England and Wales Lands Tribunal

[2001] EWLands ACQ_103_1999 (21 May 2001)

ACQ/103/1999

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory acquisition of house in poor repair – price to be paid for freehold – comparable values – Compulsory Purchase Act 1965 s.5(3) – compensation £5,700

IN THE MATTER of A NOTICE OF REFERENCE

BETWEEN PRABHUHAI & MANUBHAI PATEL Claimants

and

WALSALL METROPOLITAN BOROUGH COUNCIL Respondent

Re: 17 Ford Street, Walsall, West Midlands

Tribunal Member: P R Francis FRICS

Sitting at: Birmingham Rent Assessment Panel

East Wing, Ladywood House, 45-46 Stephenson Street, Birmingham B2 4DH

on

2 May 2001

Giles Harrison-Hall of counsel, instructed by Hadens solicitors of Darlaston, West Midlands, for the claimants

Monica Bett, solicitor to Walsall Metropolitan Borough Council, for the acquiring authority


 


DECISION

1. This is a decision to determine the amount of compensation payable to Prabhubhai and Manubhai Patel ("the claimants") by Walsall Metropolitan Borough Council ("the acquiring authority") for the freehold interest in 17 Ford Street, Walsall, West Midlands ("the subject property") in connection with the Walsall (Ford Street) Compulsory Purchase Order 1976 ("the CPO").
2. Mr. Giles Harrison-Hall of counsel represented the claimants, and called Mr. Prabhubhai Patel who as one of the claimants gave evidence of fact, and Mr. John Wadsworth who gave valuation evidence. Witness statements from Councillor Colin Beilby of Walsall Metropolitan Borough Council and Mr. Habib Pathan were produced, but they were not called. Miss Monica Bett of Walsall Metropolitan Borough Council called Mr. Alan Compson FRICS, Senior Valuer in the Wolverhampton Group Office of the Valuation Office Agency who gave valuation evidence for the acquiring authority.
3. From the written reports of the valuers and the evidence given at the hearing, I find the following facts:

3.1. The subject property comprised a late-Victorian (c.1890) two-storey end-terrace cottage in a mature residential street off Wednesbury Road, Walsall. It was constructed of brick with a slate roof and contained two reception rooms, kitchen and single storey bathroom extension to ground floor, with two bedrooms at first floor and an attic bedroom above. A cellar was included. There was no front garden, but a small enclosed garden to the rear. The properties on the south-eastern side of the street (odd-numbered 19 to 99) backed onto a railway line, but number 17 was adjacent to, and also backed onto an area of land that at the relevant date had been used as an unlicenced scrapyard. That land in turn backed onto the railway.

3.2 In exercise of its powers under Part III of the Housing Act 1957, in connection with a Clearance Area, the acquiring authority made the Walsall (Ford Street) Compulsory Purchase Order 1976 which was confirmed by the Secretary of State on 12 June 1978. Notice to Treat was served upon the claimants on 4 August 1978, and Notice of Entry was served on 5 December 1979. The Date of Entry, and thus the Valuation Date for the purposes of compensation, was 15 January 1983.

3.3 A Claim In Answer to Notice to Treat was submitted by H E Wadsworth & Co, the claimants' agent, on 21 August 1978 (unquantified) and negotiations for compensation have been continuing between the parties, intermittently, for some 18 years. Following failure to agree, a Notice of Reference was submitted to the Lands Tribunal by the acquiring authority on 3 August 1999.

3.4 The subject property was subsequently demolished, but a series of external photographs – verified by the acquiring authority's stamp as taken on 15 January 1980 and 21 October 1982, and internal photographs taken on 19 January 1983 (four days after the date of entry) were produced by the acquiring authority to assist the Tribunal.

ISSUE

4. The sole issue for my determination is the open market value of the freehold interest in the subject property at the Valuation Date.

CLAIMANTS' CASE

5. Mr. Harrison-Hall set out the background to the claim, and firstly said that the claimant disputed the dates that the photographs were taken. He said that the Tribunal should be particularly wary of the set of internal photographs alleged to have been taken only 4 days after the date of entry, as it was plainly evident that the property had been seriously vandalised. He said that a key aspect in considering the valuation evidence was the fact that the claimants were the last to leave their property following the CPO which related to a much wider clearance area. Virtually all the other residents had moved out in the late 1970's, and by the time the Patels vacated, most of the houses in the vicinity had already been demolished.
6. It was, he said, the claimants' case that property values increased substantially due to inflation in the intervening period, but the offer made by the compensating authority was based upon 1979 figures. For instance, the settlements agreed at £4,750 each on 41 and 57 Ford Street where Mr. Wadsworth had acted for the claimants, were in 1979 and both were smaller properties The comparables used by the acquiring authority's valuer in nearby Princes Street were inappropriate as that was a much worse area and the evidence provided by the claimants' valuer showed that asking prices at the relevant date were two to three times higher than the amount of compensation offered.
7. Mr. Patel produced a written statement that described the subject property which had been occupied by the families of both himself and his brother, Manubhai Patel. One of the ground floor rooms had been occupied as a bedroom, and there had been a total of four adults and ten children in residence. Some modernisation had been effected during the course of their occupation (since July 1964) including the construction of the bathroom extension, and renewal of part of the ground floor.
8. He said that it was not possible for them to vacate the property when other residents did, as the Council had failed to offer them adequate alternative accommodation (it being accepted that the property had been designated as unfit for human habitation). Whilst a suitable property was awaited (this needing to be in the Pleck area of Walsall, at least four bedrooms and close to the subject property due to the childrens' schooling needs), most of the houses around were demolished. Just the subject property, and the adjoining number 15 Ford Street remained, and even that was badly damaged due to a fire and there was a large hole in the roof that caused water ingress and dampness to the party walls of number 17.
9. It was Mr. Patel's view that the acquiring authority should not be permitted to benefit from the fact that its own actions had caused damage to the subject property, by reducing its opinion of value. There was also nuisance from the adjacent scrapyard, which was operating in contravention of planning regulations, and the Council's inability to control that use should not affect the compensation to which the claimants were entitled. He said that during the period between 1978 when number 15 was vacated, and 1983 when they moved out, essential maintenance had been undertaken by the families, and the general condition of the house was still good.
10. Mr. Patel produced copies of the property pages of local newspapers from around the Date of Entry, which showed asking prices for similar properties in the range £11,995 to £16,750. In particular, there were similar properties in nearby Hilary Street that were being advertised at £13,500 and £14,500. He also introduced a handwritten list of properties that were being advertised in the Walsall Advertiser in January 1983 at prices ranging from £17,950 to £25,950.
11. As to the photographs that the acquiring authority had produced, and in particular the internal ones taken after the families had vacated, Mr. Patel said they could not possibly be an accurate indication of the property's condition on the Date of Entry. Much vandalisation had occurred and it would have been impossible for it to have been occupied with large areas of the ground floor boarding missing.
12. In cross-examination, Mr. Patel said that his property was bigger than the other ones in the street, being end terrace, with the outside wall (that abutted the scrapyard) being built on the scrapyard side of the boundary. In response to a request for clarification from me, he said this meant that the rooms were about one foot wider than those in the other houses. He accepted, however, that the internal area of the property had not previously been in dispute. The area shown on the rating records at 103 sq.m. had, he said, been agreed by the Lands Tribunal in an earlier rating dispute (although he was unable to produce any evidence to support this) and that area included the attic bedroom.
13. He said that he could not recall the photographs dated 1980 and 1982 being taken, and denied having received any approach for permission. In any event he said he would have refused permission had he known. He could not comment upon the contents of an internal Council memorandum dated 22 October 1982 (and introduced in evidence) that referred to the occupier's refusal to grant permission for internal photographs to be taken. As to the Council's records of an internal inspection having been undertaken on 21 October 1982, Mr. Patel insisted that no such inspection had taken place. He said he had definitely not been contacted in that regard, and confirmed that even if it was his brother that had been approached, he would have known about it.
14. In response to questions relating to the copy newspaper advertisements and his handwritten schedule, Mr. Patel said that the latter had been produced from information obtained by a family member who had inspected the Walsall Advertiser's archives. He acknowledged that all his evidence related to asking prices, and none of the figures represented actual sales. In answer to a question from me, as to whether or not he still relied upon his expert valuer's opinion of value (which was lower than his own estimates from the asking prices he produced), Mr. Patel confirmed that he did.
15. Mr. Wadsworth is an estate agent who has been operating in the vicinity of the subject property for some 38 years. Although not professionally qualified, he said that he had acted in a large number of compensation cases, including some that were affected by the same scheme. He had produced as evidence a two page letter setting out his opinion of the value of the subject property at the relevant date in the sum of £10,500.
16. He said that he had acted for the claimants at the time of the CPO, had filed the unquantified claim in 1978, and that it was normal practice not to specify a sum in the initial Claim in Answer to a Notice to Treat - negotiations with the acquiring authority would normally commence soon afterwards. Mr. Wadsworth said that he had not been able to find his file on the subject property, and had no evidence of open market transactions that could be considered comparable at or around the relevant date. He relied, he said, purely on memory and upon his 38 years as a practising estate agent in the area.
17. He also produced at the hearing, a copy of a mortgage valuation report that had been undertaken on the 14 November 1985 on a property in Kingsley Street, about ½ mile away from the subject property. This was only two bedrooms whereas the claimants' house had three, and it was sold for £15,500. Discounting that price back on the basis of the Nationwide Building Society indices to the Date of Entry, gave a figure of £12,128 which, he said, supported his opinion.
18. As to his initial valuation of the subject property at £5,250 rather than the £10,500 that was being claimed, Mr. Wadsworth said that that was his view in late 1979 when negotiations commenced, and subsequently came to an impasse. He said that the house price inflation that occurred in the period between then and the Date of Entry substantiated the increase.
19. Commenting upon Mr. Compson's comparable properties in Princes Street, Mr. Wadsworth said that as no property numbers had been given, he had been unable to inspect them. However, it was his view, based upon many years trading in the area, that Princes Street was very substantially worse than Ford Street. It was virtually a "no-go" area where nobody wanted to live, and values were therefore much lower.
20. In cross-examination, Mr. Wadsworth accepted that he had no evidence other than his own experience as to when the alleged house price inflation in the late 1970's and early 1980's occurred, or by how much. He accepted that the Kingsley Street valuation was almost three years later, and that the property was in much better condition than the subject. As to the Princes Street properties, relied upon by Mr. Compson, Mr. Wadsworth said that having practised in the area for so long he was able to say with conviction that properties in that road, despite it being virtually opposite Ford Street, were substantially less valuable – it was just, he said, a local anomaly. Mr. Compson, on the other hand, had no working knowledge of the area, and would not know of the Princes Street problems.
21. Finally, in respect of the claimants' evidence, Mr. Harrison-Hall said that the written statements from Cllr Beilby and Mr. Pathan which commented upon the condition of the claimants' property should be used by the Tribunal to add weight to their case.

ACQUIRING AUTHORITY'S CASE

22. Mr. Compson is a chartered surveyor and a senior valuer with the Wolverhampton Group Office of the Valuation Office Agency. He has 25 years post qualification experience in the public and private sectors, 13 years of which were in the Wolverhampton area, and in the last three years Walsall has been with his operating area. He produced a report which was based upon Valuation Office records, it being acknowledged that none of the personnel who had been involved some 18 years ago were now available. Those records contained handwritten notes of inspections of the subject property carried out by a representative of the District Valuers Office on 21 October 1982 and initialled 'MWS' (understood to be a Mr. Stimpson), and another individual (who may have been from the Council) on the same date.
23. In the light of the claimants' insistence that no such visit had either been requested or authorised, and indeed had never taken place, Mr. Compson produced a copy of a file note thought to have been written by Mr Stimpson, dated 20 October 1982 that read:

"Tromans rang – Patel is anxious that we inspect before he moves out – I arranged to inspect tomorrow (21^st) 1:30 to 3:00".

He said that Tromans were Chartered Surveyors who were acting for the claimants at the time and with whom Mr. Stimpson had been negotiating. The file notes showed that a figure of compensation in the sum of £5,000 had been agreed subject to the claimants' instructions, but no such instructions were forthcoming, and subsequently Tromans closed their file in 1985.

24. Mr. Compson's report recorded that the subject property had been noted to be in poor condition with many slipped and missing roof slates, damaged or non existent flashings and a potentially dangerous chimney stack. External windows, woodwork and gutters were in poor order, and extensive repointing was required. There was evidence of some settlement over the front bedroom window and the house was generally affected by rising and penetrating dampness.
25. Twenty four settlements in connection with the CPO were relied upon as comparables, together with five open market sales of properties in Princes Street during 1983 which Mr. Compson considered to be similar. The failure to include the house numbers in his report (dated 15 February 2001) was for reasons of confidentiality, the information having been derived from the forms of Particulars Delivered under the Stamp duty Act 1931, although attempts were being made to obtain the owners' consent to disclosure. Mr. Compson said he had the details with him at the hearing, and Miss Bett made application to disclose the house numbers if the Tribunal so directed. However, I said that such an application must be refused as not only would the claimants' valuer need an opportunity to inspect the properties but, as Mr. Harrison-Hall pointed out, the claimants case before me had been completed.
26. As to the settlements, Mr. Compson referred particularly to 85 Ford Street, an inner-terrace house settled at £4,750 in March 1982 and 87 Ford Street, an end-terrace house with two bedrooms (and no attic bedroom) in similar condition to the subject property settled at £4,500 in September 1982. The Prince Street properties were sold between March and September 1983 at prices from £4,000 for a mid-terrace two-bedroom property of 70 sq.m. to a modernised three-bedroom mid-terrace house of 94 sq.m. at £6,500. In his view, these houses were very similar in terms of appearance, size (although acknowledged to be somewhat smaller than the subject due to its attic room), and locality.
27. In forming the opinion that the value of the subject property at the relevant date was £5,700 Mr. Compson said that he had taken into account the poor condition of the property, although he had ignored any effect on value attributable to damp penetration from the adjoining property, and had also ignored any detrimental effect of the scrapyard. His figure, he said, acknowledged that there may have been a general increase in property values over the relevant period, but the age and condition of the property would probably have precluded any uplift.
28. In cross-examination, Mr. Compson said that he had no evidence as to whether or not there had been a boom in property prices in the early 1980's and whilst he accepted that there may have been some increase, could not state what the magnitude might have been. He said that his views were based upon the historical evidence he had produced, but accepted that was based upon information from previous valuers. He said that he did not agree with Mr. Wadsworth's contention that Princes Street was not comparable, but accepted that he did not have any personal knowledge of the of either the subject property or the comparables at the relevant time. He said that Mr. Wadsworth had produced no evidence to support his somewhat bold statement that Princes Street was a 'bad' area, and was thus an anomaly in marketing terms.
29. Mr. Compson said that he had not used open market comparables from other streets in the vicinity as, in his view, Princes Street was the most similar – and virtually the nearest. As to the Kingsley Street transaction referred to by Mr. Wadsworth, Mr. Compson said that he did not know about it until the hearing, but did not think it should be given any weight as it was a property in good condition that had sold almost 3 years after the relevant date. There was certainly no evidence, either from the Nationwide indices or anywhere else to support a virtual tripling of values between 1983 and 1985.

DECISION

30. This is a case that has taken in excess of 18 years from the Date of Entry to come before the Lands Tribunal and thus it is not surprising that evidence of actual transactions at or around the time are extremely limited. The claimants' valuer produced no comparable evidence within his initial two page report, nor within a subsequent letter addressed to the Tribunal resulting from a request that such evidence should be submitted. In evidence, he sought to rely upon his experience from practising within the area for a considerable number of years, and upon details of a sale at £15,500 of a modernised house in Kingsley Street in 1985, and upon which he had undertaken a mortgage valuation.
31. Using the Nationwide indices, which appear to have been first published in 1983, he discounted the sale price to give a comparable value at the Valuation Date of just over £12,000. Whilst he said it was only two bedrooms, and in mortgageable condition, he gave no further details as to, for instance, the extent to which it had been modernised or the comparability, in marketing terms, of the area in which it was located. I can therefore attach little weight to this evidence.
32. As to the price inflation which Mr. Wadsworth said had occurred between 1979, when most of the Ford Street settlements relied upon by Mr. Compson were agreed, and January 1983, he was unable to produce any evidence to support that contention. I note from the copy Nationwide index produced with a copy of part of the mortgage valuation referred to, that despite the index showing a base of 100 at 1^st quarter 1983, it gives a figure of 91.4 for older houses, nationally, for the first quarter 1982, indicating house price inflation in that year of about 8.5 per cent.
33. Mr. Compson referred specifically to two of the Ford Street settlements agreed in 1982 at £4,500 and £4,750. This suggests to me that, whilst these were settlements rather than open market transactions, and therefore slightly less weight can be attributed to them, there is little if any evidence of the substantial rises in value to which Mr. Wadsworth alluded. If there had been significant house-price inflation, it would have been reflected in the later settlements. If anything, and if the Nationwide index is anything to go by, Mr. Compson's valuation of £5,700 at the relevant date appears generous. The sales of the Prince Street properties in 1983 indicate a range of values between £4,000 for a small two-bedroom unit and £6,500 for a modernised three-bedroom mid-terrace house.
34. I am not persuaded by Mr. Wadsworth's argument that in marketing or demand terms there was a very substantial difference between Prince Street and Ford Street. They lie opposite each other on either side of Wednesbury Road, and in terms of location, could be little closer. Again, Mr. Wadsworth produced no evidence to support his conclusions and whilst I accept that, as a practising estate agent in the area, he is likely to have significantly more local market knowledge than Mr. Compson, it might have been more helpful to his clients' case if he could have provided more weighty evidence than pure opinion.
35. The fact that the acquiring authority's expert had not provided numbers for the Prince Street properties was grasped by counsel for the claimant as a reason for their inadmissibility as evidence, but I do not accept this. Prince Street appears from the plan accompanying Mr. Compson's report to be made up of fairly standard terraced properties of similar type to the subject property, and they will therefore, in my judgment, have values falling within a fairly narrow range. If the prices achieved in 1983 were averaging between £5,000 and £6,000, I cannot see (and as I have said, there is no evidence to support the contention) that the value of the subject property in very poor condition, could possibly be almost double due to the anomaly referred to by Mr. Wadsworth, despite it being slightly larger due to its attic bedroom, and being end-terrace.
36. The evidence relating to asking prices from the local newspapers introduced by the claimant was not conclusive and I cannot attach any weight to it as evidence of actual transactions. Most of the advertisements for similar style properties at prices of £13,500 and upwards appeared to me to be for those which had been fully modernised, with central heating and proper bathrooms, but as I have said, there was no evidence of actual sales, or as to comparability of locations.
37. Doing the best that I can therefore, I conclude that on the balance of probabilities there was little between values in Princes Street and Ford Street at the relevant date, and the settlement evidence from 1979 and 1982 referred to by Mr. Compson shows little evidence of a major boom in house prices over that period. With no transactional evidence from around the relevant date forthcoming from Mr. Wadsworth, I accept Mr. Compson's evidence and his statement that in valuing the property he took no account of any detrimental effect of the adjacent scrapyard, or any additional dampness resulting from the damage to the adjoining property.
38. I also take into account the photographic evidence from 1980 and 1982 from which it is evident that the property was, overall, in poor condition with little sign of any maintenance. Whilst I accept that the internal photographs taken 4 days after the house was vacated show signs that some vandalism might have occurred, it is clear to me that it was in very poor decorative order and basic in terms of fixtures and fittings. Finally, I accept that an internal inspection was undertaken at the claimants' request in October 1982 and again, from the copy file notes it is evident that the house needed much work to bring it up to an acceptable modern standard.
39. I determine that the compensation to be paid for the freehold interest in the subject property shall be £5,700. The claimants' legal costs of transfer, if relevant in this case, are to be paid in addition.
40. This decision determines the substantive issue in this reference, and my award is final. Representations on costs are invited from the parties and a letter accompanying this decision sets out the procedure for submissions in writing. Following receipt, or expiry of the time limit for their submission, the question of costs will be decided. At that point, and not before, the decision will take effect, and the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and Part 52 of the Civil Procedure Rules will come into operation.

DATE 21 May 2001

(SIGNED) P R Francis FRICS

ADDENDUM ON COSTS

41. I have received submissions on costs from both parties.
42. The claimant said that, until the acquiring authority's sealed offer of £5,700 (sic) was made in April. 2001, no offer had been received that ought to have been accepted. It followed that the claimant's legal costs at least up to the date of that letter should be met by the Council.
43. As to costs incurred thereafter, it was submitted that the late disclosure of documentation by the acquiring authority, and the fact that house numbers had been omitted from some of the comparable evidence relied upon by it, meant the claimant was unable to give sufficient consideration to the offer. Furthermore the acquiring authority's attempt to seek to disclose those house numbers during the hearing and after the claimant had completed its case, confirmed the importance that the Council placed on the evidence. It would therefore be inequitable for the acquiring authority to recoup its costs after the date of the sealed offer.
44. The claimant submitted that alternatively, whilst it was accepted Mr Patel's witness statement was not received until late in the day, all evidence was submitted prior to the hearing and the acquiring authority had thus had time to consider it. In the circumstances the Council should pay the claimant's costs up to and including the hearing.
45. The claimant said that the considerable delay in bringing the matter before the Lands Tribunal was not at his behest and the acquiring authority should have served a Notice of Reference many years earlier. The sealed offer was also not made until many months after the reference and only shortly before the hearing.
46. The acquiring authority said that it had been endeavouring to conclude the matter since 1978 and the claimant had had various firms of solicitors and agents acting for him during that period. Early negotiations had resulted in agreement being reached on compensation in the sum of £5,000 with Mr Patel's former agent, subject to obtaining the claimant's authority to proceed. No such authority was ever forthcoming and despite numerous letters from the Council, no response could be elicited from the claimant or his agents.
47. A revised offer of £5,750 (to include valuer's fees) together with a home loss payment was made in October 1991. This was confirmed to the claimant's current solicitors as still available in November 2000.
48. The notice of reference had been made by the Council in order to bring this long outstanding matter to a conclusion. In a final attempt to prevent a hearing being necessary the acquiring authority made a sealed offer of £6,000 together with a home loss payment of £339 on 21 April 2001.
49. It was submitted that due to the claimant's persistent failure to negotiate with the acquiring authority and its pursuance of an unrealistic claim of £20,000, the acquiring authority has been put to considerable cost and those costs should, in its view, be paid by the claimant in full despite the fact the claimant is being legally aided.
50. In determining the claim in the sum of £5,700 I have awarded marginally less than the sum offered by the acquiring authority in its sealed offer made some six weeks prior to the date of the hearing. The sealed offer was, for the record, £6,000 and not £5,700 as stated in the claimant's submission. In failing to beat the offer I am at liberty to award the acquiring authority its costs in full although I do have discretion in the matter (Rule 52(1) Lands Tribunal Rules 1996 as amended).
51. I accept that the acquiring authority has been frustrated in its previous attempts to agree compensation and its efforts will have been made all the more difficult by the claimant's changes of advisors.
52. I reject the claimant's arguments that the acquiring authority's conduct both prior to and at the hearing prejudiced his ability to consider the revised (sealed) offer that had been made. The amount being claimed by Mr Patel was, in my judgment, out of all proportion to the reality of the situation and it would, to my mind, be inequitable if my discretion were not to reflect that to some degree.
53. There is some merit in the claimant's argument that the matter could and should have been referred to the Lands Tribunal somewhat earlier. Nevertheless, the suggestion that the sealed offer was not made until just before the hearing and many months after the Notice of Reference holds, in my judgment, little weight. Bearing in mind the quantum of the claim, there would probably have been little chance of the sealed offer being accepted, whenever it was made.
54. In all the circumstances and having carefully considered all the costs submissions and responses, I have decided to award the acquiring authority its costs from seven days after the date of the sealed offer (28 April 2001) such costs to be assessed by the Registrar if not agreed.
55. Each party to bear its own costs in the reference prior to that date.

DATE 26 June 2001

(SIGNED) P R Francis FRICS