FIXATION OF VALUES

Gisborne Herald, Volume LXVIII, Issue 20636, 16 August 1941, Page 9

FIXATION OF VALUES

ANNUAL RENTAL BASIS APPEAL COURT RULING (Per Press Association.) WELLINGTON, this day. The Court of Appeal to-day, in r, judgment of great importance affecting local bodies rating on an annual value, upheld Mr. Justice Kennedy in his finding that the method oi valuing leasehold interests adopted by the Dunedin City Corporation for the purpose of its rating on the annual value is incorrect. The Dunedin city valuer, in determining for rating purposes the rent at which the property would let from year to year, has adopted the procedure of taking the actual rental payable by a lessee and before deducting the statutory deductions adding thereto the rates which the lessee is liable to pay to the corporation. James William Young, lessee of the Excelsior Hotel, objected to this method, and Mr. Justice Kennedy upheld his objection in the Supreme Court, finding that there was no warrant in the legislation for taking the rent payable by a lessee and adding the rates thereto payable by him as occupier of the land and then returning such increased sum as the annual value of the premises. Question of Procedure Although upholding Mr. Justice Kennedy’s view that this method is incorrect, the Court of Appeal was not entirely in agreement with his view as to the method which should be adopted. As to this, the Court of Appeal held, firstly, that the valuer should not assess the rateable value on the basis of the rent annually being paid to the owner by the existing tenant, but, secondly, it was the duty of the valuer to take as his basis the gross annual rental, that is to say, the annual amount a hypothetical teant would be prepared to pay for the right to occupy the property on the basis of his being a tenant from year to year. The assessment must be made on the assumption that in respect of his occupation the tenant will not have to pay anyone anything other than this rent and will not have to pay rates, taxes, insurance premiums, or other outgoings. Having ascertained the hypothetical rent on this basis, the valuer must then make the statutory deductions required by statute. The court consisted of Sir Michael Myers, the Chief Justice, and Justices Blair, Callan and Northcroft. Mr. Justice Northcroft dissented from the other members on the question of the method to be adopted for fixing the annual value, his views agreeing with those of Mr. Justice Kennedy on this point.