LAW REPORTS.

Dominion, Volume 5, Issue 1421, 23 April 1912, Page 3

LAW REPORTS.

APPEAL COURT. FAIR YALUE OF CITY LEASESHOW DETERMINED? CORPORATION A XT) THE D.I.C. Glasgow leases figured in a test case between the D.I.C. and the Wellington City Corporation in the Court of Appeal yesterday. On tho Bench were the Chief Justico (Sir Robert Htout), Mr. Justice Williams, Mr. Justice Edwards, and Mr. Justico Cooper. The matter had come up previously in tho Supreme Court in tho form of an originating summons, which had been issued for tho purpose of obtaining an interpretation of the construction of ccrlniu city leases, By direction of Mr. Justice Sim, (die summons had been removed into tho Court of Appeal for argument. Tho reference was to several city sections held by tho D.I.C, in Panama Street and Brandon Street, under three sepnrate leases. Two of these leases (dated January 7, ,1592, and March IG, 1892) had been granted undo) llio Wellington Corporation Leaseholds Act, 1885. The third lease (dated September 30, 1905) had been granted under tho Wellington City Leasing Act, 190-1. On the lands included in the first two leases is the D.I.C. building. On tho lands included in the other lease there is a four-story building. The ground floor is let to tenants, who carry on therein the following bus *scs: (n) A wholesale stationer; (b) an importer of toilet requisites and skin specialist. Tho other threo stories are unlet, but the company occupy and use the third and fourth floors for the purpose of 9torngo of goods and a portion of tho second floor was let on tho first of March, 1912. It is claimed by tho company that, to make the ground floor suitablo for shops it would be necessary to spend a considerable sum of money. The parties were desirous that tho Court should determine what is the true basis on which the ground Tents for new terms under the lenses should bo ascertained, and also whether the valuations of ground rents nre governed by tho provisions of the Arbitration Act, 1908. The two first leases are shortly to fall due for renewal. • When the originating summons first issued, no fewer than ten questions had been submitted. Yesterday, however (by ngreement betwen the parties) it was arranged that the Court of Appeal should concern itself only«-with the following three questions:— Is the fair annual value of the land to lie ascertained by arriving at its fee simple value as if no building existed thereon, and Axing the fair annual ground rent at some percentage on such freehold value without any regard to any valuable building actually existing thereon or to the purpose for which any such building is designed suitable and used? What, under the provisions of the leases, is the true basis on which the valuers should ascertain the fair annual ground rent of the land included in the lease only without any buildings or improvements for the renewed term ? ' Whether the valuations of ground rents to be made under the provisions of the leases respectively are arbitrations as opposed lo valuations and the said leases "submissions" within the meaning of tho Arbitration Act, 190S, and whether the valuers are arbitrators within the meaning of that Act. Mr. C. P. okcrrctt, K.C., with him Mr. H. D. Rell, appeared for the D.I.C, and Mr. T. P. Martin, with him Mr. J. O'Shea, for the Wellington City Corpora-, tion. On behalf of the D.I.C. the contentions put forward were as follow:— i 1. That the fee simple could riot determine the rental to. bo changed, because, the feo simple taluo was liable to ,bo' raised, because a purchaser looked to the future and because of local speculation. 2. That '.he words in the lease "without any buildings or improvements" must, be interpreted to mean "exclusive of buildings, and not "disregarding buildings," . because if, on renewal, there were on the land, a building suitable for one class of user, and which could not be easily altered, that building would determine to what' purpose the land was to be put, and the arbitrators would fix the rent accordingly. In tho event of a building on the ground not being suitable, and another having to be erected, tho arbitrators would have to consider firstly tho cost .of erection, secondly the loss of rent during erection, and thirdly that the tenant might not obtain the whole value of improvements at expiry of term. It was further submitted that the test of the fairness of the valuation should bo whether it was a fair proportion of tho average profit which a prudent man would bo making out of the land if he had commenced his operations with the commencement of the lease. On behalf of tho corporation, it was submitted that the intention of these leases was to secure to the tenant the value of. his improvements, and to the corporation a fair annual rental. \fter argument, the Court intimated that a written decision would bo delivered.