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Cite as: [2005] EWLands ACQ_42_2004

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Wellington v Secretary of State for Transport [2005] EWLands ACQ_42_2004 (28 September 2005)

ACQ/42/2004

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – woodland – hope value – severance and injurious affection – function and jurisdiction of Lands Tribunal – negotiations not evidence of value and usually inadmissible – compensation awarded: £6,000 plus reasonable surveyor's fees

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN EDWIN NORMAN WELLINGTON Claimant

and

SECRETARY OF STATE FOR TRANSPORT Respondent

Re: Woodland

Blue Bell Hill

near Chatham

Kent

Before: P H Clarke FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on 20 September 2005

The claimant did not appear and was not represented at the hearing

Mr Tim Buley instructed by the Treasury Solicitor for the acquiring authority

DECISION

This is a reference heard under the simplified procedure to determine the compensation payable for the compulsory acquisition of woodland at Blue Bell Hill, near Chatham in Kent.

The claimant, who is elderly and lives in Scotland, notified the Tribunal that he would not be attending the hearing and I agreed to take into consideration his written representations. Mr Tim Buley of counsel appeared for the acquiring authority and called Mr Christopher Brian Hunt BSc MRICS, a director of Gerald C Scott Limited, chartered surveyors, consultants to W S Atkins, valuers to the Highways Agency. Mr Hunt was previously employed by W S Atkins and dealt with claims arising out of the widening of the A2/M2, including this claim.

I made an unaccompanied inspection on 21 September 2005.

Facts

The Channel Tunnel Rail Link Act 1996 authorises the construction, maintenance and operation of a high speed railway between London and Folkestone and the widening of the A2 Trunk Road and the M2 Motorway between Junctions 1 and 4 on the outskirts of the Medway Towns, including the compulsory acquisition of land shown on the deposited plan for these purposes. This reference is concerned with plot 104A (which I will call "the acquired land" or "the reference land"). Notice to treat and notice of entry were served on 22 July 1998 and possession was taken on 21 September 1998. This is the date of valuation. An advance payment of compensation has been made. Accommodation works comprising fencing to the site frontage with two gate openings and a cross-over to the service road which now gives access to the land have been carried out. The claimant referred the determination of compensation to this Tribunal on 10 October 2004. The acquiring authority declined to agree to the use of the written representations procedure under rule 27 of the Lands Tribunal Rules 1996 and the Registrar directed that the proceedings be determined under the simplified procedure (rule 28).

The general location of the acquired land is where the M3 Motorway passes under the A229 Chatham to Maidstone Road, at Junction 3, on the southern outskirts of Chatham. The area is known as Blue Bell Hill. Before acquisition Mr Wellington owned an oblong plot of woodland with an area of 1.9 acres, situated on the west side of, and with frontage to, a service road at the rear of houses fronting the A229. The reference land is the eastern part of the plot, with a site area of 0.88 acre. It is now largely under the widened carriageway of the A229 and a new service road to the west of the previous road which now gives access to Buckmore Park Scout Camp and Buckmore Park Go Kart Track. The land retained by Mr Wellington ("the retained land") comprises 1.02 acres of dense woodland. This land has a frontage to the new service road which joins the A229 at a roundabout to the south. To the north and east is the built up area of Rochester and Chatham, to the south is largely open country to Maidstone and to the west is woodland, including the Scout Camp.

Mr Wellington owns the freehold interest in the reference land and retained land. There were, and are, no tenancies.

In the Kent Structure Plan the reference land and retained land are in an area of Outstanding Natural Beauty of Special Landscape, covered by Policy ENV3 (a presumption in favour of retention of undeveloped land).

Claimant's case

Mr Wellington seeks compensation in excess of £10,000, but the claim could have been higher (up to £50,000) if he had been able to find an independent expert witness, otherwise it would be difficult to justify such a large amount.

The retained land drops away from the service road and now has only electricity. On the opposite side of the road is a large reed bed drainage pond with a high fence. The slip road and the A229 are built on an embankment leading to more noise and pollution. These factors devalue the retained land and will make it difficult to develop if it is ever rescheduled.

Mr Wellington said that he received information in November 2001 that planning permission had been given in 1998 for a road to a Go Kart Track which went across his land. This road was subsequently built by the Highways Agency and the land compulsorily acquired. Mr Wellington also referred to the grant of planning permission for a leisure centre with access from the A229 to car parks and associated buildings for Buckmore Park Scout Centre. This land remained land of outstanding natural beauty and development was refused.

In September 1998 Mr Wellington appointed a surveyor to act for him. He reached a provisional agreement with the Highways Agency but Mr Wellington thought the figure too low. In January 2003 he took over the negotiations but was unable to reach agreement.

Commenting on Mr Hunt's expert report, Mr Wellington said that plots 7 and 104B are not comparable because neither suffered injurious affection. In September 2001 his surveyor said that his land would have sold for £5,000 to £10,000 per acre with long term hope value, without considering injurious affection to the retained land. All value figures are vague, including those provided by Mr Hunt, who has done little to justify his assessment of compensation.

Acquiring authority's case

Mr Hunt said that he assessed the compensation payable for the reference land to be £5,000 plus £1,000 for Mr Wellington's time (over and above the work undertaken by his surveyor) and reasonable surveyors' fees. The value of the land taken represents long term hope value. In support Mr Hunt referred to the tone of values in the area at the valuation date as shown by settlements in respect of plots 7 and 104B.

Commenting on Mr Wellington's statement that the scheme had led to injurious affection due to the removal of services, Mr Hunt said that, given the planning designation, the reduction in services did not affect the value of the retained land. The claimant has not proved any loss of development value, eg by obtaining an alternative use certificate under section 17 of the Land Compensation Act 1961. The planning designation precludes development. The owners of plots 30 and 31 were unsuccessful in obtaining section 17 certificates for residential development. The underlying value of the land is as woodland (in perpetuity) and the provision of services is of little impact. Similarly, the level of the carriageway relative to that of the retained land does not affect the value as woodland. Mr Wellington has referred to physical factors which might be discharged onto the retained land but these are concerned with claims under Part I of the Land Compensation Act 1973. In this case the total effect of the scheme is considered under injurious affection. The physical factors referred to by Mr Wellington do not have a demonstrable effect on the value of the retained land as woodland, before and after the scheme, close to the M2. No valuation evidence has been put forward to show that woodland close to a main road is worth less than woodland in a quieter setting.

Decision

Before I deal with the compensation payable for the reference land it may be helpful, having regard to correspondence from Mr Wellington before the hearing, if I explain the function and jurisdiction of the Lands Tribunal.

The Tribunal was established in 1950 to determine disputed compensation for land compulsorily acquired. It is, as its name (a tribunal) suggests, a judicial body and must therefore act judicially, that is to say it receives evidence and submissions from the parties (usually at a hearing) and makes a decision based solely on the material put before it. The Tribunal does not make an independent valuation of the land, as suggested by Mr Wellington. It makes an independent determination of value based on evidence and submissions. Although some members of the Tribunal are valuers, we do not make our own valuation of the land acquired but act as an arbitrator to evaluate the evidence and determine the value. We cannot, as suggested by Mr Wellington, make our own investigations and provide our own evidence, although we can, and often do, put questions to the parties on matters which we think are significant or which require clarification.

It follows therefore from our judicial role that a claimant, who has the burden of proof to prove his loss, but who does not put expert valuation evidence before the Tribunal, is at a disadvantage. The member hearing the reference can evaluate the acquiring authority's evidence and is not bound to accept the whole of it, but he is limited as to the extent to which he can make a determination outside that evidence.

It is against this background that I consider the compensation payable to Mr Wellington. Part only of his land has been taken and he is entitled to compensation for the market value of the land acquired and for any reduction in the value of the retained land caused by severance and injurious affection. Mr Wellington claims compensation of not less than £10,000; Mr Hunt spoke to a total figure of £6,000, comprising £5,000 for the land acquired and £1,000 for Mr Wellington's time plus reasonable surveyors' fees. The compensation is to be assessed as at the date of entry, 21 September 1998.

When open land is acquired by compulsory purchase there are usually three ways in which the value may be determined: by compassion with open market sales, by reference to settlements and by the residual method of valuation.

The basis of valuation on compulsory purchase is open market value ("the amount which the land if sold in the open market by a willing seller might be expected to realise"). The effects of the compulsory purchase and the scheme underlying it are to be disregarded. The best evidence of value is usually open market sales of land comparable to the land acquired. Unfortunately in this reference neither party has been able to refer to open market sales close to the date of valuation.

Similar to open market sales, although of less weight, are settlements of compensation with other owners. These are not open market sales between willing parties but forced sales where compensation has been agreed as if they were open market transactions. There are given less weight than market evidence for several reasons, eg they may be affected by an anxiety on the part of the claimant to settle without the expense and stress of Tribunal proceedings; they may become, in a large scheme, self-perpetuating and a substitute for proper valuation in a particular case; and there may be disagreement as to analysis. Nevertheless, settlements are some evidence of value and, in this reference they are the only evidence. Mr Hunt referred to two settlements. Plot 7: 1.03 acres of woodland acquired as at September 1998 for £1,648. This can be analysed to show £1,600 per acre with no injurious affection to the retained land. Plot 104B: 2.576 acres of woodland adjoining the reference land acquired as at September 1998 for £4,250. Mr Hunt analysed this figure to show £1,650 per acre with no allowance for injurious affection or £1,250 per acre with £1,000 for injurious affection. He preferred the former analysis. These settlements indicate a woodland value at the valuation date of about £1,600 to £1,650 per acre, a figure which seems to me to be reasonable and which I accept in the absence of other evidence.

Where more reliable evidence is absent, it may be possible to use a valuation process to find the value of open land known as the residual method. It can only be used, however, for development land where the form of development is known and imminent, eg where planning permission has been granted and the land is immediately ready for development. This method involves assessing the value of the completed development and deducting costs and profit to find the residual land value. It cannot be used in this case.

Both parties have referred to the negotiations which took place between Mr Wellington's surveyor and Mr Hunt. Various offers and counter-offers were made and there was a provisional agreement which Mr Wellington did not accept. These negotiations are not evidence of value: they are attempts to settle a dispute. Normally, they would be inadmissible in this Tribunal on grounds of public policy, namely that parties in a dispute should be encouraged to settle their differences without recourse to litigation and would be discouraged from doing so by the knowledge that offers and other admissions made in an effort to reach a compromise might be used to their detriment in later proceedings. Although as a general rule of law this evidence is inadmissible, I have not excluded it in these simplified procedure proceedings where the strict rules of evidence do not apply. However, I give it no weight, finding it of no assistance as to value. Parties in this Tribunal (usually unrepresented) often refer to negotiations as if they are evidence of value, but for guidance I would say that, in general, they are inadmissible for the reasons given above. Even if admitted, they are not of assistance to the Tribunal as indications of value, although they may be relevant as to costs.

The value of vacant land may exist on one of three levels: existing use value, hope value and development value. Where the location of the land and other circumstances (eg planning policy) show that there is no prospect of future development the value of the land is usually the existing use value, eg as agricultural land or woodland. In this case, I find that £1,600 to £1,650 per acre as woodland represented the existing use value of the reference land at the valuation date, giving a total existing use value of between £1,400 and £1,450. Neither party has argued for development value and I agree, having regard to the location of the reference land and the restrictive planning policy. In between is hope value, a figure between existing use value and development value (although usually closer to the former) representing the hope of development on the land at some time in the future. Hope value by its nature is uncertain, speculative and difficult to quantify. Mr Wellington, by referring to a claim in excess of £10,000, appears to be asking for hope value (although he does not divided his claim between land taken and injurious affection). Mr Hunt has accepted long term hope value as the appropriate basis of valuation for the reference land. In my judgment, having inspected the land and having regard to Policy ENV3 in the Kent Structure Plan and the allocation as part of an Area of Outstanding Natural Beauty, I think this is generous to the claimant. However, I accept it as the basis of valuation though I am doubtful whether the land had any hope value at the date of valuation. Mr Hunt's total figure of land compensation is £5,000. With a maximum existing use value of £1,450 as woodland this leaves £3,550 as hope value for the land taken with no compensation for severance and injurious affection or a lower figure for the land taken with some allowance for the depreciation of the retained land. I will now look at the question of injurious affection before returning to the compensation to be awarded.

Where part only of an owner's land is compulsorily acquired he is entitled, in addition to the value of the land taken, to compensation for severance and injurious affection. This represents the reduction in the value of the retained land due to:-

(i) the loss of the land taken in cases where the remaining land cannot be so advantageously used or developed as it could have been when part of the larger area (severance); and

(ii) the execution of the works for which the land has been taken and the use of the land under statutory powers (injurious affection).

The land acquired from Mr Wellington now forms part of the carriageways of the A229 and the new service road and a reed bed. Use of the acquired land is for highway purposes. Mr Wellington seeks to justify his claim for injurious affection under three heads: lack of services, the carriageway level in relation to the retained land and physical factors. It is not suggested that the retained land has been reduced in value by its severance from the land acquired.

Before acquisition Mr Wellington's larger site had frontage to a service road at the rear of houses fronting the A229. This service road had gas, electricity and water; the new service road to which the retained land has frontage has only electricity. If the retained land had potential for development I would agree with Mr Wellington that the loss of gas and water services would reduce the value of the land. At best, however, it has only a long term hope value for development and I agree with Mr Hunt that, in these circumstances, the loss of the two services has not reduced the hope value.

Next, Mr Wellington says that the A229 and the slip road are above the level of the retained land and this will lead to water and dirt accumulating on his land. I cannot agree that the higher level of A229 and the slip road has reduced the value of the retained land as woodland or any long term hope value it may have. The service road is the same level as the retained land.

Finally, Mr Wellington has referred to physical factors (eg noise, vibration, smell, etc) being discharged on to the land. I agree with Mr Hunt that Mr Wellington, by his particular list of physical factors, is referring to claims under Part I of the Land Compensation Act 1973 where no land has been acquired. But, nevertheless, if these factors arising out of the use of A229 and the M2 Motorway cause depreciation to the value of the retained land compensation would be payable as injurious affection. I cannot, however, find that this is the case; there is no evidence to support it. The retained land is woodland with possible long term hope value, still accessed from a service road off the A229, and I do not think that woodland or woodland with hope value is reduced by the use of the A229 and the M2 Motorway.

In summary, if the retained land had a realistic development potential then the factors referred to by Mr Wellington – loss of services, levels and physical factors – might have reduced the development potential of the land and consequently the value reflecting that potential. That is not, however, the position. The land has an existing use value as woodland with, at best, a small uplift to reflect long term hope value. Those values are not affected by the above factors and I award no compensation for severance and injurious affection.

I return now to the compensation to be awarded for the land acquired. Mr Hunt's figure is £5,000. Existing use value as woodland is £1,450 leaving £3,550 as long term hope value. As I have said I am doubtful whether the reference land had any hope value at the valuation date, even in the long term, having regard to its location and planning policy. Mr Hunt has, however, put forward a higher value than woodland value and I accept it as generous to the claimant. I award £5,000 for the acquisition of the reference land (with no compensation for severance and injurious affection).

Mr Wellington has not claimed for his time but Mr Hunt has offered £1,000 for this loss, which I accept although I think it is generous to the claimant, having regard to the fact that he appointed a surveyor who negotiated an agreement with the acquiring authority.

As I have said, Mr Wellington appointed a surveyor to act for him. Mr Hunt has offered, and I accept, that his reasonable fees should be paid by the acquiring authority. I suggest that they be based on the Rydes Scale in force when Mr French was acting for Mr Wellington.

My determination is therefore that the total compensation payable to Mr Wellington for the compulsory acquisition of the reference land is £6,000 (six thousand pounds) plus the reasonable fees of his surveyor for negotiating with the Highways Agency. Interest on the compensation awarded and Mr Wellington's legal costs in connection with the transfer of the acquired land to the acquiring authority are governed by separate statutory provisions, outside the jurisdiction of this Tribunal.

This decision determines the substantive issues in this reference and will take effect as a final decision for the purposes of an appeal when the outstanding question of costs has been determined. Mr Buley requested that costs be reserved and, in the absence of Mr Wellington at the hearing, I agreed. Costs are not normally awarded under the simplified procedure but rule 28(11) of the Lands Tribunal Rules 1996 (as amended) contains exceptions to this general rule, namely where there has been an offer or the Tribunal regards the circumstances as exceptional. I will therefore consider any representations which the parties may wish to make as to costs and a letter accompanying this decision sets out the procedure for submissions in writing. If either party should ask for costs their submissions should state the amount claimed, supported by documentary or other evidence, so that a fixed sum can be awarded. My determination as to costs will be contained in an addendum to this decision.

Dated 28 September 2005

(Signed) P H Clarke