Geita Sebea v Territory of Papua

67 CLR 544
1941 - 1124A - HCA

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(Judgment by: Starke J)

Between: Geita Sebea
And: Territory of Papua

Court:

Judges: Rich ACJ

Starke JWilliams 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

Hearing date: MELBOURNE 24 February 1941; 13 October 1941
Judgment date: 24 November 1941

SYDNEY

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Judgment by:
Starke J

Appeal by case stated from the Supreme Court of the Territory of Papua pursuant to the Papua Act 1905-1940, s. 43. Counsel appeared for the Territory, but the appellants submitted a legal argument in writing pursuant to the section.

The appellants in the Supreme Court claimed compensation under the Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939 (No. 19 of 1939). By that Ordinance, s. 2, certain lands described in the schedules were vested in His Majesty, in the events which happened, for an estate of fee simple, freed and discharged from all trusts and encumbrances whatever. That Ordinance, s. 3, also provided:"The Government of the Territory of Papua shall pay compensation for the land vested in His Majesty pursuant to this Ordinance and the amount of such compensation and the persons entitled shall be determined as nearly as possible in the manner prescribed in respect of land compulsorily acquired under the Lands Acquisition Ordinance, 1914, notwithstanding anything to the contrary in such Ordinance." The Lands Acquisition Ordinance 1914 (No. 7 of 1914) provides, s. 28, that in determining the compensation under the Ordinance, regard shall be had, so far as material to the case, to the value of the land acquired, but without reference to any increase in value arising from a proposal to carry out a public purpose. In the present case, that value should be assessed as on 1st January 1939 (Ordinance, s. 29 (b)), but it would not seem that the value of the land was different at any subsequent date. The principle upon which compensation is assessed is the same as in English law. It is the value that a willing vendor might reasonably expect to obtain from a willing purchaser for the land with all potentialities, but any enhanced value attaching to the land by reason of the fact that it is being compulsorily acquired for the purpose of the acquiring authority must be disregarded (Cedars Rapids Manufacturing and Power Co v Lacoste, ^[F1] Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam ^[F2] ).

The natives or people of Kila Kila are divided into clans called Iduhu, which control through headmen their lands. These natives or people had a right of enjoyment in respect of the lands acquired: it is a communal or usufructuary occupation with a perpetual right of possession in the community. But the lands were controlled by two Iduhu, of whom the plaintiffs in the action were the headmen or representatives. In 1937, the headmen or representatives of these Iduhu by an instrument in writing describing them as the owners of the land leased to His Majesty portion of the land the subject of the acquisition for a term of ten years at a yearly rental of fifteen pounds per annum and this instrument becomes conclusive evidence of the facts therein set forth and of the title of the Crown to the estate or interest referred to: See Land Ordinance 1911-1935, Second Schedule, clause 7. The majority of these headmen or representatives are the appellants in this Court and it has been assumed in the Supreme Court and before this Court that they sufficiently represent the persons entitled to compensation under the Ordinance already mentioned.

The compensation under the Ordinance is payable on the footing that an estate in fee simple freed and discharged from all trusts and encumbrances whatever is being transferred from the natives or people of Kila Kila to the Crown: See Ordinance 1939 No. 19, s.3; Amodu Tijani v Secretary, Southern Nigeria. ^[F3] The persons entitled to the compensation are the people or natives of Kila Kila, and it is distributable among the members of the community through the headmen or representatives of the Iduhu, which controlled the lands acquired. And no objection has been taken to the form of the action or to the parties thereto.

The value of the land is necessarily one of difficulty. It is situated in an uncivilized country and can at best be only roughly estimated. The learned judge fixed the value of the land for agricultural purposes at six pounds per acre for a block of seventy-one acres upon which there was an aerodrome, and twenty-eight pounds for another block of eighteen acres, or PD454 altogether. And he held that this sum represented the true value of the land with all its potentialities. But he declined to consider as affecting the value of the land certain improvements and structures which existed upon the land at the date upon which the value of the land had to be assessed. These improvements and structures had been made by the Government of the Territory or by business firms who were licensees of the Government. They were aerodrome improvements such as the runways, drainage, roads, parking areas, and fencing, a building for housing the power plant erected on a concrete base with walls of fibrocement sheets, a building for a radio station and meteorological office and laboratory erected on heavy cement blocks, a customs and quarantine office, and there were also other buildings erected by business firms under the licence of the Government. The learned judge was of opinion that these structures were not fixed to the land so as to become part of it, but remained chattels.

"The meaning of the word" (fixtures) "is anything annexed to the freehold, that is, fastened to or connected with it, not in mere juxtaposition with the soil. Whatever is so annexed becomes part of the realty, and the person who was the owner of it when it was a chattel loses his property in it, which immediately vests in the owner of the soil. ... But an exception has long been established in favour of a tenant erecting fixtures for the purposes of trade, allowing him the privilege of removing them during the continuance of the term"

(Bain v Brand, ^[F4] at p. 772).

And in determining whether or not a chattel becomes a fixture, the intention of the person affixing it to the soil is material only so far as it can be presumed from the degree and object of the annexation (Hobson v Gorringe; ^[F5] Provincial Bill Posting Co v Low Moor Iron Co; ^[F6] Reid v Smith ^[F7] ).

The learned judge was unable to draw the inference that the improvements and structures were part of the land, because they would be useless to the natives and because he could not think that buildings erected in connection with a public utility were to remain attached to the land. Here I think the learned judge was in error. All he had to consider in connection with the structures on the land was the degree of annexation, which was very considerable, and the object of annexation, which was patent for all to see, namely their use as part of an aerodrome. Moreover, the improvements on the land in the way of runways, drainage, parking areas, and so forth were inherent in the land itself and did not depend upon annexation or affixation.

But the value of the land might, however, be affected and diminished if the structures and buildings upon the land upon the day for the assessment of its value were "trade fixtures" removable by the Government. The land did not vest in the Government until 7th February 1940, when the Gazette notice of vesting was published pursuant to the Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939 No. 19, but on 1st January 1939, when the assessment had to be made, the Government's rights under the lease from the natives subsisted, including the right to remove trade fixtures upon the land during the continuance of its term. This latter right was a relaxation in favour of the tenant for the encouragement of trade.

But whether they are or are not trade fixtures is a question of fact depending upon the circumstances of the case. In some cases, the size and permanence and the general character and object of the structures and buildings may lead one to the conclusion that they are not tenant's fixtures but something permanently annexed to the land (See Pole-Carew v Western Counties and General Manure Co, ^[F8] Whitehead v Bennett ^[F9] ), for the removal must be capable of being effected without material injury to the land or the destruction of the fixture: Cf. Foa, Landlord and Tenant, 4th ed. (1907), p. 697.

It is for the learned judge to determine whether the structures and buildings upon the land were or were not trade fixtures upon the land upon 1st January 1939. If they were, then in my opinion the value of the land should be assessed upon the footing that the Government had a right to remove them from the land and would, rather than pay compensation therefor, remove them from the land during the continuance of its term. I do not of course refer to the improvements upon the land such as runways and so forth already mentioned, inherent in the land.

The question remains how the land should be valued, if these improvements and structures or any portion thereof form part of the land. It is useless to consider what the land with the improvements and structures upon it would bring in the open or any other market, for there was no market. Some artificial method must be adopted, and the most satisfactory, to my mind, is to take the agricultural value of the land as fixed by the learned judge plus an addition measured by what it would cost to make or establish the improvements and structures existing upon and forming part of the land at the date of valuation but taking into account a proper deduction for obsolescence or depreciation: Cf. Edinburgh Street Tramways Co v Lord Provost, etc, of Edinburgh, ^[F10] at pp. 459, 460, London Street Tramways Co v London County Council, ^[F11] at p. 191, 192; Melbourne Tramway and Omnibus Co v Tramway Board, ^[F12] at p. 672.

The leasehold interest in the Government also requires consideration and a proper deduction made in respect of it. One of the witnesses placed a value, as I follow his evidence, of PD2,562 upon that interest. But the value of the interest depends, I apprehend, on the difference between the actual rent paid and the improved annual rental that the property is worth multiplied by the number of years' purchase at which the tenant's interest should be valued: See Cripps, Compensation, 8th ed. (1938), p. 189.

The appellants also claimed that they were entitled to ten per cent or some other amount for compulsory acquisition of their lands. In practice, a ten per cent allowance is often made, but "this percentage may be taken to cover various incidental costs and charges to which the owner is subject whose land has been taken, and if no percentage were added such incidental costs and charges would have to be considered in assessing the amount of compensation" (Cripps, Compensation, 8th ed. (1938), p. 213). Otherwise there is no right to this percentage, and in the present case the claim is untenable.

The question whether the provision of the Land Ordinance restricting the rights of the appellants to sell or otherwise deal with the land affects its value should be answered in the negative. The Ordinance, s. 3, provides that save as thereinafter provided a native shall have no power to sell, lease, or otherwise deal with, or dispose of, any land, and any contract made by him to do so shall be void. But the Government may in certain cases purchase or lease native lands (s. 5). The Lands (Kila Kila Aerodrome) Acquisition Ordinance 1939, however, disposes of the matter. It enables the Government to acquire the lands in question here and prescribes for payment of compensation to the natives or persons entitled thereto.

The questions stated should be answered as follows:

1.

No. The land should be valued as on 1st January 1939 with such improvements upon it as formed part of the land and such structures and buildings upon it as were permanently attached or affixed to it.

2.

The land should be valued on the footing that an estate in fee simple freed and discharged from all trusts and encumbrances whatsoever was acquired by the Government.

3.

No.

4.

See No. 5.

5.

Yes,

(a)

if subsisting improvements on 1st January 1939,

(b)

if permanently attached or affixed to the land on 1st January 1939.

6.

No.

7.

Yes.

8.

Unnecessary to answer.

Finally, I would express the hope that the administration and the Protector of the Natives will consider the propriety of protecting the money payable to the natives as compensation and appropriating it by Ordinance or in some other lawful manner for the permanent welfare of the natives; e.g., in improving their lands or dwellings or schools or hospitals, and not allowing it to be wasted in exchange for shells or beads or coloured cloths or suchlike things.