Agreement — Price for access land — Tomlin order based on guidelines in Stokes v Cambridge Corporation — Whether valuation on serviced plot basis — Whether deductions from open market value in undeveloped state
In the course
of proceedings, in which the defendants claimed a right of way over land owned
by the plaintiff council, the parties reached a compromise the terms of which
were set out in a schedule to a consent order in Tomlin form. One of the
principal terms of the schedule was to impose an obligation on the defendants
to pay to the council, in the event of the defendants’ land being sold for
development, or of the defendants developing it themselves, 30% of the
difference between its value taking into account its development potential and
its current use value; there being an obligation to the surveyor to be guided
by the approach adopted by the Lands Tribunal in determining the proper payment
for access to development land in Stokes v Cambridge Corporation
(1961) 180 EG 839. The defendants obtained planning permission for the
residential development of their land and agreed to sell it to a developer for
£760,000. The parties’ respective surveyors could not agree as to the proper
application of the Stokes‘ principle: the council’s surveyor contended
that the defendants’ land had to be valued on a service lot basis from which
the agreement then required a 15% deduction for developer’s profit and sums for
the costs of roads, sewers, fencing, consents and contingencies. The
defendants’ valuer’s opinion was that as residential development land was
rarely sold on a serviced plot basis, one starts with the contract price, as
its development value, from which the 15% deduction is made.
in effect net of the terms within the 15% deduction — for example the sale
price paid by a developer in its undeveloped state — then to proceed to deduct
them from the net figure. As a matter of construction the opening valuation
must assume that development of some kind has taken place on the defendants’
land, and must be on the same scheme of valuation as in Stokes, namely on a
serviced plot basis.
The following
case is referred to in this report.
Stokes v Cambridge Corporation (1961) 13 P&CR 77; [1961] EGD
207; 180 EG 839, LT
This was an
application by the plaintiffs, Challock Parish Council, by way of notice of
motion, to determine the meaning of the schedule to a Tomlin order in
proceedings against the defendants, Mr and Mrs Shirley and Goodpark Ltd.
David Rowell (instructed
by Kingsford Flower & Pain, of Ashford) appeared for the plaintiffs; Vivian
Chapman (instructed by Edward Harris & Son, of Swansea) represented the
defendants.
Giving
judgment, PARKER J said: Before the court is a notice of motion by the
defendants in the action, Mr and Mrs Shirley and a company which they own
called Goodpark Ltd, raising questions as to the true construction of certain
provisions contained in the schedule to a consent order in the Tomlin form made
in the action by Hoffmann J (as he then was) on February 12 1991. The
respondents to the motion are the plaintiffs in the action, Challock Parish
Council (‘the council’).
The background
to the matter is briefly as follows. The A252 Charing to Canterbury Road runs
through the village of Challock. In the village there is an area of open land
known as ‘Challock Lees’. The A252 runs along the northern edge of Challock
Lees, leaving a verge of varying widths between the metalled carriageway and
the adjacent land to the north. The council owns the verge. The defendants, Mr
and Mrs Shirley, own a part of the adjacent land to the north on which they
have until recently carried on, through their company Goodpark Ltd, a nursery
business called Kent County Nurseries. They live in a bungalow on this land. I
will hereafter refer to the defendants’ land as ‘the subject land’.
In 1988 Mr and
Mrs Shirley proposed to undertake the development of that part of the subject
land occupied by the nursery business (I will refer to that part of the subject
land as the ‘nursery site’) for residential and light industrial purposes. To
that end they set about constructing an access road across the verge connecting
the nursery site with the A252. This gave rise to a dispute, in that the
council contended that, as owners of the subject land, Mr and Mrs Shirley were
not entitled to a right of way across the verge at the point where the new
access road was to be constructed. That in turn led to the commencement of the
present action in which the defendants claimed a right of way by prescription.
It is
unnecessary for present purposes to set out the details of the
enjoyed rights of way over the verge at three specified points only, not
including the point at which the defendants proposed to construct the new
access road.
The hearing of
the action began on February 11 1991, but on the second day of the hearing
terms were agreed between the parties, those terms being incorporated into a
consent order in the Tomlin form (that being the order to which I referred
earlier). In broad terms the schedule to the order, which contains the terms
agreed between the parties, provides that the rights of way to and from the
subject land are to be limited to the three access ways contended for by the
council. However, the schedule goes on to provide that on a sale of the subject
land (defined in the schedule as ‘the defendants’ land’) or on a request by Mr
and Mrs Shirley for the provision of a new access road, the council will
execute a deed granting additional rights of way, so as to allow access over
the proposed new road, on terms that all existing rights of way are released.
Then, in para
8 of the schedule comes the provision which has given rise to the questions of
construction which are raised by the defendants’ motion. I will read the
paragraph in full.
8(a) On the
sale of the defendants’ land or upon the request to provide a new access way as
aforesaid and hence upon a request for the said deed the then owners of the
defendants’ land will pay to the plaintiff a sum equal to 30 per cent of the
development gain thereupon determined as follows:
(b) The
amount of such development gain shall be determined by an independent surveyor
appointed in default of agreement between the parties by the President for the
time being of the Royal Institution of Chartered Surveyors on the application
of either party.
(c) The
surveyor shall act as an expert and not as an arbitrator and while he shall
consider any written representations submitted by either party he shall use his
own knowledge and judgment and he shall not be obliged to give any reasons for
his decision which shall be final and binding on all parties.
(d) The fees
of the surveyor shall be paid as to one half by the plaintiff and as to the
other half by the then owners of the defendants’ land.
(e) The
surveyor shall value the defendants’ land on the assumption if not a fact that
it has planing permission for use for a mixture of Class B1A and Class C3 uses.
I interpose to
say that Class B1A relates to certain classes of light industrial use while
Class C3 relates to residential use.
Continuing
with the paragraph:
If such
permission exists the surveyor shall value the land in accordance with the
terms of such permission. If no such permission exists he shall form a view as
to what mixture of Class B1A and Class C3 uses would be most likely to obtain
planning permission taking into account: (1) any application for such
permission as has already been made or is contemplated; (2) any discussions
about the matter which have taken place between the plaintiff, the Borough
Council and the owners of the defendants’ land; (3) what mixture of such uses
is likely to be most profitable to the developer; and (4) any other factors he
considers relevant and he shall value the defendants’ land on the basis that
planning permission for such mixture of uses has been granted. In making such
valuation he shall assume that the defendants’ land enjoys the access to be
granted under paragraph (6) hereof.
I interpose to
say that is a reference to the execution of the deed to which I referred
earlier.
(f) The
surveyor shall deduct from the value of the defendants’ land ascertained under
(e) above a sum equal to 15 per cent thereof as representing the developers’
profit on such development of the land and such sum as he thinks is reasonable
for the cost of roads, sewers, fencing, consents and contingencies.
(g) The
surveyor shall also value the defendants’ land on the basis that it is subject
to an enforceable and perpetual covenant preventing its use except for the
purposes for which it is used at the order date and enjoys only the access
referred to in paragraph (2) hereof.
I interpose to
say that is a reference, in effect, to the current use value of the land in its
existing state. Continuing with the paragraph:
(h) Both the
aforesaid valuations shall be on the basis of an unencumbered fee simple with
vacant possession and free from any onerous obligations save as expressly
mentioned above.
(i) The
amount of the development gain on the defendants’ land shall be the amount by
which the sum arrived at under sub-paragraphs (e) and (f) above exceeds the
valuation under (g) above.
(j) In making
such determination the surveyor shall be guided by the approach adopted by the
Lands Tribunal in determining the proper payment for access to development land
in the case of Stokes v Cambridge Corp (1961) 13 P&CR 77.
That is the end
of para 8 of the schedule.
Thus, in broad
terms, the general scheme of the paragraph is to impose an obligation on the
defendants to pay to the council, in the event of the subject land being sold
for development, or of the defendants developing it themselves, 30% of the difference
between its value taking into account its development potential and its current
use value.
On January 6
1993 Mr and Mrs Shirley obtained outline planning consent for the development
of the nursery site for residential purposes (that is to say development
falling exclusively within Class 3C) by the erection of 28 dwellings.
On November 30
1993 Mr and Mrs Shirley agreed to sell the nursery site in its existing
condition, complete with greenhouses and a nursery garden, to a developer for
£760,000 the sale being conditional on the grant of detailed planning consent
for the road layout to serve the nursery site.
On May 25 1994
detailed planning consent was given for the development to be served by one
access road being, in essence, the new access road specified in the schedule.
It is to be
noted at this point that the planning consent in fact obtained is not a
planning consent for a mixture of residential and light industrial use, as
contemplated by the opening words of para 8(e) of the schedule, but is for
residential development only. It is common ground between the parties that the
words ‘If such permission exists’ in the second sentence of the subparagraph
refers to a consent for such a mixture of development. Accordingly, under the
strict terms of para 8(e) the terms of the planning consent which has in fact
been obtained are to be disregarded and the subject land is to be valued on the
assumption that planning consent has been obtained for a mixture of residential
and light industrial development.
In the event,
the parties have decided to ignore the strict terms of the schedule in this
respect and to value the subject land on the basis of the planning consent
actually obtained. However, for the purposes of construing para 8 of the
schedule I must take the paragraph as it stands.
It is common
ground between the parties that the sale of the nursery site triggered the
provision of the schedule which provides for the grant of additional rights of
way by the council, and also the provisions of para 8. The terms of the
requisite deed have been agreed between the respective solicitors; no problem
has arisen there.
A dispute has
arisen, however, as to the true meaning and effect of the provisions of clause
8 relating to the computation of ‘development gain’ for the purposes of para
8(a).
Each side duly
instructed a surveyor to undertake this task, the council instructing Mr David
Lowe [FRICS] of Caxton Commercial Ltd and the defendants instructing Mr Paul
Rowe [FRICS] of Rix Rowe & Partners. The two surveyors met to try and agree
the amount of the development gain for the purposes of para 8, but it soon
became clear that agreement was going to be impossible, due to a difference of
view between them as to its meaning and effect.
Mr Lowe’s
contentions in this respect are set out in paras 5 to 11 of his affidavit
lodged on the motion, in the following terms:
5. Under
clause 8(j) of the order the surveyor is required to be guided by the approach
adopted by the Lands Tribunal in determining the proper payment for access to
development land in the case of Stokes v Cambridge Corp [and the
reference is given]. In that case the tribunal started with the value of the
land if sold in plots with all services available and then made deductions of
15% for the developers’ profits and for the cost of roads, sewers, fencing,
consents and contingencies, which are exactly mirrored in clause 8(f) of the
order.
6. My
interpretation of the order is that one has to assess the initial value of
the land under clause 8(e) on the basis of a fully-serviced site in accordance
with the procedure followed in Stokes v Cambridge Corp and then
to make the deductions required by clause 8(f). I will call this the ‘serviced
plot’ basis of valuation.
7. I think
that the Lands Tribunal in Stokes v Cambridge Corp adopted the
service plot basis of valuation because all the comparable evidence was of
serviced plots; it was concerned with land for industrial development and this
is not an unusual basis for valuing such land. In the case of land being sold
in one parcel to a residential developer it would be a more normal valuation
exercise to take the value of the unserviced site and not to make the
deductions listed in clause (f) of the order. I will call this the ‘bare land’
basis for valuation. However, Mr Rowe would not agree to this, but insisted on
taking the price for which the defendants’ land was being sold in its existing
unserviced state and then making the deductions listed in clause 8(f). In my
view, that is wholly unjustified as a valuation exercise. For example, he wants
to deduct under 8(f) the costs of providing electricity, water supplies,
surface water drainage and a sewage treatment plant for the development even
though the land is being sold without those services. Abbey Developments Ltd
— and I
interpose to say that they are the purchaser of the nursery site —
would have to
bear the costs of providing those services and will have allowed for that in
fixing the price it was prepared to pay for the land. By taking that price and
deducting the costs of those services from it, Mr Rowe is, in effect, deducting
it a second time.
8. It seems
to me that Mr Rowe is being too much influenced by the fact that we now know
that the site is going to be sold as a single block for residential
development; that is not what was envisaged when the order was made. It
provides for the land to be developed partly for class C use, that is
residential, and partly for class B1A use which covers certain kinds of light
industrial use. Indeed, I am told by the planning officer for Ashford Borough
Council — and I believe that the council passed a resolution — that part of the
site should be developed for employment-generating uses.
9. If the
site were to be developed partly for housing and partly for light industrial
purposes it would be unlikely to be sold as a whole; it would have been quite
possible — and indeed advantageous in the circumstances of this case — for the
defendants to have sold off the light industrial part of the site on a service
plot basis: residential and light industrial development are not totally
compatible. It would therefore have been beneficial to both parts of the
development, and especially to the residential part, to have put in the
infrastructure and formed some sort of barrier between the two parts, possibly
some form of screening by trees or by a fence. The road layout could also help
to split the two parts of the development. If the defendants were going to put
in the services for the light industrial land it would have been best to put
them in, also, for the residential land: in that way one would achieve the best
layout for both parts and also get economies of scale.
10. When the
order was made the parties did not know how the land would be dealt with,
whether it would be sold as two separate parcels — the residential part as one
parcel and the light industrial part as serviced plots — or in some other way.
They did not know who would put in the services or even whether planning
permission would have been granted by the time the valuation came to be made.
It is plain that they intended a single method of valuation to be applied to
both the housing and the light industrial land; that was bound to introduce a
somewhat artificial element in relation to one or other part of the site. The
only alternative would have been to require the valuer to decide precisely what
portion was going to be used for housing and what portion for light industrial
purposes and to have applied different methods to the two parts.
11. It is not
unknown for housing land to be sold on a service plot basis and there is
certainly no difficulty in valuing it on that basis.
Mr Rowe’s
contentions are set out in paras 8 and 9 of his first affidavit lodged on the
motion, in the following terms.
In para 8 he
says:
In paragraph
8(j) of the Tomlin order of the 12th February 1991, after stipulating the
matters to be deducted from the value of the defendants’ land it is provided
that the surveyor determining the payment for access is to be ‘guided by the
approach adopted by the Lands Tribunal in determining the proper payment for
access to development land in the case of Stokes v Cambridge Corp‘.
Mr Rowe then
refers to the case of Stokes v Cambridge Corporation*, to which I
shall turn in a moment, noting that in that case the Lands Tribunal valued the
land in question for industrial development on a serviced plot basis.
*Editor’s
note: Reported at (1961) 180 EG 839.
He continues
in para 8.2:
In my
experience and in my view, it is quite usual to sell industrial land by way of
serviced plots; this allows the factory operator to design and construct a
factory for his own particular and possibly unique circumstances.
Para 8.3:
In my view,
it is not usual and indeed I have come across no other instance in 30 years’ of
practice, where it is considered normal for a vendor to build an estate road
and put in all services to sell 28 residential plots as serviced plots, then
leaving the purchasers of those plots to build his or her own house. In certain
cases, as here, some of the plots would be semi-detached plots and it would be
would be quite impossible to sell a plot as a semi-detached serviced plot, but
with no building on it expecting the purchaser to have to build half a house to
be joined on at some stage, if at all, by the owner of the adjoining plot. The
usual way for a residential development to be sold is for the land to be
offered as a whole to a builder or developer who will then put in the necessary
infrastructure and build and sell the houses either off the drawing-board or as
spec houses — more usually as spec houses — to individual purchasers who then
buy the completed house ready to be moved into.
In my view,
it is inappropriate to take the serviced plot view of selling plots for
residential houses. I accept that plots very much on a one-off basis, being
part of someone’s garden or being infill, are sold off as a serviced plot but
this is on the basis that such a plot has an existing frontage to an existing
road and that the services are in that road already. It is quite a different
thing for a developer to build a complete estate road layout with all
infrastructure and then endeavour to sell 28 plots on that estate. The outline
planning permission requires that the development be phased and if one were
selling serviced plots it would be very difficult to agree the phasing because
one would have to release the plots according to such phasing as may be
required by the planning authority, for there would then be no control on when
the purchaser built his individual house. Even so, I do not consider that even
if a vendor were to construct an estate road, put in and pay for all the
services that there would be, immediately, 28 purchasers who would wish to buy
a plot and then have the problems of having to find a builder, obtain planning
permission for any variations they wanted, supervise the construction and build
an individual house. I consider it would take sometime — possibly five or more years
— to find 28 purchasers who wished to buy 28 individual service plots and,
therefore, there should be a very substantial deferment element to any
valuation taken as a service plot valuation.
9. In my
view, the correct method of valuing the land of the defendants Mr and Mrs
Shirley is to value it on the basis of what it can be sold for and what it is
being sold for and the contract price — provided the property has been properly
marketed — is the best available evidence. In this view, I consider the property
has been fully and properly marketed and the £760,000 now contained in the
contract and offered by Abbey Developments Ltd is the proper valuation for the
land, ie it is what the land is capable of being sold for and did indeed sell
for.
It is important
to note that having taken as his starting point the value of the land in its
existing state, that is to say in a state where no costs of development have as
yet been incurred and no development profit yet made, Mr Rowe then seeks to
make the deductions required by para 8(f), contending that subparagraph obliges
him to make such deductions. Thus, as he says in his second affidavit:
Mr Lowe also
says that I insisted on taking the price for the sale of the land and then
deducting those deductions stipulated under clause 8(f). Mr Lowe was right in
this because I contend that this is what the Tomlin order tells me to do. The
Tomlin order requires that I value the land and then to make the deductions set
out in para 8(f). I maintained that the way the Tomlin order is worded requires
the deductions to be made. Mr Lowe did not agree with my interpretation. I
explained to Mr Lowe that my interpretation of the effect of clause 8(j)
referring to Stokes v Cambridge Corp is that one should be
‘guided’ by that approach.
That approach
in plain terms without the finer points in the present Tomlin order is that it
is generally argued that if someone holds the key to land for
of the land-locked land due to the development, ie a third of the difference
between the existing use value and the value with development. The order
however tells me to make certain deductions after the land has been valued. I
maintain that the value of the land is the best price that could be obtained
for it regardless of all other issues. The value is not some hypothetical value
of the land with all infrastructure etcetera having been installed. I
appreciate this may be argument as to what is meant by the interpretation of the
order, but I believe that is the difference between Mr Lowe and myself in the
understanding of the Tomlin order.
In argument,
counsel — Mr Vivian Chapman, for the defendants, and Mr David Rowell, for the
council — effectively adopted and argued for the positions taken by the
respective surveyors.
For the
defendants, it is contended by Mr Chapman in the first place that the surveyor
is not obliged under the terms of the schedule to value the subject land on a
service plot basis. He contends that the surveyor is free to adopt whatever
basis of valuation seems to him most appropriate in the circumstances; in
particular, submits Mr Chapman, the surveyor is free, if he sees fit, to take
as his starting point (what I may call his ‘opening valuation’), the value of
the land in its existing (ie undeveloped) state. Mr Chapman goes on to contend,
however, that if the surveyor chooses to make his opening valuation on that
basis he is then obliged to make the further deductions required by para 8(f),
notwithstanding that the opening valuation assumes that no development has yet
taken place: that is to say it assumes that no development costs have yet been
incurred and no profit has yet been made by the developer.
Thus, if for
the purposes of illustration one bases the opening valuation of the subject
land on the figure of £760,000 — being the amount paid for the nursery site by
the developer — it is contended on behalf of the defendants that under the
terms of para 8(f) deductions then fall to be made from that opening valuation
representing development costs and the developers’ profit, notwithstanding that
these items will already have been brought into account by the developer in
agreeing to pay £760,000 for the nursery site in its undeveloped state.
Mr Chapman
was, I think, disposed to accept that there is no logic in this position — and,
indeed, so far as I can see there is none. But he submits that for better or
worse — better, as it happens, for the defendants — that is the true meaning
and effect of para 8.
For the
council, Mr Rowell submits that para 8 is not to be construed in a way which
produces such an extraordinary result, involving, in effect, development costs
and developers’ profit being brought into account twice — once by the developer
in deciding how much he can afford to pay for the subject land in its
undeveloped state and a second time by the surveyor in deducting them from that
sum in computing the development gain for the purposes of para 8.
Mr Rowell
submits that the key to the method of valuation is to be found in subpara 8(j),
which provides, it will be remembered, that the surveyor ‘shall be guided by
the approach adopted by the Lands Tribunal’ in Stokes v Cambridge.
That approach, submits Mr Rowell, involves adopting the serviced plot basis for
the purpose of making the opening valuation of the subject land; and that in
turn, he submits, leads to a sensible and realistic method of determining the
development gain for the purposes of the schedule, which does not result in the
kind of double counting which is, he submits, inherent in the council’s
contention.
Before
considering the arguments advanced respectively by Mr Chapman and Mr Rowell, I
must first turn to the Stokes v Cambridge case.
In that case,
the dispute was as to the amount of compensation payable for the compulsory
acquisition for industrial development of a piece of open farmland on the
outskirts of Cambridge, not having a road frontage. The respective surveyors
put forward widely differing valuations, but in each case although the figures
were different the opening valuation of the land was made on a serviced plot
basis. Each surveyor then allowed for a deduction from such opening valuation
of an agreed amount, representing: ‘Estimated costs of roads, sewers, fencing,
consents and contingencies’, which was plainly intended to represent in that
case the estimated cost of creating the serviced plots. The local authority’s
surveyor also included a further deduction of 15% representing developers’
profit, but the landowners’ surveyor contended that such a deduction was not
appropriate. Further, aspects of the respective valuations were also the
subject of dispute between the parties, but it is not necessary for present
purposes to refer to them.
In the result,
the Lands Tribunal began by valuing the land on the serviced plot basis, as
both the parties had done, and by making the agreed deduction for the estimated
costs of ‘roads, sewers, fencing, consents and contingencies’. The Lands Tribunal
went on to hold that it was correct in principle to make a further deduction
for developers’ profit and it adopted the figure of 15% which had been put
forward on behalf of the local authority. Further aspects of the Lands
Tribunal’s process of valuation (including the question of the assumed cost of
access, which is the aspect on which the case is most frequently cited) are not
material for present purposes.
From this
brief examination of the Stokes v Cambridge case it will be
appreciated that, in addition to the general reference in para 8(j) of the
schedule to the ‘approach adopted by the Lands Tribunal’ in that case, in two
specific respects the terms of para 8(f) of the schedule also follow directly
the scheme of valuation adopted by the Lands Tribunal. In the first place,
there is to be a deduction of 15% representing developers’ profit and in the
second place, a deduction is to be made in respect of the reasonable costs of
‘roads, sewers, fencing, consents and contingencies’ (the same words as appear
in Stokes v Cambridge. Quite clearly, therefore, the draftsman of
the schedule had Stokes v Cambridge very much in mind when
drafting para 8 of the schedule.
Against that
background I return to the arguments. In the first place, in my judgment, it must
follow from the fact that para 8(f) requires deductions to be made from the
opening valuation in respect of developers’ profit and certain development
costs that the opening valuation is to be made on the basis that such profit
has been made and such costs incurred. To my mind, it makes absolutely no sense
at all to start from an opening valuation which is already in effect net of
those items — for example, the sale price paid by a developer for the land in
its undeveloped state — and then to proceed to deduct them from that net
figure. I agree with Mr Rowell that such double-counting produces an absurdity.
If there were no other way of construing para 8, then it may be that the
parties would have to live with that result. But, in my judgment, not merely am
I not forced to construe the paragraph in that way: I can see no basis in the
terms of the paragraph for adopting such a construction. Besides being contrary
to commonsense such a construction would, in my judgment, be wholly
inconsistent with para 8(j) (which requires the surveyor to be guided by the
approach of the Lands Tribunal in Stokes v Cambridge).
Accordingly, I
reject Mr Chapman’s submission that the surveyor is at liberty, should he see
fit, to make his opening valuation of the subject land by taking a figure
reflecting its value as it stands today, that is to say as an undeveloped site.
As a matter of construction the opening valuation of the subject land for the
purposes of para 8 must, in my judgment, assume that development of some kind has
taken place on the subject land.
The next
question is whether, as Mr Rowell submits, the surveyor is obliged, in arriving
at an opening value on the footing that development of some kind has taken
place, to assume that the development has taken the form of serviced plots; or
whether, as Mr Chapman submits, the surveyor is at liberty to assume some
different form of development for example, development by building out the site
and selling off completed houses.
As appears
from the references to the evidence which I made earlier in this judgment,
there is a degree of dispute between the respective surveyors as to the
appropriateness of a serviced plot basis of valuation in relation to
residential (as opposed to light industrial) development. It is to be borne in
mind, however, that what was plainly contemplated by the parties when para 8
was drafted was a
development. That is the kind of development which is to be assumed for the
purposes of computing the development gain under the terms of the schedule as
they stand.
At the time
when the terms of the schedule were drawn up the parties were looking ahead —
possibly some years ahead — and it is apparent that at that time they thought
that the most likely outcome would be planning permission for a mixture of
light industrial and residential use. It is against that background that para 8
must be construed.
In support of
his submission that the surveyor is obliged to assume the existence of serviced
plots Mr Rowell relies primarily on subpara 8(j) — and in particular on the
mandatory nature, as he would have it, of the words ‘shall be guided’, coupled
with the undoubted fact that in Stokes v Cambridge the Lands
Tribunal adopted the serviced plot basis of valuation. Mr Chapman, on the other
hand, submits that the words ‘shall be guided’ do not oblige the surveyor to
adopt the serviced plot basis. Guidance, he submits, does not necessarily
involve a slavish adoption of an identical approach. Moreover, Mr Chapman
submits that the fact that in Stokes v Cambridge the land was
valued on a serviced plot basis is no more than a reflection of the fact that
both the parties had adopted that basis; which in turn indicates (he submits)
that there were no satisfactory comparables on any other basis. He also points
out that in Stokes v Cambridge the development in question was,
it appears, solely industrial development, where a serviced plot basis of
valuation would be more appropriate.
In my
judgment, however, subpara 8(j) does, as a matter of construction, require the
surveyor to adopt, so far as it is practical to do so, the same scheme of
valuation as that adopted by the Lands Tribunal in Stokes v Cambridge.
And that in turn involves, in my judgment, making the opening valuation on a
serviced plot basis. It may be that the adoption of a serviced plot basis in Stokes
v Cambridge was, as Mr Chapman submits, fortuitous in the sense that it
resulted simply from the absence of comparables on any other basis. But whether
it was fortuitous or not, the point for present purposes is that the draftsman
of the schedule has chosen to specify the general scheme of valuation adopted
by the Lands Tribunal in Stokes v Cambridge as being the scheme
to be adopted for the purposes of computing the development gain under para
8(a).
Mr Chapman
submits that such a construction involves the implication of a further term
into para 8, namely a term obliging the surveyor to make further assumption,
that is to say an assumption that development will take the form of serviced
plots. He submits that on well known principles there is no scope for such an
implication. In my judgment, however, the requirement to adopt a serviced plot
basis of valuation arises not as a matter of implication but as a matter of
construction. Moreover, subpara 8(f) affords, in my judgment, significant
support for the conclusion that as a matter of construction subpara 8(j)
requires the surveyor to adopt the serviced plot basis of valuation. In the
first place, as I pointed out earlier, the expression ‘costs of roads, sewers,
fencing, consents and contingencies’ mirrors exactly the terms of the agreed
deduction made in Stokes v Cambridge. In the second place, it is,
in my judgment, significant that that expression contains no reference to
building costs. Had the draftsman of the schedule intended to leave the
surveyor free to adopt some other basis, for example to assume that the
development had been fully built out, I would have expected to find the
deduction for development costs to be drawn in very much wider terms.
Mr Chapman
submits that the terms of the deduction in para 8(f) are too narrowly drawn in
any event in that they do not include the preliminary costs of demolition and
clearance which will have to be incurred in this case before any development
can take place. In my judgment, however, the expression ‘costs of roads,
sewers, fencing …’ is apt to include such costs, on the basis that demolition
and clearance of the site is a necessary preliminary to the construction of
roads, sewers and fences.
I accordingly
conclude that on the true construction of para 8 of the schedule the surveyor
is required to adopt the serviced plot basis of valuation.
Turning, then,
to the defendants’ notice of motion, I propose to make a declaration in the
form of para 1.2 of that notice of motion, but with the addition suggested by
Mr Rowell in the course of argument. That will involve inserting after the
words ‘in place’ the additional words ‘and all the costs to be deducted for
roads, sewers, fencing, consents and contingencies having been paid’.
In the
circumstances it may be thought convenient that a minute be prepared.
