England and Wales Lands Tribunal

[2004] EWLands ACQ_22_2002 (7 June 2004)

ACQ/22/2002

LANDS TRIBUNAL ACT 1949

COMPENSATION – Compulsory Purchase – 458m2 of grassland, formerly site of dwelling house – valuation of freehold – whether planning permission to be assumed for construction of new dwellinghouse – whether valuation to reflect hope of future planning consent – three sites within CPO acquired at very different prices per m2 – compensation of £750 awarded.

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN

DONALD FRASER SWIFT

Claimant

and

BARNSLEY METROPOLITAN

Acquiring

BOROUGH COUNCIL

Authority

Re:

Site of 1 Quarry House,

Near The Smithies,

Monk Bretton,

Barnsley.

Before: N J Rose FRICS

Sitting at Barnsley County Court

on 21 April 2004

Mrs Mary Swift for the Claimant with permission of the Tribunal

Martin Carter instructed by Mr A Prosdick, Borough Secretary, Barnsley MBC for the Acquiring Authority


 


DECISION

1. This is a reference to determine the compensation payable by Barnsley Metropolitan Borough Council ("the acquiring authority") to Mr Donald Fraser Swift ("the claimant") for the freehold interest in 458 m² (548 sq yd) of grassland, formerly the site of a dwellinghouse known as 1 Quarry House, Near The Smithies, Monk Bretton, Barnsley ("the subject property"). Mr Swift's property was compulsorily acquired under the Metropolitan Borough of Barnsley (Burton Bank, Barnsley) (Land Reclamation) Compulsory Purchase Order 1994 ("the CPO"), which was confirmed by the Secretary of State for the Environment on 9 May 1995. It forms part of Plot 2 on the CPO plan. Notice to treat and notice of entry were served on 9 January 1996 and the agreed valuation date is 29 January 1996. Although the matter was at one stage the subject of some dispute, Mr Carter, counsel for the acquiring authority, indicated at the hearing that the claimant's entitlement to the compensation determined by the Tribunal was no longer being challenged.
2. The valuation contended for by the claimant was £22,500 and the acquiring authority's figure was £750. The disparity between the two valuations is primarily due to the fact that the claimant has assumed planning permission for the construction of a single dwellinghouse, whereas the acquiring authority considers that there was no realistic prospect of any alternative beneficial use to that of the current open space.
3. The claimant was represented, with permission of the Tribunal, by his wife, Mrs Mary Swift. She called one expert witness, Mr P Simpson, BSc, MRICS, a director of Lancasters (1790) Limited, chartered surveyors of Barnsley. Mr Carter also called one expert witness, Mr D A Strafford, BSc, MRICS, sole principal of Karlis & Co, chartered surveyors and valuers of Morley, Leeds. I inspected the subject property and certain other properties cited as comparable evidence, accompanied by representatives of the parties, on 5 May 2004.
4. In the light of the evidence I find the following facts. The subject property originally formed the site of a substantial quarry manager's house and outbuildings, which were demolished around 1988-1990. It was accessible by motor vehicles along an unmade private road, leading from the west off Wakefield Road. It was also accessible from Burton Bank Road to the south east. The house was connected to the mains water supply and drainage was via a septic tank. There was no mains gas supply and electricity was provided by a generator used in connection with quarrying activities. The site now forms part of an expanse of steeply sloping open grass/scrubland in a prominent elevated position on the east side of the Dearne Valley, overlooking Barnsley town centre some 1.5 km to the south west. This land was the subject of coal mining on various occasions between the mid 1800s and 1964.
5. On 8 March 1996 an application for a certificate under section 17 of the Land Compensation Act 1961 was submitted to the acquiring authority on behalf of the claimant by Messrs William H Brown, surveyors and valuers in respect of all the land included in Plot 2 on the CPO plan. The uses suggested by that firm were "residential development … infilling and tipping of solid waste with the possibility of using the site for processing and reclaiming such waste … (and) some form of commercial use". On 9 May 1996 the acquiring authority issued a negative certificate in respect of all the proposed uses. The reasons given were as follows:

"1. The site forms part of an elevated, prominent, topographical feature overlooking the Dearne Valley and which remains substantially undeveloped. In the opinion of the Local Planning authority this site represents a significant townscape feature of important amenity value and should therefore remain undeveloped. The proposed development would, in the opinion of the Local Planning Authority, thereby diminish the character and appearance of Burton Bank to the detriment of visual amenity.

2. The processing, tipping and reclamation of waste materials would, in addition and in the opinion of the Local Planning Authority, by reason of its close proximity to dwellinghouses and the likely noise, general disturbance and dust generated therefrom, be detrimental to the residential amenities of the occupants of the dwellings."

6. As I have indicated, notwithstanding this certificate Mr Simpson prepared his valuation on the assumption that planning permission was available for the construction of a single dwellinghouse. He accepted that formal consent would be required for such development, but he considered that there were certain factors which indicated that such consent would be forthcoming. Firstly, planning permission was granted on 10 January 1967 to use land to the north or north-west of the subject property as a scrapyard. A further planning permission was granted in 1988 to remove quarry waste stockpiles. Mr Simpson said that the acquiring authority's file appeared to suggest that the latter planning permission would supersede the scrapyard consent and thereby remove the threat of such future use taking place on the site. The file also suggested, however, that the 1988 planning permission may have been open to legal challenge, because of doubt as to whether the certificate accompanying the application had been completed correctly and the appropriate notice served on the landowner. Accordingly, Mr Simpson considered that the scrapyard use had never been extinguished.
7. The second reason for assuming residential consent, said Mr Simpson, was that the acquiring authority's file on the section 17 certificate contained an internal memorandum dated 29 April 1996 from a Mr Dave Willis to Mr C Watson, the planning officer dealing with the application, which said:-

"I presume we will resist such a certificate. If we don't it will open the door to the applicant being able to claim residential or other value on the site. Estates have assumed the site will be POS valued in earmarking funds within the Capital Programme".

8. Mr Simpson said that the acquiring authority had a vested interest in refusing the application for a certificate of appropriate alternative development and had chosen to disregard the former uses of the site and the existing consent for scrapyard use.
9. In the course of cross-examination Mr Simpson said that he did not know 'categorically' when the scrapyard use ceased. He believed that the 1988 planning permission had been implemented and that it was in accordance with the relevant policy in the Barnsley Urban Area Local Plan, which had been adopted in 1986.
10. Mr Stratford did not agree with the planning assumptions made by Mr Simpson. He produced a copy of a letter dated 13 April 2004 which he had received from the acquiring authority's development control manager, Mr S J Normington, MRTPI, which included the following remarks:

"In my opinion you are quite right to assert that the former uses have been abandoned and that residential development for a single dwellinghouse would not be acceptable in land use planning terms.

The area including and surrounding plots 2 and 3 was the subject of a mineral extraction operation undertaken in approximately 1989 and granted planning permission on 19 August 1988 (ref No. B/88/0996/BA). A copy of this permission and application site boundary are attached for your information. This permission was implemented and the land restored to amenity use.

Notwithstanding the above the site has also been subject to two planning permissions for reclamation and use as public open space. The first of these was granted on 8 May 1980 (ref No.B/80/0067BA) and more recently on 13 August 1992 (ref No.B/92/0690/BA). In addition, the certificate of appropriate development for residential, commercial and the processing and tipping of waste materials was refused on 9 May 1996, a copy of which is enclosed. Against the above background I am firmly of the opinion that the permission for the former uses has been abandoned.

If a planning application were to be submitted for residential development on any part of the site it is my opinion that this would be recommended for refusal. The site is allocated as an Urban Green Space proposal on the Unitary Development Plan and policies GS34 and GS35 are relevant. These policies require that areas of urban green space remain open and undeveloped and any proposal likely to have a significant adverse effect on the function of the area will not normally be approved. In my opinion residential development, even for one dwelling, will have a significant adverse effect on the function of the area sufficient to sustain the refusal of planning permission. In addition such development would also have an adverse visual impact on the character and appearance of Burton Bank Quarry."

Mr Stafford's valuation was prepared on the assumption that the contents of Mr Normington's letter were accurate.

11. Mr Simpson's valuation assumes the grant of planning permission to construct a house on the subject property. The acquiring authority, in its capacity as local planning authority, has certified that planning consent would not have been granted for such use. No appeal was made against that decision, nor have any other steps been taken to have it set aside. In those circumstances I see no reason to take a view that is different from the opinion expressed by the authority in the certificate. I therefore reject Mr Simpson's assumption that residential planning consent was available on the valuation date.
12. I would add that the acquiring authority made available at the hearing copies of the replies that were received by the head of planning from various officials who had been consulted on the application for the section 17 certificate. With the exception of Mr Willis's unfortunate memorandum of 29 April 1996, none of those consulted suggested that the decision on the application should be influenced by the potential compensation implications. Mr Strafford said that Mr Willis was a member of the acquiring authority's planning department who at the time was mainly concerned with derelict land schemes. He considered that Mr Willis's memorandum reflected his own narrow viewpoint, not that of the planning officer responsible for issuing the certificate.
13. Mr Carter submitted that the contents of the certificate were entirely in accordance with planning policy as it stood in May 1996. In the light of the evidence, including the planning documents submitted with Mr Strafford's report, I accept that submission. I also find that the 1967 scrapyard planning consent had been abandoned by the time the 1988 permission was implemented. In those circumstances, I consider it unlikely that Mr Willis's comments had any significant influence on the acquiring authority's decision to issue the section 17 certificate in the terms which it did.
14. The Tribunal is, nevertheless, able to determine that there was a possibility that planning permission would have been granted, despite the opinion expressed in a negative certificate. In the course of cross-examination, it was put to Mr Simpson that there was no realistic expectation of such permission at the valuation date, in view of the planning policy position, previous planning consents and the contents of the section 17 certificate. He replied that there was at least some possibility of residential planning permission, given the previous residential use on the site and the fact that access was available from Wakefield Road. He accepted that, at the relevant date, there was no obvious physical trace that a dwellinghouse had previously existed at the subject property, which was by then physically indistinguishable from the surrounding land. In those circumstances, the historical use of the site, and the fact that it enjoyed rights of access over an unmade private road, would not in my judgment have been sufficient to persuade a purchaser that there was a realistic hope of residential planning consent being granted at some future date.
15. Nevertheless, it seemed to me to be right to raise the question whether the claimant might not be able to rely on the 3^rd Schedule right to rebuild. I therefore caused a letter to be written to the acquiring authority and I received written submissions in response, as well as further observations from the claimant.
16. Section 15(3) of the Land Compensation Act 1961 provides as follows:

"Subject to subsection (4) of this section, it shall be assumed that, in respect of the relevant land or any part of it, planning permission would be granted –

(a) subject to the condition set out in Schedule 10 of the Town and Country Planning Act 1990, for any development of a class specified in paragraph 1 of Schedule 3 to that Act …"

Paragraph 1 of Schedule 3 refers to

"(a) the rebuilding, as often as occasion may require, of any building which was in existence on July 1 1948 …

… so long as the cubic content of the original building is not substantially exceeded."

17. The question is whether the 3^rd Schedule right to rebuild applies to a building which was in existence on July 1 1948 but has since been demolished. It seems to me that the provision, by referring to the rebuilding of a building, must relate to a building that continues to exist. Were that not the case this particular 3^rd Schedule right would never be lost whatever development occurred on the site of the building that existed on the First Appointed Day. Here the house had been demolished a number of years before the CPO was made, although I do not consider that any significance attaches to that. The fact is that it was no longer a building at the time of the CPO or notice to treat.
18. The compensation payable therefore falls to be assessed on the basis of open space value. Mr Simpson considered that this should be £10 per m², which was based on his personal experience of dealing with the acquiring authority over a number of years. He referred in particular to a site in Church Hill, Royston, where he said the acquiring authority had agreed that the existing use value of his client's land, which could not be developed without acquiring access rights from the council, was £10 per m².
19. Mr Strafford said that the initial works of land reclamation, which had given rise to the CPO, and for which funding was made available under the derelict land grant scheme, had been completed, although further environmental and landscape improvement works were desirable and would be undertaken when funding allowed. Funding under the derelict land grant scheme was no longer widely available, and increasingly essential safety and environmental decontamination works, such as those included within the works undertaken by the acquiring authority on land acquired under the CPO, were being implemented by way of action against landowners under the Environmental Protection Act 1990 and the Environment Act 1995.
20. In view of the zoning of the subject property, its condition at the time of entry, and the ongoing liability of the acquiring authority for future maintenance and repair, he considered that the land acquired under the CPO had little if any value. As the present reference was restricted to a relatively small area of land that had been the site of a dwellinghouse, and was largely unaffected by the majority of the essential safety and decontamination works, however, he did not propose to make an allowance for the costs of those works in his valuation. Had the area of land been more extensive, and encompassed areas that were so affected, he believed that in all likelihood a negative value would have resulted.
21. Mr Strafford considered that the crux of the matter was the cost of retaining and maintaining the site. There was no realistic prospect of any form of alternative beneficial use whose value would approach such cost, let alone produce a return over and above it. In such situations, as had proved to be the case with other nearby land acquired under the CPO, once it was established that existing use value and hope value were negligible, it was simply a matter of reaching agreement on an accommodation price for the land.
22. In practice values for such sites tended to fall into three broad bands. A pro-rata approach to the valuation of very small areas of low value land was neither realistic nor indicative of the open market. There would always be a minimum price, below which a vendor would not be inclined to treat regardless of the area of land being sold. It would in his opinion be wrong and misleading to suggest that for purposes of comparison such figures should be broken down to a price per m².
23. Mr Strafford referred to three comparables in support of his valuation, as follows:

1. Site of former 7a Old Row, Smithies.

59m², part of plot 1 on the CPO plan to the west of plot 2. Agreed price £500 plus fees and interest. Valuation date at or close to 29 January 1996.

2. Site of former 2 and 3 Quarry House, Smithies.

634 m² adjoining the subject property. Plot 3 on CPO plan, entirely surrounded by plot 2. Price £1,000 plus fees and interest. Again, the date of valuation was at or close to 29 January 1996.

3. Land to the east of Wakefield Road.

Acquisition by private treaty, with CPO powers in the background, of 4.73 ha (11.68 acres) approximately. Price £35,000, each party paying its own costs. Date of transfer 16 December 1992. The sale price was broken down as follows: 1.1 acres (0.45 ha) allocated for industrial use, £30,000; 10.58 acres (4.2 ha) of scrubland, £5,000.

24. Mr Strafford said that this evidence showed that the de minimis value, below which a vendor would not sell, was £500 (comparable 1) and that £500 per acre (£1,235/ha) was the price agreed for an extensive area of scrubland requiring environmental and landscape improvement (comparable 3). Comparable 2 was particularly useful, he said, being directly adjacent to the subject land, and formerly containing two houses. He pointed out that that property was sold with the benefit of rights of way over and along the unmade road which was within the claimant's ownership. The fact of such ownership, therefore, would not justify an increased value for the claimant's land.
25. Mr Strafford accepted that the acquiring authority sometimes agreed a price for public open space which could be as high as £10 per m². Such a figure, however, was only paid for very small sites. For example, where a houseowner wished to extend the curtilage of his home by acquiring some immediately adjoining public land with a width of one or two metres, it may well be that a price equivalent to £10 per m² would be agreed to reflect the benefits of such an enlarged ownership. It would, however, be misleading to apply that rate to a significantly larger area of land. No transaction had been completed based on Mr Simpson's suggested values for the site in Royston.
26. Having regard to all the comparable evidence, Mr Strafford considered that the value of the subject property, reflecting the fact that it was smaller than 2 and 3 Quarry House, was £750.
27. I accept Mr Strafford's evidence as to the circumstances in which a value of £10 per m² would be agreed by the acquiring authority for public open space. I find that such a value would not be applicable to the subject property, which is too large and in the wrong location for such a value to be appropriate. In the absence of any other comparable evidence adduced by Mr Simpson to indicate the existing use value of the subject property, I turn to Mr Strafford's three comparables.
28. At first glance, the most helpful evidence would appear to be comparable 2. It immediately adjoins the subject property; its site area was 634m² compared with 458m²; it was acquired at the same time as the subject property and it formerly contained quarry dwelling houses. The landowner was represented by a surveyor, who agreed a price of £1,000, which I calculate was equivalent to £1.58 per m².
29. The existing use value of comparable 3 was agreed by the vendor's surveyor at a price equivalent to only 12p per m², but I accept Mr Strafford's explanation that this value reflected the need to carry out safety and decontamination works, which would not have been necessary on the much smaller site of a former dwellinghouse. I therefore disregard comparable 3.
30. The price agreed for comparable 1 was equivalent to approximately £8.50 per m². Following his cross-examination by Mrs Swift, I pressed Mr Strafford to justify the very considerable difference between that figure and his valuation of the subject property, which is equivalent to only £1.63 per m². Having done so, I am satisfied that he is right to consider that the price paid for comparable 1 was irrelevant, because it represented the minimum figure at which a bargain would be struck with a vendor who would otherwise prefer not to sell. Mr Strafford also suggested that the price may have reflected the location of the site, close to an area of housing, and thus the possibility that it might at some stage be purchased by one of the neighbouring owners. Having inspected the site, I agree with Mr Strafford that this is another reason for discounting the price paid for comparable 1 as a guide to the value of the subject property.
31. Mr Strafford's valuation of £750 represents a slightly higher price per m² than the value agreed for the adjoining site, 2 and 3 Quarry House, which in my judgment is the most reliable evidence available. I therefore accept Mr Strafford's valuation and determine that the compensation payable for the freehold interest in the subject property is £750. In addition the acquiring authority will pay a surveyor's fee, which it is agreed should be based on Ryde's scale (before its abolition) and the claimant's proper legal costs of transfer.
32. If I am wrong in law, and compensation is to be assessed assuming a 3^rd Schedule right to rebuild the previous house, my valuation would be £15,000. This is arrived at by deducting 50 per cent from the agreed starting figure of £30,000, to reflect poor access and exceptional costs of providing services to the site.
33. A letter on costs accompanies this decision, which will take effect when, but not until, the question of costs is determined.

Dated 7 June 2004

N J Rose FRICS

Addendum

34. I have received written submissions on costs.
35. The acquiring authority submit that, as there has been no sealed offer, costs should follow the event.
36. The claimant points out that, in a letter to the Tribunal dated 28 February 2002, the acquiring authority suggested that the reference could be more easily dealt with under the simplified procedure. Although the claimant did not write to the Tribunal on the subject, he did write to the acquiring authority on 10 March 2002, asking what information the Borough Secretary required to have the matter dealt with under the simplified procedure. In those circumstances, the claimant suggests that each party should pay its own costs.
37. It would appear that there was no reply to the acquiring authority's letter of 28 February 2002 and, in the absence of a direction that the simplified procedure was to be followed, the reference proceeded under the standard procedure, with a formal hearing and evidence taken on oath. In those circumstances, I consider that the acquiring authority are correct to contend that the Tribunal has its normal discretion to award costs.
38. The principles underlying the Tribunal's exercise of its costs discretion in cases of compulsory purchase compensation were considered by the Court of Appeal in Purfleet Farms Ltd v Secretary of State for Transport, Local Government and the Regions [2002] RVR 368. At p 375, para 42 Chadwick LJ said:-

"But, where there has been no [unconditional] offer or where the amount of the award exceeds the amount of the offer, then (again, prima facie) 'the expenses of determining the amount of disputed compensation may be seen to be part of the reasonable and necessary expense which is attributable to the taking of the lands compulsorily by the acquiring authority', as the Lord President observed in Emslie & Simpson Limited v Aberdeen District Council [1995] RVR 159, at p164. In such a case the refusal to allow the claimant some part of his costs of the reference must be justified by a finding that the costs to be disallowed have not been incurred as part of the reasonable and necessary expense of pursuing the reference. As Potter LJ has put it, the Tribunal must be able to identify circumstances '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"'.

39. In this reference, although the acquiring authority did not make an unconditional offer it was clear, from the date they first submitted their expert's valuation report if not before, that they would be contending for a valuation of £750, which was the figure eventually determined by the Tribunal. It is true that, until a very late stage, the acquiring authority did not accept that the claimant was entitled to any compensation because of lack of title. So far as value was concerned, however, which was the only issue which the Tribunal was required to determine, a substantial part of the costs would have been avoided if the claimant had agreed to the value of £750 as soon as it was put forward by the acquiring authority.
40. It therefore seems to me that the fact the claimant exaggerated his claim has led to costs which were not reasonable for him to incur in vindication of his right to compensation. With that consideration in mind, I make no order as to costs.

Dated 8 July 2004

N J Rose FRICS