UT Neutral citation number: [2011] UKUT 56 (LC)

LT Case Number: ACQ/485/2010

                            TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – compulsory purchase – surveyor’s fee – whether fee based on hourly rate proportionate to size and complexity of claim – held that it was – fee of £6,306 determined

                                 IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN                                 DAVID CHARLES NEWMAN                               Claimant

                                                                           and

                                                   CAMBRIDGESHIRE COUNTY                            Acquiring

                                                                     COUNCIL                                              Authority

                                                      Re: 30 m² of shrubbery and garden

                                                             43 Station Road

                                                             Oakington

                                                             Cambridge

                                                             CB4 5AH

                                                         Before: N J Rose FRICS

                     DETERMINATION BASED ON WRITTEN REPRESENTATIONS

                                                                    DECISION

Introduction

1.           This is a reference to determine the compensation payable to the claimant, Mr David Charles Newman, for the freehold interest in 30m² of shrubbery and garden at the front of a residential property known as 43 Station Road, Oakington, Cambridge (the subject land).  That land was acquired under the Cambridgeshire Guided Busway Order 2005, which was made on 21 December 2005 by Cambridgeshire County Council (the acquiring authority) under the Transport and Works Act 1992 and came into force on 11 January 2006.  Notice to treat and notice of entry were both served on 2 December 2006 and the acquiring authority entered on the subject land on 1 May 2007.

2.           Following agreement of all heads of compensation except one, the transfer of the subject land was completed on 21 May 2010 for a consideration of £11,800 plus statutory interest.  In addition £4,000 plus interest was paid in respect of surveyor’s fees, without prejudice to the claimant’s right to refer the question of those fees, if necessary, to the Lands Tribunal.  The quantum of surveyor’s fees has not been agreed.  It is the only issue in this reference, which it has been agreed shall be conducted in accordance with the Tribunal’s written representation procedure.

3.           I have received written representations on behalf of the claimant from Mr Mark Ferguson BSc, MRICS of Ferguson Broadbent LLP of Corby and, on behalf of the acquiring authority, from Mr Charlie Overs MRICS of Bruton Knowles of Gloucester. 

Facts

4.           In the light of the evidence I find the following facts.  The claimant initially instructed Thomson Broadbent, chartered surveyors of Oundle, to negotiate compensation on his behalf.  On 17 January 2007 Mr Bruce Fowler, a partner of Bruton Knowles wrote on behalf of the acquiring authority to Mr Gay of Thomson Broadbent as follows:

“… I can confirm that your client’s legal costs and professional fees will be recommended on an hourly basis although in cases of this nature, and as agreed with all other surveyors on the scheme, I would be willing to recommend £120 per hour with rates applicable to any less qualified individuals assisting on the scheme.”

5.           The acquiring authority’s first offer of compensation was made direct to the claimant.  It was in the sum of £100.  This figure was increased on 8 April 2009, when an offer of £2,500 inclusive of fees was made to Mr Ferguson’s firm, which had taken over the case from Thomson Broadbent in December 2008.  The offer was increased further, first to £9,900 on 11 December 2009 and again to £11,800 on 23 December 2009.  The latter offer was accepted on 21 January 2010. 

6.           The agreed compensation reflected the value of the land taken and injurious affection resulting from the presence of the tramway and traffic lights outside the front bedroom window.  The amount originally claimed by Mr Ferguson in January 2009 was £46,600.  The claimant agreed to settle at £11,800 because he had been declared redundant and was in need of funds.  When, on 21 January 2009, Mr Ferguson informed Bruton Knowles that their latest offer had been accepted, he sent them a detailed note of the time he had spent on the claim.  This totalled 40.75 hours of professional time and 7.5 hours of travelling.  Mr Ferguson suggested that a further two hours would be spent in the future, dealing with queries raised by the claimant and his solicitor.  Adopting the fee basis suggested by Mr Fowler on 17 January 2007, and ignoring the additional two hours, this produced a total of £6,150 plus VAT, as follows:

Professional time   –   40.75 hours at £120  =   £4,890

Travelling time      –   7.5 hours at £120      =      £900

360 miles at £1                                            =      £360

                                                                           £6,150

7.           On 2 February 2010, in an e-mail to Mr Ferguson, Mr Overs said:

“With regards to your fees I have run through your attached timesheet and agree that the record is accurate and fair [as] to the time you are likely to have spent on this matter.  There are a few items recorded that my client may take issue with as unnecessary but to avoid arguing over individual time slots I would offer on a without prejudice basis £4,000 for full and final settlement of your fees.”

8.           On 16 February 2010 Mr Overs informed Mr Ferguson that he would recommend travelling expenses based on 50p per mile.  On 24 February 2010 Mr Ferguson wrote direct to the acquiring authority.  He offered to reduce the hourly rate for travelling from £120 to £60.  He said that since 21 January he had spent a further 6.8 hours trying to reach agreement with Mr Overs and he estimated that a further two hours would be required to deal with legal queries before the matter was concluded.  He suggested that, in order to resolve the matter, the additional 8.8 hours might be charged at 50 per cent of the agreed hourly rate “or maybe an alternative compromise.”

9.           Mr Overs sent Mr Ferguson an e-mail on 26 February 2010.  He stated that he had requested payment by the acquiring authority of £11,800 compensation and £4,000 surveyor’s fees.  He added:

“I am unable to recommend your suggested settlement to my client of a further £1,340 plus £180 expenses to cover additional fees.  I do not consider that this is reasonable considering the size and nature of the claim.  As I have indicated previously your route to settlement is via the Lands Tribunal whereby additional time incurred will be awarded by the Tribunal itself.”

Mr Ferguson’s evidence

10.        Mr Ferguson said that, since he submitted his timesheet to Mr Overs in January 2009, he had spent more than 10 hours trying to settle the matter with Bruton Knowles and the acquiring authority and completing the application to this Tribunal.  He therefore claimed total fees of £6,720 plus VAT, as follows:

50.75 hours professional time at £120 =  £6,090

7.5 hours travelling time at £60          =      £450

360 miles at 50p                                 =      £180

                                                                 £6,720

11.        Mr Ferguson said that there was no justification for the acquiring authority’s refusal to agree these fees, which had been properly calculated on the basis which, in January 2007, Mr Fowler had suggested was reasonable.

Mr Overs’s evidence

12.        Mr Overs said that his assessment of reasonable fees was based on the RICS Guidance Note on fee calculation post Ryde’s scale, which states:

“The fee should in all cases be proportionate to the size and complexity of the claim, and be commensurate with the time, effort and expertise required to deal with the case.”

13.        Mr Overs considered that the fee suggested by Mr Ferguson was unreasonable when compared with fees paid in similar cases.  It was also disproportionate to the size of the final agreed settlement and the complexity of the negotiations involved.  In his view it was unlikely that a claimant would have paid his surveyor the claimed level of fees in the light of the final settlement achieved.  The payment of £4,000 in respect of surveyor’s fees was made without prejudice, in an effort to avoid an argument about each individual item in Mr Ferguson’s timesheet.

14.        In order to judge the proportionality of the fee to the size and the complexity of the claim, Mr Overs produced details of 17 land acquisitions, both under statutory powers and through private agreement.  The fees ranged from £600 for a very simple instruction to £2,500 for settling claims in the region of £12,000.  Mr Overs said that complicated land purchases outside of statutory powers, involving lengthy negotiations and additional requirements such as Charities Act valuations, attracted fees at a level below that claimed by Mr Ferguson.  In the light of this evidence Mr Overs said that he would have expected a final fee in the region of £2,500. 

15.        Mr Overs did not agree with those items in the timesheet which he said related to seeking and providing evidence which was not relevant to the final settlement.  He said that Mr Ferguson had spent time trying to prove injurious affection based on the busway replacing an abandoned railway line, although he had been told that the line was merely disused, and could have opened at any time without the need for planning permission.  He also considered that time had been spent unreasonably lobbying the acquiring authority, contacting the local MP and discussing the matter with other parties who had no background knowledge of the scheme. 

16.        Mr Overs criticised Mr Ferguson’s approach of recording time in 15 minute units, when 5 minutes would have been a more appropriate yardstick.  Finally, Mr Overs said that the agreed hourly rate had been offered to a fully qualified  and experienced CPO surveyor.  It was therefore unreasonable to charge for attendances of and consultation with other surveyors.

Conclusions

17.        At the Registrar’s request, Mr Ferguson produced a schedule setting out each item of work undertaken, its purpose, the amount of time spent and the amount claimed.  Mr Overs then identified which items he challenged, the reasons for the challenge and how much, if any thing, he considered should be allowed for each item.  Mr Ferguson’s schedule listed a total of 47.3 chargeable hours of professional time up to 4 March 2010.  Mr Overs felt that only 27.72 hours should be paid for, or 58% of the hours claimed.  The contrast between that percentage, and the view expressed by Mr Overs in his e-mail of 2 February 2010 – that there were a few items in the schedule which might be considered unnecessary – is striking.

18.        The remarks in that e-mail related to time recorded items up to 21 January 2010, which totalled 40.75 hours.  In my judgment, they are irreconcilable with Mr Overs’s current suggestion that only 24.69 hours should be allowed in respect of that period.  Mr Overs sought to explain the comments in his e-mail on the grounds that they were

“phrased in this manner to avoid any further confrontation in an attempt to settle based on a without prejudice offer for the professional fees, compensation having been previously agreed.”

In my judgment that explanation does not begin to justify a deduction in the region of 40% for “a few items that my client may take issue with as unnecessary.”

19.        I have carefully considered the individual criticisms made by Mr Overs of each of the claimed items.  There is no justification for the objection to contacting the local MP, since this does not appear on the time-sheet.  Nor can Mr Ferguson be criticised in this case for submitting an initial claim which included a margin for negotiation, nor for making his own investigations into possible injurious affection, rather than relying on information from the compensating authority.  I agree with the view Mr Overs expressed in his e-mail that a small number of the items listed were unnecessary.  In addition, the number of hours charged would have been reduced slightly had time been recorded in 5 or 6 minute units.  On the other hand, as Mr Ferguson pointed out, no time has been recorded for telephone conversations.  Nor has any attempt been made to increase the hourly rate from £120 which was suggested by Mr Fowler in early 2007, to reflect the fact that most work was done in 2009 and that, by early 2010, Mr Ferguson was charging £140 per hour on several other schemes and this rate has been agreed by local authorities, county councils and district valuers.

20.        I have not lost sight of the fact that a fee based on £120 per hour produces a figure which forms a substantial percentage of the total compensation paid.  But that is because the compensation figures initially offered, £100 and then £2,500, were far too low and much work was needed before more realistic offers were eventually forthcoming.  Indeed, as late as 30 September 2009 the acquiring authority was resisting any payment of compensation for injurious affection.

21.        I would add that there is in my view no force in Mr Overs’s submission that the claimant would not have paid the requested fee, given the final settlement figure.  The claimant is entitled to reimbursement of reasonable surveyor’s fees in addition to compensation for the land taken.  If, as in this case, an acquiring authority offers an unrealistically low level of compensation at the outset, a claimant is entitled to proper representation from a surveyor, acting reasonably, until a proper offer is forthcoming, and the reasonable cost of such representation is to be borne by the authority, not the claimant.  I am satisfied that a fee calculated on the time basis originally suggested by the acquiring authority is proportionate to the size and complexity of the claim, and commensurate with the time, effort and expertise required to deal with it.

22.        The total of 50.75 hours suggested by Mr Ferguson included time spent on the application to the Tribunal.  That time forms part of the costs of the reference, not the subject of the reference itself to which this decision is restricted.  I therefore determine that the surveyor’s fees payable by the acquiring authority are £6,306 plus VAT at the appropriate rate, calculated as follows: 

47.3 hours professional time @ £120     =   £5,676

7.5 hours travelling time @ £60              =      £450

360 miles at 50p                                     =      £180

                                                                     £6,306

23.        Where a reference is conducted by written representations, costs will only be awarded in exceptional circumstances (see Lands Chamber Practice Direction, 29 November 2010, paragraph 3.5 (3)).  No such circumstances arise in this case and I make no order as to costs.

Dated 14 February 2011

N J Rose FRICS