SALE PRICE REDUCED

Otago Daily Times, Issue 26215, 27 July 1946, Page 3

SALE PRICE REDUCED

OWAKA FARM PROPERTY LAND SALES JUDGMENT A reduction in the sale price of a farm from £2129 to £ISBO has been made by the Otago Land Sales Committee—Messrs C. B. Barrowclough (chairman), D. J. Ross and E. Sincock—in a reserved judgment issued yesterday. The application was made by Edmund James Smith and Maurice Veinon Lousley, executors of the will of Beatrice Kitchen, deceased, and related to the sale to Thomas William Allen Latta, of a freehold property containing 157 acres 3 roods, situated about one mile from the township of Owaka. " The property was purchased in 1918 for £l9 an acre,” the judgment ’stated, ” but this is too far from the material date in 1942 to be of any real assistance to the committee. In 1918 the property was leased at a rental of £llO per annum plus rates and insurance. Mr Lousley, for the vendors, submitted that this rent was the main justification for the price at which the property was sold. The evidence, however, indicates that the tenant has completely neglected the property. Fences are down, buildings neglected, drains have not been cleared out, and nothing has been done to maintain the pastures. Noxious weeds are gaining ground. The tenant, Who is a dealer, is not living on the property, and has used it solely as a holding paddock. The committee is of the opinion that a rental that, is paid at the cost of neglecting all farm upkeep and proper farming methods is no satisfactory criterion of value.” The judgment, after dealing with the valuations submitted by the vendors and the Crown, expressed the view that the figure (£1300) given by Mr R. A. Fougere on behalf of the Crown was nearest to the true value. " Bearing In mind, however, the practical difficulty of assessing the precise value of the dilapidated buildings and improvements (indicated by the differences in this respect even between the two Crown witnesses), the committee is prepared to consent to sale at £ISBO (£lO per acre).” ~ ... At the hearing before the committee, Mr M. V. Lousley appeared for the vendors, Mr H. C. Alloo for the purchaser, and Mr J. R. Hampton for the Crown. QUESTION OF COMMISSION The committee, consisting of Messrs W. M Taylor (deputy chairman), D. J. Ross, and E.‘ Sincock, also delivered its reserved decision in a case In which Norman John McLeod sought to transfer a property to Douglas Moir Smith. Both parties and the Crown agreed that the value of this property was £IBOO. in lieu of the contract price of £2OOO. The sale agreement pro-, vided that the purchaser had appointed a certain firm as his agents to effectuate the sale and had agreed to pay it a commission of £6O. , , , ~ 44 The parties acted very frankly and disclosed the position regarding commission fully in their application,’ says the judgment. “It is quite legal and competent for a purchaser to pay commission to an agent In connection with the purchase of a property. The question is, what effect has such an arrangement upon the granting of consent under the Land Sales Act, or upon the fixing of the basic value. “ The duty of the committee is to fix the basic value as at December, 1942, and this basic value is the maximum permissible price, for the property. Such basic value must, we think, be the value at December, 1942, on the basis of the usual incidence of expenses as pertaining in 1942, e.g-, that the vendor pays commission and the purchaser pays stamp duty and transfer costs, etc. Although on rare occasion, or fpr special reasons, the purchaser might m the past pay commission, yet in the vast majority of cases the agent acted as agent for the vendor to sell the property and the vendor paid the commission. Owing to changed circumstances to-day Involving ease in selling and difficulty in buying, there is a tendency for this practice to be reversed, but, unless the committee fixes the basic value on the same original incidence of expenses and commission it is not in reality adhering to the 1942 basic value. We think, therefore, that we must take the commission into account and consent is granted to this sale at £IBOO, but subject to a condition, that, if the purchaser pays any commission, the pi ice must be reduced by a similar sum so that the total price, plus commission, is not to exceed £1800.” The judgment adds that this doe.- not mean that payment of commission by the nurchaser is illegal, or improper, but that it is a circumstance or collateral matter which must be taken into account in aetcrmining the basic value. “ Each case must be decided on its merits, but pending the decision on a similar point by the Land Sales Court, the view of the committee is that it cannot allow a general increase of values by permitting a vendor to adopt the simple expedient of requiring payment by the purchaser of a commission which was in the past normally payable by the vendor." At the hearing Mr Edmund J. Smith appeared for the vendor, Mr F. M. Hanan for the purchaser, and Mr J. R. Hampton for the Crown.