Posted on March 30, 2026 by Lindsay Taylor 18

NSW Court of Appeal Rejects Valuer-General’s Approach to Comparable Sales Method of Valuing Land

In the recent case of Valuer General of New South Wales v Esperia Court Pty Ltd [2026] NSWCA 30, the NSW Court of Appeal unanimously rejected an argument by the Valuer-General of NSW (‘VG‘) that applying the ‘direct comparison’ method of valuing land, otherwise known as the ‘comparable sales’ method, necessary involved a valuation principle as to the process of undertaking the valuation including that comparable sales must be differentiated.

In reaching its decision, the Court endorsed a line of case law authority to the effect that the Valuation of Land Act 1916 (NSW) does not prescribe the use of any specific valuation method, such as the comparable sales approach, to determine land value or, if the comparable sales approach is chosen as the valuation method, the particular method of conducting the comparable sales approach.

Esperia Court Pty Ltd appealed to the Land and Environment Court (‘LEC‘) under s 37(1) of the Valuation of Land Act against Act against the disallowance by the Valuer General of objections to notices of assessment of land value for four parcels of land in Strathfield. The primary judge, Robson J, upheld each of the appeals against the determinations of the Valuer General.

The VG’s appeal from the decision of the primary judge was under s57(1) of the Land and Environment Court Act 1979 (NSW), which is limited to appeals on questions of law. The leading judgement was delivered by Preston CJ of the LEC (with whom Payne and McHugh JJA agreed).

Appeal grounds

The VG relied on three grounds of appeal on which the primary judge was alleged to have erred on a question of law.

The ‘weight ground’

The first ground of appeal was that the primary judge erred in valuation principle (and thus on a question of law) by placing equal weight on each of the comparable sales to determine the value of the parcels of land at the relevant dates, where the comparable sales were of different parcels of land with different characteristics and the task of the judicial valuer was to determine which of the comparable sales were the most reliable.

The Court held that the process undertaken by the primary judge did not involve assigning equal weight to all of the comparable sales. Instead, each sale was analysed and adjusted differently, reflecting the differences in the parcels of land and sale transactions involved.

Preston CJ said at 62:

‘I have earlier noted that the Valuer General had difficulty in precisely articulating the “valuation principle” which the primary judge was said to have infringed in determining the value of the subject parcels of land. The best articulation the Valuer General could offer was that it was wrong as a matter of valuation principle to apply equal weight to the comparable sales. If that be the principle, it finds no basis in the terms of the Valuation of Land Act, either in the definition of “land value” in s 6A or in the valuation methodology in Part 1B.’

The Court held that even if the primary judge had infringed the so-called valuation principle by applying equal weight to the comparable sales, this would not have involved an error on a question of law, as it would not have contravened the terms of the Valuation of Land Act.

The ‘averaging ground’

The second ground of appeal was that the primary judge, in determining the value of each parcel of land, appears to have averaged the values of the comparable sales and that this averaging of values involved an error in valuation principle, which was an error on a question of law.

The Court held that the VG’s contention that the primary judge engaged in a process of averaging to determine the land value was factually erroneous. The Court held that:

• the primary judge did not average the values of the comparable sales and derive a final value based on that averaging,
• the only averaging undertaken was of the adjusted rates derived from the comparable sales, which was a different exercise to averaging the values of the comparable sales before adjustment and that the rate the primary judge determined was in each case different to the average of the adjusted rates, and
• the rate the primary judge determined, albeit that it may have may have fallen between the values of the median and the mean of the adjusted rates in the range, was not an average of those values.

The Court held that the averaging process so described did not involve an error on a question of law because, as Preston CJ said, the Valuation of Land Act does ‘not proscribe calculation and consideration of an average or a median of numbers in a data set in determining the value of land’. Thus, His Honour concluded at 75:

‘Accordingly, the primary judge’s calculation and consideration of the median and the mean (average) of the adjusted rates that he derived from the comparable sales to inform, but not to fix, the value of the parcels of land, did not involve performing the task of valuing the land not in accordance with the terms of the Valuation of Land Act.’

The ‘reasons ground’

As an alternative to the averaging ground, the VG contended that if the primary judge did not determine the rate (in $ / m² of potential gross floor area (PGFA)) to be applied to determine the value of the parcels of land by averaging, then he failed to give reasons for his decision, which was an error of law.

The Court held that the primary judge gave more than adequate reasons explaining each step in his decision-making process and that the ‘detailed explanation’ process of his decision-making process, which was ‘misunderstood’ by the VG, satisfied the obligation to provide reasons for the relevant findings of fact and conclusions regarding the value of the land parcels.

Preston CJ said at 81:

‘The primary judge explained why he decided that all of the sales selected by the parties’ valuers were comparable sales and how he analysed and adjusted each of those sales to derive rates (in $/ m² PGFA) that could inform his decision on the value of each of the parcels of land. The primary judge explained in the text of the judgment and summarised in the tables annexed to the judgment the adjustments that he found should be made to derive the adjusted rate from the comparable sales for each of the parcels of land. The primary judge provided the range of adjusted rates and their median and mean. The primary judge then determined the rate that he considered should be used to value each parcel of land for each valuing year.‘

Significance of decision

Neatly summarising the Court’s decision, Payne JA said:

‘The Valuation of Land Act 1916 (NSW) does not prescribe the use of any valuation method. Much less does that Act prescribe the “comparable sales” approach as the only or even the “preferred” method to determine the value of a parcel of land. If, in a particular case, the comparable sales approach is chosen as the valuation method, a particular methodology of conducting a comparable sales valuation is not prescribed by the Valuation of Land Act. When the comparable sales method is used, the question of whether sales are comparable is a question of fact that involves matters of degree and judgment.‘

The Court’s decision gives valuers of land a broad scope and considerable discretion when applying the comparable sales method of valuing land. The decision recognises the judgement, based on expertise and experience, that valuers bring to the process of using the comparable sales method.

The decision has significance for land valuation in NSW in different contexts including for rating purposes, the compulsory acquisition of land, and commercial agreements where the parties agree on a land valuation approach based on the comparable sales method.

The Court of Appeal decision can be found here: Valuer General of New South Wales v Esperia Court Pty Ltd [2026] NSWCA 30.

For further information on the decision, leave a comment below or contact Dr Lindsay Taylor