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ELLIS v. FERNANDO.
D. C., Colombo, 2,147.
Land Acquisition Cass—Ordinance No. -1, of 1876—Market value—Tests
for determining—Amount tendered—Amount awarded—Costs.
Per Lawbee, J.—It is fallacious to determine the market value ofa house by what another house in the neighbourhood fetched,because the one may have advantages or disadvantages which theother wants, such as difference of view, light, air and drainage, andof the fashion and popularity of the road or street in which they aresituated.
Rental is a better test of value than price obtained in theneighbourhood, but the number of years' purchase variesaccording to the money market, or according to the supply anddemand for land as contrasted with other securities.
Per CuriamT—Under section 29 of the Ordinance No. 3 of 1876,costs are payable by the contesting person, even though the DistrictJudge awards a less sum than what was brought into Court by theGovernment Agent, provided that the sum awarded does not exceedthe sum actually tendered under section 8.
N this land acquisition case the plaintiff, who was the Govern-.
ment Agent for th6 Western Province, brought into CourtRs. 1,713 as the amount of compensation tendered under sec-tions 8 and 38 of Ordinance No. 3 of 1876 by him to the defendant,who was the owner of the property acquired by Government, ascompensation, and Rs. 171 as 10 per cent, for compulsory acquisi-tion, making a total of Rs. 1,884. The defendant claimed Rs. 4,000.
After evidence heard before the District Judge and two assessors,the District Judge and Assessor Daniel awarded the sum ofRs. 1,800 as the market value of the property under sub-section1 of section 21 of the Ordinance, they being of opinion thatRs. 180 per annum would be a fair rental, and the market valueshould be placed at ten years’ rental. Assessor Green stated-that,though Rs. 180 should be takui as the yearly rental, the capitalvalue of the property should be calculated not at 10 per cent., butat 8 per cent., because the buildings standing thereon were old, atwhich rate he assessed the value to be Rs. 2,250.
The District Judge entered judgment for Rs. 1,800 and directedthe defendant to pay the costs incurred by the Government.Agent and the fees of the assessors.
Dornhorst, for appellant, argued that the market value as foundby Assessor Green should prevail, and that as the District Judgehad awarded Rs. 1,800 only instead of Rs. 1.884 brought into Courtby the plaintiff, the defendant should not have been cast in costs.
Ramanathan, S.-G.—The market value, as found by the DistrictJudge and Assessor Daniel, stood the following tests :—(1) Landsin the neighbourhood changed hands at the time of the acquisition
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1899. at the same, rate per acre which the Government had tendered toApril 26. defendant, and this value being added to the actual cost of thematerials and labour used in respect of that house gave a total ofRs. 1,800 ; (2) the rental being found to be Rs. 180 a year, buyersof small properties usually expected a return of 10 per cent,for their investments, and hence the capital which such personswould lay out on such a property would be only Rs. 1,800. Andas to costs, section 29 directed when the amount awarded doesnot exceed the sum tendered the costs shall be paid by the con-testing person. The sum tendered by the Government Agentunder section 8 was only for the value of the land, viz., Rs. 1,713,and this was so stated in the libel and admitted by the answer:The Government Agent had at the time of reference to Courtresolved to add 10 per cent, on the market value of Rs. 1,713as permitted in section 38, and had brought into Court the addi-tional Rs. 171 also, but this sum was not tendered to defendant outof Court under section 8. Hence the amount awarded by Court,viz., Rs. 1,800, does not exceed the sum tendered, and costs insuoh a case are payable by defendant. He cited D. C., Colombo,2,131 (decided by the Supreme Court on 7th June, 1899).*
Dornhorst, in reply.
Cur. adv. vult.
* The judgment of the Supreme Court in D. C., Colombo, 2,131, delivered "byWithers, J., was as follows :—
This is virtually an appeal to us to interpret our judgment of the 14thNovember last, and especially that part of it in which we said, “ We make noorder as to costs,” and which has been embodied in the decree in these words :“ This Court does not see fit to make any order as to costs.”
. In that j udgment we decided, rightly or wrongly, that the Government Agenttendered to the defendants by way of compensation for land of theirs acquiredby the Government a sum of Rs. 15,840. This was the sum awarded as themarket value of the property acquired.
The defendants claimed a sum of Rs. 19,000. The District Court adjudged asum of Rs. 16,482, which represented the Court’s award of Rs. 14,984' 37 with10 per cent, thereon. We further decided that the District Court had noauthority to award the additional 10 per cent., as that was the right or duty ofthe Government Agent under the provisions of section 38 of the Land Acquisi-tion Ordinance of 1876. For that reason we reduced the award to the sum ofRs. 14,984'37 originally tendered by the Government Agent as the marketvalue of the property, and for the additional reason that the defendants hadnot satisfied us that they were entitled to more on that account.
When the case went back the plaintiS asked the District Court to tax his costs.The Secretary of the District Court refused to tax his costs as between partyand party, and the plaintiS brought the matter up before the District Judge, whorefused to order the costs to be taxed. He felt himself unable to make suchan order in view of our declaration that we would make no order as to costs.Hence this appeal. I am not quite sure that an appeal lies ; but I think we arecompetent to deal with the matter in revision, as the record is before us, andmake such order as may seem to be just.
The Attorney-General supported the appeal, and he informed us that when thecase was before us on the former occasion we advisedly declared that we should
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28th August, 1899. Lawme, A.O.J.—
In land acquisition cases where the District Judge and the twoassessors are agreed on any question referred to them, I think theCourt of Appeal should not interfere, unless it very clearly appearsthat the Court of first instance has erred.
Here I accept the united verdict that the fair net rental perannum which could be obtained for this house after payment oftaxes and repairs is Rs. 180.
But though I accept that, I am free to consider^ whether themultiplication of the rent by so many years’ purchase is a rightway to ascertain the market value.
I think it is the difference of view, and light and air and drainage,and of the fashion and popularity of the road or street, whichmay make it unreasonable to award the same price for onehouse as for another in the same neighbourhood which on a surveyseems to be undistinguishable in size and position. A houseis more valuable because more in fashion and request. Itis fallacious to speak of the market value of a house in the neigh-bourhood : one may have fetched say Rs. 3,000, but the offer ordemand of Rs. 5,000 for another house of the same size standingvery near may be quite inappropriate, because the one may haveinnumerable advantages or disadvantages which the other wants.So I think rental is a better test of value than what has been gotfor land in the neighbourhood. So it is considered in selling
make no order as to costs, because Mr. Loos, who appeared for the Govern-ment Agent in the former appeal, directed our attention to the provisions ofthe 29th section of the said Ordinance, which enacts that “ when the amount“ awarded does not exceed the sum tendered by the Government Agent,“ or the sum which the Government Agent shall have offered to give under“ section 13, such costs shall be paid by the person or persons who shall have“ contested the amount,’' and that the Chief Justice observed that it wouldbe superfluous to make any order as to costs when the Legislature had ordainedthe payment of costs. I sat with the Chief Justice on that occasion, but I havequite forgotten the incident. I have no doubt, however, that it occurred,and the fact was not contradicted by Mr. Domhorst. Mr. Domhorst con-tended that what really was tendered by the Government Agent was anamount of Rs. 14,000 as the market value of the property acquired andRs. 1,440 as 10 per cent, on that amount, making up Rs. 13,840. But thisis going over the old ground again, for we found, as I said before, rightly orwrongly, that what the Government Agent did tender as a matter of factas the market value for the land was an amount of Rs. 13,840. It mua tbetaken as settled that that was the amount tendered under section 8 ascompensation for the value of the land to the persons interested.
Therefore, under section 29 the contestants must pay the amount of the costs,which by section 38 are to be deducted from the amount of compensation andpercentage. We left it an open question whether the Government Agent isrequired to pay 10 per cent, on the sum of Rs. 13,840. If he is, the costaare to be deducted from such amount and percentage.
That question remains open. In my opinion the District Court must tax theGovernment Agent’s costs, and the record must go back with that intimation.
I would make no order as to costs of thig appeal.
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1896.. land jn England: estates are usually sold according to the rental
August 28. (timber which yields no rental is usually valued separately), rentalLawbie, is the ordinary basis, and the number of years’ purchaseA.C.J. varies according to the money market or according to the supplyand demand for land as contrasted with other securities. Of old,even in my recollection, thirty-three years’ purchase was commonfor land in Scotland ; now it is much less.
Here the District Judge and one of the assessors gave ten years’purchase at Rs. 180 per annum ; two witnesses, Vincent Pereraand Don Alwis, fifteen years’ purchase at Rs. 200 per acre.
Mr. Green, the other assessor, makes a more suitable calculation.He says, Government is compulsorily taking from the claimant asubject which at the date of acquisition yielded Rs. 180 a year, andthe equitable compensation is a capital sum which, if invested,would yield the same annual income. This assessor says, it isimpossible now to get 10 per cent, for money, that more than 8 percent, cannot be got, and he allows Rs. 2,250 as compensation, whichat 8 per cent, would yield Rs. 180.
This seems at first sight equitable, but on further considerationthe nature of the subject sold must be considered. This incomeof Rs. 180 per annum is derived from an old house which sooneror later must have been re-built, and even while it stood the rentalfrom it was necessarily fluctuating, if not precarious, dependingon weather and the necessity for repairs.
For most men it is better to have Rs. 1,800 to invest permanentlyin a good security at a less rate of interest than a house yieldingRs. 180 per annum which from the nature of things cannot lastfor many years more.
But, after all, these considerations lead the Court away from theright track : the question is, what is the market value ? not whatopportunities there are. for investing that value when received.In my opinion the best of the evidence is that if the claimant hadwished to sell his house he would not have got more than tenyears’ purchase on the rental.
The difficulty in the case is that for five years before this acqui-sition Government has been gradually acquiring land at Fishers’Hill for harbour and graving dock accommodation and each lotacquired raised the value of what remained.
Davit Alwis says he speculated a good deal in land, buying itup on the chance of its being needed by Government. Atthe end claimants demand for what remained as much as wasdemanded for larger areas a year or two before.
It is plain that latterly the market value was what speculatorsthought they could squeeze out of Government.
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The conclusion to which I come is that Rs. 1,800 is sufficientcompensation, but that as the Government Agent offersRs. 1,848*36 that sum should be awarded. At first I was inclinedto think that as the Government Agent had offered Rs. 1,731*06as the market value, and as the Court awarded Rs. 1,800 asthe market value, the defendant should have costs, but I am boundby the words of the Ordinance :—
“ When the sum awarded does not exceed the sum tendered by“ the Government Agent, or the sum which the Government“ Agent shall have offered to give under section 18, such costs“ shall be paid by the person who shall have contested the“ amount.”
Here the sum awarded does not exceed the sum tendered.
I would affirm with costs.
I am unable to draw a distinction between this case andcase No. 2,131 in which the Government Agent was held entitledto his costs.
I saw no valid reason for pronouncing the award to be wrong,except so far as it is Rs. 84*36 short of the amount tendered bythe Government Agent. I was at first rather captivated by Mr.Green’s calculation, but the Court was not bound to accept it. Theland was rightly valued as a residential property, as that was theuse to which the land was best adapted and always had beenadapted. What I was doubtful about and wished to considerwas, who ought to pay the costs. At first I thought the GovernmentAgent ought to pay the costs, and that this case was distinguish-able from the other land acquisition case referred to in theargument; but upon comparing the two cases carefully, I canfind no distinction. As we said in that other case, the Govern-ment Agent must be taken to have offered Rs, 1,884*36 as compen-sation, though this was apparently compounded of a market valueand 10 per cent, for compulsory acquisition. But that 10 percent, cannot be added till after the award has been determinedoutside the Court or inside the Court.
I agree in affirming the award.
ELLIS v. FERNANDO