Mavis Hilda Mary Meredith v King’s Lynn & West Norfolk Borough Council

Under section 5(2) of the Land Compensation Act 1961, compulsory-purchase compensation is the open-market sum which a willing seller might expect to obtain. A purchaser of a severely derelict listed building must be assumed to be reasonably informed and, where the project is substantial, likely to obtain appropriate professional advice about restoration costs. Potential development or separate-use value depends on a realistic prospect which an informed purchaser would recognise.

An actual arm’s-length price paid by a knowledgeable purchaser may provide the best evidence of value, even where restoration cannot yield a commercial profit. For costs, an unconditional written offer made before a reference may engage section 4 where the award does not exceed it; it need not remain open when the reference is made.

The claimant sought compensation after the council compulsorily acquired her Grade II listed Manor House, adjoining cottage and grounds. At the agreed valuation date, 18 September 2013, the property was virtually derelict. The claimant contended for compensation of about £360,000. The council contended for a much lower figure, relying on the exceptional cost and risk of repair.

The Tribunal had to determine the freehold’s open-market value under section 5(2) of the Land Compensation Act 1961. It considered restoration costs, the potential of the cottage and garden land, planning prospects, comparable properties, and the price paid by Professor Rodwell after the acquisition. The addendum determined the parties’ costs under section 4 of that Act.

1. Compensation was determined at £125,000. Section 5(2) of the Land Compensation Act 1961 required the Tribunal to assess the sum which the land might be expected to realise if sold on the open market by a willing seller.

2. The assumed purchaser would be reasonably informed. Given the scale, complexity and listed status of the near-derelict property, that purchaser would seek professional advice rather than rely on a simple adjustment to published building-cost tables. The likely anticipated cost of restoring the main house and cottage, including VAT and fees, was nearer £1 million than the claimant’s estimate.

3. The Tribunal rejected claimed hope value for a new dwelling on the brown land. Planning and highway obstacles made consent unlikely. The cottage had some possible additional value, but only a remote prospect of separate use or sale, assessed at £25,000 rather than £50,000. The blue-land transaction was also affected by the costly obligation to construct a boundary wall.

4. The completed property would have been worth about £700,000 to £800,000, but the market for the unrestored property was exceptionally limited and offered no prospect of developer profit. The £125,000 paid by Professor Rodwell was the best and most reliable evidence of market value because he was knowledgeable, had investigated the property, understood the financial risks and was nevertheless a willing buyer. The Tribunal applied the reasoning in Hemingby Agricultural Traders Ltd and Another v East Lindsey District Council [2010] UKUT 390 (LC) that a loss-making restoration project may still have an underlying value.

5. On costs, the claimant was ordered to pay the council’s costs incurred after 15 April 2015, assessed on the standard basis if not agreed. A pre-reference unconditional offer may engage section 4(1)(a) of the Land Compensation Act 1961; it need not be open when the reference is made. The costs of the council’s building expert were disallowed in full because his evidence gave the Tribunal no real benefit.

not stated in the judgment. The judgment records that the claimant’s judicial-review challenges to the general vesting declaration were dismissed in the High Court before the property was transferred, but this reference was a first-instance compensation determination in the Upper Tribunal.