Rockdale Group (Pacific Hwy) Pty Limited v Valuer-General of NSW

[2024] NSWLEC 1852

Land and Environment Court

New South Wales

Medium Neutral Citation:

Rockdale Group (Pacific Hwy) Pty Limited v Valuer-General of NSW [2024] NSWLEC 1852

Hearing dates:

17 and 18 February 2025

Date of orders:

28 March 2024

Decision date:

28 March 2024

Jurisdiction:

Class 3

Before:

Peatman AC

Decision:

The Court orders

(1) The appeal is dismissed.

(2) Pursuant to s 6A of the Land Valuation Act 1916 the value of the land being Lot 1 in Deposited Plan 105032 located at 28A Phillip Street Parramatta NSW 2150 for the Land Valuation Year of 2022 is $6,300,000.

(3) Exhibits B and C are returned.

Catchwords:

VALUATION OF LAND – appeal against valuation by Valuer-General – methodology - determination of land value

Legislation Cited:

Land and Environment Court Act 1979, s 19

Valuation of Land Act 1916, ss 6A, 29, 35, 35C, 37, 38, 40

Parramatta Local Environmental Plan 2011, cll 4.4, 7.2

Cases Cited:

Arcus Shopfitters Pty Ltd v Western Australian Planning Commissioner [2002] WASC 174; (2002) 125 LGERA 180

Barkat v Roads and Maritime Services [2019] NSWCA 240

Bone v Wallalong Investments [2012] NSWSC 137

Chircop v Transport for NSW [2014] NSWLEC 63

Cremation Co Pty Ltd v Valuer-General [2016] NSWLEC 135

DBW Reynolds Pty Ltd as trustee for the DBW Reynolds Family Trust v Public Transport Authority [2023] WASC 165

Kelliher v Commissioner for Main Roads (No. 2) [2015] WASC 478

Kenny & Good Pty Ltd v MGICA (1992) Ltd 199 CLR 413; [1999] HC 7

Kogarah Town Centre Pty Ltd v Valuer-General (No. 3) [2014] NSWLEC 1124

Limina Holdings Pty Ltd ATF Galileo Superannuation Fund v Valuer-General of New South Wales [2018] NSWLEC 110

Sales and Ors v Transport for NSW (No 2) [2021] NSWLEC 96

Secretary to the Department of Economic Development, Jobs, Transport & Resources v Manor Lakes (Werribee) Pty Ltd [2017] VSCA 114

Square Holdings Pty Ltd v Valuer-General [2018] NSWLEC 140

Storage Equities Pty Ltd v Valuer-General (2013) 94 ATR 431; [2013] NSWLEC 137

Toohey’s v Valuer-General (1924) 25 SR (NSW) 75; Tooheys Ltd v Valuer-General, Judgment of the Lords of the Judicial Committee of the Privy Council delivered on 22 December 2024 pp 19-20, Australian Institute of Valuers and Land Economists (Inc) (1977) Third Edition, Court Decision for examination study. Southwood Press Pty Ltd Sydney

Trust Company of Australia v Valuer-General [2007] NSWCA 181; 154 LGERA

Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7

Vilro Pty Ltd v Roads and Traffic Authority (NSW) (2010) 179 LGERA 47; [2010] NSWLEC 234

Warwick Farm Central Pty Ltd v Valuer-General [2024] NSWLEC 25

Willis v Roads and Maritime Services (NSW) [2015] NSWLEC 165

Texts Cited:

Parramatta Development Control Plan

Category:

Principal judgment

Parties:

Rockdale Group (Pacific Hwy) Pty Limited ACN 6068 10208 (Applicant)
Valuer-General of NSW (Respondent)

Representation:

Counsel:
D E Grieve, KC (Applicant)
R White (Respondent)

Solicitors:
RBHM Commercial Lawyers (Applicant)
Crown Solicitor for NSW (Respondent)

File Number(s):

2024/121856

Publication restriction:

No

Judgment

1. COMMISSIONER: Rockdale Group (Pacific Hwy) Pty Limited (Applicant) as registered proprietor of Lot 1 in Deposited Plan 105032 located at 28A Phillip Street, Parramatta NSW 2150 (Land), has appealed the land valuation by the Valuer-General of New South Wales (Respondent) pursuant to s 37(1) of the Valuation of Land Act 1916 (VL Act) for the base date of 1 July 2022.

2. Pursuant to s 6A(1) of the VL Act the Respondent determined the land value of the Land at $6,300,000.1

3. On 6 November 2023, the Applicant contends that the Land value for the relevant period of 1 July 2022 should be $4,000,000. [1]

   1. Ex 3 Valuer-General’s Bundle of Documents Tab 1 p1

4. The Applicant received the Land Value for the Land in the amount of $6,300,000 for the base date of 1 July 2022 (2022 Valuation Year). [2]

   2. Ex 1 Court Book Tab 1 p 3

5. On 24 November 2023 the Applicant objected to the Notice of Valuation pursuant to s 29(3A) of the VL Act and in accordance with the time provision in s 35(1)(a) of the VL Act. [3] It is the making of an objection to the valuation pursuant to this provision that commences the statutory chain that can result in this Court acting as a judicial valuer to determine what should be the final outcome of such an objection. [4]

   3. Ex 1 ibid Tab 1 p 6

   4. Ex 1 ibid Tab 1 pp 8-9

6. In a letter dated 2 February 2024, pursuant to s 35C of VL Act, the Respondent disallowed the Applicant’s objection, and confirmed the Land value of $6,300,000. [5]

   5. Kogarah Town Centre Pty Ltd v Valuer-General (No. 3) [2014] NSWLEC 1124 at [53] (Kogarah).

7. The Applicant appealed to the Court within the time period provided in s 38(1) of the VL Act.

8. These proceedings fall within Class 3 of the Court’s jurisdiction pursuant to s 19 of the Land and Environment Court Act 1979 (LEC Act).

9. The Land has an area of 366.7m², and is located on at 28A Phillip Street Parramatta on the corner of Phillip Street and Phillip Lane within the Local Government Area of Parramatta. The topography of the Land is naturally level as is the adjoining land of Phillip Street and Phillip Lane. The Land has a southern frontage boundary of 12.19m to Phillip Street, and a western side boundary facing Phillip Lane of 30.48m. [6]

   6. Ex 1 ibid Tab 1 pp 10-23.

10. The Land is located to the north west within the Parramatta CBD. The Parkroyal Hotel Parramatta adjoins the Land to the east, and further east on Phillip Street the Powerhouse Museum is under construction. In the immediate vicinity of the Land there is a mix of retail/commercial and residential unit developments as well as hotels and Government buildings. Phillip Street is a two-way east/west thoroughfare with street parking on both sides of the Street, whilst Phillip Lane is a no through thoroughfare lane. [7]

    7. Ex 1 Ibid Tab 3 p 37

11. The Applicant contracted to purchase the Land on 19 November 2021 with a transfer date of 12 May 2022.

12. The sale of the Land was as a going concern and it therefore did not attract Goods and Services Tax (GST). [8]

    8. Ex 1 ibid Tab 3 p 37

13. Set out below is a map showing the Subject Land and Sales Evidence: [9]

    9. Ex A Contract for Sale dated 19 November 2023, p 2 (pages unnumbered)

Figure 1: Subject Land and Sales Evidence Map

Issue

14. The key issue for determination is: Pursuant to s 40(2) of the VL Act has the Applicant discharged the onus of proving its case that the Land value for 2022 is too high?

Legislation and the law

Valuation of Land Act 1918

6A   Land value

s 6A, hdg: Ins 1978 No 126, Sch 1 (3).

(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.

……

40   Powers of Land and Environment Court on appeal

(1)  On an 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.

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

15. The Court acts as a judicial valuer. [10]

    10. Ex 2 Evidence Book Tab 2 p 52

16. Pursuant to s 40(2) of the VL Act, the Applicant bears the onus of proving its case. This is said to mean that the Applicant must establish that the issued land value is too high. [11]

    11. Kogarah at [53], [71].

17. If I, as judicial valuer, determine that the relevant land has a land value of less than the amount determined by the Valuer-General, this onus will be discharged. If the Applicant does not discharge its onus, the appeal must be dismissed and the issued Land value for 1 July 2022 stands. [12]

    12. Warwick Farm Central Pty Ltd v Valuer-General [2024] NSWLEC 25 at [31] per Pritchard J (Warwick Farm)

18. The Court is not confined to accepting the case of one party or the other party and may use the evidence adduced in the proceedings or draw on the experience of the Court to make its own assessment. [13]

    13. Kogarah at [77].

19. The task under s 6A of the VL Act is to determine the land value of the fee simple in its unimproved state by assuming improvements (other than land improvements) have not been made. In the present case it is necessary for the Court and the valuer to assume that the improvements on the Land have not been made.

20. Section 6A(1) also requires the postulation of a notional sale which is assumed to take place in a market and the seller would conclude the sale for the highest price it could obtain in that market. [14]

    14. Warwick Farm at [37]

21. For the purposes of that notional sale, value is determined by:

1. Forming an opinion as to what a willing purchaser will pay and not an unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value;

2. Supposing both the seller and the purchaser to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property; and

3. Assuming an efficient market in which buyers and sellers have access to all currently available information that affects the property. [15]

   15. Trust Company of Australia Ltd v Valuer-General (2007) 154 GLERA 437, [2007] NSWCA 181 at [32].

22. The value of the Land is to be determined on the basis of the highest and best use of the land. [16]

    16. Kenny & Good Pty Ltd v MGICA (1992) Ltd 199 CLR 413; [1999] HCA at [49]-[51]. (Kenny & Good)

23. There is no explicit recognition in the VL Act of the highest and best use of the land concept, but the Australian Property Institute considers it to be “the use of the property that maximises its potential which is physically possible, legally permissible, and financially feasible”. [17]

    17. Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 at p 283.

24. The Court should approach the task by determining what was the ‘most profitable potential use’ of the land [18] , having regard to planning and all other relevant factors affecting its present and future potential. [19]

    18. Limina Holdings Pty Ltd ATF Galileo Superannuation Fund v Valuer-General of New South Wales [2018] NSWLEC 110 at [91]. (Limina)

    19. Vilro Pty Ltd v Roads and Traffic Authority (NSW) (2010) 179 LGERA 47; [2010] NSWLEC 234 at [17].

25. The value of the land is determined by ascertaining what a willing purchaser would pay and what a not unwilling vendor would receive for the property. [20]

    20. Willis v Roads and Maritime Services (NSW) [2015] NSWLEC 165 at [24]

26. The parties to the hypothetical sale are assumed to be “fully informed” and to make “all proper enquiries”. [21]

    21. Kenny & Good at [49]

27. The land must be valued at the relevant date in its existing condition with all its potentialities as potentialities. [22]

    22. Barkat v Roads and Maritime Services [2019] NSWCA 240 at [20] (Barkat)

1. In considering the potentialities of the relevant land, the valuer may take into account not only the present use to which the land is applied but any more beneficial use to which it may reasonably be applied. [23] This exercise is underpinned by concepts of feasibility, realism, practicality and reasonableness reviewed in the context of all the ‘circumstances’ of the land. [24] However, consideration must only be given to ‘realistic options’ [25] , and remote and speculative possibilities are to be disregarded. [26]

   23. Barkat at [20]

   24. Limina at [113]

   25. Limina at [113]

   26. Limina at [116]

2. Any future beneficial use must be assessed as follows:

1. The onus is on “the person or authority seeking to establish a value based upon some different use from that which is authorised by the restrictions the burden of showing the practicability or reasonableness of the land being devoted to some such use: and needless to say, this extends to showing the probability of some relaxation or variation of the scheme and the means by which that is likely to be achieved” (Parramatta City Council v Valuer-General (1965) 10 LGRA 160, Else-Mitchell J at 168-169).

2. In Kelliher v Commissioner for Main Roads (No. 2) [2015] WASC 478, Pritchard J held at [105] that the concept of highest and best use requires that the valuation take into account the potential of the land to be used for that more profitable use (after necessary planning approval); and at [106] in the context of a question about the prospects, at the date of valuation, of future planning permission being given for a particular (more profitable) use, it is well established that the question is to be approached objectively, by reference to orderly and proper planning, not subjectively by reference to the likelihood of particular decision-makers approving the contemplated future use: McKay v Commissioner of Main Roads (No 7) [2011] WASC 233 [307] (Beech J), citing Trandos v Western Australian Planning commission [2001] WASCA 346; (2001) 117 LGERA 256 [73] (Anderson J, Wheeler J & Einfield AJ agreeing); see also De Ieso v Commissioner for Highways (1981) 27 SASR 248; (1981) 47 LGRA 412, 253 (Wells J).

3. In Secretary to the Department of Economic Development, Jobs, Transport & Resources v Manor Lakes (Werribee) Pty Ltd [2017] VSCA 114, the Victorian Court of Appeal observed at [40] that “In the event that the potential requires the implementation under a planning scheme of regulatory change or the construction of public services such as a mains sewer, urban water supply or road link, it will be necessary for the valuer to take into account the risks and contingencies affecting the realisation of the potential which gives the land its market value.”

4. In Limina Sheahan J held that the ‘real world’ complications with the site overwhelmed the Valuer-General’s opinion and hypothesis in that case. [27]

   27. DBW Reynolds Pty Ltd as trustee for the DBW Reynolds Family Trust v Public Transport Authority [2023] WASC 165 at [71(x)] per Martin J;

3. It is well established that, if comparable sales are available, the direct comparison of sales evidence approach is the conventional method of valuation. [28]

   28. Limina at [116]

4. In using the comparable sales method, the valuer must explain which of the sales is the most important comparable sale and why, and what adjustments have been made to reach a conclusion about the value of the relevant land. The direct comparison method may involve four steps:

1. First, accumulation of a pool of potentially comparable sales.

2. Secondly, analysis to convert them to a common basis of measurement such as a unitary rate (for example, per m²) improved or unimproved (through allowance for existence or absence of improvements).

3. Thirdly, adjustment to reflect identified differences between them and the subject property (eg size, location, use, and date). Too much adjustment may make it unsafe to use a sale.

4. Fourthly, application of the adjusted unitary rates of the potentially comparable sales to the subject property in order to determine its value. This may involve attributing differing weight to the different comparable sales according to their degree of comparability (for example, direct, indirect or limited). [29]

   29. Sales and Ors v Transport for NSW (No 2) [2021] NSWLEC 96 at [191] per Robson J; NSW Cremation Co Pty Ltd v Valuer-General [2016] NSWLEC 135 @ [84] per Robson J;

5. Whether a sale is sufficiently comparable is a question of fact and degree and, although some adjustment is always necessary, too much adjustment will render it unsafe to use. [30]

   30. Arcus Shopfitters Pty Ltd v Western Australian Planning Commissioner [2002] WASC 174; (2002) 125 LGERA 180 at [78] per Pullin J (Arcus); Bone v Wallalong Investments [2012] NSWSC 137 at [32-33] per Dougall J.

Expert Evidence

28. On 17 February 2025, I inspected the Land, and the 3 agreed comparable sales, accompanied by the legal teams for both parties together with the valuation experts: Mr Mannix, for the Applicant, and Mr Hill for the Respondent.

29. Prior to Mr Mannix and Mr Hill giving their oral evidence, they had prepared the following reports:

1. Mr Michael Mannix’s Statement of Evidence dated 25 December 2024 (Ex 2 Evidence Book Tab 1 pp 1-14).

2. Mr D Hill’s Statement of Evidence dated 23 October 2024 (Ex 2 Tab 2 pp 15 – 71).

3. Joint Expert Report (Valuation) dated 15 November 2024 (Ex 2 Tab 3 pp 72-92) in which the valuers agreed the following:

1. The land achieves streetscape views from the ground and first floor of the existing development upon the land. Views would increase to include some surrounding views with elevation from a potential new development upon the land. (par [15])

2. As at the relevant valuation year the building improvements comprised a retail/commercial/warehouse building built over the entirety of the site. (par [17])

3. It is estimated that the total gross building area (GBA) of the building improvements is 500m². (par [19])

4. The relevant planning controls are contained in Parramatta Local Environmental Plan 2011 and Parramatta Development Control Plan 2011. (par [20]). As at 1 July 2022 the following controls applied:

1. Zone B4 – mixed use.

2. In accordance with cl 4.4 Floor Space Ratio and cl 7.2 as the site has less than 1,000m² the FSR is 6:1 giving a gross floor area (GFA) of 2,200.20m². However, the valuers agree that when regard is given to the site area and width of the Land, constructing a mixed use development upon the Land achieving an FSR of 6:1 may be problematic (par [41]), and they have adopted an FSR of 4:1 giving 1466.8m² GFA subject to Council’s development approval. (par [41-42])

5. An FSR of 4:1 would result in a 5-6 level building subject to Council approval. (pars 42-43])

6. The valuers agreed that the existing improvements on the Land are valued at $800,000 (T p56 L32-36) and both valuers have deducted the $800,000 to arrive at a vacant land value.

7. The Land is not heritage listed. (pars [22-23]).

8. The valuers adopted a ‘direct comparison’ approach to the sales evidence. (par [24])

9. The definition of highest and best use is: “The use that maximises its potential and would produce the highest value and must be physically possible, legally permissible and financially feasible”. (par 39])

10. The highest and best use of the land at 1 July 2022 is as a vacant parcel of land for a mixed-use development containing retail/commercial and/or residential unit use. (pars [40]-[41])

11. The valuers agreed on 4 comparable sales, which are identified on the ‘Subject Land and Sales Evidence Map (Ex 2 Tab 2 p 52). The comparable sales are listed as:

1. The Land.

2. 7 Argyle Street Parramatta

3. 136 Church Street Parramatta

4. 13 Wentworth Street Parramatta

30. Although the valuers analysed the comparable sales differently, they agreed that the four sales should be analysed having regard to sale price, site area, FSR, GFA, location, size GFA, shape, and access. Their analysis is set out in Ex Tab 3 p 92. Further evidence of their analyses is set out below.

31. Sale 1: the subject Land.

1. Mr Mannix for the Applicant:

1. Location: agreed that “the property is positioned in a convenient and central location. Near public transport with a wide mix of commercial property adjacent to the property”. (T 42 L 4-9)

2. “My answer hasn’t changed. It - it - my opinion is still - and particularly when you look at those three sales, the difference between the sale price and the analysed land value is - is reasonably marginal, two, three, $400,000 and one’s actually where the analysed land value is higher than the sale price. I don’t believe the improvements are worth 3.1 million dollars and I don’t believe that 7.1 million was a market transaction on that basis.” (T 56 L 23-29)

1. “The primary and objective method of valuation of commercial land and buildings which are situated in a CBD would ordinarily be based on the yield which is to be derived from the property.”

2. “A valuation of the subject property which is based on yield would be based on an estimated net rental income of $250,000pa plus GST (which is agreed between the valuers) and a yield of 5.2%.”

3. “Such a method would result in an objective assessment of the ‘improved’ market value of the subject property ‘as is’ to be $4.8m including improvements. Therefore, after deducting an allowance of $800,000 for the existing improvements (which allowance is agreed between the valuers) the land valuation equates to $4m.”

4. “….. Accordingly, as the yield based method of valuation takes into account the ‘current’ highest & best use of the subject land, it follows that the highest and best use for the property as at 1/07/2022 is the improved market value including improvements which equates to $4.8m and the effective market land value is $4m.”

5. “As a check method the improved market value can be adjusted by deducting the agreed allowance for improvements to arrive at land value.”

3. (Ex 2 Tab 3 p 80)

1. In relation to access: Mr Mannix considers that rear access to Sale 2 is superior to the access to the subject Land being access from Phillip Street, or Phillip Lane because Phillip Lane, being a public street, has another user accessing it and the subject Land does not have exclusive use of Phillip Lane. Mr Mannix stated that such an access is “problematic” (T 40 L 29-50) but under cross examination admitted that he had no evidence to support his supposition. (T 41 L 1).

2. In relation to the Contract for Sale of the subject Land dated 19 November 2021 (Ex A), Mr Mannix agreed in cross examination that it was a sale on the open market, and that it had been advertised as a prime development site. (T 44 L27-50; 45 L-7; 46 L 1-50)

2. Mr Hill for the Respondent states:

1. Sale 1 is the best indicator of the value of the subject Land at the valuation date 1/07/2022 for the reasons set out below.

2. The Land was the subject of a real property sale on 19 November 2021 with a settlement date of 12 May 2022 and a consideration of $7.1m.

3. The Land was sold with the current improvements in place, and Mr Hill considers the Land to be lightly improved.

4. After deducting the agreed amount for improvements of $800,000 (having agreed with Mr Mannix after my initial assessment of the value of the improvements was $655,000) gives an analysed land value of $6.3m.

5. The contract date for the Land is seven and a half months prior to the valuation year of 1/07/2022 whilst the property was transferred just one and a half months prior to the valuation year.

6. The Land was sold with the current improvements in place, and was marketed by Krulis Commercial as a “Prime Development Site”. (Ex 2 Tab 2 pp 30 and 50)

7. The Land is in the northern sector of the Parramatta CBD.

8. The Land is serviced by a bus stop on Phillip Street, and it is 350m north of the Church Street Light rail, 500m of Parramatta Station, and in the future by the South West Metro, Stage 2. Mr Hill took the Metro into account in his valuation because the Civic Plaza projects and the Metro “go hand in hand” and “it is a well-known project”. (T p 17 L23-24)

9. In considering the location of the Land, and the analysis of Sale 1, Mr Hill took into account where the property is located in comparison to say a landmark or a traffic node or transport node or something of significance which draws people in; prominence of the actual street the property is on; the prominence of the actual parcel of land on which street the property is; together with foot traffic, vehicular traffic which bypasses the car, and the vibrancy of the actual location of that site. (T p 17 L 40-49)

10. In considering access to the Land, Mr Hill takes into account the shape of the land – “is it an inside allotment? – Is it a corner allotment.” Does it have rear access for exposure to light and air and ease of construction. Mr Hill does not accept that access to the Land is inferior to access to the land in Sales 2, 3 and 4 notwithstanding that Phillip Lane is a public road and provides access to other adjoining landowners.

32. Sale 2: 7 Argyle Street Parramatta

1. Mr Mannix for the Applicant, in cross examination:

1. It’s not comparable in terms of location. The FSR’s different. It certainly is not one of the best ones. (T pp 27-28 L34-50 and 1)

2. It is not a comparable sale – too many adjustments need to be made to it. (T 28-29, L 28-50 and 1-3)

3. The sale is in fringe boundary commercial location. (T p32 L 14-21)

4. In reference to the Sales Table & Adjustments (Ex 2 Tab 3 p 92) Mr Mannix changed his responses in the Table as follows:

1. Location from -10% to +10%

2. Access from -5% to +10%

3. Thereby adjusting the “Adjusted GFA Analysis 2022 from $2,232/m² to $4,097/m².” (T 32-37)

2. Mr Hill’s detailed analysis of Sale 2 is set out in Ex 2 Tab 2 pp 57-60. In cross-examination Mr Hill did not resile from his written evidence. The reasons for Mr Hill’s adjustments to Sale 2 are:

1. Location: Sale 2 is located in the south-western fringe of the CBD – a location that is generally removed from CBD activities. It is opposite the railway line, whilst a cemetery adjoins the rear of it. Sale 2 is in an inferior location for residential, retail and commercial uses (adjustment of +15% considered appropriate).

2. Size: Sale 2 has an area of 486.9m² and an FSR of 1.5:1 whereas the subject Land contains a GFA of 1,466.80m² and an FSR of 4:1. An adjustment of -15% in comparison to the subject Land is appropriate.

3. Shape: 0% adjustment is requirement in comparison to the subject Land.

4. Access: The subject Land has a 2 street access whereas Sale 2 is an inside allotment with no secondary access. The adjoining street contains no street parking and restricted access for cars with buses being given dedicated laneways. Sale 2 is considered inferior with an adjustment of +20% in comparison to the subject Land.

5. The adjusted GFA Analysis in Ex 2 Tab 3 p 92 is $4,394/m².

33. Sale 3: 136 Church Street Parramatta

1. Location: both valuers agree Sale 3 is located within a superior location in comparison to the subject Land. The degree of superiority is in dispute:

1. Mr Mannix making an adjustment of -30%, and in cross-examination (T 37 L 48-49; 38 L 1-3) quoting Ex 2 Tab 3 p 87 of the Joint Expert Report: “Both properties are within the Parramatta City Centre, certainly enjoying closer location to various amenities”.

2. Mr Hill made an adjustment of -15%, and states in the Joint Expert Report Ex 2 Tab 3 p 87:” In my view, the adoption by Mr Mannix of an adjustment of -30% is quite extensive when considering the sales retail/commercial location. And in cross-examination (T 21 L 42-49): “…when a valuer starts applying an adjustment of 30%, it starts getting to a point where you question if the two are actually even comparable”.

2. Access:

1. Mr Mannix considers Sale 3 contains superior access and has applied an adjustment of -15%. In cross examination Mr Mannix agreed that he recited facts (rear lane access and inside allotment) but gave no reasons for applying the adjustment of -15% (T 38 L 27-50, 39 L 1-13). Mr Mannix is of the opinion that the rear lane access is superior to the subject Land because the subject Land’s access to the rear of its property is via the public road known as Phillip Lane, and there was one other occupier who accessed its property via Phillip Lane. Further Mr Mannix admitted he had no town planning advice, but considered a development application would be necessary for the subject Land to get access via Phillip Lane. (T 40 L 15-50; 41 L 1). I note that the existing improvements have access/egress to Phillip Lane for the warehouses at the rear of the subject Land.

2. Mr Hill considers access to Sale 3 to be inferior to the subject Land, applying an adjustment of +5%. Sale 3 is an inside allotment with rear lane access, whereas the subject Land is on a two-street corner allotment, and contains a wider street frontage of 12.19m with Sale 3 containing a 9.15m frontage. The subject Land contains an overall lineal street frontage of 42.67m being front and side, in relation to Sale 3 having 18.22m being front and rear access. (Ex 2 Tab 3 pp 88 and 92)

34. Sale 4: 13 Wentworth Street Parramatta

1. Location:

1. Mr Mannix makes an adjustment of -10% as he considers Sale 4’s location to be superior due to the position of Sale 4 in proximity to Westfield Shopping Centre and Parramatta Railway Station. (Ex 2 Tab 3 p 89)

2. Mr Hill considers the location of Sale 4 to be inferior to the subject Land and makes an adjustment of -10% as the subject Land is located within a preferred, and more active, retail/commercial location, and one preferred for residential unit users. The subject Land “adjoins the Parkroyal Hotel and is approximately 30m to the west of the Powerhouse Museum on the same street. Wentworth Street, whilst containing some commercial uses, is more of an access road between Parkes Street and Valentine Avenue, and it provides access/egress to the multi-level above ground public car parking station to which adjoins” Sale 4. (Ex 2 Tab 3 p 89)

2. Size:

1. Mr Mannix makes no adjustment for size.

2. Mr Hill makes an adjustment of +15% for size as the subject Land contains a developable GFA of 1,466.8m² in comparison to Sale 4 which contains a GFA of 2,074m². The subject Land is smaller in developable FA to that of Sale 4 warranting a higher GFA rate and therefore the sale is considered inferior due to economies of scale.

3. (Ex 2 Tab 3 p 89)

3. Access

1. Mr Mannix considers Sale 4 contains marginally superior access, making an adjustment of -2.5%.

2. Mr Hill considers access to Sale 4 to be generally comparable to the subject Land. Both properties are two street corner sites, the side street of the subject Land is a no through road whilst Sale 4’s side street is generally an access/egress road to a public car park.

3. (Ex 2 Tab 3 p89)

35. Mr Mannix was cross examined on his methodology in relation to the Sales Table & Adjustments (Ex 2 Tab 3 p 92), as to why the analysed land values in the valuation year for Sales 2, 3 and 4 were agreed, by deducting the agreed value of the improvements from the sale price in each scenario. Why then was Sale 1, the subject Land not agreed at the land value of $6,300,000 after deducting the agreed value of improvements of $800,000 from the sale price of $7,100,000? Mr Mannix reiterated his view, as set out in his Statement of Evidence and the Joint Expert Report, that the price paid pursuant to the contract for sale (Ex A) at $7,100,000 was excessive and out of line with the comparable sales. Mr Mannix used the check method of the current yield of the existing improvements on the subject Land to arrive at a land value of $4,800,000 and then deducted the improvements of $800,000.

36. I prefer the evidence by Mr Hill over that given by Mr Mannix, for the following reasons:

1. Mr Mannix did not consider that the consideration paid for Sale 1, the subject Land, to be reflective of the market. However in lieu of advancing evidence setting out market value on a comparable sale basis, he dealt with Sale 1 on a different basis. Mr Mannix assessed the land value of Sale 1 by analysing the yield of the existing improvements on the subject Land. That is an incorrect analysis pursuant to s 6A(1) of the VL Act because having analysed the land value by calculating the commercial return on the subject Land, he then deducted those improvements to ascertain the capital value of the subject Land. That analysis is flawed [31] , and it is obviously flawed when Mr Mannix went on to analyse Sales 2, 3 and 4 by simply deducting the improvements from the price paid under the relevant contract for sale.

   31. Chircop v Transport for NSW [2014] NSWLEC 63 at [35] per Biscoe J;

2. Further, despite having agreed in the Joint Expert Report that the value of the subject Land is to be determined on the basis of the highest and best use of the land with an FSR of 4:1 giving a FGA of 1,466.8m² which results in a five to six storey building, Mr Mannix valued Sale 1 on a yield basis using the existing building.

3. Mr Mannix did not explain his reasons underlying the analysis of each of Sales 2, 3 and 4. [32]

   32. Tooheys Ltd v Valuer-General, Judgment of the Lords of the Judicial Committee of the Privy Council delivered on 22 December 2024 pp 19-20, Australian Institute of Valuers and Land Economists (Inc) (1977) Third Edition, Court Decision for examination study. Southwood Press Pty Ltd Sydney.

4. During cross examination in relation to Sale 2, Mr Mannix substantially changed the adjustments he had made in the Sales Table & Adjustments (Ex 2 Tab 3 p 92), and therefore his adjusted GFA rate, for Sale 2, was amended from $2,732/m² to $4,097/m².

5. Mr Hill set out the reasons for each of his adjustments for the comparable sales as set out in the Sales Table & Adjustments, both in his Statement of Evidence and in the Joint Expert Report, and confirmed his reasons during cross examination. [33]

   33. Arcus at [78].

6. Mr Hill correctly relied on Sale 1 as the most comparable sale. The sale took place seven months prior to the valuation date of 1/07/2022, and settled one and a half months prior to the valuation date. Neither valuer made any comment or adjustment on the fact that the contract was subject to an extended settlement date. Nor was I referred to any of the conditions of the contract for sale which may have had an impact on the consideration paid.

7. I consider Sale 3 (136 Church Street) to be the second most comparable sale. I accept the adjustments made by Mr Hill to be the correct adjustments for Sale 3, and reject Mr Mannix’s adjustment for location at -30% to be excessive, and access at –15% to be also excessive. I find that Sale 1 is located in the CBD of Parramatta within a vibrant, commercial/residential/tourist area, relatively close to public transport with access to the light rail, future Metro, and existing Parramatta Station. It is also easy walking distance to Civic Square which is the central part of the CBD. I do not accept that Sale 3 is located in a superior position by the percentage adjusted by Mr Mannix – it is near the large Westfield Shopping precinct and very close to Parramatta Station, with several mid-range office blocks in near proximity. The more recently developed office blocks, and Civic Square, are relatively close by being on the northern side of the railway line. I also do not accept that rear access to 36 Church Street is superior to the subject Land which has access directly to Phillip Street and also Phillip Lane.

8. Sale 4 is the third most comparable sale. Again I accept the analysis by Mr Hill. I do not accept the adjustments by Mr Mannix as the location is not superior to the subject Land, and the access is almost of an identical nature, both being corner blocks with a public road giving shared access to the rear of their properties.

9. Sale 2 is the fourth most comparable sale, and in relation to this sale Mr Mannix amended his written evidence during cross examination which resulted in an adjusted GFA Analysis of 2022 of $4,097 (previously $2,732/m²). Mr Mannix’s amended evidence in this regard destroys his argument that Sale 1 is out of line – his adjusted GFA of $4,097/m² is in line with Mr Hill’s adjusted GFA Analysis 2022 for Sale 1 in the sum of $4,394/m².

37. On the last day of the hearing, Mr Grieve KC conceded that the former argument put by his valuer, Mr Mannix, that Goods and Services Tax (GST) should be deducted from each of the sale prices of Sales 2, 3 and 4 as Sale 1 was sold as a going concern, did not apply in view of the decision by Craig J in Storage Equities Pty Ltd v Valuer-General [2013] NSWLEC 137 at par [48].

38. I find that:

1. Pursuant to s 40(2) of the VL Act, the Applicant has not discharged its onus of proving its case that the Land value for 2022 is too high.

2. I shall dismiss the appeal.

Orders

39. The Court orders:

1. The appeal is dismissed.

2. Pursuant to s 6A of the Valuation of Land Act 1916 the value of the land being Lot 1 in Deposited Plan 105032 located at 28A Phillip Street Parramatta NSW 2150 for the Land Valuation Year of 2022 is $6,300,000.

3. Exhibits B and C are returned.

M Peatman

Acting Commissioner of the Court 

**********

Endnotes

Decision last updated: 28 March 2025