In re Harnish [1984] CKHC 2; HC 74.1984 (17 August 1984)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(LAND DIVISION)

No. 74/84

IN THE MATTER
of Aremango Section 7A1A1, Ngatangiia

AND

IN THE MATTER of a Deed of Lease dated the 10th
February 1975 to R.W. HARNISH AND H.R. HARNISH

Mr Clarke for the Landowners;
Mr Tylor for Mr & Mrs Harnish.

Judgment delivered 17th August 1984.

This is an application by the Landowner of Aremango Section 7A1A1 Ngatangiia to determine the value of his land excluding improvements as at the 9th December 1980, to enable a rental to be assessed as at that date in accordance with the provisions of a lease between the Landowner and Mr & Mrs Harnish. This lease was entered into on the 10th February 1976 and provides in part that the original rental of $150 p.a. is for the first five years of the 60 year term of the Lease and that for each succeeding five years thereafter the rental would be subject to review. Now this review should have been done and the rental fixed as at the 9th December 1980. This means that because of the 3¹/₂ year delay in having this matter brought before the Court the owner is deprived of the use of the increase in rent, if any, over the last 3¹/₂ years; the Lessees have had the use of that increase, if any, that they haven't paid; and both parties may now suffer by the Court being required to estimate, calculate or guess at the valuation of this land 3¹/₂ years ago. It is difficult enough to calculate the value of land on Rarotonga as at the present time - it is even more difficult to relate present day values back 3¹/₂ years. However, if landowners and lessees wish to ignore the agreements in their leases originally entered into then they must accept the consequences that follow. However, there is a further review due on the 9th December 1985 and that will allow the parties by their consent, or the Court by its order, to assess the value as at that date.

Mr Clarke on behalf of the landowner described the land as one of the best sites in Muri, which area is acknowledged as the best in Rarotonga; that it has good swimming; is directly opposite a small motu which is both attractive and provides protection from the winds; and is not swampy in the middle as some sections in this area are affected. He claimed this section was superior in location to that leased by Mrs Rima Nicholas. Her section, he said, was 1100m² and was valued by the Court at $7,000 and a rental of $350 p.a. He also referred to other properties and their value and rentals, viz South Pacific Consultants Ltd; Mr Swoboda; and Little Polynesian Motels Ltd. Mr Clarke emphasised the commercial potential of this property for future Hotel or Motel development and spoke of a prospective sale of $22,000 and a present asking price of $30,000.

In conclusion he submitted that related to comparable values in the vicinity; and taking into account the large area involved and the obvious commercial value inherent in the property; that a proper value for this land is $20,000.

Mr Tylor, while acknowledging the sections position and attractiveness contended that it was long and narrow and further restricted by a long Right-of-way running the length of the section. Because of these factors any valuation should be calculated on the basis of four sections - one fronting the beach; one fronting the road; and two in the middle. Using that method he placed a value on each section as follows:

Beach	$7,000
Middle	$2,000
Middle	$2,000
Road	$4,000
Total	$15,000 - and a rental of $750.

In undertaking this value I believe that I should relate this property to like or comparable areas where values have been established then add or subtract advantages or disadvantages this property may have - and then relate that valuation back to the 9th December 1980.

Now the comparable properties that have been submitted in evidence are: -

1. Aremango Section 781A, South Pacific Consultants Ltd 1300m², related value either $4,000, rental $200 p.a. or $8,000, rental $400 p.a.

2. Aremango Section 781A - Mr Wade Swoboda 2786m², related value $6,000, rental $300 p.a.

3. Maurunga 12B1 Ngatangiia - Mrs Nicholas 1100m², fixed value $7,000, rental $350 p.a.

Now on a relationship of square metres to value ratio this would mean that:

(a) South Pacific Consultants Ltd	= $3 or $6 m2
(b) Swoboda	= $2 m2
(c) Nicholas	= $6 m2

The values of (a) and (b) were privately negotiated - whereas the value of (c) was determined by this Court after a lengthy hearing as to its appropriate value. Based on that decision of $6 m² the present value of the Harnish property is $28,320. I am satisfied from the submissions presented to me that this property is at least equal to and probably superior to the Nicholas property. Whether it is or not I do not believe is so important for the fixing of the 1980 value. I believe it would be important when the 1985 valuation has to be fixed.

Both Mr Tylor and Mr Clarke have over the years impressed on me the scarcity of large sections for commercial development in Rarotonga. The emphasis of their arguments has depended on who in the very many cases they have both appeared upon, they are actually representing. So it is in this case. Mr Clarke for the landowners emphasises the large area - a unique feature for hotel or motel development so he says. Mr Tylor for Mr & Mrs Harnish emphasises the long narrow section and its further limitation with the Right-of-way. I have been told to ignore the Bahai Hall on the property's road frontage.

It is I believe a property that is comparable with the Nicholas property; it is a large area and such properties are difficult to acquire in Rarotonga; it is limited to a minor degree only by the Right-of-way; and the shape of the section is not a limitation when considering hotel or motel development. I believe that such development requires area; frontage to the Muri lagoon; and road access. This most attractive site has all those qualities.

Compared with the values of the other properties; allowing for the added value of the large block; and making an allowance for the Right-of-way, I would value this property in 1984 at not less than $30,000. However I am required to value the section as at the 9th December 1980. I can only take a percentage and relate back to 1980. In saying this I reiterate here that if I use a factor that is unacceptable to either or both parties, then its their own fault in delaying this application for 3¹/₂ years.

I propose to discount the present value by 8% per annum back to 1980 which equates to a figure in excess of $22,000, but I will adopt that figure. I therefore fix the value of this land at $22,000 and the rental at $1,100 as at the 9th December 1980. The sum of $150 costs and the filing fee of $5 shall be payable to Mr Clarke.