Rongotai Investments Ltd v Wellington City Council
[2022] NZHC 1668
•19 July 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-217
[2022] NZHC 1668
IN THE MATTER OF An appeal against the 2018 decision of the Land Valuation Tribunal at Wellington BETWEEN
RONGOTAI INVESTMENTS LTD and RONGOTAI ESTATES LTD
Appellant
AND
WELLINGTON CITY COUNCIL
First Respondent
2468 LTD, NZ CASH FLOW CONTROL LTD, WELLINGTON INTERNATIONAL AIRPORT LTD, ROGER BLAYLOCK AND YVONNE KEREKES, WILD BAY PROPERTIES LTD AND BUNNINGS LTD
(as joined party) Second Respondents
Hearing: 1 June to 10 June 2021 and 20 to 23 September 2021 Counsel:
G Allan, T Mijatov and M Robertson for Rongotai Parties H L Higbee for Wellington City Council
L McEntegart and E H Wiessing for Bunnings Ltd (appeal) K Sullivan and S Gazley for Other Lessees
S P Connolly and K Gaskell for the Valuer-General
Judgment:
19 July 2022
JUDGMENT OF CULL J and MEMBER VM WINIATA
[2018 Rating Valuation Appeal]
AThe appeal is allowed in part.
BThe Tribunal’s modal rate for the 2018 rating revision of $1,200/m2 is upheld.
RONGOTAI INVESTMENTS LTD and RONGOTAI ESTATES LTD v WELLINGTON CITY COUNCIL and
ORS [2022] NZHC 1668 [19 July 2022] [2018 Rating Valuation Appeal]
C The Tribunal’s land values of 20 of the subject properties under the 2018 rating revaluation are set aside.
DThe values of the subject properties for the 2018 rating year are set out at [89] of this judgment.
Table of Contents
Para No.
The Tribunal’s 2018 decision[9]
Parties’ positions[11]
Grounds of appeal [12]
The mathematical error[13]
Approach on appeal [14]
The valuation process[16]
Issue One: Did the Tribunal err in its selection of properties in its basket of comparable sales?[19]
6–8 Lyall Parade[24]
13 Kingsford Smith Street[26]
49–52 Hanson Street[29]
29 Cairns Street[32]
Our analysis of the comparables[34]
Issue Two: Did the Tribunal err in making their adjustments to the selected comparable sales? [38]
36 Tacy Street[44]
12–14 Arney Street[50]
139 Park Road[55]
72 Adelaide Road[59]
16-22 Constable Street[65]
13 Kingsford Smith Street[68]
Assessment of the modal rate[69]
Assessment of land values [72]
Conclusion[80]
Issue Three: Did the Tribunal err by fixing the roll value to the rating unit, not the individual certificates of title, thereby failing to reflect the sum of the value of each title? [81]
Conclusion[88]
Result[92]
Costs[96]
Leave[99]
[1] This judgment deals with the 2018 rating valuation appeal from the Land Valuation Tribunal (the Tribunal) and its 2018 decision (the 2018 decision).1 The Tribunal determined the 2018 rating year objections over 23 freehold properties in the Rongotai area of Wellington (the subject properties), overturning the 2018 Quotable Value New Zealand Ltd (QV) roll valuations. The Tribunal adopted the modal rate of
$1,200/m2. We agree with the Tribunal’s determination of the modal rate but do not
uphold the values of 20 of the subject properties, which we have reassessed.
[2] The parties to the 2018 rating year objections were Rongotai Investments Ltd and Rongotai Estates Ltd (collectively “Rongotai”), as owners of the subject properties; and Wellington International Airport Ltd (the Airport) in its own right and as assignee for 2468 Ltd’s (2468) objection, Bunnings Ltd (Bunnings), NZ Cash Flow Control Ltd (NZCFC), the trustees of the RB and YK Family Trust (the Family Trust) and Wild Bay Property Ltd as lessees of the subject properties. A map setting out the location of the subject property sites subject to the objections is attached as Annexure A to this decision.
[3] This 2018 appeal was heard as part of a consolidated appeal with the four appeals and cross-appeals against the Tribunal’s decisions in respect of the 2007,2 2012,3 20154 and 2018 rating year objections.
[4] The agreed background facts, with the details of the Rongotai area and the description of the assessment of rates with the applicable principles on rating valuations, have been fully described and set out in the 2007 appeal judgment, which was issued at the same time as this judgment.5 With all four appeals against the Tribunal’s decisions being heard together, this decision should be read alongside the 2007 decision as it concerns the same freehold interests, the same location in
1 Rongotai Investments Ltd v Wellington City Council [2020] NZLVT 009 [the 2018 decision].
2 NZ Cash Flow Control Ltd v Wellington City Council [2019] NZLVT 078 [the 2007 decision].
3 Rongotai Investments Ltd v Wellington City Council [2019] NZLVT 108 [the 2012 decision].
4 Rongotai Investments Ltd v Wellington City Council [2020] NZLVT 001 [the 2015 decision].
5 Rongotai Investments Ltd v Wellington City Council [2022] NZHC 1665 [2007 Rating Valuation Appeal].
Wellington, and largely the same lessees’ interests, with some differences in the leasehold parties’ involvement in the respective appeals.6
[5] The Tribunal heard the 2018 rating year objections on 10, 11 and 17–20 March 2020 including a site visit on 20 March. On 4 May 2020, the Tribunal issued its decision in respect of the 2018 rating year objections.7
[6] On 18 May 2020, Rongotai appealed the 2018 decision to the High Court and on 15 June 2020, Bunnings, the Airport, NZCFC and Wild Bay Property Ltd all cross- appealed the 2018 decision. At the hearing however, the Airport, the lessees and Bunnings confirmed that they withdrew their 2018 cross-appeal, confirming that they support the Tribunal’s 2018 roll revaluation. Mr Sullivan for the lessees told the Court that the lessees would not have appealed the modal value as determined in the Tribunal’s 2018 decision but for the wide-ranging appeal filed by Rongotai. The other lessees generally support the 2018 decision but point out relatively minor errors of the Tribunal.
[7] The Tribunal noted that Rongotai has consistently sought an increase in the valuation of the Rongotai area rating valuations and leaseholders, including NZCFC, the Family Trust, 2468 Ltd, the Airport and Bunnings have either supported the roll valuations or sought lower valuations than the QV amended roll value.8
[8] We set out in summary form the Tribunal’s revaluation and our revaluations in respect of the 2007, 2012, 2015 and 2018 rating objections.
(a)2007 revaluation: The Tribunal adopted the 2007 roll value,
discounted it by 5% for Glasgow leases, resulting in its assessment of $945/m2 for 102
6 The following witnesses gave evidence at the 2018 hearing: Ms Watson, expert valuer for QV; Mr Coleman, factual witness for Rongotai; Mr Aharoni, factual witness for Rongotai; Mr Horsley, expert valuer for Rongotai; Mr Butchers, expert valuer for Rongotai; Mr Veale, expert valuer for Bunnings and the Airport/2468; and Mr Blucher, expert valuer for NZCFC, RB and YK Family Trust and Wild Bay Property Ltd.
7 The 2018 decision, above n 1.
8 At [3].
Tirangi Road and 22 Kingsford Smith Street as a rateable modal value.9
We overturned the Tribunal’s 2007 decision. We assessed two rates, one for 102 Tirangi Road at
$1,100/m2 and one for 22 Kingsford Smith Street
at $1,000/m2.10
(b)2012 revaluation: The Tribunal confirmed the 2012 QV roll
valuation modal rate of $673/m2 for 17 subject properties, with one exception, which the Tribunal found was an anomaly.11
We overturned the Tribunal’s decision and adopted the modal rate of $780/m2.12
(c)2015 revaluation: The Tribunal adopted a modal land value rate of
$854/m2 as the roll modal rate for the 2015 revision date.13
We overturned the Tribunal’s 2015 decision and adopted the modal land value rate of $920/m2.14
The Tribunal’s 2018 decision
[9] For the 2018 rating revision, the Tribunal selected 29 Kingsford Smith Street as the modal site. The Tribunal selected six properties as the most appropriate comparable sales and adopted the land value modal rate of $1,200/m2. The Tribunal described this as a “robust and reuseable rate” for the modal site within the Rongotai area based on comparable sales.15 The Tribunal concluded that 13 Kingsford Smith Street was the best comparator, as it required minimal adjustment other than for
9 The 2007 decision, above n 2.
10 2007 Rating Valuation Appeal, above n 5.
11 5–11 Kingsford Smith Street, valued at $375,000.
12 Rongotai Investments Ltd v Wellington City Council [2022] NZHC 1666 [2012 Rating Valuation Appeal].
13 The 2015 decision, above n 4.
14 Rongotai Investments Ltd v Wellington City Council [2022] NZHC 1667 [2015 Rating Valuation Appeal].
15 The 2018 decision, above n 1, at [119].
time.16. It found that the adjusted modal rate of $1,200/m2 should displace the original roll values for 2018.17
[10] The Tribunal annexed a schedule marked “A” in relation to the individual objection values as at September 2018 and noted that several sites demonstrated the likelihood of residential developments with those on the waterfront demonstrating a particular premium. Those adjustments were included in the Tribunal’s schedule “A” and reflected the adjustments from the modal site for particular features of each objection site. This included further adjustments for waterfront and/or where residential activity is “most likely” on several relevant sites.
Parties’ positions
[11] The grounds of appeal raise the same issues as in 2015, namely, the application of the sales comparison method of valuation and the determination of the modal value. In summary, the lessees and Bunnings support the Tribunal’s decision, do not seek a reduction for the Glasgow leases, and strongly oppose the grounds of appeal. The errors alleged by Rongotai and the responses in opposition by the lessees and Bunnings are examined under the respective grounds of appeal.
Grounds of appeal
[12]There are three principal grounds of appeal for determination:
(a)Did the Tribunal err in its selection of properties in its basket of comparable sales?
(b)Did the Tribunal err in making their adjustments to the selected comparator sales?
(c)Did the Tribunal err by fixing the roll value to the rating unit, not the individual certificates of title, thereby failing to reflect the sum of the value of each title?
16 At [62].
17 At [119].
The mathematical error
[13] There was a further issue raised by Rongotai that in conducting their valuations the valuers had made a mathematical error in the calculation of their adjustments in 2012, 2015, 2018, by subtracting rather than dividing a percentage figure from the comparator sale figures. The Tribunal did not grant leave for the evidence on this issue to be adduced. We have addressed this issue on appeal by way of a separate hearing and judgment.18
Approach on appeal
[14] Under s 26(1) of the Land Valuation Proceedings Act 1948 (LVPA), Tribunal decisions may be appealed to the High Court. Such appeals are by way of rehearing.
Parties adopted the test in Austin, Nichols & Co Inc v Stichting Lodestar, that:19
[5] The appeal Court may or may not find the reasoning of the tribunal persuasive in its own terms. The tribunal may have had a particular advantage (such as technical expertise or the opportunity to assess the credibility of witnesses, where such assessment is important). In such a case the appeal Court may rightly hesitate to conclude that findings of fact or fact and degree are wrong. … An appeal Court makes no error in approach simply because it pays little explicit attention to the reasons of the Court or tribunal appealed from, if it comes to a different reasoned result. On general appeal, the appeal Court has the responsibility of arriving at its own assessment of the merits of the case.
[15] Thus, if the appellate court’s opinion is different from the conclusion of the Tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ.20
The valuation process
[16] In all the hearings for the four years of objections relating to the Rongotai area in Wellington, the valuers and the Tribunal have adopted the sales comparison method of valuation. This method involves selecting comparable sales to the properties subject to the rating valuation objections (the subject properties), with similar
18 Rongotai Investments Ltd v Land Valuation Tribunal [2022] NZHC 1664] [Mathematical calculation issue].
19 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16] (footnotes omitted).
20 At [16].
characteristics and within a relevant time period and adopting a modal rate of value per sq metre ($/m2). A modal rate is reached after adjusting the comparable sales for factors such as location, zoning, physical characteristics and time.
[17] As the issues on appeal focus on the choice and application of the comparable sales in the valuation methodology, we set out the steps of the sales comparison method the Tribunal and the valuers followed for determining the value of each of the subject properties:
(a)They first selected a modal site for the location of the subject properties, which was 29 Kingsford Smith Street.
(b)They selected six comparable sales as close as possible to the modal site.
(c)They made adjustments to each comparable sale, where it differed in comparison to the modal site, such as for location, zoning, physical characteristics and date of sale (time).
(d)They then reconciled the comparable adjusted rates, by weighting the best comparable, to determine and adopt a modal rate for the modal lot.
(e)They then applied the modal rate to each of the subject properties to determine their land values. The modal rate is normally adjusted to reflect any variation where a subject lot differs to the modal lot. For example, if a subject lot has a dual frontage, the modal rate would be adjusted upwards by an appropriate percentage to reflect that added feature of that particular subject lot.
[18]We now address the issues regarding its application by the Tribunal.
Issue One: Did the Tribunal err in its selection of properties in its basket of comparable sales?
[19] The Tribunal described the comparative sales in the experts’ combined basket of comparable sales. The basket included an initial sample of 16 comparable sales used by one or more of the expert valuers. The Tribunal noted that six properties were
in business one zone and three of those were criticised by the valuers on the basis that they were not appropriate or relevant.21
[20] Two of those properties were considered by three valuers.22 These were 13 Kingsford Smith Street and 55 Kaiwharawhara Road. The challenge to 13 Kingsford Smith Street was that it was not an arms-length market transaction. While noting this criticism,23 The Tribunal considered that this was the most comparable sale, being “in the heart of Rongotai” and zoned business one.24 55 Kaiwharawhara Road was a small site with topographical issues and a stream boundary. The third property was 170 Fraser Avenue, Johnsonville, which was regarded as remote and well outside the central area.
[21] Of the 16 properties that were in the basket of comparators used by one or more valuers, eight comparators were analysed by all experts. The eight sales are shown below alongside their date of sale, sale price, size and respective zonings:
Date of sale
Sale price
Size
Zone
36 Tacy St
5/2016
$3.55M
2983m2
Business 1
12–14 Arney St
6/2016
$2.3M
1793m2
Business 1
139 Park Rd
11/2016
$10M
9593m2
Business 1
72 Adelaide Rd
2/2017
$2.6M
1665m2
Centre zone
16–22 Constable St
5/2018
$2.2M
1392m2
Centre zone
2 Colombo St
9/2017
$1.2M
697m2
Centre zone
49–52 Hanson St
12/2018
$2M
659m2
Business 1
230A Rongotai Rd
11/2017
$870K
638m2
Business 2
[22] From the above eight sales and the challenged sales at [20], the Tribunal selected a sample of six sales it regarded as the most useful comparators to reach its modal rate of $1,200/m2. Those six sales are:25
21 At [20]–[21].
22 At [26].
23 At [21].
24 At [38].
25 At [61].
Business 1 zoned sites
13 Kingsford Smith Street
$1,111/m2
36 Tacy Street $1,383/m2 12–14 Arney Street $1,290/m2 139 Park Road $1,251/m2 Centre zoned sites
72 Adelaide Road
$991/m2
16–22 Constable Street $1,100/m2
[23] We deal with Rongotai’s challenges on the choice of comparable sales by focussing on the principal three properties under challenge.
6–8 Lyall Parade
[24] Rongotai challenge the Tribunal’s exclusion of 6–8 Lyall Parade. Rongotai submits that the property was of “striking” geographic proximity to the subject properties and sold 10 days before the relevant valuation date. It was considered a relevant comparable by both Mr Butchers and Mr Horsley. Rongotai also notes that the sale was described by the Tribunal as “a timely sale of a waterfront residential site very near Rongotai Estate”.26
[25] We do not consider this exclusion was an error. In our view the Lyall Parade property, while close geographically, is in an “outer residential zoning area” and is different to the modal site of 29 Kingsford Smith Street. It consists of a site opposite Lyall Bay, being well-developed into residential units. Although close in location to the subject lots, it is in a more developed area for residential and outside the business one zone. We accept Mr Blucher’s evidence that due to the restrictions on residential development on business one land, sales of residential land where this is a predominant use as of right do not provide an accurate comparison. We do not consider this property sale to be comparable.
13 Kingsford Smith Street
[26] Rongotai challenge the inclusion of 13 Kingsford Smith Street as an arms- length market transaction, as there was a family relationship connection between the
26 At [24].
vendors and purchaser. In addition, the purchaser had been the business owner of the company operating from the premises on 13 Kingsford Smith Street.
[27] After considering the evidence and parties’ submissions, we are satisfied that the family relationship was somewhat distant and we consider it is questionable whether such a relationship would have had an impact on the ultimate sale price. Further, the purchaser was a company comprising the business owner and other independent investors. We have taken into account that the sale price of $1.4 million was above an earlier registered valuer’s valuation on the property of $1.2 million. Even if it could be argued that the sale price was high because the occupant owner may have paid a premium to secure the continuity of his business at that premises, we cannot overlook that this was a market transaction and was negotiated following a valuation. We observe that it is not uncommon for properties to sell at, above, or below, a registered valuer’s assessment.
[28] Although 13 Kingsford Smith Street sold 25 months prior to the rating valuation date, we would include 13 Kingsford Smith Street as a sale comparator, as it is in the same location and has the same zoning as the subject properties. It is smaller than a typical sized modal lot but as with all the comparators in this instance, there is no one sale with an identical or very close land size. We also make note of the Tribunal’s observation that both Messrs Butchers and Horsley, who disregarded the sale in 2018, had included it in their 2015 evidence.27 We agree with the Tribunal’s conclusion that 13 Kingsford Smith Street was the best comparator and do not uphold Rongotai’s submission that it was given too much weight by the Tribunal.
49–52 Hanson Street
[29] Rongotai also submits the Tribunal erred by excluding 49–52 Hanson Street. Despite being considered by all of the valuers, the Tribunal considered the sale to be less preferable and “of limited usefulness given it is a small site that required adjustments of well over 50% and is also a post-date sale”.28 However, the Tribunal also noted that, taking into account adjustments for zoning and time, the adjusted rate
27 At [49].
28 At [39](b).
it reached for Hanson Street of $1,118/m2 was “consistent with the preferred comparators”.29
[30] We cannot uphold Rongotai’s submission. We would not include 49–52 Hanson Street as a comparator. We have considered Rongotai’s submission that the Tribunal placed weight on the fact that it was a post-dated sale, having been sold in December 2018, three to four months after the revision date. In our view, the factor of the date of its sale is of less concern than the significant difference in the site’s location and size.
[31] We agree with the Tribunal’s conclusion to exclude it as a comparable, but we would exclude it principally because it is significantly smaller than a typical modal lot size. It is 659m2. Significant adjustments would need to be made for zoning, its location, and its size.
29 Cairns Street
[32] Rongotai submitted in its written submissions that 29 Cairns Street was wrongly excluded because, as with 49–52 Hanson Street, the Tribunal considered it a “less preferable” sale. Only two valuers included Cairns Street in their assessment.30
[33] This submission was not pursued at the hearing but for completeness we accept the lessees’ submission that Cairns Street was correctly excluded. The purchaser of this property, Fourways Ltd, owned an adjoining site and specifically sought to purchase Cairns Street as an adjoining premises for the purpose of creating a large bus depot. Fourways Ltd then went on to purchase 230A Rongotai Road as part of this bus park (also excluded by the Tribunal as a comparator). As the lessees observed in their submissions, the valuers found it difficult to assess “the adjoining owner premium,” where the bus company had committed to purchasing adjoining properties for a bus depot and had to buy them at a premium. We would exclude this sale as it is situated in a cul-de-sac with limited traffic profile.
29 At [39].
30 Ms Watson and Mr Blucher.
Our analysis of the comparables
[34] Given the paucity of sales for 2018, we consider the six comparative sales selected by the Tribunal to be the most comparable in the circumstances. It is unfortunate that the comparative sales were not closer in dates to the rating revision date, which was September 2018. We note however, that date adjustments were made by the valuers and the Tribunal to factor in the respective dates of sale into their analyses.
[35] In this case, we agree with the inclusion of two of the properties of 36 Tacy Street and 12–14 Arney Street. Although they sold respectively in May and June 2016, they are strong comparables in regard to size and zoning.
[36] We also agree with the inclusion of 139 Park Road in the 2018 comparables, although it is significantly larger at 9,593m2 than the modal site. Again, if more relevant sales of sites comparable to the modal site were available, 139 Park Road may well be excluded. However, where there is a paucity of sales, large sites may still be relevant comparables. We note that we approved the inclusion of Rugby/Belfast/Tasman Street site of 10,244m2 in the 2015 basket of comparables, with appropriate adjustments for its size and zoning.
[37]We agree therefore with the Tribunal’s following six comparables:
1. 36 Tacy Street
2. 12–14 Arney Street
3. 72 Adelaide Road
4. 16–22 Constable Street
5. 13 Kingsford Smith Street
6. 139 Park Road
[38] Issue Two: Did the Tribunal err in making their adjustments to the selected comparable sales?
[38] Rongotai raise two main objections to the Tribunal’s adjustments. The first is that the Tribunal applied excessive negative adjustments to the comparable sales and over-penalised the subject properties for similar features. The second is that the Tribunal’s values are inconsistent with market evidence.
[39] Dealing with the second challenge first, that the Tribunal has failed to have regard to the historical market data of Wellington-wide valuation information in comparison to the Rongotai area, we answer this briefly. Despite the criticism that the Tribunal has misunderstood the sales comparison evidence, the agreed valuation method adopted requires a focus on comparable sales data. The data may include other locations if there are useful comparisons. Mr Horsley sought to persuade the Tribunal that the useful starting point to understand the dip in trends in Rongotai was the 2007– 2009 period. We consider that the Tribunal was correct to reject an historical sales review. In selecting its range of comparable sales in different zones and areas, such as Newtown within the valuation period and making adjustments for such comparisons, the Tribunal was undertaking the sales comparison method appropriately.
[40] We consider that if the Tribunal had benchmarked historical sales beyond the three year valuation period to look for market correction, that would have been an error and outside the agreed method of the 2018 valuation reassessment.
[41] We then turn to the first challenge, about excessive negative adjustments. Rongotai submit that the downward adjustments to two comparators, 36 Tacy Street and 12–14 Arney Street, were unjustified as they fail to reflect the two properties as good comparable sales. The Tribunal applied a net 15% downward adjustment for 36 Tacy Street and a net 25% downward adjustment for Arney Street.
[42] Further, Rongotai submit that the Tribunal erroneously over-penalised the subject properties for similar features. Rongotai refer to the combined location and zoning adjustments made in relation to 72 Adelaide Road and 16–22 Constable Road.31 Rongotai note that this is the approach adopted by Mr Veale, Mr Blucher and Ms Watson. However, Rongotai contend this approach “over penalises the value of the modal property because embedded within the location factor are considerations such as ease of development and highest and best use”.
31 The Tribunal made a -22.5% adjustment for location and a further -10% adjustment for zoning for 72 Adelaide Road. In relation to 16–22 Constable Road, the Tribunal made a -15% adjustment for location and a -10% adjustment for zoning.
[43] We have examined each of the comparable sales and the adjusted rates adopted by the Tribunal compared with the valuers’ adjusted rate
s. We make the following comments on that comparison.
36 Tacy Street
[44] The Tribunal made a downward adjustment of 15%, comprising -10% for location, - 5% for shape, 5% for size and -5% for views. This resulted in an adjusted rate of $1,383/m2 after making the agreed further time allowance of 32.4%. All valuers were agreed that a 5% adjustment for size was necessary. All valuers also adjusted for shape by a range of - 5% to -7.5%. The Tribunal’s adjustments for these factors were therefore in line with the expert valuers’ evidence.
[45] The key differences arise in terms of the treatment of location and views. Ms Watson, Mr Veale and Mr Blucher made adjustments for location ranging from -10% to -12.5%. Messrs Horsley and Butchers did not. The Tribunal clearly preferred the evidence of the former. It appears that when Rongotai criticises the Tribunal’s adjustments for Tacy Street, they are criticising it in relation to the location adjustment.
[46] We consider the location adjustment of -10% made by the Tribunal was reasonable and not excessive. We note that Tacy Street is reasonably close to the subject properties. However, Tacy Street is in a superior location. It is within 200m of a Pak n’ Save supermarket and in close proximity to the Kilbirnie shops. There is also residential development on the opposite side of Tacy Street. A -10% location adjustment is also consistent with our treatment of Tacy Street in our 2015 appeal judgment.
[47] Two valuers adjusted Tacy Street for views ranging from -2.5% and -5%.32 In our 2012 decision we questioned the appropriateness of an adjustment for views:33
Purchasers of commercial/ industrial land do not generally consider ‘views’ to be an important factor, unlike purchasers of residential land.
[48]We therefore do not agree with the Tribunal’s -5% adjustment for views.
32 Ms Watson and Mr Blucher.
33 2012 Rating Valuation Appeal, above n 12, at [79].
[49]Our adjusted rate for 36 Tacy Street is therefore the adjusted sale price rate of
$1,229/m2, as agreed by the valuers, with a net 10% downward adjustment (-10% location, +5% size, -5% shape), and the agreed time adjustment of 32.4%, resulting in a rate of $1,464/m2. This is $80 more than the Tribunal’s rate.
12–14 Arney Street
[50] The Tribunal noted that while the valuers did not agree as to the adjusted sale price rate, there were only minor differences, the majority of valuers’ rates were within
$3 of $1,300/m2.34 It took $1,300/m2 as its starting point. The Tribunal then made a net -25% adjustment for Arney Street, for location, dual frontage, and size, and after making a further time allowance reached an adjusted rate of $1,290/m2.
[51] The valuers agreed a -2.5% adjustment for size was appropriate. Four valuers agreed that a -10% adjustment for dual frontage was appropriate, with Mr Horsley considering no discount was necessary. Although not explicit in the Tribunal’s decision, we infer that the Tribunal adopted these adjustments, and we accept this was reasonable. We consider that an adjustment for dual frontage is necessary.
[52] We now turn to the location adjustment. Three valuers made location adjustments, ranging from -10% to -15%. Mr Blucher describes Arney Street as a “preferred location with good access to Newtown shopping area, supermarkets and public transport”, with a mixed retail/industry surrounding area and an established residential area close by. On the other hand, Messrs Horsley and Butchers made no location adjustment, with Mr Horsley considering in his brief of evidence that Arney Street was an inferior commercial premises to the subject properties’ location. He refers to evidence of residential townhouse sales near to Arney Street (on Princess Street) and compares them with sales in Lyall Bay, to say there is not much difference.
[53] We prefer the assessments of Ms Watson, Mr Blucher and Mr Veale and consider that Arney Street is in a superior location to the subject properties. Although not explicit, it appears the Tribunal made a -12.5% adjustment for location. This was within the range of the valuers who made adjustments for this factor and is reasonable.
34 Mr Horsley the exception, with an adjusted sale price of $1,319/m2.
[54]We confirm the Tribunal’s adjusted rate for Arney Street of $1,290/m2.
139 Park Road
[55] All of the valuers analysed this sale and agreed on an adjusted sale price rate at $990/m2. This was adopted by The Tribunal applied the valuers agreed adjustment of 15% for size. The Tribunal then adopted a -7.5% adjustment for corner influence and a 7.5% adjustment for location. The Tribunal also applied a 15% adjustment for the adjoining owner premium. After adjusting for location, frontage, size and adjoining owners’ premium, the Tribunal rate was unchanged at $990/m2. After making the agreed time allowance of 26% to $990/m2, the Tribunal’s adjusted rate for Park Road was $1,251/m2.
[56] Rongotai challenges the 15% downwards adjustment for the adjoining owner’s premium. We do not consider that is excessive. All valuers considered an adjustment for the adjoining owner premium was necessary, ranging between 10–20%. The 15% adjustment is directly in the middle of the range indicated by the valuers’ and was the adjustment Mr Veale made.
[57] For completeness, we also consider the Tribunal’s adjustments for corner influence and location were appropriate. All valuers considered adjustments necessary for these two factors. For location, the valuers made adjustments ranging from 5-10%. For corner influence, the Tribunal made adjustments ranging from -5% to -7.5%. The adjustments made by the Tribunal for these factors were reasonable.
[58] We consider the Tribunal’s adjusted rate of $1,251/m2 for 139 Park Road is appropriate.
72 Adelaide Road
[59] The Tribunal considered that the main differences between the valuers were the appropriate adjustments for location and zoning. The valuers made location adjustments ranging from -10% to -22.5%. Three valuers made a -10% adjustment for zoning, while Mr Horsley made no zoning adjustment and Mr Butchers made a -3% adjustment for zoning. The Tribunal considered that a 10% adjustment between centre
zone and business one zoning was appropriate to reflect the benefits associated with centre zoning.35 The Tribunal appear to accept Ms Watson’s evidence, adopting a - 22.5% adjustment for location. While the Tribunal make no mention of other adjustments, it is clear that allowance was also made for corner influence (-15%) and size (-2.5%, as agreed by all valuers), as Ms Watson did, with the Tribunal adopting her final adjusted rate of $991/m2, after accounting for the agreed time allowance.
[60] Rongotai’s main contention is that the large adjustments made for both location and zoning is inappropriate. This submission was also raised in relation to the Tribunal’s 2015 decision and addressed in our 2015 appeal judgment:36
Location and zoning are distinct adjustments. The “location” of a property refers to characteristics such as physical proximity to other properties, attractions or repulsions, infrastructure, and services (or lack thereof). “Zoning” on the other hand refers to the uses or restrictions that apply to a property. It is possible for two properties to be in the same location but have different zoning, and similarly, two properties may be in the same zone, but different locations. Given the distinct considerations relevant to location and zoning assessments, it is appropriate for adjustments to be made for both.
[61] In its 2018 decision, the Tribunal describe that the 10% adjustment between business one and centre zoned sites for zoning is specifically to account for the fact:37
the Centre zones allow residential development as of right and where consent has been granted for residential development in a Business 1 zone, evidence presented confirms and demonstrates a higher density has been generally achieved on the Centre zoned land.
[62] Accordingly, we do not think it is inappropriate for the Tribunal to have made adjustments for both location and zoning. These are separate considerations and providing discounts for both was in line with three of the valuers’ evidence. We do not accept that, in doing so, the Tribunal are over penalising the value of the modal property.
[63] In its 2018 decision, the Tribunal describe the reasoning behind its -10% adjustment between business one and centre zoned sites as accounting for the fact “the
35 The 2018 decision, above n 1, at [36].
36 2015 Rating Valuation Appeal, above n 14, at [64].
37 The 2018 decision, above n 1, at [36].
centre zones allow residential development as of right” whereas consent has to be granted for residential development in business one. We confirm a 10% adjustment for zoning is reasonable for the reasons advanced by the Tribunal.
[64] We accept that the Tribunal’s adjusted rate of $991/m2 for 72 Adelaide Road is appropriate.
16-22 Constable Street
[65] All of the valuers analysed this sale, and an adjusted sale price rate was agreed at $1,620/m2. The Tribunal applied the experts’ agreed adjustments for size and dual frontage (being -5% and -10% respectively). The Tribunal adopted a -10% adjustment for zoning and a -15% adjustment for location. After making the agreed time adjustment, the Tribunal noted reached an adjusted rate of $1,100.
[66] As above, Rongotai contested the appropriateness of making a large location and zoning adjustment for Constable Street. For the same reasons set out above, we reject this submission. The Tribunal’s zoning adjustment to account for the properties centre zoning is consistent and appropriate. Three valuers made a -15% adjustment for location. Mr Veale noted the site was located just outside of Newtown’s commercial centre, with Mr Blucher describing it as a “more preferred location close to Newtown’s shopping centre, supermarket, hospital and public transportation”. We accept their evidence and confirm these adjustments.
[67] We consider the Tribunal’s adjusted rate for Constable Street is appropriate. We note that the rate the Tribunal reached for this comparable is the same as was reached by three of the valuers, Ms Watson, Mr Blucher and Mr Veale. The Tribunal did recognise that it was applying a large net adjustment, being -40%, to the property, but recorded “this is a useful sale given the smaller time adjustment [13.2%] and our observation that the locality is currently a mix of commercial and business activity”.38 As we have held in our 2015 appeal judgments, where there is a paucity of sales, it is appropriate to consider sales that require greater adjustments.39
38 At [38].
39 2015 Rating Valuation Appeal, above n 14, at [62].
13 Kingsford Smith Street
[68] As mentioned, only three valuers considered Kingsford Smith Street a relevant property. The Tribunal considered this the most comparable sale, in the heart of Rongotai.40 The Tribunal agreed with Mr Veale’s analysis of the sale, adjusting by
- 10% for corner influence, +5% for shape and -5% for size, and with the agreed time adjustment, reaching a rate of $1,111/m2. We accept this rate to be appropriate.
Assessment of the modal rate
[69] We consider the Tribunal’s adjusted rates in relation to the comparable sales are correct, with the exception of 36 Tacy Street. We do not consider the Tribunal should have made an adjustment for views. This is consistent with our approach to views in our 2012 and 2015 appeal judgment.
[70] We set out in the table below the Tribunal’s rates; our rates (correcting 36 Tacy Street) and the valuers’ rates side by side to show the range of each in relation to the six comparables:
Property Tribunals Rates Land Valuation Court Rates Mean of Valuers Rates (i) 13 Kingsford Smith
St
$1,111/m2 $1,111/m2 $1,106/m2 (ii) 36 Tacy St $1,383/m2 $1,464/m2 $1,472/m2 (iii) 12 – 14 Arney St $1,290/m2 $1,290/m2 $1,397/m2 (iv) 139 Park Rd $1,251/m2 $1,251/m2 $1,257/m2 (v) 72 Adelaide Rd $991/m2 $991/m2 $1,177/m2 (vi) 16 – 22 Constable St $1,100/m2 $1,100/m2 $1,227/m2 Average $1188/m2 $1201/m2 $1273/m2 Median $1181/m2 $1181/m2 $1242/m2
[71] In correcting the Tacy Street adjusted rate, the average rate we reach for the comparable properties is almost identical to the modal rate of $1200/m2 reached by the Tribunal. We therefore uphold the Tribunal’s modal rate of $1,200/m2 for the 2018 revaluation.
40 At [38].
Assessment of land values
[72] The final step in the valuation process concerns the application of the modal rate to the subject properties. This also involves making adjustments but, in this step, the adjustment is to the modal rate to reflect the differences in the subject properties.
[73] The Tribunal recorded that the valuers reached agreement at the Valuer’s Conference on what adjustments should be applied when comparing a site with the modal site.41 The summarised adjustments as agreed by the valuers are:
+5% for sites fronting Tirangi Road
+10% for corner influence
-5% for shape allowance for 13 Kingsford Smith Street
+10% for double frontage
+2.5% to 10% for residential potential on the sites 20-24 Kingsford Smith Street
-5% to -15% size adjustment depending on area
[74] To cross-check the Tribunal’s application of the modal rate, we have undertaken our own analysis by applying the valuer’s agreed adjustment rates to the subject properties. The Tribunal grouped the properties into their respective rating units, as a number of contiguous properties are held by the same entity for the same purpose. The 23 properties are the rating units (comprising 33 certificates of title).
[75] We have undertaken our assessment by following the sales comparison method steps applying the modal rate of $1,200/m2.42 First, we calculate the unadjusted land value for each subject property, which is the product of the land area multiplied by the modal rate of $1,200/m2.
For example: 114–118 Tirangi Road: land area (1932m2) x modal rate ($1,200/m2) = unadjusted land value ($2,320,000) rounded.
[76] Second, we calculate the adjusted modal rate for each subject property, after applying the agreed adjustments at [73] above, to the modal rate, where required. We then apply the adjusted rate to the subject property land area, to arrive at the adjusted land value.
41 The 2018 decision, above n 1, at [86].
42 At [14] above.
For example: 114–118 Tirangi Road: land area (1932m2) x adjusted modal rate ($1,260/m2) = adjusted land value ($2,430,000) rounded.
[77] Thirteen of the 23 rating units required the modal rate to be adjusted for differences in those properties. The adjustments (if any) we have made to the 23 properties is in accordance with the adjustments as agreed by the valuers:
(a)Three properties front Tirangi Road and are corner sites:
(i)94 Tirangi Road
(ii)102–106 Tirangi Road
(iii)132–136 Tirangi Road
The modal rate is therefore adjusted upwards by 15% (5% for Tirangi Road exposure and 10% for corner influence). The adjusted modal rate for these properties is $1,380/m2.
(b)Two properties front Tirangi Road and have double frontage:
(i)108–112 Tirangi Road
25–27 Kingsford Smith Street
(ii)126–130 Tirangi Road
35–39 Kingsford Smith Street 41–45 Kingsford Smith Street
The modal rate is therefore adjusted upwards by 15% (5% for Tirangi Road exposure and 10% for double frontage). The adjusted modal rate for these properties is $1,380/m2.
(c)Two properties front Tirangi Road:
(i)114–118 Tirangi Road
(ii)120–124 Tirangi Road
The modal rate is adjusted 5% upwards to account for Tirangi Road exposure. The adjusted modal rate is $1,260/m2 for these properties.
(d)47–51 Kingsford Smith Street is a corner site. The modal rate is adjusted upwards by 10% for the corner influence. The adjusted modal rate for this property is $1,320/m2.
(e)13 Kingsford Smith Street is a corner site and is of irregular shape. The modal rate is therefore adjusted upwards by 10% for corner influence and downwards 5% for shape ( a total adjustment of 5% upwards). The adjusted modal rate for this property is $1,260/m2.
(f)59 Kingsford Smith Street fronts Lyall Parade. We have allowed an upward 20% adjustment for this lot as Lyall Parade is considered a superior location for exposure to Tirangi Road. We adjust the modal rate by 20% upwards for the exposure to Lyall Parade. The adjusted modal rate for this property is $1,440/m2.
(g)There are two sites much smaller than the modal site:
(i)5–11 Kingsford Smith Street (400m2); and
(ii)57 Kingsford Smith Street (788m2).
In 2012, the Tribunal considered 5–11 Kingsford Smith Street an anomaly, for its size.43 We affirmed this in our 2012 appeal judgment and used 230A Rongotai Road as a relevant comparator.44 We consider the use of the 2017 sale of 230A Rongotai Road, with adjustments, should set the starting or unadjusted modal rate for 5–11 Kingsford Smith Street and 57 Kingsford Smith Street for the 2018 revaluation.
230A Rongotai Road resold in November 2017 for $870,000 which is adjusted to $902,000 after allowing for deferred settlement and demolition costs. The effective land area (excluding the right of way access) is 516m2, being the land area we used in 2012. The unadjusted land value rate of 230A Rongotai Road is therefore $1,748/m2.
43 The 2012 decision, above n 3, at [57].
44 2012 Rating Valuation Appeal, above n 12, at [95]–[99].
We then apply the same adjustments made in 2012 for its inferior location, inferior zoning and for being a rear lot, being a total adjustment of 30% upwards, resulting in a rate of $2,273/m2. We note 230A Rongotai Road was an adjoining owner sale in 2017 and as such we make a deduction of 20% for that factor (so $2,273/m2 less 20% =
$1,818/m2). We also make a time adjustment of 12% as the sale occurred ten months prior to the September 2018 revaluation date. Therefore, $1,818/m2 plus 12% = $2,036/m2. We round this to
$2,000/m2.
We take 2000/m2 as the start or unadjusted modal rate applied to 5-11 Kingsford Smith Street and 57 Kingsford Smith Street. These two sites are adjusted by 15% downward for their small size in comparison to the modal site. This downward size adjustment is within the range of adjustments as agreed by the valuers in 2018 and is consistent with and close to the 17.5% adjustment made by all the valuers to 230A Rongotai Road when comparing it to a modal sized lot. The adjusted modal rate for 5–11 Kingsford Smith Street and 57 Kingsford Smith Street is therefore $1700/m2.
(h)The Tribunal identified three of the subject properties as having residential potential and a 2.5% to 10% upward adjustment was made. These properties are:
(i)20 Kingsford Smith Street;
(ii)22 Kingsford Smith Street; and
(iii)24 Kingsford Smith Street
We uphold the lessees’ submission that an adjustment should not be made for residential potential because all of the 23 properties subject to this revision may be regarded as having residential potential, not just the three at 20, 22 and 24 Kingsford Smith Street. However, the lessees submit that the Tribunal erred in omitting to make a 10% downward adjustment for 22 Kingsford Smith Street.
Ms Watson discounted 22 Kingsford Smith Street by 5% for zoning, because of the design restrictions over residential development which prevented the construction of decks, terraces, balconies, skylights or opening windows that face the lots currently occupied by Bunnings to the south side of 22 Kingsford Smith Street. It is highly improbable any residential development would incorporate the outdoor living areas to that side. They would be on the northern side of the development facing the strip of land owned by the Wellington City Council (Lot 3 DP 21360) and 20 Kingsford Smith Street (Lot 4 DP 21360) owned by Rongotai Investments Ltd. We agree with the Tribunal when it did not apply a -5% adjustment for building restrictions on the land for 22 Kingsford Smith Street.
Further, the shape of 22 Kingsford Smith Street is not so inferior to justify a 5% negative adjustment. 22 Kingsford Smith Street has legal road frontage of approximately 13m which is 50% of the legal frontage or the similar-sized neighbouring lot at 24 Kingsford Smith Street. However, as 22 Kingsford Smith Street is positioned on the bend in Kingsford Smith Street it enjoys unrestricted visual frontage of approximately 22m or 82% of the rectangular shaped neighbouring lot at 24 Kingsford Smith Street. Access is not impeded with a legal frontage of 13m, and site exposure is also unencumbered. It could be viewed as having somewhat of a corner influence. We therefore reject the lessees’ submission and agree with the Tribunal’s decision to make no adjustment for either the shape or building restrictions in the zone for the neighbouring lot at 22 Kingsford Smith Street.
(i)68–70 Kingsford Smith Street 72–74 Kingsford Smith Street
This property fronts Lyall Parade. We have allowed an upward adjustment of 20% for Lyall Bay exposure (as Lyall Parade is considered a superior location for exposure compared to Tirangi Road).
Of all the 23 properties, we consider this property would attract the most interest for residential development by virtue of its size and location. An upwards adjustment for residential potential of between 2.5% to 10% was agreed. We have allowed a 10% adjustment for that feature for this property.
The modal rate for this property is therefore adjusted upwards by 30% (20% for location/frontage to Lyall Parade and 10% for the residential potential). The adjusted modal rate for this property is $1,560/m2.
[78] The table below shows the land values of the subject properties we have determined, applying the modal rate and adjusting it in respect of each property.
Property Land Area m2 Modal Rate
$/m2
Unadjusted Land Value Valuation Court’s Adjusted Modal Rate
$/m2
Valuation Court’s Adjusted Land Value 1 94 Tirangi Rd 2000 $ 1,200 $ 2,400,000 $ 1,380 $ 2,760,000 2 102–106 Tirangi Rd 1881 $ 1,200 $ 2,260,000 $ 1,380 $ 2,600,000 3 108–112 Tirangi Rd 25–27 Kingsford Smith St 3864
$ 1,200
$ 4,640,000
$ 1,380
$ 5,330,000
4 114–118 Tirangi Rd 1932 $ 1,200 $ 2,320,000 $ 1,260 $ 2,430,000 5 120–124 Tirangi Rd 1932 $ 1,200 $ 2,320,000 $ 1,260 $ 2,430,000 6 126–130 Tirangi Rd 35–39 Kingsford Smith St 41–45 Kingsford Smith St 5796
$ 1,200
$ 6,960,000
$ 1,380
$ 8,000,000
7 132–136 Tirangi Rd 1909 $ 1,200 $ 2,290,000 $ 1,380 $ 2,630,000 8 5–11 Kingsford Smith St 400 $ 2,000 $ 800,000 $ 1,700 $ 680,000 9 13 Kingsford Smith St 1489 $ 1,200 $ 1,790,000 $ 1,260 $ 1,880,000 10 8 Kingsford Smith St 2023 $ 1,200 $ 2,430,000 $ 1,200 $ 2,430,000 11 14–18 Kingsford Smith St 2009 $ 1,200 $ 2,410,000 $ 1,200 $ 2,410,000 12 20 Kingsford Smith St 3970 $ 1,200 $ 4,760,000 $ 1,200 $ 4,760,000 13 22 Kingsford Smith St 2098 $ 1,200 $ 2,520,000 $ 1,200 $ 2,520,000 14 24 Kingsford Smith St 2169 $ 1,200 $ 2,600,000 $ 1,200 $ 2,600,000
15 28–30 Kingsford Smith St 32–34 Kingsford Smith St 4338
$ 1,200
$ 5,210,000
$ 1,200
$ 5,210,000
16 29–33 Kingsford Smith St 1932 $ 1,200 $ 2,320,000 $ 1,200 $ 2,320,000 17 36–54 Kingsford Smith St 10285 $ 1,200 $ 12,340,000 $ 1,200 $ 12,340,000 18 47–51 Kingsford Smith St 1909 $ 1,200 $ 2,290,000 $ 1,320 $ 2,520,000 19 57 Kingsford Smith St 788 $ 2,000 $ 1,580,000 $ 1,700 $ 1,340,000 20 59 Kingsford Smith St 1278 $ 1,200 $ 1,530,000 $ 1,440 $ 1,840,000 21 56–58 Kingsford Smith St 2223 $ 1,200 $ 2,670,000 $ 1,200 $ 2,670,000 22 60–62 Kingsford Smith St 64 –66 Kingsford Smith St 4446
$ 1,200
$ 5,340,000
$ 1,200
$ 5,340,000
23 68–70 Kingsford Smith St 72–74 Kingsford Smith St 5003
$ 1,200
$ 6,000,000
$ 1,560
$ 7,800,000
Total Land Value of properties (Unadjusted Modal Rate)
$ 79,780,000
Total Land Value of properties (Adjusted Modal Rate) $ 84,840,000
[79] We have compared our assessment of values with the Tribunal’s values in the table below, which shows:
a) The Tribunal’s concluded land values for each of the subject lots as shown in the first column of Annexure A of the 2018 decision.
b) The adjusted land values reached by this Court in the second column.
Property Tribunal Land Values Valuation Court Adjusted Land Values 1 94 Tirangi Road $ 2,760,000 $ 2,760,000 2 102 - 106 Tirangi Road $ 2,595,000 $ 2,600,000 3 108 – 112 Tirangi Road
25 – 27 Kingsford Smith Street$ 4,700,000
$ 5,330,000
4 114 - 118 Tirangi Road $ 2,435,000 $ 2,430,000 5 120 - 124 Tirangi Road $ 2,435,000 $ 2,430,000 6 126 - 130 Tirangi Road
35 - 39 Kingsford Smith Street
41 - 45 Kingsford Smith Street
$ 7,000,000
$ 8,000,000
7 132 - 136 Tirangi Road $ 2,635,000 $ 2,630,000
8 5 - 11 Kingsford Smith Street $ 585,000 $680,000 9 13 Kingsford Smith Street $ 1,920,000 $ 1,880,000 10 8 Kingsford Smith Street $ 2,370,000 $ 2,430,000 11 14 -18 Kingsford Smith Street $ 2,400,000 $ 2,410,000 12 20 Kingsford Smith Street $ 5,000,000 $ 4,760,000 13 22 Kingsford Smith Street $ 2,644,000 $ 2,520,000 14 24 Kingsford Smith Street $ 2,733,000 $ 2,600,000 15 28 - 30 Kingsford Smith Street
32 - 34 Kingsford Smith Street$ 4,820,000
$ 5,210,000
16 29 - 33 Kingsford Smith Street $ 2,320,000 $ 2,320,000 17 36 - 54 Kingsford Smith Street $ 11,500,000 $ 12,340,000 18 47 - 51 Kingsford Smith Street $ 2,520,000 $ 2,520,000 19 57 Kingsford Smith Street $ 1,100,000 $ 1,340,000 20 59 Kingsford Smith Street $ 2,200,000 $ 1,840,000 21 56 - 58 Kingsford Smith Street $ 2,600,000 $ 2,670,000 22 60 - 62 Kingsford Smith Street
64 - 66 Kingsford Smith Street$ 5,500,000
$ 5,340,000
23 68 - 70 Kingsford Smith Street
72 - 74 Kingsford Smith Street$ 8,500,000
$ 7,800,000
Conclusion
[80] We were unable to discern how the Tribunal arrived at its land value for each rating unit as depicted in Annexure A of its 2018 decision, as there is no shown detail on the step between applying the modal rate to each subject lot and then adjusting the modal rate in accordance with the agreed valuers’ adjustments to the subject properties. We have applied the agreed valuers’ adjustments to the properties as shown above to derive the 2018 land values as at in [89]. The detail is appended in a table to this judgment as Annexure B.
Issue Three: Did the Tribunal err by fixing the roll value to the rating unit, not the individual certificates of title, thereby failing to reflect the sum of the value of each title?
[81] This third issue is the same issue raised in the Tribunal’s 2015 decision, where the Tribunal considered the purpose of the rating review is not to rate individual certificates of title but rating units. The rating units in question are the Bunnings three single rating units. The units are 24 Kingsford Smith Street with one title, 28-34 Kingsford Smith Street and 36-54 Kingsford Smith Street, both of which have multiple or composite certificates of title over the respective sites.
[82] The Tribunal recorded in its 2015 decision that the Bunnings’ properties were rated as three rating units, rather than as individual titles, because they were owned by the same person or persons, were used jointly as a single unit, and the sites were contiguous. However, the Tribunal made a downward adjustment to account or the size of the rating units.
[83] In its 2018 decision, the Tribunal referred to its conclusion in its 2015 decision, that “the rating units for the purposes that were established and accepted for Rongotai’s Estate were also the units for the rating valuation purposes.”45 The Tribunal noted that “most valuers adopted this approach in their evidence” and the reason for the difference in the 2018 values especially in respect of the Bunnings’ sites, is that “this approach was not universally accepted by all experts.” The Tribunal said it could add little to its previous decision on this point. No adjustment was made for the size of the rating units.
[84] In our 2015 appeal judgment, we upheld the Tribunal’s approach of valuing the rating unit but did not uphold the Tribunal’s decision that the composite sites should be valued as one block of land with adjustments, as opposed to the values of the sum of the individual titles.46 We specifically noted the approach of QV to rating units with multiple titles and building over the boundaries in our 2015 judgment. We record the QV position as follows:47
45 The 2018 decision, above n 1, at [91].
46 2015 Appeal Judgment, above n 14, at [91]–[114].
47 At [79].
The rating units with multiple Titles and building over the boundaries – QV have undertaken the assessment of land value by valuing each Record of Title individually and adopting a summation approach to arrive at a total land value for the single rating unit. Individual titles remain a saleable entity independent of the rating unit.
[85] As noted in our 2015 decision, it made little difference to the final land values of each of the Bunnings’ sites, as the total value was a summation of the values of the individual certificates of title. We found, however, that the Tribunal erred by making a downward adjustment in respect of the land values because of the size of the rating unit sites. We note here that in the Tribunal’s 2018 decision, the absence of an adjustment for size is not explained by the Tribunal and nor is there any adjustment noted, as the Tribunal did in its 2015 decision.
[86] It is unclear what other purposes the rating units of Rongotai served. The Tribunal recorded that the Council had accepted the three sites as rating units. The actual position was to whether the units have been entered on the district valuation roll has not been verified in the evidence before the Tribunal or this Court. Unlike its 2015 decision, however, the Tribunal has not made any downward adjustment to the land value for the Bunnings’ sites for the 2018 revaluation assessment.
[87] The modal rate which we have assessed, therefore, should apply to each of the properties contained within the rating units, including those titles comprising the Bunnings’ site. The land value for those composite sites is the summation of the values of each title. This accords with the approach of the QV and other valuers and their comparisons with the modal site of 29 Kingsford Smith Street. The valuers did not select large block sites as their modal site or sales of large blocks of land as their comparators.
Conclusion
[88] We conclude that the Tribunal did not err in finding the applicable modal rate for the 2018 rating valuation reassessment was $1,200/m2.
[89] We find the Tribunal erred in applying the agreed adjustments to the land values in respect of the following properties and adjust the 2018 value of those individual record of titles as follows:
Property Valuation Court Adjusted Land Values 1 94 Tirangi Road $ 2,760,000
(unchanged)
2 102–106 Tirangi Road $ 2,600,000 3 108–112 Tirangi Road
25–27 Kingsford Smith Street
$ 5,330,000
4 114–118 Tirangi Road $ 2,430,000 5 120–124 Tirangi Road $ 2,430,000 6 126–130 Tirangi Road
35–39 Kingsford Smith Street 41–45 Kingsford Smith Street
$ 8,000,000
7 132–136 Tirangi Road $ 2,630,000 8 5–11 Kingsford Smith Street $680,000 9 13 Kingsford Smith Street $ 1,880,000 10 8 Kingsford Smith Street $ 2,430,000 11 14–18 Kingsford Smith Street $ 2,410,000 12 20 Kingsford Smith Street $ 4,760,000 13 22 Kingsford Smith Street $ 2,520,000 14 24 Kingsford Smith Street $ 2,600,000 15 28–30 Kingsford Smith Street 32–34 Kingsford Smith Street $ 5,210,000
16 29–33 Kingsford Smith Street $ 2,320,000
(unchanged)
17 36–54 Kingsford Smith Street $ 12,340,000 18 47–51 Kingsford Smith Street $ 2,520,000 19 57 Kingsford Smith Street $ 1,340,000
(unchanged)
20 59 Kingsford Smith Street $ 1,840,000
21 56–58 Kingsford Smith Street $ 2,670,000 22 60–62 Kingsford Smith Street 64–66 Kingsford Smith Street $ 5,340,000
23 68–70 Kingsford Smith Street 72–74 Kingsford Smith Street $ 7,800,000
[90] For completeness, we have annexed to this judgment as Annexure B a summary of our values, showing the modal rate of $1,200/m2, the unadjusted land value, the adjustments applied to the modal rate and the resulting land values for the 2018 rating revaluation.
[91] In respect of the rating units with multiple titles, the land value should be applied to the individual certificates of title and the total land value for the single rating unit should reflect the summation of the values of the individual certificates of title in each.
Result
[92]The appeal is allowed in part.
[93]The Tribunal’s modal rate for the 2018 rating revision of $1,200/m2 is upheld.
[94] The Tribunal’s land values of 20 of the subject properties under the 2018 rating revaluation are set aside.
[95] The values of the subject properties for the 2018 rating year are set out at [89] of this judgment.
Costs
[96] The parties seek clarification on the ability of the Tribunal to award costs under the Rating Valuations Act 1998 (RVA). The Tribunal reserved the matter of costs in
each of the 2007, 2012, 2015 and 2018 objections.48 The Tribunal noted that the extent to which the Tribunal can award costs on rating valuation cases is unclear, and suggested this question should be referred to the High Court for consideration on the appeals, before being remitted back to the Tribunal for arguments as to quantum.
[97] We have not heard full argument by Counsel on the cost jurisdiction in the Tribunal. We observe that the language of s 38(4) of the RVA is prescriptive and clear, providing a narrow ambit under which costs can be awarded. However, this is merely an observation. We consider that determination of this matter should await full argument.
[98] We have discussed the issue of costs generally and in this jurisdiction more fully in our 2012 appeal judgment.49 Under s 37A of the LVPA this Court may award costs on appeal. We indicated that this may be a case where costs lie where they fall. However, if any of the parties seek costs, Counsel are to file memoranda of no more than five pages as to whether they wish to be heard on the costs issue within 20 days of the date of this decision. Further directions will then follow.
Leave
[99] Leave is granted to Counsel to raise any errors or slips made in this Court’s calculations when applying this Court’s modal rate and adjustments to the subject properties.
Solicitors:
Morrison Kent, Wellington, for Rongotai Parties Simpson Grierson, Wellington, for Bunnings Limited Crown Law Office, Wellington, for Valuer-General Solicitors for Other Lessees:
……………………………………
Cull J and Member VM Winiata
Lane Neave, Christchurch, for Wellington International Airport Limited and 2468 Ltd PCW Law, Auckland, for NZ Cash Flow Control Ltd
Hughes Robertson, Wellington for R Blaylock & Y Kerekes and Wild Bay Property Ltd
48 In both 2007 and 2012, the Tribunal invited Counsel to submit applications for costs. However, in both the 2015 decision and the 2018 decision, the Tribunal recognised costs under the RVA as “problematic” and sought to defer the issue of a costs award to this Court.
49 2012 Rating Valuation Appeal, above n 12, at [111]–[121].
Annexure A
Rongotai area map showing subject site area for all decisions
Annexure B
5
0