Examination of Witnesses (Questions 6543
- 6559)
Ordered: that Counsel and Parties be called in.
6543. CHAIRMAN: Good morning, everybody.
Before we start, I want to do something which is legitimate which
is to make a factual correction to the transcript. On Day 14 at
paragraph 5561, I was in the process of giving the Committee's
response to the legal point about the EIA and at 5561, in the
penultimate sentence, I referred to a report by Messrs Mott MacDonald.
I was later told by Mr Mould that it was factually incorrect and
that the route that they were talking about at the point that
I was referring to was not Route B. Therefore, the whole of that
sentence should be deleted and, as a consequence, in the last
sentence of that paragraph, the words "After this, or perhaps
before" similarly should be deleted. It makes no difference
whatever to the conclusion, but I am dealing with the factual
correction that Mr Mould has told me about.
6544. MR MOULD: My Lord, I am grateful
for that. That is very helpful indeed.
6545. CHAIRMAN: Now, there are negotiations
going on outside, I believe, so we are dealing with the case of
Souzel?
6546. MR MOULD: My Lord, that is right,
and my learned friend Mr Hicks, Queen's Counsel, is raring to
go. In the usual way, I was proposing briefly to set the scene
for you and then hand over to Mr Hicks.
The following Petition against the Bill was read:
The Petition of Souzel Properties Limited.
MR WILLIAM
HICKS QC appeared on behalf of
the Petitioner.
Bircham Dyson Bell appeared as Agent.
6547. MR MOULD: In your pack for today,
at page 1 in relation to Souzel, you have this aerial photograph
and the position is this: that the Petitioner is the long leasehold
owner of the commercial office and retail premises at 21 Moorfields
in the City of London.[1]
We have shown in the yellow outline the premises concerned. The
photograph has been taken in an easterly direction, so you see
there Finsbury Circus and obviously beyond that is Liverpool Street
itself. The freehold owner of the premises is London Underground
Limited and, as I understand it, that arises from the fact that
the premises are situated in the immediate vicinity of Moorgate
Underground Station.
The Petition of Souzel Properties Limited
6548. If we turn please to number two, I can
give you a very brief outline of the works in relation to this
property, that is to say, the Crossrail works.[2]
The property has been situated within the safeguarding limits
for Crossrail since the 1990s and we see here the red line which
identifies the footprint of the premises. Crossrail propose to
construct a ticket hall here, the Moorgate ticket hall, to serve
the Liverpool Street Crossrail Underground Station which is in
this position here (indicating), Liverpool Street Station itself
being just to the right-hand side of this plan, as I have indicated
with the pointer. In particular, in order to construct the ticket
hall, it is necessary to undertake works at this point here (indicating),
this little blue nib in the south-eastern corner of the Petitioner's
building. What is required here is the demolition of a small part
of the front of the office premises and the deck on which that
part of the office premises stands, and it would then be necessary
clearly to make safe the balance of the premises and to provide
new access on to Moorfields itself, which is this street running
north-south on the eastern frontage of the Petitioner's premises.
The reason why those works are required is to allow the Promoters
to remove piles in this area here and then to undertake the ticket
hall works for the construction of the Moorgate ticket hall at
the basement level, so those are the works.
6549. Now, the Petitioner acquired its leasehold
estate from Hammerson's in 2003. The offices were previously occupied
by Lazard Brothers, but they have been vacant for some time. Lazard's
underlease falls in in June of this year, so the office premises
will become vacant to let from that date. The retail units on
the ground floor, as I understand it, remain occupied by underlessees
and will continue to do so for the time being.
6550. On the current programme, Crossrail will
require possession of this part of the premises, the little blue
nib, in June 2009 for the works which I have outlined to you a
few moments ago. Now, negotiations have been ongoing between the
Promoter and the Petitioner's representatives and those have resulted
in the Promoter having given a number of commitments to the Petitioner,
and we have circulated a list, which I hope has found its way
on to your tables, which sets out the relevant commitments that
have been made in correspondence in recent weeks. The correspondence
in question comprises letters from the Promoter to the Petitioner's
surveyors, dated 12 February and 14 March of this year, and an
email from Mr Colin Smith of the Promoters on 15 March, all of
which documents you will find in the pack at pages 3, 4 and 9
respectively. I do not think we need to turn to that at the moment,
but perhaps I can just take you through this list and just explain
what we are doing. They really fall into two parts, firstly, 1
and 2 and then 3 to 5, so 1 and 2 first.[3]
6551. What we have said is that we will purchase
the Petitioner's whole interest in 21 Moorfields under the powers
sought in the Crossrail Bill, not merely the land required for
Crossrail, that is the blue nib, due to the impact of the Crossrail
works upon the Petitioner's property, so we need only a small
part, but, following Royal Assent and the Funding Notice having
been issued, then our position is that we will take the whole.
We will assess compensation for the whole under the Compensation
Code as if a claim for material detriment under the statutory
compensation provisions have been made and accepted by all parties
when the compensation payable is assessed, and that is just to
confirm that the basis upon which we are prepared to compensate
this Petitioner is effectively to buy out the whole of their long
leasehold interest and that we are not simply limiting ourselves
to the compensation payable in relation to the blue nib of land.
6552. Now, that commitment effectively to extend
compulsory acquisition and compensation to the whole of their
premises and not just to the part that we actually require for
the works is designed to overcome what is really the sole, special
aspect of this Petitioner's situation and that is, as your Lordships
will understand, the fact that we require to demolish a small
part of a much larger building. It is designed to give them a
remedy in relation to the impact that those works will have on
the viability, if you like, of the balance of their office and
premises. That part of the negotiations has been successful in
that the Petitioner has accepted that that, as I understand it,
is a satisfactory way of addressing that aspect of their case,
so I say no more about that.
6553. Then we come on to the second part of
this series of commitments and that is 3 to 5, and what we have
said is that we accept that the authorised works, that is to say,
the Crossrail works, cause the offices of 21 Moorfields to be
difficult to let following the expiry of the lease to Lazard's
in June 2008. When Royal Assent and a Funding Notice is received,
the Promoters agree that, in a proper compensation settlement
with the Petitioner under the Compensation Code, the net loss
of rent from the offices from June 2008 will be accepted in principle
as a valid head of claim for payment of compensation. We have
said that we will open negotiations to purchase the property when
the Crossrail Bill has received Royal Assent and funding for Crossrail
is in place, instead of waiting until the premises are required,
in accordance with the project programme, which, as I have explained,
is currently June 2009, and we have said that we will purchase
the premises when satisfactory terms are agreed between the parties
and Board approval is received.
6554. If we then go on to 6, you will see the
force of that because 6 reflects the ordinary position, that is
to say, that the purchase would not ordinarily occur and negotiations
would not ordinarily occur in earnest until the Promoters have
actually taken possession of the premises for the purpose of the
works, that is to say, in June 2009, so what we have said in 3
to 5 is that in this case we will do better and we will set the
process of negotiation in motion after Royal Assent and once funding
has been settled and we have indicated in 3 that we accept in
principle that the net loss of rent from June of this year when
Lazard's lease falls in will be a recoverable head of compensation.
As your Lordship will know, it would fall within the embrace of
disturbance compensation under the current state of the law which
was established about ten years ago in a case involving Hong Kong
called Shung Fung v Director of Buildings and Lands, so
again there is no issue. Those commitments, as far as they go,
are also accepted by the Petitioner. That is the position.
6555. What are we then left with? What we are
left with, and I think this is the issue that my learned friend
is going to place before the Committee today, is the question
of blight. My understanding of the Petitioner's case, and obviously
I will now hand over to Mr Hicks, is that they are seeking a further
commitment from the Promoters effectively to purchase their premises
in advance of funding and Royal Assent or, alternatively, in advance
of those events, to commit ourselves effectively to indemnify
them for the loss of rent that they say they will suffer from
June 2008 onwards, so it is effectively blight. My Lord, I will
make my submissions about that—I think this will be the
proper way to do it—once you have heard what Mr Hicks has
to say.
6556. CHAIRMAN: Thank you, Mr Mould.
Mr Hicks?
6557. MR HICKS: My Lords, I can be brief,
I think, and I hope it will not be necessary to call evidence
because I do not believe there is any significant issue on the
facts. My Lords, as you have heard, the property is mixed office
and retail and it is the office that concerns us here primarily.
My clients, the Petitioner, purchased the leasehold interest in
the property and actually finally completed in early 2004 before
the Bill was announced and deposited. The property effectively
had the benefit of two planning consents for redevelopment when
they purchased it, one as one building and one as two buildings.
As you have heard, safeguarding provisions for Crossrail had been
in place for some time, since the very early 1990s, but consultation
during the planning process had led to the redevelopment proposals
incorporating features to accommodate Crossrail, or so it was
thought.
6558. CHAIRMAN: Are those planning permissions
still extant?
6559. MR HICKS: It is a little bit more
complicated than that, my Lord, because there were Section 106s
to be completed and there was no problem with them, but they had
not been completed, so that is why I said that it effectively
had the benefit of two planning consents. In addition to the planning
consents, Souzel also had the benefit of rental income of about
£6 million per annum—the precise figures I do not think
matter, my Lords—from the property, the major element being
about £5.4 million per year from the lease of the office
element to Lazard's who, although they were not in occupation,
were still having to pay the rent. That lease runs out in June
this year, but, when the Crossrail Bill was introduced in Parliament
in early 2005, it was anticipated that agreement would be reached
so as to enable redevelopment to proceed, and that remained the
position during the passage of the Bill through the first House.
1 Crossrail Ref: P44, Souzel Properties Ltd, Petition
No. 104-Aerial view (LONDLB-104_04-001) Back
2
Crossrail Ref: P44, Souzel Properties Ltd, Petition No. 104 (LONDLB-104_04-002) Back
3
Crossrail Ref: P45, Souzel-21 Moorfields-Commitments given to
the Petitioner (SCN-20080320-002) Back
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