Court of Appeal
Civil Appeal No. 7 of 1988
2nd June, 1989
SIR JAMES A. SMITH, P.
KENNETH ST. L. HENRY, J.A.
SIR JOSEPH A. LUCKHOO, J.A.

Edwin Flowers for the Appellant.
Glenn Godfrey for the Respondents.

Acquisition of Land - Land Acquisition (Public Purpose) Act, Cap. 150 - Assessment of compensation for lands compulsory acquired - Whether the potential use of the land had to be taken into account in assessing the compensation or only the actual use at acquisition - General approach to be adopted in assessing compensation for land compulsory acquired.

J U D G M E N T

LUCKLOO, J.A.

This is an appeal by Maxwell Mote from the award made by a majority of the Board of Assessment appointed under the provisions of section 12 of the Land Acquisition (Public Purposes) Act, Chapter 150 of the Laws of Belize.

The appellant was the owner of 36.31 acres of land at Caye Chapel consisting of a 31-acre parcel, a 5-acre parcel, an 86ft. by 100ft. parcel and a 50ft. by 100 ft. parcel. On the latter two parcels was a warehouse measuring approximately 30ft. by 60ft. and a staff house of the same dimensions, 18.679 acres of the 31acre parcel was designed for use as an airstrip though it was not registered as such. The respondent Pyramid Isle Ltd. owned virtually all the other lands on Caye Chapel.

Pyramid Isle Ltd. (the Promoter) made application in or about 1985 for the compulsory acquisition of the 36.31 acres of land belonging to Mote for the purpose of constructing an airstrip and other related facilities thereon. As a result, an inquiry was held under s. 3 (4) of that Act into the purpose for which the lands were required by the Promoter and whether that purpose was likely to prove useful to the public or to a substantial class or section of the public. The record of such inquiry was laid before the National Assembly in accordance with the provisions of s. 3(7) of the Act; and the National Assembly approved the compulsory acquisition of the whole of Mote's lands for the purpose for which they were sought to be acquired by the Promoter. On October 28, 1987, the Minister of Natural Resources, acting in accordance with s. 3 (8) of that Act, declared the said lands to have been acquired by the Promoter for that purpose and gave notice that by virture of s.3 (8) the said lands shall vest absolutely in the Promoter free of all incumbrances. This notification was published in the Gazette on October 11, 1987, and thereupon the lands vested in the Promoter. The Promoter had, prior to that date, been left into lawful possession of the lands under and by virture of the exercise of the powers vested in the Minister of Natural Resources by s.4 of the Land Acquisition (Public Purposes) Act, Cap. 150, and by noticc under s.4 of the Land Acquisition (Promoters) Act, Cap. 149, published in the Gazette of March 8, 1985. The Promoter' offered the sum of $255,000 as compensation but this amount was rejected by Mote. The Promoter's offer was based on a valuation undertaken by personnel from the Lands Department, Ministry of Natural Resources, at the request of the Promoter. As a result of the Mote's rejection of the Promoter's offer the appointment of a Board of Assessment became necessary to determine the amount of compensation which should be paid by the Promoter to Mote. A Board of Assessment duly constituted began its hearings in 1988.

At the hearing before the Board of Assessment, Mote relied on the testimony of James V. Hyde, a chartered valuator and surveyor and Kenneth Blackburn, Mote's attorney, while the Promoter relied on the testimony given by Hallet G. Moody, presently Permanent Secretary, Home Affairs, and formerly Principal Lands Officer in the Department of Lands and Surveys, and Clinton Gardiner, an officer in the Ministry of Natural Resources, for the purpose of ascertaining the market value of the lands at October 31, 1985, being the date two years prior to the second publication in the Gazette of the declaration under s.3 of the Act as contemplated by s.19(a) of the Land Acquisition (Public Purposes) Act, Cap. 150.

The rules for the assessment and award of compensation by a Board of Assessment for the compulsory acquisition of land are set out in s.19 of the Land Acquisition (Public Purposes) Act, (Cap. 150) as follows:

"19. Subject to this Ordinance, the following rules shall apply to the assessment and award of compensation by a Board for the compulsory acquisition of land-

(a) the value of the land shall, subject as hereinafter provided, be taken to be the amount which the land, in its condition at the time of acquisition, if sold in the open market by a willing Seller, might have been expected to have realised at a date two years prior to the date of the second publication in the Gazette of the declaration under section 3:

Provided that this rule shall not affect the assessment of compensation for any damage sustained by the person interested by reason of severance, or by reason of the acquisition injuriously affecting his other property or his earnings, or for disturbance, or any other matter not directly based on the value of the land;

(b) the special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which the land could be applied only in pursuance of statutory powers not already granted, or for a particular purchaser or the requirements of any Government department;

(a) ………………………

(b) ………………………

(c) ………………………"

Section 20 of that Act provides that in assessing compensation payable the Board shall assess separately the compensation payable in respect of (a) undeveloped land, and (b) developed land and any buildings standing on the land.

The rules set out in s.19 are substantially the same as those which obtained in England from the Land Clauses Consolidation Act, 1845, 8 & 9 Vict. c. 18, save that by s. 19 (b) of Cap. 150 special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which the land could be applied only in pursuance of statutory powers not already granted, or for which there is no market apart from the special needs of a particular purchaser or the requirements of any Government department. This exception is the same as that contained in the third of the rules for the assessment of compensation in the Acquisition of Land (Assessment of Compensation) Act, 1919 (9 & 10 Geo. 5 c. 57, s.2 (3). Thus the English case law on the subject prior to the 1919 English Act must be read bearing this exception in mind.

Mr. Hyde testified that on April 25, 1988, he made an inspection of Mote's lands at Caye Chapel and estimated the market value of those lands to be $1,700,000 Belize. He found the lands to be of coral formation of limestone structure, the highest point above water being 3ft. at the center and the other areas well drained sandy beaches in most places. His valuation of $1,700,000 was based entirely on the lands being subdivided into lots by reference to a bench mark sale made some eight years earlier fortified by sales on nearby cayes which be considered to be of inferior qualities. The bench mark sale is an arms length, sale dated 27.2.80 of a sea front lot at 75ft. frontage and 100ft. depth for $16,500 US. This works out to $4.40 per sq. ft for the land sold. Mr. Hyde submitted a report setting out in detail a description of the location and accessibility and physical description of the lands, its potential for development and an analysis showing how he arrived at the estimated market value of $1,700,000

His valuation as contained in his Report is set out hereunder:-
"Valuation

Value say $1,700,000.00"

The Chairman of the Board speaking for the majority of the Board dismissed Hyde's evidence in this way:

"Hyde's valuation was on what, in his view was a comparable plot, to the northern extremity. The evidence is clear that the northern lands were of superior quality to the southern 12.679 acres (sic) designated for an airstrip. His evidence is useless as to the conditions as to either parcel on the relevant date i.e. 31st October, 1987."

Mr. Blackburn testified that Mr. Mote acquired the lands in about 1978 or 1979 and was last in occupation thereof in 1980. There is on the record a judgment of the Supreme Court in proceedings for damages brought in 1985 by Mr. Mote and Mr. Blackburn against Pyramid, Isle Ltd. and Parks where it was found that the plaintiffs did suffer loss of use and enjoyment of the lands in question at the hands of the defendants. Damages amounting to $255,000 were awarded the plaintiffs for the permanent loss of use and enjoyment of their lands and an order made that the plaintiffs transfer the titles to the lands to Pyramid Isle Ltd. upon satisfaction of the judgment. The trial judge, found that the plaintiffs had been sleeping on their rights. It is also on record that on June 30, 1987, the plaintiffs sought to waive the benefit of that judgment in accordance with O.45; R.2 of the Rules of the Supreme Court desiring to pursue certain acquisition proceedings which had been commenced after the filing of the writ in the action. Pyramid Isle Ltd. also made an application for an order of transfer of the lands in question as required by the judgment in the action. The trial judge decided to allow the plaintiffs to abandon the judgment in the action insofar as it was beneficial to them and to have the defendants pursue their benefits through the acquisition process.

Mr. Blackburn testified that there exists on Mote's lands, under the airstrip, a natural aquafier that produces the water supply for the island, including a hotel owned by Pyramid Isle Ltd. The airstrip is the highest point on-the entire area of Caye Chapel. Mr. Mote was desirous of purchasing Pyramid Isle's interest in the island but his offer was not acceptable. On March 12, 1985, an Ontario numbered company made an offer in writing to buy from Mr. Mote, for $1,100,000 U.S. the four parcels comprising Mr. Mote's lands and the structures thereon. The sum of $50,000 U.S. was paid by the Ontario company as a deposit and the date set for completion was fixed as September 30, 1985. The sale was never completed apparently because the Promoter had made application for the compulsory acquisition of the lands (see Notice No. 309 in the Belize Gazette of March 8, 1985). Blackburn also testified as to an agreement by Mote to sell to a Mr. Strattford in 1983, three lots for $12,060 U.S. each. 'Those lots are depicted on a plan (ex. K. B. 6) showing the airstrip and 5 acres adjacent to it and lots 1-4 surveyed. According to Blackburn, subdivision approval was given for the lots sold to Strattford. The sales were not completed, Mote being unable to give clear title "because of the Promoters Land Acquisition". As a result Mote had to refund the 20% deposit paid by Strattford.

Mr. Moody testified that in arriving at a valuation of $255,000.00 Belize for the parcels owned by Mote on Cave Chapel in January 1986, he took into consideration the Land Tax Assessment for, 1983 for three parcels - 31 acres, 5 acres and the two lots. The assessed unimproved value for the 31 acre parcel is stated in the Notice of Assessment to be $69,750, for the 5 -acre parcel $17, 500, and for two lots $8,000.

Mr. Moody's valuation is set out below:

"VALUATION OF 43 ACS. APPROX. SITUATE AT CAYE CHAPEL

The subject property consists of the following parcels of land:

(1) 31 acres-designated as an airstrip
(2) 5 acres-designated as parking area for the airstrip
(3) 2 lots (100' x 86' & 100' x 56')

On inspection it was found that in respect to the 31 acres that the northern portion was being used as an airstrip, and the southern portion was swamp and in parts had mature coconut trees. The 5 acres was undeveloped. However, the lots as indicated to us was built upon by Pyramid Island Resorts Ltd. There was a portion of the workers quarters on one of the lot, and on the other was a portion of the light plant workshop. It seems this was mistakenly done.

Valuation

Mr. Moody testified as to sales of lands at Long Caye (which is 2 1/2 miles south of Caye Chapel) which he conceded were much more low lying and undeveloped than Chapel Caye. He produced conveyances of Long Caye lands: (1) for 12 acres in August 1981 for a consideration of $2,000 ($166 per acre); (2) for 25 acres (parcels of 19.6 acres and 5.4 acres) in July 1986 for consideration of $4,000 ($160 per acre). He also referred to the sale on February 22,1988 of 185 acres at San Pedro (where he said values were higher than in Caye Chapel) for $22,000 ($119.50 per acre) and an offer for sale in 1985 of 15 acres on Deere Caye (just adjacent to San Pedro) for $15,000 U.S. ($200 Bze per acre). At Deere Caye the lands are lower lying than those at Chapel Caye. Mr. Moody stated that he would take into account offers for sale in the valuation process as it gives a feel for the land market but that his valuation was based on actual sales recorded in the Registry. He approached the valuation setting aside 18.679 of the 31 acres for an airstrip on the basis that the permission needed to subdivide that portion was not granted nor would such a permission be forthcoming.

Mr. Gardiner testified that he had no recollection of any request being made after 1985 for subdivision of lands at Caye Chapel. Such a request would have to be made since 1991 under the provisions of Land Utilization Ordinance, 1981, now the Land Utilization Act, 1981.

The majority of the Board in assessing the compensation which should be paid to the claimant Mote stated that it was not in keeping with s.19 (b) of the Land Acquisition (Public Purposes) Act, Cap. 150 that the landowner is to be compensated for the potentialities of his land, i.e. the land with all its potentialities on it, only its present use is to be considered. This statement is the subject of one of the grounds of appeal argued by Mr. Flowers. The majority of the Board also stated that from the facts found proven the claimant bought the subject land with the knowledge that it was set aside for a special purpose, i.e. use as an airstrip and service area; there could be no legitimate expectation that The land could be used or offered for sale for any other purpose. The majority of the Board considered that the assessments under the Land Tax Act 1982 (No. 16 of 1982) in respect of the subject property provided it with some assistance and was of the view that as the claimant did not appeal the assessment, the true market value of the lands assessed should be taken as that on the valuation roll. In my view this conclusion overlooks the fact that the landowner is not likely to appeal an assessment if it is lower than what he thought it ought to be. The majority of the Board concluded that there was nothing in the claim to support any assumption that the 31 -acre parcel, and more particularly the 18.679 portion thereof in use as an airstrip, set aside for an airstrip, would be subjected to a change of use to allow for its subdivision into lots and that the chance of obtaining permission was far from certain. In the view of the majority of the Board "the value of the lands to be assessed is that which is based on existing user value or other potentiality not requiring statutory permission" The majority of the Board was of the opinion that Mr. Moody's valuation reflected the market value of the subject properties except that there was a difference as to the valuation given to 12.371 acres by Mr. Moody. The mean between the amounts decided upon by the two members comprising the majority of the board was taken as the market value to be given to the 12.371 acre portion as provided by s. 17 of the Act. The market value as at October 31st , 1985 was therefore $298,400 Bze. The third member of the Board would have adopted the subdivision method making use of the 1982 sale of lot 131 for $20,000 U.S., the 1980 sale of lot 72 for $16,000 U.S. and the 1988 sale of lot 99 for $15,000 U.S reducing the average to one-third because of the properties not being seafront. This resulted in $11,444 per lot. The total 38 acres would in his view produce 130 lots resulting in a total of $1,457,720 as compensation.

The first ground of appeal argued on behalf of the claimer was that the Board of Assessment erred in law in interpreting section 19(b) of the Land Acquisition (Public Purposes) act Cap. 150. Section 19(b) provides that in assessing compensation the special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which the land could be applied only in pursuance of statutory powers not already granted or for which there is no market apart from the special needs of a particular purchaser or the requirements of any government department.

Mr. Flowers correctly pointed out that there was no evidence that the lands or only part thereof were subject to any statutory provision or any restrictive covenant precluding the claimant from using the lands for any purpose other than an airstrip and he argued that its potential use (subject to any statutory provision relating thereto) should be taken into consideration in assessing compensation.

It seems to me to be beyond question that the lands in question had special suitability or adaptability for the purpose of constructing an airstrip and other related facilities. Under s. 19(b) this fact must not be taken into account in assessing compensation. However, s. 19(b) does not by its terms preclude the Board from taking into consideration any more beneficial purpose to which the lands might be applied and where such use depends on the grant of subdivision approval, the possibility of obtaining such approval may be taken into consideration in assessing the compensation. In the course of the argument reference was made to the provisions of the Land Utilization Act, 1981, as requiring subdivision approval for rural land. Section 3 (1) of that Act provides the Act applies to land situate outside any City Council or Town Board of Belize and s. 3(2) provides that, subject to the provisions of s. 3(1), the Minister (of Environment responsible for land) by Order may declare that the provisions of the Act shall only apply to such area as might be described in that Order. We were not referred to any Order made under s. 3(2). Section 3(3) provides that no person may in any area under s. 3(2) subdivide any land except it accordance with the provisions of the Act. Section 14 provides that an applicant for subdivision permission is not to sell, lease, give or in any other way alienate any part of the land which is to be subdivided until he has received the final approval of the Minister thereto. It is common ground that the 5 acre parcel of the claimant's lands was subdivided in 1979, that is before the 1981 Act came into operation, and that application was made by the claimant in or about 1985 for permission to subdivide the remainder of his lands. Apparently that application was neither approved nor rejected. The majority of the Board came to the conclusion that the possibility of the claimant obtained such permission was far from certain. Had there been evidence that the lands were not subject to the requirement of subdivision permission or, that it being so subject, there was a possibility of such permission being granted, compensation would have to be assessed taking into account the potential of the lands for sale in the open market on the basis of their being subdivided.

It was next submitted that the Board of Assessment was wrong in holding that the valuation of Mr. Moody reflected the market value of the said lands. Mr. Moody's valuation was based only on recorded sales of lands on Cayes other than Caye Chapel, particularly on a number of such sales at Long Caye. The Long Caye lands sold were, as conceded by Mr. Moody, inferior to the lands at Caye Chapel. Mr. Moody did not take into consideration the offer made by the menbered Ontario company on March 12, 1985 to purchase Mote's lands and structures thereon for $1,100.00 U.S. or the agreement by Mote in 1983 to sell to Stattford 3 lots for $12,000 U.S. perhaps Mr. Moody was not aware of the aforesaid offer or agreement but the Board was and there is no indication in its reasoned decision that it gave any consideration thereto. Further, it is quite clear from Mr. Moody's valuation report that he did not take into account any improvements or erections on the lands which were done by the promoters hence his remark- "However, the lots as indicated to us was built upon by Pyramid Island Resorts Ltd. There was a portion of the workers quarters on one of the lots, an on the other there was a portion of the light workshop. It seems this was mistakenly done" (emphasis mine). This approach by Mr. Moody makes it apparent that he did not take into consideration the presence of the marina built by the promoter onto a part of the 5 acre plot and in accepting Mr. Moody's valuation of the 5 acre plot, it is my view that the Board was in error.

The judgment of the Privy Council in Sri Raja Vyricherla Narayana Gajapatiraju Bahadur Garu. v. Revenue Divisional Officer, Vizagapatam (1939) 2 All. E.R. 317 gives valuable guidance as to the general approach to be taken in assessing compensation in matters of this kind comparable legislation. It is true that the judgment in that case is to be read in the light of the subsequent English legislation and Belize legislation that the special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose to which the land could be applied only in pursuance of statutory powers not already granted, or for which there is no market apart from the special needs of a particular purchaser or the requirements of any government department. However, what is stated in the passages from the Privy Council's judgment set out below do not in any way affect the application of the statutory restriction.

Lord Romer (at p. 321 et seq) said:

"In the case of land, its value in general can also be measured by a consideration of the prices that have been obtained in the past for land of similar quality and in similar positions, and this is what must be meant in general by the market value in sect. 23. Sometimes, it happens however, that the land to be valued possesses some unusual, and it may be, unique, features as regards its position or its potentialities. In such a case, the arbitrator, in determining its value, will have no market value to guide him, and he will have to ascertain as best he may from the materials before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land in that particular position and with those particular potentialities, for it has been established by numerous authorities that the land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined (that time under the Indian Act being the date of the notification under sect. 4 (1), but also by reference to the uses to which it is reasonably capable of being put in the future. No authority, indeed, is required for this proposition. It is a self-evident one. No one can suppose, in the case of land which is certain, or even likely, to be used in the immediate or reasonably near future for building purposes, but which at the valuation date is waste land, or is being used for agricultural purposes, that the owner, however willing a vendor, will be content to sell the land for its value as waste or agricultural land, as the case may be. It is plain that in ascertaining its value the possibility of its being used for building purposes would have to be taken into account. It is equally plain, however, that the land must not be valued as though it had already been built upon, a proposition that is embodied in sect. 24 (5) of the Act and is sometimes expressed by saying that it is the possibilities of the land, and not its realised possibilities, that must be taken into consideration.

But how is the increase accruing to the value of the land by reason of its potentialities or possibilities to be measured- In the case instanced above of land possessing the possibility of being used for building purposes, the arbitrator (which expression in this judgment includes any person who has to determine the value), would probably have before him evidence of the prices paid in the neighbourhood for land immediately required for such purposes. He would then have to deduct from the value so ascertained such a sum as he would think proper by reason of the degree of possibility that the land might never be so required, or might not be so required for a considerable time. In the case, however, of land possessing potentialities of such an unusual nature that the arbitrator has not similar cases to guide him, the value of the land must be ascertained in some other way. In such a case, moreover, there, will, in all probability be only a very limited number of persons capable of turning the potentialities of the land to account. If the owner of the land is the only person who can do so, the value to him must be ascertained by reference to what profit he might thereby have been able to derive from the land in the future. Take as an example the case of an owner of vacant land that adjoins his factory. The land possesses the potentiality of being profitably used for an extention of the factory, but the owner is the only person who can turn that potentiality to account. In valuing the land, however, as between him and a willing purchaser, the value to him of the potentiality would necessarily have to be included. The same consideration will apply to cases where the owner is not the only person, but is merely one of the persons, able to turn the potentiality to account. The value to him of the potentiality will not be less than the profit that would accrue to him by making use of it had he retained it in his own possession. Take the case, however, where the owner is himself unable to turn the potentialty to account, whether by promotion of a company or otherwise. In such a case, there may be several other persons who would be able to do so, or they may be only one. If there are more than one it is recognised by all the authorities which have been cited to their Lordships, and seems to be consistent with common sense, that the owner is entitled to be paid the value to him of' the potentiality, though, the ascertainment of its value may in many cases be a matter of considerable difficulty".

In the instant case it is my view that the majority of the Board placed undue reliance on the assessments made under the Land Tax Act, 1982 (No. 16 of 1982) in respect of the subject property. I find unconvincing the Board's reasons for finding that "the land-owner cannot be heard to say that the value assessed, which has not been rejected, by him, is not the true market value having regard to the provisions of the Act". Further, as already stated, I find that the majority erred in accepting Mr. Moody's valuation, more particularly in respect of the 5 acre plot. There is one other matter to which reference should be made under the first and second grounds argued. The Board, in its reasons, stated that it was mindful that the land is not to be valued merely by reference to the use to which it is being put; i.e. Airstrip; service area and lots on which the warehouse and staff house stand, but also by reference to the use to which it is reasonably capable of being put in the future. After refering to the provisions of the Land Tax Act, 1982, the Board went on to state "furthermore there is no prospect of subdivision permission of the 31 acres being granted having regard to its stated uses to which the property was put before the Claimant's purchase and after the acquisition. Then the claimant himself in evidence at the inquiry said he bought knowing the 31 acres was set aside as an airstrip and service area." Counsel for the respondents conceded that apart from the Aliens Landholding Act which (inter alia) forbids the sale of rural land in excess of 10 acres to "aliens" without a licence from the Minister there was no other statutory or contractual provision which could preclude the owner in the instant case from utilizing or disposing of his lands otherwise than for the operation of an airfield. However, he contended that the Board expressly recognized this principle in what is set out above as the Board's approach to this aspect of the matter. Counsel for the appellant on the other hand contended that the Board's considerations as to the use of the parcels of land otherwise than for the operation of an airfield was limited to whether there was an approved subdivision or prospect of one being granted. Reading the Board's decision as a whole I think there is much force in the contention of counsel for the appellant.

The third ground of appeal was that the Board was wrong in not arriving at a value on the basis of the subdivision. Otherwise than in respect of the 5 acre parcel, the provisions of the Land Utilization Act, 1981, would come into operation and, accordingly, the special suitability or adaptability of the land for subdivision into lots for residential purpose cannot be taken into account as that purpose is one to which the land could be applied only in pursuance of statutory powers under the 1981 Act not already granted.

In the result, I would allow the appeal for the reasons stated in dealing with the first two grounds of appeal with reference back to the Board to assess compensation in the light of these reasons.

The order of the Board is accordingly set aside. The appellant shall have his costs of this appeal to be agreed or taxed.

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