Costs — Lands Tribunal — Compensation claim — Settlement offer — Offer to settle received two working days before hearing accepted — Whether offer defective — Whether claimant entitled to costs up to date of hearing
A hearing was fixed for 15 and 16 September 1998
to determine the disturbance compensation and home-loss payment payable to the
claimant for the compulsory acquisition of his house. The acquiring authority
made an offer agreeing to pay £11,000, a signed copy of which was received by
the claimant’s solicitors on Friday 11 September. The claimant was unavailable
on Monday 14 September to consider the offer, but on 15 September, the first
day of the hearing, considered the offer with his advisers and accepted it. The
acquiring authority did not agree that the claimant was entitled to his costs
up to the first day of the hearing.
claimant was entitled to his costs up to the first day of the hearing. The
offer had two defects. It was made too close to the start of the hearing and
expressly stated that it was exclusive of costs. The claimant could not
reasonably consider the offer with his advisers until the first day of the
hearing. An offer during proceedings in the tribunal should have the dual
purpose of settling the outstanding claim and compromising the reference. The
general rule is that an acquiring authority should normally bear the costs of
proceedings in the tribunal and therefore an offer that makes no reference to
costs is defective in that respect.
Anthony Crean (instructed by CG Thomson &
Wilson, of Kendal) appeared for the claimant; Jonathan Powell (instructed by
the solicitor to Lancaster City Council) represented the acquiring authority.
Giving his decision, Mr Peter H Clarke said: This is a reference to determine
the compensation payable for the compulsory acquisition of a terraced house in
Morecambe, Lancashire.
Mr Anthony Crean, for the claimants, called C
Tague, RB Jones, A Dyson, M Howarth, PW Digby and SW Hinton BSc ARICS. Jonathan
Powell, for the acquiring authority, called PS Broadly and AJ Gask ARICS.
Facts
The parties have prepared a statement of agreed
facts and from this statement and the evidence I find the following facts:
1. On 9 September 1994 Lancaster City Council (the
council) made The City Council of Lancaster (Parliament Street, East Street,
Morecambe) Compulsory Purchase Order 1994. Following a public inquiry, it was
confirmed by the Secretary of State for the Environment on 31 March 1995.
Parcel 1 in that order is 4
2. On 27 September 1995 the council served notice
to treat in respect of the subject property and notice of entry on 16 November
1995. The council entered on the land on 11 March 1996. This is the agreed date
of valuation. On 12 February 1996 the claimants referred the determination of
compensation to the Lands Tribunal.
3. The scheme underlying the acquisition is the
redevelopment of properties in Parliament Street and East Street, Morecambe,
within the West End Renewal Initiative, to include the creation of an amenity
space with landscaping and planting, children’s play area and car parking. The
area was confirmed as a renewal area by the council in October 1993 and
approval was given by the Secretary of State for the Environment.
4. On 15 April 1994 the council served on the
claimants a direction under section 354(1) of the Housing Act 1985 (the 1985
Act) limiting the occupation of the subject property to one household.
5. The subject property was situated on the east
side of Parliament Street in a predominantly residential area, with several
local parades of shops, to the south-west of the town centre of Morecambe in
Lancashire. The surrounding area was laid out with a grid-iron pattern of
streets in the early years of this century and is known as the West End. It is
close to the promenade, sands and Morecambe Bay.
6. On the date of valuation the subject property
was a mid-terrace house, built in about 1900, of brick with a slate roof. The
property backed on to East Street and had small open areas at the front and
rear. Accommodation was on basement, ground and two upper floors. The property
was divided into four units. The basement (which had a separate access from
steps in the front area) comprised living room, bedroom, kitchen, shower compartment
and WC. At the valuation date it was used for the storage of car parts and
equipment used in a former business run by the claimants from other premises.
The ground floor comprised living room, bedroom, shower compartment, WC, hall
and kitchen. The first floor consisted of bedroom/living room, bedroom, kitchen
and bathroom. On the second floor was a living room, bedroom, kitchen and
WC/shower. The property was in poor repair and decorative condition at the date
of valuation. It was demolished in March 1996 and the site now forms part of an
open amenity area, children’s playground and small car park.
7. The claimants held the freehold interest with
vacant possession in the subject property at the valuation date.
Issues
The issues in this reference are: (i) the market
value of the freehold interest in the subject property as at 11 March 1996
under section 5(2) of the Land Compensation Act 1961 (the 1961 Act); and (ii)
the compensation payable (if any) for disturbance.
At the hearing I dealt only with the first issue.
The claimants sought compensation of £60,000 for their freehold interest; the
council offered £25,000. Within this issue three subsidiary questions emerged:
(i) Did the subject property have a lawful
residential use as four flats at the valuation date?
(ii) If not, would planning permission have been
granted for use as four flats?
(iii) What was the effect on value of the
direction dated 15 April 1994 under section 354 of the 1985 Act limiting the
occupation of the property to one household?
At the hearing I gave leave for the claimants to
make a claim for disturbance and a claim was handed to the council. The parties
said that they require my determination of the market value of the subject
property before this claim can be settled. I directed that the parties shall
have one month to negotiate on this claim following receipt of this interim
award. If agreement has not been reached by the end of this period I will issue
directions for the determination of the disturbance claim.
Evidence
Claimants
Robert Brian Jones is a partner in Pickles
Halliwell, solicitors of Oldham. He dealt with the estate of Margaret Mary
Wood, deceased, and Ernest Wood, deceased, who formerly lived at the subject
property. He is also married to their daughter. Mr Jones put in evidence a
statutory declaration dated 20 July 1990 in which he stated that, from his own
knowledge, the subject property was occupied by Mr and Mrs Wood from 1954 to
1967. After 1967 Mr Wood carried out conversion works and the property was let
on weekly tenancies up to the sale to the claimants. It was let in three
separate apartments with one entrance. At the sale only two tenants were in
occupation. In all dealings with the estate of Mr and Mrs Wood the subject
property was treated as in multiple occupation.
Christopher Tague is one of the claimants. They
bought 4 Parliament Street in or about February 1992 for £23,500. They had seen
the property advertised for sale as flats and purchased for their own
occupation and as an investment. At that time there were two tenants in
occupation. They eventually left and, after refurbishment, the premises were
fully let within six months with Mr Tague occupying the first floor. The
community charge and council tax for the basement flat (known as 6 East Street)
were paid by the tenant; Mr Tague paid the other taxes.
Mr Tague said that he understood that the subject
property was occupied from 1967 by various tenants. He put in evidence copies
of the Electoral Register for the subject property from 1986-87 to 1995-96.
Mr Tague said that he first received notification
from the council of the possible demolition of the subject property in June to
September 1993. In April 1994 the basement flat became vacant and a new tenant
could not be found. In August 1994 the ground-floor flat became vacant and in
January 1995 the last tenant left the premises. Mr Tague and his brother (on
occasions) were the sole occupiers. The basement was used for storage.
Mr Tague referred to negotiations with the council
regarding compensation and said that he disputed the opinion of Mr Gask that a
great deal of extra work was required to bring the premises up to standard. He
referred to the schedule of works necessary to register the subject property as
a house in multiple occupation prepared by Mr Broadly. He made detailed
criticisms of the scope of the works. He said that the council’s estimate of
£14,000 was unjustified.
Mr Tague said that, following receipt of the
compulsory purchase order and the vacation of the premises by the tenants, he
lived in the property on his own until the council took possession. There was
much vandalism and the surrounding area deteriorated.
Austin Dyson said that he occupied the
second-floor flat at 4 Parliament Street with his wife from October 1982 to
June 1988. They then moved to the first-floor flat. The ground floor was
occupied by Mrs Pattinson until she died in 1991. Mr and Mrs Foster occupied
the first floor before Mr and Mrs Dyson moved there in June 1988. The basement
flat was occupied throughout their occupation. Mr and Mrs Dyson finally left
the property on 8 January 1992. Mr Dyson put in evidence his rent book and
housing benefit slips.
Michael Haworth said that he lived with his wife
in the basement flat at 4 Parliament Street from 1972 to 1977. The remainder of
the house was occupied during this period. On 1 May 1976 seven adults and one
child lived in the property.
Paul William Digby lived in the basement flat of 4
Parliament Street from November 1993 to April 1994. Other people lived on the
ground and second floors but he was not sure about the first floor. When he
commenced his occupation he was aware of the impending compulsory purchase.
Stephen William Hinton Bsc ARICS is in practice on
his own account in Shropshire. He was instructed in mid-1996, after the
demolition of the subject property. He is not well acquainted with Morecambe.
Mr Hinton spoke to a valuation of £60,000 and an
alternative valuation of £43,440. He said that he agreed with the basis of
valuation and the approach adopted by Mr Gask, for the council, namely that the
value is to be assessed in accordance with rules (2) and (4) of section 5 of
the 1961 Act and that it may be on the basis of multiple occupation or as a
single dwelling-house. He said that the best comparables are the properties
acquired by the council as part of the scheme, ie 2, 6, 8, 10 and 12 Parliament
Street.
Mr Hinton’s primary valuation of £60,000 is on the
assumption that the property was lawfully in multiple occupation at the
valuation date. He assumed rents of £50, £55, £70 and £45 per week for the
basement to second floors respectively. The estimated total rental income is
£220 per week or £11,440 pa, which he capitalised at 5.5 years’ purchase. He
then deducted £3,000 for additional fire-precaution works. This value may be
compared with the prices paid by the council for 6 Parliament Street (£64,000)
and 8 Parliament Street (£60,000).
Mr Hinton’s alternative valuation of £43,440 is on
the assumption that the subject property was not in lawful occupation as four
flats at the valuation date but that planning permission would have been
granted for this multiple use. He did not consider the development plan and
other planning considerations when considering whether planning permission
would have been granted. He assumed rents of £50, £60, £65 and £70 per week for
the basement to second floors respectively, all in A1 condition. The total
income of £12,740 pa was capitalised at 6 years’ purchase and a deduction made
of £33,000 for the cost of conversion, repairs and interest. Mr Hinton said
that he had ignored the section 354 direction in both valuations.
Council
Paul Stephen Broadly is a district housing officer
of the council. He is a member of the Architects and Surveyors Institute.
In January 1991 Mr Broadly visited 4 Parliament
Street at the request of Mrs Woods to establish whether the property qualified
for a discretionary grant for conversion into flats. Planning permission had
not been granted for this use and the house was not registered under The City
of Lancaster (Registration of Houses in Multiple Occupation) Informatory and
Regulatory Scheme 1976. Mrs Woods was advised that grant aid was not available
and that the property had inadequate fire precautions under section 352 of the
1985 Act. Mr Broadly said that the property was in multiple occupation at the
time of his visit.
In December 1993 Mr Broadly surveyed the subject
property with Mr Gask, at the request of the claimants, with a view to purchase
by agreement. Mr Broadly prepared a schedule of minimum works necessary to
obtain registration under the 1985 Act. The estimated cost was £14,372.75. In
cross-examination Mr Broadly agreed that the works in the schedule can be
divided into: (i) fire precaution works necessary under section 352 of the 1985
Act (£4,500 plus VAT); (ii) repair works and other works necessary to bring the
property up to Housing Act standards (£3,700 plus VAT); and (iii) works that
are not enforceable. The works required under the Housing Act total £8,200 plus
VAT (£9,635).
Mr Broadly said that a direction under section 354
of the 1985 Act would normally have been served shortly after his inspection
but, to avoid accusations of heavy-handed action by the council, he withheld
service pending the purchase negotiations. When it became apparent, however,
that agreement on price could not be reached and, due to the risk of accusations
of negligence if a fire occurred, Mr Broadly issued the section 354 direction
restricting occupation to one household due to inadequate fire precautions.
This direction had no connection with the schedule of works referred to above
and was not part of the scheme underlying the compulsory acquisition. Nine
other directions were issued on nearby properties at about the same time. If
the works required had been carried out the section 354 direction would have
been revoked.
In Mr Gask’s valuation on the assumption of
multiple occupation he included a deduction of £13,000 per flat for the cost of
conversion. Mr Broadly prepared this figure. He said that it was a realistic
estimate of the cost of bringing the property up to the minimum standards under
the building regulations and for planning permission. The average deduction for
other properties was £22,000. In order to obtain planning permission it would
be necessary to provide a separate entrance to each flat with all facilities
behind the front door. A separate bathroom for each flat would be necessary
plus rewiring, soundproofing and fire-precaution works. In cross-examination Mr
Broadly said that his estimate was not based on detailed costings.
Anthony John Gask ARICS is a principal valuer with
the council. He has held this position since 1990. He negotiated the
compensation settlements in the Parliament Street/East Street Redevelopment
Area.
Mr Gask spoke to a valuation of £25,000 and an
alternative valuation of £44,000. He said that, although the subject property
was divided into flats and used as separate living units at the valuation date,
it did not comply with the 1985 Act and did not have planning permission for
multiple use. The direction under section 354 of the 1985 Act limited the
occupation to one household. No proof has been provided by the claimants that 4
Parliament Street was in multiple occupation in the 10 years before the council
took possession, and therefore a certificate of lawful use would not have been
issued under section 191 of the Town and Country Planning Act 1990. The
property must be valued in accordance with rules (2) and (4) of section 5 of
the 1961 Act as a single dwelling, although the potential of the property for
multiple occupation should be taken into account.
Mr Gask prepared valuations of the subject
property in multiple occupation and as a single dwelling. The depressed
situation of the West End of Morecambe is an essential factor in all
valuations.
Mr Gask’s first valuation approach reflected the
potential of the subject property as a house in multiple occupation by
reference to the investment method of valuation. His value on this basis is
£18,000. He assumed that the property could be converted into three
self-contained flats; that planning permission would be granted and that the
conversion would meet all planning requirements, building regulations and fire
precautions. The conversion costs would be about £15,000 per flat but Mr Gask
made a smaller deduction of £13,000 to reflect the fact that builders, without
improvement grants, tend to do work more cheaply. Mr Gask adopted rents of £60
per week for each of the three semi-furnished flats, which he capitalised at
5.5 years’ purchase and then added £5,700 for the unconverted basement and
deducted £39,000 for conversion costs.
Mr Gask said that this valuation is consistent
with the lower end of the market (£10,000-£20,000 range). He then made a
similar valuation by direct comparison with capital values, including
settlements in the scheme. This produced a value of not more than £25,000,
higher than the above investment value of £18,000. Mr Gask also reached the
conclusion that the value of a three-flat property, when fully converted, would
not have been more than £55,000. This provides a base figure before deducting
the costs of conversion.
Mr Gask’s second valuation approach is as a single
dwelling by direct comparison of capital values. His valuation on this basis is
£25,000. Mr Gask said that the property would not have been attractive to a
private buyer because it was neither an investment property nor a family house.
The basement would have been used for storage and the remainder of the house
would have provided living rooms and six or seven bedrooms. Alterations and
repairs would have been necessary. This valuation is Mr Gask’s primary
valuation and he therefore assessed the compensation for the acquisition of the
freehold interest in the subject property at £25,000. He said that the price
paid for the property by the claimants in February 1992 is good evidence of
value (£23,500).
Mr Gask prepared an alternative valuation on the
assumption that the use of 4 Parliament Street as four flats was a lawful
planning use. His valuation on this basis, as revised at the hearing, is
£44,000. Mr Gask said that, in this valuation, the planning status of the
subject property, although clear, would still have required registration under
the 1985 Act and it would still be necessary to carry out works at an estimated
cost (revised at the hearing) of £9,635 (see the evidence of Mr Broadly). Mr
Gask adopted rents of £50 per week for the basement, first- and second-floor
flats and £55 per week for the ground floor (total income £10,660 pa), which he
capitalised at 5 years’ purchase, to produce a gross value when converted of
£53,300, from which he deducted £9,635 as the cost of the revised Housing Act
works to produce a net value of £44,000.
Submissions
Council
Mr Powell said that the lawful use of the subject
property at the valuation date is important. It affects the value. He referred
to the time-limits for enforcement action contained in section 171B of the 1990
Act and the decision of the Court of Appeal in Van Dyck v Secretary
of State for the Environment [1992] JPL 356. Although there is evidence of
multiple occupation from 1967 the property was not in such occupation at the
date of valuation. The tenants had left, the basement was used for storage and
part of the property was occupied by the claimants. Works had been carried out
by the claimants without planning permission. Multiple use was not lawful at
the date of valuation. Furthermore, the section 354 direction limited
occupation to one household. Works were needed to make the property fit for
multiple occupation under the 1985 Act. 4 Parliament Street could not have been
valued as a property in multiple occupation. Rule (4) of section 5 of the 1961
Act excludes from compensation any element of value due to an unlawful use: see
Hughes v Doncaster Metropolitan Borough Council [1991] 1 All ER
295*. The property must be valued as a house occupied by a single household. It
was unlikely that planning permission would have been granted for multiple
occupation.
* Editor’s note: Also reported at [1991] 1 EGLR
31; [1991] 05 EG 133
On the question of value and the expertise of the
witnesses, Mr Powell urged me to give greater weight to the evidence of Mr
Gask. Mr Hinton acknowledged that he was not instructed until after the
demolition of the subject property and is not well acquainted with Morecambe.
He practises outside the area. The price paid by the claimants for 4 Parliament
Street in 1992 (£23,500) is important. It is inconsistent with a value of
£60,000 four years later.
Claimants
Mr Anthony Crean said that the central issue in
this reference is the planning status of the subject property: did it have a
lawful use for residential multiple occupation? It is necessary to look back
over the 10 years prior to the valuation date to establish whether this use had
become immune from enforcement action. He reviewed the evidence and said that
it is clear that the property had been in multiple occupation since 1972 and
possibly since 1967.
Mr Jonathan Powell, on behalf of the council, had
argued that immunity from enforcement action had been lost by: the works
carried out by the claimants without planning permission; the departure of
tenants before the council took possession; and the use of the basement for
storage. Mr Crean countered these arguments as follows. First, he said that it
is inconceivable that the council would have taken enforcement action in
respect of the works carried out by the claimants, even if planning permission
had been required. They were improvements to the property. The lawful use of
the property for multiple residential use was lawful before the works were
executed, and therefore, it could have been resumed without planning permission
(see section 57(4) of the 1990 Act). Second, the departure of tenants prior to
possession by the council did not affect immunity from enforcement. The
multiple residential use was already lawful before the tenants left the
property. The tenants left due to the scheme, which must be disregarded. The
effect of the section 354 direction was not to cause the eviction of the
tenants but to prevent further multiple lettings as tenants left voluntarily.
Third, the storage in the basement did not affect the immunity of the property
from enforcement action at the valuation date because this immunity was already
established before the start of the storage use. A change of use from storage
to residential would not have required planning permission.
Mr Crean said that the operation of the section
354 direction and r (4) of section 5 of the 1961 Act did not require the
valuation of the subject property as a single dwelling. This was not the
approach of Mr Gask, who reflected the potential for multiple occupation in his
valuations. The section 354 direction is part of the scheme and must be
disregarded. Furthermore, a section 354 notice can be revoked and Mr Broadly
accepted that the notice would be revoked if works were carried out to make the
premises fit for multiple occupation. In the absence of the scheme these works
would have been carried out and the notice revoked. That is the correct
approach to value (see Mr Hinton’s valuation of £60,000 and Mr Gask’s valuation
of £44,000). The cost of works to be deducted in the valuation is restricted to
fire-precaution works (£3,000 per Mr Hinton and £4,500 plus VAT per Mr
Broadly). If the above submissions are wrong then the property is to be valued
as a single dwelling (Mr Hinton £43,440, Mr Gask £25,000).
Decision
I have inspected the site of the subject property
and the surrounding area. 4 Parliament Street was demolished before my
inspection and I have therefore had to rely on the evidence (particularly
photographs and video) regarding the construction, condition and accommodation.
This reference, although concerned with the simple
issue of the market value of a terraced house, raises interesting subsidiary
questions, which I have identified as the lawful use at the valuation date, the
possibility of the grant of planning permission for multiple use and the effect
of the section 354 direction. I deal with these questions before making my
determination of market value.
1. Lawful use
The first question is: did the subject property
have a lawful residential use as four flats at the valuation date?
I look first at the relevant statutory provisions.
Section 191 of the 1990 Act deals with certificates of lawfulness of existing
use or development and, so far as material to this reference, provides as
follows:
(1) If any person wishes
to ascertain whether —
(a) any existing use of buildings or other land
is lawful;…
he may make an application for the purpose to the
local planning authority specifying the land and describing the use, operations
or other matter.
(2) For the purposes of this Act uses and
operations are lawful at any time if —
(a) no enforcement action may then be taken in
respect of them (whether because they did not involve development or require
planning permission or because the time for enforcement action has expired or
for any other reason); and
(b) they do not constitute a contravention of any
of the requirements of any enforcement notice then in force.
The time for enforcement action under section
191(2)(a) is set out in section 171B and is as follows:
(2) Where there has
been a breach of planning control consisting in the change of use of any
building to use as a single dwellinghouse, no enforcement action may be taken
after the end of the period of four years beginning with the date of the
breach.
(3) In the case of any other breach of planning
control, no enforcement action may be taken after the end of the period of ten
years beginning with the date of the breach.
I heard argument as to whether the enforcement
period in this reference is four years or 10 years. Mr Crean, for the
claimants, accepted that it is the longer period of 10 years. I agree. Prima
facie, therefore, and subject to the three points raised by Mr Powell, on
behalf of the council, which I consider below, the use of the subject property
as four flats was a lawful use at the valuation date if it commenced before 11
March 1986. I look now at the evidence regarding occupation and use.
Mr Jones said that the previous owner of the
subject property, Mr Wood, carried out conversion works after 1967 and it was
then let as three apartments. Mr Dyson lived in the property from 1982 to 1992
and gave evidence that there were four tenants in occupation during that
period. Copies of the Electoral Register for the years 1986-87 to 1995-96 were
put in evidence and, apart from the last year when the subject property does
not appear on the Register, the property was always in multiple occupation.
Letters from the council to Mr Tague in August 1997 show that it was assessed
as four flats for rating purposes from 1980 until the abolition of domestic
rating in April 1993. For council tax purposes after this date the basement
flat was separately banded as 6 East Street and the remaining three flats were
merged into one as a ‘house in multiple occupation’. The agent’s particulars on
the sale to the claimants described the property as four flats.
I am satisfied that the subject property was used
as four flats from at least March 1986. Mr Powell, however, submitted that this
use was not lawful at the valuation date due to the works carried out by the
claimants, the vacation of the property by the tenants before the date of entry
and the use of the basement at that time for storage. I now consider these
matters.
I was given a schedule of works carried out by the
claimants after they purchased the subject property. I am satisfied that these
works do not constitute development and that there was no change of use at that
time requiring planning permission. Enforcement action could not have been
taken in respect of these works. Even if they were thought to have been
development and an enforcement notice had been served, I agree with Mr Crean
that under section 57(4) of the 1990 Act planning permission was not required
for the lawful use of the land, namely as four flats. This objection fails. I
can take the objections on the grounds of the departure of the tenants and the
storage use together. The evidence of Mr Tague was that the tenants had left
the premises by January 1995. He then lived in a part of the house, sometimes
with his brother, and the basement was used for storage. Did these facts remove
the lawful use as a house in multiple occupation? It was a requirement of the
now superseded established use certificate procedure under the 1990 Act that
the use sought to be established must have subsisted on the date of application
for such a certificate. I do not think that this requirement exists in respect
of certificates of lawfulness. Section 191 refers to ‘any existing use of
buildings’, but I do not think that this means that the use in question must
have physically existed at the property at the time of application. Provided
the use had not been abandoned, it can be in abeyance and still be a lawful
use. I find that the claimants had not abandoned the use of 4 Parliament Street
as four flats at the valuation date. The vacation by the tenants and the
storage use of the basement were due to the scheme underlying the acquisition
and did not affect the lawful use of the subject property as four flats at that
date. The reversion of the basement to the former residential use would not
have required planning permission.
I find that the lawful use of the subject property
at the valuation date was as a house divided into four flats. In view of this
finding it is unnecessary for me to consider whether planning permission might
have been granted for this use.
2. Direction under section 354 of the 1985 Act
Although I have found that the subject property
had a lawful planning use for four flats, I must now consider the effect of the
direction dated 15 April 1994 under section 354(1) of the 1985 Act. I am
satisfied that this direction was not served in consequence of the scheme
underlying the acquisition and is not therefore to be disregarded when fixing
the value of the subject property.
The direction refers to 4 Parliament Street as a
house in multiple occupation and then states that:
3. The Lancaster City
Council for the purpose of [remedying] a state of affairs calling for the
service of a [notice] under section 352 of the Housing Act 1985, in exercise of
their powers under section 354 of the Act :
(a) fix as a limit for the premises the number
specified in the Schedule below, being in their opinion the highest number of
[households] who should, having regard to the requirements set out in section
352(1A), occupy the premises in their existing condition, and
(b)
direct that the limit specified in the Schedule shall apply to the premises.
The maximum number of
households in the schedule is one.
I now turn to the relevant provisions of the
Housing Act 1985. Section 354(1) is as follows:
The local housing authority may, for the purpose
of preventing the occurrence of, or remedying, a state of affairs calling for
the service of a notice or further notice under section 352 (notice requiring
execution of works to render house fit for number of occupants) —
(a) fix as a limit for the house what is in their
opinion the highest number of individuals or households, or both, who should,
having regard to the requirements set out in subsection (1A) of that section,
occupy the house in its existing condition, and
(b)
give a direction applying that limit to the house.
Section 352(1) and (1A) are concerned with
the power to require the execution of works to render premises fit for the
number of occupants. These provisions are as follows:
(1) …the local housing authority may serve a
notice under this section where in the opinion of the authority, a house in
multiple occupation fails to meet one or more of the requirements in paragraphs
(a) to (e) of subsection (1A) and, having regard to the number of individuals
or households or both for the time being accommodated on the premises, by
reason of that failure the premises are not reasonably suitable for occupation
by those individuals or households.
(1A) the requirements in respect of a house in
multiple occupation referred to in subsection (1) are the following, that is to
say, —
(a) there are satisfactory facilities for the
storage, preparation and cooking of food including an adequate number of sinks
with a satisfactory supply of hot and cold water;
(b) it has an adequate number of suitably located
water-closets for the exclusive use of the occupants;
(c) it has, for the exclusive use of the
occupants, an adequate number of suitably located fixed baths or showers and
wash-hand basins each of which is provided with a satisfactory supply of hot
and cold water;
(d) subject to section 365, there are adequate
means of escape from fire; and
(e) there are
adequate other fire precautions.
A direction under section 354(1) may be revoked or
varied by the local housing authority to allow more people to be accommodated
in the house, having regard to any works that have been executed or any other
change of circumstances. Section 346 gives the authority the power to make a
registration scheme for houses in multiple occupation.
Mr Broadly prepared a schedule of works necessary
to enable the subject property to obtain registration under the 1985 Act. His
estimated cost of these works was £14,372.75 but he accepted, in
cross-examination, that this figure could be reduced to £9,635 (including VAT)
comprising fire precaution works (£4,500 plus VAT) and repairs and other works
necessary to bring the property up to Housing Act standards (£3,700 plus VAT).
The section 354 direction could have been revoked
or varied under section 357(1) following the execution of works. I find that a
prospective purchaser of the subject property at the valuation date would have
taken into account the prospect of revocation or variation to allow multiple
occupation as four flats following the expenditure of £9,635 on the necessary
works.
3. Market value
I am now able to determine the market value of the
subject property under section 5 r (2) of the 1961 Act as at 11 March 1996.
This valuation is on the basis that the property had a lawful planning use as a
house divided into four flats and that it was subject to the section 354
direction dated 15 April 1994, but that this could be revoked or varied
following the execution of works at an estimated cost of £9,635. This valuation
basis is similar to Mr Hinton’s primary valuation of £60,000 and Mr Gask’s
alternative valuation of £44,000. This valuation uses the investment method and
has three components, rents, years’ purchase and a deduction for works.
Mr Hinton and Mr Gask agree on the estimated rents
for the basement and ground floor (£50 and £55 per week respectively). They
disagree as to the first floor (Mr Hinton £70 and Mr Gask £50) and the second
floor (Mr Hinton £45 and Mr Gask £50). As to the first floor I think that Mr
Hinton’s figure of £70 per week is too high and Mr Gask’s figure of £50 per
week too low. I put £60 per week on the first floor. I accept Mr Gask’s figure
of £50 per week for the second floor. The estimated rental income is £215 per
week or £11,180 pa.
For the years’ purchase both valuers looked to the
nearby comparables put forward by Mr Gask, which analyse to between 3.9 and 6
years’ purchase. Mr Hinton adopted 5.5 years’ purchase, Mr Gask 5 years’
purchase. I have considered these comparables and on this evidence I prefer Mr
Gask’s figure of 5 years’ purchase.
As stated above the deduction for necessary works
should be the figure conceded by the council of £9,635.
My calculation of market value is as follows:
Estimated rents £11,180 pa
Years’ purchase 5
£55,900
Less: cost of
works £
9,650
Market value £46,250
I determine that the market value under section
5(2) of the 1961 Act of the freehold interest in 4 Parliament Street, Morecambe
as at 11 March 1996 was £46,250. Legal costs relating to the transfer of the
claimants’ freehold interest to the council and interest on compensation are
the subject of separate statutory provisions. A claim for compensation for
disturbance is still outstanding and is to be agreed between the parties or
determined by this tribunal.
This decision determines the substantive issue
between the parties as to the market value of the subject property and my award
on this matter is final. The outstanding questions of compensation for
disturbance and the costs of the reference remain to be agreed or determined by
the tribunal. Rights of appeal under section 3(4) of the Lands Tribunal Act
1949 and Rules of the Supreme Court Ord 61 will not accrue until the decision
has been completed by the determination of the outstanding issues in a final
decision.
Addendum
This is a reference to determine the compensation
payable for the compulsory acquisition of a terraced house in Morecambe,
Lancashire. Following a hearing on 2 and 3 December 1997, I issued a decision
dated 16 March 1998 determining the market value of the land taken in the sum
of £46,250 and gave leave for the claimants to make a claim for compensation
for disturbance. This decision is to be read with the earlier decision. Agreement
could not be reached on this claim and the amount of a home-loss payment was
also in dispute. These issues were set down for hearing on 15 and 16 September
1998.
At this hearing Mr Anthony Crean, of counsel,
appeared for the claimants and Mr Jonathan Powell, of counsel, for the
compensating authority, Lancaster City Council.
At the start of the hearing I was asked for an
adjournment to allow further discussions between the parties. When the hearing
resumed I was told that they had agreed the compensation payable for
disturbance and home loss in the sum of £11,000 and that the council had agreed
to pay the claimants’ costs of the previous hearing and the claimants’ further
costs, but only up to 11 September last, the date when an offer to settle was received
by the claimants’ solicitors. The council declined to pay their costs after
that date. This is the sole issue for my determination.
I heard submissions and received copies of
relevant letters. The facts are not in dispute. On 9 September 1998 the council
wrote to the claimants’ solicitors with an unconditional offer to pay £11,000
in full and final settlement of the claim for disturbance and home loss,
exclusive of any costs. This letter was unfortunately unsigned and this
oversight was drawn to the council’s attention the next day. A signed letter of
offer was received by the claimants’ solicitors on Friday 11 September.
The first day of the hearing was Tuesday 15
September and therefore the claimants had only two working days from receipt of
the signed letter, or three days from the unsigned letter, to consider the
offer with their solicitors, surveyor and counsel. Mr Crean said that he was
unavailable on Monday 14 September and that the first opportunity for the
claimants and their advisers to consider the matter was on the first day of the
hearing. The claimants decided to accept this offer but ask for their costs up
to and including the first day of the hearing.
I agree. In my view, the offer has two defects.
First, it was made too close to the start of the hearing. No explanation was
given as to why the offer was not made earlier. It is unreasonable to expect
the claimants to accept this offer without discussion with their counsel and I
accept that this could not have been done until the first day of the hearing.
They accepted the offer at the earliest reasonable opportunity (the first day
of the hearing) and should have their costs up to and including that day. The
second defect is that the offer is expressly stated to be exclusive of costs.
In my view, it was reasonable for the claimants to defer their response until
the question of costs had been clarified. The council could have included an
offer as to costs in their letter, thus dealing with both outstanding issues.
An offer during proceedings in this tribunal should have the dual purpose of
settling the outstanding claim and compromising the reference. The general rule
is that an acquiring authority should normally bear the costs of proceedings in
the Lands Tribunal and therefore an offer that makes no reference to costs is
defective in that respect. Mr Powell referred me to a letter dated 28 May 1998
from this tribunal to the claimants’ solicitors, stating that the costs of the
reference would be dealt with after the decision on disturbance. This letter
was sent in reply to an application from the claimants’ solicitors for the
costs of the first hearing, which was premature having regard to the remaining
issues and a further hearing. I do not think that this letter assists the
council. It was always open to the council to deal with costs in their offer
letter.
I have determined the market value of the
claimants’ freehold interest in 4 Parliament Street, Morecambe, in the sum of
£46,250 (my decision of 16 March 1998). I now determine the amount of
compensation for disturbance and the home-loss payment, following the
compulsory acquisition of this property, to be the agreed sum of £11,000. I
order Lancaster City Council to pay the claimants’ costs of this reference,
such costs, if not agreed, to be taxed by the Registrar of the Lands Tribunal
on the High Court standard basis. For the avoidance of doubt, these costs are
the whole costs of the reference, including the hearing on 2 and 3 December
1997 and the hearing on 15 September 1998. I was informed that the claimants
are legally aided. Accordingly, I further order that the claimants’ costs be
taxed by the Registrar in accordance with regulation 107 of the Civil Aid
(General) Regulations 1989.
