British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
England and Wales Lands Tribunal
You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Chirstos v Secretary of State for Environment, Transport & the Regions [2002] EWLands ACQ_69_2001 (24 June 2002)
URL: http://www.bailii.org/ew/cases/EWLands/2002/ACQ_69_2001.html
Cite as: [2002] EWLands ACQ_69_2001
[New search] [Printable RTF version] [Help]
- This is a reference to determine the compensation payable by the Secretary of State for the Environment, Transport and the Regions ("the acquiring authority") to Mr George W Christos and Mrs Maureen E Christos ("the claimants") for the freehold interest in a dwellinghouse and adjoining land known as Torver Beck, Sittingbourne Road, Detling, Maidstone, Kent, ME14 3ES ("the subject property").
- The acquiring authority's powers of acquisition were exercised on their behalf by Union Railways. The powers arise under the Channel Tunnel Rail Link Act 1996. That Act incorporates Part I of the Compulsory Purchase Act 1965 ("the 1965 Act") with minor modifications. Notices to treat and notices of entry were served on the claimants on 18 December 1998 and 3 February and 2 March 1999. Those notices related to part only of the claimants' interest in the subject property. On 17 March 1999 the claimants served a counter-notice under section 8 of the 1965 Act, indicating that they were willing to sell the whole of the subject property. The acquiring authority did not dispute the validity of that counter-notice. Entry was taken of the land specified in the original notices to treat – but not the remainder of the subject property – on 17 May 1999, which is the agreed valuation date.
- By the end of the hearing the total amount claimed by the claimants as compensation for land taken, disturbance and other rule 6 losses was £799,016. The acquiring authority's corresponding figure was £467,621.10.
- Mr Barry Denyer-Green of counsel appeared for the claimants. He called four factual witnesses, namely the two claimants, their son Mr Gary Christos and Mr A P Houghton, a director of Houghton's Solicitors Limited. He also called two expert witnesses, Mr N Cowan FCA, FABRP, MCIArb, MEWI, a partner in Wilder Coe and Mr N J Altman FRICS, a director of Van de Berg Management Limited.
- Counsel for the acquiring authority, Mr Michael Humphries, called one witness of fact, Mr Stephen Bowman FRICS, property director with Union Railways Property, and two expert witnesses. The experts were Mr D Epstein FCA, AIT, MEWI, managing director of Numerica Forensic Limited and Mr C Smith, FRICS, IRRV, a partner in Bruton Knowles.
- The parties have prepared a schedule of agreed facts. In the light of that schedule and the evidence I find the following facts. The subject property is situated to the north-east of Maidstone, approximately three miles from the town centre. It is detached and consists of two bungalows which have been combined into one by the claimants. It dates from the mid 1930s and has six bedrooms, three reception rooms and three bathrooms. There is an outdoor heated swimming pool together with four stables of block construction, a five car garage block, a single garage and a separate workshop/garage. The house is on a site of about 35 acres, which includes woodland, a paddock and a garden. It lies immediately north of the M20 and immediately east of the A249 (Sittingbourne Road).
- The issues in this reference are as follows. Firstly, whether the value of the subject property has been agreed at £500,000. Secondly, and in the alternative, whether the acquiring authority is estopped from denying that the value of the subject property is £500,000, or that sum less a discount to reflect a defective title. If the answers to the first two issues are in the negative, the value of the subject property is agreed to be £380,000. The third issue is whether a deduction should be made, and if so how much, to reflect the claimants' lack of title to part of the woodland. The claimants say it had no effect and the acquiring authority contends that it reduced the value by £20,000. The fourth issue is whether there should be a deduction to reflect the deterioration in the condition of the property between 17 May 1999, the date of entry on the land the subject of the notices, and 12 October 2000, the date of entry on the remainder. The claimants' case on this issue is that no deduction should be made; if they are wrong it is agreed that the appropriate deduction is £8,500. The final issue relates to the amount of compensation payable for ten heads of claim for disturbance losses, the following items having been agreed:
- I deal firstly with the claimants' contention that there is a binding agreement that the acquiring authority will purchase the subject property for £500,000. The background to this issue is as follows. On 10 March 1999, shortly after the final notice to treat and notice of entry had been served in respect of that part of the subject property required for the Channel Tunnel Rail Link ("CTRL"), a meeting took place between representatives of the claimants and the acquiring authority. Mr George Christos explained that he wished to move to a new property and indicated that he required £1m plus costs and disturbance. Towards the end of the meeting Mr Bowman offered, without prejudice, to settle at £500,000. I shall refer again to that meeting later in this decision. The verbal offer of £500,000 was followed on 12 March 1999 by two letters from Mr Bowman to the claimants' solicitor, Mr Houghton; one without prejudice and one open.
- The without prejudice letter read:
- The open letter said:
- A further meeting took place on 25 May 1999 at which Mr Bowman explained, among other matters, that the value of the land included the value of the woodland for shooting and timber. On 10 June 1999, Mr Houghton wrote to Mr Bowman as follows:-
- On 14 September 1999 Mr Altman submitted what he termed
- The claim for those two items was repeated in Mr George Christos's witness statement and was not abandoned until the first day of the hearing.
- On 25 October 1999 the Land Registry informed Mr Houghton of its decision to cancel the claimants' application for first registration of an area of woodland at the rear of their house based on adverse possession. At a meeting on 2 November 1999 Mr Smith advised the claimants that the acquiring authority wished to amend the price payable for the subject property to reflect the title defect and would be seeking appropriate valuation advice. Mr George Christos suggested that the resultant effect on value was between £5,000 and £6,000.
- Mr Humphries submitted that Mr Houghton's letter of 10 June 1999, accepting Mr Bowman's offer of £500,000, did not result in a contract for two reasons. Firstly, it was specifically marked "subject to contract". Secondly, the claimants did not accept the offer on the terms that it was made, namely that it included timber and shooting rights. Finally, if there was a contract the claimants were not able to comply with condition 3, requiring good and marketable title to the entire property.
- For the claimants Mr Denyer-Green pointed out that, in Michael Richards Properties v St Saviour's [1975] 3 All ER 416, where the acceptance of a tender document was marked "subject to contract", Goff J said that as no further documentation was required the words "subject to contract" were meaningless and should be ignored. He accepted that it was clear from that judgment that it would only be in exceptional cases that the words "subject to contract" should not be given their ordinary meaning. He contended, however, that the present was just such an exceptional case and so there was no further requirement for a formal contract following Mr Houghton's acceptance letter of 10 June 1999.
- The words "subject to contract", said Mr Denyer-Green, may well have been relevant at the date of the offer letter (12 March 1999), because at that date the acquiring authority was offering to acquire the entirety of Torver Beck and not merely the land that was subject to the notices to treat. Where land was being acquired outside statutory powers of compulsory acquisition, a contract to acquire such land must satisfy the formal requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989; a formal contract would be required. However, on 17 March 1999 the claimants served a counter-notice requiring the acquiring authority to take the entirety of the subject property. On 17 May 1999 the acquiring authority entered that part of the subject property that had been the subject of the original notices to treat and notices of entry. The acquiring authority did not refer the counter-notice to the Lands Tribunal and the effect of entry on 17 May 1999 was that they became bound to acquire the entirety of the subject property. Mr Denyer-Green referred in this connection to Schwinge v London & Blackwall Railway Co. 65 ER 550, Marson v London, Chatham and Dover Railway Co (1869) 7 LR Eq 546 and Mercer v Liverpool, St Helen's & South Lancashire Railway Co [1903] 1 KB 652.
- Mr Denyer-Green submitted that, because the acquisition of the whole of the subject property proceeded under the statutory powers of acquisition, there was no scope for any formal contract. He said that, when Mr Houghton accepted the offer on 10 June 1999, without the use of the term "subject to contract", any requirement for a formal contract disappeared and the words "subject to contract" became meaningless.
- Mr Humphries agreed that the words "subject to contract" could be deprived of their ordinary meaning in exceptional circumstances, but he did not accept that the circumstances here were exceptional merely because the counter-notice post-dated the acquiring authority's offer of 12 May 1999. He suggested that that offer was made in contemplation that there might be a counter-notice. He also pointed out that Mr Houghton's letter to the acquiring authority's solicitors dated 17 June 1999, which enclosed among other documents a copy of Mr George Christos' statutory declaration in support of his application for possessory title, was marked "subject to contract".
- In Michael Richards, Goff J held that the words "subject to contract" were meaningless
- In Munton v Greater London Council [1976] 1 WLR 649 the Court of Appeal made it clear that the phrase did apply in the context of a compulsory purchase of land. Lord Denning MR said at p.655:
- In my judgment, there are no exceptional circumstances which would justify depriving the words "subject to contract" in Mr Bowman's without prejudice offer letter of 12 March 1999 of their normal meaning. That letter was written two days after Mr Christos has made it plain that he wanted the acquiring authority to purchase his entire property. Mr Bowman's open letter of 12 March 1999 specifically referred to the possibility that he would be asked to purchase the remainder of the claimants' holding. The formal counter-notice which was served five days later can therefore have come as no surprise to the acquiring authority. Furthermore, the reference to "subject to contract" in Mr Houghton's letter of 17 June 1999 suggests that, at that time, he considered that the figure of £500,000 was not agreed so as to be binding. Finally, in the course of cross-examination, Mr George Christos agreed that he knew that "subject to contract" meant that the matter was not binding until a contract had been signed.
- Mr Humphries' second reason for suggesting that there was no contract is that the offer was accepted on a different basis from that on which it had been made, namely that it excluded timber and shooting rights. I do not agree with that submission. When Mr Houghton wrote accepting the offer on 10 June 1999, he had been told by Mr Bowman that it was intended that those rights would be included in the price for the land. If, therefore, Mr Houghton had intended to accept the offer excluding timber and shooting, he would no doubt have said so. That he did not indicates that he had been instructed to accept the offer on the basis upon which it had been made. The fact that subsequently the claimants attempted to renegotiate by seeking compensation for timber and shooting by way of disturbance does not, in my view, alter the fact that the offer and acceptance of the £500,000 were made on the same basis.
- Mr Humphries' final reason for rejecting the existence of an obligation upon the acquiring authority to pay the "agreed" purchase price of £500,000 is that the claimants were unable to comply with the third condition of the offer, namely to show a good and marketable title to the entire property. He said that the claimants had neither paper title, nor any registered title to part of the woodland. The fact that they claimed to have a possessory title based on 12 years adverse possession did not mean that they did, in fact, have such a title. He pointed out that the letter to Mr Houghton from the Land Registry dated 25 October 1999 said:
- In reply Mr Denyer-Green said that any squatter and, indeed, a person with a possessory title registered at the Land Registry, was in the position of a trespasser as against the true owner. Thus, it did not follow from the refusal of the Land Registry to register the claimants as owner of part of the woodland that the claimants did not have a better title than anyone else apart from the true title owner. In my opinion, whilst that may well be a correct summary of the legal position, it does not entitle the claimants to say they can show a "good and marketable title" to the entire property.
- Mr Denyer-Green argued in the alternative that the acquiring authority had agreed to waive the condition requiring a good and marketable title in a letter written by Mr Bowman to Mr Christos on 26 October 1999. That letter contained the following sentence:
- Mr Denyer-Green said that, before Mr Bowman made the original offer of £500,000 on 12 March 1999, the acquiring authority knew that the claimants may have had a defective title. Mr Bowman's letter of 26 October 1999 was written on behalf of the acquiring authority. At that date the authority knew that the application to H M Land Registry had not succeeded. Accordingly, irrespective of whether Mr Bowman himself knew of the Land Registry's decision, the effect of his letter of 26 October 1999 was to waive the condition relating to a good and marketable title. Once that waiver had been communicated, the agreement for the purchase of the subject property for £500,000 became unconditional. In support of this submission, Mr Denyer-Green relied on the following passages in Hawksley v Outram [1892] 3 Ch 359:
- Mr Humphries did not agree that Hawksley was relevant. He pointed out that, whereas in Hawksley there was a concluded contract, in the present case the existence of a contract was the point in issue. There was a condition precedent relating to title and the mere absence in Mr Bowman's letter of 26 October 1999 of a reference to that condition cannot have the effect of waiving it.
- I accept Mr Humphries' submissions on this point. I am fortified in doing so by the claimants' conduct at a meeting with Mr Smith on 2 November 1999; a meeting that had been foreshadowed in the letter of 26 October. At that meeting, Mr Smith said that his clients were currently awaiting advice from FPD Savills on the valuation implications of the title problem. Neither Mr George Christos, nor his solicitor or surveyor who were also present, suggested that this problem was irrelevant because the title condition had been waived. Instead, Mr Christos sought to minimise the valuation implications of the Land Registry's decision, suggesting that a reduction of only £5,000 to £6,000 would be appropriate.
- Accordingly, I find that there was no binding contract for a sale at £500,000, because the agreement was at all times "subject to contract". Alternatively, if there was a contract, it was subject to the condition precedent relating to title, which was never waived. This condition was never satisfied.
- I now turn to the issue of estoppel. Mr Denyer-Green's principal submissions are these. Firstly, that the acquiring authority are estopped from relying on any evidence or agreement that the value of the subject property is in any sum other than £500,000 or, if not, £480,000. Secondly, and in the alternative, that the acquiring authority are estopped from relying on any evidence or agreement that the value is in any sum other than £500,000, subject to a discount to reflect the defective title .
- Mr Denyer-Green said that the requirements for the operation of the equitable doctrine of estoppel were summarised in Chitty on Contracts, 28th Edition, Volume I, p.209, as follows:
- I did not understand Mr Humphries to disagree with this formulation. I shall therefore consider the last three of the four elements in turn, it being agreed that the necessary legal relationship existed between the claimants and the acquiring authority.
- The second requirement is that acquiring authority must have made a promise or representation. It is agreed that, although such promise may be implied, it must be clear and unequivocal. Mr Denyer-Green relied on the following as promises or representations: the original offer letter of 12 March 1999, the reconfirmation of the offer in the letter dated 26 October 1999 and the representation made by Mr Smith on behalf of the acquiring authority at the meeting of the 2 November 1999. The first document contained a representation that the acquiring authority was prepared to acquire the subject property for £500,000. The second document contained a representation, made at a time when the acquiring authority knew of the claimants' defective title in relation to part of the land and that their application for possessory title would be dismissed, that the acquiring authority would not be reneging or renegotiating the originally agreed price of £500,000. The phrase "subject to contract" was not repeated. Finally, the representations advanced at the meeting of 2 November 1999 were to the effect that the price of the subject property, previously agreed to be £500,000, would be that sum less some small discount to reflect the defective title.
- Although none of the above representations expressly stated that the acquiring authority would not be relying on evidence in any Lands Tribunal proceedings of the value of the subject property other than the said represented sums, Mr Denyer-Green submitted that the clear and unambiguous implication of those representations was to that effect.
- On the other hand Mr Humphries contended that Mr Bowman's letter of 26 October 1999 did not remove the "subject to contract" status of the agreement or raise an estoppel which prevented the acquiring authority from relying on that subject to contract status. Although he produced various arguments in favour of this contention, I shall refer to only one, which seems to me to be conclusive. That is that, insofar as the claimants allege that they understood the 26 October letter to indicate that the agreement was no longer subject to contract, that understanding was plainly corrected by the meeting on 2 November 1999. Thus, any representation there may have been that that agreement was no longer subject to contract, or that the purchase price was fixed at £500,000, had been clearly dispelled by 4 November 1999, when the claimants entered into the contract to purchase their new home, Oak Manor, Newington, Kent. The claimants cannot, therefore, claim to have relied on the 26 October letter when they agreed to purchase Oak Manor. I agree with Mr Humphries' submissions on this point. As I indicated in para 29 above, the effect of the meeting of 2 November 1999 was that Mr George Christos clearly understood that the price would have to be amended in the light of the Land Registry's decision.
- Mr Denyer-Green submitted in the alternative that the acquiring authority represented that the value of the property had been agreed at £480,000, namely £500,000 less £20,000 for the defective title. Mr Humphries disagreed on the basis that, at the meeting on 2 November, Mr Smith did not indicate what the discount to reflect the title problem would be; he merely said that his clients were seeking advice from FPD Savills as to the effect of that problem on the value of the property. Again, I agree with Mr Humphries.
- It is, however, also necessary to decide whether there was a clear and unequivocal promise by the acquiring authority not to contend that the value of the property with good title was less than £500,000. Mr Denyer-Green submitted that that was the clear effect of Mr Bowman's letter of 26 October 1999, stating that Mr Smith had no instructions to renegotiate the figure of £500,000, together with Mr Smith's indication at the meeting seven days later that the acquiring authority had instructed FPD Savills to advise on the valuation implications of the title defect.
- In reply, Mr Humphries contended that there was never any suggestion between the parties that the value of the subject property was £500,000. That was merely an offer by the acquiring authority to settle. Mr Humphries said that the claimants knew that the acquiring authority's valuation was much less, because on 29 April 1999 they had been sent a copy of a report prepared for Union Railways Property by Knight Frank, which valued the subject property at £350,000.
- In order to determine this particular issue it is in my view necessary to consider the background to Mr Bowman's offer of £500,000, made at the meeting on 10 March and subsequently confirmed in his letter of 12 March 1999. According to Mr Bowman's minutes of that meeting, the acquiring authority's approach to the purchase price was as follows:
- As indicated in paragraph 10 above, Mr Bowman's open letter to Mr Houghton of 12 March 1999 stated
- In evidence, Mr Bowman said that he left the room in the course of the meeting on 10 March. He telephoned Mr Gooch of FPD Savills and asked him to estimate the market value of the subject property. Mr Gooch replied that the value was in the region of £350,000 and, if pushed, he
- Mr Bowman added that it was clear that this was a difficult property to value, because it was unique. He said that his decision to offer £500,000 following his conversation with Mr Gooch was evidence of the acquiring authority's concern to arrive at a negotiated settlement in order to avoid the cost and delay of a reference to this Tribunal. A negotiated settlement could also contain the risk of delay to the CTRL. For example, were it to prove impossible to fell the trees in the woodland by 31 March 1999, the bird nesting season would have started, resulting in a year's delay to the construction time-table for this section of the CTRL.
- It is clear that Mr Bowman was prepared to pay a full price for the subject property in order to secure an early settlement. There is, however, nothing to suggest that the claimants were aware that, in offering £500,000, the acquiring authority had decided to offer more than the market value of the property. The acquiring authority's position at the meeting on 10 March was that, whilst compensation must be based on market value, that value could fall within a range and Mr Bowman's letter, written two days later, specifically referred to the difficulty of the valuation exercise.
- It is also significant in my view that Mr Smith wrote to Mr Altman on 4 November 1999, two days after the meeting at which he had referred to a deduction to reflect the title defect, as follows:
- Some three weeks later, on 26 November 1999, after FPD Savills had advised him that the title problem would depreciate the value by between £10,000 and £20,000, Mr Smith wrote again to Mr Altman with his full and final settlement figure. This included £480,000 for
- Mr Humphries advanced two further grounds for suggesting that such a representation cannot found an estoppel. Firstly, he said that, even if the acquiring authority did indicate by Mr Bowman's letter of 26 October 1999 that they were not renegotiating the price, that indication related only to the present and did not concern what they intended to do in the future. Mr Denyer-Green replied that the claimants were entitled to assume that there would have been no point in the exchange of correspondence about re-negotiating the £500,000 if it did not relate to the price to be paid at a future date. I agree.
- Secondly, Mr Humphries submitted that the fact that negotiations were still subject to contract meant that estoppel could not arise. Although Mr Denyer-Green cited Salvation Army Trustee Co Limited v West Yorkshire MCC (1980) 41 P & C R 179 as authority for the opposing view, Mr Humphries said that the circumstances in that case were extreme and no unusual circumstances arose in the present case.
- I have found that a representation arose from the combination of the letter of 26 October and the meeting on 2 November 1999. It is clear from the minutes taken by Mr Smith's colleague at the latter meeting that Mr Christos explained that he had an alternative property in mind at a total cost of £750,000 including some neighbouring woodland and that he wanted to exchange contracts to purchase it quickly. The latter point was confirmed in a letter sent by facsimile transmission from Mr Houghton to Mr Bowman's assistant, Ms Clare Taylor, on the following day. Neither Mr Smith nor Mr Bowman made any attempt to disabuse the claimants of the impression that the "good title value" of £500,000 would not be re-negotiated and that figure was subsequently used by the acquiring authority as the basis of the further advance payment made on 17 December 1999.
- In Salvation Army, Woolf J said:
- In order to establish their claim for estoppel the claimants must also show that the acquiring authority intended the claimants to rely on their representation and that the claimants did in fact rely on it. By letter dated 26 October 1999 Mr Bowman advised the claimants that the agreed £500,000 was not being renegotiated and by his conduct at the meeting on 2 November Mr Smith again gave the impression that the acquiring authority were standing by that figure, subject only to an adjustment to reflect title. Both Mr Bowman and Mr Smith remained silent on the point, even though Mr Smith was told on 2 November that the claimants were about to exchange contracts to buy an alternative property and Mr Bowman's assistant was similarly advised on the following day. Against that background, I am satisfied that the acquiring authority intended the claimants to rely on their representation.
- Mr Humphries submitted that the claimants did not rely on the 26 October letter, because Mr Smith made it clear on 2 November that the acquiring authority wished to renegotiate the £500,000 to reflect the defect in title and the claimants did not dispute his right to do so. On the other hand, Mr Houghton said in cross-examination that, had there been any suggestion at the meeting on 2 November that the acquiring authority would back-track on the figure of £500,000 – as opposed to adjusting it to reflect the title position – he would have warned the claimants not to exchange contracts on their new property.
- Mr Humphries suggested that Mr Houghton's evidence on this point – which he described as "self-serving" – was unreliable and pointed out that nothing to the same effect was contained in Mr Houghton's witness statement or that of Mr Christos. Whilst there is undoubtedly some force in that submission, I have come to the conclusion that it should not be accepted. On 4 November 1999, when the claimants exchanged contracts to purchase Oak Manor for £650,000 and hoped to buy some adjoining woodland for a further £100,000, Mr Houghton was under the impression that the acquiring authority were not seeking to renegotiate the agreed value of £500,000 apart from a discount to reflect the title problem. If there had been any suggestion that, in fact, they would subsequently contend that the value was only £350,000, or even £380,000, I have no doubt that any competent solicitor would have advised the claimants not to exchange contracts until the position had been clarified. There is no suggestion that Mr Houghton is other than a competent solicitor. In view of that, and in view of the acquiring authority's subsequent decision to make an advance payment based on a "good title" value of £500,000, I find that Mr Houghton's evidence on the point should be accepted. It follows in my view that the four requirements for the doctrine of estoppel to operate are all satisfied in this case.
- I should add for completeness that Mr Humphries pointed out that the equitable doctrine of estoppel can only be relied upon as a defence and not as a cause of action. In other words, it may be used as a shield but not a sword. He said that, by contending that the value of the property was £500,000, the claimants were seeking to establish a value by estoppel. In reply, Mr Denyer-Green said that the claimants would only be using estoppel as a sword if they were seeking to enforce a contract to purchase at £500,000. They were not. They were engaged in proceedings in the Lands Tribunal and each party had the right to rely on valuation evidence. The claimants' position was that, because of his representations, the acquiring authority could not rely on such evidence to show that the value was other than £500,000. I agree with Mr Denyer-Green on this point. It follows that the acquiring authority is estopped from producing evidence to show that the value of the subject property – assuming good and marketable title – is other than £500,000.
- It is necessary to consider the effect on value of the claimants' inability to show good title to the entire property. The land which was the subject of the application to the Land Registry extended to some 3.6 acres (1.46 hectares). Mr Altman said that, despite the Land Registry's decision, he had been informed by Mr Houghton that the claimants' occupation of the land should be sufficient to defend any claim for possession in the future from other parties. He therefore made no deduction in respect of this matter. Mr Smith, on the other hand, thought that a potential purchaser would only pay a price which allowed for the risk of another owner claiming possession and, in view of the location of the area in question, possibly a right of access to it from the A249 across the front of the property. He pointed out that the land concerned was situated close to the house and its garden and considered that the purchaser's bid would be reduced by £20,000. In the course of his evidence, Mr Smith said that Mr Gooch of FPD Savills had expressed the view in November 1999 that the effect on value would be in the range of £10,000 to £20,000 and Mr Smith had concurred with that opinion at the time. His valuation of £20,000 was arrived at "fearing the worst". In the light of the information available at the hearing, he would assess the difference in value at £15,000, but he suggested that a purchaser at the valuation date would not have had access to all that information.
- I inspected the subject property in company with Mr Altman and Mr Smith on 8 May 2002. In the light of that inspection and the evidence I am satisfied that Mr Altman's approach to this issue is unrealistic. I consider that any prudent purchaser would have required the price to be adjusted to reflect the risk of a future challenge from another party in terms of time, cost and uncertainty of outcome. The claimants suggested that these problems could be overcome by means of an indemnity insurance policy against the risk of not having paper title or registered possessory title. There was, however, no evidence to demonstrate that an insurance company would be willing to insure against the risk in this case, or as to the premium which might be required. Doing the best I can, I find that the effect on value of the defect in the claimants' title is reflected in the sum of £15,000.
- I now turn to consider whether the agreed figure of £8,500 should be deducted from the compensation to reflect the deterioration in the condition of the subject property subsequent to the valuation date. The date of physical entry onto the land which was subject to the notices to treat/enter is agreed to be 17 May 1999. The claimants remained in beneficial occupation of the remainder of the land until 7 January 2000. On 3 February 2000 the acquiring authority's solicitors, Messrs Cripps Harris Hall wrote to Mr Houghton stating that they understood that the claimants had now left the property and were living elsewhere. They added:
- Mr Houghton replied on 8 February 2000 that
- The existence of a flooding problem at the house was first brought to the attention of the acquiring authority during a telephone conversation with Mr Altman on 23 August 2000, when it was explained that Mr Christos had seen water on the property three or four weeks previously. On 27 September 2000 Mr Smith wrote to Mr Altman with a proposed timetable for handover of the property to Union Railways. The acquiring authority took physical possession of the remainder of the property (including the house) on 12 October 2000.
- The agreed figure of £8,500 reflects the cost of remedying water damage to the house which existed at 12 October 2000. Mr Christos had maintained his insurance policy in respect of the house and has submitted a claim in respect of the flooding damage. The acquiring authority has allowed the claimants' disturbance claim in respect of their insurance premium during the period up to 12 October 2000. At the agreed handover date of 12 October 2000 Mr Christos appeared, at one time, to be unwilling to let the acquiring authority take possession of the land. Following discussions with his advisers, however, he was persuaded to allow the acquiring authority to take possession and the keys were handed over.
- Mr Humphries said that in essence the acquiring authority's position was a simple one, namely that it would be unfair for them to pay the open market value for what they had not received. When the acquiring authority took possession of the house it had suffered water damage. In those circumstances it would be quite wrong for a public body to have to pay compensation for the property as though it had not suffered water damage. The law should reflect that position. Whilst possession of the subject property was taken on two different dates it was clearly appropriate to value the property as a single entity at a single date. The parties had agreed that that single date should be 17 May 1999, the date when the acquiring authority entered the first part of the land. The acquiring authority accepted that the property should be valued at prices prevailing at that date, but they did not accept that the condition of the entire property should be taken as at that date.
- The decision of the Court of Appeal in Chilton v Telford Development Corporation [1987] 1 EGLR 12 established that, where there was a single notice to treat and notice of entry relating to the whole of the land, entry on to part of the land would be treated as entry on the whole. In the present case, however, the notices to treat and notices of entry did not relate to that part of the land which included the house. Chilton was not authority for the proposition that entry onto the land within the notices to treat and notices of entry was entry onto land outside those notices. Nor could it be argued that outside the area of the actual notices to treat there were deemed notices to treat. The circumstances where notices to treat were deemed to have been served were clearly prescribed in the relevant legislation. The 1965 Act did not deem a notice to treat to have been served in circumstances where there was a counter-notice under section 8.
- Where part of the land was taken under a counter-notice, there was clear logic why the condition of the property should not be taken as at the date when possession was taken of that part of the land within the compulsory purchase order. It might be, for example, that an acquiring authority disputed the claimants' counter-notice. Compensation for the land within the notice to treat might be agreed and paid, whilst the dispute about whether there was "material detriment" to the remainder might continue for some years. During the period of the dispute the claimant would have the benefit of occupation of the land and, indeed, the condition of the land might change. The buildings might, for example, suffer extensive fire damage and be destroyed. If, ultimately, the claimant was successful in its "material detriment" claim the acquiring authority would then be forced to take the balance of the land. It would be quite inequitable, in such circumstance, for the acquiring authority to pay for that land as it was at the date when it entered the land within the compulsory purchase order. Whilst these circumstances were somewhat more extreme than those in the present case, the same principle applied.
- Mr Humphries submitted that it was to remedy exactly this form of mischief that the House of Lords came to its decision in Birmingham Corporation v West Midland Baptist (Trust) Association [1970] AC 874. That case overruled the earlier decision in Phoenix Assurance Company v Spooner [1905] 2 KB 753. In Phoenix buildings were destroyed by fire after the date of the notice to treat but before the acquiring authority had taken possession of the property. The Court held that the authority was bound to pay the value of the property at the date of notice to treat, that being the date of valuation. The loss resulting from the fire accordingly fell on the acquiring authority, although it had no control over the property. In Birmingham Corporation the House of Lords held that Phoenix had been wrongly decided. Lord Reid said:
- By ruling that the valuation of the land should be as at the date of possession, the House of Lords was clearly seeking to protect acquiring authorities from the sort of circumstances that occurred in Phoenix. Whilst the House of Lords thought it had remedied this problem by making the valuation date the date of actual entry, it clearly did not have in mind the circumstance where an acquiring authority entered onto that part of the land within its notices to treat and notices of entry, but did not enter onto land in respect of which an owner had served a counter-notice until a later date. The House of Lords simply did not rule on this point, as it was not before them.
- Mr Humphries submitted that, following the underlying objective in Birmingham Corporation, where an acquiring authority entered onto that part of the land included within its notice to treat but did not enter onto land within a claimant's counter-notice until a later date, the land should be valued at prices prevailing as at the date of first entry onto the land within the notice to treat (that is the valuation date) but in the condition it was found as at the date of actual entry onto each part of the land. Such a solution would produce a fair result for an acquiring authority, whilst ensuring that the landowner took proper care of the land and maintained appropriate insurance. In the event of damage to the land before the acquiring authority had taken possession, a landowner would have a claim on its insurance policy, which would not have been available to an acquiring authority that had no control over the land.
- For the claimants, Mr Denyer-Green submitted that, where a valuation was required to be undertaken in accordance with rule (2) of section 5 of the Land Compensation Act 1961, and the relevant valuation date was the date of entry, any deterioration in the condition of the relevant land after the valuation date was simply not relevant. In support of this submission he referred to a passage in the Encyclopaedia of Compulsory Purchase which cited Penny v Penny (1868) LR 5 Eq 227 and Birmingham Corporation. Mr Denyer-Green pointed out that Mr Bowman had accepted that at all times after the agreed valuation date the acquiring authority had and was entitled to assert its right of possession of the subject property and that, until the claimants vacated in January 2000, they were licensees of the acquiring authority. This was in accordance with Chilton. If there were any express or implied terms of that licence, by which the claimants became liable for defects after they gave up possession in January 2000, any issue arising in relation to those terms was not within the jurisdiction of the Lands Tribunal.
- In Birmingham Corporation the House of Lords dealt at some length with Penny, which had been cited as authority for the proposition that the date of valuation was the date of notice to treat. Lord Morris of Borth-y-Gest quoted the following extract from Penny that appeared in the Law Reports:
- In my opinion, Mr Denyer-Green is right in submitting that the effect of Penny, as explained in Birmingham Corporation, is that the property is to be valued in its physical condition at the date of valuation and that Mr Humphries' proposition put forward in para 66 above expressed a hope of what the law should be, not what the law is. I also agree with Mr Denyer-Green that, if the claimants are responsible to the acquiring authority for the damage which occurred subsequent to the valuation date, the Lands Tribunal is not the proper forum for resolving the matter. In that connection, however, Mr Christos's offer to assign the benefit of his insurance claim to the acquiring authority may possibly prove to be of assistance. The compensation payable for the freehold interest in the subject property is £485,000 (£500,000 minus £15,000 for the title defect).
- I now turn to the ten items of disputed disturbance compensation. The respective figures contended for by the parties are as follows:
- The most significant element of the disturbance claim is for loss of profits in the two years ended 30 June 1999. The background to this claim is this. The claimants are the directors and own 81% of the shares in Tagrose Holding Limited ("Holding"), which in turn owns the entire share capital of Tagrose Limited ("Tagrose"). The remaining shares in Holding are owned by Mr Gary Christos. The business of Tagrose is the sale of mobile telephones and accessories and the servicing of telephones that are in need of repair. It currently has seven centres located in Vauxhall, Neasden, Bromley, Maidstone, Borehamwood, Dulwich and Tottenham.
- In 1994 Tagrose became the first registered dealer for "One To One", a major mobile network provider and a subsidiary of Mercury Telecommunications. Tagrose's success, certainly up to 1996, was due principally to the close working relationship between Mr George Christos and One To One. Indeed, Tagrose opened its Borehamwood shop in 1999 in order to be close to One To One's head office.
- Mr George Christos produced a summary of various entries in his work diaries for 1988, 1992, 1993, 1994, 1995 and 1996. He said that these indicated the considerable amount of time that both he and his wife spent as well as the efforts he made to obtain meaningful information regarding the CTRL before November/December 1996, when it became clear that the claimants would lose their home. Thereafter the uncertainty regarding the acquisition continued to have an impact upon the time the claimants were able to devote to developing their business. Mr Christos also produced two diaries for 1999, which he had kept on advice, indicating properties that he had inspected for relocation purposes. He gave evidence of the importance of ordering and stocking the right telephones and accessories in a fast-moving, "fashion conscious" market sector. He said that if he and his wife had been able to devote the necessary time to Tagrose the business would have developed much more rapidly, especially between 1996 and 1999 which was a critical time for the telecommunication industry; profits would have been considerably higher and any such loss was effectively a loss to the claimants personally.
- In his expert report Mr Cowan suggested that, assuming the claimants were personally affected by the proposed compulsory acquisition of the subject property to such an extent that their "eye went off the ball" so far as the management of Tagrose was concerned, the period for which their consequential loss should be indemnified should run from November 1996 until 12 March 1999. The commencement date was chosen because the claimants knew for certain in November 1996 that they would have to move from their home. 12 March 1999 was chosen as the cut-off date to coincide with the acquiring authority's offer of £500,000 plus disturbance. Although there was an argument for suggesting that compensation should be paid to cover the period from November 1996 to 30 June 1997, Mr Cowan considered that this period should in fact be left out of account, in view of the lack of evidence of disruption to the business in that time.
- Thus, at the commencement of the hearing Mr Cowan considered that the claimants should be entitled to compensation for profits lost by the company during the period 1 July 1997 to 12 March 1999. Mr Cowan noted that the gross profit as a percentage of turnover was considerably lower in those two years than in the years that preceded and followed it, as follows:
- Mr Cowan said that it appeared from his discussions with Mr George Christos and Mr Claude Greaves, a partner in Messrs Greaves and Associates, the accountants to Tagrose, that the distraction caused by the proposed compulsory acquisition meant that the claimants were unable to devote the time necessary to exercise sufficient control over the company's product costs. By "product costs" he meant the direct cost of mobile telephones and accessories and the control and receipt from network providers of the subsidy paid on the sale of individual telephones.
- If the fall in the gross profit percentages for 1998 and 1999 was a direct result of the claimants being unable to devote sufficient time to control product costs, then it was necessary to estimate the percentage that would have been achieved if there had been no such problem. Mr Cowan prepared this estimate by reference to the results of three competing companies, Phones 4U Limited, In Touch Communications Limited and Chitter-Chatter Telecommunications Limited. In order to compensate for the differing sizes of these companies, Mr Cowan averaged the gross margin percentages in the relevant years for all three. He thus arrived at the following average gross profit percentages, which he then applied to the actual turnover achieved by Tagrose in those years:
- Mr Cowan did not give evidence until after both claimants had given theirs. Mr George Christos described in some detail the amount of time he had spent searching for a new home during the first six months of 1999. Having heard that evidence, Mr Cowan said that he had not realised from his previous conversations with Mr Christos that the house-hunting exercise had been so time-consuming. In order to reflect this new evidence, Mr Cowan extended the period of the loss of profits from 12 March to 30 June 1999. This produced total lost profits, attributable to the claimants' shareholding, of £123,588, calculated as follows:
- Mr Epstein, the expert accountancy witness for the acquiring authority, did not accept that it was appropriate to base a claim for loss of profits on the figures appearing in the audited accounts of Tagrose. He pointed out that, for the year ended June 1998, the first of the two years during which the company appeared to have suffered losses, the directors' report stated:
- The report signed by the auditors for the same financial year included the following wording:
- Mr Epstein said that it was normal to find such wording in an audit report. In this instance, however, the report was qualified in the following manner:
- The final paragraph of the audit report said:
- Mr Epstein felt that this paragraph must have been considered very carefully by the auditors before they wrote it, as it was significantly different from the normal opinion found in formal accounts. He also noted that the audit certificate in the accounts for the year ended 30 June 1997 read as follows:
- Mr Epstein concluded that, even before the beginning of the year to 30 June 1998, the record keeping of Tagrose and the reliability of its financial statements were inadequate. If stock was significantly overstated at 30 June 1997, this would have had the effect of overstating the profits for the year ended 30 June 1997 and overstating the loss for the year ended 30 June 1998. It was also possible that the loss for the year ended 30 June 1998 may have been greater and any profit or loss adjustment would have significantly affected the value of the assets and liabilities of the company at 30 June 1998. If the net asset position of the company at 30 June 1998 was overstated, such that the company had suffered a greater loss during the year ending 30 June 1998, then the trading position of Tagrose for the following year would have been understated and it may well be that a profit arose in that year. As a result of the unsatisfactory state of the records, Mr Epstein considered that there was no way of ascertaining the real position regarding Tagrose in the year ended 30 June 1998 and what had actually happened in that year.
- Mr Epstein noted that in 1999 a new outlet was opened in Borehamwood. He concluded from the two sets of accounts and the opening of this new outlet that, in the two years to 30 June 1999, the business of Tagrose had a considerable number of matters which would have needed the claimants' attention, quite apart from anything that may have been happening in their personal lives regarding the compulsory purchase of their home. In particular, he considered that the computer failure must have had a very significant effect on the company's trading activities. In his experience the margins earned by companies in the mobile telephone industry were extremely competitive and management had constantly to keep track of what was happening in each of the individual outlets. The problem with the company's computer system was likely to have required a considerable amount of additional effort by the claimants. This alone may well have caused the losses shown in the financial statements.
- Other factors which Mr Epstein felt may have contributed to those losses were increasing competition from larger specialist mobile telephone retailers and from supermarkets and the introduction of pre-paid telephones. The latter were first introduced in 1996. They became increasingly popular in the latter part of 1997 and throughout 1998 and resulted in a reduction in the overall profit margins enjoyed across the industry.
- Having heard both claimants giving evidence, one cannot but feel much sympathy for the effect that the loss of what had been their family home for over 23 years has had upon them. Mrs Christos suffered from considerable stress, which her doctor attributed to her anxiety about the CTRL. In October 2000 Mr Christos suffered a stroke. Although there is no way of assessing with any precision the extent to which his emotional stress contributed to the stroke, his doctor considered it plausible that it did so contribute in some degree. Certainly, the claimants both feel that the loss of their home was at least partly to blame for Mr Christos' illness, from which he has happily made a reasonable recovery.
- My task, however, is to decide whether the claimants have discharged the burden which is upon them of proving on the balance of probabilities that the gross profits earned by Tagrose in 1998 and 1999 were reduced as a result of the proposed compulsory acquisition of the subject property. I consider that they have failed to discharge that burden. I accept Mr Epstein's opinion that there are several other factors which are at least as likely to have accounted for the loss and that, because of the qualifications to the accounts for the year to 30 June 1998, the gross profit figure that they show is wholly unreliable as the basis of a claim for lost profits. It is therefore not necessary for me to decide whether, if Tagrose did suffer a loss of profits as a result of the compulsory acquisition, the claimants themselves have suffered any consequential loss.
- Mr George Christos said that the payment to the Eco-Warriors arose as follows. In early 1999 a mechanic working in a motorcycle shop close to his company's Vauxhall premises mentioned that the Eco-Warriors were intending to protest against the CTRL. Mr Christos wanted to know more about this and he agreed to pay representatives of the Eco-Warriors to visit his home and discuss their plans. As a result of this discussion, Mr Christos became concerned that his property would be occupied by the protestors in order to frustrate the acquiring authority's construction works. He arranged a meeting with Mr Bowman on 10 March 1999 in order to discuss the problem with him. He said that at first Mr Bowman positively encouraged him to effect a settlement with the Eco-Warriors. Later in the meeting, however, it became clear that Mr Bowman believed that he (Mr Christos) had encouraged the Eco-Warriors to occupy the property in order that he could obtain some leverage over the acquiring authority. In fact, Mr Christos said that he had not encouraged the Eco-Warriors in any way and he did not wish to be perceived as having done so. He realised that he would have to resolve the issue himself and he arranged to meet the Eco-Warriors' representatives again. At that meeting veiled threats were made against him and his family and it was made clear that the woodland at the subject property would be occupied unless some financial arrangement could be made. Mr Christos now felt that he was being coerced by both sides. On the one hand the acquiring authority was insisting that he resolve the problem of the Eco-Warriors if meaningful negotiations were to continue. On the other hand the Eco-Warriors, for their own purposes, were threatening to occupy the property.
- Mr Christos was left with no alternative but to try to negotiate a settlement with the Eco-Warriors and he said that he was finally obliged to pay them a total of £10,000 in cash. That is the figure which he seeks to recover by way of disturbance compensation.
- Mr Bowman painted a rather different picture of the Eco-Warriors problem. He produced a letter dated 16 February 1999 from Mr Gooch of FPD Savills, who at that time was advising the acquiring authority on the compensation payable to the claimants. The letter said:
- Mr Bowman also produced minutes that he had prepared of the meeting with Mr Christos on 10 March 1999. This referred to the Eco-Warriors discussion in the following terms:
- Mr Bowman said that, although the Eco-Warriors had been based at a protest camp near Folkestone since 1998, they had not caused any problems along the entire length of the CTRL. Nevertheless, he would have been prepared to compensate the claimants for any money they had paid to keep the Eco-Warriors off their land, had he not felt that Mr Christos had himself caused the problem to arise.
- Mr Bowman's minutes of the meeting on 10 March 1999 were not agreed by the claimants. Mr Christos denied that he had threatened to invite the Eco-Warriors onto the site. Before me he said:
- The claimants' solicitor, Mr Houghton, who was also present at the meeting, considered that the minutes were
- In the light of all the evidence, and particularly that of Mr Christos mentioned in paragraph 94 above, I find on the balance of probabilities that it was Mr Christos who first put it into the minds of the Eco-Warriors that they might consider occupying his property. He did so in an attempt to persuade the acquiring authority to pay substantially more than market value for his home. If, therefore, it subsequently proved necessary to pay the Eco-Warriors to prevent them occupying the site, that was not the result of the compulsory acquisition but of Mr Christos' own actions and, as such, cannot be the responsibility of the acquiring authority. The claim for repayment of any monies paid to Eco-Warriors therefore fails.
- The claimants also claim £1,000 which they say they paid for the removal of the trees closest to the proposed railway line. Mr Christos said that he was concerned that the Eco-Warriors might still decide to occupy those trees despite having been paid £10,000. The same considerations apply to this head of claim as to the payment to the Eco-Warriors. It resulted from the claimants' own actions and is therefore not the acquiring authority's responsibility.
- The sum of £250 is claimed for photocopying costs. Mr Christos explained that he had written to many estate agents in the home counties, outlining his requirement for a new property. In addition, he had delivered letters to various properties with land adjoining which appeared to be suitable for his requirements. The photocopying was carried out either at home or at his office. Mr Smith considered the amount claimed to be excessive. He said that a very large amount of photocopying paper could be purchased for less than £5. Although he had originally declined to offer anything for this head of claim in view of the lack of documentary evidence, he would have no difficulty in agreeing to a claim of up to £10. I prefer the evidence of Mr Smith on this matter and award £10.
- The claim for mileage of £2,500 arises from the claimants' need to travel to inspect alternative properties and to attend meetings concerning the CTRL. Mr Christos said that his annual petrol bill totalled approximately £5,000, of which an average of 10% resulted from the compulsory acquisition. The amount claimed was based on the five year period from 1995 to 2000 at £500 per year. Mr Smith considered that a reasonable figure for this item of claim was £1,000, based on 5,000 miles at 20p per mile. Bearing in mind Mr Christos' evidence that his search for a new property did not start in earnest until 1999, I consider that Mr Smith's approach is reasonable and I award mileage compensation of £1,000.
- The claimants obtained a bridging loan to assist with the purchase of their new property, Oak Manor, and this loan was redeemed on 15 March 2000. They incurred costs totalling £19,829 in connection with the loan and they claim that sum as disturbance. Mr Smith accepted that these costs were in principle a valid item of claim. In his opinion, however, the claimants should have applied for a long-term mortgage for Oak Manor on or about 4 November 1999, when they exchanged contracts to purchase that property. If they had done so then, or even immediately after it became clear that the second advance payment of compensation would be received in December 1999, they could have obtained a mortgage and been able to redeem the bridging loan not later than 15 January 2000. In that case, the costs of the bridging loan would have been only £12,647.60.
- On the other hand Mr Houghton considered it was reasonable for the claimants to have delayed applying for a mortgage, because of doubts that arose at the time as to whether the acquiring authority was prepared to make a further advance payment and, if so, how much. These doubts were not dispelled until 13 December 2000. By then, because of the forthcoming holiday period, it was not possible to finalise a mortgage advance by 15 January 2000. He accepted that, with hindsight, it might have been helpful for the claimants to apply for a mortgage advance in principle before the advance payment position had been clarified. However, he thought that a prospective mortgagee would probably have wanted to know its total exposure before making a formal offer and this could not be quantified so long as there was uncertainty as to the disposal of the claimants' existing property.
- It is agreed that the claimants were justified in obtaining a bridging loan. Whilst the costs of such a loan might have been reduced if the claimants had applied for a long-term mortgage on Oak Manor several weeks before they did, I am not persuaded that they acted unreasonably in deferring the application until they were certain when the second advance payment would be forthcoming and in what sum. I accept Mr Houghton's evidence that, by then, it was probably too late to finalise a mortgage advance by 15 January 2000. I therefore find that they are entitled to all the costs they incurred in connection with the bridging loan, namely £19,829.
- The claimants paid legal fees to Mr Houghton's firm totalling £53,005 and they claim that amount. Mr Houghton said that the work charged for related to the period from February 1999 to January 2001 and was reasonably necessary as a result of the compulsory acquisition of the subject property. The work included the preparation of witness statements which were sent to the acquiring authority before the reference was made.
- Mr Smith did not question the hourly rate charged or the number of hours spent. His concern was with the amount of advice given. In his view the case did not raise particular difficulties prior to the reference to this Tribunal. He described it as
- At first, Mr Humphries questioned whether the claimants had paid the legal costs since, although the relevant invoices were addressed to the claimants, they were stated to be payable by Tagrose. Mr George Christos explained that Tagrose had agreed to grant the claimants a loan facility to enable them to pursue their claim. Although the accounts were settled in the first instance by Tagrose, they were repaid by the claimants when they were in funds, principally from rents due in respect of premises leased by the claimants to the company. Mr Humphries subsequently indicated that the acquiring authority accepted that explanation, subject to being satisfied that the claimants had paid the appropriate VAT. It is clear that the legal fees appearing in Tagrose's profit and loss accounts were very substantially less than Mr Houghton's firm's fees for the appropriate years. I therefore accept Mr George Christos' evidence that Tagrose's finance director was careful not to include in the company's accounts or VAT returns any fees which were not incurred by the company in connection with its business. Accordingly, I find that all the legal costs, including VAT, have been paid by the claimants. I agree with Mr Smith, however, that the amount of time spent by the claimants' solicitors – nearly 300 hours – appears excessive, bearing in mind that it excludes any costs of the reference. It may be that some of the work may properly be considered to form part of the costs of the reference, or that the charges reflected the requirements of particularly demanding clients. I make no findings on those possibilities, but I accept Mr Smith's evidence that the compensation payable for solicitors' costs should be £26,500.
- The claimants seek reimbursement of fees they have paid to three firms of surveyors, as follows:
- Hobbs Parker were originally instructed to negotiate the compensation payable to the claimants and they made formal application for an advance payment. The claimants were not entirely satisfied with the advice given by Hobbs Parker and they dispensed with their services in favour of Gibbs Gillespie, where Mr Altman was a director until 1 May 2001. George Webb & Co were instructed in July 2000 to advise on the prospective value of Oak Manor, assuming the claimants were successful in acquiring the adjoining pasture and woodland, which extended to some 60 acres and which was to be submitted for sale by public auction. In the event the claimants were not successful at the auction.
- I deal firstly with the surveyors' fees for negotiating compensation. Both Hobbs Parker and Gibbs Gillespie based their charges on the amount of work they carried out. Apart from suggesting that there was some duplication of work by the two firms, Mr Smith had no reason to suppose that the charges were unreasonable. However, he said that his general approach was to allow one set of surveyor's fees on the appropriate ad valorem basis contained in Ryde's scale (1996). Although that scale provided that surveyors' fees could be based on the amount of work involved in certain cases, Mr Smith did not consider that the circumstances were sufficiently unusual to justify that approach here. He added that, if Ryde's scale were upheld by the Tribunal, he had agreed with Mr Altman that £500 should be added to the scale figure in respect of disbursements.
- In seeking surveyors' fees on a quantum meruit basis rather than Ryde's ad valorem scale, Mr Denyer-Green relied on and adopted the reasoning in my decision on Matthews v Environment Agency (LCA/192/2000, unreported), as follows:
- In his submissions in support of the use of Ryde's scale, Mr Humphries pointed out that it had been applied as the standard scale for some considerable time. Mr Edward Ryde, a late president of the Surveyors' Institution, introduced a scale of surveyors' fees in respect of property taken under compulsory powers in 1855. The Monopolies Commission Report of 1977 recommended the abolition of most of the scales for property valuations, but Ryde's scale was exempted. In 1983 it was agreed by the RICS, Department of the Environment, Office of Fair Trading and Department of Trade and Industry that the Valuation Office Agency should prepare the scale, and this was promulgated, coming into effect on 1 December 1984. The current edition of Ryde's scale came into force on 1 July 1996. The Department of the Environment endorsed Ryde's scale (1996) and recommended its adoption by the authorities, bodies and companies (whether public or private) with access to compulsory powers for the acquisition of land or rights in or over land. Although Ryde's scale had no statutory force, in most cases heard by the Lands Tribunal where the amount of surveyors' fees had been an issue, fees had been awarded on the basis of Ryde's scale. Whilst it was right that paragraph 4.15 of the Government White Paper "Compulsory Purchase and Compensation: delivering a fundamental change" did suggest that the Government would seek to introduce new legislation to provide for the reimbursement of all professional fees on the basis of the actual expenditure reasonably incurred, such legislation had not yet been introduced. Until it was, Mr Humphries submitted that the Tribunal should continue to apply the well established rule of awarding surveyors' fees on the basis of Ryde's scale.
- Although I accept that Ryde's scale has long been adopted and approved, if I am satisfied on the evidence that its use would not provide the claimants with reimbursement of fees actually and reasonably incurred, it would have the result of giving them less compensation than the loss they have suffered. As was rightly accepted by the compensating authority in Matthews, my duty is to award compensation equal to the loss that has been suffered (see Horn v Sunderland Corporation [1941] 2KB 26).
- Ryde's scale, if applied in the standard way, being based entirely on value, cannot reflect differences in the amount and value of work done for which fees are properly incurred. The acquiring authority in this case clearly accept this, since they have agreed to pay their valuer, Mr Smith, on a basis other than Ryde's scale. I see no reason to apply an arbitrary figure which would deprive the claimants of the compensation to which they are entitled under statute. I therefore award Gibbs Gillespie's fees in full. It is clear that, for a period of time, that firm and Hobbs Parker were both representing the claimants in compensation matters. Although I was not provided with sufficient information accurately to assess the matter, I agree with Mr Humphries that some duplication of effort is likely to have resulted. I therefore reduce the compensation payable in respect of that firm's fees from £3,907 to £3,250.
- So far as George Webb & Co's fees are concerned, Mr Humpries submitted that they did not reasonably relate to the compulsory purchase of the subject property and should be disallowed. Mr Denyer-Green pointed out that the property to which the claimants moved had very much less land than the subject property. It was sensible for them to take valuation advice in connection with the possible acquisition of additional adjoining land. The fact that they did not succeed in purchasing the land does not mean that the valuation fees were not reasonably incurred. If one acquires a substitute property which is not equivalent to that which has been lost, one is entitled to take valuation advice in relation to the steps to be taken to achieve comparability. I agree with Mr Denyer-Green on this point and award George Webb & Co's fees in full.
- The claimants claim £2,000 in respect of the redirection of mail and a variety of work carried out to the subject property and their new house, Oak Manor. They say that the alarm system at the subject property was serviced before it was handed over to the acquiring authority and the alarm system at Oak Manor needed to be re-commissioned. The balance of this head of claim relates to the cost of removing entrance locks; changing keys; the raw materials for building a garden shed; converting the tack room to a third stable and rectifying outside lighting near the stables. With the exception of the redirection of mail, where the claimants' figure of £100 was agreed, Mr Smith considered that these items represented value for money and were therefore not allowable.
- The documentation available in respect of these items of claim was incomplete. Copies of the invoices for the two alarm systems were submitted, however. The first, dated 3 November 1999, covered the cost of annual maintenance and service to the security system at the subject property, checking the system and putting it in full working order. The total cost of this work was £420. The second invoice, dated 15 February 2000, was for £520 and covered the cost of supplying one red care board to Oak Manor, plus the first year's monitoring and supplying and fitting one remote reset unit. I do not consider that the latter invoice is a valid item of claim, since the claimants received the benefit of the relevant work at their new property. The former invoice, however, was issued some six months after the acquiring authority had taken formal entry of the land subject to the notice to treat. The acquiring authority have agreed to pay interest on all compensation monies with effect from May 1999. The have also agreed to compensate the claimants for insuring the property after that date. In my view there is no good reason why they should not equally compensate them for maintaining the security system. I therefore award £420 under this head. I agree with Mr Smith that some of the remaining expenditure – particularly that relating to the new garden shed – provided value for money and is therefore not compensatable. In any event, adequate documentary evidence has not been provided for the remaining items and I disallow them.
- The final disturbance claim is described as Miscellaneous. It comprises a cost draftsman's invoice for £881.25 and two doctors' bills totalling £120. In the course of the hearing Mr Denyer-Green produced a copy of a letter from Mr Houghton to the claimants' solicitors dated 28 September 2001. This stated that the cost draftsman's fees had been included in error. There was no further attempt by the claimants to justify this item and I reject it. I also agree with Mr Smith that the two doctors' invoices – which relate to the medical conditions of the claimants – are too remote to qualify for compensation.
- My award of compensation for the disputed disturbance losses therefore totals £63,369, as follows:
- I have determined the value of the land taken to be £485,000 and the agreed disturbance and other losses total £70,576. The total compensation payable to the claimants by the acquiring authority is therefore £618,945.
- A letter on costs accompanies this decision which will take effect when, but not until, the question of costs is decided.
- I have received written submissions from the parties on costs.
- The claimants pointed out that the acquiring authority had made a sealed offer of £550,000 and the total compensation awarded was £618,945. They submitted that "in accordance with the usual practice and having regard to s4 of the Land Compensation Act 1961" they should be entitled to their costs.
- The acquiring authority argued that a significant proportion of the time spent during the hearing (they suggested at least 50%) related directly to the claim for loss of profits and that the acquiring authority had been entirely successful on this substantial issue. They referred to AEI Limited v Phonographic Performance Ltd [1999] 1WLR 1507 as authority for the proposition that the Tribunal should consider whether its costs order should reflect the outcome of different issues and, if it should, the Tribunal should "readily depart" from the "follow the event" principle.
- The acquiring authority said that the claim for loss of profits had significantly lengthened the nine day hearing (the tenth day was for speeches only) and, thereby, significantly increased the costs. Accordingly, they submitted that they should only have to pay 50% of the claimants' costs of the reference and that the claimants should pay the acquiring authority's costs of calling Mr Epstein.
- In their counter-submissions the claimants referred to City of Aberdeen District Council v Emslie & Simpson Limited 1995 SC 254 and Lesquende Limited v Planning and Environment Committee of the States of Jersey [1998] 1 EGLR 137 as support for the underlying principle that the acquiring authority should pay the costs of determining disputed compensation. This, they argued, was a more emphatic proposition that the "follow the event" principle. They submitted that the Tribunal, in exercising its discretion on costs, should award the claimants their costs unless some part of those costs had been unreasonably incurred.
- The claimants added that their failure to persuade the Tribunal that they should be entitled to compensation for business loss did not mean that they had unreasonably incurred expense on that aspect of the reference and hearing. Mr Christos' principal witness statement and claim, including the business loss claim, was dated 9 March 2001; Mr Epstein's proof was dated 30 January 2002. It would therefore be wrong merely to reflect the outcome of different issues and it would also be wrong to adopt recent guidance in decisions on costs awards made under the Civil Procedure Rules (CPR) without regard to the underlying principle to which they had referred. Moreover, by a letter dated 26 November 1999, the acquiring authority's agent had offered to pay £10,000 towards the claimants' loss of management time. By that offer the acquiring authority was prepared to recognise that the claimants had suffered some loss and should receive some compensation for business loss. For that reason it would be wrong for the claimants not to receive their costs in relation to the business loss, or at least the majority of those costs.
- If, contrary to the claimants' submissions, the Tribunal determined that costs in relation to the business loss claim were unreasonably incurred, they submitted that a 50% deduction was too high a proportion, having regard to all other matters for which preparation was required and which were advanced before the hearing; they submitted that a 10% deduction would be more appropriate.
- I delayed finalising my decision on costs in this matter pending the judgment of the Court of Appeal in Purfleet Farms Limited v Secretary of State for the Environment, Transport and the Regions (The Times, 7 November 2002). That judgment was handed down on 15 October 2002 and the parties to this reference were invited to make further submissions on costs in the light of it.
- The acquiring authority relied upon the following observations of Potter LJ in Purfleet:-
- The acquiring authority submitted that, in the circumstance of the present case, there were "special reasons" why the Tribunal should make the costs order it had suggested. These were that the claimants did not discharge the burden upon them of proving on a balance of probabilities that the gross profits earned by Tagrose Limited in 1998 and 1999 were reduced as a result of the proposed compulsory acquisition of their house and that, in any event, they did not establish, or properly explain how, any losses to Tagrose Limited were losses to the claimants themselves. They said that this issue took a substantial amount of time at the hearing but "could not on any sensible basis be regarded as part of the reasonable and necessary expenses of determining the amount of the disputed compensation in respect of the compulsory purchase of the residential property which formed the subject of the reference."
- For their part, the claimants reiterated that it had been reasonable for them to advance all the issues they did advance, notwithstanding that they did not succeed on the issue of loss of profits.
- I am unable to accept that submission. It is clear that the claim for loss of profits failed entirely and I do not consider it was reasonable for the claimants to incur substantial costs in pursuing that particular head of claim. It is true that the acquiring authority was at one stage prepared to offer £10,000 in respect of management time. That offer, however, was made on a without prejudice basis, although privilege was subsequently waived.. There is no reason why the acquiring authority's decision to make what has proved to be a generous offer should count against it on the question of costs.
- The claimants' other justification for ignoring the outcome of the loss of profits issue – namely that Mr George Christos' witness statement on the matter was submitted some ten months before the report of the acquiring authority's expert – is nothing to the point. The loss of profits claim failed in its entirety and the claimants were not prejudiced by the date when Mr Epstein's report on the subject was submitted.
- It is not possible on the material before me to determine with accuracy the costs which would have been incurred by the claimants, had they not proceeded with their claim for loss of profits, but I am satisfied that they would have been substantially less than those which were in fact incurred. Accordingly, I order that the claimants shall recover sixty per cent of their costs from the acquiring authority. Such costs are to be agreed or, in default of agreement, assessed on the standard basis by the Registrar of the Lands Tribunal in accordance with the Civil Procedure Rules.
[2002] EWLands ACQ_69_2001 (24 June 2002)
ACQ/69/2001
LANDS TRIBUNAL ACT 1949
COMPULSORY PURCHASE – Compensation – dwellinghouse and adjoining land – whether property value agreed – whether acquiring authority estopped from denying that the value is the 'agreed' figure – whether damage to property after valuation date to be reflected in compensation – whether claimants' company suffered loss as a result of compulsory acquisition – whether surveyors' fees should be limited to Ryde's scale (1996) – other detailed disturbance items considered – compensation awarded £618,945.
IN THE MATTER of a NOTICE OF REFERENCE
BETWEEN GEORGE WILLIAM CHRISTOS
and
MAUREEN ELLEN CHRISTOS Claimants
and
SECRETARY OF STATE FOR THE Acquiring
ENVIRONMENT, TRANSPORT AND THE REGIONS Authority
Re: Dwellinghouse with land
Torver Beck
Sittingbourne Road
Detling
Maidstone
Kent ME14 3ES
Before: N J Rose FRICS
Sitting in public at 48/49 Chancery Lane, London WC2A 1JR
on 22-26 and 29-30 April and 1-2 and 20 May 2002
The following cases are referred to in this decision:
Michael Richards Properties v St Saviour's [1975] 3 All ER 416
Schwinge v London & Blackwall Railway Co. 65 ER 550
Marson v London, Chatham and Dover Railway Co (1869) 7 LR Eq 546
Mercer v Liverpool, St Helen's & South Lancashire Railway Co [1903] 1 KB 652.
Munton v Greater London Council [1976] 1 WLR 649
Tiverton Estates Limited v Wearwell Limited [1975] Ch 146
Hawksley v Outram [1892] 3 Ch 359:
Salvation Army Trustee Co Limited v West Yorkshire MCC (1980) 41 P & C R 179
Chilton v Telford Development Corporation [1987] 1 EGLR 12
Birmingham Corporation v West Midland Baptist (Trust) Association [1970] AC 874.
Phoenix Assurance Company v Spooner [1905] 2 KB 753.
Penny v Penny (1868) LR 5 Eq 227 and Birmingham Corporation.
Matthews v Environment Agency (LCA/192/2000, unreported)
Horn v Sunderland Corporation [1941] 2 KB 26
The following cases were also cited:
Winn v Bull (1877) 7 Ch D 29
Chillingworth v Esche [1924] 1 Ch 97
Duttons Brewery Ltd v Leeds City Council (1982) 261 EG 885 and 989
Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd [1972] AC 741
Charles Rickard's Ltd v Oppenhaim [1950] 1 KB 616
Attorney-General of Hong Kong v Humphreys Estate [1987] 1 AC 114
Jorden v Money (1854) V HLC 185
Low v Bouverie [1891] 3 Ch 82
Co-operative Wholesale Society v Chester le Street District Council (1997) 73 P&CR 111
Central London Property Trust Limited v High Trees House Limited [1947] KB 130
Allsopp v Orchard [1923] 1 Ch 323
Perry v Clissold and Others [1907] AC 73
Rehman v Bradford MBC (unreported, ACQ/162-5/2000)
Mountgarret v Claro Water Board (1963) 15 P&CR 53
Wrexham Maelor Borough Council v Macdougall [1993] 2 EGLR 23
Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111
Harvey v Crawley Development Corporation [1957] 1 QB 485
Hadley v Baxendale (1854) 9 Exch 341
Bibby v Merseyside County Council (1979) 251 EG 757
Prasad v Wolverhampton Borough Council [1983] Ch 333
Gaganus v Turkey (Judgment 5th June 2001)
Bolton v Southern Electric plc [1999] 1 EGLR 177
Williams v Secretary of State for the Environment (1976) 33 P&CR 131
Llanelec Precision Engineering Co Limited v Neath Port Talbot CBC [2000] 3 EGLR 158
Attn-Gen of Hong Kong v Humphreys Estate (Queens Gardens Ltd [1987] AC 114
Tomlin v Standard Telephones & Cables Ltd [1969] 1 WLR 1378
Morrell v Studd & Millington [1913] 2 Ch 648
Hughes v Metropolitan Railway (1877) 2 App Cas 439
Harding v Metropolitan Rly (1872) 7 Ch App 154
Griffiths v Young [1970] 1 Ch 675
Amalgamated Investment & Property Co v Texas Commercial Investment Bank [1982] QB 84 at 131
Bell v Lever Brothers Ltd [1932] AC 161, 218
Barry Denyer-Green, instructed by Houghtons Solicitors Limited of Pinner, Middlesex for the Claimants
Michael Humphries, instructed by Cripps Harries Hall, Solicitors of Tunbridge Wells, Kent for the Acquiring Authority
DECISION
Introduction
The subject property
Issues
£
Telephone calls 500
Postage 250
Advertising 1,255
Abortive costs of purchasing possible alternative property 1,934
Legal costs of purchasing alternative property 6,433
Mortgagees' costs for alternative property 1,316
Stamp duty on alternative property 25,981
Counsel's fees 2,250
Schedule of condition 1,763
Engineer's report 235
Removal expenses 11,409
Damage to drainage 1,350
Double overheads 900
Home loss payment (statutory maximum) 15,000
£70,576
Is there a contract at £500,000?
"Subject to Contract and without prejudice save as to costs
I am enclosing an open letter confirming the discussions on 10 March.
At our meeting we discussed the range of prices that may be appropriate for the property.
I confirm that in order to settle this matter I am prepared to offer to purchase the whole of your clients property in the sum of £500,000 (five hundred thousand pounds) together with the usual heads of claim for disturbance and fees.
This offer is made subject to the following conditions:-
1. It is open for acceptance for a period of 3 months from the date of this letter.
2. If it is necessary to take action to achieve forcible possession of the property then the offer is deemed to have been withdrawn.
3. Your client is able to show a good and marketable title to the property as shown on the attached plan. (014-DCN-ID003-00618-AA).
I reserve the right to refer to this letter in addressing any litigation on the question of costs."
"Subject to Contract
I would like to thank you and your client for attending these offices on 10 March to discuss the problems facing them. I am sorry that more progress was not achieved and that your client felt it necessary to leave the meeting prematurely.
At this point your client has not formally asked us to acquire any more land than that contained in the Notices and until that time the discussions on compensation can only relate to the land being acquired. If we are asked to purchase the remainder of your clients' holding then I confirm that we will do so in accordance with our Voluntary Purchase Scheme, details of which I have sent to you.
We are agreed that, looking at the whole property, it is unique and difficult to value. We agree that the approach should be to find a range of similar properties and then adjust the price to take account of the differences, either benefits or drawbacks. Whilst your client has adopted this methodology we are not agreed on the conclusions he has drawn. I have offered to go through this process using our existing consultants, referring the matter to an independent valuer or adopting mediation.
Your client was not prepared to consider these and expected to reach agreement that afternoon on a purchase price which was clearly unreasonable and impracticable.
I am very concerned that your client then went on to state very clearly that failure to agree that afternoon to his demands would lead to withdrawal by him of any goodwill and that it would be his intention to cause the maximum amount of delay and increase in cost to the project.
He then illustrated this by producing information that he had received from Friends of the Earth and advised the meeting that he had paid professional protestors to visit the property and it would now be his intention, with immediate effect to invite them to occupy the land to be acquired. I understand that he has paid them in excess of £1,000 to date and that he has the ability to either cause them to occupy the site or not so to do.
I must advise that we will be taking possession of the property on or after 18 March. I hope that we can do this by agreement and work together with your client to limit the impact of our works upon him and his family.
I confirm the view expressed at our meeting that in the event of forcible possession action being needed and if the site is occupied by protestors who are on the site at the instigation or invitation of your client then we will seek to recover the costs from your client.
I confirm that it is our wish to work with your client and to reach agreement by negotiation on the various issues that were raised but we are governed by the rules of compulsory purchase and cannot submit to blackmail and threats such as were made at our meeting.
This is an open letter and I reserve the right to refer to it in any future litigation."
"Following our earlier telephone conversation, I am writing to confirm that I have now been instructed by Mr and Mrs Christos to accept the offer made by you in your letter dated 12 March 1999 to purchase the whole of their property as shown on the plan attached to that letter in the sum of £500,000 (five hundred thousand pounds) together with the usual heads of claim for disturbance and fees."
That letter was not marked without prejudice or subject to contract.
"a claim for disturbance and other payments"
to the acquiring authority's agents, Bruton Knowles. This included a claim for £25,000 for
"loss of English oak trees as a growing crop"
and £30,000 in respect of
"value of shooting rights".
"on the particular facts of this case".
"The one question is: Was there a firm agreement on the price before the borough entered into possession? Throughout this correspondence the solicitors and surveyors for the house owner put into their letters the words 'subject to contract'. In my opinion those words have a decisive effect. They mean: 'Although this figure is there and we agree it, it is not to be regarded as binding. It is only a provisional figure subject to further negotiation. It is not binding.' The principle was discussed recently in Tiverton Estates Limited v Wearwell Limited [1975] Ch 146. It is of the greatest importance that no doubt should be thrown on the effect of those words. We were referred to Michael Richards Properties Limited v St Saviour's Parish, Southwark, Corporation of Wardens [1975] 3 All ER 416, which was decided by Goff J. Goff LJ will deal with it. It is to my mind a very special case on its own facts. I know that in these cases of compulsory purchase there is no contract prepared or signed, but only a conveyance. So the words 'subject to contract' have no real application. But nevertheless they have, I think, the effect of preventing there being any firm agreement on the price. In my view the words used so constantly, 'subject to contract', mean that the figure of £3,400 was not agreed so as to be binding. It was only a provisional figure.
Apart from this there are letters of February 28 and May 6, 1972, in which the house owner was saying: 'Please rehouse me quickly before other people,' and the borough was saying to him:
'If we are going to rehouse you prematurely there will have to be some reduction in the figure which we were going to pay and it will have to be renegotiated.'
Those letters show me that the figure was not regarded as fixed and binding."
"It seems clear from your clients Statutory Declaration and from the contents of your letter that the main use of the land is for the exercising of your clients horses and it has been held by the Courts that grazing and exercising of horses does not amount to a sufficient act of adverse possession."
"I would confirm that Bruton Knowles have no instructions to renege and re-negotiate the original agreed price of your house of £500,000 and I do not know what has given rise to this particular concern."
"if there is any doubt whether [the provisions of the contract in issue] are binding upon the vendors, and the purchaser waives them, what have the vendors to complain of?"
and
"the purchaser … is at liberty to relinquish [those provisions]".
Estoppel
"For the equitable doctrine to operate there must be a legal relationship giving rise to rights and duties between the parties; a promise or a representation by one party that he will not enforce against the other his strict legal rights arising out of that relationship; and intention on the part of the former party that the latter will rely on the representation; and such reliance by the latter party."
"SJB stated that compensation paid must be based on open market value and that the terms GC put were blackmail to avoid Eco-Warriors causing delay …
SJB explained the value could fall within a range and dialogue between valuers was needed before establishing that range."
"We are agreed that, looking at the whole property, it is unique and difficult to value."
"could not see more than £400,000."
"I refer to our meeting on 2 November at Torver Beck, following which I undertook to provide, as a matter of urgency, an overall figure for the property and disturbance properly payable in accordance with the compensation code [my italics]. The overall figure is to have due regard to the title defect in respect of part of the woodland and the costs incurred/time spent information provided by Mr Christos at the meeting."
"the house, buildings and land (subject to defective title on part) as at the date of entry, understood to be May this year."
I therefore have no doubt that the acquiring authority at all times represented to the claimants that their offer of £500,000 reflected the value of the subject property with good title, arrived at in accordance with the statutory compensation code.
"In the course of argument, Mr Godfrey rightly conceded that, so far as the district council was concerned, they having stood by while the new hall was built even though there was no binding contract of sale, the principle of proprietary estoppel would have prevented the district council from refusing to sell the new site to the Salvation Army."
In my judgment similar considerations apply to the acquiring authority in the present case. The claimants were not involved in ordinary commercial negotiations which left them free to refuse to sell. Their home was being acquired from them compulsorily. Entry had already been made on part of the land. They were led to believe that they would be paid £500,000, less a deduction to reflect title. The acquiring authority then stood by whilst the claimants exchanged contracts to buy an alternative property for a significantly larger sum. Against that background, the mere fact that there was no binding contract of sale does not entitle the acquiring authority – as they sought to do until the ninth day of the hearing – to adduce evidence to the Tribunal that the appropriate value was not £500,000 but £350,000. Nor does it entitle them to rely on the subsequent agreement that the market value of the property was £380,000.
Effect of title defect
Effect of post-valuation date damage to property
"Until the transfer of the property is completed, your clients will remain responsible for it. Your client should, therefore, maintain their existing insurance arrangements and we recommend that appropriate steps are taken to ensure that the property is not broken into; that pipes do not burst, the water is turned off, etc…
Just before completion of the transfer, our client's surveyor will need to re-inspect the property to ensure that on completion of the transfer, the property is in the state our client would expect to find it."
"We confirm that our clients have now left the property and are maintaining the existing insurance arrangements."
At no time did the claimants invite the acquiring authority to take physical possession of the land or indicate that they should do so. The transfer of title did not occur because the parties were not agreed on the purchase price.
"It seems to me to be wrong that the risk should pass as at the date of the notice to treat although the promoters or acquiring authority then acquire no right or interest in the property: it would mean that the owner though still in full control would cease to have any duty to preserve the property or any incentive to insure it."
"That is not at all the scheme of the Act. The scheme of the Act I take to be this: that every man's interest shall be valued, rebus sic stantibus, just as it occurs at the very moment when the notice to treat was given."
Later he added
"The case is not only reported in the Law Reports. It is also reported as follows: 37 L.J. Ch.340; 18 L.T. 13; 16 W.R. 671. It is, I think, significant that in each one of these reports the reference is not to 'the very moment when the notice to treat was given,' as in the Law Reports but to the moment of valuation. Thus in 16 W.R. at p.673 are the words:
'the scheme of the Act I take to be this: that every man's interest should be valued rebus sic stantibus, just as it occurs at the very moment when the valuation is to be made.'
In 37 L.J. Ch. at p.344 the sentence is given:
'The scheme of the Act was that every man's interest must be valued rebus sic stantibus, just as it occurred at the very moment when the valuation was to be made …'
In 18 L.T. at p.14 the sentence is given:
'I consider the scheme of the Act of Parliament to be that every man's interest shall be valued rebus sic stantibus, just as it occurs at the moment when a valuation is to be made.'
The reporters were in each case different.
It is also of interest to note that the sentence which in the Law Reports (1868) L.R. 5 Eq. 227, 235, as I have set out above, is recorded as stating that:
'the valuation ought to be made as at the time when the house was about to be taken, and should be made of the exact interest which the plaintiff would at that moment have had, assuming that the house had not been taken'
is recorded in the Law Times (18 L.T. 13, 14) in the sentence:
'To me it appears that the exact time of valuing these interests is when the public body are about to take down the house.'
If I am right in inferring that possession was taken some time after the notices to treat, the indications are, though the direct point was not in issue, that the date when possession was taken (if it preceded the actual date when valuation was being made) would be the date as at which valuation should be made.
The whole point of the decision in that case was that in valuing the leasehold interest of the executor full regard had to be paid to the fact that the sons' rights undoubtedly existed and that because they existed the value of the interest of the executor was depreciated. In my view, the case is no sort of authority for the proposition that a notice to treat is so far binding that it always determines the time by reference to which an interest being acquired is to be valued."
Disturbance and other losses
| Claimants £ |
Acquiring Authority £ |
|
| Loss of profits | 123,588 | Nil |
| Payment to Eco-Warriors | 10,000 | Nil |
| Payment to woodsman | 1,000 | Nil |
| Photocopying | 250 | 10.00 |
| Mileage | 2,500 | 1,000.00 |
| Bridging finance | 19,829 | 12,647.60 |
| Legal Fees | 53,005 | 26,500.00 |
| Surveyors' fees | 16,167 | 5,287.50 |
| Mail redirection and other items | 2,000 | 100.00 |
| Miscellaneous | 1,001 | Nil |
| 229,340 | 45,545.10 | |
Loss of profits
| Year to 30 June | Gross Profit (%) |
| 1996 | 57.96 |
| 1997 | 57.53 |
| 1998 | 36.84 |
| 1999 | 36.78 |
| 2000 | 45.61 |
| 2001 | 48.23 |
| % | |
| 1998 | 40.58 |
| 1999 | 41.30 |
| 1998 £ |
1999 £ |
|
Actual turnover |
1,850,829 |
1,845,290 |
| Achievable gross profit percentage | 40.58% | 41.30% |
| Achievable gross profit | 751,059 | 762,037 |
| Less actual gross profit | 681,796 | 678,721 |
| Lost gross profit | 69,263 | 83,316 |
| Claimants' interest – 81% | 56,103 | 67,485 |
Total lost profits – £56,103 + £67,485 = £123,588 |
Total lost profits – £56,103 + £67,485 = £123,588 |
Total lost profits – £56,103 + £67,485 = £123,588 |
"The company had a major computer error at the end of the financial year which resulted in a vast amount of accounting data lost. Management has taken action to prevent recurrence by contracting an outside firm to do daily back-up of the company data files."
"We planned our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error."
"However, the evidence available to us was limited because an error in the computer accounting system resulted in a vast amount of accounting data lost, and in consequence we were unable to carry out auditing procedures necessary to obtain adequate assurance regarding expenditure. Any significant adjustment to this figure would have a consequential effect on the loss for the year."
"Because of the possible effect of the limitation in evidence available to us, we are unable to form an opinion as to whether the financial statements give a true and fair view of the state of the company's affairs as at 30 June 1998 or of its profit of the year then ended. In all other respects, in our opinion the financial statements have been properly prepared in accordance with the Companies Act 1985.
In respect alone to the limitation on our work relating to expenses: we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and we were unable to determine whether adequate records were maintained."
"The evidence available to us was limited because of inadequate accounting records and in consequence we were unable to carry out auditing procedures necessary to obtain adequate assurance regarding the quantities and condition of stock, appearing in the balance sheet at £135,346. Any adjustment to this figure would have a material effect on the profit for the year."
Eco-Warriors
"I had a meeting yesterday with Mr Christos at his property. It is clear from my discussions with him that he is going to be somewhat difficult regarding the acquisition of his land.
He informed me that he is not interested in being paid market value for his property, as he is unable to find an alternative property with the amenity facilities that he currently has and with such good communications particularly to London.
He stated that all he really wants is to be paid a reasonable price to go and that he considers £1m to be a reasonable price. He is going to fight unless he gets this amount of money.
I explained to him that I was there to ascertain the open market value of his property and it was not within my remit to negotiate.
Mr Christos seems to be under the impression that by being bloody minded and difficult he expects to be paid an overage on the value of his property in order to go quietly.
Of more specific concern, he has already been in touch with Friends of the Earth and there was certainly correspondence from them amongst his papers. He believes that if the tree dwellers take camp in his trees Union Rail will be unable to evict them because he will not give them access to his property. I explained that by that stage Union Rail would own the property and they would fence the area they required and evict the true dwellers, and this would not affect the amount of money that he was paid…"
"Then GC stated he understood how much disruption and aggravation would be caused to CTRL if Eco-Warriors were to move onto his land. GC said he had already spoken to Friends of the Earth about it and said people were ready to be on his land within hours. He has paid £1,000 to them to establish what the possibilities are for occupation. Protestors are shortly to be evicted from Crystal Palace and would be free to move to Kent. He produced prints from FoE websites. He asked if CTRL could afford not to pay what he wanted. If a deal was not agreed now, there would be a long delay, Lands Tribunal, huge problems with Eco-Warriors and at some point the question would be asked as to who had let matters get so far without resolution. GC's price was £1m, plus costs and disturbance and he demanded an instant decision at the meeting…
SJB stated that the compensation paid must be based on open market value and that the terms GC put were blackmail to avoid Eco-Warriors causing delays."
" I was very careful how I worded the situation. It was not blackmail …
I explained that I could help them. There is an opportunity for me to negotiate, but what is in it for me? Surely they should be more sympathetic to my claim if I helped them out? I said you'd better believe it's a serious problem and the ringleaders are prepared to consider options."
"slanted in a way that did not accurately reflect the overall tenor of the meeting".
In answer to a question from me, however, Mr Houghton said he could understand why Mr Bowman had obtained the impression that he was being threatened.
Woodsman
Photocopying
Mileage
Bridging loan interest
Legal fees
"a very average case, with unusual features".
In the light of his experience, he would have been surprised if the claimants' legal costs had exceeded £10,000. He was, however, prepared to agree to a fee of £26,500, approximately half of the total claimed.
Surveyors' fees
| Hobbs Parker | £ 3,907.00 |
| Gibbs Gillespie | £10,555.88 |
| George Webb & Co | £ 1,703.75 |
| Total | £16,166.63 |
"The fees paid to Messrs Grimley total £28,932.35. The fee based on table E of Ryde, which the compensating authority suggests is appropriate, depends on the amount of compensation payable. In view of my decisions so far on the main items of claim, it will inevitably be significantly below the fees that the claimants have actually paid Messrs Grimley, even allowing for the 50% uplift offered by the compensating authority.
Ryde's scale (1996) was prepared by the valuation office agency on behalf of the Department of the Environment. I have been provided with a full copy of the scale. It was intended to be adopted for the assessment of surveyors' fees by all bodies and organisations, whether public or private, having access to compulsory powers for the acquisition of land or interests or rights in or over land. Although the valuation office agency prepared the scale after taking representations from and consulting with interested professional bodies, acquiring authorities, practising surveyors and claimants' representative bodies, there is no suggestion that the scale was actually agreed by those representing claimants. Indeed, in the course of his closing submissions that typified the very fair approach he had adopted on behalf of the compensating authority throughout the eleven day hearing, Mr Kolodziej conceded that there was a resistance to Ryde's scale in the surveying profession; he described the scale as being "possibly mean". Nevertheless, said Mr Kolodziej, Ryde's scale reflected the accepted practice in the profession and the claimants at all material times knew that the application of the scale was the accepted practice; it should therefore be adopted. Mr Matthews, on the other hand, said that he wished merely to recoup the professional fees which the claimants had actually incurred.
Mr Kolodziej accepts that the claimants' entitlement to 'full compensation' under the Act means an entitlement to compensation no less and no more than the loss imposed on them. In the case of surveyor's fees, the claimants have paid £28,932.35 to Messrs Grimley. It is agreed that that figure represents a reasonable sum for the work involved. That being the case, the application of Ryde's scale would result in the claimants receiving less compensation than the loss they have suffered. It would therefore not represent full compensation. Accordingly, I find that the claimants are entitled to reimbursement of all the fees paid to Messrs Grimley."
Redirection of mail, etc
Miscellaneous
Loss of profits |
£ Nil |
| Payment to Eco-Warriors | Nil |
| Payment to woodsman | Nil |
| Photocopying | 10 |
| Mileage | 1,000 |
| Bridging finance | 19,829 |
| Legal fees | 26,500 |
| Surveyors' fees | 15,510 |
| Mail redirection and other items | 520 |
| Miscellaneous | Nil |
| £63,369 |
Dated: 24 June 2002
(Signed) N J Rose
ADDENDUM
"Leaving aside the impact or influence (if any) of the CPR upon awards of costs in the Lands Tribunal it is my view that the proper approach of the Tribunal for the costs of a successful claimant (i.e. a claimant who is awarded more than the amount of an unconditional offer by the respondent) should be that he is entitled to his costs incurred in the proceedings in the absence of some 'special reason' to the contrary. Whether such special reason exists in any given case is a matter for the judgment of the Lands Tribunal. Plainly it may exist where wasted or unnecessary costs have been incurred for procedural reasons as a result of the conduct of the claimant (e.g. abandoned issues, unnecessary adjournments, or failure to comply with directions of the Tribunal). However, so far as the nature and substance of the case advanced by the claimant is concerned, special reasons should only be regarded as established where the Tribunal considers that an item of costs incurred or an issue raised was such that it could not on any sensible basis be regarded as part of the reasonable and necessary expenses of determining the amount of the disputed compensation. This would apply not only to a claim advanced without any statutory basis but to other examples of manifestly unreasonable conduct which may give rise to unnecessary expense in the course of the proceedings. It means, in my view, that, following the hearing of the compensation reference in the Lands Tribunal in which the claimant has been successful, a special reason for departing from the usual order for costs should only be found to exist in circumstances where the Tribunal can readily identify a situation in which the claimant's conduct of, or in relation to, the proceedings has led to an obvious and substantial escalation in the costs over and above those costs which it was reasonable for the claimant to incur in vindication of his right to compensation."
Dated: 8 November 2002
(Signed) N J Rose