[2000] EWLands LCA_171_1997 (19 April 2000)	LCA/171/1997
	
	LANDS TRIBUNAL ACT 1949
	
COMPENSATION - closing order - tenanted house - rehousing of tenant - whether any increase in value due to rehousing may be taken into account - landlord’s right to possession following closing order - whether any diminution in compulsory purchase value due to closing order - no compensation payable - Housing Act 1985, ss 264, 276 & 584A; Land Compensation Act 1961; Land Compensation Act 1973, ss 39(1)(a)(b) & 50(2)

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN	DAVID LAWRENCE JOHN WELLS	Claimant
		
	and
		
	BOURNEMOUTH BOROUGH COUNCIL	Compensating
		Authority

	Re: 91 Victoria Road, Bournemouth

	Tribunal Member: P H Clarke FRICS

	Sitting in public at Bournemouth on 29 March 2000

The following cases are referred to in the decision:

Horn v Sunderland Corporation [1941] 2 KB 26
Aslan v Murphy [1990] 1 WLR 766
R v Bristol Corporation ex p Hendy [1974] 1 WLR 498
Trocette Property Co Ltd v Greater London Council (1974) 28 P&CR 408
Lady Fox’s Executors v Commissioners of Inland Revenue [1994] 2 EGLR 185

Robert Pearce of counsel instructed by Edge, Leydon & Ellis, solicitors of Bournemouth, for the claimant
Christopher Lewsley of counsel instructed by Head of Law & Administration, Bournemouth Borough Council, for the compensating authority

DECISION OF THE LANDS TRIBUNAL

1.	This is a reference to determine the compensation payable (if any) for the making of a closing order on a freehold tenanted house in Bournemouth.  
2.	Robert Pearce of counsel appeared for the claimant and called Robert Charles Brownridge FRICS of Robert Brownridge and Associates of Bournemouth.  
3.	Christopher Lewsley of counsel appeared for the compensating authority and called Stuart Francis Pearce FRICS, of the Property Services Group, Bournemouth Borough Council.  
FACTS
4.	The parties have prepared a statement of agreed facts and I find the following facts.  
5.	91 Victoria Road (“the subject property”) is situated in the Springbourne area of Bournemouth, a mixed residential and commercial area to the north-east of the town centre, close to Holdernhurst Road.  The subject property is a terraced house of brick with a slate roof built at the end of the 19th century.  It is two-storey with a single-storey rear extension.  The accommodation comprises entrance hall, two living rooms, kitchen and WC on the ground floor and three bedrooms and a box room on the first floor.  There are small gardens at the front and rear.  
6.	On 5 January 1994 Bournemouth Borough Council (“the Council”) served a repairs notice under section 189(1) of the Housing Act 1985 (“the 1985 Act”) requiring the carrying out of the works specified in Schedule 2 to the notice to make the subject property fit for human habitation.  By a letter dated 3 February 1995 the Council recorded that the tenant had refused to vacate the premises to allow the works to be carried out and that she is elderly and frail and agreed that the works could remain abeyance until her views or circumstances change.  
7.	On 12 February 1997 the Council made a closing order on the subject property under section 264 of the 1985 Act.  The order was served on the claimant on 14 February 1997 with a covering letter stating that the “order has immediate effect and will prohibit you from re-letting the property after the current tenant leaves, until the premises are made fit for human habitation.”  Following works by the claimant the closing order was determined in May 1998.  
8.	The claimant purchased the freehold of the subject property on 15 March 1995 for £21,000.  At purchase and at the date of the closing order the property was occupied by a Miss Carter on a protected tenancy under the Rent Act 1977.  Miss Carter was over 90 years of age; she had lived in the house all her life and became a protected tenant by succession following the death of her parents.  In June 1975 the fair rent was fixed at £3.50 per week.  In May 1995 it was increased to £30 per week following the completion of temporary works to the property.  Miss Carter was rehoused by the Council on 2 June 1997 and stopped paying rent to the claimant on 9 July 1997.  
9.	On 21 November 1997 the subject property was let to Mrs J Brock on an assured shorthold tenancy for six months at a rent of £100 per week.  
10.	Between July and November 1997 the claimant carried out substantial works to the subject property at a cost of £21,168.27.  
11.	On 2 December 1997 the claimant referred the determination of compensation for the making of the closing order to this Tribunal.  
12.	The parties have agreed the following:
(i)	the date of valuation is 12 February 1997;
(ii)	the open market value of the freehold interest in the subject property at the date of valuation, in good repair and with vacant possession, was £51,000;
(iii)	the estimated cost of repairs to the subject property at the date of valuation, on the assumption that the closing order had not been made, was £15,000;
(iv)	the estimated cost of the works to the subject property at the date of valuation to secure the determination of the closing order was £18,750.
ISSUES
13.	The issue in this reference is whether any compensation is payable to the claimant under section 584A of the 1985 Act for the making of the closing order on the subject property.  The claimant seeks £5,413; the Council contend that no compensation is payable.  Within this issue there are subsidiary issues relating to the law governing the assessment of compensation and matters of valuation.  
LAW
14.	Section 264 of the Housing Act 1985 gives a local housing authority power to serve a closing order where they are satisfied that a dwellinghouse is unfit for human habitation.  The effect is to prohibit the use of the house for any purpose not approved by the authority (section 267 (2) of the 1985 Act).  It is a summary offence to use or permit the use of premises in contravention of a closing order (section 277 of the 1985 Act).  A closing order shall be determined when the authority are satisfied that the premises have been rendered fit for human habitation (section 278 of the 1985 Act).  
15.	Section 584A of the 1985 Act gives a right to compensation for the making of a closing order.  The material parts of the section are as follows:
“(1)	... where a closing order under section 264 ... is made in respect of any premises, the local housing authority shall pay to every owner of the premises an amount determined in accordance with subsection (2).  
(2)	The amount referred to in subsection (1) is the diminution in the compulsory purchase value of the owner’s interest in the premises as a result of the making of the closing order ...; and that amount - 
(a)	shall be determined as at the date of the making of the order in question;
and
(b)	shall be determined (in default of agreement) as if it were compensation payable in respect of the compulsory purchase of the interest in question and shall be dealt with accordingly.  
(3)	......
(4)	For the purposes of this section - 
“compulsory purchase value”, in relation to an owner’s interest in premises, means the compensation which would be payable in respect of the compulsory purchase of that interest if it fell to be assessed in accordance with the Land Compensation Act 1961; ...”
16.	The issue between the parties regarding the meaning of section 584A can be expressed as three questions.  First, when determining compensation under this section can regard be had to the Land Compensation Act 1973 (“the 1973 Act”) or is compensation to be assessed solely in accordance with the Land Compensation Act 1961 (“the 1961 Act”)?  Secondly, if regard can be had to the 1973 Act, does section 50(2) of that Act apply to the assessment of compensation for the making of a closing order?  Thirdly, if the effect on value (if any) of the rehousing of Miss Carter by the Council is to be disregarded under section 50(2) of the 1973 Act, can the right to obtain possession in consequence of section 276 of the 1985 Act be taken into account?  The answers to these questions provide the framework of law for the determination of compensation.  
17.	Section 584A(2) of the 1985 Act provides that the compensation for the making of a closing order shall be the diminution in the “compulsory purchase value” of the owner’s interest in the premises.  This value “means the compensation which would be payable in respect of the compulsory purchase of that interest if it fell to be assessed in accordance with the Land Compensation Act 1961”(subsection (4)).  The first question is whether this definition requires the amount to be determined solely by reference to the 1961 Act or whether the 1973 Act can also be taken into consideration?.
18.	Mr Pearce, for the claimant, submitted that “compulsory purchase value” means open market value under section 5(2) of the 1961 Act.  Section 584A of the 1985 Act imports into that value the Land Compensation Act 1973, particularly section 50(2) of that Act.  Compensation under section 584A envisages a notional compulsory purchase and therefore the 1973 Act can be taken into account, as in an actual compulsory purchase.  It was not the intention of Parliament to restrict compensation under section 584A to the provisions of the 1961 Act.  In short, “compulsory purchase value” means the value assessed by reference to the whole of the compensation code, not merely that part contained in the 1961 Act.  
19.	Mr Lewsley, for the Council, argued for a restricted definition of “compulsory purchase value” in section 584A(4).  He said that the draftsman had provided a definition which is clearly restricted to assessment “in accordance with the Land Compensation Act 1961”.  There is no reference to the 1973 Act.  This is a clear indication that this Act does not apply to compensation for the making of a closing order.  
20.	The Land Compensation Act 1961 is the principal Act for the assessment of compensation on compulsory purchase.  It consolidated the Acquisition of Land (Assessment of Compensation) Act 1919 and other enactments relating to compensation.  It does not, however, contain the whole of the statutory law on this subject.  The Compulsory Purchase Act 1965, another consolidation measure, is mainly procedural but it contains, in section 7 (formerly section 63 of the Land Clauses Consolidation Act 1845), a procedural provision which has been interpreted by the courts to give a substantive right to compensation for land purchased and for severance and injurious affection to any retained land.  This section is fundamental to any consideration of an owner’s right to compensation.  The rules of assessment in section 5 of the 1961 Act are, in effect, to be applied to the “value of the land” referred to in section 7 of the 1965 Act.  Section 10 of this Act contains another procedural provision (formerly section 68 of the Lands Clauses Consolidation Act 1845) which was given a very wide interpretation by the courts in the 19th century to give a right to compensation in limited circumstances where no land has been acquired but the owner has suffered injurious affection by the execution of public works.  The Acquisition of Land Act 1981, a consolidating measure dealing with procedure, contains in section 4 a provision to prevent an owner carrying out works or creating an interest with a view to obtaining compensation or increased compensation.  A major extension to the law is contained in the Land Compensation Act 1973.  This conferred a new right to compensation for depreciation caused by the use of public works, gave persons displaced from land new rights to compensation in the form of home loss, farm loss and disturbance payments, provided for re-housing, amended the law relating to planning blight and contained amendments to the law of compensation.  
21.	Much of the law of compensation is not statutory but case law.  I have referred to the interpretation of sections 63 and 68 of the Lands Clauses Consolidation Act 1845 (now sections 7 and 10 of the 1965 Act).  The courts found in procedural provisions substantive rights to compensation.  Almost the whole of the law relating to disturbance is judge-made and rests only tenuously on a statutory foundation (see Horn v Sunderland Corporation at page 43).  Thus, the law of compensation is to be found in several Acts supplemented by case law which has greatly extended and amplified the statutory provisions.  Having regard to this background, it would, I think, be surprising if the draftsman of section 584A(4) of the 1985 Act intended to restrict the assessment of compensation for the making of a closing order, by analogy with a compulsory purchase, to part only of the law of compensation, namely that contained in the 1961 Act.  It is against this background and observation that I consider section 584A of the 1985 Act.  
22.	This section was inserted in the 1985 Act by the Local Government and Housing Act 1989.  Subsection (1) gives the owner of premises made subject to a closing order a right to compensation determined in accordance with subsection (2).  The amount of that compensation “is the diminution in the compulsory purchase value of the owner’s interest in the premises as a result of the making of the closing order.”  “Compulsory purchaser value” is defined in subsection (4) as “the compensation which would be payable in respect of the compulsory purchase [of the owner’s interest] if it fell to be assessed in accordance with the Land Compensation Act 1961.”  It is to be determined as at the date of the order and “(in default of agreement) as if it were compensation payable in respect of the compulsory purchase of the interest in question and shall be dealt with accordingly.”  It is common ground that the compensation in this reference is to be assessed as at 12 February 1997 and is to be calculated by comparing the compulsory purchase value at that date with and without the closing order, that is to say it is to be assumed that there was a notional compulsory purchase of the claimant’s freehold interest in the subject property with and without the closing order.  The first question is whether the assessment of compensation on this notional compulsory purchase can have regard to the Land Compensation Act 1973 or whether it is restricted by the definition of “compulsory purchase value” in subsection (4) to assessment under the 1961 Act?
23.	In my judgment, the reference to the Land Compensation Act 1961 in subsection (4) of section 584A is procedural and not substantive.  The “compulsory purchase value” is to be assessed in accordance with section 1 of the 1961 Act, that is to say by the Lands Tribunal.  The side note to this section is “Tribunal for assessing compensation in respect of land compulsorily acquired” and states that compensation “shall be determined by the Tribunal in accordance with the following provisions of this Act.”  Section 584A(2)(b) provides that compensation under subsection (1), equal to “the diminution in the compulsory purchase value”, “shall be determined (in default of agreement) as if it were compensation payable in respect of the compulsory purchase of the interest in question and shall be dealt with accordingly.”  Section 584A does not contain express provision for the determination of compensation under that section by the Lands Tribunal nor any definition of that compensation, except by reference to compulsory purchase.  Both matters are dealt with by assuming a compulsory purchase with and without the closing order, with the further assumption that compensation is to be assessed by the Lands Tribunal in default of agreement.  In my view, having regard to the background outlined above, it was the intention of the draftsman that compensation under section 584A is to be assessed as on a notional compulsory purchase, with and without the closing order, having regard to the whole of the compensation code (without limitation to the Land Compensation Act 1961), such compensation to be determined, in default of agreement, as if it were compensation on compulsory purchase, i.e. by the Lands Tribunal under section 1 of the 1961 Act.  I hold that the Land Compensation Act 1973 can be taken into account when assessing compensation under section 584A of the Housing Act 1985.  
24.	This leads to my second question, does section 50(2) of the Land Compensation Act 1973 apply to the assessment of compensation for the making of a closing order?  
25.	Section 50(2) of the 1961 Act, so far as material, provides as follows:
“In assessing the compensation payable in respect of the compulsory acquisition of an interest in land which on the date of service of the notice to treat is subject to a tenancy, there shall be left out of account any part of the value of that interest which is attributable to, or to the prospect of, the tenant giving up possession after that date in consequence of being provided with other accommodation by virtue of section 39(1)(a) above; ...”
Section 39(1)(a) refers to “the acquisition of the land by an authority possessing compulsory purchase powers”.  Section 39(1)(b) is also relevant.  This refers to “the making ... of a housing order ... in respect of a house or building on the land.”  A “housing order” is defined in section 29(7)(a), as applied by section 39(9), to include a closing order under Part IX of the Housing Act 1985, which includes section 264 of that Act under which the order was made in this reference.
26.	Mr Pearce submitted that section 50(2) of the 1973 Act should be applied in this case as if the reference to section 39(1)(a) included a reference to section 39(1)(b).  It must be assumed that the rehousing of Miss Carter, which was under section 39(1)(b), was rehousing in consequence of compulsory purchase under section 39(1)(a).  Accordingly, any increase in the value of the land due to the prospect of Miss Carter giving up possession in consequence of being rehoused by the Council must be disregarded.
27.	Mr Lewsley submitted that section 50(2) of the 1961 Act must be read as drafted.  There is no foundation for changing the reference to section 39(1)(a) to section 39(1)(b).  
28.	In my judgment Mr Pearce’s submission is right but it is unnecessary to insert “section 39(1)(b)”for “section 39(1)(a)” in section 50(2) of the 1973 Act.  The assessment of compensation under section 584A of the 1985 Act proceeds on the assumption that there has been a compulsory purchase of the claimant’s interest in the subject property before and after the making of the closing order.  Compensation is to be calculated on the basis of this notional compulsory purchase.  It is therefore logical that section 50(2) of the 1973 Act should refer to section 39(1)(a) and not section 39(1)(b).  The rehousing is to be assumed to be in consequence of a notional acquisition under section 39(1)(a) and not the making of a closing order under section 39(1)(b).  Any part of the value which is attributable to, or to the prospect of, the tenant giving up possession in consequence of rehousing under the notional acquisition under section 39(1)(a) is to be left out of account.  
29.	I turn now to the third question.  Can the right to obtain possession of the subject property in consequence of section 276 of the Housing Act 1985 be taken into account?
30.	Section 276 of the 1985 Act provides as follows:
“Nothing in the Rent Acts or Part I of the Housing Act 1988 prevents possession being obtained by the owner of premises in respect of which a closing order is in force.”
31.	Mr Pearce said that the making of a closing order prohibits the use of the premises for any purpose not approved by the local authority (section 267 of the 1985 Act).  The order does not determine any tenancy; it deprives the tenant of the protection of the Rent Acts and Part I of the Housing Act 1988 (section 276 of the 1985 Act).  The tenant continues to be entitled to the protection of sections 3 and 5 of the Protection from Eviction Act 1977 (Aslan v Murphy).  He agreed however that the landlord can lawfully obtain possession in consequence of the closing order.  The court has a discretion to defer possession for fourteen days or six weeks in case of hardship (section 89 of the Housing Act 1980).  The making of a closing order places a duty on the local authority to provide the occupier with alternative accommodation (section 39(1)(b) of the Land Compensation Act 1973).  This is not a higher duty than that owed to other persons on the housing list (R v Bristol Corporation ex p Hendy).  The evidence is that Miss Carter would have wished to continue in occupation of the subject property notwithstanding the closing order and this would have been known to a prospective purchaser.  
32.	Mr Lewsley accepted most of Mr Pearce’s submissions on this question.  He referred to the letter from the Council dated 14 February 1997 which accompanied the closing order.  This stated that the order “has immediate effect” and applied to occupation by Miss Carter.  The closing order gave the owner the power to obtain possession of the subject property, a power which did not exist prior to the making of the order.  
33.	There is much common ground on this question.  The effects of the closing order were: to prohibit the use of the subject property for any purpose not approved by the Council (section 267(2) of the 1985 Act), to make it a summary offence to use or permit the use of the property (section 277 of the 1985 Act) and to give the owner the right to obtain possession (section 276 of the 1985 Act).  Miss Carter’s rights to resist an order for possession under the Rent Acts or Part I of the Housing Act 1988 were removed.  In order to obtain possession the landlord could serve notice to quit under the tenancy and seek possession through the court, if necessary.  In any such proceedings the tenant could not rely on the Rent Acts or Part I of the Housing Act 1988.  The landlord could obtain vacant possession irrespective of the question of the rehousing of Miss Carter.  The landlord must obtain possession to avoid committing an offence under section 277 of the 1985 Act.  I agree with Mr Pearce that sections 3 and 5 of the Prevention from Eviction Act 1977 continued to apply but these provisions only prohibit arbitrary eviction (section 3) and require service of a notice to quit (section 5).  They do not prevent the landlord serving such a notice to quit and enforcing it by proceedings in the court, if necessary (see Aslan v Murphy).  
34.	My overall conclusion on the questions of law is that section 50(2) of the Land Compensation Act 1973 applies to the determination of compensation under section 584A of the 1985 Act.  Any part of the value arising from the notional compulsory purchase assumed under section 584A(2) which is attributable to, or to the prospect of, Miss Carter giving up possession in consequence of rehousing by the Council is to be left out of account.  The effects of the closing order were to prohibit the use of the subject property for any purpose not approved by the Council, to make it a summary offence to use or permit such a use and to give the landlord the right, and the obligation, to obtain possession from Miss Carter by service of notice to quit enforced, if necessary by proceedings in the court.  Miss Carter’s right to resist possession under the Rent Acts or Part I of the Housing Act 1988, which existed prior to the closing order, were removed by that order.  The landlord could obtain possession and any value attributable to this right can be taken into account, notwithstanding that any increase in value due to rehousing is to be left out of account.  This is the basis of law on which I approach the questions of valuation and compensation.
VALUATION AND COMPENSATION
35.	Mr Brownridge, who gave evidence for the claimant, said that Mr Wells is entitled to compensation equal to the difference between the amounts which the subject property would have been expected to realise if sold in the open market immediately before and immediately after the making of the closing order.  
36.	Although the Council did not rehouse Miss Carter for some four to five months there was nothing to stop the claimant from seeking possession at an earlier date.  However, there may well have been good public relations reasons why such possession was not sought, bearing in mind the Council’s promise to rehouse Miss Carter as quickly as possible.  Before rehousing Mr Wells could do nothing with the property by way of refurbishment or sale.  When vacant possession was obtained in June or July 1997 refurbishment was carried out and the property was re-let in November of that year.  No rent was received between July and November 1997 and the question arises whether compensation is payable for this loss.  
37.	Having regard to the above principles Mr Brownridge assessed the compensation payable as follows:
Valuation 1		

Value of subject property subject to Miss Carter’s tenancy without the closing order
	
	Value in good condition (with vacant possession)
	Less estimated cost of repairs

	75% to represent tenanted value	£51,000
  15,000
£36,000
     0.75	
	£27,000	

Valuation 2		

Value of subject property subject to Miss Carter’s tenancy with closing order
	
	Value in good condition (with vacant possession)
	Less estimated cost of works due to closing order

	75% to represent tenanted value

	Less loss of enhanced rent of £100 pw for 6 months

Diminution in compulsory purchase value

		Valuation 1
	Less	Valuation 2
		Compensation
	£51,000
  18,750
£32,250
     0.75
£24,187
   2,600
£21,587

£27,000
  21,587
  £5,413	

38.	Mr Pearce, who gave evidence for the Council, said that the assessment of compensation requires two valuations of the freehold interest in the subject property.  The first is subject to the tenancy of Miss Carter and the second is on the basis that the closing order has taken effect.  The consequence of the closing order was to place an obligation on the Council to rehouse Miss Carter.  The freehold owner can obtain possession but is required to undertake repairs to enable the closing order to be lifted and the property sold with vacant possession.  The owner will also lose rent during the works.  The effect of the closing order is not to reduce the value of the subject property.  By securing vacant possession the owner is able to realise a higher value.  Mr Pearce’s valuations are as follows:
Valuation 1		

Value of subject property subject to Miss Carter’s tenancy without the closing order
		
	Value in good condition (with vacant possession)
	75% to represent tenanted value

	Less estimated cost of repairs
		£51,000
     0.75
£38,250
  15,000
£23,250	

Valuation 2		

Value of subject property with vacant possession and with closing order
	
	Value in good condition (with vacant possession)
	Less estimated cost of works due to closing order

	Defer for 6 months @ 10%

Diminution in compulsory purchase value

		Valuation 1
	Less	Valuation 2
		Compensation
	£51,000
  18,750
£32,250
     0.95
£30,637

£23,250
  30,637
        nil	

39.	I adopt the same approach as Mr Brownridge and Mr Pearce and look first at the compulsory purchase value of the freehold interest in the subject property as at 12 February 1997 before the making of the closing order.  The property was then subject to Miss Carter’s tenancy and to the repairs notice dated 5 January 1994 but not to the closing order.  The only difference between the two valuers is whether the agreed 75% of vacant possession value to represent value subject to Miss Carter’s tenancy should be applied to the value unrepaired or to the agreed vacant possession value in good condition.  Mr Brownridge said that the market applies the percentage to the unrepaired value.  Mr Pearce said that the high rate of 75% adopted in this case represents a discount from the value in good condition.  If the reduction is applied to the unrepaired value it should be lower to reflect the condition of the house, one of the factors taken into account when fixing the discount to tenanted value on any particular property.  
40.	I agree with Mr Pearce.  A figure of 75% of vacant possession value for the value subject to a protected tenancy is high, even taking into account Miss Carter’s age, and would only be achieved if the property were in good repair.  I adopt Mr Pearce’s value of £23,250 representing the compulsory purchase value of the subject property subject to Miss Carter’s tenancy and the repairs notice, but not subject to the closing order.  
41.	The diminution in the compulsory purchase value (if any) is to be found by comparing £23,250 with the value after the making of the closing order.  The freehold interest is still subject to Miss Carter’s tenancy, but the owner now has the right, and the obligation, to obtain vacant possession in consequence of the closing order.  The value of the property with vacant possession in good condition is agreed at £51,000 and the cost of the works necessary to determine the closing order has been agreed at £18,750.  The value in good condition (£51,000) should be deferred to allow for the obtaining of possession and the execution of the works.  Mr Brownridge has deducted six months rent in his valuation, which operates as six months deferment, and Mr Pearce has deferred his unrepaired value for six months at 10%.  A deferment of six months is therefore common ground and I adopt it.  In my view, however, the correct approach is to defer the vacant possession value in good condition of £51,000 for six months (at 10%), to produce £48,450 as the present value of the freehold with vacant possession in good condition, and then to deduct the estimated cost of works of £18,750, substantially the whole of which would be paid during the initial six months period.  This produces a value of £29,700 as the compulsory purchase value subject to Miss Carter’s tenancy, but with the right to possession, and subject to the closing order.  It is the right, and obligation to obtain possession in consequence of the closing order which gives an increased value not the obligation on the Council to rehouse Miss Carter, any value attributable to which must be left out of account under section 50(2) of the 1973 Act.
42.	Mr Brownridge said that developer’s profit should be added to the cost of the works on a vacant possession valuation but he did not suggest what that profit should be.  I have no evidence on which to make such a deduction.  
43.	My values are £23,250 before the making of the closing order and £29,700 after the making of the order.  There has been no diminution in the compulsory purchase value of the subject property as a result of the making of the closing order and therefore no compensation is payable under section 584A of the 1985 Act.  This is logical.  The making of the closing order allowed the latent value in the house to be realised by the obtaining of vacant possession and the execution of works.  Mr Wells chose to re-let the property at a higher rent following completion of the works and may not have thereby realised the full potential value.  We are not, however, dealing with the value to Mr Wells but with the open market value on an assumed sale in February 1997 immediately after the making of the closing order.  When assessing that value in accordance with rule (2) of section 5 of the 1961 Act it must be assumed that the willing seller will seek the best price he can reasonably obtain in the open market (see Trocette Property Co Ltd v Greater London Council at page 416 and Lady Fox’s Executors v Commissioners of Inland Revenue at page 186 E).  In my view, that price would have reflected the ability to obtain vacant possession and the realisation of vacant possession value in good condition by the execution of works to remove the closing order.  Clearly, this is a case where there has been no depreciation in value as a result of the closing order.  Compensation is to be measured by an objective comparison of values before and after the making of the order and not by a subjective assessment of any loss suffered by the owner.  
44.	If I had accepted Mr Lewley’s submission that section 50(2) of the 1973 Act does not apply, and therefore there is no exclusion of any value due to the rehousing of Miss Carter, it must follow that the value subject to the closing order (£29,700) would not have been reduced and may well have been increased.  My determination that no compensation is payable would have remained unaltered if I had reached a different conclusion on this issue of law.  
45.	I determine that no compensation is payable to the claimant under section 584A of the Housing Act 1985 for the making of the closing order dated 12 February 1997 in respect of 91 Victoria Road, Bournemouth.  
46.	This decision so far concludes my determination of the substantive issues in this reference.  It will take effect as a decision when the question of costs has been decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules will come into operation.  The parties are invited to make submissions as to the costs of this reference and a letter accompanying this decision sets out the procedure for submissions in writing.  
				DATED

				(Signed: P H Clarke)
ADDENDUM
47.	I have received written representations on costs from both parties.  The claimant has failed to recover any compensation for the making of the closing order.  Clearly he must pay the Council’s costs of the reference.  I order the claimant to pay the Council’s costs of the reference, such costs, if not agreed, to be the subject of a detailed assessment on the standard basis by the Registrar of the Lands Tribunal in accordance with rules 44.4 and 44.7 of the Civil Procedure Rules.  The procedure laid down in rule 52 of the Lands Tribunal Rules 1996 shall apply to such detailed assessment.  
				DATED

				(Signed: P H Clarke)