Harnek Singh Samra & Anor v Sandwell Metropolitan Borough Council

Introduction

1. These references, heard together, concern the value of a partially developed site (‘the Site’) in the West Midlands which was compulsorily acquired following damage to neighbouring properties and the collapse of a deep trench. The order which initiated the acquisition process was The Borough Council of Sandwell (103 Barclay Road and Land Adjacent, Smethwick) Compulsory Purchase Order 2010 (‘the CPO’). It was dated 26 October 2010. The site was acquired by a vesting declaration and the vesting date and consequently the date of valuation was 7 May 2014.

2. Owing to events that have occurred since the vesting date, which I will explain later in this decision, I did not consider it worthwhile to inspect the site.

3. Sadly, the second claimant, Mr Karnail Singh Samra passed away prior to the hearing. Unfortunately, Mr Samra died intestate and an administrator to his estate has yet to be appointed. In the circumstances it was determined by the Tribunal with the concurrence of the parties, that the first claimant Mr Harnek Samra, the son of Mr Samra senior, would represent his father’s interests at the hearing.

4. At the hearing both claimants were represented by Mr Cain Ormondroyd and the acquiring authority was represented by Ms Vivienne Sedgley. I am grateful to them both for their submissions. The factual background

5. The Site is on the eastern side of Barclay Road about 1.25 miles south west of the centre of Smethwick. Smethwick is part of Sandwell Borough and lies about 4 miles west of Birmingham City Centre. The Site is towards the southern end of the road, equidistant between Lightwoods Hill and Upper St Mary’s Road.

6. Barclay Road runs on a north/south axis and but for a school at the northern end, it is entirely a residential location. Apart from the school, only the eastern side of the road has been developed, and contains houses which in the main, date from the late 19 th or early 20 th centuries. To the west is Warley Woods, an area of about 100 hectares of woodland, public park and a golf course.

7. At the date of vesting the Site comprised two elements; 103 Barclay Road (‘103’), formerly the site of a three storey brick built house dating from the turn of the 19 th century and secondly an open area of land which previously contained a concrete slab and some garages. In this decision I will refer to this latter area of land as the ‘Adjacent Site’. Prior to the compulsory acquisition 103 was owned by Mr Harnek Singh Samra under the Title Number WM432173. The Adjacent Site was owned by Mr Karnail Singh Samra under Title Number WM114078.

8. The southern boundary of the Site is formed by the gable wall of 101 (‘101’) Barclay Road, a three storey house constructed in 1905 and which previously shared a party wall with 103. The northern boundary is the gable wall of 109 (‘109’) Barclay Road a house of similar age and construction to 101. The eastern boundary faces the rear gardens of 92-96 Galton Road, which runs parallel to Barclay Road. The Site has a frontage to Barclay Road of 16.7 metres and a depth of 41.6 metres. The Site slopes downwards from the frontage to the eastern boundary.

9. The following photograph shows the spatial relationship between the Site and the neighbouring properties. Planning permission

10. It was the intention of the claimants, having acquired the Site, that it would be redeveloped to provide homes for themselves and their wider family. Two separate applications for planning permission were made for three houses, one on the site of 103 and two on the Adjacent Site. Planning permission was granted on 15 June 2011 and the nature of the development was such that it would effectively fill the gap in the terrace with newly built properties that would complement the design of the neighbouring buildings. The scheme involved the provision of basement level accommodation which would require excavation of the site. The planning permission also included a series of brick built, single storey outbuildings, spanning the full width of the site at the eastern end. The following images are taken from the application for 103 but are representative of the development as a whole. Development timeline and compulsory acquisition

11. The Adjacent Site was acquired by the Second Claimant, Mr Karnail Samra, in 1986. 103 was acquired by Mr Harnek Samra in April 2006. 103 had previously experienced structural problems and three substantial brick buttresses had been constructed on part of the Adjacent Site to provide support to the gable wall.

12. These remedial works did not solve the problems and in 2006, the internal staircase at 103 had become detached from the adjacent gable wall. In 2009 the acquiring authority commissioned a report that found that the buttresses were built on poor ground conditions and the foundations for them were not properly prepared and were inadequate in size. The report concluded that although the buttresses are substantial, they were founded on loose fill ground and as a result they had settled and rotated away from the property.

13. 101 was also beset with structural problems. The pointing in the front or western elevation had been previously repaired and trial pit excavations at a later date confirmed that the foundations at the front of the building were “unstable” and “very loose”. Mr Harnek Samra said that these issues may have been compounded by a leaking drain which served 101 and 103 and was situated directly beneath the wall separating the two properties. He subsequently decided to substantially demolish 103 and this operation was completed in early 2011.

14. On the other side of the Site at 109 similar shortcomings were evident. In 2014 the owner commissioned a structural engineers report which revealed a lack of lateral restraint in the gable wall which itself was supported on a brick corbel footing. In other words, there was no foundation in the accepted meaning of the word, simply a widened section of wall below ground level.

15. After 103 Barclay Road was substantially demolished, all that remained was the ground floor bay window, the brickwork surrounding the front door and the arched passageway or ‘ginnel’ between 101 and 103 which provided access to the rear parts. Prior to the vesting date in 2014, the claimants had broken up and removed the concrete bases of the garages that previously stood on the Adjacent Site. They had also excavated the rear section of the Site, to a depth of 3-4 metres over an area of some 300 m 2 , to facilitate the building of the basements in the new townhouses and the erection of the outbuildings. Some of the spoil from this operation was deposited in the garden of 109, following an agreement with the owner who was a relation of a friend of Mr Karnail Samra.

16. New boundary walls had been built to the rear sections of the northern and southern boundaries, and the outbuildings were completed to ‘shell’ condition (ready to take internal fitting out). The boundary walls were built to a specification provided by a structural engineer and were tied into the side walls of the outbuildings. Photographs of the site submitted in evidence show this work to be in progress in June 2013.

17. Additional photographic evidence of the Site at the vesting date showed that the claimants had undertaken works intended to stabilise the buildings or walls on either side of the Site. This comprised underpinning of the gable wall of 109, the concrete from this operation protruding into the Site by some 570 mm. The underpinning did not meet with success; the front corner of the building subsided and the brickwork in that area cracked. Mr Harnek Samra then attempted to shore up the gable wall using timber props and piles of bricks. Work on this part of the Site stopped while he sought to resolve the issues with the owner of 109.

18. Meanwhile excavations and other work on the southern side of the Site continued, including the underpinning part of the existing garden wall. In February 2014 the owner of 101 notified the acquiring authority of concerns about the party wall between the 101 and the former 103. The acquiring authority’s subsequent inspection revealed excessive movement in the party wall requiring immediate attention.

19. On 17 February 2014 one of Mr Harnek Samra’s workers became trapped to his waist when a recently excavated trench collapsed. The Health and Safety Executive then became involved and work on the Site ceased. At the vesting date, the party wall between 101 and 103 had been removed along with the remaining parts of 103. A weather proofing membrane secured with timber battens covered the exposed end of the building and scaffolding and restraining supports were erected adjacent to it.

20. The CPO which culminated in the acquisition of the Site was made for the purpose of “… bringing an empty house and land adjacent into residential use”. The CPO was confirmed by the Secretary of State on 13 January 2014.

21. The General Vesting Declaration was made on 3 April 2014, and the subsequent vesting notice dated 11 April 2014 confirmed that the requisite notice under section 6 of the Compulsory Purchase (Vesting Declarations) Act 1981 was made on 8 April 2014. The compulsory acquisition took place on 7 May 2014.

22. Photographs appended to the joint statement of agreed facts prepared by the parties’ valuation experts showed the site as at the vesting date. It had been excavated to the fullest extent, the outbuildings were completed to shell specification, Mr Harnek Samra’s underpinning to part of the boundary wall of 101 was visible, the shoring of the gable wall of 109 was in place and the party wall of 101 had been demolished. Also evident were the substantially completed northern and southern boundary walls and piles of building materials and builder’s waste. It should be noted that the outbuildings were constructed before pre-commencement planning conditions were met but the local planning authority did not take any enforcement action. Events after compulsory acquisition 101 Barclay Road

23. In September 2014 Mr Stuart Broadley MRICS of Thomasons Building Surveyors, who was acting on behalf of the owner of 101, wrote to the acquiring authority explaining that as a result of the demolition of 103 the party wall between it and 101 had become unstable and been demolished. The owner of 101 had moved out and Mr Broadley stated that the wall should be reinstated as a matter of urgency in order that the house could be reoccupied. However, the replacement of the wall had been complicated by the deep excavations undertaken by Mr Harnek Samra on the site of 103. His client had insurance cover for the work on a like for like basis, but Mr Broadley thought that such a reinstatement might not be practical unless 103 was rebuilt in its original form.

24. Thomasons had looked at several options including reinstatement of the party wall and the construction of a new gable wall. The retention of the ginnel was a prerequisite. Each option, except for like for like replacement, would require the transfer of land from 103 to the owner of 101. The options were as follows: i) Option 1 – like for like reinstatement, involving the renewal of the party wall but to ‘external wall’ specification to meet Building Regulations. Cost of £102,000 plus VAT. ii) Option 2 – provided for the alignment of the party wall line to be moved towards 103 allowing a new, true party wall to be constructed to full height from ground level. This would necessitate a transfer of land equivalent to half the width of the ginnel and a surrender of the flying freehold above. The resulting ginnel would be for the exclusive use of No 101 and no longer be a shared passageway. No cost was provided but it was expected to be significantly higher than option 1. iii) Option 3 – followed the same principle as Option 2 but provided for a rebuilding of an external gable wall to 101 but with a piled foundation supporting that wall extending into the adjacent site of 103. This would again necessitate surrender of the SMBC’s flying freehold interest above the left-hand side (as viewed from Barclay Road) of the shared covered passageway or ginnel. The cost would be in the region of £99,000 plus VAT. iv) Option 3A – rebuilding of the wall as a gable wall on the same alignment as the existing party wall but with the creation of a new open sided passageway (for the exclusive use of the occupants of 101) in place of the existing ginnel. This option involved transferring from 103 to 101 a strip of land 1.2 metres wide along the side of 101 and extending a further 1.5 metres beyond the rear elevation. Mr Broadley costed this option at £87,000 plus VAT and commented that it provided the most practical and cost-effective outcome.

25. The acquiring authority chose Option 3A and subsequently carried out the works. Mr Broadley also recommended that the rear side boundary wall should be stabilised by reinstating the ground to its original level. The construction of a ‘stabilisation embankment’ took place on the weekend of 11 to 12 October 2014. 109 Barclay Road

26. After the acquisition of the Site, works to 109 were completed including underpinning of the gable wall. The gable wall itself appears to have been completely rebuilt, and a system of lateral restraint installed to stabilise the upper floors.

27. The Site remains vacant, the outbuildings have been demolished, and the ground level has been restored to its original level. The legal background Provisions relating to acquisition by General Vesting Declarations

28. Section (10)(1) of the Compulsory Purchase (Vesting Declarations) Act 1981 provides: “Where any of the land specified in a general vesting declaration has become vested in an acquiring authority by virtue of Part III of this Act , the acquiring authority shall be liable to pay like compensation, and the like interest on the compensation agreed or awarded, as they would have been required to pay if they had taken possession of the land under section 11(1) of the Compulsory Purchase Act 1965 ”, with section 11(1) providing for the service of a notice to treat and accompanying notice of entry form of acquisition.

29. Section 1(1) of the Compulsory Purchase Act 1965 (‘the CPA 1965 ’) provides: “This Part of the Act shall apply in relation to any compulsory purchase to which Part II of the Acquisition of Land Act 1981 (‘the ALA 1981 ’) ….. applies ….,” with Part II of the ALA 1981 referring to acquisition of land by local authorities.

30. Section 6 of Part 1 of the CPA 1965 provides: “If a person served with a notice to treat does not …… treat with the acquiring authority in respect of his claim, or if he and the acquiring authority do not agree as to the amount of compensation to be paid by the acquiring authority for the interest belonging to him ……… the question of disputed compensation shall be referred to the Upper Tribunal.” Determination of compensation by the Upper Tribunal

31. Section 1 of the Land Compensation Act 1961 (‘the LCA 1961 ’) provides: “Where by or under any statute (whether passed before or after the passing of this Act ) land is authorised to be acquired compulsorily, any question of disputed compensation …………… shall be referred to the Upper Tribunal and shall be determined by the Tribunal in accordance with the following provisions of this Act .”

32. At the valuation date, Section 5 of the LCA 1961 sets out six rules to be applied when assessing compensation. Rule (2) is relevant to this claim: Rule 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.” Basic Loss Payment

33. Section 33 A of the Land Compensation Act 1973 (‘the LCA 1973 ’) provides: (1) “This section applies to a person – (a) if he has a qualifying interest in land, (b) if the interest is acquired compulsorily, and (c) to the extent that he is not entitled to a home loss payment in respect of any part of the interest… (2) A person to who this section applies is entitled to payment of whichever is the lower of the following amounts – (a) 7.5% of the value of his interest; (b) £75,000. (3) A payment under this section must be made by the acquiring authority. (4) An interest in land is a qualifying interest if it is a freehold interest ….. (6) The value of an interest is its value for the purpose of deciding the amount of compensation payable in respect of the acquisition …” Occupier’s Loss Payment

34. Section 33 C of the LCA 1973 provides: (1) “This section applies to a person if – (a) he has a qualifying interest in land for the purposes of section 33 A, (b) the land is not agricultural land, (c) the interest is acquired compulsorily, and (d) he occupied the land for the period specified in Section 33 A(4)… (2) A person to whom this section applies is entitled to a payment of whichever is the greatest of the following amounts – (a) 2.5% of the value of his interest; (b) The land amount; (c) The buildings amount. (3) But the maximum amount which may be paid to a person under this section in respect of an interest in land is £25,000. (4) A payment under this section must be made by the acquiring authority. (5) The value of an interest is its value for the purpose of deciding the amount of compensation payable in respect of the acquisition …. (8) The land amount is the greater of – (a) £2,500; (b) £2.50 per square metre (or part of a square metre) of the area of the land. ….. (10)The building amount is £25 per square metre (or part of a square metre) of the gross floor space of any building on the land. (11) The gross floor space must be measured externally.” Interest

35. Section 11(1) of the CPA 1965 provides: “If the acquiring authority have served notice to treat in respect of any of the land and have served on the owner, lessee and occupier of that land a notice of entry ……. then any compensation agreed or awarded for the land of which possession is taken shall carry interest at the rate prescribed under section 32 of the Land Compensation Act 1961 from the time of entry until the compensation is paid or is paid into court in accordance with this Act .” The compensation claim

36. The claimants say that they together are entitled to compensation under the following heads of claim: (a) Under Rule (2) – the parties have agreed that the ‘base value’ (which I will explain shortly) of the Site from which adjustments may be made, if appropriate, is £400,000. The claimant deducts a figure of £50,000 from the base value for the perceived extra costs which arise as a consequence of works already undertaken by the claimant. The respondent deducts £239,000. The claimant adds £156,750 to the claim for works already undertaken which would not therefore have to be completed by a hypothetical purchaser. The respondent adds nothing. (b) Statutory Loss Entitlements – the claimant says that he is entitled to statutory compensation comprising: (i) £11,250 (Basic Loss Payment at 7.5% of £150,000, s.33 A LCA1973). (ii) £3,750 (Occupier’s Loss Payment at 2.5% of £150,000, s.33 C LCA 1973). As regards to the Occupier’s Loss Payment the claimants say that they qualify upon the basis that Mr Harnek Samra was personally undertaking building works on 103 Barclay Road, and that the test of occupation is not that of ‘rateable occupation’, but that considered to be relevant for the service of a Blight Notice, which the claimants further contends they meet. (c) Interest - The claimants claims interest on the compensation awarded in respect of compulsory acquisition from the date of vesting until the date of payment pursuant to s.32 of the LCA1961.

37. In summary, the claimants seek a total of rule 2 compensation at £506,750 (split £150,992 (Mr Harnek Samra) and £355,758 (Mr Karnail Samra)); which together with basic and occupiers’ loss payments would result in the following amounts (plus interest and post reference costs): First claimant £173,597 Second claimant £405,918 The respondent’s position is that the compensation due under rule 2 is £161,000 split between Mr Harnek Samra at £54,000 and Mr Karnail Samra at £107,000. Any entitlement to an occupier’s loss payment is denied. The issues Expert evidence

38. The claimants called Mr Andrew Chapman MRICS IRRV (Hons) to provide expert evidence in relation to valuation matters. He is a director of FHP, a firm of chartered surveyors based in Nottingham. The claimants also called Mr Ryan Hannibal-Law BSc (Hons) MRICS FPTS MFPWS, a director at Barnsley Bate, a firm of building surveyors in Sutton Coldfield, to provide expert evidence in connection with building surveying and construction issues.

39. The respondents called Mr Ken Shirer BA (Hons) MRICS, who since 2015 has been the Principal Surveyor and Sector Leader for the Local and Devolved Government Sector within District Valuer Services, across the Central Region of England. Base value

40. As I mentioned at paragraph 36, the valuation experts agreed a ‘base value’ of £400,000. The experts have also agreed that the hypothetical purchaser envisaged by Rule 2 would be intending to develop the Site and the base value is therefore based on a gross development value (‘GDV’) of approximately £1,200,000 derived from the existing planning permission for three houses of about 242 m 2 each. The base value represents the value of a cleared site, 103 having been demolished but excludes the effect on value of any other works completed by the claimants at the date of vesting. The concrete base to the former garages was assumed to be in situ. It also ignores any issues relating to damage to adjacent properties and any consequential issues arising from it.

41. Mr Chapman considered that the AA’s selection of Option 3A made no commercial sense. The loss of land from the site of 103 and the replacement of the party wall would in his view make the Site unattractive to the hypothetical purchaser. In his view the hypothetical purchaser would have designed a set of foundations at the boundary of 101 that dealt with the reinstatement of the party wall and would have facilitated the construction of the scheme for which planning permission already existed. He similarly considered that the hypothetical purchaser would have reached agreement with the owner of 109 under which the underpinning works to the gable wall of that property could have been achieved by a foundation design that not only accommodated the existing works but also permitted the building of the consented scheme next to the boundary with perhaps some minor modification.

42. Mr Shirer acknowledged that the agreed base value was predicated on a joint development of the site with both parties working together to maximise the value of the whole. This approach took into account that planning permission had been secured for a development of three houses that would be built up to and on the existing neighbouring structures, and the difficulties in selling individual plots for terraced developments. Issue 1 – deductions from base value The hypothetical purchaser’s contribution to remediation works at 101 and 109

43. Having consulted Mr Hannibal-Law about the ability of one of the owners of the party wall at 101 to act unilaterally, Mr Chapman considered it was unlikely that either owner would adopt an unreasonable stance thereby frustrating the opportunity to develop the Site. He also thought that the hypothetical purchaser would not make a specific deduction for delay but might factor it into his bid.

44. Mr Chapman also consulted Mr Hannibal-Law about the costs of reinstating the party wall between 101 and 103. In common with Mr Chapman, Mr Hannibal-Law considered that the adoption of Option 3A was neither reasonable nor appropriate as it contradicted the existing street scene and restricted the use of the neighbouring land, namely the Site. He provided a cost of £48,700 plus VAT for the reconstruction, but this figure contained a sum of £7,000 plus VAT for demolition of the wall and a further amount of £3,200 plus VAT for temporary propping. Notwithstanding that both latter items had been completed by the vesting date, Mr Chapman adopted a cost of £50,000 plus VAT for the reconstruction of the wall. He additionally noted that the assessment of the appropriate deductions was complicated by pre-existing cracking to the front elevation of 101, the leaking sewer and a lack of lateral bracing in 101, the floor joists being positioned front to rear rather than side to side.

45. Mr Chapman thought that the hypothetical purchaser would split the reconstruction costs on a 50/50 basis with the owner and/or insurer of 101 but would make a £15,000 allowance for contingencies and extra professional fees over and above those normally adopted. In aggregate therefore, the total deduction from the base value was £40,000.

46. Turning to the Adjacent Site and the boundary with 109, Mr Chapman believed the insurer of 109 would pay the cost of repairing the gable wall but the owner would need an agreement with the hypothetical purchaser to underpin his property. Mr Chapman considered that piling would not be necessary and that it would be possible to arrive at a foundation solution that satisfied the need to underpin and build out the scheme with planning permission. Nevertheless, he allowed £10,000 for contingencies and additional professional fees. His total deduction for both works and consequential matters was therefore £50,000.

47. Mr Shirer adopted a more nuanced approach. He also had regard to the costs of reinstating the party wall at 101 contained in Mr Hannibal-Law’s report but in addition he placed weight on Thomasons Option 1, the details of which I set out in brief at paragraph 24. The Thomasons figures were produced in September 2014, and Mr Shirer adjusted them to the vesting date by applying a factor of 1.2% which he derived from the BCIS All-in TPI index for Q2/2014 to Q3/2014. This produced a net figure of £100,776.

48. He deducted from both figures an allowance of £7,400 based on a figure Mr Hannibal-Law had produced to represent the savings derived from a combined build out and remedial works scheme. His adjusted Thomasons figure was therefore £93,376. His adjusted Hannibal-Law number was £48,700 less the same allowance, namely £41,300.

49. With regard to 109 he relied on a report dealing with the remedial options produced by Manuel Bueno Del Carpio BA (Hons) C.Eng. FIStructE AMICE RMaPS, Senior Structural Safety and Design Engineer at the acquiring authority. Mr Bueno Del Carpio arrived at three figures ranging between £15,286 and £85,828 but the latter included works to the roof and was disregarded by Mr Shirer. The second figure was £22,668.

50. The aggregation of these figures for both 101/103 and 109 produced a range from £56,586 to £116,044. Within this range Mr Shirer adopted a two thirds point at £96,224 which he rounded to £96,000. Mr Shirer also though that the hypothetical purchaser and the neighbouring owners/insurers would split the costs 50/50. The difference on the deduction between the valuation experts is therefore £23,000, Mr Chapman adopting £25,000 and Mr Shirer £48,000.

51. Mr Chapman took the view that the hypothetical purchaser would have anticipated a scheme which would have combined the replacement of the party wall at 101 with the building of the houses that had planning permission, as this represented the most valuable use of the Site. Mr Shirer was more cautious, he thought the hypothetical purchaser would build a modified scheme, possibly without the basements. In that scenario the works completed by Mr Samra would have no value. Mr Ormondroyd submitted that the Thomasons estimate for Option 1 was for a standalone scheme designed to persuade the acquiring authority to adopt Option 3A which was more favourable to the owner of 101 who had, of course, instructed them. As Mr Ormondroyd pointed out, the only figures before the Tribunal based on a complete scheme are those of Mr Hannibal-Law and they are not challenged by expert evidence.

52. Mr Shirer said that his selection of a point towards the upper end of his range of costs reflected a cautionary approach to any agreement on the remedial works required. As a result, he placed most weight on the Thomasons figures. In the circumstances, namely that Thomasons represented the owner of 101, it would require a very compelling reason for me to follow Mr Shirer’s approach, and nothing was adduced in evidence to persuade me that I should take that course of action.

53. As far as 101 is concerned, in my judgement the correct approach is to start with Mr Hannibal-Law’s figure of £48,700 plus VAT and deduct the £7,000 plus VAT for demolition of the wall and a further amount of £3,200 plus VAT for temporary propping. That leaves a figure of £38,500 net of VAT. Mr Shirer additionally referred to savings identified by Mr Hannibal-Law which related to site set up if the repairs and the building out of the scheme with planning permission took place at the same time. There were two elements in the savings, the cost of weatherproofing and protection to the ginnel (£5,000) and the use of blockwork rather than facing brickwork in the party wall (£2,400). Bearing in mind that the first of these was already in place at the vesting date it is only appropriate to allow for the second element. The final figure is therefore £36,100 which I round to £36,000. Taking the approach adopted by both parties of splitting the cost between the hypothetical purchaser and the owner of 101 on an equal basis, the deduction is £18,000.

54. Turning to 109, Mr Chapman had allowed nothing while Mr Shirer’s implied figure was £10,000 (after the 50/50 split). The only evidence of costs available to the Tribunal is contained in the report of Mr Bueno Del Carpio. However, nothing in that report points to any saving in costs because of the completion of the existing underpinning by Mr Samra. The comments made in respect of ‘Scheme 1’, the cheapest option, mention the ‘defective underpinning block’ and the need to properly underpin the gable wall ‘so that the foundations bear on firm ground’. Mr Hannibal-Law, in oral evidence said that Mr Samra’s concrete underpinning block could be kept and worked around. I conclude that there is no basis upon which to make an allowance and Mr Chapman’s figure is therefore to be preferred. Consequential matters

55. I have already referred to Mr Chapman’s deductions for consequential matters above. They amount to £25,000 (£15,000 for 101 and £10,000 for 109). Mr Shirer on the other hand had itemised specific heads of claim. (i) Site constraints/reduction in area

56. Mr Shirer considered that to remedy the damage to the foundations and gable wall of 109 it was probable that an agreement to create an easement would be needed and this would sterilise any development value at the boundary, other than for passageway purposes. I took this to mean that the developable site area would be reduced and not that there would be a covered ginnel. He thought that the maximum width of the sterilised strip would be 1.4 metres, a figure he derived from Mr Bueno Del Carpio’s report. Mr Shirer considered that to avoid any sterilisation a much more complicated and expensive remedial scheme would need to be adopted. He therefore allowed for a strip of 1.4 metres wide and 11.5 metres long resulting in a reduction in developable area of 16.1 m 2 . Taken as a proportion of the base value the resultant figure is £9,360.54, which he rounded to £9,500.

57. Mr Ormondroyd submitted that Mr Bueno Del Carpio’s report did not consider the possibility of an integrated scheme and that there was no basis for the deduction. It is clear from the report that Mr Bueno Del Carpio thought that the Site would be developed and the solutions he proposed took that in to account. However, there is no evidence that an integrated scheme would involve sterilisation of land, and I therefore conclude that Mr Ormondroyd is correct.

58. Mr Shirer had also considered the consequences of sterilisation might involve a fresh planning application and allowed a spot figure of £5,000 to cover the costs. This deduction is speculative and I disregard it. (ii) Sewer repairs

59. Mr Shirer also allowed £2,000 (half of a spot figure of £4,000) for repairs to the sewer between 101 and 103. His rationale for doing so was that at the vesting date the facts and liabilities had not been established, and the hypothetical purchaser would make an allowance for potential costs. Mr Ormondroyd pointed out that the drain is shared and therefore the responsibility of the statutory undertaker and that it was unnecessary to make any further provision for repairs. Mr Hannibal-Law said in his report that ‘if the shared drain is co-owned by the adjoining owners and is found to be defective- such as leaking- and this defect has caused the stabilisation issues in the wall or adjoining structure then both owners would typically share the responsibility for the cost of repairs.’

60. As the ownership of the drain has not been established, it seems to me that Mr Shirer’s prudent approach is correct. The sum he adopted is in my view reasonable. (iii) Garden wall stabilisation

61. Mr Shirer’s report refers to concerns about the stability of newly erected boundary walls to the rear of the site caused by the lowering of the ground levels at the site. The reinstatement of ground levels at the rear of the site was deemed to be the most effective way to remedy the instability. Mr Shirer made an adjustment of £15,000, on a spot figure basis to reflect the cost of potential stabilisation works.

62. Mr Harnek Samra said in evidence that the walls had been correctly constructed to a specification provided by a structural engineer and Mr Ormondroyd submitted that there was no evidence to suggest that they were defective. Mr Hannibal-Law said in his supplementary report that the cost of constructing the walls would be £41,000 which cast doubt on the reliability of Mr Shirer’s estimate. Taking these considerations into account, it is my judgment that it is unnecessary to make any allowance under this head. (iv) Disturbance costs

63. Mr Shirer’s next item arose from a lack of clarity around how far liability might extend for internal works of repair and reinstatement at 101 and 109, together with losses arising from relocation of occupants and temporary accommodation, and potential loss of rental income. To reflect the risk of such costs at the date of vesting he made an adjustment of £30,000, representing a potential 50% contribution to a spot figure of £60,000.

64. Mr Ormondroyd invited me to reject this approach. He submitted that the owners of 101 and 109 were both insured and the costs would have been met by the respective providers. Any action to reclaim the costs would be against the claimant rather than the hypothetical purchaser, a fact that would be known by the hypothetical purchaser. He considered that the hypothetical purchaser would at best allow for small goodwill payments and these were allowed for in Mr Chapman’s figures.

65. The valuation experts simply used their professional judgement to come to a figure; there was no science involved. I am inclined to the view that as both neighbouring occupiers were insured, and there was no evidence of any claims having been brought by the insurers against the claimants, the exposure to costs under this head of claim is likely to be minimal. A sum of £5,000 seems to me to be adequate to cover the risk. (v) Finance and holding costs

66. Mr Shirer thought that the challenges and uncertainties presented by the Site at the vesting date made it possible that finance costs could be higher than had been anticipated under the base value assumptions. To reflect this extra risk, he made an adjustment assuming of an additional 1% on the finance rate for the development. This was calculated at 1% on a spot figure of £800,000 for six months producing an adjustment of £4,000.

67. He also made an additional holding cost adjustment on the adjusted site land value after deductions of £173,500, to reflect the potential for an extended period to negotiate the necessary agreements with the owners and insurers of 101 and 109. He allowed for an additional 12 months over and above the typical development period under the base value assumptions at 7%, to arrive at a final adjustment of £12,145.

68. Mr Ormondroyd submitted that these deductions were hypothetical. The hypothetical purchaser might have sources of finance other than bank debt and the likelihood of delay was low given that party wall agreements were usually negotiated with short timeframes, the parties would be motivated to reach agreement, and the market was rising at the time of the vesting date.

69. Mr Shirer was correct to pose the question of whether the hypothetical purchaser would anticipate that additional costs might be incurred and adjust their bid accordingly. His answer is, however, entirely theoretical. He does not supply a rationale for the adoption of £800,000 and neither was there an explanation for the premium of 1% nor the period over which it would apply. There was nothing in Mr Shirer’s evidence or experience which provided an indication that his pricing of these factors was anything other than arbitrary. I therefore make no adjustment. The same reasoning can be applied to the additional holding costs. (vi) Negotiations and legal costs

70. Mr Shirer considered that in order to develop the site the hypothetical purchaser will have to negotiate and reach agreements with all parties, including the owners of 101 and 109 and their respective insurers on liability for contributions to remedial costs, potential contributions to cover additional disturbance costs for the occupiers and owners of 101 and 109, details, design and specification of works to be undertaken, together with Party Wall Act notices and agreements, and finally any revisions to easements and legal title that may be required. He thought it likely that the hypothetical purchaser would have to contribute to the costs of all parties as well as covering their own costs. To reflect these costs he made a total adjustment of £30,000, based on a spot figure estimate of £15,000 each for 101 and 109.

71. Mr Ormondroyd submitted that the cost of negotiating with the adjoining owners and reaching agreement on matters such as party wall legislation would have been factored into the base value of the site by the hypothetical purchaser.

72. In my judgement it can be reasonably envisaged that the hypothetical purchaser of the Site would be an experienced and knowledgeable developer who, before bidding, would have identified the challenges he or she would encounter in building the new houses, be they technical, legal or bureaucratic. An element of delay requiring a contingency in terms of money or time is commonplace in the feasibility exercises that developers undertake and would have been incorporated into the base value. To add a further sum, simply based on spot figures with no detailed justification, appears to be at best opportunistic, and at the worse double counting. (vii) Build contingency and profit

72. Mr Shirer’s final allowance was an additional 3% of contingency over and above the typical contingency allowance assumed under the base value, to reflect a range of abnormal uncertainties at the development Site. Against an estimated build cost at £760,000 this produced a figure of £22,800 which he rounded to £23,000. His adopted build cost was £1,100 per m 2 , applied to a slightly reduced GIA of 690 m 2 . It was based on BCIS 2Q 2014 build rates for ‘One-off housing terraced’ (3 units or less). He commented that as a relatively small scheme, there would be less ability for any increase in abnormal cost to be absorbed, in comparison to a much larger scheme where increased costs may not impact so much overall.

73. Mr Shirer considered that typically a developer would expect profit levels of between 15% and 20% of GDV for a scheme of this type. In his opinion it would not be unreasonable for the developer to expect a higher than typical profit reward for taking on a difficult site with several potentially variable abnormal costs including a possible reduction in the size of the site, as compared to the base value scenario with no abnormal costs. To reflect this additional risk he added an additional 5% profit, based on the GDV of £1,200,000, to arrive at an adjustment of £60,000.

74. Mr Ormondroyd characterised these additional deductions as allowances for ‘risk’ which had been accounted for elsewhere submitted that, and the total £83,000 was overstated by reference to the GDV. While not disputing that an allowance for risk was warranted, he considered that Mr Shirer had double counted, and that the level of risk should be viewed against the rarity of the opportunity, the quality of the location, and the rising market at the time of the (hypothetical) transaction.

75. The agreed base value of £400,000 was said by the valuation experts to be supported by a sale of garden land at 31 Barclay Road, 200 metres to the south of the Site. This appeared to be an entirely conventional development plot, on which a single house was built. I have not been given the details of the sale or any analysis. Neither have I been provided with any support for the GDV. A value of £400,000 for a newly constructed 230 m 2 townhouse in a desirable location, even in 2014 terms, seems to me to be modest. The addition of the base value and the build cost adopted by Mr Shirer produces an answer of £1,160,000, just £40,000 less than the GDV.

76. It would have been of assistance to have had sight of the detailed valuation that resulted in the agreed base value, but none was adduced. There are many moving parts in this valuation and an adjustment to any of them may impact others. Mr Shirer said that a developer would normally expect a profit of 15-20% of GDV (and this was already in the build cost) but he adjusted this figure upwards to 25% to account for extra risk at the Site. In other words, he added 25% to the upper value in the developer’s usual range. That seems to me to be excessive. Without clarity as to the precise details of the valuation I am left with two options; Mr Chapman’s all-encompassing figure of £25,000 or Mr Shirer’s ‘pick and mix’ approach which for contingencies and profit he deducts £83,000.

77. I have already allowed £2,000 for the costs in relation to sewers and £5,000 for costs associated with disturbance. A 10% addition to the upper end of the range of developer’s profit seems to me to an adequate measure to take in the circumstances of this case, that would add £24,000 (assuming profit at 20% of GDV). The extent to which Mr Shirer’s additional contingencies of £23,000 are included in the base value is also unclear but the sum involved is modest relative to the size of the contract and given the nature of the Site I think a prudent hypothetical purchaser would make the deduction. That brings me to a total of £54,000. This figure represents the aggregate of the deductions to be made from the agreed base value to reflect the disadvantages of the site not taken into account in arriving at the base value. Issue 2 - additions to base value

78. There is a stark difference between the valuation experts in relation to the value of works undertaken by Mr Harnek Samra prior to the vesting date and not accounted for in the base value. These include the breaking up and disposal of the concrete base on the adjacent site, the excavation of the Site, and the construction of the outbuildings and boundary walls. Mr Chapman believed that the most appropriate measure and achievement of the principle of equivalence was by reference to the likely cost of the works. Accordingly, he added £156,750 to the base value of the Site. Mr Shirer did not disagree with the principle of an adjustment for the works undertaken, his concern is with the structural integrity of the works. He concluded that they added nothing.

79. Mr Chapman’s figures are based on costs provided by Mr Hannibal-Law. The cost of breaking up and disposing of the concrete base is £6,000 plus VAT based on £84 per m 2 applied to an area of 71.5 m 2 .

80. Mr Chapman estimated that 500 m 3 of material would have been excavated from the site. He based this calculation on an excavation depth of 1.5 metres over half the site. He used a rate of £80 per m 3 as used by Mr Hannibal-Law in relation to a much smaller excavated amount. The application of Mr Hannibal-Law’s rate to Mr Chapman’s volume results in a figure of £40,000 although his report refers to £50,000 (plus VAT and excluding contractor’s costs).

81. Turning to the outbuildings, Mr Hannibal-Law had estimated a cost of £38,000 plus VAT. Mr Chapman noted that Mr Hannibal-Law had not allowed for any retaining function in the rear walls which abutted the gardens of 92-96 Galton Road. This was acknowledged by Mr Hannibal-Law in his ‘Response to Questions’. Mr Chapman therefore adjusted the cost to £45,000 plus VAT (excluding contractor’s profit) to take account of this deficiency.

82. Finally, in relation to the boundary walls (which had a retaining function owing to the excavation of the site), Mr Hannibal-Law costed these at £41,500 plus VAT (excluding contractor’s profit). It is necessary to allow for contractor’s profit and Mr Hannibal-Law provided a range of 10-20% of costs. Mr Chapman considered that the hypothetical purchaser would be a local builder who tend to inbuild a combined contractor’s and developer’s profit of 20-25%. He therefore adopted a figure of 10% in this instance.

83. Mr Shirer acknowledged that in the absence of any concerns around the integrity and design of the rear walls and outbuildings, some of the expenditure incurred could arguably be recovered through negotiation with the potential purchaser if not already taken into account in the base value. He thought that a small upward adjustment to the overall price might be appropriate and therefore would be included within in the Rule 2 valuation.

84. Ms Sedgley submitted that in any event, the works were not the consequence of the CPO but were undertaken after the CPO was made. In her view they represented a failure to act reasonably or mitigate the loss, and/or a misplaced attempt to impermissibly increase the value of the land, between the date of the compulsory purchase order and the vesting date. In this regard Ms Sedgley referred to Scotia v Plastic Binding Ltd v London Development Agency [2010] RVR 307. She went on to say that there was no causal connection between the CPO and the loss, because they were undertaken to try and defeat rather than accord with the CPO.

85. Mr Harnek Samra said in his witness statement that the acquiring authority justified the making of the CPO on the basis that it would: a) Secure a comprehensive refurbishment of the property including stabilising the gable wall. b) Remove any physical or legal encumbrances impeding the development of the adjoining unused land. He said that he substantially demolished 103 because of pressure exerted on him by the acquiring authority. It appears therefore that the claimants were not acting in a way that sought to enhance the value of the site and their actions were aligned with the acquiring authority’s objectives.

85. I agree with Mr Ormondroyd that there is no evidence that the works were in any way deficient. The problems caused by the excavation are dealt with under issue 1. The question to be answered is how much value the hypothetical purchaser would attach to works that he himself had not commissioned or undertaken. A key consideration is whether the hypothetical purchaser would build exactly the same scheme as Mr Harnek Samra. Mr Samra’s intention was to provide homes for himself and his wider family rather than bring a speculative development to market. Although the base value was formulated with the Samra scheme in mind, neither valuation expert offered an opinion about whether it represented the optimum solution in a cost versus profit sense.

88. It seems to me that a developer would want to build the largest scheme possible on the site and that would include the basement accommodation. The inclusion of the outbuildings could compromise the amenity of the garden areas and are arguably a step too far in a locality of moderate value. In my judgement any developer of the Site would break up the concrete base and complete the excavation. A prudent hypothetical purchaser would put in place a programme of works to minimise any issues with the stability of 101 which would likely form part of the overall building process. That being the case these first two items can be taken at face value. In other words, they add value to the site that is not already included in the base value. The boundary walls which perform a retaining function are a prerequisite of the construction of the basements and the lowering of the garden level and can also be incorporated into the value. The outbuildings are more tenuous. Given that the proposed houses are already quite large I consider there to be risk that the hypothetical purchaser would take the view that they added little to the value of the development. Accordingly, I adopt 50% of the cost of the outbuilding works completed by the vesting date. That amounts to £22,500. The total under this head of claim is therefore £110,000 plus contractor’s profit at 10%. In other words, £121,000. Issue 3 – calculation of basic and occupier’s loss payments

87. I will return to this item later in the decision after I have dealt with issue 4. Issue 4 – were the claimants ‘occupiers’ of the Site?

88. Mr Ormondroyd submitted that in order to receive an ‘occupier’s loss payment’ under s.33 C of the Land Compensation Act 1973 , the claimant must have ‘occupied’ the land for at least a one year period before the vesting date. However, the Act does not define ‘occupation’. He also submitted that in Thomas Newall Ltd v Lancaster County Council [2011] UKUT 437 (LC) the Tribunal said that the standard in compensation cases is not the same as that for determining rateable occupation and need not be exclusive. There is nothing in s.33 C that suggests that occupation for building or storage purposes would not amount to ‘occupation’. Mr Ormondroyd said that someone using land for a building project or for storage of materials would suffer upheaval and inconvenience from a compulsory acquisition of their land. In the context of occupier’s loss payments the statutory provisions were intended only to exclude absentee investors or landlords.

89. Ms Sedgley disputed that the claimants were eligible for an occupier’s loss payment because even if the standard of occupation is the same as for a blight notice or rateable occupation, there is no occupation. In support of this position she referred to Ministry of Transport v Holland (1963) 14 P&CR 259 where it was held by the Court of Appeal that the test of occupation under the Town and Country Planning Act 1959 was the same as that for rateable occupation and since various articles stored in sheds and a garage on the site were of no importance and not worth removing, the claimant was not in occupation of the sheds and garage and a fortiori not in occupation of the whole property.

90. She further submitted that the work done by the claimants was in a different category to the actions required to constitute ‘occupation’ in this context. There was no value to be derived from the building work; it was a means to a later end. To support this conclusion she referred to Aardvark SRE Ltd v Sedgefield BC [2009] RVR 93 where it was held that ownership alone and works of refurbishment do not amount to occupation for the purposes of a blight notice. Reference was also made to Arbuckle Smith & Co Ltd v Greenock Corporation [1960] AC 813 where the House of Lords decided that the presence of a caretaker and the making of alterations with the intention of carrying on a business when they were completed did not constitute rateable occupation because there was no enjoyment of the value of the land. She further submitted that in Ministry of Transport v Holland (1963) 14 P&CR 259 the Lands Tribunal decided that leaving chattels in sheds and a garage did not constitute occupation for the purposes of a blight notice because there was no beneficial occupation. Finally, Ms Sedgley referred to R (Public Health England) v Harlow District Council [2021] 4 WLR 65 where it was held that the use of land for storage and meetings for a more than transient period amounted to occupation.

91. She said that it was not apparent that works were undertaken for a period of not less than one year ending with the vesting date as required under s.33 C(1)(d) and s.33 A(4) of the 1973 Act . In particular, the Site was not occupied between the site closure after the serious incident on 17 February 2014 and the vesting date on 7 May 2014.

92. I agree with Ms Sedgley’s reasoning; but for some building materials and piles of waste, the claimants were not in occupation in the period between 17 February 2014 and the vesting date. The conditions set out s.33 C(1)(d) and s.33 A(4) were therefore not met and it follows that there is no entitlement to an occupier’s loss payment.

94. Basic loss payment is a matter of arithmetic. I calculate the sums as £11,225 for Mr Harnek Samra and £22,450 to Mr Karnail Samra. Determination

93. I determine the compensation payable as follows: Mark Higgin FRICS FIRRV 27 February 2026 Right of appeal Any party has a right of appeal to the Court of Appeal on any point of law arising from this decision. The right of appeal may be exercised only with permission. An application for permission to appeal to the Court of Appeal must be sent or delivered to the Tribunal so that it is received within 1 month after the date on which this decision is sent to the parties (unless an application for costs is made within 14 days of the decision being sent to the parties, in which case an application for permission to appeal must be made within 1 month of the date on which the Tribunal’s decision on costs is sent to the parties). An application for permission to appeal must identify the decision of the Tribunal to which it relates, identify the alleged error or errors of law in the decision, and state the result the party making the application is seeking. If the Tribunal refuses permission to appeal a further application may then be made to the Court of Appeal for permission.