UT Neutral citation number: [2010] UKUT 92 (LC)

LT Case Number: ACQ/174, 280, 284,285, 433, 434, 435, 436, 444, 458, 459, 465, 466, 467, 468, 469, 470, 474, 475, 479, 482, 483, 485/2009, ACQ/54, 282, 285, 286, 307/2010

                            TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – compulsory purchase – tubes of subsoil acquired for Channel Tunnel Rail Link – determination of compensation where no communication possible with claimants or where claimants have agreed compensation but not completed conveyance – held nominal amount of £50 payable as no market for acquired property

                                IN THE MATTER OF 28 NOTICES OF REFERENCE

BETWEEN                 DAVID JEAN MICHEL MAURICE COUDRIER

                                                                 AND OTHERS                                         Appellants

                                                                           and

                                                   THE SECRETARY OF STATE                             Acquiring

                                                             FOR TRANSPORT                                       Authority

                        Re: Subsoil beneath various properties in north and east London

                                                         Before: A J Trott FRICS

                                  Sitting at 43-45 Bedford Square, London WC1B 3AS

on 26 March 2010

James Pereira, instructed by Cripps Harries Hall LLP, solicitors of Tunbridge Wells, for the acquiring authority.

The claimants did not appear and were not represented.

The following case is referred to in this decision:

Matharu and Others v the Secretary of State for Transport [2010] RVR 49

                                                                    DECISION

Introduction

1.           These references relate to the acquisition of twenty eight subsoil interests by the Secretary of State for Transport (the acquiring authority) that were required for the construction of the Channel Tunnel Rail Link (CTRL) as it passes in a twin bore single track tunnel underneath north and east London.  This part of the CTRL is referred to as section 2 and runs from Southfleet Junction near Ebbsfleet to St Pancras Station in London.  Section 2 was opened in November 2007. 

2.     The acquiring authority took possession of the subsoil interests at various times from 1 September 2002, having first served notices to treat and notices of entry.  The acquiring authority wishes to grant a lease of the railway and tunnels to the nominated operator but cannot do so without first acquiring the freehold interest in the relevant land.  The Tribunal’s determination of the references will enable the acquiring authority to acquire the land by deed poll if it is unable to reach agreement with the freeholder.

3.           The acquiring authority divided the references into three categories; those where it sought a determination (24), those where it sought further directions (2) and those where it sought a stay of proceedings (2).  The references for determination were sub-divided into three groups.  Firstly, there were fourteen references where the conveyance of the subsoil was progressing with the owner but had not yet completed.  One of these references (ACQ/459/2009) was in respect of land that was within the original notice to treat but was additional to that already conveyed.  Secondly, there were six references where there had been no communication with the claimant since referral.  Two of these references (ACQ/433/2009 ad ACQ/434/2009) were in respect of land that was within the original notices to treat but was additional to that already conveyed.  Thirdly, there were four references where the claimants had not agreed to transfer their interest and had failed to provide a properly pleaded statement of case to support their claim in breach of directions from the Tribunal requiring them to do so.

Statutory provisions

4.           The compulsory acquisition of land for the purposes of the CTRL was authorised by the Channel Tunnel Rail Link Act 1996.  The CTRL Act received the Royal Assent on 18 December 1996.

5.           Section 1 of the CTRL Act authorised the construction and maintenance of the works specified in Schedule 1 to the Act (“The scheduled works”), being works for the construction of a railway between St Pancras and the Channel Tunnel portal at Castle Hill, Folkestone.

6.           Section 4(1) of the CTRL Act authorised the Secretary of State to acquire so much of the land shown on the deposited plans within the limits of deviation for the scheduled works as might be required for or in connection with the authorised works.

7.           Part II of Schedule 4 to the CTRL Act concerns the application of legislation relating to compulsory purchase.  Paragraphs 2 and 3 of Part II of Schedule 4 provide that, subject to certain modifications, the Compulsory Purchase Act 1965 applies to compulsory acquisition under section 4 of the CTRL Act, as it applies to compulsory acquisition under the Acquisition of Land Act 1981, and as if the CTRL Act were a compulsory purchase order under the 1981 Act. 

8.           By paragraph 3(2) of Part II of Schedule 4 to the CTRL Act, the time limit for service of a notice to treat under the Compulsory Purchase Act 1965 did not apply to the CTRL Act.  Instead, section 47 of the CTRL Act provided that the time limit for the service of a notice to treat was five years from the date the CTRL Act was passed.

9.           Part III of Schedule 4 to the CTRL Act contains supplementary provisions.  Paragraphs 6(1) and 6(2) of Part III of Schedule 4 provide that, for certain numbered plots, only the subsoil could be acquired by compulsory acquisition.  All of the references currently before me concern plots falling under paragraph 6(1), where compulsory acquisition of the subsoil only was authorised.

10.        Section 7 of the Compulsory Purchase Act 1965 provides that the assessment of compensation for land taken is to have regard not only to the value of the land to be purchased but also to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise by injuriously affecting that other land.

11.        Section 9 of the Compulsory Purchase Act 1965 provides, in effect, that if a landowner refuses to convey land after the acquiring authority has tendered the compensation awarded in respect of it, it shall be lawful for an acquiring authority to execute a deed poll to vest title of land in the acquiring authority absolutely, once it has paid the compensation into court.

12.         Paragraph 10(1) of Schedule 1 of the 1965 Act provides that when compensation agreed or awarded by the Tribunal has been paid into court, the owner of the land, including all parties who are enabled to sell or convey the land by virtue of Schedule 1, shall duly convey the land or interest to the acquiring authority when it requires them to do so.  By paragraph 10(2) of Schedule 1 the acquiring authority may acquire the land by executing a deed poll if the parties in question fail to adduce good title or fail to duly convey the land as required by paragraph 10(1).

13.        Compensation in respect of any compulsory acquisition shall be assessed in accordance with the rules contained in section 5 of the Land Compensation Act 1961.  By rule 2, the value of land acquired is to be taken as the amount that the land might be expected to realise if sold in the open market by a willing seller.  By rule 3, the special suitability or adaptability of the land for a purpose shall not be taken into account where it is a purpose for which there is no market apart from the requirements of any authority possessing compulsory purchase powers.  By rule 6, the provisions of rule 2 do not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land.

14.        Schedule 2 to the CTRL Act contains further and supplementary provisions relating to works.  Paragraph 6 of that schedule enables the nominated undertaker to underpin or strengthen a building within a distance of 50 metres of works involving an underground railway where it is necessary or expedient to do so in connection with the construction of the works.  Where such powers are exercised under paragraph 8 the nominated undertaker shall compensate the owners and occupiers of the building or land for any loss that they may suffer by reason of the exercise of the powers.  Paragraph 8 provides, in effect, that such losses are not a part of the acquiring authority’s liability to pay compensation for the acquisition of land.

References for determination

15.        Ms Amy Clare Rogers, a solicitor with Cripps Harries Hall LLP, gave evidence about the background and history of the references where the acquiring authority was seeking a determination of the claim.

16.        There were fourteen references where the conveyancing of the subsoil interest was progressing and was likely to be completed.  The acquiring authority was seeking a determination as a precaution in the event that such completion did not take place, either at all or in a timely manner.  In ten of these references the claimant was a London borough council, the London Borough of Newham being the claimant in six of them.

17.        In six of the references the acquiring authority had been unable to secure the acquisition of the subsoil because there had been a lack of communication with the claimants.  Ms Rogers described the background to each claim and explained the detailed efforts that the acquiring authority had made to contact the claimants.

18.        There were four claims where communication had been established but the claimant had not accepted the offer of compensation made by the acquiring authority.  The first of these was reference ACQ/174/2009 where the claimant, Mr David Coudrier, had purchased the subject property after the tunnelling works were completed.  He advised the acquiring authority on 10 August 2009 that he did not accept its offer.  On 2 October 2009 the Tribunal directed the claimant to file and serve a statement of case by 12 October 2009.  He failed to do so because had had not received a copy of the Tribunal’s order.  The Tribunal issued further directions that the claimant file and serve his statement of case by 23 November 2009.  These directions were still not complied with and so the acquiring authority sought a determination at the hearing on 26 March 2010.

19.        The claimants in the other three references where the acquiring authority’s offer of compensation had been declined (AQ/280, 284 and 285/2009) were Mr John Dromey and Ms Kathleen O’Donoghue.  The references all relate to 30-32 Manbey Grove.  There had been extensive correspondence with Mr Dromey about the effect of the CTRL works upon the property.  The case was unusual because it had been necessary to undertake underpinning works to the property before tunnelling works took place beneath it.  The foundations of 30-32 Manbey Grove had been excavated by the claimants to form a void space (in preparation for the creation of more accommodation) but, because structural engineers had declared the building to be dangerous, this space had been backfilled with concrete.  The acquiring authority said that the CTRL Act 1996 made specific provision in paragraph 6 of Schedule 2 for underpinning buildings and in paragraph 8 for the payment of compensation for any loss which the owners and occupiers might suffer by reason of the exercise of such powers.  This was separate and distinct from any claim that the claimants had in respect of the acquisition of the subsoil from beneath the property and which formed the subject of these three references.

20.        Mr Dromey and Ms O’Donoghue failed to comply with directions issued by the Tribunal on 23 November 2009 allowing an extension of time until 14 December 2009 for the service of their statement of case.  Consequently they were debarred from calling evidence in support of their claims.

21.        Mr Colin Smith FRICS, a Senior Director and Head of the Compulsory Purchase Team at CB Richard Ellis gave expert valuation evidence.  He was first instructed to advise in respect of CTRL in September 1995 and was instructed to deal with the acquisition of subsoil interests in Section 2 in 2007.

22.        Mr Smith produced expert reports in respect of all the references for which a determination was sought. These reports were in the same format as those presented by Mr Smith in Matharu and Others v the Secretary of State for Transport [2010] RVR 49 at paragraphs 39 to 45, and he relied upon the arguments that he had put forward in that case.  In summary he said that there was no open market value for a “tube” of subsoil some 24m below ground level as there would be no demand for it apart from the requirements of a body possessing compulsory purchase powers.  He therefore placed a nominal value of £50 upon the subsoil being acquired, regardless of the depth, length or volume of land taken.

23.        Mr Smith said that he was unaware of any costs or losses arising that might have given rise to a claim under rule 6 of section 5 of the Land Compensation Act 1961.  Surveys of condition and defects that had been undertaken before and after the works showed no damage that was attributable to the effects of tunnelling.  Mr Smith also said that there was no injurious affection caused by the use of the tunnel.  He concluded, in each case, that the overall compensation was £50.  In addition to this the acquiring authority agreed to pay a total of £500 per claim in respect of legal and surveying fees.

24.        In the case of 30-32 Manbey Grove an initial inspection was undertaken in October 2002 with a reinspection in March 2004 and a second reinspection in March 2009.  The surveyor responsible for these inspections, Mr Martin Ford, wrote a note of the claim history on 18 March 2010 which Mr Smith appended to his expert report of the same date.  Mr Ford said:

“When the property was re-inspected in 2004, some small differences were noted between the original survey and the re-inspection.  There was no evidence of any structural movement and all the differences were considered to be minor e.g. minor plaster cracking, slight widening of existing plaster cracking etc.  Although no conclusion was detailed on the re-inspection report, it is considered that the damage highlighted was so slight as to be attributable to normal thermal movement and not due to the tunnelling works.  The property had, after all, just been ‘underpinned’ by filling the excavation below the ground floor with concrete and would therefore be on an extremely solid foundation.

In addition to the above, the properties on either side of the subject properties also exhibited no sign of movement from tunnelling and any small differences in the schedules were also considered to be normal thermal movement.

The results of the second survey in 2009 were, in essence, of little meaning as the owner had already commenced a programme of refurbishment works to both properties and the whole area resembled a building site.  Some of the areas had been completely re-plastered and some structural works to walls and arches had been undertaken.  The layout of the flats had changed by increasing the size of one flat at the expense of another and so very few like for like comparisons could be made.  Looking at the report it can be seen that there are many differences between the 2009 survey and the original but it is considered that these are all as a result of the refurbishment works.”

25.        Mr Smith concluded that no diminution in the value of the building had been caused by the subsoil acquisition and the construction and operation of the railway and that compensation for severance, injurious affection and disturbance under rule 6 was nil.  The overall compensation should be £50 in respect of the value of the subsoil acquired.

References for determination: conclusions

26.        I am satisfied from the evidence that I should determine 21 of the 24 references for determination in the sum of £50 in respect of the open market value of the subsoil taken.  No compensation is payable in respect of injurious affection, severance or disturbance.  Legal and surveying fees of £500 per claim are payable in addition.  Statutory interest is payable in each reference from the agreed valuation date of 1 September 2002.  A summary of these 21 references is given in Appendix 1.

27.        The exceptions are the three references made in connection with 30-32 Manbey Grove.  Although Mr Dromey and Ms O’Donoghue were debarred from calling evidence in support of their claims on 14 December 2009, they remain entitled to cross-examine the evidence of the acquiring authority.  The claimants were not notified of the hearing on the 26 March 2010 until a letter from the Tribunal dated 11 March 2010 (which Mr Dromey says was not received until 15 March 2010).  Mr Dromey apparently then instructed Woodgrange Solicitors to act on behalf of himself and Ms O’Donoghue.  They wrote to the Tribunal on 19 March 2010 asking for the hearing to be adjourned “to allow sufficient time after 6 April [when Mr Dromey and Ms O’Donoghue return from holiday] for us to make proper preparations and representations on behalf of our client at your Tribunal.”  The acquiring authority did not serve Mr Smith’s three expert reports on Woodgrange Solicitors until 24 March 2010.

28.        In my opinion the late notification of the hearing date and the late service of expert evidence on the claimants did not give them sufficient opportunity to prepare properly for the hearing on 26 March 2010.  I therefore decline to determine reference numbers ACQ/280, 284 and 285/2009.  I adjourn the hearing of those references to a date no earlier than 28 days from the date of this decision.  I accept the acquiring authority’s argument that these references relate only to the acquisition of subsoil and are not concerned with the assessment of compensation under paragraph 8 of Schedule 2 to the CTRL Act 1996.

Stay of proceedings

29.        The claimant in reference ACQ/307/2010, EDF Energy Networks (LPN) plc, has agreed with the acquiring authority that there should be a stay of 28 days to enable the conveyancing of the subsoil to be completed.  The reference land in ACQ/479/2009 is not registered and there is some doubt about whether it is owned by the London Borough of Newham.  The acquiring authority has asked for a stay of proceedings for 28 days to enable the question of ownership to be clarified.

30.        I determine that references ACQ/307/2010 and ACQ/479/2009 shall be stayed for a period of 28 days from the date of this decision.

References for directions

31.        There are two references, ACQ/469 and 475/2009, where the claimant is the British Waterways Board and where agreement has been reached with the acquiring authority that the Tribunal should be asked to issue further directions.  I therefore determine that the directions contained in Appendix 2 to this decision shall apply and have effect in these two references.

32.        I make no order as to costs.

Dated 1 April 2010

A J Trott FRICS

Appendix 1

REFERENCES FOR DETERMINATION

Appendix 2

DIRECTIONS

Reference Nos. ACQ/469/2009 and ACQ/475/2009

Claimant:         British Waterways Board

1.           The claimant shall file and serve a statement of case within 28 days of the date of this decision.

2.           The acquiring authority shall file and serve a reply to the statement of case within 28 days of its receipt.

3.           The parties shall file and exchange any factual witness evidence within 14 days thereafter.

4.           Permission is given to the parties to call two expert witnesses each, one being an expert on land valuation and the other being an expert building surveyor.

5.           The parties shall file and exchange any expert evidence within 14 days of the filing and exchange of any factual witness evidence.

6.           Liberty to apply.

7.           Costs in the reference.