59

 

HOUSE OF COMMONS

MINUTES OF EVIDENCE

taken before the

COMMITTEE

on the

CROSSRAIL BILL

DAY FIFTY-NINE

Thursday 12 October 2006

Before:

Mr Alan Meale, in the Chair

Mr Brian Binley

Ms Katy Clark

Mrs Sian C James

 

 

Ordered that Counsel and Parties be called in.

16920. CHAIRMAN: Good morning. We have two petitioners today, Kempton Court Residents and then Saunderson and Saunderson. Would Counsel like to outline?

16921. MR TAYLOR: Sir, Good morning. The Committee will recall that Kempton Court Residents appeared on day 35 and at that particular point Ms Lieven explained that in respect of the noise issues at that date the promoter wished to review the position and work was then done that resulted in a report in June of this year which was then produced, I believe to the Committee, and was circulated to the residents reviewing noise issues in the Whitechapel area as a whole. I understand this morning that Ms Singleton has returned to present her petition on the noise issues in light of that report. I think that is a rather brutal summary but there we are.

16922. CHAIRMAN: It is a start. Ms Singleton?

 

The Petition of Ms Patricia Singleton

 

The Petitioner appeared in person

16923. MS SINGLETON: Thank you. I will just be providing a brief report of what I have considered from the noise information. I am satisfied that Crossrail have made an assessment of the likely level of noise that would be produced by any type of open‑air activity using mechanical plant. The assessment was by a computer programme called SiteNoise 98. Although this is an accepted industrial model, Crossrail acknowledged that conditions can change in the period up to construction and that these predicted noise projections will then need more work.

16924. The report has produced an understandable, full explanation of how noise mitigation was arrived at. This was what was not at all clear in the original Environment Statement so it is understandable for residents. The report shows a number of properties in Whitechapel Road and Cambridge Heath Road which were not included in our petition. However, I have had telephone calls from two of these owners who have heard that I might have information as they were unaware of any possible problems. Therefore, I hope that these properties have been sent the same information. This highlights the need for a continuing dialogue for any persons who may be affected by Crossrail.

16925. A further issue for Kempton Court residents is the shortening of piles that are beneath the actual building and properties. A minimum of 15, but possibly up to 40 piles, may be in the path of the crown of the tunnel lining. Crossrail sets out the process for mitigating these, and will work with the freeholder. However, it is important for the residents above these areas to have assurance that there will be no adverse effect to the fabric of their flats which we feel would be best done by a pre‑survey of the individual properties.

16926. The one item not provided in the Summary of Off‑Site Mitigation is a time‑line and a time‑line that is understandable to the residents. I realise actual dates are as yet not possible to provide, but a simple diagram could show the likely periods during construction when work would particularly affect an area, say, the relocating of utilities. This would be especially helpful for residents who would possibly face two separate periods of rehousing. It would also give some understanding and information for residents who need to sell during the construction period, this is a very big concern, what will we do if people come along and see the windows with this extra insulation on them and worry about how long this might be the case. I have received a letter from Keith Berryman, Managing Director of Crossrail, that he will be happy to maintain a dialogue with me regarding the Noise Mitigation scheme, and the other proposals relating to the construction of the proposed Whitechapel station including works to the Kempton Court piles.

16927. The particular point I have raised was the concerns of residents of how noise insulation could be installed on floor to ceiling inward opening glass and the extremely large windows of Trinity Hall. I would say that in some of the flats at Kempton Court there might only be one very small window, all the rest of the glass areas are these floor to ceiling inward opening doors. Other concerns there are there is no mention of removal and making good after the whole process of insulation is not required. As the Whitechapel site is so large, if they are growing concerns about the building site in the area, I would like assurance that Crossrail will hold informal surgeries in the area or regular meetings.

16928. I note the Promoter's letter of 1 August 2006 that assurances to Petitioners will be put on a register. However, whilst many assurances will encompass the concerns of many petitioners, some assurances, certainly to residents in Durward Street, are specific to them, and in fact, are known only to those who read the transcript of the minutes of evidence. I wonder if it is not possible to have specific assurances now rather than waiting until they appear on the register only where it is concerning residents in Durward Street, that is where we are.

16929. MR TAYLOR: Sir, I have got Mr Rupert Taylor who we can speak to about technical matters if that is necessary but I am probably in a position to respond to Ms Singleton's concerns.

16930. CHAIRMAN: There are only really two matters, one is the consultation, the request to ensure that other people in the immediate area are also consulted with any documentations which are going around which I think very easily get a response to guarantee on that. The second thing is about a host of matters in relation to ongoing dialogue and we did agree, we recommended in our interim report, about the one-stop shop option should be in the area and I think that meets all the needs and demands that Ms Singleton has put forward for regular surgeries and dialogue.

16931. MR TAYLOR: Sir, you are ahead of me but I was going to remind the Committee of the fact that we had accepted yesterday the recommendations for a one-stop shop and in our view that will form a focus for consultation with the residents and for the dissemination of information.

16932. CHAIRMAN: Ms Singleton, is that satisfactory? We have insisted and it has been agreed now with the Promoters to have this permanent one-stop shop which has dialogue continueously with all the residents in the area on an ongoing basis and that seems to be quite a lot of your demands.

16933. MS SINGLETON: Yes, I would be very happy with that. I was not sure when I read yesterday's statement whether it was only for the Spitalfields area but if it is the wider area that would be fine, thank you.

16934. MR TAYLOR: I think the intention is for the entire Whitechapel area. I have two other points which I will deal with very briefly. Ms Singleton raised concerns about the need for a pre‑survey of the flats. I can confirm that a pre‑survey will be done pursuant of the settlement deed that was entered into by those in the flats. Of course they will be offered that document and so there is already a process that we have outlined to the Committee for ensuring that is done. The only other matter that I would draw to the Committee's attention is that when the specification for noise insulation is worked up, the Committee may not be aware of this but we have got information paper D9 which sets out a lot of the detailed explanation for procedure. Within that document it indicates that the specification for noise insulation will be agreed with the particular resident concerned, so, there is inevitably going to have to be some detailed consultation through the process we have already set out.

16935. CHAIRMAN: Does that satisfy your concerns, Ms Singleton?

16936. MS SINGLETON: Yes, thank you very much.

16937. CHAIRMAN: I think you have had a very good morning, very short but very good and we thank you for coming back to us again and bringing your further concerns. If there anything else in your presentation which needs to be taken account of, we will assess those concerns as we finalise the report. Thank you very much.

16938. MS SINGLETON: Thank you.

16939. CHAIRMAN: We will now move on to Mr Saunderson. Ms Lieven, would you like to outline?

 

The Petition of Mr David James Saunderson

 

The Petitioner appeared in person

16940. MS LIEVEN: Thank you very much, Sir. I am afraid I am going to have to tell the Committee in opening something of the history of Mr Saunderson's involvement in Crossrail because of the issues that he wishes to raise and which he raises in his petition. I am going to call Mr Colin Smith who is going to give you a detailed history and explanation of where we are but I thought it would be helpful for me to give it in outline. Mr Saunderson, through a company called SHL, bought a number of companies in the Farrington area in the late 1980s and perhaps we could have up the first exhibit intending to bring forward, it was a property development company. Their properties which are close to or effected by, and I will show you in detail in a moment, the Farrington Station at the eastern end, what the Committee have come to know as the Lindsey Street ticket hall. Just to orientate the Committee, this is Smithfield market here (indicating). This is Lindsey Street and you will remember the Committee has heard a lot of evidence about that in the past and this is a street called Long Lane. SHL bought a number of properties on Lindsey Street, Long Lane and Hayne Street in the mid to late 1980s intending to develop them for property purposes. In November 1990 a safeguarding order was issued for Crossrail and that is what is shown on this plan in the dark colour which safeguarded all of Mr Saunderson's properties and it is correct to say that the effect of that, and Mr Smith will go through it in detail, was to seriously limit what planning permission, if any, could be gained on those sites on his land. It is very important to stress at this stage that, of course, Crossrail at that stage although still called "Crossrail" was being promoted by London Underground and British Rail, as it was then, and it came forward before this House as a private bill not a hybrid bill. So, the Department for Transport, although a supporter in the background, had no part in the promotion of the scheme at that stage.

16941. Importantly, in October 1991, the limits of the safeguarding were changed so that the properties that Mr Saunderson, SHL, owned on Long Lane, these properties here (indicating) were no longer within the safeguarding. The reason for that is the Committee may remember that there is a difficult issue at this end of Farrington around the relationship of Crossrail with Thames Link. When the original safeguarding was undertaken, there was effectively no thought of Thames Link 2000. In 1991 it was then assumed that Thames Link would go first before Crossrail, it was possible to shift the site of the station north because some of the Thames Link 2000 tracks would be closed and that led to the change in the safeguarding and the release of Mr Saunderson's land on Long Lane, so far, so clear.

16942. What happened next had nothing to do with Crossrail which is that the Committee may well remember that there was a very severe property slump, particularly in London and even more particularly in the fringe areas of the City of London in the early to mid 90s, very severe, prices fell enormously. I think in 1995 ‑ although Mr Saunderson will give you a precise date I am sure ‑ SHL went into receivership and all the properties owned by SHL except for 10 Hayne Street, which we will come to in a moment, was sold by the receivers and there is no issue that they were sold by the receivers both for a good deal less than Mr Saunderson had paid for many of them at the height of the market in the late 1980s but also for a great deal less than they were valued at an open market value in the 1990s. So, there is no doubt that the value of those sites fell very, very significantly. That, in itself, was not out of line with what was happening in Farrington and across other parts of London. That outlines Mr Saunderson's first issue which is that he should be compensated for what he perceives to be the detrimental effect of the 1990 safeguards and I will make submissions in full in closing but can I ask the Committee, and Mr Smith who will give evidence on this, obviously in detail, to note three markers at this stage.

16943. First of all, neither the 1990 or 1991 scheme was being promoted by the Department for Transport so, in effect, this is all history and it is not really in my submission a matter for this Committee.

16944. Secondly, and Mr Smith as always will be very straight forward about this, we are not saying Crossrail did not have an impact on SHL but a very large part of what happened to SHL was a consequence of the property market and property speculation and to coin a phrase property values go up and property values go down and this was a speculation which went down but very simply because of what was happening in the property market.

16945. Thirdly, and Mr Smith will give evidence on this as well, what happened to SHL in terms of that slump in property values was not by any means unique to SHL in its interaction with Crossrail. A very similar argument could and would be put, for example, by the Grosvenor Estates about values to many of their sites in central London where they hoped and expected to develop property and found that it was much more difficult, if not impossible, to do so, because of Crossrail. Of course there is a difference because SHL have bought the sites and is a smaller developer than something like Grosvenor Estates, but the fact that there are other sites which in those terms have been difficult, if not impossible, to develop because of Crossrail is reflected across sites in central London. That is the first issue. The second issue specifically concerns 10 Hayne Street, and perhaps we can put up the plan that shows 10 Hayne Street. This is the one part of Mr Saunderson's land which is still within his or his partial ownership.

16946. MR BINLEY: Sorry, can you show us where that is?

16947. MS LIEVEN: This is the photograph of it. It is this site here (indicating). It is an empty space which could be used for surface level car parking.

16948. MR BINLEY: Can we then relate that to the map?

16949. MS LIEVEN: Certainly, if we can go back to one of the maps and focus in on Hayne Street. Hayne Street is here and it is that site there (indicating).

16950. MR BINLEY: Can I ask how that relates to the change in the order?

16951. MS LIEVEN: Ten Hayne Street would always have been safeguarded. Here is 10 Hayne Street (indicating). The change in the order affected this block on the corner of Lindsey Street and Long Lane, so 10 Hayne Street was safeguarded in 1990 and 1999.

16952. MR BINLEY: That is fine, thank you.

16953. MS LIEVEN: The position on 10 Hayne Street is that it is the one part of the SHL land ownership that was not sold by the receivers. It is now owned, we believe, by Mr Saunderson, who appears this morning, Mr Saunderson's cousin, who, slightly confusingly, but through no fault of his own, has exactly the same name, including the same second name, and Mrs Katherine Baxter, who I understand is a member of the family but Mr Saunderson can explain who she is. We understand, although Mr Saunderson may confirm the precise land ownership, that Mr Saunderson himself retains a part ownership of the site. As I said a moment ago, the site is an empty plot and could be used for surface level car parking. As the Committee can see, it is not a particularly large plot. It is a site that is definitely needed for the scheme, there is no issue about that, and our simple solution, which is very straightforward, to this part of Mr Saunderson's concerns is that if he put in a blight notice, made an application under the blight notice scheme, the site falls within the rateable value limits for blight notices. The Committee will remember, there is a relatively low cut-out but this site falls within it. As long as Mr Saunderson, on behalf of all the owners, serves a blight notice and then is in some way in occupation and control of the site, he will satisfy the blight notice criteria and we will have no choice but to accept the notice. Have we got the photo that shows the site side on?

16954. The occupation qualification is not a difficult one to meet on this site because all that needs to be done is for the owners to ensure that one or two cars are parked on the site, we are not asking him to move in and take up residential occupation, that is a not necessary. Occupation is a relatively low test here. We may be unreasonable but we are not that unreasonable. If a blight notice was served and that relatively low test was met, we would have no choice but to buy this site as it would fall within the statutory criteria, but we cannot do it until he applies. We have no statutory power to do so. We are waiting for Mr Saunderson, who I would assume has taken his own advice, to take that course and then this part of his concern simply goes away.

16955. I should say at this point, Mr Saunderson is very aggrieved because his perception is that we encouraged him to apply under the Hardship Policy in respect of 10 Hayne Street and then rejected his application. Whys and wherefores of whether he really was encouraged perhaps do not matter very much. If he was then perhaps it was not the best course because it would have always been difficult for him to satisfy the policy. In any event, perhaps the Committee does not need to be too bothered about that and perhaps does not need to get too much into the rights and wrongs of the past history on it because if he serves a blight notice he gets exactly the same effect, which is that we buy the property. I should say, we buy it at open market value, not in any sense as blighted by Crossrail. I understand this site did have a planning permission on it originally and that will be taken into account in assessing the compensation under that blight notice proposal. Mr Smith can explain that to you in much greater detail. On that part of his issues, we say there is a simple solution. The third issue he raises is in respect of the land disposal policy which is the policy to do with owners whose land is compulsory acquired and the share that they get in over-station development profits, our simple answer to that is we have a policy and we will apply it to Mr Saunderson in exactly the same way as anybody else. When I hear what Mr Saunderson has to say about that I will ask Mr Smith to deal with that. I am sorry to have gone into more detail and perhaps put more of my case than I would do normally in opening, but it is a slightly different issue from many of those the Committee has come across. I hope that is helpful. That is all I was going to say at this stage.

16956. CHAIRMAN: Mr Saunderson, can I say before we set off, we are limited in what this Committee can do in respect of this. Firstly, we are not entitled to go back and alter a court decision which has previously been taken. We cannot do that. We cannot take a decision to award retrospectively things like compensation. I do not think that is within the remit of our powers at all. As long as you realise that. You are here to put your case so please make it as best you can.

16957. MR SAUNDERSON: Thank you very much indeed. I propose to take us through the Petition which you will find on page 49 first of all, so that you have set in writing the facts, some of which differ from the position that has been laid out to you.

16958. MS LIEVEN: I am sorry, Sir, we only got this morning. If Mr Saunderson had a set that we could give to Mr Grocock, and I can put it on the screen.

16959. MR SAUNDERSON: I have given out 12 sets this morning.

16960. CHAIRMAN: Can we list this as A192.

16961. MR SAUNDERSON: I believe you have had the Petition for a year.

16962. MS LIEVEN: Yes, we have the Petition, it is just helpful to do it in the same order.

16963. MR SAUNDERSON: What I propose to do is take us through the Petition, then take us through this bundle of documents and then submit my arguments and submissions to you. I am grateful for your time for this Petition. You will see that it is raised in the name of myself, my cousin, who is sitting behind me and has the same name, and a friend, Mrs Katherine Baxter. She is no relation, but the wife of a colleague of ours. I am asking you to prevent the further passage of this Bill in Parliament which I believe you are entitled to do, so that is what I am asking you to do this morning.

16964. CHAIRMAN: We have been told that this is a good Bill and we have to present a bill back to Parliament so that it may consider whether to take it forward or not. As you say, we have been given a specific task to do that.

16965. MR SAUNDERSON: I sympathise totally with you.

16966. CHAIRMAN: Thank you very much, we need as much as we can get!

16967. MR SAUNDERSON: I understand that it has been a long haul for you. You have heard many people and I am sure it is hard going.

16968. MR BINLEY: Would you mind, Chairman, if I read this first? I do feel if I have it in my head it helps when you allude to it and it will help build a picture.

16969. MR SAUNDERSON: Pages 49 to 55.

16970. CHAIRMAN: Can I reiterate what I said earlier, we are not able to go back retrospectively to deal with old matters. We will deal with the one which will be presented to us. We can deal with the matter of the land and property you have got now, but we cannot go back to something you had before where there has been a subsequent court decision. That is a matter for you and the civil law and is simply not now within our powers to do so. We are only dealing with what is now. On the matter of compensation, we will deal with what you have now in relation to your Petition.

16971. MR SAUNDERSON: My understanding is that you can ask the Promoter for certain things, and my case put that the Department for Transport had nothing to do with what was going on back in 1990. I think that is slightly disingenuous. I think everybody here would find that slightly strange to try and disengage the Department for Transport from London Underground and Crossrail.

16972. CHAIRMAN: I fully understand where you are coming from with your argument because of your position, but in truth, it has been described that what occurred at that time was of a different volition altogether, it came from a different direction. What has been before is not really for this Committee. We can only deal with the present. As you know, one of the fundamental principles of British law is a lack of retrospection in relation to decisions which are made in this place. We cannot interfere. We can only deal with your Petition in respect of the situation now as it stands. If there is an unfairness, however unfair it might be, we can listen to your arguments, but I am not quite sure that we can formally insist upon the Promoter to act upon that.

16973. MR SAUNDERSON: I think all MPs would be interested in the way that the government bodies are conducting their business. If they are conducting that business which is prejudice to small businesses, I do not think that is something MPs would want to support. In my case, for 16 years London Underground, Crossrail, British Rail, however you like to call it, the Department for Transport, has been dealing unfairly with me and my company.

16974. CHAIRMAN: I understand that your view is that what has occurred in the past probably has been unfair. What I am saying is, we are dealing with now and that is all we can do. We do not have the powers to go back in this regard. I do not see that there is anything wrong with you putting your case, but I want to advise you that we are restricted on how far we can go and what powers we have.

16975. MR SAUNDERSON: For example, you made an order in your interim decision that costs should be paid to certain Petitioners. That is one of the issues I am asking you to award, the costs .

16976. CHAIRMAN: Certainly, and that is in respect of your holdings now, that is right. We will look at that, there is no doubt about it. I am saying, what you have presented in the past as part of your argument is on land and property which are under a different heading altogether and are no longer in your ownership, they have been gone for some time and have been subject to decisions taken before by the receivers and so on. That is not really a matter, I believe - I will take advice - where we have the power to effect.

16977. MR SAUNDERSON: I hear what you say, and I understand what you are saying. Ten Hayne Street I do own with my cousin and Mrs Baxter and I bought that in 1982.

16978. CHAIRMAN: Can I say, I am in no way trying to stop you in your presentation of your Petition, what I am trying to do is to advise you that, yes, you do have a proper and valid Petition which relates primarily to your ownership which you have now.

16979. MR SAUNDERSON: That is fine. My case includes that because I have opened that since 1982 and the other land has come and gone, as it were.

16980. MR BINLEY: Having read through the Petition - I am grateful for that opportunity - may I ask Mr Saunderson a specific question which seems to be the nub of the Petition and can I say that I understand, as a businessman, your frustrations and concerns. I do not want you to think that there is not an understanding and there is not a great sympathy in that respect. I hope that at least makes you feel that the world is not against you because that might be helpful to you. Can I refer to page four of your Petition and to clause 10? I just want to understand a particular point. You will go on and present it. It says: "Due to direct intervention by Crossrail in the planning process to require refusal by the City of London Planning Committee ...", are we taking of 1989 and 1990 when you are referring to this because that is the period leading up to the problems? I remember the difficulties of 1989 and 1990 from a business perspective myself and indeed suffered specifically. Are you saying that was the period or are you referring to a later period when you made that statement?

16981. MR SAUNDERSON: Yes, it has continued since that time. We applied in 1992. I have included in here the City Planning Officer's report accepting our scheme saying they had no objections to our scheme but referring it to the Department for Transport who directed refusal of the scheme for 80,000 square feet of offices in the City of London.

16982. MR BINLEY: What I do not understand from that statement is the fact that if you are talking about Crossrail, which at that time I understand did not exist, and we are talking about two organisations which were not directly related to Crossrail, I can understand your general feeling that come on, London Underground and British Rail are government bodies, but in legal terms it was not directly related to Crossrail as such at that time, was it? I need to understand that from you.

16983. MR SAUNDERSON: My colleagues will correct me if I am wrong but Crossrail was a consortium, as I understand it, of London Underground, British Rail and the Department for Transport.

16984. MR BINLEY: It was a different legal entity. I am trying to get your understanding of that.

16985. MR SAUNDERSON: Than today?

16986. MR BINLEY: Yes.

16987. MR SAUNDERSON: I do not think I can comment on that. The entity as far as we are all concerned here is that it was Crossrail. How exactly the legal constitution of it occurred I do not think is so relevant. It was actually the Department for Transport that directed the City Corporation to refuse the planning so, if you like, that was the government.

16988. CHAIRMAN: As we understand it, in reply to Mr Binley's question, Crossrail as was was a private entity promoted by London Underground although, yes, it did have the necessary liaison with the statutory bodies at various times. The difference being this time this is a hybrid bill and it is under the Department for Transport that Crossrail is being done, is that correct?

16989. MS LIEVEN: That is right, sir. The Bill that was promoted in the early 1990s was promoted by London Underground and British Rail, so that is one point. There was no consortium between London Underground, British Rail and the Department for Transport. The Department for Transport was not a partner in any legal sense in Crossrail, that is why it was a private bill and this is a hybrid bill. It is right to say that the safeguarding was placed by the Department for Transport because safeguarding can only be placed by a government body, it cannot be placed by private individuals. I do not think there was a company called Crossrail or anything like that at that stage, it was literally these two railway bodies and they applied to the Department for Transport and the Secretary of State for Transport exercised his statutory functions in imposing safeguarding, as he would for any other private bill that he thought it appropriate to do so. The Secretary of State for Transport only became directly involved in Crossrail in the early 2000s.

16990. MR SAUNDERSON: I hope that is helpful. I do not want to confuse this but the Department for Transport has been intimately involved with Crossrail, as we all know from the papers, since it began.

16991. MR BINLEY: I understand that, thank you.

16992. MR SAUNDERSON: Just to take you briefly through the documents. Page three is the planning permission granted on 10 Hayne Street in 1984 for a 714 square metre gross, that is about 6,000 square feet net roughly, office building on 10 Hayne Street, which I still own with my cousin. That gained planning permission. It was in Islington Council at that stage but the boundary was moved and it is now within the City Corporation. This is an Islington planning notice. On page four you will see a valuation of that from a firm of surveyors in the area at £200,000 in 1986 for that 10 Hayne Street property, just to show that for interest. In 1990, on page five, there was a renewal of the planning permission, that same planning permission for an approximately 6,000 square feet office block. That was February 1990, again from Islington. Then we move to the City of London, the letter on page six in 1991, where we now see the larger site, which I had acquired mostly in the early 1980s. 1981, 1982 and 1985 were when three buildings were acquired and two were acquired in 1988 and 1989, so they were not all acquired in the late 1980s as the other barrister said.

16993. In 1991, in conjunction with discussions with London Underground which had been going on - because I have not gone through the petition I have not explained there were detailed discussions going on with London Underground, Crossrail, whatever you call it, regarding a joint development of this site and, indeed, they had been paying half of the professional fees - we had run an architectural competition for this site run by Jones Lang Wootton and we had six firms of architects and TP Bennett, a big firm, was selected. That firm developed a planning application and it was then agreed that it should be changed because Crossrail had given us new sizes for the ticket hall. In 1991 we withdrew that application and this is a letter from the City Corporation to our architectural associates, Noel Isherwood, withdrawing the planning application we had made and we were going to resubmit one, which we then did shortly thereafter.

16994. You will see on the next pages, starting at page seven, a report of the City Planning Officer - this is now the Corporation of London - to the planning committee of the City of London dated 9 June 1992. You will see the address, "bounded by Hayne Street, Long Lane and Lindsey Street", which you are very familiar with, close to the Barbican Station, next to Farringdon. You will see in 1.2 the recommendation of the City Planning Officer: "It is recommended that in view of the representations received from Cross Rail, the application be referred to the Department of Transport in accordance with the safeguarding directions. Furthermore, the Department be advised that the Corporation of London is minded to raise no objections to the outline application for the demolition and redevelopment of the site to provide a five storey building, with plant room areas and two lower ground floor levels; for use as A1, A2, A3, B1, hotel and provision for Cross Rail/LRT, including associated car parking and servicing, subject to the conditions as set out in the attached schedule." That was the City Planning Officer's report on our scheme to develop some 80,000 square feet of offices and other uses on that Barbican/Farringdon site.

16995. "1.3 That I be instructed to inform the London Borough of Islington on your views on that matter...."

16996. MR BINLEY: My apologies, Mr Saunderson. The phrase "Cross Rail" here interests me and I just want to get an understanding of it. That is not an official company name as it is used here, is it, it is simply a description of a project which is a Crossrail project. Is there a difference there?

16997. MR SAUNDERSON: I am a chartered accountant, as it happens.

16998. MR BINLEY: I am a salesman!

16999. MR SAUNDERSON: I see what you are saying. Crossrail, as the barrister has said, was a scheme promoted by London Underground Limited. I believe on the bottom of the notepaper it states the exact status. I do not have that in my mind.

17000. MS LIEVEN: I think it is important that the Committee understands that what is being got at here is that there be provision for the Crossrail project, infrastructure railway, and when it says "LRT" it means the sub-surface lines of the Metropolitan and Circle Lines. It is an operational provision, it is not making any legal point between Crossrail and LRT. There had to be provision both for the Met and Circle Lines to keep running and Crossrail down in a deep basement.

17001. MRS JAMES: I just have to ask you, 6.16 on page 15 has a heading "Cross Rail" and there is a whole section referred to as "Cross Rail" and all the points from 6.16 through to 6.19 refer several times to "Cross Rail".

17002. MS LIEVEN: I am sorry, I was not clear and I should have been. The project that was promoted in the early 1990s was called "Cross Rail" and it was a project in this area very similar to what the Committee knows as Crossrail. It had differences elsewhere but here it is very similar. There is no doubt at all that it was Cross Rail, that was what it was called, but as a legal entity it was a joint promotion of LUL, possibly LRT (one never knows with LUL what it called itself legally at any particular moment), call it LUL, and British Rail.

17003. MRS JAMES: You can see why Mr Saunderson has made this assumption.

17004. MS LIEVEN: Totally, and I totally accept that in terms of what Mr Saunderson saw on the ground, which was a railway going underneath his land, it was a railway in a very similar form but legally there is a very important distinction.

17005. CHAIRMAN: It is a different legal entity.

17006. MS LIEVEN: Absolutely, sir.

17007. MR SAUNDERSON: I must say I would be surprised if the Department for Transport sought to push forward an argument to you that they had nothing to do with Crossrail in 1990.

17008. CHAIRMAN: I never sought to say that and I do not think Ms Lieven has either. What we are saying is it is about the legal entity both now and then. What we have now is a different legal entity entirely, it is the Government now and before it was mainline railway companies basically under a private bill. This is an important fact of law because on your petition you are seeking redress and, as I say, we have to look to see who has responsibility.

17009. MR SAUNDERSON: I am seeking redress from the Department for Transport who existed then and who exist today. If Crossrail would like to pay the bill that is fine, I do not mind who pays, but I think it would be disingenuous to suggest that there would be a distinction from a legal point of view. We would have to come back on that if one was trying to run an argument technically trying to get the Department out of the line of fire.

17010. CHAIRMAN: Let me give the distinction. Let me put it down on the record as a distinction. What we have now is a Government Bill called Crossrail which is supported by a private entity set up by the Government and that is the entity which exists at the moment. The previous Cross Rail was not that, it was a private bill without the Government. Yes, it encouraged it, I do not think there is any doubt at all about that, and there is enough evidence for everybody to assume that was the case, but the fact of the matter is it was a private bill run by private partnerships of groups of people coming together, so there is a distinction in law between the two. If we could move on.

17011. MR SAUNDERSON: I completely understand and accept that it was a private member's bill. Paragraph 1.3: "That I be instructed to inform the London Borough of Islington of your views on the matter and that a copy of this report be sent to the Borough raising no objection to that part of the scheme within their authority. 2.1 Paragraph 5 of the safeguarding directions for development affecting the route proposed by London Regional Transport and the British Railways Board for the Cross Rail project....provides that applications which authorities are minded to approve against London Regional Transport's advice, must be referred to the Department of Transport. 2.2 The purpose of this report is to seek your views...." We move on to four, the proposal, that is outline planning permission to demolish the buildings on the site and erect a new building with a ticket hall for Cross Rail/LRT. Level one is to be used for Cross Rail, in 4.2, and level two will be Cross Rail plant and ancillary plant. "4.3 The building provides a total of approximately 8,614 square metres of floor space", some 90,000 square feet, and 1,496 square metres is for Cross Rail/LRT use and it goes on about plot ratios and so on.

17012. 5.1 is what the Cross Rail Project Team stated: "The above proposed development site falls within the safeguarding limits in respect of the Cross Rail Project for which the Secretary of State for Transport has issued directions under the General Development Order 1988. To safeguard the Cross Rail Project, we recommend that the application be refused on the grounds that the current ticket hall arrangements are inadequate, and further refinement is required in connection with this scheme which fails to address several outstanding ticket hall issues regarding the Cross Rail works. Accordingly, an objection to the outline application must be registered at this stage to safeguard the operational requirements of the railway undertaking." London Transport have commented, and they then make a point about the use of Farringdon East ticket hall and they require flexibility to handle 12 car trains up from eight car trains, and you have probably heard about that in the course of your hearings. So there is a comment on the size of the ticket hall which is addressed later in a revised scheme.

17013. In 5.2 on page ten, about the middle of the page, you will see that in London Regional Transport's submission they comment: "Further matters such as joint venture arrangements also require to be discussed. I am hopeful that agreement can be reached on these matters which will not prejudice LUL's powers and ability to construct, operate and maintain Cross Rail and the station facilities at this location and which would therefore avoid the use of the veto. In these circumstances LUL are willing to withdraw conditionally their objection to this application on the limited basis that a section 106 Agreement which unequivocally safeguards LUL's ability to exercise a vet over this scheme must be in place before planning permission is issued". If we move on, the rest of that is just a report with various other parties commenting on the scheme, health and safety and so on. We come to the conclusion on page 16, item seven, the City Planning Officer's conclusion: "Having regard to the above, I am of the opinion that, subject to appropriate conditions, the scale and bulk of the building and the mix and range of uses is acceptable. Given the terms of the safeguarding directions for Cross Rail, Members' views are sought on the scheme. 7.2 It is recommended that in view of the outstanding objections from Cross Rail, the application be referred to the Department of Transport for their comment or a direction, and that the Department of Transport be advised that the Corporation of London is minded to raise no objections subject to the imposition of appropriate conditions."

17014. We then move on in May 1995 on page 18 to 10 Hayne Street. This is a renewal of the planning permission which was unimplemented on the smaller site. The City Planning Officer writes to our architects, Noel Isherwood Associations: "I refer to your application for the renewal of planning permission. I would normally be able to recommend that planning permission be granted. However, as you are aware, the site is within the route proposed for the Cross Rail Project and I have received a comment from the Cross Rail Project Property Manager, recommending that the application be refused. I therefore intend to report the matter to the next available meeting of the Planning & Transportation Committee for their views, and if they are minded to grant planning permission, I propose to refer the application to the Secretary of State for Transport as required by the Cross Rail Safeguarding Directions issued on 5 November 1990." You are beginning to form a picture of what is happening and the various entities that are involved in this situation. "I will let you know the outcome..." Then he writes on 4 January 1996: "The Common Council of the City of London hereby refuses ....to permit the development referred to in the undermentioned schedule", which you will see at the bottom of the page is 10 Hayne Street, renewal of the planning permission for the smaller office building of 600 square feet. So in January 1996 we get a refusal notice from the City Planner for the renewal of something that had already been renewed twice in 1984 and 1990. In 1996 it was refused.

17015. You will see on page 20 he goes into the details in the report associated with the decision. In the middle of the page: "(A) 10 Hayne Street, EC1 - Redevelopment. We have received an application for the renewal of planning permission for the redevelopment of 10 Hayne Street, EC1, to provide 714 square metres of offices..." A little bit further down: "Since planning permission was granted by the London Borough of Islington, the Secretary of State has issued the CrossRail Safeguarding Directions and 10 Hayne Street is one of the properties identified as being likely to be required for the construction of CrossRail. In accordance with the Directions, the CrossRail Project Team were consulted and they have advised that planning permission should be refused on the following ground: 'That the site, which is the subject of the application, lies within the route proposed for the CrossRail Project and is likely to be required for the construction of that Project.' We were advised that the lies directly over the proposed Crossrail ticket hall..." and so on.

 

17016. CHAIRMAN: Mr Saunderson, following that refusal, it was refused by the Committee, was it?

17017. MR SAUNDERSON: It was refused and the refusal notice was on page 9.

17018. CHAIRMAN: Did you then appeal to the Secretary of State?

17019. MR SAUNDERSON: I did not appeal, no, because we had had the Order from Crossrail.

17020. MR BINLEY: Could I ask a question about the Order because on page 20 to that, it says, "Since planning permission was granted by the London Borough of Islington, the Secretary of State has issued Crossrail's Safeguarding Directions and 10 Hayne Street is one of the properties identified as being likely to be required...", so there is no doubt about that with regard to 10 Hayne Street and your rights have been made clear to you. I would have thought that would give you some comfort. How does that statement impact upon the other properties? Does it have any impact on the other properties at all?

17021. MR SAUNDERSON: First my question to you would be: if you had a property ----

17022. MR BINLEY: Forgive me, but I am asking you the questions.

17023. MR SAUNDERSON: Well, number one, the impact is that we had a little property, 10 Hayne Street, which has then been frozen effectively for 16 years and we have been unable ---

17024. MR BINLEY: Yes, I understand that about 10 Hayne Street certainly and I understand the difference between 10 Hayne Street, but that Planning Order also encompassed the other properties, did it not, laid by the Secretary of State and that is not in any doubt at all, is it, at that time?

17025. MR SAUNDERSON: No, we never received permission for the bigger scheme.

17026. MR BINLEY: My mind is slightly confused. At which stage was the plan was altered and pushed back, remind me of that date.

17027. MR SAUNDERSON: We have had the little scheme approval since 1984. The big scheme, the City Corporation raised no objection in 1992 to our final scheme and the Department for Transport ordered them to refuse it, so that was 1992 after the safeguarding directions had come in in 1990.

17028. MR BINLEY: Thank you, I have the chronology.

17029. MR SAUNDERSON: So it was obviously clear before 1990, but we only ever put the large application in after the safeguarding directions because we were in detailed discussions with London Underground, London Regional Transport, the Department for Transport, Crossrail, all the different bodies that were involved and we worked with them, as you will see in the details, with the engineers, and we had Ove Arup's working on the engineering with London Underground and so on. I use the terms because they start to intermingle, London Underground Limited, London Regional Transport, the Department for Transport, Crossrail, but you can see a slight merger of those and you will forgive me if I ever get one particular thing wrong, but they were working together and in my mind it was the Government because it was all Government-owned.

17030. MR BINLEY: The machinery of State, you could say.

17031. MR SAUNDERSON: Yes. So the final recommendation on page 21, "...we recommend that planning permission be REFUSED..." and a refusal notice was issued which I showed you on page 19.

17032. On page 23 you will see that I wrote to the Rt Hon Dr Brian Mawhinney, now Lord Mawhinney, who was Secretary of State for Transport: "Dear Brian, I was delighted for you to hear how the Party finances have recovered - a sterling achievement in so short a time. As you kindly expressed interest over the last year in my Crossrail problem, I thought I should let you know the end result of my 17-year business effort. Four out of the five buildings on my blighted site were sold by the Receivers this month for £1.3 million - I paid £4.3 million for them between 1981 and 1989. In order to more accurately reflect what my company is reduced to by order of the Government, I have changed the name of Saunderson Holdings Ltd to CBCP Ltd", and you can probably imagine what those initials stand for. "I am now available for up to four days per week consultancy work since my business has all but ceased."

17033. MRS JAMES: That has gone over my head, "CBCP".

17034. MR SAUNDERSON: Well, it could be called 'Crossrail Blight Compensation Programme' or something like that. It was just a name out of Companies House. It just changed its name, the company. It was the same company, but changed its name at Companies House.

17035. CHAIRMAN: When this occurred and you had that subsequent loss, did you then take any legal action to recover because of the loss against the partners in the previous Crossrail project?

17036. MR SAUNDERSON: We did not take legal action because we were in pretty reduced circumstances, so we were not able to find a legal case.

17037. CHAIRMAN: The reason I am asking, you have gone through the reference, but I am just trying to find if there were avenues explored which then reached a dead end. That is all I am trying to get it, but you did not take legal action?

17038. MR SAUNDERSON: No, I did not take legal action.

17039. CHAIRMAN: And you did not appeal to the Secretary of State?

17040. MR SAUNDERSON: Well, you can see that I wrote to Brian Mawhinney and you will see his reply on 4 October on the next page.

17041. MR BINLEY: May I ask you a question, Mr Saunderson, because I think this is often not understood and taken into account, but it is very relevant. This would have been a very sizeable flow to you emotionally as well as financially.

17042. MR SAUNDERSON: Yes.

17043. MR BINLEY: It does impact heavily on confidence and ability to think clearly as well. We often make a case in this place for people who are seen to be victims, if you like, by explaining that there are other issues that impact upon them, but there are equally other issues in this respect: hard businessmen are not always as hard as is often portrayed, so there is an emotional part of this that impacts at the time this sort of thing happens and I wonder if you want to put that on record too because I think it is often misunderstood. We are seen as hard-faced businessmen, but this is our baby and it impacts upon us in quite an emotional manner. Is that fair?

17044. MR SAUNDERSON: Yes, indeed. The effect was devastating and it impacted on my other little businesses as well in software and other interests. It meant the whole house was basically unable to continue. One little company survived which has prospered since, but it is very unsatisfactory to have a blot on your record like this. There was a reference to the downturn in the property market. Well, that occurred in 1991/92 and I weathered that through, but this was 1996 to 1999 when we sold the buildings and that was well into recovery even if Labour were in power, the recovery was under way, but the recovery values did not happen for this site because it was blighted by Crossrail, so there was a very unsatisfactory result.

17045. MR BINLEY: What I am trying to get at is that is one of the reasons possibly that you did not take the action suggested by the Chairman that your mind was in more of a turmoil than people might understand?

17046. MR SAUNDERSON: Well, I think taking legal action against the Government is quite a big undertaking - what is the expression - "Fools go in where angels fear to tread". I was not in a position to fund a major legal case against the Government. This is the first time I have really had to be heard in 16 years about the situation which I believe has been unnecessarily aggravated by the actions of Crossrail, and I use that in the broadest terms there, Crossrail, but you will see that on a number of occasions they have led me into joint venture discussions where we have had barristers working for us, planning consultants, surveyors, engineers, all of which cost me money, and they have encouraged that. They have now got City Planning Officer approval for the bulk of the building that is to be on that over-station development and I funded that and I am saying now that we should be paid for the work that we did for London Transport, for London Underground, Crossrail, however you like to call it, and they encouraged that. They encouraged advance purchase discussions on several occasions and the barrister suggested that we file a simple blight notice on 10 Hayne Street. We had been advised that there is no way they would pay a blight notice. We do not have the occupation qualifications, putting a car on it. Some lawyer in the Government will say, "No way is that occupancy of that site. It is a derelict site", so for her to suggest that we file a blight notice and get paid out even now is what has been happening all the time. They have said, "Come and have advance purchase discussions. Come and give us surveyor evaluations. Incur expenses to do this", and then they say, "No". That is what we have had on numerous occasions and it is unsatisfactory and there is no reason for them to encourage us to do things and then say no. That is what has really annoyed me in addition obviously to the freezing of the assets.

17047. CHAIRMAN: The one thing is that everything that Ms Lieven has said today is actually on the record and if it is on record, it could be used by you to ensure what I think is pretty clear, what was being offered by Ms Lieven on behalf of the Promoters today, and that is that you would qualify. I think it would be very difficult once reading what was said this morning for you not to be, so I think that is a bit disingenuous. Can I just go back to the question of not suing the Government, but going back legally to the Crossrail partners, as was then, which was London Underground and, did you go back to Crossrail legally and say, "You have caused us to lose this money. Having entered into a variety of areas, you have caused this to occur to us and we want redress"?

17048. MR SAUNDERSON: Yes, I did and you will see it in the next couple of pages. At page 25 I wrote to the City MP, Peter Brooke, to tell him what had happened. I had been keeping him informed and he just says that he is sorry to see it. I wrote to the Parliamentary Ombudsman in October 1996, citing the case of something that was in The Times, as you will see on the next page, 27, where the Parliamentary Ombudsman was ordered to pay or £1 million was to be paid to this couple who had had maladministration in a compulsory purchase situation and I asked him to look into this Crossrail situation, so I was pursuing each angle that I could. In fact a High Court judge, "Mr Justice Sedley said that the couple had been innocent victims of the scheme, this was a road scheme, and found that the Ombudsman, William Reid, had been guilty of maladministration in his treatment of them. It was the first successful challenge to a finding of the Ombudsman who must now review how everyone from the Council to the Transport Secretary dealt with the case", and I never received a reply from the Parliamentary Ombudsman.

17049. CHAIRMAN: You did not receive a reply?

17050. MR SAUNDERSON: No.

17051. CHAIRMAN: Well, perhaps we could help you there. Can I just say that we will endeavour to write to the Parliamentary Ombudsman and ask why did you not receive a reply to that and we will report back on that.

17052. MR SAUNDERSON: That would be very helpful. You will see the copies of the letter there and the enclosures, 28 October 1996. Then Sir George Young at the Department for Transport writes to Peter Brooke on 18 November 1996: "Dear Peter, Thank you for your letter...enclosing further copy correspondence from Mr D Saunderson of CBCP Limited...As you know, Mr Saunderson's property did not come within the scope of the regulations on blight, and London Transport concluded that it was not appropriate to make a discretionary advance purchase. I realise that this will be of little comfort to Mr Saunderson, but there really seems to be nothing fresh that I can add. You also asked about the inter-departmental working party on blight. The group has been considering the scope, cause and effects of blight arising during the various stages of large infrastructure projects. Their main aim is to ascertain whether any practical changes can be made to the existing arrangements for property purchase and compensation. The present position is that a draft interim progress report is being considered with a view to its being placed before Parliament thereafter. A final report will follow."

17053. You will see further correspondence about the blight, and on page 31, in answer to your question, Chairman, I wrote to Mr Andrew Trott on 28 January 1997: "Further to our telephone conversation on Monday, I enclose, as requested, the record of my involvement with LT/Crossrail from 1988 to date. My charge-out rate is £150 per hour and I would be grateful if you would have this approved in order that I can send in an invoice for payment of the appropriate sum. I am grateful for your assistance in this matter."

17054. Then you will see on page 32, 32A and 33 that I set out the time record of involvement with London Transport and Crossrail which is in summary, but you will see from April 1988, instructing Jones Lang Wootton; May, co-instructing with LRT Ove Arup; August, meeting with full development team and LRT to progress scheme; September, co-instructing with London Regional Transport and Jones Lang Wootton to prepare the development brief; the preparation of brief to six firms of architects; honing and agreeing the brief; initial interviews; and brief sent out to agreed firms.

17055. MR BINLEY: Can I take you back, and I am awfully sorry about all this, but this is a very complicated case, and we would normally leave our questions until the end of the presentation, so please do not think I am trying to interrupt you to cause any problems for you. I want to go back to a letter on page 30 where you were asked why you did not take any steps to argue blight at the time. One assumes that this letter sort of dispelled any hope at all in your mind that that might be an avenue open to you.

17056. MR SAUNDERSON: Yes. Statutory blight, as I understand it, we did not qualify for because it is only for rateable values below £18,000 which is quite small properties, and you have to be an owner/occupier, so it is more for residential. Then you will see going on into 1990: dealings with the press on planning application; funding partner discussions; planning and LRT discussions.

17057. Then in 1991: LRT engineering and property meeting to amend Crossrail design in scheme; funding and planning discussions with Ove Arup, the engineers; reached agreement with LRT in October 1991 over a Section 106 Agreement, and we had had barristers in to work this up with London Transport's and Crossrail's barristers; Crossrail Petition prepared with Dyson Bell Martin, who are now Bircham Dyson Bell; December, London Transport meeting regarding planning.

17058. Then in 1992: planning preparation for new application; London Transport liaison; lodged the Petition for the Private Member's Bill; submit the new planning application to the City; instruct counsel, Mr Jonathan Karas, regarding safeguarding the London Regional Transport interest in the site; meetings with counsel, Michael Burroughs, planning consultant and Daniel Watney, all of whom obviously had to be paid; preparation of Deed for London Transport safeguarding; further legal advice; meetings with London Transport and Crossrail regarding the planning application; City planners' discussions; Islington planning meeting; City Planning Committee supports the scheme; new architects list produced; Department for Transport correspondence; architects' appointment; compensation group proposals; further legal advice; meetings with Department for Transport, Department for the Environment and Crossrail; then a joint venture with London Underground Limited heads of terms prepared at the request of London Underground Limited, you will see in November 1992, so here formally the joint venture is put into legal form, as mentioned in the City Planning Officer's notes that I referred to earlier; then meeting with LRT regarding planning and joint venture; meeting at Crossrail regarding the legal position after London Underground consulted counsel; Farrell Architects' first report to London Underground after Crossrail had asked us to change to Terry Farrell who, they decided, should do the scheme.

17059. Then in 1993: further legal discussion on safeguarding; further meetings and London Transport discussions; Petition discussion; meeting with London Transport; joint venture again proposed by London Transport with the Terry Farrell new architecture plans.

17060. Then in 1994: Petition hearing preparation; London Transport send joint venture agreement; discussions continue regarding that; Crossrail writes, and this is an interesting point, to our tenants in our buildings where we had got rental income coming in and Crossrail wrote to them, much discussion ensued and two tenants subsequently left as a result of the Crossrail letters, so we lost rental income there; meeting with London Transport to discuss the Petition and the joint venture; discussions commence on the acquisition of Saunderson Holdings' buildings; valuations requested and supplied, so here is another instance of London Transport requesting us to do things for them, providing them with valuations so that they can advance purchase the buildings which they were talking about doing; Petition work carried on; joint venture work carried on; and then in May 1994 the Private Member's Bill was voted out and you will all remember the history where the Chairman gave the casting vote against the Bill in a fit of pique, I think; assessment of position; discussions with advisers, June to December of 1994.

17061. Then in 1995: we regrouped and corresponded with Members of Parliament, London Transport personnel, Crossrail personnel; preparation of blight claim and submission at the request of London Transport; and then in 1996, correspondence and meetings regarding the blight compensation.

17062. It really ends at that point because that letter was sent at the beginning of 1997, so that gives a summary of what went on in that eight-year period from 1988 to 1996 of extensive work, a heavy demand on our resources and heavy costs that we incurred in pursuit of a joint development which never happened.

17063. MR BINLEY: Can I ask, Mr Saunderson, how many people the company employed at its height?

17064. MR SAUNDERSON: About 180. Then on 30 January 1997, Mr Andrew Trott replies for Crossrail. He says:

17065. "Thank you for your letter dated 28 January 1997. During our recent telephone conversation you informed me that you wished to invoice LUL for the work which you have undertaken with respect to the above site, both in terms of discussions in the late 1980s regarding its potential redevelopment and latterly regarding the effect on the site of the proposed Crossrail scheme since 1988. I explained on the telephone that if you chose to submit these details it was without prejudice to LUL and LT's position and that I felt it unlikely that these fees would be met. Nevertheless, I agreed to forward the details to Patrick O'Sullivan, the Project Manager for the Crossrail scheme. I have today sent a copy of your letter to Patrick and I will contact you again once I have received his response."

17066. Then the Department of the Environment sends me a letter about the progress report on the blight committee which does not really add much: "The Group has completed its consideration of the proposals...and is currently deliberating over the conclusions" on blight.

17067. I write back to the Department of the Environment: "...I cannot understand why you say that Crossrail is an issue relating to statutory blight - the issue is precisely that there is no statutory compensation on commercial property of any significant size. There is 'generalised' blight of an enormous nature and this is, as you say, the Group's main focus. Secondly, why was I not consulted to provide evidence as I have been the largest blight casualty of Crossrail with all my property holdings frozen by order of Crossrail for the Farringdon East station which will most likely never be built." That was my view in 1997.

17068. I write to Mr Trott in February 1997 on page 37: "Thank you for your letter of 30 January. The situation for me is dreadful, as you are aware. My company has been destroyed with the freezing of our buildings by order of Crossrail and I am left with very little income. I need to recover the time spent on LT business to enable me to rebuild some sort of life. Please would you personally attend to the clearance of this vital matter as it is of desperate importance to me." I was making an effort to help them to understand the situation.

17069. The Department of the Environment writes back about blight on page 38 and in the third paragraph: "I infer from your letter that your definition of generalised blight would encompass commercial properties in a safeguarded area whose rateable value, being in excess of £18,000, precludes the owner from serving a statutory blight notice. One of the Working Group's tasks is the consideration of how the concept of generalised blight (which, as you know, is not recognised in statute) may be defined. In proposing a definition, the Group needs to distinguish it from statutory blight - irrespective of the existing rights of property owners to claim compensation. The Group is also charged with considering the existing arrangements for property purchase and compensation, including (amongst many other issues) the pre-qualifications for the service of blight notices. You asked why you had not received a personal invitation to submit evidence to the Group. The Group specifically invited the views of a wide range of representative bodies and other organisations", and he lists them there. "These organisations, in the Group's view, were best placed to articulate the views of the large - and unknown - number of people affected by proposals for major infrastructure projects. (You may be interested to know that BPF, who gave written and oral evidence to the Group, specifically raised the issue of compensation for commercial property owners affected by proposals for Crossrail). The Group has sought primarily to identify the principles underlying the issue of generalised blight rather than the detail of individual cases. The Group expects to make its final report to Ministers shortly."

17070. Mr Trott writes again on 7 March. He says: "I refer to my letter dated 30 January 1997. I have now received comments from both the Crossrail Project Manager and London Transport Property's Development Manager regarding your claim for the recovery of costs. I regret to inform you that neither London Underground Limited nor London Transport Property accept that there is any liability to pay these costs and consequently no such payment will be offered. I am sorry that I cannot be of further assistance to you in this matter."

17071. I write back and say on 20 March: "Thank you for your letter of 7 March. The situation is not as you describe. LT and Crossrail put me to considerable expense in the course of the discussions. They requested amendments to plans and also requested legal opinions from us for which the barristers and surveyors are chasing for the money even now. The properties have gone into receivership and I am destitute as a result with personal commitments unable to be met. There must be a way in which the reimbursement of these costs can be made even if it is on a without prejudice basis. Please would you speak to the Minister responsible as this case is a scandal of victimisation awaiting to erupt. PS You have the precedent set in the agreement to pay 50 per cent of the costs originally which Mike Withers", who was the London Transport property man, "agreed." He had agreed to pay half the costs in 1998.

17072. CHAIRMAN: On that, you did not have any earlier correspondence or anything about that with Crossrail? It just seemed a long time, 1998 through, as to whether or not you were getting your costs paid when you agreed in 1998 or Mr Withers had agreed, but you have no correspondence which clarifies that.

17073. MR SAUNDERSON: I did not actually locate copies of that correspondence to bring today, but there was obviously correspondence and they paid fees for the architects and the engineers, so there will be evidence for that, but I just have not included it today.

17074. MR BINLEY: Letter 41 shows a degree of despair which I find moving, quite frankly, yet letter 42 seems to show such a cold face of bureaucracy to the point where not only are you rejected, but the letter is not even signed by the person who supposedly sent it. Do you remember any feelings at that time that you had? Did that matter?

17075. MR SAUNDERSON: Well, I think I was shocked because there had been this relationship with them and to just get completely, as you say, cold-shouldered was unbelievable. I could not believe it. In fact Colin Smith is here today, who signed the letter, PP-d it.

17076. MR BINLEY: Then we will ask Mr Smith because it just smacks of a very harsh bureaucracy.

17077. MR SAUNDERSON: Yes, I agree totally.

17078. CHAIRMAN: Mr Saunderson, I will give you ten minutes or so to refresh yourself because we are going to break now.

After a short break

17079. MR SAUNDERSON: Could I take you to page 43 of the documents where I write to Richard Asher who was working for Jones Lang Wootton who had formed a body called 'the Business Compensation Forum' and he had invited me to join that forum. I just said that it was good to speak with him on the telephone about Crossrail. "As described to you, we have been severely hampered by the Safeguarding Order on our properties which descended in November 1990. our site has been zoned as the Farringdon East ticket hall and a working site. Your senior partner, Clive Pickford, was advising us on development in 1989/90 and then subsequently every planning application we have made to the City Corporation has been stopped by Crossrail. The City was 'minded to grant consent' in 1992, but was ordered to withhold consent by Crossrail. We would have either developed or sold the site assembled over ten years by now for some £10 million. Instead, last year, LPA Receivers were appointed and four out of five properties were sold for £1.3 million. One remains in the company and I hold one property in my own name, both still within the Safeguarding Order. Surely this is not the right behaviour for a democratic government in a free market economy. Please would you see if you can help secure some measure of compensation for the losses suffered."

17080. In 1998 I write again ----

17081. MR BINLEY: Could I stop you again and ask you a quick question, and I apologise, but I need to understand. Is the point here that the sites were sold to anybody specifically?

17082. MR SAUNDERSON: Yes, one person. Michael Chambers & Partners bought four properties. That is a law recruitment firm and he produced a book called Chambers Directory which you might have heard of, a directory of lawyers.

17083. MR BINLEY: Yes, I have, but this is true, that it is normal practice that receivers sell well below what most people consider is the market value.

17084. MR SAUNDERSON: Well, they endeavour to get the maximum they can. They do not choose to sell below price.

17085. MR BINLEY: That is the theory.

17086. MR SAUNDERSON: I appreciate obviously that they sell for what they can get. They did not sell them immediately, but they held them for some time and indeed the fifth property was held for a further three years and sold for £1.1 million, so the total that I had paid of 4.3 got to 2.2 over the course of four years, so they did not sell them overnight, as it were, they did leave them.

17087. MR BINLEY: What I am trying to establish is that that was not the true market value at the time.

17088. MR SAUNDERSON: Correct.

17089. MR BINLEY: That is the point I am trying to establish.

17090. MR SAUNDERSON: No tenant would take occupancy of the buildings who felt he wanted to be there for ten or 15 years because there was the Crossrail going to be built on it, so it was very unlettable. Michael Chambers was a local occupier across the road who needed more space and he thought he would just buy the buildings for a song because nobody else wanted them. No proper investor would buy these buildings, yes, that is absolutely right.

17091. On page 44 I write again to Richard Asher at Jones Lang, the Business Compensation Forum: "I will repeat if I may the plight of CBCP Ltd in which I am the major shareholder. I thus declare a personal interest. CBCP Ltd owned five adjoining freehold buildings...These five properties had been acquired over the period 1981 to 1989 and considerable time, effort and financial resources were expended in the acquisition process. The end objective had been the comprehensive redevelopment of the site into a prestigious City office totalling some 100,000 square feet net. The freeholds were valued at c£9m in 1990 and London Transport funded half the expenses for a joint development study to span the railway tracks over the Barbican station. In 1990, the Crossrail Safeguarding Order was issued and from that time on the site has been frozen for redevelopment and applications for planning which the City had approved at committee level were ordered by London Transport", or the Department for Transport, that should say, "to be refused. Receivers were appointed in March 1996 and four buildings were sold for £1.2m in September 1996; the one remaining building is currently for sale at some £1m. Approaches to Crossrail to purchase the block were encouraged and then rejected. A claim for reimbursement of expenses incurred in connection with LT-related work was lodged with London Transport in 1996 and rejected by Peter Ford, the Chairman. In addition to my interest in CBCP, I personally 50% of a car park site at 10 Hayne Street which had planning permission for a 6,000 square foot office block. The planning permission renewal has been refused on instruction from London Transport/Crossrail. Losses on CBCP could be estimated at many millions. On the car park, I am being prevented from developing a 6,000 sq ft office which would yield site value and development profit amounting to a significant sum. I will leave the calculation to others, but the essence of the history is here."

17092. Then there is a long gap when there is nothing much and I have not included any papers and we move to 2002 when I get a letter from Derek Baxter who is the husband of Mrs Kate Baxter who is a co-owner in 10 Hayne Street. He writes to me: "Dear David, Out of curiosity, I have recently contacted Crossrail about their interest in 10 Hayne Street. A very helpful lady confirmed that the property lies within their 'surface' interest and that they will in due course acquire the property by compulsory purchase. She said that construction is due for 2006 and that a CPO notice would be issued in 2005. Perhaps we could discuss this matter on the telephone soon." Well, we all live in hope.

17093. Then we move to 2005 at page 47 where Bircham Dyson Bell, acting as our parliamentary agents, write to Winckworth Sherwood acting for Crossrail and the Department for Transport. "We write to you on behalf of our client, David James Saunderson (representing the Saunderson family) whose position is as follows: our client, through the vehicle of a company called Saunderson Holdings (whose name was later changed to CBCP Limited) is the former owner of 3-8 Hayne Street and 20-23 Long Lane...('the Main Site') and, in that capacity, also petitioned against the original Crossrail Bill; our client also still owns 10 Hayne Street; both these properties are subject to compulsory purchase under the Bill; CBCP Limited was forced into receivership due to its inability to advance the redevelopment of the Main Site; the Hayne Street property continues also to be blighted by the Crossrail proposals; as these brief particulars convey, our client has suffered substantial financial loss due to the quite exceptional blight caused by the Crossrail proposals. We should be grateful to hear from you as soon as possible with proposals on behalf of the Promoter to address the injury suffered by our client. In particular, we would invite the Promoter to consider: (a) offering now to purchase the Hayne Street property at full development value; (b) compensating our client for the loss which he and his family have already suffered due to the blight caused by the Crossrail proposals; and (c) providing for our client to have an appropriate interest in the redevelopment proposed of the full Lindsey Street site. We and our client appreciate that the Bill and the application of the standard Compensation Code under it do not provide for any such compensation. However, for reasons which we think will be self-apparent, we invite the Promoter to conclude that this is unjustifiable and contrary to the protection which our client is entitled to expect in relation to private property rights. We look forward to hearing from you."

17094. Then we lodged the Petition which you have read and I do not propose to read that through, but it says in detail what that letter said and we pray at the end of it that, "the Bill may not be allowed to pass into law as it now stands and that they may be heard by themselves, Counsel or Agents and with witnesses in support of the allegations in this Petition against so much of the Bill as it affects the property, rights and interests of your Petitioners and in support of other such clauses and provisions as may be necessary or expedient for their protection or that such other relief may be given to your Petitioners in the premises as your Honourable House shall deem meet."

17095. We have a reply to that letter and Petition on 13 October 2005 from Winckworth Sherwood where they give their point of view writing to our agents, Bircham Dyson Bell.

17096. MR BINLEY: Could I ask you a question about that letter because it does seem to me that the information you received this morning contradicts the contents of this letter quite sizeably, does it not?

17097. MR SAUNDERSON: Contradicts the 13 October letter?

17098. MR BINLEY: Yes, does it not?

17099. MR SAUNDERSON: I think it does.

17100. MR BINLEY: "...unlikely to satisfy the qualifying conditions in (a)".

17101. MR SAUNDERSON: Yes, I think they have chosen to change their position, albeit, as I did indicate slightly to the Chairman, I have a degree of scepticism about the so-called offer which indeed had been made to me on the telephone by Colin Smith several days ago where the Department for Transport suggested they could see no reason to contest a blight notice, "provided Mr Saunderson satisfied the qualifying conditions for a blight notice". Well, I have been advised that I do not satisfy the qualifying conditions. If they want to give an undertaking that I do, that is super, and they are undertaking then unconditionally to purchase 10 Hayne Street which is an offer which it would be great to receive, if that is the case.

17102. CHAIRMAN: Let me make you an offer which might be helpful. We have heard Ms Lieven earlier today make the offer to you and we have also had a telephone call to a person a number of days ago about this. We still have time, because you can apply now, and certainly before this Committee rises, before its full report is concluded we will be able to judge for ourselves whether or not what has been offered is meaningful. All I can say is that I think it is disingenuous not to accept that there have been two offers made. You may be sceptical and I have no doubt after your experiences you are likely to be so, but we have a window of opportunity for you to make an application now because there is sufficient time before we leave this Committee and in the forthcoming weeks and months to see if it comes to fruition. Does that help?

17103. MR SAUNDERSON: Many thanks for that. I have, in my summing up, made suggestions as to how that could be handled and perhaps we could cover that in my suggested ----

17104. CHAIRMAN: I see Ms Lieven bobbing up and down.

17105. MS LIEVEN: Yes, I am really sorry, sir, but after an incident many months ago I am unwilling to interrupt, but it is really important that everyone understands exactly what is going on here. The issue at (a) of the letter was an application under the hardship policy. It was found that Mr Saunderson did not qualify under the hardship policy in no exceptional circumstances. What I raised in opening was that he could serve a statutory blight notice and as long as he meets the qualifying criteria which, as Mr Smith will explain, are extremely low for a site such as this, he just needs to show that he has left his car on the site with reasonable frequency over six months, very low qualifying criteria, and then we buy the site at full open market value, disregarding the effect of Crossrail. It is not formally an offer because it is a statutory process but what we are saying is what Mr Smith said to Mr Saunderson on the phone the other day. I do not know what advice Mr Saunderson has received but Mr Smith is very experienced in these matters and is firmly of the view that it would be extremely easy to meet those qualifying criteria

17106. CHAIRMAN: That is very helpful again. Mr Saunderson, do you want to move on and deal with that in your summing up?

17107. MR SAUNDERSON: Yes, indeed. Thank you very much. I am sorry if I misinterpreted the question about Winckworth Sherwood. Winckworth Sherwood wrote back, "As you may be aware the project has published a policy for the purchase of property in cases of hardship which provides for advance purchase of properties in certain cases. We enclose a copy of that policy. While your clients are welcome to make an application under that policy, it seems that your clients are unlikely to satisfy the qualifying conditions since you have indicated that they do not have a qualifying interest in the property for the purpose of the 1990 Act. It is not obvious that there are exceptional circumstances in this case justifying an advance purchase outside this policy, but if your clients consider that there are, these could be explained in the application. Our clients are not prepared to depart from the Compensation Code which applies to this project as it does to other infrastructure schemes. Any change to the code should be the subject of general legislation which applies on a national basis. As we think you will also be aware, the project has published a Land Disposal Policy which sets out the basis on which landowners will be offered the opportunity to acquire a beneficial interest in land that has been compulsorily acquired under the Bill", and so on about the Disposal Policy and there is a copy of that which we received. "If your clients want to pursue an advanced agreement on the development opportunity prior to Royal Assent and a decision to construct Crossrail then they will have to form a consortium of all owners of the site, and show that they have the expertise and means to take the development forward to those timescales. If your clients consider that a meeting to discuss the Bill proposals and their concerns would be helpful, our clients would be happy to arrange this.

17108. I have included the land acquisition policy on page 58. It says that they should pay fair compensation and they should compensate for "...other losses arising as a direct and reasonable consequence of the acquisition". That goes through to page 66 where there is a note about the exceptional circumstances on hardship. It says, "...the Secretary of State will exceptionally consider providing assistance for hardship cases falling outside this policy on a case by case basis having regard to the specific circumstances of the case and the reasons why the case does not fall within this policy." You will see that we then, through our agents, Bircham Dyson Bell, write back to Winckworth Sherwood.

17109. The letter states: "We refer to your letter of 13 October 2005. We have explained in our letter of 2 September 2005 how the current compensation regime and purchase policy for the Crossrail scheme is inadequate to address the exceptional long-term blight suffered by our clients. Your response to our client's rather distressing concerns on this matter does not deal with these quite particular and unusual circumstances. The Crossrail Hardship Policy to which you refer in particular is clearly not designed to deal with our client's circumstances and, furthermore, making no provision at all except in relation to applicant's who can satisfy 'the qualifying conditions' which it is clear that our clients can make an application under that policy or for such an application by them to be favourably considered. We feel that we should highlight the point that the current status of the site and the diminution on our client's stake in it results directly from the long-term blight caused by the Crossrail scheme. Our client's application for renewal of the planning permission for the site (granted in 1990) was later refused because of the proximity of the project route and has remained vacant: the best use that could be made of the site for seven years was that of a car park operated by certain licensees. You say: 'it is not obvious that there are exceptional circumstances in this case justifying an advance purchase outside this [Hardship] policy' but that overlooks in particular that a major part of our client's claim for redress is not in relation to property which they still own and might now sell but rather in relation to property that they have lost due to the blighting effects of the Crossrail project. Our client remains extremely concerned about the loss which they have and continue to suffer and the apparent unwillingness of Crossrail to respond appropriately to this. We therefore request that further consideration be now given to our client's position. As you will no doubt be aware, we have also now received a standard form letter from one of the Crossrail petition negotiating team and we are therefore copying this letter to him".

17110. Winckworth Sherwood replied on 12 December: "Thank you for your letter of 18 November. The policy does recognise in clause 7.1 that the Secretary of State may exceptionally consider providing assistance for hardship cases falling outside this policy having regard to the circumstances of the case. If your clients consider that there are exceptional circumstances which apply in their case justifying a departure from the policy, we should be grateful if you could let us have details of what these are".

17111. Then I will include two articles from the Estate Gazette about Crossrail negotiating with London landlords at prime sites and during this period they have spent a considerable amount of time negotiating with Grosvenor estates which has already been mentioned with Derwent Valley. They have had no negotiations with us during that period. Bircham Dyson Bell then advise me to submit a hardship submission which we then do. Page 73 is just stating that we forwarded a copy in March 2006, so six months ago. Here is the hardship claim (indicating). It defines the site in question and the claimants, as we have heard. It shows how the purchase of the property was made up during 1981, 1982, 1985 and 1989. "Considerable expenditure was incurred on refurbishing the properties which were all in poor condition. The total amount spent to refurbish these properties was £468,734. A valuation of the main site was carried out for Saunderson Holdings Limited on 30 September 1990 for £8,987,000".

17112. "At the time of acquisition, the main site was not safeguarded for Crossrail". Saunderson Holdings Limited was a private company which I held 100 per cent. I subsequently gave ten per cent to a charitable trust that I have, the Saunderson Foundation, of which I am a trustee. In 1996 its name changed, as we know there were two mortgages on the properties, Commercial Union and Barclays Bank, and they decided to appoint LPA receivers to the properties in 1996. "Due to the presence of the existing Crossrail safeguarding directions over the main site since 1990, the sale conducted by the LPA Receivers obtained a sale price that was less than the initial purchase price paid by the company. As a result, and as stated in the final audited accounts of the company as at 30 September 1999 (a copy of which is attached), the shareholders of the company, including the First Claimant, obtained none of the proceeds of sale of the main site from the receiver, nor did they receive any remaining capital following the payment of debts and subsequent winding-up of the company. CBCP Limited was formally dissolved and removed from the companies register on 25 September 2001."

17113. Then the Hayne Street site where we hold 100 per cent of the freehold. At the time of acquisition, the Hayne Street site was not subject to safeguarding and we retained the freehold of the site. Then we talk about hardship policy. "The First Claimant is not, in relation to the main site, nor in relation to the Hayne Street site, an owner occupier and for that and other reasons, he does not have 'a qualifying interest' for the purposes of statutory blight or the hardship policy". We state that clearly in 5.1, this is on the advice of Bircham Dyson Bell whom I think you have heard continuously throughout your hearings. Then we repeat in 5.2 part of the Petition which I do not need to read. 5.3: "Attempts were made to sell the Hayne Street property to a development company in 2005 but the offer to purchase was withdrawn when the purchaser was made aware that Crossrail Bill was to be introduced shortly that year. A copy of the correspondence evidencing these negotiations is attached.

17114. Now I will illustrate the hardship, and Bircham Dyson Bell have set out the hardship. The loss occasioned to the Claimants is of the following order, the main site, the value of the property is £ 8.9 million less the mortgage of £5.7 million which is £3.2 million which was the net equity in the properties and a copy of the accounts is enclosed. On the Hayne Street site there was a loss of net rental income amounting to £100,000 a year for 15 years because we have been unable to use the site except for car parking which occurred but no longer occurs because it no longer has permission from the City.

17115. "The First Claimant needs to recover his loss suffered in relation to the main site and the joint second claimants need to sell the Hayne Street site for the following particular reasons: The First Claimant and the Second Joint Claimants do not claim compelling personal reasons in relation to the loss of the main site or for now needing to sell Hayne Street beyond the extreme financial loss suffered over many years which is unwarranted and a fundamental breach of their civil rights. The First Claimant received a finding by the Hardship Committee of Lloyds of London in 1996 for hardship on the basis of severe financial difficulties occasioned by the events stated herein. The Claimants request: (a) payment in full compensation for their loss in respect of the main site; and (b) acquisition of the Hayne Street site at its prospective development value having regard to the planning history and with a carried interest in the overall development of the sites. The above information has been assembled for this submission in good faith. Whilst considerable effort has been expended to ensure the accuracy of the date provided, some dates and references in this submission extend to approximately 25 years. For this reason, should further information be required prior to the making of a decision on this submission, please specify the nature of any information required.

17116. MR BINLEY: Are you telling me that the City withdrew permission for car parking on the site?

17117. MR SAUNDERSON: Yes.

17118. MR BINLEY: Given that, how, therefore, can you claim a level of occupation as suggested by Ms Lieven? You have only had your car parked there for two or three times in the last six months. How do those two statements equate?

17119. MR SAUNDERSON: Precisely, they do not.

17120. MR BINLEY: Secondly, can I ask you about legal costs? Is it fair to say that if you got into a discussion of qualification of that kind that the legal costs would be a sizable burden to you?

17121. MR SAUNDERSON: Yes, indeed.

17122. MR BINLEY: And that would have an impact on your mind about proceeding in that way.

17123. MR SAUNDERSON: Yes and, indeed, incurring surveyors' costs and so on which may or may not be recoverable, which I have to fund in the meantime.

17124. MR BINLEY: Do you feel that is one of the areas that is not fully understood by people who make cold legal judgments and write to you and talk to you in that respect? It is outside of the law but it sits very firmly in your mind, is that fair?

17125. MR SAUNDERSON: Absolutely, and thank you for that. I even attended today and I am very pleased to be attending but it obviously incurs cost, time and photocopying 13 copies of this document and preparing it and so on, which obviously I am happy to do but it is all incurred because of Crossrail. I would love to be here in your presence but I do have other places to be. It is because of Crossrail that we are here and, in my humble opinion, Crossrail should pay for that.

17126. We are nearly finished the documents. Page 78 is just a copy of the CDC letter, a development company which expressed an interest in acquiring 10 Hayne Street. They wrote to my cousin saying that they would like to secure an option agreement and on the next page, page 79, they say they would be prepared to pay £300,000 initially but in the event that we are successful in obtaining an acceptable Planning Consent for the larger development site then they will pay a top-up of £200,000, the total consideration thus rising to £500,000. They will pay an option fee of £6,000 for that. That proposal was withdrawn last year when the Crossrail Bill came forward.

17127. Then, on page 80 we have a reply from the Department for Transport, Mr Tim Neate, Policy Adviser, Crossrail Bill team, Zone 2/08, Great Minster House: "I regret to inform you that, after consideration, the Secretary of State has decided not to accept your client's hardship application in respect of Crossrail. In making this determination the Secretary of State has had regard to the written advice of the Crossrail Discretionary Purchase Panel and the circumstances of your client's application. He accepts the conclusions of the Discretionary Purchase Panel that the circumstances of your client's case do not satisfy two of the Qualifying Conditions set out in his Property Purchase Hardship Policy. He is also unable to find exceptional circumstances to otherwise justify discretionary assistance. The Panel has advised that the Secretary of State reject your client's hardship application. In relation to 'the main site' 3, 8-9 Hayne Street, 20-21, 22 and 23 Long Lane and 2 Lindsey Street, London EC1, the Panel has advised the Secretary of State that your client's application: 1. fails to comply with Qualifying Condition 3.1 (b) of the Hardship Policy. This condition is that the property must not be required for acquisition, whether in whole or in part for the Crossrail scheme. The properties comprising the main site are required for a worksite in connection with the eastern ticket hall at Farringdon Station.

17128. "(2) Fails to comply with Qualifying Condition 3.1 (a) of the Hardship Policy. This condition requires the applicant to have a qualifying interest in the property for the purposes of the Town and Country Planning Act 1990 ('the 1990 Act'). As at the date of application, none of the applicants was the owner or the occupier of any of the six properties, nor had they been an owner or occupier during the relevant period of time prior to the service of the application as defined in section 3.2 of the policy. In relation to 'The Hayne Street Property' 10 Hayne Street. The Panel has advised the Secretary of State that your client's application: 1. fails to comply with Qualifying Condition 3.1 (b) of the Hardship Policy. As with the main site, the property is required for a worksite in connection with the eastern ticket hall at Farringdon Station. 2. Fails to comply with Qualifying Condition 3.1 (a) of the Hardship Policy. The Panel was not satisfied that the Second Joint Claimants had a qualifying interest for the purpose of the 1990 Act as required by Qualifying Condition 3.1 (a), because no evidence had been supplied that they were in occupation during the relevant periods of time prior to their service of the application. An independent lay member sat on the panel and has separately reported to the Secretary of State (in accordance with paragraph 5.7 of the Hardship Policy) to indicate their agreement with the advice of the Panel. For your client's information, I have enclosed two Office of the Deputy Prime Minister booklets explaining Compulsory Purchase and compensation".

17129. Our Agent wrote back on 15 June to Mr Tim Neate: "We thank you for your letter of 8 June received here on 14 June. We made patently clear in our letter to Winckworth Sherwood of 18 November 2005 that it was accepted that our clients did not satisfy 'the Qualifying Conditions' and that, in the circumstances, there appeared to be no basis upon which our clients could make an application under the policy which they were then being invited to do or for such an application by them to be favourably considered. In their former letter of 13 October and in their response of 12 December, Winckworth Sherwood made clear that the Secretary of State may exceptionally consider providing assistance for hardship cases falling outside the ordinary scope of the policy and that the proper course was for our clients now to submit a hardship application. In reliance upon this, our clients went to the further trouble and expense of preparing their application.

17130. In these circumstances, we simply do not understand why the Crossrail Discretionary Purchase Panel has been asked to rule on whether our client's application complies with Qualifying Conditions when, as a precursor to the application, we had conceded that it did not. Equally, we do not understand how, when our clients had been expressly invited to explain through the mechanism of a hardship application the exceptional circumstances applying to them, these do not appear to have been considered by the Panel

17131. You say that the Secretary of State is unable to find exceptional circumstances to otherwise justify discretional assistance without giving any reasons for this judgment and as to how the case made by our clients was considered and found wanting. These are matters which our clients may wish to pursue before the Select Committee in the House of Commons to which their Petition has been referred. We should be grateful, therefore, for an earlier and detailed response clarifying the position. We received no reply to that letter of 15 June.

17132. I then decided to appear in person and I have just included the statement required for me to be the parliamentary agent today instead of Bircham Dyson Bell on page 84, 85 and 86. Paul Thompson, whom I think you know well, certified that to the best of his knowledge and belief I am in every way a respectable person.

17133. I have prepared a little summary which I would like to pass to you, if I may, which does provide in short order my arguments and suggestions. May I take you through this?

17134. MR BINLEY: Can we read it first?

17135. MR SAUNDERSON: Yes. I sought to summarise the arguments as to why there is an issue and why I am here at all today. Crossrail has over 18 years, I have said, been dealing with me on this site and have, in my view, dealt with me unnecessarily unfairly. I go through the different periods, the early stage, 1988 to 1990, the first development opportunity where they paid half the costs and then that was halted by the safeguarding order. In the next two years there was a huge amount of effort expended to revise that development to take into account the Crossrail ticket hall and ventilation shaft required on 3 Hayne Street. That was then re-submitted to the City who found no reason to object to it, which was a considerable amount of work with plot ratios and uses and involved a lot of expenditure with professionals to get the City to that point. That was then vetoed, as we have seen, and then they requested a joint venture be pursued and that we would both develop a joint venture agreement and a section 106 agreement to protect London Underground which was then done and agreed.

17136. Then they requested advance purchase proposals from us which we then, again, had valuations done and they sought to discuss the purchasing of the main site from us. Then after receiving all that they then said "no" they would not proceed. They then refused the renewal of the 10 Hayne Street planning permission which could have been dealt with on its own and then the submission at the time, as we have seen, to Mr Trott, and then a refusal to pay for that work done. As we have seen finally with this hardship claim where they suggested the hardship route and then proceeded to reject it and, indeed, done it in a rather unsatisfactory manner where we have said we do not qualify and yet they have still asked for the exceptional circumstances and then they proceed to say we do not qualify, which in my submission is highly unsatisfactory.

17137. On the 3 October Mr Colin Smith telephoned me at 9.30 at night on my mobile phone to suggest that Crossrail might purchase 10 Hayne Street in advance and that we had missed a trick by not serving a blight notice. During the subsequent seven days he has telephoned me on a couple of further occasions to discuss the possible purchase of 10 Hayne Street. No offer to purchase materialised. A statement to the effect that the DfT could see no reason to contest a blight notice providing I fulfilled the occupancy qualifications was proffered. Mr Smith accepted that this did not amount to an unconditional offer.

17138. Then I have sought in point 2 to say about what the financial effects of Crossrail have had on me over these 16 years since the safeguarding order was issued on 5 November 1990. The loss of the net equity of £3.2 million in the company, the reputation that I have suffered, loss of reputation as a direct result of this company fizzling out and then my cousin, my associate and I lost out on the income that we could have had from 10 Hayne Street and the loss of liquidity. We could not do anything with the asset over these 16 years. I humbly request in my third point that the Select Committee makes orders on Crossrail to provide certainty to the owners through the advanced purchase of 10 Hayne Street at the CDC large development valuation within 30 days of today's date and make an additional payment equal to the excess, if any, of open market value over the some paid at completion within 180 days.

17139. That is my response as you requested, Chairman. Make the Petitioners whole in respect of their loss of income on 10 Hayne Street over the last 15 years, and that is detailed in the hardship gain. Make myself whole in respect of the pre-safeguarding equity that has been lost and pay the costs incurred by myself in developing the Farringdon East ticket hall and overstation development as submitted to Crossrail on 28 January 1997 together with interest thereon from that date until the date paid. Provide the Petitioners with pre-emption rights on the overstation development at Farringdon East or alternatively a carried interest in the development pro-rata to their land holding at 10 Hayne Street.

17140. That is my submission. Thank you so much for your patience in listening to what has been quite a lengthy time. You will appreciate from me that it has been 16 years and for you it has been two hours.

17141. CHAIRMAN: You did very well. Thank you very much. Ms Lieven?

17142. MS LIEVEN: Thank you, Sir. Because Mr Saunderson has presented his Petition himself it would not be appropriate to cross-examine him and, in any event, I think the most sensible way to proceed is to call Mr Smith and have him go through the issues that we do and do not accept in my Saunderson's Petition.

17143. MR BINLEY: Before we do that, I would like to ask you a couple of questions which seem to be very important. I want to preface my remarks by referring to the Petition which suggests that every time something was handed out to Mr Saunderson he pursued it in good faith at sizeable cost to himself on occasions and then had it rejected, almost thrown back in his face, as I would see it from an emotional political view point, not a legal viewpoint . I want to be clear about what you are actually offering him now. Are you saying that if he has not parked his car on that site on a couple of occasions in the last 6 months he should say he had, I am sure you are not? If he has not, how could the blight order be worked in that respect in terms of compensation?

17144. MS LIEVEN: Sir, can I make a preliminary point. We do not accept many of the things that Mr Saunderson says in his Petition about us having encouraged him to make applications and so on, and Mr Smith will deal with that. As far as the blight application is concerned, of course I am not saying on behalf of the Secretary of State that he tells a lie. What Mr Smith will tell the Committee, as an experienced surveyor in this area, is that in order for somebody in Mr Saunderson's position to meet the blight notice requirements there is a relatively low test of him. If he can show for the last six months that he has parked his car there, then fine, if he cannot but from today parks his car there, or the other owners, it does not have to be him, on a reasonably regular basis, then the statutory criteria will be met. I have to be absolutely clear about this. The Secretary of State is saying to the Committee that he will fulfil his statutory duty so long as that relatively low test is met and Mr Saunderson serves a blight notice, then we have no basis and we would not serve a counter-notice and then we would acquire the site. Whether he has met those conditions already or not, we do not know because he has not served the notice and produced the evidence. He may, he may not have done, I do not know anything about what parking has taken place, but even if he has not he can start meeting the requirements now and do some relatively simply and within six months.

17145. MR BINLEY: Let me clarify this absolutely solidly. You are telling me that if he has parked his car, fine, that will be accepted without question and without qualification and payment will be made on that basis? Equally, you are telling me that if he has not done so far he may in the next two weeks park his car twice on that site and he will equally be allowed to be paid without qualification or exception or any legal costs to himself whatsoever? Is that what you are telling me?

17146. MS LIEVEN: The period, I am instructed, is six months. That does not mean six months of parking your car every day. Mr Smith would be better qualified to answer the question than I, but my understanding is the period that is taken is one of six months and as long as there is evidence of occupation within that six months, which given the nature of the site would be the parking of a car owned by Mr Saunderson or one of the other owners, on a reasonably regular basis, then that would be sufficient for us not to serve a notice. Let me take instructions on that because I want to be absolutely clear. I am instructed by Mr Smith that is correct.

17147. MR BINLEY: I need to have on record what you consider to be a reasonably regular period. Forgive me for playing legal games but we have to look into this.

17148. MS LIEVEN: Can I ask Mr Smith? I will take instructions and put it on the record. Mr Smith says once a fortnight or once a month.

17149. MR BINLEY: Six times over the next six months?

17150. MRS JAMES: How long for, two hours a day?

17151. MS LIEVEN: An hour a day.

17152. MR BINLEY: What would be the proof required for that? A photograph on each occasion with a newspaper showing the date or whatever? Do you see how silly this gets?

17153. MS LIEVEN: I totally understand, Sir. There are many aspects of the law. In the circumstances of Mr Saunderson's case, I think I can say, even without instructions, that so long as he wrote us a letter saying that such parking had taken place on such dates, perhaps with a photograph of one occasion, we would accept that.

17154. MR BINLEY: Thank you, that is on the record.

17155. CHAIRMAN: Thank you for that good clarity. You were aware that if such an application for this was not successful the Committee is then empowered to change the Bill and to then ask for this property to be purchased at some point. Just so that it is on a record and it is understood, we expect that if the qualifications are met for such an application to be successful.

17156. MS LIEVEN: Sir, I can say on the record that so long as Mr Saunderson serves a blight notice and writes to us in good faith, I am not asking him to lie, that he has parked his car or his cousin or the other owner, between once a fortnight and once a month over a period of six months, he gives us the dates and sends us one photograph, we will not serve a counter-notice.

17157. MR BINLEY: Forgive me, I have one final question for you. You can assure us that any order made by the City of London with regard to parking on that site does not forbid him from so doing?

17158. MS LIEVEN: Yes, Sir, I think there may be a confusion there. My understanding is that what has happened is Mr Saunderson has not pursued a further planning permission for commercial car parking on that site. I do not know whether the City would have granted it or not. There is a difference between commercial car parking where you let a site out for third parties, in which case, Mr Saunderson would not be entitled to blight because he would no longer be in occupation. The third parties who are parking there would be this occupation and the situation now where he cannot let it to third parties but there is nothing to stop he himself parking on the site. We do not know exactly what the planning permission is but on the basis of the documents we have seen and what Mr Saunderson said this morning, that appears to be the position. He may not have pursued a planning permission because it may have been preferential in rating terms for what he has to pay for 10 Hayne Street to the City. Tat is a possibility.

17159. CHAIRMAN: I think we can move on from blight. Leave: While we are on blight, I am making an explanation before I call Mr Smith, can I explain one thing that may have confused the Committee. When Mr Saunderson or SHL owned the larger site he would not have been entitled to blight notice because the rateable value would have gone over the limit. That is why there is a letter in the bundle saying he could not serve blight notice in 1995 because the company was still the owner of the larger site. Now that it is only 10 Hayne Street we have very carefully checked that the rateable value of 10 Hayne Street falls below the blight threshold and therefore he would be entitled to serve a blight notice. That is the explanation for that discrepancy in the papers.

17160. MR SAUNDERSON: Can we just clarify that any purchase would be on the basis of the planning permissions granted on 10 Hayne Street before they were directed to refuse by Crossrail.

17161. MS LIEVEN: Any purchase will be based, as is all compensation under the Compensation Code, on open market value disregarding the impact of the scheme. So whether Crossrail would ultimately make the site more valuable or less valuable is not taken into account in the calculation of compensation.

17162. MR BINLEY: Forgive me, that is not the question Mr Saunderson asked. A site with planning permission in my part of the world is sizeably more valuable than a site without it. That might not be the case in London but it certainly would be in Northamptonshire. I want to clarify that for him, that because of the history we accept that it will be seen as a site with planning permission because the process was not stopped by Mr Saunderson but by legal edict.

17163. MS LIEVEN: I will do my best to answer. I should say Mr Mould is the compulsory purchase expert and Mr Smith will stop me if I get this wrong. My understanding is that in calculating the compensation one takes into account what the planning permission would have been absent the scheme, in this case absent Crossrail. Although at the relevant date - I am trying to be very careful about this - there is no planning permission on the site, that is not an issue, as an actual matter of fact there is no planning permission, but the compensation would take into account the fact that there would be an undoubted expectation of planning permission if it was not for Crossrail.

17164. CHAIRMAN: There is built an arbitration formula to appeal on that anyway.

17165. MS LIEVEN: It is not arbitration, sir, there is a right to appeal to the Lands Tribunal, to a wholly independent tribunal.

17166. MRS JAMES: Forgive me if I have got a little bit confused between the larger property and this property, 10 Hayne Street. Was this the property that you originally had the planning application for for the six storey building?

17167. MR SAUNDERSON: Yes.

17168. MS LIEVEN: This was the site where there was a freestanding planning permission on 10 Hayne Street itself. There is every reason to assume that one would take that, in fact one would take that, into account in calculating the compensation.

17169. MR SAUNDERSON: That is now a categoric statement that it would be taken into account. It changed from "every reason to take it into account" to "it would be taken into account".

17170. MS LIEVEN: I am sorry, I know I am a lawyer and, however hard I try, I can never forget that I am a lawyer.

17171. CHAIRMAN: Mr Saunderson, you are going to have a chance to come back at a later point but you must allow Ms Lieven to proceed.

17172. MS LIEVEN: Lawyers never make categoric statements because history shows that the strangest things pop out of the woodwork. On the basis of the papers I have seen it is clear that the planning permission in 1984 and renewed in 1990 - I may have got the dates slightly wrong - would be taken into account in the calculation of compensation. Can I proceed to call Mr Smith?

 

MR COLIN SMITH, recalled

Examined by MS LIEVEN

17173. MS LIEVEN: Mr Smith, you are well known to the Committee but can you just explain to Mr Saunderson what your role is here and what your role was in the past that is relevant to this particular petition.

(Mr Smith) At the moment I am a consultant to Crossrail, but at the time of Mr Saunderson firstly coming along and wanting to undertake a development here, and through the original Crossrail Bill, my position then was director of property for London Transport Property which was in charge of all London Transport and London Underground property matters, so ultimately I took the decisions there.

17174. Just to be clear on one point, when you say you are a consultant to Crossrail what that means now is that you are a consultant to the Cross London Rail Links Limited, which is a company of which joint owners are Department for Transport and Transport for London, is that right?

(Mr Smith) Yes.

17175. That is just so Crossrail in this becomes defined very clearly. Can we move on to this site? In opening I explained the safeguarding position and I do not think we need to go through that again, but can you just explain, so far as the Lindsey Street, Long Lane, Hayne Street block is concerned, was it ever the case that SHL or Mr Saunderson owned the whole of that block?

(Mr Smith) No. He owned a reverse L shape at that site - I am sorry that plan is not too clear - along Long Lane and up Hayne Street. The property elsewhere was owned by the City of London, London Underground owned the raft over the railway to the north of the site, and the Guardian Royal Exchange also had a property interest in the north end of the site towards Charterhouse Square. It was in multi ownership.

17176. Can we take out Mr Saunderson's chronology, which I think appears at pages 32 and 32A, and go through, as briefly as we can, what was going on here? Firstly in the period 1988-89 there is reference to a joint venture with LRT. Can you explain what was happening at that stage?

(Mr Smith) Yes. In these years this was prior to Crossrail beginning and Mr Saunderson came, as many others did, adjoining London Underground ownership. He had purchased the land and wished to explore development and my department as it then was agreed to explore that jointly with him. This was nothing to do with Crossrail, this was just to see whether between the two of us there could be a development on both London Underground land and Mr Saunderson's land, a normal commercial arrangement.

17177. We will come back to the normal commercial situation and the property crash a bit later. If we stay with what happened with Crossrail and London Underground for the moment. At the end of 1989, somewhere around here, the Crossrail project starts to come forward, is that right?

(Mr Smith) That is correct, yes.

17178. Can you explain what happened then in relation to this site?

(Mr Smith) Obviously the position changed as far as we were concerned because we could no longer explore easily a joint development between the two of us because Crossrail materially changed the nature of what needed to be done there, it was a massive work, and, therefore, it created a new situation entirely. I would accept that we did jointly pay fees to look up the initial development for Crossrail but obviously once Crossrail came along, and London Transport was about railways rather than development, we had to concentrate and the priority was Crossrail.

17179. When we come to the period after 1990, the site was safeguarded in November 1990.

(Mr Smith) Yes.

17180. So the period 1991-92. Mr Saunderson in his evidence suggested that it was London Underground who were encouraging Mr Saunderson to come forward at that stage to promote a joint venture. Can you just explain to the Committee your understanding of the position?

(Mr Smith) Yes. Mr Saunderson wanted to promote a development on the site. He submitted in 1990 an application south of London Underground land which was refused because it did not take account of Crossrail. He put in another application in 1991, as I think is shown in this bundle, which included an LRT ticket hall to try and incorporate Crossrail. We then had the Crossrail Bill and Mr Saunderson was an original petitioner to the original Bill promoted by London Underground then. In his original petition he sought to secure arrangements binding upon the Board, by which I believe he meant the London Underground Board, whereby development could continue contemporaneously with Crossrail. Looking at it I think he wanted to continue his development and see whether it could fit in with Crossrail, which was not feasible.

17181. Through this period was London Underground encouraging him to come forward with a joint venture?

(Mr Smith) No. He was a petitioner so we were responding to his actions. We were originally looking to co-sponsor but once Crossrail came along the situation changed. As Mr Saunderson wanted to continue to see whether it could be tied in we, I believe properly, tried to explore that but it was not run by us and, indeed, a private development contemporaneously with a work like Crossrail is far harder to deal with than otherwise.

17182. MR BINLEY: Forgive me, Ms Lieven, but this is such a complicated matter that I do need to clarify as we go along otherwise we will forget and it will be much more difficult. My concern is about the evidence for what seems to me to be a subjective answer given by Mr Smith. The subjective answer was, "No, I don't think it was us, I think it was Mr Saunderson". The implication of that subjective view is, "Okay, we were just going along with it". Can we have any evidence to that effect?

17183. MS LIEVEN: Sir, can I just interpose two thoughts. There is, of course, a huge amount of correspondence about this site which I would rather not burden the Committee with unless we have to, but as far as objective evidence is concerned I was going to ask Mr Smith to explain why it was that going into a joint venture with Mr Saunderson and trying to develop the site together was actually going to make life much more difficult for London Underground and the Crossrail project.

17184. MR BINLEY: I am sure it would have done, no doubt about that.

17185. MS LIEVEN: That may be some objective evidence to support what Mr Smith was giving evidence on. Can you just explain what London Underground's position was on such a joint venture?

(Mr Smith) Yes. The difficulty in developing contemporaneously with Crossrail was that Crossrail needed the space to build a big raft over the northern end of the site and, therefore, if some of the works had gone ahead in advance then it would not have given them enough space, as I understand it, to build that raft, so it caused a lot of difficulties in terms of trying to integrate the whole thing together, that is what I am trying to say.

17186. MS LIEVEN: Can I say to the Committee that there is a difficulty here, and Mr Binley has completely put his finger on it. We have a very different perspective on what was happening in 1991 and 1992 from that which Mr Saunderson explained in detail this morning, but in order to make that good there would have to be a very extensive investigation into the documentation and so on. It would be my submission to the Committee that that is not necessary because at the end of the day this is all history which is not a matter that it would be appropriate in any sense for this Committee to make a ruling on. All I want to establish in front of the Committee at this stage is that there are two sides to this story in essence and the Committee does not need to decide which side is correct or precisely what judgments to make on it at each stage. I do not want the evidence that Mr Saunderson gave this morning to be simply not contradicted so the Committee went away with the impression that LUL and British Rail in the original Crossrail project had behaved outrageously to Mr Saunderson by leading him up the garden path again and again, that there is another side to that story. If we can just go through the history as far as we need to with Mr Smith and if there are any specific points that the Committee would like us to come back to we can dig out the correspondence and put it in front of the Committee.

17187. CHAIRMAN: I think it would be more helpful, Ms Lieven, if we had a note from Mr Smith on events as he saw them and we will have the two balancing notes.

17188. MS LIEVEN: We can certainly do that, sir.

17189. MR BINLEY: Might I help you too, Ms Lieven. I understand the legal differential and the fine points relative to that that I think you might be able to make that you intimated in your opening. However, there is another dimension to this beyond and above the legal dimension, and that dimension is in conglomerate the effect of the machinery of state even though that was not an objective position that the machinery of state took. In that respect we, as a Committee, as I understand it, have the right to make that point when we make judgment, that we are not here only to assess the legal implications but we have the freedom, because we are politicians, to be slightly less legally defined and restricted than you are. I want you to know that we have a slight difference of approach from that perspective.

17190. MS LIEVEN: I completely understand that and, if I may say so, it is wholly admirable that the Committee should take that approach. The only thing that follows from that is that in order to be fair to my clients I do have to explain that the, as it were, wider human picture that is being played may not be an entirely objective wider human picture itself, but equally I am conscious that the Committee does not want to spend too much time on such issues because ultimately we want to try and focus on the issues the Committee has to determine. Mr Smith will produce a note and we will try and do so by the Committee's next sitting next Tuesday of our position on this. Can we stay on the chronology for a moment and turn to the next page if you would, Mr Fry. I think we have dealt with 92. What we are talking about to some degree is this comment here, "Joint venture with LUL. Heads of terms prepared at request of LUL", and we will come back to that. There is another specific point in this that Mr Saunderson raised which is that in February 1994 Crossrail writes to tenants of affected buildings and Mr Saunderson suggested that had a very bad effect on his business because lots of tenants got these letters and then left and the rent fell. Can you just explain why Crossrail or whoever it was, probably LRT, wrote to the tenants in affected buildings at that stage?

(Mr Smith) I believe this was a referencing under the Bill to find out exactly who was where and unfortunately that was the reason for it, I believe.

17191. MR BINLEY: So it had a blighting effect then, did it, Mr Smith?

(Mr Smith) I am not denying it, I am just explaining it.

17192. MS LIEVEN: We might have been in a very unfortunate position with the tenants, however, if we did not do that. Before we come to the 1995 hardship application, can we just go back in history and look at the property market situation when Mr Saunderson or SHL purchased the most expensive of these sites and what happened to the property market in the following years.

(Mr Smith) I think Mr Binley is probably aware of this. Broadly this is a City fringe area which tends to be quite volatile and prices go up and down even more in City fringe areas but in the City in the property market from about late 1989 onwards there was the biggest depression in the market since the Second World War. I was involved personally with a development above Monument Station for the Underground where we happily sold it in 1988 and it was based on a rent then of £65 a square foot with a three to six month rent-free period. When they came to let it in 1990/91 they achieved £30 a foot and they had to wait 18 months to two years to get any rent coming in. Values were slashed and I am afraid Mr Saunderson was not the only person to feel the effects, a lot of property companies went out of business and others sold their assets to cover their debts. I do not want to go on but it was unprecedented and values went down terrifically.

17193. Can we just have a look at page 74, not for the purpose of the document but because of the facts it sets out. At paragraph 3.1 it shows when SHL purchased the various bits of this site. We can read it for ourselves but as far as Long Lane and Lindsey Street was concerned, that was bought in 1988 for two million and 22 Long Lane was purchased in 1989 for 950,000.

(Mr Smith) Yes.

17194. Mr Saunderson in evidence-in-chief said that I had got it wrong in saying a large part of the site, the most expensive part of the site, was purchased at the height of the market. How do you analyse those figures?

(Mr Smith) From the evidence it looks that almost £3 million was spent in 1988-89 on the Long Lane properties. All I can say is that was at the time of the top of the market. They say general hindsight never lost a battle, but it was at the height of the market, I am afraid.

17195. We know that the properties, except for 10 Hayne Street, were sold by the receivers. Mr Saunderson told us that they were not all sold at the same time but in and around 1996 for, I believe, a total of about £3.2 million. In terms of that kind of diminution, in your view how does that relate to what was generally happening in the property market?

(Mr Smith) It was in line with the reductions. I understand from this document the value of Mr Saunderson's holdings was just about nine million in September 1990. For it to decrease to a fraction of that was certainly not unusual in that period. The market had a profound effect on values.

17196. So far as this type of location is concerned, the City fringe, when did values begin to rise significantly again and at what stage did they regain the kind of values that Mr Saunderson had paid in 1989 and 1990?

(Mr Smith) At the moment City offices, the prime grade A City offices, are letting for £52, £55 a foot. They have not yet reached the £60, £65 a foot nominal figures yet of 1988. In real terms they are still way below the 1988 levels even today, they just have not caught up.

17197. Turn now to the specifics of this case. Mr Saunderson implied in evidence-in-chief that if he had been able to hang on to the site to 1997-98 he would have got back something close to what he paid. Given the nature of the area, how does what you just said relate to that suggestion?

(Mr Smith) He actually paid £4 million in nominal terms. It was valued at £9 million in 1990. I do not think he would have got back the £9 million is what I am saying. If he was able to wait until the end of the decade, towards the end of it, he might have got back his original purchase price. I can only speak generally here. Property values were significantly affected, that is what I am trying to say, and have gradually recovered but have not got back to 1998 levels.

17198. Finally on this point, before we leave the impact of Crossrail and move on to hardship, the next plan shows the effect of the 1991 safeguarding change and the Long Lane properties were no longer safeguarded, would it have been possible for Mr Saunderson to sell those, or seek to develop them, separately from the rest of the site?

(Mr Smith) Yes, he could have either developed or traded them after they were excluded from Crossrail which was in 1991.

17199. MS LIEVEN: Can we then move on to ----

17200. CHAIRMAN: No!

17201. MS LIEVEN: I did wonder, that is why I said it very slowly.

17202. CHAIRMAN: We are going to break now and meet back at 2.45. Thank you very much.

 

After a short adjournment

 

17203. CHAIRMAN: Good afternoon. Ms Lieven?

17204. MS LIEVEN: Thank you very much, Sir. Mr Smith, the point that we had got to was Mr Saunderson's hardship application in 1995 to London Underground, I do not want the details but can you explain the form of that application please?

(Mr Smith) Yes, Mr Saunderson applied in 1995 in a hardship claim to have his properties acquired by London underground at the time. I think the details were set out in a letter from his agent in July of that year.

17205. I do not think there is any need to put the letter before the Committee, but can you explain what Mr Saunderson was asking for in financial terms, please?

(Mr Smith) Yes, the request was to acquire the SHL premises at 1989 values for £9 million. Loss of potential profits for development and investment at £10 million. Other losses from selling shares in Unisoft Group, planning losses and other financial losses including rental losses and the total amount that we looked at came to just about £31 million.

17206. Thank you. Did London Underground feel that it was appropriate to pay that?

(Mr Smith) No. They did not have that money to pay. The basis of the assessment was looking back to the late 1980s as if that had continued. I accept that Mr Saunderson's property did decrease in value, but, as I say, the market conditions apply to that. We could not meet that sort of cost, it was something outside of our requirement. The other point was we only needed the Hayne Street properties for Crossrail, the Long Lane properties at the south end were excluded from safeguarding, they could be sold separately anyway.

17207. I have gone through that. If you turn to Mr Saunderson's documents, between pages 34 and 42 there are various correspondence including three letters from London Transport property which end with a letter on page 42 which was from Mr Trott but you signed it in his absence and I think this is the letter that perhaps if taken baldly does look like the strong arm of bureaucracy but is there a background to that which is relevant to take into account?

(Mr Smith) This followed this claim and the request for costs and it was at the end of that that these further costs were requested and although Mr Saunderson had put in time and effort to develop on this site simultaneously to Crossrail. As I say if he wanted to do that and he took the decision that was something he wanted to do, as I said before, it was more difficult to arrange that with Crossrail and we did not feel that in relation to those costs there was a liability on London Underground.

17208. One final point on this, in terms of an application whether it be an advanced purchase application or a hardship application, quite apart from the fact that he was asking for £31 million, were the terms of such a purchase that which London Underground would have found unacceptable?

(Mr Smith) Yes, they also included a right to a 999 year lease for an eventual over site development. We had not even designed Crossrail, so it was very difficult to agree to that because we did not know exactly. We were developing the Crossrail design and the Crossrail design life was 125 years so to have an agreement that was longer than that was very, very difficult for the engineers to agree so that was another reason.

17209. MR BINLEY: I am not quite sure that I understand the point of presenting as evidence against Mr Saunderson, the fact that he should have made an objective value judgment with regard to the property because it seems to me, and you have been in the world of property for a very long time, that what property might be at a given time or indeed at any time over the next two years or indeed ten years is a massively subjected decision which will differ between experts enormously, is that fair?

(Mr Smith) Valuation of property is very often ‑‑‑

17210. I have noticed that as a house owner, buyer and seller and I have noticed the massive differences that professional advisers have told me a given house was worth depending on my position as a buyer or as a seller and I have no doubt that everybody in this room has had a similar experience. Is that fair?

(Mr Smith) That is very fair.

17211. I would like that on record too because I am not sure I understand that point.

17212. MS LIEVEN: In terms of what Mr Saunderson was claiming in his hardship application is the difference between the £9 million valuation he put on the site and I think at the date the valuation that our expert put on was something like, I cannot remember ‑‑‑

(Mr Smith) It was £1.4 million.

17213. There was also the issue of £10 million for potential loss of profit?

(Mr Smith) Yes.

17214. Was that, in your view, a justifiable claim at all?

(Mr Smith) We had no provision to pay that sort of loss.

17215. MR BINLEY: Might I ask a question about that because your background is within government service, I recognise that it has been within London Transport and proud you should be of that as well. I am in no sense demeaning that. The area of judgment and profit does not really come into your expertise, does it?

(Mr Smith) I am not judging, Sir.

17216. I just wanted to make the point that making a judgment about profit would not fall within your expertise at that time.

(Mr Smith) No, I am not judging.

17217. Thank you.

17218. MS LIEVEN: I will leave that issue there, if I may and move on. Briefly, there are two other points we need to cover, 10 Hayne Street and the land disposal policy. Just to touch on the land disposal policy, in respect of his ownership of 10 Hayne Street, what is the position with regard to Mr Saunderson being able to be involved in any over station development which involves 10 Hayne Street?

(Mr Smith) We now have a land disposal policy on Crossrail. This is a multi‑owned site and the policy is clearly that once Crossrail is constructed Mr Saunderson, along with other owners on the site, will have the right to apply to the Secretary of State under the hardship policy to apply to have those rights so he can apply to develop the site but he has to do that in competition. The Secretary of State will choose between one owner or another.

17219. Let us turn to 10 Hayne Street. I went through this in some detail with the Committee this morning, although I do not want to have Mr Smith repeating everything. The explanation I gave, for the purposes of the transcript, of the position and what Mr Saunderson would have to do and his co‑owners to qualify, did you accept that as being correct?

(Mr Smith) I accept it.

17220. Hopefully, that is enough, I will not have Mr Smith repeating it all. Can we look at two factual points. First of all, Mr Saunderson says that he never responded to the letter from Bircham Dyson Bell dated 15 June 2006. I am going to put it up. The text perhaps does not matter very much but do you understand this to be a response from the Department for Transport to that letter?

(Mr Smith) Yes.

17221. And indeed I have not got it in front of me but is it your understanding that Bircham Dyson Bell acknowledged that they had received that letter?

(Mr Smith) Yes. That is my understanding.

17222. Maybe there are problems with Bircham Dyson Bell and Mr Saunderson but there is no doubt at all that that letter was responded to whether the terms of response were satisfactory or not, that is not the issue, it was responded to.

17223. MR BINLEY: Could I ask whether that was done through registered post?

17224. MS LIEVEN: No, Sir. I do not think any of our letters are done through registered post but Sir it is not an issue because it was acknowledged by Bircham's. Whether Bircham's passed it onto Mr Saunderson I cannot possibly comment on and I am not suggesting they did not, for the person from Bircham's, at no time and issue we can get involved in. Secondly, the suggestion that we encouraged Mr Saunderson to apply for hardship, we are now in the present hardship scheme rather than the London Transport hardship scheme. Can we have a quick look at a letter at Mr Saunderson's page 56 from Mr Irving of Winckworth, Sherwood our agent and focusing on letter (a) "as you maybe aware the project has published a policy for the purchase of property in cases of hardship which provides for advance purchase of properties in certain cases. We enclose a copy of that policy. While your clients are welcome to make an application under that policy, it seems that your clients are unlikely to satisfy the qualifying conditions since you have indicated that they do not have a qualifying interest in the property for the purpose of the 1990 Act. It is not obvious that there are exceptional circumstances in this case justifying an advance purchase outside this policy, but if your clients consider that there are these could be explained in the application." Do you read that as encouraging Mr Saunderson to reply?

(Mr Smith) It seems to set out fairly that he is unlikely to satisfy the qualifying conditions. I do not know any more. I was not involved in this directly but on the face of that paragraph I do not know if there are any other discussions.

17225. Absolutely finally, there was a complaint made by Mr Saunderson that you rang him at 9.30 at night, why did you ring him at that time of day?

(Mr Smith) He and I are busy people and often not available to take each others calls during the working day.

17226. Does that apply to Mr Saunderson as well as yourself?

(Mr Smith) Yes.

17227. Sir, those are all the matters I was going to deal with.

17228. CHAIRMAN: Mr Saunderson, you can cross‑examine.

 

Examined by MR SAUNDERSON

17229. MR SAUNDERSON: I do not know if it is unusual for items to be read out in evidence which are not provided to the other side.

17230. CHAIRMAN: If you have got evidence which you want to put to the Committee, all of the Committee must see it and also the Promoters must see it.

17231. MR SAUNDERSON: It really refers to the two letters that were referred to by Ms Lieven. She referred to a letter from 1995.

17232. CHAIRMAN: Have you not received that from Ms Lieven?

17233. MR SAUNDERSON: No, I have not received anything.

17234. MS LIEVEN: Sir, the letter of 1995, which I did not put up, was a letter from Mr Saunderson, the hardship application was from Mr Saunderson, it was from his agents and I did not put it before the Committee. The other letter was one written by us to Mr Saunderson's agents in response, the letter that is going on the screen now, I am sorry I had wrongly assumed perhaps that Mr Saunderson had seen this. It is a letter to his agents in respect of his Petition if he has not seen it then I am afraid the fault has to lie with Bircham's and not us.

17235. CHAIRMAN: I think at the same time we could get some copies.

17236. MR SAUNDERSON: I think it would be helpful because I am completely unable to comment on the letter from Mr Thornley because I do not have it in front of me or the letter from the Department for Transport which I do not have from Bircham Dyson Bell.

17237. CHAIRMAN: At the same time it must be put on record that Ms Lieven is quite right, it is not the responsibility of the Promoters, it is your agents' responsibility.

17238. MR SAUNDERSON: Assuming they have received it, of course. I have not had it from them. I specifically asked them where the reply was and they said they had not had one. I do not think we need to go on a witch hunt as to whether it got to Bircham's or not. They say they acknowledged it. I am surprised, it was Paul Thompson. Let me just say I have not received it.

17239. CHAIRMAN: I think that is a matter you have got to raise with your agents and if you find that they have never received it, although we have been told it was acknowledged, perhaps you could get in touch with the Committee again. We must now proceed with Mr Smith.

17240. MR SAUNDERSON: I am merely making the point that it is very hard to deal with something when you have not copies of it. I would still appreciate copies of those two letters.

17241. CHAIRMAN: The clerk is getting them for you. We will put them on the screen and you can have a minute or two to read them.

17242. MR SAUNDERSON: I have got a number of points for Mr Smith which I will take first, if I may, while those are being copied. Mr Smith, could you just tell us when you were in charge of London Transport Property approximately how many staff you had there?

(Mr Smith) I was director from June 1993 and I was deputy from 1986-93. My staff was roundly 100.

17243. One hundred staff. Gosh, you had an enormous team. Approximately how many projects would you have had on the go at any one time, Mr Smith?

(Mr Smith) Development projects?

17244. And other projects.

(Mr Smith) We managed the London Underground estate, 5,000 properties. It was a busy time.

17245. Yes, indeed. It must have been a very responsible job. Approximately what would have been the value of the portfolio of London Transport, London Underground?

(Mr Smith) Commercially most of the property was operational so its value really was not realisable. I cannot remember the accounts but £1 billion. Just to be clear, that is the cost of replacing the operational assets, it is not like the asset value of the company which very often are tradable assets.

17246. Can you remember roughly what the annual budget in your area might have been?

(Mr Smith) Annual budget? To be honest, no. Just give me some time and I will come back to you on that. I will try and think about that.

17247. We can understand and obviously we all appreciate that it was a very substantial operation that Mr Smith was in charge of.

(Mr Smith) Yes.

17248. A hugely responsible job with some 5,000 projects on the go and with 100 staff.

(Mr Smith) Just to be clear, our job in many ways was to acquire land for new railway projects and new bus projects and, where land was surplus to requirement, to dispose and gain income for investment back in the transport infrastructure. The budget that we got, I believe I am right in saying, at that time, because the memory fades, we probably gained 20 million a year, 20 or 30 million a year to invest in public infrastructure. That was the nature of our business on the one hand; on the other hand, we were spending money buying property that was required for approved schemes for railway and bus projects.

17249. You would have had experts on your staff dealing with the different projects.

(Mr Smith) Yes.

17250. Would your job mainly have been management of those staff?

(Mr Smith) Yes. I was responsible for what they did, yes.

17251. Would you have become involved in the nitty-gritty detail of particular arrangements?

(Mr Smith) No, in essence.

17252. You made the statement earlier that London Transport and Property had agreed to pay 50 per cent of the cost of pursuing a joint development study in that 1988-90 period which Mike Withers had agreed.

(Mr Smith) That is my understanding from memory but if you could confirm that is true I would accept it.

17253. Mr Withers worked for you?

(Mr Smith) Yes, he did, but I cannot remember all the way back then, I am afraid. I accept it if he did. I am not contesting that.

17254. You made a comment on questioning by Ms Lieven that you felt after that period, 1991, 1992 and thereafter, that London Transport were not really very interested or were not pursuing this and it was me who was really undertaking it on my own.

(Mr Smith) In relation to the over site development simultaneous with Crossrail, that was an element that we were not pursuing. We were pursuing designs with Crossrail and we were pursuing our own designs on how that might fit in with some larger scheme that would be required by the City later on, but that would have been after we built Crossrail so it would have been on the basis we occupied the site, built what we needed to build, integrated any designs into it, would take something over and then would hand it back later on.

17255. I was just wondering how you managed to remember that level of detail for that 1991-92 period when the details of individual schemes were not really something you were concerned with.

(Mr Smith) That is not a detail, Mr Saunderson, that is a principal point. It is not a detail. Crossrail was a major infrastructure project brought forward by the Underground and we had to give it priority. I had to give some time to Crossrail on a number of issues and I do know that was the case and that is not a point of detail, with respect. If you ask me about individual points of the development you were proposing I probably would not know.

17256. Could I take you to page 32 of my index of documents, please. This is now 1991, the bottom of that page 32. Would any of this be familiar to you: "London Transport Engineering and Property meeting to amend Crossrail design in scheme; February-June funding discussions; July - London Regional Transport engineering discussions with Ove Arup; August - London Regional Transport meetings on engineering; September - planning discussions on uses in development; October - reached agreement with London Regional Transport to section 106 Agreement..."

(Mr Smith) Yes, sorry?

17257. Would you be familiar with that level of detail?

(Mr Smith) In general terms yes, but in very much detail no.

17258. How would that accord with London Transport not really wanting to pursue the scheme?

(Mr Smith) I see what you mean, sorry. As I understand the position, and based on what I understand from your petition, you wanted to pursue the development of the site - I forget what the words were - contemporaneously with Crossrail and a lot of these discussions were responding to your various planning applications as we were developing Crossrail to try and see if they would fit or not with your proposals. In the general sense, that is what I understand.

17259. Could I take you to page six of the City of London paper from the City Principal Planning Officer to our agent architect, Noel Isherwood, confirming: "Following your instructions authorising the withdrawal of application 5011..." referring to that main site, "the papers have been filed accordingly." Can you remember who asked Saunderson to withdraw the application filed with the City Corporation?

(Mr Smith) I would imagine it came from the Crossrail team but I would not know who in the Crossrail team.

17260. Thank you. I am just trying to give the impression that there was intimate working going on between Saunderson, Crossrail and London Underground with regard to this scheme on an ongoing basis.

(Mr Smith) There was. Could I say that I am not contesting that point. What I am saying is we were properly responding to your proposals but we had our own proposals that we were developing at the same time.

17261. Could you remember what the section 106 Agreement that was agreed with London Underground actually stated?

(Mr Smith) Not in detail but, from memory, I think what you were aiming for was to obtain planning consent subject to a planning agreement or a section 106 Agreement which would enable your application to be approved and the development to effectively undertake some of the Crossrail works. I think the problem with that was whether Crossrail would have the control over such a major project if they put bits of it into, if you like, individual private developments. From memory, I believe that London Underground required a veto, I think that was the word used, in any case. That was the situation as far as I understood it.

17262. You mentioned to Ms Lieven under examination that the reason why London Transport was backtracking, if you like, or going slowly on the development was the need for a raft over the tracks.

(Mr Smith) Yes, a new raft.

17263. You mentioned in reply to Ms Lieven that was the reason for London Transport going slowly.

(Mr Smith) I do not remember the exact question but the Crossrail proposals required a new raft over the railway that goes into Moorgate. In order to build that they needed the space upon which to put the plant equipment and materials, which was the land to the south which was partially your land and partially City of London land.

17264. That was the concern for a raft.

(Mr Smith) Yes.

17265. That was why you said you were backtracking on it. Does that jog your memory as to the section 106 Agreement and, indeed, the preparation of the deed mentioned in January to March 1992 and what was contained therein?

(Mr Smith) As I said, I think the draft deed was something that was put forward by your people to get London Underground to sign up that those works would be done in part under your development, from memory. I believe that London Underground had legal and practical issues with whether that could in fact be allowed to happen. I do not believe that agreement was ever signed because I do not think the Crossrail engineers felt they would have enough control over the building. The Crossrail works were enormous in their scale and from memory they were totally out of all proportion to the size of the commercial development in terms of their cost.

17266. Would it be helpful to go through the 1992 actions on page 32A just to help your memory? "Preparation of Deed for London Regional Transport safeguarding; further legal advice; meetings with LRT and Crossrail regarding the planning application and s106; meetings with LRT on planning application".

(Mr Smith) No-one is disputing this took place in relation to your development. I am not disputing it at all.

17267. MR SAUNDERSON: I am trying to ascertain whether the Committee feels that London Transport were not really involved and Saunderson was just flying a kite.

17268. CHAIRMAN: Can I help you, Mr Saunderson, because I think you have made your view on the issue and what we have to do is deal with the issues now, with Crossrail now. I think you made the point that you felt you were disadvantaged by circumstances. We have got that message and we now must move on with the present matter.

17269. MR BINLEY: Could I just ask one question because the impression I got from Ms Lieven's examination of Mr Smith was that all of this activity was taken at the behest of Mr Saunderson and that London Transport were replying almost because they wanted to be kind and courteous. The question I would ask is that you ran a very big department which was immensely busy and which cost a great deal of public money, so surely your customer servicing would not have been that generous as to spend all of that money and do all of that work if there was not a real interest from your organisation because if that was not the case, you would not be doing your job properly and you are too assiduous and too competent and, if I may say so, too committed a person, and I know that from listening to you, to do that, so I do not understand the point being made in respect that this was all about Mr Saunderson and not at all about your organisation.

(Mr Smith) Sorry, I do not want to mislead anyone in this and you are quite right to ask whether this was a waste of money. All I can say is that Mr Saunderson was a Petitioner to the original Bill and he did want this looked into, and we did look into it.

17270. But the truth is that you acted on a perfectly proper basis in the interests of your organisation because there might have been a outcome which they required. That is the truth of the matter, is it not?

(Mr Smith) Yes, if we could make it work.

17271. MR SAUNDERSON: There is just one other point with regard to the main site. There has been some to-ing and fro-ing on the proportions of the site and I just wanted to say that 60 per cent of the site was acquired in 1985 and prior which is listed in the hardship claim, 16,000 square feet of buildings was acquired in 1985, 1982 and 1981. It was only 11,000 that was bought in 1988 and 1989. There has been this comment that we paid a lot at the top of the market. Well, that did apply to the 1988 and 1989 purchases, but it did not obviously apply to the 1981, 1982 and 1985 purchases. Therefore, to imply, as was done, that we just bought a load of buildings at the top of the market and then they had gone down in value would not be an accurate position for the Committee to go away with. The second point is on the values. Ms Lieven said it was sold for £3.2 million, but it was actually sold for £2.2 million which is 24 per cent of what it was valued at in 1990, the £9 million, so it fell to 24 per cent. I would like to ask Mr Smith whether he knows of any other properties which fell to 24 per cent of their value. He mentioned one where the rents fell 46 per cent, but in fact yields in the latter 1990s fell, so the effect would not have been for the capital value to fall to half. We are talking now of the late-1990s when the buildings were sold, 1996 and 1999.

(Mr Smith) So these were sold for £3.2 million?

17272. No, £2.2 million. Just offhand, does that seem more than the market fall?

(Mr Smith) Not necessarily, not on secondary property. If you look at what happened in 1991 ----

17273. I am not looking at 1991, but 1996 to 1999 when they were sold.

(Mr Smith) They were sold for £2.2 million, the Long Lane properties?

17274. Yes, all the five CBCP Limited properties, all five properties.

(Mr Smith) They were sold when?

17275. In 1996 and 1999.

(Mr Smith) Somewhere between 25 and 45 per cent is the sort of range, I would have thought, which would be normal. I have to give a range because it would be misleading ----

17276. Perhaps I can advise on selling London Transport properties for you!

(Mr Smith) Well, I hate to say it, but I was in your position, although not in your position because it was not my personal money, but we did buy property near the peak of the market and it did fall significantly in value.

17277. I would put it to you that the 24 per cent is exceptional.

17278. CHAIRMAN: Mr Saunderson, we are going round and round and round and back over the same thing. I have already said that we have got this message. We have got the argument being put forward and you keep revisiting it time and time again and I think you have more than adequately covered the questions which Ms Lieven put to Mr Smith in the light of that. What I and the rest of the Committee really do want to know is about the present property, the present blight and how it affects the building as it is now, not what happened in the previous Bill. As I say, we have more than understood that and I must insist that we move on.

(Mr Smith) Yes, certainly. Well, I have sought in my summing up to suggest, in my submission, what the Committee could order the Promoter to undertake and they are my five suggestions for the Committee to undertake.

17279. CHAIRMAN: Thank you, and thank you, Mr Smith.

 

The witness withdrew

17280. CHAIRMAN: Ms Lieven, do you want to sum up?

17281. MS LIEVEN: Can I make a very short summing up, sir. So far as the large site is concerned, we do not dispute that Mr Saunderson's property interests have been detrimentally affected by Crossrail and it would be silly to do so, but a large element of his problems, and we will never get to the bottom precisely of how one splits causation here, but a large element stems from the collapse in the property market. This was a City fringe site and it was always going to be precarious and you have literally just this moment heard Mr Smith's evidence of that. It is important to remember that part of the site, the most valuable part in commercial terms, the Long Lane/Lindsey Street site, could have been developed at any date on from 1991 because it was not safeguarded and perhaps that slightly shows that a significant element of the problem here was the collapse in the property market because that bit of the site had nothing to do with Crossrail from then on.

17282. There has been a lot of evidence and a lot of cross-examination about who initiated what in 1991 and, sir, we are quite happy that it was mutual interest, but I do ask the Committee to put themselves back into the position of LUL. Leading up to the 1994 Bill, we had a Petitioner or, rather, London Underground had a Petitioner who was saying, "Don't go ahead with this Bill unless you allow me to develop this site", so we absolutely had to negotiate out with them as far as we could possibly go in terms of allowing the development to go ahead, otherwise the Committee in 1994, if it ever got to that stage which of course it did not, would have been deeply critical of the way the Promoters had acted.

17283. Ultimately, sir, I rely entirely on what you have said repeatedly today, that all this is a matter of history rather than a matter for this Committee. We have different Promoters. The site was sold ten years ago now or at least one large part of it. If there was maladministration, and I do not accept that there was for a moment, but if there was, then the complaint to the Ombudsman should have been pursued. Why the Ombudsman did not reply if he did not reply, I do not know, but that was the remedy back in the mid-1990s to what Mr Saunderson is complaining about now, an unfairness within the blight scheme.

17284. I do say gently, but very importantly, that if compensation for this kind of loss had to be paid for by Crossrail, then it would make major infrastructure development in central London almost impossible, if not impossible, because the costs that would be added on would become overwhelming, but all of that really is history.

17285. If we focus on 10 Hayne Street, which is what this Petition ought really to be about and is really about, the simple solution which meets the lawful part of Mr Saunderson's requirement A is to serve a blight notice and he will then get open market value, disregarding any impact of Crossrail for that site. He could have done so at any date from when the bulk of the site was sold, but has not done so for whatever reason which is entirely a matter for him, but he continues to be able to do so now.

17286. As far as the over-station development point is concerned, we will deal with him like any other owner of land in a site where they are only a partial owner rather than a complete owner. There is obviously a difference when we are dealing with somebody who owns the entirety of an over-station development site.

17287. Sir, I kept that short, but, in my submission, that deals with the points in the Petition.

17288. CHAIRMAN: If I can just comment on one thing, the fact about if compensation is awarded, it may preclude investment by Crossrail in infrastructure projects, that is a matter which we have to consider, but also a matter which we have to consider is justice and fairness and where it applies in the areas of our responsibility, we will do that. Thank you very much.

17289. Mr Saunderson, can I just make one suggestion. In your humble request, you have suggested a number of things and one of the things you have not included in there and what we may, with your permission, list is also your application for blight in relation to your present property, so we could include that in the humble request which you make. Is that acceptable to you?

17290. MR SAUNDERSON: I personally have a difficulty with the blight thing. The way it was discussed this morning was very disturbing, in my mind, and, in my view, if they feel they have a duty to purchase the site, they should make an undertaking to purchase the site at open market value. This business of parking cars and things, I do not really want to get involved in something that is slightly - I do not know what you would call it - but I found it quite disturbing and I would prefer that a straightforward undertaking was given. Blight is terribly complicated and, as we heard this morning, there were various statements made to and fro. I found it very difficult to accept that there was not ----

17291. CHAIRMAN: One thing which I think is important is that I think the suggestion which was being made by the Promoters this morning was not in some way underhand and designed to get around the law. What they were saying was that there is a statutory requirement for things to occur for you actually to be able to apply and I think that is where Ms Lieven helped this morning with the clarity. I must say, I was only suggesting that it was a thing which was being offered and if you wanted to include it, we could agree to include it in your request which you have listed. If you do not wish to do that, then the Committee can consider its own course in a whole variety of ways, including that, but it was just whether or not you wished to request that.

17292. MR SAUNDERSON: I think it would have been helpful actually if I had asked Mr Smith, or perhaps we can ask him now, whether they have actually paid out as yet on any blight notices. I have also been advised, which I forgot to say, that a blight notice did not apply on a Safeguarding Order.

17293. CHAIRMAN: Let me repeat this again because I did give an indication of how the Committee would view this. If the application was made now, it would have been handled and sorted out or dealt with by the time this Committee concluded and reported to the House. That is the general point we were making this morning. Then we would be the judge of that. If it had not been handled, then we could make our own views on that. As I say, if it had been, then of course that might be a different area of satisfaction in relation to the decision that we actually make. Is that helpful?

17294. MR SAUNDERSON: It is really helpful. I just wondered if you could ask the Promoters if they would give an undertaking to advance purchase the site at open market value, simple as that.

17295. CHAIRMAN: Ms Lieven, if you could state what you have already said this morning, it might give some clarity.

17296. MS LIEVEN: Let me state three things. Firstly, and I repeat what I said this morning, if Mr Saunderson serves a blight notice and meets the criteria in the terms I have described this morning, and I described them very carefully and I do not want to describe them again because they may be slightly different and then there would be confusion, but then there would be no ground for us to contest a blight notice and we would not do so. That gives him purchase now or within six months at open market value, and I am struggling to see what the problem is.

17297. Secondly, as far as we know, and we have just pooled our joint knowledge, only one blight notice has been served so far and that is on Crossrail 2, a joy for this Committee to look forward to, but perhaps not for a year or two, and that has been accepted.

17298. MR BINLEY: Not this Committee!

17299. MS LIEVEN: Nor me! This is a process which has been accepted by the Department.

17300. CHAIRMAN: Just to amplify that, you would also confirm that if there was any contest over what was a market value, then there is the Lands Tribunal to clarify that?

17301. MS LIEVEN: Absolutely, and that comes on to point three, sir. What Mr Saunderson is asking us to do, and I genuinely do not understand why he would rather this route, is to go on the non-statutory route of advance purchase for which we have no parliamentary authority to spend money to start with and which would fall outside the statutory protection in conformity with the Human Rights Act that he would get if he served a blight notice where, if he did not agree with the compensation, he could go to the Lands Tribunal. Unless there is something that I am completely missing, that is the straightforward statutory route which the Secretary of State has power to take where, if Mr Saunderson does not like the conclusion on compensation, he can go to the Lands Tribunal and if he does not like the decision, and there is no reason why he should not for the reasons I have just given, he can go to judicial review. It is all completely straightforward, up-front, open ----

17302. MR BINLEY: And expensive.

17303. MS LIEVEN: No, no, sir, in my submission, not necessarily at all. Serving a blight notice is not in the least bit expensive. I am absolutely sure, having heard Mr Saunderson today, that he is more than capable of doing it himself. If, as seems overwhelmingly likely, there is no contest, then the blight notice is accepted and then in terms of compensation, it is only cost if ultimately it goes to the Lands Tribunal and he is seeking a value which the Lands Tribunal does not give him. As long as it is dealt with either by negotiation or he seeks a higher value and we are being unreasonable and pay less, then he gets his costs, so, in my submission, that is a complete answer to the problem.

17304. Can I just put it on the record that we are doing nothing underhand. We are not attempting to twist or abuse the statute at all. What I have told this Committee is on instructions and on expert advice from Mr Smith who is highly qualified in this area. There is nothing funny going on here at all.

17305. CHAIRMAN: Mr Saunderson, we cannot do anything until the end when we make our report and Parliament decides. Certainly I have given you an indication that we have opened a door. Whether you go through it or not is entirely up to you. Whether, when you go through that door, it reaches the conclusion which you find acceptable is up to you, but we have opened the door and whether you pursue it, I cannot advise you on.

17306. MR SAUNDERSON: Could I just say, as I think we did have the answer, that there have been no blight notices served under the present Crossrail Bill. I believe, and I am not an expert, this is a terribly complex area, blight, which is why I am being so nervous about it, but I believe that you cannot serve a blight notice on a Safeguarding Order. I have had that advice in the past. I believe that I cannot serve a valid blight notice and that is my belief.

17307. CHAIRMAN: In a final attempt at clarity, we have been told this morning on a number of occasions and this afternoon that if a blight notice application was made, then it would be looked at and given very, very serious consideration. What I have said to you is that that will be dealt with in time when we are still sitting and we will view this matter in the course of any response to it. There is a first for everything in life and, as politicians, we see it on a fairly regular basis and sometimes it comes back to haunt us, but nevertheless there is a first, so why not suck it and see or not as the case may be, but that is your decision. Perhaps you would like to conclude with your summing up.

17308. MR SAUNDERSON: Yes, thank you, just a short conclusion. My suggestion is that the five things I have listed down are, I believe, the correct way for the Promoters to proceed to provide certainty to the owners through a non-conditional purchase. The sums of money are tiny in relation to the £300 million which has already been spent by Crossrail, so for them to plead poverty is absolutely unacceptable. That is £300 million which has been spent on fees so far, I understand from the papers, and you probably know more about it than me.

17309. I believe the Petitioners should be made whole in respect of their loss of income over the last 15 years, and that is set out in the hardship claim.

17310. I believe that I should be made whole in respect of the pre-safeguarding equity that I held, and again that is laid out as £3.2 million.

17311. I believe the costs that I have provided to Mr Trott of London Transport in 1997 should be paid and again in terms of the value that we added to the Farringdon East ticket hall in getting the City Corporation to approve the bulk and uses of the over-station development as that is of immense value to Crossrail/London Underground/the Department for Transport, whoever you like to name as the owner. They have that already achieved and the costs, therefore, should be paid as laid out. I understand the point about the pre-emption rights on the development and I take the point of the policy that there is and I am aware of that.

17312. Point E is of pro-rata carried interest, which is my suggestion, to compensate to some extent for having an asset frozen for nearly 16 years which I feel, if nothing else, the Committee should endeavour in future to ensure that the Promoters either put up or shut up and they should not be allowed to freeze an asset for 16 years. That is the biggest thing in general terms which I would like the Committee to take away. It does not do the business world any good, it does not do the Government any good and it wastes a lot of time and energy in the process. They could have bought this site from us years ago and we would not be having these issues today. We would still be employing 180 people and hopefully more. We have 180 lives that have been changed because of not being able to be employed in this location because of Crossrail. We have tenants who have had to move. It has had a devastating effect on so many people and all through something which so easily could have been avoided, the very few sums of money in relation to the £300 million which has already been spent on fees alone, so the value which Mr Smith mentioned that £10 million was a lot, I do not know where he got that £31 million from and I was quite disturbed that he read that out without showing us the letter, but obviously there were losses of other companies that I owned that went down because of this, but it was hard to recall the figure when I had not seen a copy of the letter recently.

17313. So there are a lot of lessons to be learned, in my view, that the land should have been bought and the project should have gone ahead or it should have been unfrozen, but it should not have been left frozen for 16 years, in my submission. Thank you.

17314. CHAIRMAN: Can I just remind you that we will be in touch because we will be getting in touch with the Parliamentary Ombudsman to see what happened to your request which you made, and I suggest that you get in touch with your agents at the time to see why they did not forward on to you some correspondence which was mentioned.

17315. MR BINLEY: I just wanted to leave an aide-memoire on the record for my own use and hopefully for consideration by the Committee when they come to consider this more fully. I would like to make the point that this is at this stage without any prejudice whatsoever because it is my initial feelings, but I have no doubt that property prices fell and that is part of a business risk that anybody would take in these circumstances, but I have equally no doubt that it is almost impossible to consider as a proper financial risk the sort of hurdles, the sort of difficulties that had to be faced in this matter. I understand that the machinery of State is heavy, often impersonal and seeming uncaring, but that is the nature of the machinery of State. That does not, however, mean that our job is not to improve that and to change it so that this unacceptable risk be removed because I do believe your final words, that the impact upon the business and commercial community is an important one. Often I think government, in its unthinking way, not because it means to be malicious, but in its unthinking way, often creates situations that, if it had a chance to think about in their entirety, it would not do, so I think we need to take that into account and that is why I think those remarks were important.

17316. MS LIEVEN: Sir, can I just put two points on the record about blight notice which Mr Saunderson referred to in closing so that he understands the point. It is not correct to say that you cannot serve a blight notice on a Safeguarding Order. That is absolutely clear. I do not know where his advice came from, it does not matter now, but it is not correct, and we have accepted a blight notice on a Safeguarding Order on Crossrail 2.

17317. The other point to make on the record is that if a blight notice is served, we will pay reasonable surveyor and legal costs of that process.

17318. CHAIRMAN: I am sure Mr Saunderson will take that away with his advisers and consider it. Can I thank everyone. We now conclude today's business and we will next meet on 17 October at 10 am.

 

Adjourned until Tuesday 17 October at 10 am