CITY HOTEL

Evening Star, Issue 19273, 11 June 1926, Page 5

CITY HOTEL

AMOUNT OF GROUND REHT QUESTION REFERRED TO SUPREME COURT Judgment in a case concerning the lease nf the land on which the City Hotel is situated was given -this morning by His Honor Air Justice Sim. Tho case was stated for the opinion of the court, under Section 20 of the Arbitration Act, 1908, by Mr Patterson, who was an umpire in an arbitration under the lease, which was held by Nancy Murphy from Edward Lund and others.

At the hearing Mr A. N. Haggitt appeared for the lessees, _a nd Mr J. B. Sinclair for the Dunedin City Properties Company, Limited, the owner of tho reversion.

His Honor pointed out that the lease was for a term of fifty years from March 1, 1886, and said tho habendum and reddendum clauses of the lease were “ to hold tho said demised premises tin to-the lessee or executors, administrators, and for tho term of fifty years computed from March 1, 1886, yielding and paying therefor during tlie first ten years of tho said term the yearly rent of £2OO, and yielding and paying therefor during tho second ten years of the said term such yearly rent as shall bo determined by arbitration or umpirage in manner hereinafter mentioned to bo tho fair ground rent for the said parcel of land with the appurtenances on the first day of tho second ten years of the said term, exclusive of any buildings, erections, or improvements which may then ho standing or ho on the said parcel of land, and yielding and paying therefor during tho third, fourth, and fifth ten years of the said term respectively such respective yearly rents as shall severally he determined in manner aforesaid to be tho fair ground rent for the said parcel of land, with the appurtenances, on the first day of each such ten years respectively, exclusive as aforesaid the said several rents to bo paid clear of ail deductions by equal quarterly payments on every first day of June, first day of September, first day of December, and first day' of March, provided always that until the respective yearly rents payable hereunder during tho second, third, fourth, and fifth ten years of the said term shall be respectively determined in manner aforesaid, the lessors, their heirs or assigns, shall be entitled to enforce payment of, and the lessee, her executors, administrators, or assigns shall pay the same yearly rent as shall have been phjd in respect of the said demised premises for the last preceding ten years.” After quoting other clauses of the lease providing for the determination by arbitrators of the amount of the rent every ten years, His Honor said tho arbitrators were appointed for tho purpose of fixing the rental for the final ton years of the term of fifty years. They were unablo to agree ns to the basis upon which the rental should he fixed, and requested the umpire to state a case for the opinion of the court. Tho contentions of tho parties before the arbitrators were stated thus in the case: “It was contended on behalf of the lessees that in ascertaining the rout to he fixed for the final ten years of the term the arbitrators must exclude altogether from their consideration the building upon tho land, and estimate only the fair annual rental of the land in an unimproved condition for a term of ten years without compensation for improvements at the end of the term, and subject to a covenant that at the end of the term any buildings which might be erected on the land by tho lessees become tho property or the lessors. Tho contention on behalf of the lessors was that the payable by the lessee for tho last period of ton years is the fair annual value for the land only at the commencement of ■pich period of ten years apart altogether from the fact that there were only ton years of the lease left, and that at the end of that term any buildings on the laud became the_ property of tho lessors without valuation.” His Honor said that in tho argument before him counsel for tho lessor relied strongly on the language of the clause which provided that the arbitrators wore to estimate the then annual value of tlie land without any regard ta the term for which it was to be hold by the lessees, or without any regard to tho conditions on which they wore to hold it. If the danse stood by itself it might lie possible, perhaps, to construe it in this way. Rut it did not stand alone, and must be read with tho other provisions nf the lease, including the. reddendum. Under that the rent for each period of ton years was to bo “the fair ground rent” for the land, exclusive of buildings, on tlie first day of each period. It seemed to he impossible to determine what would he “a fair ground rent” to be paid by a tenant for a parrel of land without taking into consideration the duration of the tenancy, and the terms upon which the land was to bo held by the tenant. Tho ground rent was a rent which, in the circumstances, was to bo “fair” to both landlord and tenant. How could a rent bo fair which was fixed without any regard to the duration and conditions of tho tenancy? Tho argument for the lessor involved the view that there was such a thing ns I he annual value of a parcel of land, which could he determined without any regard to the purposes for which it was to be used, and without any regard to the terms on which a tenant was to occupy it. There might be such an abstract value as that, but it was not what was contemplated by the parties iu the present case. Although the language was not exactly the same, there was not, His Honor thought, any difference in substance, between tlie valuation clause in the present lease and that contained in the leases by local bodies referred to by Mr Sinclair in the course of his argument. Tho result was that the basis on which tho arbitrators ought to proceed was that laid down by tho Court of Appeal to ascertain what a prudent lessee would give as a ground rent for a lease for the specified term and subject to the specified conditions. The- answer to tho questions submitted, therefore, was that tho arbitrators must ascertain what a prudent lessee would be willing to pay as a ground rent for tlie land for a term of ten years without any buildings or improvements on it, ami without any right to compensation for improvements at the end of the term, and subject to the obligation of leaving on tlie land any buildings which might bo erected by the lessee. Mr Haggitt asked for a direction regarding the fixing of costs. Rrobably the arbitrators had not much idea of what costs should be. His Honor said that if they decided to allow costs, £7 7s would bo a reasonable amount to allow.