Mon Tresor Ltd and Another v Ministry of Housing and Lands (Mauritius)

JurisdictionUK Non-devolved
CourtPrivy Council
Judgment Date09 June 2008
Neutral Citation[2008] UKPC 31
Docket NumberAppeal No 92 of 2006
Date09 June 2008

[2008] UKPC 31

Privy Council

Present at the hearing:-

Lord Scott of Foscote

Baroness Hale of Richmond

Lord Carswell

Lord Brown of Eaton-under-Heywood

Sir Peter Gibson

Appeal No 92 of 2006
Mon Tresor and Mon Desert Limited
(1) Ministry of Housing and Lands
(2) Board of Assessment



The issue on this appeal is whether the Supreme Court of Mauritius were right to reverse the decision of the Board of Assessment to value the lands compulsorily purchased by the Government of Mauritius by the residual value method and to accept instead the valuation propounded by the Chief Government Valuer, based on comparisons with an added hope value. By an award dated 5 April 2004 the Board of Assessment (Caunhye J, Mr Y Coret and Mr D Ramasawmy), having rejected the comparisons put forward, adopted the residual value basis and awarded the appellant the sum of Rs 39,743,588. The Supreme Court (Matadeen and Domah JJ) allowed the respondents' appeal and in a written judgment given on 19 January 2006 amended the award by substituting the figure of Rs 6,430,000.


It was not in dispute that the appeal from the Board of Assessment to the Supreme Court under section 24 of the Land Acquisition Act was a full appeal on both fact and law, as is the further appeal to the Privy Council. Such appeals are governed by the principles laid down by the House of Lords in Benmax v Austin Motor Co Ltd [1955] AC 370. An appellate tribunal ought to be slow to reject a finding of specific fact by a lower court or tribunal, especially one founded on the credibility or bearing of a witness. It can, however, form an independent opinion on the inferences to be drawn from or evaluation to be made of specific or primary facts so found, though it will naturally attach importance to the judgment of the trial judge or tribunal. On an appeal from a specialist tribunal such as the Board of Assessment the Supreme Court or the Privy Council should ordinarily be slow to reject its findings on matters of pure valuation, but if it considers that the tribunal has misapprehended material facts or that the primary facts established do not lead correctly to the inferences which it has drawn from them, it can and should reverse the decision of the tribunal.


The subject land consists of a plot of land at Telfair, Moka, measuring 12 arpents and 86 perches (equivalent to 54,280 square metres or 5.428 hectares). The land formed part of a larger area planted with sugar cane and owned by the appellant Mon Tresor and Mon Desert Limited, which is part of the Lonrho group of companies. It was acquired by the Mauritian Ministry of Housing and Lands under the Land Acquisition Act for the purpose of building a National Children's Hospital and Institute of Cardiology and Neurology. The statutory notice under section 8 of the Act was published on 8 April 2000, which forms the date on which the land is to be valued.


The land was surrounded by a large tract of prime agricultural land under sugar cane cultivation, owned on three sides by the appellant company. It lies approximately 200 metres from the Reduit-St Pierre public highway and 200 metres from an estate of public housing known as Cite Telfair. The site did not have electricity, water or foul drainage services, and access was by an untarred estate road. The land on the other side of the highway contained a substantial amount of development, including the University of Mauritius and the Mahatma Gandhi Institute. The subject land was zoned for agricultural purposes, and one of the issues in the appeal was the extent of the possibility that it might be rezoned for residential or other development in the foreseeable future. No application had been made before 8 April 2000 to rezone the site for planning purposes, and no development permit had been obtained for residential or other development. On the contrary, in correspondence with the Ministry of Housing and Lands in April 2000 the appellant resisted the compulsory acquisition on the ground of the value to it of the land for sugar cane production. In evidence before the Board of Assessment the company secretary stated that it had difficulty in fulfilling all its commitments for producing sugar cane and wished to keep production as high as possible. There was accordingly no indication that at the material date it had any intention of parting with or developing the land. There was a significant amount of undeveloped agricultural land, some 100 arpents, on the other side of the highway which was within the area in which residential development could take place.


In April 2001 things took an unexpected turn. The Government brokered an arrangement referred to in evidence as the "Illovo deal", described by the Supreme Court as a "very special support deal", which affected the whole zoning scheme of the area. Under this scheme a tract of land immediately surrounding the subject land was rezoned for residential purposes in preparation for a major development. Mr Noor Dilmohamed, the Chief Government Valuer, who gave expert evidence on behalf of the respondent Government department, stated categorically in evidence that no reasonable man could have foreseen that such a deal would be forthcoming and that "at the relevant date no valuer could have unless he is a magician."


Both sides produced evidence of sales of land on which they relied as comparables, in order to establish the value of plots of land in the area. The appellant's valuer Mr Rhoy Ramlackhan produced three comparables, but each of them was, as the Board of Assessment pointed out, in a far better location, being proximate to developed areas with amenities. For this reason both the Board and the Supreme Court, rightly in our view, declined to rely on them for comparison. Mr Dilmohamed produced five comparables, all of which related to sales of plots of agricultural land in the district of Trianon, some one and a half kilometres from the subject land. Each of these plots was in the middle of a large area of agricultural land under sugar cane production, well away from services or other development and with access only by estate roads. For this reason the Board of Assessment took the view that they did not have sufficient similar characteristics and that therefore the direct comparison method should be ruled out as unreliable. They accordingly resorted to the residual method of valuation. This method, deduced from a hypothetical development, assumes that the land in question can be developed for ultimate sale to purchasers. It is described in Johnson, Davies and Shapiro, Modern Methods of Valuation of Land, Houses and Buildings, 9 th ed (2000), p 165, as follows:

"The method works on the premise that the price which a purchaser can pay for such property is the surplus after he has met out of the proceeds from the sale or value of the finished development his costs of construction, his costs of purchase and sale, the cost of finance, and an allowance for profits required to carry out the project."

The Supreme Court, on the other hand, rejected the residual method on the ground that the development potential was "at best speculative and in any event not one which can reasonably be expected to be reached in the short term". They accordingly accepted Mr Dilmohamed's valuation, based on the comparables of agricultural land, with an uplift for "hope value".


In our opinion the following propositions may be deduced from the authorities:

We accordingly consider that if a spot valuation based upon comparison plus an element of hope value can give a realistic figure for the amount which a speculative developer might be willing to pay for the land, it would be wrong to adopt the residual value method. In our opinion that method should only be adopted where a proposed development scheme has such prospects of success that the comparison method cannot give such a realistic and reasonably assessable figure. It is materially more suitable for valuing land where variables such as the chance of obtaining planning permission are not large and the effect on the valuation of any contingencies can be readily assessed: cf Lavender Garden Properties Ltd v London Borough of Enfield (1967) 18 P & CR 320, affd [1968] RVR 268.

  • (a) The value of an interest in land compulsorily acquired is the amount which that interest, if sold on the open market by a willing seller, might be expected to realise at the date of first publication of the statutory notice. This familiar principle is given statutory form in Mauritius by section 19(3) of the Land Acquisition Act.

  • (b) In assessing this value the best evidence is comparison with figures from other sales of comparable property.

  • (c) The land acquired must be valued not merely by reference to the use to which it is being put at the time at which its value has to be determined, but also by reference to the uses to which it is reasonably capable of being put in the future: Gajapatiraju v The Revenue Divisional Officer, Vizagapatam [1939] AC 302.

  • (d) The use for which the land is being acquired must be disregarded in making this assessment: Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565; Waters v Welsh Development Agency [2004] UKHL 19, [2004] 1 WLR 1304.

  • (e) Where there are no comparable sales resort may be had to the residual value method. This should be reserved for exceptional cases and will not be applied where the open market value is otherwise ascertainable by such assessments as a spot valuation: Cripps on Compulsory Acquisition of Land, 11 th ed (1962), para 4-200. As the Lands Tribunal stated in Perkins v Middlesex CC (1951) 2 P & CR 42:

    " … a spot valuation based upon experiences of the market is more likely to be right than...

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