Souza v Sharma (Civil Appeal No. 339 of 1952) [1953] EACA 4 (1 January 1953)

# APPELLATE CIVIL

# Before WINDHAM, J.

## C. D. de SOUZA, Appellant (Landlord)

$v$ .

# B. R. SHARMA, Respondent (Tenant)

# Civil Appeal No. 339 of 1952

Landlord and tenant-Increase of Rent (Restriction) Ordinance, 1949-Section 2 (1) (a) (ii)—Assessment of standard rent by Board—Expert evidence of market costs of construction rejected—Board fixing lower figure—Whether Board acted unjudicially or erred in law.

A landlord applied to the Coast Rent Control Board to fix the standard rent of his premises. Two building contractors who gave evidence estimated the cost of construction at Sh. 30 per square foot and a valuer at Sh. 25 per square foot. The Board considered the evidence of these three witnesses and although no witness was called who estimated any lower figure, rejected these estimates as too high. The reasons the Board gave for rejecting the expert evidence were that the landlord had admitted that he bought the property for considerably less than the estimate of any witness and that the builder, in submitting to the municipality his form of application for a building permit, had also estimated a lower figure than the experts. The Board found that the market cost of construction was Sh. 22 per square foot. The landlord appealed on the ground that the Board had erred in law in arbitrarily fixing the market of construction and, in rejecting the expert evidence, had acted unjudicially.

*Held* $(19-8-53)$ .—(1) In order to bring the appeal within section 7 of the Increase of Rent (Restriction) Ordinance, 1949, the appellant must show that the finding of the Board<br>as to the cost of construction plus the value of the land was not merely against the weight of evidence but that there was no evidence before it which could support that finding.

(2) The Board considered the evidence of the expert witnesses and rejected their estimates as, in the view of the Board, too high. Had the Board done this without giving reasons, their rejection might have been unjudicial but it gave two reasons based on lower figures admitted by the appellant. A court is not bound to accept the evidence of<br>experts if it finds good reason for not doing so. The Board was justified in adopting a lower figure because it had to do its best with the material before it and this figure was as likely to represent approximately the actual cost as any other figure.

(3) The Board had not erred in law in assessing the market cost nor had it exercised its discretion unjudicially.

Case cited: Satya Pall Aggarwal and others v. J. G. Pankhania and others, Civil Appeal No. 34 of 1952 (unreported).

### Ahmad for appellant.

$\overline{a}$

#### Respondent in person.

JUDGMENT.—This is an appeal by a landlord against the assessment of the standard rent of his premises by the Coast Rent Control Board. Applying the provisions of section (2) (1) $(a)$ (ii) of the Increase of Rent (Restriction) Ordinance, 1949, the Board assessed the rent at 10 per cent per annum of what they found to be the "market cost of construction of the premises at the date of completing" the construction plus the market value of the land at the prescribed date". Now although section 2 (1) (a) (ii) does not lay down that the standard rent must be

10 per cent per annum of this cost of construction plus value of land, but requires merely that it shall not exceed 10 per cent per annum of it, it has been held in Civil Appeal 34 of 1952 (Rudd, J.) that the Board ought not to exercise its discretion to assess the standard rent at a lower percentage than 10 per cent without giving special reasons for doing so. In the present case the Board naturally gave no special reasons, because it purported to be assessing at 10 per cent per annum of the cost of construction plus value of land. If, therefore, the figure fixed as the standard rent was in reality something less than 10 per cent per annum of what the Board *ought* to have found to be the cost of construction plus value of the land, then the Board's decision is open to review. But in order to bring this appeal within section 7 of the Ordinance, which allows an appeal only upon a question of law or of mixed fact and law, the appellant must show that the finding of the Board as to the cost of construction (plus the value of the land) was not merely against the weight of evidence, but that there was no evidence before it that could support that finding.

The appellant does not contest the Board's finding on what was the "market value of the land at the prescribed date", but he does contend that the Board erred in finding that the "market cost of construction of the premises at the date of completing such construction" was Sh. 119,960 which represents about Sh. 22 per square foot. It is argued that the Board ought to have accepted the evidence of two building contractors who estimated that the cost of construction would probably have been about Sh. 30 per square foot, which would amount to about Sh. 160,000, or at least that they should have accepted the evidence of a valuer and estate agent who estimated that the market cost of construction in September and October, 1951, would have been about Sh. 25 per square foot which would amount to about Sh. 136,000. The construction was completed in November, 1951.

Now the Board considered the evidence of these three witnesses and their estimates and, though no other witness was called who estimated at any lower figure, it rejected their estimates as being, in its view, too high. Had the Board done this without giving reasons, their rejection might well have been considered unjudicial. But they did give reasons for doing so, and their main reasons were two. First, there was an admission by the appellant that in November, 1951, he purchased the building for only Sh. 104,000. This led the Board to think that it would be most improbable that the builders would have sold it at such a loss as would have been entailed if the building cost really had been Sh. 160,000 or even Sh. 136,000, as estimated by those three witnesses, and they accordingly concluded that the latter's figures must be an overestimate. Secondly, there was the appellant's admission that the builder, in submitting to the municipality his form of application for a building permit, had estimated the cost of building at only Sh. 119,960 again a lower figure than those given by the three witnesses. It is true that the builder himself was not called to substantiate that figure; but no objection to the admission of hearsay evidence was taken on behalf of the respondent when the appellant vouchsafed this information (and indeed since the evidence was in his favour why should the respondent object?).

These two pieces of evidence given by the appellant himself regarding the Sh. 104,000 which he paid for the building and Sh. 119,960 which the builder estimated as its cost, were, of course, not direct evidence of the actual market cost of constructing the building at the date of completing it (November, 1951). But they did constitute circumstantial evidence on which the Board was perfectly entitled to act in concluding that the estimates given by three "experts" were too high. A court is not bound to accept the evidence of experts, if it finds good reason for not doing so. It is true that the builder's estimate of Sh. 119,960 was no evidence that the market cost of construction in November, 1951, was precisely

that figure. But on the evidence before it the Board, having for good reasons rejected the figures of Sh. 160,000 or Sh. 136,000 as being too high, was quite justified in adopting the lower figure of Sh. 119,960, not because they considered it -to represent the market cost in November, 1951, precisely, but because they had to do their best with what material they had before them, and this figure was as likely to represent approximately the actual cost as any other figure, round or otherwise, that they might have arbitrarily· decided upon. Cert.ainly 1 am unable to hold that the Board erred in Jaw in assessing on the basis of that figure, or that they exercised their discretion unjudicially.

For these reasons this appeal is dismissed. By consent there will be no order for costs.