England and Wales Lands Tribunal

[2001] EWLands ACQ_133_2000 (09 August 2001)

ACQ/133/2000

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory acquisition of commercial and residential property – comparables rejected – authority's valuation increased

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN MUNAWAR HUSSAIN Claimant

and

CITY OF BRADFORD METROPOLITAN Acquiring

DISTRICT COUNCIL Authority

Re: 244-244A Manningham Lane, Bradford.

Tribunal Member: P H Clarke FRICS

Sitting at Huddersfield

On 28 June 2001

Miss Rifat, with permission of the Tribunal for the claimant

Mr Vincent Fraser QC, instructed by Department of Legal and Democratic Services, City of Bradford MDC, for the acquiring authority


 


DECISION OF THE LANDS TRIBUNAL

1. This is a reference to determine the compensation payable for the compulsory acquisition of a residential and commercial property in Bradford.
2. Miss Rifat, the claimant's sister, appeared with permission of the Tribunal for the claimant and gave evidence. Mr Vincent Fraser QC appeared for the acquiring authority and called Mr Ivor James BSc and Mr David Fisher BSc CEng MICE MIHT.

FACTS

3. The parties have prepared a brief statement of agreed facts. From this statement and the evidence I find the following facts.
4. On 18 November 1998 the City of Bradford Metropolitan District Council (234-244 Manningham Lane & 2-4 Clifton Street, Bradford) Compulsory Purchase Order 1998 was confirmed. It included 244-244A Manningham Lane, the property which is the subject of this reference. Notice to treat was served on the claimant on 26 July 1999 and notice of entry on 14 December 1999. The acquiring authority, Bradford Metropolitan District Council ("the Council"), acquired the tenancy of the shop and basement on 2 November 2000 and took possession of the remainder of the property on 14 February 2001. This is the date of valuation in this reference.
5. The subject property was situated on the corner of Manningham Lane and Clifton Street approximately 1½ miles north of the city centre of Bradford. It was an end of terrace property built in the last quarter of the 19th century on the site of a former quarry. The property was of stone construction with a slate roof. Accommodation was on basement, ground and two upper floors with a two-storey rear extension. An advertising hoarding was attached to the flank wall to Clifton Street. The basement comprised a hall or passageway and two storerooms. The front part of the ground floor was a shop with living room, bathroom and store at the rear. The first floor was residential accommodation comprising two rooms, kitchen, bathroom and WC. The second or attic floor was also residential accommodation. The property was in poor repair and had significant structural defects.
6. Mr Munawar Hussain, the claimant, held the freehold interest in 244-244A Manningham Lane subject to a lease of the shop and basement and a licence of the advertising hoarding. Mr Hussain occupied the whole or part of the remainder of the property as living accommodation. Under a lease dated 27 January 1992 the shop and basement were let for 15 years from 27 January 1992 on full repairing and insuring terms at an initial rent of £100 per week exclusive, subject to review at the fifth year of the term. The advertising hoarding was held on licence by Metro Preston Limited for 15 years and then yearly from the date on which the first poster was displayed at a fee of £850 per annum, subject to review every five years.
7. On 3 April 2000 the Council referred the determination of compensation to this Tribunal. On 20 March 2001 it was ordered by the Tribunal that this reference should be heard together with references ACQ/161-165/2000 relating to the adjoining properties. At the hearing, however, it was recognised that 244-244A Manningham Lane differed from the adjoining properties and the representation and witnesses were also different. This reference was therefore heard as a separate reference at the start of the hearing. On 31 May 2001 an application by the Council to call a third expert witness (a quantity surveyor) and to adduce further expert evidence was refused on the grounds that further expert evidence would not be proportionate to the amounts of compensation claimed and offered. This application was renewed at the start of the hearing and was again refused on the grounds of proportionality and that late admission of this new evidence would require an adjournment of the hearing which was undesirable.

CLAIMANT'S CASE

8. Mr Rifat claimed compensation on behalf of Mr Hussain of £276,000 comprising £48,000 for the shop (8YP of the rent) and £228,000 for the remainder based on an asking price of £225,000 for an adjoining property, 228 Manningham Lane. Miss Rifat said that Mr Hussain was living with his family in the subject property when possession was taken by the Council but was out of the country at the time. The Council put the furniture, goods, etc left at the property in store and are charging £70 per week for storage. Mr Rifat was unable to suggest a figure of claim for expenses and losses caused by Mr Hussain's dispossession from the property (disturbance).

COUNCIL'S CASE

9. Mr Fisher is the Senior Development Engineer in the Structural Engineering Unit of the Council. He qualified as a chartered civil engineer in 1967 and has 30 years of experience of engineering.
10. Mr Fisher gave evidence of the condition of the subject property and the estimated cost of structural repairs. He inspected the property, internally and externally, on 17 February 2000. The report of this inspection is as follows:-

"Exterior

The roof was slate covered at the front and tiled at the back and occasional slates were missing. The extension roof sagged slightly and the roof slates were in poor condition. All three chimney stacks leaned slightly. Pointing was in poor condition.

The front wall was reasonably plumb but the timber over the shop front sagged slightly. The gable wall end bulged outwards at attic level and there were a number of slight to moderate cracks in it at a high level. The rear and side walls of the extension were markedly leaning away from Manningham Lane and towards Clifton Street, and most of the sills and lintels sloped badly.

Interior

The property was occupied at the time of the inspection and had been maintained in as good a condition as could be expected under the circumstances. At attic level it was clear that the outer skin of the gable wall was separating from the inner skin but the floors were generally sound. At first floor level there were vertical cracks at wall junctions along the front and back walls. The back room ceiling sagged over the rear window and the floors in the extension sloped badly: the walls also leaned outwards.

On the ground floor the doors giving access to the shop had been sealed and this area could not be entered. The back living room floor sloped towards Clifton Street. The extension rooms were used as stores and the floor slopes could not be estimated but the walls leaned outwards. The basement was damp but not excessively so, and there was a diagonal crack in the back wall under the staircase. A steel angle had been fixed at the front, presumably to strengthen the shop floor, and this was extremely corroded."

11. His conclusion was that the property had three main structural problems:-

(i) subsidence at the rear, particularly movement of the two-storey extension;

(ii) separation of the front wall and to a lesser extent the back wall from the main cross walls;

(iii) splitting off of the outer skin of the gable wall.

12. Mr Fisher attached to his report a ground investigation report dated 24 October 1995 by T B V Stanger which showed that the property was built on an old filled quarry some 14 metres deep with a soft spot in the filling at rear of the property. Further subsidence is to be expected. Piling and ground beams would be needed to prevent further subsidence. Movement to the front and rear walls was minimal and could be halted by steel straps to tie the walls to the cross-walls and floors. The bulge in the outer skin of the gable wall could be cured by rebuilding the stone above attic floor level and installing wall tie anchors to tie the two wall skins together. The approximate cost of structural repairs was £40,000 for piling and ground beams and £4,500 for work to stabilise the walls.
13. Mr James is a Property Services Officer with the Council and has had 8 years experience in the Bradford area. He has dealt with this acquisition since 1997.
14. Mr James produced a revised valuation at the hearing of £42,000, comprising £49,000 for the residential accommodation (as if in good repair), £29,750 for the shop and £3,800 for the advertising hoarding, with an end deduction of £40,609 for repairs. These figures were produced following a meeting in November 2000 with Mr Derek O'Hearne FRICS who had been appointed to act for Mr Hussain by the claimant's solicitors. Both the solicitors and Mr O'Hearne are not now acting. The above figures are the average of Mr James's original figures and Mr O'Hearne's higher figures. All values are spot figures.
15. Mr James referred to two comparables: 154 Salt Street, a house built on a quarry and with severe structural problems, sold in September 1995 for £3,500; and a valuation of £18,000 per property of 85-103 Whatley Hill.

DECISION

16. I have inspected the site of the subject property and the surrounding area. The building has now been demolished.
17. Mr Hussain claims compensation of £276,000; Mr James values the property at £42,000. I have been referred to three comparables which I now consider.
18. Mr Hussain relies on the asking price of £225,000 for an adjoining property, 228 Manningham Lane, to support the residential value of 244-244A Manningham Lane. I was given a copy of the agents' sale particulars. 228 Manningham Lane is a commercial property at the opposite end of the same terrace as the subject property on the corner of Manningham Lane and Thorncliffe Road. It is referred to as a freehold showroom, workshop and offices with a total floor area of 572 square metres (6,162 square feet). The asking price is £225,000. I do not find this to be a helpful comparable for three reasons. First, it is a wholly commercial property and cannot usefully be compared with the residential part of the subject property or even the whole of that property which was predominantly residential. Second, although I was not given the site and floor areas of the two properties, it is clear from the Ordnance Survey map that no.228 is much larger than the subject property. Third, the price is an asking price and I was not told whether the property has been sold at that price or at all. It was still empty at the time of my inspection. I am unable to give any weight to this comparable.
19. Mr Hussain's figure for the shop is £48,000 (8YP of the rent). The initial rent under the lease of £5,200 per annum was to be reviewed in January 1997 but I was given no evidence that it had been reviewed and had been increased to £6,000 per annum (which at 8YP produces Mr Hussain's figure of £58,000). I regard a yield of 12.5% or 8YP as too low for this shop. I give no weight to Mr Hussain's comparable or his valuation.
20. Mr James referred to two comparables but I had difficulty in relating them to his valuation. His figure for the residential part of the subject property is £49,000 as if in good repair. His comparables are the sale of a house in poor condition at £3,500 5½ years before the valuation date and situated one mile away, and a valuation of unknown date of houses one mile from the subject property with no significant structural problems. I cannot see how a price of £3,500 for a house in poor repair 5½ years before the valuation date and a valuation of £18,000 of a house without structural problems can be used to arrive at a value of £49,000 for the residential part of 244-244A Manningham Lane as if in good repair. I give no weight to these comparables.
21. I find myself in the unfortunate position of having no comparables to assist me in arriving at a value for the subject property. The best I can do is to examine Mr James's figures and adopt a robust approach to valuation.
22. Mr James arrived at his figures as a result of negotiations with the claimant's former surveyor. He starts his valuation with a figure of £49,000 for the residential accommodation as if in good repair. The two comparables referred to by Mr James do not support this figure and cannot be related to it. In the absence of any evidence which enables me to check Mr James's residential value I accept it. His value for the shop is a spot figure of £29,750. The initial rent was £5,200 per annum; I was not told whether it was increased on review in 1997. I assume that it was not. Mr James's value of £29,750 (although expressed as a spot figure) means that the rent of £5,200 was in reality capitalised at 5.72 YP or a 17.5% yield in perpetuity. This yield seems to me to be high; taking a broad view I think that it should be reduced to 15% (6.67 YP), giving a capital value for the shop of £34,684. Mr James's figure for the advertising hoarding is £3,800, another spot figure. The fee for this hoarding was initially £850 per annum with 5 yearly reviews. It is not known whether the fee was increased at the first review, I assume that it was not. A value of £3,800 for the advertising hoarding (although again expressed as a spot figure) really represents capitalisation of the annual fee at 4.47 YP, a yield of 22.4%. Again this seems to me to be too high and, adopting a robust approach, I reduce the yield to 20% (5 YP). This produces a capital value for the advertising hoarding of £4,250. Mr James's deduction for repairs is £40,609, lower than Mr Fisher's figure of £44,500. In the absence of any evidence in rebuttal I accept Mr James's figure. My valuation is £47,325, comprising residential (£49,000) plus shop (£34,684) plus advertising hoarding (£4,250) less £40,609 for repairs. I round this figure up to £47,500.
23. Mr Hussain and his family were in occupation of part of the subject property when the Council took possession. He could claim for expenses and losses caused by this dispossession, that is to say disturbance compensation. I invited Miss Rifat to suggest a figure to compensate Mr Hussain for these losses. She did not do so. No claim has been made for compensation for disturbance. I accept Mr Fraser's submission that, in the absence of a claim and any evidence of loss, I should resist the temptation to pluck a figure out of the air. With reluctance, because I think Mr Hussain might well have been able to support a disturbance claim, I award no compensation for disturbance.
24. I determine that the compensation payable for the compulsory acquisition of the freehold interest in 244-244A Manningham Lane, Bradford is £47,500 (forty-seven thousand and five hundred pounds). Mr Hussain had a surveyor acting for him in the past. To this compensation I add a surveyor's fee under Rydes Scale.
25. This decision concludes my determination of the substantive issues in this reference. It will take effect as a decision when the question of costs has been decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands

Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this reference and a letter accompanying this decision sets out the procedure for submissions in writing.

DATED: 9 August 2001

(Signed) P H Clarke

ADDENDUM

26. Following my determination dated 9 August 2001 the claimant wrote to this Tribunal on 24 August and 5 and 23 September commenting on the decision and raising matters (including disturbance), some of which had already been raised at the hearing, some appeared to be new matters and some were outside the jurisdiction of this Tribunal. On 1 October I cause a letter to be written to Mr Hussain informing him that those matters within my jurisdiction could not be considered without the re-opening of the hearing. Mr Hussain was invited to make a formal application for the hearing to be reopened and was given 14 days to do so. No such application has been made. I now deal with the outstanding question of costs.
27. No representations as to costs has been made by Mr Hussain other than the brief statement that he has incurred solicitor's and surveyor's costs of £9,000. The Council ask for their costs on the grounds that the claimant has behaved unreasonably. The costs of the hearing could have been avoided. The Council reached agreement with the claimant's former surveyor at a figure which was not much less than my determination. At the hearing Mr Hussain substituted his own figure of £276,000. He failed to take his surveyor's advice and failed to appoint another surveyor or negotiate with the Council. The figure of compensation he put forward at the hearing was totally unrealistic and this would have been appreciated by any reasonable layman.
28. The starting point for my decision on costs is the general rule that the costs of a reference to the Lands Tribunal to determine compensation fall on the acquiring authority without whose resort to the use of compulsory powers there would have been no need for the owner to be compensated (see Emslie and Simpson Ltd v Aberdeen District Council (No.2) [1995] 35 RVR 159 and Lesquende Ltd v Planning and Environment Committee of the States of Jersey [1998] 1 EGLR 137). The Council say, however, that Mr Hussain has acted unreasonably and should meet their costs.
29. The relevant facts are as follows. Mr Hussain's former solicitors lodged an expert report dated 21 July 2000 prepared by Mr Derek O'Hearne FRICS containing a valuation of £52,000. The Council had previously lodged a report dated 18 May 2000 prepared by Mr Ivor James BSc in the sum of £31,750. Mr O'Hearne did not give evidence at the hearing. Mr Hussain denied all knowledge of his instructions. Presumably these were given by Mr Hussain's former solicitors, who had been disinstructed by the time of the hearing. Mr Hussain was represented by his sister who put forward a valuation of £276,000. Mr James gave evidence at the hearing and increased his valuation to £42,000. My determination was £47,500.
30. Mr Hussain, in my judgment, has acted unreasonably in his conduct of this reference. His claim at the hearing was wholly unrealistic. The question, however, is whether, on this account, I should depart from the general rule and require him to pay the Council's costs. This is a borderline case. Although I sympathise with the Council in trying to deal with Mr Hussain, I have decided not to deprive him of his costs for two reasons. First, Mr James revised his valuation upwards at the hearing from £31,750 to £42,000 and was still below my award of £47,500. The claimant was justified in proceeding to a hearing. Second, the Council could have sought to protect their position on costs by making an offer to settle; they did not do so (or at least no offer has been communicated to me). For these reasons the Council should meet the claimant's costs.
31. I order the Council to pay the claimant's costs of this reference, such costs, if not agreed, to the subject of a detailed assessment by the Registrar of the Lands Tribunal on the standard basis.

DATED: 23 October 2001

(Signed) P H Clarke