The Lands Tribunal has ruled on the role of dilapidations in assessing compensation payable under a compulsory purchase order (CPO).
The president of the Lands Tribunal, Mr George Bartlett QC, together with Mr Norman Rose held that any liability of a leaseholder for dilapidations must be taken into account in assessing compensation that is payable as a result of a CPO.
The issue arose for determination in a case brought by the leaseholder of a bridal shop situated within a 37-acre site in Bristol city centre, that was required for needed for Land Securities’ and Hammerson’s £500m Cabot Circus scheme.
Richard Parsons Ltd, which ran a Pronuptia franchise at the premises, had six months of its 20-year lease remaining and asked for £263,303 in compensation, including loss of profits up to the date its lease would have run out had it not been for the CPO.
Bristol City Council, the acquiring authority, argued that the premises were in substantial disrepair at the valuation date and that any compensation payable under the CPO procedure must take account of the dilapidations claim, which would have been made had the premises not been acquired and demolished.
The tribunal said: “Any liability of the claimant under its lease for breaches of the repairing covenants is to be taken into account in the assessment of compensation, including compensation for disturbance, and that the effect of such liability is a matter of valuation.”
Commenting on the judgment, Patrick Stell, of building surveyor Stell Consulting, said the case “highlights that whenever a CPO involves leasehold premises there is a potential role for the chartered building surveyor dilapidations specialist, who is required to identify and cost the breaches of tenant repairing covenants existing at the date of the CPO.
“Based on this judgment, there is also an equally important role in the CPO process for the valuation surveyor to assess the statutory cap on any dilapidations liability if applicable”.
Richard Parsons Ltd v Bristol City Council Lands Tribunal (Mr George Bartlett QC, President, Mr Norman Rose FRICS) 13 September 2007.
Jonathan Karas QC (instructed by TLT Solicitors, of Bristol) appeared for the claimant; Rupert Warren (instructed by Ashurst) appeared for the defendant.
