1. Mr Connell conceded under cross examination that he did not consider the purposes of the Rural Living Zone or the purposes of the Farming Zone in any detail.
2. Mr Connell after cross examination and further questions from the Tribunal gave evidence that if the purposes and requirements of the Rural Living Zone were all met, then the only basis that he considered that the Council could reasonably refuse a permit was on the size of the lot.

1. The respondent relied upon the Supreme Court decision in Challenger Property Asset Management Pty Ltd & Anor v Stonnington City Council & Anor [11] at paragraph 91 to emphasise the nexus between the Highest and Best Use and the planning controls:

A critical aspect of any consideration of the highest and best use of a particular property, in the present context, is the nature and extent of development possible under the applicable town planning regime.

2. The respondent submitted that the subject land enjoyed a reasonable likelihood of obtaining permission under the Indigo Planning Scheme for a dwelling as at the relevant date because:

a) the use and development of the Subject Land was permissible under the Scheme as at the Relevant Date; and > > b) actual or potential constraints on the capacity of the Subject Land to support a dwelling could either have been managed or overcome.[12]

3. The respondent further supports this contention, with the fact that:

...Indigo Shire Council (Council) ultimately approved an application under the Scheme for permission to use and develop the Subject Land for a dwelling only confirms the foresight that such an outcome was reasonably likely as at the Relevant Date.[13]

4. In the respondent's view, the applicant:
   • treats the absence of a permit as dispositive of the question of whether the land has the potential to get a permit or else the applicant's position is that there is no prospect of a permit; and
   • that only the owner of the subject property had the ability to get a planning permit and no one else other than the owner had any prospect of obtaining a planning permit.
5. The respondent disagrees with these premises. The respondent relies on the expert planning evidence of Ms Baldry's assessment of methodically evaluating the policy objectives and purposes of the Rural Living Zone and the mandatory requirements, and whether or not an application for a planning permit is exclusively in the domain of a property owner.

1. Ms Baldry submitted that there was no difference to the planning controls between the relevant date and the present date.
2. Ms Baldry stated that the predominant purpose of the Rural Living Zone is to provide for residential use in a rural environment. Ms Baldry commented that in looking at that area, it is surrounded by rural living land. There are other small lots of varying degrees. Although the subject land is probably one of the smaller ones, there are still smaller lots in that area that have dwellings.
3. The land area of the subject property of 1,846m2 falls below the 4 hectare minimum. Ms Baldry explained that this has the effect that a planning permit is not, as of right, but it is permissible if the requirements of clause 35.03-2 are met.
4. These requirements are:[14]

1. In Ms Baldry's opinion, these requirements are not insermountable but matters to be addressed. Ms Baldry did not see any issues with the requirements for access, water supply or electricity supply as water and electricity could be sourced by alternate means such as a water tank and electricity by an off grid solution.
2. The land capability assessment and bushfire management plan were the most significant issues in her view.
3. Ms Baldry's evidence was that neither the land capability assessment or actual application for a planning permit were required to be submitted by the owner of the land. Prospective purchasers were equally able to apply for a planning permit with the required assessments and in her experience this was frequently done.
4. Further, Ms Baldry commented that the history of the use of the land (formally a dwelling was on the land as the remnants of chimneys demonstrates) fits in with the zoning of the land.

1. Section 5A of the VL Act requires, amongst other things, the Highest and Best Use that the land might reasonably be expected to be put at the relevant time and to any potential use.
2. The applicant's position is a binary position based in his opinion on a retrospective factual investigation; either a planning permit was granted at the relevant date, or it wasn't.
3. We do not agree with this position. The key issue for the Tribunal is whether or not there was a reasonable prospective that approval could have been granted for the use of a dwelling at the relevant date.
4. The relevance of this proposition is in the context of what price would a hypothetical purchaser, fully acquainted with the land and all circumstances that may affect the land's value would have paid? Would that price be commensurate with there having been a reasonable prospect of a permit for a dwelling been granted, or would that price be commensurate with there having been little if any prospect of a permit for a dwelling been granted?
5. Mr Baldry's planning evidence has considered the purposes of the Rural Living Zone and the differences with the Farming Zone. Mr Connell conceded that he did not undertake this task in any detail.
6. Fundamentally, the purposes are very different. We agree that Ms Baldry's assessment that the opposing purposes are that :
   • the Rural Living Zone is to provide for residential use in a rural environment; where as
   • the Farming Zone, is to provide the use of the land for agricultural purposes.
7. The Tribunal also agrees with Mr Baldry's assessment that the five requirements of clause 35.03-2 could reasonably be met. Alternate sources of water supply, electricity and waste water could be provided. We also agree with Ms Baldry's opinion that it would be a reasonable expectation that as there are other dwellings that gain access from Bartsh Road, that the road does meet the standard requirements for all weather access for emergency vehicles in conjunction with the road classification as A1 access road.[15]
8. The planning controls for the subject property include a BMO and DPO. Clause 46.06 specifies that a permit application must be accompanied with a bushfire hazard site assessment, landscape assessment and management statement.
9. Turning to the applicant's three key contentions:
   • The size of the subject land was below the minimum requirement of 4 hectares;
   • The zoning of the subject land as Rural Living Zone; and
   • The need for any application to be from the owner.
10. Whilst the land area forms a trigger for a permit, the condition specified in section 2 of the Indigo Planning Scheme's Rural Living Zone is that requirements of clause 35.03-2 must be met. The minimum land area of 4 hectares is not a mandatory requirement itself, the land area of 4 hectares is a threshold that triggers the mandatory requirements of clause 35.03-02 to be met.
11. Secondly, a key purpose of the Rural Living Zone is for residential use in a rural environment.
12. The applicant's final point is that any application for a permit needs to be from the property owner. We do not accept this view. Not only is it contrary to Ms Baldry's expert evidence which we accept, it is also contrary to the functioning of the property market. Properties are often sold subject to the granting of a permit by a prospective or actual purchaser.
13. There is no evidence before the Tribunal by either planning expert that the four requirements could not be met. We accept that that there is no guarantee but that is not the test. The test is would it have been a reasonable expectation for a planning permit for a dwelling to be granted, and we consider that it was a reasonable expectation that a planning permit for a dwelling would have been granted at the relevant date.
14. Whilst we have made our determination on the planning evidence before us, it is highly relevant that both planning experts agree that the exact same planning conditions in place at the relevant date, existed in April 2025 when the planning permit for a dwelling was granted.
15. We therefore agree that the granting of a planning permit on 1 April 2025, issued on 13 May 2025 for a house and garage confirms what was already foreseeable at the relevant date.

Use and development of a dwelling in the Rural Living Zone. Construct a building within a prescribed setback within the Rural Living Zone. Construct a building and carry out works associated with accommodation within the Bushfire Management Overlay.

Issue 2 - Is the Site Value of the subject property at the relevant date too high?

1. Having determined that it was a reasonable expectation that a planning permit for a dwelling would have been granted at the relevant date, that in turn informs the Highest and Best Use at the relevant date of the subject property.
2. On the basis of our decision on the first issue, we consider the second issue within this context and only provide an overview of the applicant's submission and evidence.

1. The applicant provided the Tribunal with written submissions with his critique of each valuers valuations and a spreadsheet summarising the valuations and applying various averaging techniques to form his own valuations,
2. Ultimately, the applicant contended a Site Value of $30,000 that is lower than the evidence of his expert valuer, Mr Ferrier.
3. The information that the applicant has put before the Tribunal by way of submissions, include assertions that real estate agents had advised him that without a building entitlement, the subject land would be worth in the vicinity of $5,000 to $10,000.
4. The valuation report by Herron Todd White has been received as a submission. Two valuations have been carried out in the report on the basis that no dwelling entitlement existed and that a dwelling entitlement did exist. A summary of the valuations are as follows:[17]

Valuation - without a Planning Permit (No dwelling entitlement)

Valuation - with a Planning Permit (Dwelling entitlement)

1. Mr Ferrier's valuation was based on his instructions 'that a planning permit could not be issued'[18] and his own view:

'My view of the property based on the requirement of a lot size to be at least 4 Hectares, within a Rural Living Zone, and other constraints as discussed above, would be that a Planning Permit for a dwelling would be disallowed and that a prudent purchaser of the site on January 1st 2023 would not consider a Permit was likely and only a remote chance at best.'[19]

1. Although Mr Ferrier was forthright in proving his evaluation of Mr Connell's expert planning opinion, without being qualified to do so; Mr Ferrier did not give any consideration in his expert report to the Highest and Best Use of the subject property. The assessment of Highest and Best Use is squarely in a valuer's expert domain as it is pivotal in assessing the sales evidence and the degree of comparability of sales.
2. To the extent that the Tribunal needs to further consider Mr Ferrier's evidence given the Tribunal has determined that a planning permit at the relevant date was a reasonable expectation, we make the following comments.
   • 61.1. Mr Ferrier considered that the six sales he relied upon all had a similar unlikely potential as the subject property to get a planning permit. All six sales are within the Farming Zone with various overlays and attributes such as location, topography, shape and land size.
   • 61.2. In his experience as a valuer, properties in the Farming Zone have the same potential to be used as a dwelling as the Rural Living Zone. In his opinion, the area of the land was the main driver in the likelihood for a planning permit not to be issued.
   • 61.3. In Mr Ferrier's secondary method of valuation, he assessed the Site Value at the relevant date on the basis that a planning permit for a dwelling would be granted at $275,000 based on three sales in Beechworth. A discount of 80% was then applied on the likelihood of a planning application being refused.

1. The respondent submitted that the question before the Tribunal on whether the Site Value of $189,000 for the subject property was too high at the relevant date, turns on whether a hypothetical purchaser at the relevant date would have had a reasonably likelihood to obtain permission to build a dwelling by Indigo Shire Council.
2. The task before the valuer to determine the value of the land is a hypothetical task. The respondent relied upon the Court of Appeal in ISPT Pty Ltd v Melbourne City Council & Anor [20] amongst several other cases that rely on what is commonly known as the Spencer principle:

The concept of highest and best use is implicit in the theoretical basis of assessment of market value at a given point in time. Such value is understood to be ascertainable in accordance with the formulation of Isaacs J in Spencer v Commonwealth: > > To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. > > It is implicit in this formulation that both vendor and purchaser are to be regarded as aware of the potentially most advantageous ongoing use of the land and not simply its current use, when formulating the relevant value. Such potential is a circumstance which necessarily affects the value of the land either advantageously or prejudicially.

3. The respondent also relied on the High Court's decision in Valuer-General Victoria v WSTI Properties 490 SKR Pty Ltd.[21] The High Court reinforced the importance of ascertaining the Highest and Best Use of land when assessing its market value.

"Market value" involves the conventional concept of a hypothetical prudent seller who would require from the hypothetical prudent buyer "the fair price of the land" if the hypothetical prudent buyer was purchasing the land "for the most advantageous purpose for which it was adapted". The most advantageous purpose for which land is "adapted" is the "highest and best use" of the land. In modern terminology, "adapted" or "highest and best use" of land means the most valuable use of the land, objectively ascertained by reference to the hypothetical buyer, which is "physically possible, legally permissible and financially feasible". In addition to the explicit reference to the "highest and best use" of the land in s 5A(3)(a), each of these requirements is embedded in the various aspects of s 5A(3) of the Valuation of Land Act.

1. Mr Hann considered that the main purpose of the Rural Living Zone was for residential use. The land is situated in proximity to the Beechworth township, mostly cleared site, sloping to the north with remnants of the existence of a previous dwelling.[22]
2. The approach to the valuation by Mr Hann is outlined as follows:

The valuation has been made on the basis that a Planning Permit would be granted for the construction of a dwelling. At the time of valuation, there was no current approved Planning Permit in place for the construction of a dwelling and there was also no refusal of a Planning Permit request. We confirmed with Indigo Shire Council that a Planning Permit application dated 12/4/2024 for a house and garage had been submitted and that application has been subsequently approved (Reference PP240065) confirming that the subject allotment was able to meet the requirements. > > Our advice from Council was that, despite various requirements that would need to be achieved, there is every possibility planning approval could be granted.[23]

3. Mr Hann carried out his valuation with consideration of the following sales:[24]

1. A discount of 25% was applied to the Site Value to reflect the lack of certainty or lack of guarantee that a planning permit would be granted. Whist this is a different test to the test of reasonable expectation; Mr Hann has appropriately acknowledged that at the relevant date a planning permit had not been granted and made an allowance accordingly.
2. Mr Hann's also gave evidence that there was an error in the land area to the applicant's favour. The original land area was 1,332m2, [25], less than the actual land area of 1,846m2. The discrepancy was discovered during the objection, however as the correct land area was just over 500m2 larger, this did not alter Mr Hann's view that the Site Value of $189,000 was not too high.

1. Fundamental to the parties' submissions and evidence relied upon is what is the Highest and Best Use of the subject property.
2. Having determined that the Highest and Best Use of the subject property was for a dwelling at the relevant date; the next task for the Tribunal to determine is whether or not the Site Value of Mr Hann at $189,000 at the relevant date was too high.
3. The expert valuation evidence before the Tribunal based on a similar premise of a dwelling entitlement is $275,000 by Mr Ferrier and by submission, $333,000 by Herron Todd White.
4. Having considered:
   • 73.1. the sales evidence of Mr Hann, his analysis and appropriate use of comparable sales that align with his Highest and Best Use,
   • 73.2. the error in land area in the applicant's favour, and
   • 73.3. the evidence and submissions of the applicant's two valuers,

the only reasonable conclusion that can be reached is that the Site Value is not less than $189,000 and therefore that the Site Value is not too high.

1. We agree with the decision of the valuer that no adjustment to the valuations was justified.
2. We find that the decision of the valuer that no adjustment to the valuations was justified is affirmed. The valuations at 1 January 2023 of the subject land are confirmed as follows:

Justine Jacono, Senior Member Susan Whitney, Member

[1] The submissions of the parties have all been considered. In accordance with the practice of the Tribunal, not all the material will be cited or referred in these reasons.

[2] The definition of Site Value is defined in s 2(1) of the VL Act.

[7] "amending Act" means the State Taxation Further Amendment Act 2024.

[11] [2011] VSC 184, Tribunal Book, 624.

[16] Tribunal Book, 69. Before the development starts, a Bushfire Management Plan must be prepared to the satisfaction of the CFA. It is noted that Indigo Shire Council did not require permission under the DPO.

[18] Email from Chris Story to Mark Ferrier dated 26 May 2025 at 14:21.

[20] [2008] VSCA 180 (footnotes omitted) Tribunal Book 444.

[21] [2025] HCA 23 (footnotes omitted) Tribunal Book 1011 to 1012.