England and Wales Lands Tribunal

[2002] EWLands ACQ_170_2000 (18 February 2002)

ACQ/170/2000

LANDS TRIBUNAL ACT 1949

COMPENSATION – Compulsory acquisition of dwellinghouse in poor repair – value at date of entry – comparables – compensation £70,000

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN MOHAMMED ZULFQAR NAWAZ Claimant

and

SLOUGH BOROUGH COUNCIL Respondent

Re: 49 Lake Avenue, Slough, Berkshire, SL1 3BY

Before: P R Francis FRICS

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

on

8 February 2002

S Rajendra, Chartered Management Accountant, with permission of the Tribunal, for the claimant

Ian Colville of counsel, instructed by the Director of Legal, Democratic and Development Services, Slough Borough Council, for the acquiring authority


 


DECISION

1. This is reference by Slough Borough Council ("the acquiring authority") to determine the amount of compensation payable to Mohammed Zulfqar Nawaz ("the claimant") for the compulsory acquisition of 49 Lake Avenue, Slough, Berkshire, SL1 3BY ("the subject property") under the Slough Borough Council (49 Lake Avenue) Compulsory Purchase Order 1998 ("the CPO") made on 26 January 1998 and confirmed by the Secretary of State for the Environment, Transport and the Regions on 30 March 1999 following a public local inquiry held on 2, 23 and 24 February 1998. Notice to Treat and Notice of Entry were served on 28 May 1999 and possession was obtained by formal eviction on 24 June 1999. This is the valuation date for compensation purposes.
2. The claimant specified in the original Notice of Reference submitted by the acquiring authority was Mr Gul Nawaz, the claimant's father who was the owner of the freehold interest at the valuation date. Following the transfer of the subject property to the present claimant in April 2001, a revised Notice of Reference was submitted by the acquiring authority naming Mr M Z Nawas as the claimant.
3. At the hearing, the claimant was represented by Mr Sampson Rajendra, a Chartered Management Accountant, who called him, together with Mr Gul Nawaz, the claimant's father and previous owner of the subject property, to give evidence of fact. He also called Mr Tarsem Singh Sunder, a building contractor who had undertaken a number of repairs to the property prior to the date of entry, and who had also prepared an estimate for the Tribunal giving his opinion of the extent and anticipated cost of works that were deemed to be required to the property at that date. I accepted the acquiring authority's objection to his evidence being admitted, on the grounds that it constituted an expert opinion (rather than evidence of fact). The estimate had only been prepared on 7 February 2002 following instructions from the claimant the previous day he was thus debarred from being called, in accordance with an Order of this Tribunal dated 10 January 2002 (see below).
4. Mr Rajendra also sought to introduce a valuation and draft expert witness report that had been prepared by Mr M W J Carr FRICS of Kempton Carr, Chartered Surveyors of Gerrards Cross on 22 March 2001. Again, its introduction at this stage of the proceedings was objected to by the acquiring authority as the Tribunal's Order had not been complied with. That Order was made following an application by the claimant at the commencement of the substantive hearing on 10 January 2002 for the reference to be stayed for a month for the purposes of enabling both parties experts to produce revised reports with valuations reflecting the agreed valuation date of 24 June 1999. The Order provided that:

1. The application be granted and that the hearing is re-listed for 10.30 am on Friday 8 February 2002 at 48/49 Chancery Lane, London WC2A 1JR

2. Experts' reports be exchanged by 4 pm on Friday 1 February 2002

3. If the claimant fails to serve his expert witness report by the time and date stated in (2) above, he will thereafter and without further notice be debarred from calling an expert witness.

It was submitted by Mr Rajendra that Mr Carr's report should be admitted as its contents provided important evidence to substantiate the claimants claim for compensation substantially in excess of the figure arrived at by the acquiring authority's expert (whose valuation had been provided in accordance with the required timescale). Mr Carr was not present, and I was advised that he did not have instructions to appear.

5. In the light of the fact that despite having been granted a further 3 weeks for the exchange of expert witness reports, the claimant had not still complied with the terms of the Order, I accepted the acquiring authority's objection, and did not therefore consider any expert evidence from the claimant.
6. Mr Ian Colville, counsel for the acquiring authority called Mr Nigel Conie FRICS, a chartered surveyor of Slough who gave expert evidence.

FACTS

7. From the evidence of fact provided by the claimant, and from the expert evidence of the acquiring authority, I find the following facts:

6.1 The subject property comprised a semi-detached house constructed in the 1930's of rendered brick under tiled roofs. Aluminium framed double-glazed window units had been installed as part of a modernisation programme undertaken some years ago, together with a gas fired central heating system. The accommodation, on two floors, comprised hall, living room, dining room, kitchen, three bedrooms and bathroom. There was a shared drive with the adjacent property, leading to a dilapidated garage at the rear and there was a partially demolished single storey extension to the rear of the house.

6.2 The property was located on a large residential estate of broadly similar houses with some light industrial uses nearby and the main Great Western railway line lying just to the south.

6.3 During the 1990's the house had been let as a house in multiple occupation ("HMO"), but was in considerable disrepair and, according to the Council's officers, was not in a fit state to be used for a HMO. Despite a number of repair notices having been served upon the landlord, the required works were either not carried out at all, or were effected to an unsatisfactory standard. On 26 January 1998, Slough Borough Council made a Control Order and at the same time resolved to make the CPO.

6.4 Following a public local inquiry at which the then owner, Mr G Nawaz was the sole objector, and a positive recommendation from the Inspector, the CPO was confirmed by the Secretary of State on 30 March 1999. Notice to Treat and Notice of Entry were served on 28 May 1999 and possession was taken by the Council on 24 June 1999, the valuation date for the purposes of this reference.

ISSUE

8. The only issue for determination is the open market value of the freehold interest in the subject property at 24 June 1999.

EVIDENCE

9. The claimant said he had acquired the subject property from his father by legal transfer on 24 April 2001 for the sum of £145,000. He explained that although he had no legal interest in the property at the valuation date, or beforehand, he helped out with property management matters especially when his father was away and was present at the property when possession was formally taken.
10. During the period between the making of the Control Order, and the eviction date, he said a number of repairs and improvements had been effected including re-fitting of the kitchen and some improvements to the rear extension, at Mr Nawaz's own expense, and those works were not reflected in the costed schedule that the Council had prepared. It was not right, therefore, that the compensation should be reduced to a level that was based upon a worse condition than was, in fact, the case at the valuation date.
11. The claimant said his father had received a letter dated 4 May 1999, in accordance with the Estate Agents Act 1979, from B.Simmons & Son, local estate agents, with details of an offer that had been received for the property in the sum of £96,000. This was more representative of the true value of the property than the figure being proposed by the acquiring authority. Mr Colville said that the copy letter handed in did not constitute admissible expert evidence, as it had not been produced in accordance with the Tribunal's Order of 10 January 2002.
12. The quote that Mr Sundar had produced assessing the cost of repairs at £6,010 was, Mr Nawaz said, a much truer reflection of what actually needed doing to the property at the relevant date than the Council's estimate, produced by Mr Conie. He did not accept, in cross-examination, that Mr Sundar's quote left out many of the items that were required to bring the property up to an acceptable standard for an HMO or, for that matter, for sale as a private residence for owner occupation. Neither did he accept that, with Mr Sundar having undertaken a number of the works that had been specified in the earlier repair notices, that work was patently not up to an acceptable standard.
13. Mr Gul Nawaz said that he had owned the property since 1987, it being one of 5 that he owned in the area. He said he had put the property on the market with B. Simmons & Son a couple of weeks before the offer was made at an asking price of £99,950, and the offer of £96,000 was rejected because it was not enough. He did not accept that the sales particulars failed to reflect the allegedly appalling condition of the property at the time.
14. Mr Nawaz said that he was aware of the sale of 19 Lake Avenue, a very similar property, in 1999 at £97,000 but could produce no verification.
15. Mr Colville, introducing the acquiring authority's evidence, said that at the date of the Control Order, the property was in such an appalling state of disrepair that the only way it could be brought back to an acceptable condition was for it to be purchased by the Council. He produced a copy of the Inspector's report that followed the public local inquiry into the proposed CPO and this clearly showed that despite strenuous attempts to get the claimant's father to effect the required repairs, over a long period of time, they were not done.
16. Mr Nigel Conie is a chartered surveyor, and the partner in Pike Smith and Kemp, Estate Agents of Slough responsible for their Professional Department. He has 25 years experience of the valuation and survey of residential properties in the Thames Valley and Slough areas. He had first inspected the subject property in December 1999 both internally and externally, and subsequently made external inspections in September 2000 and January 2002.
17. He said that when he first saw it, the condition of the property was extremely poor and whilst he did not undertake a structural survey, he thought the extent of repairs that were listed in the schedule that had been prepared by the Council was broadly in line with what he considered needed doing at the time. Mr Conie did not know exactly when the schedule had been prepared, but assumed it related to the condition of the property in June 1999. He had relied upon the figure therein (£24,300) as representative of what it would cost to effect the necessary works at today's date and, applying the June 1998 RICS Building Cost index figure of 143.9 to the present day index (166.5) gave a figure at the valuation date of £21,000. From this he had made a number of deductions to reflect those items that a prospective purchaser would either consider not essential, or would estimate at lower sums on the basis that they could do some of the work themselves, arriving at a 'fair' cost of works at £15,000.
18. Mr Conie then made a minor amendment during the course of the hearing to allow for the fact that it appeared from the evidence that the kitchen might not have been modernised at the June valuation date, as he had thought it was. This gave a sum which, he said, should be deducted from whatever the open market value would have been if the property were in good overall condition of £16,000.
19. On the basis of two comparable properties that had been sold in good order in July and November 1998 at £80,000 and £82,000 respectively, Mr Conie estimated that the subject property, in good condition, would have been worth £85,000 at the valuation date. From this should be deducted £16,000 to give a true value at that date of £69,000. This was supported by two more comparables, in similar condition to the subject property, that had sold in January and December 1999 at £72,000 and £67,000 respectively. In his professional opinion, therefore, the correct value for compensation purposes was £69,000.
20. In cross-examination Mr Conie said he was unaware of the alleged sale of 19 Lake Avenue as referred to by the claimant and said that he had relied upon the only evidence that was available to him, that being derived from actual transactions effected by his own firm.
21. In response to a question from me, Mr Conie said he did not accept that a prospective purchaser would necessarily pay a little more for a property than its assumed value in good condition less the estimated cost of works. He said he had already taken this into account in discounting the Council's figure and in any event, a buyer would be mindful of what similar properties in similar condition were selling for at the time and would be unlikely to pay more than the going rate. If anything, he may discount the figure further to allow for VAT liabilities and an element of profit.

DECISION

22. The only expert evidence I had before me was that provided by the acquiring authority. Despite the fact that a further period had been granted to the claimant, at his request, to enable him to obtain his expert evidence, such evidence was not forthcoming. If Mr Nawaz had been so confident that the acquiring authority's valuer had underestimated the value of the subject property I have to question why he did not arrange for his expert to provide a report in the required timescale and for him to appear on his behalf. No evidence was adduced to back up the oral statement that 19 Lake Avenue had sold, and neither was there a representative of B Simmons & Co, the agents who were purported not only to be offering the subject property for sale at the valuation date, but who had supposedly received an offer at £96,000.
23. I am satisfied, from the evidence that was before me that the true value of 49 Lake Avenue, Slough was much nearer Mr Conie's figure – that being supported by good comparable evidence of actual sales undertaken by his own office. I must, therefore attach considerable weight to that evidence although, having said that, there was some question over the state of the kitchen at June 1999.
24. Allowing the claimant the benefit of the doubt in that regard, and bearing in mind the difficulties in being precise to the nearest £1,000 I prefer Mr Conie's original figure, which was a 'round sum'. I therefore determine that the acquiring authority shall pay to the claimant the sum of £70,000 in respect of the compulsory acquisition of 49 Lake Avenue, Slough, Berkshire together the claimant's proper legal costs of transfer, if applicable. The award will also attract interest at the standard rate from 24 June 1999.
25. This decision concludes my determination of the substantive issue in this reference, and I now turn to the subject of costs, both parties having made oral submissions to the effect that they were entitled to the costs of the reference. It is clear to me that this simple and relatively straightforward matter has been delayed and complicated by the actions of the claimant, and bearing in mind also that I have found for the acquiring authority, I can see no grounds upon which the claimant could possibly be successful in an application for costs. I therefore determine that the claimant shall pay the acquiring authority's costs of the reference, such costs, if not agreed, to be subject to a detailed assessment by the Registrar.
26. The question of costs having been dealt with, this decision takes effect and the right of appeal as set out in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules comes into operation from the date hereof.

DATE 18 February 2002

(Signed) P R Francis FRICS