UPPER TRIBUNAL (LANDS CHAMBER)
UT Neutral citation number:  UKUT 45 (LC)
LT Case Number: LCA/577/2010
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – Land Compensation Act 1973 Part I – depreciation by physical factors caused by the use of High Speed 1 – impact of increase in noise, if any – whether compensating authority’s expert evidence admissible – held that it was – analysis of conflicting noise and valuation evidence – whether evidence of agreed settlement tone of assistance – held that it was not – compensation assessed at £1,500.
IN THE MATTER OF A NOTICE OF REFERENCE
THE SECRETARY OF STATE FOR Compensating
Re: 70 Bentley Road,
Before: N J Rose FRICS
sitting at 43-45 Bedford Square, London, WC1B 3AS
on 22 October and 16 December 2010
Mr Toms on behalf of both claimants
Michael Druce, instructed by Cripps Harries Hall, solicitors of Tunbridge Wells for the compensating authority
The following case is referred to in this decision:
Wolff and others v Transport for London  RVR 316
1. This reference is in respect of a claim for compensation under Part I of the Land Compensation Act 1973 (the Act) by Mr G K Toms and Mrs S M Toms of 70 Bentley Road, Willesborough, Ashford, Kent, TN24 OHR (the subject property). The responsible authority under the Act is the Secretary of State for Transport. The public works, the use of which gives rise to a claim for compensation for depreciation in the value of the claimants’ freehold interest, is the Channel Tunnel Rail Link (CTRL), now known as High Speed 1 (HS1). The relevant date, when the railway first opened for passenger service, was 29 September 2003 and the date on which compensation must be assessed is 28 September 2004.
2. The reference was conducted in accordance with the Tribunal’s simplified procedure. Mr Toms appeared in person for himself and his wife and gave evidence. Mr Michael Druce of counsel appeared for the compensating authority. He called expert evidence from Mr Stephen Walker MRICS (valuation) and Mr Richard Greer BSc (Hons), FIOA (noise). I made an accompanied visit to the subject property and the surrounding area on the morning of 13 January 2011. I stood in the rear living room on the ground floor of the property as two high speed trains passed roughly ten minutes apart. The french windows giving access to the rear garden were open.
3. The reference was listed for hearing on 22 October 2010. Mr Toms wrote to the Tribunal on 13 October 2010. He said that the compensating authority had not sent him copies of any documents or expert reports, which the Tribunal had ordered to be sent 14 days before the hearing. On 20 October the compensating authority’s solicitors made a written application for an extension of time for service of their clients’ expert evidence, without prejudice to their contention that the Tribunal’s directions had been complied with. Witness statements in support of the application were submitted on the following day. The hearing was adjourned, both because Mr Toms said that he had not seen the application for an extension of time and the supporting witness statements, and to enable evidence to be given by the courier who had been instructed to deliver Mr Walker’s expert report to the claimants on 8 October 2010.
4. At the resumed hearing on 16 December 2010 I heard factual evidence from Mr Toms, Mr Walker, Mr Sebastien Butcher (one of Mr Walker’s assistants), Ms Carol Wakeford, a partner in Cripps Harries Hall, the firm of solicitors with conduct of the matter on behalf of the compensating authority, and Mr James Goode, who is employed by Pink Express Courier Service. I also heard evidence from two members of the Tribunal’s listing department, Mr Bhupendra Mistry and Mr Shahidul Islam, about telephone conversations they had had with Mr Toms.
5. At the conclusion of this evidence I stated that I would admit the expert evidence for the compensating authority and that my reasons would be given in writing in due course. I now state those reasons. I set them out in more detail than would normally be appropriate because Mr Toms, as a litigant in person, was clearly taken aback by my decision.
6. Directions for the exchange of expert reports were given in a letter to the parties from the Tribunal dated 20 July 2010. So far as may be relevant the letter said:
“C. The case has been listed to be heard on 22 October 2010 starting at 10.30 am, at Lands Tribunal, 43-45 Bedford Square, London WC1B 3AS. The hearing is expected to be completed within one day.
D. The Registrar now directs that:
1. The Claimant(s) must file and serve a Statement of Case within 28 days of the date of this letter;
2. The Acquiring Authority must file and serve its Reply within 28 days of receipt of that Statement of Case;
3. A statement recording all facts agreed or not disputed between the parties must be sent to the Tribunal not less than 14 days before the date fixed for hearing;
4. Copies of any documents, including experts’ report and any plans, valuations or comparables attached to experts’ reports, on which any party intends to rely at the hearing must also be sent to the other party and to the Tribunal not less than 14 days before the date fixed for hearing.
E. Please note that the deadlines set out above must be met. No extension of time or stay of proceedings will be granted in this case. The Tribunal will not grant an application for cancellation of the hearing except for a compelling reason, such as the illness of an essential participant. Any application for cancellation should be supported by documentation such as a medical certificate.
F. The Tribunal does not normally award costs to either party in a simplified procedure case, whatever the outcome, save in exceptional circumstances. The making of a sealed offer or offer of settlement might constitute an exceptional circumstance.”
7. The compensating authority originally intended to rely only on the expert evidence of Mr Walker. The position changed following receipt of a letter from Mr Toms dated 20 September 2010, in which he stated he would be issuing a noise recording for the Tribunal. The basic tape recording equipment which Mr Toms owned was unable to produce a useful recording, but Mr Toms did not inform the compensating authority of this, and they decided that it was now necessary to call Mr Greer to give evidence on noise. Mr Greer was due to attend a conference in Dublin during the week commencing 4 October 2010 and, as a result, he was not able to finalise his report until 8 October, which was the dead-line specified in paragraph D.4 of the Tribunal’s letter dated 20 July 2010.
8. The history of events summarised in paragraphs 6 and 7 above was generally not contentious. The difference between the parties centred on the events of 8 October. Mr Walker said that he received Mr Greer’s signed report at approximately 1pm on that day and he then finalised his own report. He arranged for a courier to collect his report at 3.30pm and deliver it immediately to the claimants at the subject property. The courier, Mr Goode, said that he arrived at that property at approximately 5.10pm. He knocked on the door but there was no answer. The windows were covered in newspaper and he was worried that the property might be empty. He therefore went to 72 Bentley Road and spoke to a lady there named Ms C Steen. He was told that the subject property was not empty but was being redecorated. Ms Steen offered to accept the package addressed to the claimants and Mr Goode put a handwritten note through the door of the subject property, stating that he had left the package at No.72.
9. Mr Toms said that he had been at his house all day on 8 October. He did not receive Mr Walker’s report, nor Mr Goode’s note.
10. I have no doubt that Mr Toms’s recollection of events is unreliable and that the evidence of Mr Walker and Mr Goode is to be preferred. In reaching that conclusion I have had regard to the fact that Mr Toms misled the Tribunal regarding his expert evidence. On 3 July 2010 he informed the Tribunal that he intended to call an expert witness at the hearing. In a subsequent letter to the Tribunal dated 13 October 2010 he said that he had not received any of the documents which the compensating authority was required to send him 14 days before the hearing and he concluded
“For the above reasons I feel that there is no need for me to bring my expert. I therefore wish to inform the Lands Tribunal I will not be bringing my expert to the hearing on 22 October 2010.”
11. The effect of this correspondence was to give the impression that Mr Toms had obtained expert evidence in support of his claimed figure of compensation, but that he would not be producing it in the absence of any expert evidence from the compensating authority. In fact, as Mr Toms accepted at the hearing, he did not instruct an expert to advise on his compensation claim at any time.
12. Mr Toms also misled the compensating authority’s solicitors. Ms Wakeford said that she received a letter from Mr Toms dated 28 September 2010, advising that after he had written that letter he would leave his desk and would not return until late on Friday 8 October when he would deal with any correspondence awaiting him. She suspected (because Mr Toms’s absence had not been intimated in earlier communication) that she would encounter difficulty in serving documents on Mr Toms, and that her inability to communicate with him was perhaps by design. She then received a further letter from Mr Toms, which led her to believe that she would be able to communicate with Mr Toms after all. On 5 October she sent him by e-mail and first class post the compensating authority’s draft statement of agreed facts. In the absence of a response she telephoned Mr Toms on the mobile telephone number that he had given to Mr Walker, but the recorded message advised that the telephone was switched off. Ms Wakeford tried again to contact Mr Toms several times on 7 October, but on each occasion received the same recorded message. She then located Mr Toms’s land line and telephoned the number. The call was answered by a gentleman who advised that Mr Toms was not available and that Ms Wakeford should contact Mr Toms on his mobile telephone. When Ms Wakeford explained that the telephone was always switched off the gentleman responded that he could not help further. At the hearing Mr Toms admitted that the person with whom Ms Wakeford had spoken on 7 October was himself. He added that the mobile telephone to which he had referred was not even in his possession on that day. It belonged to his daughter, who had loaned it to him for a few days some months earlier.
13. The third reason for my conclusion that Mr Toms’s evidence was unreliable is contained in an e-mail he sent to Ms Wakeford on Monday 11 October – the first working day after the dead-line of 8 October. Mr Toms quoted from an e-mail he had just received from Mr Walker, informing him that the report had been left at No.72. Mr Toms continued:
“You are aware that any document addressed to me or Susan can only be signed for by that person, or in the case of Mr and Mrs Toms by either me or Susan. A courier cannot leave something for me at a different address signed by a complete stranger. I suggest that you get the document recovered from wherever it is.”
14. The Tribunal’s order dated 20 July 2010 required the parties to send their expert reports to the other party by 8 July 2010. I find that the compensating authority did indeed send its report to Mr Toms on that day. It is noteworthy that, in contrast to the Statement of Case and the Reply, the Tribunal did not require the report to be served on the other party, but merely sent. Nevertheless I find that the only reason the expert report was not actually served on Mr Toms on 8 July 2010 is that he deliberately failed to answer the door to Mr Goode in an attempt to manufacture a submission that the compensating authority’s expert evidence was sent late and should therefore be excluded.
15. Mr Toms also submitted that the requirement on the compensating authority to send a copy of their expert’s report to the Tribunal by Friday 8 October 2010 had not been complied with. He cited a letter from the Tribunal dated 15 October 2010 which stated that the report had been received on Monday 11 October. However, I accept the evidence of Mr Butcher that he handed the report to the Tribunal’s receptionist at approximately 3 pm on Friday 8 October, which was within the time scale set by the Tribunal.
16. In view of the conclusions I have reached on the procedural issue it is not necessary for me to rule on the compensating authority’s alternative application for an extension of time for service of expert evidence. Had such a ruling been necessary, however, I would have exercised my discretion to grant the application in view of Mr Toms’s deliberately obstructive behaviour.
Substantive issue – facts
17. In the light of the evidence I find the following facts. The subject property is a two bedroom post-war semi-detached former council house, with a 60 metre long rear garden leading towards the line of HS1. The claimants first occupied it in 1996, as tenants and, from 14 January 2003, as owners of the freehold interest.
18. On 5 April 2006 the subject property was valued by Northern Rock Central Mortgage Centre on the instructions of the claimants’ son and daughter. The value reported was £140,000. On 19 December 2006 the claimants sold the property to their children for £125,000. The claimants have continued to live in the house as tenants since that date. The house itself is approximately 145m from the nearest live HSI rail, and approximately 175m from the nearest pre-existing live rail. HSI is 85m from the end of the garden. There is a cul-de-sac of semi-detached council owned properties between the end of the garden and the railway. At this point the line is 1,500m east of Ashford railway station, approximately at the point where the viaduct which carries a through line over the station begins to separate from grade. CTRL opened for passenger services on 14 November 1994. From that date until the opening of HSI in September 2003 the Eurostar train used the pre-existing railway line through Ashford station. As part of the scheme works a 4m high noise barrier with absorptive acoustic qualities was built on the north side of HSI throughout the section in Willesborough. This barrier was built at both grade and viaduct level. Through trains using the viaduct travel at speeds up to 300km (186 miles) per hour. Trains at grade, stopping at Ashford International station, travel no faster than those using the station before HSI was constructed.
19. Mr Toms’s assessment of the depreciation in value of the subject property was arrived at as follows. He said that the average price of a semi-detached house in Bentley Road in September 2004 was £130,704. The Nationwide House Price Index showed that prices has risen by 14.6% by September 2006. The average price in Bentley Road should therefore have increased by September 2006 to £149,786 (£130,704 plus 14.6%). In fact, the subject property was sold in September 2006 for £125,000. The difference of £24,786 represented the diminution in value for which compensation was payable.
20. Mr Toms said that his use of the Nationwide index was supported by the sales of two semi-detached houses in Warwick Road, Kennington, a similar housing estate to Bentley Road, but not affected by HS1. No.64 sold for £134,000 in September 2004 and No.34 for £172,000 in September 2006.
21. Finally, Mr Toms produced sales particulars for two properties in Willesborough. The accommodation in each was broadly similar but the house in Royds Road was marketed seeking offers in excess of £130,000, £24,995 less than the asking price in Drake Road. He suggested that the price difference reflected the fact that Drake Road was further from the railway line than Royds Road.
Compensating authority’s evidence
22. Mr Walker said that the assessment of Part I compensation gave rise to a number of challenges due to the hypothetical nature of the valuation exercise required by the 1973 Act. The vast majority of such claims were settled by valuer consensus. In his experience of infrastructure projects generally, settlement levels ranged from 1% to 5% of capital value, which was well within accepted valuation tolerances. Because of the difficulty of identifying the effects on value of the physical factors alone, on each individual project involving public works a tone of settlement was established by negotiation. Once this tone was accepted it was seldom altered because of the unfairness this would otherwise create for those who had settled earlier. The specialist agents acting for claimants paid particular attention to this phase of the negotiations. They would not agree the tone until they were satisfied that it was fair throughout the route and could be justified to their clients.
23. Turning to the factors which were taken into account in negotiating the tone in the residential areas of Ashford, Mr Walker emphasised that the new HSI line followed the pre-existing railway line through the town. At the valuation date the unique sound of these high speed trains (from the engine fans) was already a factor in the environment and its existence was not a new physical factor. Mr Walker attached to his report a copy of Mr Greer’s report, which concluded that long term noise increases from the introduction of HSI were within levels which were imperceptible for most people.
24. Willesborough was close to the new international railway station and improved services to London and the continent, which had had a positive effect on the local property market. Ashford had outperformed the wider market in Kent and national property price trends and indications were that this was in some part due to the influence of HSI. Properties in Willesborough had continued to sell in volumes commensurate with the wider area. This indicated a lack of market sensitivity to HSI. In the whole of Ashford town only 62 claims for Part 1 compensation were received, including 37 in Willesborough (from both north and south of the railway). Of those only 3 were from houses in Bentley Road. Finally, the tone of settlements agreed with the specialist agents provided for nil compensation for all 62 claims in the residential area of Ashford, covering an area from Chart Road in the west to Boys Hall Road in the east.
25. Mr Walker concluded that he could find no evidence of diminution in the market value of the subject property for which compensation was payable.
26. I consider firstly Mr Toms’s valuation. He has no valuation qualifications or experience and, for reasons which I have given earlier in relation to the procedural issue, I can attach little weight to any of his evidence unless it was corroborated. In any event, there are clear errors in his approach. Firstly, the 14.6% increase in values to September 2006 reported by Nationwide building society included 5.9% in the year ending in September 2004. It is plainly wrong to take this increase into account when calculating the increase in value in the period commencing in September 2004. If the correct percentage (8.7%) were used, the value in September 2006 would be £142,075, marginally higher than the figure reported by Northern Rock in April 2006 as being the then value of the subject property. Bearing in mind the evidence of other house sales in Bentley Road, I consider that that figure (£140,000) is a more accurate guide to the market value of the subject property when the claimants sold it to their children in December 2006 than the consideration of £125,000 that was paid. Although Mr Toms asserted that the latter figure was agreed on the open market, there was no evidence to suggest that the property was in fact properly marketed before the sale price was fixed.
27. Mr Toms claimed that the sales of 34 and 64 Warwick Road justified his use of the Nationwide index. In fact they do not do so. The price paid in September 2006 for No.34 was 28 per cent more than that paid for No.64 two years earlier. As I have said, the Nationwide index rose by only 8.7% in that period. It is clear that the difference between the two sale prices must have been due in part to factors other than the general increase in house prices over 2 years.
28. Nor is any assistance to be gained from the asking prices of houses in Royds Road and Drake Road because, contrary to Mr Toms’s assertion, they are both located at a similar distance from HS1.
29. I turn to Mr Walker’s evidence. Although he listed a number of factors which he considered pointed to a nil diminution in value, he acknowledged that the basis of compensation granted by Part I of the 1973 Act was such that it was effectively impossible to produce true open market evidence which separated the effects on value caused by the use of public works (for which compensation is payable) from those caused by the existence of the works themselves (for which it is not). The assessment of such compensation must therefore be based on subjective judgments by valuers. It is clear that, once the general tone of compensation was agreed with representatives of the three firms of surveyors who specialise in such work, departure from that tone was rarely possible. In effect Mr Walker’s support for his valuation rested largely on the fact that his firm had persuaded the specialist surveyors that no compensation should be paid to any of the 37 owners who had submitted claims in respect of properties in Willesborough.
30. In Wolff and others v Transport for London  RVR 316 this Tribunal (P R Francis FRICS and N J Rose FRICS) made the following observation on the use of settlements as evidence (para 44):
“A further weakness of Mr Connell’s approach is that it was, to a very large extent, based on settlement evidence. The Tribunal has frequently indicated the need to treat such evidence with caution. The difficulties which claimants generally face in pursuing claims for modest amounts of compensation are increased in the case of Pt 1 claims, where acoustics evidence as well as valuation evidence is often required.”
In the present case it is apparent that the compensating authority has used the financial implications of a Lands Tribunal reference as a negotiating tool. Mr Toms received a letter dated 7 March 2008 from one of Mr Walker’s colleagues, Mr Sayer. It contained the following warning:
“In your letter you advise of your intention to refer the matter to the Lands Tribunal. I would like to remind you that a costs award could be made by the Tribunal and that in addition to your own professional costs you may be required to pay costs incurred by Union Railways.”
In my view such a warning would cause any claimant seeking compensation – which Mr Walker said is generally limited to between 1 and 5 per cent of market value – to think very carefully before pursuing his claim to the Tribunal.
31. Moreover, in assessing the weight to be attached to the agreed settlement tone, it is in my view necessary to have regard to the fee structure which is adopted by surveyors specialising in Part I claims, since over 90% of the claims submitted along section 1 of HSI – which includes the subject property – were submitted by chartered surveyors for whom Part I compensation is their primary if not sole area of business. In answer to a question from me Mr Walker said that such surveyors obtained instructions by widespread mailing to people whose homes might have been affected by public works. In nearly every case they agreed to work on the basis of no win, no fee. In my view settlements arrived at by surveyors charging on such a basis are inherently unreliable, because one does not know the motives that led the surveyors to make the recommendations to their clients that they did.
32. In the absence of any useful settlement evidence, it is necessary to reach a conclusion based on such evidence as is available. For this purpose I consider that the appropriate starting point is the extent of the change in noise which resulted from the use of HS1. (Mr Toms did suggest that there were other physical factors affecting value, but he produced no evidence to support this contention, and I reject it). Mr Toms described the sound of the train, as experienced from the subject property, as being akin to that made by a Boeing 737 jet when taking off. The only reference to this matter in Mr Walker’s expert report was to Mr Greer’s conclusion that the long term noise increase was within levels imperceptible to most people.
33. Mr Greer explained that, before construction of the new railway commenced, noise from its operation had been predicted using an empirical calculation methodology developed and validated specifically for HS1. This was based on thousands of measurements of train noise encompassing both high speed and conventional train operations. As applied to the final design of HS1, the calculation method was further validated against measurements of Eurostar train noise including fan noise from the power cars at low speed. Noise change was evaluated by comparing noise levels with the greatest traffic forecast for the first 15 years of operation with the noise levels that would have existed in the year of opening had HS1 not been built. All noise levels were calculated 1m from the worst affected façade of a property facing HS1. Noise calculations were made at a number of assessment locations which were agreed with local authority Environmental Health Officers as being representative of all other properties potentially affected by HS1. Noise levels and impacts at receptors between the assessment locations were based on interpolation using professional judgment.
34. Mr Greer said that, to support the determination of the baseline noise environment (that is, that which would have existed in the year of HS1 opening had the project not been constructed), ambient noise surveys were undertaken along the length of the HS1 alignment including surveys in the Willesborough area. The survey locations and survey results were agreed with the Environmental Health Officers at Ashford Borough Council.
35. Following parliamentary scrutiny the CTRL Act was enacted on the basis of an environmental impact assessment that minimised the environmental impact of HS1 but recorded that there were a number of significant adverse residual effects where it was not reasonably practicable to provide further mitigation. However, no residual noise effect was identified in the Environmental Statement for the community in Willesborough located north of the existing and CTRL rail corridor, which included the site of the subject property.
36. When preparing the noise predictions for HS1 prior to its construction, noise calculations were made at 3 assessment locations in the vicinity of the subject property (reference 205007, 300008 and 300024 on Mr Greer’s exhibit RG2). In advising for the purposes of the current claim it would have been helpful if Mr Greer had commissioned further noise readings at those locations, to check whether the original predictions had proved to be accurate. Instead of taking such readings, Mr Greer relied on information obtained from the compensating authority – to the effect that the local authority had not raised any concerns about noise levels in Ashford and that there had been no complaints from residents – to conclude that the increase in noise, if any, was imperceptible to most people.
37. I am unable to accept that conclusion. It relies on hearsay from an officer of the compensating authority itself. More importantly, it is inconsistent with Mr Walker’s evidence, given in cross examination although not foreshowed in his expert report, to the effect that the noise of the high speed train, in wet weather with the wind blowing towards the subject property, was “loud”.
38. Mr Walker later described the train noise in such circumstances as being comparable to a single vehicle travelling down a motorway. That description was not borne out by my own experience. When I attended the subject property – on a dry day but with the wind direction towards the house – I obtained the impression that the noise of the train was more comparable to an aircraft than to a motor vehicle. In the light of my own observations I am satisfied that Mr Toms’s description of the noise experienced at the subject property in wet and windy conditions is more reliable than that of Mr Walker.
39. Mr Walker referred to the positive effect on house values of the improved railway services to and from Ashford. Such an increase in values, if it existed, must be taken into account when assessing compensation, because it is attributable to the existence of the public works to which the claim relates (section 6(1)(a) of the Act), Mr Walker, however, did not produce any evidence to suggest that values in Bentley Road had increased as a result of the new train services. This is not surprising in my view, because the public works, whose existence must be taken into account under section 6(1)(a), include a 4m acoustic wall, which Mr Toms said was known locally as the Great Wall of Ashford, and which I agree is an unsightly feature of the neighbourhood which is likely to be reflected in the bids of potential purchasers of the subject property.
40. I take into account the fact that Eurostar trains travelled along the pre-existing track prior to the valuation date, but at speeds which, it is clear from a paper by Mr Krylov of the Department of Civil and Structural Engineering at Nottingham Trent University, resulted in less noise than that experienced at the valuation date. I also bear in mind the noise mitigation scheme and the fact that there will be many occasions when the weather conditions are such as not to result in significant noise being transmitted towards the subject property.
41. Finally, I bear in mind, both that the residential property market was good at the valuation date (tending to reduce the valuation impact of any disabilities), and Mr Walker’s acceptance that 2 out of 10 potential purchasers would have withdrawn their offer to purchase the subject property when they became aware of the extent of the noise disturbance suffered in wet and windy conditions. I find that the hypothetical purchaser, who must be assumed to be aware of all relevant facts and to act prudently, would have sought a discount from the unaffected value to reflect noise and would have been offered a modest reduction which he would have accepted. I conclude that the agreed discount would have been £1,500, which is the amount of compensation which must be paid to the claimant by the compensating authority.
42. Although a no costs regime generally applies to references heard under the simplified procedure, the compensating authority indicated that they would be seeking an award of costs. Accordingly, a letter dealing with the question of costs accompanies this decision, which will become final once that question has been determined.
Dated 3 February 2011
N J Rose FRICS