England and Wales Lands Tribunal

[2004] EWLands ACQ_96_2001 (23 February 2004)

ACQ/96/2001

LANDS TRIBUNAL ACT 1949

COMPENSATION – purchase notice – undeveloped land – planning permission – whether effect to be given to a certificate of appropriate alternative development issued in 1987 – likelihood of grant of planning permission – hope value – compensation £27,000 – Land Compensation Act 1961, ss 14(1)(3), 15(5), 17(1)(4) and 22(1)

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN

PAUL STEVENS

Claimant

and

BATH AND NORTH EAST

Acquiring

SOMERSET DISTRICT COUNCIL

Authority

Re:

land at Hampton Row and

Beckford Gardens

Bath

Before: P H Clarke FRICS

Sitting at 48/49 Chancery Lane, London WC2A 1JR

on 28 January 2004

The following cases are referred to in this decision:

W & S (Long Eaton) Ltd v Derbyshire County Council (1975) 31 P& CR 99

Porter v Secretary of State for Transport [1996] 3 All ER 693

Williamson and Stevens v Cambridgeshire County Council (1977) 34 P & CR 117

Grampian Regional Council v Secretary of State for Scotland [1983] 1 WLR 1340

Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment, Transport and the Regions [1999] QB 1144 CA

Mrs Stevens with leave of the Tribunal for the claimant

Mr William Webster instructed by Principal Solicitor, Bath and North East Somerset District Council, for the acquiring authority


 


DECISION OF THE LANDS TRIBUNAL

1. This is a reference to determine the compensation payable for the acquisition under a purchase notice of a plot of open land in a residential area in Bath.
2. Mrs Stevens appeared with leave of the Tribunal for the claimant and gave evidence. Mr William Webster of counsel appeared for the acquiring authority ("the Council") and called Mr Clive Smith BSc BTP MRTPI, a Senior Planning Officer employed by the Council and Mr Robert Andrew Scott BSc FRICS, the Corporate Estate Manager for Property and Legal Services of the Council.
3. I have inspected the reference land and the surrounding area.

Facts

4. The Council prepared a statement of facts, which was not agreed by the claimant. From this statement, the claimant's response and the evidence I find the following facts.
5. The reference land is situated in the predominantly residential area of Bathwick, about half a mile to the north-east of the centre of Bath. It is a plot of undeveloped land, curvilinear in shape, with frontage to Hampton Row and Beckford Gardens and a rear boundary to the London to Bristol railway line, which runs in a cutting along the rear of the site. The land may have been formed by the deposit of soil from this cutting. Immediately adjoining this line, and running parallel, is the Kennet and Avon Canal, at a higher level than the reference land. The land is approximately 655 ft (200 metres) in length with a maximum width of 82 ft (25 metres). The site area is 0.82 acre (0.33 hectare). The reference land is a long, narrow plot, at a slightly higher level than the adjoining road, facing mainly terraced housing in Beckford Gardens and Hampton Row. It has grass, trees and bushes and is open along the road frontage.
6. The freehold of the reference land was previously held by British Rail. It was purchased by the claimant in March 1992. He also owns houses at 10-14 Hampton Row on the opposite of the road and just to the north of the reference land. These houses are empty and in an uninhabitable condition. No claim has been made for severance and injurious affection to these retained properties.
7. In 1986 British Rail declared the reference land surplus to requirements and submitted an outline planning application for residential development. This was refused on the direction of the highway authority on the grounds that the land could be affected by the route of the proposed Beckford Spur relief road. A compulsory purchase order was made for this road. British Rail applied for a certificate of appropriate alternative development under section 17 of the Land Compensation Act 1961 ("the 1961 Act"). A certificate was issued in the form of a letter to British Rail Property Board dated 28 July 1987 ("the 1987 certificate"). This stated that the Planning Control Committee had decided "that a Certificate be issued to the effect that, in the event of a planning application being submitted for residential development of this property, permission would be granted subject to" conditions relating to the submission and approval of drawings and a landscaping scheme, surface water discharge, the construction of a footway and vehicle turning space. The certificate did not include a time condition. The Beckford Spur road proposal was subsequently abandoned in September 1989.
8. In December 1987 Bath was included in the UNESCO list of World Heritage Sites. In June 1990 the Council adopted the Bath City Plan. On the Proposals Map the reference land was not identified as a housing site and was within the Bath Conservation Area.
9. On 1 June 1992 application was made for planning permission for 13 houses and associated development on the reference land and refused in September 1992.
10. In September 1992 the Consultation Draft of the Local Plan was published in which the reference land was not designated for any use. In the following December the Council resolved to designate the land as open space.
11. On 3 February 1993 the Council made the City of Bath (Land at Hampton Row, Bathwick) Tree Preservation Order 1993 relating to the reference land. It was confirmed on 19 May 1993.
12. On 19 January 1993 application for planning permission to build 10 houses with 26 parking spaces and associated footpath on the reference land was made and refused on 19 May 1993. On 23 February 1993 an application for eight houses with garages and parking on the land was made and refused on 13 April 1994. These applications were also refused on appeal on 25 July 1995. These refusals of planning permission led to the service of the purchase notice referred to below.
13. In 1994 the Avon County Structure Plan (Third Alteration) was adopted.
14. In 1994 the Deposit Draft Replacement Local Plan, in which the reference land had been designated as open space under Policy LR8, was the subject of a public local inquiry. Mr Stevens objected to this designation; he proposed that the land should be allocated for housing. The inspector recommended that the land should not be designated as open space nor for housing. It should be shown without notation on the Proposals Map. The Council declined to accept this recommendation and in June 1997 the Bath Local Plan was adopted with the reference land designated as Open Space subject to Policy LR3. This stated that amenity open spaces associated with housing estates and private open spaces will normally be safeguarded from development.
15. In January 2002 the Deposit Draft of the Bath and North East Somerset Local Plan (which will supersede the Bath Local Plan) was put on deposit. The reference land is identified as Visually Important Open Space subject to Policy BH15 which states that development which harms the openness and character of these open spaces will not be permitted. Mr Stevens has lodged an objection to this designation. The public local inquiry into this Plan has not yet been held.
16. On 23 September 2002 the Joint Replacement Structure Plan was adopted and has superseded the 1994 Avon County Structure Plan (Third Alteration).
17. On 6 August 2003 planning permission was refused for the erection of a detached dwellinghouse on the reference land on grounds of failure to safeguard the openness and character of this open space and detriment to the character and appearance of this part of the Conservation Area and World Heritage Site.
18. On 6 August 2003 planning permission was also refused for a change of use of the reference land to provide car parking for 10-14 Hampton Row. The grounds of refusal were: adverse impact on the character and appearance of this part of the Conservation Area and World Heritage Site, the adverse impact on the setting of nearby listed buildings, failure to safeguard the open space from development and harm to the character and openness of a Visually Important Open Space, significant and adverse impact on the amenity of residents and adverse impact on the control of private cars close to the city centre.
19. On 25 November 1996 the claimant served on the Council a purchase notice in respect of the reference land under section 137 of the Town and Country Planning Act 1990 ("the 1990 Act"). This was rejected by the Council, referred to the Secretary of State for the Environment, Transport and the Regions and, following a local inquiry in October 1997 and May 1998, confirmed on 12 August 1998. The Council are deemed to have served notice to treat to acquire the reference land on that date. On 3 August 2001 the Council referred the determination of compensation to this Tribunal. They have not entered on the land and the date of valuation is therefore the date of the hearing, 28 January 2004.

Issues

20. The main issue between the parties is the amount of compensation payable to Mr Stevens for the acquisition of the reference land under the confirmed purchased notice. He claims £750,000 on the assumption that planning permission would be granted for the building of two detached houses on the land. The Council offer £27,000 hope value. Within this issue there are three questions for my determination. First, in assessing the compensation, what weight should be given to the 1987 certificate? Second, what was the likelihood of the grant of planning permission for residential development on the reference land at the valuation date? Third, having regard to the answers to these two questions, what was the market value of the reference land at the valuation date?

Claimant's case

21. The claimant's principal contention is that the reference land has the benefit of the 1987 certificate for residential development. Following the Council's change of status for the land the inspector at the purchase notice inquiry agreed that the site has no reasonable beneficial use in its current state. His report, however, gives potential to limited development. It would seem appropriate to have the hope of at least two dwellings on the land in the future. The 1987 certificate is still relevant: the reference land has not changed and Mr Stevens has been hindered by the Council in his efforts to develop it. Any changed circumstances are of the Council's own making by deliberate and determined methods to exclude any form of development and to obtain the land without paying the value they put on it in 1987.
22. It should be possible to rely on the 1987 certificate for valuation purposes. It was issued by the Council with the full knowledge of the planning position and the Conservation Area and World Heritage Status. Listed buildings in the street were there at the time and this has not altered. It is a positive certificate and has not been cancelled. The market value of the reference land has been depreciated by the Council by their determined and absolute approach to resist the benefit of the 1987 certificate issued by their predecessors (Bath City Council) and by refusing all planning applications.
23. Section 15(5) of the 1961 Act requires the 1987 certificate to be taken into account when valuing the reference land. This subsection should be given a literal interpretation. There is no time limit on the certificate. It would absurd if no meaning is to be given to this document.
24. Even in the absence of the certificate planning permission for residential development would have been granted at the valuation date. A purchaser at that time would have expected to obtain a residential planning permission on appeal with professional assistance. This is supported by the inspector's report into the purchase notice. The reference land had a value of £750,000 based on transactions or asking prices for land at Sydney Wharf and Claverton Down. This figure reflects the value of the land for the building of two detached houses. Mr Scott's valuation can be strongly criticised.

Council's case

25. Mr Smith reviewed the past and present planning position with regard to the reference land. He said that section 54A of the 1990 Act sets out the approach to decisions on planning applications. Within this framework these applications are considered on their merits and it is not possible to predict with certainty the outcome of any particular application. However, in the light of existing planning policy and material considerations, an opinion on the planning and development potential of the reference land can be offered.
26. The policies in the Development Plan (i.e. the Bath Local Plan and the Joint Replacement Structure Plan) are the first consideration of planning application decisions. He referred to numerous policies in the Plans but particularly drew attention to Policy LR3 in the Local Plan, Policy 19 in the Structure Plan and Policy BH5 in the Emerging Local Plan. The 1995 appeal decisions and the 1998 purchase notice inquiry are still material consideration at this time. In the light of these decisions the 1987 certificate is of little weight.
27. Material considerations include the character and appearance of the Conservation Area and World Heritage Site, the listed buildings in Hampton Row, the residential amenities of nearby occupiers and highway safety and traffic levels on existing roads. Mr Smith said that, having regard to the Development Plan and material considerations, the development potential of the reference land is limited to that which would preserve the openness of this protected open space in addition to not having a harmful effect on the above development control matters. Any significant built development (including housing) is unlikely to be acceptable. It would not be in accordance with the Development Plan and is likely to have other adverse effects. Likewise any use which would not preserve the openness of the site and/or have harmful effects would be unlikely to be permitted. Only low key uses (as opposed to built development), which would preserve openness and would not result in adverse environmental effects and/or highway safety problems, would be acceptable. The reference land has therefore limited development potential. This conclusion is supported by the refusals of planning permission in August 2003.
28. Mr Scott said that the 1987 certificate is no longer relevant in determining the level of compensation; this is market value. The planning history and the purchase notice proceedings indicate that there is no realistic opportunity for obtaining planning permission for residential development or any other financially viable scheme in the foreseeable future. The reference land will have continuing maintenance and fencing liabilities; it is likely to remain a liability to the owner.
29. Mr Scott referred to the inspector's purchase notice report (para 5.4) where he recorded that the reference land had a nil or nominal value as open space with no foreseeable beneficial use. Mr Scott said that the land has value to a developer as a long-term investment in the hope that planning permission will be granted at some future date. This value is difficult to determine. He calculated the hope value of the reference land as follows.
30. Mr Scott took as his starting point the value of each of the two houses to be built on the land. He referred to the sale in April 2003 of 16A Beckford Gardens for £395,000. This is a four-bedroom semi-detached house opposite the reference land. The reference land is immediately adjacent to the railway and any houses built there would be devalued by 15%. To find site value from the finished house value Mr Scott took 50%. Two houses could be built on the reference land giving a total site value of £335,000. He referred to a letter dated 17 April 2003 from GVA Grimley to the claimant, which put the value of the reference land for a development of four houses at £550,000. This is £137,500 per plot. A two house development would have a site value of £275,000 on this basis with a higher value by selling individual plots. Mr Scott reduced his site value to £300,000. This value, however, could not be released for at least 10 years and he therefore deferred it for this period at 25%. The deferment rate reflects risk and return and reduces the site value to £32,212, say £32,000. Mr Scott then deducted £5,000 for maintenance, producing a site value of £27,000, the compensation payable to the claimant.
31. In answer to questions from me, Mr Scott said that house prices had risen little since April 2003, not more than 3%. Although he adopted a definition of market value which excluded special purchaser value this element of value was not present in the assumed sale of the reference land.
32. Mr Webster said that the reference land has to be valued on a deemed compulsory purchase. The measure of compensation is market value under rule 2 of section 5 of the 1961 Act as at the date of the Tribunal hearing (W & S (Long Eaton) Ltd v Derbyshire County Council (1975) 31 P& CR 99).
33. The 1987 certificate is irrelevant. A certificate of appropriate alternative development enables the Lands Tribunal to make assumptions about development value in cases of compulsory acquisition. That is not the position here where there is the fiction of service of notice to treat. The land is incapable of reasonably beneficial use in its present state and it is for this reason that the claimant requires compensation. The claimant's reliance on the 1987 certificate is not sustainable. There is no authority for the claimant's contention that the certificate remains binding on the Council in subsequent proceedings (see Porter v Secretary of State for Transport [1996] 3 All ER 693). Since 1987 the planning landscape has undergone fundamental change. To suggest that residential development would now be permitted and that compensation should be assessed on this basis is absurd. For the foreseeable future the prospect of obtaining planning permission must be nil. There is only hope value on the off-chance that the land might be released for development in say 10 years time. The inspector in the purchase notice inquiry flagged up the possibility that, in the absence of serious objections, some limited residential development might be permitted in the public interest. He suggested no more than two dwellings. Mr Scott puts this hope value at £27,000. There is no competing professional evidence.
34. The claimant's case is not entirely clear. It is suggested that he may be aggrieved because he overpaid for the land in 1992, assuming that the 1987 certificate entitled him to a residential planning permission and to compensation on this basis, whether or not this was attainable in practice. Mr Webster said that section 15(5) of the 1961 Act does not automatically apply to this acquisition because a section 17 certificate was issued in 1987. This subsection must be interpreted sensibly. It must be construed as if the words "in relation to the scheme proposed" are added. A section 17 certificate applies only to the particular acquisition for which it was issued. This must have been the intention of Parliament.

Decision

35. The effect of confirmation by the Secretary of State of the claimant's purchase notice is that the Council are deemed to be authorised to acquire compulsorily the reference land and to have served notice to treat on 12 August 1998 (section 143(1) of the 1990 Act). The normal rules and basis of compensation for compulsory purchase apply.
36. The basis of compensation is market value under rule 2 of section 5 of the 1961 Act, "the amount which the land if sold in the open market by a willing seller might be expected to realise." The Council have not entered on the land and the date of valuation is the date of the hearing before this Tribunal, 28 January 2004 (Long Eaton). No claim has been made by Mr Stevens for any depreciation in the value of his adjoining properties at 10-14 Hampton Row by the acquisition of the reference land. I am therefore solely concerned with the market value of that land. An important element in the value of undeveloped land is the grant of planning permission for development. Accordingly, there are a number of assumptions as to the grant of planning permission in sections 14-16 of the 1961 Act for the purposes of assessing compensation on compulsory acquisition. Section 14(1) states that for the purposes of assessing compensation such one or more of the assumptions mentioned in sections 15 and 16 of the Act as are applicable to the land shall be made in ascertaining the value. The provisions applicable to this case are in subsection (3) of section 14 and section 15(5). It will also be necessary to look at section 17 when considering the effect of section 15(5), an important issue in this reference.
37. Section 14(3) provides that sections 15 and 16 are not to be construed as requiring it to be deemed that planning permission would be refused for any development which is not development for which permission is to be assumed under those provisions. The importance of this subsection is that it allows hope value to be ascribed to the land (see Williamson and Stevens v Cambridgeshire County Council (1977) 34 P & CR 117 at 122). Section 15(5) provides that, where a certificate of appropriate alternative development has been issued, it shall be assumed that any planning permission which according to the certificate would have been granted in the absence of the acquisition, would be so granted. The procedure for the certification of appropriate alternative development is in Part III of the 1961 Act.
38. It is against this background that I turn to the three questions that I identified earlier in this decision. My first is what weight should be given to the 1987 certificate when determining the value of the reference land? Is it binding on me under section 15(5) of the 1961 Act?
39. The 1987 certificate was granted in pursuance of a proposal to compulsorily acquire the reference land from the previous owners, British Rail, for the Beckford Spur relief road. It is in the form of a letter dated 28 July 1987 from the Assistant Director Planning to the Estate Surveyor (Management) of British Rail Property Board and is as follows:-

"Land Compensation Act 1961

Proposed Residential Development at Hampton Row

Referring to our previous correspondence I confirm that the Planning Control Committee at its meeting on 15 July decided that a Certificate be issued to the effect that, in the event of a planning application being submitted for residential development of this property, permission would be granted subject to:

1. the submission to, and approval by, the Council before any work is commenced on the site of detailed drawings and particulars showing (a) the siting, levels, design and external appearance of the proposed building, the means of access thereto and the landscaping of the site; and (b) the provision to be made for the garaging or parking of cars within the curtilage of the property;

2. the submission to, and approval by, the Director of Environmental Services before any work is commenced on site of a landscaping scheme showing the number, species and position of trees and shrubs to be planted, and the surface treatment of the open parts of the site, such landscaping to be carried out within 12 months of the development being commenced, and subject further to any of such trees or shrubs which is removed, dies or becomes diseased within a period of 5 years from the first tree or shrub being planted be replaced by a new tree or shrub of the same species;

3. the discharge of all surface water being to the surface water sewer in Rockliffe Avenue;

4. a footway being constructed along the whole of the site frontage and the adjoining carriageway being widened to 5.5 metres;

5. a turning space for vehicles being formed near the northern end of the site."

The parties agree that this is a certificate of appropriate alternative development under section 17 of the 1961 Act. They do not agree its effect.

40. Mr Webster referred me to the decision of the Court of Appeal in Porter v The Secretary of State for Transport in support of his contention that I am not bound by this certificate. In my judgment this case can be distinguished on the facts and I think that Mr Webster recognised this in his closing submissions.
41. In Porter part of the claimants' land was acquired for a new by-pass. They applied for a certificate of appropriate alternative development to the effect that, if the land was not proposed to be compulsorily acquired, planning permission would be granted for residential development. The local planning authority issued a nil certificate. On appeal the Secretary of State issued a certificate specifying residential development, accepting the inspector's conclusion that hypothetically the most likely alternative to the proposed by-pass was a different route which would have made it more likely that planning permission for residential development would have been granted for the remainder of the claimants' land. The claim for compensation (for land taken and severance and injurious affection to the retained land) was referred to the Lands Tribunal. The question was then considered as a preliminary issue whether the section 17 certificate issued on appeal raised an estoppel, so as to preclude the acquiring authority from calling evidence and making submissions that the conclusions of the Secretary of State should not be followed and applied by the Tribunal in assessing the compensation to be paid in respect of the retained land (my emphasis). The then President (Judge Marder QC) decided that there was an issue estoppel on the facts. On appeal by the acquiring authority the Court of Appeal held (Peter Gibson LJ dissenting) that a decision of the Secretary of State on an appeal under section 18 of the 1961 Act would not give rise to an estoppel which bound the parties in subsequent proceedings before the Lands Tribunal to assess compensation.
42. This decision, however, relates to the facts underlying the Secretary of State's certificate in so far as they relate to the assessment of compensation for the diminution in value of the claimants' retained land and not to the land acquired, in respect of which the section 17 certificate was issued. This is seen in the preliminary question of law posed for decision, which specifically refers to the assessment of compensation "to be paid in respect of severance and/or injurious affection to the land retained by the claimants" (at 698j-699a). Giving the leading judgment, Stuart-Smith LJ said (at 703j): "What the Lands Tribunal has to assess is the diminution in value, if any, to the land of the respondents retained by them." The effect of section 15(5) of the 1961 Act is not referred to in the decision.
43. Thus, the estoppel raised in Porter referred solely to the assessment of compensation for the retained land, not to the land taken where the positive certificate of appropriate alternative development would be given effect under section 15(5) of the 1961 Act. It was therefore open to the parties before this Tribunal to produce evidence to show that the conclusions underlying the certificate should not be followed in respect of the retained land. Commenting on the case in the Journal of Planning and Environment Law the case editor said ([1977] JPL at 645):-

"It is important to emphasise that the argument in this case was not whether the Lands Tribunal could reopen the questions of whether planning permission would have been granted for the land being acquired for the road. This issue had been the subject of a section 17 certificate and this meant that the Lands Tribunal, in valuing the land, had to assume that planning permission would be granted for its residential development. So in this sense, the statutory scheme provided its own finality or issue estoppel, for the acquired land. The difficult question was whether the section 17 certificate also determined indirectly the planning assumption to be made as to the fate of the retained land."

I do not find therefore that the decision in Porter is directly in point. In this reference I am solely concerned with the value of land acquired, not the land retained. I have been unable to find any authority on this particular issue. My decision must therefore rest on the construction of section 15(5) of the 1961 Act and related provisions.

44. Section 15(5) of the 1961 Act provides as follows:-

"Where a certificate is issued under the provisions of Part III of this Act, it shall be assumed that any planning permission which, according to the certificate, would have been granted in respect of the relevant land or part thereof if it were not proposed to be acquired by any authority possessing compulsory purchase powers would be so granted, but, where any conditions are, in accordance with those provisions, specified in the certificate, only subject to those conditions and, if any future time is so specified, only at that time."

Part III of the Act (sections 17-22) contains provisions for certification by planning authorities of appropriate alternative development, including section 17 (applications for, and the issue of, certificates) and section 22 (interpretation), to which I shall refer. There is no time condition on the 1987 certificate and, at first glance, the mandatory tone of section 15(5) appears to support the claimant's contention that effect must still be given to the certificate when valuing the reference land. I do not accept this contention. In my judgment, the mandatory wording of section 15(5) applies only to a certificate issued for the particular acquisition for which compensation is being assessed. I do not believe that the effect of this subsection is that a section 17 certificate, once issued and although without a time condition, is automatically to have effect for all time and in all circumstances, however much change has occurred since it was issued. My reasons for this conclusion are as follows.

45. In my judgment, section 15(5) must be read in the context of the application for the certificate. Section 17(1) provides as follows:-

"Where an interest in land is proposed to be acquired by an authority possessing compulsory purchase powers, either of the parties directly concerned may, subject to subsection (2) of this section, apply to the local planning authority for a certificate under this section."

An application for a certificate may be made by "either of the parties directly concerned", which under section 22(1) "means the person entitled to the interest and the authority by whom it is proposed to be acquired." Thus, the application and the certificate relate to a particular acquisition and particular parties to that acquisition. In my judgment this points to an interpretation of section 15(5) which relates it to the acquisition for which the certificate was granted and not to any other acquisition of the same land.

46. This view is reinforced by the date by reference to which a certificate is to be granted. Under section 17(4) the local planning authority shall issue to the applicant a certificate stating that planning permission would be granted in the absence of the acquisition either (a) for those classes of development specified in the certificate and for any development for which the land is to be acquired but not for any other development (section 17(4)(a)); or (b) for no development other than that for which the land is to be acquired (section 17(4)(b)). The position was explained by Lord Bridge of Harwich in Grampian Regional Council v Secretary of State for Scotland [1983] 1 WLR 1340 at 1343H-1344A:-

"It will be convenient to refer to the certificates contemplated by subsection (4)(a) and (b) as positive and negative certificates respectively. A decision by a planning authority, or by the Secretary of State on appeal, whether a positive or a negative certificate is appropriate, must proceed on the hypothesis predicated by subsection (3) and determine what planning permission, if any, would have been granted if the land were not proposed to be acquired by any authority possessing compulsory purchase powers. The sole purpose of the certification procedure is to provide a basis for determining the development value, if any, to be taken into account in assessing the compensation payable on compulsory acquisition. If a positive certificate is issued, it is to be assumed that the certified permission would be granted, subject to such conditions and at such future time, if any, as may be specified in the certificate: ….. If a negative certificate is issued, 'regard is to be had' to the negative opinion certified: ….."

47. The 1987 certificate is clearly a positive certificate. Conditions may be attached, including time conditions, although this was not done with this certificate. The relevant date for determining an application for a certificate of appropriate alternative development under section 17(4), where it relates to a compulsory acquisition, is the date of the notice of the making of the compulsory purchase order under section 22(2)(a) (Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [1999] QB 1144 CA: this case proceeded to the House of Lords but the parties agreed the relevant date decided by the Court of Appeal). Thus, this also shows that a section 17 certificate relates to a particular acquisition and the circumstances which existed when notice of the making of the compulsory purchase order for that acquisition was given. The 1987 certificate related to the proposal to acquire the reference land for the Beckford Spur relief road and to the date of the notice of the making of the compulsory purchase order for that proposed acquisition. It was addressed to the then owners of the land, that is to say a party directly interested in the land, then British Rail. It is not, in my judgment, a certificate which applies in the current acquisition and to which I must give effect under section 15(5). I have reached this conclusion by construing section 15(5) of the 1961 Act in the context of Part III.
48. Accordingly, I find that the 1987 certificate is not a certificate of appropriate alternative development for the purposes of this reference and I am not required to give effect to it under section 15(5) of the 1961 Act. It is admissible in evidence but I give no weight to it due to the material changes in planning policy which have occurred since it was granted nearly 17 years ago.
49. I turn now to my second question: what was the likelihood of the grant of planning permission for residential development on the reference land at the valuation date? It is perhaps more accurate to rephrase this question by reference to the attitude of a hypothetical purchaser of the land. How would a purchaser of the land at the date of valuation have viewed the prospects of obtaining planning permission for residential development?
50. The answer to these questions requires consideration of the present planning position and the planning history of the land. I look first at the Development Plan. At the date of valuation this comprised the Joint Replacement Structure Plan and the Bath Local Plan (adopted in 1997). There was also an emerging Local Plan, the Deposit Draft Bath and North East Somerset Local Plan, which was put on deposit in January 2002 and will eventually supersede the Bath Local Plan. As a matter of law, the Development Plan is an important document. Section 54A of the 1990 Act requires the determination of a planning application to be made in accordance with the Development Plan unless material considerations indicate otherwise. In the determination of a planning application the local planning authority are required to have regard to those parts of the Development Plan material to the application and to any other material considerations (section 70(2) of the 1990 Act). In short, the current system of development control is now said to be "plan-led".
51. The Joint Replacement Structure Plan sets out general policy, trends and the broad pattern for future development. It is the framework for the more detailed Local Plans. Mr Smith referred to several policies in the Structure Plan but I think that I need only refer to Policies 19 and 34. Policy 19 requires Local Plans to protect the built and historic environment of the area and to manage development in a manner which respects local character and distinctiveness, ensuring that new development respects and enhances local character through good design and that it conforms with local character statements and guidance. Policy 34 requires Local Plans to give priority to the re-use of previously developed land and buildings. Additional housing development through in-fill will be encouraged within appropriate parts of urban areas.
52. The Bath Local Plan is more directly relevant. Policy LR3 states that:-

"Amenity open space associated with housing estates, and private open spaces as identified on the Proposals Map and Appendix F, will normally be safeguarded from development."

The reference land is subject to this policy. Other policies of relevance are C1 (the World Heritage Status of Bath is a key material consideration), C3 (special attention to be paid to preserving or enhancing the Conservation Area), C4 (development in the Conservation Area is to preserve or enhance the character of the area), C19 (planning permission not to be granted for development which adversely affects listed buildings), H13 (residential development normally permitted provided specified conditions satisfied), H15 (planning permission not to be to be granted for development significantly reducing the amenity of existing residential accommodation) and T25 (highway control criteria for new development).

53. The Emerging Local Plan, the Deposit Draft Bath and North East Somerset Local Plan, has not yet been subject to a public local inquiry. The reference land is identified as Visually Important Open Space subject to Policy BH15:-

"Development which harms the openness and character of Visually Important Open Spaces, including those shown on the Proposals Map, will not be permitted."

Mr Stevens has objected to this designation.

54. Overall, the provisions in the Development Plan are against development of the reference land. This is an important consideration when determining whether planning permission would be granted for residential development on the land.
55. I consider next the refusals of planning permission for residential development on the reference land which date back to at least 1987. Permission was then refused because the land was affected by the Beckford Spur relief road, although it would appear from the 1987 certificate that residential development would have been allowed in the absence of this road proposal. But in September 1992 planning permission was refused for the building of 13 houses with associated development. On 19 May 1993 planning permission was refused for 10 houses and on 13 April 1994 for 8 houses. Mr Stevens appealed to the Secretary of State for the Environment against these two refusals. His appeals were dismissed by an inspector on 25 July 1995 on several grounds, including detriment to the Conservation Area, conflict with Policy LR8 in the Emerging Local Plan (later Policy LR3) and the adverse consequences to highway safety. On 6 August 2003 planning permission was refused for one house for reasons of harm to the openness and character of the open space and unacceptability under Policies LR3 of the Local Plan and BH15 of the Emerging Local Plan and detriment to the character and appearance of the Conservation Area and World Heritage Site. On 6 August 2003 planning permission was also refused for a change of use to provide car parking for 10-14 Hampton Row.
56. Against this discouraging background Mr Stevens relies on the two inspectors' comments on his objection at the Local Plan inquiry in 1994 and in the report dated 15 June 1998 following the purchase notice inquiry. At the former the inspector recommended that the reference land should be shown without notation on the Proposals Map, that is to say not allocated as open space nor for housing. The future of the site would then be left to be determined in the context of Local Plan policies as a whole, considered in the light of the particular characteristics of this site and its relationship with surrounding development and the Conservation Area (para 14.13.12). Other comments by this inspector favourable to the claimant's case are that this is at best a marginal case for inclusion in Policy LR8 (para 14.13.9) and that it should be considered whether the best way of preserving key attributes of the site's visual amenity is by allowing a certain amount of development (para 14.13.10). The Council did not accept the inspector's recommendations, and included the land as open space subject to Policy LR3. In the inspector's report following the purchase notice inquiry he recommended that no direction be made regarding the grant of planning permission for any form of development, in lieu of confirmation of the purchase notice. In paras 8.25 and 8.28 –8.30 and 8.32 of his report he made comments similar to those made by the Local Plan inspector which give some hope for future development but finally decided against that development at the time:-

"8.33 Although I find the maintenance requirement for the land very persuasive, the objections to the residential scheme on highway and Conservation Area grounds are too powerful to be overridden in my view. Moreover, on the basis of the submissions made to me, and given the awkwardness of the land, I am not satisfied that any appropriate residential, or other, scheme of development could be devised for the land except for low key community uses. As I have concluded above, community uses would result in a net liability to an owner and provide no incentive to care for the land. Accordingly, I do not propose to recommend that, in lieu of confirmation, a direction be made regarding planning permission for any form of development should it be applied for."

57. My conclusion on this question is that, notwithstanding the slight encouragement given by the two inspectors, but having regard to inspector's conclusions in para 8.33 above, a purchaser of the reference at the valuation date would have taken a pessimistic view of the likelihood of the grant of planning permission for residential development, now or in the reasonably foreseeable future. The existing Development Plan and the Emerging Local Plan both contain policies restrictive of any development of the land. I think this is right. From my inspection I conclude that this land adds to the amenity of the surrounding area (including the Kennet and Avon Canal) and should not be developed. The history of refusals of planning permission shows those restrictive policies in action and gives no encouragement to a purchaser. The best that he could expect is for a change of policy at some unknown time in the future. I think it unlikely that a prospective purchaser of the land in January 2004 would anticipate receiving an early grant of residential planning permission either from the Council or on appeal.
58. I now arrive at my final question: having regard to the answers to questions 1 and 2, what was the market value of the reference land at the valuation date?
59. In answer to question 1, I have found that the 1987 certificate is not a certificate of appropriate alternative development for the purposes of this reference. I am not required to give effect to it under section 15(5) of the 1961 Act. Furthermore, I give it no weight due to the material changes in planning policy since it was granted. In answer to question 2, I have found that a purchaser of the reference land at the valuation date would have taken a pessimistic view of the likelihood of the grant of planning permission for residential development, now or in the reasonably near future. The best that he could expect is a limited residential permission at some unknown time in the future. It is clear that, in the light of those answers, the land did not have residential development value at 28 January 2004. I therefore reject Mr Stevens' figure of £750,000. At best the land had hope value. The only evidence I have on this basis is Mr Scott's valuation of £27,000. It is extremely difficult to accurately assess hope value: it cannot usually be done by comparison with other comparables. It is largely a matter of experience and impression. Mr Scott has attempted an analytical approach, which I find to be credible and fair. Although I do not agree with all his adjustments, I do agree, taking a robust approach to this difficult question of valuation, with his final figure of £27,000. I think it is generous to the claimant. The long and narrow shape of the land, its closeness to a busy railway line, its elevation above the access roads (Hampton Row and Beckford Gardens) and their narrow width make this land, in my view, an unattractive site for development. I would be surprised if, having regard to the discouraging planning position and the physical characteristics of the site, Mr Stevens could have sold the reference land unconditionally in the market for more than £27,000 in January 2004.
60. Accordingly, I determine that the market value of the freehold interest in the reference land as at 28 January 2004 was £27,000 (twenty-seven thousand pounds). This is the amount of compensation payable to Mr Stevens for the deemed compulsory acquisition of his land following the purchase notice.
61. This determination of value is dependent on a question of law (question 1 above). I am required under rule 50(4) of the Lands Tribunal Rules 1996 to give an alternative award if I had come to a different decision on the point of law. If I had decided that I am bound to give effect to the 1987 certificate under section 15(5) of the 1961 Act I would have valued the reference land with the benefit of planning permission for two houses. That is the claimant's basis of valuation. His figure is £750,000. Mr Scott's figure on this basis can be extracted from his valuation to hope value and is £300,000.
62. There is no expert evidence to support the claimant's valuation nor was I given any explanation as to how it had been calculated. I was however referred to two comparables. A site at Sydney Wharf was for sale by informal tender in March 2002 with a guide price of £500,000. This is a former nursery in a residential area adjoining the Kennet and Avon Canal with poor access. The land was for sale without planning permission but the Council had given an indication that permission is likely to be granted for two houses. Mrs Stevens said that the site sold for more than £500,000 but I have no other evidence that this is correct. At the time of my inspection the land was vacant and there was no sign of development or of a sale. This land is quite close to the reference land. If the property sold for £500,000 the price per acre is £714,286 or £250,000 per plot.
63. The other comparable is at Claverton Down, situated about two miles from the city centre. This land has an area of 0.86 of an acre and was for sale in the summer of 2003 with a guide price of £950,000. Planning permission had been granted for not more than five dwellings. A letter dated 10 November 2003 from the owner to Mr Stevens stated that several offers at around £1m had been received and were receiving consideration. I have no other evidence as to the sale price or whether the land has been sold. If the land was sold for £1m this shows £1,162,791 per acre or £200,000 per plot.
64. Mr Scott used the standing house approach to arrive at his site value of £300,000 for the reference land. His comparable for the value of each house to be built on the land was the sale of 16A Beckford Gardens, a semi-detached house situated opposite the reference land, for £395,000 in April 2003. He reduced this figure by 15% to reflect the effect of noise from the railway on a house on the reference land, reducing the value to £335,000. He then took 50% as site value giving a total site value for the reference land for two houses of £335,000 which he rounded down to £300,000. This is equivalent to £365,854 per acre or £150,000 per plot. In support Mr Scott referred to a letter dated 17 April 2003 from GVA Grimley in Bristol to Mr Stevens regarding the possible sale of the reference land, which stated that, on the assumption that planning permission could be obtained for four residential units, interest from developers could be expected at a price of £550,000. If the site could be split into individual plots the overall price would be higher. A price of £550,000 represents £137,500 per plot and is close to Mr Scott's figure of £150,000 per plot.
65. None of the comparable evidence can be given a great deal of weight. The details of the sales (if any) of land at Sydney Wharf and Claverton Down are incomplete. The latter is not comparable in location to the reference land. The letter from GVA Grimley is an opinion of value only and the writer did not give direct evidence at the hearing. Doing the best I can with this limited evidence, I have concluded that the best evidence of development value is Mr Scott's valuation of £300,000 based on the sale of 16A Beckford Gardens and on the development of the reference land with two houses (a form of development agreed by both parties). I accept this valuation.
66. Accordingly, if I had decided that I am bound to give effect to the 1987 certificate under section 15(5) of the 1961 Act I would have determined the market value of the reference land as at 28 January 2004 and the compensation payable to Mr Stevens to be the sum of £300,000.
67. This decision concludes my determination of the substantive issues in this reference. It will take effect as a decision when the question of costs has been decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule (1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this reference. A letter accompanying this decision sets out the procedure for submissions in writing.

DATED 23 February 2004

(Signed) P H Clarke

ADDENDUM

68. I have received written submissions on costs from both parties.
69. On 8 January 2004 the Council made an unconditional offer to the claimant at a figure above the amount of my award, also offering to pay the claimant's costs up to the date of the offer. A copy was sent to the Tribunal as a sealed offer under rule 44 of the Lands Tribunal Rules 1996. The Council seek their costs from 9 January 2004 on the grounds that my award was below the amount of this offer and that they were the successful party in this reference on all issues.
70. Mr Stevens responded on many grounds, including the following. He said that the Council instigated the reference and could have taken possession of the land earlier to secure the valuation date. The only way to obtain a decision on the 1987 certificate was through the Lands Tribunal and this greatly affected the value of the land. The Council should have included a time condition on this certificate and should have made it clear that it related only to the parties directly concerned and was not transferable. Mr Stevens said that he will not recover the original purchase price and subsequent maintenance costs of the land. It would be a travesty of justice for the Council to obtain costs in addition to the land.
71. I am not persuaded by the reasons put forward by Mr Stevens that the Council should be deprived of their costs. The position is clear. Mr Stevens did not accept an offer which would have given him a greater sum in compensation than the amount of my determination. The offer letter clearly stated the consequences on costs arising out of that offer. Mr Stevens knew that he was at risk as to costs if he proceeded to a hearing and lost. Mr Stevens achieved less by rejecting the offer and going on with the reference. Furthermore, he was then unsuccessful on all issues. I awarded compensation in the Council's figure. The claim of £750,000, put forward for the first time at the reference, was greatly exaggerated, even on a development value basis, and was unsupported by any reliable evidence. In these circumstances there is no reason why the public purse should bear costs of the reference after the offer.
72. Accordingly, I order the Council to pay the claimant's costs of the reference up to 9 January 2004 and I order the claimant to pay the Council's costs from that date, such costs, if not agreed, to be the subject of a detailed assessment on the standard basis by the Registrar of the Lands Tribunal.

DATED 22 March 2004

(Signed) P H Clarke