Land Compensation Manual Section 5: Costs and fees

Appendix 5/2: Upper Tribunal decisions on surveyors’ fees

The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.

General

Since the abandonment of Ryde’s Scale in 2002, it has become normal practice for surveyors’ fees in compulsory purchase cases (with the exception of Part I claims and claims for work in connection with utility company functions) to be assessed on a quantum meruit basis, usually by means of adopting an hourly rate applied to the hours reasonably and necessarily spent on the claim. The approach to be adopted in the assessment of surveyors’ fees is set out in more depth at Part 2 section 5 of the Land Compensation Manual.

Upper Tribunal decisions

In Matthews v Environment Agency [2002] 3 EGLR 168 the compensating authority initially offered fees based on Ryde’s Scale, and then on Ryde’s Scale plus 50%. The Environment Agency had however accepted that the actual fees incurred by the claimants were reasonable. The Tribunal awarded the claimants the full amount of surveyors’ fees incurred, whilst commenting on the Government’s proposal to abandon Ryde’s Scale.

In Newman v Cambridgeshire CC [2011] UKUT 56 (LC) unusually the only matter to be determined was the quantum of surveyors’ fees to be reimbursed to the claimant. The case was heard under the written representation procedure. The amount of compensation claimed (excluding surveyors’ fees) was initially £46,600 and the initial offer of compensation from the acquiring authority was £100 although that figure was ultimately increased to £11,800. The acquiring authority had agreed a rate of £120 per hour for surveyors’ fees at the outset and initially conceded that the surveyor’s time sheet was accurate and fair. However, it disputed the level of fees on the basis that they were disproportionate to the amount of compensation finally agreed.

The Tribunal determined that the compensation offers made by the acquiring authority were far too low and that much work was needed by the claimant’s surveyor before more realistic offers were forthcoming. It also noted that the acquiring authority had resisted the payment of compensation for injurious affection until the final stages of the negotiations. The fee claimed was therefore proportionate to the size and complexity of the claim and commensurate with the time, effort and expertise required to deal with it. The Tribunal awarded fees on the following basis:

47.3 hours of professional time @ £120/hour £5,676
7.5 hours of travelling time @ £60/hour £450
360 miles @ 50p/mile £180
  £6,306

This decision illustrates that the conduct of the parties (or their representatives) in a case can be relevant to the assessment of fees.

Poole v South West Water Ltd [2011] UKUT 84 (LC) also concerned solely surveyors’ fees and was heard under the written representation procedure. The compensation related to the disturbance suffered by a tenant farmer during the installation of a new water main. The project was planned to be completed in six months, although it subsequently extended to 18 months. The amount of compensation claimed (excluding surveyors’ fees) was initially £24,274 but the claim was ultimately settled at £12,940. The claimant’s surveyor submitted a fee claim totalling £3,219, based on £120/hour and mileage at 50p/mile.

The compensating authority had offered a fee of £1,274, based on Ryde’s Scale plus 20% and 36 out of the 37 fee claims received in relation to the scheme had been settled on that basis. It maintained that the hours claimed, the hourly rate and the mileage rate adopted by the claimant’s surveyor were excessive and that the amount of fee was disproportionate to the amount of compensation agreed.

The Lands Tribunal determined that the fee claimed was proportionate to the size and complexity of the claim and commensurate with the time, effort and expertise required to deal with the case. The settlement of all the other fee claims relating to the scheme on the basis of Ryde’s Scale plus 20% was held not to be relevant to this case.

This decision illustrates that an authority’s long established (unilateral) adherence to a scale fee for particular types of work does not preclude the assessment of surveyors’ fees on a quantum meruit basis where appropriate. The future attitude of the utility companies to the imposition of scale fees remains to be seen.

Downsworth v Manchester City Council [2013] UKUT 142 (LC) concerned solely the surveyor’s fees to be paid in a compensation claim which related to the compulsory acquisition of a house in Toxteth, Manchester where compensation for the property had been agreed at £59,750 and the disturbance at £4,500.

The claimants’ surveyor claimed a total of 45.5 hours @ £175/hour (£7,962), representing 28 hours for negotiating the claim, 17.5 hours for negotiating his fee, and a further 36.5 hours for the preparation of his case at Tribunal (solely in relation to the surveyor’s fees) and disbursements of £207.5 (all plus VAT). He relied on Matthews v Environment Agency [2002] 3 EGLR 168 and Poole v South West Water Ltd [2011] RVR 286 but the Tribunal found neither cases of assistance since they concerned whether or not the surveyors’ fees in those cases should be assessed by reference to Ryde’s Scale.

The acquiring authority had offered and already paid £3,840 plus VAT representing 24 hours @ £160/hour. This was calculated as comprising 8 hours for negotiating the property value, 6 hours for the disturbance claim and 10 hours for negotiating the fee. The acquiring authority stated that it normally reimbursed surveyors’ fees at between £90/hour and £150/hour. It produced evidence of two local firms of agents, one who charged between £120 and £150 per hour and the other between £90 and £110 per hour. The acquiring authority had offered £160/hour as a compromise and produced evidence to show that the surveyor had charged between £125/hour and £160/hour in four cases within this and a neighbouring CPO.

The acquiring authority also identified items on the surveyor’s case diary sheet where excessive amounts of time had been claimed. Three hours had been claimed for a 40 minute meeting with the acquiring authority when the surveyor had conceded that he was already in Manchester on that day.

The key word in the Tribunal’s decision is ‘proportionality’. It found the fees claimed were disproportionate to the work undertaken. The Tribunal found it ‘incredible’ that it took 28 hours to negotiate the claim and found it disproportionate that the surveyor should have spent a further 17.5 hours on negotiating his fees. The acquiring authority had already offered and paid £3,840 plus VAT as a compromise and the Tribunal awarded this figure together with disbursements of £207.50.

In respect of the costs of the hearing, since this was a case heard by written representations the Tribunal declined to make any order as to costs. The surveyor also claimed interest at 8.5% on his fee claim under the Arbitration Act 1996 but it was pointed out that by virtue of Rule 3(2) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 the Arbitration Act 1996 does not apply to proceedings before the Tribunal except for references by consent.

Dickinson v Network Rail Infrastructure Ltd [2014] UKUT 372 (LC) concerned a claim for £30,000 compensation under Part I Land Compensation Act 1973 relating to noise and vibration caused by the addition of extra rail tracks to the West Coast main line. The claimants were represented by Thompson Broadbent who had agreed to act on a ‘no win no fee’ basis and also indemnify the claimants for their solicitors’ costs. The claimants sought an order to protect them from any liability for the compensating authority’s costs should the claim fail. The compensating authority counter claimed for the claimant’s agent to be joined as a party with a view to making an application for costs against it in due course. The authority also sought a costs cap on both sides of £30,000 should the Tribunal decide to give costs protection.

The Tribunal dismissed both applications and used its discretion to make an alternative order.

The alternative order made by the Tribunal limited the costs that the compensating authority could recover from the claimants after the date of the order to £15,000 but without prejudice to any application that the authority might subsequently make under Rule 10(3) (costs where any party has acted unreasonably and such).

In Da Silva v London Borough of Brent [2015] UKUT 120 (LC) the authority acquired the claimant’s interest in a flat pursuant to a compulsory purchase order. The value of the property was agreed at £200,000 together with a Home Loss Payment of 15% and payments in respect of fees and disturbance. However, the authority disputed certain of the sums claimed in respect of surveyor’s fees (which in total represented nearly 20% of the value of the property) and various disturbance items.

The acquiring authority paid £9,971 plus VAT in respect of the surveyor’s first two invoices which related mainly to assisting the claimant with securing alternative accommodation. However, it disputed the surveyor’s third invoice in the sum of £28,600 plus VAT. The surveyor stated that he had necessarily undertaken more work than might otherwise have been the case owing to changes in the authority’s personnel, which had led to the authority reviewing and changing their attitude to the claim and to the value of the claimant’s property. The personal difficulties faced by the claimant were further factors increasing the time reasonably spent on the claim.

The Tribunal pointed out that the claim was not a complex one, involving the valuation of a two-bedroom flat at £200,000 and the assessment of the disturbance costs arising therefrom. The amount charged by the surveyor in the third invoice was disproportionate to the nature and scope of his instructions. The claimant had viewed 60 alternative properties, in the majority of which the surveyor accompanied her. He had also increased his hourly rate from £140 to £150 per hour without informing the authority. The authority had made an offer to settle the third invoice at £18,500 plus VAT. The Tribunal determined that a reasonable amount was £14,300 plus VAT (half the amount claimed).

Conclusion

The decisions of the Tribunal in the above cases reflect the particular circumstances of each case. They are consistent with the advice provided in the RICS Professional Statement ‘Surveyors advising in respect of compulsory purchase and statutory compensation’ (April 2017) and with the advice contained in the Valuation Office Agency’s Land Compensation Manual.