UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2012] UKUT 109 (LC)

UTLC Case Number: ACQ/369/2008

 

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

COMPENSATION – compulsory purchase – dwelling house in disrepair – comparables – compensation determined at £5,000

 

IN THE MATTER OF A NOTICE OF REFERENCE

 

BETWEEN PETER SAVVA

(ALSO KNOWN AS PANAYI SAVVA) Claimant

and

LIVERPOOL CITY COUNCIL Acquiring

Authority

 

 

 

Re: 13 Bishop Road,

Anfield,

Liverpool 6

 

 

Before: N.J. Rose FRICS

 

Sitting at: 43-45 Bedford Square, London WC1B 3AS

on 20 March 2012

 

 

 

Claimant in person

Philippa Jackson, instructed by Liverpool City Council, for acquiring authority

 

© CROWN COPYRIGHT 2012

There are no cases referred to in this decision

 

DECISION

Introduction

1.           This is a reference to determine the compensation payable by Liverpool City Council, the acquiring authority, for the freehold interest in a dwellinghouse known as 13 Bishop Road, Anfield, Liverpool 6.  The reference property was compulsorily acquired under the City of Liverpool (Chapel Road Housing Action Area) Compulsory Purchase Order No.1 1985.  The CPO was confirmed by the Secretary of State for the Environment on 22 January 1987.  The acquiring authority made a general vesting declaration on 3 January 1990 and the vesting date is 19 February 1990, which is also the valuation date.

2. The history of this case is not a happy story.  The reference was made by the claimant, Mr Peter Savva FRICS, on 16 July 2008, more than eighteen years after the vesting date.  Following an application from the acquiring authority, on 19 May 2009 the President ordered that the question whether the claim was statute-barred be determined as a preliminary issue.  Subsequently, on 13 April 2010, the President ordered that the acquiring authority be debarred from contending that the claim was statute-barred.  That order followed the acquiring authority’s failure to comply with the order dated 19 May 2009 or reply to any of the Tribunal’s letters relating to the preliminary issue.

3. The substantive issue – the value of the freehold interest – was originally listed for hearing on 5 May 2011.  That hearing was vacated due to Mr Savva’s personal circumstances and the reference re-listed for 4 November 2011.  That hearing in turn was vacated, again because of Mr Savva’s personal circumstances, and a new hearing date of 20 March 2012 was fixed.  By letter dated 13 March 2012 Mr Savva again requested an adjournment, this time on the grounds of ill-health.  I caused a letter to be written on 15 March, refusing to grant an adjournment because the medical letter which had been submitted with the application did not suggest that Mr Savva was unfit to attend the hearing.  Mr Savva wrote again to the Tribunal – sent by fax – on 19 March 2012.  He reiterated his request for the postponement of the hearing, this time on the grounds that, as a result of an occupation order granted to his wife on 16 May 2011, he had been unable to retrieve the file in respect of his claim for compensation.  He said that the hearing should be adjourned to enable him to retrieve the files and, if it was not, he would apply for judicial review.  There was clearly no merit in this application, since Mr Savva had been aware of the latest hearing date since 30 November 2011 and had therefore had ample time to obtain his file.

4. In the event Mr Savva arrived at the hearing fifteen minutes after the notified commencement time.  It then because apparent that the acquiring authority had not sent him a copy of the report of its expert witness, Mr G W Smith MRICS, as it had been ordered to do on 19 August 2010.  I was rather surprised that Mr Savva had not previously drawn this omission to the attention of the acquiring authority or the Tribunal, given that he had been aware of the order to file and serve expert reports.  Nevertheless, in the interests of justice I allowed Mr Savva time to submit any written representations arising from Mr Smith’s report which he might wish to make.  Mr Savva did submit such representations and I have taken them into account in preparing this decision.

Facts

5. In the light of the evidence I find the following facts.  The reference property comprised a mid-terraced house on two storeys with a two-storey back addition.  It contained an entrance hall and three rooms on the ground floor and three rooms and a bathroom on the first floor.  The property had been erected in about 1900 and was in a dilapidated condition.  It is situated about mid-way along the north side of Bishop Road, close to the junction with Townsend Lane (A580), a busy main road served by many bus routes and with a mixture of shopping facilities.  The property is virtually opposite Edinburgh Park on the south side of Townsend Lane.  The freehold interest was subject to a chief rent of £4.68 per annum.

6. Mr Savva purchased the reference property at auction in May 1981.  At the same time he acquired the adjoining property, No.11, which he subsequently sold to the sitting tenant.  In October 1984 the acquiring authority carried out a survey in connection with the proposed compulsory acquisition of the property, which had been included within the Chapel Road Housing Action Area.  On 7 December 1984 Mr Savva applied for planning permission to convert the property into two self-contained one bedroom flats.  Planning permission was granted on 9 April 1985.  In the same month the acquiring authority agreed to make an improvement grant of £24,000 towards the cost of repair and the proposed conversion of the property.

Case for the claimant

7. Mr Savva referred to the following sales of 3 bedroom houses in support of his valuation.  With the exception of 46 Bishop Road, which is at the end of a terrace of houses, all sales were of mid-terraced properties.

35 Bishop Road, Anfield	June 1990	£27,000
46 Bishop Road, Anfield	January 1991	£31,950
7 Abbey Road, Anfield	March 1991	£31,950
25 Vicar Road , Anfield	May 1990	£28,950
39 Vicar Road , Anfield	June 1990	£28,500
40 Butterfield Street, Liverpool 4	August 1991	£41,000

 

8. Mr Savva said that 35 Bishop Road and 39 Vicar Road were in poor condition, 40 Butterfield Road was in better condition and had been completely refurbished, and the remaining properties were in fair condition.  In the light of this evidence he suggested that the value of the reference property on the valuation date, with the benefit of planning permission for conversion to two flats and an improvement grant of £24,000, was £30,000.

 

Case for the acquiring authority

9. Mr Smith has been employed by the acquiring authority as a valuer since 1977.  He was a team leader overseeing other valuers who were dealing with the matter.  When the vesting declaration was made for the reference property and when its subsequent sale to Liverpool Housing Association was negotiated he supervised his team on a day to day basis, but was not personally involved with the property at the time.

10. Mr Smith based his valuation on contemporaneous notes made at the reference property on 22 August 1984 by Mr W Cox, a graduate valuer with the acquiring authority.  This note indicated that the property was in very poor condition, and referred to bulging brickwork and structural movement.  The internal stairs, fireplaces and some of the flooring has been removed.  Some areas could not be accessed due to accumulated rubble.  The upper floor was viewed through gaps in the internal structure and externally through the windows.

11. Mr Smith said that there was no contemporaneous evidence of Mr Savva’s intention to undertake the conversion for which consent was granted in April 1985.  Mr Savva had had ample time between confirmation of the CPO and the vesting date some three years later to commence improvement or conversion works.  If he had done so the compulsory acquisition would not have been necessary.

12. Mr Smith was not aware of any improvement work being carried out between the date of Mr Cox’s inspection and the valuation date some six months later.  It was possible that the condition had deteriorated further.

13. In arriving at his valuation Mr Smith had regard to two categories of evidence.  The first consisted of properties leased to housing associations on 75 year leases, following their acquisition by the acquiring authority under compulsory purchase powers in order that they would be improved.  The leases each contained a condition that the property would be used for housing association purposes.  In each case the lease was subject to an initial premium, with a peppercorn ground rent payable thereafter.  Each property was a six room terraced house in poor condition or worse.  Details of the premiums paid are as follows:

The reference property	15 March 1990	£4,000
15 Monastery Road, L6	May 1988	£6,000
30 Bishop Road, L6	May 1988	£6,750
Five properties in Lampeter Road , L6	February 1988	£6,000 each
31 and 38 Winchester Road, L6	February 1988	£4,000 each
38 Waltham Road, E6	February 1988	£3,000

 

14. Mr Smith said that, although all the comparable properties apart from the reference property were sold some time prior to the valuation date, the range of values agreed reflected the differing condition of each. The prices were all negotiated in advance of the lease grant by a valuer employed by the acquiring authority and the district valuer acting for the relevant housing association.  In the case of the reference property, however, the premium was negotiated directly with the housing association by Mr Cox under Mr Smith’s supervision.  In all cases the acquiring authority was under a duty to obtain the best price.

15. The agreed premiums represented the value of a 75 year lease at a peppercorn rent subject to a condition that the property was to be used for housing association purposes.  This usually involved the lessee bringing the property back into habitable condition.  The value of the leasehold interest was between 5 and 10 per cent less than the freehold value with vacant possession.

16. The second category of comparable evidence consisted of auction results which had been recorded contemporaneously by the acquiring authority’s in-house valuation team.  These details all related to terraced houses.  The accommodation, descriptions in the auction particulars, sale dates and the prices paid were as follows:

26 July Road L6	3 bedroom	Very poor/derelict condition	April 1989 £7,000
35 Whitefield Road L6	3 bedroom	Very poor external condition	March 1989 £3,750
35 Bishop Road L6	3 bedroom	Needs refurbishment and modernisation	September 1989 £7,600
31 Waltham Road L6	2 bedroom	Needs refurbishment and modernisation	July 1989 £8,250
29 Gilroy Road L6	2 bedroom	Needs refurbishment and modernisation	July 1989 £5,600
32 Gilroy Road L6	2 bedroom	Needs refurbishment and modernisation	July 1989 £7,500

 

17. Mr Smith observed that auctioneers were inclined to provide a general indication of the nature of what was being sold rather than a specific indication of its real condition.  The purchaser would be expected to make his own assessment on viewing the property prior to the auction.

18. In Mr Smith’s opinion the value of the freehold interest in the reference property on the valuation date was in the region of £4,500.

 

 

Conclusion

19. In my judgment the best evidence of the condition of the reference property at the valuation date is provided by the description prepared by Mr Cox when he inspected the property some six months earlier.  I am satisfied that a prospective purchaser would have concluded that very considerable expenditure was needed to bring the property back to habitable condition.

20. Mr Savva relies on six sales at prices between £27,000 and £41,000.  Mr Smith discounts this evidence on the basis that all six properties were in significantly better condition than the reference property.  He points out that 35 Bishop Road was sold twice by auction in the relevant period – firstly for £7,600 in September 1989 and subsequently for £27,000 some nine months later.  Although he has no personal knowledge of the condition of this property at either date, he considers that it must have been substantially improved between the two dates; there can be no other explanation for such a large change in value.

21. In my judgment Mr Smith’s interpretation of the evidence of 35 Bishop Road appears to be the only plausible explanation of the difference between the two sale prices.  I also accept his opinion that it is likely that the condition of each of the other properties quoted by Mr Savva, which all sold at prices in excess of that achieved for 35 Bishop Road, after improvement, was considerably better than the condition of the reference property.  It follows that I obtain no assistance from any of Mr Savva’s comparable evidence.

22. I therefore turn to the evidence produced by Mr Smith.  In my judgment the most reliable evidence is provided by the sale of the reference property itself, on a 75 year leasehold basis, for £4,000 very shortly after the valuation date.  This was a sale by a public authority, acting with the benefit of professional advice, and under an obligation to obtain the best price achievable.  In the absence of a truly reliable description of the condition of any of the properties which have been cited as comparables (or, indeed, of a costed specification of the works required to bring the reference property into repair), it is not possible to make an accurate comparison with them.  I therefore propose to base my determination on the premium of £4,000 which was paid for the reference property in March 1990.  It is necessary to adjust that figure to reflect, firstly, the difference between a 75 year lease and a freehold and, secondly, the restriction in the lease to housing association purposes only.  Doing the best I can to make these adjustments based on the limited evidence available, I find that the value of the freehold interest in the reference property at the valuation date was £5,000.  I do not consider that the planning permission to convert the reference property to two flats added to its value, given Mr Savva’s failure to implement the consent notwithstanding the availability of a substantial grant.  Mr Savva is entitled to reasonable legal costs, if any, incurred in connection with the transfer.  There was no evidence to support a claim for disturbance or surveyor’s fees and no home loss payment is payable since Mr Savva was not in occupation of the property.

 

 

23. A letter on costs accompanies this decision, which will become final when the question of costs is determined.

 

Dated 3 May 2012

 

 

N J Rose FRICS