England and Wales Lands Tribunal

[2002] EWLands ACQ_117_2001 (21 March 2002)

ACQ/117/2001

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory acquisition of vacant and derelict property in Rochdale – whether disrepair caused by impending acquisition – offers –comparables – settlements – value determined at £7,500 – no compensation for loss of rent.

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN DAVID HOWARD Claimant

and

ROCHDALE METROPOLITAN Acquiring

BOROUGH COUNCIL Authority

Re: 287 Oldham Road

Rochdale

Lancashire

Before: P H Clarke FRICS

Sitting at Manchester on 26 February 2002

The claimant in person

Mr Keith Burley, solicitor, for the acquiring authority


 


DECISION OF THE LANDS TRIBUNAL

1. This is a reference heard under the simplified procedure to determine the compensation payable for the compulsory acquisition of a property in Rochdale.
2. The claimant, Mr David Howard, appeared in person, gave evidence and produced a witness statement from Mr Paul Bowker. Mr Keith Burley, an assistant solicitor, appeared for the acquiring authority, and called Mr John S Taylor FRICS, a Principal Estates Officer with the Council. Mr Taylor has 14 years experience. A main part of his duties involves the valuation, acquisition and disposal of land on behalf of the Council.

FACTS

3. 287 Oldham Road (the subject property) is situated to the south-east of the town centre of Rochdale. It has a frontage to Oldham Road (A671) and the southern boundary abuts the towpath of the Rochdale Canal. The surrounding area comprises old, refurbished and new industrial buildings (including old mills), secondary shops and some housing.
4. The subject property originally comprised an end of terrace property with accommodation on basement, ground and first floors built flush with the pavement. It was of stone wall construction under a pitched flagged roof. The basement and first floors were flats and the ground floor a shop. The property was demolished in July or August 2000. It is now a vacant site. The site area is 145 sq m.
5. The condition of the property at the valuation date (13 June 2000) is evidenced by photographs taken by the Council in May 2000 and an internal memorandum dated 15 June 2000. This latter records that the external stone elevations were satisfactory for line and level; internally the property was severely dilapidated due to water penetration through the roof following removal of the stone slate cladding. Generally the property was badly dilapidated and unsafe, demolition was recommended. The photographs show that the whole of the roof covering was missing, exposing the rafters, that windows and doors were broken or boarded up, and that the external walls were still in position.
6. The claimant held the subject property on long lease for a term of 999 years from 26 June 1831 at a rent of £5.95 per annum. The property was vacant at the date of valuation but had been let in the past. The rent during the year to 5 April 1994 was £3,860 per annum.
7. On 6 January 1997 Mr Taylor wrote to Mr Paul Bowker, who was managing the property on behalf of Mr Howard, offering to buy it at a price of £14,000. This offer was accepted on 30 April 1997. Mr Howard instructed a surveyor to act for him in November 1997 and withdrew from the proposed sale in June 1998. On 1 July 1998, however, Mr Howard's surveyor informed Mr Taylor that Mr Howard now accepted a price of £14,000 for the property. Mr Howard subsequently did not proceed with the transaction.
8. On 1 August 1997 the subject property was taken out of the rating list.
9. In October 1998 outline planning permission was granted for the construction of a public house and restaurant with associated car parking on a site bounded by Oldham Road, Crawford Street, League Street and the Rochdale Canal (including the subject property). This was the land subsequently included in the compulsory purchase order. The subject property was shown on the Rochdale Unitary Development Plan (1999) as within the Canal Side Rochdale Economic Renewal Area. Policy EC/3(c) states that the Council will promote the regeneration and renewal of the area by supporting development proposals, including entertainment and leisure uses on areas adjoining the Rochdale Canal. Policies R/22 and R/32 record the Council's commitment to improving the recreational potential of the canal.
10. On 12 May 1997 agreement was given on behalf of Mr Howard to the boarding up of the property by the Council. On 2 December 1998 the Council served on Mr Howard a notice under section 41 of the Greater Manchester Act 1981 stating that they proposed to carry out works to secure the building against unauthorised entry. On 12 February 1999 the Council sought to recover the cost of the works in the sum of £76.38. On 24 June 1999 the Council wrote to Mr Howard requiring him to carry out extensive works or demolish the subject property within 90 days. Proceedings would be instigated under section 79 of the Building Act 1984 for failure to comply with this letter.
11. On 3 June 1999 the Council made the Borough of Rochdale (Oldham Road, Rochdale) Compulsory Purchase Order 1999 authorising the compulsory acquisition of 267-287 (odd) Oldham Road and land at the rear for development, redevelopment and improvement comprising the erection of a public house and restaurant with parking for which outline planning permission had been granted. The subject property was plot 10 in this order. The order was made under section 226(1)(a) of the Town and Country Planning Act 1990. Following a public local inquiry on 2 November 1999 the order was confirmed on 25 January 2000. Mr Howard did not object to this order; all objections were withdrawn before the local inquiry. The Council acquired the land under a General Vesting Declaration made on 27 April 2000 with a date of possession for the subject property of 13 June 2000. This is the date of valuation. Prior to the making of the order the Council had purchased by agreement between October 1996 and September 1998 the properties at 277-285 and rear of 279-287 Oldham Road (plots 5-9 and 13-15). The properties within the compulsory purchase order to the north of these properties (plots 1-4, 11, 12 and 16) have not yet been acquired by the Council.
12. In July 2001 Mr Howard referred the determination of compensation in respect of the acquisition of the subject property to this Tribunal.
13. I inspected the site of the subject property and the surrounding area immediately after the hearing.

ISSUES AND EVIDENCE

14. Mr Howard claims £25,000 for his long leasehold interest in the subject property and £27,580 for loss of rent. For the Council, Mr Taylor's valuation is £4,350; no compensation is offered for loss of rent. The condition of the property is material to both heads of claim and is in dispute.
15. Before I examine these figures I make a general comment on the evidence. Many facts were in dispute and the quality of the evidence is therefore important. Most of Mr Howard's evidence was hearsay, much of it was vague and unsupported. Mr Howard lived in the United States for all or most of the time with which this reference is concerned. He relied on agents and others to deal with day to day matters. Mr Taylor, on the other hand, has been directly concerned with the subject property since 1997 and could speak from first hand knowledge of the matters in dispute. He visited the property and the locality frequently. Although the rules of evidence do not apply to hearings under the simplified procedure, it is still necessary for me to decide what weight to give to the evidence. I give much more weight to Mr Taylor's direct evidence. Towards the end of the hearing Mr Howard asked for an adjournment to enable him to seek further information in support of his case. I refused this application on the ground that he had had sufficient time to prepare his case.

VALUE

16. At the hearing Mr Howard put the value of the subject property between £20,000 and £30,000 and suggested £25,000. He said this was the value in January 1997 when he was first told of the impending compulsory purchase. He could not say what the value was in June 2000. In his documents submitted prior to the hearing Mr Howard said that the value was greater than the £14,000 originally offered by the Council. He referred in support to the following evidence. At an unknown date Barclays Bank, which had loaned money to Mr Howard, valued "an investment property in Rochdale" at £20,000. On 20 June 1991 RTA (Business Consultants) Limited of Manchester wrote to Mr Howard acknowledging instructions to sell the property and stated that they "will commence marketing the property for £38,500." Mr Howard said there was limited interest and he refused an offer of £32,000. He put in evidence brief details of three houses for sale in January 2002 in Hebden Bridge at asking prices of between £31,000 and £50,000.
17. As to the condition of the property, Mr Howard said that the Council have overstated the disrepair. They have caused this disrepair by allowing adjoining properties to become derelict, by delaying the purchase and by demolishing the boundary wall. Mr Bowker's evidence is that he dealt with the personal affairs of Mr Howard including 287 Oldham Road. In 1995 or 1996 he received a letter from the Council stating that the property is to be compulsorily acquired. There was correspondence but nothing further was heard for 12 months. He contacted the Council in 1997 to find out the position. The Council had been negotiating with a Mr Campbell on the assumption that he owned the property. The subject property was bounded by a secure 7 ft high wall with padlocked gates. At a meeting on 24 March 1998 it was admitted by two representatives of the Council that this wall had been demolished in error during clearance works. The property was vandalised in consequence of the removal of this wall. Mr Howard said that, an indication of compulsory purchase having been given in 1995 or 1996, any depreciation in the value of the subject property, particularly vandalism due to the Council's actions, must be disregarded. He repaired the premises until 1997. If he had not been told in 1995 or 1996 of the proposed acquisition he would have continued to keep the property in good repair.
18. Mr Taylor said that he first visited the subject property in December 1996. At that time it was vacant and badly vandalised with 75% of the roof flags missing from the rear elevation. In May 1997 the Council boarded up the ground floor. He wrote to Mr Bowker on 6 January 1997 offering to buy the property for £14,000. This letter notes that a compulsory purchase order has not been made but that the Council passed a resolution on 29 August 1996 to include the subject property in a Clearance Inspection Programme. This was the first contact Mr Taylor had with Mr Howard. It is possible that another officer of the Council approached him in 1995 or 1996 but unlikely. No trace has been found of the letter referred to or any correspondence in 1995 or 1996.
19. Since 1996 the condition of the subject property greatly deteriorated. Mr Taylor was present at the meeting in March 1998 but cannot remember any reference to the removal of the boundary wall of the subject property. No part of this property has been demolished by the Council. An industrial property at the rear of 287 Oldham Road was demolished by the Council but no works were carried out on the subject property.
20. Mr Taylor's valuation is £4,350. This represents site value at the date of valuation. The land had limited commercial development potential. The proposed redevelopment for a public house and restaurant with parking will not be implemented. Mr Taylor supported his valuation by reference to three sales. 131-133 Crawford Road, Rochdale (about ¼ mile from the subject property) was sold by the Council in May 1998 for £4,000 (£28.57 per square metre). The site had planning permission for a shop and flat. The two other sales were in Milnrow (about 3 miles from the subject property) where sales in December 1994 and November 1998 produced prices equivalent to £53.83 and £48.54 per sq m respectively of site area. Mr Taylor said that the Crawford Street sale is a good comparable. He used £30 per square metre for the subject property applied to a site area of 145 sq m. In response to a request from me made before the hearing Mr Taylor produced a schedule of settlements on the compulsory purchase order land.
21. The first issue I must deal with is whether the considerable disrepair which existed at the subject property at the valuation date should be disregarded, wholly or partly, on the grounds that it was caused by the proposed compulsory purchase and the Council's actions, particularly the alleged removal of the boundary wall.
22. I accept Mr Taylor's evidence that the first approach made to Mr Howard was in January 1997. There is no evidence to support Mr Bowker's assertion that an earlier letter was sent in 1995 or 1996. The Council wished to buy in 1997 and made an offer. At that time the property was vacant and in disrepair. It was deleted from the rating list in the following August, no doubt because it was incapable of economic repair and of beneficial occupation. Mr Howard had a choice: he could sell to the Council or retain the property and either keep it in repair or suffer the loss in value due to lack of repair and vandalism. He agreed to sell but later withdrew. The property continue to deteriorate. In December 1998 works had to be carried out by the Council to make it secure. In June 1999 Mr Howard was required to carry out extensive works or demolish the property. In November 1997 he instructed a surveyor to act for him who negotiated a sale to the Council at the same price of £14,000 but again Mr Howard did not proceed with the sale.
23. In my judgment Mr Howard did not act reasonably in failing to complete either of the agreed sales to the Council, the second one negotiated by a chartered surveyor in Rochdale. I note that on the 20 May 1998, just before the sale price was agreed on 1 July, that surveyor advised that "an owner is responsible for the condition of a property until such time as it is transferred to the acquiring Authority." He was doubtful whether he could negotiate a substantial increase in compensation but asked relevant questions regarding past occupation, repairs, etc. In my view the advice that Mr Howard was receiving at that time was accurate and realistic. I heard a great deal at the hearing about the removal of the boundary wall, which Mr Howard said was the substantial cause of vandalism. The burden of proof is on Mr Howard. I am not persuaded that this wall was demolished by the Council. His evidence was wholly hearsay and extremely vague.
24. I find that in January 1997 the subject property had been empty for some years and was in disrepair when Mr Howard was first approached by the Council to sell. He agreed two sales but did not complete either of them. He retained the property but failed to repair or secure it. The Council did not remove the boundary wall. In my view Mr Howard acted unreasonably and must accept the consequences of failing to sell and retaining the property but failing to keep it in repair or secure. The property is to be valued in its actual condition on the valuation date. No allowance is to be made for the proposed acquisition.
25. I reject Mr Howard's value evidence. His figure of £25,000 was plucked out of the air at the hearing without any support. It relates back to January 1997 although the valuation date is June 2000. The bank valuation of £20,000 is undated; it is not explained; I do not know whether it was made by a qualified valuer. The asking price of £38,500 in 1991 did not result in a sale and was about nine years before the valuation date. The property greatly deteriorated since that date. Presumably in 1991 the property was let and in a reasonable condition. Mr Howard's three asking prices in Hebden Bridge are all houses (not shops and flats), they are about 10 miles from Rochdale and they are 18 months after the valuation date. I give no weight to any of this evidence. I am left with Mr Taylor's valuation and supporting evidence.
26. Mr Taylor's valuation is £4,350 representing the site value (145 sq m at £30 per square metre). The best of his three market comparables is 131 - 133 Crawford Street about a quarter of a mile from the subject property. This is a site of 140 sq m where the Council sold the residue of a 999 years lease from 1898 for £4,000 in May 1998. The site had planning permission for a shop and flat. The price devalues to £28.57 per sq m. This sale was two years before the valuation date for the subject property and I have no evidence as to the changes in values (if any) between these dates. I do not find the sales in Milnrow of assistance – the properties are three miles from Rochdale and the sales were in 1994 and 1998.
27. At my request Mr Taylor provided a schedule showing the prices paid on the purchase by agreement of plots 5-10 (excluding 7) and 13-15 in the compulsory purchase order. These properties were acquired between October 1996 and September 1998. 285 Oldham Road (plot 9) was bought in August 1997 for £21,000. The site appears to be slightly smaller (I was not given site areas) and the property is noted as in "a neglected condition, in a need of structural attention and is partly vandalised." This price (£21,000) is considerably higher than Mr Taylor's valuation of the subject property (£4,350). Similarly, plot 8 (283 Oldham Road), apparently a smaller site, was bought in October 1996 for £14,500 plus an ex gratia payment of £1,500 in respect of improvement works. The property is noted as "in need of improvement". I gain no assistance from the other settlements.
28. I must also look at the price agreed in 1997 and 1998 for the subject property (£14,000). This was referred to in evidence by both parties. This price was agreed for the second time on 1 July 1998. The property was in poor repair at that time. A fax dated 20 May 1998 from Mr Howard's surveyor stated that "I visited the property last week and was rather horrified to find it totally gutted with half the roof missing". I accept that the condition of the property had deteriorated further by June 2000 but the property was clearly in a very poor condition in May 1998 and I am doubtful whether this subsequent deterioration merits Mr Taylor's substantial reduction from £14,000 to £4,350.
29. My conclusion is that this is a situation where my valuation approach must be robust – a matter of impression based on experience rather than analysis. Mr Taylor's valuation is consistent with his three comparables but it is, in my view, inconsistent with the purchases by agreement of the adjacent properties and the price offered and agreed for the subject property. Doing the best I can with the inconclusive evidence and taking a robust approach to all the evidence I determine the value of the subject property to have been £7,500 in June 2000.

LOSS OF RENT

30. Mr Howard claims £27,580 loss of rent for the years 1995-1999, 2001 and 2002. The annual loss is £3,860 for 1995-97 and £4,000 thereafter. The Council wholly reject this claim.
31. Mr Howard said that the shop was originally let to an antique dealer and the flats were let, although he ceased to let the basement flat after 1993. In the tax year to April 1994 the annual rent received was £3,860. He could not tell me when the property was last tenanted nor why the tenants left. He said that in 1995 or 1996 he was told by the Council that the property would be compulsorily acquired. He was led to believe that this would be very soon and therefore, as the shop and flat became vacant, no further tenants were sought. In December 1997 Mr Howard's UK business was looking for premises to rent for fabrication work in the Rochdale area. 287 Oldham Road would have been suitable but, due to impending compulsory purchase, alternative premises had to be found at a higher cost. Mr Howard claimed the loss of rent as disturbance.
32. For Mr Howard's claim for loss of rent to succeed on the facts there must be a causal connection – a direct link – between the acquisition and the loss. This is clearly not the case. When the Council first approach Mr Howard in January 1997 the property was already vacant and in poor repair. Eight months later it was taken out of the rating list. At some time between April 1994 and January 1997 the tenants left and no attempts were made to re-let it. There is no evidence that Mr Howard carried out any repairs to put and keep the property in a lettable condition. I find that the property was kept vacant due to disrepair (and perhaps for redevelopment) and not in consequence of the threat of compulsory purchase. Even if a claim could be made in principle I have no evidence to support the amount claimed. Furthermore, on 13 June 2000 the ownership of the property passed to the Council. The value I have determined (or any value) represents the value at that date and takes into account future value. Mr Howard could not have obtained rent after this date and therefore the claim for loss in 2001 and 2002 fails for double counting even if the claim is admissible in principle. For all these reasons I reject the claim for loss of rent and make no award.

DECISION

33. I determine that the market value of the long leasehold interest in the subject property as at 13 June 2000 was £7,500 (seven thousand five hundred pounds). I award no compensation for loss of rent.
34. This reference was heard under the simplified procedure where costs are not usually awarded. The parties agree that I should make no award of costs.

DATED: 21 March 2002

(Signed) P H Clarke FRICS

Member of the Lands Tribunal