IN THE HIGH COURT OF FIJI
AT SUVA

CIVIL JURISDICTION

CIVIL ACTION NO: HBC 83 OF 2006

BETWEEN:

THE ATTORNEY GENERAL OF FIJI
PLAINTIFF

AND:

ATENDRA SINGH
DEFENDANT

Mr. Z. Sahu Khan for Plaintiff 
Mr. G. O'Driscoll for Defendant

Date of Hearing: 7th September 2006 
Date of Judgment: 19th October 2006
JUDGMENT
Atendra Singh, the defendant is the registered proprietor of CT 17196 situated at Sawakasa, Tailevu, The State has compulsorily acquired 1.1108 hectares of his land for the purposes of upgrading the Lodoni Road. It was initially thought that 2.4560 hectares would be required for upgrade but the area was later revised. The parties have not been able to agree to how much compensation should be paid so they have asked the court to fix the compensation. The issue here is what is the proper compensation which ought to be paid to the defendant.
Statutory Provisions:
The factors which guide the court in fixing compensation are set out in Section 40(2)(b) of the Constitution which requires the compensation to be "just and equitable taking into account all relevant factors including:
	(i) the use to which property is being put;
	(ii) the history of its acquisition;
	(iii) its market value;
	(iv) the interests of those affected; and
	(v) any hardship to the owner."
The use of the word including suggests there may be other relevant factors which a court may consider
Further Section 12 of the State Acquisition of Lands Act provides the mandatory factors which the court should take into consideration and factors which it should not take into consideration in determining compensation. The factors listed in Section 12 are more detailed than those given in the Constitution.
Section 12 provides:
"In determining the amount of compensation to be awarded for land acquired under this Act -
	(a) the court shall take into consideration -
(i) the market value of the land at the date of the notice of intention to take such land;
(ii) the damage sustained by the person interested, by reason of the taking of any standing crops or trees which may be on the land at the time of taking possession thereof;
(iii) the damage, if any, sustained by the person interested, at the time of taking possession of the land by reason of severing such land from his other land:
(iv) the damage, if any sustained by the person interested, at the time of taking possession of the land, by reason of the acquisition injuriously affecting his other property, real or personal, in any other manner, or his earnings;
(v) if, in consequence of the acquisition of the land, the person interested is compelled to change his residence or place of business, the reasonable expenses, if any incidental to such change:
	(b) but the Court shall not take into consideration -
(i) the degree of urgency which has led to the acquisition;
(ii) any disinclination of the person interested to part with the land acquired;
(iii) any damage sustained by him which, if caused by a private person, would not render such person liable to a suit;
(iv) any increase to the value of land acquired likely to accrue from the use to which it will be put when acquired;
(v) any increase to the value of the other land of the person interested likely to accrue from the use to which the land acquired will be put; or
(vi) any outlay or improvements on or disposal of the land acquired, commenced, made or effected after the date of the notice of the intention to take such land."
One can see that the market value is referred to both in the Constitution and the Act. The hardship to the owner referred to in the Constitution would involve the need to relocate residence and business and associated inconvenience. Hence there is some overlap between factors mentioned in the Constitution and those mentioned in Section 12.
Case Law Approach:
Some brief remarks about compensation to be paid need to be stated In Cedar Rapids Manufacturing and Power Company v Lacoste - (1914) AC 569, 576 the Privy Council looking at the compensation in Canadian context remarked that the principles upon which compensation is-to be awarded are:
	"(1) the value to be paid for as the value to the owner as it existed at the date of the taking, not the value to the taker.
	(2) The value to the owner consists of all advantages which the land possesses, present or future, but it is the present value alone of such advantages that falls to be determined."
Land which is compulsorily acquired must be valued not merely by reference to the use to which it is being put at the time when its value is to be determined but also by reference to the uses to which it is reasonably capable of being put in the future - Raja Vyricherla Narayana Gajapatiraju v Vizagapatarn -1939 AC 302. In the present case the land was not being put to use so the proposed subdivision may be a relevant factor to be considered.
The court has to consider not only the value to the seller of the land in its actual condition but also its existing advantage and possibilities - Frazer v City of Fraserville - 1917 AC 187
I shall now consider the various relevant factors as per statutory provisions
Market Value:
Central to the concept of market value are a willing buyer and a willing seller. I adopt the defendant's valuer's definition of Fair market value as "the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in arms-length transaction after proper marketing, wherein the parties has each acted knowledgeably prudently and without compulsion".
Both parties presented a valuer each to testify. They came with figures for compensation wide apart. The state valuer adopted a figure of $27, 800.00 per hectare as the market value of the land in question. He used three methods to arrive at the figure. The first was figures for comparable sales The Lands Department keeps records of all sales in Fiji. These figures are obtained from the office of Commissioner of Stamp Duties and therefore provide figures for what a willing buyer paid to a willing seller. He used five sales within ten kilometers of the land in question. These five lands were ten kilometers towards Nausori from the subject area Hence they would be close to Korovou township and in normal circumstances would get a somewhat higher price than a land which is further away. These five comparable sales all involved freehold titles so the system of tenure was same as that of the subject land.
The highest sale price was in respect of sale number 3 in his comparable sales list. It sold for $1.90 per square meter that is $19,000.00 per hectare in May 2002 so an upward revision was necessary with passage of time and also because of the difference in tenure between native land and freehold. Freehold is generally more valuable than native land. The acquisition notice is dated 18th November 2005. The plaintiff's valuer valued the land on 26th November 2004. He adopted the market value of $27,800 00 to work out his figures for compensation.
Secondly he used figures from other acquisition cases along Lodoni Road. He used eight cases along Lodoni upgrading road where compensation was negotiated out of court. These acquisitions concerned native lands. The amount per hectare in seven cases ranged from $12,500.00 per hectare to $17,500.00 per hectare. In the eighth case $27,900.00 per hectare was given. This high figure was giver as it involved school property, the state had problems with land owners and the state was forced to give a higher figure because of the vital importance of the project and it was being held up.
The position in respect of this particular school property was not on the basis of a willing buyer and a willing seller negotiating in open market but one of one possible buyer who was compelled by dire necessity in the national interest and a seller who had the opportunity to take advantage of the state's predicament. Hence it is a sale at an inflated price and one sees it is about $10,000.00 higher per hectare than other acquisition payments.
The plaintiffs valuer also used Before and After Method of Valuation It is a method of valuation which looks at the valuation of land before acquisition and the value after acquisition and effect of severance. The difference in value is the compensation payable. He used the figures from Matadali Naitaki that is $27,900.00 per hectare valuation as his base figure and then calculated what effect the new road alignment would have on each lot of the proposed subdivision by the plaintiff. Using this method he arrived at a figure of $30.900.00 which is the difference in value between pre and post acquisition value.
In arriving at the market value the defendant's valuer also took comparable sales into account. The key word is comparable. Sales considered must be of similar land that is rural agricultural and if possible close by He took into consideration nine properties of which six were not even located in Vitilevu. One each was from the island of Qamea, Taveuni and Koro. Three others were from the province of Cakaudrove. A Seventh was in Navua and therefore quite far away. One can hardly claim these to be comparable sales. The comparable sales used by the State are far more in harmony with the subject land because of their location close to the subject land. Additionally, the defendant's valuer in giving figures for comparable sales does not disclose details of legal description, the names of vendor and purchaser, area and sale price He gave only just bare figures.
I accept the market value adopted by plaintiff's valuer that is $27,800.00 per hectare.
Since this is a compulsory acquisition and therefore against the wishes of the defendant, other factors need to be considered and therefore an upward adjustment of figures has to be made.
Damage to crops and Trees:
The land in question is unimproved land zoned rural. There are some squatters on it who would therefore be an impediment to any proposed subdivision. There is no evidence of any trees or crops which were on the land at the time of taking of the possession but the defendant's valuer has provided for loss of trees see his appendix 2.
Severance:
Taking part of a person's land may cause damage to the land left behind. It may result in depreciation in value resulting from division of land into small parts or its reduction in area and consequential loss of value for its current or potential use. Generally the before and after method is used to consider severance and its effects.
In considering this issue, I have looked at the acquisition diagram. The acquisition diagram refers to balance area which has been severed from the rest of the land. It was not clear from evidence whether the balance area referred to all the severed pieces on the seaward side or just one. It was also not clear how big were these pieces so the court went on a visit to the site with the parties' and counsels to better understand the evidence and to get some idea of the size of these severed pieces.
The balance areas will remain the property of the defendant. One must note that there was an existing road with a road reserve. All the present acquisition does is to widen the existing road so really there is no fresh subdivision of the property. The small portion on the seaward side already existed.
Severance is a relevant factor for consideration in this case. The State valuer has looked at the effect of the road on a proposed subdivision and added 20 percent of the market value to his figures. When examined closely, one sees that the 20 percent was added not to the market value but to market value plus 30 percent for disturbances and injurious affection The 20 percent should have been calculated on $30.900.00 and not $40.170.00 which the valuer mistakenly did. The defendant can consider himself fortunate in this respect.
Damage sustained by other property or effect on his earnings:
There is no evidence of this except for income from the quarry The defendant's valuer stated that the defendant would lose 26.902.43 cubic meters of rocks He calculated the value at $5 50 per cubic meter and came to a total of $147,963.00 There are photos of the quarry site in defendant's valuer's report. There was a quarry lease to Covert. The quarry is not in use
I do not have evidence as to who put the quarry machinery there. I do not know when the lease to Covert will expire and whether the defendant ever operated the quarry himself or not and if he did operate the quarry then how much did he earn from it and the figures required would be nett figures.
Also when questioned by the Court, the valuer stated that there were no survey pegs when he visited the site so he could hardly have known the extent of road encroachment onto the quarry site if any This would immediately cast doubt on the volume of rocks he gave up to one hundredth of a cubic meter. He is the valuer; he is the expert called to court to put matters up with clarity He has put a substantial claim for the quarry site so he should have explained how he arrived at his figures. He simply cannot throw figures at the face of the court and expect the court to agree to those figures uncritically
On evidence adduced I do not know who runs the quarry at present and the nature of the arrangements between Covert and the defendant.
Covert, it is generally known and I can take judicial notice of it, was the company initially contracted to upgrade the Lodoni Road but it abandoned the works. It may well have set up the quarry to extract rocks for its upgrading works.
A separate calculation for the quarry would also result in a “double dipping” the State by acquiring after allowing for injurious affection would acquire and pay for everything on and beneath the acquired portion of the land so why should it pay for rocks which come onto the path of the road.
Change of Residence - Relocation:
There is no evidence that the defendant had to relocate. After all the land was unimproved land so no allowance can be given for this aspect.
Proposed Subdivision Plans:
The defendant also testified that he had a subdivision plan for the land since 1991. That has not been implemented. He was asking for cost of resurvey.
I do not believe him at all that the proposed subdivision was ever surveyed, so I do not believe that he paid $70,000.00 to a surveyor. He cannot therefore ask for costs of resurvey. His valuer stated that the scheme plan was there but individual lots were not demarcated. The plans attached to affidavits show no survey pegs. None of the lots has areas marked on them which would have been shown had a survey been done.
If the defendant had paid such a substantial sum to a surveyor, surely he would have brought some evidence of payment like receipts or calling the surveyor himself to confirm the survey.
He stated in cross-examination that he had not done preparatory work on the subdivision plan so really it is a subdivision in theory only. Its last approval from Town & Country Planning Board expired in 2002. Hence it has remained a plan and it has not moved forward since 1991. So I have to consider it as a hypothetical subdivision plan.
In reaching his market value the defendant's valuer used the highest and best use concept as a factor. He looked at the scheme plan with three lots as being for hotel/motel zoning use and the rest for agriculture.
He has not considered the fact that this optimum use basis remained a remote possibility for so long and also not considered whether the defendant has the financial resources to put the plan into effect and the costs of implementing the plan
In Boat Park Limited v Hutchinson - 1992 2 NZLR 74 at 84 the New Zealand Court of Appeal commented as follows about the hypothetical subdivision.
	"where the land has potential for subdivision and the sale of smaller lots, the hypothetical subdivision approach is likely to be of assistance. It is acknowledged, however, that this approach requires the valuer to make a number of assumptions and estimates, many or most of which defy infallibility. Thus the valuer must estimate the gross realization of the property based on assumptions about market demand and the period required for the development and sale of the sections, estimate selling expenses, including legal fees and agents' commissions, make an allowance for profit and risk, and estimate the direct engineering and development costs and the indirect holding and financial costs and costs of purchase. An error in any premise or step in this extensive exercise can have a cumulative or multiplying effect and seriously impair the reliability of the ultimate figure arrived at."
The defendant's valuer gave no allowance for disturbances because he used the highest and best use method whilst the plaintiff's valuer made allowance for disturbance while also taking the theoretical subdivision into consideration in fixing his value.
The market value must be assessed on the basis of a willing buyer and a willing seller negotiating in a friendly and not hostile manner between fair minded people. Fair minded people do not take advantage of the others predicament with no thought except to make maximum profit out of the plaintiff’s dilemma. The Constitution states that compensation must be "just and equitable" not extortionate.
The road had to go through the defendant's land. It could not go through the ocean. The defendant ought not to see this as opportunity for an extortionate windfall. At the same time a fair minded plaintiff must be aware of the advantage it was gaining by having the road there so the figure it must offer must be in excess of the market value of the land and allowance must be made for various factors listed above.
Electric Wave Lengths:
The defendant it appeared to me quite distinctly to fall into this category of person seizing on the opportunity The defendant even included a claim for $125,000.00 for electricity way leaves. He conceded that the Land Acquisition Act makes no reference to adjustment for electricity way leaves but since the State is the acquiring authority he is putting a claim to it. He agrees that the Fiji Electricity is responsible for provision of power. The power line the defendant's valuer in his report states traverses 5 proposed subdivisional lots and he assessed compensation for this traverse including trespass in the sum of $125,000.00. I cannot see any reason why the State should be responsible for the act of a separate statutory body which created the power lines.
Conclusions:
The State has used as its basis the figure of $27,800.00 per hectare as the market value of the and in question. This value is close to what it paid to Mataqali Naitaki, a price which was far in excess of what was paid to others affected by acquisition. To it the State added certain percentages for injurious affection and other disturbances and came to a figure of $48,200.00 and rounded it off to $50,000.00.
The-defendant's valuer using comparable sales reached a figure of $14.55 per square meter or $145,500.00 per hectare. Using the Before and After Method he came to a total compensation of $231,000.00 and on piecemeal approach a sum of $300,000.00. These figures are on the basis that the area to be acquired was 2 4560 hectares. Since it was later reduced to 1.1108 hectares the figures would be half of these or slightly less. The defendant has gone astray by using comparable sales from non-comparable areas and has reached a very high figure for market value. This has had a spiraling effect on his figures.
I am of the view that the defendant's demands are grossly excessive. The plaintiff I believe has offered the defendant a just and equitable compensation of $50,000.00 for 1.1108 hectares that is roughly $4.50 per square meter.
Both counsels at the end of their submissions informed the court that after the road is complete, there ought to be a re-survey done so the exact area taken up by the road is known. Mr. Sahu Khan told the court that the State is not going to ask for a refund if the area turns out to be below 1.1108 hectares but however if the area taken up exceeds 1.1108 hectares the State will pay an extra sum per square meter as per the figures assessed by the court. I consider the counsels' suggestions as wise. Hence I order as follows
	(1) That the State shall pay the defendant the sum of $50,000.00 for the 1.1108 hectares of compulsorily acquired land
	(2) A survey of the area acquired be done within three months of completion of the road by the plaintiff.
	(3) In the event it is found on survey that the road covers more than 1.1108 hectares, than the plaintiff is to pay the defendant at the rate of $4.50 per square meter of excess land taken.
	(4) I make no order as to costs because the plaintiff made the offer to the defendant of a sum with which the court finally agreed but the defendant did not accept it.
[Jiten Singh]
JUDGE
At Suva
19th October 2006