England and Wales Lands Tribunal

Jolley v Bolton Metropolitan Borough Council [2004] EWLands ACQ_27_2004 (21 April 2005)

ACQ/27/2004

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – value – former laundry – buildings in disrepair – basis of valuation: refurbishment or redevelopment – market value £51,000.

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN LESLIE AMBROSE JOLLEY Claimant

and

BOLTON METROPOLITAN Acquiring

BOROUGH COUNCIL Authority

Re: Former laundry,

Washington Street,

Bolton

Tribunal member: P H Clarke FRICS

Determination without an oral hearing under rule 27 of the Lands Tribunal Rules 1996

Levys, solicitors, for the claimant

Mr T Gundy, legal executive, for the acquiring authority

The following cases are referred to in this decision:

Arrow v London Borough of Bexley (1978) 35 P & CR 237

Lewars v Greater London Council (1981) 43 P & CR 129

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

Snook v Somerset County Council [2004] RVR 254


 


DECISION

This is a reference to determine the compensation payable for the compulsory acquisition of a former laundry in Bolton. It has been determined without an oral hearing under rule 27 of the Lands Tribunal Rules 1996. A statement of facts and bundle of documents (subsequently agreed) have been lodged and both parties have submitted written representations, including expert reports. The claimant's case is that the value of the land acquired should be assessed on the basis of the repair and refurbishment of the existing buildings, giving a total value of £296,000. The Council say that these works would not have been viable and the land should be valued as a redevelopment site at £51,000.

I have inspected the reference land, the surrounding area and the site in Nelson Street referred to as a comparable.

FACTS

The Council prepared a statement of facts and a bundle of documents which were subsequently agreed by the claimant's solicitors on 29 March 2005. From these documents and the evidence I find the following facts.

On 23 December 1998 Bolton Metropolitan Borough Council (the Council) made the Bolton (Washington Street) Compulsory Purchase Order 1998 under section 226(1)(a) of the Town and Country Planning Act 1990 for the purposes of carrying out the redevelopment of land and buildings at Washington Street, Bolton. The order comprised two plots of land. Plot 1 is described (as amended) as "2,916 sq m of land and buildings west of Washington Street and east of Back Fern Street East" and plot 2 (as amended) as "1,066 sq m of land and buildings west of Washington Street and south of the Bolton Enterprise Centre". These plots comprise the reference land. Following a public local enquiry on 29 June 1999 the order was confirmed by the Secretary of State for the Environment, Transport and the Regions on 11 August 1999. Notice to treat in respect of the whole of the reference land was served on 17 September 1999. Following notice of entry the Council took possession on 1 October 1999 of plots 1 and 2 (with the exception of the part of plot 2 known as the Swim School). (This part of the land is referred to by the parties as plot 3, a form of numbering which I shall use in this decision, so that the whole of the land acquired will be referred to as plots 1, 2 and 3, the latter comprising the Swim School, part of CPO plot 2). The agreed valuation date for plots 1 and 2 is 1 October 1999. (I should mention that Mr Ravenhill, for the claimant, used a valuation date of 17 September 1999 but the claimant's solicitors, in subsequently agreeing the Council's statement of facts, agreed 1 October 1999. Nothing turns on this slight difference in dates). On 5 March 2002 the Council served notice of entry in respect of plot 3 and took possession on 25 March 2002. This is the agreed date of valuation for plot 3.

The reference land is situated approximately three-quarters of a mile to the west of Bolton town centre, a short distance to the north of Deane Road. It is within an area of mixed residential, industrial and commercial uses. The site is bounded by the Bolton Enterprise Centre to the north, Washington Street to the east (which leads to Deane Road), Back Deane Road North to the south and Back Fern Street East to the west. It was formerly the purpose-built Bolton Laundry, occupied by the Co-operative Society until 1968. It was then occupied for light industrial and other manufacturing purposes, becoming largely vacant (except the Swim School) by 1996. The buildings were constructed of brick with tile and slate roofs with accommodation on basement, ground and first floors. At both valuation dates the buildings were in disrepair. The floor areas have not been agreed. The claimant calculates the total floor area to be 27,131 sq ft (2,700.56 sq m). The Council's figure is 24,642 sq ft (2,289.24 sq m). (I have no evidence to support Mr Ravenhill's statement that his higher floor area has been agreed). The buildings were demolished in June 2002 at a cost of £49,600 (exclusive of VAT). The agreed site areas are: plot 1, 1,288 sq yds; plot 2, 3,339 sq yds; and plot 3, 181 sq yds. (Mr Ravenhill subsequently disagreed with the site areas for plots 2 and 3 but I have no evidence to support his higher figures). The reference land was a vacant site at the time of my inspection.

Plot 1 was held leasehold by the claimant for 999 years from 12 November 1837 at a rent of £6 per annum. Plots 2 and 3 were freehold. Plot 3 was let to Judith Mary Furness trading as Initial Swim School on lease at a rent of £3,120 per annum. This tenancy had expired before service of notice to treat but the tenant continued to hold over under the tenancy.

In 1999 the current development plan was the Bolton Unitary Development Plan 1995. The reference land was not specifically allocated in this Plan but policies are consistent with the future of the area as an industrial area, particularly Policy E1 (sufficient land to be made available for employment uses), E4 (encouragement of development providing industrial, business and warehouse employment on land not allocated in the Plan), E6 (encouragement of the improvement, modernisation or replacement of buildings for industrial and business uses) and E6/2 (importance of Economic Action Areas). The area in which the reference land is situated was declared by the Council in February 1991 as the Washington Street Economic Action Area. The reference land is also within the 3Ds Partnership Area, which covers the wards of Derby, Daubhill and Deane, set up in 1995 to achieve economic and environmental improvements in the area.

On 10 May 1999 and 20 September 2001 the Council served notices under section 78 of the Building Act 1984 regarding dangerous buildings or structures on the reference land.

On 16 April 2004 the Council referred the determination of compensation to this Tribunal. On 26 January 2005 I directed, at the request of the parties, that the reference be determined without an oral hearing under rule 27 of the Lands Tribunal Rules 1996.

CLAIMANT'S CASE

The claimant's case is contained in expert report prepared by Stanley B Ravenhill FRICS, FCIArb, Head of the Professional Department of ep 2, chartered surveyors of Manchester. Mr Ravenhill has valued the reference land on the basis of the repair and refurbishment of the existing buildings, at £260,000 for plots 1 and 2 and £36,000 for plot 3. His valuations are set out in the Appendix to this decision. On 18 April 2005 the claimant's solicitors lodged a further report by Mr Ravenhill headed Points of Rebuttal. The Council objected strongly to the late admission of this evidence. This rebuttal should have been lodged on 25 March in response to the Council's initial documents already served on the claimant's solicitors (see para 2 of order dated 8 February 2005). No application has been made for permission to lodge this additional report out of time and I should give no consideration to it. However, it does not cause me to amend my determination of value and there is no prejudice to the Council by the admission of this evidence.

Mr Ravenhill said that plot 3 was subject to a lease and should be valued as an investment. He assumed that notice to quit would have been served on the tenant and a renewal or reletting would have taken nine months, with no rent payable in this intervening period. Comparables for Mr Ravenhill's estimated rental value of £4 per sq ft are Gilnow Mill and Nortex Mill where ground floor lettings of between £2.28 and £8.06 per sq ft were achieved, with an average of £5.49 per sq ft. To allow for services within the rents, 73% was taken as a net rent (£4 per sq ft). This was capitalised at 12% by reference to yields of 20% for Gilnow Mill and 18% for Nortex Mill used in valuations of these properties by his firm in June 1999. Repairs are assumed to be £9.47 per sq ft, the rate estimated by the Council.

Mr Ravenhill said that plots 1 and 2 should be valued on the basis of repair and refurbishment, and not on site value less cost of demolition. He gave four reasons. First, on inspection in September 1999 it did not appear that demolition was appropriate. Second, although a report dated 23 June 2000 by Mr Lowe of the Council favoured demolition, it did not make a whole-hearted recommendation to this effect. Refurbishment was a possibility. This report was 8½ months after the valuation date: the deterioration of the buildings would have been worse. Third, costings of refurbishment have been made by the Council, a strong indication that they considered this a possible course of action. Fourth, part of the property (plot 3) was occupied and trading to December 2001.

Mr Ravenhill valued plots 1 and 2 on a residual basis. He assumed a six months refurbishment period, interest at 3% over base rate and a developer's profit of 10%. He used as a comparable for the gross development value of plots 1 and 2 the sale price for a depot in Washington Street in September 1999 (£194,000) which he analysed to produce £26.18 per sq ft of gross internal area for the reference land with the basement at 60% (£15.71). He adopted the Council's building cost estimate to produce his figure of £9.47 per sq ft (£240,159 to which £15,000 has been added for painting). Mr Ravenhill did not make any distinction in his valuation between the freehold and long leasehold parts of the site.

COUNCIL'S CASE

The Council's case is contained in an expert report prepared by Andrew Prideaux FRICS, Principal Estates Surveyor at the Council and in a statement in rebuttal prepared by Mr Grundy (which I need not refer to further). Mr Prideaux valued the reference land as a site suitable for industrial development at £51,000, representing cleared site value of £106,676 less costs of demolition of £49,600.

Mr Prideaux said that, from his own experience, the buildings on the reference land had been in an extremely dilapidated condition since 1994. He was present at the inspections on possession. He referred to a report of the Council's Principal Structural Engineer dated 23 June 2000 which recommended that the buildings be demolished due to their dangerous condition. He shared the opinion that the buildings were beyond economic repair. The maximum site value is for redevelopment. Mr Prideaux also referred to a letter dated 28 October 1997 to the claimant from the Council which recorded Mr Jolley's decision not to let any more floor space due to the condition of the roof and stated that the Council/3D Partnership would not be willing to give grant assistance for refurbishment. The buildings on the reference land were demolished on 29 June 2002 at the lowest tender price of £49,600. The bundle of agreed documents lodged by the Council includes photographs of the reference land taken on 30 September and 1 October 1999 and 25 March 2002.

Mr Prideaux based his valuation on three comparables. Vacant industrial land at Nelson Street, Bolton was sold in June 1999 at £185,000, equivalent to £92,500 per acre. This is Mr Prideaux's main comparable. Vacant storage land at Mill Street, Bolton was let by the Council for 99 years from 1994 with five yearly rent reviews. The review rent at January 1999 was agreed at £4,000 per annum, which Mr Prideaux capitalised at 15% to produce an equivalent site value of £104,761 per acre. His third comparable is a letting by the Council of storage land suitable for industrial development at Arch Street, Bolton for 20 years from 1 June 2002 at £5,800 per annum. Mr Prideaux capitalised this rent at 15% to produce an equivalent site value of £109,919 per acre.

Mr Prideaux used his first two comparables to value plots 1 and 2 at the valuation date of 1 October 1999. The average of the Mill Street and Nelson Street transactions is £98,630 say £100,000 per acre giving a cleared site value for the reference land of £96,000. He made no distinction between the freehold and long leasehold interests. Mr Prideaux valued plot 3 at 25 March 2002 at £109,000 per acre, supported by the Arch Street comparable, giving a cleared site value of £4,676. From the total cleared site value of £106,676 he deducted the actual cost of demolition (£49,600) to produce a value of £50,476 say £51,000.

DISCUSSION

In addition to the agreed facts there is common ground on two matters affecting the value of the reference land. The first is that it is to be valued on the basis of industrial use, in Mr Ravenhill's valuation following the repair and refurbishment of the existing buildings and in Mr Prideaux's valuation following redevelopment with new buildings. The second is that no distinction is to be made between the long leasehold interest in plot 1 and the freehold interest in plots 2 and 3. All plots have been valued as if the freehold interest were held by the claimant at the valuation dates.

For the purposes of assessing the value of the reference land under rule (2) of section 5 of the Land Compensation Act 1961 it is to be assumed that it was sold in the open market at the valuation dates, that is to say for plots 1 and 2 on 1 October 1999 and for plot 3 on 25 March 2002. The question is whether the successful purchaser would have formulated his bids on the basis of the repair and refurbishment of the existing buildings or on the basis of demolition and redevelopment? The answer depends upon the condition of the buildings at the valuation dates and the view which would have been taken by a purchaser as to the viability and desirabilility of repair and refurbishment as opposed to redevelopment. I look now at the evidence relating to the condition of the buildings.

Mr Ravenhill inspected them on 14 September 1999 and considered that demolition was not appropriate. He relied on the report of Mr Lowe of the Council dated 23 June 2000, stating that he did not make a whole-hearted recommendation for demolition. He also relied on the fact that the Council prepared costings of refurbishment, which he said was the strongest indication that refurbishment was considered as a possible course of action. Mr Prideaux inspected at both dates of entry and supported his opinion that the buildings were beyond economic repair by reference to the photographs taken at entry, Mr Lowe's report and the Council's letter to the claimant dated 28 October 1997.

From the evidence I accept Mr Prideaux's opinion. In my judgment, having regard to the age, former use and dilapidated condition of the buildings, a purchaser at the valuation dates would not have considered repair and refurbishment to be viable or desirable. He would have based his bid on demolition and redevelopment as the most satisfactory way of using the land. The following evidence supports this finding.

First, the age of the buildings and their original purpose. It is common ground that they were purpose-built as a laundry. This is a specialised industrial use requiring purpose-built buildings which, in my view, cannot readily and economically be adapted to modern industrial activity. Mr Ravenhill said that the former laundry was built in 1925; the Council in their statement of reasons for the making of the CPO put the date of construction as the early years of the last century. In October 1999 the buildings were at least 75 years old, perhaps older. In my opinion, they had reached the end of their physical and economic life. Even if they had been in reasonably good repair, refurbishment may not have been economic or expedient and it is certainly ruled out by the dilapidated condition of the buildings in October 1999 and March 2002.

This is seen in the photographs put in evidence, comprising 25 colour photographs taken on 30 September and 1 October 1999 and 32 taken on 25 March 2002, with a plan showing their location and direction. These show graphically the dilapidated condition of the buildings on the reference land.

I consider next the report dated 23 June 2000. It is in the form of a two page memorandum from Andrew Lowe, Principal Structural Engineer, Property Services Consultancy of the Council to Stephen Holden, Valuation and Management Division. Mr Lowe recorded that he made a superficial inspection of the buildings on 15 June 2000. This is some eight months after the first valuation date. He stated that the "buildings are in varying stages of dereliction" and "the greatest concern is the condition of the concrete frames to the two warehouse buildings … in danger of collapse." The roofs were in particularly poor condition, with north light glazing broken, missing or boarded over, the clay tiling had failed, possibly due to rotten timber battens; there was excessive slippage of tiles on the front slope. Mr Lowe concluded that there were a range of options when considering the use of the buildings; his main concern was with health and safety issues. The north light warehouse buildings were potentially very dangerous and steps should be taken to demolish them or to establish a scheme for adequate propping. Falling concrete from various structural elements was a major hazard. He concluded that:-

"The viability of refurbishing this complex is definitely suspect. Unless a definite long term use for these buildings is found, the obvious solution would be demolition, and from a health and safety aspect this should be carried out as a matter of some urgency.

Even basic refurbishment would require considerable make safe operations, such as propping, removal of all loose and spalling concrete, loose tiles etc. The propping required would seriously limit any use of the building for warehousing. The concrete frames are not repairable, and any propping would realistically only be a short term option.

Basic services would need to be provided. Existing services would need to be made safe. Extensive clearing away of rubbish would be required. Gates and roller shutter door need to be refurbished if not replaced. General security measures would have to be taken. A full structural survey would be required.

The above are just my initial thoughts, but all tend to lead to the conclusion that early demolition would be the most economic and advisable course of action."

I do not read this report as lacking a whole-hearted recommendation of demolition (as contended by Mr Ravenhill) nor do I find a clear reservation that refurbishment is a practical possibility. I accept that the report is mainly concerned with safety and not with use and valuation (refurbishment or redevelopment), but it provides near contemporary factual evidence as to the dilapidated condition of the buildings on the reference land.

Next, I consider the inspector's report following the CPO inquiry, prepared in July 1999. This contained several references to the condition of the buildings. A description of the reference land referred to the "poor condition" of the buildings with "cracks in the brick walls" and the poor condition of the roof. "The building is not watertight and has been vandalised" (para 7). The inspector concluded that the buildings had been allowed to fall into disrepair. She was not persuaded that Mr Jolley had "made a real effort to bring the land back into beneficial use" (para 5 of the conclusions). Mr Jolley's evidence to the CPO inquiry was that, apart from plot 3, the buildings had been vacant for two years and had attracted vandals. Mr Ravenhill said that he has been instructed that repairs were not carried out because of imminent acquisition. He acknowledged that Mr Jolley's attitude to repair was mistaken but understandable. I have no evidence to support this statement and give no weight to it. In my judgment, disrepair was the reason for compulsory acquisition not a consequence of it (see eg Arrow v London Borough of Bexley (1978) 35 P & CR 237; Lewars v Greater London Council (1981) 43 P & CR 129).

Under section 78 of the Building Act 1984 a local authority may take emergency action regarding dangerous buildings or structures. The Council have twice carried out works to the reference land under this section. On 6 May 1999 notice was served in respect of a leaning wall and derelict buildings, stating that the Council intended to seal off the site to prevent access. On 20 September 2001 notice was served in respect of the roof of plot 3 that the Council intended to remove loose ridge tiles and stone coping. These are further indications of disrepair.

Finally, I consider the letter written to Mr Jolley regarding the future of the reference land on 28 October 1997 by the Principal Project Officer, Economic and Physical Development Unit of the Council. This stated that, at a site meeting in August 1997, Mr Jolley indicated that he had decided not to let any more floor space for the foreseeable future because of the poor condition of the roof. The letter recorded that the Council/3D Partnership would not be willing to assist the repair of the roof by grants because the works would not represent value for money given the substantial costs involved. There was a reluctance to assist any project which did not involve comprehensive internal and external refurbishment. The Council were keen to promote a prestigious scheme on the reference land as the "Gateway" to the Washington Street Economic Action Area. The letter indicated that grant assistance might be available for the industrial redevelopment of the land.

Having regard to this evidence, particularly the age, former use of the buildings and their dilapidated condition as shown by the photographs and Mr Lowe's report in June 2000, I find that a purchaser of the reference land in October 1999 and March 2002 would have bid on the basis of demolition and redevelopment and not on the basis of retention and refurbishment.

It follows therefore that I accept Mr Prideaux's basis of valuation and reject Mr Ravenhill's valuation. Furthermore, I consider Mr Ravenhill's valuation unreliable for other reasons. It uses the residual method of valuation which the Tribunal has criticised on several occasions on two main grounds (see eg Clinker and Ash Limited v Southern Gas Board (1967) 18 P & CR 372 at 377-9; Snook v Somerset County Council [2004] RVR 254 at para 30). First, although it is a useful method of valuation for site purchase, in litigation it lacks the restraints and sanctions of the open market. This leads to over-optimistic figures producing excessive values. Second, the residual method requires sound judgment as to the component figures and, in particular, as to the correct balance between the figures. Quite small differences in individual figures can lead to disproportionate differences in the final valuation.

As to the figures in Mr Ravenhill's residual valuation I have several reservations. Gross development value for plots 1 and 2 is based on the sale of an adjoining property in May 2000 for £194,000, with adjustments to relate the price to the reference land. These adjustments are a matter of judgment, but I think that a 10% downward adjustment for age (20 years for the comparable compared to at least 75 years for the reference land) is too low. Having regard to the age and condition of the buildings on the reference land I would expect the purchaser to look for more than 10% for profit and risk (described by Mr Ravenhill as "compensation for trouble"). I am doubtful whether six months would have been sufficient time for the repair and refurbishment works; no time has been allowed for the preparatory period before the works could start nor for letting after the completion of the works. Mr Ravenhill has used a repair costing prepared by the Council in November 2002 (in manuscript) in the sum of £256,972. This is headed "Refurbishment/Roof Works/Heating/Lighting." He has added £15,000 for painting but has not related the figures to the position at the valuation dates, particularly the first date. I have no other evidence regarding this schedule of costs – who made it, to what degree of accuracy and to what specification (if any). It appears to relate mainly to repairs and essential services and there appears to be no indication as to the cost of the improvements and other works necessary to make the 75-year old former laundry suitable for modern industrial use. As to plot 3, Mr Ravenhill has based his rental value (£4 per sq ft) on rents at Gilnow and Nortex Mills (between £2.28 and £8.06 per sq ft, average £5.49). No details have been given of these tenancies (particularly dates); this makes them of little weight. Mr Ravenhill's capitalisation yield of 12% is based on yields of 18% and 20% used in valuations prepared by his firm and not on market evidence.

I reject Mr Ravenhill's residual valuations. In my judgment, the correct approach is to value the land acquired as a redevelopment site by reference to comparable sales. This is the method used by Mr Prideaux. In arriving at his site value he referred to three comparables but two of them (Mill Street and Arch Street) are only rents which require capitalisation to arrive at an equivalent capital value for the site. The appropriate capitalisation yield is a matter of opinion and I do not find these transactions helpful. I am left with Nelson Street, a vacant site in an industrial area to the south of the town centre. Mr Ravenhill accepts that this appears to be good evidence of industrial land prices in Bolton. This is a two acre plot sold freehold in June 1999 for £185,000 with planning permission for two industrial units. The price devalues to £92,500 per acre. The land was vacant at the time of sale (and was still vacant at my inspection). This site is larger than the reference land but, in my opinion, situated in a better location. Having regard to this transaction I do not disagree with Mr Prideaux's value of £100,000 per acre for plots 1 and 2 of the reference land in October 1999. I do not accept Mr Ravenhill's figure of £110,000. For plot 3, in March 2002, Mr Prideaux has used a higher price per acre of £109,000. Mr Ravenhill's figure is slightly higher at £110,000. I accept Mr Prideaux's figure.

The Nelson Street comparable is a vacant site whereas the reference land was encumbered at the valuation dates with derelict buildings which required demolition before the site could be redeveloped. I agree that the cost of demolition must be deducted. Mr Prideaux deducted £49,600 the lowest tender price for demolition in June 2002. Mr Ravenhill put in late evidence of a quotation obtained by Mr Jolley from W & D Lee (Metals) Limited in August 1998 of £6,800. There is, therefore, a material conflict of evidence here. Furthermore, the prices relate to dates before and after the first valuation date in October 1999 when most of cost of demolition would have been deducted in the valuation. I prefer Mr Prideaux's figure for the following reasons. It was the lowest price in a competitive tendering process. It was acted upon and the buildings were demolished. The quotation from W & D Lee appears to be low; it was a revised estimate and I have some concern as to whether it was genuine; it was not accepted by the claimant. The June 2002 figure of £49,600 should be related to the valuation dates but I have no evidence on differences in demolition costs (if any) between the valuation dates and June 2002. In the absence of such evidence it would be wrong to make a guess. Accordingly, I accept the lowest tender price for demolition in June 2002 of £49,600.

My valuation of the reference land is:-

Plots 1 and 2,0.96 acre @ £100,000 £ 96,000

Plot 3,0.037 acre @ £109,000 £ 4,033

£100,033

Less: cost of demolition £ 49,600

£ 50,433

say £ 51,000

Mr Ravenhill's valuation on a redevelopment basis is £102,550 (£109,000 per acre with the deduction of demolition costs of £6,800) which I reject for the reasons given above.

AWARD

Accordingly, I determine that the market value of the claimant's freehold and long leasehold interests in the reference land under rule (2) of section 5 of the Land Compensation Act 1961 as at 1 October 1999 and 25 March 2002 was £51,000 (fifty-one thousand pounds). This is the compensation payable for the compulsory acquisition of the reference land.

On 30 March 2005 the claimant's solicitors wrote to the Tribunal stating that the claimant seeks compensation in respect of legal and surveyor's fees. I will deal with this head of claim as set out below. Professional fees and costs on compulsory purchase fall into three categories: pre-reference fees for advice and negotiation, recoverable as compensation under rule (6) of section 5 of the Land Compensation Act 1961; fees which form part of the costs of the reference; and conveyancing costs under section 23 of the Compulsory Purchase Act 1965, which are not within the jurisdiction of this Tribunal. The outstanding matters are therefore pre-reference fees (if any) and costs of the reference.

This decision determines the substantive issues in this reference (other than pre-reference fees). It will take effect as a decision for the purposes of an appeal when the outstanding issues of fees and costs have been determined. The parties are invited to make representations as to pre-reference fees and the costs of the reference. A standard letter accompanying this decision sets out the procedure for representations in writing. The reference to "costs" in that letter should be taken to include both pre-reference fees and the costs of the reference, to be quantified separately and supported by documentary or other evidence. The Council have lodged representations on costs but these have not been seen by me having regard to the letter from Levys dated 30 March which refers to the exchange of Calderbank offers. The Council are invited either to confirm these representations or lodge new representations and to make their submissions on the claim for pre-reference fees.

DATED: 21 April 2005

(Signed) P H Clarke

ADDENDUM

1. I have received representations on pre-reference fees and costs from the Council and on costs from the claimant.
2. As to pre-reference fees, the Council accept that surveyor's fees based on the final edition of Ryde's scale should be paid. In the absence of representations from the claimant I agree. I award the claimant compensation for surveyor's fees calculated by applying the final edition of Ryde's scale before abolition to my determination of land value of £51,000.
3. The Council seek their costs of the reference on the indemnity basis on the grounds that my award is below an unconditional offer made by the Council and Calderbank offers made by the claimant and having regard to the unreasonable and dilatory conduct of the claimant and his representatives.
4. The claimant says that it would be wholly inappropriate for him to meet the Council's costs. The Council lawfully submitted an application to the Tribunal and have not acted in any inappropriate manner as can be seen from the Calderbank offers and the submissions of the claimant's expert. The offers in settlement were so wide apart that it was not unreasonable of the complainent (sic) to proceed to request an adjudication of the matter. If costs are to be awarded against the claimant they should be on an inter-parties basis. It would be iniquitous to award costs on the indemnity basis when the claimant has not acted unreasonably.
5. The claimant sought compensation of £296,000; the Council's figure was £51,000 and I awarded this sum as compensation. On 27 July 2004, after the commencement of the reference, the Council made an unconditional offer of £90,000, a figure above my award. On 22 January 2004, before the commencement of the reference, the claimant made three Calderbank offers, for the whole of the reference land and for separate parts, at £225,000, £30,000 and £195,000, all figures above my award.
6. The general rule is that a claimant should be able to recover his costs in determining the amount of disputed compensation as part of the reasonable and necessary expense attributable to the taking of his land compulsorily by the acquiring authority. However, section 4(1) of the Land Compensation Act 1961 provides, so far as relevant, that, where the acquiring authority have made an unconditional offer of compensation in writing and the sum awarded by the Tribunal does not exceed that offer, the Tribunal "shall, unless for special reasons it thinks proper not to do, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made." These provisions apply to this reference and I can find no special reasons to deprive the Council of their costs: they are therefore entitled to their costs from 27 July 2004. As to costs for the shorter period from the commencement of the reference on 16 April 2004 to the offer on 27 July 2004, I have a discretion. Having regard to the Calderbank offers made on 22 January 2004, all much higher than my award and which the Council were therefore justified in rejecting, and the way in which the claimant's representatives have pursued this claim, I conclude that the Council should also recover their costs for the short period between the start of the reference and their offer. I do not think, however, that the claimant's conduct justifies an award of costs on the indemnity basis.
7. Accordingly, I order the claimant to bear his own costs and to pay the Council's costs of the reference, such costs, if not agreed, to be the subject of a direct assessment on the standard basis by the Registrar of the Lands Tribunal.
8. The Council asked for two further directions relating to costs. First, that the claimant should be directed to pay the hearing fee in these proceedings. The reference was made by the Council. Rule 4 of the Lands Tribunal (Fees) Rules 1996 provides that, unless the Tribunal otherwise directs, the hearing fee shall be payable by the party by whom the proceedings were instituted, that is to say by the Council unless I direct otherwise. They can recover this fee from the claimant under my award of costs and, as stated below, can conveniently recover it by deduction from the compensation payable. Presumably the reason for this request is that the reference became necessary by the claimant's refusal to agree compensation on the Council's redevelopment basis. I am not persuaded that I should depart from rule 4 above and order the claimant to pay the hearing fee direct to the Tribunal. The Council will not be out of pocket by paying this fee. Second, the Council asked for a direction that the costs payable to the Council may be deducted from the compensation and interest before payment to the claimant. Even if the Tribunal had power to make such an order, it is unnecessary to do so. Section 4(5) of the Land Compensation Act 1961 provides that, where the Tribunal orders the claimant to pay all or part of the acquiring authority's costs, the authority may deduct the amount payable by the claimant from the compensation.

DATED: 24 May 2005

(Signed) P H Clarke

APPENDIX

VALUATION OF STEPHEN B RAVENHILL FRICS

FCIArb, for the claimant

Plots 1 & 2
	£	£
Gross development value		632,226
Less
Building costs	255,159
Professional fees, 7.5%	19,137
Interest, 8.25% for 3 mos	5,657
Contingency, 5%	12,758
	292,711
Compensation for trouble, 10%	29,271	321,983
Available for site acquisition		310,243
Less
Fees & stamp duty	11,664
Interest, 8.25% for 6 mos	11,173
Compensation for trouble, 10%	28,204	51,041
		259,202
		say £260,000
Plot 3
Rent, 1,771 sq ft at £4		7,084
YP perp at 12%		8.333
		59,033
less: purchaser's costs		1,500
		57,533
Defer for 9 mos at 12%		0.9185
		52,845
Less: cost of repairs		16,771
		36,074
		say £36,000
Total value £296,000	Total value £296,000	Total value £296,000