Optical Express (Southern) Ltd v Birmingham City Council, Court of Appeal - Lands Tribunal, April 11, 2005,  EWLands ACQ_109_2002
|Resolution Date:||April 11, 2005|
|Issuing Organization:||Lands Tribunal|
|Actores:||Optical Express (Southern) Ltd v Birmingham City Council|
© CROWN COPYRIGHT 2005
LANDS TRIBUNAL ACT 1949
COMPENSATION - compulsory acquisition - disturbance - leasehold shop- effect of scheme - loss of profits - date at which loss of future profits to be assessed - method of valuation - compensation of £570,920 awarded
IN THE MATTER OF A NOTICE OF REFERENCE
BETWEEN OPTICAL EXPRESS (SOUTHERN) LIMITED Claimants
BIRMINGHAM CITY COUNCIL Acquiring
Re: 14 Martineau Way
Before: P H Clarke FRICS
Sitting at Procession House, London EC4
on 22-26 November 2004 with closing submissions in writing
received between 13 and 30 December 2004
Charles George QC and Richard Glover instructed by Mills and Reeve, solicitors, for the claimants
Guy Roots QC and Alexander Booth instructed by Nabarro Nathanson, solicitors, for the acquiring authority
The following cases are referred to in this decision:-
Director of Buildings and Lands v Shun Fung Ironworks Limited  2 AC 111
Waters v Welsh Development Agency [2004 1 WLR 1304
Pointe Gourde Quarrying and Transport Co Limited v Sub-Intendent of Crown Lands  AC 565
Melwood Units Pty Limited v Commissioner of Main Roads  AC 426
Afzal v Rochdale Metropolitan Borough Council  RVR 165
Horn v Sunderland Corporation  2 KB 26
Bwllfa and Merthyr Dare Steam Collieries (1891) Limited v Pontypridd Waterworks Co  AC 426
Reed Employment Limited v London Transport Executive  RVR 53
W Rought Limited v West Suffolk County Council  2 QB 338
Festiniog Railway Co v Central Electricity Generating Board  RVR 582
Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) AC 874
London County Council v Tobin (1959) 10 P & CR 79
Handley Limited v London Borough of Greenwich (1970) 21 P & CR 644
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25
Hughes v Doncaster Metropolitan Borough Council  1 AC 382
The following cases were also cited in argument:-
Halil v Lambeth London Borough Council  RVR 181
Remnant v London County Council (1952) 3 P & CR 18
Zarraga v Newcastle-upon Tyne Corporation (1968) 19 P & CR 609
W Clibbett Limited v Avon County Council  RVR 131
Aslam v South Bedfordshire District Council  RVR 121 (LT);  RVR 65 (CA);  RVR 16 (CA)
Reynolds v Manchester City Council  1 EGLR 167
Geest plc v Lansiquot  1 WLR 3111
Ryde International plc v London Regional Transport  RVR 60
This is a reference to determine the compensation payable for the compulsory acquisition of a leasehold shop in the centre of Birmingham.
Charles George QC and Richard Glover appeared for the claimants and called: (i) David Charles Moulsdale, Chairman and Chief Executive of DCM (Optical Holdings) Limited and subsidiary companies, including Optical Express (Southern) Limited; (ii) John Webber BSc MRICS, a director and shareholder of Colliers Conrad Ritblat Erdman, chartered surveyors of Birmingham; and (iii) Sara Fowler BA FCA MAE, a partner in Ernst and Young's Forensic Services Group in Birmingham.
Guy Roots QC and Alexander Booth appeared for the acquiring authority, Birmingham City Council (the Council), and called: (i) Simon Armstrong MRICS, a Development Manager of Land Securities Plc in their London office; (ii) Anthony M Chase FRICS, a partner in the London Office of Gerald Eve, chartered surveyors; and (iii) Jonathan Guy Anthony Phillips MA chartered accountant, partner Forensic Services in the London office of PriceWaterhouseCoopers.
On 18 January 2005 I carried out an unaccompanied inspection of Martineau Place and the retail area in the centre of Birmingham, including Corporation Street, Bull Street, High Street, New Street, Martineau Phase 2, Cannon Street, Caxton Gate and the New Bull Ring.
From a statement of agreed facts and the evidence I find the following facts.
The claimants, Optical Express (Southern) Limited (Optical Express), are a trading subsidiary of the group holding company, DCM (Optical Holdings) Limited. It is an optical retail business selling ophthalmic products to the general public. In January 1997 the Group purchased the share capital of Specialeyes Plc (with a change of name to Optical Express (Southern) Limited), and thereby acquired the leasehold interest in 14 Martineau Way, Birmingham (the subject property) and a nationwide chain of 65 optical retail outlets, formerly trading as Specialeyes. The Group as a whole currently trades from 144 Optical Express locations and 20 Eye Clinic locations throughout the United Kingdom. Optical Express are one of the five largest optical retailers in terms of branches and turnover. These five retailers are Specsavers, Boots, Vision Express, Dolland & Atchison and Optical Express, and commanded 43.6% of the market share in the year 2000.
14 Martineau Way formed part of a 1960s shop and office development in the centre of Birmingham, on a site bounded by Corporation Street, Union Street, Bull Street and the rear of shops fronting High Street. It included a two storey retail podium of 130,000 sq ft (12,082 sq m) and a 12 storey office block of 80,000 sq ft (7,435 sq m) (Commercial Union House). The layout provided shopping frontages to Corporation Street and Bull Street with an open central square, Martineau Square, linked to Corporation Street by a pedestrian arcade (South Eastern Arcade), to Bull Street by steps and to Union Street by an open pedestrian way, Martineau Way. The subject property was in Martineau Way. I will refer to this 1960s development in the form that existed before redevelopment as Martineau Square. For the similar shop and office scheme after redevelopment I will use the current name of Martineau Place. As a development scheme it is called Martineau Phase 1 or Martineau Place and is part of the Martineau Galleries Scheme, which comprises phases 1 (Martineau Place) and 2 (which is a site bounded by Bull Street, Corporation Street, Priory Queensway and Dale End). Opposite Martineau Square in Corporation Street was a Rackhams Department Store (now House of Fraser) and on the northern edge, where Corporation Street crosses Bull Street, were subways and subterranean shops known as Bull Street hump (now demolished).
The subject property was a two storey shop with a frontage to Martineau Way and a return frontage to Martineau Square. It was held by the claimants on an underlease dated 26 March 1993, originally granted by Ravenseft Properties Limited to Specialeyes Plc, for a term of 20 years from 25 December 1992 on full repairing and insuring terms at an initial rent of £44,750 per annum with rent reviews on 25 December 1997, 2002 and 2007.
On 20 July 1998 outline planning permission was granted for a development described as a ``multi-storey city centre development comprising retail, leisure, cinema, health, hotel, car parking and associated facilities and highway works'' on land bounded by Corporation Street, Priory Queensway, Chapel Street, Moor Street, Queensway, Carrs Lane and Union Street, which is referred as the Martineau Galleries development or Martineau Phase 1 (which included the subject property) and Martineau Phase 2. Approval of reserved matters was given on 28 January and 22 April 1999 for Martineau Phase 1.
In March 2000 Balfour Beatty were appointed main contractors for Martineau Phase 1. Enabling works commenced on 14 February 2000 and were completed on 15 April 2000. The main contract works started on 10 April 2000 and practical completion was certified on 7 December 2001. Shop units were handed over prior to practical completion: Sainsbury's in November 2000, the Corporation Street units in July 2001 and the majority of the new central square units in September 2001. The remaining shops opened throughout 2002. Demolition of the Bull Street hump by the City Council's contractor took place between 17 January and 18 October 2000.
The Martineau Place scheme (Phase 1) comprised redevelopment and the refurbishment and extension of the existing buildings. The former layout has remained largely unchanged with the retail podium and office block, central square (now partly roofed) and pedestrian access largely as before to Corporation Street, Bull Street (with steps) and Union Street. The retail floor area is now about 183,000 sq ft (17,000 sq m), an increase of 64,500 sq ft (6,000 sq m).
In February 1999 Hammerson Plc, Henderson Investors and Land Securities Plc agreed heads of terms for the creation of a joint venture partnership called the Birmingham Alliance to bring forward proposals to provide some 2.5 million sq ft (232,342 sq m) of retail accommodation under a phased and structured programme in Birmingham city centre. The Council were instrumental in bringing together these partners. The agreement was finalised in July 1999. It was agreed that the development programme would be undertaken in three separate phases, with Martineau Phase 1 (Martineau Place) undertaken first, as part of the larger Martineau Galleries scheme, followed by the Bull Ring and the remainder of the Martineau Galleries development (Phase 2). Three limited partnerships, each comprising the three partners with a one-third share each, were created to undertake the three developments. Land Securities were appointed as development managers of Martineau Place by Martineau Limited Partnership. Land Securities had acquired the long leasehold interest in Martineau Place in 1970. The Council were, and are, the freeholders and granted a new long leasehold interest to Martineau Limited Partnership to facilitate redevelopment following final possession of all the existing units in April 2000. Compensation for the compulsory acquisitions undertaken by the Council is funded by the three partners.
Planning permissions for the development of the Bull Ring were granted between 1997 and 1999. Demolition commenced in 2000 and the new centre opened for trading in September 2003. It...
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