HOTEL CECIL CASE

New Zealand Herald, Volume 80, Issue 24761, 8 December 1943, Page 4

HOTEL CECIL CASE

WAK AND VALUATION SUBMISSION BY CROWN (0.C.) WELLINGTON. Tuesday The submission was made by the Solicitor-General, Mr. H. H. Cornish, K.C., in the Court of Compensation, that in assessing compensation to the owner and the licensee of the Hotel Cecil, regard must be taken of the effect of the war situation on buyers and sellers of property in New Zealand at the time the Government took over the hotel in 1942. The hotel was taken for the use of the United States Marine Corps. The Chief Justice, Sir Michael Myers, presided. Mr. D. R. Hoggard, with him Mr. A. M. Cousins, represented the claimants, Mrs. GwVneth Alberta Edmonds, the owner of the property, and Hotel Cecil, Limited, the tenants. The Solicitor-General, with him Mr. J. M. Prendeville, appeared for the Crown. The claim was for £129,914, including £72,836 for the land, buildings, and other improvements, £47,164 for the loss of the licence arid goodwill, £IOOO for the loss on the forced sale of furniture, and £750 loss on the forced sale of liquor. From this £24,000 mortgages paid by the Government and £3-5,000 cash paid to claimants are to lie deducted, making the net claim approximately £70,000. "Grave National Situation" The Solicitor-General submitted that the Court ought to take into consideration certain well-known facts — contemporaneous with the taking of the hotel, estimate the effect of such facts on a willing buyer and seller, arid the constructive bargain resulting. The Hotel Cecil was entered on June 19, 1942, and it was notorious that at the time the country was in a state of great insecurity. That must have been reflected in the price. The national situation then was grave and extremely critical. Something less (hail actual invasion could have occurred at the time; aerial bombardment, then much feared, said Mr. Cornish. This could in _ a few minutes have reduced the Cecil, close as it was to the wharves and railway station (military objectives), to a heap of rubble. To say that a person with £60,000 or £70,000 to spend would not take account of these facts would be to convict him of levity and irresponsibility- a buyer at this time would want something for the risk taken. In 1941 the hotel had been placed in a broker's hands at £85,000, and the owner might have allowed a good discount for cash, Mr. Cornish continued. The issue, therefore, was at what point between the £85,000 and the £59,000 the Government had already paid, compensation should be fixed. He submitted that the Crown had already paid enough. Contention for Owners Mr. Hoszeard submitted that the arrival of the United States troops in New Zealand had made a vast difference to the Pacific situation, and weeks beforp the hotel was taken, possibly months before, the public view was that New Zealand had no longer to worry as much as had been the case. Every business man must have known that there was going to be a boom in the hotel business. The Chief Justice: The plaintiff is not entitled to make a profit out of the country's misfortunes. Your claim based on June, 1942, is £120,000, but in 1941 you were prepared to sell at £85.000 or less, for all I know. Mr, Hoggard continued that the 1938 profit was higher than any at the hotel during the war. Then the hotel was conducted during the two bad years of the war. The licensee was deprived of it as soon as the corner appeared turned and good yeara were in prospect. Tt could not be gainsaid that if the hotel had heen retained during the last 18 months the profit would at least have been equal to 19.38. Decision was reserved.