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	United Kingdom Upper Tribunal (Lands Chamber)
You are here: BAILII >> Databases >> United Kingdom Upper Tribunal (Lands Chamber) >> Aytan & Ors v The Secretary of State for Transprot [2009] UKUT 194 (LC) (02 October 2009)c URL: http://www.bailii.org/uk/cases/UKUT/LC/2009/ACQ_375_2008.html Cite as: [2009] UKUT 194 (LC)

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UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2009] UKUT 194 (LC) LT Case Number: ACQ/375, 376, 460, 462,467, 474, 481, 492, 494, 503, 509, 513, 515, 516, 517, 542, 550, 566/2008

ACQ/005, 027, 101, 103, 105, 112, 114, 131, 134, 145, 147, 182, 206, 207, 209, 212, 220, 221, 222, 223, 224, 225, 229, 231, 233, 234, 236, 237, 238, 239, 240, 241, 242, 243, 246, 247, 248, 250, 252, 253, 256, 257, 258, 259, 261, 262, 268, 269, 270, 271, 272, 273, 274, 275, 276, 280, 281, 284, 285, 316, 317, 318, 326/2009

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION — Compulsory Purchase — tubes of subsoil acquired for Channel Tunnel Rail Link — determination of value sought where no communication possible with claimants or where claimants have agreed compensation but not completed conveyance — held nominal amount payable as no market for acquired property — compensation of £50 awarded in each case — rule 6 compensation — directions sought in respect of claimants where no agreement possible — treatment of mortgagees

IN THE MATTER OF 81 NOTICES OF REFERENCE

BETWEEN

(1) KULRAJ AYTAN

(2) ISHRAJ AYTAN

(3) JASRAJ AYTAN AND OTHERS

Claimants

and

THE SECRETARY OF STATE FOR TRANSPORT

Acquiring Authority

Re: Subsoil beneath various properties in north and east London

Before: A J Trott FRICS

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

on 14 September 2009

James Pereira, instructed by Cripps Harries Hall LLP, Solicitors of Tunbridge Wells, for the acquiring authority

© CROWN COPYRIGHT 2009

The following case is referred to in this decision:

(1) Jit Kaur Matharu (2) Tajinder Singh Matharu and Others v The Secretary of State for Transport Lands Tribunal ACQ/370/2008, unreported

DECISION

Introduction

1. These references relate to the acquisition of 81 subsoil interests by the Secretary of State for Transport (the acquiring authority) that were required for the construction of the Channel Tunnel Rail Link (CTRL) as it passes in a twin bore single track tunnel underneath north and east London. This part of the CTRL is referred to as section 2 and runs from Southfleet Junction near Ebbsfleet to St Pancras Station in London. Section 2 was opened in November 2007.

2. The acquiring authority took possession of the subsoil interests at various times from 1 September 2001, having first served notices to treat and notices of entry. The acquiring authority wish to grant a lease of the railway and tunnels to the nominated operator in December 2009 but cannot do so without first acquiring the freehold interest in the relevant land. The Tribunal's determination of the references will enable the acquiring authority to acquire the land by deed poll if it is unable to reach agreement with the freeholder and/or mortgagee.

3. The acquiring authority divided the claims into two categories; those where it sought a determination and those where it sought further directions. The determination claims were subdivided into four categories. Firstly, there were 9 claims where the acquiring authority, despite its best efforts, had received no response, or no meaningful response, from the claimants. Secondly, there were 16 claims where the claimants had accepted the acquiring authority's offer of compensation but where the conveyance of the land had not been completed. Thirdly, there were 12 claims where the Bank of Scotland plc, Birmingham Midshires Division, was the mortgagee and had to date declined to release its charge over the land. Six of the owners of the mortgaged land had accepted the acquiring authority's proposals whilst the remaining six owners either had not been in communication with the acquiring authority or had expressed concerns. Finally, there were 13 claimants who did not accept the acquiring authority's proposed compensation and where the acquiring authority's evidence was before the Tribunal.

4. For the remaining 31 claims the acquiring authority seeks directions in a standard form, unless otherwise stated. These are claims where the claimants have contested the compensation being offered and where the acquiring authority has not been able to finalise its evidence.

5. Four claimants appeared at the hearing. Mrs Zubeda Begum of21 Oriel Road, Homerton, E9 (ACQ/542/2008) said that she had received a letter from the acquiring authority dated 28 August 2008 giving her seven days to respond failing which it would ask the Tribunal to determine her claim. She explained that, due to work commitments, she had been unable to respond in the period specified and asked for an extension of time.

6. Mr John Dromey of 30-32 Manbey Grove, London E15 (ACQ/280/2009) represented himself and Kathleen O'Donoghue on three claims, the others being at 30a Manbey Grove

(ACQ/284/2009) and 32a Manbey Grove (ACQ/285/2009). Mr Dromey said that he had agreed amended directions with the acquiring authority and that he was only attending the hearing as an observer.

7. Mrs Yau Kan Yau of 113 The Grove, London E15 (ACQ/276/2009) said that she had only recently received the letter from the acquiring authority dated 28 August 2009 and that she needed more time to consider it.

8. Mr Mohammad Amin Uddin, who was represented at the hearing by his son, owns four properties from under which subsoil has been acquired; 106 and 108 Sprowston Mews and 3 and 7 Sprowston Road, London E7 (ACQ/246/2009, ACQ/212/2009, ACQ/238/2009 and ACQ/229/2009 respectively). Mr Uddin did not understand why his neighbours had apparently been offered more compensation than he had. He said that the scheme had affected the value of his property and he was not satisfied with the level of compensation that the acquiring authority had offered. He also asked for clarification about who would be responsible for the costs of the claim.

Statutory provisions

9. The compulsory acquisition of land for the purposes of the CTRL was authorised by the Channel Tunnel Rail Link Act 1996. The CTRL Act received the Royal Assent on 18 December 1996.

10. Section 1 of the CTRL Act authorised the construction and maintenance of the works specified in Schedule 1 to the Act ("The scheduled works"), being works for the construction of a railway between St Pancras and the Channel Tunnel portal at Castle Hill, Folkestone.

11. Section 4(1) of the CTRL Act authorised the Secretary of State to acquire so much of the land shown on the deposited plans within the limits of deviation for the scheduled works as may be required for or in connection with the authorised works.

12. Part II of Schedule 4 to the CTRL Act concerns the application of legislation relating to compulsory purchase. Paragraphs 2 and 3 of Part II of Schedule 4 provide that, subject to certain modifications, the Compulsory Purchase Act 1965 applies to compulsory acquisition under section 4 of the CTRL Act, as it applies to compulsory acquisition under the Acquisition of Land Act 1981, and as if the CTRL Act were a compulsory purchase order under the 1981 Act.

13. By paragraph 3(2) of Part II of Schedule 4 to the CTRL Act, the time limit for service of a notice to treat under the Compulsory Purchase Act 1965 did not apply to the CTRL Act.

Instead, section 47 of the CTRL Act provided that the time limit for the service of a notice to treat was five years from the date the CTRL Act was passed.

14. Part III of Schedule 4 to the CTRL Act contains supplementary provisions. Paragraphs 6(1) and 6(2) of Part III of Schedule 4 provides that, for certain numbered plots, only the subsoil could be acquired by compulsory acquisition. All of the references currently before me concern plots falling under paragraph 6(1), where compulsory acquisition of the subsoil only was authorised.

15. Section 7 of the Compulsory Purchase Act 1965 provides that the assessment of compensation for land taken is to have regard not only to the value of the land to be purchased but also to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise by injuriously affecting that other land.

16. Section 9 of the Compulsory Purchase Act 1965 provides, in effect, that if a landowner refuses to convey land after the acquiring authority has tendered the compensation awarded in respect of it, it shall be lawful for an acquiring authority to execute a deed poll to vest title of land in the acquiring authority absolutely, once it has paid the compensation into court.

17. Paragraph 10(1) of Schedule 1 of the 1965 Act provides that when compensation agreed or awarded by the Tribunal has been paid into court, the owner of the land, including all parties who are enabled to sell or convey the land by virtue of Schedule 1, shall duly convey the land or interest to the acquiring authority when it requires them to do so. By paragraph 10(2) of Schedule 1 the acquiring authority may acquire the land by executing a deed poll if the parties in question fail to adduce good title or fail to duly convey the land as required by paragraph 10(1).

18. By section 5 of the Land Compensation Act 1961, compensation in respect of any compulsory acquisition shall be assessed in accordance with the rules set out under section 5. By rule 2, the value of land acquired is to be taken as the amount that the land might be expected to realise if sold in the open market by a willing seller. By rule 3, the special suitability or adaptability of the land for a purpose shall not be taken into account where it is a purpose for which there is no market apart from the requirements of any authority possessing compulsory purchase powers. By rule 6, the provisions of rule 2 do not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land.

Acquiring authority's attempts to communicate with the claimants

19. Ms Amy Clare Rogers, of Cripps Harries Hall LLP, gave evidence about the attempts of the acquiring authority to communicate with the claimants in those cases where the acquiring authority sought determinations on the basis that it had not been possible to secure the subsoil acquisition by agreement due to the lack of such communication. She divided these claims into four categories.

20. Firstly, there were two claims where there had been a change of ownership and the new owners had not responded to correspondence from the acquiring authority (ACQ/375/2008 and ACQ/467/2008). Both the acquiring authority and Cripps Harries Hall wrote to the new owners in July 2009 (including, inter alia, the acquiring authority's expert valuation report) but no response was received. Cripps Harries Hall wrote again on 28 August 2009 seeking the agreement of the new owners to standard directions in the reference proceedings failing which the acquiring authority would seek a determination at the hearing. Again there was no response.

21. Secondly, there were two claims where the claimants agreed to the transfer of the subsoil but then failed to complete when they did not reply to correspondence from Cripps Harries Hall's conveyancing department (ACQ/209/2009 and ACQ/317/2009). Cripps Harries Hall wrote again on 28 August 2009 seeking the agreement of the owners to standard directions in the reference proceedings failing which the acquiring authority would seek a determination at the hearing. Again there was no response.

22. Thirdly, there were five claims where the claimants had raised concerns about damage to their properties and where the acquiring authority's building surveyors had made a subsequent inspection but had found no damage attributable to the tunnelling works (ACQ/376/2008,

ACQ/223/2009, ACQ/225/2009, ACQ/234/2009 and ACQ/250/2009). Copies of the inspection reports were sent to the claimants but they did not respond. Cripps Harries Hall wrote again on 28 August 2009 seeking the agreement of the owners to standard directions in the reference proceedings failing which the acquiring authority would seek a determination at the hearing. The acquiring authority's expert's valuation reports were also copied to the claimants. Again there was no response.

23. Finally there were six claims where the owners had not responded to repeated letters from the acquiring authority and Cripps Harries Hall and where the acquiring authority had attempted to obtain the mortgagee's consent to release the mortgages over the subsoil for a reasonable fee (ACQ/462/2008, ACQ/492/2008, ACQ/513/2008, ACQ/566/2008,

ACQ/145/2009 and ACQ/182/2009). On 28 August 2009 Cripps Harries Hall wrote to the mortgagees seeking their agreement to standard directions in the reference proceedings failing which the acquiring authority would seek directions from the Tribunal. This letter was copied to the owners asking for their comments. None were received.

24. Ms Rogers explained that the acquiring authority's efforts to communicate with the claimants in these references were the same as those that had been made in the case of (1) Jit Kaur Matharu (2) Tajinder Singh Matharu and Others v The Secretary of State for Transport Lands Tribunal ACQ/370/2008, unreported, and which the Member, N J Rose FRICS, set out in detail at paragraphs 25 to 38.

Survey evidence

25. Mr Martin John Ford gave evidence about the defects surveys that the acquiring authority had commissioned in respect of those properties where settlement was predicted to exceed 5mm. Mr Ford is a building surveyor with WYG Engineering Limited and is a Member of the Association of Building Engineers with 34 years experience of the effect of ground movement on buildings. He has worked on the Channel Tunnel Rail Link project since the start of its construction in 2001.

26. Mr Ford explained that his company inspected all the properties within the likely settlement contour before tunnelling works started in the vicinity in order to obtain a photographic record of their condition. He examined cracks in walls and ceilings, damage to the fabric of buildings, hardstandings and boundary walls. After the tunnelling works were finished WYG made a further survey in order to record the condition before the railway opened. Where owners claimed that their property had been damaged by the works WYG were asked to undertake a second re-inspection. Those re-inspections had been undertaken earlier in 2009. (In some cases, eg ACQ/237/2009, a third re-inspection had been requested and made.) All reports were in the same format and were illustrated by reference to case ACQ/376/2008. WYG were only asked to comment upon whether any damage was due to the construction of the tunnels, they were not asked whether it was due to the operation of the railway. Mr Ford said that in none of the re-inspections undertaken in 2009 had any structural damage been found which could be attributed to the tunnelling works. Structural damage was that which affected the integrity of the building and excluded minor plaster damage.

27. Some of the re-inspection reports were accompanied by a costed schedule of repairs and decorations, eg ACQ/474/2008. Mr Ford explained that these schedules were based upon damage that was evident upon the re-inspection. If the acquiring authority decided to make a without prejudice offer in respect of the damage then it would have a rational basis for doing so. However Mr Ford said that in his opinion the damage in this example had not been caused by the tunnelling works; it was non structural plaster cracking. He said that the cause of such cracking was fairly black and white and that no new damage that had appeared between the first and second re-inspections had been caused by the tunnelling works.

Valuation evidence

28. Mr Colin Smith FRICS, a Senior Director and Head of the Compulsory Purchase Team at CB Richard Ellis gave expert valuation evidence. He was first instructed to advise in respect of CTRL in September 1995 and was instructed to deal with the acquisition of subsoil interests in Section 2 in 2007.

29. Mr Smith produced expert reports in respect of the majority of the references for which a determination was sought. These reports were in the same format as those presented by Mr Smith at the hearing in Matharu (see paragraphs 39 to 45) and he relied upon the arguments that he had put forward in that case. In summary he said that there was no open market value for a "tube" of subsoil some 24m below ground level as there would be no demand for it apart from the requirements of a body possessing compulsory purchase powers. He therefore placed a nominal value of £50 upon the subsoil being acquired, regardless of the depth length or volume of land taken.

30. Mr Smith acknowledged that there were three determination cases where the acquiring authority had agreed to pay a sum to a claimant in respect of cracking. These cracks were superficial and within the ability of a DIY competent person to repair. Where WYG had produced a costed schedule of repairs and decorations the acquiring authority had given the claimant the benefit of the doubt and had made a contribution to remedy the superficial cracking. It was considered that any settlement caused by the tunnelling works would happen very soon after the works were finished and these claims were long after the event. Mr Smith said that the superficial cracking had no perceptible effect upon the value of the properties affected and that there was therefore no sustainable claim for injurious affection caused by the construction of the works. Mr Smith said that the payments offered by the acquiring authority to repair the cracks fell within rule 6 of section 5 of the Land Compensation Act 1961 since they were compensation for "any other matter not directly based on the value of land."

31. Ground borne noise and vibration from the operation of CTRL was barely discernible. Mr Smith said that the passage of a high speed train took about three seconds and that any noise was like a "loud tummy rumble". On one inspection he said that the whirring of an electricity meter was louder than the noise of the train. He said that such noise and vibration was well below a level that would give rise to a diminution in the value of the property.

32. There were four (Birmingham Midshires mortgage) claims where Mr Smith had not prepared an individual expert valuation report and where the acquiring authority was seeking a determination following the agreement of the owners. He said that he had not visited 495 Romford Road (ACQ/206/2009) but had visited the neighbouring house and others in that road. The ground borne noise in those other properties was barely discernible and there was no reason to believe that No. 495 had experienced any diminution in value as a result of the construction or operation of the scheme. He had not visited 41 Sheridan Road (ACQ/222/2009) but had visited 3 Sheridan Road whose owners had asked him whether the trains had started running yet (they had) because they could not hear them. Again there was no reason to suppose that No. 41 had suffered any injurious affection. Nor had he visited 41 Chesterford Road (ACQ/256/2009) although he had been inside No.6. The owners said that the CTRL could be heard but that was more likely to be the nearby overground railway. Mr Smith had no reason to believe that his findings would have been any different at No.41 and he considered that no compensation was payable for injurious affection. Finally Mr Smith acknowledged that he had not visited 549 Romford Road (ACQ/262/2009) but referred to his response regarding No.495. He said that the same considerations applied to No.549 and concluded that the value of the property had not been diminished as a result of the construction or operation of CTRL.

Conclusions

33. I am satisfied from the evidence that I should determine the 36 references listed in Appendix 1 in the sum of £50 in respect of the open market value of the subsoil taken. No compensation is payable in respect of injurious affection or severance but in three of the determination claims (ACQ/474/2008, AcQ/224/2009 and ACQ/237/2009) Mr Smith says that the acquiring authority have agreed to pay for the cost of repairing cracks and that such payments constitute compensation under the second limb of rule 6 of section 5 of the Land Compensation Act 1961, namely any other matter not directly based on the value of land. The payments have apparently been agreed with the claimants.

34. In ACQ/474/2008 (15 Warwick Road, London E12) Mr Smith wrote to the claimant on 26 May 2009 enclosing a copy of a second re-inspection report prepared by Mr Ford of WYG in February 2009. In the letter Mr Smith says "As will be seen the conclusion reached is that some cracks are due to the construction and/or use of the HS1 tunnels." I can find no such reference in the report to the cause of some of the cracks being the construction and/or use of the works. The executive summary in the first re-inspection states "The re-inspection revealed no evidence of any damage due to the effects of tunnelling." The executive summary of the second re-inspection states: "Minor new cracking was noted to Bedroom 2 and Lounge but considered to be consistent with normal thermal movement. This cracking has occurred since the first re-inspection report dated 28 July 2004 and therefore in the opinion of WYG is not caused by tunnelling activities." There is therefore no apparent causal connection between the construction of the works and the cracks for which the acquiring authority are prepared to pay (apparently following negotiation) the sum of £2,200 as rule 6 compensation (WYG not having considered the effect of the use of the works but it being Mr Smith's position that vibration would not have damaged any of the reference properties). That being so I am not prepared to determine that that amount is properly payable as compensation under rule 6. There is no evidence to enable me to do so. The letter to the claimant dated 26 May 2009 does not express the payment in those terms. Instead it refers to an offer "in order to reach an agreed settlement." It seems to me therefore that the acquiring authority have reached agreement with the claimant on an ex gratia basis (having given the claimant the benefit of a doubt that does not appear to exist according to the survey evidence) and without specific reference to rule 6 of section 5 of the 1961 Act. Such payments fall outside of my jurisdiction to determine.

35. In ACQ/224/2009 (465 Romford Road, London E7) Mr Smith wrote to the claimant on 19 May 2009 in the same terms as above, namely that following a second re-inspection report prepared by Mr Ford of WYG in February 2009, "As will be seen the conclusion reached is that some cracks are due to the construction and/or use of the HS1 tunnels." Again I can find no reference in that report to such causation. The executive summary of the first re-inspection says "Following complaints of damage, a further inspection of the property was undertaken. However, there was no evidence of any damage due to the effects of the tunnelling". The executive summary of the second re-inspection says "The 2^nd re-inspection revealed no difference to the condition of the property from the previous inspections." In his letter dated 19 May 2009 Mr Smith offers the claimant £2,500 "in order to achieve an agreed settlement". This was accepted by the claimant (together with a further £550 in respect of the value of the land taken and fees) on or around 1 June 2009. For the reasons I have explained above I do not accept that this sum is properly payable under rule 6 and that instead it is an agreement reached on an ex gratia payment which it is outside of my jurisdiction to determine.

36. The situation in ACQ/237/2009 (471 Romford Road, London E7) is different. In this reference WYG made three re-inspections, the last of them in February 2009. In the original inspection report Mr Ford said: "In view of the location of the property with regard to the tunnelling operation, coupled with the length and relative slenderness of the building, it may be prudent to undertake some more detailed examination." The subsequent re-inspections identified changes in the condition of the property which are not all disclaimed by WYG as not being caused by the tunnelling works. At the end of the executive summary to the third re-inspection report Mr Ford says: "WYG recommend that the original "without prejudice" offer of £1,500 that was made to settle the claim is fair and reasonable." On 19 May 2009 Mr Smith wrote to the claimant and offered £3,500 "in order to reach an agreed settlement" (plus £550 for the value of the subsoil and fees). The claimant accepted this offer on 28 May 2009. In this reference I am prepared to accept that there was a causal connection between the tunnelling works and at least some of the cracks in the reference property. Mr Smith says, and I accept, that the extent of the damage was not sufficient to diminish the value of the claimant's freehold interest and that there is therefore no sustainable claim for injurious affection. However, Mr Smith says that the agreed cost of repairing the cracks (£3,500) is compensatable under the second limb of rule 6 of section 5 of the 1961 Act, namely as any other matter not related to the value of land. Given the causal connection that has been established and the fact that it is reasonable to repair the cracks, I am prepared to accept that figure and determine accordingly.

37. I decline to determine the reference in ACQ/513/2008 (98 Clova Road, Forest Gate, E7) where the claimant, Mr David Aviram, originally expressed concerns but then made no further contact with the acquiring authority. Cripps Harries Hall sent him a letter dated 28 August 2009 enclosing a letter they sent on the same day to the claimant's mortgagee, Birmingham Midshires, setting out proposed directions. In the letter to the claimant Cripps Harries Hall said: "If you wish to comment on the proposed directions please contact us within seven days, or we shall ask the Lands Tribunal to order appropriate directions to progress the claim at the hearing on 14 September." In view of the claimant's expressed concerns and the statement of the acquiring authority that they would seek directions (rather than a determination) from the Tribunal I consider that it would be inappropriate to determine this reference at this time.

38. I also decline to determine a further 13 references (not subject to a mortgage to Birmingham Midshires) where the claimants have expressed concern about the offer of compensation and where Cripps Harries Hall wrote to the claimants on 28 August 2009 proposing standard directions and stating "If we do not hear from you within seven days, or if you do not agree with these directions, we shall ask the Lands Tribunal to order appropriate directions at the hearing on 14 September". It is possible that some or all of the claimants did not respond to this letter because they considered that the Tribunal was in a better position to determine whether the proposed directions were appropriate. That being so I think it would be wrong to determine these references at this time.

39. In 31 references the acquiring authority has asked for directions. To these I add the 14 references where I have declined to make determinations. The total of 45 references for directions are described in appendix 2 and the directions that shall apply to each of them are set out in appendices 3 to 5. The four claimants who appeared at the hearing own properties that are the subject of directions as set out in appendix 2.

40. I would record the undertaking made by Mr Pereira on behalf of the acquiring authority that statutory interest will be paid in each reference with effect from 1 September 2001, the tunnel boring having commenced in that month.

41. I make no order as to costs.

Dated 2 October 2009

A J Trott FRICS

Appendix 3
DIRECTIONS

1. The Claimant shall file and serve a Statement of Case by close of business on 12 October 2009.

2. The Acquiring Authority shall file and serve a Reply by close of business on 9 November 2009.

3. The parties shall file and exchange any factual witness evidence by close of business on 23 November 2009.

4. Permission is given for the parties to call two expert witnesses each, one being an expert on land valuation and the other being an expert building surveyor.

5. The parties shall file and exchange any expert evidence by close of business on 7 December 2009.

6. Liberty to apply.

7. Costs in the Reference.

Appendix 4
DIRECTIONS

1. The Claimant shall file and serve a Statement of Case by close of business on 30 November 2009.

2. The Acquiring Authority shall file and serve a Reply by close of business on 29 December 2009.

3. The parties shall file and exchange any factual witness evidence by close of business on 12 January 2010.

4. Permission is given for the parties to call two expert witnesses each, one being an expert on land valuation and the other being an expert building surveyor.

5. The parties shall file and exchange any expert evidence by close of business on 26 January 2010.

6. Liberty to apply.

7. Costs in the Reference.

Appendix 5
DIRECTIONS

1. The Claimant shall file and serve a Statement of Case by close of business on 14 November 2009.

2. The Acquiring Authority shall file and serve a Reply by close of business on 12 December 2009.

3. The parties shall file and exchange any factual witness evidence by close of business on 29 December 2009.

4. Permission is given for the parties to call two expert witnesses each, one being an expert on land valuation and the other being an expert building surveyor.

5. The parties shall file and exchange any expert evidence by close of business on 12 January 2010.

6. Liberty to apply.

7. Costs in the Reference.