England and Wales Lands Tribunal

[2004] EWLands ACQ_219_2000 (2 April 2004)

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – land for road widening – access to waste disposal tip – ransom value – residual valuation method rejected – compensation of £660,000 awarded to the four claimant parties

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN

H A SNOOK (1) M L SNOOK (2) R H SNOOK (3)

Claimants

A G SNOOK & Mrs J A PETHERHAM (4)

and

SOMERSET COUNTY COUNCIL Acquiring authority

Re: Land at Dimmer Lane, Castle Cary, Somerset

Before The President and P R Francis FRICS

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

on

1-3, 6-9 and 17 October 2003

Alun Alesbury instructed by Bircham Dyson Bell for the claimants

Michael Humphries QC instructed by Somerset County Council Legal Services for the acquiring authority.

The following cases are referred to in this decision:

Stokes v Cambridge Corpn (1961) 13 P & CR 77

Blue Circle Industries Plc v West Midlands County Council [1989] RVR 34

Haddon v Black Country Development Corporation [1993] RVR 93

Clinker and Ash Ltd v Southern Gas Board (1967) 18 P & CR 372,

Batchelor v Kent County Council (1988) P & CR 320, (1989) 59 P & CR 357, (1991) 31 RVR 329

Wards Construction (Medway) Ltd v Barclays Bank plc (1994) 68 P & CR 391
 


DECISION

Introduction

1. These claims for compensation arise out of the compulsory purchase of land for highway improvements by Somerset County Council pursuant to the County of Somerset (Dimmer Lane) Compulsory Purchase Order 1998. The claimants in the references that we have to determine are respectively Mr H A Snook, Mr M L Snook, Mr R H Snook, and (jointly) Mr G A Snook and Mrs J A Petherham. These references were consolidated and the claimants have acted as a single group, although the claims relate to parcels of land in the respective ownership of the four claimant parties. We refer to them collectively as the Snooks. The CPO also gave rise to claims by two other parties, Mr R H Targett and Mrs E N Targett (the Targetts) and Miss A M Lee. These other claims were due to be heard with the Snooks claims but in the event they were settled shortly before the hearing.
2. The CPO was promoted in order to enable the carrying out of highway improvements to Dimmer Lane, Castle Cary, which provides access to a waste disposal tip, Dimmer Tip. At the time of the CPO Dimmer Tip was owned and operated by Wyvern Waste Services (Wyvern), a Local Authority Waste Disposal Company (LAWDC) wholly owned by the county council. In 1991 planning permission had been given for a major extension of the tip. It was subject to a Grampian condition, condition 2, requiring the carrying out of improvements to Dimmer Lane in accordance with specified plans. The improvements for which the CPO was promoted differed in some respects from those shown in the plans but there was recognition on the part of all concerned that they would in practice satisfy condition 2. As a consequence the claimants claim that their land has a substantial ransom value. The council accept that the land had a ransom value but they dispute the quantum of that ransom. They say that Dimmer Lane would have needed widening even in the absence of the tip extension, and they say that this and the availability of an alternative scheme (the one-way "Parker loop") would have diminished the ransom payment.
3. The parties were able to agree that those from whom it was essential to acquire land in order to implement the scheme were the Snooks, the Targetts and the council itself, as the owner of a smallholding adjacent to Dimmer Lane. They also agreed how the overall ransom sum should be apportioned: 60% to the Snooks, 20% to the Targetts, and 20% to the council. The percentages attributable to the individual Snook ownerships were also agreed. The Lee claim was settled on the basis of Miss Lee having no ransom claim.
4. In dispute between the parties were the value to be placed on the ability to satisfy condition 2 and the proportion of this value that should be treated as constituting the overall ransom sum. The claimants said that the development value of the tip under the 1991 planning permission as at the agreed valuation date (23 September 1999) was £8,400,000; the council said it was £828,000. The claimants' valuer based himself on a residual valuation; the council's valuer relied principally on a valuation based on comparables. They agreed that the development value of the tip represented the value of the ability to discharge condition 2. The claimants said that the overall ransom sum was 50% of the development value; the council said that it was 30%. The result is that on the claimants' approach the amount to be divided between the Snook interests would be £2,520,000, while on the basis of Somerset's it would be £149,040.
5. We issued a decision in this case on 9 February 2004 and said that it would only become final when the question of costs had been determined. The acquiring authority then wrote to the Registrar raising certain points on the section of the decision headed "Development value: comparables". In the light of this we invited both parties to make representations on the points raised by the acquiring authority, and we received these between 12 and 25 March 2004. We concluded, having considered these representations, that certain amendments could usefully be made to that section for the purpose of clarification and that there was a need to correct a minor error. Since the decision we had issued had not taken effect, we have incorporated these amendments, and additional consequential amendments, in the text of this decision.

Facts

6. The parties produced a statement of agreed facts and issues from which, together with the evidence and our inspection of the subject land, Dimmer Tip, and the surrounding area on 29 September 2003, we find the following facts. The CPO land comprised narrow of strips of agricultural land, hedges and lane margins abutting Dimmer Lane for a length of about 1,000 metres between the B3153 to the north and, to the south, its junction with Camp Road (a private road within the ownership of the tip operators and giving access to the site). The tip, on land that had formerly been a military camp, has been used as a landfill site since 1970. The original area of about 74 acres included, in addition to the tip itself, offices, workshops, a composting site, a weighbridge and recycling facilities, together with an animal carcass incinerator. It had been operated by the council since 1974, but in 1992, as a result of the requirements of the Environmental Protection Act 1990, the site was transferred to Wyvern, an arms-length company wholly owned by the council.
7. In 1991 the council applied for and received deemed planning consent (dated 17 September 1991) for development described as "Alterations and extensions to existing landfill site, landscaping, screening and improvements to existing access thereto at Dimmer Landfill Site, Dimmer, Castle Cary". It permitted a substantial lateral extension of approximately 128 acres (of which 121 acres was to be operational and the remainder was to contain a leachate treatment works) onto greenfield land to the west. The permission was subject to conditions relating to leachate treatment, archaeology, land drainage, site restoration and operational restrictions. Condition 2 provided:

"Before any tipping takes place on the site hereby permitted, the highway improvements shown on drawings J/175/19/0, J/175/20/0 and J/175/21/0 shall be completed and open to traffic."

The drawings showed a widening of Dimmer Lane from an existing width of between 2.9 and 5.0 metres to a 6 metre carriageway, over a length of approximately 1 kilometre between the B3153 and Camp Road, together with junction improvements at either end. Following unsuccessful attempts to acquire the land necessary for this widening (thought then to be just the hedgerows and strips of the field edges), in 1994 the council developed an alternative scheme (the Rust Report Scheme) which allowed for a narrower carriageway (5.5 metres) with passing places and, over a 100 metre section, one-way traffic light control. This could have been accommodated between the hedges but would have incorporated the then existing grass verges. The proposals, which were unpopular, were in any event found to be unworkable as, following a challenge by the Snooks, it was established by April 1997 that the council did not own the highway verges but that the claimants (and the Targetts and Miss Lee) did. The overall extent of the land (some 8,790 sq m) that was required to facilitate widening was in the ownership of six parties, including the claimants in this reference, whose land frontages extended to about 720 metres of the 1,000 metres to be widened. Ownership of the highway verges having been established, the Snooks constructed tyre walls along their verges, to prevent traffic encroaching onto them.

8. In order, therefore, to implement the required road improvement scheme (an application under section 73 to implement the 1991 consent without complying with condition 2 having been withdrawn), the council made the CPO and an inquiry into objections to it was held in September 1998. The order was promoted to enable the widening of the carriageway to a minimum of 5.5 metres, with 7 metre wide passing places and a 9 metre section at the bend immediately prior to the junction with Camp Road. At the inquiry the council in its statement of case said it considered that "Dimmer Lane is patently inadequate for the traffic using it and has been for some considerable time. Its inadequacies are giving rise to traffic conditions that can no longer be tolerated and to extensive encroachment on verges that the council has now recognised as being outside highway limits causing alleged damage to property". In his decision letter the inspector commented that "I am in no doubt that the County Council has a duty to make Dimmer Lane suitable for the ordinary traffic now using it" and "I accept the generally held view that something needs to be done now." The CPO was confirmed on 11 January 1999. Notices to treat and notices of entry were served on 6 September 1999, and entry was made on 23 September 1999. That date is the valuation date for the purposes of this reference.
9. It was agreed that the valuation falls to be assessed by arriving at the open market value of the extension land as enhanced by the ability to satisfy condition 2 at the date of entry, less the current use value of the land, which is agreed to be £327,000 (£2,531 per acre). The share of any ransom value, under the principle in Stokes v Cambridge Corpn (1961) 13 P & CR 77, attributable to the Snooks is 60% with the individual percentage shares between the parties split as to H A Snook 18%; M L Snook 16%; R H Snook 16% and G A Snook and J A Petheram 10%.
10. At the valuation date, Wyvern owned the whole of the existing tip and the extension land, with the exception of a small area in the middle of the extension land that was owned by the Blackmoor Vale Hunt. They subsequently acquired this land. They had acquired 94.27 acres of agricultural land forming part of the extension area from the Trott family on 12 July 1996. The consideration was £675,000 plus a transfer to the Trott family of additional agricultural land. Also in 1996 7.48 acres of land, required for the leachate treatment works, was acquired from a Mr Boyer for approximately £9,550 per acre.
11. At the valuation date Wyvern operated three other landfill sites within the county, namely Williton, Poole and Walpole Drove tips. Inputs into the Dimmer Tip in the years preceding the date at which tipping on the extension land began were:

1993/94 95,575 tes

1994/95 93,776 tes

1995/96 123,676 tes

1996/97 142,508 tes

1997/98 133,705 tes

1998/99 178,075 tes

1999/2000 199,932 tes

2000/01 190,758 tes

Wyvern's principal customer was Somerset County Council, under a 10 year contract made in 1992. This contract was extended 12 days after the valuation date, on 6 October 1999, for a further 5 years. The fact the contract had not been formally renewed at the valuation date had no impact upon the value of the land and there was no reason to suppose that the contract would not be renewed again or further extended prior to its expiry in August 2007. Tipping on the extension land commenced in November 2001 following the construction of the necessary cells and infrastructure in accordance with the requirements of the Waste Management Licence and environmental objectives at a cost of approximately £1.6 million.

Claimants' valuation

12. For the claimant Mr Alun Alesbury called Andrew Philip Sedgley Crawford MRICS. Mr Crawford is a chartered surveyor in practice on his own account and for the past 15 years has specialised in valuation, compensation and planning matters on mineral and waste management company properties throughout the UK and overseas. He is chairman of the Minerals and Waste Management Faculty of the RICS and is also a member of the Institute of Quarrying.
13. Mr Crawford adopted a residual valuation. He rejected the approach of the council's valuer, which relied on prices paid for land for parts of landfill sites. Such prices did not reflect the true value of such land to the operator. In reality, he said, that value would be very much higher than the sum of the constituent parts (or building blocks) being acquired in the land assembly process. He said that this was exactly the same as an office block built on a piece of land having a higher value than the land upon which it sits. He noted two Lands Tribunal cases in particular (Blue Circle Industries Plc v West Midlands County Council [1989] RVR 34 and Haddon v Black Country Development Corporation [1993] RVR 93) which, he said, established support for the valuation of such a facility on the basis of profits derived from potential revenue and costs. Mr Crawford's valuation is set out in Appendix 1. An appropriate percentage of the value so obtained was then to be taken as the amount of the ransom that would have to be paid to the landowner whose land held the key to the realisation of that value.
14. We will note later the parameters on which Mr Crawford based his valuation. Taking account of the capacity of the tip, the annual inputs in tonnes and the average profit per tonne and allowing for interest, the valuation gave a present value of £12,906,901, from which Mr Crawford deducted 30% in accordance with Haddon to reflect risk. He then deducted from the result (£9,034,831) an amount to reflect the prospective cost of acquiring the small part of the extension land that at the valuation date was in the ownership of the Blackmoor Vale Hunt. This gave as the value that would be released by the construction of the widened highway access £8,750,000. From this there had to be deducted the agricultural value of the extension land, and the net development value then became £8,400,000.
15. As far as the ransom percentage was concerned Mr Crawford said that the claimants were in such a strong bargaining position that they could demand a ransom share of at least 50%. Without the road widening, the tip could not be operated in accordance with the 1991 permission, which extended to the whole site, including some over-tipping on the existing landfill area. With the tip being virtually full at the valuation date of 23 September 1999, it would be necessary to implement the permission straightaway, even though it was an agreed fact that tipping in the extension land did not commence until 2001. Apart from the ongoing negotiations for the acquisition of the Hunt land, a small and far from critical proportion of the extension land, all the extension land had been acquired and the development could proceed. Other sites in Somerset were rapidly filling up and due to close, and with the demand for space continuing unabated, the importance of getting the extension land ready for the acceptance of waste could not, he said, be overstated. As the Parker loop scheme was unworkable and there were no other viable alternatives for creating a satisfactory access to the extended tip, there could be no question as to the strength of the ransomers' position, and that must be reflected in the proportion of the profits that the prospective, or hypothetical, purchaser would be prepared to pay. Taking, therefore, 50% of the net development value of the tip gave an amount of £4,200,000, to which the agreed percentage shares of the Snook interests fell to be applied.

Acquiring authority's valuation

16. For the council Mr Michael Humphries QC called David Thaddeus FRICS, a chartered surveyor and a partner in Matthews & Son of London WC1. He has over 20 years experience in the profession and holds a diploma in minerals surveying. He specialises in the valuation of minerals and waste management properties.
17. Mr Thaddeus said that, on the basis that it was acknowledged that in the circumstances of this case the claimants would be entitled to a share of any ransom value attaching to the land, he had been instructed to provide a valuation of the extension land only. On advice he treated condition 2 of the 1991 planning permission as applying only to the extension land. Although the permission was initially implemented in 1996 with the start of preparatory works (including the diversion of Back Brook), tipping did not actually begin on the extension land until November 2001. Thus, he thought, condition 2 only took effect on that date, and it was necessary, therefore, for any value of the extension land at the valuation date to be deferred. Mr Thaddeus said that in his opinion there would need to be, in addition to that 2 year deferment, a further 9 months before the full value could be realised and any profits started to flow, because of the time it would take for the stipulations required by the waste management licence to be implemented.
18. Mr Thaddeus provided valuations on four different bases. His first approach, and that upon which the council principally relied, was by reference to land transactions both in connection with the site assembly of the extension land and elsewhere in the county. He said that the valuation of landfill sites and other wasting assets was essentially similar to the valuation of other land in that it consisted of the analysis of open market transactions, and the application of that evidence to the subject property. In his view, the acquisition of the Trott land, at £9,575 per acre almost 3 years before the valuation date, provided an excellent comparable and gave a very reliable indication of the value, on a per acre basis, of the extension land. That land comprised 94.27 acres of agricultural land, all of which lay in the consented area. The consideration was £675,000 plus a transfer to the Trotts of several parcels of land in the ownership of the council valued by the parties to the transaction at £225,000, making a total of £900,000. Both parties, he said, had been professionally represented by chartered surveyors, and there had, in his view, been little movement in land values in the 2 years and 10 months between the date of that transaction and the valuation date.
19. The acquisition of three parcels of land in connection with the proposed extension of the council's Walpole Drove site (which was operated in a very similar way to Dimmer Tip and was also a land-raising, rather than land-filling, site) provided further support. The parcels ranged from 4.42 to 39.63 acres and the acquisitions, at dates close to the valuation date, were at agricultural land values with an uplift on the grant of planning permission. The agreements analysed at between £7,000 and £7,250 per acre. Taken with the Trott transaction these comparables provided, Mr Thaddeus said, a weight of evidence in support of values between £7,000 and £10,000 per acre, and he adopted a figure of £9,550 to give a value for the 121.03 acres acquired for the extension land of £1,155,836 – say £1,155,000. He said that he derived further support from a without prejudice offer made by agents for the Snook family on 21 August 1995 to sell their interests for a consideration consisting of an initial payment, an annual payment and royalties. This analysed, said Mr Thaddeus, at £154,908; and, brought to September 1999 values, and assuming an overall ransom value of 25% and the Snook family's 60% share of this, it gave a value for the extension land of £1,140,000.
20. Mr Thaddeus's second valuation, on a residual basis, amounted to £1,133,000. We set this out in Appendix 2. It comprised a capitalisation of the anticipated annual profit achievable from the extension land derived from an analysis of Wyvern's management accounts. Mr Thaddeus explained the inputs that he had used (which we consider in more detail below) and in this version he had adopted an all-in yield of 24% and no end allowance.
21. His third valuation (see Appendix 3), using the same inputs as the second, adopted the approach used in Haddon, by taking a lower initial yield (of 13%) and including an end allowance for risk of 50 per cent. This valuation amounted to £1,115,000 and was, he said, equivalent to a 24% yield where no end allowance was used. Mr Thaddeus's fourth valuation (using the received basis for total extinguishment valuations) simply used a multiplier of 2.5 times projected annual profits and was £1,100,000.
22. Valuation evidence on the ransom percentage was given by Colin Smith FRICS IRRV, a chartered surveyor with 30 years experience in compulsory purchase and compensation matters and a partner in Bruton Knowles based in Gloucester. In producing his report, which dealt specifically with the issue of ransom percentages, he said he had seen, and relied upon, the waste disposal site valuation produced by Mr Thaddeus and the highways report produced by Mr Parker. Applying the principle in Stokes v Cambridge he said that the amount of the enhanced value that Wyvern would be prepared to pay would be between 25 and 50 per cent, depending upon its perception of the problem.
23. Mr Smith said that by the valuation date it had become abundantly clear that the general situation in Dimmer Lane had become intolerable and that it was inevitable that the council, as highway authority, would have to do something to improve matters. As a result, in the no-scheme world, the value to Wyvern of the land required for the road widening would have decreased in direct proportion to their perception of the likelihood that, acting as highway authority, the council would have to take responsibility for the road widening. In other words they would temper the percentage that they were prepared to offer to reflect the certainty that, if they waited, the council would solve the problem for them.
24. Mr Smith also said that whilst he accepted that the Parker loop was not a viable solution in the long term, if the percentage demanded by the claimants was so high that the potential profitability of the extension land was called into question, Wyvern would walk away from the negotiations and would have to find another solution. However, on the hypothesis that a deal was to be done, he said in his report that a 25% ransom percentage was appropriate. Following later meetings between the experts, including the valuer acting for the Targetts, he amended that opinion to 30%. On the basis of Mr Thaddeus's principal valuation at £1,155,000, less the agreed existing use value of the extension land, £327,000, the sum that represented 30% of the increase in value was £248,400. This sum then fell to be divided between the claimants in the proportions that had been agreed with their valuers.

Issues

25. The issues between the parties are these:

(a) Condition 2. Whether, properly interpreted, this required that the highway improvements be completed before any tipping under the 1991 permission took place or whether it was only tipping on the extension land that had to await the completion of the works; and, if the former, the likelihood of enforcement action being taken against tipping on the existing tip under the 1991 permission.

(b) Valuation method. Whether the development value of the extension land is properly to be assessed by reference to comparable transactions or by a residual valuation based on prospective profits.

(c) Development value: comparables. If development value is to be assessed by reference to comparables, how the comparable evidence is properly to be used and the value that results from its use.

(d) Development value: residual method. The inputs into such a valuation and the value derived from them.

(e) Highways. Whether, in the absence of the scheme, the highway authority would have carried out the improvement to Dimmer Lane; and whether the Parker loop would have been seen by the parties as a potential alternative.

(f) Ransom percentage. The proportion of the net development value attributable to the interests of those whose land was essential to the Dimmer Lane improvement.

We will take these issues in turn.

Condition 2

26. Condition 2 of the 1991 planning permission, as we have already noted, required that the Dimmer Lane highway improvement must be completed and open to traffic "Before any tipping takes place on the site hereby permitted." The permission permitted tipping to take place on an area of 121 acres adjoining the existing tip, but it also permitted additional tipping to take place on the existing tip itself. Condition 9 provided that: "The final contours of the site hereby permitted shall accord entirely with those shown on drawing J/175/15/0;" and the drawing shows in section, identified by hatching, additional tipping on the existing site. The claimants contend that condition 2 applies to both the extension area and to the existing tip. The council say that, properly construed, the condition only applies to the extension area, and that, even if that is wrong, the planning authority would not have taken enforcement action to prevent tipping continuing on the existing tip before the completion of the Dimmer Lane improvement.
27. The significance of the issue is that at the date of valuation very little void space on the existing tip was left to Wyvern. Calculations put to Mr Thaddeus in cross-examination showed that there was probably sufficient for 120,000 tes at the beginning of July 1999 (which appears to us to be the date, rather than the beginning of April, by reference to which annual calculations were made). If Wyvern would have had to satisfy condition 2 before tipping on the existing tip under the 1991 permission, they would evidently have needed urgently to acquire the subject land at the valuation date, September 1999. On the other hand, if they could continue tipping on the existing tip, by implementing the 1991 permission in advance of the Dimmer Road improvement, the pressure on them would be less. Mr Thaddeus estimated that void space for 230,000 tes was available on the existing tip under the 1993 permission; and in any event it is agreed that tipping on the extension area did not start until November 2001. Mr Thaddeus therefore made an allowance for deferment in calculating the value of the 1991 permission that was dependent on the satisfaction of condition 2.
28. In our judgment the construction put on condition 2 by the claimants is the right one. The reference to "the site hereby permitted" is a reference to both the existing tip and the extension area. The permission was for development consisting of "Alterations and extensions to existing landfill site." Condition 9, which dictated the final contours of "the site hereby permitted" clearly relates to both the existing tip and the extended area. Condition 7, which deals with hours of tipping on "the site hereby permitted" must also relate to the totality of the site. The same goes for Condition 10, dealing with the restoration and after-use of "the site".
29. Having said this, we can see that it may have been, or may principally have been, the concern of the council that the Dimmer Lane improvement should be open to traffic before the extension area was started. There are certain other conditions (for example, condition 4, dealing with the diversion of the Back Brook) which appear to be specifically concerned with the extension area, even though they bite on "the development" or "the site". In our view, it is unlikely that the council would have been concerned to enforce condition 2 in relation to the existing site. Moreover, enforcement proceedings would inevitably have been uncertain in their outcome, and, in view of the time that they would take to complete and the short period of tipping on the existing tip, it is unlikely, we think, that the council would have taken enforcement action in relation to the existing tip. Finally, it is in the highest degree unlikely in our view that the planning authority would have served a stop notice, in the light of the argument on the construction of the condition, since failure on this point would have made them liable to pay compensation. With all these considerations in mind we think that in the hypothetical negotiations both parties would have discounted the possibility that the council might seek to enforce condition 2 before tipping started on the extension area. Nevertheless it is also the case that, on Mr Thaddeus's figures, there was only about 18 months' of void space still available on the existing tip at an annual tipping rate of 200,000 tes. Given the need to complete the works, we think that both parties would in reality have approached the negotiations as though Wyvern's need was immediate.

Valuation method

30. The Tribunal has made clear on a number of occasions that in valuing land for the purposes of assessing compensation a valuation based on the residual method, or one that is derived from an assessment of the profitability of the land, is only to be adopted in the absence of some more reliable method. The reason for this (see the classical explanation by Mr R C Walmsley FRICS in Clinker and Ash Ltd v Southern Gas Board (1967) 18 P & CR 372 at 377-379) is that, in contrast to the situation where the method is used by a vendor or a purchaser in prospect of an actual transaction, there is no external sanction facing the valuer who, for the purposes of an arbitration, produces what is a calculation of potential profit made in vacuo. The potentially wide range of plausible assumptions that may be made as to the inputs in such a valuation and the wide variations in the final result that quite small differences in these assumptions may make means that it is in general an unreliable valuation method. In the present case the proportionate difference between the parties' assessments of the net development value of the extension land is not untypical. The claimant's figure is £8,400,000; the council's is £806,000 (Mr Thaddeus's valuation 2, £1,133,000, minus existing use value, £327,000). Evidence of comparable transactions will thus always be preferred where it can be used, through the exercise of valuation judgment, to reach the value of the land in question.
31. Both valuers seek, as the first step in the valuation of the claimants' interests, to establish the net development value of the extension land. In July 1996, for the purpose of bringing the whole of this land into their ownership, Wyvern purchased 94.27 acres of it from the Trotts. As we shall say, the price paid for this land in the circumstances in which it was bought appears to us to constitute good evidence from which the net development value of the extension land at the valuation date can be derived. Without the Trott land no tipping on the extension land could have taken place, and there was no other land which, as at July 1996, was essential for this purpose. There is, in our judgment, therefore, no need to resort to a valuation based on an assessment of the potential profitability of the land.

Development value: comparables

32. We agree with Mr Thaddeus that the Trott transaction is an excellent comparable. From it (as well as other transactions, to which we will refer) he derived a price per acre which he then applied to the total area of the extension land. We disagree with this way in which he uses the comparable evidence. We can see no reason why the amount per acre paid for the Trott land should be taken as representing the value per acre of the extension land as a whole. The negotiations between Wyvern and the Trotts in July 1996 were between one party, Wyvern, that owned the existing tip and 25 acres of the extension land and another party, the Trotts, who owned all the rest of the extension land that was essential if the tipping was to take place. It was envisaged at that time that the Dimmer Lane problem would be solved by the highway authority (as Mr Crawford, cross-examined by Mr Humphries, accepted). The Boyer land (7.28 acres) was to be acquired for the leachate treatment works, but there is nothing to suggest that this was the only land on which a leachate works could have been sited so that, in consequence, the land was vital to the tip extension. The price later agreed for it confirms this. The Hunt land (1.295 acres) was not vital for the extension development. Failure to acquire it would simply result in the loss of tipping volume (165,000 tes according to Mr Crawford, 330,000 tes according to Mr Thaddeus). The Trott land, however, was vital to Wyvern if the extension land was to be developed.
33. We do not regard the total area of the Trott land required by Wyvern nor the amount of land owned by Wyvern in addition to the existing tip to be a matter of much significance in view of the negotiating position of the parties. What mattered was on the one hand, that the Trott land could only be developed as an extension of the existing tip, and on the other hand, that, without the Trott land, none of the extension land could be developed and that no ransom situation arose in relation to either the Boyer land or the Hunt land. In such a situation, in this marriage value negotiation, what proportion of the total development value that was in practice dependent on the satisfaction of condition 2 was attributable to the Trott land? We think that the important factors in July 1996 were these. The only possible purchaser of the land at that date was Wyvern, who needed it for the extension of their existing tip. The need for Wyvern to use the extension land was still, however, a number of years away, and any price agreed would have to take account of this deferment of the realisation of the development value. In addition the parties would have recognised that Wyvern, operating as it did other tips as well, had at that stage a significant degree of control over when tipping on the extension land should start. There were moreover uncertainties about the rate of tipping of which the parties, well informed as they were, would have been aware. In July 1992 the Poyntz Wright calculations of annual tipping volumes had assumed that Dulcote tip would close in mid-1993 (so that Dimmer volumes would increase from 43,000 cu m to 88,000 cu m in the year 1993-4) and that Odcombe tip would close in mid-1995, increasing the Dimmer volume to 160,000 cu m in 1995-6. In the event Dulcote did not close until 1997, and Odcombe closed in 1994. In the year to July 1996 the tipped volume was not the 160,000 cu m, 176,000 tes, previously anticipated but 123,676 tes. The parties would have been conscious that prediction of future tipping volumes was an uncertain matter. Furthermore in July 1996 there was the imminent start of landfill tax, a fiscal measure designed to reduce the volumes of waste disposed to landfill sites. Under section 40 of the Finance Act 1996, tax became chargeable at the rate of £7 per tonne on disposals made on or after 1 October 1996. This would undoubtedly have added to the uncertainties in July of that year.
34. In our view these uncertainties would inevitably have impinged more strongly on the vendors than on Wyvern. The vendors had a particular interest in achieving a sale. Unless their land could be sold for tipping it would be left in their hands with agricultural value only. Wyvern were in practice the only potential purchasers. Wyvern, as the owners of the existing tip and part of the extension land, and the Trotts together owned the development value of the extension land (except for the small, and inessential, Hunt parcel), and no part of that value could be realised without agreement between them. The question is how they would have divided that value between them. We do not think that they would have divided it equally. The combination of the uncertainties, deferment and Wyvern's control over the tipping operations would, we believe, have led to an agreement on the vendors' part at substantially less than 50% of the development value. An additional factor also, we think, would clearly have come into play. Part of the deal was that 116.4 acres of nearby agricultural land would be transferred to the Trotts, in effect replacing the 94.27 acres that they were selling to Wyvern. They would have realised that unless they reached agreement at that time there was no guarantee that the replacement land would remain available for transfer to them as the result of some later negotiation. Taking all these matters into account, we consider that, professionally advised as they were, they would have settled for 30%, and that the price they achieved should be treated as reflecting this.
35. The total consideration for the Trott land was £900,000. This was made up of a cash payment of £675,000 and the transfer to the Trotts of the 116.4 acres, which the parties to the transaction agreed to be worth £225,000. Although Mr Alesbury suggested that the £225,000 was likely to be an under-valuation, we have no evidence to show that this was the case. Accordingly we treat the £900,000 as the true worth of the transaction. The land sold was 94.27 acres. At the agricultural value of the extension land agreed by the parties to the present proceedings, £2,531 per acre, this land would have been worth at the valuation date £238,597. We are not aware that agricultural land prices were significantly different in July 1996, and we therefore adopt this figure as the agricultural value of the land sold at that date. If it is deducted from the £900,000, it gives the figure of £661,403 as the Trotts' 30% share of the net development value of the land in their ownership, which would therefore be £2,204,677. We think that this amount represents the net development value of the land in their ownership as at the valuation date, reflecting the small amount of deferment at that date of the realisation of that value.
36. Properly evaluated, the Trott transaction does, we believe, show both the claimants' and the councils' assessments of the net development value of the extension land to be implausible. Mr Crawford assessed the net development value of the extension land at £8,400,000 with the Hunt land yet to be acquired. With the amount attributable to the Boyer land deducted from it (say £47,500 to reflect the amount paid for it less its existing use value), the figure becomes £8,353,000. The Trotts' share of this (£661,403) would represent a mere 7.9%, which we regard as a wholly implausible percentage for them to have settled at. On the other hand Mr Thaddeus's valuation of £1,155,000, less the existing use value of £327,000, represents a net development value of £848,000 for the whole of the extension land, including the Hunt land but excluding the Boyer land. If £197,000 for the net development value of the Hunt land (£200,000, less existing use value, say £3,000) is deducted from this, to arrive at the net development value of the land owned by Wyvern and the Trotts at the date of the Trott transaction, this figure becomes £651,000, which would imply that Wyvern actually paid more for the Trott land than the total amount of net development value attributable to Wyvern and the Trotts. Mr Thaddeus did say that he thought that the amount agreed for the Hunt land included an element of ransom value. We do not agree with this: but, even if the cost of acquiring the Hunt land is disregarded entirely, so that the net development value is taken to be £848,000, the Trotts' share would represent 79.9%, which, in the light of the factors we have discussed above, would in our view be wholly implausible.
37. We do in fact think that the amount agreed for the purchase of the Hunt land lends support to our analysis of the net development value. Mr Crawford took as the tipping volume that would be lost to Wyvern if they did not acquire the Hunt land the amount that could be tipped on the Hunt land itself (165,000 tes). Mr Thaddeus said that the Environment Agency would not have allowed an enclosed pocket like this within the tip and would have insisted that it be included as part of a re-entrant from the northerly boundary of the tip. He produced an indicative design for such an arrangement, and he estimated that the amount of tipping that would be lost as a result would be 330,000 tes. We think that a negotiation between Wyvern and the Hunt would have focussed on the possible amount of tipping that would be lost if the Hunt land was not acquired, with Wyvern contending for a lower volume and the vendors for a higher volume and advancing the same arguments as Mr Crawford and Mr Thaddeus respectively. Agreement would have been reached at some intermediate figure. Taking the total tipping capacity of the extension as 2.665 m tes and dividing this into the net development value we have deduced from the Trott transaction (£2,204,677) gives a value per tonne of £0.827. The amount agreed for the purchase of the Hunt land was £200,000, representing a net development value, allowing for 1.295 acres at £2,521 per acre, of £196,735, which at £0.827 per tonne represents 237,890 tes. This is close to the mid-point between the two valuers' figures, 247,500 tes. Analysed in this way, we think that the Hunt transaction is consistent with and supports the net development value we have derived from the Trott transaction.
38. We would add that we derive no assistance from the Walpole Drove transactions relied on by Mr Thaddeus. We cannot accept that there is a standard price range per acre at which all tipping land in north Somerset can be bought and sold, regardless of the sort of factors that we find to have applied in the case of the Trott transaction.

Development value: residual method

39. As we have said, there is no need to resort to a residual valuation in this case. However, both parties have tendered residual valuations and we think it appropriate to do a calculation of our own to demonstrate that the valuation we have undertaken on the basis of the transaction evidence can be reconciled with plausible assumptions on the constituent factors upon which such a valuation has to be based. We adopt Mr Thaddeus's spreadsheet model for the purpose this exercise, and we say what parameters we adopt and why we consider them to be plausible.
40. There was no significant difference between the parties on the capacity of the extension land. Mr Crawford had adopted 2,650,000 tes, Mr Thaddeus 2,665,000 tes. We adopt the higher figure. The capacity that would be sterilised were Wyvern unable to acquire the Hunt land would be, according to Mr Crawford, 165,000 tes and, according to Mr Thaddeus, 330,000 tes. In our view, Wyvern would have sought in their negotiations with the Environment Agency to minimise the volume that would be lost. Accepting Mr Thaddeus's argument that leaving a hole in the middle of the site would be environmentally unacceptable, we think it not unreasonable to anticipate that a scheme would be devised which satisfied the Agency in terms of all the technical problems that might be advanced. Hence the, volumes lost would be less than Mr Thaddeus's figure but more than Mr Crawford's. We adopt the figure of 238,000 tes, which is the rounded up figure we derived above when discussing the Hunt land transaction.
41. As to the annual rate of fill, it was agreed that the rate would increase (from the levels of between 190,000 and 200,000 tes in 1999/00 and 2000/01) to an eventual maximum annual input of 300,000 tes. However, the year by which that level would be reached was in dispute, Mr Crawford estimating that it would be 2003, and Mr Thaddeus adopting stepped increases which also reflected the anticipated dates of closure of the other Wyvern tips. Mr Thaddeus's figures appeared to us to be much more representative of the likely inputs, based upon the tipping tonnages that had been achieved up to 2001. After adopting an apportioned figure of 30,000 tes for the remainder of the financial year from November 2001 (the date upon which it was agreed tipping on the extension land commenced), he estimated 180,000 tes pa for 2002 to 2005, rising to 220,000 tes for 1 year, and eventually reaching 300,000 tes by 2007. In our view, Mr Crawford's estimates were optimistic not only in the light of historical inputs but also due to the environmental pressures to encourage more recycling that were, by 2001 really beginning to have an effect. We therefore adopt Mr Thaddeus's figures as the most appropriate, but the life of the tip becomes shortened due to the sterilisation of 238,000 tes as referred to above.
42. As to revenue and costs, Mr Crawford analysed these heads in detail to arrive at his figures. Mr Thaddeus went straight to profit in his valuation, analysing Wyvern's average profits for the 3 years immediately preceding the valuation date, and making adjustments to give his opinion of anticipated future profit from the extension land. Mr Crawford's anticipated revenue was £13.50 per tonne. Mr Thaddeus said that he did not agree with that figure, preferring to calculate the gate price by simply dividing the turnover achieved in 1999/00 by the tipped tonnage to give £13.01. With little between them we consider it appropriate to adopt a middle-range figure of £13.25.
43. There was a much wider divergence of opinion on the costs. Mr Crawford adopted a figure of £5.50 per tonne, which he said was based upon his wide knowledge of the waste management industry and the costs incurred by other national operators, and upon the figures extrapolated from Wyvern's accounts. These showed costs in the order of £6 to £7 per tonne, but they included depreciation, which was effectively a royalty and should not, therefore, be included for this purpose. If that were removed, costs become £5 to £6 and he had taken a middle figure (which did include depreciation on the advance works). However, although he accepted in cross-examination that costs were likely to be higher in the extension land, due to the increased costs of creating the required cell structure, he said he thought those would be passed on to the customer.
44. Mr Thaddeus's costs amounted to £10.13 per tonne, but that figure was not directly derived from Wyvern's costs. He had taken Wyvern's profits of £6.40 per tonne, and reduced them by £3.52 to £2.88 to take account of the considerable additional costs that he anticipated would be incurred in operating the extension site. This included the cost of constructing the cells (adjusted from Wyvern's own figures), additional environmental costs, depreciation of capital works not already depreciated in the accounts, and the cost of the road widening. He did not accept that those additional costs would be recoverable.
45. In our view, Mr Thaddeus was right to contemplate that costs in connection with the tip extension would be higher than they had previously been, although we accept that a percentage, but not all, could possibly be recovered by passing them on. A reasonable assumption, in our view, would be to adjust Wyvern's historical profit downwards by £3.00 per tonne, to leave an anticipated profit of £3.40. This gives costs of £9.85, somewhat less than Mr Thaddeus's estimate, but significantly more than Mr Crawford's figures, which do not, in our view, adequately reflect the additional costs.
46. With regard to yield, Mr Crawford said that in his view, from his experience and analysis of other transactions, and the demand for landfill sites at the valuation date, a return of 9.5% for the first two years and 10% for the remainder was appropriate with an end-allowance of 30% to reflect risk. That percentage was in line with the decision in Haddon. He did not agree with Mr Thaddeus's contention for 24% (per his second valuation), or his argument that this was a high-risk business, that the site was a wasting asset and that the occupier would have difficulty raising finance. Mr Thaddeus accepted in cross-examination that lenders do indeed regularly finance operations of this nature. He used a return of 13% and an end allowance of 50% in his alternative valuation on the residual basis this being, he said, equivalent to an all in yield of 24%.
47. We accept Mr Crawford's opinion that, the adoption of a 24% all-in yield is somewhat pessimistic bearing in mind the circumstances here, particularly since this is an established and apparently well-run tip business. However, Mr Crawford's figures are, in our view, unduly optimistic and do not sufficiently reflect the risks that there are. We consider a more plausible all-in rate to be 20%, and we adopt this.
48. This leaves the question of deferment and we have already said that the parties would, in our opinion, treat the need as immediate. However, for the purposes of this valuation method, we consider it appropriate to allow one year for the construction of the first section of cells (not all of them, as construction of further cell areas could, of course, continue after tipping on the extension land had commenced).
49. The resultant valuation, which is at Appendix 4, becomes £2,660,000. If £324,000 is deducted from this to reflect the existing use value of the extension area less the Hunt land, the resulting figure, £2,336,000, is close to the net development value we have derived from the transaction evidence. We are satisfied that, on the evidence, the figures that we have adopted in this exercise are plausible. However, as we have already said, although we recognise that within the range of plausibility different assumptions could be made that would produce substantially different outcomes both above and below our end result. That, as we have said above, is why we prefer a valuation based upon comparable transactions.

Highways

50. The case for the claimants was that, since condition 2 required the carrying out of the highway improvements, this made Wyvern's ability to implement the 1991 permission completely dependent on their being able to acquire the land needed for the widening of Dimmer Lane. The council said that there was no such complete dependence because, if Wyvern were not going to purchase the highway improvement land, it was very likely that the highway authority would take steps themselves to improve existing conditions along Dimmer Lane. Alternatively, the highway authority could have carried out a one-way entrance and exist scheme using an unwidened Dimmer Lane and other lanes. This alternative scheme, devised by the council's highway witness, Mr Parker, was the Parker loop. The existence of these two alternatives would have influenced the hypothetical negotiations for the CPO land, the council said, so that the landowners would have settled for a smaller percentage of the tip development value as their ransom payment.
51. The first alternative, the widening of Dimmer Lane in the same way as that proposed, reflected the need to deal with the existing conditions in Dimmer Lane. It would have been necessary, so the council said, to carry out the widening works in order to deal with conditions that, at the valuation date, were unacceptable and would have continued to be unacceptable even in the absence of tipping on the extension land. Mr Humphries referred to Batchelor v Kent County Council (1988) P & CR 320, (1989) 59 P & CR 357, (1991) 31 RVR 329, and Wards Construction (Medway) Ltd v Barclays Bank plc (1994) 68 P & CR 391 (which arose out of the same facts), where the need for highway improvements in the absence of the development of the inhibited land was accepted as properly taken into account when determining the ransom value of the subject land. He placed reliance on the conclusion of the inspector in his report following the CPO inquiry accepting "the generally held view that something needs to be done now. The various presentations of likely traffic flows and the life expectancy of the existing tip do not materially alter that argument."
52. Evidence for the claimants was given by Colin White BEng (Hons) MCIT MIHT, an associate with the design department of Mayer Brown, with responsibility for the design of new and improved highways. He said that he had been involved in the design and construction of highways for 17 years. He had been instructed to provide advice to the Snooks on their claim for compensation arising out of the CPO. Mr White said that the Parker loop could not be constructed in accordance with design standards or operate safely without improvements to Dimmer Lane and other roads in the loop. For this reason he did not consider that the Parker loop would have been accepted by the highway authority as an alternative to the Dimmer Lane improvement scheme identified by condition 2 of the 1991 planning permission. No further options for access to the landfill site were available which would avoid the need for the purchase of third party land, and construction costs for an alternative scheme would have been significantly greater than the CPO scheme. Thus the only realistic scheme providing acceptable access was a Dimmer Lane improvement scheme.
53. In the event that the 1991 permission was not going to be implemented, the residual amount of traffic using Dimmer Lane after the end of tipping would not, Mr White said, justify the improvement scheme. The inspector's report following the CPO inquiry recorded that county council's statement that a traffic survey carried out in 1998 showed that the average weekday traffic flow was 532 vehicles, including 223 HGVs and that practically all the HGVs and a substantial proportion of other vehicles were travelling to and from the waste tip. The council's statement for the inquiry had stated that in June 1998 the number of refuse vehicles movements generated by the tip were stated by Wyvern to be about 200 per day. Thus, Mr White said, the total number of HGV movements generated by other uses in the vicinity of the tip was about 23.
54. Evidence for the council was given by Ian Richard McKellen Parker BSc Dip TE CEng MICE MCIT, a director of the Richard Parker Consultancy. Mr Parker had been instructed by the council after the land had been acquired and the Dimmer Lane improvements had been carried out, to advise whether, if the CPO had not been conferred, whether Dimmer Lane could have provided adequate highway facilities to serve existing uses and, if not, whether there were other arrangements or improvements utilising only highway land that could have been introduced to provide an improved facility.
55. Mr Parker said that in the absence of the CPO being confirmed he considered that the only practical alternative would have been to introduce a one-way system from the B3153 along Dimmer Lane and other lanes to Blackworthy Lane and then back onto the B3153. It would add about 1 km to the route. Certain sections of the route would be restricted to one-way operation, and it would be necessary to carry out carriageway strengthening works and a number of passing bays. It would be desirable to install traffic lights at the bridge over the railway in Blackworthy Road.
56. In evidence that we consider to have been balanced and professional Mr Parker readily acknowledged the shortcomings of the suggested one-way loop. His view was that it was, however, acceptable in the absence of the Dimmer Lane improvement. He agreed that, if the land for the Dimmer Lane improvement had been available, Wyvern would not have been able to persuade the highway authority to adopt another solution. He said that if the tipping stopped there would still be many cars needing to use Dimmer Lane, and although 300 vehicles a day was not abnormal traffic for a country lane, Dimmer Lane was narrower than other lanes in the loop. He considered that the Parker loop would be acceptable for up to 100 HGV movements a day, and, if tipping stopped, it would be implemented as a lower cost solution with, for example, no surfacing works being carried out.
57. Although we note the expression of view by the inspector on which the council places reliance, the question that has to be asked is whether, in the absence of the tip extension, the council would have gone to the lengths of making a CPO for the highway improvement land in order to carry out the improvements at considerable cost and in a way that would unavoidably destroy substantial lengths of hedgerow. We do not think that they would have done. If the tip were not to be extended, the traffic associated with it (about 200 HGV movements a day) would have ceased to use Dimmer Lane within a period of about two years. Other uses at the tip could be expected to continue, but the traffic attributable to these was of the order of 300 vehicles per day, of which only a small number, perhaps 23 per day, were HGVs. The improvement works to Dimmer Lane would inevitably be destructive of its character as a country lane, with 1000 metres of hedgerow being removed and kerbing inserted alongside the carriageway. We do not think that the highway authority would have regarded the scheme as justified, taking account of these adverse effects, the short period during which the tip traffic would continue and the low level of the residual traffic.
58. The council's second alternative was the Parker loop. We do not consider that the highway authority would have regarded this as an acceptable solution, and indeed as we have said, Mr Parker was ready to acknowledge its shortcomings. We do not think that a one-way system, directing a substantial volume of heavy goods vehicles along narrow, winding country lanes would ever have gained acceptance. Having walked the route, we are in no doubt about its inadequacies. In the hypothetical negotiations the parties would not, in our view, have placed any weight on the possibility that the highway authority might implement the Parker loop scheme in order to deal with the tip extension traffic.
59. On the other hand, Mr Parker acknowledged that the loop scheme would have been more suitable for dealing with the much lower volume of traffic that there would have been in the absence of the tip extension. The possibility of such a scheme would, we think, have influenced the hypothetical negotiations only to the extent that it might have been seen as an additional reason for discounting the possible widening of Dimmer Lane if tipping was only going to continue for another two years.
60. Our conclusion, therefore, is that the parties in the hypothetical negotiations would have discounted entirely both the possibility that, in the absence of the tip extension, the highway authority might widen Dimmer Lane anyway and the possibility that they might implement the Parker loop scheme as an alternative solution to the problem of the tip extension traffic. The ransom payment would have been arrived at on the basis that there was no effective alternative to the Dimmer Lane scheme if the tip extension was to go ahead.

Dimmer Lane ransom percentage

61. The final matter is the percentage of the value locked up by condition 2 that would be attributable to the owners of the land required for the road. Both valuers approached the issue on the basis that an overall percentage should be arrived at for division between the landowners in proportions that the valuers had agreed. For the claimants Mr Crawford took 50% because the position of the ransomers was as strong as it could be. Wyvern needed the land and they needed it without delay. Without it they could not realise the value locked up by condition 2. In these circumstances buyer and seller would divide that value equally between themselves.
62. Evidence for the council on this matter was given Mr Smith. In his view there were a number of reasons why the ransomers would have achieved less than 50%, and he put the figure at 30%. A principal reason consisted of the highway alternatives – on the one hand the certainty (as he put it) that, if Wyvern waited, the highway authority would solve the problem for them by implementing the scheme, which was needed to deal with the unacceptable existing condition in Dimmer Lane, and, on the other hand, the prospect of the Parker loop scheme being implemented. We have concluded that the negotiating parties would have discounted entirely both these possibilities.
63. Mr Smith said that Wyvern did not have a monopoly on waste disposal sites within Somerset and would have been expecting to compete with other landfill operations whose costs would not have included the acquisition of a ransom strip. Moreover Wyvern's existing contracts would significantly limit their ability to pass on increased costs during those contracts, which beyond that period they would still have needed to compete with other sites. We are doubtful whether these are matters that go to the ransom percentage rather than to the development value of the tip itself. But we do not think in any event that they would in practice have limited the amount that Wyvern would have been willing to pay in order to realise the development value of the tip. We see no reason to think that Wyvern would have used up valuable space elsewhere, even if had been available to it, and incurred the additional transport costs of taking Dimmer waste elsewhere. Mr Smith suggested that Dimmer could be turned into a transfer station, but we do not regard this as realistic and we cannot in any event see that planning permission for such a use would have been granted without the imposition of a condition in the same terms as condition 2.
64. Finally, Mr Smith said that the multiplicity of ownership would have reduced the overall ransom percentage that Wyvern would have had to pay. We do not think that, since the individual proportions of the overall ransom percentage had been agreed, this remained a point on which Mr Smith could rely. It was envisaged that agreement would be reached with all of them at the same time. We can quite see that a developer, faced with a number of ransomers, might pay varying percentages to them, depending, for example, on the order in which negotiations took place, and there would always be one final ransomer to be dealt with. It does not seem to us, however, that a developer faced with a number of ransomers could necessarily expect to pay less in total for the ransom land than if he only had one party to negotiate with. We therefore do not see this as a reason for reducing the ransom percentage. We accordingly adopt 50%.

Claimants' entitlements

65. We assess the net development value of the extension land at £2,204,667. Fifty per cent of this, the amount attributable to the ransomers, is £1,102,338, which we round to £1,100,000; and 60% of this figure, the amount attributable to the Snook interests, is £660,000. At this point we should note the council's reliance on the August 1995 negotiations, in which the Snooks offered their interests to the council for a total amount that Mr Thaddeus analyses at £154,908. We do not think that this suggests that the figure we have reached for the value of their interests at the valuation date, September 1999, is wrong. In 1995 Wyvern owned part only of the tip. They had yet to acquire the Trott land, so that they did not have a site that was capable of development, and they had no early need to start tipping on the extension land. By July 1999, by contrast, they owned the land needed for development and their need to acquire the land for the highway improvement was effectively immediate.
66. The entitlements of the individual claimants are therefore as follows:

H A Snook (18% of £1,100,000) £198,000;

M L Snook (16% of £1,100,000) £176,000;

R H Snook (16% of £1,100,000) £176,000;

G A Snook and J A Petheram (10% of £1,100,000) £110,000.

67. The parties are now invited to make submissions as to costs. A letter relating to this accompanies this decision, which will not become final until the question of costs has been determined.

Dated 2 April 2004

George Bartlett QC, President

Paul R Francis FRICS

ACQ/219/2000

APPENDIX 1

Valuation of Extension Land at Dimmer Tip, Castle Cary

(Including Hunt Land)

by A P S Crawford MRICS MIQ

Annual Input (tonnes)	200,000
Average Profit per Tonne	£8
		£1,600,000
Y P 2 years @ 10%		1.74
		£ 2,776,860
Increased annual input (tonnes)	300,000
Average profit per tonne	£8
		£2,400,000
YP 7.5 years @ 10%		5.11
PV deferred 2 years @ 10%		0.83
			£10,130,042
Total			£12,906,901
Less Deduction for Risk (per Haddon)		30%	£ 3,872,070
Gross Value of Extension Land (Equivalent to £3.41 per tonne)			£ 9,034,831
Deduct Cost of Hunt Land
Overall Capacity Hunt Land (tonnes)	165,000
Average value per tonne	£3.41
		£562,546
Ransom Value at 50%			£ 281,273
			£ 8,753,558
Net Value of Dimmer Lane Extension Land – Say £ 8,750,000	Net Value of Dimmer Lane Extension Land – Say £ 8,750,000	Net Value of Dimmer Lane Extension Land – Say £ 8,750,000	Net Value of Dimmer Lane Extension Land – Say £ 8,750,000

														APPENDIX 2	APPENDIX 2
D Thaddeus FRICS - Valuation 2
	DISCOUNTED CASH FLOW - DIMMER TIP EXTENSION AREA
1	Year		2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	Totals
2	Input Tonnes		30000	180000	180000	180000	180000	220000	300000	300000	300000	300000	280000	215000	2665000
3	Existing Profit per tonne	6.40
	Less additional working & site
	costs & environmental costs over	.
4	& above existing site post 01	3.06
	Less Capital works not yet									.
5	depreciated	0.337
	(includes interest on advance works)
	Less cost of road
6	depreciated 12.4p/tonne	0.124
7	Total profit post 01		2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879
8	Total annual profit		86370	518220	518220	518220	518220	633380	863700	863700	863700	863700	806120	618985
9	PV Risk %		0.24	0.24	0.24	0.24	0.24	0.24	0.24	0.24	0.24	0.24	0.24	0.24
10	Years Deferment		2.75	3.75	4.75	5.75	6.75	7.75	8.75	9.75	10.75	11.75	12.75	13.75
11	PV		0.553	0.446	0.360	0.290	0.234	0.189	0.152	0.123	0.099	0.080	0.064	0.052
12	TOTALS		47803	231304	186535	150432	121316	119577	131499	106048	85522	68970	51913	32146	1333064
13	TOTAL				Total	1333064
14	Less cost of Hunt Land say				200000
15	total						1,133,064
						Say	1,133,000

												APPENDIX 3
D Thaddeus FRICS - Valuation 3
	DISCOUNTED CASH FLOW - DIMMER TIP EXTENSION AREA
1	Year		2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	Totals
2	Input Tonnes		30000	180000	180000	180000	180000	220000	300000	300000	300000	300000	265000	2435000
3	Existing Profit per tonne	6.40
	Less additional working & site
	costs & environmental costs over
4	& above existing site post 01	3.06
	Less Capital works not yet
5	depreciated	0.337
	(includes interest on advance works)
	Less cost of road
6	depreciated 12.4p/tonne	0.124
7	Total profit post 01		2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879	2.879
8	Total annual profit		86370	518220	518220	518220	518220	633380	863700	863700	863700	863700	762935
9	PV Risk %		0.13	0.13	0.13	0.13	0.13	0.13	0.13	0.13	0.13	0.13	0.13
10	Years Deferment		2.75	3.75	4.75	5.75	6.75	7.75	8.75	9.75	10.75	11.75	12.75
11	PV		0.71	0.63	0.56	0.50	0.44	0.39	0.34	0.30	0.27	0.24	0.21
12	TOTALS		61716	327695	289996	256633	227109	245644	296433	262330	232151	205443	160597	2565747
13	TOTAL				2565747
14	Less 50% for risk				1282873
15	less cost of Hunt Land				200000
16	TOTAL					1152566		SAY		1115000

Lands Tribunal Residual Calculation									APPENDIX 4
	DISCOUNTED CASH FLOW - DIMMER TIP EXTENSION AREA
1	Year		2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	Totals
2	Input Tonnes		30000	180000	180000	180000	180000	220000	300000	300000	300000	300000	257000		2427000
3	Existing Profit per tonne	6.40
	Less additional working & site
	costs & environmental costs over	.
4	& above existing site post 01	3.00
	including capital works not yet
	depreciated and cost of road									.
	widening
7	Total profit post 01		3.400	3.400	3.400	3.400	3.400	3.400	3.400	3.400	3.400	3.400	3.400
8	Total annual profit		102000	612000	612000	612000	612000	748000	1020000	1020000	1020000	1020000	873800
9	PV Risk %		0.20	0.20	0.20	0.20	0.20	0.20	0.20	0.20	0.20	0.20	0.20
10	Years Deferment		1.00	2.00	3.00	4.00	5.00	6.00	7.00	8.00	9.00	10.00	11.00
11	PV		0.833	0.694	0.579	0.482	0.402	0.335	0.279	0.233	0.194	0.162	0.135
12	TOTALS		85000	425000	354167	295139	245949	250504	284663	237219	197683	164736	117603		2657663
13	TOTAL				Total	2657663
						Say	2,660,000