Mortgage broker Bishnu Aryal wanted to move to Australia from Nepal for a new life and saved diligently for a decade to buy a block of land in Edmondson Park, south-west Sydney, for $398,000. He signed a building agreement with construction company Zac Homes in 2016 for a custom off-plan build, at a cost of $322,000.

A communication issue between Bishnu and the building company, however, put an end to his dreams of the perfect house.

The agreement was for a free-standing home but, when Bishnu checked three years later, he was horrified when he came to know that the contractors had built a duplex on half the block - with a huge windowless grey wall erected down the middle.

Rather than having another building attached to the side, like with a regular duplex, the home has an unfinished look. Bishnu said that although his English is not perfect, hedefinitely did not sign up for half a house.

The construction company, Zac Homes, said that the plan was to build a free-standing home on the block, but claimed that Liverpool Council later said Bishnu's block had to have an attached dwelling. The construction company said that Bishnu had multiple opportunities to pull out of the agreement, while Bishnu claimed he trusted the process and did not look at the new plans for half a duplex when they were sent over and instead forwarded them to the bank.

Bishnu had to move in to the during during Covid because his wife was pregnant, and they had nowhere to go after he lost work. He said he's been waiting nine months for an occupation certificate from the council - which authorises the use of a new building. A spokesman for Zac Homes said the company had done everything it could to secure an occupation certificate and has been trying for months to get it signed off.

The certifier and the council were at a crossroads because the council wants the other half of the duplex built. A spokesman said the company appreciates the frustrations of Bishnu and family surrounding the delay in the issue of the Occupation Certificate, and these delays are not caused by Zac Homes.

Property expert Michael Pallier said the land would go up in value, but the building itself is likely to depreciate. It might actually get to the point where the house is a liability, and it'll cost money to take the house down for someone to buy the land and build a free-standing home with doors and windows,' he said.

Requirement

Discuss the process of how to determine the fair value of the asset (land and building) acquired. (Total 10 marks)