Collier,
J:—On
January
29,
1977
an
interim
agreement
of
sale
was
reached
between
the
plaintiff
and
the
then
owners
of
an
apartment
building.
The
closing
date
was
March
1,
1977.
The
building
was
known
as
Hampton
Court.
The
purchase
price
paid
by
the
plaintiff
was
$230,000
for
the
property.
At
the
time
of
purchase,
the
building
was
designated,
pursuant
to
relative
legislation
and
by-laws,
as
a
“Heritage
Building”.
The
building
could
not
be
demolished.
Nor
could
its
facade
or
exterior
be
altered.
It
is
common
ground
the
highest
and
best
use
for
the
land,
forgetting
Heritage
designation,
would
have
been
to
demolish
the
building
and
erect
a
new,
larger
and
modern
apartment
building.
But
in
the
peculiar
circumstances
of
this
case,
that
highest
and
best
use
could
not
be
realized.
For
practical
purposes,
the
highest
and
best
use
is
its
present
precise
use.
The
essential
dispute
in
this
litigation
is
as
to
the
amount
of
dollars
to
be
allocated
to
the
building
for
purposes
of
capital
cost
allowance
for
the
plaintiff’s
1977
taxation
year.
The
question
of
allocation
between
land
and
building
is
a
difficult
one.
In
this
case
it
is
also
a
novel
situation.
None
of
the
expert
real
estate
appraisers
have
encountered
this
particular
situation
before:
Where
the
existing
improvement
must
remain,
in
its
exterior
form
at
least,
even
though
it
may
not
be
the
best
use
of
the
property,
what
approaches
or
techniques
should
then
be
used
to
allocate
the
purchase
price
between
land
and
building?
The
plaintiff’s
three
experts,
using
the
land
residual
technique,
arrived
at
building
values
from
$170,500
to
$187,000.
They
attributed
land
values,
accordingly,
from
$43,000
to
approximately
$60,000.
The
defendant’s
two
experts,
using
appraisal
approaches
different
to
those
of
the
plaintiff’s
three
witnesses,
arrived
at
building
values
of
$70,000
and
$77,000.
Their
land
values
were
$153,000
and
$160,000.
I
adopt
the
appraisal
techniques
used
by
the
plaintiff’s
three
expert
witnesses,
Lind,
Sivertsen
and
Oikawa.
The
land
residual
approach
is,
in
my
opinion,
the
most
practical
and
business-like
method
to
use
in
trying
to
solve
the
problem
in
respect
of
Hampton
Court.
Moreover,
that
approach
is,
to
my
mind,
more
logical
than
the
approaches
used
by
Mr
Southward
and
Mr
Coell.
I
think
those
two
gentlemen
gave
their
opinions
honestly
and
objectively.
But
I
am
unable
to
accept
the
appraisal
techniques
by
which
they
arrived
at
their
results.
I
note
the
B.C.
assessment
appeal
board
in
the
Suf-
fredine
decision,
approved
the
methods
advocated
here
by
the
plaintiff.
The
pro
rata
approach
used
by
Mr
Southward
is,
to
me,
unacceptable.
It
seems
obvious,
to
my
mind,
it
gives
too
much
weight
to
the
pre-Heritage
situation
and
not
enough
to
the
post-Heritage
situation.
The
Minister
relies
on
the
two
witnesses
for
the
defendant
to
say
the
allocation
he
made
is,
nevertheless,
reasonable.
I
find
the
allocation
he
made,
because
of
the
expert
evidence
which
I
have
accepted,
is
not.
The
appeal
is
allowed.
The
assessment
is
referred
back
to
the
Minister
on
the
basis
that
the
proper
allocation
of
the
purchase
price
is
$60,000
to
the
land,
and
$170,000
to
the
building.
I
have
merely
rounded
off
the
figures,
given
by
the
plaintiff,
which
were
most
favourable
to
the
defendant.
The
plaintiff
is
entitled
to
costs.
Appeal
allowed.
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