JACK LUMB v UNITED UTILITIES WATER LIMITED (formerly NORTH WEST WATER LIMITED) LCA/44/1997

UPPER TRIBUNAL

LANDS CHAMBER

LCA/44/1997

Case No LCA/44/1997

Between

JACK LUMBApplicant

UNITED UTILITIES WATER LIMITED (formerly NORTH WEST WATER LIMITED)Respondent

Before

N J Rose FRICS

Ruth Stockley (instructed by Jackson Brierley Hudson Stoney, Solicitors of Rochdale) for Claimant

Richard Bradley (instructed by Mr T J Warn, Solicitor with United Utilities Water Limited) for Respondent

Venue Manchester Combined Tax Tribunal, 9th Floor, West Point

Date 6 August 2002

Hearing 24 January and 21-22 May 2002

Property: “Dunwood”, Smallbrook Road, Shaw, Nr Oldham, Lancs

Catchwords: COMPENSATION - quantification of damage to bungalow caused by laying of sewer - paucity of documentary evidence to support claim - whether claimant’s evidence reliable - compensation awarded £498.26

[1]This is the third stage of a reference to determine the compensation payable under s278 of the Public Health Act 1936 to the claimant, Mr Jack Lumb, for damage caused to “Dunwood”, Smallbrook Road, Shaw, Nr Oldham, Lancashire as a consequence of nearby tunnelling and blasting works in connection with the sinking of a sewer. The works were carried out by the respondent, United Utilities Water Limited, previously known as North West Water Limited.

[2]On 13 November 1997 the then President, Judge Marder QC, held that this Tribunal had jurisdiction to determine the matter. On 7 June 2001 I found that the damage in the vicinity of the north-east corner of “Dunwood”, recorded by the claimant’s expert, Mr G A Morris, CEng, MICE, AMInstHE, in his report dated 9 November 1990, and illustrated in red on his plan numbered L1166, was caused by the laying of the Shaw Main Outfall Sewer. The purpose of the third stage of the reference was to determine the financial loss suffered by the claimant as a result of that damage.

[3]Ms Ruth Stockley of counsel appeared for the claimant. She called two witnesses of fact, namely the claimant and Mr S Birkett and one expert witness, Mr Morris. Counsel for the respondent, Mr Richard Bradley, called two expert witnesses, Mr B M Kavanagh, CEng, FIStructE, FASI, FRSA, FConsE and Mr D M Hibbert, MRICS.

[4]The amount claimed totalled £9,003, being the estimated cost of remedial work to “Dunwood” if undertaken shortly after November 1990. Alternatively, if the cost of work needed to remedy additional deterioration in the property’s condition between 1990 and 1996 could be taken into account, the claim increased to £10,203. Compensation for loss of rent totalling £17,160 was claimed in addition. The respondent’s position was that the cost of the necessary work was £830.44 and that no compensation was payable for loss of rent. The respondent did not accept that the right hand gable wall was removed by Mr Lumb, but if it was removed the respondent argued that no loss has been suffered.

[5]In his expert’s report Mr Morris said that the sewer tunnel in the vicinity of “Dunwood” was approximately 14 metres below ground level. For the foundations to be adequately protected and stabilised, a piling operation was necessary. Foundation loads required transferring to a much greater depth below ground surface than would be possible with mass concrete underpinning. If piling had been undertaken shortly after November 1990, in order to restore structural stability to the bungalow foundations, it would have been necessary to provide a pile foundation beneath the complete extent of the right hand gable wall. In view of the damage which was emanating from depth and which had affected the front right hand corner of the bungalow, further damage to the gable wall could be anticipated, albeit such damage would be likely to diminish with distance from the front right hand corner of the bungalow.

[6]Mr Morris said that two alternative methods of construction could have been employed shortly after November 1990. One solution would have been to take down the gable 2 elevation completely, providing appropriate support to the roof, install a piled foundation to support a reinforced concrete ground beam and reconstruct the gable wall. An alternative solution would have been to install a double row of piles passing alongside the gable wall and cast a reinforced concrete slab cantilevering from the two rows of piles and passing beneath the gable foundation. This alternative would have been much more expensive in terms of the piling operation, but would have saved the cost of taking down and rebuilding the gable elevation brickwork. Mr Morris thought that the two schemes would have been broadly similar in terms of cost, but the first alternative provided his preferred engineering solution.

[7]Mr Morris’s cost estimate was arrived at as follows: Item No. £ 1-4 Construct rear access road round “Dunwood” 1,470 5 Excavation at front of bungalow 450 6 Hire of Acrow props (including labour) 250 7 Remove gable wall and cart away 400 8-9 Piling and reinforced raft 1,583 10 Construct new drainage system 250 11 Construct new sub-structure brickwork above new raft 250 12 Construct new superstructure brickwork 1,150 13 New front bay window 750 14 External rendering 400 15 External painting 150 16 New gutters 250 17 Internal replastering 400 18 Electrical work 200 19 Internal redecoration 250 20 New timber joists and boards 200 21 Tidying up 100 22 Reconstruct steps 500 £9,003

[8]The additional works to remedy deterioration between 1990 and 1996 were as follows: Item No. £ 23 New window to rear bedroom 300 24 New front door and vestibule 700 25 Patch plaster repairs 100 26 Internal redecoration 100 £1,200

[9]The amounts claimed for remedial work were calculated by Mr Morris on the basis of information he had been given by Mr Lumb. Mr Morris emphasised that four matters should be borne in mind when considering his figures. Firstly, he (Mr Morris) had not been 3 involved with the execution of work on site in any capacity. Secondly, the remedial work was undertaken at the same time as an extension was added to the bungalow, immediately adjacent to the right hand gable wall. Thirdly, Mr Lumb undertook much of the building work himself, without keeping records of his own time involvement and, finally, there was a paucity of supporting documentary evidence generally.

[10]In oral evidence Mr Morris said that, if he had been instructed to take responsibility for the remedial work, he would first have commissioned a bore test to determine the nature of the sub-soil and thus ascertain whether piling was required and, if so, the type of piling that would be appropriate. In fact no such test was performed. In the course of cross- examination Mr Morris reduced his estimated cost of external painting – item 15 – from £150 to £75. He also agreed that, since the gutters above the gable wall would have had to be removed in connection with the construction of the extension, No.16 was not a valid item of claim.

[11]Mr Kavanagh considered that the damage described in Mr Morris’s report dated 9 November 1990 was only slight. In his view it would have required only cosmetic remedial works and could quite easily have been repaired without any parts of the property requiring demolition and rebuilding. In the event that underpinning was required, he thought that it would have been only five metres in length.

[12]Mr Hibbert prepared a cost estimate based on underpinning with concrete for a length of five metres to the front section of the right hand elevation brickwork; re-pointing the cracked mortar joints to the superstructure brickwork and mastic pointing around the bay window. He also estimated the cost of filling the fractures, re-papering the walls and ceiling in the front bedroom and re-glazing the cracked pane in the bay window. His figures were £580.44 for underpinning and brickwork repairs and £250.00 for cosmetic repairs, making a total of £830.44 exclusive of VAT.

[13]Mr Morris’s figure of £1,583 for piling and the reinforced raft (items 8 and 9) was based on an estimate from M K Piling for underpinning the gable wall and providing a foundation to the new extension, incorporating a total of twelve piles. This estimate was dated 18 July 1995. Although the actual amount quoted was £3,052.00 excluding VAT, Mr Morris’s apportionment to the remedial work used the figure of £4,000, which Mr Lumb had told him was the total price he had paid to M K Piling.

[14]Subsequently Mr Lumb provided Mr Morris with a copy of an invoice from M K Piling dated 26 July 1995. This related to the provision and installation of a total of eighteen piles, a foundation to the new extension and underpinning the gable wall at a total cost of £5,012.55 including VAT. In Mr Morris’s opinion, one-third of this figure – or £1,670.85 – related to underpinning the existing bungalow and the remainder to the construction of the new extension. Since, however, this apportionment was rather arbitrary, he did not seek to amend his original figure of £1,583. 4

[15]The hearing started on 24 January and was then adjourned until 21 May 2002. At the commencement of the resumed hearing Ms Stockley stated that she had been instructed by Mr Lumb that the M K Piling invoice dated 26 July 1995 had been prepared subsequent to that date. Nevertheless, Mr Lumb insisted that the work described in that invoice had been carried out by M K Piling. He said that he had not paid that company, but had instead carried out building works for it to an equivalent value. After the piles had been installed, he had removed the gable wall with the assistance of Mr Birkett and his bricklayer, Mr Firth, had then laid new footings on top of the piled foundation.

[16]Following Mr Lumb’s admission that the piling invoice had been fabricated and at my suggestion, the two engineering experts, Mr Morris and Mr Kavanagh jointly inspected the relevant file of the building control department of Oldham Metropolitan Borough Council, to whom notice had been given of Mr Lumb’s intention to carry out works to “Dunwood” in 1995. Following that inspection the two experts agreed the following history of events. The first building notice was received by the Council on 19 October 1995. The proposed works were described as a “single-storey extension”. The application was accompanied by a document dated October 1995 and prepared for M K Piling by Mr F W Whelan, IEng, AMIStructE, AMICE. Mr Whelan described his brief as follows: “To design a combined pile and floor slab to support the lounge extension”.

[17]In the covering letter with which he sent his calculations to M K Piling, Mr Whelan said:

“One set of calcs. for the proposed lounge extension using a 225mm raft supported on 15 piles… Ensure when you’re forming slab up to extg. wall that a fibreboard separation joint is formed.”

[18]The drawing accompanying Mr Whelan’s calculations showed the position of the proposed piles. None was under the gable wall or any other part of the existing bungalow. A representative of the local authority visited the site on 21 and 22 November 1995 and noted that piles were being sunk on the site. His note did not indicate that the works were in any way unsatisfactory.

[19]The only documents that would have corroborated Mr Lumb’s assertion that the existing gable wall was underpinned are the M K Piling invoice and the accompanying guarantee dated 26 July 1995, but neither of these documents is genuine. Mr Lumb’s evidence is inconsistent with the information which was sent to the local authority on his behalf, which clearly suggested that piling was to be confined to the extension. In view of that, and in the light of Mr Lumb’s willingness to produce fabricated documents to support his case, I have no hesitation in rejecting his evidence and finding that the entire extent of the piling works to “Dunwood” was as described by Mr Whelan and that there was no underpinning to the existing building, as claimed in items 8 and 9 of Mr Morris’s schedule. 5

[20]Mr Lumb’s suggestion that he removed the gable wall at the same time as the extension was being constructed is also inconsistent with Mr Whelan’s reference to the formation of a slab up to the existing wall (my italics). If it had been intended to replace the existing wall, I consider it likely that a different adjective would have been used. I have not overlooked Mr Birkett’s evidence that he assisted Mr Lumb in removing and rebuilding the wall. I bear in mind, however, that Mr Lumb is both Mr Birkett’s employer and his landlord and I find that no such work was carried out.

[21]Mr Morris agreed that the following items of claim would not have been necessary if the gable wall had remained in place: 1-7, 10-12, 17, 18 and 20. The claim for those items has therefore not been substantiated. I have found that items 8 and 9 were not carried out and item 16 was withdrawn by Mr Morris. The cost of the remaining items - 13-15, 19 and 21-26 – totals £3,275. There is no evidence to corroborate Mr Lumb’s suggestion that these works were in fact done and I am not satisfied on the balance of probabilities that they were.

[22]Mr Morris agreed that, if the remedial works were limited to those suggested by the respondent, Mr Hibbert’s estimate of £830.44 was reasonable. I therefore accept that figure. Mr Hibbert did not add VAT. He assumed the claimant was able to reclaim VAT through his business activities. In the absence of any evidence to the contrary I accept that approach and find that the compensation payable for the necessary building works to “Dunwood” should exclude VAT.

[23]Mr Bradley submitted that, since “Dunwood” was a property let as part of an investment portfolio, any expenditure on it would be tax deductible. Accordingly, 40% should be deducted from any award to take into account the effect of taxation. Ms Stockley did not respond to this submission, which seems to me to be well-founded. I therefore find that the compensation payable for the necessary works to “Dunwood” is £498.26.

[24]Mr Hibbert considered that it would take about eight days to carry out those works and that they would not have resulted in a tenant being forced to vacate the property. I accept that evidence. The claim for loss of rent therefore fails.

[25]The respondent will pay the claimant compensation of £498.26.

[26]A letter on costs accompanies this decision which will take effect when, but not until, the question of costs is decided. Dated: 9 July 2002 (Signed) N J Rose 6 ADDENDUM

[27]I have received written submissions on costs from the parties.

[28]The claimant submits that costs should be awarded in his favour, since he has been successful in obtaining an order for compensation.

[29]The respondent points out that, on 19 July 1995, it offered to pay the claimant £1,000 in settlement of his claim without prejudice save as to costs. On 23 October 2001, after the Tribunal had found that certain damage had been caused by the sewer laying works, the respondent offered to pay £2,000 plus costs to be assessed if not agreed, again without prejudice save as to costs.

[30]The respondent’s primary submission is that the claimant should pay all the respondent’s costs, on the grounds that the claimant has been awarded less than half what had been offered more than 18 months before the date of the notice of reference. If the Tribunal is against the respondent in its primary submission in part, the respondent submits that the appropriate order is that the claimant should pay the respondent’s costs in the reference and shall bear his own costs, except where the Tribunal has ordered to the contrary in any one or more of the existing orders which the Tribunal decides should stand. There are three grounds for this alternative submission. Firstly, that the claimant unreasonably refused to accept an offer in excess of his entitlement before the proceedings were commenced and/or refused to negotiate a settlement when invited to do so by the respondent, that he persisted with a grossly excessive and falsely inflated claim and that he fabricated documents. Secondly, in respect of the orders dated 13 November 1997 and 2 July 2001, the fact that the Tribunal was not aware of the without prejudice offer dated 19 July 1995 and that the respondent could not reasonably have been expected to disclose such an offer at that stage of the proceedings. Thirdly, in respect of the order dated 30 October 2001, that the position taken by the respondent at that hearing has subsequently been entirely vindicated. Accordingly, no criticism can justifiably be levelled at the respondent in respect of any costs wasted on 30 October 2001 and therefore it should be entitled to its full costs of that day. If the Tribunal is wholly against the respondent, then the respondent submits that the respondent should pay the claimant’s costs up to 7 June 2001, when liability was determined in favour of the claimant and the claimant shall pay the claimant’s costs after that date, except as provided in the order dated 30 October 2001.

[31]Although the claimant has succeeded in obtaining an order of compensation, he could have obtained more than twice as much if he had accepted the offer made in 1995, well before the matter was referred to the Tribunal. To that extent, the costs which have been incurred by both parties in respect of the reference were unnecessary and should, in principle, be borne by the claimant. On the other hand, there is no reason to suppose that the costs orders in these proceedings which have previously been made in favour of the claimant would have been any different if the Tribunal had been aware of the without prejudice offers at the time. Nor does the fact that the respondent’s expert report on quantum has been accepted by the Tribunal mean that the costs order relating to the abortive hearing on 30 October 2001 is no longer appropriate. 7

[32]Accordingly, I order that the respondent shall recover its costs from the claimant and the claimant shall pay his own costs, save where the Tribunal has ordered to the contrary in the orders dated 13 November 1997, 2 July 2001 and 30 October 2001. In default of agreement such costs are to be assessed on the standard basis by the Registrar of the Lands Tribunal in accordance with the Civil Procedure Rules. Dated: 6 August 2002 (Signed) N J Rose 8