ERIC ROLAND DUTTON; DAVID WILLIAM BLACK v BLABY DISTRICT COUNCIL ACQ/132/2004

UPPER TRIBUNAL
LANDS CHAMBER
ACQ/132/2004Case No ACQ/132/2004
Between
ERIC ROLAND DUTTON; DAVID WILLIAM BLACKApplicantBLABY DISTRICT COUNCILRespondent
Before
N J Rose FRICSJ Steedman BA FRTPI of Steedman Planning Limited of Ashby-de-la-Zouch for ClaimantThomas Hill (instructed by Shoosmiths, solicitors, of Nottingham) for Acquiring AuthorityVenue Procession House, 110 New Bridge Street, London EC4V 6JLDate 3 August 2005Hearing 30 March 2005Property: Land at the rear of, 17-25 Stamford Street,, Glenfield,, Leicester,, LE3 8DLCatchwords: COMPENSATION – purchase notice – derelict land, formerly containing dwellinghouse – residential use abandoned – whether Third Schedule right to rebuild also abandoned – effect on value of absence of access for vehicles and to services.
[1]This is a reference to determine the compensation payable by Blaby District Council (“the acquiring authority”) to Mr Eric Roland Dutton and Mr David William Black (“the claimants”) for the freehold interest in a derelict site at the rear of 17-25 Stamford Street, Glenfield, Leicester, LE3 8DL (“the subject land”), which was acquired pursuant to a purchase notice. The purchase notice was confirmed by the Secretary of State for Transport, Local Government and the Regions on 12 November 2002. It had been served on the acquiring authority following their refusal of the claimants’ application to construct a single dwelling on the subject land. By section 143(1) of the Town and Country Planning Act 1990, the acquiring authority are deemed to have served notice to treat on the claimants on 12 November 2002 and to have purchased compulsorily the claimants’ interest in the subject land. Since the acquiring authority have not yet taken possession of the site, the valuation date is the date of the hearing, namely 30 March 2005.[2]It was suggested by both parties and ordered by the Tribunal that the simplified procedure provided for in rule 28 of the Lands Tribunal Rules 1996 would apply to this reference. The complexity of the legal issue which arises in this case is such that, with the benefit of hindsight, it is clear that the simplified procedure was inappropriate. Mr J Steedman BA FRTPI of Steedman Planning Limited of Ashby-de-la-Zouch appeared for the claimants with permission of the Tribunal and called Mr R M Fallowell FRICS FAAV, managing director of Fallowell and Partners, chartered surveyors, based at his firm’s Ashby-de-la-Zouch office. Mr Thomas Hill of counsel appeared for the acquiring authority and called Mr K A Shirer BA (Hons) MRICS, a valuer within the Valuation Office Agency, based at Leicester.[3]There are two principal issues between the parties, one of law and one of valuation. The legal issue is whether there are any Schedule 3 rights which should be reflected in the valuation. The valuation issue is whether, assuming such rights should be taken into account, the value of the subject land was £60,000 as suggested by the claimants or £5,000 (or possibly £500) as contended for by the acquiring authority. There is also a subsidiary valuation issue, namely the size of the rebuilt building which is to be assumed. It is agreed that, in the absence of Schedule 3 rights, the appropriate value was £500. On 5 April 2005, accompanied by both expert witnesses, I inspected the subject land and various other properties which had been referred to as providing comparable evidence. Facts[4]From the evidence I find the following facts. The subject land has an area of 300 m2. It is located a short distance from the centre of Glenfield, a residential area on the north-western outskirts of the city of Leicester. It forms part of a somewhat larger area of derelict land which is all currently fenced off. The additional land within the fenced area lies immediately to the south-east of the subject land and extends to approximately 70 m2. That land is not registered with the Land Registry and the owner is unknown. 3[5]The boundaries of the subject land adjoin the playground of Glenfield primary school to the west, the garden of a house known as White Cottage and a former blacksmith’s workshop to the north and north-east respectively, the service yard of 17-25 Stamford Street to the east and the additional disused land to the south-east.[6]The building known as 17-25 Stamford Street was erected in the 1970s. It contains a number of retail units at the front, with residential flats above and garage space at lower ground level to the rear. The shop units are used as an off licence, a café, a Chinese takeaway restaurant and a betting shop. The concrete surfaced service yard to the rear provides parking space for the flats above, access to the garages below and delivery access for the shops. This area also contains the refuse bins for the flats and retail units and, currently, a transport haulage container.[7]The subject land is densely overgrown and has not been maintained for many years, with rubble and trees present. The front (eastern) boundary of the site is set above the ground level of the service yard. The site rises towards its rear, being particularly steeply inclined at the boundary with the school playground. A public footpath runs along the eastern side of White Cottage and the blacksmith’s workshop. Vehicular access from Stamford Street to the service yard is steep and no immediate on-street car parking is available, there being double yellow lines on both sides of Stamford Street for some distance. The closest available on-street parking for the subject land is on The Avenue, a short residential cul-de-sac off Stamford Street, almost opposite the vehicular entrance to the service yard.[8]In the early 19th century one cottage stood on the subject land. By 1829 there were two cottages and these were subsequently converted to form a single cottage. That cottage was demolished in about 1962 and no other use has been made of the site since then. The legal issue[9]The planning inspector appointed by the Secretary of State to report on the purchase notice in 2002 found as a fact that the former residential use of the subject land had been abandoned, leaving the site with a “nil” use. That finding is accepted by the parties to the current reference. Nevertheless, the claimants submit that, when assessing compensation, it is to be assumed that planning permission would be granted to rebuild the cottage or cottages which existed on the land in July 1948, in accordance with the provisions of Schedule 3 of the Town and Country Planning Act 1990. The acquiring authority, on the other hand, say that since the residential use of the site has been abandoned, any right to rebuild granted by Schedule 3 has been extinguished. 4 The statutory framework[10]The six basic rules governing the assessment of compensation for compulsory acquisition are contained in section 5 of the Land Compensation Act 1961 (“the 1961 Act”).[11]Rule 2 provides that “The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise.”[12]Rule 4 provides that:
“Where the value of land is increased by reason of the use thereof or any premises thereon in a manner which could be restrained by any court, or is contrary to law, or is detrimental to the health of the occupants of the premises or to the public health, the amount of that increase shall not be taken into account.”
[13]Section 15 of the 1961 Act provides for further assumptions to be made regarding planning permission. Schedule 6 of the Planning and Compensation Act 1991 (“the 1991 Act”) amended subsection 15(3) of the 1961 Act to read:
“… it shall be assumed that, in respect of the relevant land or any part of it, planning permission would be granted – (a) subject to the condition set out in Schedule 10 to the Town and Country Planning Act 1990, for any development of a class specified in paragraph 1 of Schedule 3 to that Act …”
[14]The class of development specified in paragraph 1 of Schedule 3 to the 1990 Act relevant to the current reference is:
“(1) The carrying out of – (a) the rebuilding, as often as occasion may require, of any building which was in existence on July 1 1948, or of any building which was in existence before that date but was destroyed or demolished after January 7 1937, including the making good of war damage sustained by any such building; (b) … (c) … so long as the cubic content of the original building is not substantially exceeded.”
[15]Paragraph 10 of Schedule 3 provides that: 5 “(1) Any reference in this Schedule to the cubic content of a building shall be construed as a reference to that content as ascertained by external measurement. (2) For the purposes of paragraph 1 the cubic content of a building is substantially increased or exceeded – (a) in the case of a dwellinghouse, if it is increased or exceeded by more than one-tenth or 1,750 cubic feet, whichever is the greater…”[16]So far as is relevant Schedule 10 of the 1990 Act provides that:
“1. Where the building to be rebuilt or altered is the original building, the amount of gross floor space in the building as rebuilt or altered which may be used for any purpose shall not exceed by more than ten per cent the amount of gross floor space which was last used for that purpose in the original building … 4 – (1) For the purposes of this Schedule gross floor space shall be ascertained by external measurement. (2) Where different parts of a building are used for different purposes, floor space common to those purposes shall be apportioned rateably.”
Submissions on Schedule 3 rights[17]Mr Steedman’s submissions on behalf of the claimants were as follows. One or two cottages existed on the subject land on both 7 January 1937 and 1 July 1948. No planning applications were submitted between 1948 and the date of the application whose refusal led to service of the purchase notice. The site had attracted no new lawful use which would replace the Schedule 3 assumption for compensation purposes. Schedule 3 rights did not apply where there had been an intervening use or a change in the character of the land (Ivens and Sons (Timber Merchants) Limited v Daventry DC (1976) 31 P & CR 480). The Lands Tribunal decision in Old England Properties Limited v Telford and Wrekin Council (ACQ/111/1999, unreported) concerned a site which had remained unchanged since some buildings upon it were demolished in the 1960s. The Tribunal determined the form of rebuilding for which Schedule 3 rights existed as at 26 August 1999.[18]For the acquiring authority Mr Hill submitted that Schedule 3 rights were indistinguishable from existing use rights. Since any existing use rights in respect of the subject land had been abandoned, the assumed right to rebuild had been abandoned as well. The relevance of that right derived from section 15(3) of the 1961 Act. As originally enacted, that sub-section read: “Subject to subsection (4) of this section, it shall be assumed that planning permission would be granted, in respect of the relevant land or any part thereof, for development of any class specified in the Third Schedule to the Town and Country Planning Act, 1947 (which relates to development included in the existing use of land).” 6[19]The words in brackets were omitted from the 1991 Act. Circular 14/1991, published by the Government at the time of the enactment of the 1991 Act, however, contained no suggestion that there was any particular reason for the omission. In fact, the purpose of the 1991 amendments was to narrow the scope of the Third Schedule rights rather than extend them. If the Third Schedule rights were part of the existing use of the land, it followed that they were abandoned when the former residential use was abandoned.[20]Mr Hill also relied upon the decision of the Scottish Lands Tribunal in Northern Metco Estates Ltd v Perth and Kinross DC 1993 SLT (Lands Tr) 28). The Tribunal held that the Sixth Schedule right to rebuild the original cottages on the reference land had been extinguished when the residential use of the site was abandoned. That case was concerned with the relevant Scottish compensation legislation, but the Sixth Schedule rights referred to were parallel to the Third Schedule rights applicable in England and Wales. Conclusions on Schedule 3 rights[21]Mr Hill’s submission is that the assumption of planning permission for which section 15(3) of the 1961 Act provides does not fall to be made if, at the relevant date, any residential use of the land has been abandoned. No such qualification, in my judgment, is to be read into the provisions of section 15(3) of the 1961 Act or paragraph 1(a) of Schedule 3 to the 1990 Act, which identifies the development for which the planning permission to be assumed. There is clearly no express qualification to this effect. To satisfy the requirements of paragraph 1(a) the development must, firstly, constitute rebuilding and, secondly, it must be the rebuilding of a building that was in existence on 1 July 1948 or was in existence before that date but was destroyed or demolished after 7 January 1937. It is evident that the rebuilding contemplated need not be part of a continuous process of demolition and reconstruction. The rebuilding in 1949 of a building demolished in 1937 would have been development covered by the sub- paragraph, and the same would go for a building demolished in 1937 and rebuilt in 2005.[22]Mr Hill submitted that significance should be attached to the words “(which relates to development included in the existing use of land)” which appeared in section 15(3) of the 1961 Act as originally enacted. The explanation for their inclusion (in section 3(3) of the Town and Country Planning Act 1959, the predecessor provision of section 15(3) of the 1961 Act), is that Part I of the Third Schedule to the Town and Country Planning Act 1947 (which was the planning Act in force in 1959 and 1961) was headed “Development Included in Existing use for purposes other than Compensation under s 20” and Part II was headed “Development Included in Existing use for all Purposes”. The reason for the exclusion of the words when section 15(3) was amended for the first time by the 1991 Act was that, in the Third Schedule of the Town and Country Planning Act 1962 (which replaced the 1947 Act), Part I was headed “Development not ranking for compensation under s123” and Part II was headed “Development ranking for compensation under s 123”.[23]Under the 1947 Act development values were nationalised, and the purpose of the Third Schedule was to define the “Excepted Classes of Development”, that is those classes of development whose value had not been nationalised and accordingly could be carried out without the payment of development charge under Part VII of the Act and which were not to be taken into account in assessing compensation for the nationalisation of development values under Part VI. The general concept was that the value of the existing use of land should be 7 excluded from nationalisation. But what was to be treated as being within the existing use for this purpose needed to be defined, and this is what the Third Schedule did. The words in brackets in section 15(3) of the 1961 Act are no more than a shorthand description of this, and I can see no possible basis, as a matter of statutory interpretation, for limiting the express words in the 1947 Act by reference to this shorthand description in the 1961 Act and importing a qualification related to abandonment.[24]It is in any event hard to see that the concept of abandonment can have any application to the use of a building that is demolished. Where a building is constructed, section 75 of the 1990 Act makes provision as to its use. Subsections (2) and (3) of that section provide:
“(2) Where planning permission is granted for the erection of a building, the grant of permission may specify the purposes for which the building may be used. (3) If no purpose is so specified, the permission shall be construed as including permission to use the building for the purpose for which it is designed.”
[25]Abandonment is not, therefore, in my view relevant to the right to rebuild. Where it does become relevant is in relation to any land that may be required to be used for the same purpose. It cannot be assumed that any land other than the building itself can be used for the purpose. If, therefore, other land would be required, for instance in order to provide access, and the right to use that land for residential purposes has been abandoned and planning permission for its use to serve the assumed new building would not be given, the right to rebuild may well be valueless.[26]Mr Hill placed reliance on the Scottish case, Northern Metco Estates, in which the value of the rights under the Sixth Schedule to the Town and Country Planning (Scotland) Act 1972, which made the equivalent provision to that in the Third Schedule to the 1990 Act, was considered. At 1993 SLT (Lands Tr) 28, 37E-I the Tribunal said:
“Alternative submissions have been made on the basis of alternative planning assumptions regarding the existing use rights of the subjects. The claimants submit that since there had been four dwellings in two semi-detached buildings then the correct planning assumption as to the existing use would be four semi-detached houses or two detached houses. This would also be reasonable since the site was capable of having houses built upon it and houses would be attractive on this site. They further suggested that the houses which had existed on the site could be replaced as an existing use of the land without it being necessary to copy them slavishly in any respect. To that end a realistic substitute would be acceptable. The respondents submitted that if a right to a pre-existing use had been abandoned then it would be lost. In support of this contention they referred to Hartley v Minister of Housing and Local Government [1970] 1QB 413. In that case it was argued that since a cessation of use does not require planning permission, neither does its resumption. The question in the case was whether the cessation of the use had been merely temporary or whether it amounted to 8 abandonment. It was found on the facts that the use had been abandoned. It was held that a use once abandoned cannot be resumed without planning permission and the fact that there was no material change of use one way did not mean that there is no material change of use the other way. On the facts in this case the Tribunal finds that at the date of the notice to treat the existing use was not residential. That had been abandoned. Development of the land for residential purposes would then require planning permission as a material change of use. The rights granted by planning permission or by permitted development attach not to any individual but to the land itself. The Sixth Schedule rights attaching to the reference subjects had been extinguished by abandonment, and any action by the owners of the land, such as making application for planning permission for residential use, will have no effect since their intentions are not indicative of the actual planning rights accruing to the land.”
[27]The Tribunal thus treated the issue of abandonment as determinative of whether there could be any right to rebuild, on the basis that planning permission would be required to use the land for residential purposes. I do not find the decision to be of assistance, since it does not appear that the Tribunal’s attention had been drawn to section 30(2) of the 1972 Scottish Act which made the same provision as that now in section 75 of the 1990 Act, to which I have referred above. Nor did the Tribunal draw a distinction between planning permission for the use of the building (which, as I have said, is to be assumed) and planning permission for the use of other land (which is not to be assumed).[28]Mr Hill also submitted that it was illogical and unreasonable for the acquiring authority to be required to pay compensation in 2005 in relation to a use which had been deliberately abandoned by the then landowner 43 years earlier, with no intention to resume such use. Although there would appear at first sight to be some force in that submission, the fact is that the value of the right to rebuild was to be treated under the Third Schedule as belonging to the landowner and as being excluded from the value taken from him by the nationalisation of development values; and the right to rebuild was not qualified by any provision relating to the use that the landowner might make of the land. Of course he might, through carrying out other development, make it impossible to rebuild, as in Ivens, where tipping on the land had raised its level by 20 feet, but that is another matter.[29]Finally, I do not accept the suggestion that the right to build the hypothetical new building should be left out of account under rule 4 of section 5 of the 1961 Act. In the hypothetical world where planning permission exists for such rebuilding, the use of the new property would not be contrary to law.[30]The facts before me are insufficient to enable me to judge whether other land would be required to serve the assumed new building, and no valuation evidence was given that was based on the assumption that only the building, and no other land, could be used for residential purposes. It would be open to me to decide the issue against the claimant on the basis of the burden of proof, but it would seem to me to be fair, particularly given that the point arises on a difficult point of law on a reference conducted under the simplified procedure, that each party should be given the opportunity to submit further evidence, and argument directed to this 9 evidence, on whether other land would be required to enable the assumed rebuilt house to be used and on the valuation significance of this and of the assumption that no other land could be used for residential purposes. Each party must lodge such further evidence and argument within 14 days of the date of this decision, and I will decide in the light of it, and any submission on the matter that may be made, whether the hearing should be reopened. Valuation Evidence[31]I now consider the value of the subject land on the assumption that the conclusion I have reached on the legal position is wrong, and that both the rebuilt house and the remainder of the site may be used for residential purposes.[32]Mr Fallowell’s valuation of the subject land at £60,000 was based on a full site value of £90,000, less one-third to reflect the fact that there was no vehicular access or immediate access to services. The figure of £90,000 – or £300 per m2 – was derived from the sales of two building plots in Leicester – 19 St Swithin’s Road, Evington and land adjoining 103 Abbots Road – and two plots to the west of the city – 4 Kirkby Road, Desford and land adjoining 2 Wood Street, Ashby-de-la-Zouch. Mr Fallowell said that, adjusted to current values, and with the exception of St Swithin’s Road, these transactions were all equivalent to more than £300 per m2. He discounted the evidence of St Swithin’s Road, because development of that site was restricted by a building line and because the surrounding area comprised mainly semi- detached houses. He said that his valuation of the subject land at £300 per m2 reflected its inferior location compared with the remaining three comparables.[33]Mr Fallowell supported his valuation by the following check calculation. The plan attached to the 1963 conveyance of the subject land suggested that the ground floor area of the then existing cottage was 77.25m2. This was equivalent to 154.5m2 on two floors which, with an assumed extension of 10%, would give a total floor area of 170m2. He would expect a house of that size to contain three or four bedrooms and to be worth approximately £270,000. If the site were worth one-third of the sale price of the house, this would produce a site value of £90,000. Mr Fallowell said that his further deduction of one-third for problems of access and services was in accordance with the Stokes’ principle (Stokes v Cambridge Corporation (1961) 13 P & CR 77). It was also supported by the claimants’ option to purchase the former blacksmith’s shop for £40,000. £30,000 of that figure could be attributed to the vehicular access and services enjoyed by the option property.[34]Like Mr Fallowell, Mr Shirer used the 1963 conveyance plan to calculate the dimensions of the original structure. He arrived at a smaller area, however, namely 133.88m2, indicating that the maximum allowable gross floor space of the hypothetical new building was 147.2m2. In addition, he concluded that the rebuilding of an outbuilding of 7.7m2 – but no garage – could be assumed.[35]In arriving at the value of the subject land Mr Shirer considered two recent sales of development land in Glenfield, namely Oakley Farm, The Square and land adjoining 11 Glenfield Frith Drive. The former site had been sold with detailed planning permission and 10 the price paid was equivalent to £280 per m2. The latter site was sold with outline planning consent and Mr Shirer increased the price paid by 15% to £206 per m2 to reflect the requirement to obtain detailed consent. Valuing on the basis of this evidence Mr Shirer arrived at a range between £62,000 and £84,000 for the subject land, assuming access and detailed planning permission. This range, reflecting between £206 and £280 per m2, reflected site value for a new build dwelling, before adjustment for locational differences.[36]In order to relate these values to the hypothetical new building, Mr Shirer considered the prices paid for five detached houses sold in Glenfield during the previous six months. He concluded that the hypothetical new building would be worth approximately £250,000 (147.2m2 at £1,700 per m2), before making any adjustments for variations in location and quality compared with the comparable properties. Mr Shirer considered that, typically, site value equated to 25 to 33% of the value of the completed house. He thus arrived at a possible range of site values between £63,000 and £83,000, which was consistent with the range he had derived from the land sales evidence.[37]He then deducted £15,000 from the value of the hypothetical new building to reflect the absence of a garage which each of his comparable properties included. From the resultant £235,000 he deducted a further 15% to reflect the unattractive access to the subject land and security concerns resulting from its position and lack of lighting; the positioning of the rear elevation against the boundary and garden of White Cottage; the existence of the disused site immediately to the south-east; the poor outlook to and overlooking by the rear of the shops and flats at 17-25 Stamford Street; disturbance from externally mounted air conditioning units and the service yard deliveries and activity at the rear of those properties; the proximity to Glenfield primary school and the associated disturbance; the proximity to the refuse skips and container storage in the service yard; the lack of on-street parking in the locality and the poor natural light resulting from overshadowing by the flats and the high ground adjoining the boundaries.[38]He thus arrived at a maximum market value for the hypothetical new building of approximately £200,000. In the course of cross-examination, he accepted that there might have been some minor lighting at the rear of 17-25 Stamford Street, but this would not cause him to change his views on value.[39]Assuming a typical site value component of 25 to 33% of market value for the hypothetical new building, he considered that the maximum site value was approximately £50,000 to £67,000, assuming the availability of access. It was then necessary to consider the access to the subject property and any effect of that on value. The site had no vehicular access rights. There was a public footpath close by, but a question remained as to whether there was an easement or right of way connecting the two. The lack of vehicular access raised the question of how the right to rebuild the original building could be implemented and how users of the completed building would gain access to it in terms of deliveries and removals and emergency services.[40]Although the claimants had acquired an option to buy the adjoining former blacksmith’s shop, it was unclear whether any rights attaching to that property would permit access for the 11 use of the subject land or whether an additional easement would be required. Mr Shirer considered that the option price of £40,000 for the former blacksmith’s shop provided an indication of how much an adjoining owner might require to grant the necessary access rights and other easements, assuming he had the ability to provide all the rights that were required. Given the strong bargaining position of the adjoining property owner, the price of £40,000 might prove to be too low. Even assuming that the required access and other easements could be obtained for £40,000, Mr Shirer considered that a prudent purchaser would only be prepared to pay between £10,000 and £27,000 for the subject property before any adjustment for certain additional factors. In practice it might prove necessary to negotiate with more than one adjoining owner in order to obtain all the necessary easements.[41]At the valuation date no arrangements were in place to satisfy a prudent purchaser that access and easements for service connections were available. There was therefore a high risk attaching to any assumption on the part of a purchaser that all necessary easements could be obtained. Such agreements might be achieved with adjoining landowners. He thought, however, that those owners would seek to maximise the price obtainable, since without their agreement the hypothetical new building would be effectively uninhabitable.[42]In addition, there were further risks attached to the site in terms of unknown potential abnormal costs of development, given the overgrown and unclear condition of the site. He would expect a prudent purchaser to make considerable provision for these costs. An initial contamination survey might cost up to £2,500, with further significant expenditure if a full site investigation were required. It was unclear what – including asbestos – might be present in the site. Clearing the site might cost £4,000 or £5,000, including licences for tipping and landfill tax. Above average costs of connecting services could potentially arise, given the lack of direct frontage to existing services on adjoining land.[43]In view of the variety of uncertainties and risks attaching to the subject land, Mr Shirer thought that only a speculative builder would have been interested in purchasing it and that he would have reflected these matters fully in the price offered. Assuming there was a possibility of securing vehicular access rights to the site, his valuation of the freehold interest, with the benefit of Schedule 3 rights, was £5,000. In the absence of such access, but otherwise on the same basis, his valuation would be £500. Conclusions on valuation[44]I start by considering the dimensions of the hypothetical new building which is to be assumed for the purposes of Schedule 3. In arriving at his assessment of the size of the original building, Mr Shirer relied on a photograph which appeared in the Illustrated Leicester Chronicle on 30 July 1949. The former blacksmith’s shop appeared in the foreground and part of the house which then stood on the subject land was also shown. Mr Shirer thought that this photograph indicated that the original two-storey dwelling had a single-storey front wing. In order to arrive at the floor area of the original building, he used a photocopy of the plan attached to a conveyance of the site dated 1 January 1963. Having checked the measurements on that plan against the Ordnance Survey digital map and on-site measurements of certain remaining structures, he was satisfied that the conveyance plan was reasonably accurate. 12 Using dimensions scaled off the conveyance plan, he calculated that the gross floor area of the original building was 133.88m2 arrived at as follows: Ground floor – 10.25m x 5.75m = 58.94m2 First floor – 10.25m x 5.75m = 58.94m2 Front wing – 4.0m x 4.0m = 16.00m2 Total area 133.88m2[45]Bearing in mind the permitted floor area increase of 10 per cent, the maximum gross area of the hypothetical new building was therefore 147.2m2. On that basis Mr Shirer was satisfied that the cubic content of the rebuilt building would not substantially exceed the cubic content of the original building. There also appeared to be an outbuilding in existence at the time and shown on the conveyance plan. The dimensions of this structure were approximately 2m x 3.5m, giving a gross floor area of 7.0m2 and a maximum allowable gross floor area of 7.7m2. He did not know the precise use of the structure, but he assumed it had comprised a store and possibly an external wc.[46]In Old England Properties Ltd the Lands Tribunal (Mr P H Clarke FRICS), had held that the rebuilt dwelling must be located on the site of the foundations of the original building, subject to any minor deviations necessary to allow the permitted increase in size. Mr Shirer therefore assumed that the rebuilt building would be located against the north-western boundary of the site, where it adjoined the rear garden of White Cottage. An outbuilding with a gross floor space of 7.7m2, but not a garage, could be assumed.[47]Mr Fallowell also used the plan attached to the January 1963 conveyance. He calculated the ground floor area of the cottage to be 77.25m2, which was equivalent to 154.5m2 on two floors. With the 10% permitted increase, the overall area to be assumed was 170m2. Mr Fallowell did not refer in his written report dated 8 March 2005 to the photograph of the original building, a copy of which had accompanied the claimants’ statement of case submitted to the Tribunal on 25 February 2005. In oral evidence he said that a small area shown on the photograph, which Mr Shirer considered to be a roof over the front wing on ground floor only, was in fact a porch in front of a two-storey structure.[48]The only contemporaneous evidence of the layout of the original building is provided by the photograph in the Illustrated Leicester Chronicle. Whilst this is not definitive, I find on the balance of probabilities that it supports Mr Shirer’s contention that only part of the original building was arranged on two storeys. There is a small difference between the ground floor areas assumed by the two experts. Only Mr Shirer provided calculations to support his figures and I accept them. I therefore find that the area of the assumed hypothetical new building totals 147.2m2 plus an external store/wc of 7.7m2.[49]I now turn to the value per m2 of the subject land in the light of the evidence provided by the sales of other sites. I disregard Kirkby Road, Desford and Wood Street, Ashby-de-la- Zouch, because they took place two or three years before the valuation date and, at 6 miles and 15 miles from Leicester respectively, they are in significantly different locations. In addition, I obtain no assistance from Abbots Road, Evington, because there was no evidence of a 13 concluded transaction there. The remaining evidence, which all relates to sites in Leicester, may be summarised briefly as follows: St Swithin’s Road, Evington 500m2 Jul 2004 £200 per m2 Outline permission for one dwelling. Oakley Farm, Glenfield 500m2 Jul 2004 £280 per m2 Detailed permission for one dwelling. Glenfield Frith Drive, Glenfield 1090m2 Sep 2004 £179 per m2 Outline permission for three dwellings. Detailed consent for one dwelling Dec 2004.[50]I accept Mr Shirer’s opinion that the prices paid for sites with outline consent only should be increased by 15% to accord with the assumed full planning permission. The equivalent prices paid between July and September 2004 were therefore: St Swithin’s Road 500m2 £230 per m2 Oakley Farm 500m2 £280 per m2 Glenfield Frith Drive 1090m2 £205 per m2[51]The development of St Swithin’s Road was significantly restricted by the building line. Moreover, whilst all three sites were in much more attractive locations than the subject land, the residential quality of Glenfield Frith Drive is in my judgment the most desirable of them all. With these considerations in mind, I find that this evidence supports Mr Fallowell’s opinion that, where planning consent exists for the erection of one dwellinghouse on a plot, larger sites tend to be worth less pro rata than smaller ones. I also accept Mr Fallowell’s opinion that residential values increased between July/September 2004 and the valuation date. The area of the subject land is 300m2. I find that the value at the valuation date of a site of that size, if located in the same position as Oakley Farm, some 200 metres away, would have been £310 per m2. I reduce this by 30% to reflect the various disadvantages of the subject land which I find were, in general, accurately described by Mr Shirer (see paras 37 and 42 above). I thus arrive at a site value of £217 per m2, or £65,100, say £65,000. This value assumes that the subject land had vehicular access and access to all necessary services.[52]Both experts checked their site valuations using what is in effect a shortened residual valuation. Mr Fellowell assumed that one-third of the value of the hypothetical new building – which he estimated at £270,000 – would be attributed to the land, assuming availability of access and services. Mr Shirer considered that the completed property would be worth no more than £200,000, of which the element attributable to the land would lie in the range from 25 to 33%.[53]The assistance I obtain from Mr Fallowell’s check calculation is limited. It was based on what I have found to be an excessive floor area of the hypothetical new building and it was not supported by any comparable transactions. Mr Shirer, on the other hand, produced details of the sales of five detached houses in Glenfield which had taken place during the preceding six 14 months. In the light of my inspection I am satisfied that the most helpful evidence is provided by 39 Barley Close and 16 Winterfield Close. They were the most recent sales and were also closest to the hypothetical property in terms of size. They are both situated on modern residential estates. 39 Barley Close, which was sold for £1,709 per m2 in October 2004, has off-road parking for one vehicle and a single integral garage. 16 Winterfield Close was sold in December 2004 for £1,773 per m2 and has off-road parking for two vehicles and a part integral double garage. This evidence in my judgment supports Mr Shirer’s opinion that the hypothetical new building would be worth £1,700 per m2 (£250,000) if it were on a modern residential estate and had a garage. I consider that Mr Shirer’s deductions of £15,000 for the absence of a garage, and a further 15% to reflect the unattractive location of the subject land compared with a modern residential estate in Glenfield, are well-founded. (Since site value is a residual figure, the reduction in the value of the new building by 15% is consistent with the more than proportionate reduction in site value which I have found in para 51). I therefore accept Mr Shirer’s valuation of the hypothetical new building in the sum of £200,000. The value of the subject land which I have arrived at based on comparable land sales is, at £65,000, therefore equivalent to 32.5% of the value of the hypothetical new building. This is virtually the same percentage as was suggested by Mr Fallowell and is within the range of percentages suggested by Mr Shirer. This check therefore adds support to a site value of £65,000, assuming the existence of access for vehicles and to services.[54]In his written report, Mr Fallowell supported his deduction of £30,000 for the lack of such access in the following terms:
“Bearing in mind that the acquisition of The Smithy at £40,000 provides facilities for vehicular access and services I felt that £30,000 of this purchase price could be attributable to the access and service availability.”
[55]In the course of cross-examination he accepted that there was no documentation proving that the acquisition of the former blacksmith’s shop would secure the necessary rights of way, or access to water, electricity and gas supplies. He also accepted that, if any of these rights could not be so obtained, it would be necessary to seek them from the owner of 17/25 Stamford Street and the adjoining service yard; that, so far as he was aware, no such approach had been made to that owner and, because of the potential adverse effects of the proposed new building on the shopping parade and the yard, there was no guarantee that such an approach would be successful. In the light of those replies, I am satisfied that Mr Fallowell’s deduction of £30,000 would be inadequate to persuade a purchaser to proceed with what would clearly be a highly speculative project. In my judgment, such a purchaser would be willing to pay £5,000 – allowing £60,000 to secure the necessary easements – but no more. I therefore find that the value of the freehold interest in the subject land, assuming planning permission to rebuild the original building and to use it and the remainder of the land for residential purposes, is £5,000.[56]I now await further written submissions from the parties as indicated in paragraph 30 above. Dated: 17 May 2005 15 N J Rose FRICS Addendum[57]In paragraph 30 of my interim decision I invited the parties to submit further evidence, and argument directed to this evidence, on whether other land would be required to enable the assumed rebuilt house to be used and on the valuation significance of this and of the assumption that no other land could be used for residential purposes.[58]In response, Mr Steedman made further submissions “in relation to the consideration of whether the assumed planning permission extended to the whole of the land or just related to the assumed rebuilding of the dwelling alone.” In addition Mr Fallowell submitted a further report, in response to instructions he had received “to provide valuation evidence to the effect that the land the subject of the appeal would have no vehicular access merely pedestrian access and services”. Unfortunately, neither the further submissions nor the further report submitted on behalf of the claimants dealt with the question raised in paragraph 30 and I therefore obtain no assistance from them.[59]For the acquiring authority Mr Shirer submitted a statement from Mr Ian Davies, the principal development control officer with the acquiring authority. He said that his council as planning authority would resist any proposal likely to lead to, or assist in, the prospect of establishing residential use on the subject land for the reasons given in the original refusal of planning permission. Mr Shirer considered that the subject land would be of no practical interest to any developer if the building could be erected but would have no garden land, street or public pedestrian frontage, vehicular access or parking. Nevertheless, he believed that the land retained a hope value of £500 for potential garden use to the owner or future owners of White Cottage.[60]I accept Mr Shirer’s opinion and determine that the compensation payable by the acquiring authority to the claimants in £500. The Tribunal’s power to award costs in cases conducted under the simplified procedure is limited. This decision will take effect in 14 days and there will be no order for costs, but if an application for costs is made within that time, the 16 decision will only take effect when the question of costs has been determined. A copy of any such application should be sent simultaneously to the other party, who may submit written representations thereon within a further 14 days. Dated 7 July 2005 N J Rose FRICS Addendum on costs[61]I have received an application for costs on behalf of the acquiring authority, arguing that rules 28(11)(a) and (b) of the Lands Tribunal Rules 1996 both apply to the circumstances of this reference.[62]On 21 February 2003, in a letter sent by their legal services manager to the claimants’ surveyors, the acquiring authority said:
“I refer to your letter of 17 December 2002 enclosing your claim for compensation. In determining the amount of compensation the Land Compensation Act, 1961 has been taken into account. The offer for the above land is £1000.”
The claimants’ advisers rejected this offer, which the acquiring authority say is one to which the Tribunal should have regard under rule 28(11)(a), given that it pre-dated all reference costs incurred by the parties and it exceeded the amount of compensation eventually awarded.[63]As for rule 28(11)(b), the acquiring authority submit that the following circumstances were exceptional and justify an award of costs in their favour: the fact that the subject land was acquired for £4,500 in 1998, presumably as a speculation with a view to obtaining planning permission to develop it, or alternatively obtaining compensation in excess of the purchase price following a purchase notice; the fact that the amount originally claimed was £135,000, but no valuation to support that figure was ever produced; the fact that no prior warning of the reference in December 2004 was given, despite the fact that the respective solicitors were close to arranging a meeting at that time; the fact that in their expert’s report the claimants changed their suggested valuation date from the date of notice to treat to the hearing date without notice, putting the acquiring authority to trouble and expense in re-writing their expert evidence at short notice in order to meet the changed case before them; the fact that the figure determined by the Tribunal was 1/270 of the amount originally sought. 17[64]The claimants do not accept that an award of costs against them would be appropriate. They say that they replied on 3 March 2003 to the acquiring authority’s offer of £1,000, pointing out that the principal issue between the parties was whether or not any schedule 3 rights attached to the subject land. At no time did the acquiring authority respond to that point and so the reference to the Tribunal was inevitable. The fact that the compensation awarded was only a fraction of the amount claimed is irrelevant. The question is whether it was reasonable to have sought a determination from the Tribunal on the question of schedule 3 rights. Previous decisions on the matter had not been definitive and it was reasonable to seek a ruling from the Tribunal. This is reinforced by the fact that the Tribunal’s decision was based on a point not argued by either party at the hearing. The criticism of the claimants changing the valuation date is without foundation. The claimants should not be penalised for adopting the correct valuation date in their expert evidence. In any event, the claimants only received the acquiring authority’s statement of case 14 days before the hearing, instead of 28 days as ordered by the Tribunal.[65]Rule 28(11) provides as follows:
“No award shall be made in relation to the costs of the proceedings except in cases to which section 4 of the 1961 Act apply, save that the Tribunal may make an award of costs (a) in cases where an offer of settlement has been made by a party and the Tribunal considers it appropriate to have regard to the fact that such an offer has been made; or (b) in cases in which the Tribunal regards the circumstances as exceptional …”
[66]Where a purchase notice is accepted by the acquiring authority or confirmed by the Secretary of State, the acquiring authority is deemed to be authorised to acquire the land compulsorily and to have served notice to treat (Town and Country Planning Act 1990, s139(3) and s143(1) respectively). Thus, section 4 of the Land Compensation Act 1961 applies to this reference.[67]The offer made by the acquiring authority in their letter of 21 February 2003 was marked “subject to contract”; that is, it was only a provisional figure and subject to further negotiation (Munton v Greater London Council [1976] 2 All ER 815 at 820, per Lord Denning MR). It was therefore not an “unconditional offer” within the terms of section 4.[68]Nor do I consider it appropriate, given the nature of the offer, to have regard to it under rule 28(11)(a).[69]The only question, therefore, is whether the circumstances are to be regarded as exceptional so as to justify an award under rule 28(11)(b). In my judgment the factors summarised in paragraph 63 of this decision, when the matters in paragraph 64 are also taken into account, do not amount to exceptional circumstances. I therefore make no order as to costs. 18 Dated 3 August 2005 N J Rose FRICS 19