England and Wales Lands Tribunal

[2001] EWLands ACQ_23_1999 (22 June 2001)

ACQ/23/1999

LANDS TRIBUNAL ACT 1949

PROCEDURE – determination of preliminary issues – subsequent directions for expert evidence – claimants' valuer's report disclosing a change in the basis of claim – application to strike out for abuse of process – application refused

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN JOSEPH ROLAND RICHARDS

and

JOANNE VALERIE RICHARDS Claimants

and

SOMERSET COUNTY COUNCIL Acquiring

Authority

Re: Land adjoining British Telecom Radio Station

Burnham-on-Sea, Somerset

Tribunal Member: P H Clarke FRICS

Sitting at 48/49 Chancery Lane, London WC2A 1JR

on 18 June 2001

The following cases are referred to in this decision:

Yat Tung Investment Co Ltd v Dao Heng Bank Ltd.[1975] AC 581

Porter v Secretary of State for Transport [1996] 3 All ER 693

Henderson v Henderson (1843) 3 Hare 100

Greenhalgh v Mallard [1947] 2 All ER 255

Robin Purchas QC and Leslie Blohm instructed by Clarke Willmott & Clarke, solicitors of Taunton, for the claimants.

Guy Roots QC and Robert Walton instructed by County Solicitor, Somerset County Council, for the acquiring authority


 


DECISION OF THE LANDS TRIBUNAL

1. This is a decision on an application by the acquiring authority to strike out the claimants' expert valuation evidence in a reference to determine the compensation payable for the acquisition under a purchase notice of vacant land at Burnham-on-Sea.
2. The application was heard at pre-trial review held on 18 June 2001. Robin Purchas QC and Leslie Blohm appeared for the claimants. Guy Roots QC and Robert Walton appeared for the acquiring authority. A witness statement of Christopher Taylor, a partner in the claimants' solicitors, and correspondence were put in evidence.

FACTS

3. The facts relevant to this application may be shortly summarised.
4. The reference land is a small plot of vacant land on the line of the eastern distributor road ("the EDR") on the outskirts of Burnham-on-Sea. The road has been constructed and is in use to the north and south of the land. To the west of the EDR is Rosewood Farm which has been largely developed with housing and a Tesco Supermarket. To the east is a British Telecom Radio Station and open land.
5. Following the refusal of planning permission for the erection of a dwelling on the reference land the claimants served on Sedgemoor District Council a purchase notice dated 17 December 1997. This was confirmed on 22 January 1999 with the substitution of Somerset County Council ("Somerset") as the acquiring authority. Somerset took possession of the land on 18 August 1999, the agreed date of valuation.
6. On 26 February 1999 the claimants referred their claim for compensation to this Tribunal. Following directions from the Tribunal expert reports were lodged on 17 September 1999. The claimants' expert valuation witness was, and still is, Martyn Jones BSc FRICS MCIArb. Mr Jones's valuation of the reference land was £3,820,000 on the basis that the land had a ransom value because it was the only land available to secure access to Rosewood Farm in the no scheme world, disregarding any indication of compulsory purchase under section 9 of the Land Compensation Act 1961. Somerset's expert, Richard Burt MRICS, valued the reference land at the nominal sum of £100.
7. On 23 November 1999 Somerset applied for certain matters to be treated as preliminary issues and disposed of at a preliminary hearing. I made such an order, after hearing the parties, on 14 January 2000. The purpose of the preliminary hearing was to establish the basis of valuation for the reference land. The parties' contentions at that time are set out in my decision (para 1) as follows:-

"The claimants seek substantial compensation on the grounds that the land must be valued in a hypothetical compulsory purchase world, disregarding the decrease in value which has arisen from an indication of acquisition under section 9 of the Land Compensation Act 1961 and the scheme underlying the acquisition, which came into existence in March 1977. In the absence of the indication and the scheme the reference land would have had a premium or ransom value. Somerset County Council say that the land must be valued in the real world at the date of valuation. No indication has been given of possible acquisition, or, if it has, it has not caused any depreciation in value. The scheme underlying the acquisition did not come into existence until confirmation of the purchase notice, a few months before the valuation date. Compensation is a nominal amount."

The preliminary hearing was held in July 2000. Both parties appeared by counsel and I heard expert evidence on planning and highways. I received no valuation evidence. On 25 September 2000 I issued a written decision with a subsequent addendum on costs. My decision was as follows:-

"229. My conclusions on the preliminary issues are as follows:-

(1) No indication has been given within section 9 of the 1961 Act that the reference land is, or is likely, to be acquired by an authority possessing compulsory purchase powers.

(2) There was no scheme underlying the acquisition of the reference land.

It follows, therefore, that in relation to the preliminary issues under the order dated 14 January 2000 I accept the contentions of Somerset set out in paragraph 1 and reject the claimants' contentions set out in paragraph 2(i)-(iii).

230. The purpose of this determination of preliminary issues is to establish the basis of valuation for the reference land. The value to be determined is the open market value under section 5 of the 1961 Act of the claimants' freehold interest in the reference land as at 18 August 1999 having regard to all the circumstances in the real world at that date. No adjustments are to be made to that value in respect of an indication under section 9 of the 1961 Act nor in respect of an underlying scheme."

8. I ordered a stay of proceedings for three months to allow the parties to negotiate a settlement. This was extended to 28 February 2001. The claimants applied for a further stay but this was refused and directions were given on 5 March 2001 for the lodging of expert reports. For the claimants Mr Jones produced a report putting the value of the reference land at £4,600,000 on the basis that the land possessed ransom value in the real world at the date of valuation due to the publication on 21 June 1999 (before the valuation date) of the deposit draft local plan which allocated land for housing development on the open land to the east of the EDR. He also relied on further development of the Tesco land. He stated that the completion of the EDR across the reference land is essential to the emerging development opportunities on land to the east of the EDR as identified in the revised local plan and for the expansion of the existing Tesco Supermarket on Rosewood Farm to the west. Somerset's valuation witness lodged a report in similar terms to his previous report valuing the reference land at £100.
9. On 22 March 2001 a pre-trial review was fixed for 18 June 2001. On 5 June Somerset wrote to the Tribunal setting out the directions requested, including an order that:-

"(a) the report of Mr Martyn Jones dated 24 March 2001 not be accepted by the Tribunal in this reference;

(b) in the absence of other evidence the reference be determined in accordance with the report of the Acquiring Authority's valuer."

The claimants' solicitors applied on 13 June for an adjournment of the pre-trial review on the grounds of insufficient time to deal with this application. This was refused. Mr Purchas helpfully indicated at the pre-trial review that he was ready to deal with Somerset's application. I reserved my decision.

SUBMISSIONS

10. Mr Roots QC, for Somerset, said that Mr Jones set out his, and the claimants', basis of valuation in a letter to Mr Burt dated 5 February 1999. The value was then £6,000,000 (subject to amendment) reflecting the ransom value of the reference land if the Rosewood Farm development had been carried out in accordance with "Estate Roads in Somerset" and Design Bulletin 32. The reference land was required to complete the EDR to serve Rosewood Farm. This basis of valuation was subsequently included in Mr Jones's expert report lodged in September 1999. The expert reports comprise the pleadings in this reference. The claimants (and Mr Jones) now put forward a completely different basis of claim. Ransom value is still sought but now based on the allocation of housing land to the east of the EDR included in the revised local plan published in June 1999, before Mr Jones lodged his first report. He was, or should have been, aware of this new allocation of land when he prepared that report. This new basis of valuation could have been raised at any time after June 1999. It was not mentioned to Somerset who were unaware that it was waiting in the wings. If it had been raised earlier then the related planning and highway issues could have been considered at the preliminary hearing. To raise a new claim now is an abuse of process (see Yat Tung Co v Dao Heng Bank at pages 589H and 560A-H).
11. This reference is unusual. The acquisition of the reference land has been instigated by the claimants, not by Somerset, by the fragmentation of ownership, then the service of a purchase notice and early reference to the Lands Tribunal, all to obtain maximum compensation. The reference should not be allowed to proceed on the basis of a completely new claim.
12. Mr Purchas QC, for the claimants, said that the deposit draft local plan is referred to in para 31 of my preliminary decision and in para 195 I record the claimants' reliance on it to support the existence of a scheme. This document was not, however, primarily relevant to the issues at the preliminary hearing. Its relevance is as part of the surrounding circumstances in which the valuation of the reference land would be made, however the preliminary issues were determined. Any implications flowing from the proposals in the deposit draft plan are matters of valuation and were not for the preliminary hearing. Mr Purchase referred to Porter v Secretary of State for Transport to illustrate the distinction between the facts on which an opinion of value is based and that opinion (see pages 703j and 704a-c).
13. Following the Tribunal's decision on the preliminary issues Mr Jones wrote to Somerset setting out his valuation in the light of the preliminary decision, including the prospect of premium value arising in respect of the emerging development opportunities identified in the deposit plan and for the expansion of Tesco. That was not in any way affected by the issues determined as part of the preliminary issues but formed part of the factual matrix at the valuation date in the real world. The claimants accept that in their original valuation they had relied upon a different factual matrix as part of the no scheme/no indication world for the purposes of valuation. They accept that they must now carry out their valuation on the facts in the real world in accordance with the decision of the Tribunal.
14. Directions were then given for the lodging of expert valuation reports, following which Somerset have applied to strike out Mr Jones's evidence. This application is misconceived. For value to be attached to the prospect of premium value based on the prospects for future development does not depend upon determinations as to historical facts or the issues of law or fact with which the preliminary hearing was properly concerned. The limited role of the deposit draft has been referred to. As explained in Porter valuation is not dependent on findings on probabilities or even that "it could reasonably have been expected that planning permission would be granted," whatever that may mean. Value will respond to the prospect or chance that the parties may have concluded then existed, ranging from mere certainty to mere hope. That question is most conveniently and indeed can effectively only be determined as part of the determination of value. It is not appropriate for a preliminary issue.
15. Thus, the contentions of Somerset should be rejected in this respect. There has been no prejudice. The determination of the preliminary issues was necessary in any event to dispose of the basis for the claimants' primary basis of claim. That they have lost on that issue (and have been ordered to pay the costs thrown away) does not mean that they should be penalised or deprived of the market value of the land at the valuation date in the circumstances that then existed (which has been advanced as the correct approach by Somerset). The valuation on behalf of Somerset has remained essentially unchanged notwithstanding the determination of the preliminary issue, the letter of 31 January 2001 setting out the claimants' case in this respect and the extension of time for the lodging of its report. It then took some ten weeks before the application to bar this part of the claim was sent to the Tribunal. Any order sought by Somerset would be disproportionate and unjust.
16. The change of opinion by the claimants' valuer, in the light of the Tribunal's preliminary decision, is not an amendment of pleadings but the lodging of fresh expert evidence in accordance with the Tribunal's directions. No leave was required. The claimants were unsuccessful at the preliminary hearing and were therefore bound to change the basis of their claim. This has caused no prejudice to Somerset. It has never been suggested by the claimants that the decision on the preliminary issues would determine value and dispose of the reference.
17. The part of the judgment in Yat Tung relied on by Mr Roots must be read in the light of the facts of that case. An important fact is that the appellants brought a second action on matters which were available to them in their first action. This was the abuse of process. That is not the position in this reference where there has been a change of claim within the same reference.

DECISION

18. The basis of Somerset's application is that Mr Jones's new expert evidence constitutes an abuse of process as explained by the Judicial Committee of the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd. The passage on which Mr Roots relies is as follows (pages 589H and 590A-H):-

"The second question depends on the application of a doctrine of estoppel, namely res judicata. Their Lordships agree with the view expressed by McMullin J. that the true doctrine in its narrower sense cannot be discerned in the present series of actions, ……….. But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings. The locus classicus of that aspect of res judicata is the judgment of Wigram V.-C. in Henderson v Henderson (1843) 3 Hare 100, 115, where the judge says:

"… where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

The shutting out of a "subject of litigation" – a power which no court should exercise but after a scrupulous examination of all the circumstances – is limited to cases where reasonable diligence would have caused a matter to be earlier raised; moreover, although negligence, inadvertence or even accident will not suffice to excuse, nevertheless "special circumstances" are reserved in case justice should be found to require the non-application of the rule. …………

The Vice-Chancellor's phrase "every point which properly belonged to the subject of litigation" was expanded in Greenhalgh v Mallard [1947] 2 All ER 255, 257, by Somervell L.J.:

"… res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but … it covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them."

19. There are two questions for me to answer. Has there been an abuse of process in this reference by the new valuation evidence of Mr Jones on behalf of the claimants? Should this evidence be struck out "after a scrupulous examination of all the circumstances"?
20. I agree with Mr Purchas that the above statement of principle in Yat Tung must be considered in the context of the facts of that case. The appellants brought an action against the bank claiming that the sale of a property to them by the bank was a sham, that the property had been conveyed to them as trustee for the bank and that the mortgage with the bank (for interest on which the bank had pursued the appellants and had exercised their power of sale) was a nullity. The court dismissed this claim and upheld the bank's counterclaim. One month later the appellants brought another action against the bank with further claims arising out of the bank's exercise of their power of sale. This was struck out on the grounds that the matters in the second action were available in the first action.
21. The important fact, in my judgment, is that the appellants brought two actions on essentially the same matters and this was the abuse of process upheld by the Privy Council. It is clear from the above extract from the judgment that the abuse of process arose out of the second proceedings. Lord Kilbrandon giving judgment said (at page 590A) that "it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings." This is also implicit in the passage cited from Henderson and in Greenhalgh Somervell LJ referred to "a new proceeding" being the abuse of process. There is no suggestion that it is an abuse of process for a party to change its case in the same proceedings before a decision has been given on particular matters or those matters have been considered. That is the position in this reference: the claimants have changed their claim in the same reference before it has been finally determined. I cannot find that to be an abuse of process, particularly having regard to the following circumstances.
22. My preliminary decision established the basis of valuation. I rejected the claimants' hypothetical no-scheme/no indication world and accepted the contention of Somerset that the reference land should be valued in the real world without adjustment for scheme or indication of compulsory purchase. I have not considered the value of the land on that basis or at all. Mr Jones's new valuation is now on the basis I have determined. He is still of the opinion that the land has ransom value but the justification for that value has changed. As I understand the position, it was previously based on the existence of a hypothetical no-scheme/no indication world, that to say it was founded on past events. It is now founded mainly on the revised local plan which allocated land for housing to the east of the EDR, that is to say it is based on future events. This is a tenable opinion, not hopeless or wholly misconceived, and is not contrary to the determined basis of compensation. I cannot comment on the merits of this opinion but it should receive further consideration.
23. It was not contemplated that a decision on the preliminary issues would inevitably lead to the determination of value at a nominal amount in accordance with Mr Burt's report. As I stated in paragraph 1 of my decision: "This decision will establish the basis of valuation for future negotiation or determination." In my view, it would be wrong to strike out Mr Jones's evidence because he still differs from Mr Burt.
24. The claimants were not successful in the determination of the preliminary issues. It was inevitable therefore that Mr Jones would have to alter his evidence. The fact that this evidence has changed in a manner not anticipated by Somerset and that he has introduced a new justification for ransom value, which is constant in both of his reports, does not seem to me to be an abuse of process, justifying the striking out of the new evidence. It must also be borne in mind that the new report has been lodged in response to directions from the Tribunal and has not been introduced unilaterally by the claimants without leave of the Tribunal. Somerset are not prejudiced; no date has been fixed for a further hearing; the directions provisionally agreed at the pre-trial review give Somerset adequate opportunity to bring evidence in rebuttal.
25. To summarise the position, I reject Somerset's application for three reasons. First, the new evidence sought to be struck out arises in the same proceedings and not in subsequent proceedings. Second, the new evidence introduced by Mr Jones in his second report has not previously been considered by the Tribunal. Third, having regard to these and other circumstances, the new claim is not an abuse of process and it would be unjust to strike it out.
26. Although I reject Somerset's application I must record my concern at this change of approach by the claimants. Mr Jones could have included his current approach to ransom value in his original valuation report or at any time after June 1999. If I had known that this basis of valuation might be put forward by the claimants (perhaps as an alternative) I would have identified the preliminary issues differently. The preliminary hearing has therefore been less useful than it might have been in narrowing the issues and in determining the basis of valuation. However, regrettable as this is, this does not, in my view, justify striking out the claimants' valuation evidence. Somerset have already been awarded their costs of the preliminary hearing and the claimants' new approach to value may be a matter to be considered when I deal with costs at the end of the reference.
27. For the reasons given above, I dismiss the application by Somerset that the report of Mr Jones dated 24 March 2001 not be accepted by the Tribunal and that the reference be determined in accordance with Mr Burt's report. The directions for the future conduct of this reference agreed at the pre-trial review will now be issued. Costs of the pre-trial review, including this application, are reserved.

DATED: 22 June 2001

(Signed: P H Clarke)