112-NLR-NLR-V-42-STEVENS-v.-MUNASINGHE-et-al.pdf
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HOWARD CJ.—Stevens v. Munasinghe.
1941Present: Howard C.J. and Soertsz J.
STEVENS v. MUNASINGHE et al.
106—D. C. (Jnty.) Colombo, 3,014.
Land acquisition—Market value—Best use of land—Proof of demand for theland when put to use—Land Acquisition Ordinance (Cap. 203).
Where it is claimed that the market value of a land'acquired by theCrown should be determined by the best use to which it could be put,there must be .evidence that there would be a demand for the land whenput to such use having regard to its nature and situation.
PPEAL from a judgment of the District Judge of Colombo.
H. V. Perera, K.C. (with him D. M. Weerasinghe), for the 2nd and3rd defendants,, appellants.
G. P. Jay.etilleke, K.C., Attorney-General (with him D. W. Fernando,C.C.), for the plaintiff, respondent.
Cur. adv. vult.
June 10, 1941. Howard C.J.—
The question for decision in this case is whether the award by theAdditional District Judge of Colombo of a sum of Rs. 2fl6,000 as com-pensation for the ,compulsory acquisition by the Government of certainpremises in Colombo is adequate. The acquisition was made under theprovisions of the Land Acquisition Ordinance, Cap. 203. The mattersto be considered in determining compensation are formulated insection 21 of the Ordinance. Moreover, the principles on which compen-sation shall be determined have been considered in numerous decisions.In the Government Agent, Badulla v. Cornells1, it was held that the chiefthing to be considered in determining the amount of compensation to bepaid is the market value of the land sought to be acquired at the time ofthe assessment, i.e., when the amount was tendered. The market valuewill depend upon the extent, situation, relative position, and adaptabilityof the land for any particular use ; the use made of the propertyimmediately adjoining it, and the answer to the -question, given all thesurrounding circumstances, what is the best use to which the land canbe put. The tests of the market value of a piece of land are, the price■which would be given for it at a public auction ; the price given at recentsales for land similarly situated, taking into consideration the circum-stancess attending such sales, the opinion of an experienced valuer ; itsrent; the current rate of interest in the district; and the amount of theofficial assessment. Again in Bailey v. Ferdinandus*, the followingpassage from the judgment of Withers J. on pp. 360r361 is of considerablehelp : —
“ Now the value of landed property mainly depends on threeconsiderations : (1) the situation of the property, (2) the best use towhich it can be put, and (3) the use to which property immediately
adjoining it is put. ”
1 3 Browne's Report 27.
' * 3 N.L.R.. 356.
HOWARD C.J.—Stevens v. Munasinghe.
447
After dealing with considerations (1) and (3) the learned Judgecontinued as follows : —
“ The answer to the question: What is the best use to which the landcan be put, is, according to history, no use at all except for grazing.No one has offered to buy it for tea or cacao, and no one has offered tolease it for tea or cacao, and no one has attempted to plant tea orcacao on it …. Then why should it be valued as a building
site ? It does not become a building site because you can put upa building or two on it. A building site is a site where you canput up buildings which are likely to attract tenants as other buildingsin the vicinity …. But I think the history of the landaffords the best evidence of its value and I- regard it as provedthat the best use to which the land can be put is a grazing ground.No one has offered or tried to make a fruit garden of it, or a coconut ortea garden of it, or to convert it into a residential property.”
The following passage from the judgment of Layard C.J. in GovernmentAgent v. Perera1 is also in point: —
“ There are undoubtedly several tests by which the market valueof any particular allotment of land may be arrived at, but one of thetruest and fairest is the actual amount paid for a similar allotment ofland situated in the same vicinity and used for similar purposes.”
In Fraser v. British Steam Navigation Co. Ltd.it was argued that theJudge and assessors should have valued the land upon the basis of itssuitability as a site for the erection of workshops and offices in connectionwith a marine engineering business. In rejecting this argumentSchneider A.J. stated as follows : —
“Upon the evidence adduced it is neither practicable nor possible toascertain the market value of the land as a site for marine engineeringworks. No scheme was put before the Court showing how the landmight be developed upon that footing and what it would fetch or whatprofit it would produce when so developed: As a site for suchengineering works, it is no doubt advantageously situated from itsproximity to the harbour and the docks for repairing ships. But theeffect of the evidence is obvious that there is no demand for land to beused for such a purpose either at the present time or within a reasonabletime in the future.”
Before applying the principles laid down in the decided cases to thepresent case one Indian decision should be mentioned. In PremchandBurral v. Collector of Calcutta ’, it was held that when Government takesproperty from private persons under-statutory powers it is only right thatthose persons should obtain such a measure of .compensation as iswarranted by the current price of similar property in the neighbourhoodwithout any special reference to the uses to which it may be applied atthe time when it is taken by the Government, or to the price which' itsowners may previously have given for it. In accordance with this
3 (tsro) 2 Cat. 10:'.
* 7 N. L. R. 313.
‘22 X. L. R. 243.
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HOWARD C.J-—Stevens v. Munasinghe.
principle the question for inquiry is, what is the market value of theproperty, not according to its present disposition, but laid out in the mostlucrative way in which the owners could dispose of it.
In awarding compensation amounting to Rs. 216,000 the District Judgehas accepted the valuation of Captain Eastman, the Government Valuer,who, so he states, has valued it in the most lucrative way. CaptainEastman has made his valuation by cutting the land up into buildingblocks and valuing them by taking into consideration the pricesrealized at the sale of similar building sites. The learned District Judgehas rejected a valuation propounded by the appellants by what hedescribes as a complicated and doubtful method of valuing the landby imagining that the land has been fully built upon and valuingthe property on a rental basis and deducing the value of the landby deducting the cost of putting up the building and of bringing theproperty into the stage of producing an income. The District Judge hasalso rejected a similar scheme propounded by the appellants' assessor.Whereas the appellants’ witness Mr. Marikar proposes to divide the land,into seventy-four blocks on which he contemplated building houses at acost of Rs. 4,000 each to bring in a rental of Rs. 60 to Rs. 70 per month,his assessor proposed to divide it into ninety-two blocks each with abuilding costing Rs. 4,000 to bring in a rental of Rs. 55 a month. It hasbeen contended by Mr. Perera that the District Judge was wrong inaccepting the valuation of Captain Eastman which he asserts was notbased on the best use to which the land can be put. Captain Eastman’svaluation is made by comparison with blocks of land on which bungalowscommanding rentals of Rs. 200 a month and upwards are built, whereasthe most advantageous use to which 'the land acquired could be put isfor the purpose of building small cottages commanding a rental of aboutRs. 50 to Rs. 60 per month.
The only question for our consideration was whether the District Judgewas right in accepting Captain Eastman’s valuation. I agree that thequestion must be decided on the principle formulated in the various casesI have cited that the valuation must be calculated on the best use to whichthe land, having regard to all the surrounding circumstances, can be put.In this connection Bailey v. Ferdinandus1 and Fraser v. BritishSteam Navigation Co., Ltd. (supra) are helpful. Previous to theacquisition of this land by the Government no one had offered to buy theland with the idea of dividing it up into small blocks on which cottageswere to be built. There is no evidence that such a scheme had ever beensuggested. The land does not become a site suited for such a purposemerely because it can be divided up into small blocks on which suchcottages could be erected. There is no evidence that land in the vicinitywhich is a residential area has been put to such a purpose. Mr. Marikargave evidence that his houses were built in a congested area where thereis a great demand for houses. There was no evidence of a single house ofthis type being built in the area in question. There is thus no realevidence that there is a demand for land in this vicinity for such a purposeeither at the present time or in the near future. In Fraser v. British Steam
1 3 N. L. B. 356.
Joseph v. Commissioner of Stamps.,
449
Navigation Co., Ltd.' it was conceded that the site was advantage-ously situated for the erection of marine engineering works. So in thiscase it is possible that the site by reason of proximity to commercialbuildings, boutiques, buses and trams is suitable for the er.ection of smallcottages. But this is not sufficient in itself to prove that it is the bestuse to which the site can be put. Moreover the scheme as putforward on behalf of the appellants was vague and indefinite. Fulldetails of costs and rentals had not been worked out with care andprecision. No allowance was made for vacant periods, defaultingtenants and costs of collecting rents. There was no comparison with theprofits after deduction of working costs made by other persons who hadexpended capital in similar enterprises. The scheme was put forward by awitness without professional qualifications who was not an experiencedvaluer. In all the circumstances, I am of opinion that the District Judgequite properly rejected it. Having rejected the appellants’ basisfor the assessment of the market value of the property the District Judgewas correct in accepting the valuation of Captain Eastman which wasbased on actual amounts paid for similar allotments of land situated in thesame vicinity and used for similar purposes.
The appeal for the reasons I have given in this judgment is thereforedismissed with costs.
Soehtsz J.—I agree.
Appeal dismissed.