England and Wales Lands Tribunal

[2004] EWLands ACQ_101_2003 (19 April, 2004)

ACQ/101/2003

LANDS TRIBUNAL ACT 1949

COMPENSATION – injurious affection – house – restrictive covenant – town centre retail development – Compulsory Purchase Act 1965 s10 – no diminution in value – compensation nil

IN THE MATTER of A NOTICE OF REFERENCE

BETWEEN

ADRIAN PUTTOCK

Claimant

and

LONDON BOROUGH OF BEXLEY

Compensating

Authority

Re: St Deny's, The Green, Sidcup, Kent, DA14 6BS

Before P R Francis FRICS

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

on

5 April 2004

The claimant in person

Paul Shadarevian, instructed by the solicitor to London Borough of Bexley, for the compensating authority


 


DECISION

1. This is a decision, heard under the Simplified Procedure (Rule 28, Lands Tribunal Rules 1996, as amended) to determine the amount of compensation, if any, payable to Mr Adrian Puttock ("the claimant") by the London Borough of Bexley ("the compensating authority" or "the council") pursuant to the London Borough of Bexley (Grassington Road) Compulsory Purchase Order 1998 ("the CPO"). The claimant, former owner of the freehold house known as St Deny's, The Green, Sidcup, Kent, DA14 6BS ("the subject property"), alleges that its value was diminished by £20,000 as direct result of the execution of works permitted under the CPO, and claims that sum for injurious affection under section 10 of the Compulsory Purchase Act 1965 ("the 1965 Act").
2. The claimant appeared in person, and produced a bundle of documents and correspondence prepared by his solicitors, Judge and Priestley of Bromley. The council was represented by Mr Paul Shadarevian who called Mr John Wilkinson BSc (Hons) FRICS, a Principal Valuer with the compensating authority.
3. Mr Puttock bought his house in the early 90s, it being a 3 bedroom semi-detached brick and tiled property originally constructed in about 1910, and located on the corner of The Green and Grassington Road on the edge of Sidcup town centre. He said that he acquired it with the full knowledge of a covenant that restricted the use to which his land could be put. It was contained in the conveyance of 1911 and, being a standard clause applying to all properties standing on land formerly known as the "Manor House Land", meant that all those around his own house had the same restriction. The relevant covenant read:

"5. PRIVATE dwelling houses only shall be erected on the said land (with or without stabling or motor houses in connection therewith) and no building to be erected on the said land shall be used for any other purpose than a private dwelling house or an outbuilding belonging thereto and no trade or manufacture and no business of any kind except that of a Solicitor Surgeon Physician or Architect shall at any time be set up or carried upon the said land nor shall anything at any time hereafter be done thereon which shall or may be or grow to be in any way a nuisance damage or annoyance to the Mortgagees their heirs or assigns or the Vendor his heirs or assigns the owner or owners of the Manor House Estate or his or their tenants."

4. Mr Puttock said that the fact that the covenant prevented non-residential development (other than some professional uses) over a wide area meant he could fairly anticipate there would be little if any change in the nature of the area. His solicitor had told him, when he was buying, that the existence of that covenant enhanced the price he would have to pay for the property by at least 10%, and he was happy to do so. However, the town centre development scheme, which included a huge new Safeway supermarket, was subsequently devised and some of the land acquired under the CPO was subject to the same restrictive covenant. Whilst he accepted the advice given to him by the council that compulsory purchase powers allow statutory authorities to override such restrictions, he said he did not accept their argument that they were obsolete, principally due to the fact that there had been previous breaches on other land with no objection. Any breaches there may have been were not remotely similar to the massive scheme that had now been completed.
5. The whole nature of the area had changed since the development took place, particularly relating to Grassington Road being made into a cul-de-sac. That had not only resulted in an increase in traffic using The Green, but meant that, when leaving his house (the driveway of which was onto Grassington Road) he could no longer turn left and then exit at a safe junction onto Elm Road. Instead, he had to turn right and join The Green at what had become an extremely dangerous junction, despite traffic calming measures that had only served to make it more hazardous.
6. Mr Puttock said that the council told him he was one of three property owners in the immediate vicinity whose land had not been acquired as part of the scheme, but who could, under the provisions of the 1965 Act, claim compensation for injurious affection caused by the restrictive covenant being breached. He was advised to obtain a valuation, which he did in February 2003. It was carried out by I R Cousins BSc (Hons) FRICS of Allied Surveyors in Orpington, and it concluded that the open market value of the freehold interest at that date was £230,000 "following construction of the superstore". The valuation, on the assumption that the superstore had not been constructed, was £250,000. That diminution, Mr Puttock said, was borne out by the price he achieved when he sold the house in November 2003 for £260,000.
7. He had checked the Nationwide Building Society house price indices for the last three quarters in 2003 which showed national price rises of between 6.7% and 18% in the period. Acknowledging that the highest rises were likely to have taken place in the north of England, and the lowest in central London, he said he took a "fair" increase to be 12%. Adding 12% to his surveyor's lowest figure gave £258,000 – extremely close to the price he achieved.
8. In cross-examination, Mr Puttock accepted that there had been no perceptible change in the immediate area of his former property, and that it was not the supermarket itself that caused the problems; it was the effect on the road network that had diminished the value, but the changes to it, including the traffic calming measures, had resulted, he said, directly from the scheme. Without it, there would have been no need for the changes that had been made.
9. Mr Wilkinson is a chartered surveyor with an honours degree in land management, has 21 years experience in compulsory purchase matters, and has been involved with the Sidcup Town Centre Redevelopment CPO since 1996. He explained that the CPO only overrides certain land interests, and those do not include covenants on land benefiting third parties. The council therefore used its statutory powers under section 122 of the Local Government Act 1972 and by agreement under part IX of the Town and Country Planning Act 1990 to formally appropriate the affected land within the scheme for planning purposes. That appropriation removed the burden of such covenants on the land required by the development scheme. Any third parties (of whom the claimant was acknowledged to be one) who had the benefit of covenants prior to the appropriation, are entitled to claim compensation for actual loss caused by the breach of the covenants. Such loss is limited to financial loss arising from the use of the land in breach – it does not, he said, include any loss, perceived or otherwise, arising from alterations to the local highways. Those alterations were authorised by traffic management orders under the statutory powers of the local highway authority.
10. As to whether the restrictive covenants could now be considered effective, Mr Wilkinson said that the nature of the area had changed substantially since they were imposed in 1911 when the Manor House Estate was sold off as plots. He produced the plan that was incorporated within the auction details, together with extracts from ordnance sheets from 1909, 1956-64 series, 1970-89 series and November 2003. At the time the Manor house Estate was sold, he said, the town centre was very different to how it is now, and as it has developed over the years, the covenants have been breached with no apparent objections being raised. In that regard, he produced a plan showing the sites within the former Manor House land upon which those breaches appear to have occurred, including part of an area now used as the council offices, two blocks of flats (not private dwelling houses), an access to a public car park and various structures constructed in front of the former building line. It was Mr Wilkinson's view that these unopposed breaches, and the major changes in the area had made the restrictions obsolete. Mr Puttock's contention that the restrictive covenant had added 10% to the value of his property when he bought it was, Mr Wilkinson said, unsustainable, as plans for the proposed supermarket development that actually occurred were in the public domain at the time he bought it.
11. In any event, Mr Puttock's former property was at the far end of Grassington Road from the new supermarket, the delivery entrance to Safeway (accessed from Elm Road) being some 90 metres away. Delivery lorries do not therefore use Grassington Road for that purpose. In Mr Wilkinson's opinion, the fact that Grassington Road is now a cul-de-sac, and no longer used as a "rat-run", was an advantage to the subject property. Furthermore, the traffic calming measures, including width restrictions in The Green and Church Road (opposite the Grassington Road junction) served to reduce the number of heavy vehicles, and to generally slow traffic down. Mr Wilkinson reiterated that any detrimental effects to the subject property caused by the traffic management measures were not related to the scheme and were not therefore compensatable. Even if it were concluded that the traffic measures were undertaken because of the development, any losses caused by those works were far too remote.
12. Mr Wilkinson pointed out that the valuation obtained by the claimant contained no comparable evidence in support of the purported values (a fact acknowledged by Mr Puttock), and could not therefore be taken as anything more than an opinion. As to the claimant's reliance upon indices, Mr Wilkinson said that the internet comment from the Nationwide and the Financial Times that he appeared to be relying on, were national statistics which showed rises of over 16%. They were seriously misleading because they did not show regional variations, and if he had used the Greater London index from the Nationwide House Price Calculator, quarter 1 to quarter 4 2003, the claimant's surveyor's value (undiminished) of £250,000 in February, would become £259,188. This alone, he said, proved that with the claimant having achieved £260,000, there was no diminution in value. As a check, he used the Halifax Greater London indices for the same period, and working back from the known sale price to a date in the first quarter of 2003, gave a figure then of £243,540. The relevant regional indices showed that during the period in question there had been house price inflation of between 3.9% and 6.7%, well below the 12% that Mr Puttock had used to justify his argument. In summary, Mr Wilkinson said that even if Mr Puttock's claim under s10 of the 1965 Act was valid (which he did not consider it was), any alleged diminution in value was not proved, and the Tribunal should therefore award nil compensation.

CONCLUSIONS

13. Before looking at the issues raised, I deal firstly with a matter that arose during the hearing relating to the valuation date. The General Vesting Declaration under the CPO was dated 2 February 2002, and possession of the land followed (as the council said) "a short while later". Construction works were then commenced. The appropriation of the land under the provisions referred to by Mr Wilkinson took place on 11 November 2002. Mr Shadarevian submitted that, as with a claim for compensation where land is taken, the GVD would be the relevant valuation date. That was the date from which action could be taken by a claimant, although he acknowledged that it was upon the appropriation date that a landowner's right to sue under the covenant was removed, and was effectively replaced by the right to claim compensation under s10.
14. A claim for injurious affection under s10 is for diminution in value in the claimant's property caused by the execution of the works and the valuation date must, therefore, be determined by reference to the time when works, contrary to the covenant, were carried out. In the present case, I would think that this was the start of the construction works, but in view of my later conclusions, nothing turns on this.
15. It was the claimant's case that the alleged diminution in value to his former property had been caused principally by alterations to Grassington Road. This resulted in the need for him to exit at a junction that had been rendered more dangerous by an increase in traffic along The Green, and exacerbated by ineffective traffic calming measures. The road works resulted from the supermarket development scheme, and would not have been necessary if it had not been constructed. The council says that the claim on this basis is not valid, and therefore not within the scope of s10, as all the road works were undertaken under separate traffic management schemes. Furthermore, they say, the claimant has produced no substantive evidence to prove that any diminution has in fact occurred – Mr Wilkinson's analyses showing that, on the basis of the price achieved in November 2003, it had not.
16. On the question of highway works, I am not satisfied that the council's argument is necessarily wholly correct. Certainly, the stopping up of Grassington Road, making it into a cul-de-sac, was a part of, or at least necessitated by, the development, and it is as a direct result of that that the claimant makes the claim he does.
17. The next matter I need to consider is whether, in the absence of the council's powers to override it, the claimant could have enforced the covenant. To establish this, it is necessary to determine whether or not the covenant was still effective, or whether it was obsolete. The council says that it was, due to the change in the nature of the area since 1911 and due to the fact that other breaches have occurred without objection. The claimant says that it is not, and that he paid a premium for the benefit that it gave.
18. The council has not persuaded me that the covenant is obsolete. The test of obsoleteness – whether the purpose for which the covenant was imposed has ceased to be capable of achievement – is a demanding one, and on the restricted evidence before me there is insufficient for me to make such a finding. I proceed, therefore, on the basis that the covenant remained capable of enforcement, and therefore turn now to the question of whether the value of the claimant's property has been diminished by the execution of the works.
19. Mr Puttock's valuer produced no comparable evidence in support of his opinions, and was not called to give oral evidence upon which he could be cross-examined by the compensating authority. I find that I can attach no weight to that report and therefore accept Mr Wilkinson's evidence, which he based upon the Nationwide and Halifax house price indices for the Greater London area. From them he concluded that the price achieved by the claimant in November 2003 supported Mr Cousins's 'undiminished' valuation of £250,000 in February 2003 and I accept his analysis. Conversely, the claimant sought to rely upon the national trends, and there is, in my view, no justification for this. The use of indices is only ever appropriate as a general guide to trends in the movement of house prices and are usually referred to in support of more solid local evidence. The variation in house price movements over the country as a whole is so wide as to render reliance upon the national, overall statistics highly unreliable, and the regional figures must therefore reflect a much more accurate guide. However, as I have said, they are only a guide and nothing can replace corroborated evidence of true comparable sales. In the absence of these, I must rely upon the regional rather than the national analysis as a guide, and am satisfied that it supports Mr Wilkinson's opinion that the price achieved in the November 2003 sale indicates that no diminution has occurred.
20. It follows that whether or not the claim under section 10 of the 1965 Act is valid in terms of the grounds being that any diminution was caused by the effect of highway works, I do not find the alleged diminution in value proved. Therefore, having concluded that there has been no loss, I determine that no compensation is payable to the claimant under s10.
21. The matter having been heard under the Simplified Procedure, I make no award as to costs.
22. This determines the substantive issue in this case. Rights of appeal under section 3(4) of the Lands Tribunal Act 1949 and Order 61 rule 1(1) of the Civil Procedure Rules will come into effect from the date of this decision.

DATED 19 April, 2004

(Signed) P R Francis FRICS