England and Wales Lands Tribunal

 


Prudential assurance Company Ltd v Highways Agency [2005] EWLands ACQ_33_1998 (21 October 2005)

ACQ/33/1998

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – surveyor's fees – additional work carried out by surveyor resulting from dispute over terms of transfer deed, after quantum of surveyor's fees agreed – whether statutory contract finalising compensation terms including surveyor's fees – additional fees held not recoverable

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN PRUDENTIAL ASSURANCE Claimant

COMPANY LIMITED

and

Acquiring

HIGHWAYS AGENCY Authority

Re: Land at Portfield Retail Park

Chichester

West Sussex

Determination under written representations procedure

Before: N J Rose FRICS

The following cases were cited in argument:

Munton v Greater London Council [1976] 1 WLR 649, CA

Dutton's Brewery Ltd v Leeds City Council (1982) 43 P & CR 160, CA

Harding v Metropolitan Railway (1872) LR 7 Ch

Grice v Dudley Corporation [1958] 1 Ch 329

DECISION

Introduction

1. This is a reference originally assigned to the Tribunal's standard procedure but subsequently transferred by agreement between the parties to the written representations procedure. It arises from the acquisition by the Highways Agency ("the acquiring authority") of the freehold interest in part ("the subject property") of a retail warehouse development known as the Portfield Retail Park, Chichester, West Sussex from the claimant, Prudential Assurance Company Limited. The subject property was compulsorily acquired under the A27 Trunk Road (Westhampnett Bypass) Compulsory Purchase Order (No.SE4) 1991 ("the CPO"), which was made by the Secretary of State for Transport. Notice to treat was served on 24 July 1991 and notice of entry was served on 29 October 1991.
2. On 12 February 1998 the claimant referred the compensation payable to the Tribunal. In April 2003 agreement was reached that the compensation payable in respect of all heads of claim, including land taken and disturbance, was £1,081,236 plus VAT and surveyor's, legal and conveyancing fees. The only outstanding issue relates to costs incurred by the claimant after compensation had been agreed, resulting from the initial refusal of the acquiring authority to accept a clause in the transfer deed suggested by the claimant's solicitors. It was eventually agreed that the disputed clause would be included in the transfer. The total of the additional costs so claimed – most of which consist of surveyor's fees – is £15,812.50. The acquiring authority denies that it is responsible for reimbursing any part of those costs.

Facts

3. The facts are not in dispute and are as follows. The subject property is located approximately 1.5 miles from Chichester town centre. It is accessed from Portfield Way, which links Westhampnett Road with the Chichester bypass. Prior to the compulsory acquisition, the claimant's site was bounded to the north by adjoining property, to the east by Portfield Way and a Sainsbury's site, to the south by the A27 and residential land and to the west by Church Road. The entire site originally owned by the claimant extended to 11.7 acres. Of this, an area of 1.5 acres on its eastern side was compulsorily acquired. The claimant's land had been developed as a retail park which was completed in December 1989. The site had previously been a gravel quarry, which was filled with domestic refuse before the development commenced. The decay of the refuse produces methane. There is therefore a methane venting trench around the perimeter of the site, to allow methane to escape into the atmosphere and not on to adjoining sites. Part of the venting trench is within the land compulsorily acquired. The presence of the trench and the fact that part of it was within the land being acquired was mentioned in the revised compensation claim submitted to the district valuer in October 2000. There was no fence erected on the boundary between the subject property and the claimant's retained land. The claimant owned the freehold interest in the subject property and the retained land. The various retail warehouses on the site are subject to occupational leases. Prior to the scheme, the claimant had a right of way in perpetuity over the adjoining Sainsbury's site, to provide access to Westhampnett Road.
4. The scheme underlying the acquisition is the A27 Westhampnett Bypass. Portfield Way is an extension of the scheme to link the Sainsbury's roundabout to the A27.
5. The land acquired under the CPO was described as plot 4, comprising 6,076m², in respect of which the freehold interest was taken and plots 4a (167m²) and 4b (688m²), over which the acquiring authority obtained a working and maintenance licence. Plots 4a and 4b have now been handed back to the claimant.
6. On 2 April 2003 the claimant's surveyors, GVA Grimley, in a letter to the district valuer, said:

"I now have approval to agree full and final settlement of this claim as set out on the attached sheet, subject to contract".

The attached sheet showed that the total compensation for land taken, plus director's time, section 17 planning fees and architect's and engineer's fees was £1,081,236. It also showed surveyor's fees of £37,897 plus "surveyor's fees not yet invoiced" of £11,940.80 and "further surveyor's fees to complete agreement" as well as unquantified legal and conveyancing fees. It added that the agreement was

"subject to contract and any reasonable terms that Prudential Assurance Company Limited's solicitors may require".

7. GVA Grimley's letter explained that

"The further [surveyor's] fees charged to Prudential for further work such as calculating the final payment and statutory interest and finalising the completion of the claim will be added to the claim when the figures are known".

8. On 16 April 2003 the claimant's solicitors, Messrs Lovells, wrote to the Treasury Solicitor, accepting the acquiring authority's unconditional offer of £1,081,236 plus VAT in full and final settlement of all heads of claim, subject to

"payment of the valuation surveyor's fee by the Highways Authority, such payment to be based on actual costs incurred"

and to payment of the claimant's legal costs.

9. The Treasury Solicitor replied on 13 June 2003, saying that he was

"troubled by your (sic) that the Highways Authority should pay your surveyor's actual costs rather than his reasonable costs. I am taking further instructions on this point and will revert to you again shortly."

10. On 23 June 2003 Lovells stated in a letter to the Treasury Solicitor

"I understand that my client's surveyor has agreed with the district valuer that the surveyor's fees will be agreed when we are close to completion of the conveyance."

11. On 11 July 2003 Lovells wrote to the Treasury Solicitor, confirming

"that the Prudential Assurance Company Limited accepts the Highways Authority's offer of the total sum of £1,081,236 (plus VAT) (less advances received) plus surveyor's fees, legal and conveyancing fees as discussed in previous correspondence."

12. On 16 July 2003 the acquiring authority's solicitors, Eversheds, wrote to Lovells asking for evidence of the claimant's title. They said

"your client surveyor's fees will be met along with your reasonable legal fees – please confirm what these will be".

13. On 22 September 2003, in an e-mail to the district valuer, GVA Grimley said

"The total fees charged to Prudential so far amount to £53,241 plus disbursements of £520 plus VAT. This figure excludes the planning fees charged by GVA Grimley to Prudential Assurance Company Ltd in relation to the S17 certificate which we have agreed separately…

I hope that the Highways Agency will accept that the above is reasonable. I think that the fee basis is reasonable and also that the amount is reasonable, taking account of the fact that it covers nearly 10 years of work.

There is a further £2,287 of time plus VAT logged since our last invoice.

There will be some further work involved in agreeing the outstanding statutory interest with the Highways Agency. It is difficult to say how long this will take at this stage. I would hope that any further work will not amount to more than £2,000 of time assuming there are no unforeseen difficulties. I would therefore suggest a figure as follows.

Invoiced work	£53,241.02
Non-invoiced work	£2,287.00
Further work	£2,000.00
Disbursements	£520.24
	£58,048.26
Plus VAT.

I note that you will ask the Highways Agency to provide me with its calculation of the statutory interest to be paid on completion of the conveyance."

14. GVA Grimley then wrote a letter to the district valuer on 6 October 2003, enclosing a breakdown of the hours worked on the case and hourly rates. The letter added

"Can you confirm that the fees set out in my e-mail to you dated 22 September are acceptable to the Highways Agency?

Can you also confirm that the Highways Agency will send me its statutory interest calculation?"

15. The district valuer replied on 9 October 2003, confirming that he had

"now reported the agreed surveyor's fee as set out in your e-mail of 22 September rounded to £58,050".

and adding that this fee was exclusive of interest and VAT.

16. Lovells wrote to Eversheds on 23 September 2003, returning the draft transfer deed TP1 with suggested amendments. They said

"We note that you have proposed to grant our client a limited right in respect of current service apparatus. Our client also requires rights in the event of future redevelopment or refurbishment of the retained property. The right should therefore be amended to cover future necessary services. Our client also informs us that methane venting trenches presently serving our client's property are partly within the land to be transferred to your client. The definition of Service Apparatus should therefore be amended to include this".

17. On 2 October 2003 Eversheds wrote to Lovells with the draft TP1 further amended. They said:

"Our client has advised that clauses relating to services, exceptions and reservations are to be removed".

18. In a letter to Eversheds dated 9 October 2003, marked "subject to agreement", and under the heading "Reservations", Lovells repeated their request that the transfer be amended to deal with the methane venting trenches as suggested in their letter of 23 September 2003. In addition they said

"We should be grateful if you would provide us with a solicitor's undertaking to pay our client's legal and surveyor's costs incurred in connection with the CPO. We understand that the final figures have now been agreed and that the district valuer has agreed that the Highways Agency's contribution to our client's surveyor's fees to be £58,048 plus statutory interest and VAT. Deducting payments already made, we estimate the remaining costs will be in the region of £83,500. In addition, we estimate that our legal costs will be £2000 plus VAT for the CPO and £1500 plus VAT for the conveyancing. However, we reserve the right to increase these costs if the conveyancing is unduly protracted or complicated. Please provide us with the necessary undertaking".

19. Eversheds replied on 4 November 2003. On the subject of "Reservations" they said

"We have taken our client's instructions with regard to this point and advise that our client would not normally covenant to allow a vendor to run services under a road. Services would almost certainly have been re-routed when the road was built so there should be no problem in there being services available. Statutory Authorities are responsible for the supply of services and have powers to lay them under local roads subject to consent from the Highway Authority.

Any further development would be subject to planning permission and the right to lay services to connect would form part of that permission. The Secretary of State will not covenant to allow services in the future either."

20. They added that they were

"not in a position to give an undertaking in respect of your costs but confirm that your reasonable costs will be met under section 23 of the Compulsory Purchase Act 1965".

21. On 18 November 2003, in a further letter marked "subject to agreement", Lovells informed Eversheds

"Our client's land is currently served by methane venting trenches which are partly on the land which is to be transferred. Our client will need to continue to use these trenches after the transfer. Therefore, we should be grateful if you would insert the following clause in the transfer:

'The right to lay use maintain cleanse inspect view renew repair and replace the methane venting trenches as now appear (or may in the future be required) on or under the Property for the use and benefit of the Retained Land' …

We note that the district valuer has agreed that the Highways Agency's contribution to our client's surveyor's costs to be £43,196.73 plus VAT and statutory interest. We attach a schedule setting out the monies payable to our client calculated up to 30 October 2003. You will note that the total outstanding on 30 October 2003 is £919,821.06 (inclusive of VAT), excluding legal fees. As mentioned in our letter of 9 October 2003, we estimate that our legal costs for the compulsory purchase and conveyancing will be in the region of £3,500 plus VAT.

We should be grateful if you would arrange for the payment of the above sums to be made prior to completion, together with statutory interest from 1 November 2003 up till the date of payment."

22. [Note: the figure stated for surveyor's costs was an error. The attached schedule was headed "final payment of compensation due". It indicated that surveyor's fees were £58,050 and statutory interest thereon was £43,196.73. A note to the schedule stated that further statutory interest would accrue after 30 October 2003 if final payment was not made by then].
23. Eversheds replied on 8 December 2003. On "Reservations" they said

"We have taken our client's instruction with regard to this clause and are of the opinion that maintenance of such a duct would be covered by the Public Works Act".

The letter also noted that the claimant's surveyor's fees were £58,050 plus VAT and confirmed that the sums mentioned in Lovells's letter would be paid on completion.

24. On 15 January 2004 Eversheds sent an e-mail to Lovells and again confirmed that the acquiring authority was not prepared to accept the claimant's proposed clause concerning the methane venting trenches.
25. In view of this impasse GVA Grimley, on instructions from the claimant, carried out investigations during the spring and summer of 2004 to establish exactly where the trench was situated, the implications if the claimant was not able to maintain the trench, the requirements necessary for carrying out the maintenance work and the need for and potential cost of the relocation of the trench if the acquiring authority continued to refuse access.
26. In a letter to the Tribunal dated 20 May 2004 GVA Grimley requested a stay of the proceedings until 26 November 2004. They said

"The reason for this request is that although principal compensation terms have been agreed, there is a disagreement between solicitors regarding the terms of the land transfer. In particular there is disagreement regarding the use of and access for maintenance purposes to methane venting trenches on the land acquired by the Highways Agency.

The Prudential's retained property is built on made up ground which requires methane venting trenches to allow methane produced by the land fill material to escape. Part of a methane venting trench is now on land acquired by the Highways Agency which now forms part of the highway verge. Prudential require rights to use and maintain the part of the trench which is now on highway land, but the Highways Agency will not grant these rights. If agreement cannot be reached, there could be an additional claim for compensation which might need to be referred to the Lands Tribunal.

We are currently carrying out investigations into the trenches to help resolve this matter however we do not believe that it will be agreed within three months. Therefore I have requested a six month stay of proceedings which I hope will allow the matter to be finalised."

27. Copies of this letter were sent to the Treasury Solicitor and the district valuer. No objections were made to the application for an extension, which was granted on 4 June 2004.
28. As GVA Grimley had been involved with the site for a number of years, they began by reviewing their old planning files to see if they had any information regarding the trench. They then consulted WSP Environmental, who had been instructed by the claimant to carry out quarterly gas monitoring at the site in perpetuity in coordination with Chichester District Council Environmental Health, the Environment Agency and the claimant and to survey the vent trench to determine areas in need of maintenance. GVA Grimley asked WSP Environmental to carry out a site visit to establish exactly where the trench was situated and how much of it was on the land to be transferred. As the acquiring authority were still refusing access to the trench, WSP Environmental were asked to provide quotes as to the cost of re-routing the trench and to advise on the implications of not maintaining it.
29. GVA Grimley wrote to the district valuer with details of their progress on 21 September 2004. They explained the investigations that they had been carrying out and the potential for an additional compensation claim. The district valuer replied on 27 September 2004. He did not raise any concerns regarding GVA Grimley's investigations or the instruction of WSP Environmental. As the stay of proceedings was due to expire again and the acquiring authority were still refusing to include the trench clause, GVA Grimley applied to the Tribunal for a further extension, which was granted.
30. After receiving information from WSP Environmental GVA Grimley wrote to the district valuer on 19 November 2004, outlining the dangers if the trench was not maintained and including details regarding the re-routing of the trench and the consequential costs which would need to be added to the claim. They invited the district valuer to meet them on site together with WSP Environmental and Lovells to try and resolve the matter. The district valuer replied on 26 November 2004, declining that invitation on instructions from the acquiring authority. Eversheds wrote to Lovells on 25 November 2004, stating that they were now prepared to include a clause in the transfer allowing the claimant the right to maintain the trench on the subject property.

Submissions

31. On behalf of the claimant, Mr Mark Davey BSc (Hons) MRICS, head of compulsory purchase compensation at GVA Grimley, said that it had taken the acquiring authority over a year to accept the trench clause. If his firm had not carried out the investigations which they did, the clause would not have been agreed. The acquiring authority should therefore reimburse the claimant for its surveyor's fees for investigating the matter, as well as for WSP Environmental's fees and the time spent by Prudential staff. The amount claimed is made up as follows:

GVA Grimley invoices, various dates between 8 January 2004 and 22 April 2005	£14,297.50
WSP Environmental invoice 28 June 2004	£ 675.00
Prudential staff 7 hours @ £120	£ 840.00
Total (excluding VAT)	£15,812.50

32. On behalf of the acquiring authority, the Treasury Solicitor submitted that, following the acceptance (subject to two reservations) by the claimant on 16 April 2003 of a full and final offer made by the acquiring authority on 7 April 2003, compensation terms were agreed. The reservations related to the payment of surveyor's fees and legal costs of the transfer. Those matters were dealt with in further correspondence on 7 and 11 July 2003 and an unequivocal acceptance of the offer made. Following the acceptance by the claimant of an offer following the service of a notice to treat, a "statutory contract" is made, enforceable by either party.
33. The Treasury Solicitor submitted that in this case a statutory contract arose in April 2003 or alternatively July 2003, to the effect that compensation terms had been settled on a full and final basis and any further sums claimed by the claimant cannot therefore be entertained. The Treasury Solicitor added that it would appear that the claimant was seeking to claim for the fees of GVA Grimley as in some way assisting in the conveyancing/transfer process. Any dispute on the costs of the land conveyance fell to be dealt with by the High Court pursuant to section 23(3) of the Compulsory Purchase Act 1965. The Tribunal had no jurisdiction to deal with them.
34. Without prejudice to these submissions the acquiring authority took issue with the fees claimed for the following reasons. They were never consulted about the work which GVA Grimley was undertaking on behalf of the claimant. The acquiring authority should have been consulted if the claimant sought to charge them for Grimley's work. Secondly, the issue between Eversheds and Lovells concerning the wording of the transfer was a legal one and not a surveying one. The input of GVA Grimley did not assist in resolving the issue. In any event, the wording of the draft transfer was agreed between the acquiring authority and Lovells direct, with the acquiring authority having no knowledge of GVA Grimley's work.
35. In reply, Mr Davey denied that surveyor's fees had been agreed on a final basis. He said that the intention was always that fees would be based on the actual figure when the completion date was known. Moreover, there could not have been agreement of a final figure on 16 April 2003 or 11 July 2003 as suggested by the Treasury Solicitor, because on 16 July 2003 Eversheds asked for confirmation of an amount for fees. As to the suggestion that there was a statutory contract, Mr Davey pointed out that his firm's letter to the district valuer of 2 April 2003 and the accompanying schedule stated that agreement was subject to contract. There was therefore no statutory contract at that time. In any event, it was clear from the correspondence between 2 April 2003 and 16 July 2003 that any agreement was subject to the claimant reserving its right to add further sums to the claim if necessary.
36. Mr Davey rejected the suggestion that his firm's fees were for work directly related to the conveyance. He said that their costs arose out of the acquiring authority's refusal to grant the necessary rights to the claimant to maintain the venting trenches. This required GVA Grimley to assess the impact of the trenches not being maintained on the claimant's remaining property and to assess the additional compensation that would be claimed if the necessary rights were not granted. This was a matter that should be treated as part of the compensation negotiations between GVA Grimley and the district valuer and was therefore part of the compensation claim. The matter was dealt with at a later stage in negotiations because the trench problem did not materialise until after the solicitors were instructed. The fact, however, that these costs were incurred at a later stage should not prevent the claimant being reimbursed, as the costs were necessarily and reasonably incurred. Mr Davey also denied that the acquiring authority were not consulted about the work that GVA Grimley were undertaking. GVA Grimley's letter to the Tribunal dated 20 May 2004 was copied to the Treasury Solicitor. It mentioned the trench issue and the fact that GVA Grimley were carrying out investigations to help resolve the matter. The matter was again referred to in GVA Grimley's letter to the district valuer of 21 September 2004.
37. As for the suggestion that GVA Grimley did not assist in resolving the legal issue regarding the wording of the transfer, Mr Davey said that the wording of the transfer was a matter for solicitors, but the trench issue was a matter that needed to be investigated by surveyors. It was necessary for the surveyors to investigate the matter to determine the impact of the acquiring authority's refusal to grant access to the trenches on the claimant's remaining land and whether further compensation would be claimed.
38. GVA Grimley wrote to the district valuer on 19 November 2004 setting out the results of their investigations and the consequences in terms of compensation of the necessary rights not being granted. On 25 November 2004 Eversheds wrote to Lovells suggesting wording for a clause to provide access to the trenches. The involvement of GVA Grimley therefore assisted in the settlement of the trench issue and the district valuer and the Treasury Solicitor were both aware of GVA Grimley's involvement.

Conclusions

39. Two issues arise for my determination: firstly whether there was a concluded agreement between the parties that precludes the claimant from claiming its surveyor's fees and other costs now in dispute; and secondly, if there was no such agreement, whether the compensation should include any, and if so how much, of such costs.
40. In my judgment there was no concluded agreement as at April 2003, as the acquiring authority assert. The letter of 2 April 2003 from GVA Grimley stated that the agreement to the terms was subject to contract and any reasonable terms that the claimant's solicitors might require, and explained that further surveyor's fees would be added. Clearly at that point there was no concluded agreement. Similarly Lovells' letter of 16 April 2003 accepting the offer was stated to be subject to payment of the valuation surveyor's fee, such fee to be based on the actual costs incurred. In view of that reservation, there was no concluded agreement, and indeed when the Treasury Solicitor replied on 13 June 2003 he made clear that there was no acceptance on his part of the proposal that the payment of the surveyor's fee should be based on the actual cost.
41. However, the exchange of letters between Lovells and Eversheds on 11 and 16 July 2003 in my view removed the outstanding point of disagreement. Eversheds' letter confirmed that the surveyor's fee would be met, and, in the light of the previous correspondence, that meant the fees actually incurred in relation to the agreed compensation. The cost of the work subsequently done by GVA Grimley in investigating the methane venting trenches and the implications if the claimant was not able to maintain the trench, including the potential cost of relocation, was not in my view covered by the agreement. Compensation had been agreed, and there was nothing in the agreement providing for an increase in the compensation to reflect any difficulties that might be encountered in maintaining the methane venting trenches. Consequently any surveyor's fees relating to this were not covered. It may well be that the investigations that were carried out were prudent – indeed they may, on any reasonable view, have been essential in the interests of the claimant – but the costs of them were not covered by the agreement that had been reached in July.
42. I determine therefore that the costs incurred by the claimant as a result of the reluctance of the acquiring authority to accept a clause in the transfer deed relating to the methane venting trenches do not fall to be reimbursed by the acquiring authority.
43. The parties are now invited to make representations as to costs. A letter relating to that accompanies this decision, which will take effect when but not until the question of costs has been determined.

Dated 21 October 2005

N J Rose FRICS