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You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Ryde International Plc v London Regional Transport [2003] EWLands ACQ_147_2000 (28 March 2003) URL: http://www.bailii.org/ew/cases/EWLands/2003/ACQ_147_2000.html Cite as: [2004] 2 EGLR 1, [2003] EWLands ACQ_147_2000

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[2003] EWLands ACQ_147_2000 (28 March 2003)

ACQ/147/2000

LANDS TRIBUNAL ACT 1949

COMPENSATION – Compulsory acquisition of a development of flats and bungalows, constructed as sheltered accommodation for the elderly – open market value – whether units would have been sold individually or to a single purchaser – assessment of holding costs – interim decision - compensation awarded £2,060,000 - final decision – no additional disturbance claim under rule 6 for loss of future profits

IN THE MATTER of A NOTICE OF REFERENCE

BETWEEN RYDE INTERNATIONAL PLC Claimant

and

LONDON REGIONAL TRANSPORT Acquiring Authority

Re: Properties at Evelyn Court and Evelyn Mews

Teevan Close, Addiscombe, Croydon, Surrey

Tribunal Member: P R Francis FRICS

Sitting at: 48/49 Chancery Lane, London, WC2A 1JR

on 15 and 16 October 2002

The following cases are referred to in this decision:

Ryde International plc v London Regional Transport [2001] RVR 59

Mallick v Liverpool City Council [1999] 2 EGLR 7

Director of Buildings and Land v Shun Fung Ironworks [1995] 2 AC 111

Richards v Somerset County Council (2002) LT ACQ/23/1999 (Unreported)

McEwing and Sons Ltd v Renfrew CC [1960] SC

Collins v Feltham UDC [1937] 4 All ER 189

Wimpey v Middlesex CC [1938] 3 All ER 781

Pastoral Finance v The Minister [1914] AC 1083

Christopher Katkowski QC and Timothy Mould, instructed by Argles, Stoneham, Burstows, solicitors of Maidstone, for the claimant

Joseph Harper QC and Kate Olley, instructed by Frances Low, solicitor, London Regional Transport, for the acquiring authority

© CROWN COPYRIGHT 2003


 


DECISION

1. This is a decision to determine the amount of compensation payable to Ryde International Plc ("the claimant") for the freehold interest in a block of 37 flats and 5 bungalows known as Evelyn Court and Evelyn Mews, Teevan Close, Addiscombe, Croydon, Surrey ("the subject property") by London Regional Transport ("the acquiring authority") in connection with the Croydon Tramlink Scheme ("the scheme").
2. It follows the decision by HH Judge Rich QC in Ryde International plc v London Regional Transport [2001] RVR 59 on a preliminary issue to determine whether or not, as a matter of principle, holding costs incurred by the claimant were compensatable pursuant to section 5, rule 6 of the Land Compensation Act 1961 ("the 1961 Act"). Holding costs were defined as the interest payable by the claimant for borrowing the money to purchase the site on 29 November 1988 and to erect the dwellings thereon, from the date when it claimed that it would, but for the authority's scheme, have disposed either of the individual dwellings or of the whole site, until the date when the authority took possession (upon which date the value of the land falls to be assessed).
3. During that hearing, the parties were able to reach an agreed approach to valuation ("the agreed approach") to be followed in connection with the assessment of holding costs if, as a matter of law, they were held to be a proper head of compensation. The issue was determined on the basis that such costs, if incurred, were a proper head of compensation, and the assessment of them, therefore, was an issue in this substantive hearing. The agreed approach was incorporated into the decision.
4. Mr. Christopher Katkowski QC and Mr. Timothy Mould appeared for the claimant and called Mr. Henry Hine FCA, who was the claimant's financial director at the relevant time, and Mr. Richard Plant BSc (Hons) MRICS, a director of Stiles Harold Williams, Chartered Surveyors of Croydon who gave valuation evidence. Mr. Joseph Harper QC and Miss Kate Olley appeared for the acquiring authority, and called Miss Jennifer Ellis FRICS, a partner in Langley Taylor, Chartered Surveyors of London WC2 who gave valuation evidence.

FACTS

5. A number of facts were agreed between the parties in connection with the preliminary issue proceedings (in addition to the agreed approach to valuation on the subject of holding costs), and a further schedule of agreed facts was produced prior to the substantive hearing. From these and the evidence, I find the following facts:

5.1 The subject property comprised a development of 37 flats and 5 bungalows located off Teevan Close in Addiscombe, Croydon. It was constructed by the claimant, a property developer, in 1989 pursuant to a detailed planning permission dated 29 November 1988 as 36 elderly persons flats together with warden's accommodation (Evelyn Court), 5 elderly persons bungalows (Evelyn Mews), communal gardens, access road and 12 parking spaces. The property was of traditional construction having brick faced walls to the ground floor with part tile hung and part rendered elevations to the first, under concrete tile covered pitched roofs.

5.2 In November 1989 the units were offered in the open market for sale as sheltered accommodation, but due to the then state of the property market no sales were concluded, and, from September 1990, the claimant decided to let them for general housing purposes on short-term tenancies, despite a further planning application for general housing purposes having been refused on appeal. The lettings were tolerated by the local planning authority as, with the Croydon Tramlink scheme coming into the public domain in May 1991, it became evident that the whole of the subject property would need to be compulsorily acquired, and the purposes for which it had been constructed would not therefore be achievable. There was also an informal arrangement with the local council whereby housing benefit tenants were accommodated in the units.

5.3 Had it not been for the scheme, the development would have been sold by 25 March 1993, subject to steps having first been taken by the claimant to obtain vacant possession of the flats and bungalows. Holding costs, if any, would therefore be calculated from that date.

5.4 The acquiring authority deposited the Croydon Tramlink Bill in November 1991 with an application for leave to introduce it during the 1991-1992 Parliamentary Session. The claimant petitioned both Houses of Parliament in opposition, but withdrew its petition in April 1994 and received a Parliamentary Undertaking from the acquiring authority. In July of that year the Croydon Tramlink Act received the Royal Assent.

5.5 Notices to Treat and Notices of Entry were served on the claimant on 1 May 1997, and possession of the subject property was taken on 8 August 1997, this being the valuation date for compensation purposes. The property was demolished late in 1997.

5.6 The valuations of the subject property were to be based upon its permitted use for sheltered housing, and the 'ultimate' value of all the units (including the value of the freehold reversion but before sales and other costs) was agreed at £2,585,000. The costs of sale were also agreed at £65,175. Both valuers agreed that the appropriate basis of valuation, in respect of the open market value of the subject property at both 1997 and, in connection with holding costs, 1993 was the residual method.

5.7 Notice of Reference was made to this Tribunal on 5 May 2000, and the preliminary issue referred to above was heard on 5 and 6 February 2001. HH Judge Rich's decision was issued on 12 February 2001 and incorporated the following agreed approach to valuation:

Agreed Approach to Valuation (Holding Costs)

1. Find the value at which the property would have sold in the open market with vacant possession on 25 March 1993, disregarding the effects

of the Tramlink Scheme (deducting the costs, if any, of obtaining vacant possession.

2. Add interest to that 1993 value for the period between 25 March 1993 and 8 August 1997 at the rate at which money was in fact being borrowed by the claimant during the said period.

3. Subtract the rent received from letting the subject property as fully as could have reasonably been achieved during the said period net of the claimant's estate management costs for the said period (i.e. the costs of letting, managing and maintaining the subject property during the said period).

4. The product of steps 1 to 3 above is to be set off against the open market value of the subject property as at 8 August 1997 (i.e. the value of the subject property for the purpose of rule (2) of the land compensation rules).

5. To the extent that the set-off described in 4 above produces a positive figure, that figure shall represent the amount of the holding costs payable to the claimant by the acquiring authority in accordance with rule (6) of the land compensation rules. That figure (together with any other disturbance compensation properly payable to the claimant) shall then be added to the value of the subject property as assessed in accordance with rule (2) of the land compensation rules, in order to arrive at the overall amount of compensation payable by the acquiring authority to the claimant for the compulsory purchase of the subject property. An appropriate adjustment will then have to be made for the advance payment made by the acquiring authority.

ISSUES

6. There are two principal issues for my determination.

1. The value of the subject property as at 8 August 1997 (Rule 2 compensation). The claimant contended for a 1997 value of £2,400,000 and the acquiring authority's valuation was £2,020,000 (amended to £1,960,000 during the course of the hearing).

2. The holding costs (if any) (Rule 6 compensation). In deciding this issue, the following matters require determination in accordance with the agreed approach:

a) The value of the subject property as at 25 March 1993

b) The quantum of rents receivable from letting the property

c) The amount of the claimant's estate management costs

d) The amount of interest

The claimant sought holding costs of £19,040 and the acquiring authority said they were nil.

VALUE AT 8 AUGUST 1997

7. Mr Plant produced a residual valuation calculated on the assumption that the claimant would, after obtaining vacant possession, refurbish and sell each of the flats and bungalows (apart from the warden's accommodation) individually over an 8 month period, and would then dispose of the freehold reversion to an investor. It was set out thus:

Total sales revenue £2,370,000

Less sales costs @ 2.75% £ 65,175

£2,304,825

Deferred by phasing sales

costs over 8 months 0.971775

£2,239,770

Less deductions for marketing

and cleaning costs £ 40,000

£2,199,770

Add freehold investment value £ 215,985

Deferred 1 year @ 8% 0.9345794

£ 201,855

£2,401,625

Say £2,400,000

8. This method, Mr Plant said, as opposed to the acquiring authority's approach of selling the whole development to a single purchaser who would then sell the units on, meant that the claimant retained the profit. He said that his methodology reflected the correct application of section 5, rule 2 of the 1961 Act and was supported in Mallick v Liverpool City Council [1999] 2 EGLR 7.
9. Rule 2 provided that the value of the land was the amount that it could be expected to realise in the open market by a willing seller. The claimant was in the business of developing sheltered housing and, if it were not for the scheme, would have marketed and sold the units to individual purchasers at a profit. To assess compensation on the basis that, as the acquiring authority had done, the claimant would be deprived of profit that it would otherwise have achieved, was tantamount paying less for the land, due to the scheme, than it was really worth. Any such deduction would not accord with the principles of compensation set out in rule 2.
10. The sales revenue had been arrived at by looking at the prices achieved on three comparable sheltered housing developments – Peregrine Gardens, Shirley, Croydon; Alden Court, Croydon and Mill Court/Wiltshire Court (adjoining developments), South Croydon. The figure of £2,370,000 was not in dispute, and the cost of sales, at £65,170 was also agreed. The deduction of £40,000 for 'marketing and cleaning costs' (including some redecoration and general maintenance) was Mr Plant's assessment of the expenditure needed to prepare the units for marketing. This was based upon his inspection of the property at various times (including the interior of two of the flats) and consideration of the inspection sheets prepared by the claimant and a representative of Croydon Tramlink as each of the units had been vacated.
11. Whilst it was acknowledged that some of the flats and bungalows were in relatively poor repair when they were vacated, Mr Plant said that, in valuation terms, the claimant should not be penalised by the fact that, due to the imminent demolition of the buildings, they were unable to retain the tenants' deposits (under section 18 of the Landlord and Tenant Act 1927). His figure of £40,000 therefore reflected that, in the no-scheme world, a number of the deposits would have been retained and put towards the repairs.
12. To establish the value of the freehold reversion, Mr Plant said that he had enquired of McCarthy and Stone, one of the largest developers of sheltered homes, as to how they calculated the book value of their completed projects. In 1997 they were using ground rent figures of £330 pa for a 1 bedroom unit, and £385 pa for 2 bedrooms. The warden's accommodation was assessed on the basis of its rental value in the open market, calculated as a percentage of its open-market sale value; that percentage in 1997 being 7.5. Assessing the open market value of the warden's accommodation at the subject property at £77,000, Mr Plant produced the following calculation:

28 x 1 bedroom units @ £330 pa £ 9,240

12 x 2 bedroom units @ £385 pa £ 4,620

Warden's bungalow £77,000 x 7.5% £ 5,775

£19,635 per annum

x 11

£215,985

The multiplier of 11 was based upon advice received from Allsopp & Co, who said that figure reflected the prices being achieved for multiple ground rents at auction in1997.

13. In cross-examination, Mr Plant said it was his view that the loss of profits that would effectively be the case if Miss Ellis's valuation methodology were used was part of the value of the land, and not a separate head of disturbance. It was, he said, the claimant's business to build and sell individual units and, but for the scheme, would have done just that. The claim was for the freehold value of a total of 40 units, and that value included the profit element which was part of the 'special value to the owner' as defined in Director of Buildings and Land v Shun Fung Ironworks [1995] 2 AC 111.
14. In submissions, Mr Katkowski expanded upon the two cases Mr Plant had referred to in his evidence. It was a matter of law as to the correct valuation approach to be used in assessing the 1997 value, and it was clear from the evidence that Miss Ellis's methodology would, if adopted, result in the claimant receiving less compensation than that to which it was entitled, and which it would have achieved, in terms of value, in the no-scheme world.
15. To all intents and purposes, the compulsory acquisition of the claimant's land resulted in the extinguishment of its business (on that site) and it could not be relocated. On the authority of Mallick therefore, it was entitled to have its land valued together with the profits that went with it. In that case, the Lands Tribunal was required, in accordance with rule 2, to value freehold land that was in part occupied by the claimant as owner, and part let by him commercially on some 15 residential tenancies. It accepted as correct the view of the valuers acting for the parties, that the claimant's freehold estate fell to be valued on an 'investment' basis. The claimant appealed, by case stated; one of the grounds being that "the basis upon which compensation was claimed and awarded for the loss of the claimant's freehold property precluded a further claim for loss of profits since the rents on which the capital value was calculated constitute the whole of the profit derived from the ownership of the property" was wrong. Henry, LJ said (at 10B)

"I have no quarrel with this method, believing as I do that, in the absence of any development value in the land, it is what is required by r 2 of section 5 of the Land Compensation Act 1961 where the business is extinguished".

In reviewing the law of compensation and referring at length to Shun Fung he said (at 8L):

"Section 5 of the Land Compensation Act 1961 Act provides that:

Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules:…

(2) The value of the 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…

This rule, and rule 6 (below) are the crucial ones. The local authority will be acquiring the land but not the business. But, as the assessment of compensation is based on an open market sale by a willing seller, it will reflect the value of the land to him, which will include the value to him of his being unable to conduct his business without interruption. In the important case of [Shun Fung] Lord Nicholls said (at 125E):

Land may, of course, have a special value to a claimant over and above the price it would fetch if sold in the open market. Fair compensation requires that he should be paid for the value of the land to him, not its value generally or its value to the acquiring authority. As already noted, this is well established. If he is using the land to carry on a business, the value of the land to him will include the value of being able to conduct his business there without disturbance. Compensation should cover this disturbance loss as well as the market value of the land itself. The authority which takes the land on resumption or compulsory acquisition does not acquire the business, but the resumption or acquisition prevents the claimant from continuing his business on the land. So, the claimant loses the land and, with it, the special value it had for him as the site of his business. The expenses and any losses he incurs in moving his business to a new site will ordinarily be the measure of the special loss he sustains by being deprived of the land and disturbed in his enjoyment of it. If, exceptionally, the business cannot be moved elsewhere, so it simply has to close down, prima facie his loss will be measured by the value of the business as a going concern. In practice it is customary and convenient to assess the value of the land and the disturbance loss separately, but strictly in law these are no more than two inseparable elements of a single whole in that together they make up the value of the land to the owner: see Hughes v Doncaster Metropolitan Borough Council [1991] 1 AC 382, 392 per Lord Bridge of Harwich [Emphasis added].

He continued (at 9E):

"Rule 2 deals with the basic market value calculation. But that r 2 calculation will differ depending on whether or not it is anticipated that the business will be moved to a new site or whether it cannot be relocated: see the emphasised words in Shun Fung above. In the former case, it is assumed that with the compensation paid he has acquired an equivalent property suitable for the business, and under rule 6……the claimant will recover the disturbance costs of the move. But, where the business cannot be relocated, the r 2 calculation will be for the value of the business as a going concern, i.e. the value of the land with the profits that go with it".

16. Mr Katkowski submitted that the instant case was an example of Henry LJ's second category of case, i.e. one where the business cannot be relocated. The compulsory acquisition of the claimant's land necessarily brought about the cessation of its business on that site and on the authority of Mallick, therefore, the claimant was entitled to have its land valued together with the profits that go with it.
17. Miss Ellis produced what she described as a conventional residual valuation and hypothesised that a purchaser would acquire the subject property, in the open market, as a single lot. She said that in her experience it used to be quite commonplace for the freehold interest in blocks of flats previously used for letting to be sold 'en bloc', but in recent times that practice had been less frequent due to the stock of such blocks having dried up. The purchaser, who would most likely be an entrepreneur would, in effect, buy the property 'wholesale' with a view to 'retailing' the units individually. This was known in the trade as 'break-up'. In formulating his bid, the prospective purchaser would take into account what was required to be spent to bring all but one of the units into a suitable condition to be sold as sheltered accommodation, with the final unit to be retained for warden's accommodation. He would also build in a requirement for profit to cover his costs, risks and effort in undertaking the project.
18. In her view, a residual valuation, as defined in Modern Methods of Valuation (9^th edition) (Johnson, Davies and Shapiro, Estates Gazette) was the most appropriate method to be used for a property of this type, and accorded with her understanding of the definition of 'open market value' as defined in the RICS Appraisal and Valuation Manual. She also assumed that the whole property would have vacant possession as at the valuation date, that the sale would be completed on that date and that the price would reflect the condition of the property at the time.
19. The valuation was:

Open Market Value at August 1997

A Ultimate value of freehold (agreed) £2,585,000

B Costs of sale (agreed) £ 65,175

C Profit @ 7.5% of development value £193,785

D Works required pre-sale

D1 Interior of flats £100,000

D2 Internal common areas £ 7,500

D3 exterior & structure £ 20,000

D4 laundry & lounge £ 7,500

D5 warden's office £ 2,500

D6 gardens £ 2,500

£140,000

Building surveyors fees @

10% + VAT £ 16,450

£156,450

E Finance on half the costs for

9 months @ 8.5% £ 4,987

£161,437

£ 420,487

F Sum available for site purchase and land costs £2,164,513

G Site cost 1 x

Purchase costs 0.0375 x

1.0375 x

Finance on above

for 9 months 0.0661 x

1.10364x = £2,164,513

Site value (x) = £1,961,248

Say £1,960,000

20. In respect of the constituent figures, Miss Ellis said that in view of the inherently limited risks of the project, a purchaser would be satisfied with 7.5% profit. For instance, outlay on building costs was relatively small and the development/sales period quite short as compared with most development projects.
21. The cost of works to bring the property up to an acceptable standard for marketing would, Miss Ellis said, be much higher than Mr Plant had projected. She had inspected the block in 1997 about 1 month before it was demolished and, due to the fact that the units had been let on short term tenancies since 1990, she considered the condition of the units, the block as a whole and the grounds to be poor. It was appropriate to allow for building surveyors costs even if the works were carried out 'in-house' as, in calculating the costs of the project, the surveyors' time still had to be costed.
22. In calculating the finance costs, Miss Ellis assumed the purchaser would commence marketing whilst the refurbishment works were being carried out and, assuming 6 sales a month with 3 months between agreement for sale and completion, the whole development period would be about 9 months. It was appropriate to allow finance costs at 8.5% as that was what the claimant was paying at the time.
23. The difference between the gross proceeds of sale (the agreed £2,585,000) and the total costs of the development with profits was £2,164,513, that figure representing the sum available to be spent on the land less acquisition costs (estimated at 3.75% to include, stamp duty, legal and valuation fees) and interest on the money to be borrowed to finance the cost of the land for the 9 month development period. This left £1,960,000 to be paid for the land.
24. In cross-examination, Miss Ellis accepted that if the Tribunal found in favour of Mr Plant's approach (individual sales), she did not vehemently disagree with his methodology, but the constituent figures, and his method of dealing with deductions (deferrals rather than finance costs) were in question. She said that whilst she thought the RICS definition of open market value obliged her to adopt the single-sale method, she accepted that in the no-scheme world the claimant would have sold the units individually and retained the profits from the development. Thus, a higher figure would have been achieved than that which she was assessing as compensation under the 1961 Act. Nevertheless, Miss Ellis stressed that the costs of refurbishment would have been significantly higher than Mr Plant had calculated, before the sales at the ultimate values that had been agreed, could be achieved.
25. For instance, she had found many of the flats to have been painted in gaudy, primary colours , there was extensive cracking to the external render that had been filled, but still needed to be redecorated and the gardens were dowdy and unkempt with bare patches of grass. Miss Ellis did not accept that the inspection sheets that had been prepared and signed off by the claimant and the Tramlink representative when the units were vacated indicated there was nothing much wrong with them. She stressed that she did not know the basis upon which those sheets were prepared and, as little information was provided on the majority of them, she thought the inspections had probably been cursory to say the least. She also accepted that the claimant had carried out ongoing maintenance during the years that the properties were let, and that her estimated figures were 'ball-park' rather than the result of detailed or scientifically prepared costings.
26. As to the costs of finance, Miss Ellis acknowledged that she had not allowed any offset for monies coming in during the development period (as sales completed), and accepted that, in reality, such receipts would have been used to reduce the borrowing commitment.
27. Mr Harper submitted that the key difference between the parties came down to who was going to take the profit. Mr Plant's approach ultimately, he said, did not relate to the freehold value of the land but to ensuring that any profit element in that freehold value inured to the benefit of the claimant, and minimised the deductions made from the profit element to achieve it.
28. The acquiring authority's approach was conventional. The property should be valued with vacant possession for sale to a purchaser on a particular date, not (as the claimant would have it) to 40 purchasers spread over an 8-month period. In this case, the claimant wished to hold on to the developer's profit it claimed it could have made had it been allowed to trade the property piecemeal over a period. That, Mr Harper said, was compensation for extinguishment of a business, not for the present value of the land. The point was that the CPO regime recognises that a bidder for commercial property in the open market would always seek to make a bid that would enable it to make a profit. Any compensation for land taken can similarly be re-invested by the recipient to make a profit – effectively the next deal. Here, the claimant should receive the value of the land as at August 1997, not the sum of money he might have been able to achieve had he 'traded' and achieved a number of sales piecemeal. It is not the present value of the land plus the projected future profit that is to be compensated.
29. Mr Harper said that in Shun Fung the value of the land was not in issue. The problems there related to the extinguishment of a business versus relocation. What was being considered was the value of the business at the date of the compulsory acquisition, together with the loss of profits prior to that date (during the shadow period). Similarly, Mallick had nothing to do with the value of land taken, but was again related to compensation for the extinguishment of a business onto which the claimant attempted, unsuccessfully, to mount a claim for disturbance.
30. The way the claimant had constructed its claim put it outside rule 2 and into rule 6 – disturbance. Mr Harper said that the suggestion that the claimant's business was effectively extinguished (on that site) at the relevant date was fundamentally flawed. The 'business' was not tied to this particular site. Sheltered housing developments could be carried out anywhere and the compensation for the value of the land from here could be used to make profit on another scheme. The key point was that if the claimant were to receive the value of the land, together with the profit as assessed by Mr Plant, and then invest the money elsewhere, a double-profit would be made.
31. Mr Harper said that the claimant seemed to be suggesting that 'something special' had been brought into compensation law by Shun Fung but, as could be seen from the Encyclopaedia of Compulsory Purchase and Compensation (Local Government Library, Sweet and Maxwell) at B-0356, the law has not yet got there. It says:

"RULE (2)

Compensation additional to the market value of the land may be payable in respect of disturbance, or severance, or injurious affection. See post, note to rule (6) in this section, and Compulsory Purchase Act 1965, ss7,10 and notes thereto.

This rule reverses, subject to the qualifications in rules (5) and (6), the principle applied under the Lands Clauses Consolidation Act 1845, s.63 ante, that the value of the land is to be taken as the actual or potential value to the owner. Thus, whereas under the 1845 Act the prospective profits that the particular owner might make out of his use of the land are to be taken into account (see White v Works and Public Building Commrs (1870) 22 LT 591), loss of such prospective profits is not, under this Act, a subject for compensation……………."

Decision

32. During the course of the hearing, I referred counsel to Hooper v City and County of Swansea (2000) (LT) ACQ/68/1997 (Unreported) which dealt with the question of value to owner. That decision (by Mr N J Rose FRICS) related to the compensation to be paid for the compulsory acquisition of an area of agricultural land that had the potential for a self-build development of 15 plots. At para 85, Mr Rose said:

"85. I now turn to the approach that should be adopted when valuing the subject land. Mr Jones [counsel for the claimant] referred to s5(2) of the Land Compensation Act 1961 which says:

"The value of the 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".

86. That provision, he said, only required one to assume that there was a willing seller. This was highly relevant, as Mr Harlow [the acquiring authority's expert valuer] had based his valuation on the assumption that the claimant would sell the land, once planning permission had been granted, to a single purchaser – i.e. a speculative developer or builder. The claimant's case was that he was free to sell the land as he saw fit and that he would have sold it on a self-build basis, plot by plot, after undertaking the infrastructure works (if 15 plots) and without the need for such works if 4/5 plots. Section 5(2) made it plain that the tribunal did not have to assume a willing purchaser (singular) but only that there was a willing seller. The tribunal must take into account every possible purchaser and for a self-build scheme there would be many of them".

Mr Jones went on to summarise the argument for 'individual' sales along broadly similar lines to Mr Katkowski's arguments in this case, his evidence continuing (at 88):

"88 The fundamental fallacy in the acquiring authority's case was to argue that the tribunal must assume that the entire land was sold at the valuation date……but the actual valuation exercise then undertaken need not assume that a single sale of land to a single purchaser must necessarily take place on that date. If that were so it would be tantamount to saying that no valuation exercise could ever be undertaken without a sale of the item to be valued actually taking place on the valuation date. This, he submitted, was 'plain nonsense'."

Referring to the acquiring authority's case, Mr Rose said (at 90):

"90. Mr Alesbury [counsel for the acquiring authority] submitted that Mr Jones' valuation approach was fundamentally erroneous as a matter of law. He entirely accepted that there was nothing in [the 1961 Act] to say that the hypothetical sale by a willing seller which s5(2) required to be considered must be a sale to only one purchaser. If the evidence supported the proposition that it would have been practically and realistically possible in the real world to sell off a piece of land at the same time in more than one parcel to different buyers, then that possibility would have to be considered in a CPO valuation. But, it was the exact opposite of the position here. It was agreed that such simultaneous sales of all 15 plots would not have been possible….

91. S5(2) required that the land must be 'sold' – i.e. a sale must take place; and that this was by a willing seller. Mr Alesbury accepted that this did not mean a forced sale; but it did mean a willing sale of the land – not some small part of it as an expensive parcel, coupled with an indication from the vendor that that he was willing to sit on the rest of the land for as long as was necessary for other premium price purchasers of serviced plots gradually to come along and buy the remainder in small pieces at a time. That was to confuse the question of land value with a business idea the claimant claimed to have had in relation to the possible future use of the land…."

In his decision, Mr Rose said (at 93):

"93. In my view, it is essential to bear in mind that my task under s5(2) is to assess the amount which the subject land might have been expected to realise if it had been sold in the open market by a willing seller. The claimant suggests that, in valuing the land, it is legitimate to start from the aggregate retail value of 15 serviced plots on the site, to be sold to different individuals over a period………

94. I agree with Mr Alesbury that this is a fundamentally erroneous approach. In my opinion, the reference in s5(2) to the land being 'sold in the open market', together with the parties' agreement that the valuation date was 27 February 1996, means that the sale of the land is assumed to have taken place at that date, not over a period of 12 months or more commencing with that date. Mr Jones submitted that it was 'nonsense' to assert that the valuation exercise had to assume a sale of the subject land actually taking place on the valuation date. In my view, there is nothing nonsensical in that assertion; the expression 'market value' has no realistic meaning in the absence of an assumed sale on the market.

95. I accept Mr Harlow's evidence that the most likely purchaser of the land on that basis would have been a developer who intended to carry out works to make it saleable to purchasers requiring individual self-build plots".

33. Mr Katkowski said that the circumstances of that case were very different. Neither Shun Fung nor Mallick were cited, and there was no discussion on the fundamental principles of 'value to owner'. He did not accept that Hooper was relevant in this claim, but if I decided that that it did contain rulings on points of law that were contrary to his submissions, then he could only suggest that the decision in Hooper was wrong. That case related to a prospective residential development, whereas in the instant case, the buildings were already there. Mr Harper said that he was fortified by that decision, although he acknowledged that the facts were very different.
34. In my judgment the Hooper case was, fundamentally, dealing with the same issue: was the land to be valued, at the valuation date, on the basis of a sale to a single purchaser, who may then go on to divide up and sell the plots individually, or, was it to be valued on the basis of sales of plots, over a period, by the claimant? The fact that that was a prospective residential development and here we are dealing with units that have already been built makes, to me, no difference. The principal is the same.
35. In Hooper, Mr Rose concluded that the most likely purchaser of the land would have been a developer who would do some works and would then sell the plots individually. That would have been the situation at the valuation date, and I agree with Mr Harper's submissions that that is the issue – the present value of the land and not the projected future profit. However, I disagree with his submission that if the claimant received the profit that he would otherwise (in the no-scheme world) have received, and put the money into another development ('the next deal'), he would effectively be getting double profits. It is necessary to consider the nature of the claimant's business. Were it not for the scheme, (and this point was not in issue) it would have sold the flats and bungalows over a period of around 9 months, and could, had it so wished, have then sold the freehold reversion. The 'ultimate', or gross, figure it would have achieved was £2,585,000. That money, less the sales, marketing and other costs to which I will turn, would be available to be ploughed into the next site. That next development would in turn show a profit, and so the cycle would continue. If, as was the acquiring authority's case, the profit from the development at the subject property was denied to the claimant then that figure would not be available to go towards the next deal, and the claimant would therefore be disadvantaged.
36. Mr Plant had adopted the inclusive approach, and by deferring the income from sales over the development period, was, effectively, arriving at a figure applicable at the valuation date which included the profit element in the value of the land under rule 2.
37. Miss Ellis, in her 'conventional' valuation, had extracted the profit as a cost. Her valuation of £1,960,000 was what another developer, who himself would expect to make a profit, would be prepared to pay, and that was her opinion of what the compensation should be. The question is, therefore, if the profit does not form part of the value of the land, how does the claimant receive compensation for the loss of it? Mr Harper said that the way the claim was constructed, it put it outside rule 2 and into rule 6.
38. Under rule 6 a claimant is entitled to be compensated for any loss of profits, in business carried out on the land acquired, that is attributable to the compulsory acquisition. That is not just loss of profits in the shadow period prior to the acquisition, but also profits that it would have achieved in the post acquisition period. It does not seem to me that the fact that the business of the claimant is a property developer, where the profits are derived from the land itself, is any reason in principal for denying him compensation for loss of profits. If the claimant ran a business from the site, such as a shop, and from that shop he made a profit, he would be entitled, as an item of disturbance under rule 6, to compensation for any losses of profit occasioned by the compulsory acquisition. The question is one of causation. If, in the absence of the compulsory acquisition, he would have made a profit that is not reflected in the value of the land assessed under rule 2, he is in principle entitled to be compensated for that loss under rule 6.
39. I agree with Mr Harper that that neither Mallick nor Shun Fung assist the claimant in this case. In the former, it was held that the part of the value of the property that related to its investment value (both in terms of the rental income received and its future potential) had already been taken into account in the valuation and in the compensation that had been paid on a total extinguishment basis. As was clear in the passage from Henry LJ, (see para 15 above) that was also a case where there was no development value in the land whereas, here, there was. The claimant was not, in that case, entitled to compensation for loss of rental income (due to delays in the payment of the compensation) as an item of disturbance, but could only claim interest. Shun Fung was also a total extinguishment claim, and I agree with Mr Harper that the value of the land was not in issue in that case.
40. Despite Mr Katkowski's submissions, I cannot see how this case could possibly be determined as if the claimant's business had been extinguished. It had to cease at the subject property, but, by its very nature, the business could, and would, continue elsewhere. The claimant's business was that of property developer, and it was not a series of disjointed and disparate undertakings, each site being capable of translation as a separate business. Perhaps if the claimant had been Ryde International (Evelyn Court) plc, and it was, in terms of its constitution, a totally separate business entity, the situation might have been different.
41. The simple answer, in my view, is that as in Hooper, the value of the land is what it would fetch in the open market as at the valuation date, and if sold on that date the likely purchaser would be another developer who would expect to achieve a profit on the subsequent sales of the individual units and, eventually, the freehold reversion. The price that purchaser would pay would be calculated on the basis of a 'conventional' residual valuation (of the type referred to and used by Miss Ellis) and his bid would reflect an allowance for profit at whatever rate he deemed appropriate. The passage that Mr Harper recited from the Encyclopaedia of Compulsory Purchase and Compensation at B-0356 continued:

"The potential profits, however, to be derived from the land by a purchaser other than the particular owner will, to some extent, be reflected in the market value of the land and are to that extent only a factor to be taken into account by the tribunal in assessing the market value".

I do not take that to mean that the full value of those future profits form part of the value of the land – that would, indeed, be double-counting if, as I believe to be the case, the claimant is entitled to compensation for the loss of those profits under rule 6.

42. It follows therefore, that whilst I prefer the acquiring authority's approach to the value of the land, I do consider the loss of profit that the claimant would have made had it not been for the compulsory acquisition to be something to which it is entitled to be compensated, but under rule 6 rather than as part of the value of the land. The claimant chose not to base its claim in this way, and the acquiring authority made no more of it than the submission that the loss of profit element should have been a claim under rule 6 rather than rule 2.
43. It would not be right, in my judgment, for me to simply determine the value of the land (and I shall turn to the evidence in respect of the valuations in a moment) and ignore the matter of compensation for loss of profits to which, as I have said, I consider the claimant to be entitled. I have decided, therefore, that following my determination of the value of the land under rule 2, and the second issue (holding costs) to which I shall shortly turn, this will be issued as an interim decision, and I shall invite the parties (if they fail to come to agreement on the matter) to make separate submissions in respect of the loss of profits element, to be determined as an item of disturbance under rule 6.
44. Turning now to the evidence on value, I have already said that I prefer Miss Ellis's approach but the experts were at considerable variance as to their opinions of what needed to be spent to put the units into readily saleable condition. Neither Mr Plant nor Miss Ellis had undertaken costings on any form of scientific basis, and both admitted that they were 'ball park' figures. Whilst, in my view, Mr Plant has, from the evidence before me, significantly underestimated the likely costs of repair and refurbishment (if anything like full market value is to be achieved), Miss Ellis's figure does seem to be rather high. I propose therefore to take a robust approach and adopt a figure midway between the two, at £90,000.
45. In my view, Miss Ellis has been more than fair in her estimate of the percentage profit with which a developer would be happy (7.5%) and her estimate of finance costs at the rate the claimant was actually paying at the time (8.5%) must be sensible. The projected time spans also appear realistic, and accord with Mr Plant's own views on that aspect. However, in my judgment, there should have been some offset to allow for the income received from early sales; therefore, I have adjusted the finance charge on site acquisition down from 9 months to 6 to reflect this. With the ultimate value of the freehold and the costs of sale being agreed, I set out below my valuation:

Open Market Value as at August 1997

A Ultimate Value of Freehold £2,585,000

B Costs of Sale £ 65,175

C Profit @ 7.5% of development value £193,785

D Works required pre-sale £ 90,000

Building Surveyors fees @

10% + VAT £ 10,575

£100,575

E Finance on half the costs for

9 months @ 8.5% £ 3,205

£103,780

£ 362,740

F Sum available for site purchase and land costs £2,222,260

G Site cost 1 x

Purchase costs 0.0375x

Finance on above for

6 months 0.0425x

1.10800x = £2,222,260

Site Value (x) = £2,059,596

Say £2,060,000

46. I determine that the compensation payable by the acquiring authority for the value of the land in accordance with rule 2 shall be £2,060,000 to which interest shall be added from the valuation date at the statutory rate. As I have said, this is an interim decision in respect of this issue, and I invite the parties to make submissions in respect of the disturbance claim for loss of profits in accordance with rule 6.

HOLDING COSTS

47. I now turn to the second issue. According to the claimant's calculations, the amount of interest which it was entitled to receive as compensation for the loss of opportunity to receive the market value of the land as at March 1993 was £19,040. In the acquiring authority's view, that sum was nil. A considerable volume of evidence had been produced to substantiate each party's stance, and the claimant's former financial director was to be called to give evidence of fact. At the commencement of the hearing I asked if, bearing in mind the relatively small amount in dispute (in relation to the overall claim) the parties had made any attempt to reach a compromise on this issue.
48. The reason that agreement had not been reached was because of the question of costs relating to the preliminary hearing. In his decision, HH Judge Rich said:

"17. The formulation as to the computation of the claimant's holding costs which has been agreed, leaves open the possibility that the claimant may have suffered no loss. It is by no means impossible that when the state of the market is investigated, it will turn out that the claimant will have been better off being unable to sell in the market conditions of 1993 but receiving rent to off-set the interest on the price at which the property would have been sold until the compulsory acquisition in 1997. I say this because the way in which the claim was originally presented appeared to indicate that a sale when the property was first marketed would have involved the claimant in accepting a loss on its investment in the land and the development.

18. For this reason, having heard counsel on the appropriate order as to costs on a hypothetical basis, I will order that the authority should pay the claimant's costs of this preliminary issue if the claimant succeeds in establishing its claim for holding costs as now formulated. Otherwise there should be no order as to costs."

49. A determination in respect of this issue was therefore critical and with there now being rather more at stake, I proceeded to hear the evidence.
50. Mr Hine is a chartered accountant, having qualified in 1961 and, since 1972 has been involved with property development and investment companies. He joined the claimant in 1987 as financial director. His witness statement had been formulated, he said, to accord with the agreed approach to valuation as determined in the preliminary issue, and the figures used had been extracted from the company's accounts.
51. The gross rental income that had been received during the relevant period (24 March 1993 to 8 August 1997) was £755,359 (this figure having now been agreed with the acquiring authority), and the rental expenses actually incurred were £33,941, leaving a net income figure of £721,418. He said that a further sum of £133,132 should be deducted, this being a 'hypothetical' management charge based upon 15% of the gross rent received (£113.304) to which VAT of £19,828 should be applied. This was the industry norm, and as it would be paid to an outside agency, the VAT element would apply, it not being recoverable as the provision of rental properties was an exempt supply for VAT purposes.
52. Administrative charges then needed to be deducted. He had calculated them by reference to the company's financial statements for the 15 month period ended 31 March 1994, that being a time when the claimant was dealing with little else other than the subject property. The costs for that period were:

Bank charges £ 3,829

Print/postage £ 146

Telephone £ 5,193

Insurance £ 2,443

Audit and accountancy £ 2,500

Advertising £ 1,701

£15,812/15 = £1,054 per month

The whole relevant period amounted to 52.33 months, giving a total of £55,159.

53. Repairs and renewals actually undertaken were £33,421. Interest had been calculated, Mr Hine said, by "faithfully following" the agreed approach as set down in the preliminary issue. Based upon a value of the property as at 25 March 1993 of £2,085,000 (per Mr Plant) he calculated interest on that sum on a compound basis, adjusting interest rates being charged to the claimant as changes occurred, and adding the sum to the capital on a quarterly basis. This gave a total interest charge of £833,746.
54. With all the constituent parts in place, his calculation of the holding costs became:

Open market value at 25 March 1993 £2,085,000

Add interest £ 833,746

£2,918,746

Add Collection Expenses:

Management charge £ 133,132

Administration charge £ 55,139

Repairs & renewals £ 33,421

Rental expenses £ 33,941

£ 255,653

£3,174,399

Less Gross rents received £ 755,359

£2,419,040

Less Open market value at 8 August 1997

(per Mr Plant) £2,400,000

Holding cost £ 19,040

55. In cross examination, Mr Hine acknowledged that the principal areas of disagreement between the parties on this issue related to the costs to be deducted from the gross rents received, and the way in which the interest had been calculated. In respect of the management and administration of the lettings, he accepted that the rental expenses of £33,941 and the administration charges of £55,139 were costs actually incurred. However, the 15% management charge was an addition that had been arbitrarily made as, in his view, if the units had not been managed in house, an external managing agent would have been employed, and 15% plus VAT was the market rate. Mr Hine thought this was a reasonable approach because the total management costs became between 25 and 28%, whereas if they had employed agents to effect the lettings as well (the claimant having done that work in house), that would have incurred another 15%, bringing the costs to 30% plus VAT in total.
56. Mr Hine said that he understood that, in the marketplace, there were separate letting and management charges, and that, particularly bearing in mind the 'difficult' type of tenants that were being dealt with, that was what would have had to be paid, not the total 15% suggested by Miss Ellis. He acknowledged, however, that by including both known (actual) costs, and a hypothetical 15% management charge, there was a certain element of double counting.
57. As to the individual actual costs, Mr Hine agreed that the telephone and bank charges appeared high, but was unable to shed light on the reasons. On interest, no account had been taken of the rental income, Mr Hine interpreting the agreed approach to valuation to mean that the debt had to be rolled-up on the basis of the 1993 value with no offset for income. He accepted, however, that this was not the correct way to calculate the interest costs, and that were it not for his believing that was the way he was required to do it, would have allowed for the income.
58. In calculating the 1993 value, Mr Plant said he had had difficulty in finding sufficient comparable evidence of sales in 1993 to enable him to form a definitive opinion as to the rise in the market between then and 1997. However, from two sales that had taken place at Peregrine Gardens and Mill Court/Wiltshire Court in 1993, he estimated the rise to have been 15%. This percentage (but not the figures) was agreed. Thus, the 1997 value of £2,400,000 became £2,085,000. As to the management charges, Mr Plant said in cross-examination that he had checked with his own firm's letting department and whilst a single fee of 15% would be applicable for the letting and management of a single unit, where large, difficult blocks were concerned and such matters as maintenance of communal areas were concerned, and additional fee would be charged. He said he thought a further 15% was typical.
59. In respect of Mr Hine's calculation of interest, Mr Plant said that he thought the agreed approach to valuation had been correctly interpreted by him, and he did not think para 3 could be interpreted differently, looking at it on a 'step by step' basis.
60. Mr Katkowski submitted that the way the interest was to be calculated was clearly set out in the step by step approach to valuation that Mr Plant had referred to, and Mr Hine was correct not to offset the income that had been received, whether that was right or wrong in accountancy terms. The method, which was unambiguous, had been determined in a binding judgment in the preliminary issue, and I was therefore bound to follow it.
61. In preparing her estimate of the value in March 1993, Miss Ellis undertook a further residual valuation on the same basis as that adopted for the 1997 valuation, but made some adjustments to reflect the state of the market at the time. For example, she considered a developer would, in 1993, have required a 10% profit margin and it would have taken 3 months longer to complete all the sales (a year in total). She also reduced the pre-sale repair and redecoration costs to £121,250, reduced purchase costs by 1% to reflect the fact that stamp duty was then only 1%, and calculated finance costs at a borrowing rate of 8%. Miss Ellis also made an allowance for loss of rent for the period between when flats were vacated and when they were sold (in her view 4 months). This figure was necessary because, she said, it would be necessary to obtain vacant possession of all the units before any of them could be sold for sheltered housing. Based upon the claimant's rental income for 1993, the loss of rent was £40,166 which she rounded to £40,000, and her valuation became:

Open Market Value at March 1993

A Ultimate value of freehold (agreed) £2,248,000

B Costs of sale (agreed) £ 56,675

C Profit @ 10% of development value £224,800

D Works required pre-sale

D1 Interior of flats £ 75,000

D2 Internal common areas £ 6,000

D3 exterior & structure £ 17,500

D4 laundry & lounge £ 6,000

D5 warden's office £ 2,000

D6 gardens £ 2,000

£108,500

Building surveyors fees @

10% + VAT £ 12,749

£121,249

E Finance on half the costs for

12 months @ 8% £ 4,850

£126,099

£ 407,574

F Sum available for site purchase and land costs £1,840,426

G Site cost 1 x

Purchase costs 0.0275 x

1.0275 x

Finance on above

for 12 months 0.0822 x

1.10970x = £1,840,426

Site value (x) = £1,658,490

H Less Allowance for obtaining vacant possession £ 40,000

£1,618,490

Say £1,620,000

62. In calculating whether or not there would be any holding costs, Miss Ellis said she had assumed management costs of 15% of the gross rental income. This figure would be an 'all-up' charge to include finding the tenants, collecting the rents and generally managing the property. Whilst that was the going rate for single units and an owner would normally expect a discount for multiple lettings, bearing in mind the type of tenant and the management problems that could be anticipated, she felt 15% plus VAT was an appropriate figure to apply. In the light of this, Miss Ellis said Mr Hine's figure of £133,132 could be agreed, but if that was the one to be applied, his administrative charge and rental expenses (although actually incurred) could not. In other words, she said, an overall letting and management charge not exceeding 15% plus VAT was fair.
63. On repairs and renewals, as Miss Ellis had no other means of verifying the figures, she accepted those of the claimant (£33,421) and added insurance (which had been within Mr Hine's figures which she had 'disallowed' on top of the percentage based management charge) at £8,630. Thus, the estate management costs became £175,183.
64. As to the calculation of interest, Miss Ellis said that she did not interpret paras 2 and 3 of the agreed approach to mean that interest had to be rolled up, with no account being taken of the rental income. Whilst the wording of para 2 could be described as "a bit opaque", she said that, in any event, whichever way it was calculated the result was the same – there were no compensatable holding costs. She had calculated interest on 3 bases: firstly in accordance with Mr Hine's approach – that interest was rolled up. This gave a figure of £647,803. However, as she had said, this was not how she thought it should be calculated, and that method was not fair unless interest was added to the income stream in respect of the rental profits earned.
65. Miss Ellis's second calculation was on the constant balance basis – the interest payable on an unchanging site value throughout the period in question. This amounted to £550,145. However, in her view "money that was in fact being borrowed by the claimant" (para 2) would not have been the full value of the site as at March 1993 throughout the term. Even if it were assumed that the full value was being borrowed on 25 March 1993, as time progressed, the balance of the rents received over the estate management costs should have been applied to reducing the loan. There would thus have been a diminishing balance, on which interest was being paid. The third calculation therefore, and the one which she considered followed the requirement of the agreed approach, gave an interest figure of £531,733 (rounded to £532,000). The assessment of holding costs then became:

1 Value at March 1993 £1,620,000

2 Add interest £ 532,000

Subtotal £2,152,000

3 Subtract

Rents received £755,358

less Estate Management costs £175,183

£ 580,175

4 Product £1,571,825

Set off value of subject property

in August 1997 £1,960,000

As the 1997 value exceeded the 'product' above, Miss Ellis said no claim for holding costs could be substantiated.

66. In cross-examination, Miss Ellis admitted that she was not aware that whilst Mr Hine's administrative charges and rental expenses had actually been incurred, the 15% management charge the claimant had sought to add, had not. She thought that all the claimed costs had been incurred, but it was her view that a maximum of 15% was reasonable.
67. It was put to Miss Ellis that the acquiring authority's original interest calculations, incorporated into the Points of Reply to the Points of Claim, were on the same 'roll-up' basis as the claimant was now adopting, and she accepted that that appeared to be the case. However, in her view, hers was the correct approach.
68. In submissions, Mr Harper said that it was accepted the wording of paras 2 and 3 of the agreed approach were capable of more than one interpretation. However, the simple point was that it could not be right for the subtractions relating to the rental income to be made at the end of the period, with no account taken of that income whilst it was coming in. Furthermore, it was also not right for estate management costs in addition to those that had actually been incurred to be allowable. The acquiring authority had made a concession on this point in allowing 15%, which was more than the actual costs incurred by the claimant (about 13%). However, it was not prepared to accept the argument for 15% costs on top of what had already been spent – that amounting to approaching 30% of the rental income – a figure way out of line with the reality of the marketplace.

Decision

69. The first matter to determine is the value of the subject property at March 1993. Mr Plant used a very simple approach – taking a straight 15% reduction in value, on the basis of comparable sales, from the figure applicable in August 1997. Miss Ellis's method was somewhat more technical and comprehensive, but the 15% was agreed between the parties as the market shift over the period. It would be easy for me to take a 15% reduction from the figure I have determined as the 1997 value (£2,005,000) to give a 1993 value of £1,743,782. However, preferring as I did, Miss Ellis's valuation approach in respect of the first issue and noting her comments in evidence relating to the constituent parts of the 1993 valuation, I follow her methodology.
70. Items A and B were agreed. There was no evidence to support Miss Ellis's contention that a purchaser would be likely to require a higher profit in 1993, but to me her reasoning appeared sound. She had reduced the anticipated cost of works from £140,000 by 22.5% to reflect the fact that, in 1993, the extent of refurbishment and repairs was likely to be that much less, and in the absence of alternative evidence from the claimant, I adopt that percentage. Finance costs were taken from what the claimant was being charged at the time, but, as with the 1997 valuation, I reduce the period by 3 months (to 9 months) to allow for sales income offset. Miss Ellis's reduction in purchase costs appeared entirely logical. This left the allowance for obtaining vacant possession, calculated as loss of rent over a 4-month period. The comment that, of course, nobody would buy a house in a sheltered development before the requisite facilities were in place, and whilst there were housing benefit tenants still living there were, in my view, apposite. Again, in the light of no evidence to the contrary, I adopt her figure.
71. Based, therefore upon my 1997 valuation, the 1993 valuation becomes:

Open Market Value as at August 1993

A Ultimate Value of Freehold £2,248,000

B Costs of Sale £ 56,675

C Profit @ 10% of development value £224,800

D Works required pre-sale £ 73,500

Building Surveyors fees @

10% + VAT £ 8,636

£ 82,136

E Finance on half the costs for

9 months @ 8% £ 2,464

£ 84,600

£ 366,075

F Sum available for site purchase and land costs £1,881,925

G Site cost 1 x

Purchase costs 0.0275x

Finance on above for

9 months 0.0617x

1.0892x = £1,881,925

Site Value (x) = £1,727,804

Say £1,728,000

72. Turning now to the rents received, the parties have agreed the gross rental income in the sum of £755,359. The matter of the estate management costs to be deducted was, however, a matter still in dispute. Mr Hine produced details of the actual costs directly incurred as rental expenses in the sum of £33,941. He then added a further 15% of the gross rents received, plus VAT on the premise that this was an allowable cost, being what would have been paid if the properties had been managed externally. A further £55,159 was applied, being his estimate of administrative expenses incurred, based upon financial statements for a 15-month period only, divided to give a monthly total, and then multiplied be the total number of months in the relevant period. In total, the claimed charges amounted to (excluding repairs and renewals) £222,232, some 29% of the gross income. It was his view that, for a full external tenant finding and management service, the market would have to pay 30%.
73. Miss Ellis 'allowed' 15% of the gross rents on the basis that she did not have access to detailed actual costs incurred by the claimant and in her opinion that was the going rate that would be charged in the marketplace. I agree that 15% plus VAT is the most that would have to be paid in the market for a full management service, and was surprised at Mr Plant's comment that his own firm had confirmed it would expect to charge 15% for finding tenants and a further 15% for collecting rents and generally managing the property. Miss Ellis's figure was based upon her not inconsiderable knowledge of the lettings market, whereas Mr Hine admitted he was not personally aware of the situation and had merely 'understood' that two separate charges of 15% would apply. In preferring Miss Ellis's evidence I am mindful also of my own professional experience, which supports a maximum overall management charge of no more than 15%. In any event, Mr Hine acknowledged that by including both actual and hypothetical costs in his assessment, some double counting would have occurred.
74. The actual costs incurred in connection with the collection of rents (and actual costs are all that can be claimed under the 1961 Act) were £89,080, some 12% of the gross rents. However, for the purposes of this determination, I acknowledge Miss Ellis's 'concession' to 15% plus VAT, and therefore accept the figure of £133,132. To this must be added the repairs and renewals (which were not in dispute) and the insurance, giving a total estate management costs figure of £175,183. Having accepted Miss Ellis's figures, there is no need for me to look closely at the administration charge of £55,139 that Mr Hine had calculated, although it was apparent to me from the evidence, and from his answers under cross-examination, that in calculating that figure he had only limited financial information and personal knowledge of the subject property upon which to base his estimate.
75. The key area upon which the parties were opposed was the subject of interest, to which I now turn, and in this regard the question of how it should be calculated needs to be resolved. It was the claimant's case that a strict interpretation of para 3 of the agreed approach to valuation meant that interest on the 1993 value had to be rolled up for the whole period, and that net rent received was to be deducted at the end. No allowance was to be made for the net rents received to be applied to reducing the interest during the term. Indeed, it was submitted that I have no alternative but to adopt that approach as, being incorporated into a decision of this Tribunal, it was binding at law.
76. Miss Ellis had calculated interest on 3 bases, and adopted that which, she said, accorded with correct accounting convention. In her view, whilst being somewhat opaque, her interpretation of paras 2 and 3 of the agreed approach did not suggest the interest had to be rolled up, and her calculations on the diminishing balance basis took account of the net rents received in arriving at her interest figure of £532,000. She also said in evidence that, in reality, the claimant would probably not have had to borrow the whole of the 1993 value, but her calculations, on her third basis, assumed that it did.
77. The wording of para 3 is not as clear as it might have been and, in my judgment, could be interpreted either way. However, I cannot accept that it could possibly have been the intention of the parties, in agreeing (in an extremely short time span during the hearing of the preliminary issue) an approach that compelled anyone to calculate interest upon anything other than what is required under normal accounting convention. In reality, the net rental income could, and probably would, have been used to reduce borrowings and I propose therefore to adopt the basis used by Miss Ellis. On the basis of the 1993 value that I have determined above, the interest becomes (adopting the interest rates that she had used, as they are what the claimant would have had to pay) £591,452. The calculation is set out at Appendix 1 to this decision.
78. On the basis of the above, the assessment of holding costs is as follows:

1. Value at 25 March 1993 £1,728,000

2. Add interest £ 591,452

Subtotal £2,319,452

3. Subtract

Rents received £755,358

less Estate Management costs £175,183

£ 580,175

4. Product £1,739,277

Value of subject property at August 1997: £2,060,000

It follows, therefore, that with the 1997 value being in excess of £1,739,277 there are no holding costs applicable.

79. This deals with the majority of the substantive issues raised in this case, and as set out at para 46 above, I determine that the acquiring authority shall make an interim payment of compensation, under rule 2 of the 1961 Act, to the claimant in the sum of £2,060,000 together with interest at the statutory rate in respect of the issues decided herein. The parties are invited to make further submissions in respect of the loss of profits element.
80. The issue of costs in respect of the preliminary issue is resolved in accordance with the decision of HH Judge Rich, and I therefore determine that, in respect of that issue, there shall be no award as to costs. I shall deal with the question of costs regarding the substantive issue following submissions on the loss of profits issue, or, if that can be resolved without such submissions, or a further hearing, following receipt of formal submissions on costs by the parties. This decision shall not take effect until the question of costs is decided.

DATED 28 March 2003

(Signed) P R Francis FRICS

Loss of future profits

81. Following my invitation (para 79), written submissions have been received from the parties on the question of loss of projected future profits. The claimant said that the ultimate gross figure that would have been achieved for the development, including the value of the freehold, had been agreed between the parties, and accepted by the Tribunal, at £2,585,000. That was the amount, less sales, marketing and other costs that, were it not for the scheme, would have been available to be ploughed into the next site. A calculation based upon the agreed and determined figures in the Tribunal's residual valuation gives a loss of profits of £266,590 thus:

Total sales £2,370,000

Less Cost of sales £ 65,175

£2,304,825

Deferred over 9 months; PV of £1 at 8.5% £2,228,130

Less Cost of pre-sale works, building surveyor's fees

and finance costs £ 103,780

£2,124,350

Add Freehold investment value, deferred 9 months

at 8.5% £ 202,240

£2,326,590

Deduct Rule 2 compensation awarded £2,060,000

Loss of profits £ 266,590

82. The acquiring authority submitted that any claim for disturbance under rule 6 in this case is misconceived. No such claim was included in the notice of reference, and, if the Tribunal finds for the claimant on this point, the acquiring authority would wish to be heard specifically in relation to costs.
83. In determining a market value of the land at the valuation date, the possibility that the claimant would, absent the scheme, have engaged in a sales campaign over several months to obtain a greater figure by sales of the individual units was, it was submitted, irrelevant. The value to be obtained was the value at the valuation date, that figure being higher the less the risk that was perceived by a potential purchaser. The price the claimant achieved would, without any ongoing risk or delays, be immediately available to invest in the next project. The potential purchaser would take on the risk (reflecting his perception of that in the bid price) and it would be he who eventually made a profit.
84. To give the claimant additional compensation, the acquiring authority said, equivalent to, or even based upon the profit he had hoped to make could only be done in a valuation scenario that involved ascribing two sets of profits (out of the same ultimate value) to the same property.
85. In inviting submissions on loss of future profits under rule 6, it was submitted that I had misapplied the principles of disturbance. Whilst it may be the case that loss of profits for the temporary disruption of a business could properly be claimed, there appears to be no lawful claim for disturbance of land on the basis of loss of potential profits. This is demonstrated in McEwing and Sons Ltd v Renfrew CC [1960] SC 53. There, a firm of builders claimed, in addition to the residential development value of their land, the loss of future profits that would have been earned if they had been left to erect and sell the houses that were due to be built. Having considered fully the English authorities (Collins v Feltham UDC [1937] 4 All ER 189 and Wimpey v Middlesex CC [1938] 3 All ER 781 together with the dictum of Lord Moulton in the Australian case Pastoral Finance v The Minister [1914] AC 1083, the Court of Session (The Lord President (Clyde) and Lord Sorn) rejected the claim on the basis that the profitability of the land was reflected in the compensation for the value of the land.
86. Where, the acquiring authority said, as in the present case, the buildings have already been built, the case is a fortiori; the market value will obviously be higher because all that is left is the sales campaign – but, that market value is for the land as a whole on the valuation date.
87. In Pastoral Finance Association v Minister (NSW) [1914] AC 1083 Lord Moulton said (at 1088):

"No man would pay for land in addition to its market value the capitalised value of the savings and additional profits which he would hope to make by the use of it".

88. In 'Cripps on Compensation' (11^th Edition – 1962) para 4-228 the principle is summarised as "There would appear to be no right to a claim for disturbance of land in relation to its potentiality. An owner can only be disturbed from an actuality…." Therefore, it was submitted, an award of compensation for the loss of the claimant's profits, as an element of disturbance, would be based upon a misconception of the legal principles underlying the current system of compensation.
89. In response to the claimant's submissions, the acquiring authority said (without prejudice to its case regarding the lawfulness or otherwise of the rule 6 claim) that no reason had been given as to why the claim for loss of profits was £266,590 when the profit that had been deducted from the residual valuation in the interim decision was £193,785. If the correct figure was £266,590, then it would be that figure that had to be deducted at item C in the valuation, leaving a residual value of £1,987,000 rather than the £2,060,000 as determined. The rule 6 disturbance would then be the difference between £266,000 and £193,000 (rounded) leaving £73,000.
90. Furthermore, even if the claimant's flawed approach were accepted, the deferment of the capital receipts, as shown, was too optimistic. It is inevitable that there would be a time lag between the agreement and completion of sale on any of the units, thus the first receipts would be later than the first month. Miss Ellis had estimated at least 3 months, and given that it would take time for the first sale to be agreed, it would be fair to assume the first receipt would be in month 5, continuing monthly thereafter. It followed that the sale of the freehold would not then occur until month 13 rather than month 9, and the deferment figure for that would need to be adjusted accordingly.
91. The reworked figures become:

Sales receipts £2,370,000

Less Costs £ 65,175

Net receipts £2,304,825

Monthly receipts £256,092

Month 5 PV £1 @ 8.5% 0.96658= NPV £ 247,533

Month 6 0.960031 £ 245,856

Month 7 0.953526 £ 244,190

Month 8 0.947066 £ 242,536

Month 9 0.940649 £ 240,892

Month 10 0.934276 £ 239,260

Month 11 0.927946 £ 237,639

Month 12 0.921659 £ 236,029

Month 13 0.915414 £ 234,430 £2,168,366

Less Pre-sale works, fees and finance £ 103,780

£2,064,586

Add Value of freehold £215,000

Deferred 13 months @ 8.5% 0.915414 £ 196,814

£2,261,000

Deduct Rule 2 compensation £2,060,000

£ 201,400

92. Responding to the acquiring authority's submissions, the claimant reiterated that the interim decision fully accords with the established principles of compensation under rule 6, and the authorities relied upon by the acquiring authority are not to the point in the present case. McEwing dealt with potentiality, whereas in the instant case it had been determined that the effect of the compulsory acquisition was to deprive the claimant of profits that it would, absent the scheme, have made in its course of business as a property developer. All that was needed now was quantification of the loss. The situation in Pastoral Finance was so very different that it could not be considered to be of any assistance in this case.
93. The Tribunal, it was submitted, had found as a clear fact that the direct effect of the compulsory acquisition had been to deprive the claimant of its opportunity to make a profit that it would have made. It had been 'disturbed from actuality', and as a matter of principle it was entitled to receive compensation in respect of that loss.
94. The principles were established in Horn v Sunderland Corporation [1941] 2 KB 26 CA where Scott LJ said (at 49):

"…on a compulsory sale the principle of compensation will include in the price of the land, not only its market value, but also personal loss imposed on the owner by the forced sale, whether it be the cost of preparing the land for the best market then available, or incidental loss in connection with the business he has been carrying on, or the cost of reinstatement, because otherwise he will not be fully compensated".

95. The same principle was applied in Harvey v Crawley Development Corporation [1957] 1 QB 485 CA where Lord Denning said (at 494):

"compensation for disturbance…includes all damage directly consequent on the taking of the house under statutory powers".

96. The 3 conditions for the award of compensation under the principle of equivalence, as set out in Shun Fung were, it was submitted, plainly satisfied in respect of the claimed losses and, with the profit element not being reflected in the market value of the land (per para 38 of the interim decision), that profit must be recoverable as an item of disturbance.

Decision

97. I have now been referred by the acquiring authority to the authorities that touch directly on the point in question, particularly McEwing and Pastoral Finance, and, notwithstanding comments made in my interim decision, I am now satisfied on careful reflection their submissions are correct. McEwing and the two Divisional Court cases to which it refers (Collins and Wimpey) are good authority. The English cases in particular, whilst unreasoned and not strictly binding upon the Tribunal, are such clear authority for the proposition that compensation for land acquired from a developer cannot include prospective loss of profit from the development of land, that I cannot properly do anything but follow them.
98. I cannot accept the claimant's submissions that McEwing, dealing as it did with potentiality, was not to the point, and that the situation in Pastoral Finance was so very different as to not be relevant. I quote extensively from McEwing below as, it seems to me, the circumstances were very similar to the instant case. Although referring to the Acquisition of Land (Assessment of Compensation Act) 1919 it is in my judgment of equal applicability in terms of the 1961 Act, the jurisdiction under which this determination is made. Lord Clyde said (at 60):

"So far as Rule 2 is concerned, the value of the land is not restricted to its actual use at the time it is taken. Its potentialities must be taken into account, for these would obviously enter into the market price. Its suitability for building dwelling houses upon it would be a factor in its price as between a willing buyer and a willing seller. But these potentialities must be viewed as possibilities, and not as realised in the hands of the purchaser at the date of the take-over – Cripps on Compulsory Acquisition of Land, (10^th ed) par 1. In the present case, head (1) of the claim takes into account the building suitability of the land in question, as Rule 2 entitles the claimants to do, and it is not now maintained that their claim (3) for prospective future profits could fall under Rule 2. It obviously could not. Their contention was that it was part of their disturbance claim preserved under Rule 6.

But, in the first place, a claim for prospective profit from an enterprise in the future is not a disturbance claim at all. The typical disturbance claim is for payment in respect of expenditure rendered useless by the compulsory acquisition. It relates to a liability or an expense already incurred at the date of the compulsory acquisition. As Cripps on Compulsory Acquisition, (10^th ed) par 4-228 says: "There would appear to be no right to a claim for disturbance of land in relation to its potentiality. An owner can only be disturbed from an actuality and only compensation for the value of the potentiality may be recovered" (under Rule 2). Head (3) of the present claim therefore is not a disturbance claim at all.

In the second place, however, the matter can in principle be carried further. To permit the claimants to secure, in addition to the market value of the land at the date of the compulsory acquisition, something additional in respect of the potential profit which they reasonably hoped to make from the land by building houses on it and selling them, is more than the statutes contemplated that they should get. It would give them more than their loss at the date when the compulsory acquisition takes effect. For this is the material date. It was never envisaged that, in addition to the existing value of the land taken, the future profits, which the proprietor might have made out of the land had it not been taken, should also be paid. As Lord Moulton said in (Pastoral Finance) at p 1088:

'That which the appellants were entitled to receive was compensation not for business profits or savings which they expected to make from the use of the land, but for the value of the land to them. No doubt the suitability of the land for their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shown would probably attend the use of the land in their business furnished material for estimating what was the real value of the land to them. But that is a very different thing from saying that they were entitled to have the capitalised value of these savings and additional profits added to the market value of the land in estimating their compensation. They were only entitled to have them taken into consideration so far as they might fairly be said to increase the value of the land. Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it. Now it is evident that no man would pay for land in addition to its market value the capitalised value of the savings and additional profits which he would hope to make by the use of it'.

It is quite true that these observations are made in a case dealing with the Public Works Act, 1900, of New South Wales. But the case was not decided on any specialities of the New South Wales Act, Part VII of which contains a compensation code similar to the Lands Clauses Consolidation (Scotland) Act 1845. Moreover, the authorities referred to in the course of the argument were all authorities on the interpretation of the Lands Clauses Consolidation Act 1845. It would be wrong in principle, in my opinion, if this third head of claim, regarding future profits, were to be allowed as a legitimate addition to the market value of the land. This is not even a case of a firm's business premises being compulsorily acquired in whole or in part. So far as the claimants are concerned, the site in question is part of the stock of raw material of the business. By their processing of this raw material and selling the result they anticipate making a profit. They are entitled to the market value of their raw material, so that they may use the surrogatum for making profits in other ways, but, if they get the price of their raw material, they cannot also get something in respect of the profit which they hoped to make upon it. For, if so, they would have the means of securing that profit twice over. Prospective future profits on future prospective developments, therefore, cannot be claimed in addition to the market value of the land."

99. In referring to Collins and Wimpey, Lord Clyde concluded that whilst both decision were brief, and no opinions were delivered by the Court, they appeared to justify the proposition taken from them and as quoted in Cripps on Compulsory Acquisition of Land (10^th ed) par 4-236 that "Loss of profits on development of a building site is not a subject of compensation. The profitability of the land has already been reflected in the market value of the land."
100. In this case, of course, the acquiring authority is right when it says that the market value of the land will be higher [than it would as a building site] because all that is left is the sales campaign. However, that fact was reflected in my residual valuation of £2,060,000 set out in the interim decision. That valuation established how much a purchaser in the open market would decide to pay for the land, in its then current state, and at that point in the development cycle. In deciding how much to pay, he would deduct from the estimated ultimate realisation figure the amount of profit that he would hope to make from the completed development (together with the other costs such as finishing off works, marketing and finance), because if he did not, he would not make a profit.
101. What the claimant receives by way of compensation (the value of the land) is a sum that it can invest elsewhere in order to make a profit. It is put in the same position as it would have been in, at the valuation date, if the land had not been compulsorily acquired. If the claimant is kept out of its money for any period after the date it loses possession, it will receive interest – to reflect what that money would have been worth to it if it had been paid on the date of entry. Since the claimant obtain compensation for the land that reflects its potentiality for profit making, and interest that reflects the cost of borrowing money to invest in another profit-making venture, it is fully compensated.
102. It follows that, on the basis of the authorities to which I have referred, I am satisfied that no claim lies for compensation for disturbance in respect of loss of projected profits under Rule (6). The claimant's submissions as to either the applicability, or the calculations in respect of, the loss of profits do not, therefore, fall for consideration.
103. This decision concludes my determination of the substantive issues in this reference and will take effect when the question of costs has been determined. At that point, and not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules will come into operation. A letter accompanying this decision sets out the procedure for submissions on costs in writing.

Dated: 28 March 2003

(Signed) P R Francis FRICS

ADDENDUM ON COSTS

104. Submissions have been received from the parties. The claimant seeks all of its costs in the reference other than those incurred in connection with the preliminary issue where it was determined that there shall be no order for costs.
105. Although compensation was determined in the sum of £2,060,000 and a sealed offer had been made (under Rule 44 of the Lands Tribunal Rules 1996) of £2,100,000 on 17 January 2002, that offer was stated to be inclusive of all the claimant's costs. With the claimant having incurred total legal, surveyors and associated costs in excess of £150,000 net of VAT, if that amount is added to the sum determined, the sealed offer is substantially exceeded.
106. Even if the costs relating to the preliminary issue and those paid to the claimant's former solicitors are deducted, the remaining sum amounts to £109,378 net of VAT. Again, the sealed offer, which was in any event stated to be inclusive of the claimant's costs, was comfortably exceeded.
107. The acquiring authority said that the latest statement of law (to be found in the Court of Appeal decision in Purfleet Farms Ltd v Secretary of State [2003] 02 EG 105) clearly confirmed that, in the absence of special reasons why it should not do so, the Lands Tribunal would award the claimant its costs if it had succeeded in achieving compensation in excess of any offer previously made by the acquiring authority.
108. In this case it was acknowledged that the claimant had been awarded a sum which, by the time costs are added, exceeded the acquiring authority's Rule 44 offer. However, it was submitted that special circumstances exist for depriving the claimant of the whole, or at least part, of its costs in that its case had been formulated as a rule (2) claim (under s.5 of the 1961 Act) but was subsequently partly pursued as a rule (6) (loss of profits) claim, that element of which had not only served to extend the proceedings but which it also lost.
109. The acquiring authority said that the claimant should not be entitled to any costs incurred in respect of the additional submissions on the rule (6) claim and neither could it bring into the equation costs associated with the preliminary issue. Furthermore any costs incurred by the claimant after the rule 44 offer of 17 January 2002 must be ignored in calculating whether or not the value of that offer had, with costs, been exceeded.
110. This last point is significant, and I invited the claimant to advise as to the costs incurred up to that date. In response, they said that, as far as it was possible to do so without employing a costs draughtsman, the estimated costs to 17 January 2002 amounted to £80,950 exclusive of VAT and the preliminary issue fees. Thus, if that figure was added to the compensation awarded of £2,060,000 (making £2,140,950), the acquiring authority's combined offer of £2,100,000 was comfortably exceeded.
111. In these circumstances I can see no reason why the claimant should be deprived of any of its costs (excluding those relating to the preliminary issue). Furthermore, I concluded in t he interim decision that it would be reasonable for the claimant to pursue the rule (6) claim, and there can be no justification therefore in depriving it of its costs related to that element.
112. I therefore determine that the acquiring authority shall pay the claimants costs of this reference (other than those associated with the preliminary issue) such costs to be subject to a detailed assessment by the Registrar if not agreed.

Dated: 28 May 2003

(Signed) P R Francis FRICS


 


APPENDIX 1

ACQ/147/2000

Interest calculation: Diminishing balance

Period	Days	Interest rate %	Balance b/f	Net rent received	Balance	Interest calculation	Total interest	Balance c/f
25/3/93-23/6/93	91	.08	£1,728,000	0	£1,728,000		£34,465	£1,762,465
24/6/93-28/9/93	97	.08	£1,762,465	£29,714	£1,732,751		£36,838	£1,769,589
29/9/93-23/11/93	56	.08	£1,769,589	£29,714	£1,739,875	£21,355
24/11/93-24/12/93	31	.075				£11,082	£32,437	£1,772,312
25/12/93-3/2/94	41	.075	£1,772,312	£29,714	£1,742,598	£14,680
4/2/94-24/3/94	49	.075				£17,545	£32,225	£1,774,823
25/3/94-23/6/94	91	.075	£1,774,823	£29,714	£1,745,109		£32,631	£1,770,740
24/6/94-11/9/94	80	.0725	£1,777,740	£33,580	£1,774,160	£27,715
12/9/94-28/9/94	17	.0725				£ 5,890	£33,605	£1,777,765
29/9/94-7/12/94	70	.0775	£1,777,765	£33,580	£1,774,185	£25,924
8/12/94-24/12/94	17	.075				£ 6,093	£32,017	£1776,202
25/12/94-1/2/95	39	.0775	£1,776,202	£33,580	£1,742,622	£14,430
2/2/95-24/3/95	51	.0825				£20,088	£34,518	£1,777,140
25/3/95-23/6/95	91	.0825	£1,777,140	£33,580	£1,743,560		£35,862	£1,779,422
24/6/95-28/9/95	97	.0825	£1,779,422	£34,918	£1,744,504		£38,248	£1,782,752
29/9/95-12/12/95	75	.0825	£1,782,752	£34,918	£1,747,834	£29,629
13/12/95-24/12/95	12	.08				£ 4,597	£34,226	£1,782,060
25/12/95-17/01/96	24	.08	£1,782,060	£34,918	£1,747,142	£ 9,190
18/1/96-7/3/96	50	.0775				£18,548
8/3/96-24/3/96	17	.075				£ 6,103	£33,841	£1,780,983
25/3/96-5/6/96	73	.075	£1,780,983	£34,918	£1,746,065	£26,191
6/6/96-23/6/96	18	.0725				£ 6,243	£32,434	£1,778,499
24/6/96-28/9/96	97	.0725	£1,778,499	£35,504	£1,742,995		£33,582	£1,776,577
29/9/96-29/10/96	31	.0725	£1,776,577	£35,504	£1,741,073	£10,721
30/10/96-24/12/96	56	.075				£20,034	£30,755	£1,771,828
25/12/96-24/3/97	90	.075	£1,771,828	£35,504	£1,736,324		£32,110	£1,768,434
25/3/97-5/5/97	42	.075	£1,768,434	£35,504	£1,732,930	£14,955
6/5/97-5/6/97	31	.0775				£11,406
6/6/97-24/6/97	19	.08				£ 7,217	£33,578	£1,766,508
25/6/97-9/7/97	16	.08	£1,766,508	£11,327	£1,755,181	£ 6,155
10/7/97-6/8/97	28	.0825				£11,108
7/8/97-8/8/97	2	.085				£ 817	£18,080	£1,773,261

Aggregate interest £591,452