Hmb Holdings Ltd Appellant v [1] Attorney General of Antigua and Barbuda [2] David Matthias Respondents [ECSC]

• Jurisdiction: Antigua and Barbuda
• Judge: Pereira, J.A,Justice of Appeal,Janice M. Pereira,Davidson Kelvin Baptiste,Mario Michel,Justice of Appeal [Ag.]
• Judgment Date: 05 December 2011
• Judgment citation (vLex): [2011] ECSC J1205-1
• Date: 05 December 2011
• Court: Court of Appeal (Antigua and Barbuda)
• Docket Number: HCVAP 2010/007

[2011] ECSC J1205-1

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Janice M. Pereira Justice of Appeal

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

The Hon. Mr. Mario Michel Justice of Appeal [Ag.]

HCVAP 2010/007

Between:

Hmb Holdings Limited

Appellant

and

[1] The Attorney General of Antigua and Barbuda

[2] David Matthias

Respondents

Civil appeal — Compulsory acquisition of land — Land Acquisition Act, Cap. 233, Revised Laws of Antigua and Barbuda 1992 — Assessment of value of property acquired by the Government of Antigua and Barbuda — Methods used in valuing property to award compensation — Sales comparison approach — Residual value approach — Most appropriate method for valuing the property — Whether the property was a "greenfield site" — Whether the majority of the Board of Assessment was correct in rejecting the residual value method of assessment — If the sales comparison approach was the proper method to use in the circumstances, whether the majority of the Board failed to weigh properly the evidence of the value of comparable properties and therefore reached incorrect conclusions in relation thereto

The appellant, HMB Holdings Limited ("HMB"), owned property comprising some 108.17 acres of land and including 1,800 feet of beach frontage ("the Property"). HMB operated a 100-room hotel with a 9-hole golf course on the Property, until Hurricane Luis struck in 1995 causing extensive damage to it. The Property was never reinstated.

In July 2007, the Government of Antigua and Barbuda, acting under the Land Acquisition Act 1 ("the Act"), compulsorily acquired and took possession of the Property. However, it was not until June 2008 that a Board of Assessment under the Act ("the Board") was established for the purpose of assessing the amount of compensation to be paid to HMB following the Government's acquisition, in pursuance of HMB's constitutional right to compensation. The Board comprised three members: Justice David C. Harris, as Chairman; Victor J. Michael ("Member Michael"), a successful businessman and substantial property owner; and Joyce A. Kentish ("Member Kentish"), a practising lawyer. Member Michael was nominated by the Government and Member Kentish was nominated by HMB.

In assessing the amount of compensation to be awarded to HMB, the Chairman and Member Michael used the sales comparison approach, while Member Kentish used the residual value approach. The Chairman arrived at a valuation of US$26,616,998.00 and Member Michael, at a valuation of US$21,025,000.00. Member Kentish however, arrived at a valuation of US$60,000,000.00, which was also the valuation arrived at by HMB's expert. Pursuant to section 17(2) of the Act, the Board's award was taken as the mean of the Chairman's award and the one closest to his, which was in this case, that of Member Michael. The award of the Board was therefore US$23,820,999.00 ("the Award"). The Board awarded interest at the rate of 10.25% as from July 2007, that being the agreed date of possession, and costs were awarded to HMB. HMB however, was dissatisfied with the valuation placed on the Property, and appealed.

Held: allowing the appeal and substituting the award of $45,499,102.09 in place of the award of $23,820,999.00 made by the Board, and ordering that the respondents pay to HMB on this appeal two-thirds of the costs as assessed by the master in respect of the proceedings before the Board, that:

• 1. The criticisms of Member Michael are well founded, as, in the exercise of his discretion, he took into account irrelevant considerations, seemingly relied on his own personal knowledge and acted contrary to the principles of natural justice and the rules of evidence. In so doing, he committed grave errors of principle. As such, reliability cannot be placed on his award given the flawed basis on which it is grounded.

  Raja Vyricherla Narayana Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] A.C. 302 (P.C.) cited.

• 2. Assessing the Property's potentialities for future subdivision (which would include having regard to a notional or hypothetical subdivision) is quite different from embarking on an assessment on the basis that it had already been subdivided and all approvals obtained, or, in essence, as if its potentialities had already been realized. The Master Plan containing the specificities as provided to the company that prepared HMB's expert valuation report, coupled with their understanding that it was approved, was clearly the key basis for treating the Property as an existing

  development and utilizing the residual method. The Master Plan not having received planning approvals proceeded on an erroneous basis leading to a flawed result with too many variables.

  Blakes Estate Limited v The Government of Montserrat [2005] UKPC 46 distinguished.

• 3. Notwithstanding the Chairman may have held an erroneous view as regards certain matters, he gave due consideration to the real question of deciding which competing method (on the evidence before him) was best suited for the valuation of the Property. He rejected the residual value method for good reason. Were the Court required to exercise its discretion afresh it would also reject the residual method in the circumstances of this case, given the grave danger it poses by inviting the risk of "compensating a party as if unrealized possibilities were in fact, realized possibilities."

  Maori Trustee v Ministry of Works [1958] 3 All E.R. 336 applied.

• 4. It is undesirable to seek to compare sales of smaller parcels with the sale of a large tract of land. The Emerald Cove property represented the only true comparable and ought to have been treated as such rather than taking into account the smaller properties contained in the Deloitte report. This could only lead to an unrealistic result and discount of the potentialities of the Property for the kind of development which is envisaged by both sides. In this respect, the Chairman fell into error in his application of the sales comparison approach.

  Blakes Estate Limited v The Government of Montserrat [2005] UKPC 46 cited.

Pereira, J.A

1 The appellant ("HMB") owned property comprising some 108.17 acres of land including 1,800 feet of beach frontage ("the Property"). This beach has been variously described as the best beach in the world and as one of Antigua's best beaches.2 HMB operated thereon the Half Moon Bay Hotel comprising 100 rooms as well as a 9-hole golf course until Hurricane Luis struck in 1995, causing extensive damage (beyond repair) to the Property. It was not reinstated. The Government of Antigua and Barbuda 3 compulsorily acquired and took possession of the Property in July 2007, acting under the Land Acquisition

Act4 ("the Act"). However, it was not until June 2008 that a Board of Assessment under the Act ("the Board") was established for the purpose of assessing the amount of compensation to be paid to HMB following Government's acquisition, in pursuance of HMB's constitutional right to compensation. The symbol '$' in this judgment shall denote the currency of the United States.

2 The Board heard evidence in relation to the assessment in July 2009 and delivered its decision on 5^th January 2010. The three members of the Board (Justice David C. Harris, as Chairman; Victor J. Michael ("Member Michael"), a successful businessman and substantial property owner, nominated by Government; and Joyce A. Kentish ("Member Kentish"), a practising lawyer, nominated by HMB) each arrived at different awards in respect of the value of the Property. The Chairman, using the sales comparison approach arrived at a value of $26,616,998.00; Member Michael, seemingly using the same approach, but taking into account wholly different considerations (to which I will revert), arrived at a value of $21,025,000.00; and Member Kentish, using the residual value approach, arrived at a value of $60,000,000.00 (being the valuation arrived at by HMB's expert). Accordingly, pursuant to section 17(2) of the Act, the Board's award was taken as the mean between the award of the Chairman and the award of the Member closest to that of the Chairman. The award of the Board was therefore $23,820,999.00 ("the Award'). The Board also awarded interest at the rate of 10.25% as from July 2007, being the date on which all members of the Board agreed as the date of possession, and costs 5 to HMB. HMB, being dissatisfied with the valuation placed on the Property, has appealed. There is no appeal in respect of the date stated by the Board as being the date of possession for the purposes of assessment, the rate of interest to be applied, or in respect of the costs orders made. Further, there is no counter notice by the respondents.

HMB's complaints on Appeal

3 HMB's Notice of Appeal set out five main grounds of appeal which then contain various sub-grounds. However, Mr. Carrington, counsel for HMB, has quite succinctly in his skeleton submissions and at the hearing, set out the main issues arising for this court's determination. They are as follows:

• (a) Whether the award by Member Michael is so replete with errors of principle that it should be disregarded in toto (ground (i)).

• (b) Whether the majority of the Board was correct in rejecting the residual value method of assessment (ground (ii)).

• (c) If the sales comparison approach was the proper method in the circumstances, whether the majority of the Board failed to weigh properly the evidence of the value of comparable properties and thereby reached incorrect conclusions in relation thereto (Grounds (iii)-(v)).

The evidence before the Board

4 Three expert valuation reports featured significantly before the Board — two on behalf of the Government (those of Property Consulting Services ("PCS") and Deloitte) and the other prepared by CB Richard Ellis ("CBRE") on behalf of HMB. PCS and Deloitte used the sales comparison approach...