High street commercial premises taken for comprehensive redevelopment — Claim of £700,000 based on residual approach reflecting development potential — Offer of £350,000 — Zone A value main issue — Whether market evidence to be preferred to settlement evidence
The subject premises, in the High Street, Epsom, were compulsorily acquired for a scheme of comprehensive redevelopment for retail and ancillary uses, the Ashley Centre. The land was vested with the acquiring authority by general vesting declaration on September 1 1981. The premises consisted of a number of old buildings, a yard and an auction hall.
Evidence was given for the claimant company that the value of the premises for redevelopment purposes was £700,000 using the residual valuation approach; alternatively, its existing use value was £590,000. For the acquiring authority it was said that the value for redevelopment purposes was £250,000, but £350,000 for existing use purposes. The parties agreed plans of a “surrogate” development scheme consisting of the refurbishment and extension of the subject premises at a cost of £175,000.
The main issue was the proper zone A figure. J Sainsbury plc obtained an interest in a site opposite the subject premises and in November 1980 obtained planning permission for a retail store. Premises adjoining the store were refurbished in 1981, let and the reversions sold. Zone A values of £23 and £25.50 per sq ft derived from these lettings formed the basis of the claimants’ evidence; their valuer took into account the coming of the Sainsbury supermarket and used a zone A value of £30 per sq ft in his valuations. The acquiring authority’s valuer relied primarily on settlements of claims and these showed a range between £10 and £15 per sq ft.
Held The claimants’ reliance was on lettings of premises made in unusual circumstances, as the developer took an underlease and the premises adjoined the Sainsbury store. The proper figure for zone A was £16; that figure must be used in the valuations. Although the subject premises did have development potential at the time, redevelopment in accordance with the “surrogate” scheme would not have been worthwhile. But the potential of development was a factor to be reflected in the interest rates used in the existing use valuation. After adjustments, the proper figure for compensation was £415,000.
Xerri and Shanks v Enfield London Borough Council
(1967) 18 P & C R 117 referred to.
Anthony Anderson QC and Alun Alesbury (instructed by Druces & Attlee) appeared for the claimants and called Mr W J F Malings FRICS and Mr J B Sharp FRICS; Elizabeth Appleby QC and Richard Humphreys (instructed by the solicitor to Epsom and Ewell Borough Council) appeared for the acquiring authority and called Mr W R Keeble MRTPI and Mr L J Bamford FRICS.
