Purchase notice for 20-ft-wide strip of land at Stirchley, Birmingham–‘Provided’ by developers as rear access road as condition of 1966 planning permission for development of 20-acre site for housing–Now a mainly grass-covered area fenced along both sides and giving no access ‘to anyone for any purpose at all’–Section 17 certificate issued for ‘private service-road purposes’–‘Pointe Gourde’ principle applies to decrease in value from £15,000 to £4,000–Tribunal ‘values the valuers’
Mr Mathew
Horton (instructed by Coward Chance) appeared for the claimants, and Mrs Janet
Dean, a solicitor to the Birmingham District Council, represented the acquiring
authority.
Giving his
decision, MR WALMSLEY said: This is a reference by Morris & Jacombs Ltd for
the determination of the purchase price payable in respect of 2.35 acres of
land at the rear of Fordhouse Lane, Stirchley, in the City of Birmingham,
pursuant to a purchase notice dated May 6 1968 served upon Birmingham County
Borough Council (now Birmingham District Council) under section 129 of the Town
and Country Planning Act 1962.
Departure from
Development Plan
Ten years ago
the reference land stood part of a larger area of about 20 acres used as
non-statutory allotments and allocated in the current development plan for that
purpose. The council wished the land to be made available for housing, a
substantial departure from the development plan. They saw the Minister and
obtained a release. On December 16 1965 an outline planning permission was
issued to a company, Colmore Development Co Ltd, for the development of the 20
acres for residential purposes, subject to the provision of some three acres of
public open space. In January 1966 the present claimants submitted a planning
application for the development of the whole of the 20 acres residentially, and
in April 1966 they purchased the 20 acres from Stirchley Allotment Association
Ltd. Meetings and discussions ensued between the claimants and representatives
of the council, related more particularly to the provision of land for use as
public open space. That particular matter was later resolved by the allocation
of 1.60 acres for that purpose. This 1.60 acres, a separated parcel of land, is
included in the 2.35 acres which form the subject of the present reference, but
happily, during the course of the hearing, the parties were
no more time on it.
The issue for
the tribunal to resolve is the compensation payable for the balance of
0.75-acre. This 0.75-acre comprises a strip of land about 20 ft wide and 1,600
ft long, immediately abutting the rear gardens of houses which front to
Fordhouse Lane. Fordhouse Lane is a lane in name only; it is in fact a main
road and forms part of the Birmingham Ring Road. The frontage houses referred
to, some 79 in number, were built in or about 1920: most are terraced, but some
are semi-detached and a few are detached. Only 14 out of the 79 have facilities
for off-street parking: seven of these have garages and the other seven have
hardstandings within their curtilages. The occupiers of the other 65 houses
have parking difficulties.
Prior to
reaching a decision on the planning application lodged by the claimants in
January 1966, members of the town planning sub-committee visited the site on
June 16 1966. After this visit the claimants were informed that:
On receipt of
a formal application, favourable consideration will be given to the granting of
planning permission for the development of land off Fordhouse Lane, Stirchley,
by the erection of dwellings subject to the provision of an access road at the
rear of dwellings in Fordhouse Lane, to serve such dwellings. . . .’
Such documents
as were put in at the hearing indicate that the claimants thereupon lodged an
application which did not provide for the requested access road; but
that, following a meeting of the town planning sub-committee on September 22
1966, a new plan was lodged which did make such provision. The council’s
planning department, in a report for a meeting of the town planning
sub-committee on October 20 1966, observed:
‘The
applicants are now seeking your committee’s formal approval of their proposal
to erect 301 dwellings and 301 garages on their Fordhouse Lane site.
The
accompanying plan is similar to that previously considered by your committee on
22nd September with the exception that rear access is indicated for houses in
Fordhouse Lane. The road will be 20 ft wide to comply with your committee’s
condition that it should be of sufficient width to allow two cars to pass.’
The
sub-committee was recommended by the department, in the same report, to grant
permission subject to certain conditions, the fourth of which was to be:
‘A rear
access road is to be provided to houses in Fordhouse Lane of sufficient width
to allow two cars to pass.’
Permission was
duly given, as recommended, but a different fourth condition was imposed. On
the permission document dated October 20 1966 that condition reads:
‘The road
indicated A-A on the plan submitted shall be provided and shall be of a width
of not less than 20 ft and shall be paved with a suitable hard impervious
material to the satisfaction of the local planning authority.’
The ‘rear
access road’ (which I shall now call ‘the accessway’) has been duly ‘provided’
by the claimants in the sense that the 20-ft strip is there to this day, but it
remains a mainly grass-covered area fenced along both sides, and with stumps
across at either end as a barrier to vehicles.
The claimants
proceeded with their permitted development. Between August 1967 and December
1968 houses were erected with their back gardens running down to the accessway,
and having their frontage to an estate road called Hazelwell Crescent. None of
the Hazelwell Crescent houses and none of the Fordhouse Lane houses enjoy any
rights over the intervening 20-ft strip which runs along their respective back
gardens; and thus the accessway does not in fact provide any ‘access’ to anyone
for any purpose at all, except (as is only to be expected in the circumstances)
on a de facto basis. This state of affairs was, and is, clearly an
unsatisfactory one. Anticipating the problem, and with a view to resolving it,
the claimants during the course of their development lodged a formal planning
application in January 1968 for the residential development of the accessway
(and also of the 1.60 acres of public open space). On March 14 1968 they
received, predictably, a refusal. This refusal gave them the basis for the
originating purchase notice of May 6 1968. In this notice it was claimed that
the areas of 1.60 acres and 0.75-acre had become incapable of reasonably
beneficial use. On August 5 1968 the council served a counter-notice with a
stated reason, in respect of the accessway:
‘With regard
to the area of the proposed access road, it is difficult to understand how this
part of the site could be capable of more beneficial use. The existence of a
rear access to the new housing fronting on the estate road could be a
significant factor in the sale of such properties, while an income would also
be possible from allowing a right of access to the occupiers of existing houses
on Fordhouse Lane.’
Minister
Confirms Purchase Notice
The matter
went to the Minister, on whose behalf a letter was written to the town clerk on
December 24 1968 stating that the Minister ‘hereby confirms the notice and
directs that the Birmingham County Borough Council shall be deemed to have
served today a notice to treat in respect of the interest of Messrs Morris
& Jacombs Ltd, in the land in question.’
The present
reference to the tribunal, by Morris & Jacombs Ltd was not made until
October 4 1974, nearly six years later. What happened, I was told, was that
negotiations were embarked on in 1969 but proved abortive: the claimants were
contending for residential value, and this was being contested by the council.
In January 1970 the claimants apparently lodged a reference to the tribunal,
but a stay of hearing was ordered to allow an application for a certificate of
appropriate alternative development to be sought under section 17 of the Land
Compensation Act 1961. In respect of the accessway, a certificate was issued on
March 16 1971 for ‘private service-road purposes,’ and that certificate was
confirmed by the Minister on October 20 1972 after the holding of an inquiry.
I opened the
hearing in Birmingham on May 18 1975. Mr Mathew Horton appeared for the
claimants and Mrs Janet Dean for the council. Mr Horton told me that,
subsequent to the lodging of the reference in October 1974, the affairs of the
claimants had passed into the hands of a receiver, on whose behalf his own
services had only very recently been retained. Counsel apologised that his
instructions were still incomplete; he asked me to assume that the earlier
reference of January 1970 had been withdrawn; and he sought an adjournment of
the hearing in order that his expert witness might lodge a fresh valuation. An
adjournment was granted on terms and the hearing was resumed in London on June
30 1975.
By the time of
the resumed hearing the parties had reached agreement on a number of matters,
including:
(a) That the date at which the valuation falls
to be made is June 30 1975. (The date of the deemed notice to treat is, as
already stated, December 24 1968. Entry on the land has not yet been made.)
(b) That the value of the open space area of 1.60
acres may be taken to be £500.
(c) That the value of the accessway of
0.75-acre, if developed as part of the 20 acres, may be taken to be £15,000,
representing six house plots at £2,500 per plot.
The contention
for the claimants is that the purchase price for the 0.75-acre should be
determined at £15,000 as above. The contention for the council is that the
0.75-acre falls to be valued, on the basis of the confirmed section 17
certificate, as a private service-road. In support of these respective
contentions the following cases were cited: Fraser v City of
Fraserville [1917] AC 187, PC (‘the Fraser case’); Devotwill
Investments Ltd v Margate Corporation (1969) 20 P & CR 150, CA
(‘the Devotwill case’); Salop County Council v
v Liverpool City Council [1971] 1 All ER 628, CA (‘the Wilson
case’); Jelson Ltd v Blaby District Council (1974) 232 EG 93,
205, LT (‘the Jelson case’).
The principles
which regulate the fixing of compensation for lands compulsorily acquired are
conveniently to be found in the classic statement by Lord Buckmaster in the Fraser
case:
‘The value to
be ascertained is the value to the seller of the property in its actual
condition at the time of expropriation with all its existing advantages and
with all its possibilities, excluding any advantages due to the carrying out of
the scheme for which the property is compulsorily acquired, the question of what
is the scheme being a question of fact for the arbitrator in each case.’
Adjusting this
statement slightly (as italicised below) to bring into account what is now
section 5 of the Land Compensation Act 1961, and in the light of the decision
in the Craddock case, those principles now stand as follows:
‘The value to
be ascertained is the value in the open market of the property in its
actual condition at the time of expropriation with all its existing advantages and
disadvantages and with all its possibilities, excluding any advantage or
disadvantages due to the carrying out of the scheme for which the property
is compulsorily acquired. . . .’
Parties’
Valuations
I propose to
take, as a first step, the ascertainment of the open market value of the
accessway in its present condition ‘with all its existing advantages and
disadvantages and with all its possibilities,’ and I will leave to a later
stage the proviso ‘excluding any advantage or disadvantage due to the carrying
out of the scheme for which the property is compulsorily acquired.’ Clearly the open market value of the
0.75-acre as at June 1975 is its value as a private service-road. On this basis
Mr D H Hackett BSc FRICS, for the claimants, put forward a valuation of £4,000
and Mr M E Pepper ARICS, for the council, put forward a valuation of £500. Both
witnesses assumed that the most likely purchaser would be a speculator (or
possibly a consortium of frontagers) whose motive in buying would be to derive
a profit from the sale of access rights to individual frontagers in Fordhouse
Lane and Hazelwell Crescent.
Mr Hackett
considered that such a purchaser would arrive at his bid in this way:
|
Sale of |
£5,000 |
|
Sale of |
£1,000 |
|
£6,000 |
|
|
Less cost of making-up accessway with 6in ash on |
£2,000 |
|
£4,000 |
In rebuttal of the above calculation Mr Pepper thought the
purchaser’s bid would be formulated thus:
|
Sale of |
£3,630 |
|
Sale of |
£120 |
|
£3,750 |
|
|
Less cost of making-up accessway with 6in |
£3,000 |
|
£750 |
|
|
Deduct for profit, risk, deferment, interest, time |
£250 |
|
£500 |
No External
Evidence to Support Valuations
Mr Hackett
referred to his own calculation as ‘a residual valuation’ and told me he was
not happy with it. This is understandable. Both ‘valuations’ seem to me typical
of those arithmetical calculations which come before the tribunal from time to
time; such calculations are built up of a number of unprovable variables
capable of being adjusted by even the most honest valuer in such a way as to
produce whatever end-figure the witness may already have decided on.
Neither Mr
Hackett’s £4,000 nor Mr Pepper’s £500 was supported by external evidence. This
being so, the only way the tribunal is able to ‘value the valuations’ is to
‘value the valuers.’ Mr Hackett is sole
principal in the firm of Leeson Son & Hackett, of Birmingham; and in
support of his proffered expert opinion he had been able to draw on 20 years’
professional experience. Mr Pepper, by contrast, is a young man with
insubstantial grounds (as yet) for offering his opinion as being that of an
expert; he entered private practice in 1965 as a trainee, he qualified in 1970
and took up his present position, as a senior valuer employed by the acquiring
authority, in 1971. I find Mr Hackett’s opinion to be more reliable, and I
accept £4,000 as the open market value of the 0.75-acre.
It does not
necessarily follow that the price payable under the purchase notice is the same
figure of £4,000. Mr Horton, in this connection, relied on section 9 of the
Land Compensation Act 1961, which provides:
‘No account
shall be taken of any depreciation of the value of the relevant interest which
is attributable to the fact that (whether by way of designation, allocation or
other particulars contained in the current development plan, or by any other
means) an indication has been given that the relevant land is, or is likely, to
be acquired by an authority possessing compulsory purchase powers.’
The above
statutory provision was considered in depth by the tribunal in the Jelson
case, the circumstances of which were in many respects similar to those of the
present reference. In the present case, however, the accessway with which I am
concerned is not shown at all on the current development plan, and I accept the
submission by Mrs Dean that no indication was given ‘by any other means’ that
it was likely to be acquired. The indications, as I understand them, were all
the other way. On the evidence, the resolve of the council that there should be
this access road was coupled with an equal resolve that the road should be
provided and paid for, not by themselves, but by the developers. Section 9, in
these circumstances, does not bite.
It does not
follow from this finding that the price payable under the purchase notice is
necessarily £4,000. There still remains for consideration the proviso (on which
Mr Horton relied, as an alternative) that the value to be ascertained is to
exclude ‘any advantage or disadvantage due to the carrying out of the scheme
for which the property is compulsorily acquired.’ This principle–the Pointe Gourde
principle–has been affirmed and reaffirmed in a long line of cases and is
accepted as a fundamental rule of compensation law, being one facet of the
wider principle which Scott LJ in Horn v Sunderland Corporation
[1941] 2 KB 26 described as being the most fundamental of all: ‘the principle
of equivalence which is at the root of statutory compensation, the principle
that the owner shall be paid neither more nor less than his actual loss.’ The classic statement of the Pointe Gourde
principle is contained in the speech of Lord McDermott in Pointe Gourde
Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands
[1947] AC 565: ‘It is well settled that compensation for the compulsory
acquisition of land cannot include an increase in value which is entirely due
to the scheme underlying the acquisition.’
In the light of the decision in the Craddock case the phrase
‘cannot include an increase’ is now to be read as ‘cannot include an increase or
decrease.‘
The cases
cited were all dealing with conventional compulsory purchase orders, whereas
what I am concerned with is a deemed compulsory purchase. In this respect the
circumstances are the same as those in the Jelson case and I adopt the
view expressed by the learned member of the tribunal, Mr V G Wellings QC, in
that case:
‘I think that
Widgery LJ’s words in the Wilson case (‘whenever land is to be
compulsorily acquired, this must be in consequence of some scheme or
undertaking or project’) must be applicable both to a conventional compulsory
purchase order and to a deemed compulsory purchase.’
Mrs Dean
submits that in the present case no ‘scheme’ can be discerned as underlying the
acquisition. With respect, the scheme seems to me readily identifiable; in the
council’s own words it is ‘the provision of an access road at the rear of
dwellings in Fordhouse Lane, to serve such dwellings.’
Was Decrease
Due to Scheme?
I have already
mentioned that the value of the accessway, if developed as part of the
claimants’ ownership of 20 acres, has been agreed between the parties at
£15,000. I have found its value, as a private access road, to be £4,000. Is
this decrease in value, of £11,000, one which is entirely due to the scheme
underlying the acquisition? Mrs Dean
submits that all that happened was that the council requested the claimants to
provide the access road; that a planning application was then lodged which
incorporated that provision; and that planning permission was given on the
application as lodged. Mrs Dean’s further argument, as I understood it, was
that if the claimants had intended to put themselves in a position to obtain
the residential value of the accessway a different procedure had been open to
them: they should not have complied with the council’s request but should
instead have lodged a planning application which showed the access-way as
within the area to be developed residentially: on that application being
refused they could then have appealed to the Minister; and if the Minister had
upheld the refusal on the grounds that the accessway was required as an access
road for dwellings in Fordhouse Lane, it would have been clear on any
subsequent acquisition of the accessway that the council would have been liable
to pay residential value.
I accept that if
the claimants had adopted the above procedure the present dispute would almost
certainly not have arisen. But this does not assist me in deciding the question
posed: Is the ascertained decrease in value one which is entirely due to the
scheme underlying the acquisition? On
this question it is illuminating to look at a letter written to the council by
the claimants’ solicitors as early as July 15 1966, extracts from which run:
‘Our clients
have submitted an application for detailed residential development of the whole
of the site (Fordhouse Lane, Stirchley) on 30th January 1966.
Our clients
instruct us that there have been numerous meetings and discussions with your
department regarding the outcome of this application and only now is a decision
imminent.
You will
realise that an area of land of this size has involved our clients in very
great capital expenditure, which is increasing day by day due to the delay in
our clients being able to obtain planning permission so that they can commence
development. Further expense is also being incurred because our clients have
been unable to utilise the labour force which they have reserved so that a
start might be made on the site immediately it was in their power to do so.’
The above
extracts are to be read against the background of the intimation, received by
the claimants from the council less than a month earlier, to the effect that
the provision of the access road by the claimants was a condition precedent to
the grant of a planning permission. (I took note of, but need not express any
opinion on, a submission made by Mr Horton that such a condition, if imposed,
would have been unenforceable.)
The
circumstances I have described leave me in no doubt that the provision of land
for the access road, and the resultant decrease in value of the accessway from
£15,000 to £4,000, is entirely due to the scheme underlying the acquisition.
This decrease of £11,000, therefore, is one which cannot be included in the
compensation for the compulsory acquisition of the 0.75-acre. Accordingly, the
total compensation is found to be:
|
1.60 |
acres open space. |
As |
£500 |
|
0.75 |
acre access road. |
As |
£15,000 |
|
2.35 |
acres |
|
£15,500 |
I determine the purchase price for the reference land in the sum of
£15,500.
Having read the
decision in this matter, and having then opened the sealed offer lodged by the
acquiring authority, I find that the amount thereof is less than the amount of
my award; accordingly the acquiring authority will pay to the claimants their
costs of this reference, save for the costs of the adjournment on May 18 1975.
In respect of that adjournment the claimants will pay the costs of the
acquiring authority. All such costs unless agreed are to be taxed by the
Registrar of the Lands Tribunal on the High Court Scale.
