Mustafa Behic & Ors v Northumberland County Council

Introduction

1. This is a decision to determine the compensation payable by Northumberland County Council (“the Council”) to Mustafa Behic, Mermer Ltd and Orhan Behic (“the claimants”) following the compulsory acquisition of land and premises at 4 & 4A Station Road, Blyth, Northumberland (“the reference land”) pursuant to The Northumberland County Council (Blyth Town Centre) Compulsory Purchase Order 2010 (“the CPO”).

2. The compulsory acquisition was due to the reference land (Plots 23 & 24) and many other sites being required principally in connection with the provision of a new 65,000 sq ft Morrison’s foodstore and car park at Regent Street, Blyth, to replace an earlier and much smaller 1970’s built first-generation supermarket that formerly traded as Presto. Most of the required sites have been acquired by agreement, and it is understood that this reference is the only one under this CPO to proceed before the Upper Tribunal.

3. The claimants did not appear at the hearing and were not represented. Mr Martin Carter of counsel appeared for the acquiring authority and called Ms Elizabeth McLoughlin BSc (Hons) MRICS of Sanderson Weatherall, Newcastle upon Tyne, who provided a comprehensive statement setting out the background to the scheme and the acquisition of the reference land, and gave expert evidence relating to the value of the land and the extinguishment of the claimants’ businesses. Facts

4. Prior to the hearing, the Council had helpfully prepared a draft statement of facts and issues to be determined which was submitted to the claimants, but despite several attempts to elicit their agreement, no response was received. Nevertheless, the contents do not appear to me to be controversial, and from this document together with the claim, the Council’s statement of case and its expert evidence, I find the following facts

5. The reference land comprised, at 4 Station Street, a predominantly brick and part rendered two-storey commercial unit consisting of, at ground floor, a hot food takeaway trading as “Marmaris Kebab and Pizza House” that contained a retail sales area and serving counter together with a preparation area. An open staircase led to the first floor which contained a kitchen/food preparation area along with a walk-in cold store. A wc and staff amenity area was located off the landing. The building, which had a net internal floor area of 106 sq m (1,141 sq ft) was believed to have been constructed in the 1960s. It had subsequently been extended, particularly to the rear to create 4A Station Street. This was a basically constructed single storey warehouse/garage unit approached over a narrow entrance lane and small yard (suitable only for small vehicles) to the east of No. 4. It was constructed of brick with a mono-pitch roof corrugated roof over a steel frame and other than mains electricity had no services connected. Although physically attached to No. 4, the buildings were not interlinking and were thus capable of separate occupation, however it should be assumed that the occupier of 4A would need to have use of the wc facilities and water supply in No.4. No. 4A was suitable for secondary retail sales or other quasi-commercial uses such as a small repair shop. The net internal area was 95 sq m (1,024 sq ft).

6. The premises were located on the north-west edge of Blyth town centre in a predominantly tertiary retail zone and adjacent to residential areas lying to the north and north-west. There was a Council owned public car park immediately next door to the reference land to the west and three small shops to the east (fronting Regent Street) which had consisted of a Pizza King takeaway, a musical instrument shop and a mobile phone shop trading as The Phone Doctor. All three of those units ceased trading between 2005 and 2010. Within the vicinity there was also a florist, a veterinary surgery, furniture shop, hairdresser and a frozen food store together with a cycle shop, sandwich bar and a taxi office.

7. The freehold of the reference land was owned by the first claimant, Mr Mustafa Behic who purchased it on 27 March 2007 for £50,000. No.4 was said to be subject to a lease (which has not been produced) to Mermer Ltd (the second claimant), the Company that ran the takeaway and of which the freeholder’s wife Susan was the sole director. The first claimant was an employee of the Company. The third claimant, Mr Orhan Behic (Mr Mustafa Behic’s son), held a lease of No.4A and operated a retail unit known as “Bits & Bobs & The Phone Shop” in addition to, according to the claim document, also being employed by the second claimant.

8. In February 2008, the first claimant attended a meeting at which the Council’s regeneration proposals for the area were explained, and was advised that it was intended to acquire all the land required by agreement wherever possible. The Council’s intentions were then confirmed to the claimants in writing and, following an inspection of the reference land by its agents, Sanderson Weatherall (“SW”) at which, according to the Council’s expert, Mr Behic advised that he was not interested in receiving an offer for the land), an offer of £115,000 was nevertheless made in February 2009. There having been no response, the offer was re-issued in July 2009. Following that, and a recommendation by “SW” that he appoint a surveyor to act on his behalf, the first claimant engaged Mr Alistair McGillivray of John McGillivray, Chartered Surveyors. Unsuccessful negotiations then ensued between January and May 2010. The CPO was made on 9 July 2010, and an objection was lodged by the first claimant in August 2010. In that month, Mr McGillivray advised that he was no longer acting. In September 2010 SW provided the claimants directly with details of potentially suitable premises for the relocation of the claimants’ businesses.

9. Following notification on 12 October 2010 from Rook Matthews Sayer (“RMS”) that they had been appointed to act as the claimants’ agents, and that a claim for compensation in accordance with the provisions of the Land Compensation Act 1961 would be forthcoming, SW provided them with schedules of potential relocation sites that were available in the market. This was updated in January 2011. The first claimant attended the public inquiry into the CPO in March 2011. In April 2011, the first claimant was advised that if the CPO was confirmed, possession of the reference land would be required on or around 31 January 2012. The CPO was confirmed by the Secretary of State on 3 June 2011 and on 22 June the Council’s notification of its intention to execute a General Vesting Declaration (“GVD”) was served.

10. During the CPO process, discussions had continued between the claimants’ agents and the Council particularly in respect of a site on the corner of King Street and Regent Street, Blyth, a few yards away from the reference land, which was partly owned by the Council, and partly in private ownership. The Council subsequently advised that it was prepared to dispose of its part for the construction of two retail units subject to planning permission and other matters being resolved, and provided details of the private owner so that the claimants could contact them direct. Eventually RMS advised SW that the proposed scheme was not financially viable and negotiations in that regard terminated.

11. The GVD was made on 18 October 2011 and the reference land formally vested in the acquiring authority on 31 January 2012 (which is the valuation date for the purposes of this reference). Although a request for a short extension to the claimants’ occupation was agreed in principal subject to a tenancy at will being formally entered, the documentation was not completed and possession was finally obtained by forced entry on 6 February 2012 – the claimants stating at that time that they would not be removing any of the catering or other equipment or the remaining stock at No.4A – this all subsequently being sold at auction by the Council.

12. A formal claim for compensation was eventually made by RMS on 15 March 2013 without supporting evidence. On 8 July 2013, the first claimant advised the Council that he had dis-instructed RMS and, also, that he “did not want any further meetings with his solicitors” who at the time were Bond Dickinson, Newcastle upon Tyne.

13. The Notice of Reference was eventually made by the Council on 16 September 2015 together with a brief statement of issues which noted that a formal claim for compensation had yet to be received from the claimants. A response was filed by the first claimant on 28 October 2015 together with a statement of case and a claim amounting to £301,306.40 plus a basic loss payment calculated (incorrectly) at £12,000. The Council’s statement of case in reply was filed on 11 December 2015. In an email to the Tribunal dated 8 February 2017 the Council’s solicitors pointed out that neither its statement of case nor Ms McLoughlin’s expert witness report of 15 February 2016 had dealt with the claims by the second and third claimants. Permission was thus sought to formally join the second and third claimants to the reference, to file an amended statement of case, and submit a brief supplementary expert report to cover these claims. Permission was granted by an Order dated 16 February 2017 and the relevant documents were filed and served on 27 and 28 February 2017 respectively. Issues

14. The issues for determination can be summarised as: First claimant 1) Value of the freehold interest in the reference land 2) First claimant’s time Second claimant Losses pursuant to the total extinguishment of the business carried on by Mermer Ltd at 4 Station Street Third claimant Losses pursuant to the total extinguishment of the business undertaken by Mr Orhan Behic at 4A Station Street The Claim

15. The claim that accompanied the first claimant’s statement of case dated 28 October 2015 was set out thus: Heads of claim Amount claimed Freehold interest £225,000.00 (Plus statutory basic loss payment) Total extinguishment of business Loss of profit £20,000.00 Loss on forced sale of equipment: Value to owner £40,000.00 Less net proceeds from sale £ 1,210.00 £38,790.00 Loss on forced sale of stock (Value to owner) £ 5,000.00 Redundancy payments Mustafa Behic £3,024.00 Notice £1,728.00 Holiday pay £ 806.40 Orhan Behic £ 576.00 Notice £ 576.00 Holiday pay £ 806.00 £ 7,516.40 [First] Claimant’s time £ 5,000.00 Total claimed £301,306.40 Plus, basic loss claimed at £12,000.

16. Mr Mustafa Behic, who has been unrepresented since July 2013, said in his statement of case that he laid the blame fairly and squarely on the Council for the fact that this matter had not been satisfactorily concluded by negotiation. It had always been the claimants’ intention to relocate within Blyth, but SW’s initial offer in June 2009 of £115,000 was insufficient to allow this to happen and far less than the property was worth, let alone if it was to include the loss of profits and compensation for other factors connected with the enforced relocation. Mr Behic referred, as an example, to 28-30 Bowes Street, Blyth which had sold for £175,000. It was a terraced building on a plot of equal size to No. 4 Station Street alone. Further, the reference land had added value in that No.4 Station Street had the benefit of an A5 hot food takeaway licence and the premises were immediately adjacent to a public car park.

17. Following the claimants’ change of experts in October 2010, Mr Behic said that he had advised Mr Andrew Toes of RMS that it was their intention to relocate, and a search commenced for suitable alternative premises. A property on Regent Street which was on the market for £285,000 was considered (believed by Ms McLoughlin to be a corner property known as 30 Regent Street/2 Simpson Street ), but the Council said it would constitute betterment as it was closer to the town centre, even though it did not have the yard or buildings to the rear that 4 and 4A Station Street had. Another property in King Street (probably, according to Ms Mcloughlin, 7-8 King Street ) on the market at £400,000 was dismissed for similar reasons. As to a plot of land that was partly owned by the Council and partly by a Mr Bell and located on the corner of Regent Street and King Street, Mr Behic stated that despite the site being smaller than that which the reference land occupied, he had been prepared to be co-operative and “willing to lose out to move matters forward”, SW had advised him that the Council wanted £100,000 towards the cost of acquiring the land and building a shop. This was not acceptable. Other available properties were considered (although not specifically detailed in the statement) but, Mr Behic stated, “At every turn, SW had an excuse and no interest in relocating my business.”

18. Mr Behic stated that after possession was taken of the reference land, he and Mr Toes had a meeting with SW, at which they were told the intention was to extinguish the businesses, but they reiterated the relocation intention. Soon afterwards, at another meeting, a figure based upon total extinguishment was offered and the claimants were urged to accept an advance payment of £131,692.50 (under s.52 A of the Land Compensation Act 1973 – being 90% 0f the Council’s estimate of the level of compensation due) and the third claimant was advised to accept £6,600. At subsequent meetings and in correspondence, efforts were made to persuade him to accept the advance payment, together with a cheque from Sutherlands Auctioneers for the proceeds of the sale of the fixtures, fittings and equipment that had been left on the premises. All of these offers were refused on the grounds that they were too low and insufficient to enable them to relocate and re-start their businesses.

19. An allegedly final open offer (with limited time for acceptance) to cover all heads of claim which was made by the Council on 20 May 2013 was discussed at a meeting on 30 May at which the claimants’ accountant, Mr Martin Atkinson, was also present. At that meeting the Council also provided details that had been sought relating to the compensation said to have been paid for other premises affected by the compulsory purchase. Mr Behic said that that offer was also rejected.

20. The statement of case then went on to say: “In 2012 my representatives along with the Council’s representative decided to totally extinguish the business. We provided the Council with a professional value as well as comparables, buildings that were sold on the open market in 2010 were used as a comparison…” and “Again in 2012, we provided values of the equipment that we were given by two separate parties…both companies specifically deal with the equipment I was using in my business. Yet all the values and evidence provided have been ignored.”