Lambe v Secretary of State for War
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PARKER,LORD JUSTICE HODSON,THE MASTER OF THE ROLLS |
| Judgment Date | 28 April 1955 |
| Judgment citation (vLex) | [1955] EWCA Civ J0428-1 |
| Court | Court of Appeal |
| Date | 28 April 1955 |
[1955] EWCA Civ J0428-1
In The Supreme Court of Judicature
Court of Appeal
The Master Of The Rolls (Sir Raymond Evershed)
Lord Justice Hodson and
Lord Justice Parker
Mr B.S. WINGATE-SAUL (instructed by the Treasury Solicitor) appeared on behalf of the Appellant.
Mr NIALL MacDERMOT (instructed by Messrs Hewett & Pim, Reading) appeared on behalf of the Respondent.
THE MASTER OF THE ROLIS: I will ask Lord Justice Parker to deliver the first Judgment.
This is an appeal by the Secretary of State for War, the Acquiring Authority, from a decision of I the Lands Tribunal as to the basis of the compensation payable by the Authority for the freehold interest of the claimant in premises known as "Inniscarra", 53 Bath Road, Reading.
The short facts, so far as they are material, are as follows: Since 1938 the property, which consisted of a large dwelling-house on three floors with a coach house and grounds extending to a little over an acre, was occupied by the Territorial and Auxiliary Forces Association, I think as subtenants, The premises were used as the Headquarters of a Royal Corps of Signals unit and in the course of that occupation the Association erected in the grounds a canteen, a signal store and a general stores. Later, in December 1949, the Association purchased the unexpired term of a 99-year lease of the premises due to expire on the 24th June, 1990, at a ground rent of £17. 15. 0d. per annum. Under that lease there was a restrictive covenant under which the premises were to be used as a private dwelling-house only, and by a Deed of Release dated the 15th December, 1949, the claimant, who is the tenant for life of the freehold interest, in consideration of a sum of £500, waived the breach of the covenant resulting from the user by the Association and substituted a covenant whereby the premises could be used as offices, including, while vested in the Association, the provision of a canteen or club. He also authorised an assignment of the lease to the Association.
In 1951 the Acquiring Authority was minded to purchase the freehold interest in the premises, and on the 14th July, 1951, served on the claimant a notice to treat. Thereafterthe matter was referred to the Lands Tribunal, not (be it observed) to determine the amount of compensation payable, but to decide which of three agreed bases of valuation was applicable in the circumstances of the case, namely, in the light of the facts set out above, which were agreed. The Tribunal held that the third alternative basis was that to be applied.
Before referring to these three bases of valuation, I would refer, so far as it is material, to the general rules laid down by Section 2 of the Acquisition of Land (Assessment of Compensation) Act, 1919. By Rule 2, the value of the land, which includes by definition any interest therein, "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". Prima facie, that would include the value of any potentiality which the land possessed, but by Rule 3 it is provided that "The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose', and then omitting irrelevant words, "for which there is no market apart from the special needs of a particular purchaser or the requirements of any Government Department or any local or public authority". In other words, if one of the potentialities of the land is such that there is only one purchaser of the land with that potentiality, the added amount which he would pay is to be ignored.
The question referred to the Tribunal was as follows; "Which one of the following valuation was to be adopted as the basis of compensation in the reference? 1. assessed in accordance with Rule 2 of Section 2 of the Acquisition of Land (Assessment of Compensation) Act 1919, and on the basis that Rule 3 of Section 2 of that Act operates to eliminate the special suitability or adaptability of the freehold interestin the land for the purposes of merger with the leasehold interest, for which purpose there is no market apart from the requirements of the war Department", There follows a calculation which arrives at a stun of £600. "2. assessed in accordance with Rule 2 of Section 2 of the Act of 1919 and on the basis that Rule 3 of Section 2 of the Act does not apply where the purpose is the merger of freehold and leasehold interests, but that nevertheless the principles laid down in the Judgment in the Indian case mentioned below do not apply", and the value arrived at on that basis is the sum of £710. "3. assessed in conformity with the Judgment in the Indian case of Raja Vyricheria Parana Gajapatiraju v. The Revenue Divisional Officer, Vizagapatam, 1939 Appeal Cases, 302, the value to represent the amount which the Acquiring Authority, in a friendly negotiation, would be willing to pay in acquiring a freehold interest for its purposes, and as though no compulsory powers of acquisition had been obtained'1, and the amount arrived at on that basis is stated to be the...
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