“(2) The value of land shall… be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realize: (6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land:”
“The purpose…is to provide fair compensation for a claimant whose land has been compulsorily taken from him. This is sometimes described as the principle of equivalence. No allowance is to be made because the acquisition was compulsory; and land is to be valued at the price it might be expected to realise if sold by a willing seller, not an unwilling seller. But subject to these qualifications, a claimant is entitled to be compensated fairly and fully for his loss. Conversely, and built into the concept of fair compensation, is the corollary that a claimant is not entitled to receive more than fair compensation: a person is entitled to compensation for losses fairly attributable to the taking of his land, but not to any greater amount. It is ultimately by this touchstone, with its two facets, that all claims for compensation succeed or fail. Land may, of course, have a special value to a claimant over and above the price it would fetch if sold in the open market. Fair compensation requires that he should be paid for the value of the land to him, not its value generally or its value to the acquiring authority. As already noted, this is well-established. If he is using the land to carry on a business, the value of the land to him will include the value of his being able to conduct his business there without disturbance. Compensation should cover this disturbance loss as well as the market value of the land itself. The authority which takes land on…compulsory acquisition does not acquire the business, but the...acquisition prevents the claimant from continuing his business on the land. So the claimant loses the land and, with it, the special value it had for him as the site of his business……In practice it is customary and convenient to assess the value of the land and the disturbance loss separately, but strictly in law these are no more than two inseparable elements of a single whole in that together they make up the value of the land to the owner…”
“The claimant was in the business of developing sheltered housing and, if it were not for the scheme, would have marketed and sold the units to individual purchasers at a profit. To assess compensation on the basis that, as the acquiring authority had done, the claimant would be deprived of profit that it would otherwise have achieved, was tantamount to paying less for the land, due to the scheme, than it was really worth.” (para 9) The Tribunal recorded Miss Ellis’ comment on this in cross-examination (a passage strongly relied on by Mr Katkowski QC, for the claimant): “She said that whilst she thought the RICS definition of open market value obliged her to adopt the single-sale method, she accepted that in the no-scheme world the claimant would have sold the units individually and retained the profits from the development. Thus, a higher figure would have been achieved than that which she was assessing as compensation under the 1961 Act.” (para 24) In submissions, Mr Harper for LRT submitted that “the key difference between the parties came down to who was going to take the profit”
“101. What the claimant receives by way of compensation (the value of the land) is a sum that it can invest elsewhere in order to make a profit. It is put in the same position as it would have been in, at the valuation date, if the land had not been compulsorily acquired. If the claimant is kept out of its money for any period after the date it loses possession, it will receive interest – to reflect what that money would have been worth to it if it had been paid on the date of entry. Since the claimant obtains compensation for the land that reflects its potentiality for profit making, and interest that reflects the cost of borrowing money to invest in another profit-making venture, it is fully compensated.”
“Certain things are necessarily entailed by the statutory hypothesis. The property must be assumed to have been capable of sale in the open market, even if in fact it was inherently unassignable or held subject to restrictions on sale. The question is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date (see IRC –v- Crossman[1937] AC 26 ). Furthermore, the hypothesis must be applied to the property as it actually existed and not to some other property, even if in real life a vendor would have been likely to make some changes or improvements before putting it on the market (see Duke of Buccleuch v IRC[1967] 1 AC 506 at 525). To this extent, but only to this extent, the express terms of the statute may introduce an element of artificiality into the hypothesis. In all other respects, the theme which runs through the authorities is that one assumes that the hypothetical vendor and purchaser did whatever reasonable people buying and selling such property would be likely to have done in real life. The hypothetical vendor is an anonymous but reasonable vendor, who goes about the sale as a prudent man of business, negotiating seriously without giving the impression of being either over-anxious or unduly reluctant. The hypothetical buyer is slightly less anonymous. He too is assumed to have behaved reasonably, making proper enquiries about the property and not appearing too eager to buy. But he also reflects reality in that he embodies whatever was actually the demand for that property at the relevant time. It cannot be too strongly emphasised that although the sale is hypothetical, there is nothing hypothetical about the open market in which it is supposed to have taken place. The concept of the open market involves assuming that the whole world was free to bid, and then forming a view about what in those circumstances would in real life have been the best price reasonably obtainable.”
“the greater the risk that the purchaser may not receive in due course the future payments he is buying, the higher the rate of return he will require”
“… the owner in a proper case – that is, in a case where he really does incur a loss of money by disturbance due to the taking over and beyond the loss for which he is to be reimbursed in respect of the land taken – is entitled, because it has to do with the land, to have that element of the loss taken into the reckoning of the fair price of the land, as has been held by the Courts from a very early stage.”