Pepper (UK) Limited v Burnley Borough Council

Where the value of compulsorily acquired mortgaged land is less than the debt secured on it, Compulsory Purchase Act 1965 section 15 permits the mortgagee to seek a determination of compensation. The amount determined is payable to the mortgagee in satisfaction or part satisfaction of the secured debt.

A basic loss payment cannot be awarded where no written claim for it has been made to the acquiring authority. The absence of such an award does not prevent the person entitled from making a claim later.

A local authority acquired a vacant and seriously deteriorated long leasehold house by general vesting declaration. Its value was less than the mortgage debt secured on the property. The registered mortgagee made a reference under section 15(1) of the Compulsory Purchase Act 1965 after the mortgagor ceased to engage in compensation negotiations.

The mortgagee did not dispute the acquiring authority's valuation evidence. The Tribunal had to determine the compensation payable to the mortgagee and whether a basic loss payment could also be awarded.

1. Compensation was determined at £20,000, plus statutory interest from the valuation date. The claimant had made a valid reference under section 15(1) of the Compulsory Purchase Act 1965. As the value of the acquired land was less than the secured debt, section 15(2) required the determined compensation to be paid to the mortgagee in part satisfaction of that debt.
2. The Tribunal accepted the acquiring authority's expert valuation. It was based on the property's poor and unusable condition at the valuation date and on the available comparable sales evidence. The claimant did not challenge the proposed figure.
3. No basic loss payment was awarded. There had been no written claim to the acquiring authority. The Tribunal applied the explanation in Pramar v The London Borough of Barnet [2015] UKUT 0510 (LC) that section 33E of the Land Compensation Act 1973 requires such a claim. The interested party remained free to make one.
4. The decision was final on all matters other than costs.

not stated in the judgment.