Professional negligence–Did surveyor fail to take advantage in clients’ interests of the Baptist Chapel case when handling in 1969 a compensation claim based on 1962-63 notices to treat?–Yes–Measure of damages taken as a 36 per cent increase in the value of the land concerned over the relevant period–£7,440 and costs awarded against Blackheath firm
This was a
claim by Mr Charles Stuart Weedon and Mr Stanley William Weeks, suing as
executors of Charles John Rice deceased, against Hindwood Clarke & Esplin,
surveyors, valuers and estate agents, of National Westminster Bank Chambers,
Blackheath Village, London SE3, for damages for professional negligence.
Mr P
Curtis-Bennett (instructed by Lewis Rubin, of Bexleyheath) appeared for the
plaintiffs, and Mr W A Blackburne (instructed by Herbert Smith & Co)
represented the defendants.
Giving
judgment, WILLIS J said: This is an action for damages for professional
negligence brought by the executors of Charles John Rice deceased against a
firm of estate agents and chartered surveyors, Hindwood Clarke & Esplin.
Briefly, the allegation of negligence arises from the circumstances in which it
is said that, in valuing land for the purposes of compensation for compulsory
acquisition in December 1969, the defendants, that is to say Mr N Singleton,
senior partner of the defendant firm, failed to exercise the proper standard of
care to be expected of a valuer.
The case has
unusual features, and I should indicate briefly the background of the matter.
In premises in Bexleyheath, at the junction of Mayplace Road West and Erith
Road, the late Mr Rice and his son carried on a commercial and industrial
undertaking on land which had at all relevant times a number of uses. They
dealt in secondhand building materials; they manufactured concrete kerbs and
sold them from the site; they either let or licensed–it perhaps matters not–to
a firm called Andersons part of the site for the purpose of the sale of
secondhand cars; there were two relatively dilapidated cottages on part of the
site, and there were a number of buildings used for various purposes, garages,
stables and sheds of one sort and another; it was a fairly typical backyard
form of industry which had grown over the years and was carried on in a
somewhat haphazard way. Indeed, part of the site had been the subject in 1958
of an enforcement notice by the local authority, because the land was zoned for
residential purposes and there was alleged to be a nonconforming use. Some
steps were taken to comply with the enforcement notice, but clearly
nonconforming use was continued thereafter with apparently no protest or action
from the local authority. It is not a material fact in this case, but that is
part of the background. It was a site which the local authority desired to
acquire for housing purposes. It was not made the subject of a single
compulsory purchase order. Two compulsory purchase orders were made, one in
1960 in respect of what was described as plots 4 and 5, and the other, which
concerned plots 1 and 2 and the frontage land, in 1962. Both those orders were
confirmed by the appropriate Minister, and the matter proceeded in the ordinary
way with notices to treat being served in respect of the first order in June
1962 and in respect of the second order in April 1963.
Claims were
made by Mr Rice. In respect of the first order a claim of some £44,000 was
made. At that time, Mr Rice retained the services of a well-known firm of City
surveyors, Debenham, Tewson & Chinnocks, and a partner, now a consultant,
in that firm, Mr R F Hill, negotiated for him. There is no doubt that the
negotiations which took place between Mr Hill and Mr W E Ellis of the district
valuer’s office were conducted on the footing of the law as it applied in those
days. That law was to be found in section 5 of the Land Compensation Act 1961, which,
as is well known, reproduced the code of compensation for compulsory
acquisition laid down in section 2 of the Acquisition of Land (Assessment of
Compensation) Act 1919. Three only of the six rules of that code are applicable
to this case: ‘(2) The value of land shall, subject as hereinafter provided, be
taken to be the amount which the land if sold in the open market by a willing
seller might be expected to realise’; ‘(5) Where land is, and but for the
compulsory acquisition would continue to be, devoted to a purpose of such a
nature that there is no general demand or market for land for that purpose, the
compensation may, if the Lands Tribunal is satisfied that reinstatement in some
other place is bona fide intended, be assessed on the basis of the reasonable
cost of equivalent reinstatement’; and (6), the disturbance rule, ‘The
provisions of rule (2) shall not affect the assessment of compensation for
disturbance or any other matter not directly based on the value of land.’ Acting on the basis of rule (2) as set out in
that section, Mr Hill and the then district valuer reached a figure of £20,550
as being the value of the land. They deferred the question of any assessment of
compensation under rule (6), and there never, in the circumstances, became an
agreed figure between Mr Hill and the district valuer for disturbance. It is
apparent that Mr Rice was not altogether happy about the figure of £20,550 and
thought that Mr Hill should have done better. Mr Hill took the view that he
could not do better. Indeed, there is a letter in the correspondence which
indicates that Mr Hill thought that if they went to the Lands Tribunal they
would not get anything more than he had been able to negotiate, and that in
certain circumstances possibly the figure agreed might not be reached before
the tribunal. None the less, finality was not achieved. The years went on, and
Debenham, Tewson & Chinnocks dropped out. By 1968 the local authority
wished to get things moving again. Mr Rice had died in 1964. The district valuer
therefore approached his executors, Mr Weeks, an accountant, and Mr Weedon, a
solicitor, to get the matter finalised, because the council wanted the land for
development. In these
because, as I have indicated, the figure of £20,550 was a provisional figure
which had never been accepted.
By 1968, when
Mr Singleton undertook his instructions and started to negotiate, a very
important thing had happened, that is to say, at long last the challenge which
had been threatened over many years to the current practice of paying
compensation under rule (5) of the Land Compensation Act had succeeded before
the Court of Appeal in the case of West Midland Baptist (Trust)
Association (Incorporated) v Birmingham Corporation [1968] 2
QB 188. It is unnecessary to refer to the details of that case, beyond saying
that it was a unanimous decision of the Court of Appeal in relation to the
injustice of the practice of assessing compensation under rule (5) whereby,
once notice to treat had been served, the cost of reinstating was taken to be
the cost as at the date of the notice to treat. That manifest injustice, said
the Court of Appeal, was to be put an end to forthwith so far as they were
concerned. Additionally, Salmon LJ in particular made a strong attack upon the
justice of the practice of taking the date of the notice to treat as the date
for assessing compensation under rule (2). That was the legal position,
therefore, when the negotiations started, and it would be supposed that a very
experienced surveyor like Mr Singleton and the district valuer with whom he was
negotiating would both have been aware that the law as to rule (5) had probably
been changed and the practice as to rule (2) might possibly be changed. It
would also have been known that the Baptist Chapel case was on its way
to the House of Lords. By the time Mr Singleton had concluded his negotiations,
and recommended figures to the executors which they accepted, namely £21,000
for the value of the land and £6,000 for disturbance, the House of Lords had
pronounced in relation to rule (2). That was in August 1969, and the figure
agreed by Mr Singleton with the district valuer was arrived at in December
1969.
Mr Rice had
been unhappy about a similar settlement, and the question was raised with Mr
Singleton by Mr Weeks whether he had had in mind the decision in the Baptist
Chapel case in negotiating the figure he had recommended for acceptance,
because it seemed very strange to the trustees that the figure agreed in 1969
by Mr Singleton was only £450 more than the figure which had been agreed by Mr
Hill in 1965 on the basis of 1962-1963 values; it would have seemed, so thought
the plaintiffs, that with the general rise in land values which was common
knowledge, the figure ought to have been a great deal more. Mr Weeks therefore
queried whether perhaps Mr Singleton had either not been aware of the Baptist
Chapel case, or if he had, had not given effect to it, and had indeed
accepted from the district valuer 1962-1963 values. Faced with that inquiry
from the executors, Mr Singleton made it perfectly clear in correspondence that
he had been aware from the start of his negotiations of the Baptist case
and of the impact it had had upon the practice of valuation for the purposes of
compensation, and that he had taken it into account in the course of his
negotiations. He told me in evidence that he valued on the basis of what he
described as ‘current,’ that is to say 1969, values, and that the similarity between
his and Mr Hill’s figures was due to the fact that the general rise in property
values was not reflected in the sort of property owned by Mr Rice.
That is the
background of the case. Mr Curtis-Bennett submits that if the valuation which
was made by Mr Singleton in 1969 was right, two things follow. Either the
valuation of Mr Hill and the district valuer in 1965 on the basis of 1962-1963
values at £20,550 was wrong, or if that was not wrong, then land values have
not increased or at least have not increased quoad this particular
property. Alternatively, counsel says, Mr Singleton must have been applying the
wrong criteria, and by that Mr Curtis-Bennett means that despite what Mr
Singleton has said, he was indeed applying 1962-1963 values, despite the fact
that the Baptist Chapel case had been at least before the Court of
Appeal. What Mr Curtis-Bennett then says is this. Even though Mr Singleton was
faced, or might have been faced on the basis of that case, with the district
valuer saying, ‘Well, it is only in the Court of Appeal, and I cannot possibly
take account of current values until we know what the House of Lords has said,’
it would have been the action of a prudent valuer to have made known to his
clients that that was the position and to have deferred, as Mr Hill has told me
that he deferred in a number of negotiations at that time, coming to a final
decision until it was known whether or not the House of Lords approved the
majority view in the Court of Appeal.
In January
1969 Mr Singleton supplied to the executors a written statement setting out the
position under compulsory purchase orders as viewed by him. Paragraph 2 reads:
‘The freehold interest is to be valued as at the dates of the notices to treat,
namely, 1962-1963.’ Paragraph 3, so far
as material, reads: ‘The compensation should represent the market value of the
whole land in 1962/63.’ The statement is
a long document, and it is unnecessary to refer to all of it; but in paragraph
9, after setting out the various figures which had been bandied about from time
to time as to the value of this land, including the provisional agreement of
the district valuer in 1965 of £20,550, and ‘D.V.’s best offer to date’–that is
to say, in the current negotiations–the same figure, £20,550, Mr Singleton went
on to say: ‘If the land is sold entirely for residential purposes, the likely
density would permit approximately 16 two-bedroomed flats. Because of the
awkward shape of the land and the additional cost, a residential developer in
1962-63 would probably have been prepared to pay £1,000 per unit, but no more.
This would give a price of £16,000 as compared with the district valuer’s
original offer of £15,000.’ Mr Singleton
agrees, of course, that that was perfectly obviously a 1962-1963 valuation. He
went on to say in paragraph 10: ‘Although part of the land has no commercial
use rights, a better valuation can be made by working on existing use rights
section by section, and this gives a figure of about £19,000 as compared with
the district valuer’s best offer to date of £20,550.’ Plainly, as I think, that refers to the
district valuer’s offer in the 1962-1963 provisional agreement; despite the
fact that Mr Singleton, when cross-examined upon that paragraph, says that he
was not contrasting on a 1962-1963 basis a residential valuation on the one
hand with a commercial section-by-section valuation on the other, I regret to
say that I think he plainly was. He sought to explain the phraseology by saying
that, somehow or other, between paragraph 9 and paragraph 10 he had moved
mentally from a 1962-1963 to a 1969 current-value concept of valuation. With a
valuer of Mr Singleton’s experience, I find it impossible to accept that he
would not, if that had been his process of thought, have made it clear in that
document. The statement concludes by saying: ‘A recent discussion with the
district valuer indicated that he considers that he has gone as far as he can
at £20,550, although possibly he would round this up a bit in order to reach
final agreement.’ That, Mr Singleton
says, is a 1969 current-value figure.
The criticism
which is made of Mr Singleton in relation to that document is this. If he were
indeed mindful throughout these negotiations of the Court of Appeal’s decision
and of what might well be a much more favourable basis of compensation by
reason of being able to take advantage of any increase in land values since the
date of the notice to treat, why was there not a word of that possibility in
the memorandum? There is no indication
at all of a caveat that the executors might well be advised to await a final
settlement until the House of Lords had pronounced upon this problem.
Everything in that document, as Mr Curtis-Bennett submits and as I accept,
points to the fact that the figures were based on 1962-1963 notice to treat
valuations. There-
it is essential for Mr Singleton to be able to convince me that, whereas nobody
could be blamed for thinking that he was using 1962-1963 figures throughout
that document, he and Mr G Shadlock, the assistant district valuer, were in
fact negotiating and did in fact agree the final figure on the basis of 1969
values. Mr Shadlock confirmed that he and Mr Singleton negotiated on the basis
of values current in 1969. Mr Singleton was cross-examined about his figure of
approximately £21,000 for the 1969 valuation of this land and about the
breakdown which was supplied contemporaneously in 1965 by Mr Hill, and, within
a few hundred pounds or so, the figures are exact. Mr Singleton says that it is
a pure coincidence that the notice to treat figures are in fact almost pound
for pound the same as his figures for 1969. If indeed he was taking account of
the Baptist case, and produced the same figures for all practical
purposes as Mr Hill and the district valuer did in 1965, then inevitably it
must follow that for some reason or another the value of this particular land
did not share in the general rise in land values. It is common ground with all
the valuers that in South London there was an average increase in land prices
generally of about 6 per cent per annum over the period that I have to
consider, which gives something like a 36 per cent increase between 1962-1963
and 1969. Mr Singleton and the two valuers who supported him on this matter, Mr
Shadlock and Mr Jennings, who is an experienced local valuer, say that this
land is to be treated exceptionally. Mr Shadlock went so far as to say that
although, apart from increased dilapidation of the buildings, the condition of
the land and the nature of its user were exactly the same in 1962-1963 as in
1969, as I so find, nevertheless because the business was making a loss
virtually no increase in value had taken place. I find this evidence quite
impossible to accept. Mr Jennings’s evidence was to the effect that it was not
this particular piece of land, but land of this type, with rather a ramshackle
mixed use upon it and with a lot of backland, which had not shared in the
general increase.
What then is
the position as to the basis upon which Mr Singleton was valuing in 1969? He told me that although he was himself aware
of the Court of Appeal’s decision and of the fact that it would, if approved,
drastically affect the practice under rule (2), his experience of the valuation
office at the time when he started upon his investigations was that its valuers
were not prepared to work on the new basis. He went on to say that the
valuation office was waiting for the appeal to the House of Lords which was
known to be pending, and that when he prepared the memorandum in January 1969
he was hopeful that the House of Lords decision would confirm the new basis
under rule (2); although he was optimistic, however, he got no concession from
the district valuer, who still maintained that he must approach the valuation
as at the date of the notice to treat, even though claiming that the figures
previously agreed by his predecessor had exceeded the 1963 value. Mr Singleton
went on to say, when asked why in those circumstances nothing appeared in the
memorandum about that matter, that he did not want to complicate the situation
for Mr Rice, so he made no mention of the Baptist case, although in fact
he was working on 1968-1969 values. I have to ask myself this: if Mr Singleton
was working on 1968-1969 values, and the district valuer, as would appear from
the evidence which I have just quoted, was not prepared to budge from the
notice to treat value, how was it that their figures were so near, because they
were never more than between £1,000 and £2,000 apart? One explanation for this apparently strange
position is the view held by all three valuers called for the defence that the
district valuer and Mr Hill were wrong in 1965. Mr Singleton advanced a figure
of some £1,500 as the excess valuation; Mr Shadlock, though understandably he
did not wish to criticise a colleague, particularly as he was not in that
office in 1965, thought that Mr Ellis was ‘a bit on the high side,’ while Mr
Jennings was prepared to say that he was something like £5,000 out in 1965.
Equally, he thought that Mr Singleton and the district valuer in 1969 were also
about £5,000 too high. I am bound to say that I can get very little assistance,
in spite of his local expertise, from the evidence of Mr Jennings.
I accept that
there was an overall increase in the value of land between 1962-1963 and 1969.
I accept that there is no sensible distinction to be drawn between the
categories of land which shared in that increase. Prima facie,
therefore, I ask myself why I should not apply a 6 per cent increase to this
land over the years between 1962-1963 and 1969. Having heard the explanations
given in relation to this particular piece of land by Mr Shadlock, or land of
this type by Mr Jennings and Mr Singleton, I can find no reason why I should
make any modification to a 6 per cent per annum increase in value between the
two dates of valuation. If that is so, it seems to me that to reach a figure in
1969 which was virtually the same as that reached in 1962-1963 must prima
facie be wrong. How does the defence seek, in part at all events, to meet
that position? Mr Blackburne, who, if I
may say so, has argued this case and presented it with great persuasiveness and
ability, invites me to say that I ought to accept the evidence of the three
valuers on his side that the district valuer was too high in 1965. I am unable
to do so. I propose to accept the provisionally-agreed figure in 1965 as being,
as near as one can get, correct. It was agreed at arm’s length between the
district valuer, Mr Ellis, and a very experienced valuer, Mr Hill, and I can
find no reason why I should accept the criticism that is made years later of
that valuation by people who were not concerned at the time. I therefore
propose to anchor myself to the figure of £20,550 agreed in 1965 as being the
fair value of the land for the purposes of the assessment of compensation at
1962-1963 values.
Because the
matter has been raised and closely argued, I feel compelled to make a finding,
although I regret the necessity of doing so, as to the basis upon which the
1969 figure of compensation was assessed. I am not able to accept Mr Shadlock’s
evidence that he was valuing for the purposes of the district valuer’s office
on current values. Mr Singleton has told me that so far as he recalls–although
Mr Shadlock does not–there was a directive from the Inland Revenue to district
valuers following the Court of Appeal decision that they were to continue to
value on the traditional basis of rule (2). If there was, it would accord with commonsense
and what could be expected in a fluid situation. I think Mr Shadlock was
sticking to his instructions and was throughout the negotiations valuing on a
1962-1963 basis. It is apparent from the correspondence, and in particular the
memorandum of January 1969, that it was not until Mr Singleton was questioned
about the correctness of the 1969 valuation that he asserted that he was well
aware of the Baptist case during the negotiations and that it was taken
into account both by him and the district valuer to the advantage of the
executors. I am bound to say that I am unable to draw any other inference from
the memorandum and the relevant correspondence which followed it, and from the
evidence which I have heard, than that throughout the negotiations which led to
the final figure of some £21,000 for the land out of a total of £27,000, the
valuation was on 1962-1963 values and no effect was given to the Baptist
Chapel case. On that finding, Mr Blackburne has conceded that if Mr
Singleton either (1) knew of the Baptist Chapel case, and either did not
take it into account in his valuation or, as I think may well have been the
case, was pushed off it by a district valuer who would not budge, or (2) did
not know about the case as he should have, then a finding of negligence must
follow. It is always exceedingly distasteful to make a finding of this sort
against a professional man, and I do so with the greatest
me but to find that there was a failure on Mr Singleton’s part to take the
steps which a prudent valuer should have taken, either because he was not aware
of the Baptist case and its implications for valuation at the time, or
because, being aware of it, he did not apply it as he should have. In either
event, his conduct amounted to a failure in his duty to take normal
professional care and exercise his normal professional skill.
What, then, is
the measure of damage? Mr Hill has put
before me a valuation of £32,000 as being what, in his view, was a proper
valuation in 1969. As I indicated during the case, I do not feel myself
equipped to deal with valuations on one side or another, nor even if I were do
I feel that the evidence which it has been possible to put before me was in sufficient
detail, particularly in relation to comparable properties, to enable me to do
so. Therefore, as it seems to me, I am only able to approach the matter of
damages on a general basis. Mr Blackburne has urged upon me that I should
embark upon a consideration of various aspects of the valuation and prefer his
clients’ valuations to that of Mr Hill. As I have already indicated, I do not
propose to embark upon a detailed valuation because I am unable to do so. Where
I am, I think, on safe ground is in accepting what is common to both sides,
namely, the average increase in values over the years amounting to some 36 per
cent. I have already indicated that I also regard myself on safe ground in
accepting £20,550 agreed between Mr Hill and the district valuer in 1965. A
possible view would be to say that I accept Mr Hill entirely, but I do not
think that that would be a proper approach in the circumstances of this case.
As Mr Curtis-Bennett puts it, it may well be as optimistic a valuation as Mr
Jennings’s valuation was pessimistic. I propose to base myself on the increase
in the value. The figure I have been given by way of calculation–and I think it
is roughly right–is £7,400, which is 36 per cent of the 1965 valuation. This
seems to me to be the proper measure of damages as reflecting the amount by
which the sum recommended for acceptance in 1969 fell short of what was the
market value of the land at that time assessed under rule (2). In the
circumstances, therefore, this claim must succeed, and there must be judgment
for the plaintiffs for the sum of £7,400.
The
plaintiffs were awarded the costs of the action.
