Tomago Aluminium Company Pty Ltd v Valuer-General of New South Wales (No 2)

Cases Cited: Gollan v Randwick Municipal Council (1960) 6 LGRA 275
Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225
Koutsouras v State Rail Authority [1988] NSWLEC 83
Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444
Spencer v The Commonwealth of Australia (1906) 5 CLR 418; [1907] HCA 82
Trust Company of Australia Ltd v The Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437
Valuer General of New South Wales v Esperia Court Pty Ltd [2026] NSWCA 30
Valuer-General of New South Wales v Oriental Bar Pty Limited [2016] NSWCA 48; (2016) 217 LGERA 1
Valuer-General v Fivex Pty Ltd [2015] NSWCA 53; (2015) 206 LGERA 450

Texts Cited: Land and Environment Court, Practice Note – Class 3 Valuation Objections
Hunter Water, Guidelines for Development in Drinking Water Catchments, Protecting our Drinking Water Catchments (2017)
Port Stephens Council Comprehensive Koala Plan of Management (CKPoM), June 2002

Category: Principal judgment

Parties: Tomago Aluminium Company Pty Ltd (ACN 001 862 228) (Applicant)
Valuer-General of New South Wales (ABN 20 770 707 468) (Respondent)

Representation: Counsel:
N M Eastman SC with T Poisel (Applicant)
A Pearman with M Carpenter (Respondent)
Solicitors:
MinterEllison (Applicant)
Crown Solicitor’s Office (Respondent)

File Number(s): 2024/00349112

Publication restriction: Nil

JUDGMENT

Introduction and outcome

1. By Class 3 application filed 20 September 2024, Tomago Aluminium Company Pty Ltd (‘Tomago’) brings this appeal pursuant to s 37 of the Valuation of Land Act 1916 (NSW) (‘Valuation Act’) against the determination of the Valuer-General of New South Wales (‘VG’) of an objection dated 6 May 2024 to the valuation of land owned by Tomago and known as 638 Tomago Road, Tomago (being Lot 1 in DP 1278541, Lots 7 and 8 in DP 1286735, Lot 3 in DP 808004, Lot 70 in DP 634535 and Lot 104 in DP 1125747) (‘Land’) as at the base date of 1 July 2023. Tomago operates the Tomago Aluminium Smelter (‘Smelter’) on part of the Land.

2. The VG determined the land value of the Land at $52,000,000 on the basis that the highest and best use of the Land is its existing use as an aluminium smelter pursuant to the assumptions under s 6A(2) of the Valuation Act. Although marshalling evidence at hearing that the land value of the Land should be determined at a significantly higher amount, the VG does not contend for a higher value than the issued value.

3. Tomago contends that the land value of the Land should be determined at $32,830,000 on the basis that the highest and best use of the Land is as a potential industrial development site pursuant to the assumptions under s 6A(1) of the Valuation Act.

4. As will be seen, a pivotal issue in this appeal is whether the statutory assumptions pursuant to s 6A(1) or s 6A(2) of the Valuation Act are determinative or material in the present circumstances.

5. The hearing of the appeal proceeded over four days from 5 February 2026. Tomago relied upon the expert valuation evidence of Grant Jackson and the expert town planning evidence of David Waghorn. The VG relied upon the expert valuation evidence of Terry Glitsos and the expert town planning evidence of David Haskew. The Court received extensive documentary material, including expert reports, and conducted a view of the Land and various other properties, the sales of which were considered in the expert evidence.

6. For the reasons that follow, I have determined that the land value of the Land as at the base date of 1 July 2023 is $52,000,000 and, as such, Tomago has not discharged its onus of proof that it bears to establish that the VG’s determination in the sum of $52,000,000 is too high. The appeal should be dismissed.

Background

7. The Land, which is approximately 440ha and irregularly shaped, is located within the Port Stephens local government area, approximately 125km north of Sydney. It is zoned E4 General Industrial under the Port Stephens Local Environmental Plan 2013 (‘PSLEP’).

8. The Smelter, which is the largest aluminium smelter in Australia, is conducted pursuant to development consents DA 391-80 (granted in 1981) and DA 4980-90 (granted in 1991). The Smelter has operated since 1983 and the operational capacity at the base date was 600,000 tonnes per annum. The operational improvements and works comprise 105.12ha with contiguous cleared areas comprising 56.12ha (together being an area of 161.24ha, variously referred to in the evidence as “operational land”). The remaining area of the Land comprises 278.73ha (variously referred to in the evidence as “non-operational land”). An aerial photograph depicting the various areas is annexure “A” to this judgment.

9. The existing improvements used for the purpose of the Smelter (highlighted in dark pink on annexure “A”) are on the southern portion of the Land and comprise various facilities and infrastructure including aluminium storage, substations, warehouses, maintenance and other workshops, a sewage treatment plant, and a stormwater pond.

10. The northern half of the Land is uncleared and referred to in the development consents and the expert evidence as the “buffer” areas.

Statutory framework and legal principles

11. These proceedings focus on the application of s 6A of the Valuation Act, which relevantly provides:

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.

…

12. The broader statutory framework relevant to this appeal was summarised, in terms I respectfully adopt, by Sackville AJA in Valuer-General of New South Wales v Oriental Bar Pty Limited [2016] NSWCA 48; (2016) 217 LGERA 1, as follows:

“[61] Subject to certain exceptions, the land value of each parcel of land in New South Wales is to be ascertained each year. The valuation is to be made as at 1 July in the valuing year in which the valuation takes place. The Valuer-General is empowered to value any parcel of land at any time.

…

[68] The Valuer-General is required to give notice of each valuation of land to specified persons, including the owner of the freehold estate on the land. A person to whom the Valuer-General has given notice may lodge a written objection to the valuation...

...

[70] A person entitled to object to a valuation may appeal to the [Land and Environment Court] if dissatisfied with the Valuer-General’s determination of the objection. Section 40(1) of the [Valuation Act] provides that on 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.’

On an appeal, the appellant has the onus of proving the appellant’s case.” (Citations omitted.)

13. In undertaking the statutory valuation task and determining land value of the Land at the base date, the Court considers a notional sale whereby the Land (shorn of improvements) is hypothetically purchased for its “highest and best use”, being the most financially rewarding use permitted within the boundaries of applicable legal regulation: Trust Company of Australia Ltd v T**he Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 (‘Trust Company of Australia’) at [32]; Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444 (‘Olefines’) at [16].

14. The “highest and best use” of the Land is not prescribed by s 6A of the Valuation Act. The land is valued either on the basis of the uses permissible by the relevant zoning or the existing use (subject to certain assumptions), through the statutory valuation task in accordance with s 6A of the Valuation Act: Olefines at [16]-[17].

15. In this way, the notional sale occurs between a hypothetical willing purchaser and a not unwilling vendor: Spencer v The Commonwealth of Australia (1906) 5 CLR 418 at 432; [1907] HCA 82. This means that a hypothetical “bona-fide seller”, cognisant of land value (based upon the land’s potential use or continuing use), would not part with the land for less than what it is worth. And, a hypothetical “bona-fide buyer”, cognisant of land value, would not pay more for the land than it is worth. The hypothetical sale price is determined by reference to market conditions in the real world at the base date: Valuer-General v Fivex Pty Ltd [2015] NSWCA 53; (2015) 206 LGERA 450 at [12].

16. As the statutory valuation exercise is singular, being that there is no discrete ‘s 6A(1) valuation’ or ‘s 6A(2) valuation’, a pivotal issue in this appeal is whether the statutory assumptions pursuant to s 6A(1) or s 6A(2) of the Valuation Act are conclusive in determining the highest and best use in the present circumstances. The VG submits that because a s 6A(1) approach requires consideration of the substantial risks associated with achieving developable land on what is agreed to be a highly constrained site, the s 6A(2) assumptions are conclusive in determining the highest and best use of the Land. Tomago instead maintains that a s 6A(2) approach is inappropriate because, among other matters of concern that would be known to the parties to the notional sale, the hypothetical bona fide purchaser is constrained by the dire state of the aluminium smelter market and the viability of ongoing use.

17. While the Valuation Act does not prescribe any valuation method, given that both expert valuers, Mr Jackson (for Tomago) and Mr Glitsos (for the VG), adopted the comparable sales approach, and as there is some dispute as to how each undertook the task, it is relevant to note that this methodology is usually (but not always) undertaken as follows. First, the valuer gathers and analyses sales of comparable properties and then adjusts those properties to create equivalence with the unimproved subject property. Then the valuer determines the value of the subject property based on the adjusted values of the comparable properties. Despite this ‘usual’ approach, the valuation of land using comparable sales need not involve a particular “process” and the comparability and concomitant adjustment of sales invariably involve matters of degree and judgment: Valuer General of New South Wales v Esperia Court Pty Ltd [2026] NSWCA 30 at [2], [24].

18. As will be seen, while there has been agreement as to the initial adoption of two primary comparable sales, the dispute between the expert valuers relates to how those sales (and, in particular, three discrete adjustments to be made to those sales) are used in the application of the assumptions in s 6A(1) and (2) of the Valuation Act.

Issues

19. In determining the land value of the Land at the base date, the primary issue is the determination of the highest and best use of the Land which involves:

20. for the purpose of s 6A(1):

(a) the extent of the developable and non-developable parts of the Land considering the extent to which the drinking water catchment and the ecological constraints impact upon the development potential of the Land; and (b) the appropriate adjustments to be made to the two primary comparable sales.

2. for the purpose of s 6A(2):

(a) the appropriate valuation approach; and (b) the adjustments to be made to the two primary comparable sales.

Town planning

20. The expert town planners, Mr Waghorn (on behalf of Tomago) and Mr Haskew (on behalf of the VG), provided expert town planning evidence detailing the advice each would have given to the hypothetical buyer and seller in accordance with s 6A of the Valuation Act.

21. The expert planners agreed on the applicable statutory and planning controls applicable to the Land being, the Biodiversity Conservation Act 2016 (NSW) (‘BC Act’); Hunter Water Act 1991 (NSW) (‘HW Act’); Hunter Water Regulation 2015 (NSW) (‘HW Reg’); Hunter Water, Guidelines for Development in Drinking Water Catchments, Protecting our Drinking Water Catchments (2017) (‘DW Guidelines’); State Environmental Planning Policy (Resilience and Hazards) 2021; State Environmental Planning Policy (Biodiversity and Conservation) 2021; PSLEP; and Port Stephens Development Control Plan 2014 (‘PSDCP’). The PSDCP contains controls for koala protection that apply as the Land is partially within areas identified as “Preferred Koala Habitat” and/or “Supplementary Koala Habitat” under the Port Stephens Council Comprehensive Koala Plan of Management (CKPoM), June 2002.

22. In summary, the expert planners disagreed, first, in relation to s 6A(1), as to how the drinking water catchment and ecological constraints would impact upon the development potential of the Land at the base date; and, second, in relation to s 6A(2), whether the buffer area is to be considered as part of the smelter operation.

23. When dealing with industrial subdivision as the highest and best use (pursuant to s 6A(1)) and not assuming a continuation of the existing use (pursuant to s 6A(2) of the Valuation Act), the expert planners separately opined as to the areas each considers “developable” and “non-developable”. Although there was further disagreement in their joint report as to the extent of a likely required buffer area on the Land assuming a continued use under s 6A(2), this disagreement had no bearing on the valuation calculations later employed by the expert valuers who both utilised the agreed areas of “operational” and “non-operational” land noted at [8] above.

24. Mr Waghorn maintains that there is little achievable development potential based upon a number of constraints on the Land. He maintains that vegetation in the assumed “developable areas” is capable of being removed subject to retaining vegetation over 54.5% of the Land, including in areas north and south of the Smelter, concluding that 45.5% of the Land is capable of development.

25. Mr Haskew maintains that, while the planning controls seek to avoid, minimise and manage water quality impacts, they do not represent a prohibition on development. He maintains that any potential development that involves clearing more than 30% of existing vegetation (plus threshold clearing) involves significant development risk and cannot be reasonably achieved. Therefore, he says that 70% of the Land may be developed.

26. Having regard to the drinking water catchment and the ecological constraints and their potential impact upon the development potential of the Land, will be further considered below, and although they differed as to the actual areas that were affected, Mr Waghorn would advise that the developable area of the Land is 200.3ha and the non-developable area of the Land is 239.6ha; whereas Mr Haskew would advise that the developable area of the Land is 231.2ha and the non-developable area of the Land is 208.7ha.

27. In relation to the drinking water catchment constraint, both expert planners considered cl 7.8 of the PSLEP, which relevantly provides:

7.8 Drinking water catchments

(1) The objective of this clause is to protect drinking water catchments by minimising the adverse impacts of development on the quality and quantity of water entering drinking water storages.

(2) This clause applies to land identified as “Drinking Water Catchment” on the Drinking Water Catchment Map.

(3) Before determining a development application for development on land to which this clause applies, the consent authority must consider the following—

(a) whether or not the development is likely to have any adverse impact on the quality and quantity of water entering the drinking water storage, having regard to the following—

(i) the distance between the development and any waterway that feeds into the drinking water storage,

(ii) the on-site use, storage and disposal of any chemicals on the land,

(iii) the treatment, storage and disposal of waste water and solid waste generated or used by the development,

(b) any appropriate measures proposed to avoid, minimise or mitigate the impacts of the development.

(4) Development consent must not be granted to development on land to which this clause applies unless the consent authority is satisfied that—

(a) the development is designed, sited and will be managed to avoid any significant adverse impact on water quality and flows, or

(b) if that impact cannot be reasonably avoided—the development is designed, sited and will be managed to minimise that impact, or

(c) if that impact cannot be minimised—the development will be managed to mitigate that impact.

28. The expert planners agree that Lots 7 and 8 (effectively the northern part of the Land) are within the “Drinking Water Catchment” area (shown on the Drinking Water Catchment Map found in the PSLEP) and that land use is governed by the HW Act, the HW Reg, cl 7.8 of PSLEP and the DW Guidelines, which variously prescribe controls applicable to agriculture, sewage and pollution, and that there are (water-related) operational effects on nearby areas such as the Grahamstown Storage Reservoir and the Tomago Sandbeds Catchment Area which are designated as specified “special areas” pursuant to the HW Reg. They agree that the HW Act requires that the Hunter Water Corporation be notified of any development application which has potential to adversely affect the quality of the water, and that a development consent for land within a Special Area cannot be issued without the approval of the Secretary of the Department of Planning, Industry and Environment.

29. Mr Waghorn opines that, as 221ha of the Land is mapped as drinking water catchment, there is little achievable development potential because of the number of constraints on the Land and, although there are “engineering solutions” available to avoid issues within the catchment, these are not typical solutions. He points to two earlier development applications made by Tomago (before the base date) in 2014 and 2015 seeking development consent for industrial subdivision of 12 lots and 37 lots respectively. Each development application was considered by Port Stephens Council (‘Council’) and thereafter withdrawn by Tomago (at Council’s request) after numerous concerns were raised by both Council and the Hunter Water Corporation including in relation to water and the use of engineering solutions within the mapped catchment.

30. Mr Waghorn concludes that the avoidance of the mapped catchment area, coupled with the avoidance of the land to the south of the Land (approximately 18.6ha), would have the benefit of avoiding a number of the other ecological and engineering issues that were raised in the earlier development applications. This would mean that 54.5% of the Land would be set aside from future development opportunities and that the most important part of the Land would remain in situ.

31. Mr Haskew accepts that the planning controls seek to avoid, minimise and manage water quality impacts, however, he maintains that they do not represent a prohibition on development on the Land. He opines that the two earlier development applications indicate that the concerns of Council related primarily to the inadequacy of the documentation lodged in support of the proposals rather than the Land being inherently unsuitable. Council and the Hunter Waste Corporation also had concerns relating to the future regulation and unknown uses of the proposed subdivided lots, and the overdevelopment of the Land, which involves significant vegetation removal from the drinking water catchment.

32. Mr Haskew states that a development application could propose a combination of voluntary planning agreements and/or restrictions pursuant to s 88B of the Conveyancing Act 1919 (NSW) to address such concerns, and that such concerns may not arise if the proposed development did not involve subdivision. An application would also need to demonstrate a negligible, if not nil, risk of chemicals, wastewater or solid waste materials leaving the development site in an uncontrolled manner.

33. In relation to ecological constraints, both expert planners considered s 7.16(2) of the BC Act which requires that development consent be refused if the proposed development is likely to have serious and irreversible impacts on biodiversity values. These are defined to include vegetation integrity and habitat suitability and include “additional biodiversity values” prescribed by cl 1.4 of the Biodiversity Conservation Regulation 2017 (NSW) (‘BC Regulation’) being, threatened species abundance; vegetation abundance; habitat connectivity; threatened species movement; and water sustainability. The planning experts accepted that part of the Land is identified on the Biodiversity Value Map published under s 7.3 of the BC Act.

34. Although Mr Haskew had access to further information after completing his primary report (more particularly in relation to the koala habitat map and water catchment constraints), he maintains his view that 30% of the remaining vegetation on the Land may be cleared and that any land clearing strategy that involves more than 30% of vegetation clearing could not be reasonably achieved. In the absence of expert ecological advice, Mr Haskew opines that a high level of caution is to be applied because, as the percentage of vegetation removal increases, so does the development risk. He accepts that his adopted 70% vegetation retention clearing rate is “unavoidably arbitrary”.

35. Mr Waghorn, while agreeing with Mr Haskew that removal of vegetation for any development is not without risk, as noted above, maintains that all existing vegetation in the otherwise developable areas is capable of being removed, subject to retaining vegetation to over 54.5% of the Land, including in the areas to the north and south of the Smelter.

Consideration

36. While considering the planning evidence, I remain conscious that the VG's primary position is that Mr Haskew's analysis of developability and his risk assessment makes a s 6A(1) approach inherently risky in comparison to that under s 6A(2) – such that an approach pursuant to s 6A(1) cannot be considered to be the highest and best use of the Land.

37. Accepting that the expert planners were not significantly apart in their final calculations in relation to developable and non-developable land when adopting the assumptions in s 6A(1), while remaining conscious that each takes a different approach in determining the respective areas, for the reasons that follow, and in the absence of expert ecological evidence (a matter noted by all experts), I prefer the evidence and more cautious approach and conclusions of Mr Waghorn.

38. There is no doubt that there is an element of risk in relation to land-clearing strategy on the Land at the base date and that this would be known and would affect the notional sale. It is clear that the relevant statutory framework under the BC Act and the Environmental Planning and Assessment Act 1979 (NSW) provides for rigid controls in relation to the drinking water catchment and known ecological matters. As well as the controls in cl 7.8 of the PSLEP, s 7.16(2) of the BC Act, as noted above, contains a precondition to the grant of development consent where there is likely to be serious and irreversible impacts on the biodiversity values as defined in s 1.5(2) of the BC Act and expanded by cl 1.4 of the BC Regulation.

39. Mr Haskew supplemented his earlier evidence (which comprised his primary report including over 1,000 pages of appendices), having obtained access to further material including the koala habitat map. He accepts that the obligation to avoid and minimise impacts on biodiversity is a significant matter that could lead to the refusal of a development application and that there is a further concern in relation to connectivity (in the context of the BC Act), which would be an issue for a hypothetical purchaser.

40. Although the VG submits that Mr Waghorn’s analysis of the developability of the Land (in particular Lot 70), which adopted a very different approach to that of Mr Haskew, was fundamentally flawed, I do not accept this submission. Nor do I accept the submission that Mr Waghorn’s analysis proceeded without the proper consideration of the statutory planning framework and whether biodiversity offsets could be achieved.

41. I accept the evidence of Mr Waghorn that there are a number of available methods to offset the loss of vegetation which may be available in the event that the majority of the existing vegetation is set aside to the north and south of the Smelter. I also accept that Mr Waghorn’s analysis for potential development provides that the areas in the north and south of the Land, which he maintains are the most important, remain in situ, and that all land mapped on the Biodiversity Values Map, the mapped wetlands, the 1% flooding area, and the majority of the mapped koala habitat would remain undeveloped. In these circumstances, although his final area figures were determined on a different basis to Mr Haskew, I prefer Mr Waghorn’s assessment relating to the potential clearing for the development rather than the “unavoidably arbitrary” 30% proffered by Mr Haskew.

42. I place weight upon the concerns raised by Council and Hunter Water Corporation in considering the withdrawn development applications despite those concerns being primarily related to “inadequacies in the engineering design” and “insufficient detail”. The failed (in the sense of withdrawn) development applications would clearly be matters that would be known at the base date and would have been relevant in any advice being given to the hypothetical parties. Moreover, I find that the obvious, and overlapping, constraints in relation to any development on the Land would be at the forefront of any advice to the hypothetical parties at the base date, which would clearly raise a level of caution.

43. For clarity, I accept Mr Waghorn’s evidence that there is little or no achievable development potential in the drinking water catchment based upon a number of the constraints noted above. Although there may be engineering solutions available to avoid such issues, I find this is not a typical approach.

44. In summary, I find that the town planning advice that would be given to the hypothetical parties at the base date was that the Land is subject to overlapping constraints which increase the risk for any potential development. As such, adopting Mr Waghorn’s evidence, I find that the developable area of the Land is 200.3ha and the non-developable area of the Land is 239.6ha.

45. In forming my view, I remain conscious that the VG submits that the extent of the ecological and drinking water catchment constraints on the Land renders both expert planners’ conclusions (on developable and non-developable land) uncertain and inherently risky such that the continuing use for the purpose of an aluminium smelter (as per s 6A(2) assumptions) would provide the highest and best use. As will be seen, I do not accept this position and, to provide context for my consideration (and determination) of the highest and best use, it is convenient to summarise the valuation evidence.

Valuation

46. The expert valuers, Mr Jackson (on behalf of Tomago) and Mr Glitsos (on behalf of the VG) provided expert valuation evidence based upon the agreed valuation method of the comparable sales approach. While each expert values the Land both on the basis of, first, vacant land with industrial development potential; and second, the continuing use as an aluminium smelter, they disagree as to the highest and best use of the Land.

47. Mr Jackson considers that the highest and best use of the Land is as a vacant parcel suitable for industrial development and determines land value using the respective areas determined (by the expert planners) to be capable of development. Mr Glitsos instead considers that the highest and best use of the Land is the existing use as an aluminium smelter with the surrounding buffer area.

48. In relation to the differences between the expert planners’ opinions on the size of the developable and the non-developable areas of the Land (in the scenario adopting the assumptions in s 6A(1)), and the agreed “operational land” and the “non-operational” land (in the scenario adopting the assumptions in s 6A(2)), the expert valuers agree that the Court will determine those areas first. Then the Court will likely apply $/m² rates after determining the dispute between the expert valuers regarding their adopted unitary ($/m²) rates consequent upon their respective analyses of two common comparable sales.

Overview

49. In adopting the comparable sales approach, because there were no sales of aluminium smelters (or similar) close to the base date available, the expert valuers agreed that sales of industrial land provide comparability, and adopted and analysed two large industrial sales as the best evidence of the value of the developable component of the Land. These are the sales of industrial land at 198 Lenaghans Drive, Black Hill and 1134 John Renshaw Drive, Black Hill.

50. In relation to the non-developable component of the Land (in their s 6A(1) approach), the expert valuers agreed on the rate to apply being $2.00/m², based upon their analysis of an agreed comparable sale of similarly affected land, being the sale of 604 Lemon Tree Passage Road, Saltbush.

51. In relation to the developable component (in their s 6A(1) approval), after their analysis of the two agreed comparable sales which will be considered later in this judgment, Mr Glitsos derives a rate of $27.90/m² and Mr Jackson derives a rate of $14.00/m². Applying these rates to the developable areas determined by the expert planners, and applying their agreed $2.00/m² rate to the non-developable areas (as determined by the expert planners), Mr Jackson determines land value at $32,830,000 when adopting Mr Waghorn’s areas, and $36,540,000 when adopting Mr Haskew’s areas; whereas Mr Glitsos determines land value at $60,675,700 when adopting Mr Waghorn’s areas, and $68,682,848 when adopting Mr Haskew’s areas.

52. It is appropriate to note that, when valuing the Land in accordance with the assumptions in s 6A(2) of the Valuation Act, the expert valuers adopt a different approach. In summary, each first, adopts his $/m² rate based on his analysis of the two primary comparable sales (after making the same adjustments as he does on the s 6A(1) basis), and then each makes a further (and significantly different) adjustment on the assumption of the continuing use as an aluminium smelter. This adjustment is then applied to the agreed “operational” and “non-operational” portions of the Land respectively, noted at [8] above and shown on annexure “A”.

53. Mr Jackson opines that it is appropriate to adopt a −20% risk allowance after applying his earlier determined rates. He applies his deduced $14.00/m² to the area of 1,612,400m² agreed to be “operational land”, being the combined area of the Smelter and contiguous cleared area shown on annexure “A”; and the agreed $2.00/m² to the area of 2,787,250m² agreed to be “non-operational land”, being the buffer area and the non-developable area, giving a total of $28,148,100. He then reduces this amount by 20% for “risk allowance” to accommodate what he maintains is the risk associated with the ongoing economic viability of the Smelter primarily in relation to higher electricity supply costs after the expiry of the existing electricity supply agreement in 2028. As such, he concludes that, on the basis that the highest and best use is the existing use as an aluminium smelter, the land value of the Land is $22,520,000.

54. Mr Glitsos, adopting a similar approach, opines that it is appropriate to make a series of upward adjustments in the order of 75% to each of his earlier determined rates of $27.90/m² (becoming $48.83/m²) for the 1,612,400m² area of operational land and $2.00/m² (becoming $3.50/m²) for the 2,787,250m² area of non-operational land. He concludes that on the basis that the highest and best use is the existing use as an aluminium smelter, the land value of the Land is $88,480,805. Mr Glitsos states that his 75% “uplift” is comprised of 20% to account for the benefit of the existing development consents allowing 24-hour operation; 20% to account for the existing buffer area which (because of its existence) permits the continued use of the Smelter; 10% to account for the Land not needing contamination remediation; and 25% to account for the Land’s close proximity to a reliable high-volume supply of electricity.

Highest and best use

55. With the above different determinations of land value in mind, it is appropriate to consider and determine the parties’ respective positions in relation highest and best use.

56. Mr Jackson opines that the highest and best use of the Land is future industrial development similar to the two agreed comparable sales and maintains that this accords with the conventional valuation approach. He considers that the existing use of the Smelter cannot be the highest and best use of the Land based upon his understanding that at the base date the use was not financially feasible. He considers that there would not be a buyer for an aluminium smelter because of the following matters that would have been known at the base date.

57. First, that the current use as an aluminium smelter is at risk of economic/financial obsolescence. He maintains this is because its short-term future is heavily dependent on the cost of its energy supply contract beyond the expiry of its current fixed price energy supply contract in 2028.

58. Secondly, that, as early as 2017, concern as to the future cost of electricity was acknowledged by the then chief executive officer of Tomago in the 2017 Tomago Aluminium Summer Edition News where he stated, “…we face the reality of a new energy contract kicking in from November 1. The new contract runs until late 2028 at pretty much a fixed rate, but well over a hundred million dollars more in annual cost”.

59. Thirdly, Mr Jackson points to knowledge in the community of the general state of aluminium smelters noting, first, an announcement by Rio Tinto, the major operator of aluminium smelters in Australia, in February 2023, that it had written down the value of its Queensland Boyne Island aluminium smelter to zero because of high energy costs; second, the fact that Rio Tinto also announced in July 2020 that “impairment triggers” were identified at its aluminium smelter at Bell Bay, Tasmania (as contained in the Rio Tinto Annual Report 2020); and third, the fact that Rio Tinto announced the closure of its Tiwai Point aluminium smelter in New Zealand in July 2020 because of high energy prices (referring to an article in the Guardian Australia, on 9 July 2020).

60. Mr Jackson also notes that more recently, in 2025, Tomago’s chief executive officer stated, in the Tomago A**luminium N**ews, (Vol 1, 2025), “Our search for renewable energy suppliers has confirmed viable options to support our long-term goals, though current pricing remains a challenge.” He also points to newspaper articles in T**he Australian, on 23 September 2025, and the Australian F**inancial R**eview, on 29 September 2025, which, according to Mr Jackson, “confirm[s] the hindsight” of the earlier concerns expressed from 2017.

61. Given the above, Mr Jackson opines that at the base date it was well-known that the supply of the necessary energy to the Smelter was a critical issue which would have significant ramifications in relation to the ongoing viability of the Smelter. As such, a prudent purchaser would need to carefully consider the likelihood of the future use and its financial viability. Mr Jackson considers that the level of risk associated with the continued use is very high and it is a “realistic possibility” that the Smelter may only continue for a short-term, before its ultimate closure.

62. For the above reasons, Mr Jackson would have recommended that the hypothetical parties obtain advice from an economist on the viability of, and the risks associated with, developing/operating an aluminium smelter on the Land in the short, medium and long-term. In addition, Mr Jackson opines that the hypothetical purchaser, in assessing the viability of the continued smelter use, would be aware of the state of the facility on the Land and that the improvements made were up to 40 years old.

63. Mr Glitsos opines that the highest and best use of the Land is the Smelter. While accepting that he is not an expert in the aluminium smelter industry (nor business valuations generally), he relies upon his experience in relation to valuations of a variety of heavy/hazardous industrial developments and State significant industrial uses to point to the following market drivers of value and other matters known at the base date which collectively contribute to his views.

64. First, the Land is an existing and operating smelter, and the surrounding industrial uses are positive attributes that add to the land value.

65. Secondly, access to the nearby Hunter River and the adjoining location of the AGL Gas and Transgrid facilities are significant locational advantages for the existing use of the Smelter and, as such, add to land value.

66. Thirdly, the absence of contamination remediation costs with the continuing use of the Smelter is appropriate.

67. Mr Glitsos states that, while he accepts that electricity costs are major costs in operating an aluminium smelter, the Smelter has operated since 1983 and there is no evidence that the property was operating “under insolvency”.

68. In response to the newspaper articles and company reporting referred to by Mr Jackson, Mr Glitsos notes that the quoted comments by Tomago’s chief executive officer (in 2017) also included the words “…and we have a very bright future if we continue to work together”, and should be considered in circumstances where the Smelter has continued and expanded its operation and production several times since 2017. He further states that a number of the matters relied upon by Mr Jackson regarding the “uncertainty” of the future viability of smelter operations were not in the public domain at the base date and media reports from 2025 do not confirm any “hindsight” from the statements made in 2017 in various Tomago reports. In any event, Mr Glitsos notes that the reporting relied upon by Mr Jackson also states that there is $51 million in CapEx spending anticipated at the Smelter.

69. Mr Glitsos states that Mr Jackson’s concern in relation to the age of the improvements has no bearing on the assessment of value on a s 6A(2) land value basis. Contrary to Mr Jackson’s view, he maintains that the absence of sales or transactions in relation to aluminium smelters does not mean that the two comparable sales primarily relied upon by the expert valuers are not able to be used, even accepting their uses are less intensive and less specialised industrial type uses.

Consideration

70. It is trite to state that for the purpose of s 6A(2) of the Valuation Act, the improvements are assumed to be present merely in order to permit the land value to be calculated having regard to the purpose for which they were erected, and for which they are required. It is not part of the assumption that an aspect which is personal to an operator or applicant would not be part of the notional sale.

71. I accept the position of Tomago that there is effectively no electricity supply contract or existing relationship with energy providers or mines. The assumption would also be that there is no actual client base and on one view, no workforce, that would be part of the notional sale. As such, to the extent that it may be relied upon by the VG, there can really be (at least at the base date on the present evidence) no assumption of some form of government bailout, or subsidy, or assistance.

72. There is dispute between the parties (and more particularly, the expert valuers) as to whether the identification of a “class” of purchaser is required. I note that the expert valuers did accept that there may be a very limited pool of buyers for operational aluminium smelters primarily because there was one, or possibly two, operators of the few (possibly four) operational smelters in Australia at the base date. This would explain why there is no market evidence in relation to the sale of operational smelters in Australia.

73. As noted above, Mr Jackson maintains that it would have been known at the base date that future electricity supply and costs would be substantially more than that which was existing at the base date and, in the absence of more specific expert economic evidence, he would have advised the parties of that concern. Although he maintains there would therefore be no identifiable “buyer”, I do not consider that this affects the notional sale to any great extent. It is clear that although artificial, a sale of the fee simple has to be assumed: Gollan v Randwick Municipal Council (1960) 6 LGRA 275 at 278.

74. Subject to matters that follow, I consider that the knowledge of the aluminium smelter industry that was available at the base date would likely be that articulated by Mr Jackson, and that the knowledge of the nature and extent of the operations at the Smelter would likely be that as noted by Mr Glitsos (at [64] and following above).

75. While not determinative in my finding that the highest and best use of the Land is pursuant to the potential for industrial development, I am otherwise concerned with the significant differences between the approaches of the expert valuers and, in particular, the nature and extent of the 75% uplift factor applied by Mr Glitsos and the −20% adjustment applied by Mr Jackson in his continuing use scenario.

76. Although Mr Glitsos acknowledges (as far as I can discern) that there was some risk in relation to a number of the matters raised by Mr Jackson being in the public domain, I am uncomfortable with the valuation approach involving the adoption of one initial $/m² rate (determined on an unimproved basis) with a large uplift of 75%. While Mr Glitsos breaks down the 75% (as noted at [54] above), each individual adjustment is significant and although he opines that each of his four factors “adds to the value of the [continuation of the] existing smelter”, I also have a concern in addition to the size of the adjustment as to whether there is any evidence before the Court that each component is warranted.

77. Mr Glitsos states, albeit briefly, that his discrete percentage uplifts are based upon his “professional opinion and valuation experience” which include “experience in a variety of other heavy/hazardous industrial uses … including properties within critical services sector and energy sector”.

78. Mr Glitsos adopts a 20% uplift because of the buffer area on the basis that “the smelter use can continue due to its potential environmental impact on the surrounding land uses being mitigated by the existence of this geographical buffer” area which Mr Glitsos considers a significant advantage “for its incumbent use”.

79. The adjustment of 20% for the buffer area is not fully explained and, as Tomago submits, it appears there is little justification as to why a hypothetical purchaser would add 20% to an area of 161ha on which the smelting operations subsist because of the existence of the buffer area, and then pay a further $2.00/m² (or $3.50/m²) for the same buffer area.

80. In relation to his 20% uplift for “DA-24 hours”, I also have a concern that, apart from a few sentences in Mr Glitsos’ primary report (which are repeated in the expert joint report), to the effect that the Smelter has “no operational time-restrictions is considered a significant advantage for its incumbent use”, and that “the use would not be able to operate without this allowable condition of use…”, there is little evidence before the Court that a 24-hour operation is something that either adds value of itself and, moreover, whether that value is such as to warrant a 20% uplift.

81. I am also not satisfied, on the present evidence, that Mr Glitsos’ 10% upward adjustment for “contamination” is warranted with the effect that it is a positive feature in circumstances where contamination is ordinarily a negative factor. As I understand the position, although not dealt with in detail in the evidence, I accept that a valuation based on the continued existence of smelter operations could properly disregard the cost of remediation: cf. Olefines at [78]. It appears that Mr Glitsos’ view is based upon his understanding that in recognition of the hazardous heavy industrial use and long-term tenure of the Smelter, there would be otherwise an elevated risk of contaminants on the Land which, on the continuing use basis, do not need to be remediated, therefore providing an added benefit under the continuing use approach. There is no market evidence to support this.

82. The final adjustment of 25% for “reliable high-volume supply of electricity” sits uncomfortably with Mr Jackson's evidence as to the concerns in relation to future electricity supply. Mr Glitsos states that his 25% uplift for transmission line easements reflects the fact that the smelter use can continue due to its “reliable high-volume supply of electricity as an energy source” in circumstances where the present use as a smelter operation itself is a high user of electricity and, but for its “close strategic proximity to this power supply”, it would not be able to operate. In support of this uplift, he gives evidence of a sale of industrial zoned land at Marsden Park in January 2024 which he submits shows that a 75% premium was paid for the land being very close to a main electrical substation. I do not find this evidence persuasive.

83. Without needing to prefer the evidence of one expert valuer over the other, in this instance, I am uncomfortable that there is a 75% uplift proffered in circumstances where Mr Glitsos’ opinions are not materially supported by market evidence.

84. Although Mr Glitsos uses the word “uplift”, it is, effectively, a large adjustment which I consider should be regarded with caution: Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]. Moreover, the effective difference between the expert valuers in terms of their percentage adjustments in relation to the operational land is 95% when considering the continuing use assumption pursuant to s 6A(2) of the Valuation Act. This results in respective determinations of land value in the range from $88,480,805 to $22,520,000. Even if I formed the view that no uplift (or a modest uplift) was warranted, the deduced land value would most likely be below the VG’s determination of land value.

85. While I accept that the purpose of s 6A(2) is to ensure that land is not undervalued when an existing use is more valuable than any use to which the land could be put if the improvements on it had not been made: Trust Company of Australia at [58], I am unable to properly determine an appropriate adjustment or uplift. It may be that if there was persuasive evidence (even of an expert economic nature) of the adjustments (either way) the Court may have been in a better position to determine that the approach pursuant s 6A(2) was the highest and best use.

Section 6A(1) approach – consideration

86. Having agreed that $2.00/m² was the appropriate rate to adopt for the non-developable land area, in relation to the developable land area, having adopted the comparable sales approach, in analysing the two comparable sales (which were large industrial sites at Black Hill, undeveloped at the base date), the expert valuers agreed on an adjustment for time (using 2% per month for market movement). As such, 198 Lenaghans Drive, Black Hill is adjusted at the base date to $20.20/m², and 1134 John Renshaw Drive, Black Hill is adjusted at the base date to $24.80/m². As I record later in these reasons, I consider that, of the two comparable sales, 1134 John Renshaw Drive, Black Hill is the more comparable sale.

87. While the expert valuers also agreed on an adjustment for size of −5%, they disagreed in relation to adjustments for what they each described as “location”, “DA/planning”, and “environmental” factors. After joint conferencing, their respective adjustments for the two comparable sales were as follows:

198 Lenaghans Drive, Black Hill

| Adjustment | Mr Jackson | Mr Glitsos | | Size | −5% | −5% | | Location | −40% | −2.5% | | Planning | −5% | +12.5% | | Environmental | +5% | +7.5% | | Total | −45% | +12.5% |

1134 John Renshaw Drive, Black Hill

| Adjustment | Mr Jackson | Mr Glitsos | | Size | −5% | −5% | | Location | −40% | −2.5% | | Planning | 0% | +15% | | Environmental | +5% | +5% | | Total | −4****0% | +12.5% |

88. As recorded at [51] above, after their respective analyses, Mr Glitsos derived a rate for developable area of $27.90/m² and Mr Jackson derived a rate of $14.00/m².

89. The critical difference is the adjustment for location, where Mr Jackson applies an adjustment of −40% to the Land whereas Mr Glitsos applies an adjustment of −2.5%.

90. Having agreed that using a paired sales analysis is a reasonable basis to compare locations, each expert valuer prepared a separate analysis of various sales of smaller industrial sites to assist in determining the adjustment for location when comparing the two primary sales, both located at Black Hill, with the Land at Tomago.

91. In his primary report, Mr Jackson undertook a paired sales analysis and considered the sale of six smaller industrial sites being 16 Martin Drive, Tomago; 9-11 School Drive, Tomago; 24 Yilen Close, Beresfield; 7B Cobbans Close, Beresfield; 6 Viney Creek Drive, Black Hill; and 8 Imperial Avenue, Black Hill. Having analysed these sales, he maintains that they demonstrate a substantial difference in value between Black Hill (being the location of the two comparable sales) and Tomago. This is because they show analysed site area ranges of $565/m² to $587/m² in Black Hill and $614/m² to $717/m² in Beresfield, whereas the analysed site area range in Tomago is $366/m² to $386/m². He concludes that the Black Hill and Beresfield sales reflect in the order of 40% to 50% superiority over the location of the Land, which justifies his −40% adjustment. He states that the reason for the difference relates to mains sewer, flood-free land and proximity to direct main and arterial roads, which are not present at Tomago.

92. In response to Mr Jackson’s analysis, Mr Glitsos undertook a paired sales analysis which is annexed to the joint expert report. He relied on eight sales, using 9-11 School Drive, Tomago and 37 Laverick Avenue, Tomago as “benchmark” (Tomago) sites; he then analysed each of 6 Viney Creek Drive, Black Hill; 6 Orange Road, Black Hill; 3 Plantation Road, Black Hill; 5 Orange Road, Black Hill; 29 Imperial Avenue, Black Hill; 14 Imperial Avenue, Black Hill; 8 Imperial Avenue, Black Hill; and 6 Imperial Avenue, Black Hill. Two of the sales analysed by Mr Glitsos, being 8 Imperial Avenue, Black Hill and 6 Viney Creek Drive, Black Hill, were used by Mr Jackson. Mr Glitsos concludes that his analysis supports only a minor adjustment for location between Tomago and Black Hill, and that although his paired sales analysis was prepared after his primary report, it confirmed his earlier opinion that Black Hill has a 2.5% superiority over Tomago for location.

93. In his oral evidence, possibly in response to criticisms of his analysis of the sales in Imperial Avenue, Black Hill, and in relation to 9-11 School Drive, Tomago, Mr Glitsos stated that, although analysing eight comparable sales in Black Hill, his three “best” sales were 29 Imperial Avenue, Black Hill; 6 Orange Road, Black Hill; and 5 Orange Road, Black Hill. In relation to 37 Laverick Avenue, Tomago, Mr Glitsos stated that his three “best” sales were 6 Orange Road, Black Hill; 5 Orange Road, Black Hill; and 6 Viney Creek Drive, Black Hill. In his analysis, Mr Glitsos uses three primary adjustments styled “adjustment to sale price” (being an adjustment for “delayed settlement”), “market movement”, and “% adjustment for larger site market in Tomago”.

94. Mr Jackson takes issue with Mr Glitsos’ adjustments for “delayed settlement”, his adjustment for “% for larger site market in Tomago”, and the manner in which Mr Glitsos considered three of the sales being 6, 8 and 14 Imperial Avenue, Black Hill.

95. In relation to the three Imperial Avenue sales, Mr Jackson notes that there is a large transmission line easement across the rear of each of the sites which cannot be constructed upon. Further, when he analysed 8 Imperial Avenue, Black Hill for his paired sales analysis, Mr Jackson made an allowance for what he considered to be the undevelopable area of the Land which comprised to the land impacted by the transmission line easement. As such, he states that Mr Glitsos’ failure to properly analyse those sales to reflect the transmission line easement impact renders the exercise undertaken by Mr Glitsos inutile.

96. Mr Glitsos responds that the transmission line easement affecting 6, 8 and 14 Imperial Avenue, Black Hill, is at the very rear of the properties and occupies land that can be used for certain purposes such as onsite parking, and landscaping as would otherwise be required by various planning controls. He also states these were not his “best” sales.

97. Tomago submits that Mr Glitsos’ “% adjustment for large site market in Tomago”, is lacking any explanation in circumstances where his groups of paired sales are generally similar in size to the Tomago benchmark sales and, as such, the ($/m²) rate has already been analysed (and this independently accounts for size). Therefore, there is no warrant for any adjustment.

98. Tomago submits that, leaving aside Mr Glitsos’ adjustment for delayed settlement and the adjustment for size, the remaining figures in Mr Glitsos’ tables would support Mr Jackson's greater adjustment.

99. Tomago made significant criticism of Mr Glitsos’ evidence during the course of the proceedings and highlighted a number of amendments to his earlier opinions and various corrections made at the hearing to both his calculations and stated reasoning. Tomago submits that these various mistakes (and corrections) would cause the Court to adopt a very cautious approach to Mr Glitsos’ evidence and in particular consider his failure to provide, at least in his initial report, appropriate reasoning for his opinions.

100. Tomago specifically criticises Mr Glitsos for not providing any analysis of the actual manner in which he applied his series of sales which he maintains supported his earlier −2.5% adjustment and submits this should be considered as “confirmation [of a] bias”.

101. The VG submits that the Court would prefer Mr Glitsos’ analysis because Mr Jackson, first, has both used an insufficient sample size and has therefore been “selective” in his choice of sales; second, has used two “irrelevant” sales being those located in Beresfield; and third, has chosen only one sale in Imperial Avenue, Black Hill, while ignoring other sales in that street that had been considered by Mr Glitsos, all of which has resulted in a “skewed” result. As such, the VG submits that Mr Jackson’s “selective” approach renders his large −40% adjustment for location unsafe.

102. While I consider that it is unfortunate that a number of corrections were made to Mr Glitsos’ calculations, and that on occasions Mr Glitsos did not clearly disclose his reasoning, I do not consider that the various concessions and clarifications made at the hearing by Mr Glitsos are such that, on their own, they detract from the weight that I would otherwise give to his evidence. Despite this, I have some concern in relation to his reliance upon various undisclosed discussions with “other valuers” and “professional experience” (although I acknowledge that courts frequently accept that valuers, may, on occasion, obtain information informally (Koutsouras v State Rail Authority [1988] NSWLEC 83)) in the absence of market-based evidence.

103. Noting the significant difference between Mr Glitsos’ adjustment for location of −2.5% and Mr Jackson’s −40%, and having heard the expert evidence and attended a number of the properties, I accept the VG's submission that the −40% for location is excessive. Although I do not adopt the adjustment of Mr Glitsos, I consider that using his paired sales analysis and doing the best I can, I consider that an adjustment of −5% is appropriate. I find that this figure sits comfortably in the adjusted ranges of the sales relied upon by the expert valuers and reflects my acceptance of the VG’s analysis of Mr Glitsos’ evidence. Simply stated, while I find that as a location for industrial sites, Tomago is marginally inferior to Black Hill, I do not accept that the evidence justifies a finding that the Tomago locality is 40% inferior to the Black Hill locality. My reasons follow.

104. First, although Mr Jackson contends that accessibility to Black Hill is superior because it is closer to the M1 Pacific Motorway and the Hunter Expressway, I accept Mr Glitsos’ evidence that this is counterbalanced by the Land being in closer proximity to Newcastle Airport, the Port of Newcastle (being a deep water port and the largest port on the eastern seaboard of Australia), and the Hunter River.

105. Secondly, contrary to the submission of Tomago, I do not find that Black Hill and Beresfield are to be treated similarly in circumstances where I accept Mr Glitsos’ evidence that Beresfield is a superior locality, being a well-established industrial estate with other businesses and community facilities. I find that the Beresfield locality is a mostly developed industrial suburb. In contrast, the majority of industrial sales relied upon by the expert valuers are predominantly regular-shaped parcels in the less intensely developed Black Hill locality, which has similar locational features to Tomago. It was clear from the view of the Land and various other properties, and from the evidence, that the Beresfield sales are some distance from the main highway and are distinctly irregular in shape with 24 Yilen Close, Beresfield, being a cul-de-sac and 7B Cobbans Close, Beresfield, being an unusual shape. As such, I disregard the Beresfield sales which, as submitted by the VG, would skew the paired sales analysis.

106. It follows that, even on Mr Jackson’s analysed sale ranges (as noted at [91] above) and excluding the Beresfield sales, I consider the better comparison is between Black Hill and Tomago where there is less difference in the sales.

107. Thirdly, having attended many of the sites of the comparable sales relied upon by the expert valuers, I find that the common sale at 9-11 School Drive, Tomago and 37 Laverick Avenue, Tomago, are appropriate “benchmark” sales (for the paired sales analysis) as they are located relatively close to the Land, in the same suburb, and enjoy the same zoning, topography, services, and not dissimilar environmental hazards.

108. Fourthly, although I maintain a concern that Mr Glitsos’ evidence (particularly his paired sales analysis) was produced after his primary report, despite maintaining his earlier −2.5% adjustment, it is obvious that the choice of specific comparators (and discrete adjustments) can significantly influence the deduced (analysed) outcome. For example, Mr Glitsos’ eight paired sale sets (using the two benchmark properties), shows a wide range of (locational) differences that arise in circumstances where certain adjustments (either for delayed settlement or larger size) are or are not made. As such, having regard to all eight sales, as the VG submits, if no adjustments for delayed settlement are made, and an adjustment is made for larger size, the range of locational differences is between +56% to −16%. Further, if no adjustments for delayed settlement are made but an adjustment for larger size is made, this shows a wide range of locational differences of between +41% to −26%. Thus, if using the sale of 6 Viney Creek Drive, Black Hill (as used by Mr Jackson), Mr Glitsos’ analysis would show Black Hill has a 41% superior location. However, if the sale of 6 Imperial Avenue, Black Hill (not used by Mr Jackson) is used, it shows that Black Hill is 25% inferior to Tomago.

109. Fifthly, although not determinative in forming my view, I also consider there is merit in the VG’s submission that Mr Jackson’s choice of sales is selective in the sense that he has not used other sales that were available. Similarly, as I have recorded, I have concerns with Mr Glitsos’ original choice of the eight sales, only to later effectively confine his evidence to three specific sales, and note my ongoing concerns with Mr Glitsos’ failure to fully articulate his reasoning in his primary report. Despite this, I consider the detail in Mr Glitsos’ analysis although produced later and not originally fully reasoned, provides a more thorough analysis to determine the locational adjustment.

110. Sixthly, again, having had the advantage of seeing the smaller sized allotments in Black Hill, I find that an adjustment needs to be made to reflect this size differential, otherwise the locational value ascribed to the larger subject land (at 440ha) is not correctly compared. I accept Mr Glitsos’ evidence that some adjustment for size needs to be made with regards to the paired sales analysis in circumstances where there are no larger paired sales available for analysis. This necessitates reliance on smaller sized sales and that, due to a scarcity of larger industrial site sales, there is limited market evidence to assist. As such, although he has again relied upon his experience and discussions with “other professionals in the market”, and as noted at [98] above, not without some concern as to this evidence, I consider that an adjustment for “size” is required otherwise a distortion will occur.

111. Again, doing the best I can, I consider that −5% is an appropriate figure for the adjustment for “location”.

112. The next adjustment in dispute relates to “planning”, with Mr Jackson adopting −5% in relation to 198 Lenaghans Drive, Black Hill and 0% in relation to 1134 John Renshaw Drive, Black Hill, and Mr Glitsos adopting +12.5% in relation to 198 Lenaghans Drive, Black Hill and +15% in relation to 1134 John Renshaw Drive, Black Hill.

113. In relation to 198 Lenaghans Drive, Black Hill, Mr Jackson notes that the sale had the benefit of a “Concept Approval” which would assist in the process for future industrial development of that property, in circumstances where the Land would need to seek an approval for development. As such, Mr Jackson applies a −5% to the Land when compared to 198 Lenaghans Drive, Black Hill. He applies no similar adjustment to 1134 John Renshaw Drive, Black Hill, which sold without development consent.

114. Mr Glitsos maintains that while part of each of his +12.5% and +15% adjustments relate to a “Concept Approval” (in relation to 198 Lenaghans Drive, Black Hill), he also takes account of the fact that the Land is zoned E4 General Industrial which allows heavy industrial type uses. In contrast, the zoning applicable for the two comparable sales is equivalent to IN2 Light Industrial which he maintains means that the Land is superior overall to the two comparable properties.

115. In his oral evidence, Mr Jackson confirmed that he had made no adjustment in relation to town planning for the difference in zoning and maintained that, contrary to Mr Glitsos’ view, the IN2 zone provides for a more intensive style of development and is, in his view, more valuable because it “yield(s) a lot more from the land”. He maintained that it is evident from the present development in the light industrial areas that such land is developed to a more intensive level with a greater ratio of building to land area. Instead, heavy industry is mostly a low-density use of land with smaller scale development over the land area and, as such, in Mr Jackson's experience, more intensive use of the land enables a higher price to be paid.

116. Tomago submits that the significant adjustments made by Mr Glitsos of 12.5% to 15% are made without market evidence or support, and, in particular, there is no sales evidence that would demonstrate a significant premium is paid for the potential for “heavy industry” use.

117. I accept the submission of Tomago that there being no analysis similar to paired sales or any equivalent market evidence to establish the basis for Mr Glitsos’ not insignificant adjustments, I prefer the evidence of Mr Jackson, that adjustments of −5% and 0% respectively should be applied to the comparable sales.

118. The remaining difference between the expert valuers is the adjustment for “environmental”. In relation to 198 Lenaghans Drive, Black Hill, Mr Jackson adjusts upwards by +5% and Mr Glitsos adjusts upwards by +7.5%. They both make adjustments of +5% in relation to 1134 John Renshaw Drive, Black Hill.

119. Although Mr Glitsos and Mr Jackson agree that a +5% adjustment reflects that the Land is superior in comparison to either site in Black Hill, on a “cleared site” basis, Mr Glitsos considers the Land is superior to 198 Lenaghans Drive, Black Hill in particular because it is less bushfire prone, not within a mine subsidence area, and is not severed by a creek traversing through the middle of the Land.

120. I find that it is clear from the evidence that a creek severs the land at 198 Lenaghans Drive, Black Hill. Although in his oral evidence, Mr Jackson accepted that he did not give consideration to the creek and did not make an adjustment thereto, he maintained that there were other matters of concern. I find that these ‘concerns’ were not compellingly articulated, and I accept the submission of the VG, and prefer Mr Glitsos’ analysis and his adjustment over Mr Jackson's +5% adjustment.

121. In summary, I find that the appropriate adjustments are as follows:

| | 198 Lenaghans Drive | 1134 John Renshaw Drive | | Size | −5 | −5 | | Location | −5 | −5 | | Planning | −5 | 0 | | Environment | +7.5 | +5 | | | −7.5 | −5 |

122. In the light of my findings above, I consider that of the two comparable sales, the more comparable sale is 1134 John Renshaw Drive, Black Hill because, first, the sale is closer in time to the base date, with the sale occurring in April 2022; second, it is closer in area (being 219ha); and third, it requires, on any view, marginally less adjustment than 198 Lenaghans Drive, Black Hill.

Conclusion

123. In the circumstances, considering land value of the developable portion of the Land, adopting my findings and concomitant reasoning, applying my deduced −5% adjustment to the agreed rate of $24.80/m² (for the most comparable sale), and then applying that to the developable area, being 2,003,000m² as determined by Mr Waghorn (whose figures I have adopted), this gives a figure of $47,190,680. To that amount, I add the non-developable area of the Land being 2,396,000m² at the agreed rate of $2.00/m², the amount being $4,792,000. Arithmetically, this gives the figure of $51,982,680. However, pure arithmetic aside, taking into account my various findings (including the closeness of the expert town planners’ figures considered earlier in these reasons and my evaluative determinations of the expert valuers’ variable factors), I find that the figure of $52,000,000 properly reflects the land value of the Land as at the base date.

124. As I have determined the land value of the Land at $52,000,000, I find that Tomago has not discharged the onus of proof it bears to establish the VG’s determination in the sum of $52,000,000 is too high.

Orders

125. The orders of the Court are:

126. The proceedings are dismissed.

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Annexure A (492 KB, pdf)