Tree compensation valuation uses an 8-year multiplier where damages are based on yield from plantations.

Valuation of fruit-bearing trees by capitalisation requires the annual net yield to be converted into capital value using a multiplier reflecting return period, safety and risk. Where compensation is assessed on the basis of yield from trees or plantations, the settled rule is that the multiplier should ordinarily not exceed 8 years. The text notes that earlier decisions linked the multiplier to prevailing safe returns and the nature of the investment. Although the High Court had applied an 18 years' multiplier, the stated legal position was that 8 years was the proper benchmark; interference was nonetheless declined because the amount involved was small.

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Issues: Whether the compensation for cutting of fruit-bearing trees could be assessed by applying an 18 years' multiplier, or whether the settled rule required application of an 8 years' multiplier where valuation is based on yield from trees.

Analysis: The settled approach in valuation by capitalisation requires the annual net yield to be converted into capital value by applying an appropriate multiplier, taking into account the nature of the investment, the period of return, safety, and risk. Where compensation is determined on the basis of the yield from trees or plantations, the established rule is that the multiplier should ordinarily not exceed 8 years. Earlier decisions recognised that capitalisation must reflect prevailing safe returns and that the multiplier varies with the nature of the property and the investment climate. The Court also noted that, although the High Court had applied a higher multiplier, the appeal involved a small amount of compensation and the Court had in similar situations declined to interfere.

Conclusion: The High Court erred in applying an 18 years' multiplier, and the proper legal position was to apply an 8 years' multiplier; nevertheless, interference was declined in view of the small amount involved.

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