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UPPER TRIBUNAL
(LANDS CHAMBER)
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UT Neutral citation number: [2011] UKUT 169 (LC)
LT
Case Number: ACQ/512/2010
TRIBUNALS,
COURTS AND ENFORCEMENT ACT 2007
COMPENSATION
– compulsory purchase – property acquired by agreement as though compulsorily
acquired – bridging loan for replacement property bought 12 months before
authority took possession – whether claimant entitled to payment for this –
held he was not – Land Compensation Act 1961, ss 5, 10A
IN
THE MATTER OF A NOTICE OF REFERENCE
BETWEEN GERALD
DUNBAR Claimant
and
BLACKBURN
WITH DARWEN Acquiring
BOROUGH
COUNCIL Authority
Re: 23
Alaska Street
Blackburn
Lancashire
BB3 0LY
Determination
on written representations
DECISION
1.
The claim in this case arises out of a sale by agreement of a house, 23
Alaska Street, Blackburn, which the claimant held as an investment property.
On 15 September 2005 Alaska Street was declared a clearance area by the
respondent council. The council first made an offer to purchase the house in
November 2005, but agreement was not reached (on a purchase price of £60,500)
until February 2007. Completion took place in April 2007. Left outstanding
was a claim for disturbance compensation, and the claimant referred this to the
Tribunal. The council for their part accept that this is a matter that can
properly be determined by the Tribunal, and I proceed therefore on the basis
that the claimant is entitled to such compensation by way of disturbance as he
would have been entitled to if the property had been acquired from him
compulsorily in April 2007.
2.
The claim is for a total of £12,381.78 plus surveyor’s fees, and of this
amount £10,620 is in respect of a bridging loan on a replacement house, 34 Lytham Road, which, it is said, the claimant bought in April 2006. The council deny that
he is entitled to this element of compensation, and the parties have agreed
that the Tribunal should determine this question of entitlement on the basis of
their written representations.
3.
The case for the claimant is set out in a report by David Briffett BSc,
MRICS, of Thomas V Shaw & Co Ltd, Chartered Surveyors, Commercial Valuers
and Managing Agents in Blackburn and in a letter to the Tribunal dated 24
November 2010. Mr Briffett says that he was instructed by the claimant on 21
October 2005 to enter into negotiations with the council on their intended
acquisition of the house and to negotiate his compensation claim.
4.
The property, Mr Briffett says, was a mid-terrace house, built on the
pavement line and with a yard to the rear. It was located in an area of low
value Victorian terraced houses in the Mosley Street area of Blackburn. The
property had gas central heating, and one window was double glazed. It was in
good condition. The council had originally classified it as unfit, but the
claimant did not accept that it was unfit, and a change of classification to that
of added land would have been sought had the valuation not been agreed. The
property was let on an assured shorthold tenancy.
5.
Mr Briffett says that at the initial meeting with claimants the
council’s officers confirmed that they would treat the negotiations as though
notices to treat had been served and that claimants would be entitled to the
statutory payments. The claimant was paid market value for the property plus
compensation for basic loss, leaving outstanding the disturbance claim.
6.
Mr Briffett sets out in tabular form the history of the negotiations
with the council. In June 2005, he says, the claimant had agreed to sell the
house to a Mr Martin Corky, and on 25 August 2005 Baristow Eves, his estate
Agents, issued a memorandum of agreed sale at a price of £59,950, and
solicitors on both sides were instructed. When, on 25 September 2005, the
clearance area was declared, Mr Corby withdrew. The council’s first offer,
£43,500, was made on 21 November 2005. A second offer, £52,500, was made in
early 2006, and this was increased in May 2006 to £55,000 and on 8 June 2006 to
£56,500. A revised offer, £60,500, was made in February 2007, and this was agreed.
7.
Mr Briffett says that had the council not acquired the property it would
have been sold in the open market in the summer of 2005. The negotiations with
the council were long drawn out, and a number of surveyors had been involved on
the council’s part. The council were dilatory in agreeing the compensation.
It took them nearly 18 months to accept the market figure that has previously
been freely negotiated. Mr Dunbar knew that he was to lose his property, and
in a rising market it was not an easy task to find alternative premises for the
same sum as he was receiving for the property which was to be demolished. His
main source of income, Mr Briffett says, is his letting properties and he was
not in a position to wait until the completion of one before commencing the
search for an alternative investment property. In answer to the council’s
assertion that the costs of the bridging loan were not recoverable under
section 10A of the Land Compensation Act 1961 because they were incurred more
than one year before the date of entry, Mr Briffett says that they are
nevertheless recoverable under rule (6) of section 5. Reliance is placed by Mr
Briffett on the decision of this Tribunal on Harvey v Crawley Development
Corporation [1957] 1 QB 485 and on the decisions of the Lands Tribunal in Sadiq
v Stoke-on-Trent City Council (LCA/316/2008), Cole v Southwark London
Borough Council [1979] 251 EG 477, Adam v Woking Borough Council
(LCA/88/1999) and Christos v Secretary of State for the Environment,
Transport and the Regions (ACQ/69/2001).
8.
For the council there is a statement of case prepared by Trevor James,
Senior Regeneration Surveyor with Capita Symonds, and written representations
that were also prepared by Mr James. It is stated that Capita Symonds were
instructed on 2 November 2005 to negotiate the purchase of 23 Alaska Street and
a chronology of the negotiations, similar to Mr Briffett’s, is produced. It is
denied that the council were dilatory in agreeing the purchase price.
9.
Appended to the statement of case is a copy of the Land Registry entry
for 23 Alaska Street, which shows registration of the freehold title of Mr
Dunbar on 5 August 2005 and records that the price stated to have been paid on
7 July 2005 was £37,500. It is questioned whether Mr Dunbar could, as Mr Briffett
asserts, have negotiated the sale of the property in June 2005. The council’s
offers, it is said, reflected the rising property market and the final amount,
agreed on a market value basis, should have left Mr Dunbar in no better or worse
a situation. He continued to collect an income until he handed the keys to the
council on 23 April 2007. Although it could be expected that a claimant will
begin the search for an alternative property before completing the sale to an
acquiring authority, it would have been reasonable for Mr Dunbar to wait until
there was a degree of certainty before committing himself to a purchase and
taking out a bridging loan. In this respect, by acting as he did, Mr Dunbar
failed to mitigate his loss. In any event, it is said, he has no statutory
right to compensation. The costs claimed were incurred more than a year before
entry, and there is therefore no entitlement under section 10A; and he was not
in occupation of the premises and is therefore not entitled to disturbance
compensation under rule (6). Mr Dunbar, it is asserted, took advantage of a
rising market by acquiring 34 Lytham Road some 10 months before completing the
sale of 23 Alaska Street to the council. During that period 23 Alaska Street
increased significantly in value due to the rising market, and Mr Dunbar
continued to receive an income from his tenant.
10.
The claimant would not, in my judgment, have been entitled to be
compensated for the cost of the bridging loan had his land been compulsorily acquired
in April 2007, either under section 10A or under rule (6). Section 10A
provides as follows:
“Where, in
consequence of any compulsory acquisition of land –
(a) the acquiring
authority acquire an interest of a person who is not then in occupation of the land;
and
(b) that person
incurs incidental charges or expenses in acquiring, within the period of one
year beginning with the date of entry, an interest in other land in the United
Kingdom,
the charges or
expenses shall be taken into account in assessing his compensation as they
would be taken into account if he were in occupation of the land.”
11.
The property at 34 Lytham Road was acquired by the claimant in April
2006. The council took possession of 23 Alaska Street on 23 April 2007. The
period within which the charges or expenses in acquiring an interest in other
land must be incurred if they are to give rise to a claim under section 10A is
the period of one year beginning with the date of entry. It is clear,
therefore, that there would have been no entitlement to compensation under this
provision.
12.
Nor could there be entitlement to disturbance compensation under rule
(6) because the claimant was not in occupation of the property. The law is as
stated by Denning LJ in Harvey v Crawley (at 493):
“...Supposing a man did not occupy
a house himself but simply owned it as an investment. His compensation would
be the value of the house. If he chose to put the money into stocks and
shares, he could not claim the brokerage as compensation. That would be much
too remote. It would not be the consequence of acquisition but the result of
his own choice in putting money into stocks and shares instead of putting it on
deposit at the bank. If he chose to buy another house as an investment, he
would not get the solicitors’ costs of the purchase. Those costs would be the
result of his own choice of investment and not the result of the compulsory
acquisition.”
13.
The claim in respect of the costs of the bridging loan must inevitably
fail, therefore. I would only add that it is clear in any event that Mr Dunbar
has not incurred any loss that is attributable to his purchase of 34 Lytham
Road. He does not dispute the council’s assertions that during the period from
November 2005 to April 2007 there was a rising market and that he had the
benefit during this period of two properties. Each of these increased in value
during that period and he was able to derive a rent from each. The claim is
wholly unmeritorious.
14.
The claimant is not entitled to the amount claimed in respect of the
bridging loan costs (£10,620). This leaves a balance on the total specified amount
claimed of £1,761.78. Of this, it appears from Mr Brickett’s report, the only
item in dispute is the loss on the in situ value of carpets. For this, £1,000
is claimed, £300 is offered. I hope that the parties will be able to settle
this item without further recourse to the Tribunal and also the amount of
surveyor’s fees, left unspecified in the notice of reference.
Dated 20 April 2011
George Bartlett QC,
President
