England and Wales Lands Tribunal

[2000] EWLands ACQ_93_1999 (03 November 2000)

ACQ/93-97/1999

LANDS TRIBUNAL ACT 1949

COMPENSATION - Compulsory purchase of land for purpose of nature reserve to compensate for loss of SSSI caused by Cardiff Bay Barrage – preliminary issues - Land Compensation Act 1961 s 5 rule (3) - Pointe Gourde rule - held land had no special suitability or adaptability for purpose - rule (3) did not apply - public purpose of acquisition must be left out of account - scheme underlying acquisition was Cardiff Bay Barrage

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN MELVILLE JOHN WATERS and Claimants

ELIZABETH LILLIAN WATERS

WILLIAM NEVILLE WATERS

HENRY DYSON PREECE and

SARAH H PREECE

ROGER WILLIAMS

STEPHEN WATERS

and

THE WELSH DEVELOPMENT AGENCY Acquiring

Authority

Re: Various plots of land at

Nash, Newport

South Wales

Before: The President

Sitting at 48/49 Chancery Lane, London WC2

on 18, 19, 20 and 21 September

The following cases are referred to in this decision:

Pointe Gourde Quarrying and Transport Company Limited v Sub Intendent of Crown Lands [1947] AC 565

Batchelor v Kent County Council (1989) 59 P & CR 357

Lambe v Secretary of State for War [1955] 2 QB 612

Laing Homes Ltd v Eastleigh Borough Council (1978) 250 EG 350

Trustees of the Nonentities Society v Kidderminster BC (1971) 22 P & CR 224

Fraser v City of Fraserville [1917] AC 187

Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426

Davy v Leeds Corporation [1964] 1 WLR 1218, [1965] 1 WLR 445

Wilson v Liverpool Corporation [1971] 1 WLR 302

Re Ossalinsky and Manchester Corporation (1883)

Rugby Joint Water Board v Foottit [1973] AC 202

In re Lucas and Chesterfield Gas and Water Board [1909] 1 KB 16

Horn v Sunderland Corporation [1941] 2 KB 26

Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111

Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302

Camrose v Basingstoke Corpn [1966] 1 WLR 1100

Myers v Milton Keynes Development Corpn [1974] 1 WLR 696

St John the Baptist Hospital v Canterbury City Council [1970] RVR 608

Birmingham City Council v Morris and Jacombs Ltd (1976) 33 P & CR 27

Bird v Wakefield District Council (1978) 37 P & CR 478

Cronin v Swansea City Council (1972) 24 P & CR 382

Bolton Metropolitan Borough Council v Tudor Properties Ltd (19 April 2000)

Sprinz v Kingston upon Hull City Council (1975) 30 P & CR 273

Pye v Kingswood Borough Council [1998] 2 EGLR

David Holgate QC and Timothy Morshead instructed by Jacklyn Dawson and Meyrick Williams, solicitors of Newport, for the claimants.

Anthony Porten QC and Adrian Trevelyan Thomas instructed by Roy J Thomas, Legal Director of the Welsh Development Agency, for the acquiring authority.


 


DECISION ON PRELIMINARY ISSUES

1. The preliminary issues which, on the application of the claimants, the Tribunal has ordered to be determined at a preliminary hearing, arise on claims for compensation by landowners at Nash, near Newport, Gwent. Their land is low-lying farmland adjacent to the Severn Estuary. The various parcels total about 225 acres. They were included, along with other land, in the Land Authority for Wales (Gwent Levels Wetlands Reserve, Newport) Compulsory Purchase Order 1997. Under that CPO the Land Authority for Wales (LAW) (whose successor is the Welsh Development Agency (WDA)) were empowered to acquire about 1,000 acres of land bordering the Severn Estuary for the purpose of disposing of it for the development and maintenance thereafter of a wetlands reserve involving the creation of saline pools, reedbeds, and managed grassland. A general vesting declaration was made on 26 January 1998, and on vesting the claimants' land was transferred to the Cardiff Bay Development Corporation (CBDC) who themselves transferred it immediately to the Countryside Council for Wales (CCW).
2. The proposal for a Gwent Levels wetland nature reserve arose from a scheme to construct a barrage across Cardiff Bay, which lies 15 km or so to the west. The permanent inundation of the bay meant the loss of an extensive area within the bay of mudflats and saltings which supported large colonies of birds, principally dunlin and redshank, and was a Site of Special Scientific Interest. The Gwent Levels nature reserve was intended to compensate for the loss of the habitats in Cardiff Bay. The land acquired from the claimants was agricultural land, but they say that the loss of the habitats in Cardiff Bay has given their land a value in excess of agricultural value because, together with the rest of the 1000 acres, it constitutes the most suitable area for the nature reserve which it was necessary to establish as a compensatory measure. The claimants say that in the circumstances their land had a ransom value and should be valued accordingly.
3. In the light of this claim, and the rejection of it by the acquiring authority, the following preliminary issues have been identified for determination:

(1) Whether or not the intended use of the land taken as a nature reserve amounts to a purpose to which that land could be applied only in pursuance of statutory powers, or which there is no market apart from the requirements of any authority possessing compulsory purchase powers.

(2) Whether the scheme underlying the acquisition is the intended use of the land taken as a nature reserve or the construction of the Cardiff Bay Barrage; and whether or not it is necessary to discount for the purposes of valuation any increase in the value of the land taken as being due to the need to acquire the land taken as a palliative measure necessary as a result of the environmental consequences of the construction of the Cardiff Bay Barrage, following Pointe Gourde Quarrying and Transport Company Limited v Sub Intendent of Crown Lands [1947] AC 565.

Issue (1) has been treated as posing the question whether rule (3) in section 5 of the Land Compensation Act 1961 applies.

The facts

4. There is a substantial factual background. The facts, derived from the relevant documentation, are as follows. On 19 November 1985 the then Secretary of State for Wales, Mr Nicholas Edwards MP, indicated his support for proposals by South Glamorgan County Council for a barrage scheme and announced a feasibility study into the construction of a barrage across the estuary of the Taff and Ely rivers. The Nature Conservancy Council (NCC) immediately identified this proposal as posing a significant environmental threat to the Taff/Ely Estuary SSSI, which had been designated in 1980 and renotified under the Wildlife and Countryside Act 1981 in 1983. The NCC indicated its strong objections to the proposed barrage. In November 1985 South Glamorgan County Council (SGCC) deposited in Parliament the South Glamorgan (Taff Crossing) Bill which sought authority to build either a bridge or barrage structure to carry a southern distributor road. The RSPB lodged a petition against the Bill on the ground that the proposal involved an unacceptable loss of nationally important bird habitat. They put forward a clause "For the Protection of Birds" that became clause 27 of the Bill. The NCC formalised its objection to the proposed development on the ground that it would cause serious damage to the SSSI. During the passage of the Bill the Secretary of State for Wales said that it might be possible to create replacement habitats by the eradication of sparttina grass from other areas in the Severn estuary and the creation of replacement mud banks. The Government, he said, was studying such suggestions. The Bill was never enacted.
5. On 5 December 1986 the Secretary of State for Wales announced his plans to establish a Cardiff Bay Development Corporation, which would have the task of creating the Cardiff Bay Barrage; and on 6 January 1987 he laid before Parliament "The Cardiff Bay Development Corporation (Area and Constitution) Order 1987" (SI 1987 no 646) made under sections 134 and 135 of the Local Government, Planning and Land Act 1980. Article 3 of the Order designated Cardiff Bay (as shown on a plan forming part of the Order) as an urban development area, and by article 4 the Cardiff Bay Development Corporation was established as an urban development corporation for the purposes of regenerating the development area. The Order came into effect on 3 April 1987.
6. On 16 January 1987 the RSPB made a formal complaint to the European Commission (EC) that the UK government's decision to develop a Cardiff Bay Barrage would result in breaches of Articles 2,3 and 4 of EC Directive 79/409 on the Conservation of Wild Birds. On 11 May 1987 Mr William Waldegrave MP, Parliamentary Under-Secretary of State for the Environment, said in answer to a parliamentary question that the Severn Estuary (including the Cardiff Bay area) had been designated as a Special Protection Area (SPA) under the European Birds Directive. (In fact it was only a proposed SPA at that stage.)
7. On 27 November 1987 the Cardiff Bay Barrage Bill was deposited in Parliament by South Glamorgan County Council. Clause 34 repeated the Taff Crossing Bill Clause 27 requirement that NCC was to be consulted on measures to be taken by the County Council at its own expense to diminish detriment to bird life arising from the exercise of its powers under the Bill. In January 1988 the NCC lodged a petition against the Cardiff Barrage Bill referring to the effect of the barrage on the existing nature conservation status of the SSSI with its regionally and nationally important bird populations. Environmental studies carried out on behalf of CBDC identified shore and land sites for alternative habitat creation, in particular lagoon sites on land beyond the Rhymney Estuary immediately to the east of Cardiff. In May 1988 CBDC resolved that alternative mudflats should be provided on one of two favoured sites at a cost of around £5m, and it advised the Welsh Office of its intention to progress a single lagoon site. The Bill promoted by South Glamorgan County Council was abandoned, and a second Cardiff Bay Barrage Bill, jointly promoted by South Glamorgan County Council and Cardiff Bay Development Corporation, was deposited in the House of Lords on 25 November 1988. It included provisions to authorise the Council and the CBDC to construct a lagoon at Wentlooge Levels to the east of Cardiff. The Council and/or CBDC were empowered to acquire land and to construct the lagoon, and CBDC were given specific powers to manage the lagoon.
8. On 6 February 1989 NCC deposited a petition against the Bill in the House of Lords on the grounds that the proposals were contrary to the Wildlife and Countryside Act 1981, that the destruction of an SSSI was unacceptable and that compensation proposals were unsatisfactory. On 13 June 1989 the House of Lords Select Committee report on the Bill acknowledged that under the Bill's proposals a public authority would eliminate an entire SSSI, possibly for the first time. The Committee accepted that a balance had to be struck between ecological and economic considerations. It said that the elimination of the SSSI and the possible effect on the United Kingdom's attachment to the Ramsar Convention and the EEC Birds Directive could only be viewed with concern, but had to be weighed against the economic and other benefits which would flow from the barrage scheme. The Committee said that having considered all the evidence it recommended that the Bill should be allowed to proceed.
9. Seventy-one petitions were deposited against the second Bill in the House of Commons, amongst them petitions from the NCC and RSPB. The NCC petition described the lagoon as "token compensation for the loss of the SSSI" which might prove to be ineffective in practice. The RSPB petition stated that the lagoon provided for in the Bill would prove an inadequate substitute for inter-tidal lands permanently inundated as a consequence of constructing the barrage. On 17 April 1991 the passage through Parliament of the second Bill was adjourned. However, the Leader of the House of Commons announced the intention of the Government to sponsor a new Bill for the construction of the Barrage. The Government's intention to introduce its own Bill was repeated in a letter from the Welsh Office to the NCC's successor in Wales, the Countryside Council for Wales (CCW), dated 3 June 1991. CCW responded in a letter dated 13 June 1991 summarising its opposition to the Cardiff Bay Barrage in principle but indicating its willingness to work constructively with the Welsh Office to minimise the effect of the barrage.
10. The Cardiff Bay Barrage (No 2) Bill was introduced on 3 July 1991. It included provision empowering CBDC to construct a tidal lagoon in a coastal area at Wentlooge to constitute a natural habitat and feeding area for wading birds. On 20 August 1991 the Welsh Office wrote to CCW asking them to advise the Secretary of State for Wales on mitigation measures other than the Wentlooge lagoon but at similar cost, which could produce better value in nature conservation terms, and on 4 November 1991 CCW responded by providing a paper giving an appraisal of possible alternatives. The preferred options for compensating for the loss of the SSSI were full mitigation (ie like-for-like replacement) or partial mitigation as proposed at Wentlooge. In a letter dated 6 December 1991 the Secretary of State for Wales gave a specific assurance that the Cardiff Bay Barrage Bill would be amended during its passage through Parliament to reinstate the requirement that if the barrage were built the lagoon must also be built, and the Welsh Office would ensure that the lagoon was constructed before the impoundment of the barrage. In a letter dated 11 December 1991 CCW confirmed that as a result of the Secretary of State's assurances they would not petition against the Bill.
11. The Wentlooge lagoon proposal was opposed before the House of Commons Select Committee, and, announcing the Committee's decision on 20 February 1992, the Chairman said that they had decided that it should be taken out of the Bill because the financial consequences for the farming families who owned the land were considered too severe and the proposal itself was considered too experimental. Throughout the Commons committee stage and afterwards CBDC consistently expressed the view that it was right to pursue the Wentlooge lagoon proposal as a mitigating measure. They were concerned that if there were no such proposal there would be difficulties with the European Commission, with potentially serious repercussion should the matter be referred to the European Court of Justice.
12. On 3 March 1992 the Welsh Office wrote to the RSPB asking for clarification of a series of questions relating to compensation measures. These included an enquiry about the possibility of alternative mitigation sites on the Gwent levels. On 10 March 1992 RSPB responded to the Welsh Office by saying that the £6m proposed for Wentlooge would be better spent in re-creating coastal habitats from farmland, and they suggested that for the same amount of money an area of 1,000 acres could be purchased, endowed and managed intensively. They wished to explore long-term protection via SPA designation of all remaining inter-tidal land on the Severn Estuary and compensatory measures to provide a large extent of saline flood, freshwater and brackish marsh habitats to mitigate the loss of the SSSI. Land at Goldcliff was mentioned as a potentially suitable component of an overall package. As a practical measure RSPB suggested that the Welsh Office should instruct local agents to carry out a land search. They later wrote to CCW saying that what was needed was a "continuous block of land of circa 1000 acres which is low lying and which has frontage to the sea wall." The site must be large, free from disturbance and adjacent to the estuary. On 15 April 1992 the Welsh Office instructed local agents, Rennies, to look for a site. They were told to provide a report as to the feasibility of acquiring an area, or areas, of land up to a maximum of 1000 acres within an area of search that included a substantial part of the north side of the Severn estuary. The land was required to create a bird reserve as replacement feeding and breeding grounds following completion of the Cardiff Bay Barrage, and acquisition was dependent on the Bill becoming law. The letter of instruction stated: "we should be seeking to acquire by agreement, although any substantial departure from normal CPO compensation levels may cause problems." The intention of the Welsh Office was that the land should be acquired by LAW. On 7 May 1992 the Welsh Office wrote to LAW inviting them to attend a meeting on 15 May 1992. The letter indicated that LAW's role would be to pick up negotiations once the land agents had made their initial reports, thereby enabling LAW's compulsory purchase powers to be held in reserve for use if necessary. The letter also indicated the Welsh Office's current expectation that the long term ownership and management of the site would be in the hands of the Countryside Council for Wales.
13. Rennies considered as potentially suitable five sites from the Wentlooge levels to the west of the river Usk to the site of the second Severn crossing on the east. The five areas did not include Uskmouth or the land between Uskmouth and Goldcliff. Rennies' conclusion was that a site of 650 acres to the south and west of Redwick represented the best option for further progress. At its nearest point this area is about 2 km to the east of the site eventually chosen for the reserve. Following the work by Rennies, a firm of environmental and engineering consultants, Mason Pittendrigh, were instructed jointly by LAW and CBDC to advise on the suitability of the alternative sites. In February 1993 Mason Pittendrigh produced the results of their feasibility study, and, following this, Redwick was selected as the preferred option. It was to include the 650 acres identified by Rennies and an additional 90 acres of saline lagoons at Goldcliff just to the west.
14. The selection of Redwick was announced by the Welsh Office in a press release on 16 February 1993. Prior to this CCW had decided to support the Redwick proposal and had agreed to become the ultimate owner of the nature reserve, provided that certain conditions, including appropriate funding, were met. RSPB were told by the Welsh Office that £5.7m was available to cover the capital cost of the project and that £125,000 per annum was available to cover running costs. Once vested in CCW, the reserve could not be abandoned, by reason of CCW's statutory duties. In the light of this RSPB on 10 March 1993 withdrew its petition in the House of Lords against the Bill, which, on 3 November 1993, received Royal Assent as the Cardiff Bay Barrage Act 1993. It contained no provision relating to mitigation or compensatory measures for the loss of the SSSI.
15. After construction of the barrage had started, discussions on land acquisition were begun with landowners at Redwick. These revealed that it was likely that at least three farming businesses would have to be extinguished. In view of this, the Secretary of State for Wales asked the steering group that had been formed to guide the implementation of the mitigation measures (consisting of representatives of CBDC, CCW, RSPB and LAW) to investigate alternative options as a matter of urgency. Mason Pittendrigh were instructed to carry out detailed investigations into three alternative sites - the Loughor estuary, near Llanelli, Uskmouth, and Caldicot, near the new Severn bridge. The first two had not previously been considered. They extended their investigations to include the land between Uskmouth and Goldcliff. In its report of October 1995 the steering group said that a majority (RSPB dissenting) did not believe that land at Redwick should be acquired as this would involve the use of compulsory purchase order procedures to extinguish farm businesses. They recommended instead the acquisition of sites in the area between Uskmouth and Goldcliff, and, or as an alternative, the use of management agreements. On 7 November 1995 the Secretary of State for Wales, meeting with CBDC and LAW, decided that the Redwick proposal should be abandoned and a proposal should be advanced for a site comprising parts of Uskmouth, Goldcliff and the intervening land.
16. The urgency that the Secretary of State for Wales evidently felt to identify and establish the new nature reserve was substantially due to the pressure brought to bear by the European Commission. A formal complaint to the Commission about the loss of the Taff/Ely Estuary SSSI had been made by RSPB in 1987, at the time when CBDC was created by statutory instrument. In February 1992 the World Wildlife Fund for Nature made a formal complaint to the Commission about the UK government's proposal to exclude the SSSI from the proposed Severn Estuary Special Protection Area. A similar complaint was made by RSPB in November 1992. The Commission took a close interest in what was proposed by way of compensation for the loss of the SSSI, and it regarded with favour the Redwick proposal, adopted by the Welsh Office in February 1993. Commissioner Paleokrassas, replying to a complaint from a Member of the European Parliament on 15 July 1994, referred to a number of proposed measures, including the creation of "substantial areas of wetland habitat at Redcliff and Goldcrest [sic] on the shores of the Severn," and said that the UK Government would thus be fulfilling its obligations under the Habitats Directive.
17. The Commission wrote formally to the Welsh Office on 11 October 1995. It said that the Cardiff Bay Barrage and its legitimacy under the Wild Birds Directive had been of major importance to the Commission for some time. The Commission's view was that the Bay was an integral part of the Severn Estuary and should have been included in the SPA. The construction of the barrage could be acceptable under Community law for overriding socio-economic reasons, but only if the requirements as to compensatory measures were fully met. The letter went on:

"Despite the fact that the Commission was given assurances that the Welsh Office is fully committed to the provision of the compensation measures we have still to learn about the implementation of any wetland creation measures...This undue delay in deciding upon an implementing appropriate compensatory measures is a matter of serious concern to the European Commission. It is essential that the issue of the compensation measures is satisfactorily resolved in the very near future. I therefore request you to inform me as soon as possible of the course of action that is to be proposed and the time frame for this action. I look forward to hearing from you very soon."

18. The Welsh Office responded to the Commission on 7 November 1995, the day of the Secretary of State's meeting with CBDC and LAW. Its letter enclosed a copy of the steering group's report and assured the Commission that the Government remained "committed to implementing appropriate compensation/mitigation measures as soon as practicable." On 20 November 1995 the Commission wrote to the Welsh Office noting that the steering group's conclusions on alternative measures "do not represent a definite and clear package of measures as we had been led to believe would be the case arising from our meeting in Brussels last February" and emphasised the need for "a clear and definite set of compensation measures by the UK authorities." The Commission reminded the Welsh Office that, as construction of the barrage was under way and in the absence of implementation of full compensation measures, there was increasing pressure to re-open the complaint file and request a halt to work on the barrage and that the Commission had exercised considerable flexibility and good will in this matter over the past two years. The letter concluded:

"Unless there is a demonstrably clear and firm commitment to provide the compensation measures that were agreed as a basis for closing this complaint file, or at least their equivalence, we will have to review our position on the matter over the next few weeks."

19. On 27 November 1995 the Welsh Office sent the Commission an appraisal of the area between Uskmouth and Goldcliff by CCW and a paper indicating the UK Government's definitive alternative compensation proposals. The letter indicated that the UK Government "does propose to announce its firm commitment to the compensation measures at Goldcliff/Uskmouth." The accompanying reports gave a breakdown of the habitat type that could be achieved, providing a range of reedbed, wet grassland and saline proposals, and of the type of birds likely to be accommodated. On 21 December 1995 the Welsh Office confirmed to the Commission that the UK Government would announce details of the compensation measures in January, including the intention to develop the reserve to SPA status within 5 years, and would supply relevant site details and bird target figures by the end of May. The letter also reported that LAW had confirmed that it would use its compulsory purchase powers if necessary to secure the land at Uskmouth, Goldcliff and the area between.
20. On 5 January 1996 the Commission wrote to the Welsh Office stating that the Commission needed to be certain of the precise measures that the UK authorities were committed to undertake, with more details on the conservation and management measures that would be carried out, especially in the land between Uskmouth and Goldcliff. On 9 January 1996 the Commission expressed concern to LAW that management agreements (which LAW were contemplating employing) would provide insufficient control over the land; and an officer of LAW responded to the Commission on 19 January 1996 stating, "I confirm that the Land Authority will do whatever is necessary to secure the land." On 17 January 1996 the Secretary of State for Wales announced the proposal for the Gwent Levels Wetland Reserve which would be developed so that within 5 years it would qualify for Special Protection Area Status alongside the Severn Estuary.
21. On 12 February 1996 the Commission wrote to one of the parties who had lodged a formal complaint in relation to the barrage and the Wild Birds Directive. It stated its acceptance of the UK Government's view that the construction of the barrage could be justified for reasons of overriding socio-economic interest. The letter continued:

"The UK authorities have also given guarantees concerning the measures to be taken to satisfy the criteria of Article 6(4) of Council Directive 92/43/EEC. The wetland compensation and conservation measures to be taken by the UK authorities include substantial measures to create new wetland habitat and put in place additional management plans for 31 estuaries in the UK which will in particular benefit migratory wildfowl including Dunlin and Redshank. The Commission is satisfied that these measures will meet the requirements laid out in Article 6(4). A failure to implement these measures would require a review of the case with a view to determining the appropriate action in accordance with Community law.

In the light of this information, the Commission has decided not to proceed further with the complaint, and it has formally been closed."

22. A little over a year later, in a letter to LAW of 25 March 1997, the Commission referred to the fact that the complaint had been closed, and said:

"The Commission has consistently supported the provision of this Reserve since its boundary was agreed in December 1995. We note the creation of the Reserve of around 400 hectares with three distinct but integrated habitats. The Commission considers that anything less would fail to meet the requirements of the Directive.

The Commission is firmly of the opinion - as a matter of principle - that the compensation must be delivered on time and before the bay is closed off. Furthermore, the Commission considers it essential that the compensation measures give a permanent solution because the loss of Cardiff Bay is a permanent loss. In particular, in respect of the above reserve, the Commission considers it essential that the land within the Reserve is effectively managed to ensure its success and that the management arrangements (inter alia) are safeguarded by legal (statutory) instruments which contain provisions necessary to ensure the creation and maintenance of the area in the appropriate condition and for the appropriate length of time."

23. On the same day as the Secretary of State's announcement the proposal for the Gwent Levels Wetland Reserve, LAW submitted a planning application for the proposal to Newport Borough Council. On 12 July 1996 the planning application boundary was amended and a full accompanying environmental statement was submitted. On 15 January 1997 LAW made a compulsory purchase order for the whole of the site and on 16 January it gave notice of appeal to the Welsh Office against non-determination of the planning application. In its statement of reasons for making the CPO, LAW said, among other things:

"In November 1995 the Land Authority entered into an agreement with Cardiff Bay Development Corporation to seek planning permission for the proposed development and to acquire all relevant interests in the land, including if necessary, following attempts to acquire by agreement, the use of Compulsory Purchase Powers.

The proposal for the Gwent Levels Wetlands Reserve arises from the need for an agreement between the UK Government and the European Commission to provide compensatory measures for the loss occasioned by the construction of the Cardiff Bay Barrage of the site of Special Scientific interest in the Taff/Ely Estuary.

The objectives of the Gwent Levels Wetlands Reserve, were identified by the Secretary of State for Wales, as being to:-

i) sustain nationally important numbers of at least two species of waterfowl;

ii) be eligible for designation as a Special Protection Area (SPA) alongside the Severn Estuary SPA within five years;

iii) in the long term, attract internationally important numbers of certain bird species."

24. The agreement referred to had been entered into by CBDC and LAW on 6 November 1995. Under its provisions CBDC agreed to pay all LAW's costs, including in particular the costs of acquiring the land. The agreement also provided:

"Nothing in this agreement creates any partnership or agency between the parties nor shall either party represent or act in such manner as to convey that it is the partner or agent of the other."

25. A public inquiry into the CPO and the planning appeal was held over two weeks in May 1997. In a statement prepared for the inquiry dated 9 April 1997 the Welsh Office said:

"Having determined the necessity for the barrage, the Government has committed itself to the policy of providing compensatory measures for the lost habitat. It has accepted that the compensation has to be in line with the principles of Article 6(4) of the Habitats Directive. The compensatory measures include the reserve being promoted at this Inquiry. The reserve is being financed by the Cardiff Bay Development Corporation out of funds from the Government's provision of grant in aid to the Corporation."

26. The inspector recommended that planning permission should be granted and the CPO confirmed. The Secretary of State for Wales accepted the recommendations, granted planning permission and confirmed the CPO. In the decision letter the following was said in relation to the CPO:

"Welsh Office policy as set out in paragraph 8 of Circular WO 4/95 is that in general, Compulsory Purchase Orders should not be made unless there is a compelling case in the public interest and the order has been considered against this background. The Secretary of State accepts the inspector's conclusion that there is a requirement to provide compensation for the loss of the Cardiff Bay habitat and no better scheme than that proposed by the Land Authority has emerged. The Secretary of State is satisfied that the order satisfies the requirements of paragraph 8 of the Circular."

In a paragraph under the heading "The Adequacy of the Compensation Measures", the following was said:

"The Secretary of State agrees that the confirmation of a Compulsory Purchase Order should not be undertaken lightly and it is for this reason that it is his policy to ensure that there is a compelling case in the public interest. He accepts that in the case presently before him, the provision of a reserve has been proposed because of the need for compensatory measures due to the construction of Cardiff Bay Barrage and the consequent loss of the intertidal mudflats when impoundment of the water in the Bay occurs. However, regardless of the Barrage project and the adequacy of the compensatory measures when considered in the terms of the Birds and Habitats Directives, the Secretary of State is satisfied that the provision of a substantial nature reserve which will aim to qualify for SPA status and which will contribute to meeting the UK's objectives under the Bio-diversity Convention (signed at Rio de Janeiro in June 1992) is, of itself, a project that is in the public interest and, although not a primary reason for seeking the CPO, he nonetheless accepts the view of LAW that it will form a valuable conservation measure in its own right."

27. A general vesting declaration was made on 26 January 1998 and the land constituting the Gwent Level Wetlands Reserve was vested in LAW on 25 February 1998. In due course ownership of the land passed to CBDC and then from then to CCW.
28. RSPB, which the claimants suggested might have acquired the land and developed the nature reserve instead of CCW, manages a large number of nature reserves. In 1991 the total was 120 reserves, covering about 188,000 acres, about half of which it owned. Over the previous 10 years it had spent an average of almost £2 million per annum on land purchase and at that time its management costs for existing reserves amounted to some £3 million per annum. At the present time the number of reserves in 140 and they cover more than 240,000 acres. In selecting land for reserves, four main criteria are taken into account:

(a) The site must include one, or more, of the listed habitat types (which include lowland wet grasslands, intertidal flats/saltmarsh, and coastal lagoons).

(b) The habitat or habitats must have a typical community of birds or, if not, the potential for the development of such a community or communities.

(c) There must be the capability for habitat control and management permitting the maintenance and improvement of the associated bird community.

(d) It should have been declared a Site of Special Scientific Interest or, if not, the site must satisfy the criteria under which the Nature Conservancy Council declare such sites.

Statutory provisions

29. Under the section 1 of the Cardiff Bay Development Act 1993 CBDC were empowered to carry out the barrage works, and within the inland bay created by the barrage to execute any necessary consequential construction works. Under section 2 the power to execute such consequential construction works could in particular be exercised so as to develop or conserve flora or fauna. Section 4 gave CBDC the power compulsorily to acquire land for the purpose of the works authorised by section 1. As an urban development corporation CBDC had power under section 136(3) of the Local Government, Planning and Land Act 1980, for the object of securing the regeneration of its area, to acquire, hold, manage, reclaim and dispose of land and other property; and generally to do anything necessary or expedient for the purposes of the object or for purposes incidental to those purposes. Under section 142 it had power to acquire by agreement or compulsorily:

(a) land in the urban development area;

(b) land adjacent to the area which the corporation requires for purposes connected with the discharge of the corporation functions in the area;

(c) land, whether or not in or adjacent to the area, which the corporation requires for the provision of services in connection with the discharge of the corporation functions in the area."

30. Under section 103(1) of the 1980 Act LAW had the function of acquiring land in Wales which in its opinion needed to be made available for development, and of disposing of it to other persons (for development by them) at a time which was in the Authority's opinion appropriate to meet the need. Under section 102(4) LAW was required to comply with any directions the Secretary of State for Wales might give requiring it to perform its functions in particular circumstances or to perform its functions in a particular way. Section 102(5) provided that it should not be regarded as a servant or agent of the Crown. Under section 104(1) LAW had power to acquire by agreement or, on being authorised by the Secretary of State, compulsorily, "any land which, in the Authority's opinion, is suitable for development". The CPO in the present case was made under this power.

Evidence

31. Evidence for the claimants was given by Edward Martin Sheard, MA, FRICS, MRTPI, a partner in the firm of Matthews and Son, chartered surveyors. He expressed views on the applicability both of rule 3 and the rule in Pointe Gourde. On rule 3, he said that he did not consider that the intended use of the land acquired, as a wetlands nature reserve, was one to which the land could be applied only in pursuit of statutory powers. There were numerous cases of such reserves being owned or operated by organisations without compulsory purchase powers, for example Wicken Fen (National Trust), Minsmere (RSPB) and Slimbridge (Wildlife and Wetlands Trust (WWT)). He did not consider that there would be no market for the land as a wetlands nature reserve apart from the requirements of an authority possessing compulsory purchase powers. National organisations, such as RSPB, WWT and the World Wildlife Fund, had the specific objective of setting up and managing such reserves. He said that he had no knowledge of whether such organisations competed against each other financially to secure sites, but he supposed that for the most part they were inclined to co-operate and to pool their resources, rather than to bid up the selling price against each other. The fact remained, however, that there were numerous such bodies with interests in nature conservation, and in his view they constituted a market. RSPB in particular had spent substantial sums on acquisitions, and it was possible that a number of bodies could have co-operated to purchase the land, and that financial support from other agencies, public and private, would have been forthcoming.
32. On Pointe Gourde, he said that the documentation in his view established that the scheme underlying the acquisition of the claimants' land for a nature reserve was independent of that underlying the construction of the Cardiff Bay barrage. CBDC had no power or duty in relation to provision of a replacement wetlands habitat, and LAW had no power or duty in relation to the barrage scheme. After the abandonment of the Wentlooge provisions in the Bill, the requirement to provide replacement habitat was entirely due to the government's undertaking to RSPB and CCW and its obligations to international bodies, in particular the European Commission, and under the Rio de Janeiro Treaty and the Ramsar Convention. He considered there was no direct causative connection between the barrage and the reserve. The wide-ranging compensating measures which the government undertook to the Commission to provide could not form part of a scheme that included the barrage.
33. Evidence for the acquiring authority was given by Peter Williams, PhD, CCW's Area Officer for South Wales, and Nicky Goodwin-Bailey, MA, MSc, Dip TP, MRTPI, Planning Manager South with the Land Division of the Welsh Development Agency. Mr Williams said that the land was acquired for the purpose of providing a site which could be developed to provide a wetlands reserve that would meet certain conditions and criteria and would satisfy the compensation measures required by the European Commission and fulfil the undertakings given to the Commission by the UK government. The conditions and criteria were that the compensatory measures should provide a range of habitats, for example saline lagoons, freshwater lagoons, flooded grassland, wet grassland, reedbeds and experimental intertidal mudflats; that the site should be a continuous block of about 1000 acres; that it should be low lying land with frontage to the sea wall, free from disturbance arising from the development proposals, aesthetically attractive and appropriate to an estuarine setting, and with an adequate water supply; that the wetland created should support nationally important numbers of two or more water fowl; that the reserve should be capable of achieving the agreed bird targets, international standing, and SPA status alongside the Severn Estuary within 5 years. Mr Williams said that the total cost of reserve was £10.4m. He said that there was no evidence in the UK of a comparable acquisition of a 1000 acre block of agricultural land which required substantial sums to be spent on it to turn it into a nature reserve. There was in reality no market for the land for the required purpose other than on the part of LAW and CBDC backed by the Welsh Office.
34. Miss Goodwin-Bailey was responsible for dealing with planning matters for LAW, and she provided a history of the events leading to the acquisition of the claimants' land. She said that from the earliest consideration of a barrage across Cardiff Bay, some form of compensation for the negative impact of the proposal on nature conservation interests had been regarded as important. The ensuing history showed that the creation of the Cardiff Bay Barrage was clearly the scheme underlying the compulsory acquisition of the claimants' land.

Issue (1): rule (3)

35. As I have said, issue (1), although as expressed it does not refer to rule (3), is whether that rule applies on the facts of this case. Rule (3) as amended provides:

"The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from the requirements of any authority possessing compulsory purchase powers."

The rule thus has application where the reference land has a "special suitability or adaptability" for any specific purpose; and either

(a) the purpose is one to which the land could be applied only in pursuance of statutory power; or

(b) the purpose is one for which there is no market apart from the requirements of any authority possessing compulsory purchase powers.

36. Mr Porten accepted that the onus is on the acquiring authority to show on the facts that rule (3) applied. He did not contend that (b) was made out, but he submitted that the other two requirements were established by the evidence. On (a), he said that the land was acquired for the purpose of creating a wetlands nature reserve that would meet the need to provide compensatory measures for the loss of the Taff/Ely SSSI occasioned by the project for the construction of the Cardiff Bay barrage. The subject land was part of a wider area, the 1000 acres, which had a special suitability and adaptability for creating a reserve with this specific purpose. He referred to Batchelor v Kent County Council (1989) 59 P & CR 357, Lambe v Secretary of State for War [1955] 2 QB 612, Laing Homes Ltd v Eastleigh Borough Council (1978) 250 EG 350 and Trustees of the Nonentities Society v Kidderminster BC (1971) 22 P & CR 224. In Laing Homes, which concerned the acquisition of a spine road through a housing development, the Lands Tribunal (Mr E C Strathon FRICS) said that the line of the spine road:

"was considered to be the acceptable line for the purpose and I am satisfied that geographically it is the best line for its purpose."

Accordingly, he concluded, the reference land possessed the quality of special suitability for this purpose. The Kidderminster case was a rule (5) case and Mr Porten relied on it for the proposition that "purpose" in rule (3) imported the considerations of intention and obligation.

37. Mr Porten said that, on the unchallenged evidence of Mr Williams, the site satisfied the conditions and criteria that were required to be met by the European Commission, and there was no evidence that any other site was more suitable. Mr Williams had set out a long list of characteristics and attributes which, he said, the land possessed and the special suitability or adaptability of the land should, said Mr Porten, be judged in relation to these.
38. Whether the subject land has a special suitability or adaptability within the terms of rule (3) falls to be judged in relation to the purpose for which the acquiring authority acquired it – that is to say, as part of a nature reserve that would meet the need to provide compensatory measures for the loss of the Taff/Ely SSSI. That is Mr Porten's formulation, and I adopt it. The requirement of special suitability is not met by showing that the land is the most suitable land for the purpose. In Batchelor Mann LJ, having considered the Oxford English Dictionary definition of "special" said ((1989) 59 P & CR 357 at 362): "Most suitable does not correspond with specially suitable." The land must possess some exceptional character in relation to the purpose in question. I am satisfied that the subject land does not have a special suitability or adaptability in this sense. The evidence suggests strongly that there are other areas along the Severn Estuary that could have performed the same function. Three particular matters appear to me to be important. The first is that the need to provide compensatory measures was discussed and agreed as between the Welsh Office and the European Commission not in terms of specific like-for-like replacement of the Taff/Ely mudflats and saltings but in terms of a project that would provide a nature reserve of sufficient quality and importance to mitigate the loss of the SSSI. The purpose was not, as the earlier Wentlooge proposal had been, to provide a substitute habitat for the particular dunlin and redshank that would be displaced when Cardiff Bay was permanently inundated. The original suggestion for a 1000 acre new reserve was that of RSPB. The size of the area was simply a reflection of the amount of land that RSPB suggested could be bought for the amount that had been proposed to be made available for Wentlooge. The suggestion was that it could contain saline flood, freshwater and brackish marsh habitats, and would have a frontage to the Severn Estuary. This was the suggestion that was taken up by the Commission. The proposal was of a general nature.
39. Secondly, and as a reflection of the general nature of the requirements, the potential areas of land considered extended along the estuary from near Cardiff to the new Severn Bridge. The initial studies of Rennies and Mason Pittendrigh considered much of this land, but did not consider the land that was later acquired.
40. Thirdly, the Redwick option, identified by Mason Pittendrigh in February 1993, was approved by the Welsh Office, supported by CCW, and earned the endorsement of the European Commission. The abandonment of the Redwick option in 1995 was a matter of considerable concern to the Commission, and their letters to the Welsh Office of 11 October 1995 and 20 November 1995 are evidence of this.
41. Mr Porten submitted, on the basis of the evidence of Mr Williams, that the reasons for the abandonment of Redwick was, firstly, that the area fell short of the 1000 acres which had been identified and, secondly, that there were difficulties with the supply of fresh water to the scheme since the proposal, a supply form Magor some distance to the north, would have involved a considerable length of piping. While I have no doubt that size and the ready availability of fresh water were in due course seen as factors in favour of the adopted scheme, the October 1995 report of the steering group does in my view make clear that the reason for the abandonment of Redwick was the land acquisition consideration – that three farming businesses would have to be extinguished. Ownership considerations are not relevant to rule (3) (see Lambe), and I am satisfied that, in the absence of this consideration, the Redwick proposal would have been pursued. In the light of this conclusion it is clear that the subject land did not have a special suitability or adaptability for the purpose for which it was acquired, and that the first requirement of rule (3) is not made out, and therefore that rule (3) does not apply.
42. As far as the other requirements of rule (3) are concerned, Mr Porten accepted that the purpose was not one to which the land could be applied only in pursuance of statutory powers; but he contended that it was one for which there was no market apart from the requirement of any authority possessing compulsory purchase powers. Mr Holgate submitted that both the Welsh Office, which did not have compulsory purchase powers, and RSPB were potential bidders. On this, I accept Mr Porten's submissions. The purpose of the acquisition – to create a wetlands reserve to compensate for the loss of the Taff/Ely SSSI – was not one that RSPB saw, or would ever have seen, as being its function to achieve. Its concern throughout was to bring pressure to bear on the government to provide a compensatory reserve, and it would have been inconsistent with this stance to consider providing a reserve itself. As for the Welsh Office, I can see no evidence that it would ever have pursued land acquisition on its own behalf. LAW was there with the specific function of acquiring land in Wales for development, and the Secretary of State had power to give LAW directions as to the performance of its functions. I can see no reason for thinking that he would ever have acted other than by these means. Had the special suitability or adaptability requirement been made out, I would in these circumstances have held that rule (3) applied.

Issue (2): Pointe Gourde

43. The rule in Pointe Gourde, as stated by Lord MacDermott ([1947] AC 565 at 572), is this:

"…compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition."

It had earlier been stated in another Privy Council case (Fraser v City of Fraserville [1917] AC 187) in which Lord Buckmaster at 194 expressed the "principles which regulate the fixing of compensation of lands compulsorily acquired" in this way:

"…the value to be ascertained is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantages and with all its possibilities, excluding any advantage due to the carrying out of the scheme for which the property is compulsorily acquired, the question of what is the scheme being a question of fact for the arbitrator in each case."

The rule applies equally to decreases in value due to the scheme: see Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426. The claimants' contention is that the scheme underlying the acquisition is the proposal to develop a nature reserve to compensate for the loss of the Taff/Ely SSSI and not, as the acquiring authority contends, the Cardiff Bay Barrage project. As a result, they claim, the barrage project is not excluded from consideration in the assessment of compensation, and any increase in the value of the subject land arising from the pressing need of the UK Government to provide a compensatory nature reserve in consequence of the barrage project can be taken into account.

44. It is a major shortcoming of current legislation on compensation for compulsory purchase that it contains a series of apparently very specific rules with no statement of the principle or principles on which they are based. The rules contained in section 5 of the 1961 Act date from the Acquisition of Land (Assessment of Compensation) Act 1919 and those in sections 6 to 9 and Schedule 1 were originally enacted in section 9 of and Schedule 1 to the Town and Country Planning Act 1959. Expressed in specific terms, they have been subjected to detailed linguistic analysis (see, for example, on rule (3) Batchelor v Kent County Council (1989) 59 P & CR 357 at 362, to which I have referred). Obscurities that they contain have given rise to scathing judicial comment: see for instance the colourful passages in Davy v Leeds Corporation [1964] 1 WLR 1218 (a case under what is now section 6 of and Schedule 1 to the 1961 Act) at 1222 (Lord Denning MR), 1224-1225 (Harman LJ) and 1227 (Diplock LJ).
45. The Pointe Gourde rule itself, which has been applied by the courts to fill a gap which is perceived to have been left by sections 5 to 9 of the 1961 Act has sometimes been treated by practitioners as though it were a statutory provision, with excessive concentration on the precise words used in the short formulation of Lord MacDermott. In Wilson v Liverpool Corporation [1971] 1 WLR 302 at 310 A-B Widgery LJ warned against this practice of treating the word "scheme" as though it had some magic of its own. Despite this (and, I believe, because of the lack of a statutory statement of the basic principle) concentration has continued to be focussed on this one particular formulation of the rule rather than on the principle that underlies it. The claimants' case, it seems to me, is in conception an example of this approach. If, they say, the Cardiff Bay Barrage is a separate "scheme" from the nature reserve, in valuing the subject land regard can be had to the barrage and to the pressure that it has put the Government under to develop a compensatory nature reserve: all that is necessary is to establish that they are different "schemes", and the rest follows. Such an approach, which in my judgment is undoubtedly fallacious, might not, I think, have arisen if attention had been paid to the principle underlying the Pointe Gourde rule rather than the words in which the rule is expressed.
46. As expressed in Pointe Gourde the rule is, I believe, one manifestation of a single principle that underlies also rule (3) and other rules as well – notably rule (1), section 6, sections 7 and 8, and section 9. A long line of judicial pronouncements establishes the principle. In Re Ossalinsky and Manchester Corporation (1883) Grove J (quoted by Lord Hodson in Rugby Joint Water Board v Foottit [1973] AC 202 at 219) said:

"…it has been the invariable practice sanctioned by the courts that arbitrators are not to value the land with reference to the particular purpose for which it is required, particularly where the matter is under Parliamentary powers with reference to what the parties who are taking the land under compulsory powers are obliged by their necessities, or what they suppose to be their necessities, to pay for it there - that it is to be excluded from consideration, and the only way it can or ought to be put forward at all is as a possible illustration of the probability of the land being useful for such a purpose. You must not look at the particular purpose which the defendants in the case before the arbitrator are going to put land to when they take it under parliamentary powers or undertakings for any special purpose,..."

47. In In re Lucas and Chesterfield Gas and Water Board [1909] 1 KB 16 Fletcher Moulton LJ said at 29:

"The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, ie, that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognized as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorized by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him."

48. In Horn v Sunderland Corporation [1941] 2 KB 26 Scott LJ said at 42:

"…what it gives to the owner compelled to sell is compensation - the right to be put, so far as money can do it, in the same position as if his land had not been taken from him. In other words, he gains the right to receive a money payment not less than the loss imposed on him in the public interest, but, on the other hand, no greater."

And at 49 he said:

"The statutory compensation cannot, and must not, exceed the owner's total loss, for, if it does, it will put an unfair burden on the public authority or other promoters who on public grounds have been given the power of compulsory acquisition, and it will transgress the principle of equivalence which is at the root of statutory compensation, the principle that the owner shall be paid neither less nor more than his loss."

49. In Wilson v Liverpool Corporation [1971] 1 WLR 302 Widgery LJ said at 310:

"Whenever land is to be compulsorily acquired, this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project compulsory powers of acquisition will not arise at all, and it would I think be a great mistake if we tended to focus our attention on the word 'scheme' as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so-called Pointe Gourde rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition."

50. In Rugby Joint Water Board v Foottit [1973] AC 202 Lord Hodson said at 218G:

"It is well established that the value to the owner and not the value to the purchaser is relevant in the case of the exercise of compulsory powers. Were it otherwise the use of compulsory powers would be largely frustrated."

And in the same case Lord Simon of Glaisdale said at 241E-F:

"The purpose of the Pointe Gourde rule is thus clear. You must not allow the price to be paid for property compulsorily acquired to be inflated by reason of the fact that it is acquired compulsorily under parliamentary powers; because you would then be making the acquiring authority pay, not for the value of the property to the vendor, but for its value to themselves, including the value engendered by the very powers by which they acquired the property."

51. In Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111 Lord Nicholls of Birkenhead said at 125:

"The purpose of these provisions, in Hong Kong and England, is to provide fair compensation for a claimant whose land has been compulsorily taken from him. This is sometimes described as the principle of equivalence. No allowance is to be made because the resumption or acquisition was compulsory; and land is to be valued at the price it might be expected to realise if sold by a willing seller, not an unwilling seller. But subject to these qualifications, a claimant is entitled to be compensated fairly and fully for his loss. Conversely, and built into the concept of fair compensation, is the corollary that a claimant is not entitled to receive more than fair compensation: a person is entitled to compensation for losses fairly attributable to the taking of his land, but not to any greater amount. It is ultimately by this touchstone, with its two facets, that all claims for compensation succeed or fail."

52. In the course of argument in the present case reference was made to Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302. There land containing springs of fresh water had been compulsorily acquired by the Vizagapatam Harbour Authority for the purpose of providing a water supply to the harbour land and to its hinterland as a replacement for wells which were a source of malaria. The authority was the only potential purchaser for this purpose. The Judicial Committee of the Privy Council decided that the proper approach to the assessment of compensation was to have regard to the authority's purpose in acquiring the land, but to assume a "friendly negotiation" between it and the vendor rather than one taking place against the background of the authority's pressure to buy under the compulsory acquisition: see the judgment of Lord Romer [1939] AC at 323 and 330. Although the case was decided under the Indian Law, in which the statutory provisions were contained in the Acquisition of Land Act 1894, the underlying principles to be applied were the same as under the Lands Clauses Consolidation Act 1845 (see 311); and in theory those principles should continue to apply at the present day in England so as to govern the approach to compensation where the statutory rules make no specific provision. Lord Romer's analysis of the principles is considerably fuller than that in the judgments in Fraser v City of Fraserville and Pointe Gourde. The approach that he found to be the right one has some attractions, particularly where the acquiring authority is a commercial utility rather than an arm of central or local government acquiring the land for social needs. It does, however, give rise to problems in distinguishing between the authority's pressure to buy, which is to be disregarded, and its motivation, which is not; and difficulties of valuation are also likely to arise. But the Vyricherla approach is in my judgment unquestionably at odds with the Pointe Gourde rule as stated and as it has been applied in a number of cases in the Court of Appeal and House of Lords: see for instance Davy v Leeds Corpn [1964] 1 WLR 1218 at 1224, [1965] 1 WLR 445 at 453; Camrose v Basingstoke Corpn [1966] 1 WLR 1100 at 1107; Wilson v Liverpool Corpn [1971] 1 WLR 302 at 308-9, 310; Myers v Milton Keynes Development Corpn [1974] 1 WLR 696 at 701-2; Rugby Joint Water Board v Foottit [1973] AC 202 at 213.
53. There appears to be one major Lands Tribunal decision in which Vyricherla has been applied, St John the Baptist Hospital v Canterbury City Council [1970] RVR 608, and one reported case in which it has been applied in the superior courts. That case in Lambe v Secretary of State for the War [1955] 2 QB 612, which concerned the purchase by the Secretary of State for War of the freehold of a territorial army headquarters building of which the TA already had a lease. It was in the context of that somewhat unusual CPO that Vyricherla was applied. The Lands Tribunal, given by the parties the choice of three valuations, had determined as correct the one "Assessed in conformity with the judgment of the Indian case of Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam, the value to represent the amount which the acquiring authority, in a friendly negotiation, would be willing to pay in acquiring a freehold interest for its purposes, and as 'though no powers of compulsory acquisition had been obtained." The Court of Appeal held that the Tribunal was correct. The Court of Appeal's application of Vyricherla in Lambe is in my view inconsistent with the substantial number of subsequent cases in which Pointe Gourde has been applied in the Court of Appeal and the House of Lords, and should not be treated as good law.
54. The basis of the Pointe Gourde rule and the rules contained in sections 5 to 9 of the 1961 Act appears to be this. The owner is to receive as compensation the equivalent in money terms of what he has lost through the compulsory acquisition of his land. He must be put into the position that he would have been in if there had been no compulsory acquisition. Compulsory powers of acquisition are only conferred in the public interest. A compulsory purchase order is only made and confirmed for a public purpose which the making authority and the confirming authority judge to be sufficiently important to warrant compulsion. The principle is that any effect on the value of the land acquired arising from the public purpose or public purposes prompting the acquisition, whether from their adoption by the authority or from their implementation, is to be disregarded. A scheme or proposal is the embodiment of the public purpose or public purposes concerned.
55. In the present case there must be excluded from consideration any increase or decrease in the value of the subject land that arises from the proposal for its compulsory acquisition for the purpose of providing land to be developed as a nature reserve to compensate for the loss of the Taff/Ely SSSI through the construction of the Cardiff Bay Barrage. That was certainly a public purpose for the acquisition (whether or not there was also some wider purpose encompassing the barrage as well), and the land must be valued assuming that there was not and had never been such a purpose. That the Government was under pressure to acquire land for this purpose is of no significance. What has to be left out of account is the effect on value of the public purpose of acquiring the land for the development of a compensatory nature reserve. Clearly, if that is done, what gave rise to the adoption of that purpose, or the pressure that the Government was under, has no relevance.
56. It is not suggested that the barrage has had any effect on the value of the claimants' land other than to create a ransom value for it as part of a compensatory nature reserve. This is not surprising. It is somewhat remote low-lying farmland 15 km or so from Cardiff. If the land had been adjacent to the barrage, it might have been increased or reduced in value by reason of the barrage development for reasons unconnected with the compensatory nature reserve. For instance, prospects for urban development might have been opened up, or some problems of access might have been created. In such circumstances it would be necessary to determine whether the construction and use of the barrage constituted one of the public purposes of the acquisition of the subject land: whether, in other words, the barrage was the scheme underlying the acquisition. If the conclusion was that the barrage was the scheme, any increase in value due to the prospect of urban development or any reduction in value due to access problems must be left out of account.
57. The requirement is to leave out of account the effect on value of the adoption and implementation of the public purpose of the acquisition, and not simply the effect on value of the authority's pressing need to acquire the land. Adopting that approach, it is clear that it becomes immaterial whether the "scheme underlying the acquisition" is the Cardiff Bay Barrage or the nature reserve proposal itself since there is no suggestion that the barrage had any effect on demand for the subject land other than for the public purpose so identified. Whichever of the alternatives constitutes the scheme, there must be left out of account such effect on value as the adoption or implementation of the purpose of providing the compensatory nature reserve may have had. Given this conclusion it becomes unnecessary to seek to identify the scheme underlying the acquisition in the way that is frequently necessary in compensation cases. However, issue (2) expressly raises the question; the parties have addressed it and a substantial amount of time has been spent in analysing the considerable documentary material for this purpose; and I will therefore express a conclusion on what was the scheme.
58. What constitutes the scheme for the purposes of the Pointe Gourde rule is a question of fact, as has frequently been stated: Fraser v City of Fraserville [1917] AC 187 at 194 (above). But Mr Holgate submitted that, as a matter of law, a project cannot count as a scheme for the purposes of the rule unless it is the acquiring authority's own project; and here the barrage was not the project of LAW, but of CBDC. He relied on Birmingham City Council v Morris and Jacombs Ltd (1976) 33 P & CR 27 and Bird v Wakefield District Council (1978) 37 P & CR 478. In the former Sir John Pennycuick said at (1976) 33 P & CR 33:

"There has been some discussion as to what is meant by 'a scheme' in this connection. A scheme means, I think, no more than a project on the part of the authority concerned to acquire land – and, of course, to acquire it for some purpose for which it is authorised to acquire it."

59. In Bird v Wakefield the District Council had plans for an industrial development. The County Council had more ambitious plans for a broader development project. Initially, the two projects were separate. But the Tribunal held that, over the course of time, the two projects "merged" together; and the scheme to be disregarded under Pointe Gourde was the "merged" scheme. The claimants appealed to the Court of Appeal, which upheld the Tribunal's decision. The Tribunal's idea that the two scheme had "merged" was consistent with Lord Denning MR's concept of a scheme being a "progressive thing" (Wilson's case). However, Browne LJ (having cited the passage of Sir John Pennycuick's judgment in the Birmingham case mentioned above) summarised the relevant principle in this way at 487):

"I understand [the Tribunal's finding] to be a finding that, although [the County Council's project] was originally in form a scheme by an authority different from the acquiring authority, which also had a scheme of its own, it became, by what the tribunal calls 'merger', though possibly that is not the right word, a scheme to which the acquiring authority was party and not a scheme by a different authority."

60. In neither of the cases relied on by Mr Holgate was the court, in my judgment, holding that a project could only be a scheme for the purposes of the Pointe Gourde rule if it was the project of the acquiring authority alone. Neither Sir John Pennycuick in Morris and Jacombs or Browne LJ, in my view, were purporting to lay down a rule of law in this respect. It may well be the case that the fact that proposals are the proposals of two authorities is a material, indeed an important, consideration in determining whether they together constitute a single scheme. But this is no more than one of the considerations to be taken into account in the factual exercise of defining the scheme.
61. It is, of course, the case that where land is acquired in pursuance of planning powers it will not be the acquiring authority, the planning authority, that will carry out the development. A number of the cases referred to by Mr Holgate related to land assembly CPOs (Bird; Cronin v Swansea City Council (1972) 24 P & CR 382; Bolton Metropolitan Borough Council v Tudor Properties Ltd (19 April 2000, unreported). In Pointe Gourde itself the scheme underlying the acquisition by the Crown was the US Government's proposal to build a naval base. If, for the purposes of a large development proposal, a land assembly CPO were to be made by the planning authority for the areas of land on which built development was proposed and another CPO was made by the highway authority for requisite road connection, I can see no reason, as a matter of principle, why the two CPOs should not be seen as components of a single overall scheme. It may be that a single overall CPO could have been made, with the land required for the highway being transferred to the highway authority after acquisition by the planning authority. But I cannot see that whether the road element of the development is or is not a separate scheme must as a matter of law depend on the particular acquisition route that is followed. In the present case, therefore, the fact that the nature reserve land was acquired by LAW for development by CCW while the barrage land was acquired by CBDC does not, as a matter of law, prevent the acquisition being part of the single scheme.
62. Apart from this contention of law, Mr Holgate submitted that, on the facts, the barrage and the nature reserve were separate schemes. He referred to Sprinz v Kingston upon Hull City Council (1975) 30 P & CR 273, Pye v Kingswood Borough Council [1998] 2 EGLR and Tudor Properties as examples where the sequential making of compulsory purchase orders gave rise to separate schemes. The Cardiff Bay Barrage Act 1993, he pointed out, made no provision for any compensatory measures. It gave CBDC power to acquire land for the purposes of constructing the barrage, to construct it and to operate it. CCW and RSPB had withdrawn their petitions against the Bill on the basis of assurances given by the government that a bird reserve would be created, not on the subject land and other land at Uskmouth, but at Redwick and Goldcliff. At the time the Act was passed it was that land, and not the Uskmouth land, that was proposed for acquisition, and it was not then envisaged that the land for the reserve would be transferred from LAW to CBDC before being transferred to CCW. LAW was involved in the proposals to create a bird reserve because CBDC lacked the power to acquire land on the Gwent Levels for that purpose. LAW was not involved in the proposals for the barrage which led up to the passing of the 1993 Act. LAW had no power under any CPO or the 1993 Act to acquire land for or build a barrage. In 1993 it was made clear that LAW would not consider whether to participate in the creation of the bird reserve until after the Royal Assent; and it appeared that LAW did not approve a proposal for the compulsory acquisition of land until about October 1995. By contrast, the Government had authorised the construction of the Barrage to proceed and works had commenced before June 1994, prior to the formal request to LAW to consider promoting a CPO. The agreement made between LAW and CBDC dated 6 November 1995 made it clear that no partnership or agency was being created as between the two bodies.
63. Thus, said Mr Holgate, the barrage and the nature reserve were the projects of two separate authorities. LAW had no power to acquire land for the barrage project, and CBDC's power to acquire land was restricted in area and did not extend to the subject land. The Act had been passed and construction had begun before the Uskmouth land had been identified as the site for the proposed nature reserve. Moreover the European Commission did not see the new reserve as being adequate in itself but required the government in addition to take enhancement measures elsewhere in the UK; while the Secretary of State for his part, when confirming the CPO, made clear that, disregarding its compensatory role, the project was in the public interest and would form a valuable conservation measure in its own right.
64. Since, in my view, it is the public purpose or public purposes of the acquisition on which the identification of the scheme must depend, the crucial factors are that the nature reserve proposal was made necessary by the barrage scheme and that the barrage scheme proceeded on the basis that some such compensatory measures would be provided. In the absence of the barrage scheme there would have been no public purpose for the acquisition; and in the absence of assurances on the part of Government that a compensatory nature reserve would be provided it is unlikely that the Act would have become law, certainly in its present form, but if it had done I think it probable that action would have been taken by the European Commission to prevent impoundment. Thus the implementation of the barrage scheme as regards the permanent inundation of Cardiff Bay was, I find, dependent on the acquisition and development of land for the Gwent Levels nature reserve. The fact that the Secretary of State, in confirming the CPO, saw the nature reserve as having an additional wider justification, and the fact that the Commission sought and obtained additional compensatory measures on the part of the government do not change the essential nature of the acquisition as one element in the barrage scheme. That different agencies were used for the purposes of developing the barrage and for acquiring and developing the land taken for a nature reserve does not prevent there being a single scheme. The agencies, CBDC, LAW and CCW, acted in concert at the behest of the government, and finance for the nature reserve was channelled through CBDC. In the light of these factors, if it is necessary to identify the scheme underlying the acquisition, I find that it was the Cardiff Bay Barrage.
65. On the preliminary issues, I therefore conclude as follows:

(1) The subject land has no special suitability or adaptability for the purpose of providing a nature reserve to compensate for the loss of the Taff/Ely SSSI, and rule (3) therefore does not apply.

(2) The subject land must be valued leaving out of account any effect on value of the adoption or implementation of the proposal to provide land for the development of a nature reserve to compensate for the loss of the Taff/Ely SSSI through the construction and impoundment of the Cardiff Bay Barrage; and the scheme underlying the acquisition is the Cardiff Bay Barrage.

66. The parties are invited to make submissions on costs, and a letter on this accompanies this decision. The decision on these preliminary issues will take effect when the question of costs is determined.

DATED 3 November 2000

George Bartlett QC, President

ADDENDUM ON COSTS

67. The parties have made submissions on costs. The claimants say that they won on the first issue and lost on the second, but that the second issue was decided on a basis that the respondents did not advance. The large volume of documents before the Tribunal was, they say, of equal importance to each of the issues. They say that the acquiring authority should pay the claimants' costs of the determination of the preliminary issues generally; alternatively that they should pay such costs except to the extent that the claimants' costs were increased by the second issue; alternatively that there should be no order as to such costs.

69. The claimants also seek an order for their costs of an interlocutory hearing on 8 September 2000, the member who held the hearing having ordered that the costs of the hearing should be reserved. The hearing concerned the claimants' application for permission to rely on Mr Sheard's evidence, which had been served out of time; the basis on which an agreed statement of facts should be prepared; and the extension of time for the exchange of skeleton arguments. The claimants say that the principal question was Mr Sheard's evidence, and the need for a contested application arose from the authority's refusal to consent to its production. The authority's only reason for resisting was their contention that the Tribunal should mark its disapproval of the late service by refusing permission.

70. The acquiring authority say that the purpose of the preliminary issues hearing was to determine the claimants' contention that their land should be valued on a ransom basis. On this the claimants failed. The authority say that the rule 3 issue did not add substantially to the length of the hearing and, although they lost on it, they did not act unreasonably in pursuing it. They should therefore have their costs of the preliminary issues. The interlocutory hearing was only needed because the claimants needed permission to rely on Mr Sheard's evidence. The authority had resisted this on the ground that they would be unfairly disadvantaged – the claimants having already had the authority's evidence for four months, while they would only have had Mr Sheard's evidence a short time before the hearing. Skeleton arguments had been due to be exchanged three days before the interlocutory hearing, and the question of an extension only arose because of the fixing of that hearing. All the costs of the interlocutory hearing were in connection with the preliminary issues and they should be the authority's.

71. I accept the basic submission of the authority – that the purpose of the preliminary issues hearing was to determine the claimants' contention that they should be compensated on the basis of a ransom value, and that on this the claimants failed. Although the authority did not advance the argument that what had to be left out of account was the public purpose of acquiring the land for a compensatory nature reserve, so that the end result was the same whether the scheme was the nature reserve or the barrage, even if they had done so the claimants would still undoubtedly have sought to contend – as they did after I had raised this argument with them – that the scheme was the nature reserve proposal and not the barrage; and the authority would have contended, as they did, that the scheme was the barrage. It was the question of what was the scheme, on which the authority were successful, that took up the greatest part of the time at the hearing through exploration of the substantial documentation and argument upon it. It does, however, seem right to me that an award of costs should reflect the failure of the authority on the rule 3 issue and the proportion of time attributable to this. In relation to the interlocutory hearing it does not seem to me that any distinct order for costs would be justified. The appropriate order in my judgment is that the claimants should pay three-quarters of the authority's costs relating to the determination of the preliminary issues. Such costs if not agreed will be the subject of a detailed assessment on the standard basis by the Registrar.

Dated 3 January 2001

George Bartlett QC, President