England and Wales Lands Tribunal

You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> RMC (UK) Ltd v London Borough Of Greenwich [2005] EWLands ACQ_6_2003 (14 January 2005)
URL: http://www.bailii.org/ew/cases/EWLands/2005/ACQ_6_2003.html
Cite as: [2005] RVR 140, [2005] EWLands ACQ_6_2003

[New search] [Printable RTF version] [Help]

[2005] EWLands ACQ_6_2003 (14 January 2005)

ACQ/6/2003

ACQ/60/2003

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – sites on Greenwich Peninsula acquired for millennium exhibition and longer term development – planning assumptions – Pointe Gourde principle – comparables – £3,850,000 and £450,000 awarded

IN THE MATTER OF TWO NOTICES OF REFERENCE

BETWEEN

(1) RMC (UK) LIMITED

(2) ACE ELECTRICAL DISTRIBUTORS LIMITED

Claimants

and

LONDON BOROUGH OF GREENWICH Acquiring

Authority

Re:

(1) Derelict industrial land on the north of

River Way, formerly Blackwall Point Generating Station,

Greenwich, London, SE10

(2) Derelict industrial building on the south of River Way,

formerly Switchgear House, 94-100 River Way,

Greenwich, London, SE10

Before: The President and N J Rose FRICS

Sitting at Procession House, 55 Ludgate Hill, London, EC4M 7JW

on 24-28 May, 7, 10-11, 14-17, 28 and 30 June, 1 July and 12 October 2004

Robin Purchas QC and Hereward Phillpot, instructed by Osborne Clarke and Richard Max and Co for the Claimants

Guy Roots QC and Guy Williams, instructed by Berwin Leighton Paisner for the Acquiring Authority

The following cases are referred to in this decision:

Jelson Ltd v Blaby District Council [1977] 1 WLR 1020

Waters and others v Welsh Development Agency [2004] 1WLR 1304

Myers v Milton Keynes District Council [1974] 1 WLR 696

DECISION

Introduction

These are two references, heard together, to determine the compensation payable for the freehold interests in two parcels of land on the Greenwich Peninsula, London, SE10. Both properties were compulsorily acquired by the London Borough of Greenwich by means of a vesting declaration, under the London of Borough of Greenwich (Greenwich Peninsula) Compulsory Purchase Order 1998. The CPO was made on 2 March 1998 and was confirmed by the Secretary of State for the Environment, Transport and the Regions on 28 August 1998. The first plot, 2.59 acres in area, belonged to RMC (UK) Limited ("RMC") and was described in the CPO as "Derelict industrial land on the north side of River Way, formerly Blackwall Point Generating Station, Greenwich, London SE10". The second plot belonged to ACE Electrical Distributors Limited ("ACE") and was described as "Derelict industrial building on the south of River Way, formerly Switchgear House, 94-100 River Way, Greenwich, London SE10". The vesting date (and the agreed valuation date) is 11 January 1999 for the ACE claim and 12 April 1999 for the RMC claim. The amount of compensation claimed is £5,500,000 (RMC) and £1,250,000 (ACE). At the commencement of the hearing the acquiring authority's valuations were £1,600,000 (RMC) and £240,000 (ACE), but these were subsequently amended to £1,780,000 (RMC) and £225,000 (ACE).

The total area of the land in the CPO – there were in total some 35 plots – was 19 acres. It was within a wider area of 294 acres which had received outline planning permission for comprehensive redevelopment in 1996. Part of this area, 181 acres in extent, was the subject of a planning permission granted in 1997 for the millennium exhibition (called the New Millennium Experience), the principal element of which was the Dome. Both the reference sites were within the area of this latter permission. Most of the 294 acres had been in the ownership of British Gas and had contained a very large gasworks before the closure of the works in 1986. British Gas's interest had been acquired by agreement by English Partnerships in 1997. Although the CPO was made by the London Borough of Greenwich, the interests were acquired under it so that they could be transferred to English Partnerships.

There was agreement between the parties in relation to each of the reference sites that planning permission for high density residential development was to be assumed. There was disagreement as to when development of each site might have been expected to take place on the assumptions that fell to be made for the purposes of valuation (the acquiring authority's valuer saying that it would have been postponed for two years in the case of RMC and for five years in the case of ACE); as to the number of units and habitable rooms that would have been approved on each site; in the case of ACE, as to whether the site could have been developed by itself and also whether the existing building on it could have been converted to residential use; and, in relation to each site, on the values that were to be derived from the evidence of comparables. Both the claimants' valuer and the acquiring authority's valuer had produced residual valuations in addition to their valuations based on comparables. As the result, however, of indications that we felt able to give as to the usefulness of the residual valuations, these were not pursued.

The parties' cases had been prepared before the House of Lords decision in Waters and others v Welsh Development Agency [2004] 1 WLR 1304. Both parties had lodged extensive experts' reports and factual witness statements directed towards establishing the identity of the scheme for the purpose of the Pointe Gourde principle and what would have happened in the no-scheme world. For the claimants the scheme consisted of the exhibition proposals of the NME and extended to 181 acres. For the acquiring authority the scheme was the comprehensive development of the Greenwich Peninsula under the 1996 planning permission.

For the claimants Mr Robin Purchas QC and Mr Hereward Phillpot called eight witnesses. Simon Barrett, RMC's Director of Estates and Development, recounted the history of RMC's ownership of its site from 1987 to 1999; Surinder Chadda, who had bought Switchgear House in 1988 and had transferred it to ACE in 1997, gave evidence of his efforts to achieve planning permission for the ACE site and to dispose profitably of the interest; and Michael Lynch, formerly a senior environmental planning manager at the headquarters of British Gas, described what British Gas had done to bring forward the Greenwich Peninsula for development. Geoffrey Michael Seeff PhD, FCA, FCMC, MAE gave expert evidence on grant aid, expressing an opinion on what the likelihood, scale and timing of grant aid would have been if English Partnerships had not acquired British Gas's land and invested money directly. Peter Edwards BA (Hons), MRTPI gave evidence on planning; Philip Jonathan Rust CEng, MICE, MIHT on highways; Graeme Noble AA Dipl, RIBA on residential development design and density; and William Simpson BSc (Est Man), FRICS on valuation.

For the acquiring authority Mr Guy Roots QC and Mr Guy Williams called two factual witnesses: Philip Kirby OBE, managing director of SecondSite Holdings Limited, a property arm of National Grid Transco (formerly British Gas), who described the circumstances leading to the transfer to English Partnerships of British Gas's interest; and Ralph Luck, director for the Thames Gateway at English Partnerships, who gave evidence of EP's involvement. They also called three expert witnesses: Raymond Keith Merrington BArch (Hons), MA (Urban Design), RIBA, who gave evidence on residential development design and density; Paul Michael White MA, MSc, MRTPI, who gave evidence on planning; and Jane Asquith MRICS, who gave evidence on valuation.

We draw on this evidence, together with an agreed statement of facts, in setting out the factual background and in dealing with the issues that arise. After hearing the evidence we carried out a site inspection, both from the land and from the river, of the sites and their surroundings and the numerous comparables that the parties had referred to.

We deal below with questions affecting the planning permissions that are to be assumed, the identification of the scheme and the no-scheme world following Waters. As we shall say, we believe that Waters gives rise to a fundamental change in the way that the Pointe Gourde principle is to be applied. The approach is no longer first to identify the scheme and then to pursue, possibly in relentless detail, a hypothetical reconstruction of what would have happened in the no-scheme world. The role of the principle, as we understand the decision of the House of Lords, is to supplement the provisions of the Land Compensation Act 1961 to the extent that is necessary to ensure that the claimant receives no more and no less than fair compensation. Whether the application of the principle is needed for this purpose, how the scheme is to be identified in order to achieve it and the extent to which features of the no-scheme world need to be constructed will depend on the facts of the particular case.

The reference sites and the surrounding area

The reference sites were on what is referred to as the Greenwich Peninsula. For present purposes this consists of an area of approximately 300 acres forming part of the north-westwards-pointing peninsula that is bounded by the Blackwall and Bugsby's Reaches of the River Thames. The A102 (M) runs north-westwards and south-eastwards on the west side of the peninsula, becoming in due course the roads leading into and out of the Blackwall Tunnel. Greenwich Peninsula, as referred to (the 300 acres), comprises the whole of the area between the river on the north-east and the A102(M) on the south-west, extending to the tip of the peninsula and back, at its south-easterly extremity, to Horn Lane, which runs south from the river to join the A102(M) at a grade-separated junction. It was formerly known as the Blackwall Peninsula. For nearly 100 years the Greenwich Peninsula consisted in the main of the East Greenwich Gas Works. British Gas declared it surplus to requirements in 1987, and at the valuation dates much of the land had been cleared and was derelict (see History below).

The reference sites were located on River Way, RMC on the north-west and ACE south-east. River Way, an adopted highway, ran north-east from Blackwall Lane to the river. Besides the subject sites, River Way also served the Thames Barrier Yacht Club and the City Sea Fishing Club, the Riverside Industrial Estate, a row of eight terraced cottages and a public house called The Pilot. To the south of the River Way junction Blackwall Lane joined Dreadnought Street, which was fed from the north by a slip road from the A102(M). A road called Bugsby's Way ran eastwards from Dreadnought Street to Horn Lane. Blackwall Lane continued south (as the A2203) under the A102(M) to join Trafalgar Road, a major arterial route into central London.

The RMC site was rectangular and 1.031 hectares in area. It had a direct frontage of some 150 metres to River Way and a direct frontage of some 70 metres to the River Thames. A jetty extended from it into the river. The site was formerly occupied by the Blackwall Point Electricity Generating Station. This had been demolished and the site cleared to its foundations by the time it was acquired by RMC in 1987. It was still in that state at the relevant valuation date. The former British Gas land to the northwest had also been cleared.

The ACE site was rectangular and 0.2359 hectare in area. It had a direct road frontage of 118 metres to River Way and a depth of between 18 and 25 metres. The site was occupied by buildings known as Switchgear House. At the relevant valuation date these buildings comprised part single-storey and part multi-storey buildings. They were subsequently demolished. The buildings were constructed in the 1950s. They were structurally sound but dilapidated and dirty. Windows were corroded. The roof leaked and there were pools of rainwater on the internal floors. Joinery was non-existent. White asbestos was present in limited quantities in door insulation, in electrical equipment and in general rubbish present in the buildings. The site was generally impenetrable because of sapling and briar growth. The principal accommodation measured approximately 23,330 sq ft (2,074.5 m²) gross internal area with an additional 4,600 sq ft (427.3 m²) of accommodation comprising open topped bays. The site's north-eastern and south-western sides comprised vehicular accesses to the Riverside Industrial Estate although the north-eastern access was no longer in use. The Riverside Industrial Estate, located to the south-east of the site, was owned by LBG and included 21 single height units of 1970s construction used for various light industrial and distribution operations. To the north-east was Greenwich Yacht Club, also owned by LBG, and to the south-west was the terrace of eight Grade II listed brick and tiled houses, River Way Cottages, and the two and three storey public house, The Pilot, at the south-western end.

Transport links and infrastructure

The basic road network in the vicinity of the subject sites is described above. The sites were located approximately 700 metres from the Dreadnought Street exit of the south-bound A102(M) motorway, accessed from there by way of Blackwall Lane and River Way. Access from the north-bound A102(M) was by way of the Horn Lane exit further to the south, along Horn Lane and Bugsby's Way to the Dreadnought Street roundabout adjacent to the A102(M) and then, again, by way of Blackwall Lane and River Way. The Highways Agency had proposals for improvements to be made to the access to the Greenwich Peninsula from the A102(M). The A102(M) Compulsory Purchase Order was confirmed by the Secretary of State on 24 December 1997 following a public local inquiry. The principal elements of the proposals were new slip roads from the A102(M) and a new roundabout at the junction between Bugsby's Way and Blackwall Lane.

The North Greenwich station of the Jubilee Line Extension, which opened in May 1999 to north/east bound trains and, in September 1999, to south/west bound trains for Central London, was situated just over 500 metres to the north-west of the reference sites and 1,000 metres away by road. Electricity and gas were available in River Way. Telecom services were not available to the reference sites. There was a foul water public sewer located in River Way. There would not have been significant abnormal servicing costs. Although there might have been issues over drainage capacity and the condition of the sewer that might attract connection costs, the parties ignored such costs for the purposes of valuing the reference lands.

History

The South Metropolitan Gas Company built the first gas production plant to the north of River Way shortly after purchasing a large part of Greenwich Peninsula (approximately 95 hectares) in 1881. By 1960 it was one of the largest gas works in Europe. The production of gas from oil continued until the 1980s, when the majority of the plant was closed and demolished. The Greenwich Peninsula was scheduled by British Gas for large scale production of substitute natural gas, but in late 1986 an alternative site was acquired elsewhere and in 1987 the site was declared surplus to operational requirements. Following the cessation of gas production much of the site became under-used or semi-derelict, although there were several short term tenancies granted on Blackwall Point, and uses included scrap metal and aggregates activities, a waste transfer facility and temporary car parking areas. Access to this area was gained from the A102(M) via Tunnel Avenue. Access to the main body of the Greenwich Peninsula was from Horn Lane / Bugsby's Way and Trafalgar Road / Dreadnought Street.

With their own site surplus to operational requirements British Gas looked to develop the Greenwich Peninsula, and during the late 1980s and early 1990s a subsidiary company, Port Greenwich Limited (PGL), acquired by private treaty a number of other land holdings throughout the peninsula, including Pioneer Aggregates' wharf at Horn Lane and some of the residential properties in Tunnel Avenue, which were known to be necessary to facilitate highways improvements. Overall more than 24 ha (60 acres) was acquired.

In 1988-1989 PGL undertook a characterisation ground investigation survey (boreholes and trial pits) across all of its site to ascertain the geological and chemical condition of the ground at a cost of approximately £200,000. In 1989 PGL re-built part of the river wall at Blackwall Point to a specification suitable to withstand future development. The cost of these works was approximately £250,000. In 1991 they began giving notices to all the existing short term tenants and lessees (approximately 40 in number) on the Greenwich Peninsula and offering them new leases outside the provisions of the Landlord and Tenant Act 1954. The income from these tenancies amounted to £2m per annum. In 1993 PGL submitted three separate planning applications to the London Borough of Greenwich for the stockpiling of arisings from the Jubilee Line Extension, principally London clay, on sites referred to as the sports field site, the Coalite site and the East Greenwich Gas Works site. The London clay was required for raising levels of the land in certain parts of the site and to place a clay cap over areas of the site that would be remediated prior to or as part of any redevelopment. Planning consent for these works was granted in March 1994. In addition to obtaining planning consent, waste management licences had to be applied for and obtained from the London Waste Regulatory Authority for the Coalite site and the East Greenwich Gas Works site, as this stockpiling was considered to be "long term storage" by the LWRA. Subsequently, some 750,000 cubic metres were stockpiled on the three sites in 1994 and 1995. The London clay was later used as part of site improvement and remediation works during 1995-1998.

In 1995 Port Greenwich Limited rebuilt the river wall at Ordnance Wharf (the Millennium site) in conjunction with the Port of London Authority at a cost of approximately £1m, of which the PLA funded 90%. In 1994-1996 PGL undertook further ground investigation surveys (boreholes and trial pits) in phases across the entire site. The objective of the surveys was to ascertain the precise geological and chemical conditions of the ground, so as to be able to design the specification for the remediation of the site. Derelict land grant was obtained from the Urban Regeneration Agency via the London Borough of Greenwich, which funded approximately 50% of the cost of these ground investigation surveys. The contracted cost of the surveys was approximately £550,000. In 1995-1996 PGL raised the levels of the sports field (which was low-lying) to required Greater London Council development level for redevelopment to take place. The contracted cost of these works was approximately £500,000. In 1995-1996 PGL re-configured the below ground gas mains in the Coalite and sports field sites so as to accommodate the redevelopment proposals for the realignment and construction of new roundabouts on Bugsby's Way. The contracted cost of these works was £2.5m.

Remediation works – stage 1, phase 1 – were undertaken during the period June 1996 to January 1997 on all of the land to the north of the planned new Jubilee Line Extension station on the Greenwich Peninsula (now the Millennium Dome site) and a small area in the north-east corner of the sports field site on Bugsby's Way. The cost was approximately £10.5m. The works involved the removal of contaminated soils and in situ remediation by extraction of water and vapour. Remediation works – stage 1, phase 2 – were undertaken during the period March 1997 to January 1998 on all of the land to the south of the planned JLE station down to River Way with the exception of the RMC site, which was not in the ownership of PGL. The works involved the removal of deep tanks and contaminated soils and the treatment of in situ soils by scrubbing. The cost of these works was approximately £10.75m.

The proposed route of the Jubilee Line Extension was published in 1989. This indicated that the line would go from Canary Wharf to Brunswick Wharf and then to Canning Town, excluding the Greenwich Peninsula. British Gas engaged in negotiations with the Secretary of State for Transport in 1989/1990 to persuade the Government to re-route the JLE via the Greenwich Peninsula. British Gas offered to make a financial contribution of approximately £25m to the cost of constructing a station, North Greenwich, on the northern part of the peninsula. In February 1991 the government confirmed that the JLE would pass through the Greenwich Peninsula. Port Greenwich Limited financed and project managed the parliamentary process to make the necessary amendments to the Jubilee Line Bill during 1991. Royal assent was granted on 26 March 1992. Construction of the JLE commenced in December 1993, and work on the construction of the North Greenwich station box started in February 1994. During 1995-1996 the construction of the access road to the station, an extension of Blackwall Lane, within the curtilage of the PGL land was undertaken by contractors on behalf of London Underground.

In September 1990 Port Greenwich Ltd submitted an outline planning application for mixed-use development of the Greenwich Peninsula. It submitted a revised application in December 1991. On 15 October 1992 the London Borough of Greenwich resolved to grant planning permission subject to the completion of a section 106 agreement, but in the event the planning consent was never issued. In September 1995 PGL submitted a revised application, which on 14 February 1996 the London Borough of Greenwich resolved to approve, subject to the completion of a section 106 agreement. On 13 December 1996, following the completion of a section 106 agreement, planning permission was granted.

In July 1995 the Millennium Commission had invited potential exhibition operators to submit proposals for an all-weather venue capable of accommodating a large audience for one-off events and entertainments to celebrate the year 2000. Before the submission of the 1995 planning application English Partnerships had begun informal discussions with both British Gas and prospective purchasers and developers of parts of the peninsula on how they might be able to provide assistance. In August 1996 the Millennium Commission selected Greenwich Peninsula as the site for the New Millennium Experience. A planning application was made on 31 October 1996 for a development that included the Millennium Dome, and planning permission was granted on 18 June 1997. Construction of the Dome began almost immediately. A separate highway works planning application was submitted on behalf of PGL and English Partnerships in November 1996, and permission was granted on 18 June 1997. In February 1997 EP purchased the Greenwich Peninsula landholdings of British Gas and PGL for £20m and a share of future land sales receipts.

Planning history

On the RMC site planning permission was refused on 13 September 1988 for the erection of a plant and use of the site for industrial processing and distribution of coated roadstone together with distribution of dry roadstone. On 20 August 1990 planning permission was granted for the temporary use of land for storage and distribution of dry roadstone products. In September 1988, as the result of negotiations with British Gas, the London Borough of Greenwich had published the draft "Blackwall Peninsula" brief for the development of the Blackwall Peninsula. This was never formally adopted and existed as non-statutory planning guidance. Each of the reference sites was shown partly within a central activities zone and partly within an area of high density residential development. On 31 January 1989 an application was submitted for redevelopment of the RMC site for residential purposes up to a density of 120 habitable rooms per acre, including a private riverside walk. This application was never determined.

On the ACE site planning permission was refused on 13 September 1988 for the conversion of the existing building and bays into light industrial business units and offices under class B1, and a further application for the same purpose was refused on 13 March 1989. On 12 November 1990 planning permission was granted on appeal for the conversion and extension of existing buildings into light industrial studios, business units and offices under class B1.

The PGL scheme for which the council resolved to grant planning permission in October 1992 (see above) showed the reference sites as wholly within an area to be developed for housing at a density of 120 habitable rooms per acre (except for a strip along the river frontage of the RMC site, broadly coincident with a riverside walk and cycle route that had been shown on the UDP proposals map).

The outline planning permission granted on 13 December 1996 related to a site of 118.91 ha (about 294 acres). The permission was referred to as the Media Master Plan permission ("the MMP permission") after the name of the layout plan that accompanied the application. The development for which permission was granted was described as:

"Residential development (up to 3,000 dwellings), employment (B1), leisure/employment, retail, hotel, pub/restaurants, multiplex cinema/leisure uses, public open space, riverside walkway, primary school, health centre, transport interchange, modified access to A102(M) at Blackwall Lane and Horn Lane, modified access to Bugsby's Way, new spine road and on-site road network, footpaths, cycleways."

The illustrative land use plan that had accompanied the application in its revised (January 1996) form showed River Way retained, and to the north and south of it, 78.4 acres for leisure/employment uses, including a theme park. The RMC site was within this area, and while the ACE site itself, and other frontage development on the south side of River Way, appears to have been excluded it was abutted by the area. Residential uses were shown along the river frontage to the south of River Way and covering much of the area between a new road (what is now John Harrison Way) and Horn Lane.

The permission was subject to a large number of conditions. Three conditions relating to the highways infrastructure (42, 43 and 45) are referred to later. Condition 29 provided:

"No development except the highway layout access works shown on drawings 4A and 4B, remediation and statutory utility works, shall take place until details of the phasing of the development and the disposition of uses across the whole site shall be submitted to and approved by the Local Planning Authority and the development shall be carried out in accordance with such approved details unless otherwise agreed in writing with the Local Planning Authority."

A section 106 agreement between Port Greenwich Ltd, British Gas and the London Borough of Greenwich was completed on the same day (13 December 1996) as the grant of the MMP permission. The agreement made provision for the transfer of affordable housing to the London Borough of Greenwich or a housing association on remediated and serviced land, comprising not less than two sites representing 25% of the land proposed for residential development; transfer to the London Borough of Greenwich of a site for a primary school; laying out and leasing to the London Borough of Greenwich of 8.82 ha of open space; construction of a riverside walk and its subsequent dedication and maintenance; improvements to Mudlarks Way (now John Harrison Way); payments to the London Borough of Greenwich of £150,000 towards local training and employment and £350,000 towards traffic management works; construction of a pedestrian bridge across the A102(M); transfer of land for a health centre; and other matters.

The planning permission granted on 20 June 1997 related to a site of 181 acres. It excluded from the 294 acres of the MMP permission the southern part of that site. The development permitted was described as:

"Demolition of existing buildings, remediation of contaminated land, construction of roads and new means of access to A102(M); erection of Millennium Exhibition Dome and ancillary buildings for temporary exhibition use, construction of permanent new river piers, riverside walkway, park and related works, laying out of temporary open spaces, car and coach park and operational areas."

The site included the two reference sites, which were shown on the layout plan as being laid out and temporarily used as a "service area" to the south of the coach parking for the duration of the Millennium Experience. Condition 1 of the permission limited the period of the use to 31 December 2001, unless renewed by the local planning authority. A section 106 agreement was completed on the day that the permission was granted. It made provision for major highways within the site; a riverside walk along the shorter river boundary of the Millennium Experience site, and open space; the reservation of land for a transit link, and a contribution of £1m towards its provision; a contribution of £90,000 for off-site landscaping, screening and environmental improvements, and a permanent pier; £1,750,000 for off-site traffic management works and provision of controlled parking zones; and possible, unspecified, funding for off-site priority bus lanes.

On 18 June 1997 the MMP permission was varied, providing for a modified access to the A102(M) at Blackwall Lane, Dreadnought Street and Bugsby's Way, construction of a dual carriageway road from Horn Lane/A102(M) junction to Bugsby's Way, internal distributor and access roads and modified spine road. A supplemental section 106 agreement was completed on 18 June 1997 between Millennium Central Ltd, the Urban Regeneration Agency and the London Borough of Greenwich. On 18 December 1997 the MMP permission was further varied to modify the access arrangements to A102(M) at Woolwich Road/Horn Lane, together with the provision of new local access roads following the completion on the same day of a second supplemental section 106 agreement.

On 8 May 1998 approval was granted pursuant to condition 29 of the main permission for a scheme of phasing and land use disposition prepared by Richard Rogers Partnership. The formal submission was made up of various figures including single topic plans and a comprehensive illustrative master plan (referred to as the Richard Rogers Plan or the Greenwich Peninsula Master Plan ("GPMP")). The approval was subject to a section 106 agreement to secure a second school site. This was completed on 8 May 1998. The GPMP showed the reference sites as being within phase 2A for development in the period 2001-2002. It showed the RMC site within an area for high density residential development with the riverside frontage to the side traversed, inter alia, by a riverside road to service adjoining development.

Outline planning permission for the Millennium Village was granted on 20 May 1999 following completion of a section 106 agreement. Millennium Village lies to the south of the reference sites, south of Mudlark's Boulevard and within the area of the MMP permission but outside the area of the NME permission. The Millennium Village outline permission permitted 1,377 dwellings (houses and flats from two to twelve storeys), community facilities, mixed use commercial centre, mixed retail (A1, A2 and A3), business (B1), health clinic, tele services centre, temporary visitor centre, primary school, crèche, community buildings, landscaped open spaces with water features and the provision of a combined heat and power plant. A separate planning permission (ie not an approval of reserved matters) was also granted on 20 May 1999 for buildings 2 and 6 of Phase 1 of the Millennium Village ("the Millennium Village Phase 1 permission"). This permission proposed 90 residential units arranged in two buildings of five and eight storeys, on 0.75 hectares (1.86 acres).

In parallel with the applications for the Millennium Village, approval of reserved matters was granted pursuant to the MMP permission for the following developments on the former British Gas sports ground between Bugsby's Way and the A102(M): a J Sainsbury food and non-food development, which was approved on 10 February 1999; a hotel and restaurant, which was approved on 11 January 1999; and a multiplex cinema, which was approved in October 1999.

Implementation of the MMP permission

At the valuation dates implementation of the infrastructure approved pursuant to condition 29 (including East Parkside and John Harrison Way) had commenced. Access roads associated with the discharge of conditions 42 and 43 of the main permission had been approved, although they were not fully implemented or contracted. This highway framework directly abutted the reference sites and provided a structure for the high-density residential area within which the reference sites lay. It would have been open to an acquiring developer to have submitted a reserved matters application for the housing in phase 2A of the GPDP or to have made a new planning application for this development area, including the reference sites. If a reserved matters application had been submitted for the ACE site or the RMC site it would have had to satisfy the conditions in the permission relating to density (condition 9) and housing mix (condition 19), the requirement that 10% of housing stock be capable of conversion to full mobility standards to be distributed throughout the development, and the Grampian conditions relating to the construction of new highways and improvements (conditions 42, 43 and 45).

The development plan

At the valuation dates the development plan was the London Borough of Greenwich Unitary Development Plan, which had been adopted in 1994. The UDP applied a policy (J19) and a site proposal (MU23) specifying a range of uses for the majority of the Greenwich Peninsula as delineated on the proposals map. J19 designated 120 ha of the peninsula for comprehensive development comprising housing (at least 25% of which had to be affordable), employment, a mixed use area, a "central activities zone", central business district, schools, and public open spaces, including a riverside walk. In the UDP schedule of site proposals MU23 identified the Greenwich Peninsula and referred to the proposal for mixed use development, including housing, business, open space, community facilities and tourism. Except for the land reserved for a cycle route and riverside walk along the eastern margin of the RMC site, there was no site-specific allocation on the proposals map relating to the reference sites. Policy J20 required mixed use sites to be developed in accordance with the relevant brief, which was the 1988 "Blackwall Peninsula" brief that preceded the October 1992 resolution to grant planning permission.

The statutory planning assumptions and the Pointe Gourde principle

The assumptions that fall to be applied in valuing the reference lands are, on the one hand, those relating to the planning permissions to be assumed in respect of each of the sites and, on the other, those relating to any increase or diminution in value arising from the proposal to acquire each compulsorily.

Planning assumptions are contained in sections 14 to 16 of the Land Compensation Act 1961. Section 14(1) provides that, for the purposes of assessing the value of the relevant land, such of the assumptions in sections 15 and 16 as are applicable to the relevant land shall be made. Section 39(2) defines the relevant land as the land acquired from the claimant. No question arises under section 15, which the parties agree is not relevant to these references. Section 14(2) provides that any planning permission to be assumed under sections 15 and 16 is in addition to any planning permission in force at the date of notice to treat. Section 14(3) provides that nothing in sections 14 and 16 is to be construed as requiring it to be assumed that planning permission would necessarily be refused for any other form of development. In addition account is to be taken of any planning permission that could reasonably have been expected to be granted in the no-scheme world (see Jelson Ltd v Blaby District Council [1977] 1 WLR 1020).

There was agreement in the light of this that there were three possible planning assumptions to be made for the purpose of these references:

(a) any actual planning permission;

(b) any planning permission to be assumed under section 16; and

(c) any planning permission that would have been granted prior to the valuation date in the no-scheme world.

Assumptions relating to increase or diminution in value are contained in section 6 and Schedule 1, section 9 and in the Pointe Gourde principle. Section 6 provides for the disregard of actual or prospective development in certain cases. The different cases to which the provision applies are set out in Schedule 1. Case 1 is: "Where the acquisition is for purposes involving development of any of the land authorised to be acquired." There is no dispute that Case 1 applies for present purposes. Section 6 requires that in such a case there must be left out of account any increase or diminution in the value of the land acquired that is attributable to the carrying out or prospect of such development of the other land within the CPO, for the purposes for which that other land was acquired, as would not have been likely to be carried out if the acquiring authority had not acquired and did not propose to acquire any of that land. Under section 9 no account is to be taken of any depreciation of the value of the relevant interest which is attributable to the fact that an indication has been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers. Under the Pointe Gourde principle any increase or decrease in the value of the subject land that is wholly attributable to the scheme underlying the acquisition is to be left out of account.

The Waters case

Most of the experts' reports in the present references had been prepared before the House of Lords decision in April 2004 in Waters. The valuers, although they had referred to section 6 of the 1961 Act, had adopted an approach to the disregards arising from the scheme that was based entirely on an application of the Pointe Gourde rule. This was understandable as it had become the practice of valuers, certainly in Case 1 cases, to treat the statutory disregards as subsumed by Pointe Gourde. A valuer would say that he simply valued in the no scheme world; and (as in this case) reports prepared for Lands Tribunal hearings would frequently quote the words of Lord Denning MR in Myers v Milton Keynes District Council [1974] 1 WLR 696 at 704 that the valuer must let his imagination "take flight to the clouds".

The parties each identified as the scheme one that was very greatly wider in geographical area than the land in the CPO under which the reference lands had been acquired. The acquiring authority contended that the scheme was the comprehensive development of the Greenwich Peninsula and that it came into existence when English Partnerships purchased the British Gas land holding in February 1997. This was, they said, the point at which public funds were committed to securing the comprehensive development. The claimants contended that the scheme underlying the acquisition was the 1997 planning permission for the New Millennium Experience and its associated development and infrastructure works, since it was the intervention of English Partnerships for that purpose that led to the CPO being made by the London Borough of Greenwich in respect of the reference lands. The area of the CPO was 19 acres; the area of Greenwich Peninsula in the MMP permission was 294 acres; and the area of the New Millennium Experience planning permission was 181 acres.

In Waters the House of Lords, while confirming that Pointe Gourde applies as a principle of law and goes beyond the statutory provisions, has clarified its function and provided guidance as to how it should be applied. The principle had come to be applied, following the Town and Country Planning Act 1959 and the 1961 Act, in order to make good what the courts saw as the incomplete nature of the statutory provisions (see Lord Nicholls of Birkenhead at paras 48-54). The purpose of the principle "is to forward Parliament's objective of providing dispossessed owners with a fair financial equivalent for their land. They are to receive fair compensation but not more than fair compensation" (per Lord Nicholls at para 61). At para 63 Lord Nicholls set out some "pointers" as to the appropriate application of the Pointe Gourde principle.

The view of the House of Lords was that the Pointe Gourde principle had come to be applied too widely and should be restricted in its application. At para 56 Lord Nicholls (with whom Lord Woolf, Lord Steyn and Lord Brown of Eaton-under-Heywood agreed) said that "as matters stand, there are indications that the Pointe Gourde principle has become too wide ranging", and when setting out his pointers he did so in terms that were intended to restrict the ambit of its application (see in particular pointers (1), (4) and (6), which we quote below). Lord Brown (with whom Lord Woolf and Lord Steyn agreed), having at para 146 referred to the "wide version" of the no scheme rule described in para 7.16 of the Law Commission's report No 286 – "the valuer disregards, not only the purpose of the particular acquisition, but also the 'underlying scheme', which may extend the planning history over a much wider area, and dating back many years" – said at para 148:

"In so far as 'the wide version' of the rule described in para 7.16(2) of the report involves the disregard of 'the planning history over a much wider area [than the order land] and dating back many years', I too would deprecate it. If, indeed, that is thought to be the approach required following Pointe Gourde's reference to the 'underlying scheme' as subsequently interpreted, then, in my opinion the rule has been developed impermissibly far and should now be narrowed down. Clearly, for example, it cannot be right that the valuer must let his imagination 'take flight to the clouds' as Lord Denning MR suggested in Myers v Milton Keynes District Council [1974] 1 WLR 696, 704…"

Setting out his pointers at para 63 Lord Nicholls said this:

"In applying [the general principle that a dispossessed owner should receive fair compensation but not more than fair compensation] there is of course no magical formula which will provide a ready answer in every case. That is in the nature of things, circumstances varying so widely. But some pointers may be useful. (1) The Pointe Gourde principle should not be pressed too far. The principle is soundly based but it should be applies in a manner which achieves a fair and reasonable result. Otherwise the principle would thwart, rather than advance, the intention of Parliament. (2) A result is not fair and reasonable where it requires a valuation exercise which is unreal or virtually impossible. (3) A valuation result should be viewed with caution when it would lead to a gross disparity between the amount of compensation payable and the market values of properties which are not being acquired. (4) When applied as a supplement to the section 6 code, which will usually be the position, the Pointe Gourde principle should be applied by analogy with the provisions in the statutory code. Thus in the class 1 type of case the area of the scheme should be interpreted narrowly, for instance, so as to embrace the property acquired under the compulsory purchase order and property which would probably have been so acquired had it not been bought by agreement. In other cases, such as case 2, Parliament has spread the 'disregard' net more widely. Then it may be appropriate to give the scheme a wider scope. (5) Normally the scope of the intended works and their purpose will appear from the formal resolutions or documents of the acquiring authority. But this formulation should not be regarded as conclusive. (6) When in doubt a scheme should be identified in narrower rather than broader terms."

The following matters in the application of the Pointe Gourde principle in the light of Waters in our view need to be noted. Firstly the principle comes in at two points – in relation to the planning assumptions (see (c) in para 37 above) and in relation to increases and decreases in value. It would seem that both these aspects should be borne in mind when deciding how the principle is to be applied. Secondly the principle is an adjunct of the statutory provisions, and it is to be applied for the purpose of achieving fair compensation in the particular case. Thirdly, the application of the principle is in general to be restricted in its scope, and in particular the scheme is to be interpreted narrowly when applied in a Case 1 case.

In the light of Waters we invited the parties in the course of the hearing to produce further evidence, applying three alternative sets of assumptions – (a) the assumptions in sections 6 and 9; (b) the assumptions in sections 6 and 9 and the claimants' no-scheme assumptions; and (c) the assumptions in sections 6 and 9 and the acquiring authority's no-scheme assumptions. These three sets of assumptions reflect the three potential schemes for the application of the Pointe Gourde principle – (a) the CPO land developed for its acquisition purposes, (b) the NME land developed for the NME, and (c) the Greenwich Peninsula developed in accordance with the 1996 planning permission. Following our invitation to the parties Mr Simpson and Ms Asquith each produced a final supplementary report. Their conclusions can be seen in the following tables:

RMC

Assumption	Mr Simpson	Ms Asquith
(a)	£5,500,000	£2,295,000
(b)	£5,500,000	£1,780,000
(c)	£4,750,000	£1,780,000

ACE

Assumption	Mr Simpson	Ms Asquith
(a)	£1,250,000	£449,500
(b)	£1,250,000	£207,000 / £226,000
(c)	£1,075,000 / £996,000	£207,000 / £226,000

The alternative figures in relation to ACE reflect the alternative possibilities of the site being developed by itself or together with adjoining land, the latter giving a lower value than the former.

Planning assumptions

We have identified above the three possible planning assumptions. We will consider them each in turn. Before we do so, however, there is one matter we must refer to. It concerns RMC and the contents of two letters written by Gerald Eve, the chartered surveyors who were acting for English Partnerships in relation to the acquisition of the CPO land, to RMC shortly before the CPO public inquiry. On 10 June 1998 Mr A M Chase FRICS of Gerald Eve wrote:

"I confirm that I and my clients, English Partnerships, consider that the appropriate basis of valuation of this site for compulsory purchase compensation is as follows:

(i) An assumption that the site is currently available for open storage, vehicle parking or similar purposes but subject to the land being physically suitable for such use and to any decontamination work which may need to be carried out before the land could be used.

(ii) An assumption the planning permission would be granted for a high density residential development on the land, again taking into account the physical characteristics of the site and any decontamination work required – although I understand that the latter would be minimal and confined primarily to any areas of soft landscaping.

For the avoidance of doubt I can confirm that my clients have discussed this matter with the Planning Officer at London Borough of Greenwich who advises informally that he considers that planning permission would be likely to be granted for the uses which I have stated above.

I hope that this assurance is sufficient for you now to withdraw your objection to the compulsory purchase order, but please let me know immediately if you have any queries or if there are any aspects upon which you require clarification."

Mr Chase wrote again on 12 June 1998 in these terms:

"I have been asked by my clients, English Partnerships, just to clarify two points arising out of my letter to you of 10^th June.

First, I should just reiterate a point which was made previously in correspondence between Ralph Luck and Jannie Stockton which is that in assessing the value of the land for compulsory purchase we would wish to disregard any effect on value of remedial works which English Partnerships have already carried out at their expense to your land.

Secondly, my comments regarding the availability of planning permission refer, so far as residential development is concerned, to a development in accordance with the current 'master plan' which envisaged high density residential development in conjunction with the development of surrounding land. Notwithstanding this point however I can confirm, but on a strictly without prejudice basis, that we are prepared alternatively to assess the vale for compulsory purchase on the assumption that planning permission would be available for high density residential development in isolation. A valuation in accordance with the second assumption is, however, conditional upon your withdrawing your objection to the compulsory purchase order as my understanding from the local planning authority is that permission for such a development, which would not accord with the master plan, may well in practice be resisted.

I trust that neither of these points will cause you any concern as they do not alter the intention of my letter of 10^th June nor do they detract in any way from the compensation to which you would be strictly entitled upon a compulsory acquisition of the land.

I look forward to hearing from you as soon as possible."

In the light of that letter RMC withdrew their objection to the CPO.

There was thus acceptance on the part of the acquiring authority that permission was to be assumed for high density residential development on the RMC site in isolation. They also accepted that planning permission should be assumed for high density residential development on the ACE site, but only in conjunction with adjoining land in other ownership. They accepted that, apart from the actual permission (the 1996 MMP permission, with the GPMP approved pursuant to condition 29), planning permission was to be assumed in each case under section 16(2). On the basis of their identification of the scheme (the 294-acre redevelopment), they said that planning permission could have been expected to be granted, but not until after the valuation date.

In his closing submissions Mr Roots said that any planning permission to be assumed (either under section 16(2) or in the no-scheme world) would have been subject to the same Grampian highways conditions (conditions 42, 43 and 45) as were imposed in the MMP permission. He also submitted that it was inconceivable that the local planning authority would have granted planning permission for development of parts of the area within the outline planning permission, including therefore the RMC and ACE sites, which authorised development to be carried out on a timescale different from the phasing incorporated in the outline permission. We should deal at this stage with the latter of these two submissions. We will consider the Grampian conditions later.

Under condition 29 of the MMP permission development had to be carried out in accordance with the phasing and disposition of uses approved by the local planning authority. Approval under condition 29 was given by the authority to the phasing and layout shown on the GPMP. On the GPMP the references sites were shown within Phase 2A for high density residential development in the period 2001-2002. Although Mr White, the acquiring authority's planning witness, referred to this in his reports, neither he nor Ms Asquith suggested that this time limitation should be implied as to the grant of any permission that was to be assumed. In her first report (at para 5.72) Ms Asquith allowed for a two-year deferment, but this was because, in her view, implementation of the permission would have been delayed by the developer in the physical surroundings of the no-scheme world, not because of restrictions in the permission itself. Mr White's evidence was that permission was to be assumed under section 16(2) for planning permission at the valuation date for the RMC site on its own and for the ACE site with other land. It would not have been open to the acquiring authority to impose a condition on the permission to be assumed for development of the RMC site in isolation as at 12 April 1999 that prevented its development until 2001. We therefore reject the submission that no permission is to be assumed for the RMC site that would have enabled its development in advance of the phasing in the GPMP. As far as the ACE site is concerned, the issue does not in practice arise since (as we shall say) the requirement to develop it in conjunction with the adjoining industrial estate would have given rise to delay while possession was obtained of the whole of the industrial estate, so that development could not have taken place before the time provided for in the phasing programme.

We have identified above the three possible planning assumptions to be made for the purpose of these references: (a) any actual planning permission; (b) any planning permission to be assumed under section 16; and (c) any planning permission that would have been granted prior to the valuation date in the no-scheme world. We will consider each of these, although our principal purpose in doing so is to identify how the acquiring authority's acceptance of an assumption of permission in each case should be treated as arising in the light of the statutory provisions.

(a) Actual planning permissions. Both reference sites were within the area of the MMP permission, the outline permission that had been granted on 13 December 1996, and the 1997 permission for the New Millennium Experience. It is not suggested that this latter permission gave any value to the land in either case that affected the compensation payable. In the approval of disposition of uses and phasing granted on 8 May 1998 pursuant to condition 29 of the MMP permission, both reference sites were shown within an area shown for high density residential development. The acquiring authority contended, however, that this permission could not have been implemented on either of the reference sites individually because of the conditions to which it was subject, in particular those relating to the approval of details and to highway works. The claimants contended that approval of details would have been achieved for the development of each site individually and that development would not have been prevented by the highways conditions.

As far as the approval of details is concerned, Mr White expressed the view in relation to the RMC site that the local planning authority would have wished to see how the whole development cell of which the site was a part would be laid out before granting approval for the site itself. He recognised, however, that it would have been possible for a purchaser of the RMC land to meet this requirement by designing, or preparing a development brief for, the whole of the development cell in order to show how the RMC site could be developed. He thought that development on the RMC site would have been proposed in an "L" shape, with a frontage to the river and a frontage to River Way (or its replacement). There was no dispute that this was the most likely form of development, and indeed both Mr Noble for the claimants and Mr Merrington for the acquiring authority produced schemes showing such a development. In view of this we do not think that the need to obtain approval of details represented an inhibition to the development of the RMC site under the MMP permission.

Different considerations would, however, we think, have applied to the ACE site. Mr White said, and we accept, that the acquiring authority would not have been willing to grant approval of reserved matters for this site on its own, primarily because it lacked the necessary depth. It would have needed to be developed together with adjacent land. We consider below the particular factors that would have dictated this. In addition it is to be noted that on the GPMP East Parkside was shown aligned across the western end of the site, but Mr White nevertheless treated the whole of the site as available for high density residential development under the MMP permission.

The other inhibition that the acquiring authority said would have prevented the claimants from implementing the MMP permission on their sites was the need to comply with the Grampian highway conditions, conditions 42, 43 and 45. These had been imposed on the direction of the Highways Agency. They had been varied before the valuation date. They prevented development on the reference lands before certain highway works had been carried out, and the timing of the works was not within the control of either of the claimants. Ms Asquith said that in consequence the MMP permission did not add significant value to the reference lands.

The claimants acknowledged that, because of the Grampian conditions, planning permission would have been required, either to modify further the 1996 permission or to give fresh permissions for the reference sites, in each case excluding the Grampian conditions to the extent that they prevented immediate development, if they were to be capable of development at the valuation dates. The MMP permission was thus not capable of implementation at those dates. The value that the permission gave to the reference lands, to the extent that they were otherwise capable of implementation in advance of the Grampian conditions being satisfied, would accordingly have depended on the prospects of such further permission being granted and on any particular requirements that would have been imposed in the approval of details. We consider these matters later.

(b) Section 16. This section creates assumptions of planning permission on the basis of four types of designation in statutory development plans. As this Tribunal has noted in previous decisions, the language employed is out of date and can cause difficulties as it is that of the old-style development plans that were replaced under the Town and Country Planning Act 1968. Subsection (1) applies where land is designated for a particular type of development, and none of the parties suggest that it has any application in the case of the reference lands. Nor is there any suggestion that subsection (4) has any application. That provision applies where land is shown in the development plan as being included in an area of comprehensive development. Comprehensive development areas were replaced in the 1968 Act by action areas, and section 54(5) of the Town and Country Planning Act 1990 substitutes references to an action area for references to a comprehensive development area. The present provision, section 12(1) of the 1990 Act, enables a planning authority in a unitary development plan to designate any part of the authority's area as an action area, "that is to say, an area which they have selected for the commencement during the prescribed period for comprehensive treatment by development, redevelopment or improvement (or partly by one and partly by another method". Greenwich Peninsula could have been designated an action area, but it was not, so that subsection (4) of section 16 does not apply.

There was disagreement between the parties as to whether subsection (2) or subsection (3) applied, although they were in agreement that one or other of them did. Subsection (2) applies where the land is allocated for a particular use, and subsection (3) applies where the land is allocated for a range of uses. There was no dispute between the parties that planning permission for high density residential development was to be assumed under one or other of these subsections. There was no dispute also that both conditions (pursuant to subsection (6)(a)) and the terms of any section 106 agreement would need to be taken into account since planning permission would not have been granted in the absence of such agreement. There was disagreement about the form and density of development and whether the Grampian highways conditions would have been imposed. There was disagreement as to whether permission would have been granted for the development of the ACE site otherwise than as part of a wider development site.

The judgment as to whether planning permission might reasonably have been expected to be granted must be made on the assumption that "no part of the relevant land were proposed to be acquired by any authority possessing compulsory purchase powers": section 16(7). "Relevant land" is the land in which the interest acquired subsists. Thus the question whether planning permission might reasonably have been expected to be granted must be determined for each of the reference sites separately on the basis of all the circumstances of the real world except for the compulsory acquisition of the particular land under consideration. What has to be disregarded when applying section 16(3) or (4) in relation to each site is simply any proposal to acquire that site compulsorily. No assumption is required that other land in the CPO would not have been acquired, still less that there would have been no scheme. The question whether planning permission might reasonably have been expected to be granted has to be considered in the light of circumstances as they were in the real world, subject only to leaving out of account the proposal to acquire the reference land.

In the real world at the valuation date the works for the NME were taking place and the other land within the CPO was in the process of being acquired. River Way, the Greenwich Yacht Club and the Riverside Industrial Estate were being acquired as support areas for the NME, to be used with surrounding land already in English Partnership's ownership. Both the RMC site and the ACE site were acquired for similar purposes. We find it impossible to believe, however enthusiastic the council may have been about redevelopment of the peninsula, that if the ACE site alone had been excluded from the CPO planning permission for its development, as an island of residential land amid the NME uses, would have been forthcoming, nor can we believe that if the RMC site had been excluded it could have expected planning permission in these circumstances, with River Way being kept open in order to provide access to it. Nevertheless, as we have said, there was no dispute between the parties that planning permission for high density residential development was to be assumed under section 16; but, in view of the conclusions that we have come to about planning permission in the no-scheme world (see below), the difficulty that we find in accepting the agreed position of the parties is happily rendered of no practical consequence. The issues between the parties on the section 16 assumed permissions – the Grampian conditions, the form and density of the development, and whether the ACE site could have been developed by itself – arise also in relation to planning permissions in the no-scheme world, and we will consider them in that context.

(c) Planning permission in the no-scheme world. Planning permission for development of the RMC site in isolation, which the acquiring authority agreed should be assumed, is not an assumption to be derived from (a) or (b) above, as we have explained. Necessarily, therefore, Pointe Gourde is to be applied to ensure its presumption. In our view such planning permission would fall to be assumed in each of the three no-scheme worlds. Given its position on River Way, its frontage to the river, its developable size and its accessibility to the JLE station, we think that the RMC site would have been an obvious site for early development for high density residential development. It is not surprising that a planning application had been made for this purpose as early as 1989. In the CPO scheme no-scheme world it would have been enhanced by the new road system and the improved surroundings. In the no-scheme worlds of the MMP and NME schemes – in the absence therefore of the new road infrastructure that opened up extensive areas of the peninsula for development – it would have been virtually uniquely well-positioned in terms of access and river frontage, albeit its surroundings would have been somewhat desolate.

Similar considerations in terms of access and accessibility to the JLE station would have applied to the to the ACE site, and we consider that planning permission would have been granted in each of the no-scheme worlds. The claimant contended that that site was capable of development on its own and would have received planning permission for this, and Mr Noble produced drawings to show how the site might be developed. The acquiring authority contended that planning permission would only have been granted for development in conjunction with adjacent land. The reason for this was the limited size and the narrowness of the site. Mr Merrington produced drawings, showing the ACE site developed together with the adjoining industrial estate. He said that Mr Noble's design was unsatisfactory in that parking, rather than living accommodation, was provided at ground level along River Way, amenity space consisted only of balconies, the dwelling-mix was inappropriate, and the flats overlooked the adjoining industrial estate. In our view there is substance in each of these criticisms and we are in no doubt that the council, which would have wished the industrial estate redeveloped for residential purposes in accordance with the planning permission, would only have granted permission on the ACE site for a development that included the industrial estate (and possibly also the yacht club as well). We say below that we consider that the need to buy out, or to await the termination of, all the industrial estate leases would have delayed development of the ACE site for five years.

It was also contended by ACE that the existing building on the site was capable of conversion to residential use at a lower cost than redevelopment, that a purchaser might have been interested in such a scheme and that planning permission would have been granted for it. Mr Noble produced drawings showing how the building might be converted. A conversion scheme would in our view, however, be open to many of the same objections as a redevelopment of the site by itself, and we do not think that planning permission would have been granted for it.

The acquiring authority contended that any planning permission to be assumed would have been subject to the same Grampian conditions as in the MMP permission. We consider this below, and also the density and scale of development that should be assumed for the purposes of valuation.

Grampian conditions

Mr White referred to one potential Grampian condition in his evidence. This related to East Parkside, the road to be constructed under the GPMP proposals parallel to the river, crossing River Way at right angles to the east of the RMC site and taking part of the ACE site. River Way between East Parkside and the river was to be closed. Mr White envisaged a Grampian condition in the permissions he assumed for RMC and ACE preventing development until a satisfactory connection between East Parkside and a retained River Way had been constructed. Mr Rust addressed this in his reports. He considered that no such condition would have been imposed since it would have been the responsibility of the developer of East Parkside to provide the necessary connection.

Ms Asquith, in addressing her application of the planning assumptions referred to the need to discharge conditions 42 and 43 of the MMP permission, even though these had not been mentioned by Mr White. She expressed the view (G/R/4a para 5.72 G/A/4a para 5.85) that the implementation of any scheme of development on the RMC site "would have been delayed by a developer pending the completion of infrastructure improvements etc and given the environs of the 'no scheme world'", and she accordingly deferred the commencement on site by 24 months in the case of RMC and 5 years in the case of ACE. As expressed, the deferment was a developer decision and not the consequence of any condition in the assumed planning permission.

The need to discharge condition 45 in the MMP permission was raised in cross-examination of Mr Edwards, who accepted the need to discharge the condition, and said that the easier course would be to apply for a fresh permission. Mr Rust, when he came to give evidence, noted that modifications had been made to condition 45 between its original imposition in the MMP permission and the valuation dates. In its amended form it related only to the provision of traffic lights at the Woolwich Road/A102(M) roundabout. He considered that, just as no equivalent condition had been imposed in the Millennium Village permission, it would not have been imposed on permissions assumed for the reference lands, the development of which was minor in relation to the MMP area as a whole. At most a contribution towards general highway or other transportation improvements would have been required. As far as conditions 42 and 43 were concerned the requirements in condition 42 were extremely modest and had in fact been met at the valuation dates, while British Gas was committed to and had secured by bond the works required to satisfy condition 43.

The acquiring authority called no expert evidence on highways, and the issues on the Grampian conditions, which had scarcely arisen in the reports of the planning and valuation witnesses, in our view fall to be determined in the light of Mr Rust's evidence. We see no reason to reject his evidence that condition 45 would not have been imposed on any planning permission relating specifically to the RMC and ACE sites and that the satisfaction of conditions 42 and 43 would not have delayed the development. In addition we have no reason to believe on the evidence adduced that the construction of a suitable junction between East Parkside and River Way would have delayed development.

Density and scale of development

The parties differed as to the density and scale of residential development that would have been permitted on the reference sites. The comparable evidence, on the basis of which compensation is to be assessed, does not show that there was direct relationship between the amount of development permitted and the value of the site, but the number of units that a developer might expect to construct on the site would, we accept, be a significant factor in determining the amount that he would pay for the land. The same considerations would, we think, apply in the all the no-scheme worlds and also in the context of the approval of details under the MMP permission or for the purpose of any permission to be assumed under section 16 (see above).

Evidence was given by Mr Edwards and Mr White on planning policy relating to density and the approach of the council to the question, and Mr Noble and Mr Merrington both produced drawings showing schemes of development that they considered to be satisfactory. Mr Noble's scheme for the RMC site had 158 units, 114 of which either overlooked the river or had indirect views of it down River Way. Mr Merrington's scheme showed 93 units, all with river views. For the ACE site Mr Noble's redevelopment scheme, which did not involve the use of other land (and which, on this account, we have concluded would have been unacceptable) was for 65 units, and Mr Merrington's scheme, with the site developed together with the industrial estate showed 57 units on the site itself.

The UDP in policies H10 and H11 set a maximum density of 120 habitable rooms per acre, but the planning witnesses recognised that since the adoption of the plan there had been a trend towards higher densities, principally because of Government policy to maximise the re-use of urban land. It was not in dispute that the form, density and scale of development of the reference sites would have been determined primarily having regard to the quality of the design submitted for approval. Policy H11 set out specific criteria, including a high standard of design, dwelling mix, internal space standards, a high standard of usable private amenity space and safe and secure car parking to acceptable standards. River views should be capitalised on. The draft of the revised PPG3 current at the valuation dates referred to the appropriateness of higher densities, and like the UDP emphasised the importance of design and the residential environment.

Mr Noble's scheme for the RMC site had 10 storeys facing the river stepping down to 4 storeys facing River Way, with parking at ground level. Twenty-five per cent of the flats would have been affordable housing, and the density was 210 hra. Mr Merrington made a number of criticisms of the scheme. Firstly he said that the scheme did not capitalise appropriately on river views. It would have been possible to have more smaller units with views of the river, and in his own scheme all the flats had river views. We reject this criticism. There is clearly no reason why, simply because the site has a river frontage, all the flats must face the river, and we conclude that a scheme of the height and L-shape form proposed by Mr Noble would have been found acceptable. There is in our view greater force in Mr Merrington's second criticism, that ground floor parking would not have been acceptable, and we think that the council would have insisted, with justification, on living space at ground floor level along River Way. Mr Merrington said, thirdly, that private amenity space on decking as proposed by Mr Noble would not have been acceptable, but we do not understand why this should be so, provided that a suitable outlook from the living accommodation could be designed. Fourthly Mr Merrington said that the planning authority would have insisted on a wider mix of affordable units, with a greater proportion of family units, and we think that it is likely that this would have been the case. It is unnecessary for us to enter into any detailed assessment of what, in the event, might have been approved, because those in the market for the land at the valuation date would have made their own various assessments. We conclude that a useful working assumption would be that developers would have made their bids on the basis of a scheme similar in shape and height to Mr Noble's scheme, but that the number of units would have depended on what the particular developer considered would be most saleable. We think that in any event the number of units that could be achieved would be rather less than that suggested by Mr Noble because of the mix of affordable units and the design considerations to which we have referred.

As far as the ACE site is concerned, our conclusion is that this could only have been developed along with adjoining land and that the density and design considerations for any such development would have been similar to those applying to the RMC site.

Section 6 and Schedule 1

It is necessary to apply section 6 and Schedule 1 before deciding whether the Pointe Gourde principle needs to be invoked in order to supplement the statutory provisions. Section 6 requires that there must be left out of account any increase or diminution in the value of the land acquired that is attributable to the carrying out or prospect of such development of the other land within the CPO, for the purposes for which that other land was acquired, as would not have been likely to be carried out if the acquiring authority had not acquired and did not propose to acquire any of that land. We have noted in relation to the question whether planning permissions were to be assumed under section 16 that neither reference site, if it had been excluded from the CPO, would have been capable of being developed. The reason for this is that all the other land in the CPO was taken for development. River Way, the sole means of access, was closed and became used as part of the NME support area and for other purposes. In the absence of the assumptions to be made under section 6, therefore, or alternatively under the Pointe Gourde principle, the assumed residential planning permissions, being incapable of implementation, would have given no value to the reference lands.

As we have said, both parties, in answer to a request from us, produced evidence (in the form of supplementary reports by Mr Simpson and Ms Asquith) setting out their views on the effect of section 6 and Schedule 1. They both referred to the particular purposes for which the individual plots of land included in the CPO had been acquired. They both identified as the plots of significance the reference sites themselves (plots 2 (RMC) and 9 (ACE)), plot 3 (River Way), plots 15-30 (Riverside Industrial Estate) and plot 10 (Greenwich Yacht Club). Ms Asquith also drew attention to plots 4 and 13 (highway land), and, some distance away from the reference sites, plot 5 (proposed for employment), plot 7 (hotel development) and plot 8 (hotel development and leisure uses).

Mr Simpson said, and we agree, that in the absence of the CPO, plot 3 (River Way) would not have been acquired but would have remained as highway. Plot 2 is the RMC site, which, in the absence of the CPO, would have been available for residential development. Plot 9, the ACE site, would similarly have been available for residential development, but only, as we have found, together with the industrial estate. Switchgear House would have remained until the time came for this development to be carried out. In the absence of the CPO the industrial estate (plots 15-30) would have remained until the outstanding tenancies fell in or were bought out. Ms Asquith expressed the view that there was a high degree of uncertainty that satisfactory arrangements could have been negotiated for a surrender of all the remaining leases in a timescale of less than, say, five years. We deal later with the question of the length of time needed for this purpose. Plot 10, the yacht club was subject to a tenancy. Ms Asquith assumed that it could have been terminated in not more than one year. We think the likelihood is that it would have been redeveloped together with the ACE land and the industrial estate.

Under section 6, therefore, the RMC site would fall to be valued as a site available for development, with access from River Way. To the south of River Way Switchgear House, the industrial estate and the yacht club would remain until, after all the industrial estate leases had fallen in or been bought out, residential development could take place. The rest of the surroundings were those that existed and could be expected in the real world. To the north of the RMC site would be the extensive tarmacadamed areas of the NME coach park, which would eventually be developed for residential purposes. To the south, some distance beyond the industrial estate, the Millennium Village development would be proceeding. The road system would be that of the GPMP, subject to a modification of East Parkside in the region of the ACE site. The ACE site would fall to be valued on the basis of these same surroundings, with the development of the RMC site, at the valuation date a cleared site, in early prospect.

Application of the Pointe Gourde principle

The concept of the scheme was explained in this way by Lord Nicholls in Waters (at para 21):

"…It is necessary to separate from the market value of land any enhancement in value attributable solely to the presence of the acquiring authority in the market as a purchaser of the land in the exercise of its statutory powers. It is important to recognise that, for this purpose, it is not the existence of a power of compulsory acquisition which increases the value of land. What is relevant, because this may affect the value of the land, is the use the acquiring authority proposes to make of the land that it is acquiring. Accordingly, in identifying any enhanced value which must be disregarded it is always necessary to look beyond the mere existence of the power of compulsory purchase. It is necessary to identify the use to be made of the land under the scheme for which the land is being taken. Hence the introduction of the concept of the 'scheme' or equivalent expressions such as project or undertaking."

Later, at para 58, Lord Nicholls said:

"…A scheme essentially consists of a project to carry out certain works for a particular purpose or purposes. If the compulsory acquisition of the subject land is an integral part of such a scheme, the Pointe Gourde principle will apply accordingly…"

At para 138 Lord Brown treated the provisions of section 56 of the Land Acquisition (Terms Compensation) Act 1991, operating in New South Wales, as embodying the Pointe Gourde principle in providing for the disregard of:

"any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired."

Any identification of the scheme will thus require the public purpose for which the land was acquired to be identified.

The compulsory purchase order was made by the council under section 226(1)(a) of the Town and Country Planning Act 1990. That provision empowers an authority, on being authorised to do by the Secretary of State, to acquire compulsorily any land in their area "which is suitable for and required in order to secure the carrying out of development, redevelopment or improvement". The CPO authorised the council to acquire the CPO lands "in order to secure the carrying out of development, redevelopment and improvement in the nature of comprehensive redevelopment". The purposes of the acquisition of each of the reference sites and the other parcels of land within the CPO are to be found in a number of documents, including in particular the CPO statement of reasons, the acquiring authority's statement of case for the CPO inquiry, the inspector's report and the Secretary of State's decision.

As was the case in Waters (see Lord Nicholls at para 60) the purpose (or purposes) of the acquisition can be identified at different levels of generality. In the present case there appear to us to be four different levels of generality in which, in the light of the CPO documentation, the purpose of the acquisition of the reference lands can be expressed. They are: (i) the enhancement of the Thames Gateway; (ii) the comprehensive development of the Greenwich Peninsula; (iii) the implementation of the NME development; and (iv) the development of the reference lands as support areas for the NME development.

Purpose (i) is to be found, for instance, in the CPO statement of reasons, which referred to the Thames Gateway Planning Framework RPG9a, and the contribution that the NME would make. It said that completion of the full works in the NME planning permission was:

"…essential to ensure the success of the exhibition and the regeneration of the wider area on both sides of the River Thames, with the creation of new jobs and new businesses, and the opportunity to enhance the whole western section of the Thames Gateway area."

On (ii) the statement of case for the CPO inquiry said:

"6.2 Both the Council and EP believe that it is necessary to acquire all third party interests in order to achieve comprehensive and integrated redevelopment of the Peninsula…"

And the inspector agreed with this, saying:

"9.6 As to the requirement for the Order lands to be acquired, I consider that comprehensive regeneration on the scale proposed is only realistically achievable through an agency with direct control over all the appropriate areas."

As to (iii) the CPO statement of reasons said:

"All the plots in this Compulsory Purchase Order relate to land or buildings affected by or in close proximity to the New Millennium Experience and the Millennium Village and the new highway proposals included within the detailed planning permission for the New Millennium Experience. The Council considers that there is a compelling case in the public interest for the compulsory purchase order being made and confirmed, in order to enable the New Millennium Experience and the Millennium Village projects to proceed in a planned and integrated manner for completion prior to December 1999."

As to (iv) the CPO statement of reasons said this:

"Plot 2: Derelict industrial land formerly Blackwall Point Generating Station. This land is derelict and unoccupied, and will be used in the short term for the New Millennium Experience (for parts of the riverside walk/cycleway, an access road, the coach park, and the support area). In the longer term the coach park and the support area will be developed for high density residential use."

"Plot 9: Derelict industrial building and land formerly Switchgear House, River Way. This land and building is derelict and unoccupied, and the land will be used for the support area and an access road to the New Millennium Experience. In the longer term the support area will be developed for high density residential use…"

As we have said, the claimants said that the scheme for the purpose of the Pointe Gourde principle consisted of the exhibition proposals of the NME and extended to 181 acres; while the acquiring authority said that the scheme was the comprehensive development of the 294 acres of the Greenwich Peninsula under the 1996 planning permission. Having identified the scheme in this way the witnesses each constructed the requisite features of the no-scheme world, postulating, for example, what would have happened in terms of planning and the grant of permissions, the rate at which remediation would have occurred, including what grant aid would have been available and when, where on the peninsula development would have occurred, what it would have been and when it would have been carried out. To identify the scheme in either of these ways and to construct the no-scheme world accordingly was the conventional application of the Pointe Gourde principle prior to Waters. Following Waters, however, the question to be asked for the purpose of applying the Pointe Gourde principle is not "What is the scheme underlying the acquisition?" but "How should the scheme underlying the acquisition be defined as an adjunct of the statutory disregards in order to give the claimant compensation that is neither more nor less than what is fair?"

The conclusion we have come to is that Pointe Gourde should be applied simply so as to leave out of account any increase in value of the reference lands that resulted from the changes to the neighbourhood brought about by the implementation of the NME development. It does not need to be applied for any wider purpose, nor should it be. We believe this to be an obvious and commonsense conclusion, which we are able to reach as the result of Waters. We shall explain how we reach it.

It was agreed that the acquisitions in the present case fell within Case 1 in Schedule 1 to the 1961 Act. In his pointer (4), which we have set out above, Lord Nicholls said that in such a case "the area of the scheme should be interpreted narrowly, for instance, so as to embrace the property acquired under the compulsory purchase order and property which would probably have been so acquired had it not been bought by agreement". There is no dispute that this is a Case 1 case, and there is nothing to suggest that the rest of the land constituting the Greenwich Peninsula would probably have been compulsorily acquired if English Partnerships had not bought it by agreement. Had the Greenwich Peninsula been shown as an action area in the local plan, Case 2 would have applied and any development within the whole of that area would have fallen to be left out of account if it would not have been likely to have occurred in the absence of such designation. But the Greenwich Peninsula was not shown as an action area, no doubt because the London Borough of Greenwich did not see intervention by compulsory purchase on any significant scale as necessary for its redevelopment. If it had been shown as an action area, the blight provisions of Part VI of the Town and Country Planning Act 1990 would have applied, and a landowner falling within the scope of the provisions would have been able to require the council to acquire his land, with compensation being determined if necessary by the Lands Tribunal. As a matter of approach, therefore, we should seek to confine the scheme to the area of the CPO and should only treat the scheme as extending more widely if this is necessary for a particular reason in establishing fair compensation.

The acquiring authority contended that the scheme was the comprehensive development of the Greenwich Peninsula and that it came into existence when English Partnerships purchased the British Gas land holding in February 1997. We are in no doubt that it would not be appropriate to apply Pointe Gourde by treating the scheme as extending to the whole of the 294 acres of the Greenwich Peninsula so that for the purposes of valuation there should be disregarded all works that would have been carried out under English Partnerships' ownership, even in the absence of the NME scheme, but would not have been carried out otherwise. The value of the reference lands consisted entirely in their potential for residential development, the use that the acquiring authority say is the relevant one in both the scheme world and the no-scheme world. The prospect of the owners being able to realise this value, and the value itself, would have waxed and waned over the years between the Blackwall Peninsula brief in 1988 and the acquisition in 1999. It would have been heavily dependent on the provisions of the development plan and the successive development proposals. The Blackwall Peninsula brief of 1988 showed the sites within an area of high density residential development; the MMP illustrative plan of 1996 showed them within a leisure/employment area; and in the GPMP of 1998 they were again in an area of high density residential development. Infrastructure works, most importantly the JLE station, but also road improvements in the vicinity, no doubt increased the value of the sites before English Partnerships' involvement. The extensive investments by Port Greenwich Ltd in their efforts to bring forward redevelopment on the peninsula are likely also to have had a positive effect. It is not suggested, however, by the acquiring authority that these matters should be left out of account. If British Gas had retained their interest and the CPO had been made so that the land in it could be transferred to them, we very much doubt that it would have been appropriate to apply Pointe Gourde so as to diminish the compensation payable to the claimants. It is hard to see why the position is made different by reason of English Partnerships succeeding to British Gas's interest.

In any event, any question of whether the comprehensive development of the Greenwich Peninsula should be treated as the scheme would have to be determined in the light of the practicability of constructing the no-scheme world (cf Lord Nicholls's pointer (2)). The acquiring authority accepted that the scheme should be taken to have commenced in 1997, and it is certainly the case that the task of constructing the no-scheme world may become feasible and the application of Pointe Gourde to the scheme under consideration may thus be made appropriate if the scheme is defined in terms of a relatively recent commencement date. It must moreover always be relevant in determining how Pointe Gourde is to be applied to have regard to the features of the no-scheme world that need to be identified in order to determine the valuation issues.

There is in fact no need to treat as the scheme the comprehensive development of the Greenwich Peninsula in order to determine the valuation issues in this case. The position of the valuation witnesses was this. Mr Simpson originally said that he had taken as the scheme the NME development and had left it out of account because it had delayed development of the reference lands, which in the no-scheme world would have enjoyed the benefit of neighbouring development. In his final supplementary report he considered the application of section 6 and attributed the same value to the reference lands in both the no-scheme world of section 6 and the no-scheme world of the NME scheme. Ms Asquith in her final supplementary report attributed the same value to each site in the NME no-scheme world as in the MMP no-scheme world but a lower value than the one she reached by applying section 6. She considered that in either of those no-scheme worlds the surroundings of the reference sites would have been unattractive and infrastructure would have been inferior. She identified as the particular matters that were to be left out of account: the remediation works carried out by English Partnerships both on the reference lands and on other land on the peninsula; the provision by EP of new roads and other infrastructure on the peninsula; the highway works on the A102(M) for improvement of access to the peninsula; the carrying out of landscape works; the development of Millennium Village, the hotel, Sainsbury's, the school, the health centre, etc; the removal and relocation of Greenwich Yacht Club; the removal and relocation of Riverside Industrial Estate; and the removal of Switchgear House (as far as RMC was concerned). Leaving these matters out of account, she applied a site value that was 11% less than in the section 6 scheme world. She also said that a developer would have deferred development for two years in the no-scheme world. Mr Simpson said that, if the surroundings were as Ms Asquith had described in her no-scheme worlds, with no secured proposals for development on neighbouring land, he would allow a reduction of 10-15%.

It is clear from the fact that Ms Asquith has the same values in both the NME and MMP no-scheme worlds that what she says should be left out of account is any increase in value resulting from the NME development, which was a first stage of the implementation of the MMP permission. It is also clear that the difference between her and Mr Simpson is that, in the absence of the NME development, she says that the surroundings of the reference lands would at the valuation dates have remained unimproved, while Mr Simpson considers that there would have been neighbouring residential development. Both parties regard it as appropriate to leave out of account the effects on value of the NME development. Neither contends that the scheme should be confined to the area of the CPO. The issue is whether the infrastructure and surroundings would have remained as they were before the NME development (as Ms Asquith contends) or the improvements that Mr Simpson envisaged would have come about. The NME development is appropriately to be regarded as the scheme for this purpose.

The case for the claimants was that, if the peninsula had remained for British Gas to develop, British Gas would have worked up an alternative scheme, obtained approval for it, obtained the funding that was needed and would have sold land to developers. Dr Seeff's evidence was that English Partnerships funding via its Partnership Investment Programme would have been forthcoming. Mr Edwards considered that development on the southern part of the peninsula, which was well served by Bugsby's Way and Horn Lane would have been at an advanced stage by 1999, and there would have been commercial and residential development around North Greenwich station. For the acquiring authority Mr Luck of English Partnerships said that it was the NME that acted as the catalyst in terms of EP's involvement and making things happen. Had the NME not come along, he said, he believed it would have taken some time for British Gas and EP and others to go ahead, because without lottery funds it would not have been possible to carry out the infrastructure works so fast. We accept this.

It was, we conclude, the national importance of NME, the deadline of December 1999 for its completion and the availability of lottery funds that brought about a transformation of the Greenwich Peninsula between the grant of permission for the NME in June 1997 and the valuation dates in January and April 1999. To the extent that works remained to be done at the valuation date they could have been expected to be completed in time for the exhibition. The reference sites thus benefited from the road system that was laid out, the landscaping and the general improvement in the surroundings on the northern part of the peninsula. We do not think that, in the absence of the NME, development would have proceeded on the scale assumed by the claimants, and in particular we think it reasonable to assume that, although some development might have taken place to the south and around the station, the improvements that benefited the reference sites would not have occurred by the valuation dates. Despite the tarmacadamed expanses of the coach park that we saw on our view, the surroundings of the reference sites were less unattractive in the real world than they would have been in the no-scheme world. As Ms Asquith said, the walk to North Greenwich underground station, in the absence of the NME works, would have been past derelict sites.

In our judgment, if the claimants' compensation were to include the additional value given to their sites by works carried out for the NME, it would exceed what was fair. We think it appropriate that Pointe Gourde should be applied in these circumstances so as to exclude that increase in value, and indeed the parties are agreed that it should.

Section 9

We do not see this provision on the facts of these cases as adding to the assumptions that we have already discussed.

The Law Commission's proposals

In Waters at para 164 Lord Brown expressed the hope that the opinions of the law lords in that case coupled with Law Commission's report No 286 "Towards a Compulsory Code: Compensation" might pave the way for early legislation. We believe that the House of Lords decision in Waters, constructively applied, will assist greatly in the task of applying the Pointe Gourde principle. The lengths, however, to which we have had to go in this decision (and the parties had to go in preparing and presenting their cases) to deal with the unsatisfactory and complex provisions of the legislation, and the interaction of those provisions with the Pointe Gourde principle, demonstrate the continuing difficulties the present state of the law creates for claimants and acquiring authorities. We believe that the application of the suggested Rules 13 and 14 of the Law Commission's report (see pp 92-95 of the report) in the present case would have produced the same result as our conclusions in the above paragraphs have done, but at a very great saving in time and cost.

Valuation Evidence for the claimant

Mr Simpson prepared his valuations on the basis that the scheme underlying the acquisition, including the Millennium Dome, delayed the development of the two reference sites which, in the no scheme world, would have enjoyed neighbouring development carried out by private developers. This was not possible as the area was blighted by the decision to locate the Dome on the adjoining land and the proposed compulsory acquisition associated with it.

He considered that, in the absence of the scheme, some form of millennium exhibition would have progressed on the northern part of the Greenwich Peninsula and in conjunction with this commercial and residential development would have taken place around North Greenwich station. He also assumed that development would have commenced on the southern part of the peninsula.

The RMC site was nearer the North Greenwich station than the Millennium Village. If the property had not been part of the Millennium Dome project he considered that it and the surrounding land would have been likely to have been redeveloped ahead of the Millennium Village scheme. Accordingly, development in the no scheme world would have taken place around the property and the reference land would have been ripe for immediate development.

The underground system provided a direct access from the Greenwich Peninsula to central London via Canary Wharf. The underground had been planned for a number of years and by the valuation date was substantially completed. The line was opened in 1999 and developers bidding for the reference lands would have been aware that by the time units were for sale the line would be open. It would then take no more than 15 to 20 minutes to travel from the reference sites to Canary Wharf, allowing time for the purchase of a ticket and waiting for a train.

Mr Simpson said that by the valuation date there was strong competition between the major house builders for development sites generally and in particular in London. Demand from house buyers had forced prices upwards and the buoyant economy with low interest rates had made property appear a good investment. The buy to let market was strong, with rentals showing better returns than other forms of investment and with the added bonus of capital growth.

London had continued to attract well paid staff and it had become more fashionable to live in closer proximity to work. Consequently, new development schemes were carried out in London, particularly along the river, where prices attained a premium. The massive commercial centre of Canary Wharf, developed in the mid-1990s, brought demand for residential schemes in Docklands. The opening of the JLE would mean that the Greenwich Peninsula was one stop and 3 minutes away from Canary Wharf.

The 1990s had also seen a change in the style of developments in Docklands. The early schemes were traditional brick structures. By the mid 1990s more modern design buildings of metal frame with large glass elements took advantage of river views. Values for housing started to challenge those for commercial purposes, both for conversions from existing office buildings and for new schemes. Residential developers started competing with commercial developers for new build sites.

With high demand for new high density schemes in London, developers carried out successful schemes in areas that had not previously been regarded as residential areas. This applied particularly to Docklands.

One example of such development was the Millennium Village on the Greenwich Peninsula and within one mile of the reference sites. In 1997 English Partnerships invited offers from developers to bid for the Millennium Village site. The introduction to the brief to potential purchasers stated:

"English Partnerships is inviting development proposals for approximately 13 hectares (32.2 acres) of prime residential land to the south of the Millennium Exhibition."

Mr Simpson concluded that English Partnerships clearly saw this site as prime in 1997, two years before the valuation date. Therefore, by that date, with the imminent opening of the JLE, the reference sites must have been very prime sites. There were also a number of other riverside developments around Greenwich in the London Boroughs of Greenwich, Tower Hamlets and Newham.

Mr Simpson produced an extract from the Estates Gazette dated 27 February 1999, which quoted a Housebuilder's Federation spokesman as saying, in respect of residential developments:

"The market has turned up and there is not enough supply – developers can't build them fast enough."

He considered that the reference sites, with their proximity to the proposed underground station, would be a prime opportunity for residential developers.

Mr Simpson said that it was usual for a developer purchasing land to look at a number of approaches to cross check that his bid level was about right. In his experience, the customary method of developers bidding for a site by adopting a price per hectare/acre was still a good yardstick for the price being right. He therefore started by gathering comparable evidence and analysed it to see what trends could be found. Secondly, he looked at the evidence in terms of a price per residential unit. Thirdly, he looked at the sale revenue and adopted a percentage to arrive at a land value. In his opinion, these approaches would all be used in determining an appropriate value.

In his first report dated 26 June 2003, Mr Simpson referred to nine transactions as providing evidence of land sales in the general area over a period spanning the valuation dates. They were Pierhead Lock, Isle of Dogs, E16; Barrier Point, Silvertown, E16; Virginia Quay, East India Dock, Leamouth, E16; Old Gas Works Site, Kingston Town Centre; South Quay, Marsh Wall, Docklands; Limehouse Basin, Docklands; Butler's Wharf Estate, SE1; Arrowhead Quay, Marsh Wall; Tradewinds, Silvertown, E16.

In analysing the evidence from these sales, Mr Simpson gave particular consideration to three factors. So far as the site area was concerned, although some sites were subject to a planning agreement whereby part was dedicated for public use, he took the gross area in each case. Secondly, the price paid would reflect the abnormal development costs which would be payable by the purchaser. It was a rare site in the Docklands area which was clear of some form of contamination. The third factor was the costs and obligations arising from a section 106 planning agreement. All development sites would be subject to similar planning requirements. Some would have an element of affordable housing and others would not. Rather than trying to analyse each site in detail he had taken a broad view on the subject, which he believed would have reflected that of a developer making a bid in the market. Thus, when analysing the evidence he had assumed that all sites would be affected in a similar way and that the simplest approach would be to use a price per hectare and a price per unit rather than trying to adjust each transaction.

The only adjustments that Mr Simpson made were to reflect location and timing. The location adjustments reflected not only the particular characteristics of each site, but also the fact that sites north of the river were generally regarded as being worth about 10% to 15% more than an otherwise comparable site on the opposite side. The time adjustment adopted was 10% per annum, which he regarded as the average land price increase at that time.

Having made these adjustments, the prices paid per hectare ranged from £5m to £6m at the bottom to £7m to £8m at the top of the range. The arithmetical average of the nine transactions on the adjusted basis was £6.22m per hectare. In the light of this evidence Mr Simpson felt that £6m per hectare was appropriate and he arrived at a value of £6m for the RMC site.

Mr Simpson's second approach was to apply a percentage to the sales revenue. The adjusted evidence for the six transactions where details of unit numbers were available ranged from £30,000 to £50,000 per unit, with an arithmetical average of £40,000. Applying that figure to the Noble scheme of 158 units gave a valuation of £6,320,000. His third approach, adopting a percentage of sales revenue was, said Mr Simpson, effectively a short cut version of a full development appraisal but nevertheless a good guide. The gross sales revenue in his appraisal was about £34.5m. Adopting 22% would give a site value of about £7.6m, from which he deducted the abnormal costs of development (£550,000), off-site roadworks (£150,000) and the planning obligation costs (£600,000) to arrive at a value of £6.3m.

Mr Simpson prepared a rebuttal report dated 14 August 2003. By that time, some of the information he had obtained on the comparable land sales had been amended. He now divided his comparables into two categories. The primary evidence, of what he considered to be the closest and best comparables, was termed the "A transactions". The remainder, which showed a wider trend of values, were referred to as "B transactions". His adjusted analyses of the comparables was as follows:

Site	Adjusted price per hectare	Adjusted price per unit
"A Transactions"
Pierhead Lock	£4.90m	£30,000
Barrier Point	£3.71m	£30,000
Virginia Quay	£6.10m	£45,000
Limehouse Basin	£5.38m	£32,000
Tradewinds	£5.61m	£47,900
"B Transactions"
Kingston	£8.50m	£59,700
Discovery Dock	£9.27m	£27,260
Butlers Wharf	£11.86m	£40,500
Arrowhead Quay	£9.10m	N/A

Mr Simpson pointed out that, apart from Virginia Quay, all the transactions on which he relied were, like the RMC site, small riverside schemes in what he considered to be comparable locations. Moreover, the densities were consistent. The five "A transactions" ranged in density from 116 to 168 units per hectare. His valuation assumed a scheme for 158 units, which equated to a density of 150 units per hectare.

Mr Simpson reviewed his valuation of the RMC site in the light of the amended information now available. On the basis of land values per hectare he now considered that a value of £5,500,000 was appropriate; the transactions suggested a value of £36,000 per unit, giving a value of £5,688,000; the value by reference to sales revenue was £6,250,000, reflecting an increase of £50,000 in the abnormal development costs. In the light of these amended calculations, Mr Simpson now considered the correct value to be £5,500,000.

In his second rebuttal report, dated 9 February 2004, Mr Simpson indicated that he was no longer relying on the transactions at Kingston and Arrowhead Quay. He was, however, relying on two additional comparables, one of which – Anchoriron Wharf – had first been introduced by Ms Asquith and the second, Bellamys Wharf, had been sold by RMC in 1995. His analysis of the nine comparables upon which he was now relying, by comparison with the RMC site, is attached (Appendix 1).

In the course of re-examination Mr Simpson said that, in order to be consistent, he should have made an upward adjustment of 10% to the analysis of Barrier Point to reflect the passage of time between the transaction and the valuation date. He added that the location of the RMC site in terms of communications was much better than that of Barrier Point. Although this was to some extent offset by the disadvantage of being situated south of the Thames, on reflection he ought probably to have made a further upward adjustment to reflect the overall better location of the RMC site.

In valuing the ACE site, Mr Simpson again assumed that by the valuation date the 1996 planning permission would have been advanced, and that the first phase of development would have commenced in the south of the Greenwich Peninsula, together with a degree of development around the North Greenwich underground station. He also assumed that planning permission would have been available for high density residential development of the site as an independent unit and for the conversion and extension of the existing building, in both cases in a similar form to the Noble proposals. He also assumed that the Riverside Industrial Estate would have been vacated or be in the process of relocation to enable its site to be redeveloped for residential purposes.

Mr Simpson considered that the hypothetical owner of the ACE site would have been in touch with the owners of the neighbouring sites in order to establish their intentions. RMC were looking to redevelop or sell their site and had submitted a planning application for a housing scheme. The planning policy of the local authority was to see a comprehensive redevelopment of the Greenwich Peninsula, and it would be reasonable to assume that the industrial estate and yacht club would be included within the redevelopment proposals. He therefore thought it appropriate to assume that neighbouring sites would have been brought forward for development in the no-scheme world. He further assumed that some form of Millennium Exhibition would have been progressed on the northern part of the Greenwich Peninsula, and in conjunction with this a high density commercial and residential development would have taken place around North Greenwich station.

Mr Simpson pointed out that English Partnerships had marketed the Millennium Village scheme in 1999. There had been considerable interest from national housebuilders and, apart from the Taywood/Countryside Consortium who had won the competition, Barratt/Persimmon and Wimpey Homes had also bid strongly. In his opinion those developers, together with Fairview Homes, Bellway Homes, Berkeley Homes, Ballymore and others, would have bid for the RMC site.

Mr Simpson's first report on the ACE site was dated 3 December 2003, some two months before the date of his second rebuttal report on RMC. He produced a schedule of adjusted comparable transactions which was broadly similar to that in the latter report (paragraph 113 above). There were certain differences, however. In his ACE report Mr Simpson was still relying on the Kingston transaction and he was not yet aware of the Bellamy's sale. In addition, the available information on Barrier Point and Butlers Wharf suggested a somewhat lower price per hectare for those two sites than was mentioned in the second RMC rebuttal.

Mr Simpson considered that the December 2003 comparables schedule pointed to a value of about £5m per hectare. Unlike the ACE site, however, the comparables had river frontage. The ACE site was linear in shape and had the industrial estate behind it, although it was likely that this would be developed for housing in the near future. Allowing for these physical differences, he considered that a value of £4,250,000 per hectare (£1,710,000 per acre) was appropriate; or £1m for the ACE site of 0.2359 acres.

The six comparables which Mr Simpson considered provided the best evidence – Pierhead Lock, Barrier Point, Virginia Quay, Limehouse Basin, Tradewinds and Anchoriron – ranged between £27,000 and £48,000 per unit. He took the average figure of £35,000 as his starting point and adjusted this by the same 15% that he had used for his site area based approach. This gave an adjusted figure of £30,000 per unit. He then made a further reduction to £27,000 per unit, to reflect the fact that the average floor area of the units in the Noble scheme was smaller than in the comparable schemes. Assuming 65 units of £27,000 each produced a value of £1,750,000, from which he deducted £273,000 and £130,000, which were the figures he assumed at the time for planning and abnormal development costs respectively, to produce a valuation of £1,347,000. In evidence in chief, however, Mr Simpson said that the latter deductions had been wrongly made.

Mr Simpson's third valuation approach was to take 20% of an assumed gross sales revenue of £10.5m, which was based on a net area of 41,140 sq ft at £260 per sq ft less sales costs of 1.75%. This produced a figure of £2.1m which, after deducting abnormal development and planning costs of £403,000, gave a site value of £1.697m. Again, Mr Simpson indicated in his evidence in chief that the figure of £403,000 "should probably not have been deducted".

Mr Simpson also applied his third valuation approach to the conversion scheme. The net floor area was 39,353 sq ft which, at £260 per sq ft, gave a gross sales revenue of £10.24m. The conversion rather than new build would result in an agreed cost saving of £715,000. The cost of development would be similar to a new build scheme, but there was a risk of unknown costs arising on refurbishment schemes, and the layout was constrained by the physical characteristics of the existing structure. He thought a developer would require a higher profit margin for the conversion due to the uncertainty surrounding development costs. There may also be an element of stigma attached to a conversion from an old building rather than a new build, with constraints of layout determined by the structure. He considered that a bid of £1,500,000 would be realistic on this approach.

Finally, Mr Simpson considered the offers which had been made for the ACE site. British Gas had offered £1,350,000 in 1988 in the no scheme world. He considered that this was good evidence of what the adjoining owner was, on advice, prepared to offer at the top of the market in 1988. The later offers were either in poorer market conditions or were not open market and/or were subject to the proposed CPO.

Mr Simpson then stood back and had regard to the history of the site and the evidence from comparable land transactions. The evidence pointed to a range of values between £1m and £1,700,000. There may have been a developer in the market at the time who would have paid towards the upper end of this range, but in his opinion a fair and realistic value for the property at the valuation date was £1,250,000.

In the course of the hearing, and as we have said, at our request Mr Simpson produced a further report, providing his valuations of both reference lands, firstly on the basis of the statutory assumptions under section 6 and section 9 of the 1961 Act, and then on those assumptions together with the parties' respective no-scheme assumptions. On the sections 6 and 9 assumptions, he said that he valued both reference sites on the basis that the NME proposals would have been limited to the land to the north and west of the RMC land but with River Way retained. On that basis the market value of the land would have been the same with the NME proceeding on the adjoining land as in its absence. Accordingly, the valuation attributable to the reference sites on this basis should be £5,500,000 (RMC) and £1,250,000 (ACE).

On the assumption that the scheme underlying the acquisition was the proposal for the NME Mr Simpson said that, given the importance of the Greenwich Peninsula as an area for regeneration, the involvement of EP in the PGL land would have occurred in the non-NME world. The NME did not have a material effect on the value of the non-CPO lands. If it had, however, and if on the evidence this was not in any event to be disregarded under section 9, there might be a case for an additional non-statutory disregard. On his assumptions in the no scheme world, however, the value would be the same as on the statutory assumptions only, namely £5,500,000 (RMC) and £1,250,000 (ACE).

On the acquiring authority's assumption, the Greenwich Peninsula would have been coming forward in the absence of the intervention of the acquiring authority through the CPO. EP would have been able to provide funding or subsidy, if required, for the redevelopment of the PGL lands. The effect of the scheme, even on the broader basis, was that it included the requirements of the NME to delay the redevelopment of the Greenwich Peninsula. Thus, his valuation would remain at £5,500,000 (RMC) and £1,250,000 (ACE).

However, Mr Simpson said, if, he had to ignore this pre-existing potentiality of the land, and base his valuation on Ms Asquith's approach to the no scheme world, the RMC site would have provided an opportunity for immediate high density residential development with the benefit of planning permission and highway access. The area would have remained one of high priority for regeneration, with a clear prospect of continuing regeneration in the future and the opportunity for grant support. While the uses to the south of River Way would remain, he did not regard these as diminishing the value of the RMC land. The yacht club would itself be an amenity. On the acquiring authority's assumptions, new retail and residential development would have taken place to the north. The land to the south of Mudlark's Boulevard close to the new retail development would have been seen as another area with the clear prospect of early regeneration. The site should be valued on the basis of a permission for high density residential development but with no secured proposals for redevelopment of the land to the north of River Way. In these circumstances, Mr Simpson remained firmly of the opinion that the sites would be regarded as a valuable development opportunity. River Way itself provided a potential focus within the Greenwich Peninsula, with an existing road leading to the river, a public house and period cottages, giving this area an identity of its own.

On the other side of the river Barratt Homes had developed Barrier Point with 252 residential units in a predominantly commercial area from 1998. Fairview had developed Galleon's Reach on the north of the river downstream beyond the Royal Docks. It was, said Mr Simpson, in a far worse location than the Greenwich Peninsula. Both it and Barrier Point had demonstrably poorer transport connections. The reference sites had the major advantage of the underground station opening in 1999. On the assumptions made by the acquiring authority, however, he had taken the view that the market might have allowed some reduction on account of the pioneering element to development on Greenwich Peninsula. He considered that this would not exceed 10 to 15%. On a conservative basis he allowed a discount of 15% and therefore arrived at a value of £4,750,000 (RMC) and £1,075,000 (ACE).

Acquiring Authority's valuation evidence

In her first report on RMC dated 26 June 2003, Ms Asquith stated that she considered it was only really necessary to consider the Pointe Gourde principle when preparing the valuation, since the matters to be disregarded in that exercise included, but were much wider than, the statutory disregards.

In Ms Asquith's view, if Switchgear House had remained and the activities had continued at the adjoining Riverside Industrial Estate, the value of the RMC site for residential development would have been detrimentally affected. In addition, in the absence of all the acquisitions under the CPO, the development of the Greenwich Peninsula would have been possible only on a piecemeal basis.

Ms Asquith considered that it would be reasonable for a prospective purchaser of the RMC site to assume a density of 167 hra (412 hrh). Such a scheme could be accommodated on the river frontage with a return frontage to River Way. She would expect the buildings with river frontage to have a range of different heights, similar to that at Millennium Village, and that the return frontage to River Way would reduce in height from the headline, say, 10 storeys on the river frontage to, say 4 storeys.

It was important to remember that, at the relevant date, no residential development had commenced on Greenwich Peninsula and the improvements to the highways infrastructure were not in place. In the 1980s, British Gas had endeavoured to market their site as a willing seller but no sale had taken place. Furthermore in 1995 British Gas and Bellway Homes, a prospective purchaser of part of the site, had approached EP for grant aid on the grounds that development was uneconomic due to abnormal costs. Had the nearby sites at Switchgear House and the Riverside Industrial Estate not been acquired as part of the overall scheme and had their existing uses therefore continued, the prospects for the general environs of the RMC site would have been very different. Whilst to the north of the river many of the riverside residential opportunities had already been taken up, to the south along the Thames Gateway and Greenwich residential developments were, in her experience, still considered to be somewhat premature. To illustrate this point, she produced an extract from an article in the journal Property Week dated 9 June 2000. The sales director of Redrow Homes, who had developed five sites in Docklands, was quoted as saying that the Thames Gateway and Greenwich would take two to three years to mature. The degree of caution both landowners and developers were attributing to residential development, particularly of more complicated sites, was demonstrated by the number of schemes which proceeded by way of licence arrangements, with a percentage share in subsequent unit sales values as opposed to outright land sales. Examples of this were the refurbishment and redevelopment of the former Royal Arsenal by Berkeley Homes; the OneSE8 scheme adjoining Deptford DLR station by St James Homes, a joint venture company between Thames Water (the site owners) and Berkeley Homes; and the development of Galleons Reach at Thamesmead by Persimmon Homes. Ms Asquith concluded that, at the relevant date, a developer assessing the value of the RMC site would make allowances to reflect the uncertainties arising from the lack of control over adjoining land, and market risks in terms of pioneering a high density residential scheme in an untested residential location.

After a somewhat quiet period, towards the end of the 1990s the number of new housing schemes in this part of south-east London was increasing. For example, Fairview were developing sites at King Henry's Wharf, Woolwich and at Millennium Quay, Greenwich; Bellway Homes at King's Mews, Thamesmead; Beazer Homes at Galleon's Reach, Thamesmead; and Berkeley Homes at Royal Arsenal. Developments with water frontage commanded higher values than those with no such amenity, although the evidence for this was scarce. In the mid 1990s residential land in this area was considered to be worth between £300,000 and £500,000 per acre (£741,000 to £1,235,000 per hectare).

By late 1999 housing in this part of south-east London had become more attractive for potential purchasers. The JLE, which was completed in 1999, with North Greenwich station and a link to the Docklands Light Railway at Canary Wharf, were factors contributing to the accelerated rate of development. Housing schemes were proving to be the most financially viable and popular with developers. The Valuation Office property market report, in April 1998, noted that

"In Greenwich the already strong market is being underpinned by the ongoing construction of the Docklands Light Railway and Jubilee Line extensions. However, the values for all categories of residential land are below those of neighbouring boroughs and are currently steady at approximately £1.6m per hectare, although this average conceals a wide range of values from Thamesmead in the east to Greenwich in the west."

Ms Asquith referred to advice her firm had given in April 1999 in relation to the development potential of a 1.2 acre (0.49 hectare) site at Deptford Creek with wharf frontage. Offers were received comprising an unconditional base figure plus a top-up payment depending upon the amount of floor space eventually permitted. Neither offer was accepted and the site was sold in 2002 as part of a much larger scheme.

Whilst development sites with river frontages still commanded premiums, developers of many such sites had to contend with poor ground conditions or liabilities to repair river walls etc. Large parcels of land (over 10 acres) tended to attracted a discount for size as a result of infrastructure requirements and associated costs. It was thought that clean sites of around 1 to 3 acres requiring little in the way of infrastructure improvements could be expected to achieve £800,000 to £950,000 per acre (£1,976,000 to £2,350,000 per hectare) although there was little evidence to back this up. The valuation office commented in April 1999 that

"South of the river, in Greenwich and Lewisham, there is good demand for all types of residential building land but the paucity of transactions makes the perception of value trends difficult, and it is thought that values are currently stable."

By the year 2000 the Millennium Dome and the associated regeneration of the east of Greenwich Peninsula had significantly improved this part of London and helped to promote further the area to both developers and occupiers, although this improvement was due to the underlying scheme which had to be disregarded. The presence of the JLE was undoubtedly a positive factor and did not have to be disregarded. Demand for well located sites remained very strong with premium prices achieved, although few transactions were reported. The valuation office report for October 2000 noted that, insofar as residential building land was concerned

"there have been very few transactions in Greenwich and the borough is one of extremes in value according to location, and limited supply of sites. The opening of the Lewisham extension of Docklands light rail is considered to have an effect on house and land prices in Lewisham. Demand is high, and the construction of Millennium Quay at Creekside, Deptford by Fairview is an example of the improving nature of the location."

To demonstrate how the values of residential building land and house prices increased after 1996, Ms Asquith produced extracts from property market reports prepared by the valuation office agency and extracts from the Nationwide and Halifax Building Societies' house price indices.

She was able to identify some transactions in respect of land for riverside developments in the Greenwich area prior to the relevant date, but there was a general dearth of such evidence around that date. She therefore thought it appropriate to look at later transactions to illustrate valuation trends as at the relevant date, although she did so with caution.

The most comparable site in terms of location and timing was Millennium Village, which was located on the Greenwich Peninsula to the south of the RMC site. However, the Millennium Village site was much larger at approximately 36 acres (14.6 hectares). In addition to the high density residential development on the River Thames frontage, lower density residential development was proposed inland.

Ms Asquith referred to a number of other sites which she considered provided a useful indication of value. Two of them – at Thamesmead and Creek Road, Deptford – were offers rather than completed sale. She adjusted the prices, where appropriate, to reflect differences in time, use, absence of river frontage, size, location and remediation costs and arrived at the following prices per acre:

	£
Millennium Village	£375,000
Deptford Creek, Fairview	£800,000
Rose Bruford College	£915,000
King Henry's Wharf	£770,000
Thamesmead	£375,000
Deptford Creek	£787,500

Average:	£670,000 per acre
	£1,656,000 per hectare

With the exception of the Millennium Village and Thamesmead comparables, there was a relatively narrow band of average adjusted values, from £770,000 to £915,000 per acre (£1,900,000 to £2,260,000 per hectare). Gerald Eve had been considering the Thamesmead site at a time when there were vast areas of vacant land in the vicinity and the area as a residential location had certainly not come to fruition. Millennium Village had somewhat similar circumstances, in that it included the first development of new residential accommodation on the Greenwich Peninsula. She concluded that both these comparables must have incorporated a "pioneering discount".

In the no scheme world, with the arrival of North Greenwich station, she would have expected that housing located closer to the station would have been more attractive to end occupiers. She thought that developers would have preferred to acquire a site to the north of the RMC site on which to commence construction unless they opted to "landbank" the land and wait for the Greenwich Peninsula market to become more established. In her opinion, it was likely that in the no scheme world other development sites would have been available as at the relevant date. It was possible that developable plots would have been brought to the market by British Gas or the then landowner and that this in turn would have helped to reduce the pioneering element of any development on the RMC site. Thus, whilst she had had regard to the adjusted value of Millennium Village of £375,000 per acre (£926,250 per hectare) she had given more weight to the remaining values apart from Thamesmead. Taking into account all the circumstances, she considered that a developer would have been prepared to offer a price for the RMC site at the lower end of the range, say between £750,000 and £800,000 per acre (£1,850,000 to £1,976,000 per hectare). On the basis of a net site area of 2.088 acres (0.85 hectares) this represented a value of £1,566,000 to £1,670,000, say £1.6m.

In her rebuttal report dated 7 August 2003 Ms Asquith disagreed with Mr Simpson's adjustment of 10% to reflect the differential between schemes north and south of the river. She produced figures prepared by the Land Registry and by London Residential Research which, she said, showed that during the late 1990s the average flat/maisonette price in Tower Hamlets, north of the river, was 75% to 100% higher than in Greenwich. This difference would be broadly reflected in differences in land values, although it had subsequently reduced substantially as a result of the opening of the JLE.

Ms Asquith explained that her time adjustments had been based on the residential building land index prepared by the valuation office. Those prior to the valuation dates of the two reference sites were not significantly different from Mr Simpson's 10% per annum, but that percentage was much too low to be applied after the valuation dates.

Ms Asquith did not consider that an analysis by reference to a land price per unit was reliable. In her experience this was always a very rough calculation, dependent upon the number and range of unit types, particularly in a high density scheme where the range could be quite diverse.

Similarly, the application of a percentage of the sale receipts could only give a rough indication as to value. Although some transactions did proceed on this basis, particularly where there were uncertainties regarding matters such as ground conditions and the market, each percentage sales revenue deal was likely to be individual to a particular scheme. In addition, the onus of risk was put on the seller, which made it an unreliable comparable for open market value on an outright sale.

In her second rebuttal report dated 17 May 2004 Ms Asquith accepted that, if the RMC site were to be valued by reference to its net area, the precise area of the river walkway should be ascertained and deducted from the area calculations of all the comparables as well. In order to avoid such an exercise she now considered it appropriate to use the gross area of the RMC site. However, the river walkway in the RMC site occupied a larger share of the gross area than in any of the other comparables except one. To adopt a gross area, therefore, erred on the generous side. Based on the agreed gross area of 2.55 acres (1.031 hectares), the land value referred to in paragraph 144 above of £750,000 to £800,000 per acre produced a value of £1,912,500 to £2,040,000. Ms Asquith also noted that she had not made any specific allowance in her valuation based on comparables for abnormal costs, which she had been advised would amount to £550,000, or for deferment of 24 months before development commenced. If these items were specifically reflected in the calculation, the value would be below £1,600,000, but she still considered that that figure had been arrived at on a reasonable approach and was fair.

During the course of the hearing, Ms Asquith produced an amended analysis of her six and Mr Simpson's nine favoured comparables. This schedule incorporated the adjustments that Ms Asquith had made to the various comparables to arrive at the equivalent value of a riverside development site on the Greenwich Peninsula. These adjustments reflected differences in date, size, use, water frontage and location as at 2003. In the case of two of Ms Asquith's comparables, Millennium Quay and King Henry's Wharf, additional adjustments were made to reflect exceptional remediation costs. The adjustments for location were based on the sales values in 1993 of flats in the various developments, by comparison with flat prices in Millennium Village which was situated on the Greenwich Peninsula and which she took as a proxy for a development on the RMC site. A further adjustment was then made to reflect the fact that the differential between flat prices on the north and south of the river was much greater at the valuation date. No such adjustment was necessary for Ms Asquith's comparables since, like the RMC site, they were all located south of the river. With the exception of Bellamys Wharf and Anchoriron Wharf, all of Mr Simpson's comparables were north of the river. Ms Asquith adjusted all the comparables north of the river by a further 45 per cent, apart from Barrier Point and Tradewinds. In those cases her adjustment was 25%, reflecting the fact that they were in different locations further to the east.

The schedule also contained information relating to seven other sites, in respect of which some information was available, although in only two cases was an actual sale price provided. The adjusted values per acre indicated by each of these comparables varied considerably; they were as follows:

Scheme	Suggested Value per acre (£)
Mr Simpson's evidence
Bellamys Wharf	1,558,000
Pierhead Lock	1,299,000
Virginia Quay	930,000 (guaranteed price)
	1,690,000 (price plus overage)
Barrier Point	1,056,000
Butlers Wharf	1,881,000
Limehouse Basin	1,399,000
Discovery Dock	1,740,000
Tradewinds	1,187,000
Anchoriron Wharf	1,305,000

Ms Asquith's evidence
Millennium Quay	966,000
Millennium Village	381,000 (original price paid excluding subsequent additional payment)
King Henry's Wharf	1,024,000
Rose Bruford College	914,000
Anchoriron Wharf	1,305,000
Former West Greenwich Boys School	1,072,000

Other evidence
Creek Road, Deptford	787,000
Thamesmead	371,000

In her evidence in chief Ms Asquith explained that, apart from Anchoriron Wharf, she did not consider that any of Mr Simpson's evidence was truly comparable. Nevertheless, she had done her best to make the necessary adjustments to that evidence in order to make some sense of it.

In her second rebuttal report on the ACE reference, dated 19 February 2004, Ms Asquith explained why she considered it appropriate to make an adjustment of 45% to reflect the difference in sales values north and south of the river and the prematurity of Greenwich Peninsula at the valuation date. Information published by the Land Registry showed that the average price paid for flats and maisonettes between January and March 1999 was 89% higher in Tower Hamlets than in Greenwich, and this differential had fallen to 45% in the first quarter of 2003.

In the course of cross-examination Ms Asquith said that when she prepared her valuation report she did not know that the extent of contamination in the north of the Greenwich Peninsula was much greater than in the south. She now accepted that, in the no scheme world, development might also have taken place in the south by the valuation date.

Ms Asquith's first report on ACE was dated 4 December 2003. She prepared her valuation on the assumption that any redevelopment of the site at the valuation date would have been premature and not possible without adjoining land. A potential purchaser would therefore need to assess the prospects of reaching agreement with the owner and occupiers of the adjoining industrial estate in order to assemble a larger site. He would also need to take a view as to whether the previously untested location would become favoured in the residential market by end occupiers.

She concluded that a willing buyer would reflect in the price offered the uncertainties resulting from the lack of control over the adjoining industrial estate, and the risks associated with pioneering a residential scheme in an untested location. In order to ensure that the site did not deteriorate and to achieve some income in the short term, she believed that a buyer would seek to obtain a temporary use of the site in its existing state. A temporary planning permission for a maximum of two years subject to reviews as appropriate may have been granted for a Class B1 (offices and light industrial) use pending the comprehensive redevelopment of the area. In order to make the ACE site capable of occupation on a temporary basis, a basic repair and refurbishment programme would need to be undertaken.

Ms Asquith prepared a valuation on the basis that the site was let for a temporary use for five years (assuming renewal of two year temporary planning consents) and then, assuming in the meantime that agreement could be reached with the adjoining owners and occupiers, developed for residential use as part of a larger site. She thought that five years was a realistic time period to adopt to gain vacant possession of the land comprising part of the adjoining industrial units to form a development cell. The lease expiry dates for units 1 to 11 of the adjoining estate ranged from immediate to September 2006 and that could have been further delayed if a tenant were to resist the landlord's application for vacant possession on the grounds of redevelopment.

Ms Asquith produced what she termed a summary of indicative industrial values. She said that, at the relevant date, values for industrial property ranged from £250,000 to £500,000 per acre (£617,750 to £1,235,500 per hectare) depending on location and ease of access. There was a lack of modern good quality, small-scale industrial units of between 2,500 sq ft and 10,000 sq ft. Such units could command rents of between £6 and £7 per sq ft. Switchgear House, however, would not come within this category, since it provided approximately 34,000 sq ft of old accommodation on basement, ground and two upper floors, including open storage areas. She therefore adopted a lower rental level.

Assuming that Switchgear House could be repaired and adapted for a temporary light industrial use, the first part of her valuation was as follows:-

Industrial Space Say 19,000 sq ft @ £2.50 per sq ft =		£ 47,500 pa
Open Storage Areas Say 15,000 sq ft @ £1 per sq ft =		£ 15,000 pa
	YP 5 years @ 12%	£ 62,500 pa 3.605
		£225,299
Allowance for voids, say 1/3rd		£150,950
Less
Costs of refurbishment Say, 19,000 sq ft @ £1 per sq ft 15,000 sq ft @ say	£19,000 £ 5,000
Windows Say, 50 windows @ £500 per window	£ 25,000
		£ 49,000
		£101,950

Ms Asquith also prepared a valuation on the assumption that the existing building would be demolished and the site used for temporary storage, but this produced a lower figure than for temporary industrial use.

Turning to the residential value of the ACE site, Ms Asquith considered the six comparables referred to in connection with the RMC valuation (see paragraph 142 above). The adjustments she now made to these comparables were generally greater than in the case of RMC. As a result, the average adjusted value was £600,000 per acre. Excluding the Thamesmead and Millennium Village comparables, the values ranged from £655,000 to £800,000 per acre (£1,618,000 to £1,976,000 per hectare). Ms Asquith considered that a developer would have been prepared to bid for the ACE site a price at the lower end of this range, between £650,000 and £700,000 per acre (£1,605,000 to £1,853,000 per hectare). Adopting a value of, say, £700,000 per acre (£1,729,000 per hectare) would give a value of £406,000 for the ACE site had it been capable of being developed in isolation and assuming that redevelopment could commence immediately. This was not the case, however. Ms Asquith prepared a valuation assuming a temporary use for five years and then a residential redevelopment in combination with the adjoining land, on the assumption that this should allow sufficient time to assemble a site comprising a development cell for redevelopment and, also, on the assumption that other redevelopment may have occurred in the meantime on the Greenwich Peninsula.

On the basis of an area of 1.45 acres (0.585 hectares) for the ACE site and the adjoining land (of which 0.58 acres or 40% was ACE) her valuation was as follows:

Temporary Industrial use (see para 159)			£101,950	£101,950
Residential development
Less
Costs of demolition		100,000
Costs of decontamination		15,000
		115,000
Defer 5 years @ 8.0%	0.681
			(78,267)
Residential Redevelopment Land
1.45 acres @ 700,000 per acre	1,015,000
Defer 5 years @ 8.0%	0.681
		690,792
Apportion 60% Industrial Estate	414,475
40% Switchgear	276,317	276,317
Less
Costs of Abnormal Foundations	100,000
Defer 5 years @ 8.0%	0.681
			(68,058)
				129,991
				231,941
Less
Incentive payment to Industrial
Estate owner	15%	Say	19,499	19,499
				212,443
Less
Purchase Costs @ 2.7625%			5,711	5,711
				206,732
			Say	£207,000

This valuation incorporated an incentive payment of 15% to the industrial estate owner. It assumed that, whilst the estate owner would wish Switchgear House to be demolished so as not to detract from development on the estate, the ACE site owner would need the industrial estate's co-operation more.

As an alternative approach, Ms Asquith valued the ACE site in isolation on the basis of residential development in five years time, when redevelopment might no longer be premature and the adjoining land may become more readily available to enable a development cell to be assembled. This valuation was as follows:

Temporary industrial use			£101,950
Residential Redevelopment
Less
Costs of demolition	100,000
Costs of decontamination	15,000
	115,000
Defer 5 years @ 8.0%	0.681	(78,267)

Residential redevelopment land
0.58 acres @ 700,000 per acre	406,000
Defer 5 years @ 8.0%	0.681
		276,317
Less
Cost of abnormal foundations	100,000
Defer 5 years @ 8.0%	0.681
		(68,058)
			129,991
			231,941
Less
Purchase costs @ 2.7625%			6,235
			225,706
			Say £226,000

Ms Asquith prepared two residual appraisals, assuming residential densities on the combined site of 120 and 136.5 habitable rooms per acre. These produced values, including the temporary industrial use, of £175,000 and £201,000 respectively.

Ms Asquith considered that a potential purchaser would look at the four values she had produced - £207,000, £226,000, £175,000 and £201,000 – and take an optimistic view, bidding at the high end of the range a figure of £225,000.

In her rebuttal report dated 19 February 2004 Ms Asquith explained why she considered that the residential market north of the river, particularly on the Isle of Dogs and Docklands, was far more mature on the valuation date than that on the opposite side of the river. The principal reason for the difference was the establishment of the London Docklands Development Corporation ("LDDC") in 1981. The LDDC was charged with accelerating the process of urban renewal and had powers to purchase land and undertake infrastructure works to make land suitable for development by the private sector. As a result, the area to the north was approximately 15 years ahead of the Greenwich Peninsula in terms of being an established commercial and residential location. LDDC was dissolved in March 1998, but as a result of its strategy to extend London's economic base eastwards from the City, the momentum had continued further eastwards, covering the remainder of Tower Hamlets and along the Thames towards Newham, Barking and beyond.

Ms Asquith said that she disagreed with Mr Simpson's 10% adjustment between schemes north and south of the river. She produced data from the Land Registry to show that, during the late 1990s, the average flat/maisonette price in Tower Hamlets was some 75 to 100% higher than in Greenwich. More recently, with the opening of the JLE and increased accessibility, the differential had reduced to approximately 10 to 25%, although it was difficult to generalise.

In addition, there should be an allowance to reflect the abnormal costs of developing the ACE site, which she understood had been agreed at £250,000.

In her second rebuttal report dated 17 May 2004 Ms Asquith said that she had discovered a mathematical error in the interest calculation for her residual valuations. The effect of correcting this was to increase her valuations of the ACE site based on a residual calculation to £238,000 and £260,000 for the 120 and 136.5 habitable rooms per acre schemes respectively. In these circumstances Ms Asquith considered that the market value of the site was £240,000.

Like Mr Simpson, Ms Asquith produced a supplementary report, providing her valuations on the statutory basis, and also on the statutory basis plus the parties' respective versions of the no-scheme world. For the purposes of her valuation under section 6, she considered that certain development projects carried out on land acquired under the CPO might have occurred in the absence of the CPO, but not in the same time-scale. In her opinion, these development projects had improved the environs of the RMC land. At the valuation date they were still in prospect, but a potential purchaser would have known that they were highly unlikely to occur quickly. If she only left out of account the development, or prospect of development of the plots included in the CPO, she would adopt a land value at the higher end of the range, say £900,000 per acre (£2,223,900 per hectare) for the RMC land and £775,000 per acre for the ACE land. Her valuations under section 6 would therefore be £2,295,000 (RMC) and £449,500 (ACE).

As for section 9, Ms Asquith considered that the earliest date at which the reference sites could have been sold would have been the latter part of 1998. Between then and the valuation dates the market was rising, and potential purchasers would have been increasingly confident that EP and other parties were pressing ahead to achieve the NME in time for the millennium. In those circumstances she considered that no depreciation in value was caused by the indication that compulsory purchase powers might be used.

Turning to Pointe Gourde and the claimants' no scheme world, Ms Asquith considered that, in the absence of the NME scheme, it would have been extremely unlikely that the infrastructure which was in fact put in place, and the remediation which was actually carried out, in time for the millennium, would have been achieved in that or another form until long after the valuation date. Thus, even if the claimants each had planning permission which authorised development to be carried out immediately, the reference sites would have to be valued in a context in which the remediation and lack of infrastructure prevented other land north of John Harrison Way from being developed. The environs of the reference sites would have been unattractive and the walk to the North Greenwich station would have been past derelict sites. Once the grant application had been approved and negotiated in detail, sites south of John Harrison Way might have been offered for sale. The reference sites, if offered on the market at the same time, would have been competing against such sites.

Having regard to these circumstances, she would expect that any redevelopment value would be deferred until the area surrounding the reference sites improved. A purchase at the valuation date would have been seen as an opportunity to "landbank" sites acquired at a discount for development at a later date. For this reason, in her opinion the appropriate way to reflect this consideration in valuing the sites was to introduce a deferment of two years.

Her valuations on the basis of the claimants' no scheme world were as follows:

RMC

2.55 acres at £800,000 per acre = £2,040.000

PV 2 years @ 7% = 0.873

£1,780,920

say £1,780,000

ACE

Having regard to the particular circumstances of the ACE site her valuation was as set out in paragraphs 162 and 164 above at £207,000 and £226,000 respectively, dependent on whether the site would be developed as part of a combined site or in isolation.

Ms Asquith considered that the effect on the valuation of disregarding the NME scheme would be precisely the same as that of disregarding the MMP scheme.

In evidence in chief, Ms Asquith said that, although her reports contained a range of values for the ACE site, she now considered the appropriate figure to be £225,000 in the light of the Tribunal's indication as to the usefulness of residual valuations.

Conclusions

The primary approach adopted by both valuation experts was by reference to the price per acre or hectare paid for other residential development sites in the area. They referred in total to 20 properties in connection with the valuation of the RMC site although only one of them, Anchoriron Wharf, was relied upon by both valuers. Before we state our conclusions on the weight to be given to the RMC comparables, we deal with a number of matters which were raised in connection with their analysis.

Firstly, Ms Asquith adjusted the prices paid for comparable sites before the relevant valuation date to reflect the passage of time by reference to the residential building land index prepared by the valuation office agency. Mr Simpson, on the other hand, adopted a flat increase of 10% per annum. There was, in fact, little practical difference between the two approaches. For the purposes of our decision, we propose to apply Ms Asquith's adjustments.

Secondly, the weight given by the respective experts to sales of residential sites north of the river differed considerably. Ms Asquith was firmly of the opinion that, at the valuation date, the river created a distinct division into separate locations with clearly distinguishable levels of value. Mr Simpson accepted this approach in principle, but he strongly disagreed with the degree of difference which Ms Asquith considered to exist at the valuation date.

So far as Ms Asquith's comparables were concerned, she based her adjustments for location on the sales values in 2003 of flats in the various developments, compared with the prices of two flats, one with and one without river views, at Watermark, part of phase 1 of the Millennium Village development on the Greenwich Peninsula, which she took as a proxy for a development on the RMC site. In fact Millennium Village is significantly further from North Greenwich Station. (The latter is 12.5 minutes walk from the reference sites but 21 minutes from Millennium Village). She then made a further adjustment to reflect the greater prematurity of the Greenwich Peninsula as a residential location on the valuation date than in 2003, illustrated by the fact that the differential between flat prices on the north and south sides of the river was much greater on the valuation date than in 2003. In most cases her further downward adjustment was about 31%, although it was actually expressed in terms of north bank sites being 45% more valuable pro rata than those on the south bank.

The figure of 45% was derived from statistics published by the Land Registry. In the case of two of the north bank comparables – Barrier Point and Tradewinds – Ms Asquith's second downward adjustment was only 20%, as she felt that the historic value advantage enjoyed by the north bank was lower in locations further to the east of the City.

Mr Simpson did not make a specific adjustment to reflect the side of the river on which a particular comparable was located. He looked at the location of each comparable and formed a judgment on how it compared with the reference site. The river was only one factor to be taken into account in this comparison exercise. He felt that a more significant factor was the quality of the transport links. The major advantage of the reference sites was their proximity to North Greenwich Station. Some of the sites to the north of the river – particularly Barrier Point and Tradewinds – had poor transport links. The physical characteristics of each site and its surroundings also had to be reflected.

We deal firstly with Ms Asquith's locational adjustments based on flat sale prices in 2003, using Watermark as a "benchmark". Although many flats had been sold in Millennium Village, Ms Asquith relied on only two of them, neither of which had she inspected. It was clear from information provided in her rebuttal report that there was a range of other two bedroom apartments in Watermark which had been sold at earlier dates for significantly higher values, but Ms Asquith had no further information about them. As for her approach to the 2003 sales values for the comparable developments, Ms Asquith accepted that she had made no allowance to reflect the inclusion or otherwise of a parking space in the sale price, nor whether the transaction related to a new unit or a re-sale. She also accepted that the information she had obtained from the selling agents regarding the floor areas of the flats was not necessarily accurate. During the course of cross-examination, Ms Asquith said that she was unhappy with some of the adjustments she had made. We share that view and do not find her locational adjustments by reference to 2003 values to be of assistance.

Turning to Ms Asquith's further adjustment of 45%, she accepted in cross-examination that the Land Registry figures indicated that the difference between the values of new units in the boroughs of Tower Hamlets and Greenwich was less than that for all residential properties in those areas. A prospective purchaser of the reference sites would, of course, only be interested in new units. She also accepted that not all the comparables were in Tower Hamlets. For example, Barrier Point and Tradewinds were in the borough of Newham, where the Land Registry figures suggested that the differential in values compared with Greenwich actually increased by 29% between 1999 and 2003, compared with the reduction of approximately 45% which had occurred in the case of Tower Hamlets. Finally, it was put to her that, even if her approach and the 45% figure were both correct, the latter adjustment should be applied not to the overall value but only to the original locational percentage. Ms Asquith replied that she followed that suggestion.

In the light of the evidence we are satisfied that Ms Asquith's method of adjusting twice for location is artificial and unreliable. We accept Mr Simpson's view that, when comparing residential development sites on opposite sides of the river, it is necessary to form an overall judgment based on all the locational characteristics of the properties and that, in that exercise, the accessibility of the reference sites to North Greenwich station and the JLE was an extremely important factor. Nevertheless, we accept Ms Asquith's opinion that, in early 1999, the general market perception of the Greenwich Peninsula was that it was significantly less attractive than an otherwise comparable residential location on the other side of the river. This was largely due to the historically inferior accessibility of sites to the south, which was still influencing purchasers' choices despite the great improvements which would soon arrive. We accept Ms Asquith's opinion that the effect of the improvements in communications has tended to change this perception in the last five years. We therefore approach the consideration of the comparables on the basis that, at the valuation date, the prematurity of Greenwich Peninsula as a location for residential development, compared with sites north of the river, would have been reflected by developers discounting the value of the reference sites to an extent somewhat greater than would be justified by their remaining locational characteristics alone.

Our third observation relates to the valuation approach to be adopted to reflect the fact, as we have found, that the surroundings of the reference lands would have been in an unimproved condition at the valuation date. In her supplementary report, submitted during the course of the hearing, Ms Asquith suggested the RMC site would have been seen as an opportunity to purchase a site at a discount, to be "landbanked" for development at a later date. It was therefore appropriate to introduce a deferment of two years into the valuation. Her amended valuation of £1,780,000 was therefore arrived at as follows:

2.55 acres @ £800,000 per acre	£2,040,000
PV 2 years @ 7%	0.873	£1,780,920
	Say	£1,780,000

Ms Asquith was unable to produce any examples of developers landbanking residential sites in London around the valuation date. In the light of that, and in view of the evidence that a number of substantial developers were interested in acquiring sites in unestablished residential areas but with river frontage at the time, we accept Mr Simpson's opinion that the RMC site would have been developed as soon as it was purchased in 1999. It was, as we have said, an obvious site for early development in view of its position on River Way, its river frontage and its accessibility to the JLE station.

Our fourth observation results from the parties' agreement that any planning consent granted for a scheme of 40 or more dwellings on the reference sites would be subject to a requirement that affordable units of at least 25% be provided. Mr Simpson considered that all development sites would be subject to the requirements of a section 106 planning agreement. Some would incorporate an element of affordable housing and others would not. Rather than trying to analyse each site in detail he had taken a broad view on the subject, which he believed would have reflected that of a developer making a bid in the market. Thus, when analysing the comparable evidence he had assumed that all sites would be affected in a similar way and that the simplest approach would be to use a price per hectare and a price per unit rather than seeking to adjust each transaction.

Ms Asquith agreed that affordable housing was one of the elements of section 106 agreements. In an ideal world, full details would have been obtained of all the agreements relating to the comparables, including affordable housing and these would then be reflected in the adjustment of the comparables. Such information was not readily available to the experts in this case, who had made no specific adjustments between the comparables and the reference sites. Ms Asquith noted that most of the comparable sites where no affordable housing was required had older planning consents originating from the LDDC. She thought that there might be a distinction to be drawn between sites where there was a proportion of affordable housing and sites where there was none. A planning permission granted in an earlier planning context with no requirement at all to provide affordable housing could, she believed, be seen by developers as being potentially more valuable.

Neither expert attempted to adjust any of the comparables to reflect the presence or otherwise of an affordable housing condition. Mr Simpson assumed that no adjustment was necessary. Ms Asquith felt that such an adjustment could "potentially" be required, but she did not attempt to make one. Moreover, in arriving at her range of values, based on what she considered to be the four most useful comparables, namely Millennium Quay, Rose Bruford College, King Henry's Wharf and Creek Road, Deptford, she made no allowance for the fact that the percentages of affordable housing required ranged from 10.5% to 15.7% for the first three and that, in the case of Creek Road, the offer figure of £700,000 which she adopted was an unconditional offer, which would in due course be augmented, depending on the details of the eventual planning permission.

Both experts considered that a valuation by reference to prices per acre or hectare paid for other development sites was the primary approach to be adopted. When considering the price to be paid for a particular site in the light of prices previously achieved for other sites, a developer would no doubt seek to obtain as much information as possible about the requirements of the relevant section 106 agreements, including any affordable housing requirement. Having given the matter careful consideration, we are unable to accept Ms Asquith's suggestion that the percentage of affordable housing is potentially relevant if it is nil, but not otherwise. Throughout their evidence, the experts both adopted a broad approach to the analysis of the comparable evidence and did not adjust for the presence or otherwise of an affordable housing requirement. Such an approach is not one which is likely to be adopted by potential purchasers in the market. It is, however, one that we feel constrained to adopt in the light of the evidence before us.

Similar considerations apply to the treatment of abnormal development costs. Mr Simpson did not make an adjustment to reflect this factor. It was a rare site in the Docklands area which was free of any form of contamination and he assumed that each site would be similarly affected. Ms Asquith agreed that developers of many sites fronting the Thames had to contend with poor ground conditions or liabilities to repair river walls, etc. Nevertheless, in comparing the prices paid for the comparables with the RMC site, she added £200,000 per acre at Millennium Quay to reflect "site uncertainties" and £230,000 per acre at King Henry's Wharf, being her understanding of the cost of remediation works there. There was in fact no evidence to suggest that the abnormal costs of developing the RMC site were significantly different from those incurred at the comparable sites. In those circumstances, and in the light of the experts' agreement that site problems were a common factor in sites with river frontage, we do not consider it appropriate to make any adjustments to the comparables to reflect this factor.

We now turn to a consideration of the comparables. We put on one side the following six sites, either because no transaction occurred or because no evidence of the sale price was put forward: Creek Road, Deptford; Thamesmead; Galleon's Reach; Borthwick/Paynes Wharf; One SE8 and Royal Arsenal. Nine of the remaining fourteen were regarded by Mr Simpson as being sufficiently comparable to the reference sites to provide evidence of value. Five of the fourteen were considered to be sufficiently comparable by Ms Asquith, with an additional one in the ACE reference. We obtain no assistance from Royal Artillery Quay or Virginia Quay, because all or much of the sale price in each case was based on a percentage of the eventual revenue from the completed flats. Consequently, although the formula for calculating the consideration was agreed at the time of the sale, the prices eventually paid did not reflect market conditions at that date but at a later date or dates.

Ms Asquith also relied on the sales to Fairview Homes of Millennium Quay and King Henry's Wharf. These were both large sites, of 20 acres and 16 acres respectively. In each case planning permission was not granted until after the sale had completed, in the case of Millennium Quay fifteen months later and an unknown period later – but not exceeding ten months – at King Henry's Wharf. The prices paid therefore reflected hope value rather than the value with the benefit of residential planning permission and are therefore of limited assistance in the exercise we are required to undertake. Mr Simpson relied on the sale of Pierhead Lock, which also occurred before the grant of planning consent. In that case, the site area was far more comparable, at 1.48 acres and the consent was issued only some three months after the sale. Nevertheless, in the interests of consistency we consider that we should disregard that transaction as well.

Another three of the transactions referred to took place after the valuation date. They were Tradewinds, Anchoriron Wharf and Rose Bruford College. There was significant disagreement between the experts as to the adjustments which should be made to the sale prices of these properties to reflect the change in residential land values between the relevant dates. Mr Simpson used a uniform increase of 10% per annum. Ms Asquith, relying on the valuation office agency's residential building land index for inner and outer London, applied downward adjustments of 68% for Tradewinds and Anchoriron and 75% for Rose Bruford College.

A prospective purchaser of the RMC site, when estimating the price he should bid would bear in mind, among other matters, prices which had been paid previously for comparable sites elsewhere and his perception of how values of the proposed flats would increase in the period before they were sold. Ms Asquith said, and we accept, that the scale of the increases in residential values which took place after the valuation date could not have been foreseen at the time. The three sites in question were sold between February and June 2001, at price levels which were clearly in excess of what would have been in the hypothetical purchaser's contemplation some two years earlier. In those circumstances, although post valuation date evidence is admissible for the purpose of assessing compensation for compulsory purchase, we consider that little weight should be given to such evidence in this case, even if it were possible to determine the rate at which land prices increased in the intervening period on the limited evidence which is before us.

The remaining comparables showed the following figures per hectare, after Ms Asquith's adjustments for time, with which Mr Simpson did not significantly disagree:

	Date	Area (hectares)	Price adjusted for time	Time adjusted price per hectare
Bellamy's Wharf, Rotherhithe	Jan 95	1.00	£4,347,000	£4,347,000
Barrier Point, Silvertown	Mar 98	1.92	£8,140,000	£4,239,583
Butler's Wharf, Tower Bridge	Jun 98	0.71	£6,682,500	£9,411,972
Limehouse Basin, E14	Jul 98	2.60	£15,400,000	£5,923,076
Discovery Dock, Isle of Dogs	1999	0.55	£6,000,000	£10,909,000
Millennium Village, original price total price when next phase obtains planning permission	Jan 99	6.46 14.41	£4,150,000 £7,500,000	£642,414 £520,000

It will be noted that the price paid for Millennium Village was strikingly lower, pro rata, than any of the others. Only Ms Asquith relied on this comparable. It is clear, however, that she placed little weight on it since, on the basis of her own adjustments for time, size and limited water frontage, it suggested a value for the RMC site of £381,000 per acre (£941,000 per hectare), whereas her own valuation was roughly double that figure. Moreover, Mr Simpson pointed out that the price eventually agreed for Millennium Village was very substantially less than the four bids which had been received following the marketing of the site and there was no clear evidence before us to explain the discrepancy. We therefore obtain no assistance from that transaction.

At the other extreme of the time-adjusted comparables are Discovery Dock and Butler's Wharf. Discovery Dock is in the centre of the Isle of Dogs, south of Canary Wharf in an established, primarily commercial area which is dominated by office buildings and with a car showroom opposite. Butler's Wharf has been a fashionable location since the 1980s. It is situated close to Tower Bridge and opposite the Tower of London and St Katharine's Dock, in an established complex which includes restaurants and other commercial uses. In the light of our inspection we are satisfied that the locations of these two properties are so far superior to that of the RMC site that they, too, do not provide a helpful indication of the value of the latter.

In comparing the location of the RMC site with that of the remaining three comparables, we remind ourselves of what we have found to be the hypothetical situation on the Greenwich Peninsula at the relevant date in the no scheme world (see paragraph 91). With those considerations in mind we consider, firstly, the relative merits of the location of Bellamy's Wharf, Rotherhithe. Of the three remaining comparables, this is the only one situated, like the reference sites, on the south side of the Thames. It has an area of 2.47 acres. It fronts the river to the north-east and Rotherhithe Street to the south and is adjoined by 1990s residential riverside accommodation on either side. The other side of Rotherhithe Street contains a mixture of private 1980s/1990s housing schemes and 1950s local authority housing. By 1995 Rotherhithe was in the main a mix of 1980s residential properties, following redevelopment during the 1980s instigated by LDDC, and 1950s local authority housing. Surrey Quays shopping centre was built in 1988. Canada Water (Jubilee Line) is 15 minutes walk away (Canary Wharf 3 minutes, no change, Bank 12 minutes, one change, Oxford Circus 20 minutes, one change). Rotherhithe (East London line) is 10 minutes walk away (Canary Wharf 7 minutes, one change, Bank 16 minutes, two changes, Oxford Circus 23 minutes, two changes). Planning consent had been granted for 113 units.

Ms Asquith's analysis indicated that the location of Bellamy's Wharf was 13% more valuable than that of the RMC site – in other words, RMC was 11½% less valuable than Bellamy's Wharf. Mr Simpson considered that no locational adjustment was appropriate. He, however, was approaching the matter on the assumption that the development of the area surrounding the RMC site was significantly further advanced than we have found to be the case. We therefore accept Ms Asquith's adjustment and find that Bellamy's Wharf suggests a site value of £3,847,000 per hectare.

Barrier Point is situated on the north side of the river to the east of the Greenwich Peninsula. It has an area of 4.74 acres. In March 1998 this was a predominantly commercial/industrial location. LDDC had promoted redevelopment and regeneration of the area as part of the larger Royal Docks improvement area. EP and the London Development Agency funded the adjoining Millennium Park which was opened by the Mayor in November 2000. On the western boundary Barrier Point adjoins Minoco Wharf, which was decommissioned in 1997/1998 and is now a cleared site.

The housing development at Barrier Point comprises a 14 storey river tower with six storeys of apartments at right angles to the river. All the inland units have garden areas facing east with views across Millennium Park. The site is about 13 minutes walk along the A1020 from Silvertown railway station (North London line, overground). There are two trains per hour from Silvertown (Canary Wharf 17 minutes, one change, Bank 31 minutes, one change, Oxford Circus 37 minutes, one change). There was planning consent for 252 units and no affordable housing requirement.

Ms Asquith considered that the RMC site was 23% less valuable than Barrier Point in 2003. She made a further deduction of 20% for the greater north-south differential in 1999. (She expressed this in terms of the north bank site being 25% more valuable). Mr Simpson originally made no adjustment for location, but in the course of his oral evidence he suggested that the RMC site was in fact 10% more valuable than Barrier Point. We find that the undoubtedly superior public transport access to Central London from the RMC site was offset by the attractions of the outlook from Barrier Point to the Thames Barrier and the proposed Millennium Garden and that, the relationship to the Thames apart, the advantages and disadvantages of the two sites were in balance. We accept Ms Asquith's opinion that, at the valuation date, the market's preference for flats north of the river meant that Silvertown was a more favoured location than the Greenwich Peninsula. The differential was, however, less marked than in the case of sites further west and in our judgment justifies a deduction of 15%. The Barrier Point transaction therefore suggests a value of £3,603,000 per hectare for the RMC site.

On the basis of the evidence of Bellamy's Wharf and Barrier Point, we find that the value of the RMC site was £3,725,000 per hectare. Applying this value to the agreed area of 1.031 hectares produces a value of £3,840,475 say £3,850,000.

The remaining comparable, Limehouse Basin, is significantly closer to the City of London than the other two. The nearest station, Limehouse (DLR), is 9 minutes walk away, crossing the A1203. From there it is only 6 minutes to Bank station (no change), as well as 19 minutes to Oxford Circus (one change) and 5/8 minutes to Canary Wharf (either one change or none). The Basin is a marina neighbourhood which had become an established residential location with good local amenities since the 1980s. We do not consider it is possible to use this transaction as an accurate indicator of value, because the development included a community centre, museum and restaurant, in respect of which no separate valuation evidence was adduced. Nevertheless, the price paid for Limehouse Basin – of approximately £5,925,000 per hectare before adjustment for location – is some 60% more than our valuation figure of the RMC site. Bearing in mind the very much more accessible location of Limehouse Basin to the City, and its more attractive environment, this relationship does not give us cause to reconsider that valuation.

One of Mr Simpson's alternative approaches was to arrive at the land value by applying a percentage of the sales revenue. The percentage he adopted was based on certain transactions where the vendor had agreed to accept a specified percentage of the eventual sale proceeds. A significant element of risk had therefore been accepted by the seller, which would be absent from an outright sale on the open market. We obtain no assistance from this approach.

Mr Simpson also used a price per unit of developed accommodation. Although we have found that the bid of an individual developer would have been influenced by the number of units he expected to build on the site, we do not consider that this is a reliable method of valuation because, within a given floor space, the number of units will vary depending upon the developer's preferences. A further complication is the fact that the number of units which may be permitted will depend upon the local planning authority's opinion of the architectural quality of the particular scheme that is being proposed.

There is, therefore, no reason in our judgment to depart from the valuation of £3,850,000 for the RMC site at which we arrived in paragraph 206 above.

We now turn to the ACE site. Mr Simpson's valuation of £1.25m was arrived at after considering valuations based on the following approaches: comparables, £1m; price per unit £1,347,000 (subsequently adjusted to £1.75m); percentage of sales, £1,697,000 (subsequently adjusted to £2.1m) for a new build scheme and £1.5m based on a conversion scheme; and the 1988 offer of £1.35m. The first three approaches assumed that the site was ready for immediate development and that the scheme underlying the acquisition had not brought the land on the Greenwich Peninsula forward for development more quickly than would have happened in the no scheme world.

Ms Asquith, on the other hand, assumed that in the no-scheme world development on the Peninsula would have been less advanced that it was. She also assumed that the ACE site could not be developed immediately, because of the need to include the site of the adjoining industrial estate, where the last lease would not expire until September 2006. In fact, she considered that a developer would assume that possession of the estate could be obtained within 5 years – that is, by January 2004. Meanwhile, he would carry out a modest refurbishment of the existing building (at a cost of £1 per sq ft on the building) and then let the resultant accommodation at £2.50 per sq ft on the industrial space and £1 per sq ft on the open storage. In arriving at these figures, she bore in mind that modern, good quality, small scale units were letting for between £6 and £7 per sq ft. She assumed that voids would reduce the total potential income by a third and that the rental income should be capitalised for five years at 12%. This produced a capital value of £101,950.

She then deferred the site value – taken at £700,000 per acre – for five years at 8%, deducted the cost of demolition, decontamination and abnormal foundations deferred for five years and assumed that the industrial estate owner would require a payment equal to 15% of the deferred site value as an incentive for his co-operation. As an alternative, she valued the site in isolation on the basis that, in five years time, redevelopment might no longer be premature and the adjoining land might become more readily available to enable a development cell to be assembled.

Assuming that Ms Asquith's approach was correct in principle, Mr Simpson disagreed with her suggested rental income, voids and capitalisation rate.

At the valuation date, the longest unexpired lease term on the Riverside industrial estate was more than 7½ years. In those circumstances Ms Asquith's assumption that it would have taken 5 years to secure possession seems to us not to be excessive and we accept it. In our judgment, the very modest standard of refurbishment which would result from the level of expenditure she has assumed – and which is all that would be justified for such a short-term investment – would mean that the rent reasonably to be anticipated for such a substantial area of accommodation arranged on four floors would be very much less than the £6 or £7 per sq ft achieved for small, modern, good quality space. We consider that the rental income which has been assumed by Ms Asquith realistically reflects the differences between the two categories of space and that, in disagreeing with Ms Asquith's suggested allowance for voids and capitalisation rate, Mr Simpson has failed to reflect the low calibre of the investment which would be available for only five years.

Ms Asquith was not cross-examined about her estimates for the cost of demolition (£100,000) or decontamination (£15,000). She was asked whether her estimate of £100,000 for the abnormal foundations related solely to the ACE site and she replied that it did. In the absence of any more cogent evidence we accept all three cost estimates.

Turning to the reversionary land value of the ACE site, although both experts arrived at their valuations by reference to comparables, in answer to a question from the Tribunal Ms Asquith expressed the view that the ACE site was worth 15% less pro rata than the RMC site to reflect the fact that the latter enjoyed river frontage. We accept that opinion and find that the reversionary site value was £3,166,250, say £3,150,000 per hectare (85% of £3,725,000), or £743,085, say £745,000 for the 0.2359 hectare site. We do not consider that a purchaser would have increased this figure to reflect the possibility that, when the site came to be developed after five years, its value would have increased at a greater rate than the general increase in land values as a result of improvements in the surroundings, since that was purely speculative.

Our valuation of the ACE site is therefore as follows:

Temporary industrial use			£101,950
Residential development
Residential development land	£745,000
Defer 5 years at 8%	0.681
		507,345
Less
Costs of demolition	£100,000
Costs of decontamination	£ 15,000
	£115,000
Defer 5 years at 8%	0.681
		( 78,267)
Less costs of abnormal foundations	£100,000
Defer 5 years at 8%	0.681
		(£ 68,100)
			£360,978
			£462,928
Less purchaser's costs @ 2.7625%			£ 12,495
			£450,483
		Say	£450,000

We would add that Mr Simpson supported his valuation figure of £1,250,000 by reference to the offer of £1,350,000 made by British Gas in June 1998. The property market subsequently went into a steep decline. Although that decline later reversed, we do not consider that an offer, made more than ten years before the valuation date, in respect of which little information is available and which did not lead to a transaction, is of significant evidential value. Certainly, we find it is inadequate to displace the much more contemporaneous evidence upon which we have arrived at our valuation of £450,000.

We therefore determine that the compensation payable to RMC is £3,850,000 and that to ACE is £450,000. In addition the acquiring authority will pay the claimants' professional fees, which have been agreed at £7,563.06 (RMC) and £4,258.81 (ACE). The latter figure (but not the former) includes VAT and both figures, as well as the compensation sums, are exclusive of statutory interest.

The parties are now invited to make representations as to costs, and a letter relating to this accompanies this decision, which will only take effect when the question of costs has been determined.

Dated: 14 January 2005

George Bartlett QC, President

N J Rose, FRICS

Addendum on costs

Both claimants ask for their costs. Relying on the Lands Tribunal Practice Directions of 4 January 2005 and the Court of Appeal decision in Purfleet Farms Ltd v Secretary of State for the Environment [2002] RVR 368, they say that as claimants who have been awarded compensation they should be awarded their costs unless there are special reasons for not doing so and that there are no such special reasons. Moreover in each case the acquiring authority's sealed offer was substantially exceeded (RMC award £3,850,000, offer £2,000,000; ACE award £450,000, offer £300,000). The acquiring authority, while accepting that the claimants are entitled to their costs, say that they should not be awarded the whole of their costs since, in the case of RMC, the figure arrived at was almost precisely half way between those of the parties and both sides succeeded and failed on numerous issues; and, in the case of ACE, the award was one-third of that contended for by the claimant, both sides succeeded and failed on numerous issues, and the authority succeeded on the important point of whether the site could be developed in isolation.

We can see no good reason to deprive either of the claimants of any part of their costs. The failure of a successful claimant on particular issues, including important ones, is not of itself justification for awarding less than the full amount of costs; and no suggestion is made that in pursuing any of the issues on which they were not successful the claimants did so unreasonably. The acquiring authority must pay the costs of each claimant, such costs if not agreed to be the subject of a detailed assessment by the Registrar on the standard basis.

Dated: 8 February 2005

George Bartlett QC, President

N J Rose, FRICS

Appendix 1

ANALYSIS OF COMPARABLES BY COMPARISON WITH THE RMC SITE BY W H SIMPSON - SECOND REBUTTAL REPORT

							Adjustment	Adjusted	Adjusted
Site	Units	Ha	Acres	Sale Price	£/acre	Date	Time	Location	£/Acre	£/ha	£/unit
Bellamys Wharf	113	1.0	2.46	£3,105,000	£1,260,000	1995	+46%	NIL	£1,843,000	£4,533,000	£40,100
Pierhead Lock	99	0.6	1.48	£2,242,000	£1,515,000	1996	+33%	-10%	£1,813,000	£4,480,000	£27,000
Virginia Quay	632	4.69	11.6	£26,000,000	£2,241,000	1997	+21%	-10%	£2,440,000	£6,029,000	£44,800
Barrier Point	252	1.92	4.74	£7,400,000	£1,561,000	1998	NIL	NIL	£1,561,000	£3,857,000	£29,400
Butlers Wharf	117	0.4	1.0	£6,075,000	£6,075,000	1998	NIL	-20%	£4,860,000	£12,150,000	£41,500
Limehouse Basin	438	2.6	6.42	£14,000,000	£2,181,000	1998	NIL	NIL	£2,181,000	£5,389,000	£32,000
Discovery Dock	187	0.55	1.36	£6,000,000	£4,412,000	1999	NIL	-15%	£3,750,000	£9,266,000	£27,300
Tradewinds	250	2.14	5.29	£14,500,000	£2,741,000	2001	-17%	NIL	£2,275,000	£5,623,000	£48,000
Anchoriron	86	0.5	1.24	£3,250,000	£2,621,000	2001	-17%	NIL	£2,161,000	£5,340,000	£31,2000
							AVERAGES	£2,543,000	£6,285,000	£35,700	£35,700

NOTE

Time adjustment by adopting a movement in land prices by an average of 10% per annum.