England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL

		Royal Courts of Justice Strand London, WC2
		9th July 2015

1. LORD JUSTICE BRIGGS: This is an oral renewal of an application for permission to appeal a decision of the Upper Tribunal (Lands Chamber) of 15th May 2014, determining three references for compensation on a compulsory purchase of land in East London (I think south of Stratford) which was acquired for the assembly of the Olympic Park, the land having been taken up in July 2007.
2. The first appellant, Mr Halpern, owned the land (1.1 acres) and the second appellant, Clearun Ltd, operated a waste management station on it.
3. Two issues arising before the Upper Tribunal are pursued on appeal. The first is the extent, if at all, to which the land had development value on the necessary hypothetical assumption that there would be no Olympic Park. The second was the extent to which, if at all, the compulsory purchase order caused the extinguishment of Clearun's business.
4. Appeals against determinations of this kind face two large hurdles. Firstly, they are limited to points of law, as Mr Tager QC for the Appellants acknowledged. The Upper Tribunal is the final arbiter of fact. Secondly, the Upper Tribunal is a highly experienced tribunal operating in an area of considerable sophistication and technical difficulty so that its decision, unless clearly vitiated by errors of law, is to be given great respect by an appellate court.
5. Taking the development value issue first, the Upper Tribunal found that the reference site did have some potential for residential development but only in the wake of development at Stratford itself, which was 1km away and then at a nearer site called Carpenters Road which lay between Stratford and the reference site. At 117 they said this:

"We do not see that development on the reference land could have a realistic prospect of viability until the wider development of Stratford City and Carpenters land to the north was likely to happen in the reasonably near future. We have considerable doubt that the sort of development proposed on the reference land would be viable if it faced an indefinite period as a standalone residential development in the comparatively unwelcoming circumstances of Marshgate Lane at the valuation date."

6. This led the Upper Tribunal to value the reference site on the basis of existing use with a 15% uplift to represent future development hope value rather than as a site ripe for immediate or proximate development.
7. In reaching the conclusion quoted the Upper Tribunal heard a wealth of evidence from experts on both sides and from three factual witnesses, Mr Burton, Mr Spiller and Mr Luck. They were witnesses of fact but experienced property professionals. Mr Burton was a senior employee of the Westfield Shopping Mall Group which was envisaged as the anchor tenant in the development of Stratford City. Mr Spiller was closely involved in the appraisal for development of the Carpenters Road site and Mr Luck was at the material time the director of property for the Olympic delivery authority. Their evidence is summarised in paragraphs 88-98 of the decision and Mr Tager does not challenge that as a fair summary after they had been cross-examined. It led to this conclusion by the Upper Tribunal at paragraphs 146 to 147:

"Planning permission is one thing. When it is commercially viable to implement it is another. Concerning the longer term, as we have said above, we found the evidence of Mr Spiller, Mr Burton and Mr Luck persuasive. We find that in t world without the Olympics there would have been the prospect of an eventual major development at Stratford city with Westfield at its heart and, once that was becoming established, there would have been sufficient demand to support development on the Carpenters' Land. However, without the spur of the Olympics and its CPO, that development would have been long delayed. We do not accept the claimants' suggestion that Mr Spiller, Mr Burton and Mr Luck were exaggerating the various impediments. We think that it is quite possible that the developments would only have been starting to get underway by 2012 or 2013. Of course it is true that the major redevelopment of a large area has to start somewhere, but we do not think that any sensible developer or potential investor, aware of the comparatively peripheral position and access difficulties of the reference land, would have thought that it was a good idea to start here. The predominantly residential development of the reference land would have been unlikely to make financial sense until, at the very least, it was clear that Stratford City was in the process of realisation and that the Carpenters Land and the highway improvements that would bring were committed for the near future.

We therefore conclude that a prospective purchaser of the reference land would have recognised that it had potential development value, but would have thought that it would probably be some seven years or so before that hope could be realised. In the meantime the reference land was valuable as a waste transfer station. In our view the most realistic way to value it in a world without the Olympics is to take its existing use value and add a percentage to reflect the relatively long-term hope value."

8. There was deployed evidence to the contrary, both factual and expert, to the effect there already was an existing development value in the reference site on the necessary hypothetical assumptions. The Upper Tribunal by no means preferred the whole of the respondent's expert evidence to that of the appellants but they clearly rejected the central theme of the appellant's case, that there was an immediate prospect of development. This was not because planning permission would not have been available within a suitable time, it was more or less common ground it would have been, but because development would not have been financially viable in advance of the development of Stratford City and Carpenters Road.
9. This is challenged by ground 1 of the grounds of appeal:

"1. The Upper Tribunal (Lands Chamber) erred in law in determining (paragraph 147 and 186 of its Decision) that the amount of compensation payable by the Respondent to the First Appellant for the value of the land taken was £2,127,500 because:

(a) the Tribunal erred in law in concluding that it would probably be some seven years or so before the hope of potential development value could be realised when the weight of the evidence was such that the reference land had potential development value as at the valuation date, which evidence the Tribunal unreasonably failed to accept;

(b) the Tribunal gave no or no adequate reasons as to why it rejected the evidence and submissions of the Appellants on these matters, which were a substantial and significant part of their case; and (c) there was no evidence before the Tribunal to enable it to reach conclusions about the non-viability of development on the reference land until the wider development of Carpenters Land and Stratford City."

10. That ground, as amplified by the skeleton argument in the helpful oral submissions this morning of Mr Tager, appears to come to this. First, that the Upper Tribunal's conclusion was against the weight of the evidence. Secondly, it was inadequately reasoned because the rejection of the contrary evidence was not sufficiently explained and thirdly, there was no evidence at all that immediate development of the reference site as at the valuation date would not have been viable. Mr Tager really concentrated on the third point, submitting to me that all there was was evidence as to how long it would take Stratford City and Carpenters Road to be developed but nothing to link that properly to a conclusion there was no development value in the meantime for the reference site.
11. In my judgment, none of this gives rise to a real prospect of success on this ground. Firstly, the attribution of weight to evidence is, as Mr Tager frankly acknowledged, preeminently a matter for the Upper Tribunal and no error of law is disclosed merely because an appellate court is persuaded that it would have weighed the evidence differently. This is a fortiori the case where, as here, the decision maker is a specialist Tribunal.
12. Secondly, the task of the Upper Tribunal is not to explain in detail why it rejects evidence pointing in a different direction from its conclusion. A fair hearing requires only that the Tribunal gives intelligible reasons for its conclusions on the factual issues. Sometimes this may be because it rejects particular evidence; sometimes, as in this case, it may be because it finds particular evidence to be of compelling weight.
13. Thirdly, it seems to me there was material before the Tribunal upon which it could find that development of the reference site was not viable in advance of development at Stratford or Carpenters Lane. It came from the combined effect of what they called the compelling evidence of Messrs Burton, Spiller and Luck, so far as the rate of advance of Stratford and Carpenters Lane was concerned, combined with the evidence of Mr Kelway himself, who was Mr Halpern's expert, which is summarised in paragraph 108 of the decision in the following way:

"Mr Kelway was of the opinion that the Stratford City scheme would still have proceeded in a no scheme world [that means no Olympic Scheme world] and would have begun to transport the rail lands [and I interpose that the reference site is approximately to or within the rail lands] by the valuation date. He was challenged in cross-examination on this. Reference was made to the Secretary of State's decision in ... 2012 ... Mr Kelway conceded that if there was no CPO to assemble the site and no funding for Stratford City, then that scheme would probably not be viable at the valuation date."

I read from that paragraph a conclusion that Mr Kelway's own analysis was itself dependent upon his view about and an earlier development of Stratford City than that which the Tribunal concluded was probable so there is not, in my view, even arguably the missing link to which Mr Tager refers. For those reasons I do not give permission to appeal on ground 1.

14. The second issue, that is extinguishment, arises in this way. Not long before the taking of the reference site, Clearun sold a substantial part of its equipment, mainly lorries and skips, at an auction in June 2007 and sold the residue of the business equipment and the goodwill "as a going concern" to OS Hire, at an unspecified date, but recorded in a contract only in May 2008, that is after the valuation date. The Upper Tribunal found there could not have been a total extinguishment, which was the case being run by Clearun in the Tribunal, because part of the business was sold as a going concern to OS Hire. The Upper Tribunal expressly rejected Mr Halpern's evidence that the going concern provision in the contract was "just a meaningless flourish by the lawyers". That is not challenged on appeal.
15. Secondly, the Upper Tribunal held that the evidence did not enable it to conclude that any lesser part of the business had been extinguished by the compulsory purchase order. This is the subject of ground 2. The Upper Tribunal reasoning was that Clearun, which has the burden of proof, had failed to discharge it with convincing evidence. This was in part because the then proprietor of Clearun, Mr Gladwell, did not give evidence at all, whereas those who did give evidence lacked the requisite basis of knowledge of the facts, because Mr Halpern's evidence was found to be unreliable and because there was a lack of transparency about the conduct of the business and its finances during the period surrounding the valuation date. The Upper Tribunal concluded, at paragraph 61:

"We have set out our reasons for not being satisfied that the business was totally extinguished. So far as what was happening with the business of Clearun in 2007 and 2008 can be fathomed, it is consistent with a coherent and determined, but undeclared, strategy to maximise the remaining value of the business. For those reasons and the reasons identified by both the acquiring authority and the claimants we are not satisfied that we have any sound basis for deciding that 50% or any other percentage of the business was extinguished.

Ground 2 of the grounds of appeal says this:

"The Upper Tribunal (Lands Chamber) erred in law in determining (paragraph 61) that it had no sound basis for deciding that 50% or any other percentage of the business of the Second Appellant was extinguished because:

(a) the Tribunal possibly confuses (at paragraph 56 of its Decision) the continuation of the business of the Second Appellant, which on its own findings at least part of the business was sold to OS Hire Limited, with the loss of future profits that the Second Appellant would have been expected to have earned but for the forced sale;

(b) there was evidence to enable the Tribunal to determine the proportion of the business that was lost;

(c) there was evidence on which the Tribunal could have assessed the measure of valuation of the business loss under that proportion."

16. Taking those grounds together, there plainly was evidence from which the Upper Tribunal could have fashioned a rough and ready approximation of the extent of extinguishment, for example from the details about the auction sale assessed against the amount of equipment sold to OS Hire, and there was evidence about the price ultimately paid to OS Hire which could have been compared with the valuation of the whole business in its last trading periods. It would have been open to the Upper Tribunal to make a proportionate determination and to have decided that the unsatisfactory aspects of Clearun's evidence were not fatal to such an exercise.
17. To an extent Clearun appears to have been the author of its own misfortune. It went single-mindedly for a total extinction case without attempting to make a lesser and more realistic case. It failed to tender its best witness evidence and failed to dispel real doubt in the Upper Tribunal about the reliability of that which was deployed, part of which the Upper Tribunal was entitled to find was plainly wrong.
18. Nonetheless it seems to me that the evidence from which some sort of comparison could have been made, albeit on a rough and ready basis, was to a significant extent not the subject of serious challenge, in particular the evidence of what was sold off at the auction and the contract to OS Hire. In my judgment, there is just a real prospect of success, that is there is sufficient case just to cross the relatively low threshold for purposes of appeal to the Court of Appeal on this issue.
19. It seems to me that it is at least arguable that the Tribunal's decision that the uncertainties and unreliability and difficulties about the evidence in relation to business extinguishment ought not to have led it effectively to throw up its hands and say that no more refined calculation below 100% could properly be made.
20. For those purposes I will give limited permission to appeal, that is on ground 2 only and refuse permission to appeal on ground 1.