Costs of conversion — Capital value after conversion agreed — Costs of conversion in issue — Effect of section 9 of Land Compensation Act 1961 — Whether dilapidated state attributable to indication of compulsory purchase — Whether extra costs of conversion to be disregarded
By a vesting declaration the acquiring authority, Wakefield Metropolitan District Council, acquired legal title to the former Queen’s Theatre, Commercial Street, Castleford, Yorkshire, on March 31 1990. On January 27 1986 full planning permission was granted for the conversion of the building and the permission contained a note that the building was within an area where the acquiring authority had resolved to exercise powers of compulsory purchase.
The parties agreed that it could be assumed that the building would have been converted and, on the valuation date of March 31 1990, it would have had an investment capital value £25,000. The issues between the parties concerned the costs of conversion to be deducted from the capital value in arriving at a residual valuation. The claimant also contended that by reason of the indication of compulsory purchase in January 1986, which meant that the claimant did not proceed with the conversion work, the physical condition of the building on the valuation date was worse and the costs of conversion greater than would otherwise have been the case; accordingly, the effect of the increased costs on the residual valuation had to be disregarded under section 9 of the Land Compensation Act 1961.
Held 1. On the evidence the residual valuation, after deducting the costs of conversion, was £75,000.
2. The claimant remained in full control and was not precluded in law from implementing the conversion scheme until the deemed notice to treat in March 1990. Although in the real world incurring expenditure upon the subject building may well have appeared futile, in the world of compulsory purchase the claimant could and would have been compensated if the expenditure had enhanced the value of the freehold interest at the valuation date. The subject building must therefore be valued in the actual state in which it is on the valuation date.
Lewars v Greater London Council (1981) 259 EG 500 and Birmingham Corporation v West Midlands Baptist (Trust) Association (Inc) [1970] AC 874 followed.
Philip Lancaster (instructed by Moxon & Barker, of Castleford) appeared for the claimant and called Harold Senior Carr FRICS; and Miss Elizabeth O’Hare (instructed by the solicitor to Wakefield Metropolitan District Council) appeared for the acquiring authority and called Mrs Carole A Pullan ARICS and John L Allan ARICS.