IN THE KIRIBATI COURT OF APPEAL
CIVIL JURISDICTION
HELD AT BETIO, KIRIBATI

Civil Appeal No. 5 of 2000

BETWEEN:

Attorney-General
in respect of the Minister for Home Affairs
Appellant

AND:

Kakai Teenga
Rara Teenga
Respondents

Before: Casey JA
Bisson JA
Tompkins JA

Counsel: Mr D James for the appellant
Mr B Berina for the respondents

Date of Hearing: 28 March 2001
Date of Judgment: 5 April 2001

JUDGMENT OF THE COURT

The appeal is from a judgment of the Chief Justice dated 30 June 2000 assessing compensation due to the applicants at $42,677.78 that being the figure agreed by the parties as the improved value of the land in question. The dispute centres on whether compensation on the compulsory acquisition of land or the lease of land should be assessed on the market value or the land value excluding improvements. Before dealing with the rather complicated history of this matter we should refer to s.16 of the State Acquisition of Lands Ordinance Cap. 95B.

This section lists a number of matters to be taken into consideration and others not to be taken into consideration. The relevant provision of s.16 is as follows,

16. In determining the amount of compensation to be awarded for land acquired under this Ordinance-

(a) the High Court shall take into consideration-

(i) the market value of the land at the date of the notice of intention to take such land.

Now, as to the facts. The respondents are half sisters who inherited land from their father at Betio. In 1957 their father executed a lease which has been lost, in favour of the Government, the appellant, for 99 years of land which both parties thought included a part of Temwinnako Plot 814e containing 0.275 acre ("the plot").

In May 1966 the appellant sub-leased the plot to Nei Mina Highland for a term of 25 years from 1 March 1996 to 28 February 1991. During the term of this lease the sublessee erected on the land two commercial buildings. Clause 7 of the sub-lease provided,

"....any fixed improvement made with the written consent of the leaseholder (i.e. the sub-lessor) shall become the property of the leaseholder, any compensation being arranged by mutual agreement."

It appears that the sub-lessee had obtained the prior approval of the sub-lessor to the proposed new buildings, as required under clause 10 of the sub-lease as after its expiry in 1991 the appellants paid to the sub-lessee in 1996 $52,933.00 as compensation for the buildings. At that time the appellant was not aware that the plot was not included in its head lease.

One of the two respondents, Rara Teenga, gave evidence in the High Court. She said she lived on the outer islands and was not aware of the buildings having been erected on the plot until her arrival from the outer islands in the 1970's.

According to affidavit of Erene Nikora, Acting Chief Lands Officer of the Republic of Kiribati sworn in January 1997, the fact that the plot was not included in the land leased to the appellant came to light as a result of her own research when the respondents in early 1996 sought a share of the compensation money paid by the appellants to the sub-lessee.

As there had not been a valid sub-lease, the buildings which had been erected on the respondents' land, on the face of it, were their property, subject of course to questions of claims in equity. It is difficult to understand why the respondents thought they should share in compensation paid under a contract between the sub-lessor and the sub-lessee for buildings erected by the sub-lessee on their land. This question does not appear to have been pursued but it does appear that the next development was a proposed solution that the appellant pay the respondents rent for the 25 year period that rent had been paid by the appellant to the sub-lessee and that to regularise the anomaly a lease of the plot for 99 years from 1st March 1966 be drawn up and signed by the appellant and respondents with rent of $233.75 per annum based on the unimproved value of $850.00 per acre, subject to five-yearly reviews of rent.

Two payments of rent totalling $2,614.26 were paid by the appellant to the respondents, but the lease agreement of the plot dated 9 May 1996 signed by one respondent, Kakai Teenga and not by Rara Teenga, was not confirmed by the Magistrates' Court. The appellant says the respondents "reneged" but only one had signed and it appears that they thought better of a deal under which they were paid $233.75 per annum when they had been receiving rent of $150.00 per month for one of the buildings on the plot from 1992.

At all events, the appellant after one defective notice on 15 August 1996 gave a new notice on 7 August 1998 of intention to acquire land pursuant to the State Acquisition of Lands Ordinance (Cap. 95B) including the plot for a term of 56 years as a leasehold estate, the public purpose being the building of a government owned and operated copra processing factory. It is this notice that has raised the question of compensation under s. 16 (supra).

The appellant has a problem, possibly of its own making, in that it may have to pay the respondents compensation of $42,677.78 assessed as the market value of the land with the improvement of two buildings as at 7 August 1998 when it had already paid the sublessee compensation of $52,933.00 for the same buildings in 1996. The appellant in its Reply to the Originating Summons raised a number of matters in opposition to the orders sought. Those included "wrongful repudiation" of the lease agreement, unjust enrichment, and estoppel. In his judgment the Chief Justice said,

Despite Mr Tabane's ingenious and persistent arguments there was one point obstinately against him, a point which, I think, no counsel could avoid. The Ordinance says, "the High Court shall take into consideration .... the market value of the land". That must mean the market value of the land with the improvements on it. The two buildings were improvements: they were fixtures: they became the property of the landowner. Their value had to be taken into account in assessing compensation. It does not matter who else may have been paid compensation or how much. That could not possibly affect the entitlement of the applicants. That is, I hope, and believe not only the law but, I suggest, just as well.

With that succinct and fair view of the inter-relationship of the parties we entirely agree. The judgment concluded,

The applicants abandoned all other claims except for the annual rental for the 56 years of the compulsorily acquired lease. The rental is to be agreed later and is not to be included in the judgment: this arrangement is part of an agreement between the parties.

I accordingly assess the compensation due to the applicants at $42,677.78.

It is to be noted that although there has been an assessment of compensation there is no order for its payment and there remains a rental claim to be settled.

Finally, the appellant in a letter to the Chief Registrar of the Court has raised, since the hearing, that it has had second thoughts as to its agreement to the figure of $42,677 being the correct amount for compensation. The letter has been referred to Mr Berina who sees no occasion for any mistake and adheres to the agreed figure of $42,677 recorded in the judgment. This is not a matter that can be taken further on this appeal. The assessment of compensation at $42,677.00 stands and the appeal is dismissed.

The respondents are entitled to an order for costs under s. 19, such amount to be agreed or fixed by taxation.

Casey JA
Bisson JA
Tompkins JA