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GOVERNMENT AGENT v. PERERA.D. C., Colombo, 2,SOS.
(The “ Mount Mary ” Case.)
Land Acquisition Ordinance—Ordinance No. 3 of 1876—Acquisition for publicpurpose—Finality of Governor's decision—Jurisdiction of District Courtto revise Governor’s decision—Sufficient and propercompensation—
Standards of valuation—Market value.
In the acquisition of a private lank for a public purpose the Governoris not bound to take the report of the Surveyor-General as to its fitnessfor such purpose.*.«
His decision on the question whether a land is needed or not for apublic purpose is final, and the District Court has no power to entertainobjections to His Excellency's decisions.
Of the several tests by which the market value of a land may bearrived at, one of the truest and fairest is the actual amount paid fora similar allotment of land in the same vicinity about the time ofthe acquisition.
N this land acquisition case the Government Agent of theWestern Province (Mr. G. M. Fowler), upon receiving the order
of the Governor to acquire an allotment of land situate in Maradana,Colombo, and the house standing thereon, called “ Mount Mary,”
. assessed the value thereof and tendered to its owner, Mr. JamesPerera, the defendant, Rs. 39,730, as sufficient and proper compen-sation therefor, under section 8 of the Ordinance No. 3 of 1876.As the owner declined the amount tendered, the Government Agentbrought the money into Court and .prayed the District Court ofColombo to inquire into and determine the amount of compensationto be paid by him.
The owner pleaded that the land was not required for a publicpurpose; that the sum of Rs. 39,750 was not. tendered to him; and. that that amount was – not sufficient and proper compensation.He claimed Rs. 67,500.
On behalf of the Government Agent three methods of valuationwere proved. The first method was by assessing the land andhouse. It was shown that the land ftself was not all of one kind:2J acres of it were flat and good, and the remaining three werepartly scooped out for gravel, partly hilly, and • partly sloping.The 2$ acres of good land were valued at Rs. 7,000 per acreand the remaining land at Rs. 3,000 per acre, and the house wassworn to be buildable for about Rs. 12,000. The total value of thehohse and land thus arrived at was Rs. 39,750. The secondmethod of valuation was by capitalizing the rent. It was shown
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1903. that • the rent of the house was Rs. 1.200 a year. At fourApril 8.per cent.( which was the rate allowed by the English
banks on fixed deposits, Rs. 1,200 would represent a capitalof Rs- 30,000, so that, if this method of valuation wereaccepted, the Government Agent would appear to have allowedRs. 9,750 too much. The third method of valuation was accordingto the prices paid for similar lands in the vicinity. It was proved.that “ Karlsruhe,” which includes a commodious house and about5 acres of ground, situated. next adjoining “Mount Mary,” wasoffered by its owner to the Government for Rs. 40,000 and wasdeclined.
The learned District Judge, after hearing evidence for theplaintiff and defendant, and considering the opinions of the assessorsnominated by each of the parties, held that the amount tenderedby the plaintiff was sufficient and proper compensation, anddismissed the defendants claim with costs.
The defendant appealed. The appeal was heard on 9th March,1903.
Domhorst, K. C., (with him Elliott), for the appellant. Theprinciples upon which the Court will exercise its jurisdiction overbodies to which the Parliament has given powers of making com-pulsory purchases of land were settled in Webb. v. ManchesterRailway Company, 4 M. & C. 117. The Lord Chancellor observedthat it was his duty to see whether this transaction was a bond fideproceeding upon the powers given by the Act, or whether it was amere colour to cover another object; the powers given were solarge and so injurious to the interests of individuals that everyCourt ought to keep, such bodies most strictly within those powers.The Crown is not different from a private person in similar cases.The liberty of the subject must be carefully guarded. There isno proof in the present case that “ Mount Mary ” is required fora public purpose. InMoses v.Marsland, 1K. B. 671(1901),
it has been held thata placeused for public purposesmeans,
not a place used in the public* interest, but a place towhich the public can demand admission, or to which they areinvited to come. That decision of Bruce,. -T., followed the caseoi Josolyne v. Mees'on, 53 L. T. 319. See also Mersey Docks v.Cameron Jonesf 11 H, L. Rep. 443 (1864). The GovernmentAgent has not sho^n for what public* purpose tL_ 1opd acquiredneeded, but +he defendant has established 'hat- the Govern-ment intended to putup some‘buildings fortb i guar isserving
on t. le Kelani ValleyRailway.That is nota public, purpose.
Unde 29 and 30 Viet. c. 118, section 7, prem >s in which a certified
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industrial school was held was considered not liable to the poorrate. Queen v. West Derby, 10 Q. B. 283 (1875). So, the MerseyDocks, though conferring great public benefit, were held rateable.Mersey Docks v. Cameron Jones, 11 H. L. Bey. 478. The benefitmust be direct and exclusive. Queen v. Harrowgate Commis-sioners, 15 Q.B. 1,012 (1850). [Layard, C.J.—Has it not been heldthat the Governor only can decide whether a land is needed fora public purpose or no.t?] No. [Moncreiff, J.— see section 6 ofOrdinance No. 3 of 1896: “ It shall be lawful for the Governor,” Ac.]This is only discretionary. [Monereilf, J.—But is not his discre-tion final on the question?] It is not conclusive as in the IndianAct No. 1 of 1894, section 6 (3), where it is expressly providedthat ‘‘ the said declaration (of the local Government) shall beconclusive evidence that the land is needed for a public purpose.”Locally, it has been held in D.C., Colombo, 2,133, that land acquiredfor the establishment of a school is no.t land needed for a publicpurpose.Then, there was no legal tender of Rs. 39,750 to the
appellant. Elliott v. Podihamy, 2 C. L. R. 152. No money wasoffered to him. And the amount intended to be offered was toolittle. The evidence recorded for the appellant justified anaward of Rs. 65,000 at least. That was .the market value of theproperty at the date of the acquisition, because Neyna Marikaroffered to buy it for that amount.
Rdmanathan, K. C., for the respondent.—The mandate of theGovernor, given under section 6 of the Ordinance No. 3 of 1876, isconclusive. The Ceylon Ordinance is differently worded fromthe Indian Act. By section 4 the Governor determines whetherland in any locality is “ likely to be needed for any public purpose,”and directs the Surveyor-General to report whether the same is
fitted for such purpose.” And if the report is in the affirmativethe Governor issues his direction to the Government Agent “ totake order for the acquisition of the land ” (section 6). Theresponsibility of the acquisition is cast entirely on the Governor.No power is given to any Court to review his discretion. Baileyv. Ferdinandiis, 3 N. L. R. 856. As to the meaning of the t.erm” public purpose,” it may be compared with the term “ publicworks,” which according to Ogilvie means works constructed atpublic cost.On this analogy, acquisition for public purpoJe
would mean acquisition of land paid for out, of the public,exchequer and brought to fcredit as a public asset. The case ofJosolyne v. Meeson, 15 L. T. 319 (1885), governed the decision inMoses v. Marsland, 1 K. B. 671 (1901). The question in thefdhner case was whether an ambulance station structurally disconnectedwith any building, and from ’which the public were rigorously24‘
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1903. excluded, was a public building within section 3 of “ The Metro-AprU 8. politan Building Act, 1855,” so as to require the builder to jlepositplans and sections of the building, with the notice of its erection tothe District Surveyor, under by-law made in terms of section 16of the Amending Act of 1878. In the Act of 1855 a ‘‘ publicbuilding ” was specially defined as “ every building used as achurch or other public place of worship: every building used forpurposes of public instruction; every building used as a college,public hall, hospital, theatre, public concert room, public ballroom, public lecture room, public exhibition rooms, or for anyother public purpose.” In this Act ‘‘ public purpose ” meanspufilic purposes ejusdem generis. As every building there men-tioned is one to which the public had access, “ The MetropolitanBuilding Act, 1855,” (18 and 19 Viet. c. 122, section 3), is not a usefulguide for construing the Ordinance No. 3 of 1876. The cases whichexplain that Act do not apply to the present case. . The only wayof construing the expression “ public purpose ” in our Ordinanceis to assign to it its ordinary meaning, as given by Ogilvie. If theland acquired is acquired by the Government at public cost, itwould be land acquired for a public purpose. The Governor’smandate is final. [Layard, C.J.—Section 12 of the Ordinance' supports that view. It provides that a.t any time after the GovernmentAgent has made an award i.t shall be lawful for .the Governor todirect that the land be taken possession of by some officer of theCrown, and that upon the said officer signing a certificate the saidland shall absolutely vest in Her Majesty.] Quite so. Then, as tothe “market value” of the property. That expression, occurringin section 21 of the Ordinance, has not yet been properly defined. Itis neither cost value, otherwise known as natural value (Cripps OnCompensation, p. 119); nor scarcity value, that is the value intimes of scarcity; nor monopoly value; nor utility value or thevalue which one pays on account of the usefulness of the articleto him; nor fancy value; but exchange value, which varies withthe demand and supply, rising as the demand rises and fallingas the supply falls. In exchange valu*, the cost of production andthe profits of the producer are modified by the wants andresources of purchasers. SymeJs Industrial Science, p. 124. Inth® Century Dictionary “ market value ” is said to be valueestablished or sfyown by* sales, public or private, in the ordinarycourse of business. Ney'na Marikar’s offer to buy the property inJune,’1901, that is*nine months before the Government Agentawarded the compensation, cannot be accepted as the market valueof the property. That offer wasjhot accepted in June, 1901. It waslost for good, as the Moorman^ bought anothei house in a better
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locality for a smaller amount' and lie admitted he" did not want" Mount Mary ”in March, 1902. The Government Agent placedenough material before the Court to arrive at the market value ofthe property. It was shown that according to the price realizedby the owner of “ Karlsruhe,” which was next to ” Mount Mary,”Rs. 39,750 for “ Mount Mary ” was sufficient compensation. Anestimate according to cost value also pointed to that sum asreasonab1" And if the test of worth at so many years’ purchasebe considered, it will be found that a very excessive amount hasbeen offered. The expression “to J>e worth so many years’purchase ” is said of property that would bring in, in the specifiednumber of years, an amount equal to the sum paid. “ To buy an•estate at .twenty years’ purchase ” means to buy it for a sum equalto the total return from it for twenty years, The yearly returnfrom " Mount Mary ” being Rs. 1,200, the sum of Rs. 89,750 awardedi would represent .thirty-three years’ purchase, a most unusual limitof years. The usual period is from ten to twenty years’ purchase..The sum awarded was offered in fact, but not accepted by theclaimant.
Domhorst replied on the question of tender and market value.
Cur. adv. vult.
8th April, 1903. Moncreiff, J.—
This was a case under the Land Acquisition Ordinance, No. 3 of1876. The Government Agent of the Western Province, proposingto acquire under the Ordinance a portion of land called “ MountMary, offered to the claimant, James Perera, who now appeals, asum of Rs. 39,750 by way of compensation.
It is said that the Government Agent did not tender the amountas required by the Ordinance, with “ current coin in an out-stretched hand, ” as the District Judge puts it. But, I think, theobjection is not seriously meant. The offer was refused, and ona reference to the District Court the claimant was awarded theexact sum offered by the Government Agent.
The claimant appeals, urging that the land is not required for apublic purpose within the meaning of the Ordinance, and that thevaluation of the District Judge and the Crown Assessor is wrong.The Judge says that the land is required for quarters for drivers andguards of the Ceylon Government Railway .and that it is alreadyplotted out for the construction of nineteen cottages for guards and
drivers, the old main building being let as a club and hall.
Before entertainic the objection iiiat the land is not required fora public purpose, /e must find whether the apellant is entitled
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to raise it. The Indian Land Acquisition Act is based upon thesame materials as our Ordinance, but differs in matters of detail,and comparison with it does not, I think, .assist us much upon thispoint. By section 4 of our Ordinance—whenever it shall appearto the Governor that land in any locality is likely to be neededfor any public purpose, it shall be lawful for the Governor todirect the Surveyor-General or other officer generally or speciallyauthorized by the Governor on this behalf to examine such landand report whether the same is fitted for such purpose. Thiscourse may be taken when the Governor thinks it likely that theland will be needed for the puSlic purpose. Provisions follow asto what the authorized officer may and shall do, and section &provides: “ the Surveyor-General or other officer so authorized asaforesaid shall then make his report to the Governor, whether thepossession of the land is needed for the purposes for which itappeared likely to be needed as aforesaid.” I think this sentencehas not been intelligently adopted, because it implies that the officerauthorized to examine the land and report whether it is fitted forthe purpose for which the Governor thinks it likely to be neededreports to the Governor whether it is needed. However, accord-ing to the wording of the section, when the authorized officer hasreported, whether he reports that the land is or is not needed,” upon the receipt of such report it shall be lawful for theGovernor, with the advice of the Executive Council, to direct theGovernment Agent to take order for the acquisition of the land.”According to section 6 of the Indian Act, a declaration must bepublished in the Gazette to the effect that the land is needed fora public purpose or for a company, and the “ said declaration shallbe conclusive evidence that the land is needed for a publicpurpose or for a company, as the case may be.” There is no suchprovision in our Ordinance. No declaration is required. But itseems to me that the Governor has a discretionary, ana notu compulsory power. He is not bound to take the report of theSurveyor-General or authorized officer, but it is left to him to say,with the advice ’ of the Executive Council, . whether the land isneeded for the public purpose. I find'no provision in the Ordinancefor questioning his decision. I find no trace of an intention thatit should be questioned.*
*The only remaining ljiatfcer is the payment of compensation topersons interested. The ” matter ” which, the Government Agentrefers to the District Court is the value of the land and theamount of compensation. The District Court has no power toconsider whether the land is peeded for a public purpose. Tljisview is, 1 think', confirmed by the terms of section 12-, which
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provides that “ at any time after the Government Agent has madeati award under section 10, or a reference to the Court under section11 ”, and certain formalities have been observed, the said landshall vest absolutely in Her said Majesty free from all encum-brances ”, If, therefore, the moment a reference is made undersection 11 and before the matter referred is heard, the Governorcan, by taking certain steps, cause the land to vest absolutely inthe King, it is impossible to suppose that his decision to the effectthat the land is needed for public purposes can be questioned.
In my opinion, the appellant cannot enter upon that question.
Some criticism has been bestowed upon the remarks ofWithers, J. in Government Agent, Badutta, v. Gomalis (3 Browne,27) as to the tests of the market value of land. His suggestionswere subject to " surrounding circumstances ”. He did not meanthat the rent of the land or the sum realized at a public auctionwas always a sound test. Indeed I understand him to mean nomore than this, that any fact which may reasonably affect anestimate of the value, of the land may be taken into consideration,provided that it is not rendered irrelevant by surroundingcircumstances.
In this case, the Government Agent capitalized the rent whichthe owner had received at Rs. 30,000, allowed Rs. 3,750 becausethe land might be improved, added Rs. 6,000 in respect of buildingsites, and put the compensation due at Rs. 39,750. Mr. De Vos.the witness upon whom the respondent mainly relied, thoughtthis was not a fair basis of calculation, the Judge rejectedit, and I do not think it could be usefully applied here. We haveno sufficient materials for applying it. Mr. De Vos valued the land.(which is 5 acres 2 roods and 16 perches in extent) at Rs. 26,500and houses at Rs. 13,000, thus producing a total market value ofRs. 39,500. I think this is not a satisfactory method.
It was pointed out in the Canonry Case (3 Browne. 131) that it isnot always reasonable to reach the value of land with buildingsupon it, and of buildings upon the land, by estimating their valueseparately. The land and thp buildings depend intimately uponeach other for their value., and when premises are sold not in lotsbut as a whole, it may be fallacious to^ value them piecemeal.
While accepting the various tests suggested as useful by wayof comparison, we think the, circumstance! of thg case offer a•standard of valuation which ean be easily applied. Karlsruhe estate,which adjoined “ Mount Mary ”, was sold in and .after June, 1900.partly by auction and partly by private contract. Its elevation isslightly greater, and bn one side it feaces Campbell Park. On theother hand, in order to make ‘^MoVmt Mary” completely fit for
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building purposes, it has been necessary to remove a cabook hilland fill up a depression of the ground with the materials. Itappeared to us, however, on visiting the site that the advantageof the Karlsruhe estate for building purposes is very slight, andthat the prices obtained for it might be taken as a fair indicationof the market value of “ Mount Mary Each of these estates had afine house upon it. The Judge says that the Karlsruhe house wasthe more stately, and the Mount Mary house more commodious.
6 acres 3 roods and 4 perches of “ Karlsruhe ” were sold in lots byauction for Rs. 40,650. The remainder, which included the house,sold as follows: lot 2 (2 roods 12 perches), Rs. 5,000; (lots 4, 5, and14 (4 acres 2 roods 26 perches), Rs. 36,000; total 5 acres 38 perches,As. 41,000. It would scarcely be fair to value “Mount Mary” by theaverage price per acre realized on the sale of the whole of thisneighbouring property. It contained 12 acres, and the extra valueof the house diminishes as the acres increase: the extent of “ MountMary ” is about five acres and a half. But finding that Karlsruhehouse with 5 acres 38 perches of land sold privately for Rs. 41,000,it seems reasonable that the adjoining 5 acres 2 roods and 16 ■.perches of “ Mount Mary ” with its house should be valued on the-.;same basis. I would, therefore, suggest that a sum of Rs. 44,000should be awarded to the claimant.
I agree. There are undoubtedly several tests by which themarket value of any particular allotment of land may be arrivedat, but one of the truest and fairest is the actual amount paid for asimilar allotment of land situated in the same vicinity and usedfor similar purposes. The evidence discloses that an adjoiningproperty called “ Karlsruhe ”, consisting of 5 acres, together with ahouse more stately than “ Mount Mary ” house, but less commodious,sold shortly prior to the Crown seeking to acquire “ Mount Mary ”for the sum of Rs. 41,000, or say Rs. 8,000 per acre. There is noreason to suppose that an inflated price was paid for “ Karlsruhe ”or that it realized any more than its market value. Judging fromthe price paid for Karlsruhe house ^nd 5 acres, Mount Mary housewith five and half acres would be worth Rs. 44,000, and I wouldaward the claimant that amount. The claimant is entitled tocosts, in both Courts'.
GOVERNMENT AGENT v. PERERA