UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 120 (LC)

UTLC Case Number: ACQ/132/2011

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

 

COMPENSATION – compulsory purchase – dwelling house – settlements and open market sales as comparables – residual valuations – disturbance – compensation awarded £99,794.45

 

 

 

 

IN THE MATTER OF A NOTICE OF REFERENCE

 

 

BETWEEN ANDREW LEWICKI Claimant

 

and

 

NUNEATON & BEDWORTH BOROUGH COUNCIL Acquiring

Authority

 

 

Re: 3 Ludford Road,

Camp Hill,

Nuneaton,

Warwickshire,

CV10 9HW

 

 

Before: N J Rose FRICS

 

Sitting at: Coventry Magistrates Court, Little Park Street, Coventry,

West Midlands CV1 2SQ

on 26 February 2013

 

Mr Arthur Greenway of Course and Shelton, surveyors and estate agents of Nuneaton for the claimant

Mrs Wendy Davies–White, principal solicitor, Nuneaton and Bedworth Borough Council for the acquiring authority

 

No cases are referred to in this decision.

 

The following cases were cited in argument:

Harvey v Crawley Development Corporation [1957] 1 QB 485

Delaforce v Evans (1971) 2 P & CR 770

Director of Buildings and Land v Shun Fung Ironworks [1995] 2 AC 111 (PC)

Horn v Sunderland Corporation [1941] 2KB26

 

DECISION

Introduction

1.           This is a reference to determine the compensation payable to Mr Andrew Lewicki arising from the compulsory acquisition by Nuneaton and Bedworth Borough Council (the acquiring authority) of the freehold interest in a dwelling house known as 31 Ludford Road, Camp Hill, Nuneaton (the subject property).  The subject property was acquired pursuant to The Nuneaton and Bedworth Borough Council (Camp Hill Phase 3 – Queen Elizabeth Road, Hazel Road, Ludford Road, Springhill Road and Rowan Road) Compulsory Purchase Order 2010 (the CPO).  The CPO was confirmed by the Secretary of State for Communities and Local Government on 1 April 2010.  On 5 July 2011 the acquiring authority made a General Vesting Declaration in respect of the subject property, which became vested in the acquiring authority on 6 August 2011, the valuation date.

2.           Mr Arthur Greenway, the managing partner of Course and Shelton, surveyors and estate agents of Nuneaton appeared for Mr Lewicki and gave expert evidence.  He called Mr Lewicki to give evidence of fact.  Mrs Wendy Davies-White, senior solicitor with the acquiring authority, appeared on its behalf and called expert evidence from Mr Ian Wilson Dip. Est. Man, MRICS.  Mr Wilson is currently employed as land and property manager with the acquiring authority.  He left the Valuation Office Agency in July 2011, where he had been responsible since early 2010 for negotiating the purchase of properties which were subject to the CPO.

3.           Mr Greenway’s valuation of the subject property for its existing use as a house was £90,000.  If the Tribunal considered that a residual valuation was appropriate, however, he considered that the property was worth, as a building plot, either £105,000 or alternatively £134,500.  In Mr Wilson’s opinion the freehold value was £75,000 based on the existing use, and there was no additional value for redevelopment.

4.           It is agreed that Mr Lewicki is entitled to a basic loss payment equal to 7.5% of the market value.  Disturbance items totalling £3,071.47 were agreed.  Mr Greenway sought compensation for further items of disturbance totalling £11,368.54, but Mr Wilson contended that only £1,410.00 was justified for those additional heads of claim.

Facts

5.           From the evidence I find the following facts.  The subject property was situated on the Camp Hill housing estate, a large residential estate on a sloping site on the north eastern fringe of Nuneaton some 1.5 miles from the town centre.  The estate was constructed mainly in the early 1950s, partly for the National Coal Board and partly for the acquiring authority.  The Coal Board’s stock was subsequently transferred to the acquiring authority, with the exception of certain dwellings which were sold to the occupiers.  A number of the acquiring authority’s properties have been sold under the “right to buy” legislation. The estate incorporates a village centre comprising a number of shops, a church, care home and, more recently, a built community centre with clinic and surgery facilities.

6.           Camp Hill is a ward of high deprivation, being in the top ten most deprived wards in the country and the most deprived in Warwickshire.  To address the problems of the area a regeneration scheme was instigated to replace the majority of the housing stock with new dwellings.  In addition, as part of the scheme, a new village centre has been created with shops and community facilities.  The regeneration scheme commenced in 2006/7 and is due to run over several years in three phases.  Phase 1 comprised the demolition of 10 dwellings and part of a former industrial estate and the erection of 172 new dwellings.  Phase 2 comprised the demolition of 92 dwellings and retail units and the erection of 227 new dwellings, new youth and community facilities and new retail units.  Phase 3 comprised the demolition of 372 dwellings and the erection of 813 new dwellings.  The majority of the house stock was in poor order, although some buildings had been improved.

7.           The subject property, which has been demolished and therefore could not be inspected by me, comprised a two storey end of terrace house built by Messrs Wimpey in the early 1950s of cast in situ solid concrete “no fines” construction with pitched tiled roof.  The accommodation comprised entrance hall, through living room, kitchen, utility room, two double bedrooms, single bedroom and bathroom.  There were relatively large sloping gardens at the front and rear with additional frontage to Edinburgh Road at the rear.  Access to the rear took the form of two lines of concrete slabs on hardcore. 

8.           The subject property was similar in style, construction and accommodation to the majority of properties in the vicinity.  At the valuation date it was vacant, although it had previously been occupied on successive assured shorthold tenancies.

Valuation – existing use value

9.           In his expert report Mr Greenway referred to the prices paid for twelve three bedroom houses within the Camp Hill estate, as follows:

(a)  Properties within the CPO area

4 Ludford Road - £82,000 in August 2010

32 Hazel Road - £78,000 in October 2010

35 Hazel Road - £79,000 in 2011

307 Queen Elizabeth Road - £80,000 in September 2010 

32 Hillcrest Road - £80,000 in February 2008

 

 

(b) Properties outside the regeneration area

401 Cedar Road - £93,000 in August 2010

426 Cedar Road - £82,500 in April 2011

117 Sycamore Road - £80,000 in December 2011

149 Sycamore Road - £78,500 in August 2010

257 Cedar Road - £77,000 in August 2010

` 199 Cedar Road - £91,500 in March 2008

245 Cedar Road - £85,000 in January 2008

10.        Mr Greenway prepared a detailed comparison between the subject property and five of these properties, namely 4 Ludford Road, 307 Queen Elizabeth Road, 401 Cedar Road, 426 Cedar Road and 257 Cedar Road.  He said that properties within the CPO area had been blighted as a result of the acquiring authority’s early purchase scheme under which individual houses were acquired and then left vacant.  Moreover, the prices paid for many houses within the CPO area had been agreed direct with the owner rather than a valuer, and such evidence should therefore be considered with caution.  The sale prices of both 4 Ludford Road and 307 Queen Elizabeth Road had been agreed direct with the owners.

11.        In Mr Greenway’s opinion the subject property had been generally maintained in a satisfactory condition.  Its particular benefits were that it was an end terrace house, with a gas fired central heating system, a replacement four piece bathroom suite, UPVC double glazing and direct car access to the front and rear.  In addition the electric circuits had been rewired.  Based on the available evidence Mr Greenway considered that the freehold interest was worth £90,000.

12.        Mr Greenway exhibited to his report a copy of a valuation of the subject property which had been prepared on Mr Lewicki’s instructions by Mr T P Curtis FRICS of Storers, chartered surveyors of Rugby.  The valuation was dated 14 January 2011.  Mr Curtis expressed the view that the then market value of the freehold interest was £105,000.

13.        In his expert report Mr Wilson said that, although no structural deficiencies had been identified in the subject property, it would have benefited from some general refurbishment and updating.

14.        Mr Wilson produced three schedules of comparables.  The first, Appendix 2, headed “Market Comparisons”, contained details of thirteen open market sales of properties in Camp Hill but outside the regeneration area.  The sales were completed at different dates between January 2008 and July 2012 at prices ranging from £58,500 to £93,000.  The second, Appendix 5, was headed “Camp Hill Early Purchase Scheme”.  It listed 44 properties within the CPO area which were acquired between January 2010 and March 2012 at prices between £25,000 and £86,750.  Five of these sales were negotiated with the owner’s surveyor, one with a financial adviser and one with a solicitor.  In addition, two properties were owned by a Housing Association.  Otherwise the owners were not professionally represented.  The third schedule, Appendix 6, entitled “Acquisitions with Professional Representation”, gave details of nine sales within the CPO area between March 2010 and April 2011 at prices between £62,000 and £86,750.  Six of the vendors were represented by surveyors and one by solicitors, the remaining two properties being owned by a Housing Association who negotiated with the acquiring authority direct.

15.        In Mr Wilson’s opinion the valuation of the subject property should have regard to evidence of open market sales outside the regeneration area.  It was also appropriate to consider the acquisitions of other properties within the scheme, particularly where agreement had been reached with the owners’ professional advisers.  Mr Wilson considered that the value of the subject property was towards the upper end of the range of prices indicated by his first schedule of comparables.  (He ignored the price of £93,000 paid for 401 Cedar Road, because he considered it to be exceptional).  In his opinion 245 and 247 Queen Elizabeth Road provided particularly good evidence.  Both were sold for £77,000 (245 in July 2012 and 247 in March 2011), one was mid terrace and one end terrace and both had been refurbished and included a garage.  In addition 247 had two conservatories.  Mr Wilson considered that the subject property was less valuable than either, hence his figure of £75,000.  He observed that his valuation was towards the upper end of the range of values shown in his second and third schedules of comparables.  This reflected his view that the subject property was neither the best nor the worst in terms of facilities and condition;  it was an average property.

16.        In support of his opinion Mr Wilson produced a copy of a valuation of the subject property at £72,500, prepared by Mr R F Hawkins FRICS of Messrs Hawkins of Nuneaton and dated 8 August 2011.

17.        I start by considering Mr Greenway’s suggestion that less weight should be attached to evidence of sales of properties within the CPO area – and in particular those which were negotiated direct with the owners – than to prices paid for properties in Camp Hill outside the regeneration area.  I accept as a matter of principle that prices agreed under the shadow, or reality, of a CPO (settlements) are less reliable as evidence of value than prices paid for properties which are not blighted in that way (open market sales).  Mr Greenway did not seek to quantify the difference between the two levels of value.  In my judgment such evidence as there is suggests that, little, if any such difference exists in this particular case.  My reasons for this conclusion are as follows.

18.        Mr Greenway relied on seven open market sales, for which the total price paid was £587,500, an average of £83,928 per property.  Two of these sales – 199 and 245 Cedar Road – took place early in 2008.  Mr Wilson considered that those two sales constituted unreliable evidence, because there was a very significant change in the financial climate and the property market both generally and in Nuneaton between early 2008 and the valuation date.  I accept that evidence.  I also accept Mr Wilson’s opinion that the price of £93,000 paid for 401 Cedar Road in August 2010 was exceptionally high, being £10,500 more than was paid for any other 3 bedroom property in Camp Hill – whether by way of settlement or open market sale – in 2010 and 2011.

19.        Mr Wilson’s first schedule of thirteen open market comparables included the seven cited by Mr Greenway.  If one excludes the two transactions in early 2008, and also what I have concluded to be the exceptional price paid for 401 Cedar Road, the total paid for these properties was £721,500; an average of £72,150.

20.        Turning to the settlement evidence, Mr Wilson’s second schedule listed a total of 44 transactions between 2010 and 2012, most of which were negotiated directly with the owners.  I disregard the prices paid for 26 Spring Hill Road, which was derelict, and for 33 Hazel Road, 287 and 305 Queen Elizabeth Road, all of which had 4 bedrooms and were thus larger than the vast majority of houses on the estate.   I also discount 291 and 311 Queen Elizabeth Road, 26, 29 and 31 Hazel Road, and 15 Ludford Road, where the vendor was either represented by a surveyor or was a Housing Association.  I also ignore the subsequent reductions to the prices originally agreed for 9 and 32 Ludford Road, because they reflected the effects of fire damage.  I do, however, take account of the price of £64,000 paid in November 2010 for 22 Ludford Road, which Mr Wilson accepted had wrongly been shown in his third schedule as having been negotiated with the assistance of a surveyor.  The total paid for the 35 houses in the amended second schedule was £2,447,000, or an average of £69,914 for settlements where the owner was not represented by a surveyor.

21.        The third schedule – containing details of settlements negotiated with professional representatives – included two houses, 33 Hazel Road and 305 Queen Elizabeth Road, which also appeared in the second schedule.  As I have said, they were both 4 bedroom properties and I disregard them.  I also disregard 22 Ludford Road, which has been included in my analysis of the second schedule.  The remaining 6 sales were negotiated by the owners’ surveyors and produced total proceeds of £426,180, an average of £71,030.

22.        There was no evidence to suggest that there was any material change in values during the period covered by Mr Wilson’s three schedules apart from in early 2008 and I have excluded the 199 and 245 Cedar Road sales from my analysis.  Nor was there any suggestion that there was a significant valuation difference between different parts of the estate.

23.        Although the average price obtained on open market sales (£72,150) was slightly higher than those obtained on settlements (£71,030 agreed with surveyors and £69,914 with owners direct), I do not consider the difference to be significant in valuation terms.  I bear in mind that surveyors were involved in only a very limited number of transactions, so that the prices listed in Mr Wilson’s third schedule are likely to be rather less representative than the settlements in his second schedule.  Nevertheless, I do not consider that the evidence supports the contention that settlements at Camp Hill negotiated directly with owners were agreed at significantly less than the prices which the relevant properties would have achieved had their owners been represented by surveyors, or if they had been the subject of open market sales.

24.        Having concluded that settlements and open market sales are of similar evidential value in this case, I turn to the comparables themselves.  A difficulty which confronts the valuer is that the overwhelming majority of the comparable evidence relates to 3 bedroom houses in terraces, built at about the same time in similar style and construction.  Differences in prices paid are therefore attributable to (a) whether the property was in the middle or at the end of a terrace, (b) whether additions had been made since original construction, (c) differences in structural condition, (d) differences in decorative condition and (e) differences in the quality and condition of services.  With the exception of (a) it is not possible on the information available to be sure, in any particular case, whether the price paid was influenced by one or more of these factors and, if so, to what extent.  So far as the open market sales are concerned, the evidence consists largely of estate agents particulars.  These contain limited details and do not necessarily provide an objective description of the property in question.  In the case of each of the settlements, all which were negotiated by Mr Wilson, he confined his description of the condition to a generalised adjective, such as “quite good”, “fair” or “poor”.  Whilst it is entirely understandable that he adopted this approach, it means that the reliability of any conclusion drawn  from the settlement evidence is dependent on the accuracy of such descriptions.  As I explain below, I am not satisfied that the descriptions in the schedules of comparables are reliable.

25.        In my judgment the most useful evidence of the value of the subject property is provided by the price of £82,000 paid for the immediately adjoining property, 4 Ludford Road (No.4) in March 2010.  The evidence about No.4 is more detailed than in the case of any other comparable.  Mr Wilson produced seven internal photographs provided by the previous owner.  The precise date on which those photographs were taken is not known, but it was prior to March 2010 and Mr Wilson said (and I accept) that the photographs provide a fair indication of the condition of the house when he inspected it prior to the sale.  Mr Greenway produced 40 photographs of the exterior and interior of No.4, taken after the property had been stripped out and boarded up following its acquisition.  Mr Greenway’s photographs were only of limited assistance in view of the physical changes which had taken place since the valuation date.  Nevertheless, they did provide sufficient material to enable Mr Greenway to cross examine Mr Wilson in some detail on the respective physical characteristics of the subject property and No.4.

26.        The two houses had been occupied differently.  The claimant purchased the subject property in 2003 and it was let thereafter on assured shorthold tenancies until shortly before the valuation date.  No.4, on the other hand, had been owner occupied for many years.  Having considered the evidence I conclude that, in certain respects, the subject property was superior to No.4.  Unlike No.4, which was a terraced property, the subject property was at the end of the terrace.  This meant that, in contrast to the position at No.4, rubbish carried from the rear garden to the front of the subject property did not need to be taken through the house.  There was also an additional side area of undeveloped land within the curtilage of the subject property, some 2.43m in width.  The extent of these advantages was partly offset by the fact that the subject property adjoined an area of public open land, which could be a source of problems in a relatively high crime area.  The subject property was in somewhat better structural condition than No.4.  The latter had a number of vertical cracks up to 75mm deep to internal walls, whereas there was no evidence of movement or cracking in the subject property.  No.4 had an old electric fuse box, surface mounted electrical cabling, solid fuel central heating, aluminium double glazing and a 3 piece bathroom suite.  By contrast, the subject property had a modern RCD unit to the mains electricity, chased in wiring, combination gas fired central heating, UPVC double glazing and a bathroom with 4 piece suite including separate shower cubicle.  In each case, the facilities at No.4 were inferior to those in the subject property.  On the other hand, No.4 had a conservatory (of basic construction built directly off the concrete floor) and a front porch (with some rot to the timbers), whereas the subject property had neither a porch nor a conservatory.  Although the respective merits of the two kitchens were the subject of some discussion I conclude that neither was materially more valuable than the other; nor was there any significant difference between the decorative condition of the two houses.  Nor do I consider that the existence at the subject property of a very basic form of rear vehicular access, or the potential – subject to planning permission – for front on-site parking of a small motor vehicle, would have added materially to its market value.

27.        Taking all these matters into consideration, I conclude that the subject property was slightly more valuable than No.4.  I find that the price of £82,000 agreed for the latter suggests that the subject property was worth £84,000.

28.        I would add that No.4 was included in Mr Wilson’s second schedule of comparables.  It was the only property whose condition was described as “very good all round”.  There was no reference to the disadvantages to which I have referred in para 26 above.  The condition of one other house, 309 Queen Elizabeth Road, was described as “very good”.  The remaining 42 houses in Mr Wilson’s second schedule were described variously as being between “good” and “poor”.  I bear in mind that Camp Hill was a deprived area in need of regeneration.  Nevertheless in my judgment No.4 could not reasonably be described as “very good all round”.  The fact that it was so described casts doubt on the reliability of the descriptions in Mr Wilson’s schedules generally.  In reaching that conclusion I have not overlooked the contents of a manuscript note prepared by Mr Wilson when he inspected No.4, which was produced at my request.

29.        I obtain no assistance from the two supporting valuations which were adduced as evidence by the parties.  The search criteria relied upon by Messrs Hawkins when seeking comparables specified a maximum price of £80,000.  This means that any sales above that figure, including the price paid for No.4, would not have been taken into account.  As for the report from Messrs Storers, this stated that the valuation of £105,000 was “based upon the factual information known and provided to us at the present time” and that the authors reserved the right to vary their figure “should any of the information upon which we have based our opinion prove to be inaccurate or incorrect”.  The report did not specify what factual information had been provided, nor did it refer to any comparable evidence.  In those circumstances, and in the absence of any oral evidence from Mr Curtis, I do not consider that his letter takes the matter any further.

30.        I conclude that the market value of the subject property on the valuation date, considered as an existing house, was £84,000.

Residual valuation

31.        Mr Greenway also approached the valuation by considering the subject property as a building plot.  He said that Barratt Homes, who were redeveloping Camp Hill, were building their “Hasley” three storey semi detached properties on plots with the same frontage as the subject property, 9.45m, and with a smaller depth.  On the basis that site value was, say, one third of the combined sale price of the two completed units, which Mr Greenway estimated at £319,000, the site value was £106,500.

32.        Mr Greenway also produced two development appraisals of the site based on the erection of two Hasley houses, assuming gross sale proceeds of £319,000.  The first assumed a site value of £105,000 and construction costs of £750 per m² .  It produced a developer’s profit of £29,560, equivalent to a 10.21% return on cost.  The second assumed a purchase by a small developer builder, who would be able to complete the development at a cost of less than £750 per m² and would be prepared to accept the difference as providing adequate profit.  On this basis the site value would be £134,560.

33.        Mr Wilson pointed out that Mr Greenway had not sought a certificate of appropriate alternative development under s.17 of the Land Compensation Act 1961 as amended, nor had he made any informal enquiries of the local planning authority.  He produced a letter dated 8 August 2012 which he had received from the Head of Development Control at the local planning authority.  This commented on the proposal to replace the subject property with a pair of three storey semi detached town houses as follows:

“Whilst there appears to be enough room to accommodate these on the plot design wise these would also not be in keeping with the street scene.  The depth of the design would also mean that there could be a detrimental effect on the neighbouring properties  sufficient enough to warrant a refusal of planning permission.”

34. Notwithstanding this advice Mr Wilson prepared two of his own development appraisals assuming gross sale proceeds of £270,000 and £280,000 respectively.  In both cases the estimated construction costs were approximately 50% higher than those adopted by Mr Greenway, reflecting an assumption that substantial abnormal costs would be incurred in line with the experience of Barratts when they redeveloped the estate.  Neither appraisal produced a positive site value.

35. In response Mr Greenway produced a plan which showed examples of new houses being erected adjacent to existing “no fines” homes.  He expressed the view that a prospective developer would have negotiated with the local planning authority and would have been able to overcome its concerns.  He criticised Mr Wilson’s reliance on building costs obtained from Barratts, on the grounds that the abnormal costs that arose in the course of the regeneration of the entire area would not have been incurred by a developer who only wished to acquire the subject property.

36.        Mr Greenway put forward his residual valuations somewhat cautiously, suggesting that the Tribunal “may consider” the claim on this basis.  His caution was understandable, given the repeated reluctance of Members of this Tribunal and its predecessor, the Lands Tribunal, to attach weight to residual valuations prepared solely for arbitration purposes.  In my view the uncertainty attaching to the level of price which could be obtained for two new houses in this location, to the proportion of that price attributable to the value of the site, the prospects of obtaining planning permission for two new units immediately adjoining a 1950’s terrace of smaller houses and the level of building costs is such that I am unable to obtain material assistance from any of Mr Greenway’s alternative valuations.

37.        For completeness I should add that in my view Mr Wilson’s criticism of Mr Greenway’s approach based on the absence of a s17 certificate was misplaced.  Such a certificate should specify “any classes of development” which would be appropriate if there were no proposal to acquire the property by any authority possessing compulsory purchase powers.  Since it is common ground that residential use would have been appropriate in principle, no useful purpose would have been served by applying for a s.17 certificate.

38.        I conclude that there is no reliable evidence to suggest that the value of the subject property for redevelopment purposes would have exceeded its existing use value of £84,000.

Disturbance

39.        The following items of disturbance compensation, arising from the acquisition of an alternative investment property, 3 Trent Road, were agreed:

£

Building survey 475.00

Conveyancing costs 968.89

Fitting floor coverings (carpets) 697.00

Electrical test   95.00

Gas test   65.00

Smoke alarm   26.58

Agent’s letting fee 594.00

Inventory check for subject property 150.00

_______

 £ 3,071.47

A number of additional disturbance items were disputed and I consider each in turm.

 

 

Mortgage set up costs

40.        Mr Lewicki claimed £1,553.00, being the costs he incurred in obtaining a mortgage to enable him to purchase 3 Trent Road as an alternative investment.  Mr Wilson pointed out that the price paid for 3 Trent Road was £74,000 and the acquiring authority had made an advance payment of £72,562.50 on 23 August 2011 in respect of compensation for the subject property.  Any loan required to purchase the replacement property would therefore have been relatively small and for a short period of time.  Mr Wilson accepted that a small bridging loan might have been required and he suggested that an appropriate sum to cover the costs of obtaining such a loan would be £500.00.

41.        Mr Lewicki replied that, in addition to the shortfall between the purchase price of the new property and the advance payment, he needed money to cover the cost of certain disturbance items, continuing loss of rent and necessary repairs to 3 Trent Road.  A bridging loan would have been very expensive, since such finance was designed to provide very short-term loans; he had still not received the balance of the compensation moneys which would enable him to repay part of the mortgage.  I am satisfied that, in the circumstances with which he was faced at the time he acquired 3 Trent Road, it was reasonable for Mr Lewicki to obtain a mortgage rather than a bridging loan and that the fees he incurred would not have been any lower if he had decided to limit his borrowings to £25,000, the minimum available for a buy to let mortgage.  Mr Lewicki is entitled to the amount claimed for this item.

Floor levelling and underlay

42.        Mr Lewicki claimed for the cost of removing carpets from 3 Trent Road (£125), together with the cost of purchasing and laying underlay (in the entrance hall, bathroom and kitchen) to take new ceramic tiled floors (£643) and the cost of the corresponding work in preparation for laying new laminate flooring in the living room and dining room (£498).  Mr Wilson contested the cost of floor levelling and carpet removal on the grounds that those items would have been reflected in the purchase price of the replacement property.

43.        Mr Lewicki replied in oral evidence that he was not claiming the cost of a new bathroom or kitchen, or of repairing damaged timbers, all of which would have been taken into account in the price agreed for 3 Trent Road.  He considered, however, that he was entitled to the cost of work which was required to enable him to let the property.  There was a difference between the requirements of tenants and many owner occupiers and the works for which he was claiming compensation would not necessarily have added to the market value of the freehold interest.

44.        Having heard this explanation Mr Wilson maintained his opposition, although he conceded that he could “perhaps discuss” the claim for the provision of underlay in the living room and dining room.  I accept Mr Lewicki’s evidence on these heads of claim and determine compensation for them in the total sum of £1,266.

Shower screen

45.        Mr Lewicki claimed £42.99, being the cost of a new shower screen.  Mr Greenway considered that this claim was justified on the principle of equivalence.  Mr Wilson disagreed, on the basis that the price paid for 3 Trent Road reflected the absence of a shower screen.  I agree with Mr Wilson and I disallow the item of claim.

Gas hob

46.        The costs of purchasing and fitting a new gas hob at 3 Trent Road were claimed in the sums of £98.98 and £130.00 respectively.  Mr Greenway said that the replacement property was fitted with an electric hob, which was generally unpopular with tenants.  Mr Lewicki had therefore decided to replace it with a gas hob.  Mr Lewicki said that, in an attempt to mitigate his loss, he had asked the acquiring authority to notify him before the subject property was demolished, so that he could remove the gas hob for use at 3 Trent Road.  In the event he was not warned of the demolition in advance, and so he had to purchase a new hob.

47.        Again, Mr Wilson considered that the absence of a gas hob would have been reflected in the purchase price and was therefore not compensateable.

48.        I prefer Mr Lewicki’s evidence on this issue and award compensation as claimed.

Claimant’s time

49.        Mr Lewicki sought compensation for the time he spent dealing with the compensation claim (£2,333) and seeking a replacement property (£1,668.77).  He produced two schedules to support the claim.  The amounts claimed were based on the time spent at £125 per hour, plus travelling at 45p per mile which he said was his charging rate in his building surveying practice.  Time spent dealing with the claim outside normal working hours was charged at £20 per hour.

50.        In Mr Wilson’s opinion, since the subject property was held as a private investment, most of the activities claimed for should have been carried out in the claimant’s own time and outside his normal office hours.  He accepted that Mr Lewicki had been present on two occasions when the acquiring authority’s representative viewed the subject property and that he had conducted some initial compensation negotiations before instructing Mr Greenway.  However, a number of the items listed in the schedule appeared to pre-date the CPO, others were not properly explained and others should have been dealt with by Mr Greenway to whom a separate fee was payable.  Mr Wilson said that the charging rate of £125 per hour was higher than the rate at which he had been charged when working at the District Valuer’s office.  He suggested that an appropriate figure to reflect the claimant’s time was £360, based on four hours at £90 per hour. 

51.        Mr Lewicki’s evidence that his professional charging rate was £125 per hour was not challenged.  I adopt it as the measure of his loss in respect of time spent on work which could not reasonably have been carried out outside normal office hours.  I bear in mind Mr Wilson’s observations on the individual items claimed and consider it appropriate to adopt a broad brush approach to this head of claim.  I determine the compensation payable in respect of Mr Lewicki’s time dealing with the CPO and seeking an alternative investment, limited to time spent during office hours, at £1,500, based on 12 hours at £125 per hour.

Legal fees

52.        Mr Lewicki claimed legal fees of £970.80, which he had paid to Cripps Harries Hall, solicitors.  Mr Wilson contested this claim, on the basis that the fees were for advice in connection with submission of the reference to this Tribunal.

53.        Cripps Harries Hall’s invoice related to work done between 23 August and 22 September 2011.  It described the advice given as:

“considering original and revised statement of case and draft notice of reference form.”

54.        In my judgment these charges do not qualify for inclusion in a disturbance claim.  Rather, they form part of the costs of the reference, which fall to be considered at a later date.  Accordingly, no compensation is payable for legal costs.

Surveyor’s fees

55.        It is agreed that the acquiring authority should pay Mr Greenway’s reasonable fees for negotiating the compensation claim prior to the reference.  Mr Greenway said that his normal charging rate was £125 per hour and he had spent between 20 and 25 hours on the matter.  Mr Wilson concluded that a reasonable fee would be £550.  This was based on the fees he had agreed in two other cases.

56.        Mr Greenway rejected the comparables relied on by Mr Wilson on the basis that they had been based on Ryde’s seale, which was historic.  Mr Wilson confirmed that, so far as he could recall, Ryde’s seale had been adopted.  As has been made clear in various previous Tribunal decisions, a claimant is entitled to a reasonable surveyor’s fee related to the work reasonably done in preparing and negotiating the claim.  Unless Ryde’s seale is agreed in any particular case it is not a helpful indicator of the appropriate fee.  I bear in mind that this claim includes a significant number of disturbance items as well as a valuation of the subject property.  I find that a reasonable surveyor’s fee is £1,875, based on 15 hours at £125 per hour.

 

Result

57.        I determine that the compensation payable to Mr Lewicki for the freehold interest in 3 Ludford Road, Nuneaton is £99,794.45 calculated as follows:

£

Freehold interest 84,000.00

Basic loss payment (7.5%)   6,300.00

Disturbance

Agreed disturbance items   3,071.47

Mortgage costs   1,553.00

Floor levelling`   1,266.00

Gas hob 228.98

Claimant’s time   1,500.00

Surveyor’s fees   1,875.00

_________

£99,794.45

58.        A letter concerning costs accompanies this decision, which will become final when the question of costs is determined.

 

 

Dated:  20 March 2013

 

 

N J Rose FRICS

 

 

Addendum

59.        I have received submissions on costs from the parties.

60.        The claimant asks for an award of costs in his favour on the indemnity basis and totalling £19,913.79.  In support of his claim for costs he points out that the acquiring authority did not make a sealed offer.  In support of his request for indemnity costs he relies on the following aspects of the acquiring authority’s conduct: the Tribunal’s conclusion that the description of 4 Ludford Road in Mr Wilson’s expert report was unreasonable; the inflexible approach adopted in without prejudice negotiations; the original refusal to share the costs of mediation and the subsequent offer to pay only one quarter of those costs; informing the Tribunal that it would be prepared to agree to the written representations procedure without sending a copy of its letter to the claimant; the delay in agreeing part of the disturbance claim and paying the agreed compensation; offering to pay a surveyor’s fee limited to Ryde’s scale; offering £500 in respect of mortgage costs for the first time in its Statement of Case; withdrawing from an agreement to pay compensation for loss of rent; seeking permission to call a second expert witness.

61.        The acquiring authority suggests that each party should be responsible for its own costs for the following reasons.  The amount awarded for the value of the freehold interest was considerably below the figure put forward by the claimant and the disturbance compensation determined was below the total claimed.  The length of the hearing was unduly protracted by the claimant.  The amount contended for in the statement of case (£105,000) was significantly below the highest valuation in Mr Greenway’s expert report, making meaningful negotiations extremely difficult.  The acquiring authority had offered to pay half the fees of mediation but this was not followed up by the claimant.  The acquiring authority has already incurred costs of £4,704 in connection with the reference.  There was no delay in part payment of the disturbance claims. 

62.        The acquiring authority objects to the quantum of costs claimed on the following grounds.  Much of the time claimed for by the claimant was included in the previous claim for disturbance for which compensation has been awarded.  Similarly, many of the items claimed in respect of Mr Greenway’s time duplicate those included in the disturbance claim.  The costs claimed in respect of the claimant’s witness statement should be disallowed, because the Tribunal did not give permission for a second witness for the claimant and indeed refused permission for the acquiring authority to call a second witness.  A number of the items claimed in connection with preparation for the hearing are duplicated between the claimant and Mr Greenway.  The claimant unnecessarily increased the costs of the proceedings and the total costs claimed are unreasonable relative to the value of the claim.

63.        Where, as in this case, the claimant has made a claim for compensation for the compulsory acquisition of his land and the acquiring authority has not made an unconditional offer pursuant to s4 of the Land Compensation Act 1961, the claimant will normally be awarded costs unless there is a special reason not to do so (Colneway Ltd v Environment Agency [2004] RVR 37).  In my judgment none of the matters referred to by the acquiring authority constitutes a special reason for departing from the general rule.  I turn to the basis of costs which should be awarded to the claimant.  It is true that, in principle, the refusal of a party to participate in mediation might justify any costs awarded against it being assessed on the indemnity basis.  However, in a letter to the claimant dated 27 November 2012 the acquiring authority stated in terms that it would support an application for mediation.  Admittedly in that letter the authority indicated that it was not prepared to pay a proportion of the application fee.  In a subsequent letter received by the claimant on 2 January 2013, however, the acquiring authority stated that, “having considered the matter further in the spirit of attempting to resolve the matter we would be agreeable to paying half the application fee of £212.50.”  The claimant points out, rightly, that the  application fee would have been £425.00 plus VAT and not £212.50.  It is, however, just possible to interpret the letter of 2 January 2013 as an offer to contribute half of the mediator’s fee.  In view of the fact that the acquiring authority was happy for the matter to proceed to mediation, I do not consider that an award of indemnity costs would be justified on the basis of the ambiguity of its position on the mediator’s fees.  Nor do I consider that such an award is justified by any of the other matters relied upon by the claimant. The acquiring authority must pay the claimant’s costs of the reference, such costs to be assessed in default of agreement by the registrar of the Lands Chamber on the standard basis.

Dated:  18 April 2013

 

 

N J Rose FRICS