Adnow Pty Ltd v Greenwells Wollert Pty Ltd
[2016] VSCA 282
•23 November 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0058
| ADNOW PTY LTD (ACN 006 684 395) (AS TRUSTEE FOR THE ADNOW PENSION FUND) | Applicant |
| V | |
| GREENWELLS WOLLERT PTY LTD (ACN 128 803 092) | Respondent |
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| JUDGES: | TATE, FERGUSON AND KAYE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 4 November 2016 |
| DATE OF JUDGMENT: | 23 November 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 282 |
| JUDGMENT APPEALED FROM: | [2016] VSC 153 (Judd J) |
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CONTRACT – APPEAL — Option to purchase land – Price to be determined by expert valuation – Specified assumption that applicable Precinct Structure Plan approved by Minister – Effect of assumption – Whether valuation made pursuant to contract —Leave to appeal granted —Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J Delany QC and Dr C Parkinson | G & M Lawyers |
| For the Respondent | Mr D Batt QC with Mr A Dinelli | Maddocks Lawyers |
TATE JA
FERGUSON JA
KAYE JA:
By a deed dated 14 October 2008, the applicant granted an option to the respondent to purchase property owned by the applicant at Wollert. The term of the option was subsequently extended by a series of deeds between the parties. In July 2015, the respondent gave notice to the applicant, pursuant to the deed, that it might exercise the option. Pursuant to the terms of the deed, a valuer was appointed by the parties to determine the value of the property, such valuation to constitute the price to be paid by the respondent to the applicant upon exercise of the option. The valuer assessed the current market value of the property at $18,700,000.
The applicant issued the current proceeding, by originating motion, seeking a declaration that the valuer failed to comply with the provisions of the option deed, and an order that the valuation be set aside. The proceeding was heard before a judge of the Trial Division on 11 April 2016 as a matter of urgency. With commendable expedition, the trial judge delivered judgment dated 14 April, dismissing the applicant’s claim.[1] The applicant seeks leave to appeal from that decision.
[1]Adnow Pty Ltd (as trustee for the Adnow Pension Fund) v Greenwells Wollert Pty Ltd [2016] VSC 153 (‘Reasons’).
Summary of facts
The applicant was, at the times relevant to this proceeding, the registered proprietor of prime residential development land comprising 42.63 hectares situated at 220 Craigieburn Road, Wollert (‘the Property’). By a deed dated 14 October 2008 (‘the Option Deed’), the applicant granted to the respondent an option to purchase the property on the terms contained in the deed. The specified period for the exercise of the option was subsequently extended by a series of deeds dated 14 July 2014 and 14 October 2014.
Clause 5 of the Option Deed was entitled ‘Purchase Price’. The relevant parts of it provided as follows:
5.1The Parties agree that the Price under the Contract [the contract of sale attached to the Option Deed at Annexure A (the Contract of Sale)] will be determined in accordance with this Clause 5.
5.2At least 3 months prior to the Grantee exercising the Option, the Grantee must give the Grantor written notice that the Grantor may exercise the Option and wants to determine the Price under the Contract (‘Pre Exercise Notice’).
5.3As soon as practicable after the date of the Pre Exercise Notice, the Parties will meet to negotiate the Price under the Contract. The parties agree to negotiate in good faith to agree on the Price under the Contract.
5.4In the event that the Parties are unable to agree on a Price within 14 days of the date of the Pre Exercise Notice, each party will engage an Appointed Valuer who shall then meet and use their best endeavours (having regard to the Valuation Guidelines), to agree on the valuation of the Property. In the event that the Precinct Structure Plan has been prepared by the City of Whittlesea, but has not yet been approved by the Minister for Planning, the Appointed Valuer for each Party must assume that the Precinct Structure Plan has been approved.
5.5In the event the Appointed Valuers cannot agree on the valuation of the Property within 1 month of the date of the Pre Exercise Notice, the Grantor and Grantee will arrange for a valuation of the Property as at the date of the Pre Exercise Notice to be carried out by an Independent Valuer who must be appointed no later than 45 days after the date of the Pre Exercise Notice.
5.6Each Party will be entitled to provide a submission to the Independent Valuer within 7 days of his appointment.
5.7 The Independent Valuer’s valuation must:
(a) be in writing;
(b) have regard to the Valuation Guidelines;
(c)assume that the Precinct Structure Plan affecting the Property has been approved by the Minister for Planning;
(d)specify the matters to which the Independent Valuer had regard in making the determination; and
(e) be provided within 1 month of his appointment.
5.8The Parties agree that the Price under the Contract will be the greater of:
(a) the amount specified in the valuation; and
(b)the amount calculated by multiplying the Developable Area by $200,000 per acre.
…
Clause 1.1 of the Option Deed defined the term ‘Valuation Guidelines’ to mean:
The guidelines adopted by the Australian Property Institute as they relate to the valuation of development properties.
The relevant guidelines are the Australian and New Zealand Valuation and Property Standards, September 2012 edition.
Since April 2015, the proposed Precinct Structure Plan, that affected the property, was the Wollert Precinct Structure Plan, April 2015 — Exhibition (the ‘Wollert PSP’).
On 10 July 2015, the respondent served on the applicant a Pre-Exercise Notice pursuant to cl 5.2 of the Option Deed. Subsequently, the parties agreed that the date of the Pre-Exercise Notice was deemed to be 11 September 2015 for the purposes of cll 5.3, 5.4 and 5.5 of the Option Deed. As at that date the Wollert PSP had not been approved by the Minister for Planning.
The parties were not able to agree on the purchase price, under cl 5.3 of the Option Deed. Nor was there any agreement between the parties’ respective appointed valuers as to a valuation for the property under cl 5.4 of the Option Deed. Accordingly, pursuant to cl 5.5 of the Option Deed, the applicant and the respondent jointly appointed Mr Mark Murray, a Fellow of the Australian Property Institute, as the Independent Valuer to carry out the valuation in accordance with cl 5.7 of the Option Deed. The parties agreed to the terms of appointment specified by Mr Murray, which included the statement:
In undertaking this independent valuation assessment, you agree that my determination will be final and binding upon both parties … .
Pursuant to cl 5.6 of the Option Deed the applicant made a submission to Mr Murray, consisting of a report by J F McEntee and P J Brady of WPB Property Group that the property had a valuation of $30,000,000. The respondent made a submission to Mr Murray consisting of a report by B W Papworth of Charter Keck Cramer that the property had a valuation of $17,650,000. The parties did not exchange their submissions.
On 21 December 2015, Mr Murray sought an extension of time to 7 January 2016 for the provision of his valuation, to which the parties agreed. On 7 January 2016, Mr Murray delivered his valuation to the parties, in which he assessed the current market value of the property, as at the deemed date of the Pre-Exercise Notice (11 September 2015) at $18,700,000. In arriving at that figure, Mr Murray adopted a land value rate of $525,000 per hectare of gross developable area.
On 19 January 2016, the respondent gave notice to the applicant that it was exercising the option at the price determined by Mr Murray.
The present proceeding was commenced by originating motion dated 4 April 2016. As a matter of urgency, it was heard one week later, on 11 April, and as stated, judgment was delivered on 14 April. Subsequently, pursuant to an agreement entered into between the parties on 27 April, the applicant transferred the property to the respondent in consideration of payment by the respondent of the amount the subject of the independent valuer’s report ($18,700,000), on the basis that if the applicant’s application for leave to appeal and any appeal succeeded, and an alternative valuation was obtained, the parties would adjust the settlement sum accordingly.
The proceeding
In the originating motion, the applicant specified five reasons why it contended that the independent valuer’s valuation had not been carried out in accordance with cl 5 of the Option Deed. The trial judge condensed those five reasons into three substantive grounds, namely:
(1)Contrary to cl 5.7(c) of the deed, the valuer failed in his assessment to assume that the Wollert PSP had been approved by the Minister. In particular, the applicant asserted that the valuer failed to have regard to the content of the plan.
(2)Contrary to cll 5.5 and 5.7 of the deed, the independent valuer failed to carry out a ‘valuation’ in making his determination. In particular (the applicant contended) the report failed to satisfy the minimum requirements for a valuation, because the valuer failed to identify comparable transactions on which he relied, and provided no analysis or workings to demonstrate the basis for his calculations in reaching a valuation rate of $525,000 per hectare of Gross Developable Area (‘GDA’) for the property.
(3)The valuer failed to have regard to the Valuation Guidelines referred to in cl 5.7(b) and, in particular, the valuation procedures contained in Part 8.1 of the Guidelines, and the provisions relating to feasibility studies contained in Part 11.5 of the Guidelines.
The trial judge’s reasons
The judge commenced his reasons by noting that the critical question was not whether there was an error in the valuation conducted by the independent valuer, but, rather, whether the valuation complied with the terms of the contract.
In respect of the first ground raised by the applicant, the judge noted that the applicant, in effect, had contended that by cl 5.7(c) of the deed, the valuer was obliged to have regard to all or some part of the content of the Wollert PSP. In particular, the applicant had argued that cl 5.7(c) required the valuer to consider and adopt estimated housing yields by reference to the Wollert PSP, or, at least, to explain why he had not adopted those estimates. The judge rejected that proposition. His Honour noted that cl 5.7(c) required the valuer to assume that the Wollert PSP had been approved. Mere approval of the Wollert PSP would provide a valuable degree of certainty to any development proposal.[2] Further, the Wollert PSP did not purport to be prescriptive, but, rather, it comprised a long term plan for urban development, setting out objectives, requirements and guidelines for land use development and subdivision.[3]
[2]Ibid [14].
[3]Ibid [15].
The judge was satisfied that the valuer had assumed that the Wollert PSP, affecting the property, had been approved by the Minister, as his report expressly said so. His Honour noted that the report did not reveal any consideration of the application of the particular housing densities, and estimated yields, stated in Table 3 of the Wollert PSP. Rather, the valuer considered the yields that were referred to in the Taylors Indicative Master Plan[4] that was contained in the submission of the respondent. The judge rejected the submission by the applicant that the valuer was required, by cl 5.7(c) of the Option Deed, to apply the yields specified in the Wollert PSP. In particular, his Honour stated:
The particularity of the required assumption [in cl 5.7(c)], that an incomplete process be assumed to have been completed, militated against the implication of any requirement that the valuer assume, consider or apply any particular item of content. There was significance and purpose in the assumption, without the need to interpret, and attempt to apply, particular, unspecified parts of its content.
I am not persuaded that the parties’ intention, objectively ascertained, was to require the valuer to undertake his own hypothetical application of the Plan to the site by reference to the particular yield estimates. Their intention was only that he should make the required assumption of approval.[5]
[4]See [26] below.
[5]Reasons [24]–[25].
The judge further noted that, in its submissions to the valuer, the applicant had not suggested that the valuer should direct his attention to the relevant content of the Wollert PSP. In particular, there was no evidence that the valuer was invited, or instructed, by the applicant to make an assessment of yield by reference to the content of the Wollert PSP.[6] The judge regarded the applicant’s conduct, in that way, as constituting a further reason for concluding that the valuer was not required to undertake a hypothetical application of the Wollert PSP to the site by reference to particular yield estimates.
[6]Ibid [27]–[28].
The judge then turned to the submission by the applicant that the valuer had failed to have regard to the Valuation Guidelines referred to in cl 5.7(b) of the Option Deed. The judge noted that the valuer was a Fellow of the Australian Property Institute, and therefore he was bound by those Guidelines. The valuer had acknowledged the application of the Guidelines in his letter of engagement. The judge did not regard the absence of an express acknowledgement of the Guidelines by the valuer in his report as a defect or omission vitiating the report, since the valuer was, by reason of his appointment, qualification and status, bound to apply those guidelines.[7]
[7]Ibid [33].
The judge noted that the Guidelines provided that the content of any valuation report would depend on the style of the report and the nature of the property involved.[8] The applicant made two complaints about the adoption by the valuer of the direct comparison approach. The first concerned the absence of any explanation about how the valuer arrived at the value of $525,000 per hectare. The judge noted that the report did not contain a detailed explanation as to how the valuer selected that valuation. However, his Honour was able to discern a rational basis for the selection of that value. In particular, such a valuation was a matter of opinion, more of an art rather than a science. Accordingly, the analysis conducted by the valuer in his report was adequate in that respect.[9]
[8]Ibid [39].
[9]Ibid [41].
The second complaint by the applicant, concerning the application of the Guidelines, was the absence of important data concerning the hypothetical development model contained in the valuer’s report. In respect of that criticism, the judge noted that that model was not deployed by the valuer to arrive at his opinion as to the value of the land. Rather, the valuer had applied that model as a means of cross-checking the accuracy of his primary assessment. For that purpose, the Guidelines did not require the valuer to disclose more details than that which was contained in the report.[10]
[10]Ibid [42].
Finally, the judge rejected the complaint by the applicant that the valuer had failed to specify sufficiently the matters upon which he had relied to compile his valuation. The judge stated that the report was ‘replete’ with evidence that the valuer relied on particular matters in formulating his opinion.[11]
[11]Ibid [44].
The proposed grounds of appeal
The applicant relies on four proposed grounds of appeal, namely:
(1)The trial judge erred in failing to hold that cl 5.7 of the Option Deed required the independent valuer to assume, consider and apply the content of the Wollert PSP.
(2)The trial judge erred in holding that the applicant could not now rely upon the proper construction of cl 5.7(c) of the Option Deed.
(3)The trial judge erred in failing to hold that the independent valuer did not have regard to the Valuation Guidelines as prescribed by cl 5.7(b) and (d) of the Option Deed.
(4)The trial judge erred in failing to hold that the independent valuer did not carry out a ‘valuation’ as that term is used in cll 5.5 and 5.7 of the Option Deed.
The thrust of the submissions made by the applicant in support of the first ground is that the valuer failed to apply the housing density yields that, it was contended, were prescribed by Requirement 24 of the Wollert PSP. In support of ground 3, it was submitted that the valuer failed to comply with the Valuation Guidelines, in that he failed to set out the methodology that he used in applying the comparable sales method of valuation, and that he also failed to expose his methodology in using a feasibility study as a cross-check to the comparable sales method.
Before considering those grounds, it is useful, first, to summarise the valuation, to identify the legal effect and structure of the Wollert PSP, and to set out the legal principles that are applicable to the appeal.
The valuation
The valuation commenced with a description of the property. The valuer noted that he was required to assume that the Wollert PSP had been approved by the Minister for Planning at the date of the assessment (11 September 2015). The valuer described the location of the property, noting that it was situated on the fringe of existing development, and that it was proposed to provide future residential development within a developing outer northern growth area, in proximity to a number of existing and proposed facilities and amenities. Under the heading ‘Planning Conditions’ the valuer noted that the property was predominantly included in an ‘Urban Growth Zone’ under the Whittlesea Planning Scheme. He noted that the property was included in the proposed Wollert PSP, and that it was proposed to provide primarily ‘conventional density residential development’ in addition to some local parks, an electricity easement and conservation and drainage reserves.
The valuer noted that he had been provided with an Indicative Master Plan (dated 30 October 2014) prepared by Taylors, that involved a total of 543 allotments with an average lot size of 422 square metres. The valuer stated that the proposed yield reflected a density of approximately 14.7 lots per hectare of GDA ‘as outlined within the PSP (36.69 hectares)’. He also referred to a preliminary engineering estimate of costs of development of $52,669,414. He stated that in forming his assessment he had had ‘due regard’ to the Wollert PSP and costing ‘as an indicator of the potential development for the subject’.
The valuer then referred to submissions by both the applicant and the respondent relating to comparable sales evidence. We shall return to that aspect of the valuation report in detail when considering the issues raised by ground 3. The valuer indicated that in making his assessment he had full regard to four comparable sales in the immediate Wollert area (which he nominated). He stated that he had carried out cash flow assessments as a ‘check method’ of assessment, but noted that a qualification of the costs and plans had been produced under the instruction of the respondent and had not been subject to ‘due diligence’. As earlier stated, the valuer concluded that it was appropriate to adopt a land value rate of $525,000 per hectare of gross developable area, which equated to a value of $18,700,000.
Legal effect of Wollert PSP
As stated, the subject property came within the Whittlesea Planning Scheme. Clauses 37.07–9 to 37.07–16 of the Scheme apply if a PSP applies to the land. Clause 37.07–10 provides that a permit is required to subdivide land, and that any requirement in the PSP must be met. Clause 37.07–9 states that a permit granted must ‘generally’ be in accordance with the PSP applying to the land.
A PSP operates as an amendment to an existing planning scheme. Part 3 of the Planning & Environment Act 1987 contains extensive provisions applicable to amendments to such schemes. The last step, in making the proposed PSP a part of the planning scheme, comprises the approval of the amendment by the Minister under s 35 of that Act. Subsection (1) of that section provides:
The Minister may —
(a)approve an amendment or part of an amendment prepared by the Minister or submitted to the Minister under s 31 —
(i)with or without changes; and
(ii)subject to any conditions the Minister wishes to impose; or
(b)refuse to approve the amendment or part of the amendment.
The Wollert PSP
Ultimately, the principal submission advanced by the applicant in support of ground 1 was that the valuation failed to conform with and apply minimum housing density yields that were prescribed as mandatory requirements under the Wollert PSP. It is convenient, at this stage, to set out the provisions of the Wollert PSP that were relied on by the applicant in support of that submission.
Clause 1.1 of the Wollert PSP notes that each element of the PSP contains ‘requirements’ and ‘guidelines’. The relevant parts of cl 1.1 are as follows:
REQUIREMENTS must be adhered to in developing the land. …
GUIDELINES express how discretion will be exercised by the Responsible Authority in certain matters that require a planning permit. If the Responsible Authority is satisfied that an application for an alternative to a guideline implements the outcomes the Responsible Authority may consider the alternative. … .
Clause 2.3 of the Wollert PSP is entitled ‘Summary Land Budget’. It states that Table 1 to the Wollert PSP provides a summary of the land that was required for various services, and it identifies the total amount of land available for development. Table 1 (entitled ‘Summary Land Use Budget’), which is contained in a section entitled ‘Estimated Dwelling Yield and Population’, provides for 15 dwellings per net developable area for land categorised as ‘Residential–Conventional Density Residential’, and 27.5 dwellings per hectare of net developable area for land categorised as ‘Residential–Medium to High Density’.
Clause 3.2.1 of the Wollert PSP is entitled ‘Housing Density’. It states:
The overall housing density target for the precinct is based on the Residential Net Developable Area (‘NDA’). Residential NDA is defined as the total amount of land within the precinct that is available for the development of housing and town centres. It includes lots, local streets and connector streets.
Table 3 is intended to provide statutory planners with guidance on the required densities and lot yields across the precinct to underpin the viability of town centres and support the broader town centre objectives. …
It is noted that subdivision applications must be tailored to the context of each individual site. Subdivision plans must take into account local environmental features, interfaces and distance from services and amenities, and seek to innovatively respond to these features, providing diversity and lot sizes and dwelling types.
Table 3 is entitled ‘Estimated housing yield and distribution’. For a residential area of ‘standard density’, it provides for a minimum average 15 dwellings per hectare of NDA. For areas described as ‘medium density’, it prescribes a minimum of 27.5 dwellings per hectare of NDA. It is common ground that the contents of Table 3 constituted ‘guidelines’, and not ‘requirements’, under the Wollert PSP.
Clause 3.2.2 of the Wollert PSP is entitled ‘Housing Delivery’. Requirement 24, contained in that section, states:
Subdivision of land within a 400 metre walkable catchment of town centres or designated public transport routes must create a range of lot sizes suitable for medium or high density housing types listed in Table 4 and in accordance with guidance provided in Table 5. …
Guideline 21, in the same section, provides:
Subdivision of land should create an overall average net density greater than the minimum average densities specified for the relevant town centre catchments specified in Table 3.
Table 4 (referred to in Requirement 24) is preceded by a preamble that states:
Table 4 is intended to provide guidance on the achievement of housing diversity objectives by providing an example of how variation in lot sizes supports the delivery of a broad range of housing types.
Table 4 is entitled ‘Housing type by lot size’. It then sets out typical lot sizes, for ‘standard density’, ‘medium density’ and ‘high density’ developments, according to the type of development involved, such as whether it is standard detached housing, small detached housing, walk up flats, or apartments. The ‘typical lot sizes’ specified in the table are stated in square metres.
Legal principles
Before considering the proposed grounds of appeal, it is useful also to outline the legal principles that apply as to the circumstances in which a court will interfere with a valuation that has been produced pursuant to an agreement by parties to refer a question of value or price to a valuer.
In short, a court will only set aside such a valuation if it has not been made in accordance with the terms of the contract. Ordinarily, in the absence of fraud or collusion, a mere error in the production of the valuation will not constitute a departure by the valuer from the terms of the contract. In the case of fraud or collusion, it may be concluded that the valuation has not been made in accordance with the terms of the contract. However, otherwise, mistake or error by the valuer is not sufficient to invalidate the valuation, unless the error is of such a kind as to demonstrate that the valuation has not been made in accordance with the terms of the contract.
McHugh JA, in Legal & General Life Australia Ltd v A Hudson Pty Ltd[12] stated the relevant principles as follows:
In my opinion the question whether a valuation is binding upon the parties depends in the first instance upon the terms of the contract, express or implied. … A valuation obtained by fraud or collusion can usually be disregarded even in an action in law. For in a case of fraud or collusion the correct conclusion to be drawn will almost certainly be that there has been no valuation in accordance with the terms of the contract. … It is easy to imply a term that a valuation must be made honestly and impartially. It would be difficult, and usually impossible, however, to imply a term that a valuation can be set aside on the ground of the valuer’s mistake or because the valuation is unreasonable. The terms of the contract usually provide, as the lease in the present case does, that the decision of the valuer is ‘final and binding on the parties’. By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision. It is now settled that an action for damages for negligence will lie against a valuer to whom the parties have referred the question of valuation if one of them suffers loss as a result of his negligent valuation … . But as between the parties to the main agreement the valuation can stand even though it was made negligently. While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistake and application of the principles of valuation may still be made in accordance with the terms of the contract. In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.[13]
[12](1985) 1 NSWLR 314; see also Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305, 315–316 [26] (French CJ, Crennan and Kiefel JJ).
[13]Ibid 335–6.
In WMC Resources Ltd v Leighton Contractors Pty Ltd,[14] Ipp J summarised those principles as follows:
First, by the contract the parties agree to be bound by a valuation made in terms thereof. Therefore, if the valuation complies with the contract, they are bound thereby. Because of the discretionary nature of the valuation, the contract will not require the valuation to be ‘correct’. There will be no uniquely correct valuation. The valuation will merely have to be within the terms of the contract.
Secondly, a court will not set aside a valuer’s determination merely on the ground that it is ‘incorrect’ or that it reveals errors. The determination will only be interfered with if it is not made in terms of the contract; a mere mistake in the valuation will ordinarily not be a departure from the terms of the contract.[15]
[14](1999) 20 WAR 489.
[15]Ibid 499 [36]–[37].
Those principles have been adopted and applied by this Court in AGL Pty Ltd v SPI Networks (Gas) Pty Ltd & Anor[16] and, more recently, in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd.[17]
[16][2006] VSCA 173, [51], [54] (Nettle JA, with whom Maxwell P and Bongiorno AJA agreed) (‘AGL’).
[17](2013) 41 VR 636, 643–646 [15]–[22] (Maxwell P, with whom Ashley and Redlich JJA agreed).
In AGL, Nettle JA referred to a distinction, drawn in some of the authorities, between an error in the exercise of a judgment, opinion or discretion entrusted to an expert, and an error which involves objective facts or a mere mechanical or arithmetical exercise. His Honour stated:
Subject to the contract in question, it is easier to suppose that the parties to a contract contemplate that an error of the former kind be beyond the realm of review than it is to think that they intend to be fixed with errors of objective fact or in processes of mechanical calculation.
As this case demonstrates, however, matters are likely to be more complex where error occurs in the course of an exercise which is partly comprised of discretion, judgment or opinion and partly constituted of objective fact or mechanical calculation. In some such cases, the overriding discretionary or judgmental character of the exercise may so inform each step in the determination as to put even those steps which are matters of objective fact or mere mechanical calculation beyond the scope of permissible review. In other instances it may appear that, despite the overall character of the exercise, the various steps in the determination are severable, according to whether they are essentially discretionary or judgmental or simply matters of objective fact or mechanical calculation, and that those steps which are of the latter kind are within the scope of permissible review. The question in each case is what the parties should be presumed to have intended, and that is to be determined objectively from the terms of the contract, bearing in mind the context in which it was created.[18]
[18]AGL [2006] VSCA 173, [53]–[54].
The present case concerned the valuation of real estate. There is no one fixed method by which a valuation must be conducted. As Croft J stated in Challenger Property Asset Management Pty Ltd & Anor v Stonnington City Council & Anor.[19]
The courts have not adopted a prescriptive position with respect to valuation methodology and care should be taken to ensure that no single process of reasoning is elevated into a statement of principle.[20]
[19](2011) 34 VR 445.
[20]Ibid, 456–7 [24]; see also Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575, 623–4 (Hayne J), 653 [283] (Callinan J).
The comparative sales method, that was adopted by the valuer in the present case, is a well-recognised methodology by which such a valuation might be performed.[21] Where that method is adopted, there is no hard and fast rule as to which sales are comparable. Rather, that question is largely one that depends on the judgment and expertise of the individual valuer.[22]
[21]Coastal Estates Pty Ltd v Bass Shire Council [1993] 2 VR 566, 577 (Gobbo J).
[22]Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 550–551 (Wells J); Roads Corporation v Love (2011) 31 VR 451, 501 [377] (Osborn J).
Ground 1 — submissions
As we have stated, the fundamental submission made by the applicant, under ground 1, is that cl 5.7(c) of the Option Deed required the valuer to consider and apply the content of the Wollert PSP, as an underlying factual assumption as to the development potential of the land in carrying out his valuation.
In support of that submission, counsel for the applicant noted that while cl 5.7(b) of the Option Deed required the valuer to ‘have regard’ to the Valuation Guidelines, cl 5.7(c) required him to ‘assume’ that the Wollert PSP had been approved. Counsel submitted that the latter phrase was more specific than the more general terminology employed in cl 5.7(b). Counsel further submitted that cl 5.7 disclosed an intention by the parties that the valuer should specify in the valuation all the matters that were relevant to his opinion, and should set out the process of reasoning adopted by the valuer in determining the valuation of the property. Counsel therefore submitted that the precision, so required by cl 5.7(c), supports the view that that clause was intended to be prescriptive about the terms of the planning scheme upon which the valuer was to base his opinion.
Further, counsel noted that cl 2.2(a) of the Option Deed provided that the option may only be exercised if a proposed PSP affecting the property has been prepared by the City of Whittlesea or approved by the Minister of Planning. Thus, it was submitted, cl 5.7(c) could only be engaged in circumstances in which there was a high degree of certainty as to the development potential of the property, and the nature of the PSP that would apply to it. The content of the PSP might be favourable or unfavourable in its impact on the potential value of the property. Thus, it was submitted, the assumption, prescribed by cl 5.7(c) of the Option Deed, necessarily required the valuer to take into consideration the content of the particular PSP that affected the property. Counsel submitted that the fact that the Wollert PSP had not been approved by the Minister does not support the construction of cl 5.7(c) contended for by the respondent and accepted by the primary judge. Rather, he submitted, cl 5.7(c) was directed to placing an incomplete process, and a complete process, on the same footing.
Counsel accepted that, in a number of respects, the valuer referred to aspects of the Wollert PSP in his report. However, he contended, by adopting a yield of 14.7 houses per hectare, the valuer failed to implement the requirements of the Wollert PSP. Counsel submitted that the effect of the Wollert PSP was that there should be a housing density of 27.5 per hectare. However, he accepted that that criterion, specified in Table 3, was not a requirement within the Wollert PSP.
Counsel further refined his submission to contend that in any event the valuer failed to comply with Requirement 24. He noted that a small part of the north east section of the property fell within a ‘400 metre walkable catchment’ of the designated Wollert town centre. He also noted, by reference to plans contained in the Wollert PSP, that a part of the south east section of the property came within a 400 metre walkable catchment of a designated public transport route situated on the property that abutted its eastern boundary. He contended that the plan, used by the valuer, did not adopt the lot sizes prescribed by Table 4, as stipulated by Requirement 24. In that way, he contended, the valuer failed to conduct a valuation specified in cl 5.7(c) of the Option Deed.
In reply submissions, junior counsel for the applicant developed and refined that submission. In particular, he referred to a plan that was part of the Taylors Indicative Master Plan, and that was an annexure to the valuer’s report. Junior counsel noted that the allotments, described on that plan in the south east section of the property, were all larger than the ‘medium density’ or ‘high density’ lot sizes prescribed by Table 4. However, he accepted that it was at least arguable that the allotments, described in the north east corner of the Taylors Indicative Master Plan, or a small portion thereof, did comply with requirements of Table 4.
Counsel submitted that the failure of the valuer to implement the effect of Table 4, in respect of the south east section of the property, in formulating his valuation, went beyond a matter of mere mistake, but, rather, had the effect that the valuer did not conduct the valuation in accordance with the requirement specified in cl 5.7(c) of the Option Deed.
In response, senior counsel for the respondent contended, first, that properly construed cl 5.7(c) of the Option Deed did not require the valuer to assume and take into account the detail of the Wollert PSP. Rather, he submitted that cl 5.7(c) did no more than require the valuer to assume that the Wollert PSP had been approved. In the absence of an approved PSP, the land could not be subdivided and developed. Thus, the assumption, required by cl 5.7(c), that the Wollert PSP had been approved, was of value to the parties, and gave reality to the valuation, because it entitled the valuer to proceed on the basis that the property could be subdivided and developed.
It was submitted that the construction of cl 5.7(c), contended for by the applicant, constituted a re-drafting, and not an interpretation, of the clause. If the parties had intended that the valuer take into account and apply the detail of the Wollert PSP, cl 5.7(c) would have been expressed quite differently.
Counsel noted that cl 5.7(c) did not prescribe a methodology by which the valuation was to be carried out. Thus, there was no requirement that the valuer must use a hypothetical development methodology. In fact, the only use by the valuer, of an anticipated housing yield per hectare, in his valuation, was to enable the valuer to make a meaningful comparison of the property with other properties that had been the subject of comparable sales. In addition, the valuer used the yield suggested by Taylors (14.7 houses per hectare) to make a ‘cross-check’ of the valuation that he had arrived at by way of comparable sales. However, counsel submitted, the comparable sales methodology did not, of necessity, involve the adoption by the valuer of any particular yield value.
Counsel then referred to the statutory provisions, relating to the amendments of planning schemes, which we have summarised above. He noted that ministerial approval of a PSP had the effect that the PSP would become part of the planning scheme. However, before the Minister had approved the PSP, it could be altered or amended, particularly by the Minister. In those circumstances, it was submitted, it would not make sense for the valuer to be required to apply the fine detail of the Wollert PSP (which had not been approved), when it might subsequently be altered.
Counsel submitted that the role of the valuer, in performing the valuation under cl 5.7, was that of an ‘umpire’, in circumstances in which the respective valuers, selected by each side, had failed to reach an agreement as to the valuation of the property. Under cl 5.7(e) of the Option Deed, the appointed independent valuer only had 30 days within which to produce his valuation. Given that constricted time limit, the parties could not have intended that the valuer hypothesised a development in accordance with the multiple details contained in a PSP, in formulating his valuation.
Senior counsel for the respondent ultimately accepted that cl 5.7(c) required the valuer to take into account more than the bare fact that the PSP affecting the property had been approved by the Minister for Planning. In particular, he accepted that in making that assumption, the valuer might be required to apply the broad effect of the Wollert PSP, in the sense that it permitted a residential development. However, he contended that that was quite different to requiring a valuer to implement the fine detail prescribed by a particular PSP.
Accordingly counsel submitted that the valuer did not fail to comply with cl 5.7(c) of the Option Deed. Counsel noted that, ultimately, the argument of the applicant was that the valuer failed to apply the lot sizes to some areas of the property that came within the 400 metre zone specified in Requirement 24 of the Wollert PSP. However, there was no evidence that proved which areas of the property came within that zone. The application of Requirement 24 to the property was uncertain in its scope and effect. He submitted that the contentions by the applicant, by reference to the details of the content of the Wollert PSP, left much to conjecture as to how much of the subject property actually came within that zone. If and to the extent that the valuer failed to apply the lot sizes prescribed by Table 4 (as specified by Requirement 24), he submitted that that was no more than an unreviewable mistake by the valuer conducting a valuation in accordance with cl 5.7(c).
Ground 1 — analysis and conclusions
Ground 1 of the proposed appeal raises an issue as to the correct construction of cl 5.7(c) of the Option Deed. The primary question raised by ground 1 is whether cl 5.7(c) required the valuer to carry out a valuation in the manner, and taking into account the matters, contended for by the applicant. It also involves a second question, namely, whether the valuer did not carry out the valuation in that manner, or by taking those matters into account. In order to address those issues, it is necessary first to identify precisely how the applicant contends that the valuer failed to comply with cl 5.7(c).
There is no doubt that, on its proper construction, cl 5.7(c) required the valuer to do more than merely assume that a particular PSP applying to the property had been approved by the Minister. As senior counsel for the respondent correctly accepted, as a minimum, cl 5.7(c) required the valuer to assume that the Minister had approved the PSP that permitted subdivision and residential development of that property. As contended by the respondent, it was that assumed fact that, at the least, gave meaningful work and content to the assumption prescribed by cl 5.7(c) of the Option Deed.
In that respect, it is clear, from a plain reading of the valuation, that the valuer did substantially more than merely acknowledge or make the assumption that the PSP applying to the property had been approved by the Minister. In a number of parts of the valuation, the valuer referred to and took into account aspects of the Wollert PSP. They include the following:
·At the commencement of the valuation, the valuer noted that he was required to presume that the Wollert PSP had been approved by the Minister. When considering the location of the property, he noted that the property was situated on the fringe of existing development, and that it was proposed to provide future residential development within a developing outer northern growth area, in proximity to a number of existing and proposed facilities and amenities.
·In the section of the valuation entitled ‘Planning Conditions’, the valuer specifically referred to the Wollert PSP, noting:
The subject property is identified as being part of Property 13 within the draft Wollert PSP, and is proposed to provide primarily conventional residential development in addition to some local parks (unencumbered) an electricity easement and conservation and draining reserves.
The valuer then reiterated that, in accordance with the Option Deed, the valuation was to assume that the property was included within the Wollert PSP at the valuation date.
·In the section of the valuation entitled ‘Site Conditions’, the valuer referred to the specific requirements of the Wollert PSP that related to issues of site contamination, flora and fauna, and Aboriginal cultural heritage issues.
It is therefore abundantly clear that the valuer did not simply pay ‘lip service’ to the assumption specified in cl 5.7(c), but that, on the contrary, the valuer had reference to the Wollert PSP, and applied specific aspects of it to his valuation of the subject property. The critical questions therefore are whether under cl 5.7(c) the valuer was required to, but did not, take into account or apply the aspects of the Wollert PSP relied on by the applicant.
As we have noted, senior counsel for the applicant ultimately confined his contention, that the valuer had failed to implement the content of the Wollert PSP, to the proposition that the valuer failed to base the valuation on the housing yield per hectare that, he submitted, had been prescribed by the Wollert PSP. In that respect, counsel referred to the parts of the valuation in which the valuer accepted a housing density of 14.7 lots per hectare of gross developable area utilised in the Taylors Indicative Master Plan. Counsel submitted that that yield was less than the minimum yield prescribed by the Wollert PSP. In support of that proposition, he referred to and relied on the content of cl 3.2.1 and Table 3, that referred to an ‘estimated’ housing yield of 15 dwellings per hectare for a ‘standard density’, and 27.5 dwellings per hectare for a ‘medium density’ yield. He also relied on the land use budget, to which we have referred, that referred to a yield of 15 for ‘residential — conventional density residential’, and a yield of 27 for ‘residential — medium to high density’ developments respectively.
The difficulty with that contention is that the densities referred to in Table 3, and cl 3.2.1, of the Wollert PSP, did not comprise ‘requirements’ of the Wollert PSP. Rather, as stated in cl 3.2.1, Table 3 was intended to provide statutory planners with ‘guidance’ on the required densities. Table 3 was entitled ‘Estimated housing yield and distribution’. The densities contained in the land use budget referred to targeted estimated densities for the whole of the Wollert PSP area, which comprised 1400 hectares, and specifically to the developable area of that precinct, which comprised 931.41 hectares. Thus, it could not be maintained that by assuming a density of 14.7 lots per hectare of gross developable area, the valuer had failed to apply or comply with a matter prescribed in the Wollert PSP as a ‘requirement’.
In the end, as we earlier have outlined, the contention of the applicant, concerning the valuation, was of a narrower dimension. In particular, the applicant submitted that the valuer failed to comply with Requirement 24, by failing to proceed on the basis of the lot sizes prescribed for the two portions of the property which were within a 400 metre walkable catchment either of the town centre (in the north east section of the property) or designated public transport routes (in the south east section of the property). The critical questions are, first, whether, on its correct construction, cl 5.7(c) required the valuer to apply the lot sizes that were specified in Table 4 of the Wollert PSP, secondly, whether the valuer failed to comply with that requirement, and, thirdly, whether such a failure by the valuer had the effect that the valuation produced by him was not a valuation made in accordance with cl 5.7(c) of the Option Deed.
As we have already noted, it was common ground that, in making the assumption prescribed by cl 5.7(c), the valuer was required to do more than merely assume that a PSP, or a particular PSP that applied to the property in question, had been approved by the Minister. The assumption specified by cl 5.7(c) was clearly directed to a particular PSP, namely, the plan referred to in cl 2.2 of the Option Deed. Further, as accepted by senior counsel for the respondent, the assumption would be meaningless, unless the valuer was required to take into account the effect of the PSP (if approved) on the value of the property in question. Thus, cl 5.7(c) required the valuer to regard the land as one that was subject to and affected by the particular PSP that had entitled the purchaser to invoke its rights under cl 2.2(a) of the Option Deed.
On the other hand, it is important not to lose sight of the precise language chosen by the parties, by which to express the particular obligation that the valuer was required to comply with. That obligation was expressed in terms that the valuer would ‘assume’ that the PSP (affecting the property) had been approved by the Minister. Clause 5.7(c) did not specify, in express terms, that the valuer apply, and comply with, each prescription contained within the particular PSP.
In that context, it is important to bear in mind that, under cl 5.7(e), the valuer was required to produce the valuation within one month. Clause 5.7 did not require that the valuer should obtain any particular information, or that he act on the advice of any particular specialists who might otherwise be engaged in the development of residential land, such as the property in question. Certainly, in the present case the valuer was provided with a particular development plan that had been produced on behalf of the respondent. However, cl 5.7 did not contemplate that, as a requirement, the valuer obtain or act on such a plan, or that the valuer should obtain the advice and assistance of town planners, engineers and designers. Obviously, in the short time available to the valuer to produce the valuation, such a process would not be feasible, and could not have been contemplated by the parties.
That consideration weighs against the contention by the applicant that the contractual intention of the parties, in cl 5.7(c), was that the valuer should take into account those parts of a PSP that prescribed detailed requirements applicable to any proposed development of the subject property.
In that respect, it must be appreciated that the PSP that applies to the subject property contains a mixture of aspirations, specific guidelines and requirements. There are a number of aspects of it which, on any view, it could not be expected that the valuer provide for in the valuation. If the construction of cl 5.7(c), contended for by the applicant, is correct, then that would require the valuer, in each case, to ‘pick and choose’ the part or parts of the PSP that the valuer considered might be applicable to the property in question.
In the end, the submission made on behalf of the applicant required that the verb ‘assume’, in cl 5.7(c), be construed to require the valuer to take into account and give effect to a very specific requirement contained in the Wollert PSP. Such a construction of cl 5.7 does not conform to the language which the parties chose to express the obligation of the valuer. The considerations that we have set out above militate against a contractual intention that the valuation must comply with each particular detail of a PSP that is assumed to apply to the property especially in circumstances where, as here, the application of any detail, including Requirement 24, was uncertain in its scope and effect.
Taking those matters into account, we consider that on its correct construction cl 5.7(c) did require the valuer to take into account, and to utilise for the purpose of the valuation, the nature and the scope of the use of the land that was permitted or prescribed by the applicable PSP. However, that obligation did not require the valuer to comply with detail to the extent contended for by the applicant. In particular, we do not consider that the assumption referred to in cl 5.7(c), required the valuer to apply such detail as the lot sizes prescribed by Table 4 to the two particular parts of the property referred to by counsel for the applicant. Such a requirement would, in our view, go well beyond the terms of the assumption expressly specified in cl 5.7(c).
Further, if (for the purposes of argument) cl 5.7(c) did require the valuer to apply the lot sizes prescribed in Table 4, we do not consider that the failure of the valuer to do that would in any event have the effect that the valuation produced by him was not within the terms of the contract between the applicant and the respondent.
First, Table 4 was not expressed in strict prescriptive terms, as indicated by the preamble to the table, that we have already recited. The table itself uses non-specific terms such as ‘indicative housing type’ and ‘typical lot size’.
Secondly, ultimately the complaint made by the applicant, as to the non-compliance of the valuation with Requirement 24, related only to the south east corner of the property, and some of the north east corner, as the applicant correctly conceded that the Taylors Indicative Master Plan might have complied with Table 4 so far as it applied to a portion of the north east corner of the property. In the absence of evidence adduced by the applicant as to that matter, the Court is left to speculate as to the extent to which that plan did not comply with the requirements of Table 4 in respect of its application to some parts of the property. The degree of the departure of the plan, from Table 4, could not be determined with any reasonable degree of precision based on the evidence put before the primary judge.
Thirdly, the yield, and the lot sizes, utilised by Taylors, were not directly the basis of the valuation produced by the valuer. Rather, as stated, they were used by the valuer, first, to compare the property with properties that had been recently sold in the area, and, secondly, as a basis of a simple ‘cross-check’ by the valuer in relation to the valuation produced by him by reference to those comparable sales.
Taking those three points into account, if (contrary to the views that we have expressed) cl 5.7(c) of the Option Deed required the valuer to take into account and apply the lot sizes prescribed by Table 4 to some part of the property, any failure of the valuer to comply with that requirement could not, in our view, be characterised as more than a mere mistake or error of the valuer, which was not such as to lead to the conclusion that the valuer had failed to provide a valuation in accordance with the terms of the agreement between the applicant and the respondent.
For those reasons, the applicant has failed to make out ground 1 of the proposed grounds of appeal.
Ground 2
Ground 2 of the proposed grounds of appeal is directed to the additional basis upon which the judge rejected the proposition that the valuer was required to apply the Wollert PSP by reference to particular yield estimates, namely, that the applicant, in its submissions to the valuer, had not contended that the valuer was required to take those yields into account. In view of our conclusions in relation to ground 1, it is not necessary that we address ground 2, and we shall not do so.
Ground 3
Ground 3 is directed to the rejection by the judge of the submission of the applicant that the valuer had failed to comply with the requirements of cl 5.7(b) and (d) of the Option Deed. In particular, at trial, it was submitted that the valuer had failed to comply with Item 4.5 of Part 8.1, and with Part 11.5, of the Valuation Guidelines.
Item 4.5 of the Guidelines states:
Unless not required in a proforma report, the methodology should be appropriately outlined for each approach along with important calculations and rationale. A reconciliation of the approaches adopted should be included. A value range may be expressed before being reconciled to a single point figure.
Part 11.5 of the Guidelines was entitled ‘Feasibility Studies’. Its provisions specified the manner in which valuers are to conduct and prepare feasibility studies.
Counsel for the applicant submitted that the valuation prepared by Mr Murray did not comply with either of those requirements. In particular, counsel referred to the finding by the judge that the report did not contain a detailed explanation of how the valuer selected $525,000 per hectare as the applicable value for the property.[23] It was contended that the valuer’s report did not disclose a rational basis for selecting that amount, and, in particular, it did not explain how the valuer reached that conclusion in light of the comparable sales evidence referred to by him in his report.
[23]Reasons [41].
Counsel further contended that the valuer relied on a feasibility study in forming his opinion of the value of the property. Although the valuer’s primary valuation method was by way of assessing comparative sales, nevertheless, in the conclusion of his report, the valuer stated that he had considered the proposed Taylors Plan and the associated yield, and considered it to be a reasonable outcome for the site. Counsel submitted that although that observation was directed to a ‘check method’ adopted by the valuer, nevertheless it involved a hypothetical development of the property, such that the valuer was obliged to, but did not, set out in his report the matters prescribed by Part 11.5 of the Guidelines.
In response, it was submitted on behalf of the respondent that there was no requirement, in cl 5.7, that the valuer specify that he had had regard to the Valuation Guidelines. In any event, in paragraph 2.2 of the Valuation Report, the valuer set out the substance of cl 5.7, including the requirement that he have regard to the Valuation Guidelines.
It was submitted that the Valuation Report set out, in some detail, the comparable sales to which the valuer had reference, and it also set out the attributes of the properties that were the subject of those sales.
Further, it was submitted, there was no substance to the submission that the valuer had failed to comply with Part 11.5 of the guidelines. The valuer utilised a direct comparison approach, and he only made brief reference to having used a hypothetical development as a secondary check on the conclusions that he reached by analysing the comparative sales. In those circumstances, it was not necessary for the valuer to set out the detail of the ‘cross-check’ that he used for that purpose.
In our view, a proper consideration of the valuation reveals that the valuer outlined sufficiently the methodology that he applied, and the data that he relied on in applying that methodology, in compliance with Item 4.5 of Part 8.1 of the Valuation Guidelines.
Section 8 of the report is entitled ‘Market Analysis’. In that section, the valuer summarised the submissions of the applicant and the respondent, and referred to the sales evidence relied on by each party. He noted that the sales evidence of englobo holdings relied on by the applicant’s valuers ranged between $340,000 per hectare and $868,000 per hectare, which, when analysed, reflected rates ranging between $645,800 per hectare and $868,000 per hectare of developable land. He noted that the sales evidence of englobo holdings relied on by the respondent’s valuer indicated englobo holdings ranging between $394,000 per hectare and $597,359 per hectare, after making relevant adjustments. The valuer stated that the most pertinent sales referred to by each side were of a property at 340–360 Craigieburn Road, Wollert ($738,000 per hectare GDA, 180 Craigieburn Road, Wollert and 440 Craigieburn Road, Wollert ($485,845 per hectare).
In the section entitled ‘Comments on Submissions’, the valuer referred to a property at 75 Craigieburn Road, Wollert ($750,000 per hectare), noting that that property was of a ‘zoned holding’ with issues relating to the provision of services through the adjoining holding. He also noted that the sales of properties at Doreen and Tarneit, referred to in the applicant’s submission, were of limited assistance in light of their location and the sale details. He repeated that the most relevant current sale was that of 340–360 Craigieburn Road, Wollert, and he discussed that property in a little detail, noting that in light of the factors pertaining to that property, the ‘GDA value rate’ of the subject property was approximately $360,040 per hectare. The valuer also considered the sale of the property at 180 Craigieburn Road to be of some significance, indicating a valuation rate of $488,967 per hectare after adjustment.
The valuer then discussed, in tabular form, sales of three properties that he had considered in forming his assessment at 75 Craigieburn Road, Wollert, Edgars Road and Harvest Home Road, Epping and Wollert, and 440 Craigieburn Road, East Wollert. The valuer then concluded that he had primary regard to four transactions in the immediate Wollert area being:
·340-360 Craigieburn Road and 390 Vearings Road, Wollert (value rate per hectare of GDA $364,040);
·180 Craigieburn Road, Wollert (value rate per hectare of GDA $488,967);
·440 Craigieburn Road, Wollert (value rate per hectare of GDA $485,000);
·75 Craigieburn Road, Wollert (value rate per hectare of GDA $750,000).
Having considered that range, the sales evidence, and the terms of the sales of those properties, the valuer stated that he considered that it was appropriate to adopt a land value rate of approximately $525,000 per hectare of GDA.
That summary of the relevant section of the valuer’s report reveals that, contrary to the submission by the applicant, the valuer adequately exposed the methodology which he adopted to value the property, including the data on which he relied. The valuer set out, in some detail, the comparative sales which he considered, and he discussed the comparability of some of those sales to the subject property. As the judge stated, the assessment by a valuer of the value of a particular property, by that method, is an art, not a science. In our view, the judge was correct to conclude that the reference by the valuer to other sales, and his analysis of them, sufficiently revealed the path of reasoning of the valuer in arriving at his valuation of the property. For those reasons, we do not consider that there is any substance in the submission made on behalf of the applicant that the valuer failed to comply with Item 4.5 of Part 8.1 of the Valuation Guidelines.
Nor do we consider that there is any substance to the submission on behalf of the applicant that the valuer failed to comply with the Valuation Guidelines, in that the valuation did not conform with the requirements prescribed by Part 11.5 of those Guidelines, that related to feasibility studies.
The valuer did not, and did not purport to, carry out a feasibility study in his valuation. Rather, he expressly stated that he had made an assessment on the hypothetical development basis ‘as only a check method’. He noted that in doing so, he had utilised the development costings contained in a Preliminary Engineering Estimate prepared by Calibre Consulting dated 4 November 2015, and included in the submission supplied by the respondent. The valuer set out the details relating to that cost estimate in Part 7.2 of the report, and annexed to his report, as a schedule, a copy of the costing estimates of Calibre Consulting. He stated that, in the development model, he used an average lot pricing of $210,000 per lot.
It is clear from the foregoing that the valuer did not purport to carry out a feasibility study in respect of the property, nor did he utilise a development model as the method by which to value the property. Rather, as he stated, his sole use of the model was as a cross-check of his valuation based on the comparative sales methodology. As such, the valuer provided sufficient detail of the hypothetical development model to comply adequately with the requirement in Item 4.5 of Part 8 of the guidelines, that he should expose his methodology sufficiently in the body of his report.
For the foregoing reasons, we reject the submissions made in support of ground 3 of the application.
Ground 4
In support of ground 4, the applicant merely relied on the submissions made in support of ground 1 and ground 3. It follows from the foregoing that, accordingly, ground 4 must also be rejected.
Conclusion
By reason of the matters that we have discussed, the applicant has failed to succeed on the grounds contained in the proposed Notice of Appeal. Accordingly, we would grant the applicant leave to appeal, but dismiss the appeal.
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