Statutory Valuations & Compulsory Acquisitions - Case Law

Question 1

Valuer General Vs Addington Raceway (1968)

Answer 1

MAIN POINTS
+Methodology of determining value of unimproved land.
+Leases should be disregarded when valuing land for statutory purposes “assuming land to be unencumbered”

CASE
North Canterbury Hospital Board owns the land, Addington Raceway is the lessee.

The valuer general (NCHB) assessed the land at £105,000 with a 100% chance of rezoning occurring. The land valuation committee (ARL) assessed the land value at £75,000 with a 0.00% chance of rezoning occurring.

MAIN ISSUES
+The effect of the lease on land value
+The extent to which designations should be considered

HELD
the unimproved value must be fixed on a consideration of the land value as bare with no improvements nor lease in place. The designation/chance or rezoning must, however, be considered.

GENERAL RULES
+Land must be considered bare/unimproved
+Land must be considered free of lease/encumbrance
+Subdivision potential must be considered
+Planning restrictions and the chance of them remaining
+Land considered to be free from restrictions

Question 2

Lindisfarne College Council V Valuation Department (1981)

Answer 2

MAIN POINTS
Rating valuation. The case concerns a the valuation of designated land & assessing the chance of a designation being lifted.

CASE
Involves land owned by Lindisfarne College that was designated for schooling purposes.

a. ) The land was valued at $95,000 using rural sales and was given a 10% adjustment to allow for location.
b. ) The land was again valued using residential evidence and which came in at $200,000.
c. ) The difference between the two figures was $105k, to which the valuer applied a 75% chance that the designation would be uplifted.

Lindisfarne contended that the valuation was grossly excessive & that allowance had been too great.

HELD
When assessing land value a valuer should consider the chance of the designation being lifted, rather than the likelihood the owner would seek to have it lifted.

The applied 75% was upheld, with it having been decided an even greater weighting may have been justified.

Question 3

Jacobsen Holdings Vs Drexel (1986)

Answer 3

MAIN POINTS
High court decision. Compensation for a landlocked land should be assessed on the basis of a willing buyer/seller situation where the seller is not an “unprincipled opportunist” and the purchaser “recognises the benefit to them and is willing to buy above market”.

CASE
Jacobsen owned some 50Ha of land in the Bay of Islands. Access to the land was possible either over the respondents land or by sea. Jacobsen sought access over Drexel’s land.

IUSSUES

a. ) was the land considered landlocked under S. 129B of the PLA?
b. ) should compensation be assessed on a willing buyer/seller situation?

HELD

• The land was landlocked. Sea access was not sufficient.
• Compensation should be assessed on the basis of what a willing seller would arrive at during friendly negotiations, taking into account the situation of all parties, including gains to the landlocked land and detriments to the servient land.
• Compensation was set at $6,000 and the landlocked party was to pay for all access costs.

HIGH COURT DECISION
The high court ruled that compensation for a landlocked land should be assessed on the basis of a willing buyer/seller situation where the seller is not an “unprincipled opportunist” and the purchaser “recognises the benefit to them and is willing to buy above market”.

Question 4

Valuer General Vs Wellington City Council (1933)

Answer 4

MAIN POINT
Rating valuation. An owner could be considered to be a hypothetical purchaser.

CASE
Involved the valuation of septic tanks and abattoirs. The Valuer General valued these improvements on the basis of their utility and replacement. The Wellington City Council argued that they were not salable and therefore had no value.

HELD
The owner could not be excluded as a potential purchaser of its own property. The cost to replace was a factor.

Such assumptions were not necessarily correct for other purposes such as lending, disposal or asset valuations.

Question 5

Warren & Susan Duffy Vs Valuer General

Answer 5

MAIN POINT
Rating valuation. Whether Government valuations should consider contractual leases.

CASE
Involves an industrial property with a 10 year lease in place (8 years unexpired) to NZ Railway Corp for $5,000 above the agreed market rent for the property. This case considered whether the government should consider the lease when assessing the value.

HELD
The lease has a material effect on the value of the property and the Valuation of Land Act does not exclude the use of contractual leases, therefore the award was to favour of Duffy. The lease should be allowed for in the Government valuation.