Case No. UKUT-0074-(LC)

17. The first claimant, Mr Alfred Yazdiha, is a property investor of Dollis Hill, London N3, trading as Alfred Yazdiha “Luxury Home Provider to Professionals”. He, along with the second claimant (his father-in-law) purchased the leasehold interest in the property on 5 February 2010 for the purpose, it was said, of providing Mr Fatemy with a source of income. The property was subsequently let – the tenant remaining in occupation at the valuation date. Mr Yazdiha said that the property was bought without a mortgage (properties of that type of construction being virtually un-mortgageable), but loans towards the purchase were obtained through re-mortgaging other properties and through business loans. Mr Yazdiha acknowledged that they had first been notified of the regeneration proposals in 2013, and of the possibility of CPO measures being pursued during 2014.18. The itemised claim for compensation, Mr Yazdiha said, was made on the very day the property was vested in the Council. In an email to Mr Joao DaSilva (the Council’s Leasehold and Voids Officer, Estate Regeneration Team) dated 19 January 2016, to which the claim was attached, he said:“I am sure you do not agree with our claim figure but we will consider any reasonable offer. Please note that our property was held for investment and we are only requiring a reasonable compensation to replace the same. We would be delighted if you could make suggestion of any property which we can buy with the compensation monies you would offer.” Apart from receiving, on the same day, a copy of an internal email from Mr Richard Barrett, the Council’s Estates Regeneration Manager, to Mr DaSilva asking him to concentrate on gaining possession of the property due to [the claimants’] failure to provide vacant possession, nothing further was heard for several months. Eventually, following various chase-ups which Mr Yazdiha said were also ignored, he wrote to Mr Barrett on 8 June 2016, reminding him that to date no offer of compensation had been received and advising him of the anguish that was being caused by the lack of progress, and the fact that their plans for reinvestment of the proceeds were being delayed. The email concluded with the words “If I do not hear from you within the next seven days, I will issue a money claim against the Council without further communication.” Mr Barrett responded on 9 June saying that a full response would be provided “within the next week.” 19. An email was eventually sent by Mr DaSilva on 20 June 2016 confirming receipt of the claim for compensation and advising that the claimants’ assessment of market value (then at £320,000) was not agreed, and that the Council would be arranging for DVS to undertake a valuation as at the vesting date (to update the one that was undertaken in July 2015). The email also advised that, if agreement could not be reached, the Council “will be able to make an offer of compensation based upon 90% of the total compensation due as estimated by the Council until an agreement is reached.”20. In response, on 21 June, Mr Yazdiha advised Mr DaSilva that due to the Council’s delays and the fact that there were still no concrete proposals on the table, the valuation should be at “today’s date” as, with increasing property values as time goes by, the chances of the claimants being able to replicate what they had were becoming less and less. He also said that unless such proposals were received by 24 June, the court claim would proceed and that the issue fee of £10,000 would also be claimed. 21. There followed an intense flurry of email exchanges between Mr Yazdiha, Mr DaSilva, Mr Barrett and, latterly, Mr Patel. Mr Barrett said on 21 June that “it would appear you do not fully understand the CPO process and rules governing the acquisition of your property.” He said that rather than pursuing a money claim, a meeting with Mr DaSilva might be more beneficial, and went on to say:“As he [Mr DaSilva] has explained, whilst we are in dispute in regard to the sum payable, the Council is willing to pay 90% of our valuation figure immediately. The remainder is payable on agreement of purchase price either through negotiation or independent determination via court as appropriate.”Mr Yazdiha’s response to that (on the same day) was that he was aware of the CPO process (indeed referring to the matter being finally resolved through the tribunal process, rather than court as Mr Barrett had wrongly said), and reiterated that only having received confirmation of the claim some 6 months after it was made meant that the claimants were continuing to be kept out of the money to which they were legally entitled.22. The formal offer of £246,037.50 was then eventually made in an email from Mr DaSilva on 24 June 2016. The offer was broken down into its constituent parts (set out in paragraph 8 above). In reply, on 29 June, Mr Yazdiha called the offer abysmal, and reminded him that at a meeting the two of them had in December 2015, before the valuation date, the Council had verbally offered £270,000. 23. Mr Patel then got involved, and sent an email on 1 July 2016 reminding the claimants of the basis of the advance payment and saying:“Either party can of course apply to the First Tier Tribunal [incorrect] for a determination of the compensation entitlement. However, our preference is to come to an agreement with the claimant. I would therefore propose that the claimant appoints a chartered surveyor to prepare a Red Book valuation report on his behalf. Both parties’ surveyors will then be in a position to discuss the comparable evidence and begin to narrow the points in dispute. The claimant will be able to reclaim his reasonable professional fees.”On 5 July, Mr Yazdiha confirmed acceptance of the advance payment offer and said he would appoint a surveyor to act on his behalf if required. 24. There was then a further delay, the Council insisting that it had not received that confirmatory email. In the meantime, Mr Yazdiha said that he had prepared the court application and advised the Council on 10 August that he would be issuing it on 24 August. On 11 August he confirmed that he would not be appointing a surveyor as “we have more than adequate historic experience and expertise…and the comparables were already forwarded to you several weeks ago.”25. Also on 11 August, Mr Patel advised that because the Council had not received Mr Yazdiha’s email of 5 July confirming that the claimants were prepared to accept the advance payment until it was re-sent very recently, it would not be possible to meet the deadline that the claimants had set for receiving the relevant forms for completion, and that “we will get back to you shortly”. Mr Yazdiha subsequently confirmed, on 17 August, that, having heard nothing further, he had lodged the claim and particulars at the County Court. 26. The Council’s ‘Receipt of Compensation’ form was finally submitted to the claimants on 2 September 2016, which Mr Yazdiha returned, signed, on 7 September. Due to the further delays occasioned by having to appoint a solicitor to receive the payment, Mr Yazdiha told me that it was not until 12 December 2016 that his solicitor acknowledged that it had been received, that being nearly 12 months after their income from the property ceased. It was also claimed that the Council had not paid over the advance payment within three months of it being requested (as required under section 52(2) of the 1973 Act). Three months and five days elapsed between Mr Yazdiha returning the signed acceptance form on 7 September to the date when his solicitors acknowledged receipt of the advance payment.27. The claimants were therefore claiming from the Council all costs, including loss of rent suffered from the vesting date until the final compensation is determined, together with fair compensation for the property’s value and the court fee that had been paid.28. The Council said that it had been seeking to acquire the property by agreement since May 2014, but to no avail even though all the other long leasehold interests in Gloucester House have been successfully acquired by agreement with the occupiers. At the time it served its original statement of case, the Council said that the claimants were being professionally represented by Perrin Myddleton Solicitors LLP and by Dunsin Chartered Surveyors but that was no longer the case. The Council’s original valuation of the leasehold interest at £245,000 (from July 2015) had been revised upwards to £270,000 in Mrs Covill’s expert witness report of 27 September 2017, and with the associated basic loss payment at 7.5% and £10,000 estimated claimant’s costs and professional fees entitlement, the total amount offered was £305,625. That was the offer that remained on the table, less the advance payment already paid. The disturbance element, Mr Patel explained, was assessed at £3,750 Stamp Duty Land Tax (“SDLT”) at the rate applicable on the valuation date, and £3,125 for legal fees and the same for other professional fees, these being based upon typical packages agreed in other similar cases. As to the alleged delay in making the advance payment, the clock would have started ticking when the claimants’ solicitor formally provided the required information, and in any event, even if the three month period for payment began to run on 7 September, the Council’s banking records showed that the money was actually transferred by BACS on 9 December 2017– only two days late. 29. Mr Patel only became directly associated with this matter as the relevant Residential Property Manager in July 2016. He said that he had a number of staff working for him who would have been more closely involved, and on being asked if he had ever met Mr Yazdiha, he said he could not precisely recall, but “may have met him once” (although in Mr Yazdiha’s response to Mr Patel’s first email of 1 July 2016 he reminded him that they had met at his property “three years ago”). Mr Patel was unable to explain how it was that the Council had allegedly made a verbal offer of £270,000 to the claimants in December 2015, as the offer eventually made was based upon the valuation at £245,000 that had been carried out by DVS in July 2015. As to the alleged delays in payment of the advance payment, it was his view that it had been made in reasonable time. However, on being asked by Mr Yazdiha about the delays that he had encountered from late 2015 until the money was actually paid over to the claimants in December 2016, Mr Patel acknowledged that his was a small team dealing with a very large regeneration programme, that they were under significant pressure and “sometimes things get overlooked”. 30. I now turn to consider the rest of the evidence on an issue by issue basis. Issue (1) The value of the property 31. Mr Yazdiha said that whilst he accepted Mrs Covill’s evidence as an expert (as confirmed by the details of the six principal comparables of open market, arms-length, ex-council flat sales that she had relied upon set out in the agreed statement of facts), he insisted that because the property had a GIA of 55 m2, it was larger than many one-bedroom flats and could easily, and at very modest cost, be converted into a two-bedroom unit. This would be achieved by converting the existing spacious kitchen into a second bedroom, and providing a small open plan kitchen area within the living room. He said that Mrs Covill had not taken this into consideration, nor the positive effects that possibility would have on value. 32. Mr Yazdiha provided at the hearing a revised spreadsheet (an earlier version had been produced and submitted to the Council as part of the negotiations) based upon Mrs Covill’s schedule of comparables to demonstrate that, based upon the average prices per m2 of the sold flats, adjusted to January 2016 by the Nationwide Building Society and UK HPI property price indices, the value of the subject property came to approximately £425,000. However, it was pointed out by the Council that this methodology was clearly flawed. For each of the comparables, Mr Yazdiha had divided its sale price by its EFA to give a value per m2. He then totalled the sale prices of all six comparables and their EFAs and divided the resultant totals by six to give an average price per m2 (£7,722 per m2). That figure was then multiplied by the GIA of the property (55sq m) to give the suggested figure of £425,000. 33. Mr Yazdiha had therefore multiplied the average EFA by the subject’s GIA which was not comparing apples with apples. If the multiplier had been by the accepted EFA (39 m2) the result would have been, on the claimant’s basis, £301,158. Mr Yazdiha did not seem to take the error point. He noted that Mrs Covill took EFA figures from the Valuation Office Agency’s own records, and had also taken GIA figures from Energy Performance Certificate (“EPC”) calculations where they were available. Mr Yazdiha said that EPC figures were notoriously unreliable and he had taken the GIA of the property from Dunsin’s valuer’s measurement. 34. The claimants also included a list of other comparables that produced even higher average values per m2 (bundle p.414) but accepted that these were not sold properties, and were merely asking prices in March 2017 taken from information (mainly Zoopla) on the internet.35. Mrs Covill produced a comprehensive, well researched and clear expert witness report. She described the property as in average condition and said that the residential market for flats in the area was active from 2014 to the valuation date, and remained so until mid-2016. She pointed out however, that due to the non-traditional form of construction, the market for the property would be limited because traditional mortgage providers were reluctant to lend on such properties. Nevertheless, she produced details of six flats that were similar in age, design and construction that had been sold in the area between August 2014 and July 2016. She then made allowances for material differences such as specific location and proximity to rail and bus routes, and relied upon the HPI and Nationwide Price Indices to make appropriate adjustments for time. All of these comparables and the information relating to them were accepted by the claimants and were, as I have said, included within the joint statement of agreed facts. From this information and her inspection of the property Mrs Covill concluded that its open market, vacant possession value as at the valuation date was £275,000.36. Following the hearing Mr Yazdiha submitted a revised plan of the layout of the flat and said that in his view the enclosed balcony should have been taken into account when calculating the EFA whereas Mrs Covill had excluded both the balcony and the entrance hall/corridor within the flat when converting GIA to EFA. Although not obliged to do so once the hearing had finished, particularly as the question of floor areas had been agreed and comprehensively dealt with in evidence, I sought her comments on the point. In response, copies of the relevant provisions within the RICS Code of Measuring Practice were provided, from which it is clear that whilst open balconies, walkways and the like will be included in GIA, they are specifically excluded from EFA. From Mrs Covill’s own layout plan and area calculations, it is clear that she followed the Code to the letter, and I accept those submissions. 37. This has been a long and tortuous saga, which in my judgment could and indeed should, have been avoided.38. I note from the papers (bundle p.438) that in a meeting between Mr Yazdiha, Mrs Covill and Mr Paul Pierides of the VOA on 7 November 2017, Mr Yazdiha confirmed that he would not be relying upon the valuation he had obtained from Dunsin Chartered Surveyors in 2015, as he was not impressed with the valuer who came to inspect the property. Asked whether his own valuation at £400,000 was as at the valuation date, Mr Yazdiha (according to the meeting note) indicated that that was not necessarily the case, and that the claimants were open to dialogue, but that the Council’s revised valuation of £275,000 could not be agreed. 39. The Dunsin valuation was included with the claimants’ documents. Following consideration of a number of comparable sales, it gave an estimated open market value “assessed in accordance with the compensation code” at £290,000 as at 17 September 2015 on the basis that it was available with vacant possession. That was within a whisker of the figure that Mr Yazdiha said he was verbally offered by the Council in December 2015. Mr Yazdiha chose to dis-instruct Dunsin because, he said, he did not like the young man who carried out the inspection and thought he lacked experience in the area. There was no indication that further valuation advice was then sought or obtained.40. In my judgment, Dunsin’s valuation was well within the correct range. Indeed, the claimants’ own assessment of value as at the valuation date, and included within the claim, was £320,000, only about 5% more than Dunsin’s had valued it at in September 2015, and not the £400,000 now claimed. There was no persuasive evidence to support this latter figure, Mr Yazdiha’s calculations suggesting a value of around £425,000 based on prices per m2 being clearly incorrect, and the additional comparables being asking prices in March 2017. I am entirely satisfied that Mrs Covill undertook a thorough and professional job, and indeed Mr Yazdiha stated that he had no issue with her report, or the comparables she produced. With there being not a scintilla of evidence to support the claimants’ figure, I accept her assessment of value at £275,000. Issue (2) The basic loss payment 41. In accordance with section 33(A)(2) of the 1973 Act this is calculated at 7.5% of the value of the property, and is therefore in the sum offered by the Council: £20,625. Issue (3) Disbursements 42. The claims under this head were summarised in the Claimants’ statement of case thus:Valuation fee (Dunsin Chartered Surveyors) £ 1,200.00Stamp Duty for purchase of replacement investment property (5% of £400,000) £20,000.00Legal & professional costs £14,354.00Furniture in property used by tenant £ 2,500.00Loss of rent