Between: Geita Sebea
And: Territory of Papua

Judges: Rich ACJ
Starke J

Williams J

Subject References:
Crown
Resumption and acquisition of land in Territory of Papua
Construction of aerodrome on land leased by Crown
Mode of assessment of compensation

Legislative References:
Land Ordinance 1911 No 5 - s 3
Lands Acquisition Ordinance 1914 No 7 - s 26; s 28; s 29
Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939 - the Ordinance

SYDNEY

Judgment by:
Williams J

On 23rd March 1937 the appellants, who are natives of Papua, leased approximately fifty acres of land to the Crown for the term of ten years computed from 19th March 1937 at the yearly rental of fifteen pounds. The Crown constructed an aerodrome upon this land known as the Kila Kila Aerodrome. By 1st January 1939 the Crown had constructed on the land a runway formed with concrete drains and parking areas and had enclosed the whole aero-drome with a fence. The Crown had also erected certain buildings occupied as a radio and meteorological station and office and a customs and quarantine office; and certain companies had also placed buildings on the land, which they used in connection with servicing the aircraft. The owners of the buildings paid no rent and no charges were made for the use of the aerodrome. The buildings, with the exception of one, were erected on concrete piers. There was no evidence to show whether or not they were fastened to these piers. All the buildings were erected for the purpose of using the land as an aerodrome and for no other purpose whatever. The value of the work done in making the aerodrome was assessed on behalf of the appellants at PD2,740 and of the buildings at PD3,460. The respondent gave no evidence of value.

After this work had been done to the land and these buildings had been erected the Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939 was passed, authorizing the resumption of the leased lands which, together with about twenty acres of adjoining lands and a further area of land comprising about eighteen acres situated about one mile from the leased lands, were included in the schedules thereto. Clause 3 of the Ordinance provided that the Crown should pay compensation and the amount of such compensation should be determined as nearly as possible in the manner prescribed in respect of land compulsorily acquired under the Lands Acquisition Ordinance 1914. By notice in the Government Gazette dated 7th February 1940 the lands described in the schedules were resumed by the Crown.

The appellants brought an action in the Central Court of Papua to determine the amount of compensation to which they were entitled. The action came on for trial before Gore J., who held that the resumed lands had no potentiality except for use as agricultural lands and assessed the compensation on that basis at PD454.

This appeal raises the question whether the basis of compensation adopted by the learned trial judge was correct.

As appears from his Honour's informative report, the appellants' title to the land was a communal usufructuary title equivalent to full ownership of the land, so that they were entitled to be compensated on this footing (Amodu Tijani v Secretary, Southern Nigeria ^[F13] ). The Land Ordinance 1911-1935, s. 3, prohibits the disposal of land owned by natives by sale, lease or any other dealing and any contract made by them to dispose of land is void, but this restriction could have no detrimental effect upon the determination of the value of the land when compulsorily acquired, because in the hands of the Crown it would be freed therefrom. Indeed, the reference in the Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939, s. 3, to the Lands Acquisition Ordinance 1914 is sufficient to show that the appellants as full owners of the land are entitled to have the compensation assessed upon as ample a basis as though it had been acquired from a European. The Crown stressed the fact that under the peculiar circumstances of this case it was the only possible purchaser, but even so, as pointed out by the Privy Council in Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam, ^[F14] at pp. 316, 317, "if the potentiality is of value to the vendor if there happen to be two or more possible purchasers of it, it is difficult to see why he should be willing to part with it for nothing merely because there is only one purchaser. To compel him to do so is to treat him as a vendor parting with his land under compulsion and not as a willing vendor. The fact is that the only possible purchaser of a potentiality is usually quite willing to pay for it."

The Lands Acquisition Ordinance 1914, s. 29, provides as follows:

"The value of any land acquired by compulsory process shall be assessed as follows:

(a)

In the case of land acquired for a public purpose not authorized by a Special Ordinance according to the value of the land on the first day of January last preceding the date of acquisition; and

(b)

In the case of land acquired for a public purpose authorized by a Special Ordinance, according to the value of the land on the first day of January last preceding the first day of the meeting of the Legislative Council in which the Special Ordinance was passed.

(2) The value of the land shall be assessed without' reference to any increase in value arising from the proposal to carry out the public purpose."

At the date of the resumption the leased part of the land had been improved as an aerodrome, but the additional land was still unimproved for this purpose. The Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939 does not specifically authorize a public purpose, but the preamble states that the lands described in the schedules are required immediately for the purposes of or connected with the Kila Kila Aerodrome, and it appears to me that this statement is sufficient to bring the case within the Lands Acquisition Ordinance 1914, s. 29 (b). The correct date of valuation is therefore 1st January 1939. It is true that the Crown was free to acquire other suitable lands of the same dimensions and construct an aerodrome there, but to do so would require considerable outlay, so that the resumed lands had the potentiality that, having been improved to the extent already mentioned, the Crown would be willing to acquire them for their agricultural value plus the value of the expenditure already made rather than to have to purchase other lands at their agricultural value and then have the trouble and expense of improving them to the same extent. Assuming, therefore, that the appellants were willing vendors and the Crown was a willing purchaser the price would be determined having regard to the fact that the vendors would know that the Crown would pay this amount but no more, and the Crown would know that the vendors could reasonably expect this price (In re London County Council and London Street Tramways Co; ^[F15] Melbourne Tramway and Omnibus Co v Tramway Board. ^[F16] Similar principles are applied where land used as a church or school is resumed, the compensation being fixed by ascertaining what it would cost to acquire an equally convenient site and erect equally convenient buildings there (Halsbury, 2nd ed. vol. 6, p. 45; Cripps on Compensation, 7th ed. (1931), p. 170). In determining the amount, the improvements made to the leased land consisting of the runway and the concrete drains would have to be taken into account.

There remains the question of the buildings. On the scanty evidence available to this Court they were apparently fixtures, but this is a matter for the learned trial judge to determine applying the principles referred to in Halsbury, 2nd. ed, vol. 20, pp. 96 and following, and in the cases referred to by this Court in Commissioner of Stamps (W.A.) v L. Whiteman Ltd. ^[F17] A tenant is allowed to remove trade fixtures during or at the end of the term. The Crown as lessee was not trading in the strict sense, but the aerodrome was used for commercial purposes, although not for profit, and it seems to me that the principles applicable to trade fixtures can be applied to the buildings placed there by the Crown. The buildings erected by the companies with the permission of the Crown were clearly placed there for the purposes of trade, and were therefore tenant's fixtures (Halsbury, 2nd ed. vol. 20, pp. 105, note a, and 106, note e; Mears v Callender, ^[F18] at pp. 396, 397; Webb v Bevis Ltd; ^[F19] North Shore Gas Co Ltd v Commissioner of Stamp Duties (N.S.W.), ^[F20] at p. 68). If, as appears to be probable, the buildings can be removed, their only materiality in the assessment of the compensation would be that it would benefit the Crown to pay something more for the resumed land rather than to have to go to the expense of removing and re-erecting them elsewhere.

The case is not one in which ten per cent should be added to the value of the land when determined in accordance with these principles. This addition is often made to cover incidental costs and charges to which an owner whose lands are taken is subject so as to ensure that he will receive full compensation, but there do not appear to be any circumstances here which would require the addition.

These considerations show that the valuation on an agricultural basis made by the learned judge was erroneous and that the case should be referred back to him to amend his valuation in the light of these general principles. When the amount of compensation has been determined, it will be necessary to consider whether the rental of fifteen pounds per annum payable under the existing lease of the fifty acres is equivalent to the full rental value of the land. If it is not, as appears to be the case, the lessee would be entitled to an amount to represent the value of the lease to him for the balance of the term and this amount should be deducted from the compensation, because, under an ordinary resumption, the lessee would be entitled thereto as his share of the full value of the land, but here the Crown and the lessee are the same person.

As a check to the amount of the valuation arrived at according to these principles, it would be justifiable to assess the rental value of the resumed lands by estimating the amount which the Crown would be willing to pay to continue its occupation of the leased lands having regard to the extent to which they had been improved for the purpose of an aerodrome, and to occupy the additional lands rather than to have to go elsewhere, carry out similar improvements and remove the buildings thereto, and then to capitalize this rental value (Earl of Eldon v North-Eastern Railway Co, ^[F21] In re Athlone Rifle Range ^[F22] ).

The appeal should be allowed and the questions asked in the case answered as suggested by my brother Starke.