Westview Business Park Pty Ltd v Valuer-General of New South Wales

Evidence

1. Westview relies upon the valuation report of Lucy Bates dated 11 March 2024. Ms Bates determines land value in the sum of $1,960,000.
2. The Valuer-General relies upon the valuation report of John Ewing dated 28 February 2024. Mr Ewing determines land value in the sum of $2,740,000.
3. Ms Bates and Mr Ewing also prepared what they described as a "joint expert report" filed on 19 March 2024, which, as I noted during the hearing, was not in a form that complied with either the Court's Practice Note - Class 3 Valuation Objections or Pt 31, Div 2 (r 31.26) of the Uniform Civil Procedure Rules 2005 (NSW), which clearly articulates that a joint report must specify "matters agreed and matters not agreed and the reasons for any disagreement" - requirements which were not addressed in the joint report. As such, the joint report was not of particular assistance except to note that on a number of occasions in the joint report Ms Bates corrected errors in her primary report and provided (by way of annexure to the joint report) some more detail in relation to her primary report.
4. The valuation experts also gave oral evidence.
5. Westview read the affidavit of Christopher Brian Leo Condon affirmed 21 March 2024. Mr Condon is a director of Westview and deposed to circumstances surrounding Westview's purchase of the Land which were matters relied upon by Ms Bates.

The statutory valuation task

1. As a result of concerns that will be later expressed, I consider that a lengthier analysis of the relevant principles that I am to apply is required than otherwise would be the case.
2. This appeal focuses 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. …
3. 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 at [61]-[62], [68]-[70] 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. [62] Assessment of land value is to take place in accordance with s 6A(1) of the [Valuation Act]… … [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. Section 34(1) specifies the only grounds on which objection may be taken under the [Valuation Act] to a valuation…. [69] The Valuer-General is required to consider an objection that has been duly made and either allow or disallow it. If the objection is disallowed in whole or in part, the Valuer-General must give reasons for doing so. [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." (Some citations and emphases omitted.)
4. In undertaking the statutory valuation task and determining land value for the Land at the base date, the Court needs to consider a notional sale whereby the Land is being hypothetically purchased for its highest and best use: Trust Company of Australia Ltd v the Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 at [32] (Campbell JA); Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444 at [16]-[17] (Basten JA).
5. In this way, the notional sale occurs between a hypothetical willing purchaser and a not unwilling vendor: Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 ('Spencer') at 432. 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 it is worth.
6. Given the expert evidence in this matter, in particular the fact that both Ms Bates and Mr Ewing adopted the comparable sales approach, it is important to note that the accepted methodology for the comparable sales approach is that it be undertaken in four steps, being: accumulation, analysis, adjustment, and application: Marroun v Roads and Maritime Services [2012] NSWLEC 199 at [197] ('Marroun'); New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 at [99].
7. First, the valuer (which includes the Court acting as valuer on appeal) is to accumulate comparable properties. In Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8, McHugh, Gummow, Kirby, Hayne and Callinan JJ commented at [18] that the "sales to be treated as comparable sales need to be truly comparable", although they added that the Court should not be "unreasonably selective".
8. Secondly, the valuer should analyse those comparable sales. This often involves converting the value of those sales into another measurement that can be easily compared: Marroun at [201].
9. Thirdly, the valuer (judicial or otherwise) should adjust those properties it considers comparable to create equivalence with the unimproved subject property. I adopt the comments of Biscoe J in Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]: "The basis for the valuers' valuation assessments is the sales comparison method. Accepted valuation practice permits adjustments for differences, such as in location, area and time to enable valuers to have comparable values which, following adjustment, account for the various differences with the subject property. Such adjustments are generally based on a reasoning process drawing on the skill and experience of the valuer and are undertaken to derive an opinion of value through a deductive process. Because properties are rarely identical, adjustments for differences are 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. Too many adjustments potentially render the comparable sale unsafe to rely upon. Caution is therefore required where large adjustments are to be made. …"
10. Fourthly, the valuer should apply the comparable sales approach to determine a value of the subject property based on the adjusted values of the comparable properties.
11. It is trite that no two properties are truly identical, and adjustments are made to find a basis for practical comparison, for example, by hypothesising a unitary rate to reflect differences (such as size, location, use, date, etc) between a respective potentially comparable sale and the subject property.
12. Although there had been some judicial debate, it is now accepted that when there are comparable sales available, the process of making explicit adjustments for differences in the valuation method allows the adjustment process to be logical and transparent as opposed to an implicit process comprising a single adjustment that risks rejection for want of transparency: The Trust Company Limited v Minister Administering the Crown Lands Act 1989 [2012] NSWLEC 73; (2012) 211 LGERA 158 ('Trust Company') at [115]; Tomago Aluminium Company Pty Limited v Valuer General [2010] NSWLEC 4 at [45]; Marroun at [203]-[207]; Richard Capuano v Roads and Maritime Services [2018] NSWLEC 59 at [19].
13. Relevantly, in Trust Company at [115]-[119], Pain J declined to give any weight to a valuation report where the valuer's facts and assumptions could not be scrutinised due to the failure to set out a clear stepwise process.
14. Relevant to my consideration of the evidence before the Court, I consider that a transparent process of explicit adjustment, leading to an explicable assessment of value, is to be preferred to an opaque process of implicit adjustment.

Consideration

1. In his primary report Mr Ewing relied upon three sales: 1. 12R Narromine Road, Dubbo ('prior sale of subject land'); 2. 2R Richardson Road, Dubbo ('2R Richardson'); and 3. 22R Narromine Road, Dubbo ('22R Narromine').
2. In her primary report Ms Bates relied upon five sales: 1. 11L Rosedale Road, Dubbo (also known as '4R Freight Drive'); 2. 2R Richardson (as defined above); 3. 14 Transport Drive, Dubbo; 4. 9 - 11 Transport Drive, Dubbo; and 5. 13L Narromine Road, Dubbo.
3. Despite each adopting the direct comparison approach, it is relevant to note, first, there was only one common sale between the valuers being 2R Richardson, a property close to the Land which sold on 31 May 2021; and, second, that Mr Ewing relied upon the earlier sale of the subject land (to Westview) on 10 January 2022, six months before the 1 July 2022 base date in circumstances where Ms Bates maintained that such prior sale was not "comparable".

The valuers' evidence

1. Mr Ewing gave evidence in relation to the three sales upon which he relied and provided transparent adjustments in a manner which addressed the concerns otherwise expressed (at [23] and [25] above). Before giving further consideration to his (and Ms Bates') comparable sales, it is appropriate to consider the dispute regarding reliance upon the prior sale of the subject land.
2. Mr Ewing placed significant weight upon the prior sale of the subject land. He derived $29.05/m² on the basis of the sale price of $3,190,000 (reduced to $2,850,000 due to the deduction of $290,000, being the GST component of the purchase price, and a further deduction for improvements (being fencing) in the sum of $50,000). He considered that no further adjustments were required.
3. Ms Bates maintained that the prior sale of the subject land did not meet what she stated was "market value definition" (a discrete definition she adopted from "International Valuation Standards (effective 31 January 2022)") and that this sale was not comparable based upon the fact that the property had been "listed for some time, sold with [a] non favourable lease, sold with a deed of call option and a lease surrender fee required".
4. Westview submitted that the Court should disregard the prior sale of the subject land on the basis of Ms Bates' opinion, and the matters raised in the affidavit of Mr Condon. Mr Condon deposed to a conversation he had with the vendor of the Land in July 2021, six months before the prior sale of the subject land to Westview, where the owner stated he would not be "budging" from a figure of $2,900,000 and that he intended to compensate the then lessee in the sum of $400,000. Westview noted that Ms Bates stated that the "payment of $400,000 was negotiated to commit vendor to enter variation of lease … and relinquish option for renewal prior to Deed of Call being entered [in]to". Because the Land was therefore sold with a lease indicating a rental of $1.00 per annum and as such "…is not reflective of market rental", Ms Bates concluded that "above market level [was] paid" and therefore the sale does not meet (her) definition of market value.
5. I do not consider the submissions of Westview and the evidence of Ms Bates in this regard compelling, and I find that it is appropriate to rely upon the prior sale of the subject land. Subject to the carveout for improvements in s 6A of the Valuation Act, land value is the "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…". The determination of value is to be made as if the Land was converted to cash or money by reason of the hypothetical sale contemplated by s 6A of the Valuation Act. As such, the purchase price on 31 May 2021 reflects the sum of money that secured the entitlement of the purchaser (in this matter, Westview) to a transfer of title. The amount paid by the purchaser is the sum "realised" by the vendor regardless of any component of that sum that the vendor may be liable to pay as a consequence of receiving it: Storage Equities Pty Ltd v Valuer-General [2013] NSWLEC 137 at [41]. The requirement of s 6A is to consider a sale negotiated between a vendor and purchaser according to Spencer (at 432).
6. Simply stated, on the evidence before the Court and taking into account the adjustments made to the purchase price by Mr Ewing (in relation to the GST component and the fencing improvements) this sale effectively reflects the price agreed being the amount which must be paid in order to obtain a transfer of title. Put another way, that amount is the purchaser's "net liability". There is not one "value" from the perspective of the vendor and a different "value" from the perspective of the purchaser.
7. Further, as will be seen, I consider that it is the most appropriate (or, to use a valuation term, the "best") comparable sale because Mr Ewing provided evidence that once the purchase price is adjusted, as he has done, there needs to be no specific adjustments based upon land size, access, shape, topography, location, and market movement.
8. Despite the above, if I am wrong in considering the prior sale of the subject land, I have closely considered the "common" sale, 2R Richardson, where Mr Ewing, from the sale price of $1,028,500 and a site area of 43,080m², derives an unadjusted rate of $22.70/m² which he then adjusts discretely for size, access, shape, and market, arriving at an adjusted rate of $28.38/m². Having considered the evidence including Ms Bates' "Comparison Comment" column in her primary report, her "Comparability" commentary in the joint expert report, as well as the photographic and mapping material, and having heard each valuer's oral evidence, for the reasons that follow, I find that each adjustment to this sale made by Mr Ewing is appropriate.
9. I consider that an adjustment for land size is appropriate given that the subject land is almost twice the size of 2R Richardson, and I accept the evidence that, generally, a smaller lot will have a greater rate per square metre than a larger lot. I find that Mr Ewing's −10% adjustment for size is appropriate.
10. In relation to access, I find that Mr Ewing's 10% adjustment reflects the fact that the subject land provides for better access than 2R Richardson (and 22R Narromine).
11. In relation to shape, I accept Mr Ewing's 15% adjustment due to the fact that the Land has an advantage over 2R Richardson (but not over 22R Narromine), and that in relation to topography and location, there needs to be no adjustment.
12. Finally, I accept that Mr Ewing's adjustment of 10% for market movement reflects the change in the market between the relevant date of 1 July 2022 and the date of the sale of 2R Richardson, being 31 May 2021. These adjustments lead to a total adjustment of 25% to Mr Ewing's unadjusted rate of $22.70/m² resulting in Mr Ewing's adopted rate of $28.38/m².
13. Furthermore, in relation Mr Ewing's third sale (22R Narromine), again he makes discrete adjustments for size (−30%), access (10%), shape (−5%), leading to a total adjustment of −25% to his unadjusted rate of $39.23/m² deriving a rate of $29.42/m².
14. Each of Mr Ewing's derived rates ($29.00/m², $28.38/m² and $29.42/m²) applied to the subject land (an area of 98,100m²) comfortably brings the land value to amounts appropriately similar to the Valuer-General's determined land value.
15. I now turn to Ms Bates' evidence. Ms Bates determines land value of the subject land at $1,960,000 and initially relies on five comparable sales. Ms Bates analyses these sales by determining various dollar per square metre rates ranging from $8.26/m² to $55.18/m². Despite providing in her primary report an analysis under the heading "Comparison Comment" in relation to each of the sales, I am unable to discern anywhere in her report (or her contribution to the valuers' joint report) where she articulates with precision any reasoning leading to her deduced rate of $20.00/m² which she applied to the Land (at 98,100m²) to determine land value at $1,960,000. At the highest, she states: "Available sales evidence illustrates a rate per square metre in the range of $8.26 - $85.75 [later corrected to be $55.18] per square metre. This variation is largely reflected in the size of land, physical nature, and location. The variation of analysed land value rates adopted in this assessment have been used illustrate the difference in the market for well configured sites with development potential, good road exposure, location, and access, despite earthworks required, versus smaller 'ready to build sites in older however similar zoned industrial areas'."
16. While I understand Ms Bates' general reasoning, apart from references to size, physical nature and location, there is no breakdown of these aspects in relation to her sales which reflect a wide variety of shapes and sizes.
17. Although the absence of discrete adjustments makes it difficult to assess the comparability of Ms Bates' sales (including her analysis of the common sale 2R Richardson), accepting Ms Bates' oral evidence that the "Comparison Comment" column in the tabular formulation dealing with the sales in her expert report reflects her reasoning, I note the following in relation to each of her sales.
18. In relation to Ms Bates' first sale (11L Rosedale Road, Dubbo), the site area is 349,000m² in comparison to the subject land at 98,100m², and while Ms Bates comments that this is an "older sale, significantly larger englobo and better configured site however is considered comparable in terms of physical nature of site, the location and similar planning provisions", and apart from reference to an adjustment (which is not precisely articulated) for "market movement", there is no further explanation. In these circumstances, I accept Mr Ewing's evidence and find that this sale is too large for direct comparison as significant adjustments would be required particularly in relation to size.
19. In relation to Ms Bates' second sale (the common sale, 2R Richardson), Ms Bates opines that the sale is comparable in terms of planning controls, location, exposure to Narromine Road, and sloping topography, and despite a number of different expressions of her adjusted land value rate (being variously $28.38/m² or $25.00/m²), she states that her deduced rate from this sale is $23.75/m². There is no further analysis apart from Ms Bates stating that this land "requires earthworks" (which appears to be an aspect in common with the subject land), and "Adjustment for market movement and for Development Application and fencing", however, there is no further detail provided.
20. I find that in relation to 2R Richardson, in circumstances where both valuers initially arrived at a similar value of the unadjusted rates, being $22.70/m² determined by Mr Ewing and $23.75/m² determined by Ms Bates, as noted above, the Court has the advantage that Mr Ewing gives evidence as to precisely how he has arrived at his adjusted rate ($28.38/m²) by way of adjustments for size, access, shape, topography, and market movement. I also note that there was little criticism of Mr Ewing's adjustments by Ms Bates except that Mr Ewing may not have adjusted sufficiently for "services", however, I note that it is unusual for "services" to constitute a discrete separate adjustment.
21. In relation to Ms Bates' third and fourth sales (14 Transport Drive, Dubbo and 9 - 11 Transport Drive, Dubbo), which the Valuer-General maintains are both located at Brocklehurst - and not Dubbo, it is clear that 14 Transport Drive (at 5,872m²) is approximately 6% the size of the subject land and 9 - 11 Transport Drive (at 8,289m²) is approximately 9% the size of the subject land. Taken at its highest, Ms Bates' reasoning (in her column headed "Comparison Comment"), is that both sites are "significantly smaller" but are "comparable in terms of zoning though located in older industrial area with inferior exposure north-east of subject property". The same wording is used in relation to her commentary in relation to each sale. Again, there is no breakdown of adjustments for these properties and given the significant size and location differences, it is clear that these sales require large adjustments, and with other more appropriate comparable sales available, I find that these sales are not of assistance.
22. In relation to Ms Bates' fifth sale (13L Narromine Road, Dubbo), Ms Bates agreed in the joint report to "remove this sale from the valuation due to significant size variation from subject property", however despite its removal, there was no explanation as to whether that sale was, or was not, important in her valuation.
23. In addition, and as noted above, Ms Bates states that her sales evidence illustrates an adjusted rate per square metre in the range of $8.56/m² to $55.18/m² and that "this variation is largely reflected in size of land, physical nature, location, and access". Although in the joint report she provides further detail in relation to each of the four sales she now relies upon, and while she refers to such matters as shape of the development sites, location, comparable zoning, again, there is no identifiable reasoning process that discretely considers each sale to explain how (even noting the range from $8.56/m² to $55.18/m²) her concluded value of $20.00/m² is determined.

Conclusion

1. In the circumstances noted above, and having closely considered the material, I prefer the evidence of Mr Ewing primarily on the basis that I consider his approach is orthodox and his sales (in particular his first and second sales) to be more comparable than the other sales (apart from 2R Richardson) relied upon by Ms Bates, and, moreover, Mr Ewing has provided discrete transparent adjustments which I consider are appropriate in the circumstances.
2. Accepting Mr Ewing's evidence (noted at [42] above) and considering my reasoning above, I find that Westview has not discharged the onus of proof it bears to establish that the Valuer-General's determination in the sum of $2,740,000 is too high.

Orders

1. The orders of the Court are: 1. The proceedings are dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 April 2024

On an appeal, the appellant has the onus of proving the appellant's case." (Some citations and emphases omitted.)

1. In undertaking the statutory valuation task and determining land value for the Land at the base date, the Court needs to consider a notional sale whereby the Land is being hypothetically purchased for its highest and best use: Trust Company of Australia Ltd v the Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 at [32] (Campbell JA); Olefines Pty Ltd v Valuer-General of New South Wales [2018] NSWCA 265; (2018) 234 LGERA 444 at [16]- [17] (Basten JA).
2. In this way, the notional sale occurs between a hypothetical willing purchaser and a not unwilling vendor: Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 ('Spencer') at 432. 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 it is worth.
3. Given the expert evidence in this matter, in particular the fact that both Ms Bates and Mr Ewing adopted the comparable sales approach, it is important to note that the accepted methodology for the comparable sales approach is that it be undertaken in four steps, being: accumulation, analysis, adjustment, and application: Marroun v Roads and Maritime Services [2012] NSWLEC 199 at [197] ('Marroun'); New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 at [99].
4. First, the valuer (which includes the Court acting as valuer on appeal) is to accumulate comparable properties. In Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8, McHugh, Gummow, Kirby, Hayne and Callinan JJ commented at [18] that the "sales to be treated as comparable sales need to be truly comparable", although they added that the Court should not be "unreasonably selective".
5. Secondly, the valuer should analyse those comparable sales. This often involves converting the value of those sales into another measurement that can be easily compared: Marroun at [201].
6. Thirdly, the valuer (judicial or otherwise) should adjust those properties it considers comparable to create equivalence with the unimproved subject property. I adopt the comments of Biscoe J in Holcim (Australia) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]:

"The basis for the valuers' valuation assessments is the sales comparison method. Accepted valuation practice permits adjustments for differences, such as in location, area and time to enable valuers to have comparable values which, following adjustment, account for the various differences with the subject property. Such adjustments are generally based on a reasoning process drawing on the skill and experience of the valuer and are undertaken to derive an opinion of value through a deductive process. Because properties are rarely identical, adjustments for differences are 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. Too many adjustments potentially render the comparable sale unsafe to rely upon. Caution is therefore required where large adjustments are to be made. ..."

1. Fourthly, the valuer should apply the comparable sales approach to determine a value of the subject property based on the adjusted values of the comparable properties.
2. It is trite that no two properties are truly identical, and adjustments are made to find a basis for practical comparison, for example, by hypothesising a unitary rate to reflect differences (such as size, location, use, date, etc) between a respective potentially comparable sale and the subject property.
3. Although there had been some judicial debate, it is now accepted that when there are comparable sales available, the process of making explicit adjustments for differences in the valuation method allows the adjustment process to be logical and transparent as opposed to an implicit process comprising a single adjustment that risks rejection for want of transparency: The Trust Company Limited v Minister Administering the Crown Lands Act 1989 [2012] NSWLEC 73; (2012) 211 LGERA 158 ('Trust Company') at [115]; Tomago Aluminium Company Pty Limited v Valuer General [2010] NSWLEC 4 at [45]; Marroun at [203]-[207]; Richard Capuano v Roads and Maritime Services [2018] NSWLEC 59 at [19].
4. Relevantly, in Trust Company at [115]-[119], Pain J declined to give any weight to a valuation report where the valuer's facts and assumptions could not be scrutinised due to the failure to set out a clear stepwise process.
5. Relevant to my consideration of the evidence before the Court, I consider that a transparent process of explicit adjustment, leading to an explicable assessment of value, is to be preferred to an opaque process of implicit adjustment.

1. In his primary report Mr Ewing relied upon three sales:

(1) 12R Narromine Road, Dubbo ('prior sale of subject land');

(2) 2R Richardson Road, Dubbo ('2R Richardson'); and

(3) 22R Narromine Road, Dubbo ('22R Narromine').

1. In her primary report Ms Bates relied upon five sales:

(1) 11L Rosedale Road, Dubbo (also known as '4R Freight Drive');

(2) 2R Richardson (as defined above);

(3) 14 Transport Drive, Dubbo;

(4) 9 - 11 Transport Drive, Dubbo; and

(5) 13L Narromine Road, Dubbo.

1. Despite each adopting the direct comparison approach, it is relevant to note, first, there was only one common sale between the valuers being 2R Richardson, a property close to the Land which sold on 31 May 2021; and, second, that Mr Ewing relied upon the earlier sale of the subject land (to Westview) on 10 January 2022, six months before the 1 July 2022 base date in circumstances where Ms Bates maintained that such prior sale was not "comparable".

1. Mr Ewing gave evidence in relation to the three sales upon which he relied and provided transparent adjustments in a manner which addressed the concerns otherwise expressed (at [23] and [25] above). Before giving further consideration to his (and Ms Bates') comparable sales, it is appropriate to consider the dispute regarding reliance upon the prior sale of the subject land.
2. Mr Ewing placed significant weight upon the prior sale of the subject land. He derived $29.05/m² on the basis of the sale price of $3,190,000 (reduced to $2,850,000 due to the deduction of $290,000, being the GST component of the purchase price, and a further deduction for improvements (being fencing) in the sum of $50,000). He considered that no further adjustments were required.
3. Ms Bates maintained that the prior sale of the subject land did not meet what she stated was "market value definition" (a discrete definition she adopted from "International Valuation Standards (effective 31 January 2022)") and that this sale was not comparable based upon the fact that the property had been "listed for some time, sold with [a] non favourable lease, sold with a deed of call option and a lease surrender fee required".
4. Westview submitted that the Court should disregard the prior sale of the subject land on the basis of Ms Bates' opinion, and the matters raised in the affidavit of Mr Condon. Mr Condon deposed to a conversation he had with the vendor of the Land in July 2021, six months before the prior sale of the subject land to Westview, where the owner stated he would not be "budging" from a figure of $2,900,000 and that he intended to compensate the then lessee in the sum of $400,000. Westview noted that Ms Bates stated that the "payment of $400,000 was negotiated to commit vendor to enter variation of lease ... and relinquish option for renewal prior to Deed of Call being entered [in]to". Because the Land was therefore sold with a lease indicating a rental of $1.00 per annum and as such "...is not reflective of market rental", Ms Bates concluded that "above market level [was] paid" and therefore the sale does not meet (her) definition of market value.
5. I do not consider the submissions of Westview and the evidence of Ms Bates in this regard compelling, and I find that it is appropriate to rely upon the prior sale of the subject land. Subject to the carveout for improvements in s 6A of the Valuation Act, land value is the "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...". The determination of value is to be made as if the Land was converted to cash or money by reason of the hypothetical sale contemplated by s 6A of the Valuation Act. As such, the purchase price on 31 May 2021 reflects the sum of money that secured the entitlement of the purchaser (in this matter, Westview) to a transfer of title. The amount paid by the purchaser is the sum "realised" by the vendor regardless of any component of that sum that the vendor may be liable to pay as a consequence of receiving it: Storage Equities Pty Ltd v Valuer-General [2013] NSWLEC 137 at [41]. The requirement of s 6A is to consider a sale negotiated between a vendor and purchaser according to Spencer (at 432).
6. Simply stated, on the evidence before the Court and taking into account the adjustments made to the purchase price by Mr Ewing (in relation to the GST component and the fencing improvements) this sale effectively reflects the price agreed being the amount which must be paid in order to obtain a transfer of title. Put another way, that amount is the purchaser's "net liability". There is not one "value" from the perspective of the vendor and a different "value" from the perspective of the purchaser.
7. Further, as will be seen, I consider that it is the most appropriate (or, to use a valuation term, the "best") comparable sale because Mr Ewing provided evidence that once the purchase price is adjusted, as he has done, there needs to be no specific adjustments based upon land size, access, shape, topography, location, and market movement.
8. Despite the above, if I am wrong in considering the prior sale of the subject land, I have closely considered the "common" sale, 2R Richardson, where Mr Ewing, from the sale price of $1,028,500 and a site area of 43,080m², derives an unadjusted rate of $22.70/m² which he then adjusts discretely for size, access, shape, and market, arriving at an adjusted rate of $28.38/m². Having considered the evidence including Ms Bates' "Comparison Comment" column in her primary report, her "Comparability" commentary in the joint expert report, as well as the photographic and mapping material, and having heard each valuer's oral evidence, for the reasons that follow, I find that each adjustment to this sale made by Mr Ewing is appropriate.
9. I consider that an adjustment for land size is appropriate given that the subject land is almost twice the size of 2R Richardson, and I accept the evidence that, generally, a smaller lot will have a greater rate per square metre than a larger lot. I find that Mr Ewing's −10% adjustment for size is appropriate.
10. In relation to access, I find that Mr Ewing's 10% adjustment reflects the fact that the subject land provides for better access than 2R Richardson (and 22R Narromine).
11. In relation to shape, I accept Mr Ewing's 15% adjustment due to the fact that the Land has an advantage over 2R Richardson (but not over 22R Narromine), and that in relation to topography and location, there needs to be no adjustment.
12. Finally, I accept that Mr Ewing's adjustment of 10% for market movement reflects the change in the market between the relevant date of 1 July 2022 and the date of the sale of 2R Richardson, being 31 May 2021. These adjustments lead to a total adjustment of 25% to Mr Ewing's unadjusted rate of $22.70/m² resulting in Mr Ewing's adopted rate of $28.38/m².
13. Furthermore, in relation Mr Ewing's third sale (22R Narromine), again he makes discrete adjustments for size (−30%), access (10%), shape (−5%), leading to a total adjustment of −25% to his unadjusted rate of $39.23/m² deriving a rate of $29.42/m².
14. Each of Mr Ewing's derived rates ($29.00/m², $28.38/m² and $29.42/m²) applied to the subject land (an area of 98,100m²) comfortably brings the land value to amounts appropriately similar to the Valuer-General's determined land value.
15. I now turn to Ms Bates' evidence. Ms Bates determines land value of the subject land at $1,960,000 and initially relies on five comparable sales. Ms Bates analyses these sales by determining various dollar per square metre rates ranging from $8.26/m² to $55.18/m². Despite providing in her primary report an analysis under the heading "Comparison Comment" in relation to each of the sales, I am unable to discern anywhere in her report (or her contribution to the valuers' joint report) where she articulates with precision any reasoning leading to her deduced rate of $20.00/m² which she applied to the Land (at 98,100m²) to determine land value at $1,960,000. At the highest, she states:

"Available sales evidence illustrates a rate per square metre in the range of $8.26 - $85.75 [later corrected to be $55.18] per square metre. This variation is largely reflected in the size of land, physical nature, and location. The variation of analysed land value rates adopted in this assessment have been used illustrate the difference in the market for well configured sites with development potential, good road exposure, location, and access, despite earthworks required, versus smaller 'ready to build sites in older however similar zoned industrial areas'."

1. While I understand Ms Bates' general reasoning, apart from references to size, physical nature and location, there is no breakdown of these aspects in relation to her sales which reflect a wide variety of shapes and sizes.
2. Although the absence of discrete adjustments makes it difficult to assess the comparability of Ms Bates' sales (including her analysis of the common sale 2R Richardson), accepting Ms Bates' oral evidence that the "Comparison Comment" column in the tabular formulation dealing with the sales in her expert report reflects her reasoning, I note the following in relation to each of her sales.
3. In relation to Ms Bates' first sale (11L Rosedale Road, Dubbo), the site area is 349,000m² in comparison to the subject land at 98,100m², and while Ms Bates comments that this is an "older sale, significantly larger englobo and better configured site however is considered comparable in terms of physical nature of site, the location and similar planning provisions", and apart from reference to an adjustment (which is not precisely articulated) for "market movement", there is no further explanation. In these circumstances, I accept Mr Ewing's evidence and find that this sale is too large for direct comparison as significant adjustments would be required particularly in relation to size.
4. In relation to Ms Bates' second sale (the common sale, 2R Richardson), Ms Bates opines that the sale is comparable in terms of planning controls, location, exposure to Narromine Road, and sloping topography, and despite a number of different expressions of her adjusted land value rate (being variously $28.38/m² or $25.00/m²), she states that her deduced rate from this sale is $23.75/m². There is no further analysis apart from Ms Bates stating that this land "requires earthworks" (which appears to be an aspect in common with the subject land), and "Adjustment for market movement and for Development Application and fencing", however, there is no further detail provided.
5. I find that in relation to 2R Richardson, in circumstances where both valuers initially arrived at a similar value of the unadjusted rates, being $22.70/m² determined by Mr Ewing and $23.75/m² determined by Ms Bates, as noted above, the Court has the advantage that Mr Ewing gives evidence as to precisely how he has arrived at his adjusted rate ($28.38/m²) by way of adjustments for size, access, shape, topography, and market movement. I also note that there was little criticism of Mr Ewing's adjustments by Ms Bates except that Mr Ewing may not have adjusted sufficiently for "services", however, I note that it is unusual for "services" to constitute a discrete separate adjustment.
6. In relation to Ms Bates' third and fourth sales (14 Transport Drive, Dubbo and 9 - 11 Transport Drive, Dubbo), which the Valuer-General maintains are both located at Brocklehurst - and not Dubbo, it is clear that 14 Transport Drive (at 5,872m²) is approximately 6% the size of the subject land and 9 - 11 Transport Drive (at 8,289m²) is approximately 9% the size of the subject land. Taken at its highest, Ms Bates' reasoning (in her column headed "Comparison Comment"), is that both sites are "significantly smaller" but are "comparable in terms of zoning though located in older industrial area with inferior exposure north-east of subject property". The same wording is used in relation to her commentary in relation to each sale. Again, there is no breakdown of adjustments for these properties and given the significant size and location differences, it is clear that these sales require large adjustments, and with other more appropriate comparable sales available, I find that these sales are not of assistance.
7. In relation to Ms Bates' fifth sale (13L Narromine Road, Dubbo), Ms Bates agreed in the joint report to "remove this sale from the valuation due to significant size variation from subject property", however despite its removal, there was no explanation as to whether that sale was, or was not, important in her valuation.
8. In addition, and as noted above, Ms Bates states that her sales evidence illustrates an adjusted rate per square metre in the range of $8.56/m² to $55.18/m² and that "this variation is largely reflected in size of land, physical nature, location, and access". Although in the joint report she provides further detail in relation to each of the four sales she now relies upon, and while she refers to such matters as shape of the development sites, location, comparable zoning, again, there is no identifiable reasoning process that discretely considers each sale to explain how (even noting the range from $8.56/m² to $55.18/m²) her concluded value of $20.00/m² is determined.

1. In the circumstances noted above, and having closely considered the material, I prefer the evidence of Mr Ewing primarily on the basis that I consider his approach is orthodox and his sales (in particular his first and second sales) to be more comparable than the other sales (apart from 2R Richardson) relied upon by Ms Bates, and, moreover, Mr Ewing has provided discrete transparent adjustments which I consider are appropriate in the circumstances.
2. Accepting Mr Ewing's evidence (noted at [42] above) and considering my reasoning above, I find that Westview has not discharged the onus of proof it bears to establish that the Valuer-General's determination in the sum of $2,740,000 is too high.