Valuations different basis of value for different purposes – Expert Valuer required

06/11/2018

Watson & Watson have been involved in many issues where valuations of real estate were required to enable a party to receive “compensation” based on the valuation.  In the past 18 month we have given advice and engaged valuers in relation to matters concerning the following issues:

1.        Easement

There are many varied circumstances in which an easement is required from neighbouring owners.  Two common easements that are required are easements for stormwater or an easement for access to a property.

It is common that where an owner of land makes application for redevelopment of land Council may require the owner to obtain an easement from the owner of land downstream to enable the owner of the land to connect up to the Council storm water system.  This requires delicate negotiation.  In those cases the dominant tenement (the owner who requires the easement) is usually obliged to pay compensation and the legal costs of the other parties as part of the process.

In the leading case the Court has confirmed that the basis of the valuation was to assess the compensation for the losses and other disadvantages suffered by the servient tenant arising from the imposition of the easement.  In other words it is not the benefit to be achieved by the owner of the property who receives the benefit of the easement.

There are different basis of assessing the value based on this principle.  These have been dealt with in various cases.

2.        An encroachment by an owner of property on the neighbouring land. 

           The basis of valuing an encroachment is a valuation of the land upon which the encroachment occurs rather than the increased value to the owner who obtains a benefit from the easement.

3.        Compensation to be paid by an owner of a Strata Titled Lot for exclusive use of part of the common property.

           Where an owner of a lot in a strata complex seeks to obtain exclusive use of common property the lot owner seek use of the common property by way of approval of a by law.

It is common that the Owners Corporation is paid the appropriate “compensation” for the exclusive use rights.

           The value of the exclusive use is based on the benefit is to be obtained by the recipient of the exclusive use by law.  There are cases which set out the principles of making an assessment of the “value” of the exclusive use rights.

           The principles associated with such valuation are different to those examples 1 and 2 referred to above.  There are also critical elements as to the basis of the valuation.

4.        Calculation of damages where a purchaser was deceived to complete a purchase a property.

The property was said to be without defects however contained numerous and extensive defects.  We have recently been involved in one such case namely Carr v Miller & Others 22 October 2018 unreported 2018 NSWSC 142 in which our client the Owner Plaintiff owner received an award of damages having regard to the circumstances in which she was induced to settle a purchase of a property at Seaforth.  One issue was the issue as to the valuation of the damages.  Were the damages limited to the cost of rectification of the unknown defects at the time of settlement?  Based on valuation evidence by a Valuer engaged by us for the specific purpose, the Court held that there were also additional damages and in that case the Court allowed a 35% mark up or uplift of the Court’s findings as to costs of rectification of defects allowed.  The Defendants had engaged an expert valuer and asserted that the damages should be limited to the cost of the rectification of the appropriate defects.  The case also involved many other significant issues including the liability of the various Defendants and the assessment of the actual cost of rectification works.  These were dealt with by other experts engaged for the specific purposes required.

5.        Access to or indulgences from Neighbour

A Builder or developer often will need access or other indulgences from the owners of neighbouring lands.  These include for example:

(a)       Access to a boundary wall from the neighbours property.

(b)       The need for rock anchors (either temporary or permanent) in the neighbouring property to enable the construction of the development.

(c)       The need for a crane for example a swing crane to enable or allow it to swing over the neighbours land.

           Where there is a need by a developer or builder or adjacent owner to operate outside their own land it is critical that the appropriate indemnities are obtained from the appropriate parties when the developer or builder or adjacent neighbour seeks access or an indulgence from the owner of the neighbouring land.  Often in these circumstances for example a crane the risk of an accident is minimal however the consequence of an accident is catastrophic.  You need to cover yourself for this. This is much forgotten.

7.        Claims as a result of an Owners Corporation’s failure to maintain common property.

We have dealt with elsewhere in articles the obligation of an Owners Corporation to properly maintain the common property.  Unfortunately often this does not occur.  Previously it was thought that the lot owner’s right was limited to obtaining an order that the Owners Corporation rectify the defects and undertake the works that are necessary to properly maintain the common property.  This of itself has led to hundreds of cases.

Watson & Watson have acted on behalf of the Owners Corporation or a lot owner in such cases.

           However under the new Strata Schemes Management Act 2015 and having regard to a recent case even under the previous 1996 Act the Owners Corporation is responsible for losses due to its failure to properly maintain the property.  Often in those cases a significant loss is due to the loss of the ability for the lot owner to occupy his/her lot.  This may result in the need to rent premises elsewhere or the loss of rent from an inability to lease the property.  In either case one needs a valuer to properly assess those losses.

If you have any issues relating to matters including those types of matters referred to above please contact Watson & Watson for an initial conference or second conference to discuss your matter.  Please telephone Richard Watson Accredited Specialist Building & Construction or his Personal Assistant Shereen Da Gloria to discuss your concern and seek the appropriate advice relevant to your circumstances.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.