Olefines Pty Ltd v Valuer-General of New South Wales

The Valuation Act

1. The Valuation Act is the principal statute which makes provision for and regulates the valuation of land in New South Wales. For the purposes of the Valuation Act, s 6A(1) defines the meaning of "land value of land" and s 6A(2) sets out two assumptions that must be made in determining the land value of any land. These provisions are 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.
2. Although neither Lot 103 nor Lot 5 is heritage listed, for reasons that will become clear below, it is also appropriate to set out ss 14G and 14K(1) of the Valuation Act which relate to the valuation of heritage restricted land: 14G Valuation subject to heritage restrictions under EPI (1) Land that is heritage restricted on the date by reference to which its land value is to be determined is to have its land value determined on the basis of the following assumptions: (a) that the land may be used only for the purpose, if any, for which it was used when the value is determined, (b) that all improvements on that land when the value is determined may be continued and maintained in order that the use of that land as referred to in paragraph (a) may be continued, (b1) that all improvements referred to in paragraph (b) on that land are new (without any deduction being made because of their actual condition), (c) that no improvements, other than those referred to in paragraph (b), may be made to or on that land, (d) that the cost of construction of improvements on that land has no effect on its land value, with the result that there is to be no reduction in land value because of any difference between the cost of construction of the improvements referred to in paragraph (b) as new improvements and the cost of construction of other improvements used as a basis for comparison in the determination of land value. (1A) When the land value of heritage restricted land is determined on the basis of the assumptions required by this section, there is to be no deduction from or other adjustment of that land value on account of the effect on land value of any factor concerned with the land being heritage restricted land (other than the effect of those assumptions). (2) Land is heritage restricted as at a particular date if the Valuer-General has determined that it would be reasonable to make the assumptions referred to in subsection (1) in respect of the land as at that date because of any provision of a planning instrument concerned with the heritage significance or heritage value of the land or any building, work or other thing on or in the land. (3) The Valuer-General may, and on the application of the owner of land must, make a determination as to whether a particular parcel of land is heritage restricted. (4) An application under subsection (3) is to be in the form required by the Valuer-General and accompanied by such supporting information as the Valuer-General may request. (5) The Valuer-General is not to determine that land is heritage restricted as at a particular date if the land is the subject of a listing on the State Heritage Register under the Heritage Act 1977 as at that date. 14K Assumption as to physical condition and manner of use of land (1) For the purpose of valuing any land, it is to be assumed: (a) that the physical condition of the land, and of any other land, and (b) that the manner in which the land, and any other land, may be used, were the same on 1 July of the valuing year in respect of which the land is being valued as they were on the date on which the valuation is made.
3. Part 4 of the Valuation Act makes provision, inter alia, for a person (if entitled to object to a valuation) to appeal to this Court if that person is dissatisfied with the Valuer-General's determination of any such objection to a valuation: s 37. Importantly, s 40 confers on this Court specific powers: 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.

Land use

1. It is uncontested that, at all material times, Lot 103 and Lot 5 were zoned as IN1 ­General Industrial land under State Environmental Planning Policy (Three Ports) 2013 ('the SEPP'). The relevant land use table under Part 2 of that instrument provided as follows: Zone IN1 General Industrial 1 Objectives of zone • To provide a wide range of industrial and warehouse land uses. • To encourage employment opportunities. • To minimise any adverse effect of industry on other land uses. • To facilitate and encourage port related industries that will contribute to the growth and diversification of trade through the port. • To enable development for the purposes of business premises or office premises associated with, and ancillary to, port facilities or industries. • To encourage ecologically sustainable development. 2 Permitted without consent Environmental protection works 3 Permitted with consent Boat building and repair facilities; Business premises; Depots; Food and drink premises; Freight transport facilities; General industries; Jetties; Light industries; Neighbourhood shops; Office premises; Roads; Signage; Truck depots; Vehicle body repair workshops; Vehicle repair stations; Warehouse or distribution centres; Waste or resource management facilities 4 Prohibited Any development not specified in item 2 or 3
2. Under the SEPP, cl 4(3) provides that words not defined in the instrument have the same meaning as the standard instrument set out at the end of the Standard Instrument (Local Environmental Plans) Order 2006. The following definitions from that Order are useful to set out: general industry means a building or place (other than a heavy industry or light industry) that is used to carry out an industrial activity. heavy industry means a building or place used to carry out an industrial activity that requires separation from other development because of the nature of the processes involved, or the materials used, stored or produced, and includes: (a) hazardous industry, or (b) offensive industry. It may also involve the use of a hazardous storage establishment or offensive storage establishment. hazardous industry means a building or place used to carry out an industrial activity that would, when carried out and when all measures proposed to reduce or minimise its impact on the locality have been employed (including, for example, measures to isolate the activity from existing or likely future development on other land in the locality), pose a significant risk in the locality: (a) to human health, life or property, or (b) to the biophysical environment.
3. In this context, I identify that the parties agreed that, at all material times, the purpose of use of Lot 103 and Lot 5 was that of hazardous industry and, therefore, encompassed within the meaning of heavy industry. Hence, the use of both lots was ostensibly prohibited under the above land use table to the SEPP.
4. However, it was also agreed that the particular heavy industry use of each lot was shielded from this prohibition due to the existing use provisions of the Environmental Planning and Assessment Act 1979 ('EPA Act'). In particular, it was a common position that s 107(1) of the EPA Act allows the existing heavy industry use to continue despite the later prohibition of such a use by the SEPP.
5. In addition to the SEPP, it should be noted that it was uncontroversial that the following two instruments are also applicable to the site: State Environmental Planning Policy No 33 - Hazardous and Offensive Development and State Environmental Planning Policy No 55 - Remediation of Land.
6. Finally, as will be seen, the CLM Act is of some significance in these proceedings. Division 2 of Part 3 of the CLM Act provides for the regulation of significantly contaminated land. As mentioned above, Lot 103 and Lot 5 fall within the meaning of significantly contaminated land. The CLM Act provides that the Environment Protection Authority may issue a management order concerning significantly contaminated land on an appropriate person directing that person to carry out any action that may be specified (including, inter alia, carrying out remediation, ceasing to carry out any activity on the land, and treating or disposing of materials) and/or submitting a plan of management for approval: ss 14-16. This leads to the question of who can be chosen as an appropriate person to be made subject to a management order. The answer is found in s 13(1)-(4), which is in the following terms: 13 Choice of appropriate person to be made subject to management order (1) If the EPA makes a management order in respect of significantly contaminated land, the order must specify one or more appropriate persons (or public authorities that are not appropriate persons) as the subject of the management order. (2) The EPA is to choose the appropriate persons from among the following persons: (a) a person who is responsible for significant contamination of the land (whether or not there may be other persons who are also responsible), (b) an owner of the land (whether or not the person is responsible for contamination of the land), (c) a notional owner of the land (whether or not the person is responsible for contamination of the land). (3) In determining the appropriate persons, the EPA is, as far as practicable, to specify a person referred to in subsection (2) (a) over a person referred to in subsection (2) (b) or (c) and to specify a person referred to in subsection (2) (b) over a person referred to in subsection (2) (c). (4) For the purposes of this section, it is not practicable to specify a person if: (a) there is no such person, or (b) the EPA cannot, after reasonable inquiry, find out the identity or location of the person, or (c) the person, in the opinion of the EPA, is unable to pay the person's debts or would, if the person took steps to comply with the management order, become unable to pay the person's debts.

The evidence

1. It is not necessary to provide a detailed account of the entire body of evidence relevant to the determination of these appeal proceedings. As is set out below in the detailed summary of the parties' submissions, both parties (via their written and oral submissions) competently identified the pertinent aspects of the body of evidence which they relied upon in support of their case.
2. Nevertheless, to establish the necessary context, it is appropriate to briefly identify the main evidentiary material.
3. The expert evidence in these proceedings was drawn from the following three areas of expertise: contamination science and engineering; town planning; and land valuation. The expert contamination evidence comprised the reports and oral evidence of the Applicant's engineering scientist Mr Roger Parker and the Respondent's environmental scientist Mr Colin McKay. The expert town planning evidence comprised the reports and oral evidence of the Applicant's town planner Mr Robert Chambers and the Respondent's town planner Mr David Haskew. The expert valuation evidence comprised the reports and oral evidence of the Applicant's valuer Mr Grant Jackson and the Respondent's valuer Mr Errol Ferdinands.
4. In addition to this expert evidence, the body of evidence also included, inter alia, aerial photography and a Valuer-General policy on valuing contaminated land. More importantly, the evidence included a 2012 quantitative risk assessment summary report (prepared for the Department of Planning pursuant to a condition in the above mentioned subdivision development consent) concerning the BIP. In this assessment of the risk posed by BIP, the risk of explosions and relevant blast zones were considered. For instance, Figure 9.1 of the assessment report depicts the cumulative individual fatality risk created by the BIP.

The valuation evidence

1. In determining the land values for Lot 103 and Lot 5, Mr Jackson and Mr Ferdinands both adopted the comparable sales approach. Moreover, both valuers relied on the same three comparable sales to derive their valuations. The three common comparable sales were 26 McPherson Street, Banksmeadow; 32 Swinbourne Street, Banksmeadow; and 19 McCauley Street, Matraville. These three properties are all proximate to Lot 103 and Lot 5 and were zoned as IN1 General Industrial land.
2. Importantly, the valuers agreed on a derived 'starting rate' value of Lot 103 and Lot 5 from these comparable sales of $400 per m2 for 2013, $430 per m2 for 2014 and $480 per m2 for 2015. As will be seen, despite the common starting points, the final land values derived by each valuer are significantly different because of the differing adjustments made by each valuer to the starting rates (see the appended "Schedule of valuation calculations and adjustments" below). It should also be flagged here that whilst both valuers carried out their valuations on the basis that the existing heavy industrial use (and associated improvements) of Lot 103 and Lot 5 'may continue' (although each valuer took a different approach to what this means), Mr Jackson also valued Lot 103 on the basis that the assumptions in s 6A(2) of the Valuation Act are not operative.
3. It is also important to note that the valuers both relied on further sales evidence to determine the value of Lot 103 and Lot 5. However, these additional property sales were used by the valuers as proxies to determine whether the availability of continuing the existing heavy industry use of Lot 103 and Lot 5 would result in Lot 103 and Lot 5 selling at a premium or at a reduced sum. To this end, Mr Jackson relied on a comparison of various sales of land in Rosehill - which were zoned as IN3 Heavy Industrial land - and sales of land in Rydalmere and Silverwater -­ which were zoned as IN1 General Industrial land. Whereas, Mr Ferdinands relied on a comparative sales analysis of two proximate properties in Prestons, one zoned as IN1 General Industrial land and the other zoned as IN3 Heavy Industrial land.
4. As part of the hearing, the Court visited the relevant properties during two on-site views. On the afternoon of 8 May 2017, the Court viewed BIP (including Lot 103 and Lot 5) and the valuers' comparable sale properties of 26 McPherson Street, Banksmeadow; 32 Swinbourne Street, Banksmeadow; and 19 McCauley Street, Matraville. The following morning the Court viewed the relevant non-proximate properties mentioned above that were used by the valuers to ascertain whether the availability of continuing the existing heavy industry use of Lot 103 and Lot 5 would result in Lot 103 and Lot 5 selling at a premium or at a reduced sum.

The Competing Interpretations of section 6A(2) of the Valuation Act

The Applicant's interpretation

1. A key claim of the Applicant in these proceedings is that the contamination of Lot 103 and Lot 5 must be considered in determining the land value of the relevant land under s 6A of the Valuation Act. More specifically, the Applicant contended that this land contamination must be taken into account when making the assumptions in s 6A(2): namely, the assumptions that the land "may continue to be used, for any purpose for which it was being used" and that "such improvements may be continued … in order to enable the land to continue to be so used". The Applicant asserted that the requirement to have regard to the contamination of Lot 103 and Lot 5 follows from a proper interpretation of s 6A.
2. The Applicant asserted that the fundamental valuation approach required to be undertaken by s 6A is that which was set out by the High Court in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 at [16]: The first step to be taken under s 6A is to identify what is capable of being regarded as improvements, ''other than land improvements''. The second step is notionally to remove the improvements from the land. It is at the third point that difficulties arise…
3. The Applicant submitted that the second step in the valuation approach reflects the fundamental assumption that, pursuant to s 6A(1), what is to be valued is the land in a notionally unimproved state.
4. The Applicant contended that nothing in s 6A(2) displaces, reverses or is inconsistent with the requirement to make this fundamental assumption. Moreover, the Applicant argued that s 6A(2) does not create an "overlay" or a "ratcheting up of the [section] 6A(1) exercise" (Transcript, p 253). In this respect, the Applicant submitted that it is significant that the terms of the chapeau to s 6A(2) - "in determining the land value" (emphasis added) - adopts the definition of land value in s 6A(1). Hence, it was claimed that the assumptions under s 6A(2) only concern the development potential or capacity of the notionally unimproved land. What is required to be assumed "is that the purchaser of the [notionally unimproved] land … has an entitlement to develop the land by erecting the existing buildings on the land and to use that land for that existing use".
5. The Applicant asserted that s 6A(2) does not permit the valuer to assume that the notionally unimproved land is acquired with the buildings (improvements) in situ or that they magically appear once the hypothetical sale is completed. The buildings must still be physically re-erected on the notionally unimproved land after the hypothetical sale.
6. Consequently, the Applicant submitted that the issue of land contamination must be considered in valuing the relevant land because this would affect the physical re-erection of the buildings on the notionally unimproved land. It would do so, according to the Applicant, because the land contamination would enliven an obligation to remediate the land prior to the erection of such buildings. However, the Applicant conceded that it should be assumed that the necessary approvals to erect the buildings (such as development consents) are, although required, in place: citing Valuer-General v Oriental Bar Pty Ltd (2016) 217 LGERA 1; [2016] NSWCA 48 at [138] and [142] (see also, Transcript, p 259).
7. The Applicant contended that the above interpretation and application of s 6A(2) is consistent with the relevant authorities. In particular, the Applicant relied upon Commonwealth Custodial Services v Valuer-General (2007) 156 LGERA 186; [2007] NSWCA 365 at [9] and [111]; Valuer-General v Fivex Pty Ltd (2015) 206 LGERA 450; [2015] NSWCA 53 at [48]; and Valuer-General v Oriental Bar Pty Ltd at [122] and [134].
8. The Applicant submitted that those decisions confirm that nothing in s 6A(2) displaces or is inconsistent with the need to assume, pursuant to s 6A(1), that the land is notionally vacant. For example, the Applicant said that although the Court of Appeal in Valuer-General v Fivex Pty Ltd stated that s 6A(2)(b) refers partly to improvements "in the real world", the Court of Appeal emphasised at [48] that "none of this is to deny that what is to be determined is the unimproved value of the 'fee-simple' stripped of those improvements".
9. Furthermore, the Applicant focused on the observation in Valuer-General v Fivex Pty Ltd at [49] that "…given the mandatory assumption that 'such improvements [as exist in the real world] may be continued', it seems unlikely that the exercise should ignore the capacity of one lot, but not the other, to sustain a five storey office block". The Applicant posited that this confirms that what is to be assumed pursuant to s 6A(2) is the "capacity" of the land to "sustain" the relevant improvements (rather than an assumption that the land is to be purchased with the improvements in situ).
10. With respect to Valuer-General v Oriental Bar Pty Ltd, the Applicant similarly contended that this decision provides support for its interpretation that s 6A(2) does not permit the valuer to assume that the land is acquired with the buildings in situ or that they magically appear once the hypothetical sale is completed. To this end, the Applicant submitted that it was accepted in that decision, at [143], that the relevant assumptions required an approach whereby: The land value for the [subject property] took account of the assumed entitlement of the hypothetical purchaser to erect a building of the same dimensions of the building actually on the land and to use that building in the same way as the existing building … was in fact used.
11. According to the Applicant, this confirms that the required (albeit hypothetical and artificial) valuation task under s 6A(2) is to value the land on the basis that it is vacant but has the "entitlement to erect [and] the capacity to sustain [the improvements] but nothing more than that" (Transcript, p 256). The Applicant recognised that this decision in Oriental Bar concerned the assumptions in s 14G of the Valuation Act, which are applicable to the determination of the value of heritage restricted land. However, the Applicant claimed that the corresponding assumptions in s 14G(1) and s 6A(2) were closely related and that, therefore, "the reasoning in the case is relevant to these proceedings".
12. Similarly, the Applicant submitted that its interpretation of s 6A(2) is supported by the decision of Valuer-General v In Adam Pty Ltd (2012) 211 LGERA 75; [2012] NSWCA 20. The Applicant said that this decision - again concerning s 14G - supports the contention that s 6A(2) requires an assumption that the land is vacant but is sold with the entitlement to erect the relevant existing improvements. The Applicant drew particular attention to the holding, at [26], that: In the present case the imaginary new heritage restricted building which must be treated as real has as one of its inevitable corollaries an imaginary cost of construction. There being no relevant prohibition, one of the consequences which the Court must also treat as real is that the hypothetical willing and informed purchaser would take its cost of construction into account in negotiating for the purchase of the land.
13. The Applicant acknowledged that s 14G(1) is not now directly analogous to s 6A(2) because of the insertion of subs (1)(b1) and (1)(d), which prevent the valuer from making any deduction for the actual condition of any improvements or for the cost of constructing these improvements. Indeed, the Applicant argued that it supports their case that these amendments to s 14G were necessary to, according to the Applicant, reverse (for heritage restricted land) particular consequences of the correct position that the improvements would have to be re-erected on the land after the hypothetical sale (Transcript, p 293).
14. Finally, the Applicant also relied upon the decision of Valuer-General (NSW) v Commonwealth Custodial Services Ltd (2009) 74 NSWLR 700; [2009] NSWCA 143 in support of its interpretation of s 6A(2). The Applicant submitted that this decision demonstrates that the valuation assumptions under s 6A(2) are concerned with the potential of the land to sustain improvements rather than an assumption that such improvements need not be put back onto the land after the hypothetical sale. In this respect, the Applicant quoted the following passage at [24]: To my mind nothing said by this Court in Commonwealth Custodial Services about s 6A requires the outcome for which the Valuer-General contends. There is no difficulty in valuing the land upon the assumption that it is vacant land but with its potential development and ultimate return confined by the existing building and the purpose or purposes for which it may be used. That existing building may be more or less marketable than a new building and may have greater maintenance costs, but it is that building which the statute assumes will remain and accordingly defines the potential of the land as vacant land.
15. For the above reasons, the Applicant concluded that, on a proper construction of s 6A, the contamination of Lot 103 and Lot 5 is a matter of fact for the valuer to assess, based on the evidence, in determining the land value: citing Challenger Listed Investments Limited v Valuer-General (No 2) [2015] NSWLEC 60 at [25], [32] and [35]. The Applicant criticised the Respondent's alternative construction of s 6A(2) for allegedly constituting an impermissible valuation approach of valuing the improved land and then deducting the value of the improvements: citing Toohey's Ltd v Valuer-General (1924) 25 SR (NSW) 75 (Transcript, pp 258-259).

The Respondent's interpretation

1. The Respondent contended that the valuation assumption in s 6A(2)(b) - that "such improvements may be continued … in order to enable the land to continue to be so used" - does not mean that the relevant improvements have to be re-erected on the land. Rather, the Respondent submitted that the proper valuation approach in the present case is to assume that the improvements, as they exist "in the real world", may be continued without the need for development consent or reconstruction (Transcript, p 16). Consequently, the Respondent asserted that the issue of land contamination, as articulated by the Applicant, could not be relevant in valuing the highest and best use of the land, which was said to be the continuation of the existing use. The triggering of an obligation to remediate the contaminated land, so the Respondent submitted, would only happen if the improvements had to be rebuilt on the relevant land (Transcript, p 274).
2. The Respondent emphasised that, contrary to the Applicant's criticism, this approach does not involve any "assumption that the improvements are actually there in the valuation exercise". Additionally, the Respondent stated that it does not seek to impermissibly "value the improvements and then … deduct the cost of the improvements to ascertain the land value": citing Toohey's Ltd v Valuer-General; Maurici v Chief Commissioner of State Revenue; and Valuer-General v Oriental Bar Pty Ltd (Transcript, p 277).
3. In support of its interpretation of s 6A(2)(b), the Respondent principally relied upon the decision of Valuer-General v Fivex Pty Ltd. The Respondent said that this decision stands for the proposition that s 6A(2)(b) requires the valuer to assume "that improvements may continue in order to enable the continuation of the use": quoting at [50]. The valuer must assume under s 6A(2)(b) "that the improvements as they exist in the real world 'may be continued'": quoting at [46]. The Respondent submitted that it is the improvements that must be continued and not some re-creation of the improvements (Transcript, p 275).
4. Similarly to the Applicant, the Respondent identified a number of decisions concerning s 14G of the Valuation Act as being of assistance to the interpretation of s 6A. Yet, the Respondent cautioned that these authorities need to be understood in the context of the relevant amendments to s 14G.
5. The Respondent submitted that the insertion of s 14G(1)(b1) into the Valuation Act reversed the position that the valuer should assume that the relevant improvements to be continued on the land would remain in their existing condition (rather than being new): citing Commonwealth Custodial Services v Valuer-General and Valuer-General (NSW) v Commonwealth Custodial Services Ltd (Transcript, p 276). The Respondent argued that, following this amendment, the assumption that the improvements on the land were new meant that the (hypothetical) construction costs were relevant because the existing buildings were not new. Therefore, the assumption that the existing buildings were new meant that the valuer was permitted to consider the associated construction costs (Transcript, p 275): citing Valuer-General v In Adam Pty Ltd. The Respondent said that this new position was then, in turn, reversed by the insertion of s 14G(1)(d) (Transcript, pp 275-276). Nevertheless, the Respondent argued that the need to insert s 14G(1)(b1), demonstrates that the pre-amendment position (continued with respect to s 6A) was that the valuer need not assume that the improvements would be new or that they would have to be rebuilt (Transcript, p 276).
6. With respect to Valuer-General v Oriental Bar Pty Ltd, the Respondent asserted that this decision does not support the making of an assumption under s 6A(2) that the assumed improvements must be rebuilt. Rather, the Respondent submitted that this decision demonstrates that there is "no need to undertake even a notional assessment of whether or not a development consent would be granted and on what terms" (Transcript, p 276).
7. In response to the Applicant's submissions, the Respondent criticised the Applicant's construction of s 6A(2)(b) for erroneously omitting the word "continued" from this section and reading into the subsection a requirement to rebuild the improvements (Transcript, p 275).

The Respondent's submissions on onus

1. The Respondent submitted that, pursuant to s 40(2) of the Valuation Act, the Applicant bears the onus of proving that the valuations of the Valuer-General are too high: citing Wu v Valuer-General (No 2) [2013] NSWLEC 1160 at [7]; Tomago Aluminium Company Pty Ltd v Valuer-General [2010] NSWLEC 4 at [12]; and Ashleigh Developments Pty Ltd v Valuer General [2010] NSWLEC 1270 at [19]. Moreover, the Respondent emphasised that the Applicant cannot discharge its onus by proving that there are significant or manifest defects in the Respondent's evidence (Transcript, p 272).
2. The Respondent claimed that the appeals must be dismissed if the Applicant fails to discharge this onus: Kogarah Town Centre Pty Ltd v Valuer-General [2014] NSWLEC 1124 at [81]. Indeed, the Respondent asserted that the Applicant has failed to discharge its onus in each of the proceedings and that the Court should, therefore, confirm the valuations under s 40(1)(a) of the Valuation Act (Transcript, p 292).

The Applicant's rebuttal on onus

1. Referring to Ashleigh Developments Pty Ltd v Valuer General at [19], the Applicant submitted that it would be wrong for the onus placed upon the Applicant to be understood as requiring the Applicant to convince the Court of the totality of its case. The Applicant also observed that the Respondent's role in these proceedings is not simply to "cast stones" at the Applicant's case; rather, the Respondent "also gets to live in a glass house" (Transcript, p 292).

The Competing Submissions as to the Correct Land VALUES

The Applicant's submissions concerning Lot 103

1. The ultimate land values for Lot 103 (for each base year) determined by Mr Jackson and Mr Ferdinands are derived from different valuation exercises. Mr Jackson's derived land values are the product of applying the assumptions in s 6A without the assumptions in s 6A(2) being operative. On Mr Jackson's analysis, this valuation exercise produced a higher land value than that produced by his alternative valuation exercise of applying s 6A such that the assumptions in s 6A(2) are operative. In contrast, Mr Ferdinands' derived land value is the product of applying the assumptions in s 6A such that the assumptions in s 6A(2) are operative. The Applicant criticised Mr Ferdinands for adopting this approach without, allegedly, carrying out the comparative alternative exercise in which the assumptions in s 6A(2) are not operative. The Applicant asserted that Mr Ferdinands did not sufficiently explain why he did not do so.

The valuation exercise where s 6A(2) is not operative

1. The Applicant submitted, as its primary case (Transcript, p 240), that Mr Jackson's approach to valuing Lot 103 under s 6A with s 6A(2) not being operative - and his ultimate derived land values for the base years 2013, 2014 and 2015 - should be accepted by the Court.
2. For the 2013 base year, Mr Jackson's (comparative sales) valuation approach is based on the premise that the agreed 'starting rate' value is $400 per m2. From this 'starting rate', a deduction of 45% is made for the less desirable size and shape of Lot 103, a deduction of 5% is made to account for the issue of excising Lot 103 from the BIP, and a deduction of 20% is made for the less desirable frontage of Lot 103. Applying the derived rate to the land area of Lot 103 produced a land value of $38,880,000, from which Mr Jackson deducted $20,400,000 to account for the likely required remediation costs. This resulted in an ultimate land value of $18,480,000. Mr Jackson relied upon the same methodology to arrive at an ultimate land value of $21,396,000 and $23,756,000 for the base years 2014 and 2015 respectively. The following summary of the Applicant's submissions uses the figures relating to the 2013 base year to illustrate the Applicant's case.

The 'starting rate' - where s 6A(2) is not operative

1. The Applicant noted that the valuers agreed that the appropriate 'starting rate' for the subject lands, as derived from the sales evidence of land zoned for general industrial use in the vicinity of Lot 103, is a rate of $400 per m2 for base year 2013 (Exhibit A, pp 1108-1109).

Size and shape - where s 6A(2) is not operative

1. Similarly, the Applicant noted that the valuers agreed that a deduction of 45% to this 'starting rate' was appropriate to reflect their assessment that the shape and size of Lot 103 is less desirable than that of the comparable sales (Exhibit A, p 1109).

Contamination - where s 6A(2) is not operative

1. The Applicant submitted that the Court should accept Mr Jackson's subtraction of $20,400,000 from the derived 2013 land value for Lot 103 to account for the costs of remediating Lot 103 to be suitable for general industry use.
2. The Applicant submitted that the evidence of the town planners confirmed that Lot 103 would need to be remediated if it were to be excised from the BIP (Exhibit A, p 855) and approved for a general warehouse type of development (Transcript, p 245). According to the Applicant, the town planners agreed that it would be, in their words, "inconceivable that a consent authority would reach the conclusion that the land would be suitable in its contaminated state to accommodate a new development" (Exhibit A, p 855). Thus, the Applicant asserted that "there can be no doubt that contamination is relevant to the circumstance of valuation" (Transcript, p 293).
3. It was emphasised that the valuation exercise requires it to be assumed that the hypothetical sale is an unconditional sale: citing Randwick Municipal Council v Valuer-General (1960) 5 LGRA 387 at 393. Hence, the Applicant submitted that the purchase of Lot 103 would occur in circumstances where the hypothetical purchaser would take into account the contamination of Lot 103. The fact that the extent of the land contamination and the likely costs of remediation are not precisely known cannot, according to the Applicant, negate the necessity to make such a deduction to Lot 103.
4. In order to estimate the quantum of this necessary remediation cost deduction, the Applicant claimed that the Court should rely on the evidence of Mr Parker (Transcript, p 245). More specifically, the Applicant endorsed Mr Parker's "sensibly conservative" estimate that the remediation costs of Lot 103 (to allow the land to be used for a general industry warehouse use) would amount to approximately $20,400,000 (if s 6A(2) is not operative) (Transcript, p 243), which includes the cost of a comprehensive land contamination investigation (said by the Applicant to be of some significance: Transcript, p 244). In response to criticism of Mr Parker's decision to account for an Environment Protection Authority levy in his 2015 base year remediation cost estimate, the Applicant submitted that this is a minor component of the overall cost and should not be conflated with the overall estimated offsite disposal costs, which would include associated transportation costs.
5. With respect to the argument that the purchaser might be absolved from paying any remediation costs under the CLM Act, the Applicant said that it would be erroneous for the Court to make no adjustment for contamination "in the hope that the polluter would pay" (Transcript, p 253). The Applicant said that the sale cannot be conditional on the land being remediated; the land is sold as is. Furthermore, it was stressed that, from the perspective of the purchaser, there is only a prospect that someone else might pay to remediate the contaminated land under the CLM Act: citing s 13. The Applicant submitted that "in the legislative scheme and on the facts there is considerable risk which is faced by both the potential purchaser and any party with a financial interest [that] the polluter may become unable to meet the commitment for the remediation of the contamination" (Transcript, pp 252-253). Indeed, the Applicant quoted a statement to this effect in the Valuer-General's valuation of contaminated land policy (Exhibit E, p 6).
6. Finally, the Applicant submitted that it is unknown what adjustment Mr Ferdinands would have made to account for land contamination. This is because Mr Ferdinands did not carry out any assessment of the land value of Lot 103 on the basis that s 6A(2) is not operative.

Access - where s 6A(2) is not operative

1. The Applicant conceded that Lot 103 has some (currently unused) frontage to Anderson Street and that easements over adjoining lands provide the means of accessing Lot 103. However, it was reasoned that this access and frontage is limited in comparison with the comparable land sales. Hence, Mr Jackson's associated downwards adjustment of 20% to Lot 103 was said to be appropriate.
2. The Applicant noted the Respondent's suggestion that Lot 103 has sufficient frontage to Anderson Street. In response, it argued that this frontage is insignificant in relation to the size of Lot 103 and, importantly, is significantly less advantageous than the frontage of the comparable land sales. Moreover, the Applicant claimed that one part of Lot 103, "the triangular part", "has no Anderson Street frontage" (Transcript, p 247).

Excision from the BIP - where s 6A(2) is not operative

1. The Applicant embraced Mr Jackson's 5% downwards adjustment to account for the necessary excision of Lot 103 from the BIP, such as maintaining access to Lot 103 and security arrangements (Exhibit A, p 925). On the town planners' evidence, the Applicant claimed that Lot 103 would need to be excised from the BIP for Lot 103 to be used for general industry purposes (Exhibit A, p 855 and Transcript, p 248). Similarly, the Applicant emphasised that the excision of Lot 103 from BIP would require the approval of the relevant Special Purpose Company and a subdivision development application (Exhibit A, p 855 and Transcript, pp 241, 247-248 and 297). Hence, the Applicant said that this adjustment was measured, appropriate and based on the relevant evidence.
2. Again, the Applicant submitted that Mr Ferdinands' assessment of this issue is unknown because he did not undertake an analysis on the basis that s 6A(2) is not operative.

The reliability of Mr Jackson's valuation - where s 6A(2) is not operative

1. The Applicant claimed that Mr Jackson's comparable sales valuation approach is reliable and appropriate. With respect to the Respondent's argument that Mr Jackson's approach was unreliable because of a large quantum of adjustments to the starting rate, the Applicant countered that the adjustments made by Mr Jackson are appropriate and do not make his approach unreliable. The Applicant denied that there is any rule that the comparative sales approach becomes unreliable after a certain level of adjustments: citing Sydney Water Corporation v Marrickville Council [2014] NSWCA 438 at [48] (Transcript, pp 249-250 and 263-264). In fact, the Applicant stressed that the reliability of adopting the comparative sales method in the present circumstances is evidenced by the agreement of the valuers on the appropriate starting rate. The Applicant reasoned that the methodology embraced by both valuers "doesn't stop becoming an appropriate methodology because a valuer forms the view that in order to derive comparability, more adjustments than the other valuer needs to be made" (Transcript, p 250).
2. Additionally, the Applicant denied that it would have been appropriate for Mr Jackson to adopt a hypothetical development valuation methodology to value Lot 103 (Transcript, pp 250-251 and 295).

The valuation exercise where s 6A(2) is operative

1. In the alternative to its primary case above (Transcript, p 240), the Applicant submitted that Mr Jackson's approach to valuing Lot 103 under s 6A (with s 6A(2) being operative) and his ultimate derived land values for the base years 2013, 2014 and 2015 should be accepted by the Court.
2. For the 2013 base year, Mr Jackson's (comparative sales) valuation approach is based on the premise that the 'starting rate' value is 50% less ($200 per m2) than that derived from the agreed comparable sales ($400 per m2) if s 6A(2) is operative. From this reduced 'starting rate' of $200 per m2, a deduction of 45% is made for the less desirable size and shape of Lot 103 and a deduction of 10% is made for the less desirable frontage of Lot 103. Applying the derived rate to the land area of Lot 103 produced a land value of $29,160,000 - from which Mr Jackson deducted $14,100,000 to account for the likely required remediation costs. Mr Jackson's ultimate derived land value for this valuation exercise was $15,060,000. Mr Jackson relied upon the same methodology to arrive at an ultimate land value of $17,247,000 and $18,892,000 for the base years 2014 and 2015 respectively.

The 'starting rate' - where s 6A(2) is operative

1. The Applicant submitted, in accordance with the evidence of Mr Jackson, that the agreed 'starting rate' of $400 per m2 for the 2013 base date should be ("conservatively") reduced by 50%. This was said to be necessary to reflect the assumption under s 6A(2) that the notionally unimproved Lot 103 would be purchased for use as a petrochemical or similar development - rather than for general industry development like the comparable land sales (Exhibit A, pp 929-930 and 1111).
2. According to Mr Jackson, this revised 'starting rate' is justified because the value of certain land sold in Rosehill capable of being used for heavy industry was 72-90% less than certain land in the same area capable of being used for general industry but not heavy industry (Exhibit A, p 929). Mr Jackson focused on these sales because of an absence of sales of land used for petrochemical or similar uses or other heavy industries in the vicinity of Lot 103. The Applicant claimed that Mr Jackson's discount of 50% was a reliable reflection of the impact on value of the specialised nature of the existing use of Lot 103.
3. The Applicant challenged the competing analysis of Mr Ferdinands in this respect, which the Applicant said amounted to attributing a 10% premium to the 'starting rate'. This premium was said to be predicated on a comparison of the value of certain land at Prestons zoned to allow general industry development and comparable other land in Prestons zoned to allow both general industry and heavy industry development. The Applicant claimed that this comparative analysis was unreliable because, unlike the general industry land, the heavy industry land assessed by Mr Ferdinands had the benefit of a development consent permitting traditional office or warehouse use (Exhibit A, 1112) and was not burdened by an easement (Transcript, p 265). Furthermore, the Applicant said that Mr Ferdinands' assessment that there is a premium for land zoned to allow heavy industry use is inconsistent with the reality that the land at Prestons so zoned was actually used for general industry purposes. Indeed, the Applicant asserted that Mr Ferdinands' analysis was infected by the fallacy that land will axiomatically be more valuable if a greater range of purposes of use are permitted on it (Transcript, p 267).
4. Additionally, the Applicant criticised Mr Ferdinands' approach as being legally unsound. Whilst Lot 103 can be continued to be used for its existing use, it cannot (contrary to Mr Ferdinands' assumption) be used for all the heavy industry uses that are permissible in an IN3 Heavy Industrial land use zone: citing, by analogy, Minister for Planning v Rose Bay Marina (2003) 126 LGERA 181; [2003] NSWCA 119 at [28]. Moreover, the Applicant emphasised that the relevant existing use provisions would prevent the conversion of the existing heavy industry use to another heavy industry use.

Size and shape - where s 6A(2) is operative

1. The Applicant noted that the valuers agreed that it was appropriate to adjust the derived value of Lot 103 by making a deduction of 45% from the 'starting rate' to reflect their assessment that the shape and size of Lot 103 is less desirable than that of the comparable sales (Exhibit A, p 1109).

Contamination - where s 6A(2) is operative

1. Consequential on its interpretation of s 6A(2) of the Valuation Act, the Applicant argued that - consistent with the approach adopted by Mr Jackson - it is appropriate to subtract $14,100,000 from the derived 2013 land value for Lot 103 to account for remediation costs. That is to say, a deduction is necessary to account for the costs of sufficiently remediating the land to allow the re-erection of the existing improvements on Lot 103 and the continuation of the existing petrochemical or similar use upon it.
2. In support of this, the Applicant referred to Mr Chambers' evidence to the effect that he would advise a prospective purchaser, under the s 6A(2) scenario, that the consent authority would require Lot 103 to be remediated as a condition of development consent for the re-erection of existing improvements (Exhibit A, pp 600-601). Hence, the Applicant said that Mr Parker would have advised a prospective purchaser to make an allowance for the costs of the remediation, which he estimated to be $14,100,000 (Exhibit A, pp 135 and 140). The Applicant said that Mr McKay accepted that remediation might be required on Lot 103 but that the available evidence did not establish that this is necessary (Exhibit A, p 539).
3. The Applicant repeated its submissions above regarding the relevance to the valuation exercise of the potential liability under the CLM Act to pay remediation costs (Transcript, p 261).
4. The Applicant criticised Mr Ferdinands for allegedly erroneously omitting to make any adjustment for the contamination of Lot 103. The Applicant said that Mr Ferdinands disregarded the issue of land contamination because he wrongly assumed that, under s 6A(2), the existing improvements would not have to be rebuilt on the land.

Access - where s 6A(2) is operative

1. The Applicant conceded that Lot 103 has some (currently unused) frontage to Anderson Street and that easements over adjoining lands provide the means of accessing Lot 103. Although Mr Jackson acknowledged that street frontage and access would be of less significance to a purchaser intending to use the land for a petrochemical or similar use (as opposed to a general industry use), Mr Jackson made a 10% downward adjustment to reflect the limited access and frontage of Lot 103. The Applicant claimed that this adjustment is measured and appropriate.

Other features - where s 6A(2) is operative

1. The Applicant denied that there is sufficient evidence for the Court to conclude that Lot 103 has added value by virtue of its gas pipeline connection or location (Transcript, p 268).

The Applicant's submissions concerning Lot 5

1. The Applicant submitted that Mr Jackson's approach to valuing Lot 5 under s 6A (with s 6A(2) being operative) and his ultimate derived land values for the base years 2013, 2014 and 2015 should be accepted by the Court. The Applicant noted that both valuers only assessed the land value of Lot 5 on the basis that s 6A(2) is operative.
2. For the 2013 base year, Mr Jackson's (comparative sales) valuation approach is based on the premise that the 'starting rate' value is 50% less than that derived from the agreed comparable sales ($400 per m2) if s 6A(2) is operative. From this reduced 'starting rate', a deduction of 10% is made for the less desirable frontage and a deduction of 70% is made for the inclusion of Lot 5 in a blast zone. Applying the derived rate to the land area of Lot 5 produced a land value of $1,264,000. From this value, Mr Jackson deducted $3,000,000 to account for the required estimated remediation costs - leaving an ultimate land value of $0. Mr Jackson relied upon the same methodology to arrive at the same land value for the base years 2014 and 2015.

The 'starting rate'

1. As outlined above in relation to Lot 103, the Applicant submitted, in accordance with the evidence of Mr Jackson, that the agreed 'starting rate' of $400 per m2 for the 2013 base date value of Lot 5 should be (conservatively) reduced by 50% (to make the 'starting rate' $200 per m2).

Contamination

1. As outlined above in relation to Lot 103, the Applicant submitted that Mr Jackson's 2013 deduction of $3,000,000 from the value of Lot 5 is supported by the planning and contamination expert evidence (citing Exhibit A, pp 141-142).

Access

1. Given that Lot 5 has no frontage to a public road and is currently accessed by way of easements over adjoining land in the BIP, the Applicant submitted that Mr Jackson's downwards adjustment of 10% is appropriate. The Applicant argued that Mr Ferdinands' decision not to make any access adjustment ignored the inferior form of accessing Lot 5 as compared to the comparable sales.

Blast zone

1. The Applicant argued that Mr Jackson's downwards adjustment of 70% to the value of Lot 5 is necessary to properly account for the "sterilising effect on any development potential of Lot 5" caused by approximately 70% of Lot 5 falling within a blast zone (that is to say, an area assessed to be of acute fire and explosion risk in the BIP): relying on the above mentioned quantitative risk assessment report.
2. The Applicant contended that a prospective purchaser would pay less for Lot 5 on the basis that it is "surrounded by physical facilities [including those on Lot 103] which give rise to a blast zone" regardless of whether the blast zone is a statutory planning restriction (cf the evidence of Mr Ferdinands at Exhibit A, p 1110). The Applicant denied any suggestion that the valuation of Lot 5 should proceed on the basis that the surrounding land users would have to adjust their pre-existing activities so as to not burden Lot 5 with blast zone risk: citing, by analogy, Inghams Enterprises Pty Ltd v Kira Holdings Pty Ltd (1996) 90 LGERA 68 at 77. The Applicant also repeated its submissions above as to the irrelevance of the quantum of the adjustment to the reliability of Mr Jackson's valuation approach.

Scarcity

1. The Applicant said that it would be wrong for the Court to determine the value of Lot 5 on the basis that it is essential and valued infrastructure supporting the other uses of the BIP. That would, according to the Applicant, make the mistake of valuing the land on the basis that there would be anxious buyers (Transcript, p 299).

The Respondent's submissions on the valuation evidence

1. The Respondent noted the Applicant's case that the proper valuation approach to adopt in the present proceedings is to apply s 6A such that s 6A(2) is not operative. However, the Respondent claimed that the proper valuation approach is to apply s 6A such that s 6A(2) is operative. This is because the highest and best use of both Lot 103 and Lot 5 is, according to the Respondent, the continuation of the existing use and its associated improvements. The Respondent submitted that its determination of the value of the relevant lands - produced carrying out the s 6A valuation exercise such that s 6A(2) is operative - should be upheld by the Court. In support of this, the Respondent provided the following reasons why the Court should not accept the valuation evidence of Mr Jackson.

The reliability of Mr Jackson's valuation approach

1. The Respondent criticised the comparative sales valuations of Mr Jackson on the basis that his approach involves "large adjustments … in the order of more than 100%" (citing Transcript, p 230). The Respondent maintained that the Court should be uncomfortable with the numerous large adjustments made by Mr Jackson in valuing the relevant lands: citing Tomago Aluminium Company Pty Limited v Valuer General at [44] and [51].
2. In contrast, the Respondent submitted that the smaller quantum of Mr Ferdinands' adjustments means, amongst other reasons, that his determined land values are acceptable and reliable. Moreover, given the large adjustments made by Mr Jackson in his comparative sales valuations, the Respondent criticised Mr Jackson for not undertaking hypothetical development valuations. The Respondent suggested that Mr Jackson's reasons for not doing so were unconvincing. It was also said to be of some significance that Mr Jackson was not given sufficient information to undertake such a valuation approach (Transcript, p 279).

The frontage adjustment

1. The Respondent argued that Mr Jackson's adjustment for the frontage of Lot 103 and Lot 5 is not warranted because the roads within the BIP are "paved and signed-marked" and there is "no material difference to driving on a public road". The Respondent alleged that Mr Jackson had effectively double-counted the disadvantageous size and shape of Lot 103 in his frontage adjustment by reasoning that the frontage did not facilitate effective internal transportation and movement (Transcript, p 280). With respect to the Applicant's claim that a "triangular part" of Lot 103 has no frontage, the Respondent dismissed this claim as being without evidentiary support (Transcript, p 280).
2. Moreover, the Respondent reiterated and adopted Mr Ferdinands' reasons for not making such an adjustment, namely, that: Lot 103 has frontage to Anderson Street of 114.49 metres and benefits from rights of way through the BIP; the existing use of Lot 103 does not use its frontage; and Lot 5 has the benefit of rights of way through the BIP.

The excision adjustment

1. The Respondent argued that Mr Jackson's adjustment for the excision of Lot 103 from BIP was unjustified because the relevant provisions applying to the BIP do not "indicate that there would be any [associated] reduction in the land value" (Transcript, p 282). In particular, the Respondent submitted that the evidence does not support any assumption that there is a power to prevent the owner of Lot 103 from carrying out uses on land without the consent of the Special Purpose Company.
2. Furthermore, the Respondent contended that there is an inconsistency in Mr Jackson's evidence with respect to his irreconcilable claims that (1) Lot 103 would need to be excised from BIP to be used for general industry purposes and (2) the Special Purpose Company, which is responsible for the management of the BIP, would attempt to prevent such an excision (Transcript, pp 282-283).
3. Additionally, the Respondent submitted that no excision adjustment should be made for the land value of Lot 5 because its highest and best use is its existing use.

The setting of the 'starting rate'

1. The Respondent contended that the Court should not accept Mr Jackson's approach of setting a 'starting point' rate for Lot 103 and Lot 5 that is 50% less than the agreed starting rate for each base date. The Respondent submitted that the vendor "would not sell [its] land for 50% less than the market is prepared to pay for IN1 land".
2. According to the Respondent, Mr Jackson's method of deriving this 50% adjustment, by analysing particular sales in and nearby Rosehill, was unreliable because he failed to adjust these sales for "size, improvements, time, development consent", rarity and contamination. Furthermore, the Respondent alleged that Mr Jackson erred by comparing IN1 and IN3 sales in his proxy sales comparison exercise when the subject lands can only be used for IN1 uses and their particular existing uses (Transcript, pp 284-285). It was also emphasised by the Respondent that this 50% deduction on the starting rate should be understood as an adjustment (Transcript, p 283).
3. Instead, the Respondent claimed that the Court should embrace Mr Ferdinands' evidence of an (conservative) upwards adjustment of 10% to account for the potential to use Lot 103 and Lot 5 for a greater variety of uses than the comparable lands (that is to say, the lots can be used for a permissible IN1 use or the relevant existing use).
4. The Respondent submitted that Mr Ferdinands' method of using relevant IN1 and IN3 sales of lands in Prestons as a proxy to determine the purchase price premium that would be paid (for the potential to use Lot 103 and Lot 5 for IN1 uses or the existing heavy industrial use) was reliable. Additionally, the Respondent noted that location of Lot 103 is "highly desirable" because "[i]t is a large site surrounded by similar uses, close to port facilities and with limited need to transport hazardous materials long distance[s] by road".

The 'blast zone' adjustment

1. The Respondent submitted that Mr Jackson's valuation of Lot 5 was predicated on the basis that the 70% of Lot 5 that is within a blast zone is effectively incapable of being used, including its current use (which was said to be carried out on 70% of Lot 5: citing Mr Jackson's oral evidence at Transcript, p 220). The Respondent contended that this was erroneous because s 6A(2) requires the valuer to assume the continuation of the current use and, therefore, the continuation of this use on the area of Lot 5 (70%) on which it is currently carried out.
2. Additionally, the Respondent submitted that, contrary to Mr Jackson's evidence, a market of buyers for Lot 5 has to be assumed under the Valuation Act. Indeed, the Respondent reasoned that the "very fact that lot 5 is consumed by this blast zone would produce demand by the adjoining owners to own it … because, if they didn't own it, the risk to them of being able to continue their operations is real": citing the law of nuisance and negligence (Transcript, p 286).

The contamination adjustment

1. For the reasons given above, the Respondent repeated its position that, if s 6A(2) is operative in the current valuation exercise, no adjustment for the contamination of Lot 103 or Lot 5 should be made in valuing Lot 103 or Lot 5. The issue of contamination was said to only become relevant "if the Applicant can convince the Court that a process of approval is required to reinstate, to rebuild the improvements" because, otherwise, there would be no obligation to remediate (Transcript, p 274). The Respondent stressed that the Applicant's case is not that an adjustment needs to be made for contamination but that the land value will be reduced by the cost of remediation; "[the Applicant] is not saying your Honour would make an adjustment and that adjustment needs to be down" (Transcript, p 287). Hence, the Respondent submitted that Mr Ferdinands' decision not to make any adjustment for contamination was correct.
2. Ultimately, the Respondent maintained the position that the contamination of Lot 103 and Lot 5 "does not give rise to a risk of [the purchaser] incurring cost" (Transcript, p 290). The Respondent considered that the evidence does not establish: that the purchaser would be required to remediate, let alone pay to remediate, the land (citing the CLM Act and the fact that the polluter is a well-known international company already taking responsibility for the pollution); that the purchaser would need to pay significant ongoing contamination management related costs to continue the existing uses; or the likely final remediation costs with any certainty (Transcript, pp 289-290). It should also be noted that the Respondent denied that the issue of liability to remediate the land was something that it needed to plead (Transcript, p 290).
3. For these reasons, the Respondent asserted that Mr Jackson's assumption that the purchaser(s) of Lot 103 and Lot 5 would remediate the lands, or would have a liability so to do, was incorrect. Consequently, the Respondent said that Mr Jackson's valuation approach is unreliable in this critical respect.

The Respondent's submissions on the contamination evidence

1. The Respondent conceded that Lot 103 and Lot 5 are contaminated. In fact, the Respondent said that the lots would remain contaminated even if all of the remediation works contemplated by Mr Parker were carried out. However, the Respondent argued that this contamination does not affect the land value of Lot 103 or Lot 5 unless the lots need to be remediated. As already identified above, the Respondent emphasised that the Applicant's case is that remediation costs (and not the land contamination in and of itself) have to be accounted for in the valuation exercise. For the reasons given above, the Respondent stressed that (given that the assumptions in s 6A(2) are operative) the costs of remediation should not be considered in valuing Lot 103 or Lot 5.
2. With respect to Mr Parker's evidence, the Respondent submitted that it is significant that Mr Parker conceded that it was unlikely that remediation of Lot 103 or Lot 5 would be required if the current uses of those lots were to continue without the need to rebuild the relevant improvements. Although Mr Parker said that the lands would require ongoing management of the risks posed by the extant contamination, he was said to have accepted that this would not require any materially different management to that currently occurring. Hence, the Respondent asserted that "[n]othing different to what happens now would be required".
3. In the event that the Court was to find that the costs of remediation were relevant to the valuation exercise, the Respondent provided a detailed account of the contamination evidence. In particular, the Respondent focused on the evidence pertaining to the need for remediation and the costs of remediation.
4. In essence, the Respondent submitted that, on the whole of the available evidence, the need for the remediation of the lands has not been established and that the remediation costs (if any) are unknown. In the Respondent's words, "[e]ach expert agrees that detailed site investigation is necessary to understand the extent of contamination and to quantify any remediation". For this reason (and other reasons), the Respondent claimed that "the Applicant has not satisfied the onus that the impact on land value is as high as judged by Mr Parker - the remediation costs, and consequent impact on land value, could be as little as tens of thousands or hundreds of thousands of dollars". On the balance of probabilities, it was said that the Court could not be satisfied that (as a determination of fact) remediation would be required or that it had sufficient information to determine the likely remediation costs.

The Respondent's submissions on the town planning evidence

1. On the Respondent's construction of s 6A(2), it was submitted that the town planning evidence confirms that development consent would not be required to continue the existing use and associated improvements on Lot 103 and Lot 5 and, therefore, that no requirement for remediation would arise. Indeed, the Respondent suggested that the agreement of the town planners in this respect means that the contamination evidence is of no assistance.
2. To the extent that Mr Chambers gave evidence that development consent would be required if the relevant existing improvements were to be demolished and rebuilt, the Respondent dismissed this evidence as irrelevant because it is predicated on a misconstruction of s 6A(2).

Consideration

1. If ever there was a statutory provision which requires one to stand back and strive for a clear thinking mindset, it is s 6A of the Valuation Act, specifically ss 6A(1) and 6A(2). Rarely has there been a statutory provision that so lends itself to entrapment down the path of obfuscation. Counsel for both parties in this case ably argued their respective interpretations, finding recourse to much case law which, they submitted, assisted their particular perspectives. This Court has decided it is necessary to return to basics, in order to clearly explain its determination. The Court of Appeal in Trust Company of Australia v Valuer-General [2007] NSWCA 181, [78]-[95] assists with an historical analysis of s 6A. In returning to basics, the Court notes that this Trust Company case is authority for what might be thought to be a truism that: "a court was not limited to selecting between various views of the construction of legislation that were presented to it, but was entitled, and indeed required, to put on the legislation in question the construction that the court itself concluded was the correct one".
2. The valuation of land requires the valuer to determine a fair and reasonable value of land. The underlying assumption, indeed requirement, is that that determined value would equate to "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" (subject to the stated assumptions as to improvements) which a willing but not overly anxious purchaser would pay. It should be assumed that it is the range of lawful uses of the land which provides the basis by which the valuer determines value. The user of land will have many options (within the constraints of planning law) as to how land might be developed and used, but it is only those optional uses which are lawful which the valuer can consider as contributing to the options by which the land might be used and so, consequently, its value. As our legal system is predicated on a principle that one should not profit from unlawfulness, logically it follows that unlawful uses of land are not within the range of options available for consideration by the valuer, so the ways by which land could be used unlawfully ought not to be taken into account in the valuation exercise. As will be explained below, these considerations presumably underpin the rationale for providing for the consideration of protected existing uses in the valuation exercise. If the legislative scheme did not protect the continuance of existing uses, then those uses would be unlawful and so not capable of adding value.
3. Section 6A(1) provides for valuation on the normal basis, that is valuation of land on an unimproved land value basis: to determine the basic land value without the added capital value of improvements (but excluding from that exclusion land improvements). A broad definition of "land improvements" is found in s 4(1).
4. Valuing land on an unimproved land value basis requires the valuer to take into account the zoning of the land, which, in essence, is the "rule book" which provides for the range of permissible land uses for which the land being valued may be used. Logically it is only the lawful use of land, in planning law terms, which the valuer can only take into account in the course of the valuation exercise. The zoning of the land is only the start of the exercise.
5. In the case of land which has historically been used in a particular way which, due to zoning changes, is now prohibited, planning law protects the continuance of such land use via the existing use right provisions in the EPA Act. As explained earlier, the uses of Lots 103 and 5 within the BIP petrochemical plant, are categorized as hazardous industry, falling within the definition of "heavy industry" which, within Zone IN1 General Industrial in the SEPP, would be a land use which is prohibited were it not for the protection of the existing use provisions in the EPA Act.
6. If the s 6A(1) valuation exercise were to proceed in the normal course without special provision being made for taking into account the continuance of land use which was once lawful but which is now (but not for existing use rights) unlawful, then the valuer would effectively penalise the owner of such land when carrying out a valuation. Continuing uses of land which are now prohibited would, in the absence of special provision, have to be disregarded thereby resulting in an unjustifiably distorted value, being a value that fails to take into account the continuing lawful use rights. Such a scenario would result in a potentially unfair outcome for the owners of such land used and developed in such a way.
7. Given such a potentially unfair scenario, s 6A(2) constitutes the special provision devised by the Legislature to redress such implications. Section 6A(2) is intended to bring fairness into this equation by providing a means by which land uses which would otherwise be prohibited but which are protected as existing uses are brought into the equation by being ascribed an appropriate value properly and fairly reflecting the continuance of the land use. These existing uses are recognised as having a legitimate basis for continuing and so the valuation process is provided with a rational methodology by which such land being put to such an existing use can be valued.
8. With the need for a rational methodology being accepted, the challenge with existing uses is to precisely determine their characterisation. It is not an exercise in the broad, determining whether the land usage is general industry or heavy industry, rather it is an exercise demanding particularity. As noted in many existing use planning cases, the characterisation of a land use is not led by the definitions found in an LEP, rather it requires an examination of the facts on the ground: what is developed on the land and how that development is actually used. This discussion brings us to the underlying purpose of s 6A(2). In order to precisely characterise the existing use of the land to be valued, s 6A(2)(b) provides a methodology by which the particular characteristics of the continuing land use can be precisely identified for the purposes of properly determining the attributes of the land to be valued. In search of greater exactitude, s 6A(2)(b) adopts a methodology which extends beyond the usual characterisation exercise in planning law. The language in s 6A(2)(b) takes the exercise further, for as Leeming JA confirmed in Valuer General (NSW) v Fivex Pty Ltd at [45], the subsection "uses different language the which is capable of bearing a broader meaning". I return to this point below.
9. So an assumption, hypothetical in nature, is provided in s 6A(2)(b) whereby it is assumed that the improvements on the land "may be continued" so that the existing use of the land continues to be so used. The assumption necessarily contains within it an acceptance that all necessary approvals have been obtained and that nothing more is required in order to accept that the existing use with the necessary improvements upon the land may continue. (This point, that it is inherent in the assumption that nothing more is required to be done, is a critical issue in this case and so shall be returned to later). Further, consistent with the planning principles applicable to existing uses whereby the owner of land so used is entitled to modify and make improvements on their land such as would be necessary to enable the existing use to continue, so it is that s 6A(2)(b) provides for that flexibility by stating that "such improvements may be ….. made on the land as may be required in order to enable the land to continue to be so used".
10. It needs to be clearly understood that by hypothetically allowing the improvements on the land to remain for the purposes of facilitating a proper valuation, this is not to say that the actual capital value of the improvements are taken into the calculation exercise. It remains the case that the land is being valued for its land value only, in its unimproved state. The "bricks and mortar" of the actual improvements are not valued, simply the land upon which they sit. The hypothetical "remaining" improvements are simply considered as part of an artificial mechanism in the valuation exercise in order to precisely identify what the highest and best use of the land is at the relevant date - that use which underpins the hypothetical offering to sell the land, on reasonable terms and conditions, by the bona-fide seller with a realisation expectation. In other words, the scheme of s 6A(2) is to allow the improvements to remain so as to act as a touchstone to precisely identify and characterise the use of the land being valued.
11. There is further confirmation of the evident endeavour to align and dovetail the valuation methodology with planning law. Consistent with planning law, which protects the continuance of existing uses and allows modifications to improvements to occur (within allowable limits), s 6A(2)(b) also contemplates that improvements "may be … made" on the land as may be required for the existing use of the land to continue to be so used. This means that the assumption in s 6A(2)(b) provides not only for existing improvements to be upon the land, but that alterations or changes over time to those improvements are also within contemplation.
12. Adopting the above approach, the legislation is requiring a focus on the specific "real world" actual use of the subject land where that particular use has the benefit of existing use protection. So in the case of the BIP, to draw upon the language of biology, the focus is not on the genus of "heavy industry" and it is not a focus on the specie of "petrochemical plant" within heavy industry, rather the focus is on the specific extant sub-specie on the subject land - the particular, actual Olefines petrochemical plant that existed and operated within the BIP at the relevant dates of valuation - which most accurately characterises the allowable and continuing use of the land being valued. In essence, it is the actual improvements on the land which, with the greatest particularity, helpfully delineate the sub-specie of heavy industry allowed to continue on the land, thereby identifying the highest and best use of that land.
13. It is instructive to return to Valuer General (NSW) v FIVEX at [46 - 48] and heed the analysis of Leeming JA: "…. to my mind critically, there is para (b) of s 6A(2). Paragraph (b) goes beyond the use of land, and speaks in terms of the improvements on the land. The paragraph refers at least in part to improvements in the real world, as appears from the verb "continued", a point noted by Handley JA in Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673; 114 LGERA 376 at [26]. If the operation of s 6A(2) were exhausted by ensuring that an existing use is one to which the valuation exercise may have regard, then it is difficult to see why para (b) is needed at all. Conversely, the presence of s 6A(2)(b) requires, in particular, as assumption to be made that the improvements as they exist in the real world "may be continued" In particular, it is difficult to reconcile the presence of para (b) with Fivex's submission that the subsection proceeds on the basis of a distinction between the purpose of a use, and the nature of an improvement. A mandatory assumption as to an existing building in the real world continuing is inconsistent with the subsection applying only to use for a purpose and eschewing regard to the nature of the use. None of this is to deny that what is to be determined is the unimproved value of the "fee-simple", stripped of those improvements. Necessarily, the task required by the statute is a highly artificial one. However, the statute refers in terms not merely to the purpose of the existing use, but also to the actual improvements in the real world that enable that existing use to continue".
14. So to reiterate: s 6A(2) establishes a methodology by which the characterisation of a particular continuing use can be precisely identified for the benefit of the valuer charged with the task of carrying out a valuation. Essentially it is a scoping exercise by which the relevant precise existing usage of the subject land is most accurately identified, in its hypothetically physically improved state. The closer the focus on the particular continuing use, the sub-specie, the more likely is the valuation exercise to be accurate. Focusing on the improvements hypothetically allowed to continue is the means to most accurately identify the permitted continuing heavy industrial use in a "real world" sense. It could be said that in the circumstances of this Olefines petrochemical plant, the valuation exercise requires the plant to be treated as unique with both the particular attributes and disbenefits (such as contaminated areas within the plant) which characterise it being taken into account.
15. Therefore is would be erroneous for a valuer to approach the valuation exercise simply on the basis that the subject site is IM1 zoned land without the petrochemical plant improvements being in place - simply as cleared General Industrial land. The valuation task approached in that manner, would result in a s 6A(1) valuation exercise with no consideration of the mandatory requirement to consider and comply with s 6A(2). The commencing words in s 6A(2) confirm the mandatory consideration of this subsection with the words: "Notwithstanding anything in subsection (1), .."
16. It would be doubly erroneous for the valuer to approach the task pursuant to s 6A(1) alone, that is without a consideration of s 6A(2), and then take into the equation a discount calculated by reference to an allegedly required remediation of the land due to legacy contamination. To approach the exercise in this manner would be inappropriate, costing the disbenefit of contamination (allegedly assessed by reference to the estimated costs of a hypothetical clean-up of the site) whilst ignoring the benefit of a hypothetical continuation of the unique petrochemical plant in situ within the BIP.
17. Focusing on the question whether remediation of the subject land is a necessary component of the valuation exercise, s 6A(2) requires the adoption of the assumption: that the land may be used (at the date of valuation) or may continue to be so used. In passing, I might observe that land can't continue to be used for a purpose if it is not already in fact being so used. These words, in effect, accord with the scheme of the planning legislation which protects the continuance of existing uses. So for the purposes of the valuer's valuation exercise, those assumptions do not allow the valuer to question the legality of the continuing use and so thereby bring into the equation supposed additional requirements which might be said to be necessary in order for the use of the land to continue. In short, the assumption is that the improvements are in place and that all necessary consents have been obtained and requirements met.
18. As said earlier, due to s 6A(2), the specific, particular use is to be identified so as to precisely identify the hypothetically continuing use, but not in such a way that presumes that the actual improvements are on the land (as a component of the land to be valued), but as the touchstone pointing to the actual use characterisation with particularity. Further, the assumption allows for such improvements to be potentially replaced on the land (but just so as to leave no doubt that the existing use can continue). Again, it is stressed that the "bricks and mortar" of improvements are never included components of the valuation as the valuation exercise is never to stray from being an exercise to determine the land value with the land use having been precisely identified. This artificial exercise is required, as part of the valuation exercise, so as to precisely characterise the use of the land in the current real world that hypothetically can continue.
19. The acceptance of the "can continue" basis upon which this exercise proceeds, means that the continuance of the use does not trigger any of the normal requirements to obtain the requisite approvals via a normal development application process, rather it is to be assumed that all approvals are in place. It is on this point Senior Counsel for the Applicant erred in his interpretation: he argued that "can continue" means that they can erect the necessary plant in order to conduct the permitted continuing use, but they would hypothetically need to have gone through the permitting process leading to a grant of consent - but that consent would be subject to compliance with requirements, critically remediation of contaminated land. Consequently, it was argued by the Applicant that as the normal development application process in NSW with respect to a contaminated site would trigger the need for land remediation (de-contamination) - especially in circumstances where the underlying zone has changed from the Heavy Industry zoning to the General Industry zoning - the real world consideration of the cost of remediation had to be taken into the equation at each valuation date.
20. This interpretative approach adopted by the Applicant is fundamentally flawed. It is illogical for it to be accepted that the improvements may be referenced in order to determine the usage of the land being valued, but then be effectively stripped from the land, in a real sense, in order to determine a base land value - presumably for fear of erroneously taking into the calculation the capital value of those improvements. The stripping of those improvements does occur, but only in a hypothetical sense. It is not a "real world" removal, to be followed by the necessity for a real world reinstatement of the improvement. Rather the exercise remains a hypothetical one: the improvements reappear, they are effectively reinstated. In short, nothing needs to be rebuilt, no improvements need to be reinstated and so any prerequisites for development consents or building approvals (such as land remediation) need not be satisfied. The real world improvements remain in situ for the land use "sub-specie" characterisation exercise, in a s 6A(2) sense rather than a planning law sense, thereby identifying the highest and best use; they are then hypothetically removed in order to "see" the underlying land to be valued in its unimproved state (thereby avoiding their capital value being part of the valuation); but are then hypothetically returned to their extant state so that the real world usage can continue. Again, as Leeming JA emphasised at [46] in Valuer-General v Fivex Pty Ltd: " …the presence of s 6A(2)(b) requires, in particular an assumption to be made that the improvements as they exist in the real world "may be continued" ".
21. The Court accepts the evidence of the Respondent's environmental scientist Mr McKay, in particular, when Mr McKay considered what might be the requirements for remediation should the extant Olefines petrochemical plant continue to operate. Quoting from his report (Exhibit A1, p 472), Mr McKay relevantly set out his conclusions on this issue: 167. As was introduced in Section 5.1.2, the need for remediation should not simply be assumed because there is contamination on the Site, but should be considered in the context of risk and the regulatory framework that the Site operates within. 168. At the base dates (July 2013, July 2014 and July 2015) the Site was regulated by the NSW EPA under approved Voluntary Management Proposals (Appendix D). Under the VMPs there was no specific requirement for Orica to carry remediation of the soil, though Orica was required to convene a strategy meeting every three years with input from global experts in the field to review data, and assess options and feasibility for remedial strategies for the Site. 169. There is no information available in the reviewed documentation on the impacts of contamination on current Site activities. The CSM notes in Section 5.1.1 that the focus of risk assessment to date has been on areas off the BIP as onsite risk issues are managed on the BIP under Site Management Plans. 170. These plans have not been reviewed but clearly the Site continues to operate as an industrial facility. 171. As the Site is a heavy chemical user and manufacturer the Site operator would be well placed to know and manage exposure risks to its staff. Based on the ongoing operation of the Site, I would assume that Site management has conducted its own due diligence with respect to worker health and safety and is comfortable that the risks posed by residual soil and groundwater impacts are acceptable. 172. A summary of findings from the 2007 strategy meeting was provided in Section 6.2.1 of the CSM and at the time it was noted that "human health and environmental risks were well understood and being adequately controlled". 173. Having reviewed available technology those present at the strategy meeting concluded that "current DNAPL depletion technology is not practicable in delivering significant additional short and medium-term reduction to human health and ecological risks, or a meaningful reduction in overall clean-up duration". 174. Based on those two statements, the fact that the former and current NSW EPA approved VMP (Approval No. 20151711) do not require soil remediation to be undertaken, and the Site continues to operate, I would conclude that at the base dates July 2013, July 2014 and July 2015 remediation above and beyond operation of the groundwater treatment system was not considered necessary, either by Site management or the NSW EPA. 175. Assuming the Site is suitable from a health and safety perspective for its ongoing current use, and the NSW EPA is satisfied with the ongoing management of the offsite risk, the only conceivable rationale (in my opinion) for remediation would be pre-emptive clean-up of targeted areas to facilitate future possible site sale or to reduce future liability associated with the contamination, neither of which are statutory requirements.
22. It is important to understand the distinction between the valuation of land with a petrochemical plant operating on a capital improved basis - that is, valuing the actual nuts and bolts of the plant in situ - and the exercise pursuant to s 6A(2) at the Olefines plant where the valuation of the land is occurring simply on the basis of a continuing land use being precisely identified by specifically focusing on the extant petrochemical plant. The extant Olefines petrochemical plant, with its improvements in place, has characterised the continuing use, thereby identifying one of the parameters of value. This is not to be mistaken for an impermissible valuation of the "bricks and mortar" of the actual improvements.
23. So in circumstances where the required assumption is that the petrochemical plant may continue, thereby identifying how the subject land was used at each relevant valuation date and may continue to be so used, it is inappropriate for remediation costs of the contaminated land to be taken into account in the valuation exercise. The contaminated state of the land is irrelevant to the capacity or entitlement of the petrochemical plant to remain, thereby identifying the continuing use of the subject land. For the usage of that plant to be considered for valuation purposes as a continuing use with improvements in situ, there is no need or requirement to rehabilitate the contaminated land. Consequently, for the valuation of the subject land on any of the relevant dates it would be erroneous to take into account in the equation the cost of a hypothetical remediation of the land. There was no evidence before the court that without remediation the petrochemical plant could not continue to be operated and therefore that the subject land could not continue to be used for that particular petrochemical plant. On the contrary, in the course of cross-examination Mr Parker's evidence was that costs of remediation of contaminated land would not be required if the petrochemical plant were to be a continuing use.
24. Having accepted that it would be wrong for the valuer to take into account the costs of a hypothetical clean-up of the contamination, it would nevertheless be the case the hypothetical continuance of the petrochemical plant does require, as indicated above, that both the benefits and disbenefits are taken into account in the valuation of the extant petrochemical plant. The consideration of the disbenefits would include the fact of the land being contaminated but in a context that there is no legislative necessity nor other influence requiring the contamination to be remediated. It would remain a relevant factual circumstance, a benign presence in the land, which ought not be ignored but which does not trigger responsive obligations for as long as the extant petrochemical plant remains. So a prospective purchaser carrying out a due diligence assessment of the extant petrochemical plant would: (a) be taken to be informed that the plant sits on contaminated land; (b) be taken to be informed that their acquisition would not in and of itself trigger a requirement to clean-up the contamination; and (c) be taken to be cognizant of the current legislative regime that requires, normally, the original polluter, if and when remediation is to occur, to be responsible for both the clean-up and the costs thereby incurred.
25. The Court finds confirmation of its interpretation, in relation to the contamination issue in Alan Hyam, The Law Affecting Valuation of Land in Australia (5th ed 2014, The Federation Press) at 153-154 and the cases cited therein. In particular, it is instructive to examine the decision of the Queensland Land Court in Logform Industries Pty Ltd v Chief Executive, Department of Lands (1994-1995) 15 QLCR 141. In the context of s 12(1A) of the Queensland Valuation of Land Act 1944 being relevantly identical to s 6A(2) of the Valuation Act in this case (save for "land value" being "unimproved value" in the Queensland Act), the Land Court was required to consider the valuation of land that, being probably contaminated with a chemical used for treating pine timber products, was included on the Contaminated Sites Register pursuant to the Queensland Contaminated Land Act 1991. The Court held [pp148 - 9]: "The effect of s 12(1)(b) of that Act is that the unimproved value of the land must be determined assuming that the improvements thereon had not been made. In other words, it is the price that a hypothetical prudent purchaser would pay for the land if it was offered for sale in its unimproved state. A hypothetical prudent purchaser would be well aware that the land is a probable contaminated site and that at some time in the future the Chief Executive may order remediation. There is evidence from Mr Miles that the cost of remediation may well exceed the unimproved value of the land. However, this does not mean that the land should be valued at a nominal value only. [quotes s 12(1A) of the Queensland Act]. The legislative and judicial history of these provisions were explained by Carter J in Stubberfield v The Valuer-General (1988-89) 12 QLCR 328. At p335 he said: "S 12(1A) should be construed to mean that in assessing unimproved value the assumption may be made that the land may be lawfully used and continue to be lawfully used for the purpose for which it was in fact being used at the valuation date and the improvements thereon may continue to be used or may be made as required to enable the land to be continued to be so used". In the present case, in its unimproved state the subject land may have little value. However, as it is presently improved, Logform is using the land and may continue to do so, unless and until the Chief executive takes some action under the Contaminated Land Act. Should that happen, the respondent can alter the valuation accordingly under s 13(2) of the Valuation of Land Act. In such circumstances, I am of the opinion that the provisions of s 12(1A) are sufficiently wide to encompass the present situation. Therefore, until such time as the subject land ceases to be used for the purpose for which it is presently being used, or the Chief Executive issues a notice under the provisions of s 19 or s 20 of the Contaminated Land Act. I consider that the subject land should be valued for the purpose for which it is being used. The land is being used for industrial purposes and I have already found that the sales of industrial land used by Mr Lucas are appropriate. In the circumstances, the appeal must fail".
26. In the instance of the Olefines petrochemical plant, the consideration of estimated remediation costs of contaminated land is an instance of an improper factor being brought into the calculation by the Applicant's valuer. The land can continue to be used as a petrochemical plant in its contaminated state. For the valuer, this is its highest and best use. There is no requirement for the land to be remediated for the petrochemical plant to continue to operate. Simply, it is the continuation of that same petrochemical plant which best characterises the protected continuing use, most clearly identified the mode of operations on the land and thereby which precisely characterises the land being valued.
27. On the basis of the foregoing analysis, it follows that the Court rejects the Applicant's interpretation of how s 6A(2) is to be applied, it follows that there is no necessity to determine the cost of any hypothetical remediation of contaminated land. It is unnecessary to take into account remediation of the subject lots in the valuation exercise in this case. With the land being deemed to have all approvals in place for all improvements hypothetically considered to remain in place for the extant Olefines petrochemical plant to continue, it necessarily means that all component steps normally required to put in place those improvements will hypothetically already have occurred. So with all necessary approvals deemed to be in place, hypothetical remediation is unnecessary hence, whatever the estimated range of assumed remediation costs (which were examined in the course of the hearing through the evidence of the Applicant's remediation expert Roger Parker), such costs do not need to be deducted from the assessed land value of the subject lots. I have therefore concluded, that all the evidence regarding the remediation of Lot 103 and Lot 5 is irrelevant in the subject valuation exercise. Therefore, to the extent that adjustments were made by the Applicant's valuer Grant Jackson in order to take into account remediation costs estimated by Mr Parker, the Court rejects those adjustments, considering them to be inappropriate and unnecessary.
28. I accept the planning evidence before the Court that if the use of the two lots was to change to a General Industrial use, such as warehousing, then the land which is contaminated would need to be remediated, as it is most likely that co-existence of contamination would be impermissible with such an alternative land use. However, in the context of the s 6A(1) valuation exercise, applying the mandatory requirements of s 6A(2), it is not my task in this case to focus on the consequences of a change to a General Industrial use. Rather, I have concluded that the continuation of the extant petrochemical plant pursuant to the existing use entitlement under the EPA Act, coexisting with the extant contaminated land, would be its highest and best use. I agree with the Respondent's interpretation of the law, in accordance with Spicer v Valuer General at [320], that the hypothetical "bona-fide seller" is entitled to demand a land value based on the best or most profitable potential use. Consequently, I accept the valuation evidence of Mr Ferdinands, the Respondent's valuer, wherein he determines the land value on the basis of s 6A(2) with the extant petrochemical plant usage remaining in coexistence with the contamination, without there being any requirement to take into account estimated remediation costs.

Conclusion on adjustments for street frontage / access.

1. The Court rejects the Applicant's proposition, based on the evidence of its valuer, that, with respect to Lot 5, there needs to be an allowance or reduction of 10% to compensate for what Mr Jackson perceived to be inferior access arrangements due to a lack of street frontage. Similarly, with respect to Lot 103, a similar inferior access arrangement through the BIP is pressed by the Applicant as being justification for an allowance or reduction of 20%. Mr Jackson maintained the need for such an allowance despite Mr Ferdinands being of the view that there is legal access benefiting Lot 103 to some 114.49 metres of frontage to Anderson Street. The Court also rejects the Applicant's stance with respect to the Lot 103 access issue.
2. In determining the disagreement with respect to access, it is highly material that the Court has found that the existing use of the two Lots as the extant petrochemical plant is the highest and best use. In such circumstances, the secure-perimeter, single controlled-entrance industrial park approach to site management of the whole BIP would seem to be the most appropriate, indeed desirable. Petrochemical plants, indeed heavy industry generally, are hazardous places requiring restricted access for occupational health, safety and security reasons. The Court is of the opinion that with such hazardous industrial usage of land, a managed and secure BIP is not only common place for industrial parks, but highly desirable. The fact that both Lot 5 and lot 103 are accessed via a controlled security entrance is, in the real world context being considered, a desirable attribute rather than a negative attribute. If there had been evidence to say that the managed industrial park actually adds value to a hazardous industry site, the Court would not have been surprised. However, although Mr Ferdinands considered the access arrangements with respect to Lot 103 were beneficial for the existing use, in circumstances where the Court did not hear specific evidence quantifying some value-adding contribution due to the access arrangements, the Court accepts that the approach adopted by Mr Ferdinands is appropriate, concluding that his rationale for his opinion is plausible. There should be no allowance, specifically no discount, attributable to access and street frontage issues with respect to both Lots 5 and 103.

Conclusion on adjustments for size and shape

1. In circumstances where the valuers called for both parties agreed that it was appropriate to adjust the derived value of Lot 103 by making a deduction of 45% from the 'starting rate' to reflect their assessment that the shape and size of Lot 103 is less desirable than that of the comparable sales, it is not for the Court to quibble with their assessment. Their evidence is accepted and so the agreed adjustment will be made.

Conclusion on adjustments for blast zone

1. The Applicant's valuer Mr Jackson adjusted the value of Lot 5 downwards by 70% arguing that it was necessary to properly account for the "sterilising effect on any development potential of Lot 5" caused by approximately 70% of Lot 5 falling within a blast zone (that is to say, an area assessed to be of acute fire and explosion risk in the BIP. The Court rejects such an adjustment to the value of Lot 5, concluding that to accept that proposition would be tantamount to concluding that the extant "sub-specie" of petrochemical plant, with all its benefits and dis-benefits, which ss 6A(2) requires the valuer to assume remains, is not in place.
2. The alternative perspective of the Respondent is to be preferred. The Court agrees that a market of buyers for Lot 5 has to be assumed under the Valuation Act and that, as the Respondent reasoned, the "very fact that lot 5 is consumed by this blast zone would produce demand by the adjoining owners to own it … because, if they didn't own it, the risk to them of being able to continue their operations is real". The Court considers this proposition is plausible. Further, given that the extant improvements on Lot 5 are assumed, by reason of s 6A(2)(b), to be continued, it is highly material that Lot 5 is the site of a utilities plant that services the BIP by providing, inter alia, steam and cooling water. It would seem logical, as the Respondent suggested, that there must be a ready and willing market amongst the owners of other premises within the BIP to purchase Lot 5, thereby ensuring that its utility function continues. In these circumstances, the extant blast zone (well-understood by other owners in the Park) would not act a disincentive and so would not justify any discount in the value of Lot 5, let alone a 70% discount.

Conclusions on adjustment for scarcity, pipeline connection and BIP location

1. The Court accepts the Respondent's submissions, supported by the evidence of Mr Ferdinands, that the assumptions required by s 6A(2) allowing the extant petrochemical plant to define and most accurately identify the highest and best use of both Lots 5 and 103, has the consequence of enabling these lots to have a premium benefit by reason of their location within the BIP. Although the Appellant asserted that there was no evidence ethane pipeline from South Australia would add value to Lot 103, it is logical that the extant benefits, such as the pipeline, by reason of both lots being located within the BIP offer unique advantages over other sites not so established with beneficial attributes.
2. The Court accepts Mr Ferdinands' evidence of a conservative upwards adjustment of 10% to account for the potential to use Lot 103 and Lot 5 for a greater variety of uses than the comparable lands (that is to say, the lots can be used for a permissible IN 1 use or the relevant existing use). Importantly, the Court adopts the Respondent's description of the material benefits arising from the location of Lot 103, in particular that it is "highly desirable" because "[i]t is a large site surrounded by similar uses, close to port facilities and with limited need to transport hazardous materials long distance[s] by road".
3. Accordingly, the Court accepts that the Respondent's 10% premium, for both Lot 5 and Lot 103, attributable to its existing use is justified.

DETERMINATION

1. The Court accepts the Respondent's analysis of the law in relation to onus: that the Applicant bears the onus of proving that the valuations of the Valuer-General are too high, and/or that the valuations put forward by its valuer are correct. In that context, for all of the above reasons, the Court has determined that, in each of the proceedings, the Applicant has failed to discharge its onus that the relevant land value determinations are too high.
2. Accordingly, the appeals will be dismissed and the land value determinations formally confirmed. The Court notes, as it summarised in paragraph 5, that the Respondent's land value determinations which I confirm are the adjusted values for Lot 103 for the 2013 and 2014 and not the issued values for those years.

COSTS

1. Unless within 28 days of the date of this judgment the Respondent by Notice of Motion seeks its costs in the proceedings and a further order is thereby necessitated, I do not propose to make any order as to costs.

Orders

1. The Court makes the following orders: In 2016/00153950 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 103 in Deposited Plan 1192400 (PID 3815743) in the amount of $70,000,000 as at 1 July 2013 is confirmed. In 2016/0015839: 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 103 in Deposited Plan 1192400 (PID 3815743) in the amount of $70,000,000 as at 1 July 2014 is confirmed. In 2016/00254571: 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 103 in Deposited Plan 1192400 (PID 3815743) in the amount of $86,870,000 as at 1 July 2015 is confirmed. In 2016/00254588 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 5 in Deposited Plan 1016112 (PID 2781878) in the amount of $9,920,000 as at 1 July 2013 is confirmed. In 2016/00153841 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 5 in Deposited Plan 1016112 (PID 2781878) in the amount of $10,300,000 as at 1 July 2014 is confirmed. In 2016/00254579 1. The appeal is dismissed; and 2. The Valuer-General's decision to value Lot 5 in Deposited Plan 1016112 (PID 2781878) in the amount of $12,800,000 as at 1 July 2015 is confirmed.

Schedule of valuation calculations and adjustments (refer to paragraph 26) Olefines Schedule (4.80 MB, docx) 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: 22 February 2018