035-NLR-NLR-V-74-C.-E.-A.-PERERA-Appellant-an-THE-ASSISTANT-GOVERNMENT-AGENT-KALUTARA-Respond.pdf
130
Perera v. Assistant Government Agent, Kalutara
1970Present: Alles, J., and Weeramantry, J.
E. A. PERERA, Appellant, and THE ASSISTANT GOVERNMENTAGENT, KALUTARA, Respondent
S. C. 3169—BR 2753jKT 212
Land Acquisition Act (Cap. 400)—Sectio?is 45 {1), 45 (3), 46—Acquisition oj a long and
narrow strip of land—Basis of assessment of compensation—“ Market value —
" Separate entity ”.
A long and narrow strip of land consisting of fivo lots in extonb 9 G0 pcrchosout of certain property belonging to tho appellant was acquired by the Crownfor tho purpose of constructing a masonry drain to convey rain wntor. Thostrip was at tho extremity of tho appellant’s property and ran along an irregulartrack. In awarding Rs. 1,G05 as the amount of compensation payable to thoappellant, tho Board of Review hold that tho strip could not bo used for anycommercial purposo or for tho building of stores and therefore, consideringthe entire strip ns a separate entity, tho market vnluo would bo tho amounttho appellant, as a willing seller, would realiso for this strip in tho open markot.
Held, that tho award of Rs. 1,GG5 as compensation should bo confirmed.
Per Air.ES, J.—Tho award was in conformity with section 45 (1) of thoLand Acquisition Act.
Per W'eeramantry, J.—Section 45 (1) of tho Land Acquisition Act isinapplicable to a case such ns tho present, where there would bo no buyersin tho open market. However, tho award of Rs. 1,005 was not unreason-able having regard to tho figures of comparative sules in tho- neighbourhood.Observations on tho necessity to redraft section 45 (!) of tho Land AcquisitionAct in view of tho possibility that tho land sought to bo acquired may sometimesbo totally devoid or valuo when it is considered as a “ separoto entity ” apartfrom tho land of which it forms a portion.
AXLES, J.—Pcrcra v. Assistant Government Agent, Kalutara
131
ApPEAU under Section 28 of the Land Acquisition Act.
M.T. M. Sivcirdecn, for the appellant.
P. 8. de Silva, Crown Counsel, for the respondent.
Cur. adv■ vult.
October 26, 1970. Alles, J.—
The appellant, who was the owner of Lots 2, 3, 4, 5 and 6 in PP K115 in extent 9 60 perches, ajjpeals from the decision of the Board ofReview which affirmed the award of tho Acquiring Officer under theLand Acquisition Act fixing the quantum of compensation for the saidLots at Rs. 1,665 which included a 20% allowance for injurious affection.The land acquired was a strip 410 feet long by 6 to S feet wide and wasto be used for the purpose of constructing a masonry drain to conveyrain water from 6th Cross Street to 5th Cross Street, Panadura. Theproposed drain skirted the southern edge of the appellant’s land ‘A’and proceeded along tho northern edge of his Lots ‘ C ’ and ‘ D ’ in thePlan A1 produced by the appellant.
The main contention of the appellant at the argument before us wasthat the basis on which compensation was awarded was erroneous inlaw and not in conformity with the provisions of the Land AcquisitionAct. Although several matters, purporting to be questions of law,were certified by Counsel in the petition of appeal as being fit questionsfor adjudication by the Supreme Court, the basis on which compensationshould be awarded was not specifically raised as a question of law" inthe petition or certified as required under Section 28 (2) of the Act.Since, however, wo permitted this matter to bo argued before us and.as it was submitted that tho method of computing the compensation inthis case had been consistently adopted by Acquiring Officers sincethe passing of the Act in 1950, we considered it desirable to expressour views on the question of law that has presently been argued.
Under Section 21 of the Land Acquisition Ordinance (now' repealed)in determining the amount of compensation to be aw'arded the matterswhich had to be taken into consideration by the Court may be brieflystated as—
The market value at the time of awarding compensation ;
(£>) The damage caused as a severance of the acquired land from theowner’s other property ;
Injurious affection ; and
Reasonable expenses, if any, incidental to a change of residence..
132
ALICES, J.—Perera v. Assistant Government Agent, Kahttara
“ Market value ” was not defined under the Ordinance and the viewaccepted by the Supremo Court prior to the decision of the Privy Councilin Municipal Council of Colombo v. Letchiman Chetliar1 (which for thesake of convenience may be called the Vajira Road Acquisition case)was, that in order to arrive at the market value, the value of the entireestate had first to be ascertained and thereafter a proper proportionof that value should be assigned to the land acquired. This was theview adopted in the earlier decisions of the Supreme Court {Govt. Agent,Kandy v. Marikar Saibo2 and Govt. Agent, ]V. P. v. The Archbishopof Colombo 3) and the view submitted for our consideration by Counselfor the appellant in the present appeal, in spite of the provisions ofSection 45 (1) of the new Act. That view contemplated the paymentof compensation for the acquired strip on the basis that it was a portionof buiklable land, a view which found favour with Soertsz J. and theChief Justice in the Vajira Road case. In the latter case what wassought to be acquired was a strip of land for the purpose of wideningVajira Road, the acquisition being within sanctioned street lines underthe Housing and Town Improvement Ordinance. Only a token valueof Rs. 5 was granted for the acquired strip, the rest of the compensationbeing granted for the demolition of certain tenements, an old boundarywall and for the cutting down of some trees. Justice Keuneman whowas associated with the other two Judges took a different view from thatof the other Judges in regard to the basis of compensation, and thoughtthat enclosing the acquired strip within building lines had the effectof preventing it from being built upon and that it could not thereforebe valued as building land. He however stated that compensationmight be granted on the basis of the possible development of the owner’sestate by building houses on it, the gardens or yards of which mightinclude the acquired strip. When the case was argued before the PrivyCouncil the Board held that the method of computing the market valuesuggested by Soertsz J. and the Chief Justice was erroneous and, in theabsence of evidence, was unable to agree with the view put forwardby Justice Keuneman. The Privy Council held that “market valuewas the price which a willing vendor might bo expected to obtain inthe open market from a willing purchaser.” Sir John Beaumont whodelivered the advice of the Privy Council stated further that—
" the owner of the laud, who is notional]}' the vendor, cannot alsobe the purchaser, and the fact that he owns other land in thoneighbourhood is irrelevant for tho purpose of ascertaining the marketvalue of tho land to bo acquired, though such fact is the foundationof a claim under heads {b) and (c) of Section 21, for damage for severanceand other injurious affection to his other property by reason of theacquisition.”
1 {1017) 4S N. L. 11. 97.
{1913) 1G N. L. It. 393.
5 (1911) C S. C. D. 3G.
AJLLES, J.—Pcrera v. Assistant Government Agent, Kalutara
133
It was tbo view of the Privy Council that the Supreme Court in valuingthe acquired strip did not ascertain the market value, but decided thebasis of compensation as the loss which the claimant suffered by reasonof the acquisition of the acquired strip—a method which found nowarrant in the Ordinance. It is possible, in view of Sir John Beaumont’sobservations referred to earlier, that the claimant might have succeededunder heads (b) and (c) had a claim been made under these headsand evidence placed before the Acquiring Officer to support such aclaim.
Subsequent to the decision of the Privy Council, the present LandAcquisition Act in 1950 in Section 45 (1) defined “market value” tobe “ the amount which the land might be expected to have realisedif sold by a willing seller in the open market as a separate entity… ”It is significant that the words “ willing buyer ” are not mentionedin this definition because presumably in the case of acquired propertywhich has no intrinsic value there may be no buyer and still less awilling buyer. In the case of acquired land falling within street linosor a building limit, special provision has been made in Section 45 (3)to assess the market value of such land as if it did not fall within suchstreet lines or building limit. Section 45 (1) however makes it clearthat the market value was to be assessed by considering the acquiredland as a “ separate entity ”. Justice ICcuneman in dealing with theacquired strip in the Vajira Road case stated that it would not be correctto value the strip as a separate entity, since on account of its shapeand size, it might be of no value to a prospective purchaser. Section45 (1) however omits all reference to a prospective purchaser. Thisomission would really be advantageous to the owner for, as a willingseller, one may' be able to ascertain an amount which might be realisedin the open market but a prospective purchaser may' not be willing topay anything for a land which has no value to the buyer. It does notnecessarily follow, however, that in all cases where the market valueis fixed for a separate entity’ that the claimant is ahvay's at a disadvantage.If the “ separate entity ” comprises a land which cannot be put to anyuse as commercial or residential land the only' basis of compensation,would be to treat it as agricultural land, in which case the compensationpayable would be negligible. On the other hand if the “ separate entity ”consists of buildable land which can be put to commercial or residentialuse, the compensation payable would be much more than the ownerwould receive if the market value is fixed in relation to his other propertyand a proportionate sum paid thereof. In either case the market valueis fixed in relation to the separate entity sought to be acquired.
Since writing my judgment, I have had the advantage of reading thejudgment prepared by my brother Weeramantry J. While I appreciatethe criticisms he has made in regard to the basis of compensation underthe Act, I take the view that the law has adequately provided forcompensation in those cases envisaged by him. Although there maynot be a willing purchaser for small allotments of land from a citizen’s
134 WEERAMANTRY, J.—Perera v. Assistant Government Agent, Kalutara
property in those cases where such allotments are required by the Crownfor the erection, for instance, of a telegraph or electric post, the relevantenactments under which such allotments are appropriated providesfor adequate compensation—Vide Proviso IV to Section 15 of theTelecommunications Ordinance (Ch. 192) and Section 17 of the Electricity-Act (Ch. 205). With all respect therefore to my brother I cannot agreethat no compensation is payable in such a case even though the separateentity is worth nothing to the prospective purchaser. In regard tothe second case mentioned by him it may be possible for additionalcompensation to be paid to the citizen under the provisions of Section46 of the Act. Sir John Beaumont in delivering the advice of thePrivy Council contemplated such a possibility when he made theobservation referred to earlier in this judgment.
The Board of Review held that the strip in question could not beused for any- commercial purpose or for the building of stores andtherefore considering the entire strip as a separate entity, the marketvalue would be the amount the appellant, as a willing seller, wouldrealise for this strip in the open market. On that basis the compensationawarded in this case was in conformity with Section 45 (1) of the Act.
I would dismiss the appeal but without costs.
Weeramantry, J.—
The simple question involved in this appeal is the basis of assessmentof compensation in respect of a long and narrow strip of land acquiredby the Crown. This strip is 4 to 5 feet broad, about 100 yards long,runs along an irregular track and lies at the extremity of the applicant’sproperty.
Section 45 (1) of the Land Acquisition Ordinance (Cap. 4G0) providesthat the market value of a land for the purposes of that Ordinanceshall be the amount which the land might be expected to have realisedif sold by a willing seller in the open market as a separate entity on thedate of publication of notice under Section 7.
This Section would appear to embody a revision of the law basedupon the decision of the Privy Council in The Municipal Council, Colombov. Letchiman Chetliar 1 where Their Lordships took the view that Section21 of the former Ordinance 2 required the Government Agent and theCourt to take into consideration the market value of the land to beacquired, such market value being the price; which a willing vendormight be expected to obtain in the open market from a willing purchaser.Their Lordships further held that the Supreme Court was wrong invaluing the acquired strip as a part of the rest of the land of therespondent.
1 (1047) 4S N. L. ft. 07.3 Cap 203 oj the 1033 Edition oj the Legislative
Enactments.
TVEER AMAXTRY, J.—Percra u. Assistant Government Agent, Kalutara 135
Iii that case a strip of iand along the length of Vajira Road had beenacquired by the Municipality. This strip was of a width between 28and 32 feet and was 1,140 feet long. In terms of their Lordships’judgment this strip of land had therefore to be valued as an independententity apart from the question of the value of the land of which it formeda part.
It seems to me that although in the Vajira Road case this method ofassessment might have been entirely reasonable, such a principle cannotbe formulated in the abstract form that in all cases the land must bevalued as an independent entity without leading to absurd results.In the Vajira Road case the width of the strip was such as to render itcapable of use, as, for example, by accommodating boutiques, and onecould therefore speak in terms of assessing the value of the strip of landas an independent entity. On the other hand the portion of land soughtto be acquired may in many a case be such that it is totally devoid ofvalue, considered as an entity by itself. For example, the acquiringauthority may desire to acquire a little island of land on a citizen’sproperty in order to erect a telegraph post thereon. Now, this bitof land is not one in respect of which there would be anj'willing purchaser, for, except to the authorities concerned, such anunusual shape and size of land would be completely valueless, and allthe more if it is landlocked. Docs this mean then that in such an eventno compensation should he paid to the owner, however valuable be theland from which that piece is taken ? Or, shall we say, twenty suchbits of land, each separate from the other, are wanted for twenty telegraphposts. Does a person who is required to yield up so many pieces ofIand from his property have to he satisfied with no compensation atall merely because each piece as a separate entity is worth nothing toprospective purchasers ?
Let us take again the very case of acquisition for widening of a road,such as occurred in the Vajira Road case. If the strip acquired had beennot 28 to 32 feet in width, but 2 feet in width, it would have been a stripwhich would have had no willing buj-er, for nothing worthwhile couldhe done upon such a strip. Unlike in the case of a strip 2S to 32 feetwide, no boutiques or other structures could be put up on it, and itspractical value to any purchaser would be nil. Suppose such a strip be1,140 feet long as in the Vajixa Road case, the total extent of land acquiredwould be approximately l/15th of the land acquired in the Vajira Roadcase which according to the computation in that case embraced an areaof 2k 37-2p, that is 117 2 perches. One-fifteenth of this would be anextent of nearly 7 perches. Could an owmer of an extent of 7 perchesof valuable land in the City be deprived of it without any compensationat all ? The result seems absurd, but if a literal meaning be givento section 45 (1) of the Land Acquisition Ordinance this is thesituation that results.
136WEERAMAN T RY, J.—Perera v. Assistant Government Agent, KahUara
The Land Acquisition Ordinance is a Statute which, as the SupremeCourt observed in Letchiman Chettiar v. The Municipal Council,Colombo *, imposes restraints and restrictions upon the citizen and musttherefore be interpreted as favourably to the citizen as can reasonably bedone. I do not think that it would be correct to give an enactment of thelegislature, if we can avoid it, an interpretation which results in anabsurdity, not to speak of a total denial to the citizen of that very right tocompensation on which the entire Ordinance rests.
In the present case the strip of land is so irregular in shape and sonarrow in width that it quite clearly cannot be used for the purpose ofconstructing a building. This is undoubtedly so if the strip is taken byitself. If however the strip is considered as a portion of the land com-prising it, it makes so much the more land available to the owner forbuilding purposes. It might, for example, enable the owner to use thisland for the rear space of his building, when Municipal Regulationsprescribe such a rear space, and thus increase to that extent the buildableland available to him. Again if no Municipal or other regulations requirethe leaving of a rear space, this strip of land would be entirely buildableif the owner so desires to use it and could constitute the rear portion of abuilding. One would of course always bear in mind as a factor depressingthe proportionate value of such a portion of land, the fact that valuedeclines as the distance from the road frontage increases. It would bewrong therefore to say that the strip of land is a strip of which no usecould be made by the owner, for it is only the very act of acquisitionthat renders it useless.
It is significant also that the draftsman of Section 45 (1) has omittedreference to a willing buyer which their Lordships of the Privy Councilmade in their judgment in the Vnjira Road case, where they took carealso to specify in their definition of market value that it constitutes theprice which a willing vendor might be expected to obtain in the openmarket from a willing purchaser. The italicized words have beenomitted from Section 45 (1), thereby helping to bring about a resultwhich can in circumstances such as those I have pointed out, result in anabsurdity.
There are of course cases where it may be to the advantage of a sellerthat his land should be considered as a separate entity. Some suchsituation may arise for example where a buildable extent of land borderinga road is taken out of a large tract of land lying to the hinterland. Insuch a case it would certainty enure to the benefit of the owner if thatseparate block of land is valued as a separate entity', for it would have agreater value per perch than if the entirety of the land were consideredas a whole. It was presumably to provide for such a situation that thelegislature in Section 45 (1) stipulated that the price should be the price
1 (1942) 44 N. L. R. 170, at 177.
WEERAMANTRV, J.—Pcrera v. Assistant Government Agent, Kalulara 137
that- would be realised if the land were sold in the open market as aseparate entity, and in such a context the section can well be given a'reasonable meaning.
Where, however, the land is such that there would be no bujer forit at all, the section becomes unworkable and the case becomes oneunprovided for by Statute. In such a case the normal principles ofvaluation should apply and one would have to estimate the value by unitof area of the land of which the acquired portion forms a part, makingduo allowance for any lessening in value caused by such circumstancesas distance from the road frontage and other factors which may affectthe value of that particular portion. This is the principle ofcompensation which, for example, is utilised amongst co-owners in apartition case and is one commended by connnonsense and equity.
In the present case, therefore, I would hold that this is the principleof valuation upon -which the assessment of compensation must be made,and that section 45 (1) is inapplicable to a case such as this where therewould be no buyers in the open market.
However, it seems to me that the award of Rs. 1,665 for the extent of9 60 perches acquired is not unreasonable having regard to the figures ofcomparative sales in the neighbourhood. I therefore consider that evenupon the basis which I have adumbrated the compensation is reasonableand that there is no ground for interference with the quantum whichcould not have been awarded upon a literal reading of section 45 (1).
I would therefore dismiss this appeal but without costs.
Since the matter decided bjr their Lordships of the Privy Council inthe Municipal Council, Colombo v. Letchiman Chettiar, is now the subject ofStatute Law, namely Section 45 (1) of the Ordinance, and is thereforenow not the ruling law on the matter, I would also wish to state that hadthe matter been res Integra I would certainly have inclined to the viewtaken by the Supreme Court in that case. However should any matterarise regarding the interpretation of the former Ordinance the PrivyCouncil ruling would of course be binding.
I would also like to draw attention to the dangers inherent in a view ofthe law other than that which I have expressed, for it may theoreticallybe possible for an acquiring authority to launch upon a series of separateacquisitions and acquire in little bits and portions, irregular and unusableextents of land, each of which is unsaleable as an entity but all of whichtaken together would be of great value. In such a way the subject maywell be deprived of a valuable asset without any compensation.
I do not think the legislature ever intended to achieve so unjust aresult; and in any event I would commend to the attention of thoLegislature the necessity to re-draft section 45 (1).
■Appeal dismissed.