Bank Of Chettinad V. Municipal Council Of Colombo

1954 Present: Gratiaen J. and Gunasekara J.

BANK OF CHETTINAD, Appellant, and MUNICIPAL
 COUNCIL OF COLOMBO, Respondent

S. C. 329-D. C. Colombo, 22,991
 

Municipal Councils Ordinance, No. 29 of 1947-Sections 236 (1) and 325 (1)-Annual value of premises-Scope of assessee's objection to assessment-Principles applicable in assessing annual value-Relevancy of economic factors of supply and demand--Rent Restriction Act, No. 29 of 1948.

When the annual value of a house is assessed for rating purposes, the owner may, under section 236 (1) of the Municipal Councils Ordinance, institute an action against the Municipal Council to have the annual value increased so that the premises may be taken outside the scope of the Rent Restriction Act.

In assessing the annual value of premises which, at the time of assessment, are not rent-controlled, the proper test of " annual value " as defined in section 325 (1) of the Municipal Councils Ordinance is what a man of ordinary prudence and foresight, who has duly advised himself as to the state of the market existing at the relevant time, would offer to pay as rental for the premises rather than fail to obtain the tenancy. The test prescribed is concerned only with the reasonableness of the expectation that a certain rent would be obtained in a commercial transaction ; the " fairness " of the bargain is irrelevant.

APPEAL from a judgment of the District Court, Colombo.

H. V. Perera, Q .C., with G. T. Samarawickreme, for the plaintiff appellant.

E. G. Wikramanayake, Q .C., with N. Nadarasa, for the defendant respondent.

Cur. adv. vult.

April 2, 1954. GRATIAEN J.-

The appellant Company owns four residential bungalows, precisely similar to one another in all respects, which were erected in Park Road, Havelock Town, Colombo, during the year 1949. After their completion, the respondent Council served a notice on the appellant under the Municipal Councils Ordinance, No. 29 of 1947, assessing the " annual value " of each bungalow for rating purposes at Rs. 1,245. The appellant objected to the assessments and instituted this action against the Council to have the annual value increased in each case to Rs. 2,100.

An issue was raised at the trial as to whether the action was maintainable, the Council's argument being that the appellant could not properly claim to be " aggrieved " by the assessments within the meaning of section 236 (1) of the Ordinance. If (so it was contended) the assessments were in fact too low, the appellant stood to gain financially by the under assessments. Under normal circumstances, this argument would no doubt have carried conviction. But in the present case, the foundation of the appellant's " grievance " was that the under-valuation complained of would have the consequence of bringing each bungalow within the scope of the Rent Restriction Act, No. 29 of 1948, whereas the correct assessments would have the opposite effect. It is therefore perfectly clear that the appellant had a pecuniary interest in securing assessments beyond the limit of statutory rent control. For these reasons, I agree with the learned Judge that this preliminary objection was without substance. It is interesting to note that in R. v. Surrey (Mid-Eastern Area) Assessment Committee1[ (1948) 1 All E. R. 856 at 858.] Lord Goddard C.J. explained that a " person aggrieved " for the purposes of the Rating & Valuation Act 1925 " must mean a person who considers that he is aggrieved ".

With regard to the merits of the dispute, the learned Judge took the view that the appellant had not discharged the burden of proving that the assessments were too low, and the action was accordingly dismissed with costs. The conclusion at which I have arrived is that the principle underlying the Council's assessments, as explained by its expert witness Mr. Ferdinands (a retired officer of the Assessor's Department), was erro

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