Before:

A Board of Assessment constituted of:

Mr. A.L. Staine, Chief Justice (Chairman)
Mr. J.A. Waight
Mr. Allen McNab

30th July, 1980

Compensation - Compulsory Acquisition of Land - Compulsory Purchase - CAP 114 Laws of Belize, Land Acquisition (Public Purposes) Ordinance.

A W A R D

On the 20th December, 1975, the Minister of Lands, acting under the authority of the Lands Acquisition (Public Purposes) Ordinance, Chapter 114 of the Laws of Belize, compulsorily acquired for public purposes the lands which are the subject of these proceedings. Initially the lands in question comprised 101.30 acres. Of this there existed, unknown to the Government, an area consisting of lots which had already been sold by Mr. Castillo to certain persons. Government, on becoming aware of this situation, undertook to give title to those persons who had purchased land from Mr. Castillo. This being done there is left 89.51 acres, and it is this area which forms the subject of consideration, and in respect of which compensation falls to be determined.

The history of the lands can be recounted briefly.

The lands, known as Louisiana Farm, were acquired by Santiago Castillo Sr. in 1935. He acquired them from an aunt who was a nun at the time, and living in Texas. At the time of acquisition by Mr. Castillo, the lands were high bush, and used mostly for hunting. The area was unfenced and consisted of high ridge.

Over the years Mr. Castillo said he spent up to more than $1,000,000.00 developing the land. He felled the bush, stumped it out, and fenced it with barbed wire fencing. He also planted grass, imported quality cattle for breeding purposes and generally improved the quality of the land.

It appears that Mr. Castillo had entertained notions of living on the farm, when he retired from his business. It appears it was also his intention to subdivide the land into building lots, and sell them to persons wishing to purchase. He had in fact given instructions to Mr. Henry Fairweather to commence this subdivision, and, that Mr. Fairweather had commenced to do his surveys when the notice of acquisition appeared in the Government Gazette. Thereupon, Mr. Castillo instructed Mr. Fairweather to discontinue this subdivision.

It may be that Mr. Castillo in developing Louisiana Farm was not acting in accordance with the strictest dictates of business policy. He conveyed the impression that although a shrewd and successful businessman, the profit motive was not the primary incentive for the development of Louisiana Farm. There appears to have been on the part of Mr. Castillo an attachment to this land that superseded any money incentive, and an attachment which dictated the way he was prepared to act, and, indeed, acted, or so it seems.

While understanding such an attitude, we feel that we are precluded from giving any consideration to any expenditure incurred in developing Louisiana Farm, but which was not strictly necessary for the improvement of the land. This is not merely our considered view, but a requirement of the Law. Chapter 114, the Land Acquisition (Public Purposes) Ordinance, requires that the figure the Board should arrive at for the compensation payable by Government to the persons interested in the lands for its compulsory acquisition, is a figure that represents the value which the land, in its condition at the time of its compulsory acquisition, might have expected to have realized in the open market, at a date two years prior to the 20th December, 1975, had it been sold by a willing seller. Such a value would embrace Mr. Castillo's expenditure on the lands, in so far as such sums which were expended, had the effect of enhancing the value of the lands acquired.

Our law on the subject has developed along the lines of English Law, and based on the same principles with one important exception: the laws of Belize do not provide for compulsory purchase, which appears to be different from compulsory acquisition. Whether the principle of assessing market value in the case of compulsory acquisition equated it with compulsory acquisition, is debatable. In the case of compulsory acquisition, the Board has to treat the acquisition as though the transaction was a voluntary one. The notion of willing buyer and seller in the open market, is not without its difficulties, and it is this artificiality which creates problems since the Board is required to imagine a situation quite the opposite to the one which exists.

Blackstone, writing in his celebrated Commentaries, Volume I, was able to say:

"So great, moreover, is the regard of the law for private property, that it will not authorize the least violation of it; no, not even for the general good of the whole community. If a new road, for instance, were to be made through the grounds of a private person, it might perhaps be extensively beneficial to the public; but the law permits no man, or set of men, to do this without the consent of the owner of the land. In vain may it be urged, that the good of the individual ought to yield to that of the community; for it would be dangerous to allow any private man, or even any public tribunal, to be the judge of this common good, and to decide whether it be expedient or no. Besides, the public good is in nothing more essentially interested, than in the protection of every individual's private rights, as modeled by the municipal law."

Blackstone, later in the same passage quoted, conceded that in- roads had been made by the Legislature to right the "wrongs" he was so vigorously defending, but even after that concession is taken into consideration, it is a sweeping statement, and borders on the side of platitude. It asserts that on those rare occasions when Parliament interferes with the subject's land or profit, it is followed by "a full indemnification and equivalent."

It is probably true to say that compulsory purchase or acquisition existed in Blackstone's time, very much as it does today, except that the terminology has changed or altered. For Parliament one can now substitute "Minister." In all other respects the law has remained unaltered, even to the use of artifice in the terminology. Save and except that, the compulsory purchase or acquisition of land (We are now convinced that there is no difference between the two) existed since the days of Blackstone, and the practice, too, seems little changed.

The Board's task, in this case, has had the added difficulty of the land being pasture land, treated as though it was land developed for building, that is, to be cut up into building lots, and assessing its value thus.

It would be convenient, if, at this stage, if we had a bird's eye view of the land in question, as it was described to us.

It was said to be high land, and of an undulating nature used as pasture land. When the land was first acquired, its value for the purposes of determining what was payable as compensation, was worked out. For this purpose it fell to be considered for what purpose the land was being used, and it was learnt that it was used as a pasture. Valuation therefore proceeded on this basis.

But it was submitted that the best use to which the land could be put was to convert it into building land, and then cut it up into building lots, in the extended area of Orange Walk Town.

It was agreed with the Government that the best purpose to which the land could be put, was conversion into building lots, and it was also agreed that for the purpose of determining compensation payable, the land should be treated as if it had already been converted into lots.

As part of this agreement, it was stated to us that it was agreed that the 89.51 acres could be divided into 537 lots of a size 60 feet in length by 60 feet wide. In order to convert from pasture-land to building lots, it would be necessary to survey and mark out the land. Allowing for access, this would give six lots per acre, and the cost of surveys, would amount to $40,275.00. By agreement this figure has been rounded off at $40,000.00, which will fall to be deducted from the final figure which the Board determines is due as compensation.

For the purpose of arriving at the figure which we consider is due to be paid to the owner of the land, we considered evidence tendered on behalf of Government, and evidence given on behalf of the land owner. The evidence put before us was evidence which, in the main represented figures obtained from a perusal of the records in the General Registry, recording the price paid for land in Orange Walk Town, around the time Louisiana Farm was acquired by Government.

The factors with which we were concerned, were primarily:

(a) relationship of the land sold to the acquired land, i.e. quality, nearness to town, etc.
(b) the price paid;
(c) existence or provision of access roads;
(d) the height of the land.

In this connection the Board was forced to rely very heavily on the evidence of Mr. Clinton Gardiner of the Lands Department, who provided the only working figures on which we could place any reliance, since these figures represented known sales which had been recorded in the General Registry, and representing sales which had taken place between late 1972 and early 1974. The recorded sales numbered 24 and represented principally sales of land from three large estates in Orange Walk Town. These were:

1. Lands sold from the Lupita Castillo Estate
2. Lands sold from the estate of Leonides Gonzalez
3. Lands sold by B.S.I. Ltd. in the Otro Benque area of Orange Walk Town

The lots sold by B.S.I. Limited were 10 in number. These lots were all of a uniform size 80 feet by 100 feet, and sold for the price of $295.00 per lot in November, 1973, or $0.33 per square yard. This appeared to us an unusually low price, as compared with other lot prices around this same period. The Board felt therefore that it could not accept these transactions, as truly representing the market price for land in Orange Walk at that time, and that, no doubt, special considerations attached to these sales, and therefore, to accept these figures as an index of land price around that time, would be to deflate the true value of land at that period.

This was unfortunate, since there were 10 such lots out of a total of 24. But to include these, appeared to us to be grossly unfair, so we excised these lots from our consideration in attempting to fix the market value of a lot, at the time of the acquisition. Our endeavours thus, became confined to consideration of the Lupita Castillo Estate and the Leonides Gonzalez Estate.

Of the two Estates, lands of the Lupita Castillo Estate appeared the one, which most nearly lent itself for comparison with the Louisiana Farm lands. We were of the opinion mainly for the reasons that:

1. It was a fairly large estate;
2. In quality, the lands appeared lower than the claimant's lands;
3. The lands were near the claimant's lands.

We were further driven to reliance on a comparison of prices prevailing in respect of the Lupita Castillo Estate lands, since in the case of Leonides Gonzalez, the lot size was sometimes not given.

This comparison revealed that in the case of lands in the Lupita Castillo Estate, the evidence was to the effect that in two cases at least, lots from the Estate of Lupita Castillo, fetched a price of $1,500.00 each, although on an average the lot price seemed to be nearer $1,200.00. We were more inclined to the view that the lands in the Louisiana Farm Estate were of a higher quality and would therefore not command a price lower than the highest price paid for a lot in the Lupita Castillo Estate. On this basis, we were of the opinion that a fair market value of a lot in Louisiana Farm would be $1,500.00. This price we determine was based on Mr. Gardiner's own figures of sales despite his extremely elaborate tabulation that the market value of a lot would be $1,200.00. We are not here discounting Mr. Gardiner's much learning, but we express a preference for known facts as opposed to theories, which may or may not apply to our particular circumstances. Given a known demand for lots in Orange Walk Town, we would fix the market value of a lot at $1,500.00 each, without any need to deduct any advertising costs. Similarly, we are of the opinion that the practice whereby the purchaser bears all the legal costs is substantially general, and we see no need for any departure from that practice in this case. We have considered the evidence of Mr. Fairweather and Mr. Castillo, that a lot in Louisiana Farm could fetch from $3,000.00 to $3,300.00. We consider these figures extremely optimistic and a departure from reality.

Given that a lot would sell for $1,500.00, we feel that it would be reasonable to expect that access roads would be put in, and would allow a deduction of $28,000.00 for this purpose.

Having fixed the price of a lot at $1,500.00, the Board considered that it was necessary to remind itself that what it was doing was to notionally convert pasture land into building lots. We feel that in doing so, in order to be induced to part with his land, it is axiomatic that the vendor would have to receive a price which would contain that element of profit that would make it worth his while to sell. While in the case of Santiago Castillo it might not in reality be considered profit nevertheless, we are constrained to think that the so-called profit margin is a reality. The accepted norm is a profit of 20%, but from the history of Louisiana Farm, and expenditure on it by Mr. Castillo, on a scale beyond the pale of the sound dictates of profitability, we are disposed to consider the reality of the position, and feel that Mr. Castillo's profit realized, would not exceed 15% and would allow such a deduction on this account.

We would therefore assess the compensation payable in this way.

We therefore assess the compensation payable as $616,675.00, and recommend this figure as our award.

We would also recommend that this sum bear interest at the rate of 6 per cent per annum, calculated in accordance with section 21 of the Ordinance, and continuing until payment of the compensation.

This Report opened with a quotation from the Commentaries of Blackstone. We feel that we must conclude with an appraisal of the state which obtains today, and look, as far as we can, into the future.

It has taken some five years for this particular case to reach the present stage. During the years that have intervened, matters have not stood still, while negotiations on this case was taking one turn or another, or had bogged down. We learn, with some anxiety that some 40 cases await the convening of a Board to assess compensation payable. Given the present rate of progress, one is uneasy, and would hesitate to predict when the end will be reached.

Moreover it can truthfully be observed that, judging from the notices published in the Government Gazette, compulsory acquisition seems to be on the increase, although the reason for this must be a matter of conjecture.

We feel that the time for streamlining the machinery for dealing with the assessment of compensation, can not be delayed, if grave injustice is to be avoided. We would urge that the moment for the setting up of a Lands Tribunal, is upon us.

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