adjustment factor for 12 Florida Road (I have annotated 39 and 40 Ocean Road with a zero adjustment for access, as the access to these two sites is effectively identical to that of the valuation site).

Views from 12 Florida Road 157Mr Webster makes an allowance in favour of 12 Florida Road of 10% for the views able to be obtained from that allotment. I consider that this underestimates the superiority of the view potential from this site when compared to the valuation site. There are two reasons for this. Mr Webster acknowledged, as I recollect, during the course of the site inspection, that the views from 12 Florida Road were superior as a consequence of the additional elevation of a building site on this allotment, located to maximise the views, when compared to the location of a similarly selected building site on the valuation site (he being of the opinion that a slightly superior building site on the valuation site was available compared to that which had been actually utilised, see exhibit 2 at folio 544). I accept that this element of his analysis is well founded as was borne out during the course of the site inspection. 158However, I do not consider that Mr Webster has had regard to the more northerly orientation of 12 Florida Road compared to the somewhat more north-north-easterly orientation of the valuation site nor has he made appropriate allowance for the slightly more easterly location of 12 Florida Road compared to the valuation site. 159These two factors, in my opinion, also combine to enhance, to an extent requiring additional adjustment, the quality of the views available up the coast (including what will necessarily be a qualitative improvement in the view of the Barrenjoey Headland from 12 Florida Road). For this reason, I consider that the adjustment in favour of 12 Florida Road for the quality of the views available from that allotment should be increased from 10% to 20% and this has been incorporated in the reproduced spreadsheet.

Topography of 12 Florida Road 160The final adjustment factor adopted by Mr Webster for 12 Florida Road, that I consider warrants recalibration, is the adjustment that he proposes for the topography of the sites. In this regard, Mr Wotton considered that no adjustment for topography was warranted, when 12 Florida Road is compared with the valuation site, whilst Mr Webster proposed an adjustment of 10% to reflect what he considered was the more favourable nature of the valuation site. I am unable to accept his conclusion in this regard and prefer the position adopted by Mr Wotton. I have reached this conclusion despite the fact that there are some elements of slope difference between the two sites, but accepting Mr Webster's proposition earlier noted, that the building location of the dwelling on the valuation site is probably not the optimum one for that site, the topographic differences lessen sufficiently so that no adjustment for this is warranted.

Conclusion - 12 Florida Road 161Given the overall derived value for the valuation site, utilising 12 Florida Road alone for the 2011 base date valuation, it is clear that the Valuer General's statutory valuation can be accepted as being conservative on whichever land area basis is adopted into the spreadsheet calculations.

Valuing the land improvements 162Before turning to the differing positions adopted by the valuers concerning the land improvements on 40 Ocean Road, I should observe that Mr Wotton and Mr Webster agree that cost does not equal value (at least in this instance) for this item. Despite that agreement, Mr Wotton and Mr Webster had significantly differing views as to what value (if any) should be ascribed to the land improvements on 40 Ocean Road. As I have earlier indicated, I have no evidence concerning costs of land improvements on 39 Ocean Road that I could use as a starting point for considering what value (if any) I should ascribe to the land improvements on that allotment. It is evident from what must have been the pre-existing topography of the cross slope on the combined land area of 39 and 40 Ocean Road that, at least along the northern boundary of 39 Ocean Road the height of the retaining structures would be less. In addition, self-evidently, the volume of material needing to be excavated from 39 Ocean Road would also be less as a consequence of the cross slope of this combined land area. Whether or not there would be a need for the same number or fewer rock bolts is entirely unknown as I have no evidence of the underlying geological composition of either the rear of 39 Ocean Road or its northern boundary. 163There is no basis, having determined a cost for the land improvements to 40 Ocean Road as a consequence of my resolution of the issues in dispute between Mr Mills and Mr Martin, upon which I could then turn to some hypothetical calculation of a cost to be applied to 39 Ocean Road. It is necessary, therefore, bearing in mind the provisions of s 40(2) of the Act that I consider that I am obliged to treat the analysed value of 39 Ocean Road as being one to be considered without any allowance (even if my merit conclusion were to have been that such an allowance might properly be made). Therefore 39 Ocean Road must be treated as a sale to be analysed without any allowance for land improvements. 164Mr Wotton adopted the position that, based on his extensive experience as a valuer, it was appropriate to allow, in these circumstances, 50% of the cost of giving effect to the land improvements as their value for the purposes of a s 6A valuation process. From the amount determined by me and set out at (127), this would be $685,580. 165Mr Webster, as I understood his position to have been throughout, was that the land improvements added no value whatsoever to the value of 40 Ocean Road. 166To understand these competing positions, it is necessary to provide a brief description of what I understand to be the nature of 39 and 40 Ocean Road after the carrying out of the land improvements but prior to any dwelling construction on either of these allotments. Although 39 Ocean Road does not arise in a monetary context for this analysis for the reasons earlier set out, 39 Ocean Road is necessary to be described to give a context to my consideration of the land improvements on 40 Ocean Road. 167The description I now give of my visualisation of the land improvement effected, preconstruction state of 39 and 40 Ocean Road is drawn from what we were able to observe of the characteristics of the retaining elements for the land improvements along the side of 40 Ocean Road adjacent to 41 Ocean Road coupled with the portion of the rear element of 40 Ocean Road where the land improvement works are located, a matter of a few metres, at most, from the rear boundary. The earthworks adjacent to 41 Ocean Road are similarly a matter of a few metres from its boundary. 168On each of the three sides of this land area, there is a light grey shotcreted covering of the earth surface behind (whether concrete piered or rock or sand or earth is immaterial). These walls are steeply battered but are not vertical. The corner of the excavated area able to be viewed at the south eastern, rear corner of 40 Ocean Road is gently rounded rather than being at a sharp angle. A number of the heads of rock bolts protrude at various locations on the shotcrete slopes. The walls, for the reasons earlier outlined, on the southern side of 40 Ocean Road are higher than those on the northern side of 39 Ocean Road. The shotcrete wall at the rear, to the west, would slope gently from south to north although not as extensively as the side walls with this being a function of the cross slope on this land area before excavation commenced. The highest point of the shotcrete walls is at the corner on 40 Ocean Road where the shotcrete walls turn from being adjacent to 41 Ocean Road to run along the western boundary of this land area. The floor of this enclosed amphitheatre would have been horizontal and, effectively, at grade or a little above the adjacent cul-de-sac head at the southern end of Ocean Road. 169I now set aside any impression or potential impact on value that might have been occasioned by the land improvements on 39 Ocean Road and turn to consider only that element of the excavated site that would fall within 40 Ocean Road. Mr Webster described the ambience of this space as being like living in Warragamba Dam. I understood, by this remark, him to be referring to the enclosure of the grey shotcrete walls on the southern and western sides of the building pad now located in the excavated portion of 40 Ocean Road. In his statement of evidence on this point, Mr Webster said (Exhibit B, tab 13, folios 471 and 472): 17.2.4 Estimate of excavation for No 40 Ocean Road As I have only been provided with cost estimates the excavation of 40 Ocean Road the following comments relate this property only. The first question in the analysis is whether the excavation is a positive or negative feature. In my opinion a purchaser of land opposite a beach would prefer an elevated block/view. This is supported by the neighbouring properties, numbers 42 onwards. They have utilised the slope of the site to construct homes well above street level. The excavation of these neighbouring properties is minimal, if at all. The elevation, of the subject property, is a significant advantage compared to numbers 39 and 40. As vacant land, I consider a home on 41 Ocean Road would possibly be set further up the block away from the existing footprint. If the excavation is an advantage, it would need to be assumed that the whole of the cost would need to be deducted from the purchase price. The two experts have assessed the cost to be $1.564 million (Mills) and $1.093 million (Martin). As Mr Martin is a qualified quantity surveyor I have place more weight on his estimate of $1.093 million for the works on 40 Ocean Road. There is no evidence that supports the contention that all of this estimate should be deducted from the purchase price. The works are of marginal utility, at best. The excavation to ground level, it would appear, exposes the site to a greater risk from wave or tidal inundation. The site is within Council's coastline beach hazard area. This view is supported by an examination of the plans for the proposed new home where the section shows the site being raised throughout the whole excavated area. Prima facie, it could be argued that part of the estimated cost of the excavation should be considered as a reasonable deduction for any sales analysis. This is not my view however as I believe any marginal benefit in providing a building platform for garaging is then outweighed by the negative impact of the limits imposed by the total excavation. As noted earlier in this report, the retaining walls on three sides look very unattractive and provide a very poor outlook to living areas at the rear and sides. A more conventional and more aesthetically pleasing option would be to do exactly what has occurred at 41 Ocean Road, that is, some excavation for a garage and maybe for minor terracing. At the rear and sides of any proposed dwelling the areas would be landscaped and again, as with the subject property, include outdoor entertaining areas. With the total excavation of the site, that option is lost. An owner is now compelled to construct a house with minimal outdoor living areas. These areas are at the front of the homes and offer no privacy. In my view, the deleterious impact of the total excavation outweighs any positive feature of the total excavation. 170At 7.3 of their Joint Report (Exhibit B, tab 15, folio 563), Mr Wotton incorporated further comments relating to the sales at 39 and 40 Ocean Road. Although I reproduce these comments in their entirety, I have had heed to them only to the extent that they relate to 40 Ocean Road for the reasons earlier discussed concerning the absence of evidence concerning the costs of excavation works on 39 Ocean Road. Mr Wotton's comments are in the following terms: These properties comprise two steeply sloping parcels of land that have been extensively excavated to facilitate the development of a dwelling on each lot. In addition to the excavation, shoring works have also been undertaken. The excavation works were needed to be undertaken in order to develop the dwellings approved in their respective development consents. The joint quantity surveyors' report indicates a cost of the excavation, piling and shoring works undertaken at 40 Ocean Road Palm Beach. The cost estimate is based on a costing as at October 2013. The joint quantity surveyors' report does not find agreement on the cost for these works, however, considers a range of costs inclusive of builder's margin and GST. I have adopted the midpoint of these calculations, $1,350,000 inclusive of a builder's margin and GST at October 2013. I adjusted this cost by reducing it to 1 July 2012 using the consumer price index. The CPI indicates that between June 2012 and September 2013 prices moved forward by around 3.78%. A copy of the CPI table which I considered is included at Appendix F in my expert valuation report. I thus reduce the October 2013 cost of the works to arrive at a cost for the works at July 2012 of $1,300,000. In my opinion I do not consider the market, acquiring 40 Ocean Road Palm Beach would have paid the full cost of the land improvements (the excavation, shoring and pier works) but would have paid around half this cost. I consider the price, which the market paid for 40 Ocean Road ($4,500,000), could be apportioned as to $3,850,000 for the land, prior to consideration of land improvements and then an additional $650,000 for the land improvements. These two sale properties achieved prices of $4,500,000 respectively. I adjusted these prices to reflect on the land improvements and arrived at a price for the land of $3,850,000 for each property. The adjusted sale price for the land reflects $3,998 and $4,225 per square metre of land area respectively. 171Mr Webster's further analysis of these two sales commenced, in the Joint Report, immediately after the comments set out above from Mr Wotton. Mr Webster's comments are in the following terms: These properties were originally configured as a street frontage allotment and a battleaxe allotment. The front allotment had originally been excavated in the 1950s/1960s, In February 2007 the Court approved an appeal in respect of a boundary adjustment to create two side-by-side allotments (the present configuration) and demolition of the existing improvements. A further DA was lodged (645/07) in 2007 for a seniors living development comprising six dwellings. This DA was refused by the Council on 05/08/2008. TW understands the further excavation of the site took place in 2007/2008 by the then owner in anticipation of the seniors living DA being successful. TW is of the view that this was a huge leap of faith, as most owners would not have commenced the total excavation until such time as the DA had been approved. It is TW's opinion that the total excavation of the site was unnecessary and under normal circumstances would not have been undertaken by a prudent owner. Levelling both sites also increases the risk of possible flooding from storms. The Patterson Britton Engineering report for DA 368/06 lodged in June 2006 on p 10 states in September 1967, there was damage to the South Palm Beach change rooms and flooding of Ocean Road near Hordern Park. Ocean Road was also flooded near Hordern Park during these storms in 1974. With rising sea levels the relevance of this advice is more pressing in 2011 and 2012 than 2006. In TW's experience it is not normal valuation practice, in the analysis of residential properties, to deduct an amount for the cost/added value of site excavations. He agrees for some commercial properties e.g. sites with basement excavations, a deduction may be appropriate. 172Mr Wotton gave two statements of evidence, one for each base date year. These were contained in Exhibit B, tab 5 (2012 base date year) and Exhibit B, tab 9 (2011 base date year). 173As earlier noted in the revised matrix where I set out the sales I was prepared to accept as comparable for the purposes of this analysis, the valuers rely on the sale of 40 Ocean Road only for the 2012 base date year. The comments of each of the valuers are to be regarded in that light. Mr Webster provided a single report and his material concerning the land improvements on 40 Ocean Road is extracted from that. As Mr Wotton provided two statements of evidence, the material extracted has been taken from his 2012 base date year document. His comment on the land improvements is brief (Exhibit B, tab 5, folio113) and is in the following terms: The property comprises a vacant parcel of residential land which has been excavated and had engineering works completed to retain walls and provide drainage. The works undertaken on the land are substantial and are estimated to have cost is around $1,350,000 (see the joint quantity surveyor's report). 174His further comments at paragraphs 64 to 67 of this statement were generally reflective of the comments reproduced above from the joint valuers report with some minor arithmetical differences that are not presently relevant. It is, however, worth reproducing two sentences from para 64 (at folio 117). These sentences read: At the time of sale of 39 and 40 Ocean Road the excavation and shoring and piering works were completed and in place. In my opinion, the price paid for the land included consideration for the excavation, shoring and pier works that had been completed. 175The average amount adopted by Mr Wotton is not far removed from that determined by me as appropriate after considering the evidence of Mr Mills and Mr Martin where they reached differing conclusions on five proposed allowance sums.

A land improvement allowance for 40 Ocean Road? 176However, having determined the appropriate value and setting out the competing approaches of the valuers, it is necessary for me to determine whether any such allowance is warranted to be made in this instance. 177Although Mr Mills gave evidence of the nature of that which has been approved for inclusion on the lowest level of the dwelling to be constructed on 40 Ocean Road, this can only be, in my view, regarded as an example of what additional benefit, in a building envelope sense, that might be achieved on this allotment when compared to that which might have been available had the land improvements not been undertaken. 178In effect, as I understood Mr Wotton's evidence on this point, the effect of the excavation achieved by the land improvements was to permit a development consent being able to be achieved that contained an additional level to that which might have been expected to be achieved had the land improvements on 40 Ocean Road not been carried out. That position, in my view, is entirely consistent with the analysis (brief though it might be) contained in Bly C's determination where it is made clear that four levels were approved for the site after amendments to the proposal, based on discussions with the Council and that the building envelope so approved was one level higher than might have been expected under the local controls then applying. I accept that this aspect of the resultant development capability of an additional level warrants a modest reflection in the adjustment process. 179The analysis and adjustment process, as set out by the valuers in their spreadsheet analysis, have the adjustment made for land improvements (if one is to be made) taking place at the conclusion of the analysis process and I have adopted this approach in the reproduced spreadsheet appended to this judgment. 180I have earlier set out, when considering what adjustment, if any, should be made for allotment frontage width, the process by which I considered that such an adjustment factor should be derived for both 39 and 40 Ocean Road, with that factor being different to that advocated by Mr Webster, because I considered that, for each of these allotments, an additional allowance should be made for development potential arising from the ability to incorporate an additional level in the building envelope on each allotment. 181I am of the view that making that adjustment in the fashion earlier described is the appropriate approach rather than simply endeavouring, without any proper basis for calculation, adopting some percentage relating to the cost of the land improvements on 40 Ocean Road (calculated in accordance with my earlier determinations of the matters in dispute between Mr Mills and Mr Martin). I have reached this conclusion for the reasons that follow. 182First, and most importantly, approaching the matter in this fashion permits me to make what I consider to be the appropriate adjustment to each of 39 and 40 Ocean Road. If I were to do otherwise by adopting some monetary sum basis somehow extracted from the determined value of the land improvements on 40 Ocean Road, I would not have a proper basis to make any such allowance for 39 Ocean Road. Making a frontage-based adjustment for the extra level for both these allotments, whilst making an additional adjustment for land improvements to 40 Ocean Road because of the ability to obtain an extra level within a building envelope, would, effectively amount to double-dipping for this allotment on that point. 183However, if I am wrong in taking this approach and it were to be held that there was a proper basis for considering whether or not to make a land improvement allowance solely for 40 Ocean Road, in addition to such adjustment as I have made for each of 39 and 40 Ocean Road in the frontage factor analysis earlier set out, I prefer the evidence of Mr Webster (that, despite the cost of the land improvements, they add no functional value to 40 Ocean Road) over the evidence of Mr Wotton that a land improvement allowance of half the determined cost of the land improvements should be made. I have reached this conclusion for the following reasons:

• First, as observed by Mr Webster, the ambience of a dwelling enfolded within the elbow of two substantial grey shotcrete walls will be of distinctly poor quality;
• Because of the steepness of the excavation on the south and north of 40 Ocean Road, there is no ability to use any residual area at the top of the shotcrete walls for any private open space purpose of a functional nature;
• There is no evidentiary basis upon which I conclude that there would be any realistic expectation of establishing landscaping that would cover the shotcrete walls in any substantially disguising fashion;
• The width of this allotment and the likely building envelope available for it will mean that there is little or no potential for private open space at ground level save, as Mr Webster observed in his written evidence earlier quoted, at the front of the building in the vicinity of the cul-de-sac head in Ocean Road. Private open space at that location would, in conventional town planning terms, be regarded as having poor amenity and be of little utility.

2011 base date valuation 184As I have concluded that the single comparable sale relevant for this base date year is that of 12 Florida Road Palm Beach, the properly analysed derived valuation (from this sale) for 41 Ocean Road is nearly $9 million on Mr Wotton's figures and a little more than that on the basis of Mr Webster's figures as revised by me. As either amount is higher than the statutory valuation for 1 July 2011, the result in the appeal for that base date year must fail.

2012 base date valuation 185All three derived valuations (on the basis of Mr Webster's figures as revised by me) for 41 Ocean Road from a proper analysis of each of 39 and 40 Ocean Road and 12 Florida Road, for the base date 1 July 2012, disclose analysed valuations significantly higher than the statutory valuation determined by the Valuer General for this base date. 186As a consequence, it is unnecessary for me to endeavour to undertake further analysis of the these results to express a concluded view on what would be the appropriate statistical basis to derive a single derived, analysed value for 41 Ocean Road. It is sufficient that all three derived values are significantly above the determined statutory value and thus, on any further analysis, the appeal for base date 1 July 2012 must fail. 187I note that, with respect to the 2012 base date year, this appeal would also fail, even if I am entirely incorrect in my conclusions concerning the land improvements on 40 Ocean Road not being appropriate to be allowed, for that comparable sale, to the full 50% extent proposed by Mr Wotton. 188In addition, despite the fact that there is no evidence that would permit any such allowance for 39 Ocean Road, transmuting the full allowance proposed for land improvements for 40 Ocean Road, to be regarded as equally and completely applicable to 39 Ocean Road, would still not alter the outcome in the 2012 base date valuations as, although the analysed derived values based on 39 and 40 Ocean Road would be lowered, they would both remain significantly above the statutory valuation determined by the Valuer General for 41 Ocean Road for that base date year.

Orders 189As a consequence of the foregoing, the orders of the court are: In Matter 30520 of 2013: (1)The appeal is dismissed; (2)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, the statutory valuation for 1 July 2011 of $6,960,000 for 41 Ocean Road Palm Beach is confirmed; and (3)The exhibits are returned. and In Matter 30340 of 2013: (1)The appeal is dismissed; (2)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, the statutory valuation for 1 July 2012 of $6,960,000 for 41 Ocean Road Palm Beach is confirmed; and (3)The exhibits are returned. Tim Moore Senior Commissioner Spreadsheet 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: 27 November 2014