Rifon 2 Pty Ltd v Valuer General

APPLICANT Mr P Prilis and Mr A Prilis

LEGAL REPRESENTATIVES: RESPONDENT Ms M Carpenter, Barrister Instructed by Ms J Donohue and Mr P Rankins, Solicitor for Valuer General

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30769 of 2009 Archon Group Pty Limited v Valuer General

JUDGMENT 1 This is an appeal by Archon Group Pty Limited (the Applicant), under Section 37 of the Valuation of Land Act 1916 (the Act), against the Land Value assessed by the Valuer General (the Respondent) in respect of the property known as the Taverners Hill Hotel, 463 Parramatta Road, Leichhardt (the subject property). Background 2 The Applicant was self represented by Mr P Prilis and Mr A Prilis, respectively. 3 The Respondent was represented by Ms M Carpenter, Barrister, instructed by Ms J Donohue and Mr P Rankins, Solicitor for the Respondent. 4 The Land Value of the subject property at 1st July 2008 (the Base Date) was assessed by the Applicant at $495,000 and by the Respondent at $1,070,000. 5 The matter was the subject of a conference under Section 34 of the Land and Environment Court Act 1979 but the parties were unable to reach agreement. 6 The matter was the subject of an on site inspection on 27th May 2010, followed by a hearing in Court on 27th and 28th May 2010. 7 Section 40(2) of the Act states: "On an appeal, the appellant has the onus of proving the appellant's case." The subject property 8 The subject property is located in Leichhardt, an inner western suburb being approximately eight kilometres south west of the Sydney CBD in an area of retail and commercial development. 9 Situated on the corner of Parramatta Road and Rofe Street in an elevated position, the subject property is surrounded by retail and commercial development, with a significant level of vacancy, being within a fringe retail / commercial location. The subject property has a frontage to Parramatta Road, a high volume vehicular thoroughfare, with a return frontage to Rofe Street, a side street, but does not have rear lane access. 10 The subject property is improved comprising a three level building including partially excavated basement level, ground level tavern and one upper level of residential accommodation which the parties agree to be the highest and best use of the subject property.

11 With a site area of 449.7sqm, the subject property slopes moderately downward from the Parramatta Road frontage and is a regularly shaped block. 12 The subject property is zoned Business under the Leichhardt Local Environmental Plan 2000. 13 The permissible floor space ratio is 1.5:1 if including a residential component. 14 The subject property comprises Lots 1 and 2, Section 3 in DP612 and Lot 1 in DP55153.

The issues 15 Concerning the analysis of the sale of 491 Parramatta Road, Leichhardt, the parties differed regarding the treatment of GST with the Applicant contending a GST exclusive sale price of $700,000 to be relevant for consideration and the Respondent contending a GST inclusive sale price of $770,000 to be relevant for consideration.

16 In Tomago Aluminium Company Pty Limited v Valuer General [2010] NSWLEC 4 (Tomago), Pepper J considered the issue of whether GST ought to be a separate component in the determination of market value and proffered the view, which I accept, that it is not with the effect that $770,000 should be the relevant sale price of 491 Parramatta Road, Leichhardt for consideration.

17 The Applicant raised the potential for heritage issues to arise in the event that the subject property was to be redeveloped and which may adversely impact land value.

18 The Applicant did not tender evidence concerning the heritage status of the subject property. Accordingly, I have not had regard to the potential impact on land value of any potential heritage issues that may or may not arise in the event that the subject property was to be redeveloped.

19 As the subject property occupies a sloping corner site, the ground level for the front of the property and that for the rear of the property differ by the extent of the gradient of the slope. Historically, a part of the site has been excavated to the ground level of the rear of the property though such excavation does not appear to have been continued at the same depth through to the front of the property. Accordingly, the excavated portion is relatively small and Mr Fogg gave evidence that the cost of excavation was in the order of $24,750.

20 While the parties differed on whether or not such excavation was land improvements for the purposes of s6A(1) of the Act, given the immateriality of the cost of excavation to the party's respective assessments of value, I do not propose to consider this matter further. The comparable sales evidence 21 Mr Perkins, Registered Valuer, tendered as evidence a valuation dated 9th April 2010 of the subject property as at the Base Date and gave expert evidence on behalf of the Applicant. He concluded the land value of the subject property to be $495,000 at the Base Date. 22 Mr Fogg, Registered Valuer, tendered as evidence a valuation dated 15th February 2010 of the subject property at the Base Date and gave expert evidence on behalf of the Respondent. He concluded the land value of the subject property to be $1,150,000 at the Base Date. 23 I note that Mr Fogg's valuation is in excess of the amount assessed and claimed by the Respondent of $1,070,000 at the Base Date.

24 The parties submitted eight comparable sales, comprising five common comparable sales with the Respondent submitting three further comparable sales. 25 The parties submitted five common comparable sales at 467, 491 and 491-507 Parramatta Road, Leichhardt and 568-572 and 586-590 Parramatta Road, Petersham which were inspected externally with 491 Parramatta Road, Leichhardt also being inspected internally. 26 The Respondent further submitted three comparable sales at 329 Parramatta Road, Leichhardt, 520 Parramatta Road, Ashfield and 395-399 New Canterbury Road, Dulwich Hill which were inspected externally. Consideration of the comparable sales evidence 27 Having regard to location, situation (being in line or corner, frontage and exposure or visibility), position (being elevation and topography), existence of rear land access, surrounding uses, shape of site, site area, zoning/development potential, sale as land or as an improved property and date of sale, the comparable sales may be compared with the subject property as follows. 28 467 Parramatta Road, Leichhardt, submitted by both parties, comprises an improved property which sold in February 2007. Located in Leichhardt, the property is comparable to the subject property in proximity, position (being elevated and sloping away from Parramatta Road), surrounding uses, zoning/development potential and absence of rear lane access. Though the property is substantially smaller, it has an inferior elongated shape and situation to the subject property, being in line, narrow frontage and lacking exposure/visibility. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 29 491 Parramatta Road, Leichhardt, submitted by both parties, comprises an improved property which sold in April 2010. Located in Leichhardt, the property is comparable to the subject property in proximity, position (being elevated and sloping away from Parramatta Road), surrounding uses, zoning/development potential and being a regular shape. Though the property is substantially smaller and has rear lane access, it has an inferior situation to the subject property, being in line, narrow frontage and lacking exposure/visibility. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 30 491-507 Parramatta Road, Leichhardt, submitted by both parties, comprises an improved property which sold in September 2009 with settlement in December 2009. Located in Leichhardt, the property is comparable to the subject property in proximity, situation (having high exposure/visibility as a result of the long frontage despite being in line), position (being elevated and sloping away from Parramatta Road), surrounding uses, zoning/development potential and being a regular shape. Though the property has rear lane access, it is very substantially larger than the subject property. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 31 568-572 Parramatta Road, Petersham, submitted by both parties, comprises a lightly improved property occupied by a car yard which sold in September 2006. Though located in Petersham, the property is almost opposite the subject property and has comparable surrounding uses and a regular shape. The property has a superior position to the subject property, being elevated and sloping up from Parramatta Road, benefits from rear land access and has higher zoning/development potential. Conversely, the property has an inferior situation to the subject property, lacking exposure/visibility through being in line despite having a long frontage and is larger than the subject property. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 32 586-590 Parramatta Road, Petersham, submitted by both parties, comprised a partially improved, fire damaged property at the time of sale in June 2007. Though located in Petersham, the property is in close proximity to the subject property and has a comparable situation (being a corner block with comparable frontage offering high exposure/visibility), surrounding uses and a regular shape. While the property is larger, it has a superior position to the subject property, being elevated and sloping up from Parramatta Road, benefits from rear lane access and has higher zoning/development potential. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 33 329 Parramatta Road, Leichhardt, submitted by the Respondent, comprises a heavily improved property which sold in August 2006. Though located in Leichhardt, the property is some distance from the subject property and in a section of Parramatta Road with significantly higher levels of occupancy and consistency of retail uses. The property has a comparable situation to the subject property (occupying a corner with comparable frontage and high visibility/exposure), position (being elevated and sloping down from Parramatta Road), regular shape and site area. The property benefits from rear lane access but has lower zoning/development potential than the subject property. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 34 520 Parramatta Road, Ashfield, submitted by the Respondent, comprised a sale of vacant land in March 2007. The property is comparable to the subject property in situation (occupying a corner with significant frontage and high visibility/exposure), regularity of shape and absence of rear land access. However, the property is located in a different suburb to the subject property, has an inferior position (being relatively flat) and surrounding uses, is substantially larger and has a lower zoning development potential than the subject property. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 35 395-399 New Canterbury Road, Dulwich Hill, submitted by the Respondent, comprised a sale of lightly improved development land which sold in April 2007 with settlement in June 2007. The property is comparable to the subject property in surrounding uses. However, the property is located in a different suburb to the subject property, has an inferior situation (having limited exposure/visibility due to being in line despite a long frontage) and position (being relatively flat with a downward slope from the road), being an irregular shape and substantially larger though with the benefit of rear lane access and a higher zoning/development potential. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance.

36 Accordingly, I consider the comparable sales at 329, 467, 491 and 491-507 Parramatta Road, Leichhardt and 568-572 and 586-590 Parramatta Road, Petersham to be directly relevant comparable sales. 37 Further, I consider the comparable sales at 520 Parramatta Road, Ashfield and 395-399 New Canterbury Road, Dulwich Hill to be of limited relevance. 38 I note that Mr Perkins and Mr Fogg generally analysed each of the directly relevant comparable sales to derive a rate psm for land value as at the date of sale before then adjusting each analysed rate psm land value for application to the subject property as at the Base Date.

39 Concerning the analysis of 467 Parramatta Road, Leichhardt, Mr Perkins made a deduction of $206,000 for improvements (based on $1,000psm for the ground floor area) from the sale price and derived a rate of $1,040psm land value as at the date of sale. Mr Fogg made a deduction of $50,000 for improvements (based on experience and judgment) from the sale price and derived a rate of $1,700psm land value as at the date of sale.

40 Concerning the analysis of 491 Parramatta Road, Leichhardt, Mr Perkins made a deduction of $420,000 for improvements (based on $1,200psm for an area of 350sqm) from the sale price excluding GST and derived a rate of $1,325psm land value as at the date of sale. Mr Fogg made a deduction of $175,000 for improvements (based on experience and judgment) from the sale price including GST and derived a rate of $2,815psm land value as at the date of sale.

41 Concerning the analysis of 491-507 Parramatta Road, Leichhardt, Mr Perkins made a deduction of $990,000 for improvements (comprising seven estimates based on experience and judgment) from the sale price and derived a rate of $887psm land value as at the date of sale. Mr Fogg made a deduction of $555,000 for improvements (based on experience and judgment) from the sale price and derived a rate of $1,165psm land value as at the date of sale.

42 Concerning the analysis of 568-572 Parramatta Road, Petersham, Mr Perkins made deductions of $104,000 for improvements (based on $1,000psm for the building and $300psm for rooftop parking) and $60,000 for continuing business usage (based on discussion with the purchaser) from the sale price and derived a rate of $1,156psm land value as at the date of sale. Mr Fogg made a deduction of $80,000 for improvements (based on experience and judgment) and no deduction for continuing business usage (based on discussion with the purchaser) from the sale price and derived a rate of $1,309psm land value as at the date of sale.

43 Concerning the analysis of 586-590 Parramatta Road, Petersham, Mr Perkins contended the fire damaged improvements to be of value in aiding the approval for and rebuilding of the property, making deductions of $584,500 for improvements (based on $500psm for the 1,049sqm building and $10,000 per space for six undercover car spaces), $50,000 for reduced holding costs (based on 8% interest) and $100,000 for reduced required car spaces (based on reduced excavation costs) from the sale price and deriving a rate of $1,196psm land value as at the date of sale. Mr Fogg contended the fire damaged improvements to be of no value, made no deduction for improvements from the sale price and derived a rate of $2,516psm land value as at the date of sale.

44 Concerning the analysis of 329 Parramatta Road, Leichhardt, Mr Perkins did not consider the sale comparable and so did not analyse the sale. Mr Fogg analysed the sale in three different ways, including the deduction of $1,280,000 for improvements (based on $1,550psm for ground level, $1,250psm for upper level and $550psm for rear storage improvements) from the sale price, deriving a rate of $2,870psm land value as at the date of sale.

45 I note that the analysed rates psm land value as at the date of sale may be summarised as follows:

Address Mr Perkins Mr Fogg $psm $psm 467 Parramatta Road, Leichhardt $1,040 $1,700 491 Parramatta Road, Leichhardt $1,325 $2,815 491-507 Parramatta Road, Leichhardt $887 $1,165 568-572 Parramatta Road, Petersham $1,156 $1,309 586-590 Parramatta Road, Petersham $1,196 $2,516 329 Parramatta Road, Leichhardt N/A $2,870

46 Having analysed each of the directly relevant comparable sales to derive a rate psm for land value as at the date of sale, Mr Perkins and Mr Fogg then adjusted each analysed rate psm land value for application to the subject property as at the Base Date.

47 Concerning the adjustment of the analysed rate psm land value for 467 Parramatta Road, Leichhardt, Mr Perkins considered an adjustment for size to be offset by an adjustment for the lack of rear access deriving an adjusted analysed rate psm land value of $1,040psm for application to the subject property as at the Base Date. Mr Fogg made an upward adjustment for passage of time of 6.82% with a further upward adjustment of 40% (comprising -10% for size, +20% for shape / topography / frontage, +10% for zoning / development potential and +20% for risk / non-market) deriving an adjusted analysed rate psm land value of $2,543psm for application to the subject property as at the Base Date.

48 Concerning the adjustment of the analysed rate psm land value for 491 Parramatta Road, Leichhardt, Mr Perkins adopted a downward adjustment of 20% (being 10% for size, 5% for outlook and 5% for the passage of time with the benefit of rear lane access offsetting the in line situation) deriving an adjusted analysed rate psm land value of $1,060psm for application to the subject property as at the Base Date. Mr Fogg made a downward adjustment of 10% for size offset by an upward adjustment of 10% for shape / topography / frontage deriving an adjusted analysed rate psm land value of $2,815psm for application to the subject property as at the Base Date.

49 Concerning the adjustment of the analysed rate psm land value for 491-507 Parramatta Road, Leichhardt, Mr Perkins adopted an upward adjustment of 25% for size deriving an adjusted analysed rate psm land value of $1,108psm for application to the subject property as at the Base Date. Mr Fogg made an upward adjustment of 110% (comprising 50% for size, 10% for shape / topography / frontage and 50% for risk / non-market) deriving an adjusted analysed rate psm land value of $2,446psm for application to the subject property as at the Base Date.

50 Concerning the adjustment of the analysed rate psm land value for 568-572 Parramatta Road, Petersham, Mr Perkins, while considering the property to be superior, made no adjustment to the analysed rate psm land value of $1,156psm for application to the subject property as at the Base Date. Mr Fogg made an upward adjustment for passage of time of 8.92% with a further upward adjustment of 71.5% (comprising 1.5% for size, 10% for shape / topography / frontage and 60% for risk / non-market) deriving an adjusted analysed rate psm land value of $2,445psm for application to the subject property as at the Base Date.

51 Concerning the adjustment of the analysed rate psm land value for 586-590 Parramatta Road, Petersham, Mr Perkins considered a downward adjustment of 5% for the inferior location of the subject property to be appropriate. I note that Mr Perkins made the adjustment prior to deriving the analysed land value which I do not consider to be a logical approach (Rifon 2 Pty Ltd v Valuer General [2010] NSWLEC 1115 at paragraph 58). Adjustment after analysis indicates an adjusted analysed rate psm land value of $1,136psm for application to the subject property as at the Base Date. Mr Fogg made an upward adjustment for passage of time of 5.25% with a further upward adjustment of 9% (comprising -2.5% for location, +1.5% for size, -10% for shape / topography / frontage and +20% for risk / non-market) deriving an adjusted analysed rate psm land value of $2,887psm for application to the subject property as at the Base Date.

52 Concerning the adjustment of the analysed rate psm land value for 329 Parramatta Road, Leichhardt, Mr Perkins did not consider the sale comparable and so did not analyse or adjust the sale. Mr Fogg made an upward adjustment for passage of time of 9.48% with a further downward adjustment of 2.5% for shape / topography / frontage deriving an adjusted analysed rate psm land value of $3,064psm for application to the subject property as at the Base Date.

53 I note that the adjusted analysed rates psm land value for application to the subject property as at the Base Date may be summarised as follows: Address Mr Perkins Mr Fogg $psm $psm 467 Parramatta Road, Leichhardt $1,040 $2,543 491 Parramatta Road, Leichhardt $1,060 $2,815 491-507 Parramatta Road, Leichhardt $1,108 $2,446 568-572 Parramatta Road, Petersham $1,156 $2,445 586-590 Parramatta Road, Petersham $1,136 $2,887 329 Parramatta Road, Leichhardt N/A $3,064

54 Having regard to the directly relevant comparable sales and to his analysis of other comparable sales evidence, Mr Perkins considered the appropriate rate psm land value for application to the subject property to be $1,100psm as at the Base Date.

55 Having regard to the directly relevant comparable sales and to his analysis of other comparable sales evidence, Mr Fogg considered the appropriate range to be $2,887-$3,064 and to support $2,500psm to which Mr Fogg added $24,750 for the benefit of excavation deriving the rate of $2,557psm land value for application to the subject property as at the Base Date. 56 I note that the Land Value as at the Base Date was assessed by the Applicant at $2,379psm.

Findings 57 Accepted valuation practice permits both explicit and implicit adjustment for differences, such as in location, area and time, to enable valuers to have evidentiary comparable values which, following adjustment, account for the various differences with the subject property. Such adjustment is generally based on a reasoning process drawing on the skill and experience of the valuer and undertaken to derive an opinion of value through a deductive process (per Biscoe J in Holcim (Australia) Pty Ltd v Valuer General [2009] NSWLEC 225 (Holcim)). 58 Because properties are rarely identical, explicit and/or implicit adjustment for differences is obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property, with too much adjustment potentially rendering the comparable sale unsafe to use. Caution is, therefore, required where large adjustments are to be made. Reflecting the significant roles of skill, experience and personal assessment in the adjustment process, the scope for differences in the quantum and direction of adjustment between valuers can be considerable (per Biscoe J in Holcim). 59 Such adjustment process should work forwards from the comparable sales to derive an opinion of value, rather than working backwards to justify an opinion of value previously formed (per Jagot J in Graham Trilby Pty Limited v Valuer General [2008] NSWLEC 217 at paragraph 25)

60 Explicit adjustment was preferred by Bly C in Jessica Investments Pty Ltd v Valuer General [2008] NSWLEC 1375: [6] Also, in my opinion, if a valuer does not have a final land value in mind, the detailed percentage adjustment approach could be utilised and revealed in an attempt to provide transparency. Otherwise the valuer's less transparent approach would be to identify a range of factors that distinguish in one way or another, the comparable sale from the subject property and, based on the valuers own judgment simply assert the land value. 61 This view was echoed by Pepper J in Tomago: [45] To this it may be added that it is necessary to make explicit adjustments for differences so that the adjustment process is sufficiently logical. An implicit process comprising a single adjustment, rather than separately itemised and reasoned adjustments, risks rejection for want of transparency. 62 I note that under Section 40(2) of the Act, the Applicant has the onus of proof.

63 I note the very significant differences arising between Mr Perkins and Mr Fogg concerning both the analysed rate psm and the adjusted rate psm land value summarised in the tables, above. I consider it to be both disappointing and regrettable that greater consistency could not be achieved despite Mr Perkins and Mr Fogg participating in a joint conference.

64 I note that both Mr Perkins and Mr Fogg adopted a common approach to the derivation of land value, being the analysis of comparable sales followed by adjustment of the analysed rate psm land value for application to the subject property.

65 However, Mr Perkins adopted a generally explicit approach to the analysis of comparable sales and a generally implicit approach to the adjustment of the analysed rate psm land value for application to the subject property, whereas Mr Fogg generally adopted the reverse approach.

66 Having regard to Pepper J's stated view in Tomago, in principle I prefer the generally explicit approach adopted by Mr Perkins to analysis and the generally explicit approach adopted by Mr Fogg to adjustment, though I do not necessarily concur with either regarding specific detail as set out below.

67 Concerning the analysis of the sale of 467 Parramatta Road, Leichhardt, I accept the analysis undertaken by Mr Perkins leading to a rate of $1,040psm land value as at the date of sale.

68 Concerning the analysis of the sale of 491 Parramatta Road, Leichhardt, I note that the GST inclusive sale price was $770,000 and accept the allowance of $420,000 for improvements proposed by Mr Perkins which leads to a rate of $1,656psm land value as at the date of sale.

69 Concerning the analysis of the sale of 491-507 Parramatta Road, Leichhardt, I note that Mr Perkins adopted an allowance of $420,000 for improvements to 491 Parramatta Road, Leichhardt, above. If this is adopted in Mr Perkins analysis of 491-507 Parramatta Road, Leichhardt, a rate of $729psm land value as at the date of sale may be derived though I note that this rate is based on an implicit approach to the assessment of an allowance for improvements for several buildings.

70 Concerning the analysis of the sale of 568-572 Parramatta Road, Petersham, I note that Mr Perkins and Mr Fogg gave differing evidence concerning the allowance or otherwise of an amount reflecting continuing business usage based on discussion with the purchaser. As the purchaser was not called to give evidence as to the allowance or otherwise of an amount reflecting continuing business usage, I have disregarded the allowance made by Mr Perkins resulting in a rate of $1,265psm land value as at the date of sale.

71 Concerning the analysis of the sale of 586-590 Parramatta Road, Petersham, I note that Mr Perkins and Mr Fogg gave differing evidence concerning the value of the fire damaged improvements as at the date of sale. At the date of sale, I am satisfied that some improvements remained on the property and that the previous built form permitted reconstruction of the property with a lower number of car parks than Council may require for a new development. The Development Application for the property tendered as evidence (Exhibit C) refers to the "partial demolition of building and reconstruction to previous form" which I consider consistent with retention of some improvements and the benefit of a lower level of car parking provision. Accordingly, I consider it likely that the sale price would reflect, to some degree, the net benefit of the improvements and lower level car parking provision and so accept Mr Perkins allowance of $584,500 though consider the further allowances of $100,000 for reduced required car spaces and $50,000 for reduced holding costs to be too distant to be likely to be reflected in the sale price and so do not accept same resulting in a rate of $1,466psm land value as at the date of sale.

72 Concerning the analysis of the sale of 329 Parramatta Road, Leichhardt, I note that Mr Perkins did not analyse the sale but that Mr Fogg analysed the sale adopting an explicit approach leading to a rate of $2,870psm land value as at the date of sale which I accept.

73 I note that the analysed rates psm land value as at the date of sale may be summarised as follows: Address Analysed Land Value psm 467 Parramatta Road, Leichhardt $1,040 491 Parramatta Road, Leichhardt $1,656 491-507 Parramatta Road, Leichhardt $729 568-572 Parramatta Road, Petersham $1,265 586-590 Parramatta Road, Petersham $1,466 329 Parramatta Road, Leichhardt $2,870

74 The generally explicit approach to adjustment of analysed rates psm land value for application to the subject property adopted by Mr Fogg, which I prefer in principle, permits adjustment for differences between the comparable sale and the subject property in terms of passage of time, location, size, shape / topography / frontage, zoning / development potential and risk / non-market issues.

75 Concerning the adjustments by Mr Fogg for passage of time, Mr Fogg gave evidence of an upward market movement in the order of 5%pa which he derived from the analysis of repeat sales (Exhibit 4) and experience in the market. Mr Perkins gave evidence, based on experience, that the market may have been flat or falling. Given the limited impact of the passage of time on the adjustment of comparable sales, I accept Mr Fogg's evidence.

76 Concerning the adjustments by Mr Fogg for location, I generally concur with Mr Fogg's adjustments except for 329 Parramatta Road, Leichhardt which I consider to be in a significantly superior location, being some distance from the subject property and in a section of Parramatta Road with significantly higher levels of occupancy and consistency of retail uses, warranting a downward adjustment of the analysed rate psm land value for application to the subject property.

77 Concerning the adjustments by Mr Fogg for size, I note that these are consistent in direction but consider the magnitude to be inappropriately low excepting the adjustment of 50% for 491-507 Parramatta Road , Leichhardt which I consider to be beyond the bounds of reasonableness in this case.

78 Concerning the adjustments by Mr Fogg for shape / topography / frontage, Mr Fogg gave evidence that this adjustment sought to capture the adjustments for situation (being in line or corner, frontage and exposure or visibility), position (being elevation and topography) and existence of rear lane access. As such, Mr Fogg endeavoured to reflect several individual yet inter-dependent variables in a single adjustment which I consider to be particularly challenging. Following separate consideration of each of the several individual yet inter-dependent variables and combination into a single adjustment, I do not accept Mr Fogg's adjustments in terms of magnitude for any of the comparable sales and in terms of direction for 467 and 491-507 Parramatta Road, Leichhardt and for 568-572 Parramatta Road, Petersham.

79 Concerning the adjustments by Mr Fogg for zoning / development potential, I note that Mr Fogg made an adjustment for 467 Parramatta Road, Leichhardt for development potential though the zoning is common with the subject property but did not make an adjustment for 568-572 and 586-590 Parramatta Road, Petersham and 329 Parramatta Road, Leichhardt where the zoning / development potential differs from the subject property. I consider that zoning / development potential of a comparable sale, where differing from the subject property, should be reflected in the adjustment process and so do not accept Mr Fogg's adjustments.

80 Concerning the adjustments by Mr Fogg for risk / non-market issues, I note that such upward adjustments were made to four directly relevant comparable sales and ranged from 20% to 60% in magnitude. I noted, above, that I considered an adjustment of 50% to be beyond the bounds of reasonableness in this case.

81 Concerning the risk / non-market adjustment of 20% by Mr Fogg for 586-590 Parramatta Road, Petersham, Mr Fogg gave evidence that this reflected risks associated with the property being fire damaged and uncertainty concerning the extent and nature of redevelopment. I consider that any risks associated with the property being fire damaged and uncertainty concerning the extent and nature of redevelopment may be more appropriately addressed in the analysis of the sale rather than in the adjustment process. Accordingly, I do not accept Mr Fogg's adjustment.

82 Concerning the risk / non-market adjustment of 20% by Mr Fogg for 467 Parramatta Road, Leichhardt, Mr Fogg gave evidence that this reflected the possibility that the sale may not meet the requirements of the definition stated in Spencer v Commonwealth (1907) 5 CLR 418 (Spencer). While Mr Fogg gave evidence that the property had been for sale for an extended period, I do not consider that it was clearly established that the sale did not meet the requirements of the definition stated in Spencer and so I do not accept Mr Fogg's adjustment.

83 Concerning the risk / non-market adjustment of 50% by Mr Fogg for 491-507 Parramatta Road, Leichhardt, Mr Fogg gave evidence that this reflected sale by a mortgagee in possession which may be inconsistent with the Spencer concepts of willing seller and without compulsion. Exhibit 5 indicates that the sale was a transfer by mortgagee under power of sale and evidence was given that the property was marketed by expressions of interest. Accordingly, I consider that the sale is likely to meet the requirements of the definition stated in Spencer and so I do not accept Mr Fogg's adjustment.

84 Concerning the risk / non-market adjustment of 60% by Mr Fogg for 568-572 Parramatta Road, Petersham, Mr Fogg gave evidence that this reflected the special market for car yard sites along Parramatta Road and the risk of contamination. Mr Fogg also gave evidence that the property was purchased at auction which I consider to be indicative of a sale process likely to meet the requirements of the definition stated in Spencer. While I accept that contamination risk may require specific adjustment, I consider that adjustment of the magnitude of 60% to be beyond the bounds of reasonableness in this case and so I do not accept Mr Fogg's adjustment. 85 Having regard to the analysed rates psm land value as at the date of sale for the directly relevant comparable sales given above and to my views on adjustment of the analysed rates psm land value for application to the subject property as at the Base Date given above, I am satisfied that the majority of directly relevant comparable sales may be analysed and adjusted to support a land value in the range of below to approximating the $1,100psm land value contended by the Applicant for the subject property as at the Base Date. 86 Having regard to the evidence tendered, the cross examination and the summation presented, I consider that an analysis of the directly relevant comparable sales and an adjustment of the analysed rates for application to the subject property support the assessment of value contended by the Applicant.

87 Having regard to the evidence tendered, I consider that the Applicant sufficiently proved the Applicant's case as required by section 40(2) of the Act. Orders 88 The orders of the Court: 1. The Appeal is upheld. 2. The Land Value for the property known as the Taverners Hill Hotel, 463 Parramatta Road, Leichhardt as at the base date of 1 st July 2008 is $495,000. 3. No Order is made as to costs. 4. The exhibits are returned.

      Dr David Parker
      Acting Commissioner of the Court
      ljr

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