Aston, Birmingham, premises with established use as warehouse occupied for residential purposes on a regulated tenancy without planning permission–‘Indication’ in current development plan that compulsory purchase likely–Application of section 9 of 1961 Act–Section ‘concerned with valuation and not with ascertainment of circumstances attending interest to be valued’–Valuation to be on basis of actual use
Mr C J S
Glanvill, of Shirley Smith Glanvill & Henson, of Birmingham, appeared for
the claimant, W J Tranter; Mrs J Dean, senior assistant solicitor, Birmingham
City District Council, represented the acquiring authority.
Giving his
decision, MR WELLINGS said: This is a reference to determine the amount of
compensation to which the claimant is entitled for the compulsory acquisition
of premises known as 394 Victoria Road, Aston, Birmingham. The premises had an
established use as a warehouse. No planning permission for that use had been
obtained. It was unnecessary because that use was established before July 1 1948,
the appointed day for the coming into force of the Town and Country Planning
Act 1947. However, both on the date of the notice to treat and the date on
which the acquiring authority took possession of the premises they were let on
a regulated tenancy protected under the Rent Act 1968. The dispute between the
parties is: should the premises be valued on the basis of their actual use as
at the date of the notice to treat or should they be valued as having an
established use as a warehouse? The
amount of compensation on the first footing was agreed at £1,400 and on the
second footing at £3,850.
Constructed as
Public House
No evidence
was tendered before me, but the following primary facts were agreed:
(i) The premises were originally constructed and
used as a public house. At all times they were capable of being used
residentially. By 1945 they had ceased to be used as a public house. In that
year they were purchased by the claimant and at the time of purchase were
occupied by the Standard Yeast Co and used by that company as a warehouse.
(ii) From 1948 until May 1967 the premises were
occupied and used as a warehouse by a toy manufacturer or dealer.
(iii) In 1967 the claimant’s agents attempted to
sell the premises in the market, but were unable to do so because they had
become ‘blighted’ by reason of the proposals of the acquiring authority,
namely, clearance of the premises and the surrounding area.
(iv) After that attempt failed the premises were
offered to the acquiring authority who, however, declined to purchase them.
(v) The property was let from November 13 1967 to
a company called Hobday Metals on a seven-year lease which was, however,
surrendered in the following year.
(vi) On October 7 1968 the property was occupied
by an electrical supply firm who quit the premises soon thereafter.
(vii) From June 2 1969 the property was let as a
house and shop without the grant of planning permission therefor having been
obtained.
(viii) The occupiers referred to in (vii) above
ceased to trade from the premises within the next 12 to 18 months, and
thereafter, until the acquiring authority took possession, the property was
occupied as a whole for residential purposes under a regulated tenancy, no
planning permission for that use having been obtained.
(ix) The property was included in the City of
Birmingham Town and Country Planning Acts 1962-1968, Birmingham (Queens
Road–Part I) Compulsory Purchase Order 1970. Notice to treat was served on the
claimant on August 5 1971. The acquiring authority took possession of the
property on September 5 1971.
It was clear
from documents submitted at the hearing, and it was agreed between the
advocates thereat, that an indication had been given by designation, allocation
or other particulars contained in the current development plan, or by other
means, that the premises were, or were likely, to be acquired by an authority
possessing compulsory purchase powers. The relevance of this feature of the
case will appear when I refer to section 9 of the Land Compensation Act 1961.
It was also agreed between the advocates at the hearing that but for the
above-mentioned indication and but for the letting on a regulated tenancy there
would have been a market for the
have been sold on that basis would have been £3,850.
Mr C J S
Glanvill, solicitor, on behalf of the claimant based his case 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.’
Mr Glanvill
endeavoured to apply that section in the following manner:
(i) On the date on which the acquiring authority
took possession the property could lawfully have been used as a warehouse
without the need for any specific grant of planning permission.
(ii) On that date a purchaser or tenant desiring
to use the property as a warehouse could not be found, because of the effect of
the ‘indication’ referred to above.
(iii) The effect of that ‘indication’ was therefore
to depreciate the value of the relevant interest, because if there had been no
such ‘indication’ a purchaser or tenant desiring to use the property as a
warehouse could have been found.
(iv) The fact that at the date of the notice to
treat or the date of possession the premises were occupied by a regulated
tenant must be ignored: see Myers v Milton Keynes Development
Corporation [1974] 2 All ER 1096, per Lord Denning MR at 1102, where he
said:
‘It is
apparent, therefore, that the valuation has to be done in an imaginary state of
affairs in which there is no scheme. The valuer must cast aside his knowledge
of what has in fact happened in the past eight years due to the scheme. He must
ignore the developments which will in all probability take place in the future
10 years owing to the scheme. Instead, he must let his imagination take flight
to the clouds. He must conjure up a land of make-believe, where there has not been,
nor will be, a brave new town, but where there is to be supposed the old order
of things continuing. . . .’
(v) One must ignore the fact that the premises
could not be let or used as a warehouse and treat them as being usable as a
warehouse. The claimant’s own action in letting for residential purposes must
be ignored: one must go back to the use which was stopped by the indication or
scheme. The depreciation took place before the letting and as a consequence of
the scheme or indication. The letting was just as inescapably the result of the
scheme or indication as was the depreciation. The claimant was making the best
use he could of his land.
Mrs Dean,
solicitor, for the acquiring authority, said that the property must be valued
in accordance with the circumstances existing as at the date of the notice to
treat. The tenancy could not be ignored: see Penny v Penny (1867)
LR 5 Eq 227, at 235, per Page Wood V-C: ‘the scheme of the Act I take to
be this: that everyone’s interest shall be valued, rebus sic stantibus,
just as it occurs at the very moment when the notice to treat was given.’ See also the decision of the House of Lords
in Rugby Joint Water Board v Shaw-Fox [1973] AC 202. One must,
said Mrs Dean, ignore depreciation induced by the scheme or indication but not
the facts, not even those which may have been induced by the scheme or
indication.
Comparison
with ‘Pointe Gourde’ Principle
I agree with
Mrs Dean. It appears to me that, like the Pointe Gourde principle,
section 9 of the Act of 1961 is concerned with valuation and not with the
ascertainment of the circumstances attending the interest to be valued. In
saying that, I am of course paraphrasing the words of Russell LJ (that the Pointe
Gourde principle relates ‘not to the ascertainment of what is the interest
to be valued, but to the value of the interest when ascertained’) in Minister
of Transport v Pettitt (1968) 20 P & CR 344 at 355, approved by
the House of Lords in the Rugby Joint Water Board case, supra.
Furthermore, I can see no causal connection between the depreciation
attributable to the ‘indication’ and the letting for residential purposes. The
latter appears to have been an independent act on the part of the claimant. It
was not argued before me that the residential letting had to be ignored,
because no planning permission for such use had been obtained. I was not asked
to decide whether an enforcement notice under the Town and Country Planning Act
1971 was likely to be served by the local planning authority. There was indeed
no material from which I could have drawn such an inference. Moreover, there is
no certainty that such an enforcement notice would necessarily have put an end
to the regulated tenancy.
The
consequence must be that the claimant is entitled to compensation in the sum of
£1,400. I award that sum to him.
At the hearing
the advocates told me that in the event of success they would not ask for costs
against each other. In the circumstances there will be no order as to costs.
