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High Court of Solomon Islands |
REGINALD BULE AND -V- JOHN MANENIARU
DAPHNE BULE (Defendant)
(Claimant)
HIGH COURT OF SOLOMON ISLANDS
(BROWN J)
Civil Case No.235 of 2008
Date of Hearing: 6 July 2017
Date of Judgment: 4 August 2017
W. Rano for claimant
M. Pitakaka for defendant
Judgment for damages for mesne profits for unlawful use of vacant town land.
Brown J:
This is an assessment of damages following summary judgement for liability for mesne profits for unlawful use of vacant land in the Honiara City area, following upon an order of the Court of Appeal.[1]
That appeal arose after a judgement by Faukona J in these proceedings, when my brother judge had awarded damages in the sum of $30,000. The award was set aside in the absence of evidence on which to base the award and the proceedings were referred back to the High Court for this assessment.
The judgement of the Court of Appeal given on 23 July 2009 recounted the circumstances leading to the earlier order of this court
for immediate possession in favour of these applicants, Reginald Bule and Daphne Bule, and the award of damages in their favour in
the amount of $30,000. That earlier order was given in default of defence, although the argument raised on the appeal touched on
the argument run unsuccessfully before the trial judge. The quotation is from the Court of Appeal judgement at paragraph 4.
“Since the hearing in October 2008 the appellant has instructed different Counsel, and criticism of previous counsel is contained
in the applicant's submissions. The essence of the case for the appellant in this court is that the Commissioner of Lands should
not have issued a lease to the claimants of this particular piece of land due to its nature, size and position as related to the
adjoining land which the appellant holds, in other words that the land is not suitable for subdivision. Having at one time believed
that this land was a part of the land he had acquired, the appellant built upon that land, as it now turns out, in error.”
It can be seen the appellant, John Maneniaru had cause to complain about the action of the Commissioner of Land by granting the fixed
term estate in parcel 191-041-200 to Reginald Bule and Daphne Bule. As evidence of the Commissioner's error, it would seem counsel
argued error before the Court of Appeal, which reiterated the factual basis for the complaint. For John Maneniaru owned the adjoining
parcel of land and by mistake, thinking the land plot was his, had had built a kitchen and storeroom on the land, partly fenced it,
and planted three coconut trees. The Court of Appeal at paragraph 8 ruled;
“In the event this appeal against judgement being entered in the circumstances presented to the judge at first instance fails.
As regards the quantum of damages, we are of the view that this must be assessed by a judge, and the order should have been damages
to be assessed rather than damages in an amount for which there is no evidence in support. This court therefore allows the appeal
to the extent that the quantum of damages be entered as damages to be assessed and remits the matter to the High Court for determination
of the quantum of damages only, the balance of the order to remain. The appellant has not been successful on this appeal in seeking
that the judgment be reversed, but he has been successful in part on quantum. In the circumstances the appropriate order as regards
costs is that each party bear their own costs of the appeal.”
While upholding the order for immediate possession, the award of damages of $ 30,000 was overturned.
The High Court judgment the subject of appeal was given on the 9 October 2008, perfected on 10 October, and on 2 February 2009 an
application for enforcement order was filed on the Bule’s behalf. The application for enforcement came before the Registrar
on 12 March 2009, when from the file note the matter was adjourned sine die to be relisted on 7 days’ notice by either party, by reason of the appeal to the Court of Appeal. No order was apparently made
for enforcement at that time, although on the 23 September 2009, the matter again was mentioned before the Registrar, when the following
orders were recorded.
“matter adjourned generally with liberty to restore on 7 days’ notice. Defendant to file application for stay of enforcement order within 7 days.”
No enforcement order appears on file although 4 draft copies of a document entitled “Enforcement Order” are on file. I am satisfied for whatever reason, no enforcement order was given by the court, nor was an application for stay of the order for immediate possession ever made.
There was, in separate civil proceedings, a claim by the defendant against the Commissioner of Lands seeking rectification of the title to parcel 191-041-200 by reason of fraud or mistake. That claim was refused by this court and the appeal failed.
By statement of Daphne Bule filed in support of the application for assessment of damages, at paragraph 5, the deponent says;
“Assessment could not been conducted due to the Respondent instituting Civil Case number 317 of 2009”
That case concerned the claim for rectification, did not presume to stay the earlier order for immediate possession and did not name
the Bules as a party.
That High Court decision was appealed and by judgement delivered on 9 October 2015, the Court of Appeal upheld the trial judge's findings
in his judgement of the 13 October 2010 (incorrectly referred to as 13 October 2014 in the Court of Appeal judgement) and dismissed
all grounds of appeal. Again no mention was made of any earlier stay of proceedings, whether in relation to the order for immediate
possession or any application for enforcement order
I am satisfied no stay orders had been made, rather the parties had proceeded on the basis that the fact of both appeals was reason perhaps for delay in seeking to enforce the earlier order for immediate possession in favour of the Bules. For on the 24 October 2014, some days before her statement in support, the application for assessment of damages was filed, seeking damages based on “user pay principle and/or mesne profits for period commencing February 1998 up to date of judgement.”
Later, on the 27 April 2016, an amended application for assessment was filed in these terms
By statement of case the total claim had jumped from $30,000 to $1,041,337 (inclusive of interest).
The claim is detailed in the amended case:-
“5) The applicants are now seeking damages to be assessed on the user pay principle and or alternatively on mesne profit basis for the period of occupation from 1998 up to date of assessment with interest at the rate of 5% per annum commencing from 1998 being the time of deprivation of use.
6) The method of assessment used by a Valuer instructed by the applicants is the Hypothetical Approach. His assessment is as follows:
a) $53,374.80 multiply by total of 17 years equals $907,371.60; and
b) $907,371.60 plus $84,378.00 equals $991,749. 60.
9) The total compensation sought by the Applicants with interest is $1,041,337.00”
The land (henceforth described as Lot 1639) is only 0.0287 ha in size, a small corner block and adjoins blocks of size approximately 0.0747 for instance, considerably larger and suitable for residential development, which these applicants had in mind. For by original claim filed 25 July 2008 the applicants pleaded that the defendant John Maneniaru “had erected a house thereon which members of his family now occupy and by letter of 14 May 1999, the claimants told the defendant not to access the land and to cease construction work thereon.” The claim was then for damages for trespass limited to $30,000, and that order for immediate possession of land.
On 26 April 2016, Mr. Rano, solicitor for the applicants sent a letter to the Registrar of the Court seeking to relist the amended application for assessment since the appeal had been finalised by the Appeals Court. This fact, delay in prosecuting the claim attributed to the presumed need to await the conclusion of appeal proceedings, while underlying the request to the Registrar to relist the application, is not a fact that may stand uncontradicted. As shown, no stay of proceedings was ever obtained in this court or by particular application to the Court of Appeal. The standing of the applicants, the Bules, to pursue their claim, has been unaffected by any court order staying their action pending an event, a Court of Appeal decision for instance.
The applicant’s action commenced in July 2008. It initially claimed damages for trespass limited to $30,000 as well as other relief, particularly the order for immediate possession of land. Following the decision of the Court of Appeal in their favour, but directing proof, if you like of the damages claimed in the sum of $30,000 the Bules amended their claim as shown by assessment of damages “based on user pay principle and or mesne and profit for period commencing February 1998 up to date of vacation of land.”
The cause of action has remained the same for a action for trespass in these circumstances was previously an action for trespass quare clausum fregit or action of trespass for mesne profits. The underlying law as to the action, however, remains.
It is an action where profits are assessable from the date of the writ, not from the time of the wrong[2]. Although the Bules complained by letter after they took title in 1998, on authority this court may only consider damages from the
date of the writ in July 2008.
A question then is the period of time for which claim may be had for dispossession.
The value of any improvements to the land was sought by the applicants, as their own for they originally sought a declaration that “any buildings erected on the land are the property of the claimants”.
It needs to be remembered that the erections on the small block of land of the applicants, adjacent to that of the defendant were rudely constructed, a kitchen, out-building and a store room (not further described). It is not correct to say as is stated in the original statement of case, that:- “the defendant has, without the consent of the claimants, entered onto the land and has erected a house thereon which members of his family now occupy.”
I am satisfied the house of the defendant is on his own land, and the kitchen was an appurtenance of the house possibly predating the time the applicants came to own the corner block and had been built by the defendant for his use when he had reason to suppose his land encompassed that land now owned by the applicants, the Bules.
The claim then for mesne profits is a claim for continuing trespass to the land. That continuation may have shown to have ceased by the defendant voluntarily relinquishing the use of the property, but in this case, it was deemed necessary for an application for enforcement order of the earlier order for possession given in the Bule’s favour. That application for enforcement came before the Registrar on the 23 September 2009, both counsel, Mr. Rano and Mr. Pitakaka were heard. The result is recorded above, but no stay order eventuated.
I am consequently satisfied the application for enforcement relied upon a final order for possession given by Faukona J on the 9 October 2008 (order perfected 10 October 2008). The orders made on the application on 23 September 2009 in the terms shown, above do not gainsay, or deny, the applicants, the Bules, the benefit of the earlier order for possession given on the 9 October 2008, and they cannot be seen to directly or impliedly extend the period of the continuing trespass beyond that date. The right remained with the Bules to pursue their claim for immediate possession, no right arose, in the absence of any stay order, to a continuing benefit by way of mesne profits while no steps were taken to avail themselves of the right to immediate possession. It is not a question of laches; no alternate cause of action for damages continuing trespass arises, impliedly in this case, automatically at the time of the apparent relinquishment of the right to enforcement order on 9 October 2008. While having the right to immediate possession, the Bules cannot choose not to pursue that right by later seeking continuing damages for the trespass by amended claim. Damages they claim now amount to $ 1,041,337. It is not the variation in the amount claimed which gives rise to this refusal to accept the continuing damages but the absence of any legal basis. While the right to possession is shown, no right has been shown to allow the applicants to choose to delay exercise of that right with a view to further benefit.
In this case, the defendant appealed the original HC order granting possession. The question of a stay of execution of the orders
of Faukona J was touched on by the Court of Appeal in its judgement delivered on the 23 July 2009. In the latter part of paragraph
5 of the Court reasons, the Court said;
“We are aware that present counsel for the appellant sees no merit in a stay of execution of this order pending such proceedings
being brought, as the same was raised during the hearing of this appeal and was not considered to be a route that the appellant wished
to adopt.”
Clearly neither stay was applied for nor given by the Court of Appeal. No extension then of the period of dispossession by reason
of court order is available to these applicants [beyond a reasonable time for likely execution by the Sheriff of the order for possession
in favour of the applicants, the Bules]. It is immaterial, [although argued to the contrary], that control over the fence (and presumably
the land) has never been relinquished, such control may be seen to be easily obtained by wire cutters; the kitchen has long since
gone, the defendants having willingly relinquished possession.
From the date of the writ in July 2008 to the date of the orders made in September
2009 ( plus some 3 months for execution by the Sheriff of any necessary eviction proceedings (delivery of possession to these applicants)
is some 14 months, that is the period for which these applicants are entitled to seek damages for loss of mesne profits.
There was an argument over the valuation methodology sought to be applied in this case. The claimants called Mr. Victor Ma’ahanoa,
a registered valuer, under the Valuers Act 2009. At paragraphs 3 and 4 of his statement given in evidence on 3 March 2017 he said
“3. On 23 October 2014 I carried out an assessment on parcel number 191-041-200, Lot 1639 situated at Panatina Ridge on instruction
of Rano & Co, Barristers and Solicitors to ascertain the fair rental value of the property for the period of loss suffered by
the claimants through the illegal occupation by the Defendant. I have made my report in writing. Now produced and shown to me and
marked ‘VM 1’ is a true copy of the report.
4. Whilst the report was made in 2014, I believe there have been no changes to the method of valuation. Save that additional 3 years
to be factored in the calculation given that the Defendant continued to remain on the land up to now.”
Under cross examination, he conceded there were no buildings on the land, the kitchen area consisting of a concrete base. His assumptions presumed the actual use of a 2 bedroom house.
There was no 2 bedroom house on the land and his conclusions would have been different had he accepted the land as vacant. From evidence given on cross-examination, I accept the report was premised on the fact of the existence of a 2 bedroom house. No house existed on the land. I do not accept his report of assessed value based as it is on what he describes as, hypothetical approach to valuation since that site has never been developed because of the trespass. Hypothetical method is considered to see what would be the rental income per year should that is bracket (sic) developed with a standard 2-3 bedroom residential building[3].
The defendants valuer, Mr. Romeo Silekesa, also a registered valuer, has valued the property at $362,000 unimproved capital value and market comparison, while he places an annual income value on the property of $39, 873.
The covering letter of his report states:
“Since there is no building on the land I am convinced that a fair compensation for the title holders can be realized by the opinion
generated from the unimproved capital value of the land. [4]
Cross-examination did not explain quite how the annual income of $39, 873 was derived, apart from what he described as a capitalisation rate of 11%.
The income approach in his Report relies on rental $40,223 per annum , (less land rent and rates) and when I read the Report, can
only be seen to relate to rental of residential premises, for his calculation of the unimproved Capital Value is based on the potential
rental income multiplied by the 11% capitalisation rate he speaks about.
I do not accept such a small block of vacant land for rental purposes, would command $40,223 per annum, in the absence of clear evidence.
The report is useful however since a number of photographs show the small plot to be land with a small tin roofed besa block building, [presumably the outbuilding], on ground dominated by what appears to be a built-up portion with a flat concrete top. The land would not appear to be capable of being described as habitable, or able to be used for commercial use without development.
I accept Mr. Pitakaka’s argument for the defendant, who says the user principle does not accept assertion that the property
owner is entitled to that which he would reasonably expected to have profited out of the property had he in fact had erected a two
bedroom house. The applicant has lost the use of a small plot of land, a portion which on the evidence may support the erection
of a 2 bedroom home (for it is predominantly a residential area) but no residential building was on the land. For to presume to assess
mesne profit on a hypothetical basis where rental may be expected from a residence, rather reflects the Court of Appeals approach
[by accepting the actual situation, not a hypothetical situation envisaging the two bedroom home], in CP Homes Ltd v Zhong Xing Investments (S I) Ltd[5] where:
“To give more is in effect to confer a profit on the respondent for its grievance and this is not the purpose of compensatory
damages”.
The land is in effect vacant land and from the photographs may presume to be cleared of the besa block building ediface very quickly with a sledge hammer and a few work- men.
Whilst the applicants have argued that assessment should be calculated by reference to the rentals the applicants would have gained “were they permitted to build their 2 bedroom residence on the land.” (or highest use) such approach would garner them a windfall profit without out-lay (of the cost of the 2 bedroom house) and leave them far better off than had they sold the land, on either of the valuations. Such approach to the assessment is wrong in principle for it effectively ignores the factual situation on the land. For the hypothetical development method relates to the valuation of property not an assessment of mesne profits[6]
While the method has been criticized when comparative sales may be a better approximation of value, it shows that unimproved capital value arrived at in this fashion does not assist the court on assessment of mesne profits.
This court must be cognisant of its role and should not bring a third set of opinions into the arena “or to piece together a valuation of its own”[7] and to quote further from Croft J’s judgement, “it is open to the court to accept the evidence of one valuer on one issue and the evidence of another valuer on another, separate issue.”[8] Now that case was wholly concerned with the valuation of certain property, not an assessment of mesne profits. It is guidance however, for this court may not substitute its view on the appropriate assessment unless that view may be seen to be based on other specific evidence.
Mr. Rano for the applicants in a well-argued submission addressed the damages issue by reference to various cases in support, including that case of Challenger Property Asset Management but many of the cases were directed to valuation of property, not relevant to this loss through dispossession.
Before addressing the cases which, counsel say, support their respective cases, I propose to again refer to the applicant’s
basis of claim, the action for recovery of possession and the claim for damages or mesne profits. Under the head of mesne profits,
the text, Clerk and Lindsell on Torts (11thEdit.) at 948 includes;
“What they include. Under the head of mesne profits are included compensation for the value of the use and occupation of the premises, whether occupied
by the defendant himself or by a tenant holding under him (f), and also any damages which has been caused to the premises themselves
(g), for the term “mesne profits” is not confined to the profits which have accrued to the defendant, but extents to
all loss that the plaintiff has sustained (h). In considering the value of the use and occupation the net annual value must be taken.
Mesne profits can be claimed up to the time when possession is given (i).
Mesne profits can be claimed up to the time when possession is given. On the evidence, I am satisfied the possession was conceded
to these applicants at least at the time of the Court of Appeal decision of the 23 July 2009, for the court recorded counsel for
the appellants concession that there was no merit in a stay of execution of the order, the judgement of possession, (notwithstanding
talk of proceedings to be commenced against the Commissioner for Lands for mistake perhaps, in registering these applicants as owners
of the parcel). For by accepting the fact of ownership (by virtue of the argument before the Court of Appeal over the merits of the
Commissioners lease to these applicants) and by conceding any right for a stay of proceedings in relation to the judgement for possession,
the defendant had effectively conceded possession, in the absence of any evidence of continuing use of the land or kitchen by him.
As I say, by looking at the photographs, no person could say access to the land was wholly dependent on the defendants will, for
any fencing was cosmetic,
and could not be seen to be by way of exclusion.
These two findings, the failure of the applicants to accept possession or take steps to prosecute their claim for enforcement order and the time when possession may be seen to have been conceded (July 2009) effectively ends the period of dispossession
The next issue is that concerning profits which have accrued to the defendant and any loss that the applicants have sustained.
I accept Mr. Rano’s use of the Court of Appeals judgement in CP Homes Ltd v Zhong Xing Investments (SI) Ltd[9] as authority of the proper method of assessment of use is “user pay principle” . I do not accept his argument that I should adopt the hypothetical method, or best use based as it was on the supposition of the existence of a 2 bedroom house when that was not there. The Court of Appeal addressed the
issue of the appropriate way to assess damages for mesne profits where no actual loss has been shown by the plaintiff by adopting
the principles given by Nicholls L.J in Stoke-on-Trent City Council v W & J Wass Ltd[10] which had approval of the Privy Council in Inverugie Investments Ltd v Hackett[11]
“The plaintiff may not have suffered any actual loss by being deprived of the use of his property. But under the user principle
he is entitled to recover a reasonable rent for the Wrongful use of his property by the trespasser. Similarly, the trespasser may
not have derived any actual benefit from the use of the property. But under the user principle he is obliged to pay a reasonable
rent for the use which he has enjoyed. The principle need not be characterised as exclusively compensatory, or exclusively restitutionary;
it combines elements of both”
Our Court of Appeal went on to quote from Swordheath Properties Ltd v Tabet[12]
“It appears to me to be clear, both as a matter of principle and of authority, that in a case of this sort the plaintiff, when
he has established that the defendant has remained on as a trespasser in residential property, is entitled, without bringing evidence
that he could or would have left the property to someone else in the absence of the trespassing defendant, to have as damages for
the trespass the value of the property as it would fairly be calculated; and in the absence of anything special in the particular
case it would be the ordinary letting value of the property that would determine the amount of the damages.”
The ordinary letting value of this small block of land is not really to be ascertained from either of the two valuations unless I accept that Mr. Rameo Silebesa whose “annual income” of the property $39, 873 is premised, as he says on the unimproved capital value, $362,000. The annual income in these circumstances has been quantified by using a mathematical calculation, as I have earlier shown. When the authorities, useful in determining the assessment of damages where vacant land, is concerned, speak of “reasonable rate for the use which he (the defendant) has enjoyed”, I am minded to look to the actual use to which the defendant has put this small plot of land. He apparently used it as an appurtenance to his house, a kitchen perhaps. It certainly could not be seen to be residential accommodation. The wider area about his home, however would have afforded him use, thus have been of value to him.
The difficulty in this case is the assessment of the value to the defendant for loss to the claimants of the use of this small plot for the period would not approach the value to the defendant. The Court of Appeal judgement of the 23 July 2009 refused the damages claimed in the sum of $30,000 to stand, for no particular evidence had then been advanced.
I now propose to rely on the material to which I have referred. For while Mr. Silakesa has spoken of the “capitalization rate” in coming to his conclusions on the figures, “capitalisation rate” in simple terms is the return that a prudent investor would require in buying property having regard to the attributes of the property, the security of that income stream, the likelihood of being able to maintain and potentially grow that income stream into the future, potential requirements for capital expenditure at some point in the future, economic conditions as they might be at the time and also risk, so his conclusions rather address matters irrelevant in this case, the land had no income stream, it was not land intended to be sold (when commensurate sales may help valuation) and no real description of the property, apart from the photographs, may claim that the land was, while in a residential area, much smaller and may have required development approvals, let alone any likelihood of attracting income as vacant land[13]
I am reassured, however by the comments of Griffith CJ of the High Court of Australia when discussing the responsibilities and powers
of a judge at 1st instance, where he said;
“It has often been pointed out that, when a cause has been heard by a Judge on oral evidence, a Court of Appeal is very reluctant
to differ from him on a question of fact, especially when there is a conflict of evidence. And the same considerations apply whether the conflict is as to the actual facts, or as to a matter of opinion as to which it is material to weigh the relative values of opinions of different witnesses. So far, therefore, as
Higgins J. founded his judgment on the weight to be given to the opinion of the different witness as to relevant facts. I am not
prepared to differ from him. I therefore accept the conclusion (though I doubt whether I should have arrived at it myself) that,
if the land had been cup up and sold in small attotments in January 1905, it would not have realized more than 2,250. I will assume
also that he thought that at that date it would have realized more if sold in that mode than in any other. But I do not think that
these facts conclude the question of value, although they are very relevant to the question.”
In the circumstances of which I have described and since the revenue figure of $39,873.20 by Mr. Silekesa speaks of rental (when no comparative rental of small vacant lots about the area is alluded to) I propose to discount that figure. Since the benefit to the defendant has been accepted by his acknowledgement of the use of the land for his own purposes, believing he had right (since shown to have been erroneous) the applicants are entitled to be recompensed for the loss of its use. The applicants initially sought $30,000 for the loss of the amenity and I find that is the appropriate amount of compensation payable for damages based on the user pay principle and/or mesne profit for the period (commencing from the date the writ was filed in 2008) to the conclusion of practical dispossession, some 14 months.
I accordingly give judgement for the applicants in the sum of $30,000 plus interest pursuant to the Rule 17.68 at the rate of 5% per
annum from the date of the institution of the claim in 2008.
Costs are awarded the applicants on the 3rd schedule basis [plus disbursements] to be paid within 28 days following assessment or taxation.
__________________
BROWN J
[1] Civil Appeal 01 of 2009 (23 July 2009)
[2] Elliott v Boynton (1924) 1 CH 236
[3] Annex VM1-valuation Report to statement of Victor Ma’ahanoa Exhibit “1”
[4] RS.1 of statement of Romeo Silekesa exhibit “2”
[5] (1998) Civil Appeal no. 5 of 1997
[6] CPT custodian Pty Ltd anors v Valuer general (2009) NSWL FC 1426 (18 December 2009) adopting the ratio of Sugaman J in A.G Robertson Ltd v Valuer general (1952) 18 LGR 261 at 262.
[7] Per Croft J at paragraph 7, Challenger Property Asset Management Pty Ltd anor v Stonninglon City Council anor (2011) VSC184 (5 May to 2011)
[8] Ibid at 18
[9] (1998) SBCA4, CA-CAC5 CHC of 1997 (27 February 1998)
[10] (1988) 1WLR1406
[11] (1995) 1 WLR713 at 718
[12] (1979) 1 WLR 285.
[13] Challenger, ibid para 313
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