House in Reading occupied by statutory tenant at date of notice to treat–Tenant rehoused by council seven months later–Basis of valuation changed by section 50 (2) of Land Compensation Act 1973 with effect from date between the two events–‘Tenanted value’ held to be correct basis as at date tenant rehoused
John Uff
(instructed by the solicitor to the Reading Borough Council) appeared for the
acquiring authority; no appearance by or on behalf of the claimant.
Giving his
decision, MR LAIRD said: This reference concerns the compensation payable to
one Arthur Alfred Henry Bailey (‘the claimant’), of 30 Tilehurst Road, Reading,
Berkshire, as the owner of a freehold dwelling-house known as 89 Mount Street,
Reading, Berkshire, which, according to his claim form dated September 1 1972,
was occupied by a Mr and Mrs Scutter as weekly tenants at an inclusive rent of
£1.50 per week. The background to this acquisition is as follows:
June 29
1971. The then Reading County Borough Council (now
the Reading Borough Council and hereafter called ‘the council’) made an order
under section 45 of and the Third Schedule to the Housing Act 1957 for the
compulsory acquisition of a number of properties on the south side of Reading.
The title of the order is the Reading County Borough Council (Mount Street,
Waterloo Road, Norfolk Street, Lynn Street, Ffoulkes Street, Sprink Gardens,
Essex Street, Milman Road and Waldeck Street) Compulsory Purchase Order no 1
1971.
August 11
1972. The council served a notice to treat on the
claimant.
September
1972. The claimant’s then solicitors submitted a
claim form to the council, naming surveyors as acting and claiming the sum of
£6,000 for his interest.
October
1972. Mrs Scutter died; Mr Scutter remained in
occupation of the reference property.
October 17
1972. Circular 103/72 entitled ‘Compensation,
Blight and Rehousing’ published by the Department of the Environment [referring
to the White Paper Development and Compensation—Putting People First,
Cmnd 5125].
December 12
1972. The council served a 14-day notice of entry
on the claimant.
March 12
1973. The council rehoused Mr Scutter under its
statutory duty as housing authority.
May 23 1973. Part IV Land Compensation Act 1973 came into force.
March 1974. The council demolished 89 Mount Street.
September
10 1975. The claimant’s then solicitors served a
notice of reference on the registrar of the Lands Tribunal applying for the
determination under section 59 of the Housing Act 1957 of the compensation due
to the claimant; the amount claimed was increased to £7,000; it stated that the
council had entered upon 89 Mount Street on December 28 1972, and that the
claimant intended to call an expert witness at the tribunal hearing.
(Note: The
council does not agree that it took possession on that date but contends for
March 12 1973, when Mr Scutter was rehoused.)
December 9
1975. The claimant’s then solicitors advised the
registrar of the Lands Tribunal that they were no longer acting for Mr Bailey.
December 19
1975. The claimant notified the registrar that he
would conduct his case himself.
March 25
1976. Pursuant to Lands Tribunal Rule 51 (4), (SI
1975 no 299) a hearing, which the claimant attended in person, took place
before the assistant to the registrar of the tribunal for cause to be shown why
this reference should not be listed for hearing; the registrar ordered that the
reference be listed forthwith.
The registrar
sent a notice of the date, time and place of the hearing to the claimant.
May 25 1976. Lands Tribunal hearing, at which the claimant was not present or
represented.
At the
substantive hearing by the tribunal, the Reading Borough Council was
represented by Mr John Uff of counsel, who explained that there are two issues
here, namely:
(1) The correct basis of valuation and
(2) The correct amount of that valuation.
I will deal
with these matters accordingly.
Basis of
Valuation
This boils
down to the question whether the reference property should be valued as a
dwelling:
(a) occupied by a controlled
sitting tenant (the ‘tenanted value’); or
(b) at vacant possession
value.
The council
contends for the former; and submit that the claimant’s original figure of
£6,000, subsequently raised to £7,000 on September 10 1975, unsupported in any
way, can only have been vacant possession value which is now incorrect in law.
The relevant
statutory provisions governing this acquisition, which, incidentally, changed
the basis of valuation previously applied to cases of this nature, are
contained in Part IV of the Land Compensation Act 1973, section 50 (2) of which
states:
‘In assessing
the compensation payable in respect of the compulsory acquisition of an
interest in land which on the date of service of the notice to treat is subject
to a tenancy, there shall be left out of account any part of the value of that
interest which is attributable to, or to the prospect of, the tenant giving up
possession after that date in consequence of being provided with other
accommodation by virtue of section 39 (1) (a) above; and for the purpose of
determining the date by reference to which that compensation is to be assessed
the acquiring authority shall be deemed, where the tenant gives up possession
as aforesaid, to have taken possession on the date on which it is given up by
the tenant.’
I draw
attention to the last sentence of this section, which clearly specifies the
date of possession being taken and thus the date of valuation. Section 89 (3)
of the Act goes on to state:
‘Section 48
above does not affect any compensation which fell or falls to be assessed by
reference to prices current on a date before the passing of this Act, and the
other provisions of Part IV of this Act relating to the assessment of
compensation do not affect any compensation which fell or falls to be assessed
by reference to prices current on a date before 17th October 1972.’
Now section 48
refers to agricultural holdings and does not apply in the instant reference.
The Act received the Royal Assent on May 23 1973 and thus came into force on
that day. Mr Uff explained the relevance of October 17 1972, the date referred
to in section 89; it was on October 17 1972 that the Department of the
Environment had issued Circular 103/72 entitled ‘Compensation, Blight and
Rehous-
Under the paragraph headed ‘Acquisition Terms,’ the circular states:
‘The White
Paper reaffirms the Government’s belief that market value should continue to be
the basis of the compensation code. A number of changes are however to be made
to improve the terms of compensation on acquisition. These will not become
rights nor be payable until after the necessary legislation is passed. To avoid
a hold-up in land transactions meanwhile, the Government have announced their
intention to provide in the legislation that all cases where the valuation date
is on or after October 17 1972 will be eligible for the new terms. The
valuation date for this purpose will be the date when the compensation was
agreed or determined or, if it is earlier, the date when possession was taken.
Authorities should therefore continue their normal programme of acquisitions
and payments on the basis of the present law, in the knowledge that, following
enactment, those cases affected by the new provisions will be reopened to
settle any supplementary compensation then payable. The Secretaries of State
wish to stress that they therefore see no reason for those whose property is
being acquired to hold up negotiations nor for authorities to delay either completing
transactions or making payment meanwhile on the basis of the existing law,
where claimants wish for this.’
Thus it seems
that Parliament intended to put an end to the situation where an owner of a
dwelling-house was able to obtain compensation based upon vacant possession
value (even though the dwelling was subject to a tenancy at the date of service
of a notice to treat), simply because the sitting tenant was subsequently
rehoused by the acquiring authority in the execution of its statutory duty as
housing authority.
Mr Uff
contends that the right to compensation arises at the date of the notice to
treat, which also fixes the interest to be valued; in this present reference
that interest on August 11 1972 consisted of a dwelling-house occupied by a statutory
tenant. By reason of the above-quoted sections of the 1973 Act, the vacant
possession value effect arising from the rehousing of the statutory tenant by
the council on March 12 1973, in the execution of its statutory duty as housing
authority, must now be ‘left out of account.’
Furthermore, as March 12 1973 is after October 17 1972, as specified in
section 89 (3) of the Act, the correct basis of valuation in the instant
reference is ‘tenanted value’ on March 12 1973, the date Mr Scutter was rehoused.
In order to
clarify the position now arising as a result of the Act of 1973, Mr Uff went on
to explain that but for that Act the position would have been different and the
claimant in the instant reference would have been entitled to vacant possession
value. He referred me to the judgments of the House of Lords in Birmingham
City Council v West Midland Baptist (Trust) Association (Incorporated)
[1970] AC 874 which, I understand, are to be taken as meaning that interests as
well as values must be taken as at the date of valuation or entry, unless the
owner has done something which so altered the interest as to increase the
burden of compensation to the acquiring authority. He also cited four Lands
Tribunal decisions which, prior to the Act of 1973, would have been against
him, namely:
Bradford Property Trust Ltd v Hertfordshire County Council 229 EG
1226 given on December 14 1973.
Burson v Wantage Rural District Council 229 EG 1600 given on January 11
1974.
Metcalfe v Basildon Development Corporation 230 EG 1140 given on April 24
1974.
Midland Bank Trust Company Ltd v London Borough of Lewisham 235 EG
59, [1975] 2 EGLR 154 given on May 22 1975.
Mr Uff
submitted that the 1973 Act withdrew the ‘windfall of a vacant house before the
date of entry,’ vide Metcalfe, or the ‘uncovenanted benefit’ referred to
in Bradford. He explained that he was not seeking to apply the Act
retrospectively, since its provisions apply in all cases where the valuation
date falls on or after October 17 1972.
As I have
said, the claimant was not present or represented at the hearing, and so I did
not have the benefit of any submissions on his behalf. Having considered the
matter, I determine that the basis of valuation in this case is to be ‘tenanted
value.’
Correct Amount
of Valuation
Now to the
second issue, namely, the correct amount of compensation payable to the
claimant. I have no evidence from or on behalf of Mr Bailey other than his form
of claim, despite the fact that in his notice of reference he stated that he
intended to call an expert witness.
Mr Uff called,
as expert witness, Mr M C Matthews ARICS, chief valuer to the council since
1970, who told me that some sort of negotiations had taken place with two firms
of expert valuers who, at different times, had been acting for Mr Bailey;
agreement had not been reached because the claimant was seeking first £6,000,
and then £7,000, which, in Mr Matthews’ opinion, could only have been vacant
possession value to which the claimant was not, in law, entitled. Mr Matthews
described the reference property as a terraced house, built about 150 years
ago, in an area of small houses, shops, public houses and factories, situated
west of Whitley Street, a shopping parade on a main road leading from Reading
to the south (A33). Properties in this area had been purchased by the council
since 1962, first by private treaty and then by compulsory purchase action to
clear phase 1, and subsequently to clear phase 2. No 89 Mount Street had been
classified initially as ‘unfit’; but after a public inquiry on January 18 1972,
the inspector visited no 89 and reclassified it as ‘fit.’
The
accommodation comprised:
|
Front B/R: |
11 ft 6 in by 9 ft 1 in |
Decs fair only and generally |
|
|
Middle B/R: |
11 ft 6 in by 10 ft |
Decs fair. Pen damp under |
|
|
Rear B/R: |
5 ft 10 in by 9 ft 2 in |
Decs poor. Settlement — wing |
|
|
Stairs: |
Decs fair. Sound. |
||
|
Front door opens into hall: |
Decs fair. |
||
|
Front S/F: |
8 |
Decs fair. Rising damp and |
|
|
Rear S/F: |
11 ft 6 in by 10 ft |
Decs poor. Tp ceiling and |
|
|
Kitchen: |
6 ft by 8 ft |
Poor. |
|
|
Exteior: |
Wc fair, pointing and eaves |
||
There was no bathroom nor inside wc.
The site
measurements were 11 ft 6 in wide and 86 ft deep, rectangular and level, making
approximately 998 sq ft. Forecourt plot between pavement and house 10 ft deep
with dwarf brick wall topped with round bar railings and pedestrian gate of
same material. Garden at rear less than 40 ft.
Mr Matthews’
valuation of the reference property on the basis of ‘tenanted value,’ as
defined earlier, was as follows:
‘3 bed, 2 LR,
K.
Weekly
inclusive rent £1.50–£78.00 per annum, or £45 net of outgoings.
Gross value
for rating (pre-1973 list) £75.
External floor
area 650 sq ft.
Valuation date
March 1973.
Price £1,990,
which devalues to 44.3 YP on net rent.’
Mr Matthews
produced photographs of the reference and similar properties in Reading and he
supported his figure of
town, but not in clearance areas, held on April 17 1972 and May 1 1974; the
average years’ purchase of both auctions (one of which included a few
better-class properties with bathrooms) came out at 44.3 YP. He also produced
supporting evidence in the shape of settlements of compensation in respect of
similar tenanted ‘fit’ dwelling-houses in the same redevelopment area
negotiated by his staff with well-known firms of Reading chartered surveyors.
In his opinion 89 Mount Street, as a tenanted property, would have realised his
figure, which, he said, reflected the age of the elderly sitting tenant.
Having
questioned Mr Matthews, I accept his figure of £1,990 and I award this sum as
the compensation payable by the council to the claimant.
As to costs of
the reference, Mr Uff explained that an offer of compensation in writing had
been made to the claimant which he had not accepted; a sealed offer would not
have taken the matter any further. The claimant will pay the sum of £100 costs
to the council.
