Decision Nº ACQ 144 2006. Upper Tribunal (Lands Chamber), 10-07-2012
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS |
| Date | 10 July 2012 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | ACQ 144 2006 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2012] UKUT 107 (LC)
UTLC Case Number: ACQ/144/2006
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – compulsory purchase – shops with residential upper parts – whether losses from assumed redevelopment of part of property as a hotel sustainable as a rule 6 claim with rule 2 value assumed to be zero – alternative value assuming residential redevelopment – whether uplift in value to reflect lack of affordable housing provision – condition of order land at valuation date in no scheme world – loss of rent – holding costs – value for existing retail use of remaining part of property – pre-reference costs – held losses from assumed hotel use cannot be claimed only under rule 6 – no uplift in residential values – loss of rent and holding costs disallowed – compensation determined at £634,751
IN THE MATTER OF A NOTICE OF REFERENCE
BETWEEN ACROFAME PROPERTIES LIMITED Claimantand
THE LONDON DEVELOPMENT AGENCY Acquiring
Authority
Re: 8-12 New Road
and 4 Chequers Corner
Dagenham,
Essex,
RM9 6LA
Before: A J Trott FRICS
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on 3-6 January 2012
© CROWN COPYRIGHT 2012
Richard Harwood, instructed by Charles Russell, for the claimant
James Pereira, instructed by Squire Sanders Hammonds, for the acquiring authority
The following cases are referred to in this decision:
Express Homes Limited v London Development Agency [2010] RVR 112
Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111
Spirerose v Transport for London [2009] 1 WLR 1797
Ryde International plc v London Regional Transport [2004] RVR 60 (CA)
Horn v Sunderland [1941] 2 KB 26
Hughes v Doncaster [1991] 1 AC 382
McEwing (D) & Sons Ltd v Renfrew County Council (1959) 11 P&CR 306
Pattle v Secretary of State for Transport [2009] RVR 328
Urban Edge Group Limited v London Underground Limited [2009] RVR 361
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 Waters v Welsh Development Agency [2004] 1 WLR 1304.
Thomas Newall Limited (no.2) v Lancaster City Council [2011] UKUT 437 (LC)
Ryde International plc v London Regional Transport [2001] RVR 59 (LT)
Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson and Others [2002] EWCA Civ 879
Esure Services Ltd v Quarcoo [2009] EWCA Civ 595
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This is a reference to determine the compensation payable to the claimant, Acrofame Properties Limited, following the compulsory purchase of 8-12 New Road and 4 Chequers Corner, Dagenham, Essex, RM9 6LA (the reference land). The acquiring authority is the London Development Agency.
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The claimant owned the freehold interest in the reference land which was acquired under the London Development Agency (Chequers Corner, Dagenham) Compulsory Purchase Order 2003 (the Order). The purpose of the Order was to further the economic development and regeneration of the area, and in particular Dagenham, by securing development at Chequers Corner. The Order was confirmed by the Secretary of State for Trade and Industry on 22 July 2005. The acquiring authority made a general vesting declaration on 12 December 2005 and took possession of the reference land on 17 January 2006, which is the valuation date.
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The reference land may be divided conveniently into two areas: Firstly, 4 Chequers Corner and, secondly, 8-12 New Road. These areas are considered separately in this decision.
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Mr Richard Harwood of counsel appeared for the claimant and called Mr Surendra Patel as a witness of fact; Mr Robert Chess BSc FRICS, a director of Christie & Co, as an expert hotel valuer; Mr Peter Trevor Foster FRICS IRRV, a director of Porter Glenny, as an expert residential valuer; and Mr James Winbourne BSc MRICS, principal of Winbourne Martin French, as an expert compensation witness. Ms Eleanor Azzopardi also submitted a witness statement of fact but was not called to give evidence.
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Mr James Pereira of counsel appeared for the acquiring authority and called Mr Nicholas Boyd BSc FRICS, a partner in Edward Symmons LLP, as an expert hotel valuer; and Mr Colin Michael David Cottage BSc MRICS IRRV, a partner in Glenny LLP, as an expert valuer and compensation witness.
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The parties made written submissions following the close of the hearing the last of which was received on 10 February 2012.
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I made unaccompanied site inspections of the relevant residential and retail comparables following the hearing.
Facts
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The parties produced two statements of agreed facts. The first was agreed between Mr Cottage, Mr Winbourne and Mr Foster (the valuation experts’ agreement), the second was between Mr Boyd and Mr Chess (the hotel experts’ agreement). From these and from the evidence I find the following facts.
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The reference land is located to the south side of New Road, Dagenham (now the A1306 but previously the A13), at its junction with Chequers Lane and close to Merrielands Retail Park to the west. The southern end of Dagenham’s main retail area in the Heathway is approximately 1km to the north. Dagenham Heathway underground station is 1.15km to the north and Dagenham Dock station on the C2C National Rail Network is 550m to the south.
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4 Chequers Corner comprised a mid-terrace three-storey building, originally constructed in the 1890s. There was retail space at ground level (with planning permission having been granted for the sale of hot food in May 1989) and residential accommodation above. The claimant purchased 4 Chequers Corner in May 1989 and reconfigured the upper floors in 1990 to provide a self-contained flat on each of the first (Flat 4a) and second (Flat 4b) floors. The experts agreed that the combined freehold value of the two flats was £130,000. They also agreed compensation in respect of the loss or rent from the flats following their vacation prior to the valuation date. The agreed sums were £1,755.18 for Flat 4a and £2,867.84 for Flat 4b.
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It was agreed that works of repair and refurbishment were needed to put the ground floor retail accommodation at No.4 into a lettable condition. The cost of those works was not agreed. The experts agreed that the retail unit at No. 4 should be valued on an investment basis and that its rental value, which was not agreed, should be capitalised at a yield of 7%.
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8-12 New Road comprised a terrace of three adjoining buildings believed to have been constructed in the late 1930s. Nos.8 and 12 were two storeys high and No.10 was three storeys high. Part of No.8 had been used as offices in the period leading up to the valuation date and 10-12 New Road had been used historically as a café and bed and breakfast accommodation.
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In October 1991 planning permission was granted on appeal for the erection of a three-storey rear extension in connection with the conversion of No.8-12 into a hotel. This planning permission was renewed in January 1997.
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The parties’ hotel experts agreed that No.8-12 would have received planning permission in the no scheme world for a 33 bedroom hotel with ancillary facilities. It was further agreed that the hotel was more akin to a hostel style of accommodation or a privately run bed and breakfast hotel than to a corporate brandable budget hotel. The proposed hotel would be likely to be used by trades people and/or by local authorities to accommodate homeless persons or asylum seekers.
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The hotel experts agreed the following matters about the state of the hotel market leading up to the valuation date:
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At the macro level the UK hotel market was reasonably strong and was improving;
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Certain parts of East London had not traditionally been perceived as suitable locations for hotel development;
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In early 2006 the market for hotel opportunities in Dagenham would not have extended to corporate hotel chains; and
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The homeless persons market was in decline by the valuation date following government policy changes that had been introduced in 2002/3. Prior to this time the homeless persons market had been stronger.
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The hotel experts agreed that the gross development value of the (completed) hotel scheme was £1.675m as at the valuation date. There were no direct comparable transactions of the...
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