STATUTORY VALUATION

Statutory Valuation - Q & A

Statutory Valuation - Q & A

The Point Gourde Principle

The Point Gourde principle is not a principle of valuation. It is a principle of law. This principle is a key constituent of land compensation law. At the heart of it, the principle is rather simple - namely that resumed land should be valued disregarding any increase or decrease in the value of the land originating from the carrying out, or the proposal to carry out, the purpose for which the land was resumed (Leach, 2003).

Applying this principle will mean that land will be valued on the basis of the hypothetical highest and best use that the land would have had had it not been required for the public purpose for which it was acquired. This reliance on hypothetical scenarios to determine land compensation may be a reason why the Pointe Gourde principle can emerge so daunting. However, hypothetical scenarios are common location in land valuation (e.g. ascertaining site value for land levy purposes).

The context in which the Pointe Gourde principle arises is that an obtaining authority desires to pay market value for the land that it has acquired. Typically, the courts have held that “value” in this context is determined by forming an attitude as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. However, the reality will often be that the involvement of government in undertaking a public project will have a important influence on land values in the vicinity of the area (Leach, 2003).

The Raja Principle

An analysis of the Raja principle - where the resuming authority may be the sole possible purchaser for the potential highest use was undertaken by the Court. (Brown, 1996) Key observations included:

The possibility that the acquiring authority, as a willing buyer in a amicable negotiation, might be willing to pay more for land with its potentiality than without was not to be disregarded. That would not be to allow the existence of the scheme to enhance the value of the land (Brown, 1996).

Potentiality is part of the market value of land and should be taken into account when assessing compensation. Potentiality should be valued even if the only probable purchaser is the acquiring administration itself.

But market value does not encompass enhanced value attributable solely to the specific use proposed to be made of the land under a scheme of which compulsory acquisition of the subject land is an integral part. This element of value is not part of market value because it is not an element the owner could have recognized in the open market.

Potentiality is to be considered and valued as matters stood before the specific scheme, of which the subject land's acquisition is part, came into being.

'Value to the owner' principle is a sound basic principle, whereas in recent years some difficulties have arisen. Subject to statutory provision to the contrary, it should continue to be applied generally (Brown, 1996).

The Marshall Principle

The Marshall principle is a general principle ...