Ransom strip — Strip of land adjoining highway at Bishop’s Stortford — Used for agricultural purposes — Agreed value of £5,500 for such purposes — Acquired in 1978 for improvement of highway as prerequisite to full development for residential purposes of nearby large development area — Claim for £1.24m, but acquiring authority argued rule (3) debarred payment above £5,500 or, alternatively, that claim was for access value which reference land never had in real world — Claimants submitted reference land had special value by enabling provision of proper access to southern half of development area — Acquiring authority contended purpose of acquisition was replacement of existing highway, achievable only in pursuance of statutory powers — Claimants contended that in absence of scheme planning permission would have been granted for development of development area, but with conditions or planning agreement to ensure highway improvement was integral part of development — Reference land would therefore have had to be acquired by developer by agreement in open market at price reflecting fact that it was required in order to realise full development value of development area — DV’s figure on that basis £45,000
Tribunal finds that owners of development area land would have been well aware that full development was dependent on provision of satisfactory access to south — Only satisfactory practical solution was improvement and realignment of relevant highway — Therefore, in no-acquisition world there was market for reference land as ransom strip — First limb of rule (3) could not apply because special suitability or adaptability of reference land could be realised other than by use of statutory powers — Second limb, too, did not apply as expression “particular purchaser” therein refers to single purchaser or two or more acting jointly, whereas in present case each possible purchaser had a different interest and a different need — Since rule (3) did not apply, it would have been essential in no-acquisition world for owners of development land to acquire reference land by agreement and the price paid would reflect that fact
Tribunal disallows deduction by DV of £260,000 estimated road construction costs from figure representing gain in development value — Principle underlying valuation method adopted in present case was assumption that in negotiation between development land owner and access land owner a bargain would be struck based on share in increases value of development land due to merger — Calculation based on gross gain in land value, not net profit arising from development — Present case not one where account might be taken of abnormal and excessive costs of providing road access ‑- Share of gain to be apportioned to reference land determined by tribunal at claimants’ valuer’s 50%, derived from market experience in similar circumstances, rather than DV’s 30% ‑- Apportionment of gain divided up as to 75% to owners of reference land and 25% to owners of nearby plots ‑- DV’s deduction of 50% for middleman’s profit (from assembling sites for onward sale), being for risk, reward and deferment, was disallowed ‑- Award of full claim of £1.24m
The following cases are referred to in this report.
Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478; [1978] EGD 533; 248 EG 499; [1979] JPL 25, CA
Birmingham City District Council v Morris & Jacombs (1976) 33 P&CR 27; [1976] EGD 513; 240 EG 539, CA
Blandrent Investment Developments Ltd v British Gas Corporation [1979] EGD 721; (1979) 252 EG 267; [1979] JPL 828, HL
Fraser v Fraserville [1917] AC 187
Laing Homes Ltd v Eastleigh Borough Council [1979] EGD 618; (1979) 250 EG 350, 459, LT
Myers v Milton Keynes Development Corporation [1974] 1 WLR 696; [1974] 2 All ER 1096; (1974) 72 LGR 420; 27 P&CR 518; [1974] EGD 405; 230 EG 1275, CA
Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565, PC
Rathgar Property Co v Haringey London Borough Council (1977) 248 EG 693, LT
Rugby Joint Water Board v Shaw‑Fox; Rugby Joint Water Board v Foottit (1973) AC 202; [1972] 2 WLR 757; [1972] 1 All ER 1057; 70 LGR 339; (1972) 24 P&CR 256; (1972) EGD 356; 222 EG 815, HL
Wilson v Liverpool Corporation [1971] 1 WLR 302; [1971] 1 All ER 628; (1971) 22 P&CR 282; [1971] EGD 144; 217 EC 987, CA
Matthew Horton (instructed by Berwin Leighton) appeared for the claimants; Michael Rich QC and John Howell (instructed by the solicitor to Hertfordshire County Council) for the acquiring authority.
Giving his decision, MR MALLETT said: This is a reference to determine the amount of compensation payable on the compulsory acquisition of a strip of land (the reference land) amounting to 1.605 ha, adjoining the south side of Thorley Lane, Bishop’s Stortford.
At the agreed date of valuation, March 6 1978, the land was used for agricultural purposes under a licence only and it is not disputed that, at that time, planning permission for any alternative use would not have been forthcoming. The value of the land for agricultural purposes is agreed to be £5,500.
The claimants contend that the reference land was what is termed a ransom strip. That is to say, the land was required for the purpose of realigning and improving Thorley Lane as a prerequisite to the full development for residential purposes of a large area of land to the north of Thorley Lane (the development area). This fact, they say, increases the value of the reference land to £1.24m.
The acquiring authority dispute this amount, but primarily they argue that they are debarred from making any payment in excess of £5,500 under the provisions of rule (3) of section 5 of the Land Compensation Act 1961. In the alternative they contend that the claim was for access value which the reference land never had in the real world. Therefore, they say, the claim could be justified only on assumptions to be made in some relevant scheme world. Whether that scheme consisted only of the realignment of Thorley Land or included also the development area, in neither case was there justification for disregarding the planning permission granted in March 1974 which allowed the development to start without imposing any conditions as to the improvement of Thorley Lane.
The claimants submit that the authority’s case is based upon a misconception of the law and is contrary to the facts.
A Outline history
The claimants are the trustees of the Boyd Gibbins Family Trust. They are the freehold owners of part of the land authorised to be acquired compulsorily pursuant to the East Hertfordshire District Council (Thorley Lane, Bishop’s Stortford) Compulsory Purchase Order 1976 (the Thorley Lane CPO).
The Thorley Lane CPO was confirmed on October 12 1977 and authorised the East Hertfordshire District Council as agent of the Hertfordshire County Council to purchase land for the construction of a new highway from the existing junction of Thorley Lane with the London‑Norwich trunk road (A11) to a point 123 m west of the junction of Thorley Lane with Pynchbek.
Pursuant to the Thorley Lane CPO, notice to treat dated January 27 1978 was served on the claimants by the East Hertfordshire District Council (the district council) as agent for the Hertfordshire County Council (the county council). The East Hertfordshire District Council became the successor to the Bishop’s Stortford Urban District Council on the reorganisation of local government on April 1 1974. References to the district council are intended where appropriate to be references to the urban district council.
Notice of entry dated February 20 1978 was served and entry took place on or about March 6 1978.
The development area, to the north of the reference land, comprises some 282 acres. It is bounded by the B1004 road in the north and Thorley Lane in the south. In the first review of the county development plan (1971), part of it (notated R16) was shown allocated for residential development. A further part to the west of R16 (notated R19) was proposed for residential development in a non‑statutory document adopted by the county council in 1972 and entitled “Hertfordshire 1981”. Access to the whole of the development area was envisaged to be from the B1004 to the north and southwards to the A11.
At all material times it was the view of the county and district councils that no development on the land should have access to Thorley Lane until highway access to the southern part of that land had been improved and that, although approximately one half of the development of that land could have been served by access from the B1004 to the north and the other half by, access southwards, such a solution was undesirable because it would not have provided a through route between the B1004 and Thorley Lane.
In 1968 the county planning officer prepared outline proposals for the development of the development area. At that time the said land was in five separate ownerships as follows:
|
Bishop’s Stortford UDC |
19 acres |
|
Trustees of the WL Tinney Family Settlement |
100 acres |
|
Trustees of the Boyd Gibbins Family Settlement |
83 acres |
|
Streeter Trust |
52 acres |
|
St Albans Diocesan Board |
24 acres |
On May 2 1972 the district council made a compulsory purchase order in respect of that part of the development area not already in their ownership (the 1972 CPO). This order was subsequently withdrawn prior to confirmation.
On May 2 1972 the district council made an application (the 1972 application) to the county council for planning permission to develop the development area by a “comprehensive development including residential in accordance with developer’s brief and the principles of development shown on Drawing No 72/35 (both brief and drawing form part of this application)”.
Outline permission was granted in March 1974 (the 1974 permission). Approval for details of the first stage was given on November 1 1974. Construction of this stage commenced in August 1975. The reference land was not included in the land the subject of the 1972 CPO or the 1972 application.
In para 2.1 of the brief accompanying the 1972 application it was stated that the district council proposed to seek from not more than five development companies a comprehensive layout for the whole of the development. The following developers were selected: George Wimpey & Co Ltd, Francis Parker Development Ltd, New Ideal Homes Ltd, Taylor Woodrow Homes Ltd and Richard Costain Homes Ltd.
Following the 1972 application, considerable interest was expressed by the owners of the development area, and by developers, in the development of that land and in forming a consortium for that purpose. Approaches were made both between owners and between owners and developers with a view to assembling the land. By March 1973 the county and district councils had decided to abandon any attempt to select a developer by competitive tender. By July 1973 Rialto Properties Ltd had acquired the Boyd Gibbins, Streeter and Diocesan Board land and the district council had acquired the Tinney land. One of the district council’s reasons for increasing its landholding was in order to “exercise control over the development”.
Meanwhile, in February 1973 the county surveyor undertook an appraisal of the traffic implications of the development of the development area. He considered Thorley Lane not to have a suitable alignment or carriageway strength for future southern estate road flows and that it would be necessary to evaluate various improvement schemes. Specific mention was made of reducing Thorley Lane to a service road fronting existing properties and providing an adjacent new route to serve future development on the consortium land. The county surveyor made it clear to the district council that no major access to Thorley Lane would be allowed in advance of such improvement.
By early 1973, if not before, local residents had formed the Thorley Lane Development Action Group. It, too, opposed the use of Thorley Lane for traffic generated by development of the development land. It made its views known to the district and county councils.
On October 4 1974 the County Highways Committee resolved to approve the scheme for the diversion of Thorley Lane to the south of the existing lane. Thereafter, compulsory purchase procedures were initiated culminating in confirmation of the Thorley Lane CPO in October 1977.
A claim dated February 16 1978 was made in answer to the notice to treat and, as the negotiations to agree the claim failed, the matter was referred to this tribunal by the claimants’ notice of reference dated April 30 1983.
Mr Matthew Horton appeared for the claimants and called Mr FE Noble CE MICE and Mr Michael St John Hopper FRICS. Mr Michael Rich QC and Mr John Howell appeared for the acquiring authority and called Mr Peter Field, a chartered engineer employed by the Hertfordshire County Council; Mrs Susan Elizabeth Bonfield MA MRTPI, employed by the Hertfordshire County Council; and Mr Andrew Graeme Smith ARICS, a deputy district valuer and valuation officer in the Stevenage office of the Inland Revenue Valuation Office.
The issues
The claimants submit that the reference land had a special value in that it enabled a proper access to be provided to the southern half of the development area thereby enabling the fullest development of that land to take place. This fact, they say, increased the value of the reference land to £1.24m.
The acquiring authority contend that the purpose for which the reference land was acquired was the replacement of an existing highway, which purpose was achievable only in pursuance of the exercise of statutory powers. Therefore, the special suitability, and adaptability of the reference land were to be disregarded under rule (3) of section 5 of the Land Compensation Act 1961.
The claimants contend that the submissions of the acquiring authority are wrong both in law and in fact.
It is not disputed that the value of the reference land for compensation purposes must exclude any increase or decrease in its value attributable to the scheme underlying the acquisition.
The claimants contend that in the absence of any such scheme planning permission would have been granted for the development of the development area, as it was in the 1974 permission, but with conditions, or a section 52 agreement, to ensure that the Thorley Lane realignment was an integral part of the development. Any person seeking to develop the development area would therefore have had to acquire the reference land by agreement in the open market and the price would have reflected the fact that the land was required in order to realise the full development value of the development area.
In the alternative, the acquiring authority contend that the development of all but 11.25 acres of the development area could have been permitted without generating a peak traffic flow exceeding Thorley Lane’s environmental capacity of 500 vehicles an hour. Also, an area in excess of that could have been developed with access from other local distributor roads to the cast of the development area. Furthermore, if the relevant land is to be valued so as to reflect the developed value of the development area, then the figure should be £45,000.
Appendix I
Valuation of freehold interest by M St J Hopper FRICS
Basis of valuation
1. That the claimants’ interest was freehold and free from encumbrances.
2. That vacant possession could be given on completion.
3. That the valuation date was March 6 1978.
4. That the land was required to improve the southerly access to an area of about 286 acres available for residential and ancillary development (the development site) by constructing a new road on land south of Thorley Lane.
5. That, but for this improvement of the southerly access, only 47.4% of the development site would have been developable.
6. That the breakdown of uses of the development site would have been generally similar with the planning proposals by Leonard Vincent Raymond Gorbing & Partners in July 1973 and revised in October 1973, as follows:
|
Acres |
||
|
Residential |
216.35 |
|
|
Schools |
17.30 |
|
|
Shopping and community facilities |
5.75 |
|
|
Open space |
36.23 |
|
|
Distributor roads |
10.50 |
|
|
Total |
286.13 |
7. That a similar proportionate breakdown of uses would have been applicable to the part of the development site which could have been developed if the southerly access had not been improved.
1. Value of the development site assuming the whole available for development with benefit of access over the land taken
|
Land for development |
Acres |
|
|
(a) Residential |
216.35 |
|
|
(b) Schools |
17.30 |
|
|
(c) Shopping and community facilities |
5.75 |
|
|
(d) Open spaces |
(36.23) |
|
|
(e) Distributor roads |
(10.50) |
|
|
Total excluding (d) and (e) |
239.40 |
|
|
239.40 acres @ £60,000 an acre |
14,364,000 |
|
|
Defer 5 years @ 10% |
0.6209 |
|
|
(286.13 acres @ £31,170) |
8,918,608 |
|
|
Say |
8,900,000 |
2. Value of the development site assuming no improvement of southerly access
|
Land for development |
Acres |
|
|
(a) Residential |
102.55 |
|
|
(b) Schools |
8.20 |
|
|
(c) Shopping and community facilities |
2.73 |
|
|
(d) Open spaces |
|
(17.17) |
|
(e) Distributor roads |
|
4.98 |
|
|
Total excluding (d) and (e) |
113.48 |
|
113.48 acres @ £60,000 an acre |
|
6,808,800 |
|
Defer 21/2 years @ 10% |
|
0.7888 |
|
(135.63 acres @ £39,599) |
|
5,370,781 |
|
Add remainder of site |
|
|
|
150.50 acres @ £1,400 an acre |
|
210,700 |
|
|
|
5,581,481 |
|
|
Say |
5,600,000 |
3. Value of land taken
|
(a) Value of development site assuming the whole available for development with benefit of access over the land taken |
|
8,900,000 |
|
(b) Value of the development site assuming only part available for development with access from the B1004 |
5,600,000 |
|
|
(c) Gain in value upon the land south of Thorley Lane becoming available |
|
3,300,000 |
|
(d) Share of gain to owners of land south of Thorley Lane |
1,650,000 |
|
|
(e) Less in respect of part of land held with Thorley Hall, London Road |
25% |
412,500 |
|
(f) Value of land taken from claimants |
(75%) |
1,237,500 |
|
|
Say |
1,240,000 |
Appendix II
Valuation of freehold interest by Andrew Graeme Smith ARICS
Valuation 1
On the basis that:
1 The provisions of the Highways Acts 1959-71 and the Land Compensation Acts 1961 and 1973 are applicable.
2 The claimants’ interest is freehold with possession.
3 The valuation date is March 6 1978, the date of entry pursuant to the East Hertfordshire District Council (Thorley Lane, Bishop’s Stortford) Compulsory Purchase Order 1976.
4 That the reference land was required to provide a new southerly access road to the Thorley Development Area described in the planning proposals prepared by Leonard Vincent Raymond Gorbing & Partners in July 1973 and revised in October 1973.
5 The breakdown of uses within the Thorley Development Area would be similar to those planning proposals.
6 Without a new southerly road, 1,360 dwellings (47.4% of the total permitted) would be accessible; the remainder not being accessible and developable.
7 The value of the accessible lands would be £60,000 per developable acre deferred at 10% for an appropriate number of years.
8 Land incapable of development would be valued at £1,400 per acre.
Valuation 2
On the basis specified in Valuation 1 on p123 except that assumption 6 should be as follows:
6 There was a condition in the same form as Condition 4 of the planning permission actually granted on March 22 1974, and Condition 3 of that permission was amended to prohibit the completion and use of the main distributor roads and principal feeder roads in such a way as to provide a through road connecting the B1004 to Thorley Lane, not only before the opening of the M11 Motorway, but also before provision of a new southerly access road over the reference land. Thus, all but 412 dwellings (14.4% of the total permitted) would be accessible without road access.
Valuation 1
Valuation of whole of Thorley Development Area with unrestricted access
|
|
Acres |
|
|
|
|
Residential development areas |
216.35 |
|
|
|
|
Schools |
17.30 |
|
|
|
|
Shops and community facilities |
5.75 |
239.40 |
@ £60,000 |
14,364,000 |
|
Open space |
36.23 |
|
|
|
|
Distributor roads |
10.50 |
46.73 |
nil |
nil |
|
|
|
286.13 |
(£50,201) |
14,364,000 |
|
10 years’ development defer 5 years @ 10% |
|
|
|
0.6209 |
|
|
|
|
(£31,170) |
8,918,608 |
|
|
|
|
Say |
8,920,000 |
|
2 Value of part developable without new southerly access road (47.4%) |
|
|
|
|
|
|
|
Acres |
|
|
|
|
|
Residential development areas |
102.55 |
|
|
|
|
|
Schools |
8.20 |
|
|
|
|
|
Shops and community facilities |
2.73 |
113.48 |
@ £60,000 |
6,808,800 |
|
|
Open space |
17.17 |
|
|
|
|
|
Distributor roads |
4.98 |
22.15 |
nil |
nil |
|
|
|
|
135.63 |
(£50,201) |
6,808,800 |
|
|
5 years’ development defer 21/2 years @ 10% |
|
|
|
0.7888 |
|
|
|
|
|
|
5,370,781 |
|
|
Add back land not developable |
|
150.50 |
@ £1,400 |
210,700 |
|
|
|
|
286.13 |
|
5,581,481 |
|
|
|
|
|
Say |
5,580,000 |
|
|
|
|
|
|
|
|
|
3 Gross development value released by land available for new southerly access |
|
|
|
3,340,000 |
|
|
4 Deduct estimated cost of road construction |
|
|
|
260,000 |
|
|
5 Net amount released by new road |
|
|
|
3,080,000 |
|
|
6 Proportion of net development value paid to owners of completed strip by developers of TDA |
(30% of 5) |
|
|
924,000 |
|
|
7 Proportion remaining after deduction of cost of purchase of other land necessary for access to A1184 |
(50% of 6) |
|
|
462,000 |
|
|
8 Value of claimants’ interest in reference land as part of assembled development area incorporating new southerly road access |
|
|
|
462,000 |
|
|
9 Open market value of claimants’ interest — allow for risk; reward; deferment |
(50% of 8) |
|
|
231,000 |
|
|
|
Say |
|
|
230,000 |
|
Valuation 2
|
1 Value of whole of Thorley Development Area with unrestricted access (as before) £8,920,000 |
|
|
|
|
|
|
2 Value of part developable without new southerly access road (85.6%) |
|
|
|
|
|
|
|
Acres |
|
|
|
|
|
Residential development areas |
185.20 |
|
|
|
|
|
Schools |
14.81 |
|
|
|
|
|
Shops and community facilities |
4.92 |
204.93 |
@ £60,000 |
12,295,800 |
|
|
Open space |
31.01 |
|
|
|
|
|
Distributor roads |
8.99 |
40.00 |
nil |
nil |
|
|
|
|
244.93 |
(£50,203) |
12,295,800 |
|
|
9 years’ development defer 41/2 years @ 10% |
|
|
|
0.6520 |
|
|
|
|
|
|
8,016,862 |
|
|
Add back land not developable |
|
41.20 |
@ £1,400 |
57,680 |
|
|
|
|
286.13 |
|
8,074,542 |
|
|
|
|
|
Say |
8,075,000 |
|
|
|
|
|
|
|
|
|
3 Gross development value released by land available for new southerly access |
|
|
|
845,000 |
|
|
4 Deduct estimated cost of road construction |
|
|
|
260,000 |
|
|
5 Net amount released by new road |
|
|
|
585,000 |
|
|
6 Proportion of net development value paid to owners of completed strip by developers of TDA |
(30% of 5) |
|
|
175,500 |
|
|
7 Proportion remaining after deduction of cost of purchase of other land necessary for access to A1184 |
(50% of 6) |
|
|
87,750 |
|
|
8 Value of claimants’ interest in reference land as part of assembled development area incorporating new southerly road access |
|
|
|
87,750 |
|
|
9 Open market value of claimants’ interest — allow for risk; reward; deferment |
(50% of 8) |
|
|
43,875 |
|
|
|
Say |
|
|
45,000 |
|
I was referred to decisions in the following cases: Pointe Gourde Quarrying & Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565; Fraser v Fraserville [1917] AC 187; Rugby Joint Water Board v Foottit [1973] AC 202; Myers v Milton Keynes Development Corporation [1974] 1 WLR 696; Birmingham City District Council v Morris & Jacombs Ltd (1976) 33 P&CR 27; Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478; Laing Homes v Eastleigh Borough Council (1979) 250 EG 350, 459; Rathgar Property Co v Haringey London Borough Council (1977) 248 EG 693; Blandrent Investment Developments Ltd v British Gas Corporation (1979) 252 EG 267; Wilson v Liverpool Corporation [1971] 1 WLR 302.
Decision
No‑acquisition world
It seems to me that the first step is to enter the imaginary world where the powers of compulsory acquisition do not exist. Here I find that the development area was ripe for development and the owners of that land would have been well aware of the fact that full development was dependent on a satisfactory access being provided to the south. Some access was available through existing estate roads to the east but, in my view, on the evidence, this could not have formed a satisfactory solution on a permanent development of this scale.
Another possibility was the in‑line improvement of Thorley Lane to a 6.1 m width without the acquisition of any of the reference land. There is no evidence as to whether this was ever seriously considered in the real world. There are no contemporary measurements or survey details available and deductions have to be made from existing plans which leave some doubt as to whether the bare minimum standard width and sight lines could in practice have been achieved. A wholly unsatisfactory feature of this alternative would have been that a number of houses already had direct access on to an unclassified country lane which would be converted into a local distributor road. This would have been entirely contrary to the standards adopted by the Hertfordshire County Council in their “Standards for Residential Development” approved by the council in 1964. In the very early stage, when the prospect of the development was being considered, it was recognised that Thorley Lane would have to be improved, and as the possibility of development became closer there was very considerable opposition from the residents of the houses facing on to Thorley Lane that the increased traffic would be routed past them.
Another alternative was the in‑line improvement of Thorley Lane to a 7 m width, but this would have involved some acquisition of land, including part of the reference land, and would not have solved the problem of housing already facing on to Thorley Lane.
The evidence is that in the real world both the district council and the county council were of the view that it was imperative to provide a proper access to the south and that Thorley Lane in its original state did not meet this requirement. I do not consider it material that the 1974 planning permission did not impose a condition as to the southern access, because by that time the district council had a controlling interest in the consortium and the county council had assumed responsibility for providing the southern access. In these particular circumstances it was unnecessary to impose conditions in the planning permission.
On the evidence, I am left with the view that, although there were various means of access available, the only satisfactory practical solution was the improvement and realignment of Thorley Lane on much the same lines as has in fact been carried out.
Therefore, I find that in the no‑acquisition world there existed a market for the reference land as a ransom strip.
Rule (3) and the acquisition world
I now return to the real or acquisition world to consider whether rule (3) of section 5 of the Land Compensation Act 1961 applies. Rule (3) reads as follows:
(3) The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from the special needs of a particular purchaser of the requirements of any authority possessing compulsory purchase powers:
I have already found that in the no‑acquisition world there would be a market value for the reference land in order to provide an access to the development area. Clearly the first limb of the provision of rule (3) cannot apply in that the special suitability or adaptability of the land can be realised other than by the use of statutory powers.
As to the second limb of the provisions of rule (3), it seems to me that the expression “particular purchaser” refers to the prospect of a single purchase made by a single person or two or more acting jointly. To that extent only can the singular include the plural within the meaning of the Interpretation Acts, because the word “particular” has no plural equivalent. In this case it can be said that the consortium of owners of the development area have a need to acquire the reference land, but so, too, has a single member, or more than one member of the consortium acting jointly, each possible purchaser having a different interest and a different need. In my view, therefore, it cannot be said that the market is confined to the special needs of a particular purchaser.
For these reasons I find that rule (3) does not apply. That being the case it would have been essential in the no‑acquisition world for the owners of the development land to acquire the reference land by agreement and the price paid would reflect that fact.
The scheme
It is unnecessary for me to go further into the submissions on law and fact as to the existence and extent of any scheme, as I have already found that in the no‑acquisition world the reference land had a value as a ransom strip.
Valuation issues
On the evidence there is little doubt that the development area was ripe for development and a considerable portion of that land could have been developed without acquiring an access to the south.
I have already found that access was available through existing estate roads to the east, but that could not form a satisfactory solution on a permanent basis to a development of this scale. I accept Mr Noble’s evidence that some limited use could be made of the eastern accesses and that this would allow 113.48 acres of land to be developed in the absence of any southern access.
I turn now to the issues on valuation matters that arise once it is assumed that the reference land had a market value in the no-acquisition world in excess of agricultural value.
Mr Hopper arrives at a figure of £3.3m as representing the gain in the value of the development area upon the reference land becoming available. Mr Smith’s figure is £3.34m and this difference arises as to whether there is a rounding up or rounding down.
Deduction of road construction costs
Mr Smith then makes a deduction of £260,000 as representing the estimated costs of the Thorley Lane construction works. Mr Hopper makes no such deduction.
It seems to me that the principle underlying the method valuation adopted in this case is the assumption that, in negotiation between the owner of the development land and the owner of the access land, a bargain will be struck based upon a share in the increased value of the development land due to the merger. The calculation is based upon the gross gain in the value of the land and not the net profit arising from its development. This approach reduces to a minimum the number of estimates that have to be made and has the particular advantage that, on limited evidence, it is one that is adopted in negotiations in the market. It also appears to have been adopted in other cases before this tribunal.
If, in any particular case, the cost of providing an access road proves to be altogether abnormal and excessive then it might be appropriate to take account of the excess cost; but that is not the case here. I disallow this item.
Share of gain to be apportioned to reference land
Mr Hopper allows 50% of the gain to the owners of the land required for the Thorley Lane realignment. Mr Smith allows 30%.
Mr Hopper derives his figure from his experience of what happens in the market in similar circumstances. Mr Smith’s approach appeared to be influenced by two facts. One was that when the claimants sold their part of the development area they may have obtained the full development value without any deduction for lack of access. The other was that 50% might be appropriate only where there was no alternative access available. There is no evidence to confirm the first allegation and in any event I would regard it as immaterial to the consideration of compensation as at the material date. As to the second, I have already found from the evidence that there was in fact only one practical access available for the development of the 113.48 acres. For these reasons I prefer Mr Hopper’s estimate of 50%.
Apportionment of gain between owners of land in Thorley Lane
Mr Hopper estimates that the sum of £3.3m would be divided up as to 75% to the owners of the reference land and 25% to the owners of plots at the east end of Thorley Lane. In his view the owner of the reference land would be justified in seeking a greater share because his land was essential to any realignment of Thorley Lane, whereas at the eastern end the road could have been deflected slightly to the north or south so as to exclude one particular owner or another. Mr Smith estimates that the figures would he 70% and 30% respectively. So the principle is not disputed, only its application in practice.
There is little to choose between these two expressions of opinion by two experienced valuers. Mr Hopper suggested that where a small portion of a house‑owner’s land is taken the owner might not be expected to prolong negotiations when the compensation offered exceeded more than double the value of his house and when the alternative might be that the road be diverted and he receive nothing. I accept Mr Hopper’s apportionment of 75% and 25% as being the more realistic.
Middleman’s profit
At this stage Mr Smith makes a further deduction of 50% from the claimants’ interest. His explanation is that a middleman, or land speculator, would assemble the various sites for onward sale to the owners of the development area and that he would expect to receive 50% for his risk, reward and deferment.
Mr Hopper makes no such deduction. In his experience a land speculator might well appear on the scene at a very early stage of the development before the potential value of the access land was generally realised. When, however, the development area became ripe for development, as in this case, any middleman would be unlikely to persuade the prospective seller to sell his land at a figure less than that which could be obtained from the developer. I agree and I disallow this deduction.
For these reasons I award compensation in the sum of £1.24m.
I heard submissions as to costs. The acquiring authority will pay the claimants their costs of this reference such costs, if not agreed to be taxed by the Registrar of the Lands Tribunal on the High Court Scale.
