England and Wales Lands Tribunal

[2000] EWLands ACQ_111_1999 (15 June 2000)

ACQ/111/1999

LANDS TRIBUNAL ACT 1949

COMPENSATION - purchase notice - preliminary issue - former country railway station - buildings demolished - whether planning permission can be assumed for building of 1 house - whether hope value for up to 4 houses - planning permission to be assumed for rebuilding of previous buildings on same sites, without merger - hope value not an inevitable consequence of assumed planning permission: a question of fact - assumed planning permission unlikely to add to value of the land - Land Compensation Act 1961, ss 14(1) & (3) and 15(3)(a); Town & Country Planning Act 1990, Schedule 3, para 1 and Schedule 10

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN OLD ENGLAND PROPERTIES LIMITED Claimants

and

TELFORD & WREKIN COUNCIL Acquiring

Authority

Re: Former station house, buildings and

land, Walcot, near Wellington, Shropshire

Before: P H Clarke Esq FRICS

Hearing of a preliminary issue at 48/49 Chancery Lane, London WC2A 1JR

on 3 May 2000

The following cases are referred to in this decision:

Sorrell v Maidstone Rural District Council (1961) 13 P&CR 57

Trustees of Walton-on-Thames Charities v Walton and Weybridge Urban District Council (1969) 20 P&CR 250, LT; (1970) 21 P&CR 411, CA

British Railways Board v Waveney District Council (1983) 23 RVR 70

City of London Real Property Co Ltd v War Damage Commission [1956] 1 Ch 607

Ivens & Sons (Timber Merchants) Ltd v Daventry District Council (1976) 31 P&CR 480

East End Dwellings Co Ltd v Finsbury Borough Council [1952] AC 109

Colley v Canterbury City Council (No.2) [1993] 1 PLR 142

Halliwell & Halliwell v Skelmersdale Development Corporation (1965) 16 P&CR 305

Camrose v Basingstoke Corporation [1966] 1 WLR 1100

Bromilow v Greater Manchester Council (1975) 31 P&CR 398, CA; (1974) 29 P&CR 517, LT

Charles Mynors of counsel, instructed by Jones and Granville surveyors of London W1, for the claimants.

James Strachan of counsel, instructed by Head of Legal and Administrative Services, Telford and Wrekin Council, for the acquiring authority


 


DECISION OF THE LANDS TRIBUNAL

1. This is a decision on a preliminary issue in a reference to determine the compensation payable for the acquisition under a purchase notice of part of a former railway station.
2. Charles Mynors of counsel appeared for the claimants. James Strachan of counsel appeared for the acquiring authority ("the Council").

FACTS

3. The parties have prepared a brief statement of agreed facts. Other facts emerged as common ground during the hearing or have been taken from expert reports lodged prior to the hearing. I find the following facts.
4. The reference land is in the hamlet of Walcot, 10 miles east of Shrewsbury and four miles west of Wellington in Shropshire. The land was formerly part of Walcot railway station.
5. In April 1848 the Shrewsbury and Birmingham Railway Company purchased a plot of land now comprised in the reference land. Walcot Station was built on this land and opened in 1849. It closed in September 1964. The buildings were demolished after that date. The line remains open as the main railway line from London and Wolverhampton to Shrewsbury. The claimants have described the former station as "a rural station, ... two platforms with the main buildings including a station house on the north side with the signal box being positioned later to the south." An Ordnance Survey map of 1902 shows the station as an L-shaped plot situated to the north of the line with two oblong station buildings alongside the tracks and two small buildings to the north and to the east. A signal box is to east and to the south of the line. An Ordnance Survey map of 1966 shows a larger oblong plot as station land. It would appear that additional land was purchased in 1912 and now forms part of the reference land. The main station buildings are still immediately to the north of the line and there are four other buildings on the land. The land is labelled "Station House" and "Station (Disused)."
6. The reference land now comprises an oblong site aligned east to west with a small parcel excluded in the south-western corner. The site area is 2,703 square metres. The land is bounded on the north by the B4394 road and a lay-by, on the west by a minor road, on the east by arable land and on the south by the Wolverhampton to Shrewsbury railway line and land owned by Railtrack. The reference land is covered with self setting and larger mature trees and overgrown with brambles, ivy and ferns. There is brickwork and other rubble on the site. It is not possible to discern the line of any foundations of buildings formerly on the land.
7. The location and areas of the former buildings on the reference land are material to the determination of the preliminary issue and the amount of compensation. Unfortunately the parties have not reached agreement on these matters. There is, however, common ground which enables me to make sufficient findings of fact for the determination of the preliminary issue. I record the position as follows.
8. Mr Mynors, for the claimants, attached to his written submissions a sketch plan of the reference land. This shows the boundary of the part of the main station building on the reference land (which I will refer to as "the station house") as a thin L-shaped sliver of land in the south-western corner. The station house was residential on the ground floor with station offices and other railway uses on the first floor. It comprised two buildings close together which Mr Mynors has treated as one building. To the north-east of the station house and close to it was an oblong building which Mr Mynors referred to as a single storey outbuilding ancillary to the station house. To the north-east were two connected outbuildings, also described as ancillary to the station house. On the northern and southern boundaries of the reference land respectively were two small buildings. I will refer to all these buildings as "the outbuildings". Mr Mynors gave the approximate floor areas of these buildings as 77.01 square metres residential and 72.50 square metres non-residential. The station house is only partly on the reference land and the above floor areas relate only to that part on the land. The outbuildings are wholly on the reference land. These floors areas are not agreed and no evidence was put forward in support Following the closure of the station, said Mr Mynors, the residential part of the station house continued in use for that purpose and the part formerly used for railway purposes appears to have been left vacant. Mr Mynors treated the use of the outbuildings as ancillary to the station house.
9. For the Council's position I rely on an expert report prepared by David Joseph Taggart FRICS. This includes an enlarged copy of the 1966 Ordnance Survey map and his calculations of the site areas of the buildings on the reference land as at 1 July 1948. He treated the station house as two buildings. The part in the south-western corner of the reference land comprised a thin sliver of land 1.25 metres by 12 metres (15 square metres). The ground floor was residential. To the east and close to the above building was another part of the station house comprising an oblong sliver of land 8 metres by 1 metre (8 square metres), the ground floor of which was residential. There were two outbuildings to the east, wholly on the reference land, used for storage or stabling animals. Mr Taggart does not refer to Mr Mynors' other outbuildings although they are shown on his map.
10. Having regard to the parties' positions outlined above, I make the following findings for the purposes of this decision:-

(1) The station house comprised two buildings in the south-western corner of the reference land, sited partly on that land and partly on other land not in the ownership of the claimants.

(2) The parts of the station house on the reference land were on an L-shaped thin sliver of land in the south-western corner and another, but not contiguous, thin oblong sliver of land to the east.

(3) The ground floor of the station house was formerly in residential use; the first floor was in non-residential use, probably used as a ticket office and other railway purposes.

(4) There were two connected outbuildings separate from the station house on the eastern part of the site.

(5) There may have been an outbuilding to the north-east of the station house.

(6) There may have been two small outbuildings situated on the northern and southern boundaries of the reference land.

(7) The uses of the outbuilding have not been agreed.

(8) The site areas and floor areas of the station house and outbuildings have not been agreed.

11. Three points arise from these findings which are material to the preliminary issue. The first is that only small parts of the station house were on the reference land, on two thin slivers of land in the south-western corner. The second point is that only the ground floor of the station house was used for residential purposes. The third point is that the outbuildings and station house were not contiguous but on different locations on the land. The use of these outbuildings has not been agreed.
12. On 13 August 1997 the claimants purchased the freehold of the reference land from British Railways Board, subject to indemnities arising out of accommodation works obligations on the Board and a demarcation agreement dated 24 January 1996 between the Board and Railtrack Plc.
13. On 5 June 1998 the claimants applied for outline planning permission for residential development on the reference land. This was refused by the Council on 18 September 1998.
14. On 12 October 1998 the claimants served a purchase notice on the Council under section 137 of the Town and Country Planning Act 1990 ("the 1990 Act"). This was rejected by the Council but confirmed by the Secretary of State for the Environment, Transport and the Regions on 26 August 1999. The Council have not taken possession of the land.
15. On 9 September 1999 the claimants referred their claim for compensation for determination by this Tribunal.
16. On 27 April 2000 the Council applied for the substantive hearing listed for 3 and 4 May to be a preliminary hearing to determine the correct basis of compensation. No objection was made by the claimants and an order to this effect was made on 28 April.

ISSUES

17. The preliminary issue for my determination is the correct basis of valuation under section 15(3)(a) of the Land Compensation Act 1961 ("the 1961 Act"), which allows the assumption to be made that planning permission would be granted for development under paragraph 1 of Schedule 3 to the 1990 Act (rebuilding). Three questions emerged at the hearing. First, whether the rebuilding allowed under paragraph 1 of Schedule 3 must take place on the same sites as the original buildings? Second, whether the floor areas of individual buildings may be merged to allow the assumed rebuilding of a larger building? Third, whether the assumed planning permission would create hope value for a greater density of development, as a matter of law or as a matter of fact?
18. It is the contention of the claimants that the assumed planning permission allows rebuilding as one large building and is for the erection of one house or, if hope value may be taken into account, for up to four houses. It is the contention of the Council that the original buildings on the reference land must be assumed to be rebuilt on their original sites, without merger, for their former uses.

CLAIMANTS' CASE

19. Mr Mynors said that the correct basis of valuation is open market value under section 5(2) of the 1961 Act, subject to whatever constraints and with whatever potential may be perceived by a prospective purchaser. This may be seen as hope value (see Sorrell v Maidstone Rural District Council at page 67) or may be implied in the valuation of any buildings to be erected on the land.
20. The 1961 Act sets out the planning position. Under section 14(1) and 15(3) planning permission may be assumed for rebuilding under paragraph 1 of Schedule 3 to the 1990 Act, subject to the constraints on size under paragraph 10(2) of that Schedule and in Schedule 10. A "building" includes part of a building (section 336 of the 1990 Act).
21. The former buildings or parts of buildings on the reference land have been demolished but this is no bar to basing the compensation on their previous existence (see Sorrell, Trustees of Walton-on-Thames Charities v Walton and Weybridge Urban District Council and British Railways Board v Waveney District Council). The floor area of the station house and two of the outbuildings was 1,717 square feet or 159.51 square metres, wholly on the reference land. The correct approach to the determination of the buildings for which planning permission can be assumed is to increase these areas by ten per cent. The replacement building must not be a wholly different building (City of London Real Property Co Ltd v War Damage Commission) and it must be capable of being rebuilt on the site as it now is (Ivens and Sons (Timber Merchants) Ltd v Daventry District Council). But there is no compulsion to create a slavish copy of the original building. Improvements and other alterations are allowed (Sorrell at page 66). Enlargement must necessarily envisage a different siting for at least some of the walls of the replacement building (Sorrell, Walton-on-Thames and Waveney).
22. The reference land should be valued as a site for a single dwelling which could be located sensibly in the middle of the land or, alternatively, up against the southern boundary with the railway. This is the starting point for the assessment of value. The last use of the outbuildings was ancillary to the residential use of part of the station house. In planning terms the dwelling and outbuildings could be taken together, so that the floor area of the rebuilt dwelling would be 147 square metres (1,590 square feet) plus one-tenth, 162 square metres (1,799 square feet). This approach envisages the merger of the original separate buildings to allow the erection of one large building.
23. Mr Mynors accepted that the overall use of the reference land in July 1948 was as a railway station but said that the majority of the buildings were in residential use following closure of the station. He accepted that the assumed rebuilding must be for the purposes of the previous or last use of the original buildings.
24. Finally, he said it is necessary to consider the implications of the assumed planning permission. The inevitable consequence must be taken into account (East End Dwellings Co Ltd v Finsbury Borough Council at page 132). The assumed planning permission for one house arises from a situation which differs from the real world. In this hypothetical world it is difficult to imagine that planning permission would be granted for only one house in one corner of the reference land. The inevitable consequence of the planning policy which led to the grant of planning permission for one house is that permission would be granted for up to four houses. This permission cannot be assumed under the 1961 Act but inevitably follows from the 1961 Act assumptions. Alternatively, the reference land would have hope value in the hypothetical world over and above value as a plot for a single house.

COUNCIL'S CASE

25. Mr Strachan referred to the relevant statutory provisions, particularly section 15(3) of the 1961 Act, and said that assumed planning permission is derived solely from statute. The provisions are self-contained. The normal principles of statutory construction apply. Schedule 3 to the 1990 Act must be given its ordinary meaning unless there is ambiguity (Colley v Canterbury City Council at pages 147H-150B). It is unnecessary to import other non-statutory planning concepts, such as the planning unit, or a hypothetical planning policy.
26. Section 15(3)(a) of the 1961 Act and Schedule 3 to the 1990 Act allow rebuilding of a building which was in existence on the reference land on 1 July 1948. A "building" includes any part of a building. The extent of rebuilding is governed by Schedules 3 and 10 to the 1990 Act. Under Schedule 3, where the original building was a dwellinghouse, the rebuilt size must not be exceeded by ten per cent or 1,750 cubic feet. In any other case the tolerance is ten per cent. Schedule 10 provides a more general constraint: the gross floor space in the new building must not exceed by more than ten per cent the space in the original building used for a particular purpose.
27. Mr Strachan advanced five propositions regarding rebuilding on the reference land. First, that part of the station house which was originally on the land can be rebuilt on that land. This is now accepted by the claimants. Second, although on rebuilding it may not be necessary to assume slavish adherence to the design and materials of the former building, there can be no departure from the site of that building, subject only to permitted enlargements (Sorrell at pages 64 and 66). Third, there is no entitlement to rebuild as a completely different building (City of London Real Property Co Ltd v War Damage Commission). The station house must be assumed to be rebuilt on a thin sliver of land in the corner of the reference land. Fourth, there is no entitlement to merge the original buildings into one large building which could rebuilt on a different part of the land. Fifth, although hope value may be taken into account when determining market value, this is a matter for evidence. It cannot be assumed as a matter of law that an assumed planning permission for very limited rebuilding would automatically give the land hope value for additional development.
28. An assumed planning permission for rebuilding will only be relevant if it is capable of implementation (Ivens). The planning permission will not of itself add value to a plot of land: the permitted development must be feasible in the circumstances and there must be demand for the land for that development (Halliwell & Halliwell v Skelmersdale Development Corporation,Camrose v Basingstoke Corporation and Bromilow v Greater Manchester Council). The value of a planning permission must be assessed having regard to any difficulties and disadvantages in respect of the land (Waveney).
29. The valuation of the reference land involves the following steps:-

(i) a determination of those buildings or parts of buildings which were on the land in July 1948;

(ii) the assumption that there is planning permission for their reconstruction (without being slavish copies);

(iii) the assumption that those parts of the buildings on the land could be enlarged by ten per cent on rebuilding;

(iv) the assumption that rebuilding is only permitted on the sites of the former buildings (subjected to permitted enlargements);

(v) an assessment as to whether the assumed planning permission is capable of implementation (having regard to siting, location, building regulations, etc);

(vi) an assessment of the value (if any) which the assumed planning permission adds to the land, having regard to such matters as demand, feasibility, costs, site clearance, etc.

DECISION

30. I do not consider it necessary to inspect the reference land for the purposes of the preliminary issue. I look first at the relevant statutory provisions.
31. The acquisition in this reference arises out of a purchase notice confirmed by the Secretary of State for the Environment, Transport and the Regions under section 143(1) of the 1990 Act. The Council are deemed to be authorised to acquire compulsorily the claimants' freehold interest in the reference land in accordance with Part IX of the 1990 Act (acquisition for planning purposes) and to have served notice to treat on 26 August 1999. Compensation is to be determined as if this acquisition were a normal compulsory purchase.
32. Section 7 of the Compulsory Purchase Act 1965 ("the 1965 Act"), although in procedural terms, gives an owner whose land is compulsorily acquired the right to compensation for "the value of the land to be purchased" and for damage by severance or injurious affection where part only of the land is taken. This latter head of compensation does not arise in this case. The "value of land" is defined in section 5(2) of the 1961 Act as "the amount which the land if sold in the open market by a willing seller might be expected to realise."
33. Planning permission may be relevant to value (as in this case). Section 14(1) and (3) of the 1961 Act provide as follows:-

"(1) For the purpose of assessing compensation in respect of any compulsory acquisition, such one or more of the assumptions mentioned in sections 15 and 16 of this Act as are applicable to the relevant land or any part thereof shall (subject to subsection (3A) of this section) be made in ascertaining the value of the relevant interest."

"(3) Nothing in those provisions shall be construed as requiring it to be assumed that planning permission would necessarily be refused for any development which is not development for which, in accordance with those provisions, the granting of planning permission is to be assumed."

Subsection 3(A) of section 14, referred to above, relates to certificates of appropriate alternative development and is not relevant.

34. The relevant assumption as to the grant of planning permission is contained in section 15(3)(a) of the 1961 Act (as substituted by the Planning and Compensation Act 1991 from 25 July 1991):-

"Subject to subsection (4) of this section, it shall be assumed that, in respect of the relevant land or any part of it, planning permission would be granted -

(a) subject to the condition set out in Schedule 10 to the Town and Country Planning Act 1990 for any development of a class specified in paragraph 1 of Schedule 3 to that Act;"

Subsection (4) of section 15, referred to above, does not apply. The "relevant land" means the reference land (section 39(2) of the 1961 Act).

35. In paragraph 1 of Schedule 3 to the 1990 Act subparagraph (a) is relevant and provides for

"1. The carrying out of -

(a) the rebuilding, as often as occasion may require, of any building which was in existence on July 1, 1948, or of any building which was in existence before that date but was destroyed or demolished after January 7, 1937, including the making good of war damage sustained by any such building;

(b) ............

(c) ............

so long as the cubic content of the original building is not substantially exceeded."

The proviso regarding cubic content is amplified in paragraph 10 of Schedule 3 as follows:-

"(1) Any reference in this Schedule to the cubic content of a building shall be construed as a reference to that content as ascertained by external measurement.

(2) For the purposes of paragraph 1 the cubic content of a building is substantially increased or exceeded -

(a) in the case of dwellinghouse, if it is increased or exceeded by more than one-tenth or 1,750 cubic feet, whichever is the greater; and

(b) in any other case, if it is increased or exceeded by more than one-tenth."

The assumed planning permission under section 15(3)(a) is "subject to the condition set out in Schedule 10" to the 1990 Act. The following paragraphs of this Schedule are relevant:-

"1. Where the building to be rebuilt or altered is the original building, the amount of gross floor space in the building as rebuilt or altered which may be used for any purpose shall not exceed by more than ten per cent the amount of gross floor space which was last used for that purpose in the original building.

2. ...

3. ....

4(1) For the purposes of this Schedule gross floor space shall be ascertained by external measurement.

(2) Where different parts of a building are used for different purposes, floor space common to those purposes shall be apportioned rateably.

5. ...."

Section 336 of the 1990 Act defines a "building" as including "any structure or erection, and any part of a building, as so defined, ..."

36. The effect of these provisions is that it is to be assumed that planning permission would be granted for the rebuilding of those buildings on the reference land in existence on 1 July 1948, provided:-

(i) the cubic content of the new building is not increased or exceeded in the case of a dwellinghouse by more than one-tenth or 1,750 cubic feet, whichever is the greater, or in any other case by more than one-tenth;

(ii) the gross floor space of the new building which may be used for any purpose does not exceed by more than one-tenth the gross floor space last used for that purpose in the original building.

Three questions remain for my determination. First, whether the assumed rebuilding must take place on the site of the original building? Second, whether the cubic content and gross floor space of the individual buildings originally on the reference land may be merged to allow the rebuilding of a larger building or buildings? Third, whether the assumed planning permission would create hope value for a greater density of development, as a matter of law or as a matter of fact?

37. I can conveniently deal with the first two questions together. I find no assistance in the statutory provisions but find the answers to these questions in the cases to which I have been referred.
38. In City of London Real Property Co Ltd v War Damage Commission the issue was whether the construction of two new large buildings on the sites of 10 small war damaged properties was the making good of damage by works which included alterations or additions in order to qualify for a cost of works payment under the War Damage Act 1943. I was referred to part of the judgment of Vaisey J on page 614 where he made the observation that the new building is not the same property as before the war damage, but a wholly different property. Mr Mynors said that a replacement building must not be a wholly different building. I do not dissent from this proposition.
39. I find the next case, Sorrell v Maidstone Rural District Council, of particular assistance. This was a reference to determine the compensation payable for the acquisition of land formerly used as a hutted camp for housing purposes. In July 1948 there were 36 units of dwelling accommodation on the land, later removed except for the foundations. The statutory provisions then in force regarding assumed planning permission (contained in paragraph 1 of Schedule 3 to the Town and Country Planning Act 1947 and sections 2 and 3 of the Town and Country Planning Act 1959) did not materially differ from those in this reference. The Tribunal (RCG. Fennell FRICS) held that 36 separate dwellings could be rebuilt on the site but the rebuilding must be restricted to the sites of the former huts. He rejected the argument that the land could be regarded as a council housing site and that the new dwellings should not be tied to the old foundations with allowances for tolerated enlargements (page 64). He said (page 66):-

"... I consider the claimant entitled to compensation for being prevented from building small dwellings of lapboard, shingles or more durable materials on the sites of the former huts subject to deviation to allow for tolerated enlargements and improvements."

But, he said (page 66):-

"There is no compulsion, on rebuilding a building, to create a slavish copy of dimensions, appearance and materials, as the Schedule expressly allows for improvement or other alterations."

This decision gives support to Mr Strachan's contention that the rebuilding of the previous buildings on the reference land must take place on their original sites, without merger of the individual buildings.

40. In Trustees of the Walton-on-Thames Charity v Walton and Weybridge Urban District Council the issue was the compensation payable for the acquisition of land on which 50 pre-fabricated bungalows had been built and were in use on 1 July 1948. The claimants sought compensation on the basis that they had existing use rights for the erection of 50 dwellings, but not limited to pre-fabricated dwellings. The Tribunal (Sir Michael Rowe QC) agreed (page 260):-

"... I determine that the proper basis for compensation should be that planning permission must be assumed for the development of this land by the erection of fifty dwellings with no conditions, qualifications, or limitations other than those contained in the Third Schedule as to size and, of course, compliance with the by-laws."

Mr Mynors referred to this part of the decision but I derive no assistance regarding the siting and merger of new buildings. These matters were not in issue in Walton. This case proceeded to the Court of Appeal. I was not referred to this decision. I have looked at it but do not find it of assistance.

41. The decision of this Tribunal in Ivens and Sons (Timber Merchants) Ltd v Daventry District Council concerned the compensation payable for the acquisition of land occupied by a house until 1964 and subsequently altered by the dumping of soil and factory waste and the closure of access. The claimants' valuation was based on assumed planning permission under section 15(3) of the 1961 Act for the rebuilding of the former house. The Tribunal (Douglas Frank QC) held that it was a question of fact and degree in each case whether a building was a rebuilding of a pre-existing building or whether it was a new building. It could not be said that a planning permission to build a house on the acquired land, as it was before filling, would authorise the building of a similar house on the site in its existing condition. The notional right to rebuild was incapable of being exercised and was therefore valueless. The President referred to Practice Notes issued by the War Damage Commission, approved in the City of London case, and asked himself the question (page 483):-

"... looking at a notional new building of the same design as the demolished house on the site as it exists today and in the same vertical plane as the demolished house, could it reasonably be said that the new house is the same property as before although rebuilt, or is it an entirely new house."

42. This decision supports the decision in Sorrell that rebuilding must take place on the site of the original building: any rebuilding of merged floor space on a different part of the reference land would clearly be the erection of a new building and not rebuilding of the original buildings. It also confirms that a notional planning permission may be incapable of implementation and therefore valueless.
43. I gain no assistance from British Railways Board v Waveney District Council. This concerned the value of a triangular plot of land fronting a railway line formerly occupied by a railway crossing keeper's cottage and outbuildings. It was common ground that the land should be valued as a building plot for one dwelling. Section 15(3) of the 1961 Act applied and there was a right attached to the land to rebuild the demolished cottage plus ten per cent. This decision was solely concerned with value: the basis of valuation was not in dispute.
44. The above decisions establish the following propositions:-

(1) The rebuilding envisaged under paragraph 1(a) of Schedule 3 to the 1990 Act must constitute the rebuilding of the original building and not the erection of a new building; this is a question of fact and degree in each case (City of London and Ivens).

(2) Rebuilding must take place on the site of the foundations of the original building, subject only to any minor deviations necessary to allow the permitted increase in size (Sorrell and Ivens).

(3) There is no compulsion on rebuilding to create a slavish copy of dimensions, appearance and materials of the original building (Sorrell).

(4) A notional planning permission under section 15(3) of the 1961 Act may be incapable of implementation and therefore valueless (Ivens).

45. Applying these propositions to the facts in this case I find that the planning permission assumed under section 15(3) of the 1961 Act would allow rebuilding as follows:-

(1) The rebuilding of the part of the station house solely within the boundaries of the reference land, as two buildings, on two thin slivers of land in the south-western corner of the reference land, such rebuilding to take place on the sites of the original foundations within the reference land (subject only to minor deviations to allow the permitted increase in size).

(2) On the rebuilding of the station house the cubic content of the ground floor shall not be exceeded by one-tenth of the cubic content of the ground floor formerly in the part of the station house on the reference land or such proportion of 1,750 cubic feet as the ground floor of the original station house on the reference land bears to the total cubic content of the ground floor of the station house (on the reference land and other land).

(3) On the rebuilding of the station house the cubic content of the first floor shall not be exceeded by one-tenth of the cubic content of the first floor formerly in the part of the station house on the reference land.

(4) In the rebuilt station house on the reference land the ground floor may be used for residential purposes, provided the gross floor space is not in excess of 110 per cent of the gross floor space used for that purpose in the original building on the reference land.

(5) In the rebuilt station house on the reference land the first floor may be used for the non-residential purpose of the last use for this purpose in the original building, provided the gross floor space is not in excess of 110 per cent of the gross floor space last used for that purpose in the original building on the reference land.

(6) The rebuilding of the outbuildings which formerly existed on the reference land on the sites of the foundations of the original outbuildings (subject only to minor deviations to allow the permitted increase in size).

(7) On the rebuilding of each outbuilding the cubic content shall not be exceeded by one-tenth or 1,750 cubic feet, whichever is the greater, if the last use was as a dwellinghouse, or one-tenth in any other case.

(8) On the rebuilding of each outbuilding the gross floor space in the rebuilt outbuilding may be used for the last use for this purpose in the original building, provided the gross floor space is not in excess of 110 per cent of the gross floor space last used for that purpose in the original outbuilding.

46. It is unfortunate that the parties have been unable to agree the sizes, locations and uses of the original buildings on the reference land, thus making it necessary to formulate the complicated wording for the assumed planning permission set out above. In summary, the assumed permission permits the rebuilding of a small part of the station house in two parts in the south-western corner of the reference land, with residential use on the ground floor and non-residential use (probably railway ticket office and other railway uses) on the first floor, and the rebuilding of the outbuildings in various scattered locations on the reference land, for use for the last use (probably storage or other railway use). The assumed planning permission does not allow the merger of buildings and uses to permit the erection of one or more buildings on more central or convenient locations on the land nor does it permit the erection of one dwellinghouse on the land. It is a matter for evidence whether this assumed and very limited planning permission adds to the value of the land.
47. I now consider my third question: does the assumed planning permission set out above create hope value for a greater density of development, as a matter of law or as a matter of fact?
48. Mr Mynors' argument was that, if it can be assumed that planning permission would be granted for one house on the reference land, this differs from the position in the real world and it is an inevitable consequence of this hypothetical position that planning permission would be granted for up to four houses. He relied on East End Dwellings Co Ltd v Finsbury Borough Council.
49. This case concerned the compulsory purchase of a former block of dwellings let at rents controlled under the Rent Acts and demolished by enemy action in 1944. The War Damage Commission directed that the appropriate compensation for the damage under the War Damage Act 1943 was a cost of works payment. No rebuilding was carried out by the owners and the land was compulsorily acquired. Under section 53(1) of the Town and Country Planning Act 1947 compensation for the acquisition of war damaged property where the damage had not been made good and a cost of works payment was appropriate was the value as if the damage had been made good before notice to treat. The House of Lords held that the new building to be assumed for compensation purposes would have had a different identity and would not have been subject to the Rent Acts. Lord Asquith said (page 132):-

"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. ... The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."

Mr Mynors relied on this passage from Lord Asquith's speech. He said that the inevitable corollary of the assumed planning permission for one house on the reference land is an assumed planning permission for up to four houses. The imagination should not boggle at this state of affairs.

50. I cannot accept this argument for two reasons. First, the assumed planning permission for the reference land is not for one house but is a permission for the rebuilding of part of a house plus other uses on thin slivers of land and for the rebuilding of scattered outbuildings, all on land which was formerly a railway station. Second, even if the assumed planning permission is for one house, it is not an inevitable consequence or corollary that planning permission would be granted for up to four houses. Mr Strachan said that hope value arising out of the assumed permission is inadmissible in law. I do not accept this argument. Section 14(3) of the 1961 Act provides that planning permission is not necessarily to be assumed to be refused for any development which is not development for which planning permission is to be assumed under sections 15 and 16 of the Act. The effect of the assumed planning permission on value is a question of fact and opinion, to be determined on the evidence. I reject Mr Mynors' submission that I must assume a further planning permission for more houses. Whether that assumption should be made depends on evidence, but I would state here, to assist the parties to reach agreement on value, that I would need clear and persuasive evidence before I could accept that the restricted planning permission I have found would be granted on the reference land adds anything to the value of the land, either on its own or as the cause of the possible grant of planning permission for up to four houses. In my view, a hypothetical purchaser of the reference land would look at the restricted planning permission to be assumed under section 15(3)(a) of the 1961 Act and would probably conclude that he should not attribute any value to it. However, this is a matter for evidence and I make no decision on it. I was referred to several cases on the effect of planning permission on value. A planning permission may have no value because it cannot be implemented (Ivens). It does not in itself add value to the land (Halliwell): it is planning permission coupled with demand which increases value (Camrose and Bromilow). I agree with these authorities. If the claimants are to recover more than the existing use value of the reference land they must show that the restricted planning permission which I have found to be assumed would produce a demand for the land which would be reflected in a higher value, either directly based on the assumed planning permission or as consequential hope value based on the possible grant of a more advantageous planning permission.
51. I would add that, in my view, the claimants' basis of compensation is misconceived. Although the planning permission under section 15(3)(a) of the 1961 Act is an assumed permission it must not be wholly divorced from reality as would be the case if I accepted Mr Mynors' submission that this assumed permission should be for the building of up to four houses. The reality is that the reference land was formerly part of a country railway station: the small element of residential use was part of the overall railway use. This is common ground. When the station closed the ground floor of the station house may have continued in residential occupation by a railway employee until demolition. The part of this building on the reference land was insignificant. It was never the position that there was a house on the reference land, the rebuilding of which can be assumed under section 15(3)(a) of the 1961 Act. As Mr Strachan pointed out in his review of the history and reasons for the preservation of what are usually known as third schedule rights, this particular planning assumption was originally intended to compensate an owner for the loss of his existing use right to rebuild what was originally on the land and therefore part of that existing use. The purpose of section 15(3)(a) is not to allow an owner to assume a right to carry out development unrelated to that existing use, as in this case to assume a planning permission for the building of one to four houses in place of a railway station. Mr Strachan also drew attention to the anomalous position which would arise if I find in the claimants' favour. The Council are required to acquire the reference land under a purchase notice because the land has become incapable of reasonably beneficial use in its existing state and cannot be rendered capable of reasonably beneficial use by the carrying out of development for which planning permission has been or would be granted (section 137 of the 1990 Act). This suggests that the land has little value. On the other hand the claimants seek compensation on the basis of a building site for one to four houses. I agree with Mr Strachan that this is anomalous. I would hesitate to perpetuate this anomaly unless forced to do so. Fortunately, I am able to arrive at a determination of this preliminary issue which produces a common sense answer by the application of the relevant statutory provisions to the facts.
52. My determination of the preliminary issue is set out in paragraphs 45 and 46 above with regard to the content of the planning permission to be assumed under section 15(3)(a) of the 1961 Act and, with regard to the issue of hope value arising out of that assumed planning permission, in paragraph 50 above.
53. I will stay the proceedings in this reference for two months to allow the parties to negotiate a settlement based on this decision. If agreement has not been notified to the Tribunal by the end of this period I will issue directions for revised expert evidence and a further hearing.
54. I heard submissions on costs. Both counsel agreed that I should make an award of costs in respect of the preliminary issue and that costs should follow the event. The claimants have been unsuccessful. I order the claimants to pay the Council's costs of this preliminary issue, such costs, if not agreed, to be the subject of a detailed assessment on the standard basis by the Registrar of the Lands Tribunal in accordance with rules 44.4 and 44.7 of the Civil Procedure Rules. The procedure laid down in rule 52 of the Lands Tribunal Rules 1996 shall apply to such detailed assessment.

Dated 15 June 2000

(Signed: P H Clarke)