In re of Aratere Part Section 79 [1984] CKHC 8; No. 106.1984 (17 August 1984)

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

No. 106/84

IN THE MATTER
of Aratere Part Section 79

AND

IN THE MATTER

of a Deed of Lease dated the 20th day of April 1964.

Mr Manarangi - for Solicitor General - the Lessee;
Mr Clarke - for the Landowners.

Judgment delivered:- 17^th August 1984

This is an application by the Solicitor General on behalf of the Crown as Lessee of Aratere part Section 79. The Lease is dated the 20th April 1964 and affects an area of 10575 m². The application is to fix the capital value of the land less any improvements in order to assess the new rental for the further term of the lease commencing on the 1st April 1984.

The land is at present occupied by the Government Printer and the Bond Store on the road frontage; and to the rear of the Section by Rarotonga Welding and Steel Ltd and the Government petrol depot.

To indicate the contour of the section Mr Clarke pointed out that behind those last mentioned operations Pyramid Joinery and Short Ltd were established.

This case was contested by Counsel on the basis of whether the established valuation of the adjoining property leased by the Latter Day Saints Church was relevant. That lease came before the Court for determination of the capital value of the land which was subsequently fixed at $50,000. However, evidence was called to establish that considerable filling to this section was necessary before any building work could commence. In the result the sum of $10,000 was allowed for this work and the rental calculated on the value of $40,000.

There is no disputing the fact however, as quite correctly stated by Mr Clarke, that the value of the Latter Day Saints section was fixed at $50,000. Unfortunately Mr Manarangi did not appreciate the significance of the allowance for upgrading the section. The present property and the adjoining section leased by the Latter Day Saints Church are comparable and relevant for valuation calculations.

The area of the Latter Day Saints section is 12,014 m². The area of this section is 10,567 m².

Based on an area comparison if the Latter Day Saints section @ 12,014 m² attracts a $50,000 value, then this section @ 10,567 m² would attract a value of $43,800.

However these are commercial or industrial properties or both and as such the frontage comparison is an important factor to consider.

The frontage of the Latter Day Saints section is 58 metres. The frontage of this section is 85 metres.

Based on a frontage comparison if the Latter Day Saints section at 58 metres attracts a $50,000 value, then this section at 85 metres would attract a value of $73,276.

Mr Clarke has submitted that a proper valuation is $60,000; Mr Manarangi now concedes to a valuation of $50,000. When considering the comparable valuations based both on frontage and area I must also relate to both, the variation of the other. By that I mean that in arriving at a comparative valuation based on area of $43,800 I must add a factor to take into account the much bigger frontage. Likewise in arriving at a comparative valuation based on frontage of $73,276 I must deduct a factor to take into account the overall lesser area.

The increase in frontage produces a factor of 1/3; the reduction in area produces a factor of 1/8. Relating these factors to:

(a) Area value of $43,800 + 1/3 frontage of $14,600 = $58,400;

(b) Frontage value of $73,276 - 1/8 factor of $9,160 = $64,116

The Latter Day Saints property was valued as at 1980. While there have been certain fluctuations over the last four years in property values this has not so affected commercial valuations that in this case I should add a further factor to adjust the valuation to the 1st April 1984.

Accordingly I fix the capital value of this section less the value of improvements at $60,000 with a consequential rental of $3,000 p.a. as from the 1st April 1984.

Mr Clarke asks for costs and in support of that application claimed the original offer by the Crown was $20,000; this was subsequently increased to $34,000; then to $40,000 the day before the hearing; and then to $50,000 on the day of the hearing. The original proposal was certainly unrealistic when related to the valuation fixed for the adjoining section. However all parties are entitled to inquire into the mysteries of valuation assessment; but if they do, then they will have to pay for the privilege. The landowners should not be penalised in this instance because the Crown wanted to check on the machinations involved in the valuation of this section. The Crown will pay Mr Clarke's costs of $175.00.

Since dictating this decision the Registrar has forwarded to me further submissions of Counsel. The Crown now suggests that the valuation should be $40,000. But my notes record Mr Manarangi conceding a figure of $50,000 at the hearing. I have already referred to this. While it is true the Latter Day Saints rental was assessed on $40,000 this was only after $10,000 of acknowledged improvements were deducted from the total valuation assessed at $50,000.

Now if the Crown in this instance had lead evidence that substantial filling etc was necessary on this section before any development had taken place, and that the value of this filling was say $20,000 then the same principle of the Latter Day Saints section could have been applied here, i.e. value of section $60,000 less value of improvements $20,000 = $40,000. Rental on $40,000 = $2,000. But there has been no such evidence; the principles applied in the Latter Day Saints section has no application on this section. It is not necessary therefore to review my decision. Mr Clarke has had to file a further submission in reply. There will be an additional award of $60 payable by the Crown to Mr Clarke.