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England and Wales Lands Tribunal
You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Essex County Showground Group Ltd v Essex County Council [2006] EWLands ACQ_120_2004 (28 April 2006)
URL: http://www.bailii.org/ew/cases/EWLands/2006/ACQ_120_2004.html
Cite as: [2006] RVR 336, [2006] EWLands ACQ_120_2004
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- The claimant in this reference seeks compensation for the compulsory acquisition of about 18 acres of land forming part of the Essex County Showground at Great Leighs in Essex. The land was acquired for the purpose of constructing the Great Leighs bypass on the A131 between Chelmsford and Braintree. The showground had been used for many years for the annual Essex County Show, and a range of other events had also been held there. Showjumping was part of the show. The chief executive and principal shareholder of the claimant company is Mr John Holmes, who has had a lifelong association with that sport, and in 1997 the claimant bought the showground. Mr Holmes staged additional showjumping events there in that year and in 1998. Land adjacent to the showground that had been used for car parking in connection with the show was sold in June 1990. The sale included a minerals lease of the showground and the right to cross it to take minerals from the land sold to the A131. In October 2004 the claimant entered into an agreement with the then owner of the land that had been sold, and this included the purchase by the claimant of the minerals lease. The taking of the 18 acres for the bypass, which has been constructed and opened to traffic in 2002, isolated 8 acres of the showground site in the shape of a narrow piece of land between the bypass and the old road. It also resulted in the loss of five vehicular accesses to the showground (out of a total of ten that had been used for the County Show). A bellmouth access to the land from the bypass was provided and also a further new access on an adjoining minor road.
- The subject land vested in the acquiring authority on 8 December 2000, and this is the valuation date. At the time of the hearing, in January and February 2006, earthmoving works preparatory to the construction of an all-weather horse racing track had been carried out and a deep excavation had been made as a start to the construction of a 6-storey grandstand. Planning permission for this development had been granted in September 2004, and permission extends to the provision of floodlighting. The racecourse would be the first new racecourse to be constructed in this country for nearly 80 years. Fixtures have been arranged from October this year.
- The case for the claimant is that at the valuation date planning permission existed that would have enabled a racecourse to be laid out on the showground and that, in the no-scheme world at that date, the planning permission that is now being implemented could reasonably have been expected to be granted. Compensation for the land taken, it is said, should be assessed on the basis of these actual and assumed permissions. The intention is that the severed land of 8 acres should be used for race day stabling, so that an underpass beneath the road would be needed for the horses to get to the track, and the cost of such an underpass is one of the items of the claim. In addition it is said that the scheme has resulted in a delay in opening the racetrack, and there is a claim for the profits that are said to have been lost because of this. Finally, there is an item of claim unrelated to the racecourse. This relates to a nearby housing development in Great Leighs, the construction of which was dependent on construction of part of the bypass. It is said that acquisition of the subject land deprived the claimant of negotiating a ransom payment from the developer. The total amount claimed under all heads is about £9.3m.
- The acquiring authority deny the planning permission for a racecourse existed at the valuation date or could reasonably have been expected at that date. They say that there is no evidence to show that a racecourse development would be profitable, so that no compensation should be paid in respect of loss of profits or the cost of an underpass; and that in any event there would be no entitlement in law to this. They say that the minerals lease would have prevented the racecourse from being constructed, and they deny that the land taken had any ransom value. There are also subsidiary issues in relation to access and landscaping. The acquiring authority assesses the value of the claim at £202,952 (or £314,339 or £714,339 on certain alternative assumptions).
- Essex County Showground occupies a predominantly rural situation just to the north of the village of Great Leighs, about 8 miles north of Chelmsford, and 3 miles south west of Braintree. At the valuation date of 8 December 2000 the site within the claimant's freehold ownership extended to some 118 acres (48 ha). The whole of its eastern boundary was formed by the main A131 Braintree to Chelmsford Road, its southern boundary was Moulsham Hall Lane, and part of its western boundary was Blackley Lane. The site was principally laid to grass with hoggin roadways but also included an area of protected woodland (Fair Wood) and a lake on the Moulsham Hall Lane boundary. There were various buildings, including a part two-storey pavilion, which was centrally located in the site and was used as offices and conference facilities, with an associated reception area and catering accommodation; a single storey office building with rooms for stewards to use on event days; a portakabin used by Essex Young Farmers; a large workshop building in Fair Wood; a manager's house; and stable blocks. There was a Grand Ring and a second judging ring. There were two main public car parks located on the main showground (the "Chelmsford" and "Braintree" car parks) together with various additional parking areas for competitors, staff and other event participants.
- A further 45 acres (18ha) adjoining the north west of the site, and also fronting onto Blackley Lane (referred to later as the "Lyons land") had originally belonged to and formed part of the showground. It was used for car parking and was referred to as the "Dunmow" car park. This land was sold by the Essex Agricultural Society to Evered Quarry Products (England) Ltd in June 1990 for sand and gravel extraction. Planning permission for the extraction was granted in 1993, subject to requirements as to access, which had to be across the remaining showground land and out onto the A131, and improvements to highway infrastructure. The transferor reserved the right for 21 years to use any of the land not being worked for car parking and other purposes for 7 days each June in connection with the Essex County Show. It was also the subject of an option for 21 years for the transferor or its successors in title to re-purchase it for a nominal £5,000, once extraction and restoration was completed. On the same day as that land was sold, Essex Agricultural Society granted a lease for 50 years ("the minerals lease") to Evered Quarry Products over the remainder of the showground land (save for an unspecified area of ten acres in not more than two parcels and a section of the land fronting Moulsham Hall Lane which includes Fair Wood) permitting the extraction of sand and gravel subject to planning permission being obtained and to the payment of royalties to the landlord. The land was subsequently sold to a Mr Frank Lyons, some 6 months after the valuation date, on 11 May 2001.
- There were, at the valuation date, a total of ten accesses serving the main showground, five of which were along its frontage to the A131. The access known as gate 2 (formerly gates 1 and 2), some 14 metres wide, was located immediately adjacent to the junction with Moulsham Hall Lane at the south eastern corner of the site. It gave access to the Chelmsford car park, which, in a study of showground traffic undertaken by W S Atkins in December 1996, was estimated to have a capacity of 2,100 vehicles. It was principally used for visitor traffic arriving from the south. The other main visitor access, close to the north eastern corner of the site (gate 6), served the Braintree car park (2,500 vehicles) and immediately adjacent to it (gate 5) was a trade and exhibitor entrance. There was another trade and exhibitor entrance further south (gate 3). Gate 4 was the main public entrance for those arriving without cars. It had an in/out loop for buses. Two gates (gates 8 and 9) were located on Blackley Lane and provided access to the Dunmow car park (3,400 vehicles). In addition there were gates 11, 12 and 13, which served Moulsham Hall Lane. Gate 10, which has not been included in the total, is not used as it is on the line of a public footpath.
- Planning permission was granted in 1957 for use of the showground site as a "permanent showground" soon after it was acquired by Essex Agricultural Society as a home for the Essex County Show, which had previously been held annually at various locations in the county. Use of the site developed over the years as an agricultural showground with ancillary activities. In 1974 permission was obtained to use part of the Dunmow car park for equestrian activities, and a number of other permissions were also granted. In July 1990 the remainder of the showground (excluding the Lyons land) was sold to the National Farmers Union ("NFU"), who sought clarification as to the extent of uses permitted under the 1957 consent. There was concern on the NFU's part that the word "agricultural" had been included in a number of the permissions that had been granted, and this was considered potentially to restrict the uses to which the showground could be put. By letter of 13 December 1994, the Director of Planning at Chelmsford Borough Council wrote (to Mr Michael Aves, who was then solicitor to the NFU and is now the claimant's solicitor) expressing his opinion that:
- The claimant acquired the freehold of the showground from the NFU in February 1997. Mr John Holmes, the chief executive and principal shareholder of the claimant had ambitions to expand the range and programme of equestrian events, and he set about doing this. In September 1997 an additional national showjumping event was held, and the 1998 events were further improved. Accreditation was received in 1998 for the showground to stage advanced horse-trials and in the same year the British Show Jumping Association included the site as having potential for expansion of its Centres of Excellence Programme. The claimant then sought and obtained planning permission (in October 2000) for the erection of a 10,000 sq m arena building, stable block, all weather manège, a new dwelling for the showground manager and the change of use of an on-site chapel to a café ("the arena permission"). The consent was subject to a section 106 agreement that required the approval of traffic management arrangements for significant events that attracted more than 5,000 visitors, but it did not otherwise restrict the use of any of the existing accesses.
- The land taken for the construction of the bypass amounted to 17.9 acres (7.24ha). The area of land severed by the new road (between it and the old A131) is 8 acres (3.24ha) and is referred to as "the island site". The bypass opened for public use on 19 September 2002. The island site retained its former accesses onto the A131, gates 2, 3, 4, 5 and 6, but no provision was made for connecting it with the rest of the showground over or under the new road. A new main access was provided from the northbound carriageway of the dual-lane bypass into the principal showground site by means of a left-in/left-out bellmouth junction, and this is located at a point which gives access into the Braintree car park. This junction is also required for the gravel traffic from the Lyons land. A new secondary 6 metre wide access has been provided off Moulsham Hall Lane approximately 70 m from the junction with the newly constructed roundabout. The remaining accesses off Moulsham Hall Lane and Blackley Lane are physically unaffected.
- In his evidence Mr Holmes said that, although his original interest in the Essex County Showground related to showjumping, his concept for the arena development, which received planning permission in 2000, was as the creation of a venue for showjumping with a view to moving additionally into racing and using the funds from that to support the showjumping, a model that worked extremely well in Europe. In 1998 the on-line gaming industry was rapidly expanding, and he saw the opportunity to run at Great Leighs races that were pitched directly at the on-line gaming sector. He said that he began recruiting racing expertise. Great Leighs Ltd, a subsidiary of the claimant, was incorporated in early 2000. He said that the company was formed in order to deal with the eventuality of the bypass happening. Great Leighs, he said, had always been the working title for the racecourse project and its logo had always borne the shape of a racing circuit. During television coverage of the Horse Show at the showground Great Leighs's ability to deliver uninterrupted television coverage was investigated. He had numerous meetings with SNAI, the Italian betting company. He did not reveal his plans at first, in order to keep them secret from business rivals, because of the sensitivity of talk with prospective partners, and because the British Horseracing Board (BHB) asked him not to discuss his scheme with the press until April 2001. In addition he was seeking to acquire adjoining land and he did not wish to alert neighbours to the racing project.
- During 2001, Mr Holmes said, he tried to come to terms with the fact that the 2000 arena planning permission was now unworkable by reason of the bypass. However, there was growing enthusiasm from the racing industry for a track in this location, and he commissioned leading sports stadia architects, HOK Sport + Venue + Event to draw up a masterplan. A grandstand backing onto the new bypass was proposed, with a left handed all-weather racing circuit with a back straight passing through Fair Wood. The only place the race-day stables could go was on the severed strip, and the viability of that depended on an underpass to link it to the main site. This scheme achieved planning permission, and was highly commended by the Commission for Architecture and the Built Environment (CABE). In April 2003 Chelmsford Borough Council resolved to grant planning permission for a revised scheme, which moved part of the racecourse onto a parcel of gravel land that the claimant was seeking to acquire from Mr Lyons.
- Mr Holmes said that Great Leighs would be the first new racecourse in the UK since 1927. It would have floodlighting and would share with only two out of the 60 racecourses in Britain, Wolverhampton and Kempton Park, the ability to hold evening floodlit meetings. The BHB awarded Great Leighs its racecourse operator's licence in June 2003 and it had now awarded Great Leighs a core calendar of 16 race meetings in a normal operational year, with the ability to supplement them with a potentially infinite number of other fixtures under the new bidding system. The BHB had given Great Leighs a start-racing date of October 2006. Although the racecourse was not yet fully funded, Mr Holmes said the laying of the all-weather Polytrack would start in about March or April. It was a four-month programme. The grandstand would not be ready for racing in October, but racing could be held without a grandstand.
- The business plan for the racecourse development was produced. It was dated December 2004. It showed the proposed space allocation in the grandstand building, or, as it referred to it, the leisure complex. At lower ground floor level there would be a nightclub of 10,000 sq ft, casino space or a health and fitness club of 14,000 sq ft and ancillary accommodation. The upper ground floor would be entirely taken up by a 45,000 sq ft casino. At level 1 there would be the racing concourse and a 20,000 sq ft betting hall. At level 2 there would be 40 hospitality boxes and 18,000 sq ft for banqueting, functions, conferencing and public catering. Level 3 would contain a 700-seat dine-and-view panorama restaurant, a 150-seat "destination" restaurant and 12,000 sq ft for banqueting, functions and conferencing. The top floor, level 4, would contain racing club and VIP suites, a management suite, studios and additional space for rent, and a media and press centre.
- With the exception of one element of the disturbance claim, the whole of the case for the claimant was predicated on the contention that it would have been possible to develop a racecourse under the arena permission and that, as at the valuation date, 8 December 2000, planning permission for a racecourse could reasonably have been expected. This provided the basis for valuing the land that was taken, the severance and injurious affection of the land retained, the claim for loss of profits and for certain additional costs. We deal with this fundamental issue under Planning.
- Before the bypass there were ten accesses serving the main showground, five of which were along the frontage to the A131. In place of these five accesses, which, after construction of the bypass, could serve only the severed island site, a new bellmouth junction off the northbound carriageway of the new bypass was constructed and this is now the principal access to the site. In addition a secondary access has been constructed off Moulsham Hall Lane. The claimant contended that the replacement accesses provided are inferior to those that previously existed and that this should be taken into account in assessing compensation. We deal with this under Accesses. There is a related issue about the provision of an underpass under the bypass, which we deal with separately and refer to below.
- The acquiring authority agreed to provide landscaping on the land acquired. The claimant contended that this was inadequate, and that further landscaping was required to mitigate the loss in value of its land. We deal with this under Landscaping.
- In October 2004 the claimant acquired 45 acres of adjoining land from the owner, Mr Lyons. Its contention was that 10 acres of this land was acquired to replace land lost through the compulsory purchase and that the amount that it paid for the land should form part of the compensation. We deal with this issue under the heading Lyons land.
- The claimant contended that an underpass was needed to connect the main site with the severed island site and that the cost of this should form part of the compensation. We deal with this under Underpass.
- In September 2000 planning permission was granted to David Wilson Homes to develop 42 acres of land for housing at Great Leighs. The developers agreed to make a contribution to the construction of the bypass, and they also agreed that no more than 100 of the permitted dwellings should be occupied before the relevant section of the bypass was completed. The claimant said that, in the absence of the bypass proposal, some of its land would have been required to make adequate highway provision for the David Wilson Homes development, and that the amount that it could reasonably have expected to negotiate for this should form part of the compensation. We deal with this under Loss of opportunity.
- The value of the land taken and the loss suffered on account of severance and injurious affection we deal with under the heading of Valuation of land, and we take account at that stage of our conclusions in the earlier sections. There was also a substantial claim in respect of loss of profits and this was principally based on the contention that in the no-scheme world the claimant would have carried out a racecourse development and would have done so in a shorter timescale than in fact occurred. We deal with this under Disturbance.
- For the claimant Mr Joseph Harper QC and Mr John Dagg called as witnesses of fact:
- For the acquiring authority Mr Paul Shadarevian and Miss Melissa Murphy called:
- The statutory assumptions as to planning permission are contained in sections 14 to 17 of the Land Compensation Act 1961. It is not contended that there is any planning permission that is to be assumed pursuant to these provisions, apart from planning permissions that were in force at the valuation date. The claimant has sought, however, to rely under the Pointe Gourde rule on the assumption of planning permission for a racecourse, which it contended could reasonably have been expected at the valuation date. The acquiring authority said that no such racecourse planning permission could reasonably have been expected, but they accepted that the correct approach, in assessing both the value of the land taken and the reduction in value of the land retained, was to ask what planning permission could reasonably have been expected to have been granted as at the valuation date. We accept that this approach is correct: see Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426, where the Privy Council determined that compensation for the land taken and for severance should be assessed on the basis of the planning permission that, but for the project, would have been granted for the entirety of the claimant's holding.
- Mr Shadarevian submitted that, in making an assessment of the likelihood of planning permission being granted for a specified form or class of development in the no scheme world, the proper approach was to determine what a reasonable planning authority, correctly addressing both law and policy, could have been expected to decide at the valuation date. We agree. It was not what the particular planning authority, Chelmsford Borough Council, composed as it actually was in terms of membership and with such attitudes or predispositions as might be evinced in its decisions, would have decided, but what a reasonable planning authority could have been expected to decide in the circumstances to be assumed at the valuation date.
- The governing planning permission for the showground was granted in 1957 by Essex County Council to the Essex Agricultural Society. It described the development permitted as "Use of Land for permanent showground". In 1981 full planning permission was granted for 120 loose boxes, of which 60 have been constructed. In 1984 full planning permission was granted for the erection of the pavilion building, and this was implemented. In 1996 a further planning permission allowed the pavilion to be used for conferences, meetings, exhibitions, training seminars, trade fairs, examinations and social functions in addition to activities ancillary to the showground. In 1996 permission was granted for a limited period for use of the showground for outdoor retail events, and this was renewed in October 2000. In 1996 full permission was granted to convert a single storey site office building to showground manager's dwelling, and this was implemented.
- In addition to these planning permissions there was in force at the valuation date planning permission referred to as the arena permission for development described as: "Erection of arena building, erection of new dwelling for showground manager & change the use of chapel building to cafe". The permission was granted on 23 October 2000. The layout plan did not show the proposed bypass. It is this permission that the claimant asserts would have enabled the construction of a racecourse at the valuation date, and we shall consider this contention shortly.
- On 16 October 2002, permission was granted for: "Erection of showground centre including fitness area, terracing for 7000 spectators, conference and multi-use areas; horse racing & equestrian tracks; stables and ancillary buildings, underpasses; lagoon; landscaping; replacement dwelling." This permission we shall refer to as the "first racecourse permission". The layout plan showed the proposed bypass and the land laid out as a racecourse. On 20 September 2004 a further planning permission was granted, the "second racecourse permission", for development that was described in effectively the same terms as in the first racecourse permission, except that "underpasses" and "lagoon" had been omitted. The racetrack was shown on the layout plan orientated slightly differently from that in the first racecourse permission and its configuration was also slightly different. It extended onto land that formed part of the Lyons land had not been included in the land that was the subject of the earlier permission.
- Mr Holmes said that, although his original interest in the Essex County Showground related to showjumping, in his concept for development he had set about creating a venue for this with a view to moving additionally into racing, and using the funds from that to support the showjumping. That was a model that worked extremely well in Europe. The arena proposal had been designed with this in mind, with the arena building set against Fair Wood so as to be outside the configuration of a racetrack. It was the claimant's contention that under the arena permission it could lawfully have lain out and operated a racecourse. We reject this contention. The permission was for: "Erection of arena buildings, erection of stable block, construction of all weather manège, erection of new dwelling for showground manager and change of use of chapel building to café." Clearly that did not expressly or impliedly permit the laying out and use of a racecourse. The arena building could be used, pursuant to section 75(3) of the Town and Country Planning Act 1990, for the purpose for which it was designed, ie as a large indoor arena, except that under condition 13 of the permission it could "not be used for motor sports of any kind." Mr Holmes suggested that there could have been erected pursuant to the permission a building that was designed and could be used both as an arena and as a racecourse grandstand. That is clearly not the case. Nor can any of the earlier planning permissions relating to the showground be relied on as enabling the laying out of a racecourse on the land and its use for this purpose. A planning permission of April 1974 permitted equestrian activities in the Dunmow car park. The permission of April 1981 for the erection of 120 loose boxes was subject to a condition that they should be used "solely for the stabling of animals associated or connected with equestrian events pursuant to the use of the overall site as an agricultural showground by the applicant". No other permission relates to equestrian activities.
- It was part of the claimant's case that, in the absence of the bypass, a racecourse could physically have been laid out on the land between the permitted arena building and the woodland strip along the eastern boundary of the land. An aerial photograph of the land was produced showing a racetrack and an arena building designed to include a grandstand and occupying the space between Fair Wood and the woodland strip. This was wholly misleading. It was suggested that such a building could have been constructed pursuant to the arena permission. It could not have been. The permission did not extend to a grandstand, as we have said. Moreover, the orientation of the building in the plans forming part of the permission would not have been face-on to the track (as the one in the aerial photograph was). Although the permission was in outline, siting was not a reserved matter, so that re-orientation could not have been achieved. In addition condition 14 provided that the arena "shall be of the nature indicated" on the submitted drawing, and that showed a tent-like arena structure, quite dissimilar to a grandstand. More fundamentally, as Mr Ward stated in evidence, the distance between the eastern corner of the permitted building and the woodland strip was less than 200 metres, and the total width needed to accommodate a racetrack, because of the need for bends of a minimum radius, was over 300 metres.
- Despite what appeared to us to be conclusive evidence that a racetrack could not be accommodated as Mr Holmes had suggested, the claimant persisted in asserting that it could, and, following the close of evidence, a plan was submitted which was designed to show that a racetrack that met the requisite standards could have been fitted onto the land in addition to the indoor arena. Mr Ward commented on the plan in a note submitted after the hearing. We accept what he says in that note, including the following.
- The plan shows a racecourse oval of 620m in length compared with 700m in the approved scheme, and there is no evidence to support the statement on the plan that it would meet Jockey Club standards. The plan in fact demonstrates that the racetrack could not be built as shown in the photomontage. The racetrack shown would be physically and functionally incompatible with the arena building. It would also be physically incompatible with the retention and operation of the showground. It would prevent the use of access gates 4, 5 and 6 and the use of the Braintree car park, and all established roads and buildings would have to be removed, as would the Grand Ring. The remaining car parking provision would be grossly inadequate.
- Our conclusion, therefore, is that not only did the arena permission not permit a racecourse but that in any event a racecourse could not physically have been accommodated on the land, as the claimant asserted that it could have been accommodated pursuant to the arena permission.
- On 16 August 2001 a planning application for development described as "Erection of showground centre including fitness area, terracing for 7000 spectators, conference and multi-use areas; horse racing and equestrian tracks; stables and ancillary buildings, underpasses; lagoon; landscaping; replacement dwelling." It was accompanied by a statement in support prepared by Mr Aves. This said that the application was "for the following development:
- 3 To overcome these problems, and to ensure the continued viability and success of the Showground, it is necessary to reorder the Showground in a radical way."
- Our conclusion on the evidence is that the first racecourse proposal was a product of the scheme. While we have no doubt that Mr Holmes had given thought to the possibility of a racecourse at Great Leighs before the valuation date and had discussed some aspects of what might be involved with others, there was nothing at that stage to suggest that there was anything in the nature of a scheme for such a development, even in embryo. There is before us no documentary evidence from before the valuation date of anything being done in relation to a possible racecourse. The earliest document is a communication from SNAI, the Italian betting company, in February 2001. Mr Holmes had not mentioned a racecourse proposal to Knight Frank, who were acting for him in relation to the prospective claim for compensation. Mr Aves did not say that he had been told. We do not think that the absence of any such evidence of a racecourse scheme before the valuation date is sufficiently explained by Mr Holmes's concern for commercial secrecy. We see no reason to doubt what Mr Aves's statement in support of the planning application said, that it was the bypass that led to the racecourse proposal. It was that, we find, that led Mr Holmes to concentrate into a firm proposal his previously undeveloped thoughts on the possibility of racing.
- Although the Essex and Southend-on-Sea Replacement Structure Plan was not formally adopted until April 2001 there was no dispute that the relevant planning policies at the valuation date were contained in that plan, far advanced as it was, and in the Chelmsford Borough Local Plan. Structure plan policy C5 "Rural Areas not in the Green Belt" restricted new uses to those appropriate to a rural area and applied strict control of new building outside existing settlements to that required to support agriculture, forestry or other rural uses. There were also policies, NR1, NR6 and NR9, protecting the landscape, nature conservation sites and woodland and trees. Policy LRT1 "Sports/Leisure Centres and Major Sports Stadia" provided that sites for such developments should be located in or adjoining urban areas identified in adopted local plans. Policy LRT3 "Formal Countryside Recreational Facilities" provided that large scale or intensively used facilities for formal countryside recreation including golf courses, golf driving ranges and equestrian centres should be located so as to ensure compatibility with adjoining land uses, enhancement of the visual appearance of the area, acceptable traffic generation and easy accessibility. It stated that such uses or extensions to existing facilities would not be permitted where they would result in large-scale new building in the countryside. The text before this policy said: "Proposals for large equestrian centres, or commercial stables incorporating indoor riding facilities or arenas, which involve a substantial amount of building will not be permitted in the countryside."
- The local plan contained rural area policies that permitted limited forms of development as exceptions to the generally restrictive policies relating to development in countryside locations. There was a policy, RE26, dealing specifically with the Essex Showground. It was in these terms:
- Mr Fellows expressed the opinion that the relevant strategic policy for consideration of an application for a racecourse in the no-scheme world would have been structure plan policy LRT3, which referred to equestrian centres and provided information on their preferred location. There were four policy requirements. Firstly, proposals had to be compatible with adjoining uses. On this, he said that, given the existing authorised uses and development on the site, proposals for a racecourse would be so similar in nature that they would have been regarded as compatible with the adjoining uses as the existing use and therefore acceptable. Secondly, the proposals had to enhance the visual appearance of the area and be compatible with the surrounding landscape character. Mr Fellows said that a suitable enhancement of the visual appearance of the area would have been possible through a landscaping scheme such as that in the racecourse proposals. The third requirement was that traffic generated should be capable of being accommodated on the road network in physical and environmental terms. On that, he said that the arena proposal had been considered acceptable in terms of its highway impact. The permission had required the submission of traffic management measures for significant events of more than 5,000 visitors, and it could be assumed that such a requirement would have been made in respect of a racecourse proposal. Fourthly, a choice of means of transport had to be available at the site. In the no-scheme world, Mr Fellows said, there were footpath links outside the showground site and bus stops were immediately accessible on the old A131, so that the situation was better than with the bypass in place.
- In strategic policy terms, therefore, Mr Fellows considered that there was a very good chance that a racecourse would have secured permission. At local plan level policy RE26, the policy that applied specifically to the showground, identified the criteria for acceptable development. These included the suitability of the site for the proposed use, the suitability of the highway network and car parking, and the potential environmental impact on the surrounding area. The council had found a racecourse use to be acceptable; it would, for the reasons given in relation to policy LRT3 have been acceptable in highway terms; and, although the potential environmental impact of the proposal in the no-scheme world was more difficult to assess, there was a strong likelihood that the proposal would have been supported.
- In cross-examination Mr Fellows accepted that policy RE26 did not create a presumption in favour of any particular type of development but required proposals to be assessed by reference to other policies in the plan. He agreed that he had only assessed a racecourse proposal against policy LRT3 and had not analysed other policies. However, he said, the other policies had been considered by the local planning authority and they had found a racecourse proposal acceptable. Mr Shadarevian put to him passages from a planning appraisal prepared in May 2000 for Mr Holmes by Mr Fellows's firm, Knight Frank LLP. Mr Fellows said that he had not been involved in the preparation of the document, but he did not dissent from what was said in it. The purposes of the report were stated to be to support the claim for compensation and to advise the showground management in respect of future development opportunities. The report was written against the background of the arena application, which had by then been before the planning committee and had secured approval subject to a section 106 agreement being entered into. It considered the possibility of various types of development, but a racetrack was not among them. It said that, in view of the recent approval for the arena proposal, it was unlikely that further permission would be given for equestrian-related facilities in the short term unless there was a particular functional need in relation to the equestrian and showground events. Mr Fellows said that had a different form of design been put forward for the arena building, which the council saw as producing a landmark building, it could have been considered acceptable.
- Mr Ward said that the development plan and other considerations provided support for the view that there was a reasonable expectation of planning permission being granted at the valuation date for a limited range of sporting, recreational, tourism or employment related activities. There could not, in his opinion, however, have been a reasonable expectation of planning permission for the large-scale racecourse facilities that were subsequently consented. The reason for this was that they gave rise to quite different policy, traffic, parking and environmental considerations from those that applied to the arena permission. Policy RE26 of the local plan at best implied that some use that was complementary to the showground use was likely to be acceptable, but any development would in any event have been subject to the development plan policies concerning development in the countryside. These (particularly C5, NR1, NR6 and NR9) were essentially restrictive policies, and a racecourse scheme would have been in conflict with them.
- Mr Ward said that he thought that the approach of the local planning authority on the first and second racecourse proposals had to be treated with a certain degree of caution. It was very unclear from the reports how the borough planning officers interpreted the relevant policies, and there was very little analysis of whether the development accorded or conflicted with them. Unless the degree of conflict with the policies was established it was impossible to judge what weight to accord to the other considerations.
- Structure plan policy LRT3, which related to formal countryside recreation facilities had no application, Mr Ward said. The only support for a large-scale sports facility with a grandstand stadium of the type proposed was under policy LRT1, but that provided that such developments should be located within or adjoining urban areas and was subject to eight criteria. The first criterion was that there should be an identified need for the proposed facility. In the context of a racecourse proposal this would have meant a comprehensive assessment of need in regional or local terms in a report that could be the subject of consultation. That was never done, and even if such a need had been established a case would still have to have been made out for the other proposed facilities that were proposed to be included in the building and which did not need a rural location. Considerations of that sort would touch on the extent of the activity and the size of the building that was needed to accommodate them.
- Mr Ward contrasted the racecourse proposals with what was permitted under the arena permission. The racecourse scheme involved a very substantial alteration to the character and landform of the whole site. He estimated that approximately 36% of the land owned by the claimant at the valuation date was affected by operational development, whereas only 3 to 4% of the same area would have been so affected in the arena proposal. The racecourse building was 24 m in height, whereas the main part of the arena building was 15 m high, with peaks of 23 m at the corners only. The arena building was for equestrian events and other events within the compass of the showground use, while the racecourse building included large-scale exhibition floors, a fitness centre and swimming pool, nightclub, casino as well as racecourse related activities. There were also other elements, particularly floodlighting, which would have a very dramatic effect on the rural environment.
- The claimant's case was that it would have been possible to develop a racecourse under the arena permission and that the grant of permission for the first racecourse proposal showed that at the valuation date planning permission for a racecourse could reasonably have been expected. We have explained above why we reject the first of these contentions. As for the second contention, counsel referred to the provisions of section 5A of the 1961 Act, which was inserted by the Planning and Compensation Act 2004. Subsection (1) provides that the valuation of land for the purposes of rule (2) must be made as at the valuation date. Subsection (2) provides that no adjustment to the valuation is to be made in respect of anything that happens after the valuation date. Mr Harper submitted that the provisions made no change in the law, and that reference to the later planning permission merely confirmed what was foreseeable at the valuation date, and did not result in an adjustment. Mr Shadarevian also submitted that the provisions did not change the law. He submitted, however, that in contrast to the assessment of disturbance compensation, where, under Bwllfa & Merthyr Dare Steam Collieries (1891) v Pontypridd Waterworks Co [1903] AC 426, compensation could be assessed on the basis of events occurring after the valuation date, in the case of valuation of land regard to events in the scheme world could only be had for the purpose of checking the no-scheme world valuation.
- We do not find subsection (2) an easy provision to understand. The prohibition is against an "adjustment" to the valuation and this certainly suggests that it is not intended that events happening after the valuation date should be made inadmissible in all respects for the purpose of a rule (2) valuation. On the other hand we find hard to understand the concept, put forward by counsel, of post-valuation date events being taken into account solely for the purpose of checking some previous conclusion. It is difficult to see the utility of such a check if there is a prohibition on adjusting the valuation in the light of it. What has to be determined in the present case is whether a reasonable planning authority could have been expected to grant planning permission for a racecourse at the valuation date. In determining this question it would seem to us to be unfair and unreal to exclude from consideration the actual grant of planning permission for this purpose some months after the valuation date. There is, however, agreement on the part of counsel that the permission can be taken into account as evidence at least for certain limited purposes; and the conclusions that we reach below would have been no different if the permission had been excluded from consideration. In the event, therefore, it is unnecessary for us to reach a conclusion on the meaning of the provision.
- Mr Harper, basing the claimant's case four-square on the grant of planning permission for the first racecourse proposal, argued that to reject the claimant's case it would be necessary to hold that the grant of that permission was Wednesbury unreasonable. That is plainly not the case. Both approval and refusal could have been within the range of the planning authority's discretion in determining the application. If the claimant had applied, with the agreement of the acquiring authority or the consent of the Tribunal, for a section 17 certificate, specifying a racecourse as appropriate development, and Chelmsford Borough Council had issued a certificate in these terms, it would have been open to the acquiring authority to appeal to the Secretary of State and to advance the same considerations as those in Mr Ward's evidence here as to why planning permission would not reasonably have been expected to be granted. The Secretary of State would not have been compelled to agree with the planning authority's disputed decision on the section 17 application because the same authority had granted planning permission for a similar development.
- We are not satisfied that a planning authority in the position of Chelmsford Borough Council, properly advised on planning policy and other material considerations, would have granted planning permission for a racecourse proposal at the valuation date. The applicable planning policies (in the Essex and Southend-on-Sea Replacement Structure Plan and the Chelmsford Borough Local Plan) were effectively the same at the valuation date as at the date of the resolution to grant permission for the first racecourse proposal (although the Replacement Structure Plan was not formally adopted until April 2001). Although the officer's report on the first racecourse application contained a long list of the relevant planning policies, it did not identify what were the policies of particular importance. In its discussion of the merits of the proposal it made no proper assessment of the proposal in relation to planning policy. It expressed a very general view: "it is considered that the equestrian proposals would sit consistently and comfortably with the wording and spirit of planning policy, including local plan policy RE26." Mr Ward's view, which we accept, is that there would have been strong policy and environmental objections to a racecourse proposal in both the scheme and no-scheme worlds. In particular, as he said, policy RE26 did not propose any development of the site and made any proposal that might be advanced subject to the restrictive countryside policies. We accept also that structure plan policy LRT3, which dealt among other things with equestrian centres, had no application to a racecourse and, in any event, ruled out large-scale new buildings in the countryside. Policy LRT1 limited the location of new sports centres, stadia and arenas to locations within and adjoining urban areas. The proposal was for a development consisting primarily of an all-weather racecourse and a 6-storey building to be used as a grandstand and for leisure purposes. Operational development would cover about 36% of the site (as compared with 3 or 4% under the arena permission). The absence of policy support for such a proposal and the countryside policy objections to it would have required to be outweighed by other considerations.
- The evidence before us is wholly insufficient to enable us to conclude that at the valuation date a racecourse proposal held out any prospect of commercial success or that a case on need could have been made out. At that date, unlike at the time when the borough council resolved to grant the first racecourse permission, no racecourse proposal had been devised, let alone evaluated. There had been no discussion with bodies responsible for the racing industry. Even consultations on the first racecourse application elicited no response from the British Horseracing Board, while the Jockey Club's response was limited to a statement that the proposed scheme would not meet its licensing requirements. We accept, as Mr Ward said, that there was no proper assessment of need in regional or local terms for the purposes of the first racecourse application. Nor was there evidence before us to show that a case on need could have been made out at the valuation date. The case for the claimant was in essence that the fact of the first racecourse permission established the reasonable expectation of permission for a racecourse at the valuation date. In our judgment, it does not do so, and we accept Mr Ward's conclusion that planning permission for a racecourse could not reasonably have been expected at that date because the strong policy objections would not have been shown to be outweighed by other considerations. This is a conclusion that applies to both the scheme world and the no-scheme world.
- In a key section of his report to the planning committee on the first racecourse proposal the officer said:
- The fact is that the principal benefits envisaged by the planning officer in recommending approval for the first racecourse application – the continued success of the showground, employment and economic benefits for the area and the opportunity to provide a boost for showjumping and eventing – would be dependent on the success of the racecourse proposal. As we say later, the evidence before us does not establish that the proposed racecourse and leisure building, viewed at the present time, would be a profitable venture, and there is nothing to suggest that a case could have been made out at the valuation date to show that the development held out the prospect of commercial success. Moreover the council had been told in Mr Aves's statement (see above) that the loss of land for the road and the severing of a further area had reduced the working area of the showground below the level at which it was possible to host major shows, including the Essex County Show. It would be surprising if, having been told that the county show was to be lost, the council were not keen to replace it by a new development. That is not a consideration that would have applied in the no-scheme world. Not only, therefore, do we think that the proposal for a racecourse was conceived as a result of the scheme but we also conclude that the first racecourse permission itself is to be regarded as the result of factors that would not have applied in the no-scheme world.
- In the light of our findings above, we consider the question of the effect on access to the showground in terms of its existing use at the valuation date, and any increased use that could be anticipated as a result of the arena permission, together with the requirement for the gravel traffic to have direct access to the A131. It was agreed that there were, at the valuation date, a total of 10 accesses serving the main showground, 5 of which were along its frontage to the A131. The access known as gate 2 (formerly 1 & 2), some 14 metres wide, was located immediately adjacent to the former junction with Moulsham Hall lane at the south eastern corner of the site and gave on to the Chelmsford car park which, in the Showground Traffic Study undertaken by W S Atkins in December 1996, was estimated to have a capacity of 2,100 vehicles. It was principally utilised for visitor traffic arriving from the south. The other main visitor access, close to the north eastern corner of the site (gate 6), served the Braintree car park (2,500 vehicles) and immediately adjacent to it (gate 5) was a trade and exhibitor entrance with another for the same purpose further south (gate 3). Gate 4 was the main public entrance for those arriving without cars, with an in/out loop for buses. Five further gates were located on Blackley Lane and Moulsham Hall Lane (8, 9, 11, 12 and 13). Gates 8 and 9 provided access from Blackley Lane to the Dunmow car park (3,400 vehicles), with gates 11, 12 and 13 serving Moulsham Hall Lane. Gate 10, which has not been included in the total, is not used as it is on the line of a public footpath. There was no gate 7 referred to in the 1996 WS Atkins Traffic Study.
- Subsequent to the construction of the bypass, the island site continues to be accessed from the old A131 through the former gates 3, 4, 5 and 6. The main showground now has its principal access from a newly formed left in/left out bellmouth junction off the northbound carriageway of the new bypass, located towards the north-eastern corner of the site, and leading into the Braintree Car Park. It also serves as access and egress for the gravel traffic, and has been constructed in accordance with design standard TD41/95 "Vehicular Access to All-Purpose Trunk Roads". A new 6 metre access has been provided onto Moulsham Hall Lane 70 metres from the new roundabout by ECC (to replace the former gate 2) and this complies with Layout 3 as specified in TD41/95. The former gate 11 (giving access through Fair Wood) remains in use as a showground access, as do gates 12 and 13.
- Mr Holmes said that prior to the construction of the bypass there were 5 public entrances to the showground off the old A131, including facilities for public transport to pull off the road and disgorge passengers. The replacement of those with a single bellmouth junction off the new bypass, which has to cater for public as well as exhibitors access and also has to be used by the gravel lorries, was wholly inadequate to cope with large scale spectator traffic whether that be for showground use, uses associated with the arena permission or for a racecourse. The additional access that the council had provided off Moulsham Hall Lane was located too close to the new roundabout and also had to be used by pedestrians. It was the claimant's case that the bellmouth access should be upgraded to comply with Highway Design Standard TD42/95, the cost of which was estimated at approximately £126,000.
- Mr Adam said that he had considered the adequacy or otherwise of the showground access post construction of the bypass in terms of capacity and safety aspects, although he had not specifically considered the question of the claimant's operational requirements. His firm, Halcrow, had previously been commissioned by the project managers acting for the claimant in respect of the proposed planning application for the racecourse development to prepare 4 reports on highways and safety issues, and he had undertaken two of them. Firstly, in connection with the new bellmouth junction off the bypass, Mr Adam said that it served to replace, at a single point, all the entrances and exits that had formerly been off the A131. His assessment concluded that the as-built layout had a theoretical capacity of 410–560 vehicles per hour but for County Show type events, perhaps attracting up to 20,000 visitors a day, or a sporting venue (eg the Arena/Equestrian Centre) with a design capacity of 7,000, up to 1,200 vehicles per hour entering and leaving from that one point would not be an unrealistic expectation. The new main entrance was, therefore, inadequate in terms of capacity but if it had been constructed in accordance with Highway Design Standard TD42/95, which had greater entry and exit radii and extended merge tapers (and is the design that had been shown on the ECC design brief but was not actually implemented) that would have been more appropriate. Design standard TD41/95, to which it appeared the bellmouth had more or less been constructed was for 500 vehicles per day annual average daily traffic (AADT) although it was accepted that that could be substantially exceeded at peak times subject to adequate traffic management measures being put into place. Even though it was accepted that, prior to the construction of the bypass, traffic management measures had been provided by the claimant during the County Show week, Mr Adam said that he was aware there had been congestion problems in the past – possibly caused as much by poor on-site traffic management as by steps taken to keep traffic flowing smoothly on the roads. The new traffic management proposal, to cone off one of the lanes to the northbound carriageway to facilitate smooth merging and demerging at the bellmouth would, he said, create congestion and delays to non-showground traffic using the A131.
- Further problems were created by the requirement for the access to be shared with the gravel traffic, Mr Adam said, and with up to 176 HGV movements per day permitted under the gravel extraction planning consent, this would undoubtedly cause conflict as these vehicles need wider turning radii and are slower to accelerate and decelerate on entering and leaving the site. He accepted in cross-examination that there was no causal link between the construction of the bypass and the need for the gravel lorries to cross the showground land and access the A131 directly as there was previously an easement in place to that effect. However, it is a fact that whereas there were previously 5 separate accesses, which would have enabled gravel traffic to be segregated if the site had ever been allocated for mineral extraction, and planning permission obtained, there was now only one and segregation was not, therefore, possible. Mr Adam also acknowledged that gravel lorries would not be operating on show days (although this was not a planning requirement and he had not seen any confirmatory documentation) nor on bank holidays or at weekends other than Saturday mornings. It was not only the HGVs emanating from the gravel workings that had to be taken into consideration, but also the fact that the main public access also had to be shared with exhibitors traffic including horse boxes and trailers.
- As to the new access provided by ECC off Moulsham Hall Lane, given its small size, proximity to the new roundabout connecting with the bypass and insufficient carriageway width to allow for a ghost island and filter lane for right turning traffic, Mr Adam said that he did not consider it made any meaningful contribution to traffic flows into and out of the showground. His views on the adequacy of the vehicular accesses post bypass construction applied, he said, whichever operational scenario prevailed – original showground use, extended use under the Arena permission or as a racecourse.
- Regarding pedestrian access, Mr Adam noted that there was no provision for formal pedestrian access off the new A131 bypass. In the absence of an underpass from the island site, those arriving by public transport would have to get off buses (which still use the old A131), cross over the dual carriageway at an at-grade crossing on the Chelmsford side of the new roundabout, walk about 70 metres up Moulsham Hall Lane, cross it and enter the site at the newly formed access point. This was an unsatisfactory arrangement particularly as no footways had been provided either to the side of the bypass or in Moulsham Hall Lane.
- Mr Cuthbert said that his firm, Faber Maunsell, had reviewed the access arrangements that prevailed before the bypass was built, and in doing so had considered the report that W S Atkins had prepared in 1995 on traffic movements during the Essex County Show, a Young Farmers Show and a Sunday Car Boot Sale. It was evident that during the County Show all of the former accesses were used but at the other events public parking was restricted either to the Chelmsford and Braintree car parks or, for the car boot sale, the Braintree car park alone. Gate 11 (which had not been affected by the scheme) had been, and still was, the principal form of access for the showground offices. It was noted by W S Atkins that there was significant traffic congestion in the area at County Show time, especially on the Sunday afternoon at the close of the show when upwards of 1,700 vehicles per hour were leaving the site. That fact had been acknowledged by the claimant in that it had now agreed to a traffic management scheme for events where public attendance was anticipated at more than 5,000.
- Faber Maunsell assessed the number and frequency of events using data supplied in respect of the 1998 season. The main County Show attracted 85,000 people over 3 days, there were 8 events having between 5,000 and 20,000 visitors, 43 having between 3,000 and 5,000 (mainly car boot sales) and 28 smaller events with less than 3,000 people. Most of the events were at weekends with only 10 held on weekdays. Traffic forecasts for the unimproved A131 undertaken in 1999 showed that it could be anticipated there would be congestion at peak periods and the situation would worsen over time as general traffic levels grew. The main access was now onto a dual carriageway, where the inside lane could be cordoned off to assist access and egress for major events and this was, in Mr Cuthbert's view, an advantage and constituted betterment as far as the overall former access arrangements were concerned. At times other than major events where traffic management would be in place, he said he was satisfied that that the road network could cope adequately.
- Since the inception of the scheme, Mr Cuthbert said that, ignoring the accesses that were not affected; there was a net loss of just two gates - gates 3 and 4. The former gate 2 had been moved to a point about 70 metres from the new roundabout and this could also act as an access for pedestrians. In that regard, it was acknowledged that access for those arriving by public transport was worse now than prior to the scheme, but in his view the numbers of people arriving or leaving by that means would be extremely limited, and for major events there was no reason why a shuttle-bus could not be deployed – as occurred at other venues within the area.
- Mr Cuthbert accepted that in the original design brief for the bypass the bellmouth was shown as complying with TD42/95 (Geometric Design for Major/Minor Junctions) but it appeared to have actually been built in compliance with TD41/95 (Vehicular Access to All-Purpose Trunk Roads). However, whilst this was technically a departure from the design brief, it was perfectly sufficient for the then existing and, under the arena planning permission, anticipated level of use of this access, including the use by gravel lorries. Although the bellmouth was intended to be the principal public access, there was the replacement for gate 2 to be taken into account and it was his understanding that this was intended to make a major contribution to showground access needs. This was now in a much better position than the former gate 2 - that having been right next to the Moulsham Hall Lane junction with the old A131 which was very heavily trafficked. It was also a fact that most of the other pre-existing accesses were still useable. Mr Cuthbert said the need for the bellmouth to be upgraded to comply with TD42/95, as contended for by the claimant, arose not from the fact that gravel lorries (which would not be operating when peak levels of showground traffic were likely) had to share it, but from the anticipated substantial intensification of use resulting from the racecourse permission.
- Looking firstly at the facilities for pedestrians and those visitors arriving by public transport, we accept that the arrangements now, as far as the principal showground is concerned, are less satisfactory than they were pre-scheme. However, we concur with Mr Cuthbert's views that large numbers of people arriving on foot or by bus are extremely unlikely, and there is no reason, in our view, why those that do should not access the site from the bus stops on the old A131, cross the bypass at the at-grade crossing and enter the ground via the replacement for gate 2. No case has been made out by the claimant and no evidence has been provided to establish the anticipated numbers, or the appropriateness or otherwise of their gaining access by this route.
- As to the access provisions for vehicles post construction of the new bypass, we prefer Mr Cuthbert's evidence and accept his view that, with adequate traffic management measures in place for major events, the new bellmouth and the re-located Moulsham Hall Lane access (replacing the former gate 2) are, if anything, an improvement on what went before. There has been a net loss of two accesses to the main showground, one of which was gate 4 that was the principal access for pedestrians. As we have said, the loss of that is not considered to be a major factor, and could in our view be resolved with some minor improvements around the replacement for gate 2. The bellmouth, whilst not constructed in accordance with the original design brief, and the new Moulsham Hall Lane access are both in accordance with TD41/95 that allows for exceptional peak traffic flows over and above the normal 500 vehicles per day AADT subject to traffic management – which the showground has agreed to provide. There was no evidence (as admitted by Mr Adam) that the bellmouth junction has provided any less capacity than existed previously. Furthermore, it is a fact that the old accesses did not conform to the modern design standards, which in itself is an indication of their comparative unsuitability against what has replaced them. We accept that the use of the bellmouth by the gravel extraction traffic could result in some conflict, but the permitted usage is not considerable, and in any event, the times during which use of that access for the public is going to be at its highest are those during which the gravel lorries will not be operating. Also it is our view that the potential for conflict between public access and that for exhibitors is overstated by Mr Adam. The arrival and departure of horse boxes, trailers and commercial vehicles belonging to exhibitors would be likely to be concentrated, for the most part, at different times to those during which paying visitors would wish to use the junction.
- In our judgment, the provision of a new roundabout at the Moulsham Hall Lane junction, and the improvement, to dual-carriageway status, of the A131 will have a significantly beneficial effect upon traffic flows generally, and we do not accept Mr Adam's concerns over prospects for congestion if one of the northbound lanes is cordoned off, or his arguments about the need for those visitors and exhibitors leaving the showground having to go a short distance northbound, before turning at the new northern roundabout and heading south.
- Regarding predicted increases in traffic resulting from the arena planning permission, we note the section of Mr Aves's Statement in Support for the arena application that relates to traffic and is dated 16 April 1999. In it he says:
- The acquiring authority purchased compulsorily a total of 5.32 acres of the claimant's land for the purpose of mitigating any adverse effects that the bypass would have on the surrounding area. This formed part of the agreed total of land taken of 17.9 acres. The mitigation works comprised a landscaping scheme.
- The planning permission that was obtained for the bypass in 1996 was subject to a planting scheme for which planning approval was obtained in September 2002. It included land taken from the claimant. Planting was carried out along the whole route of the bypass during the winter of 2002-03 with the exception of the section through the Essex Showground. The reason for this was a request made by the claimant on 1 October 2002 to be involved in the design, implementation and management of the landscaping as it affected the showground site. The claimant asked that the acquiring authority did not plant within the verges adjacent to its site but retain the funding contribution for future use. Such a contribution was included as a provisional sum of approximately £15,900 in the acquiring authority's landscape works contract.
- In subsequent correspondence between the parties the acquiring authority agreed in November 2003 to transfer back to the claimant the land which was acquired from it for landscaping purposes subject to a commitment by the claimant to carry out landscaping either in accordance with the condition imposed on the original planning permission for the bypass or in accordance with the landscaping condition imposed in respect of the subsequent racecourse planning permission. If the latter landscaping had not been carried out within two years the acquiring authority required the claimant to undertake the original landscaping scheme within the next available planting season. Although the claimant accepted this proposal (subject to contract) in March 2004 no legal agreement had been completed by the date of the hearing and the matter remains outstanding between the parties.
- Although the acquiring authority did not undertake any landscaping works at the request of the claimant it did erect a highway boundary fence to the eastern boundary of the main showground and the western boundary of the island site, a total run of 2,027m. This is a wire mesh fence with concrete posts provided at a cost of £52,216.
- In its revised claim dated September 2005 the claimant seeks compensation in the sum of £997,000 in respect of boundary treatment. The claim is made as one for accommodation works. The claim was submitted on the basis that the landscaping strips (5.32 acres) would be returned to the claimants at nominal value. The claim figure is made up from total soft works (including maintenance) of £233,000, total hard works of £638,000, a contingency of £35,000 and professional fees at £91,000. The claimant has costed the acquiring authority's proposed landscaping scheme (total soft works, including maintenance) in the sum of approximately £58,000.
- The acquiring authority has costed its landscaping scheme (soft works) in the sum of £29,870 based on contract prices. In addition it has allowed a further £14,382 for the costs of planting on the remainder of the compulsory purchase order land making a total of £44,252. Of this £25,692 is for planting and £18,560 for maintenance.
- The parties agreed that the landscape character and semi-natural vegetation of the locality is Ash-Maple woodland with Hazel coppice and also Oak-Hornbeam woodland. There is an irregular field pattern with predominantly medium sized fields, bounded by thick hedgerows or by banks and ditches. The mature trees, woodlands and hedgerows are an integral part of the landscape character of the rural area around Great Leighs.
- Mr Lawson's evidence focused upon two main arguments:
- He concentrated upon the landscaping scheme required in connection with the racecourse planning permission. In response to a question in cross-examination about whether there was anything in his evidence which dealt with the showground or arena Mr Lawson replied "….. there is nothing in my evidence about that [arena] planning approval". Nevertheless, Mr Lawson did comment upon the landscaping requirements of the arena scheme to some extent during the course of his evidence.
- Mr Lawson stated in evidence that "… the basis and centre of my case is that we are so constrained by the geometry of the road and of the filter drains supporting the road that we are unable to complete the scheme in accordance with the [racecourse] planning approval and will have to modify the scheme". He proceeded to describe the new bypass as a harsh, engineered traffic corridor, the design of which constrained implementation of landscape planting and landscape character improvements. He considered that these constraints would also affect the "very modest landscaping improvements" proposed by the acquiring authority. The difficulty as he saw it was that there was no space available between the highway boundary fence, the filter drain and the engineered back edge of the kerb of the bypass to implement a coherent scheme.
- The scheme that had been presented to the Borough Council and to CABE sought to mitigate the impact of the bypass by focusing attention on the landmark grandstand building. Mr Lawson sought to do this by accentuating the straight lines of the bypass by means of a double hedge including evergreen material punctuated with fastigiate forest type specimen trees such as Fastigiate Oak. This would create a softer linear feature. Mr Lawson felt that this design solution (which forms the basis of the claim of £997,000) had been compromised by the conflict between the boundary fence and the filter drain and could now never be implemented. It was therefore necessary to consider a wider range of materials and the final scheme, which had not yet been designed or agreed, was likely to have less dense tree and hedgerow planting and more hard structures. The problem of conflict with the filter drain was one that also affected the acquiring authority's landscaping scheme. Mr Lawson said that this could not be implemented as a result.
- Mr Lawson accepted a description of his landscaping scheme as having the purpose of promoting and marketing the racecourse. He agreed that it sought to make the racecourse very obvious in the landscape and that it was a design which "… goes with the vision Mr Holmes had for the land". He did not accept that his proposals achieved this without regard to the local landscape character. He considered that the arena scheme would also have required a landscape treatment that reflected the site's importance. The acquiring authority's scheme was described by Mr Lawson as a typical highway scheme with low/small scale stock planting. He considered that a higher status soft landscaping scheme was also required for the arena scheme and that the existing boundary fence was inadequate for any use of the site for equestrian purposes. He stated that the acquiring authority was treating the highway as the focus for the landscaping scheme rather than the showground and its users.
- Mr Lawson believed that it was inevitable that the existing highway boundary fence would have to be replaced. It was not suited to an equestrian scheme for principally security and secure by design reasons. His landscaping proposals costed for removing all of the existing fence (on both sides of the bypass) and its replacement with factory railings and handmade railing sections. It was essential to ensure that all of the retained land was made secure by appropriate boundary treatment to prevent any horses escaping onto the bypass. Mr Lawson felt this treatment would also have been required if the arena permission had been implemented.
- Mr Downs described the acquiring authority's proposals for ameliorating the impact of the bypass as seeking to integrate the new road back into the landscape and to provide some screening between the road and the showground. This had been the rationale for obtaining compulsory purchase powers for the mitigation works. The effect would be to knit the site back into the existing pattern of hedgerows and woodland by providing a staggered hedge of ten mixed species commonly found in hedgerows in the area. This number of species was proposed to mirror the older, historic nature of the hedges in the locality.
- Mr Downs stated that the acquiring authority did not consider there was any justification for providing different mitigation works if there was a racecourse on the retained land rather than a showground. He considered that the claimant's soft landscaping proposals had been designed to promote the racecourse development through a very geometric, uniform hedge structure that would be markedly different to the natural landscape of the area. He did not consider that the claimant's proposals achieved the integration of road planting with the adjacent landscape as advised by national guidance. Instead they sought to create a separate roadscape.
- Mr Downs did not consider it necessary for older plants to be used for the soft landscaping as allowed for in the claimant's costings. He stated that research had shown that planting smaller stock meant that the root system adjusts to the soil and conditions better than stock grown in a nursery and then moved. The only benefit of planting larger stock is an immediate visual effect. Longer term there will be no benefits. Short term the use of larger plants will also require greater maintenance.
- In cross-examination Mr Downs explained that the proximity of the filter drain to the highway boundary fence was not the problem that Mr Lawson considered it to be because the land acquired to mitigate the effect of the scheme was set back into the showground and island sites from this fence. He illustrated this by reference to photographs produced in Mr Lawson's evidence that showed two fences, the highway boundary fence and another fence beyond it, within the showground, which marked the edge of the compulsory purchase order boundary.
- Mr Downs accepted that the only hard landscaping element allowed for by the acquiring authority was the existing concrete post and mesh fence. He acknowledged at the hearing that this fence had not been based upon standards for racecourse boundaries since he was unaware that any such standards existed. He had tried to assist the Tribunal by considering the cost of fencing types recently installed at Kempton Park racecourse. He did not accept, however, that by undertaking this exercise he had agreed, as a matter of principle and for whatever equestrian use was made of the site, that the existing fence is not the right solution. Mr Downs said that there is a similar boundary fence treatment at Epsom racecourse and that the appropriateness of the existing fence depended upon the function it was to perform and the degree of security needed.
- The claimant has given evidence about the hard and soft landscaping that would be required upon the assumption that the racecourse planning permission was foreseeable at the valuation date. For the reasons given earlier in this decision we do not accept this assumption. In our opinion the landscaping solution should address the situation prevailing in the no scheme world, namely the existing showground use with the benefit of the arena planning permission.
- Mr Lawson stated unequivocally in his evidence that his landscaping proposals had the purpose of promoting and marketing the racecourse. But he considered that his proposals were appropriate whatever planning assumptions were made:
- We do not accept that the landscaping requirements for the showground and arena will be the same as those for the racecourse. The acquiring authority's proposed landscaping scheme has been implemented successfully along the remaining length of the bypass. It has been criticised for being a typical highway scheme with a boundary fence that lacks robustness. But it seeks to integrate the new road with the surrounding countryside in accordance with local and national policy guidance. In our opinion these proposals represent a reasonable means of mitigating the impact of the bypass upon the surrounding area. We consider the existing boundary fence to be adequate for securing the showground site for the equestrian uses to which it would have been put in the no scheme world, particularly in view of our conclusion reached below that the island site would not be used for equestrian purposes.
- The problem of the filter drain described at length by Mr Lawson appears to us to be an illusory one. We accept Mr Downs's evidence, which was not challenged, that adequate land was purchased under the Highways Act 1980 for the purposes of mitigation works and that there has been confusion between the highway boundary fence and the boundary of the land compulsorily acquired. There is adequate room to undertake a soft landscaping scheme without prejudicing the integrity of the boundary fence or the filter drain.
- We make no further award for hard landscaping since the acquiring authority have already constructed what is in our opinion an adequate concrete post and mesh boundary fence. We award the sum of £45,000 (rounded from £44,252) for soft landscaping based upon the evidence of Mr Downs that we prefer.
- The compensation for landscaping has been included by both the acquiring authority and the claimant under the heading of accommodation works. For reasons that we discuss at greater length in the section "Underpass" below, there is no statutory right to claim compensation under this heading. However we are prepared to make the award as the cost of landscaping works given the agreement in the approach of the parties, the fact that a planting scheme was a condition of the planning permission for the construction of the bypass and because the land affected was acquired for the purpose of mitigation works under section 246 of the Highways Act 1980. The future ownership of the land acquired for mitigation works is a matter for the parties and is outside the jurisdiction of this Tribunal.
- The claimant originally submitted a claim for £447,500 for the value of the land taken. This was subsequently amended to £197,500 by deducting the value of 10 acres of land at £25,000 per acre. This was done to allow for the fact that the claimant had acquired the Lyons land, 10 acres of which were said to have been purchased in lieu of 10 acres of land taken. The claimant revised its claim to include the total cost of acquiring the Lyons land, including the minerals lease, in the sum of £3,270,100. This comprised £3.15m plus costs and stamp duty land tax and was included under the heading of severance.
- In the amended statement of claim it is said that the £3.27m "…. also takes the place of the 'premium' element of the disturbance claim, which figure is also appropriately reduced." This 'premium' is identified as the sum of £338,310 including costs and stamp duty land tax, although its provenance is not explained. This sum has not been deducted from the original disturbance claim of £995,000 to arrive at the revised claim of £436,338 under the head of general disturbance, contained in Mr Lallmahomed's evidence. Nor does the adjustment in the claim for profits forgone explain this discrepancy.
- The freehold interest in the Lyons land was acquired by the claimant under an agreement dated 27 October 2004. This provided for the transfer of the land to the claimant in phases and for staged payments to be made. The first such payment comprised the sum of £150,000 together with a non-returnable deposit of £1.25m and was in respect of Phase I, an area of land adjoining the showground to the north west. This payment has been made. A further payment totalling £250,000 was to be made upon the actual transfer of Phase I which was to take place no later than 12 months (in the case of Phase IA) and 18 months (Phase IB) from the date of agreement. At the date of the hearing this payment had not been made. The remainder of the Lyons land is to be transferred in phases as it is reinstated following minerals extraction. The total consideration for the remaining land will be £500,000, payable in phases, but so that all the land will be transferred no later than 2016. The total consideration for the freehold interest in the Lyons land was therefore £2.15m.
- The agreement also provided for the transfer of the minerals lease to the claimant upon payment of £1m by 10 equal instalments commencing on 3 January 2006. At the date of the hearing no payments had been made. No adjustment was made in the claim of £3.27m to give the net present value of the future payments due under the terms of the agreement. It is claimed as a gross figure before discounting.
- The October 2004 agreement followed, and settled, a dispute between the parties that culminated in an action in the High Court in June 2002. Mr Lyons, as defendant in the action, contended that he had a right to construct and use an access roadway from his land across the claimant's land under the 1990 transfer and sought a final declaration to that effect. He also sought a declaration as to his rights under the minerals lease and, in particular, that there should be no derogation from grant in the event that the parties could not reach agreement about the access roadway and were the claimant to obtain planning permission to redevelop the showground. The claimant contended that Mr Lyons at least arguably had no such right and sought an interlocutory injunction to restrain Mr Lyons from constructing or using such a roadway. The result of the action was inconclusive since both sides were considered to have an arguable case on the points raised and no summary judgment was made in favour of either party.
- Mr Holmes estimated that in the no scheme world Mr Lyons would have been faced with a cost of approximately £500,000 to construct a haul road in accordance with the original 1990 land transfer to Mr Lyons's predecessor, Evered Quarry Products. Such expenditure would have made mineral extraction unviable. Also, so the claimant argued, the route of any such roadway access would have required the claimant's cooperation and consent.
- Under cross-examination Mr Holmes said that he was fully aware of the minerals lease when he acquired the showground site and that he had taken a view about the prospect of the rights under that lease being exercised. He had considered it a remote possibility that the showground would be included in the minerals plan or that planning permission would be granted for minerals extraction. He thought that the minerals under the 45 acres of Lyons land would be excavated first and the land reinstated before any extraction on the showground site could take place. He did not think that this would happen within a 10 to 15 year period. Also there was a provision in the lease under which a total of 10 acres (in no more than two parcels) could be nominated by the claimant to be excluded from the minerals extraction rights. Mr Holmes stated that if any development of the showground of a permanent nature, falling outside of the 10 acre exemption, was challenged by the gravel operator under the lease he would have met that challenge. In the scheme world Mr Holmes viewed the question of derogation of grant to be totally academic because without the Lyons land he could not proceed with the racecourse proposals. In the no scheme world Mr Holmes did not see a conflict between the minerals lease and the arena permission. The grandstand [arena building] stood on the 10 acres of exempted land and nothing else was operational development, eg a racetrack and temporary railings. Such surface activities would not, said Mr Holmes, have permanently deprived Mr Lyons of the ability to excavate the gravel, provided he got the site included in the minerals plan and obtained planning permission.
- Mr Bedford gave the history of the court action between the claimant and Mr Lyons. He described the substance of Mr Lyons's counter claim in the High Court in respect of derogation from the grant of his lease to be two fold. Firstly, the physical impairment of the demised land by the proposed redevelopment and, secondly, the legal impairment represented by that development in frustrating Mr Lyons's chances of succeeding with a planning application for minerals extraction at a future date. He stated that no derogation from grant would occur unless planning permission had been granted, or there was a reasonable prospect of it, for minerals extraction. He agreed, however, that any permanent [operational] development outside of the 10 acres exempted under the lease would "most likely" have amounted to derogation from grant. Until such planning permission had been granted Mr Bedford considered Mr Lyons's rights to be theoretical rather than practical and therefore damages rather than injunctive relief would be the likely outcome in respect of an action for such derogation.
- Mr Smith said that the existence of the minerals lease did not diminish the value of the site. He based this opinion upon his understanding that, at the valuation date, development of the site did not require Mr Lyons's agreement, the parties had subsequently worked towards an agreement of their various differences and the site was not in the minerals plan and therefore had extremely limited value. In answer to a hypothetical question Mr Smith commented that had Mr Lyons had a complete and absolute ransom over the future development of the showground site a 30% ransom payment might have been an appropriate allowance depending entirely upon the negotiating strength of the parties.
- Mr Smith said that the claimant was entitled to receive £1m in respect of the acquisition of the minerals lease because it formed part of a larger "all or nothing" deal with Mr Lyons. In order to acquire the additional land needed for the racecourse, it was necessary also to acquire the minerals lease. The same principle applied to the acquisition of the whole 45 acres of Lyons land. It was not possible to acquire only the amount of land required to operate the racecourse because there was no option other than to do a single comprehensive deal with Mr Lyons. In making the payment of £3.27m Mr Smith acknowledged that the claimant had paid a ransom of nearly twice the figure per acre that he had assumed for the open market value of the land taken.
- Mr Morgan stated that there could be no absolute certainty that the tenant under the minerals lease would not seek to exercise its rights at some stage during the term. Consequently, in advising a prospective purchaser of the 118 acre showground site, he would not recommend its acquisition at anything other than existing use value, ie £1.45m. He believed the extent of permanent development under the racecourse scheme would exceed the 10 acre exemption under the lease and that this took such development "outside the envelope of security". Mr Lyons effectively enjoyed a ransom, the amount of which Mr Morgan said would be based upon a percentage of the vendor's profit from the completed scheme.
- At the hearing Mr Ward produced a schedule showing the extent of operational development under the racecourse planning permission. This showed a total figure for operational development (buildings and engineering operations) on the demised land under the minerals lease of 16.1 hectares (39.7 acres). To this he added a further 1.6 hectares (4.1 acres) of operational development on land owned by the claimant but outside of the demised area. This gave a total of 17.7 hectares (43.8 acres) which Mr Ward said represented 36.71% of the claimant's total land ownership in the no scheme world. Although Mr Ward had not undertaken a similar exercise in relation to the arena permission he estimated at the hearing that the total operational development under that scheme would be 1.5 hectares (3.7 acres) or 3.1% of the claimant's total land ownership.
- Mr Ward concluded from this analysis that a planning authority looking at a planning application for minerals extraction at some stage in the future would be less likely to grant planning permission for such development the greater the amount of investment and development that has taken place at the time of its decision. From a mineral operator's point of view, the less development there is the more likely he is to get planning permission. In reaching this conclusion he agreed with Mr Holmes that at the present time and at the valuation date there was not a realistic chance of the minerals being extracted from the demised land under the minerals lease. However he thought it was impossible to say what might happen over the remaining life of the lease that did not expire until 2040.
- Mr Ward stated that there is no development plan provision for additional mineral extraction within the showground site and as at the valuation date there was no reasonable expectation of planning permission being granted for such a use given the scale of existing commitments, the conflict with the local plan policy for the site, the need to take into account the loss of, or disruption to, showground activities were the site to be included in whole or in part in a future review of the minerals plan and the merits of other sites bidding for allocation.
- Mr Shadarevian submitted that Mr Smith had not justified why the acquiring authority should pay £1m for the minerals lease nor for the totality of the Lyons land when less than half of that land was required for the racecourse and in circumstances where the cost of the underpass was still being claimed. The only justification made by Mr Smith was that the £3.27m was the amount demanded in a ransom situation. He had not sought to disaggregate this amount into its constituent parts and had produced no evidence to show that it was a prudent figure to pay in all the circumstances. Nor had the amount claimed been discounted to the valuation date.
- Mr Ward's evidence had shown that 16.1 hectares (39.7 acres) of the land demised under the minerals lease was affected by operational development under the racecourse planning permission. It was impossible to exclude all of this under the 10 acre (4 hectares) exception contained in the minerals lease. Mr Shadarevian submitted that this meant that in practice the showground centre and training stables would not be able to operate as approved.
- The minerals plan at the valuation date was the adopted first review of 1996 and covered the period until 2004. It anticipated sufficient supplies up to and beyond 2009. But Mr Ward, whose evidence was unchallenged, had concluded that no assumptions could be made about the extraction of minerals under the minerals lease in the longer term until the expiry of the lease in 2040.
- The minerals lease gave Mr Lyons an incontrovertible pre-existing ransom over the claimant as at the valuation date in circumstances where the claimant chose to develop the greater part of the showground with operational development. Such development would, if implemented, amount to a material derogation from the rights granted under the minerals lease. The leaseholder continued to have the right to access and remove the mineral reserves from under the demised land until 2040. That right precluded the permanent development of the showground until then or until an agreement was reached with the leaseholder. That was the case regardless of the claimant's need to acquire the Lyons land to accommodate its proposed racecourse development. Mr Shadarevian submitted that the courts would not allow Mr Lyons's rights in rem to be commuted to a claim for damages.
- At the valuation date a reasonable purchaser, acting prudently, would not have paid more than the existing use value of the site, ie £1.45m. Alternatively, a purchaser would be aware of the lessee's very strong bargaining position and would provide for 30-50% of the estimated net development value at the valuation date as a ransom payment. It was academic that the deal with Mr Lyons was structured as it was; he had a pre-existing and effective ransom regardless of the claimant's averred (and subsequent) need to acquire additional land from him.
- Mr Harper submitted that in the no scheme world there would have been no need to purchase the Lyons land because the claimant already owned enough land to construct a racecourse. Furthermore the minerals lease gave them sufficient flexibility, in terms of the demised area and the specific exclusion of 10 acres of land from minerals extraction, to have implemented the racecourse proposals without derogation from grant. In the no scheme world the minerals lease just had a nuisance value to Mr Lyons. The cost of compliance with the 1990 transfer requirement for the construction of an 8.4 metre wide access road to the A131 would have been prohibitive in the no scheme world and its route would have to have been agreed with the claimant. The bypass scheme had materially altered the position. The acquisition of 17.9 acres of the claimant's land and the isolation of the island site meant that the claimant could only pursue its racecourse development and meet Jockey Club requirements by acquiring at least 10 acres of the Lyons land. Mr Lyons was now able to ransom the claimant and proceeded to do so. The deal that was eventually reached in October 2004 was on a take it or leave it, all or nothing basis. There was no scope for negotiating separate parts of the deal, such as the acquisition of 10 acres of land or the separate acquisition of the minerals lease.
- The showground was not in the minerals plan which was very negative to new sites. Planning permission was inconceivable for mineral extraction if that would involve disturbing a beneficial surface use, a point acknowledged by Mr Ward. The rights under the lease were therefore incapable of being exercised. Talk of an injunction to protect the lessee was fanciful. Any remedy would be in damages. In any event the claimant was entitled to royalties of 25%. Nor had Humberts made any discount in their valuation to reflect the existence of the minerals lease.
- The claimant had sought to mitigate its loss by acquiring the Lyons land and the minerals lease. This was reasonable because it could not move its business elsewhere and did not wish to extinguish it. It had been held to ransom but had had no choice. The need to make these acquisitions was a consequence of the scheme. The total acquisition cost of £3.27m was therefore payable either as disturbance or as a cost of remedying the injurious affection.
- The claimant's need to acquire the Lyons land was a function of its desire to implement the racecourse planning permission in the scheme world. It had tried, but failed, to design a racecourse that met Jockey Club standards without using any of the Lyons land. Consequently Mr Lyons was put into a very advantageous negotiating position. The claimant argued that he would not have enjoyed this position in the no scheme world because there would have been sufficient land for the claimant to have developed the racecourse on its own site. In our opinion, for the reasons stated earlier, the racecourse planning permission was not foreseeable in the no scheme world. Consequently the immediate reason for having to acquire the Lyons land would not have existed. We have also considered whether it would have been necessary to acquire the Lyons land in the scheme world in order to implement the arena permission. We have already concluded that it would not have been possible to form a racetrack in the no scheme world given the location of the arena building. This was not a consequence of the scheme. In any event such a racetrack did not form part of the arena planning application and was not referred to in Mr Aves's covering letter dated 16 April 1999. This mentions a cross country course of 3.5km but acknowledges that it does not involve development and is thus outside the scope of the application. It was also possible to continue with the existing showground use without the acquisition of further land, as we have concluded in paragraph 212 below. We therefore conclude that it was not necessary to acquire any of the Lyons land in the scheme world in order to implement the arena permission and we make no award under this item of claim.
- The claimant also seeks £1m compensation in respect of the price it had to pay for the acquisition of the minerals lease. This amount was included in the larger payment of £3.27m with the acquisition of the Lyons land. It was suggested to us that it formed part of an "all or nothing" deal with Mr Lyons and that it was a ransom payment that had to be met. We do not doubt that it was. But it is not a loss that is due to the scheme because there would have been no such ransom in the absence of the racecourse proposals (as explained in the previous paragraph) and, in our opinion, such proposals were not foreseeable in the no-scheme world. We do not accept that the acquiring authority should be liable to pay for such a ransom and we make no award for it.
- Having reached that decision it is not necessary for us to consider the arguments in relation to the derogation of grant from the minerals lease which may have been occasioned by the implementation, or prospect thereof, of the racecourse permission and whether, as the acquiring authority maintained, there was an incontrovertible pre-existing ransom opportunity. However, we do believe that this is an issue that may have affected, albeit slightly, the value of the retained land following the acquisition of the land required for the bypass and we comment accordingly. We accept Mr Ward's evidence about the land demised under the minerals lease neither being included within the minerals plan nor likely to receive planning permission in the short term. But we share his uncertainty about the longer term up to 2040. In the absence of the racecourse scheme we consider that the possibility of an action for derogation of grant would have been reduced because, under the arena permission, the amount of operational development on the demised land was significantly less (36.75% of the claimant's land ownership compared with 3.1% respectively according to Mr Ward). But that also means that the prospect of obtaining planning permission for mineral extraction is likely to be higher in the long term.
- We note that no planning permission currently exists for minerals extraction in respect of the land demised under the minerals lease and that no planning application for such a use was submitted at any time between the grant of the lease in 1990 and the valuation date (or subsequently). However, minerals extraction has now commenced on the Lyons land which we consider is due, at least in part, to the presence of the bypass making the vehicular access arrangements more convenient and viable, a point acknowledged by Mr Holmes in his evidence in chief. That in turn is likely to make the long-term exercise of the rights under the minerals lease more likely as the reserves under the Lyons land are exhausted. We conclude that there would be an increased risk of the exercise of the rights under the minerals lease as a result of the scheme. The effect of this in terms of the calculation of injurious affection is considered in paragraph 213 below.
- Although it not necessary for us to do so in the light of our decision above we would make two observations upon this item of claim as submitted. We consider that an adjustment should have been made to reflect the fact that 35 acres of the Lyons land was not required for the racecourse scheme. The acquisition of that land (adjusting for any ransom element) represented value for money and should not have been included in the claim. We also note that, at the date of the hearing, only £1.4m of the total claim of £3.27m had been paid. The claim should have been adjusted to its net present value, a point accepted by Mr Smith in answer to questions from the Tribunal.
- The claimant objected to the compulsory purchase order and the side roads order in May 1997. The grounds of objection included the need to mitigate the alleged loss of 36.4% of the showground's Braintree and Chelmsford car parks by using the severed land (the island site) for car parking. The claimant requested a vehicular and pedestrian underpass to link the island site to the retained showground. On 9 October 1997 the acquiring authority offered to include a 3 metre headroom vehicular underpass within its bypass scheme, connecting the A131 London Road and the showground. It offered to invite tenders for the construction of the bypass with and without the underpass. The claimant would then decide, on or before the letting of the construction contract for the bypass, whether or not to proceed with the underpass. That decision was subject to conditions, the substance of which was that the cost of the underpass would be met by the acquiring authority but deducted from the agreed compensation payable to the claimant. If the cost exceeded the total agreed compensation for all heads of claim then the claimant was to pay the acquiring authority the difference. The offer was made subject to committee approvals and without prejudice. The claimant conditionally accepted the acquiring authority's offer (without prejudice) on 10 October 1997 and withdrew its objections on 27 October 1997.
- The acquiring authority applied for planning permission in July 2000 for the construction of the underpass as conditionally agreed between the parties on a without prejudice basis in October 1997. On 24 August 2000 the claimant objected to this planning application on three grounds: (i) the proposal would greatly disrupt the internal ordering of the showground due to the western access ramp penetrating the site (ii) the underpass would connect the A131 directly to the main showground but failed to provide any connection between that showground and the island site, and (iii) the headroom of 3 metres would be insufficient for trade vehicles and horse boxes. In view of this objection the acquiring authority wrote to the claimant on 1 September 2000 asking it to confirm its position regarding the without prejudice agreement reached in October 1997. In its reply to the acquiring authority on 21 September 2000 the claimant stated that circumstances had changed radically since 1997, that there was concern about the proposed 3 metre headroom underpass and that it was the claimant's opinion that 5.3 metre headroom was required for practical and safe operation.
- The acquiring authority appointed Alfred McAlpine as its contractor for the bypass and work commenced in January 2001. The contract did not provide for the construction of an underpass. In February 2001 the claimant decided not to pursue an underpass with a height of 5.3 metres because the cost would exceed the likely level of compensation consequent on it not being provided. In May 2001 the claimant made a new proposal for twin pedestrian and equestrian underpasses, each 3 metres wide by 3 metres high, connecting the island site with the main showground. No vehicular access was proposed. The parties agreed to proceed on the basis of this new proposal and negotiations commenced on the wording of an agreement under section 278 of the Highways Act 1980. The planning application submitted in July 2000 was withdrawn and the acquiring authority submitted a planning application for the construction of the twin underpasses and the relocation of lay-bys in September 2001. Planning permission was granted on 2 November 2001.
- In order that the programme for the construction of the twin underpasses did not delay the opening of the bypass it was necessary to order the pre-cast concrete units from which they were made by the end of December 2001. The claimant paid for these units by a cheque in the sum of £69,296, which was received by the acquiring authority on 2 January 2002.
- The draft of the section 278 agreement dated 4 January 2002 provided for the underpass works to be constructed in stages at the option of the claimant. These stages may be summarised as:
- The claimant could opt to serve an Underpass Notice on the acquiring authority either in relation to stages 1 and 1A or to stages 1 and 2. Whichever option was chosen the Underpass Notice was not to be served after 22 January 2002. This date was set because on 21 January 2002 the claimant's planning application for the erection of a showground centre and racecourse was to be considered by Chelmsford Borough Council's Planning Committee. That committee resolved to grant planning permission subject to completion of a section 106 agreement and provided the Secretary of State did not intervene. The claimant decided not to enter into the section 278 agreement given the remaining uncertainty about whether and when planning permission would be granted.
- The claimant queried the acquiring authority's cost estimates for the underpass and sought alternative quotations. In February 2002 the claimant decided to proceed with a bid from Laing O'Rourke. The claimant informed the acquiring authority that the underpass works should take no longer than 4 months pending agreement on the solution for constructing replacement lay-bys. The parties proceeded on the basis that the underpass works would be constructed by the claimant's contractor after the bypass was completed but before the northern section of it was opened to the public. The acquiring authority sent the claimant a revised draft section 278 agreement on 12 June 2002 that led to the preparation of an engrossed version on 9 August 2002.
- There were several differences between the draft section 278 agreements dated 4 January 2002 and 9 August 2002. The latter contained no explicit references to stages 1, 1A and 2. There was no longer a requirement for the claimant to serve an Underpass Notice. Instead the acquiring authority agreed to give three weeks written notice to the claimant of the date when the underpass site would be made available to it for the purpose of carrying out the underpass works. The claimant had four weeks from receipt of such notice in which to commence the underpass works. Failure to do so meant that the acquiring authority would open the northern section of the bypass for use by the public. The claimant had four months to complete the underpass works from the date of their commencement.
- On 21 August 2002 the claimant wrote to the acquiring authority informing them that the construction of the ramps to the underpass would not be included in the contract for the underpass construction. The scope of the works was said to be stages 1 and 1A (as per the previous draft agreement dated 4 January 2002). It excluded stage 2. The acquiring authority believed that staging was no longer an option and it wrote to the claimant on 27 August 2002 stating that there was not enough time to meet the agreed timetable. The acquiring authority was not prepared to have a part of the bypass completed but unopened without the underpass works under way. Therefore the section 278 agreement did not proceed. The claimant drafted a response to this letter on 3 September 2002 but did not send it until 6 November 2002. The northern section of the bypass opened on 19 September, 2002.
- The claimant wrote to the acquiring authority on 26 November 2004 seeking to reopen negotiations on the underpass issue. The claimant subsequently confirmed that it wished to proceed with the construction of the underpass in accordance with the planning permission received in November 2001. The acquiring authority responded by stating that the previous draft section 278 agreement was no longer appropriate and that new arrangements would be required. The claimant would need to provide and agree the technical detail of the proposals before a section 278 agreement could be completed. Since that time the parties have exchanged correspondence and have met to discuss the acquiring authority's requirements. The parties agreed that, at the date of the hearing, progress was being made to resolve the outstanding issues.
- The parties submitted an agreed underpass chronology and an agreed statement between experts in which the figure of £2,420,000 plus VAT is given as the appropriate value for the construction cost of the twin underpass and ramp works at the third quarter of 2005. A further agreed statement submitted during the hearing gives the figure of £1,828,000 plus VAT as the equivalent value for the construction cost at the valuation date (8 December 2000).
- The alternative of providing a footbridge across the bypass to connect the island site with the main showground site was introduced by the acquiring authority shortly before the hearing. It did not form part of the historical discussions between the parties and there is no agreement on the principle, design or cost of such a footbridge.
- Mr Holmes stated that the claimant had tried to install the underpass during the construction of the bypass and had spent £170,000 on consultants' fees and on purchasing the pre-cast concrete units. He considered that the acquiring authority had been entirely reactive and that its attitude had been influenced by an apparent refusal to accept that the continued use of the island site was essential to mitigate the claimant's loss.
- Mr Aves emphasised that the underpass that had been proposed by the acquiring authority in October 1997 did not have a connection between the main showground site and the island site. The discussions that ensued once this proposal had been rejected explored the possibility of constructing a vehicular underpass with 5.3 metre headroom. But that idea proved to be impractical because it involved the construction of much longer ramps, took up too much land and would not have provided the island site with a direct link to the main site. The cost would have been prohibitive. Consequently the claimant decided not to pursue the proposal.
- He acknowledged that the conditions attached to the acquiring authority's offer dated 9 October 1997 had the intention and effect of cost neutrality to the authority. He also agreed that by February 2001 the claimant had sent a message to the acquiring authority that neither a 3 metre headroom nor a 5.3 metre headroom underpass was acceptable. He said this was because neither of the solutions that had been canvassed would satisfy the operational needs of the showground. No other proposal was under consideration at that stage and the opportunity to include the underpass as part of the bypass construction contract was lost.
- Mr Aves accepted that the acquiring authority were pressing the claimant to commit themselves to the underpass at the end of 2001 because they wished to exploit the window of opportunity for the underpass to be constructed during the course of the main contractor's (McAlpine's) contract. The claimant's objective was to postpone any final decision on the provision of the underpass pending the outcome of its application for planning permission for the racecourse scheme. Mr Aves accepted that the acquiring authority had taken the claimant's circumstances into account by extending the deadline for serving the Underpass Notice under the draft section 278 agreement until 22 January 2002. He did not accept that the claimant had necessarily forgone the opportunity of constructing the underpass before the opening of the bypass to traffic as a result of exploring the possibility of using alternative contractors.
- Mr Smith included the estimated cost of the underpass as part of the head of claim for severance. In doing so he was solely concerned with the effect of the scheme on the racecourse proposals. He considered that the underpass was critical to the development of the site and that its provision would reduce the amount of severance claimed.
- It was put to Mr Smith during cross examination that if the cost of providing the underpass was greater than the assessed diminution in the value of the land retained the acquiring authority ought not to be held liable to pay for it. Mr Smith did not accept that assertion in principle but explained that what he had tried to do was to put the claimant back in the position it would otherwise have been in but for the scheme. He did not accept that this would equate to equivalence at any cost. His approach was intended to be reasonable in terms of the principle of equivalence. He accepted that one might reach the stage where accommodation works were so expensive as to make them unviable. Nevertheless, Mr Smith considered that because the claimant could not relocate its business the provision of an underpass in this case was critical.
- Mr Lawson was asked to comment upon the footbridge and said that he thought it was an appalling proposal in the context of the showground centre (racecourse) scheme and that he saw no likelihood that it would obtain planning permission. He considered that the footbridge would intrude on views from both the north and the south and that it would detract from views of the showground. He felt it was inappropriate in the setting and described it as frightful in terms of what the claimant wanted to do with the site.
- Mr Burns explained that the cheapest option for providing the underpass would have been to include it as part of the acquiring authority's tender for the bypass. The next most expensive option was to construct the underpass during the bypass works since that had the advantage of avoiding a traffic management scheme. The most expensive option was to wait until the bypass was completed and then to undertake the underpass works at a later date. The first two options had passed by spring of 2002.
- Mr Burns said that it was the acquiring authority's view that a footbridge should be explored as a compromise between having no provision for a connection between the island site and the main showground site and having the full underpass solution. He agreed that the underpass addressed the equestrian as well as the pedestrian need whilst a footbridge would only serve the latter. He did not accept that everybody would consider the footbridge to be an inferior solution to an underpass since different people have different views on their respective merits. He accepted that the underpass was wider and would therefore enable more mass movement but that the amount of such movement would depend on the use to which the land is put on either side.
- Mr Ward acknowledged that if it were essential to use the island site then it would be desirable to have direct linkage of one sort or another between that site and the main showground. He considered that a footbridge would have more visual impact than an underpass and was therefore less desirable. From a planning perspective the issues were ones of visual amenity but he considered that both a footbridge and an underpass would be acceptable. However he accepted that the underpass would be preferable.
- Mr Cuthbert explained the origin of the pedestrian footbridge proposal in the same terms as Mr Burns. The proposal was discussed during December 2005 and Mr Cuthbert was charged with establishing the feasibility and cost implications. The results were contained in his supplementary report dated 17 January 2006. He considered that the footbridge was suitable for pedestrian use and that it was only if the island site was to be used for equestrian purposes such as raceday stables that an underpass connection would be required.
- Mr Morgan considered that the provision of an underpass at considerable cost would not be justified by reference to any diminution in the value of the claimant's retained land. In reaching this conclusion Mr Morgan had not relied upon any specific statutory provision. In reply to questions from the tribunal Mr Morgan acknowledged that his views were at one end of a spectrum that had been defined by their Lordships in the case of Director of Buildings and Lands v Shun Fung Ironworks [1995] 2 AC 111. At the other end of that spectrum was the notion of equivalence at any cost. Their Lordships, on the facts of the Shun Fung case, had introduced an additional test to those of causation and remoteness when considering a disturbance claim (for total extinguishment), ie that one should have regard to what a reasonable businessman, using his own money, would do in the circumstances. Mr Morgan was asked whether he considered that Mr Holmes's behaviour with regard to the underpass was that of a reasonable businessman bearing in mind that he had spent his own money on purchasing the culverts. He replied that he did not think Mr Holmes's behaviour was reasonable if the proposed use of the island site for raceday stables could have been relocated elsewhere on site.
- Mr Shadarevian submitted that the acquiring authority had treated the underpass as an item for which compensation could be paid, depending upon whether its provision would reduce the overall level of compensation payable by mitigating the impact of the bypass. This approach was to ensure cost neutrality for the acquiring authority and had been adopted consistently since negotiations had begun in 1997. The acquiring authority's approach had not been contested by the claimant until the hearing. It was appropriate to apply the broad principles of Shun Fung to the claim which require the claimant to behave reasonably in respect of losses or expenditure incurred. The acquiring authority did not accept that a reasonable businessman would have spent £2.42m (or £1.828m at the valuation date) on the construction of the underpass. It did not believe that such expenditure was justified. If the Tribunal were to conclude that the acquiring authority was wrong in this respect and that compensation should be paid in relation to the provision of the underpass, then the acquiring authority believed it would be relevant to assess whether the claimant had mitigated its loss by enabling the construction of the underpass when it would have been cheapest or cheaper to do so.
- The claimant had put forward two reasons why the underpass was required. Firstly to accommodate the needs of non-car users and secondly to make effective use of the island site by accommodating facilities for which no room was available on the main showground site, eg raceday stables. It had failed to prove that either of these reasons would justify a reasonable businessman investing £2.42m of his own money in constructing the underpass. In any event the construction of the underpass could only be justified if the tribunal found in favour of the claimant on the foreseeability of the racecourse planning permission and the viability of that use.
- The acquiring authority had consistently maintained its position that it would not delay the opening of the bypass because of the underpass. It was prepared to agree to the construction of the underpass provided that the overall effect would be cost neutral. However, the costs varied significantly depending upon when the works on its construction began. The cheapest option was for the underpass to be built during the construction of the bypass and the most expensive was to construct it following the opening of the new road. The acquiring authority had given the claimant the opportunity of specifying which type of underpass (3 metre or 5.3 metre headroom) it wished to proceed with. In the absence of an indication from the claimant about its preference the acquiring authority applied for planning permission for the 3 metre headroom design. In the event the claimant rejected both options and consequently lost the opportunity for the underpass works to be tendered at the same time as the bypass works. Once the bypass scheme began the acquiring authority prepared a timetable with the claimant in order that the underpass could still be constructed during the course of the bypass works. The claimant met an extended deadline for the acquisition of the pre-cast concrete underpass units but failed to meet a final deadline of 22 January 2002 for completion of the section 278 agreement.
- That section 278 agreement had provided for the construction of the underpass in stages. The acquiring authority agreed to this in order to allay the concerns of the claimant that the acquiring authority's contractor, McAlpine, might use its monopoly position to increase the cost of construction. By introducing stages the claimant would be able to obtain quotations from alternative contractors that might reduce the overall cost. By summer of 2002 it was unlikely that McAlpine would be able to construct the underpass at the same time as the bypass. That being so, the acquiring authority considered that staged construction was no longer justified. The draft section 278 agreement that was produced by the acquiring authority in June 2002 did not provide for phased construction and Mr Shadarevian submitted that Mr Aves had acknowledged that staging would not happen in the manner previously discussed between the parties. From the acquiring authority's viewpoint there was no doubt that staging formed no part of the June 2002 draft agreement. That agreement provided for completion of all of the underpass works within four months from notice having been given to the claimant by the acquiring authority. The claimant would need to carry out staged works within that period and no evidence was adduced by the claimant in support of its suggestion that it could secure advantageous financial arrangements by means of such staging.
- The acquiring authority was as amenable and flexible as it reasonably could have been given the implication of delaying the opening of the bypass. It had even provided lay-bys in such a way as to enable construction of the underpass even though the claimant had not entered into a section 278 agreement. Mr Shadarevian submitted that on the balance of probabilities the claimant had for its own reasons refused to commit to the provision of the underpass. Provision of the underpass now would be at considerably more expense and the claimant had thus failed to mitigate its loss. He suggested that the renewed sense of urgency shown by the claimant to enter into a section 278 agreement since November 2004 could be related to the claimant's agreement over mineral rights with Mr Lyon in October 2004. Prior to such an agreement the claimant would have run the risk of being stopped by means of an injunction if it had constructed the underpass. The acquiring authority had stated that it was prepared to enter into a section 278 agreement provided sufficient information was supplied by the claimant to enable the proper management of the underpass works, to minimise disruption to the bypass and to ensure that the construction works were carried out safely. The acquiring authority needed to be satisfied of the benefit to the public before entering into such an agreement. Mr Shadarevian submitted that the claimant had not demonstrated that there had been any delay on the part of the acquiring authority and if there was such delay that any loss had been caused to the claimant thereby.
- Mr Harper submitted that the acquiring authority's test of cost neutrality in respect of the provision of the underpass was wrong in law. The claimant had no choice. Either the island site was unsuitable for any use or it was compensated for the underpass. Insofar as the trigger for compensation (to be derived from Shun Fung) was whether a prudent businessman would invest his own money in the project, the claimant passed the test with flying colours. The racecourse development would go ahead regardless of the outcome of the proceedings but the impact of the scheme had been enormous and the law required that the claimant be paid fair compensation for its loss. This was not a case for total extinguishment and, on the basis of the principle of equivalence, the claimant was entitled to have its severed land connected so that it could implement in full its planning permission. The test was not for the claimant to demonstrate that the development that had been permitted on the island site could not be otherwise accommodated on the remainder of the retained land. Its entitlement was to be put into the same position that it would have been in but for the compulsory purchase order. The claimant was entitled to implement the scheme for which it had planning permission and there was no authority in the law relating to compulsory acquisition that enabled the acquiring authority to dictate how it satisfied its business ambitions. Thus compensation must include the cost of connecting the severed site.
- Mr Harper submitted that the acquiring authority was under an obligation to construct the underpass at its own expense following the October 1997 agreement that was the basis upon which the claimant had withdrawn its objection to the compulsory purchase and side roads orders. This was a basic obligation that subsequent events regarding the design of the underpass did not affect. The claimant could not achieve equivalence (if at all) without the underpass being provided. The island site had no beneficial use on its own and there had been no suggestions by the acquiring authority (other than the late representations regarding the footbridge) for its operation in connection with the main site. There was no suggestion from the acquiring authority that this was a case of total extinguishment. The racecourse development was the only use that had planning permission and there was nowhere else to put the development that was proposed for the island site. It was irrelevant to discuss whether the claimant was or was not responsible for the acquiring authority not including the underpass as part of its contract for the construction of the bypass or for any delay in agreeing to pay for the underpass and/or the access thereto before the road was completed and/or opened. There was severance, and the claimant was entitled to have the severed parts of the site connected up. That was an obligation upon the acquiring authority regardless of the cost of the underpass works.
- That being so, the argument about whether the claimant had somehow disentitled itself to the underpass being constructed following the events of February to August 2002 was irrelevant. The parties agreed that, as at January/February 2002 there was agreement on a phased construction of the underpass. The acquiring authority then changed its attitude to the phasing of the works because the claimant was thereafter to arrange for the work to be done by its own contractor. However, there was no communication between the acquiring authority and the claimant to this effect. It was submitted that the acquiring authority wanted the bypass to be opened four months early and that it was not interested in doing a deal by August 2002, hence the perceived reluctance of the acquiring authority to enter into a section 278 agreement since that date.
- In its original notice of claim in November 2004, the claimant proceeded on the basis that the acquiring authority had accepted in principle that it should provide the underpass at its own expense. By the time of its statement of case in March 2005, the claimant had amended its approach to include the cost of the underpass under the head of claim for severance with an alternative claim under the head of accommodation works. In its amended statement of case in September 2005, the claimant not only claimed the cost of the underpass, but also claimed as a disturbance item the additional business losses that it had incurred as a result of the continued delay of the acquiring authority in dealing with the underpass issue. In the amended notice of claim dated 23 September 2005 the cost of the underpass was included as a separate part of the severance claim and did not form part of an alternative head of claim for accommodation works. In its statement of case (undated) the acquiring authority stated that it did not accept that the cost of the underpass properly formed a separate head of claim for severance. The cost of the underpass could only be justified if it was equal to or less than the diminution in the open market value of the retained land in the no scheme world. The claimant's claim for compensation for the underpass should also be subject to its obligation to mitigate its losses.
- There is no statutory right to a separate head of claim for the cost of accommodation works. Such works are undertaken at the discretion of the acquiring authority where it considers that there will be a commensurate reduction in the claim for severance and/or injurious affection. This approach has been described by the acquiring authority in this case as one of cost neutrality. It is an approach that the acquiring authority has consistently adopted and formed a condition to its original without prejudice offer to the claimant made in October 1997.
- The head of claim for severance originates in section 7 of the Compulsory Purchase Act 1965:
- The claimant has argued that the acquiring authority is under a binding obligation to pay for the construction of the underpass from the time it first made a conditional and without prejudice offer to do so in October 1997. It is therefore seeking what the acquiring authority described as equivalence at any cost. The claimant's argument is that without a connecting underpass between the island site and the main showground site the principle of equivalence cannot be satisfied and the claimant will not be able to develop the showground centre and associated business for which planning permission was received subsequent to the valuation date. We do not accept that the acquiring authority is under any such binding obligation. Its offer to provide an underpass on 9 October 1997 was made both without prejudice and subject to conditions regarding cost neutrality. Although the claimant accepted this offer and withdrew its objection to the compulsory purchase and side roads orders it did so on a without prejudice basis and subsequently rejected both the 3 metre headroom and 5.3 metre headroom underpass options. The claimant also objected to the planning application which the acquiring authority made on 18 July 2000 in accordance with the October 1997 offer. Furthermore in his first witness statement Mr Aves stated in relation to this offer: "…. so far as I am aware no legally binding agreement on the matter was concluded."
- For the reasons stated above we do not accept that the racecourse planning permissions granted in 2002 and 2004 were foreseeable at the valuation date in the no scheme world. Consequently the diminution in the value of the retained land due to the scheme must be assessed without regard to those planning permissions. But we have very limited valuation evidence before us about the value of the site at the valuation date in the no scheme world with the benefit of the arena planning permission. Mr Smith has not considered it in his evidence. He has assumed that the showground centre/racecourse planning permissions would have been granted in the no scheme world and values accordingly. Mr Morgan has assessed the diminution in the value of the island site due to severance in the sum of £20,288. In reaching this figure he has relied upon Mr Ward's evidence that there would have been no reasonable expectation that the racetrack applications would have been granted planning permission at the valuation date in the no scheme world.
- We set out our valuations in this case in paragraphs 206 to 214 below. We have assessed the diminution in the value of the retained land (the main showground and the island site) due to severance and injurious affection in the following amounts:
- The cost of a twin underpass was agreed in the sum of £1,828,000 exclusive of VAT as at the valuation date. This figure is based upon the assumption that the twin underpass would be constructed in the scheme world, ie with the bypass built and opened. It also assumes that the twin underpass will be suitable for pedestrian, equestrian and light vehicular use. It may be that a smaller, single pedestrian underpass would have been a sufficient connection between the sites in the absence of the racecourse planning permission, but no submissions to this effect were made nor any direct evidence given as to the estimated cost of such a solution. We consider it unlikely, however, that the cost of such a single underpass would have been less than £1m as at the valuation date. From the above figures we find that the reduction in compensation for severance resulting from the provision of the twin (or single) underpass is significantly less than the cost of the underpass. We are therefore satisfied that the construction of a twin (or single) underpass would not have mitigated the claimant's loss and we find no financial justification, or legal obligation, to hold that the acquiring authority should be liable for the cost of such an underpass in a claim for severance.
- The cost of a footbridge was estimated by Mr Cuthbert in the sum of £560,000 exclusive of VAT as at January 2006. This figure was not agreed but was not challenged by the claimant at the hearing. No equivalent figure was given for the cost of the footbridge as at the valuation date. However we have estimated the cost by applying the ratio of the cost of the twin underpass as at the valuation date to its cost as at quarter three 2005, to the cost of the footbridge as at January, 2006. This gives a figure of £423,000 for the cost of the footbridge as at the valuation date.
- The acquiring authority did not propose the construction of a footbridge at any time before the substantive hearing. In discussions with the claimant it has always been an underpass that has featured as the means for connecting the main showground site with the island site. Planning permission has been obtained for an underpass but not a footbridge. However the discussions between the parties have always assumed that the underpass must serve vehicular and/or equestrian as well as pedestrian traffic. The removal of the requirement for vehicular access follows the claimant's proposal in May 2001 for a twin equestrian and pedestrian underpass that then formed the subject of the planning permission granted on 2 November 2001. At the valuation date the only type of connection that had been considered by the parties was a vehicular and pedestrian underpass.
- We have received no evidence about the likelihood of planning permission being granted for a pedestrian footbridge at the valuation date. The evidence that was given related to the provision of a footbridge in the context of the racecourse planning permission. From the inspector's report into the compulsory purchase and side roads orders we note that the bypass severed a total of eight public footpaths and bridleways. Seven of these were diverted to cross above or below the new bypass although no breakdown is given between the number of footbridges and underpasses.
- In our opinion, and without the need for a vehicular or equestrian connection between the main showground and the island site in the absence of the racecourse proposals, it is reasonable to assume that a footbridge would have received planning permission as at the valuation date. However the provision of such a footbridge will, in our opinion, only reduce the diminution in the value of the retained land due to severance by £75,000, which is significantly less than the cost of the footbridge. That being so we are not satisfied that the construction of a footbridge would mitigate the claimant's loss and consequently we make no award in respect of the cost of its provision.
- We have also considered the possibility that the cost of the underpass could form the subject of a claim under Section 5 Rule (6) of the Land Compensation Act 1961. In doing so we have had regard to the modern statement of the principle of equivalence that is to be found in Shun Fung. Applying that principle to the current claim, it is necessary for the claimant to demonstrate that:
- The need to retain a connection between the severed island site and the main showground has been consistently recognised by the acquiring authority since its conditional offer to provide an underpass in October 1997. We consider that the construction of an underpass or footbridge is a direct and reasonable consequence of the acquisition and that the necessary causal connection does exist in this case. Nor do we consider that a claim in respect of such an underpass or footbridge would be too remote.
- The claimant is entitled to continue to operate its business from its retained land and to be compensated for the costs of so doing, which is caused by the acquisition of land from him. In this case we consider it reasonable that, at the valuation date, the claimant would wish to continue with the long established showground use of this site and to exploit the potential, if any, of the unimplemented arena planning permission. To do so requires the physical connection of the main site with the island site. However, the acquiring authority cannot be expected to be responsible for expenses that no reasonable businessman would incur. As we have noted above the cost of constructing either the underpass or the footbridge is significantly greater than the saving in compensation for severance. The cost of the twin underpass is greater than our estimate of the open market value of the whole site in the no scheme world as at the valuation date. The cost of the footbridge is some £1.4m cheaper than the underpass but nevertheless it is still over five times greater than the saving its construction would produce in the claim for severance. On balance we do not consider that a reasonable businessman with adequate funds of his own would incur such a cost and that consequently there is not a sustainable claim for the cost of the footbridge under the head of disturbances as an alternative to the approach we have taken above.
- The offer to construct an underpass was first made by the acquiring authority in October 1997. It has still not been constructed. The parties have blamed each other for delays at various times. In our opinion there are three occasions where delays have occurred due to failure to complete a section 278 agreement:
- The delay in January 2002 was due to the claimant's reluctance to complete a section 278 agreement before it had certainty on the outcome of its planning application for a racecourse. This was a reasonable commercial precaution in our view.
- The delay in August 2002 arose from a dispute about whether or not staging was still envisaged under the revised agreement. In our opinion it was not. There was no reference to staging in the revised agreement and the whole of the underpass works, including the ramps, had to be completed within four months of their commencement, a timescale first proposed by the claimants in February 2002. Mr Aves suggested that the benefit of staging for the claimant would be to spread the cost of the works. We do not find this a credible reason given such a short time scale. In our opinion the claimant did not justify having failed to complete the agreement in August 2002. Had that agreement been implemented the cost of the underpass works would have been reduced and subsequent delay would have been avoided.
- The claimant has argued that there has been delay on the part of the acquiring authority since November 2004. However, the claimant appears to have done little to advance negotiations in the two years before that time. The acquiring authority argued that circumstances had changed by November 2004 and we agree; the bypass having opened to traffic meanwhile. We are not satisfied that the acquiring authority have caused unreasonable delay and we note that both parties are now working towards a settlement of the outstanding underpass issues.
- The claim for loss of profits due to the alleged delays caused by the acquiring authority in constructing the underpass is considered separately below.
- Planning consent, subject to conditions, was obtained by Essex County Council in April 1996 for the construction of the A131 Great Leighs dual-carriageway bypass between Strawbrook Hill, Great Leighs and Great Notley Garden Village, although at the time government funding for its construction was not available. In the same year, David Wilson Homes ("DWH") submitted an outline planning application to Chelmsford Borough Council for the development of up to 42 acres of land to the west of Great Leighs village and to the south of the showground, 28 acres of which was to accommodate approximately 280 dwellings. The application was initially considered premature but, in the Chelmsford Local Plan that was adopted in April 1997, the DWH land was allocated for housing development (Policy H13). The Borough Council then indicated its support for the proposed development subject to DWH constructing a section of the bypass from south of the village to Moulsham Hall Lane at its own expense.
- In the absence of the requisite government funding and in order to secure its consent, DWH offered to build a single carriageway relief road following part of the line of the proposed bypass, to include earthworks and bridges ready for the later addition of a second carriageway. Initial designs by their engineering consultants, Aspen Burrow Crocker, provided for a conventional roundabout at the northern end to form the junction with Moulsham Hall Lane and the original A131. This required a small area of the claimant's land at the south east corner of the showground and the claimant was approached in this regard. Subsequently, the design concept developed into a two-roundabout scheme (referred to as the "dumb-bell"), which avoided the need to acquire any of the showground land. Although the council had indicated in its planning brief of April 1997 that "a relief road of the nature proposed by the applicants would be unacceptable for reasons of highway safety", subsequent engineering and safety reviews of the dumb-bell concept by its own consultants resulted in indications being given that an application for planning permission for the road would be supported.
- During the period that DWH were negotiating with the claimant and other landowners to obtain the requisite land for the relief road, they were in parallel discussions with the council over a contribution to the original bypass scheme. Negotiations with the claimant, which did not come to fruition, eventually ceased when the government announced in 1999 that funding for the bypass as originally proposed was to be made available. With DWH's contribution to it subsequently agreed, planning consent for the development was finally granted on 15 September 2000 subject to a section 106 legal agreement specifying that not more than 100 of the permitted dwellings could be occupied before the relevant section of bypass was completed.
- Mr Holmes said that he was first approached by DWH in October 1997. Their proposed roundabout, in addition to requiring the purchase of some showground land, would have necessitated closing off the existing 14m wide access at gate 2 with replacements anticipated on both Moulsham Hall Lane and onto the existing A 131 a little further to the north. He said he had been prepared to co-operate with them and that he would have incorporated the new layout and access arrangements into his own arena planning application.
- DWH, he said, proposed taking an option that would have included payment of the claimant's costs pending approval of their plans. In his evidence in chief, Mr Holmes said that he had initially agreed a sum, but after about a year negotiations ceased as DWH decided it would not pay the previously offered legal costs. Instead, they proceeded to design an alternative arrangement that he described as a contrived and, in terms of highway and traffic engineering requirements, defective double roundabout (the dumb-bell) that whilst avoiding showground land, would need alternative land from a Mr Thomasin-Foster on the opposite side of the A131. Subsequently, he said, DWH must have come to realise that whether or not any of the showground land was required, they would still need to negotiate regarding the provision of new or replacement accesses, as contact was made again and in September 1999 they made an increased offer of £150,000 for the land, a £5,000 option fee (which would be deducted from the former figure if the option proceeded) and £6,000 towards fees (again only payable if the matter proceeded to a conclusion). However, Mr Holmes said that by that time the council had resolved to grant consent for the arena application, subject to a section 106 agreement, which had been submitted without reference to the DWH proposals. He said he was not minded at that late stage to change those plans and re-apply for permission, as that would cause an unacceptable delay to the emerging business plans and, considering himself to be in a very strong negotiating position, DWH were told that he required £1 million before he was prepared to reconfigure the scheme. Then, with the subsequent announcement in December 1999 that government funding for the whole of the dual carriageway bypass was, after all, to be made available, any remaining opportunity he had to negotiate a ransom payment with DWH was, he said, immediately lost.
- Mr Fellows commented briefly on the planning background to the DWH scheme and the fact that the eventual planning consent, achieved in 2000, contained a condition limiting the number of houses that could be occupied prior to the completion of phase 1 of the bypass to 100. In his view, this meant that the construction of a roundabout at the Moulsham Hall Lane junction, utilising some of the showground land, was fundamental to the ability to provide the rest of the houses. With no realistic alternative to the acquisition of some of the claimant's land a ransom situation clearly existed.
- Mr Smith said that, in deciding how much it could afford to pay for the area of showground land required for a roundabout, DWH would have taken into consideration the overall value of its own development site (thought by him to be in the region of £14m based upon evidence of land sales in the area provided to him by a partner, but not verified) and the estimated profit for the whole scheme (in the region of £6.272m). In his view the developer would have been prepared to bid up to £1m for the required area of showground land, having in mind the additional delays and costs associated with the alternative dumb-bell scheme, and the possible need to negotiate with other parties. He said that the calculation of ransom value was not likely to be the subject of any specific valuation formula, especially in this instance where there was an alternative, but would be a 'rough and ready' commercial negotiation which would reflect the fact that any loss in value of the showground caused by the land take would probably have been offset by the improved access that could have been provided as part of the roundabout design and construction process. However, he said the real value was to DWH and the price they paid would have to reflect their need.
- Mr Adam, speaking on the highway aspects, agreed with Mr Smith that if the roundabout initially proposed by DWH had proceeded, an improved main access to the site could have been provided to replace gate 2. This, together with the retention of the remaining A.131 accesses would have been a significantly better solution than that which has actually resulted from the construction of the new dual carriageway bypass in the scheme world, particularly in that the main public access to the showground and the route for the gravel traffic across it could have been separated. In his view, the concept of the dumb-bell layout was an artificial device designed only to avoid the need to acquire land from a third party, and would be of no benefit to the travelling public. It was not suitable for a busy primary route and, if the new showground access were to be located, as suggested in Faber Maunsell's later revision, midway between the roundabouts at each end of the dumb-bell, there would be a tendency for the junction to 'lock-up' at times when the showground was being heavily used. The revised conventional roundabout situated principally on showground land that had been designed by WS Atkins in April 1999 following the approach to the council by the claimant's then agents, Humberts, (Mr Cuthbert's figure 7) was, Mr Adam said, a demonstrably better option than the dumb-bell. It would minimise geometric delay, would be unlikely to lock-up and could easily be adapted when, and if, ECC eventually found the funding to dual the DWH section of relief road whereas in that latter respect, a dumb-bell configuration would need to be replaced.
- For the council, Mr Cuthbert said that his firm, Faber Maunsell, had carried out an independent review of the dumb-bell layout in terms of engineering, road safety and traffic capacity. The original design by Aspen Burrow Crocker was reviewed by W S Atkins and Mouchel – and was accepted as feasible by the council. Development of the concept continued and its acceptance in design terms was reiterated in the exchanges of correspondence that took place between ECC and Chelmsford Borough Council between October 2000 and March 2001.
- In engineering terms, Faber Maunsell accepted that whilst the first dumb-bell design met technical requirements for roundabout design, it was not ideal and there were a number of issues that needed to be addressed, including the question of the continued use of the Chelmsford car park access at gate 2, and the fact that the overall design appeared to be somewhat cramped. Hence, they produced a revised layout, moving the northernmost of the two roundabouts (that were linked by a short section of dual-carriageway) slightly to the east. With the purchase of a small sliver of land from Mr Thomasin-Foster on the east side of the A.131, a number of the issues including visibility considerations would be resolved. Mr Cuthbert said that as Mr Thomasin-Foster was already selling a large amount of his land to DWH both in connection with the proposed development, and for the relief road, there was no reason to suppose that a ransom situation would apply. This revised layout allowed either for the retention of the existing gate 2 access into the showground or alternatively a new left in/left out access from the northbound section of the interlinking dual carriageway, midway between the two dumb-bell roundabouts. Mr Cuthbert said that from the evidence he had seen the dumb-bell proposal could have resolved any existing conflicts caused by the close proximity of the existing gate 2 access and the Moulsham Hall Lane junction.
- As to traffic capacity, Mr Cuthbert said Faber Maunsell carried out a series of ARCADY runs to determine the adequacy of the dumb-bell in both normal and show day forecasts and that whilst the results show that by 2014 the layout would be reaching capacity, this was entirely consistent with a developer led relief road that would not have been expected to fulfil the same long-term needs as would result from a major bypass scheme. He went on to consider the traffic impact on the dumb-bell layout if the claimant, as had been argued, had been able to secure planning consent for its proposed racecourse development in the no scheme world. In that case, based upon the claimant's own visitor predictions, such an arrangement would not have been able to cope, and a 5-arm roundabout of the type latterly produced by W S Atkins at the request of the claimant, would have been a more appropriate solution. Such a design would take up about 2.5 acres (1.01 ha) of showground land but as it would have been an alternative to the dumb-bell that would have otherwise been built, it would not have had any further cost implications on the showground. Mr Cuthbert said the fact that the roundabout solution needed showground land would not, in this scenario, result in a ransom situation since its provision would have been based upon the claimant's own requirements to develop a racecourse. In all other scenarios, including the arena proposals, traffic generation would be substantially less than a fully-fledged racecourse operation that the claimant was now pursuing and in his view, the dumb-bell would have been an acceptable solution.
- Mr Snell produced a report that set out his opinion, in valuation terms, of what DWH would have been prepared to pay to the claimant if a ransom situation had prevailed, and in so doing, considered the extent of the ransom that might have existed: complete, partial, or none at all. In assessing a value for DWH's residential development land (28 acres), he said he had taken into account evidence of land sales that had been undertaken by his firm for the council between November 1999 and December 2001. He produced a schedule and said that he had been personally involved in two of the sales, and knew all the other sites, their locations and circumstances. In his view, the sale of the residential development land at Silver Birches, Stanway, about 3 miles outside Colchester was the most directly comparable in terms of a suburban rather than an urban location where prices were similar. He came to the view that £400,000 per acre (£11.2 million) for the DWH land was a fair figure. Having said that, he acknowledged that the price paid by DWH for its Great Leighs development site was not known, or the date of purchase and whether it had been part of their land bank. What was known, from a breakdown of the individual payments made (provided by DWH), was that in the scheme world they paid £1,225,280 to a total of 10 landowners to acquire the land that was required for the construction of the bypass – that land being transferred to the council as part of its overall agreed contribution to the road of £6m. Mr Snell said that was the only actual evidence that existed to support any ransom arguments
- In order to construct the bypass roundabout at the opposite end of the bypass to the showground, south of Great Leighs village, DWH had to pay £808,812 (about 2/3 of the total) for 13.58 acres (the Tritton land). The reason for this exceptionally high payment (£59,500 per acre) was because they were fully ransomed due to Tritton's extensive land ownership in the area, and there were no alternatives. With the showground there were alternatives, as evidenced by the dumb-bell proposals, although DWH would have had to acquire a small piece of land from Mr Thomasin-Foster in order to proceed with that option. Thus, the claimant did not have the same hold over the developer as Trittons did, but neither did Thomasin-Foster as, in their case there was also an alternative. Mr Snell said that in his opinion, the maximum DWH would be prepared to pay the claimant was 1/11 of the total ransom 'pot' – say £111,000. The £150,000 that DWH had offered in 1999 was, he said, within that range. If, which was not the case, they had been fully ransomed by the claimant, his view was that the amount paid to Tritton would have been shared equally – say £400,000 plus fees. However, Mr Snell said that if the claimant had opted to proceed to negotiate at land sale for the W S Atkins 5-arm roundabout, there would have been no ransom as it would have been built to meet their requirements for a new and improved access as well as providing a termination for the northern end of the relief road. In cross-examination he accepted that the calculation based upon sharing out a ransom pot was not the only way of determining what a developer might pay, and he had not looked specifically at a Stokes v Cambridge situation where a percentage of the projected profit from the development might be applied to assess what was available for ransom payments.
- Mr Snell stressed that there were three possible scenarios that could affect the outcome of any ransom negotiation. First, that there was no ransom at all. Second, there was an element of ransom, but the development was not entirely dependent upon the purchase of a particular piece of land and, third, a situation where, as was the case with the Tritton land, the existence of a ransom situation was not in doubt, in that the development could not proceed without its acquisition. He accepted that DWH must have considered there was a possible ransom with the showground as it had approached them and had eventually been prepared to offer what was a significant sum of money for the very small area of land that it required from them. However, they had been prepared to spend money looking at alternatives (the dumb-bell) and if that option saved them money, they would have been likely to adopt it whether or not the design was contrived. There was a ceiling to the amount that a developer could afford to pay a ransomer (or a group of ransomers) if their scheme was to remain viable and, as he had said, we have the evidence of what DWH did actually pay for the required land in this instance. The fact that some of the 10 landowners who did actually sell their land to DWH were selling for development purposes, other sales were part development and part ransom related, with the remainder ransom only would, he said, have an effect on the negotiations. However, it would not be in any party's interests to hold up the proposed development, and each one would expect to receive a share that reflected their particular position.
- Mr Ward said that the DWH land had been allocated for major housing development in the 1997 local Plan, but the release of that land would be contingent upon agreement with the council relating to phase 1 of the bypass to Great Leighs village. There was also a condition limiting the number of houses that could be occupied prior to completion of that section of the bypass. In those circumstances, he said that there was unlikely to be any objection to an alternative highway scheme that met the council's requirements in terms of highway design and that could accommodate the intended future upgrade of the bypass to a dual carriageway. In his view, the dumb-bell was one such alternative.
- Regarding the claimant's case, we find ourselves in some difficulty as to Mr Holmes's evidence. He said in his first witness statement that "the correspondence with DWH shows the history of my dealings with them" and that this proved the claimant to have been deprived of the opportunity to deal with the developer. He went on at some length both in his statement and in cross-examination about the abortive negotiations but all that was produced in the bundles was a copy of the letter from David Wilson Estates dated 17 September 1999 offering a figure of £150,000. No other documentary evidence was produced in support of Mr Holmes' contentions and nobody from DWH was called. We find therefore that we can attach little weight to this historical evidence.
- What we do know is that for precise reasons that were not clear, DWH took steps, after their initial approach to the claimant, to develop a scheme that would avoid the need to utilise showground land. The council's case was that if the developer could have achieved what was required in terms of providing an acceptable junction at the northern end of its relief road, without having to negotiate with the claimant for any reason (including realignment or replacement of the access at gate 2,) the question of lost opportunity to negotiate a ransom payment will not arise. They said the dumb-bell provided an alternative that was acceptable in planning and highway terms and, had it not been for the subsequent availability of funding for the dual carriageway bypass, DWH could, and most likely would, have adopted that solution without having to buy any of the claimant's land. We have heard expert evidence on planning and highways, but nothing was put before us as to the cost implications relating to the dumb-bell alternative. This last point is relevant to the question of whether DWH would have continued to negotiate with the claimant, even if they were not fully ransomed.
- The key question for us to answer is whether consent would have been forthcoming for a single-carriageway relief road that terminated at its northern end in a dumb-bell roundabout. We are of the view that on the balance of probabilities, despite the dumb-bell's undoubted somewhat contrived nature, it would. We prefer Mr Cuthbert's evidence, which resulted from his firm's detailed appraisals of the layout in terms of engineering, highways and traffic capacity aspects. Any questions as to the adequacy of the layout for long term forecast traffic flows must be considered in the absence of the claimant's racecourse proposals, and we accept that the dumb-bell would have been sufficient in the medium to long term where access for showground and equestrian activities in connection with the site's existing and proposed Arena uses could be anticipated. It was clear from Mr Cuthbert's evidence that any concerns as to safety aspects, visibility matters and the like had been addressed in the revised plans that Faber-Maunsell produced.
- As to whether there was a risk that the junction would 'lock-up' on busy show days if the showground access was moved to a point midway between the two roundabouts, this is not a matter that needs consideration in determining this particular issue. If DWH was contemplating an alternative junction arrangement that avoided the need for any negotiation with the claimant, then we have to assume that the showground access would be in precisely the same position as the location of gate 2. If the access was to be moved to the midway point as suggested in Faber-Maunsell's revised layout (Mr Cuthbert's figure 6), then negotiation with the claimant would be required, and this is not the situation we are asked to consider in determining the ransom question. Having said that, we suspect that wherever the access was to be positioned off the dumb-bell, traffic congestion could well be a problem on show days. However, this is a scenario that has existed historically, and with adequate traffic management measures operating (as was likely to have been one of the planning conditions if consent were to be obtained), we do not see that as an insurmountable problem.
- Regarding the attitude of the authority, there was a clear statement in the letter of 4 March 1998 from Carol Craven, Development Control Manager at the council to Aspen Burrow Crocker (relating to Aspen's original dumb-bell design) that "this Authority is now satisfied that the above drawing is acceptable" subject to the need for 3 items that required attention. The first related to visibility issues that were subsequently addressed in Faber Maunsell's revised design, the second to the need for traffic calming measures to be put into place and the third related to the treatment of the surface at the showground access. None of these do we consider to be particularly contentious. Ms Craven's letter followed safety audit comments that had been obtained from the council's retained consultants, W S Atkins. The later correspondence between ECC and CBC in 2000 and 2001, also referred to by Mr Cuthbert, adds considerable weight to our view.
- Although we have concluded that the dumb-bell was viable and would be likely to have achieved planning consent, we are of the view that, as indicated above, it was not an ideal solution, especially in terms of linking in a second carriageway to the relief road at some later stage, and it does seem clear to us that it was devised purely as a result of perceived or actual difficulties that DWH encountered in its negotiations with the claimant. There is no doubt in our minds that a 5-arm roundabout of the type shown in Mr Cuthbert's figure 7, that design being produced as a response to an approach by the claimant's former agents, would have been altogether more appropriate and such a layout could have provided the showground with a much improved access to replace its former gate 2. Any improvement to the showground access, whether off the dumb-bell, or from a roundabout would, in our judgment, be a considerable benefit (as admitted by Mr Smith) and, if any showground land were to be required, that fact would balance out any diminution in value in terms of land taken.
- With the dumb-bell option, we note that DWH would have had to treat with Mr Thomasin-Foster for a small area of his land to the east of the A131, but in our judgment, that would not put him in the same position as the claimant either was, or thought he was, in terms of ransom value. Mr Thomasin-Foster was already a considerable beneficiary of the proposed housing development as DWH was acquiring large areas of his landholding for the purpose. He would not therefore be in a position to 'ransom himself' and, as Mr Snell pointed out in his evidence, would be keen to ensure that his actions did not delay the development. The share of the value that he would expect to receive would reflect his position in the broad context of the development as a whole and not, as the claimant was attempting to do, extract a sum that bore no relation to what had been paid to others (even to the price per acre paid for the Tritton land).
- In deciding which party to pursue negotiations with the developer would, in our view, weigh up all the options, including any additional costs that might be incurred in constructing the dumb-bell against those anticipated for a more traditional roundabout (although, as we have said, no evidence on costings was produced to us). The maximum price that they would be prepared to pay to the claimant would therefore reflect this position, and it stands to reason that, as Mr Snell said, rightly in our view, they would proceed on the most cost effective basis when all those options had been weighed. Of Mr Snell's 3 ransom scenarios, it is clear to us that this situation falls as the second in that there was an alternative option, and the claimant was not in such a strong position as was the case with the Tritton land. By the time DWH came to make the offer of £150,000 in September 1999 they had had time to consider the various dumb-bell options, including Faber-Maunsell's revisions, and in the absence of evidence from them we are satisfied that that was the highest figure that they could have been expected to pay – especially when balancing the access advantages that the claimant could anticipate. The viability of the dumb-bell option would serve to reduce the strength of the claimant's negotiating position, and thus the ransom value.
- No evidence was produced as to the precise extent of land that DWH was requiring at the time they made their offer of £150,000 but it seems to us that it could have been a very small sliver in the bottom south-east corner of the site as per the original proposal, or up to 2.5 acres as indicated following the Humberts' suggestion of a 5-arm roundabout. In our view, the most beneficial solution to the claimant, operating as a reasonable businessman, would have been to negotiate the 5-arm roundabout. In that scenario, if we were to ignore any benefit to the claimant created by an improved access, £150,000 for 2.5 acres of land amounts to £60,000 per acre – virtually the same as was paid for the Tritton land where it was acknowledged that they were fully ransomed.
- It is not for us to speculate, but in the absence of any evidence from DWH and the paucity of documentary evidence relating to the history of the negotiations, we can only conclude that the figure offered represented the developer's commercial view as to the maximum it was prepared to pay to the claimant, in the light of the alternatives. In our judgment, the best figure that the claimant could have expected to receive would be no more than the amount offered which, as will be seen from the above analysis of the evidence, appeared to be in line with that offered for land where they were fully ransomed – which in this case they were not. We therefore accept that, if it had not been for the announcement of funding for the council's bypass, there was an opportunity to negotiate with the developer, but not to the extent that was claimed. In that regard, as the President indicated during the course of the hearing, we consider Mr Smith's evidence adduced to support a figure of £1 million to be of no probative value.
- Finally, we deal quite shortly with Mr Fellows' suggestion that the restriction on development contained in condition 4 of the planning permission that DWH eventually achieved in 2000 created a ransom situation in favour of the claimant. The condition read:
- In the light of what we say above, and doing the best that we can on the evidence before us, we determine that the figure that the claimant would have been in a position to negotiate was £150,000 together with the sum of £6,000 towards their fees, and award compensation under this head, therefore, at £156,000.
- Mr Smith said that he had assessed the compensation on the basis of various individual components (land taken, severance, injurious affection and accommodation works) and had then undertaken an exercise to see if, in total, those figures might fit with what he described as a "before and after" check. He said he excluded the claim for £1 million relating to the DWH ransom as that would not materially affect the "after" valuation.
- At the valuation date the land taken, agreed at 17.9 acres, had the benefit of the original showground use and the recently obtained arena consent, which in his view demonstrated the further potential of the site that had since been realised with the racecourse permission. Although, to his knowledge, there had been no sales of similar properties, in deducing a value of £25,000 per acre for the land taken (£447,500), Mr Smith said that he had considered sales of a number of racecourses (provided to him by Cluttons and other agents) and had also taken account of the price the claimant had to pay (£47,777 per acre) for the Lyons land. He accepted in cross-examination that the figures achieved for the racecourse sales were for established, operational racecourses. An alternative approach, he said, was to consider the income earning capacity of the land taken on the basis of car parking at 100 cars per acre, at £5 per day for 30 days per annum. After allowing for administration, martialling costs etc this produced an annual profit of £120,000 that at 4 YP gave a capital value of £480,000.
- Mr Smith said that the severance of an area of land by the construction of the bypass (the island site) produced a claim of £80,000, that being upon the assumption that underpasses were provided. This was due to three factors. Firstly, extra vehicular journeys were required because there was now no direct vehicular access between the two parts of the site. An average of 10 extra journeys of 4 miles each per day at 40 pence per mile for 360 days a year produced an additional cost to the claimant of £14,688 per annum. To this should be added £500 per year for extra fencing maintenance. The resulting annual costs, multiplied by a YP of 4 gave £60,752 to which should be added about £20,000 for general loss of convenience to produce the claimed amount. This sum was appropriate, he said, assuming that underpasses would be provided. In costing the vehicular journeys, it became apparent that a mathematical error had been made (the annual cost should have been £5,760), and this was raised with him in questions from the Tribunal on Day 3. He accepted that that appeared to be the case, but following our offer for him to reconsider his figures, did not provide any further comment during the hearing. When we asked Mr Harper about this during his closing submissions, Mr Harper referred to an e-mail that he had just received from Mr Smith. In that, he changed the YP from 4 to 10 to give, with the £500 for fencing maintenance, a revised annual cost of £58,100 which, when added to the other costs, came to the claim value of about £80,000.
- Turning to injurious affection, Mr Smith said that due to the fact that the layout of the showground was now less convenient than previously, a prospective purchaser would no longer be prepared to make a premium bid. He assessed that to be £250,000 being 5% of his estimate of the site's pre-scheme value of £5 million. That had to be added to the cost of accommodation works - £997,000 for landscaping (per Mr Lawson's report), £126,000 for the required improvement to the bellmouth junction and £1,800,000 for the cost of the underpasses. This produced a total of £3,700,500.
- Mr Smith said that to support his opinion that the showground was worth £5 million at the valuation date, he had considered the price the claimant paid for it in 1997 (£850,000), the value attributed to it by Humberts in 1998 (£1,450,000) and the subsequent valuations undertaken by Knight Frank in 2003 (£7 million) and DTZ in 2005 (£8.75 million). He admitted that he had not made any attempts to verify or investigate the basis upon which those valuations had been made and that, in deriving his figure, he had "put his finger in the air" and that the figure "seemed to fit with the pattern of movement in values over that [period of time]". He also said that he had taken into account the fact that there was a minerals lease in place, but did not think that had any effect on value because the land was not included in the minerals plan, he understood the gravel to be of very little value and the racecourse development could, in any event, proceed because there were 10 acres excluded that could house any buildings required. Mr Smith said that he had not undertaken any valuation or appraisal of his own, but saw no reason to question the assumptions made in the valuations upon which he had relied. The post-scheme value became £1,299,500 (deducting £3,700,500 from £5 million) and on the basis that the racecourse permission was no longer viable, he considered that to be an appropriate figure. It reflected an increase on basic agricultural value that took account of the existing uses and any additional value attributable to the arena permission. Mr Harper said in closing submissions that there was plainly planning potential in the site at the valuation date, as had been recognised by Mr Holmes, and hope value should therefore be included. Finally, Mr Smith referred to the claimant's acquisition of the 45 acres of Lyons land, only 10 acres of which was expected to be used in connection with the racecourse in the near future. On the basis of a land value of £25,000 per acre as referred to above, the claim of £447,500 for the land taken was therefore being reduced by £250,000 to £197,500. The acquisition of the Lyons land in the total sum of £3,270,100 forms a separate head of claim and is considered elsewhere in this decision.
- Mr Morgan said that in his view, the value of the showground in the no-scheme world would have been no more, in December 2000, than the figure attributed by Humberts in their valuation of 1998. He said that he had not been furnished with a copy of the valuation when he wrote his first report, but understood the figure to have been £1.4 million, which he believed to represent a price of £8,536 per acre. However, having since seen the Humberts' report he noted and accepted that the valuation figure was in fact £1.45 million. He said that that they had based their valuation on turnover figures provided by the claimant that forecast net profitability at £497,200 per annum, whereas his own analysis of the claimant's companies' accounts showed consistent losses. Nevertheless, he believed there was potential for profits of circa £140,000 to be made from the uses that were permitted at the time, and at a YP of 10, this would give a capital value approaching £1.4 million. He therefore accepted that, overall, the Humberts' valuation gave credence to his opinion of value at the vesting date, £1.45 million.
- Applying the figure of £8,536 to the land taken (at the agreed 17.9 acres) the compensation figure would be £152,794. When asked, in examination in chief, about the effect that the minerals lease had on the value of the land, Mr Morgan said that, if a comprehensive development (such as the racecourse scheme) were to be envisaged, the lessee would undoubtedly be able to hold the showground owner to ransom, as indeed had happened in reality. If he were advising a purchaser of the land, for development purposes, he said he would have been unable to attribute anything more than the site's current use value (£1.45 million) while such a situation prevailed. He said Mr Smith's assessment of £5 million was totally unsustainable and pointed out that the Knight Frank and DTZ valuations that had been relied upon were based upon the racecourse scheme, and the forecasts set out in the claimant's business plans.
- Mr Morgan said he accepted the conclusions reached by Mr Ward on the planning prospects at the valuation date, and based his valuation assumptions upon the existing showground user. Whilst he accepted that the provision of the bypass would be an improvement in terms of traffic management in the vicinity, he thought that as at December 2000 there was no realistic prospect of planning permission being achieved for a racecourse scheme in the absence of a bypass. In any event, even if there was, the development costs alone far exceeded any potential capital value, and with the projected turnover being unsubstantiated by evidence of concluded contracts (other than the Sodexho catering concession agreement which was weighted so heavily in favour of the contractor that it was a potential liability to the claimant), the whole scheme was not financially viable. In those circumstances, the site had no additional value, either with the planning permission in place, or with the prospect of it.
- Mr Morgan said that the value of the remaining showground, even allowing for the fact that a part of it had been severed, had not suffered a measurable diminution in value as the land taken (which he had calculated to be only 10.46% of the total available) did not contain any buildings and was only used, historically, for parking principally on 3 days per year. Although alternative car parking was available to the north of the site, it was accepted that this was less convenient than the area that had been taken. Based upon the occasional use of the island site for parking purposes, Mr Morgan said that the considerable cost of the underpasses would not be justified. However, it did have value over and above pure agricultural values of £2,500 - £3,000 per acre, but not as much as had been attributed by Humberts (£8,536 per acre). He took a spot figure of £6,000 per acre as a justifiable value that, on the basis that the island site was 8 acres, gave a value of £48,000. This figure was on the basis that there was no connection (by way of either an underpass or a footbridge) provided. The diminution in value of the island site was, therefore, £8,536 per acre less £6,000 per acre multiplied by 8 to give a figure of £20,288.
- On the question of disturbance, Mr Morgan said that he had obtained from Companies House and had analysed the accounts of the 4 trading showground companies referred to in the claim for the years 1997 - 2003, and he had seen the report of Martin Adeley & Co. There had been no net profits shown and there were substantial losses incurred. It was the claimant's decision to abandon the showground format, and it was this that had an effect upon the companies' figures, rather than the impacts of the scheme. As there were no net profits shown within the accounts, and in fact the companies were in serious debt, any claim for loss of profits was unsubstantiated. As to the claimed loss of rental income which was spoken to by Mr Lallmahomed, Mr Morgan said that that report did not appear to be derived from original thinking, much of it having been lifted directly from the Martin Adeley report, it did not indicate any loss of rental income by virtue of the implementation of the bypass scheme, and the inter-company accounts and transfers did not seem to be transparent. He did not attach any weight to that report.
- We expressed our concerns during the course of the hearing as to the fact that Mr Smith had not only failed to undertake his own valuation exercise based on the premise that the racecourse permission could reasonably have been anticipated in the absence of a bypass, but he had also failed to provide any opinion as to values if we were to find against the claimant on that aspect. He confirmed that he had taken no steps to verify any of the valuation figures provided by others, and upon which he had relied, and his unusual methodology, it seems to us, clearly sought to justify figures that were not the product of his own professional opinion or experience. His re-working of his severance calculation (see paragraph 198 above) in which, without any apparent justification, he simply altered the 4 YP that he had originally taken to 10 YP to compensate for his previous mathematical error, was in our view no more than an exercise designed to justify a previously determined figure. We can place very little weight upon any of his evidence. Mr Morgan's starting point was the Humberts valuation of 1998. He adopted this, and carried out a check calculation related to a notional profitability of the land. He produced no original valuation of his own. The inadequacy of the valuation evidence thus presents us with some difficulty, particularly in the absence of any useful evidence on comparables and we have come to the conclusion that our starting point must be the only figure that is agreed between the parties – the £1.45 million of the Humberts' valuation of 1998.
- Whilst the Humberts' valuation was accepted by both sides as the appropriate figure in 1998, Mr Morgan said £1.45 million would also have been the applicable value as at December 2000, whether or not planning consent for a racecourse could reasonably have been anticipated. However, Mr Smith said it was worth £5 million at that date as the racecourse permission could have been anticipated. We have earlier concluded that planning permission for a racecourse could not have been expected at the valuation date, and although Mr Harper asserted that there was hope value, such an assertion was not supported by any of the evidence. With no evidence to support any rise in values between 1998 and 2000, we accept £1.45m as the showground's value at the vesting date. In adopting Humberts' valuation Mr Morgan said that he understood the value per acre to be £8,536, and used this in assessing the value of the land taken and as a basis for calculating diminution in value of the island site. However, at a value of £1.45 million, that would make the site 170 acres. That understanding is borne out by Mr Morgan's calculation of the percentage of the total site area that was formed by the land taken. But, Humberts' report quoted an acreage of 125 – which would amount to £11,600 per acre. The actual showground acreage was, excluding the Lyons (or, at the time, Bardon Aggregates) land, 118 which gives a value per acre of £12,288. Applying this to the land taken gives a total value of £219,955 – say £220,000. In the absence of any other plausible evidence, we adopt that figure.
- Moving to the diminution in value of the island site, adjusting Mr Morgan's figure of £20,288 on the same basis gives £50,304 (£12,288 - £6,000 x 8). We reject Mr Smith's arbitrary figures, and we are also concerned that Mr Morgan has done precisely the same thing in adopting a "spot value" of £6,000 per acre for the island site post-scheme. We are not persuaded that, with no form of pedestrian access provided, the island site would be likely to have any additional value over and above its value for agricultural purposes. Even if the land was available just for very occasional parking (for instance, the 3 main show days), the route pedestrians would have to take to access the main showground would be long and arduous. Therefore, bearing in mind the close proximity of that land to residential areas, we consider the agricultural value to be at the upper end of Mr Morgan's range and adopt £3,000 per acre. The diminution therefore becomes £74,304 – say £75,000 (£12,288 - £3,000 x 8).
- Mr Smith said that the value of the showground as a whole, post scheme, was reduced by £250,000, this being the loss of an opportunity to obtain a "5% premium bid" because the site was now less attractive, and any development could not be so well laid out. Mr Morgan said in his rebuttal of Mr Smith's report that the existence of the new bypass meant that any permitted development, whatever that may be, would be very much higher in profile than if it had been tucked away behind the substantial tree screen that formed the original eastern boundary to the old A131. He said that Mr Smith's estimated premium price was unsupported by evidence and that such a figure could only be considered to be an unsubstantiated guess. No prospective purchaser would pay a premium for land upon which the permitted development was not economically viable, but he would pay a price commensurate with the projected profitability of whatever development scheme was permitted or could reasonably be anticipated. We note that in his view there was no measurable diminution in the overall asset value of the showground caused by the land take, but the question remains as to whether, in reality, a prospective purchaser would pay the same price per acre for a showground with an effective reduced area of 92 acres (118 less 18, less 8 acres severed). Although Mr Smith's argument seems to us to be much in the same vein as his justification for the severance claim in that it was a figure plucked from the air, and his opinion assumed that planning permission for the racecourse scheme could have been anticipated (which we discount for reasons given elsewhere), we believe that he is justified in his reasoning on this point.
- However, we received no evidence as to the operational capabilities of the showground over this reduced area assuming that the racecourse permission could not be anticipated, other than Mr Holmes's statement that the capacity of the Braintree and Chelmsford car parks had been substantially reduced. We note that he referred to the W S Atkins survey undertaken to assess the impact of the bypass, carried out on the instructions of the council in 1995 and revised in 1996, and his statement that it had incorrectly assumed the availability of the 45 acres of Lyons land that included the Dunmow car park. If that area was removed from the equation, he said that the actual availability of parking for the County Show was reduced by 57%. However, as we have said elsewhere in this decision, facilities were available for parking and setting out facilities for the 7 days of the show under the 1990 agreement. Also, we note that in the statement made by Mr Aves in support of the arena application in 1999 he referred to the overall site area of 163 acres (which included the Lyons land) and the availability of the Dunmow car park. The statement said that there would be no material increase in traffic as a result of that proposal and there would be no requirement to make any special provision for traffic.
- In the impact assessment, W S Atkins expressed the opinion, from the visual studies that had been made, that more efficient management and control could have facilitated the accommodation of more vehicles on the available land, the total requirement, they anticipated, being for approximately 6,000 cars. Mr Morgan expressed a similar view when he said that with some reconfiguration of the presently underutilised areas, all the existing and anticipated events would be able to be accommodated. He said there were no operational buildings on the land taken or the island site and that the principal operational aspects of the showground were not compromised, and the creation of new internal roads and replacement parking facilities would not result in a further loss of areas for staging events. Mr Ward, who had analysed the W S Atkins assessment, said that in his view there would have been sufficient land for parking for the Show, in the scheme world, so long as the Dunmow car park was available in the absence of the land taken. Without that land, there would be a shortfall during the County Show.
- On balance, and in the light of the fact that, at the valuation date, the availability of the Dunmow car park was no different as a result of the scheme, we are satisfied that the overall operation of the remaining land as a showground would not have been materially compromised, despite the loss of some of the parking in the Braintree and Chelmsford car parks. Any marginal affect on value which might be attributable to the reduced overall parking availability during the annual show would, in our judgement, be countered by the improvements in terms of visibility and accessibility resulting from the provision of the bypass. We do not therefore consider there to have been any material detriment, in value terms, to the showground or its potential use resulting from the land take and severance and, as accepted by the acquiring authority, do not believe there to have been any material betterment either.
- However, we do also need to consider the question of the extant minerals lease, and as will be seen from paragraphs 116 and 117 above we are of the view that a prospective purchaser of the showground land in the scheme world would deem there to be an increased risk of the minerals lease being implemented, although such risk is considered to be only slight. Doing the best that we can, we conclude that a prudent purchaser would be likely to reduce his opinion of the value per acre (of the remaining 92 acres) from [the agreed] £12,288 per acre to £11,500 per acre. The value of the 92 acres becomes £1,058,000 against £1,130,000 (a reduction of £72,000 or 7.5%)
- The net reduction in value caused by the scheme if there is to be no underpass or footbridge is therefore £367,000 (£220,000 (land taken) + £75,000 (severance) + £72,000 (injurious affection). With some form of pedestrian access between the main showground and the island site, that would be reduced by £75,000 for the reasons given above.
- The disturbance claim advanced on behalf of the claimant contained four elements. The first consisted of loss of rental income for the years 2001 and 2002 (£132,394 and £192,394 respectively). Secondly there was a claim for additional interest charged on racecourse capitalised expenditure in the sum of £111,550 for the years 2003 and 2004. Thirdly there was a claim for interest charges of £390,799 on borrowings to fund the project that would otherwise have been repaid if there had not been a delay in the opening of the racecourse. Fourthly there was the loss of prospective profit from the racecourse business caused by the delay in opening. This was put at £737,882 if the delay were to be from June 2006 to October 2006, and at £4,472,400 if the delay was for the period June 2006 to December 2006. The first element was based on the showground business as it existed at the valuation date. The other elements related to the racecourse business.
- Mr Harper said that under the principle in Director of Buildings and Lands v Shun Fung Ironworks [1995] 2 AC 111 at 125C a claimant is entitled to be put in the position he would have been in but for the compulsory acquisition – the principle of equivalence. The business losses that the claimant had sustained by reason of the acquisition, and the prospective losses also, were therefore recoverable. He called evidence from Mr Holmes on the facts relating to the claimant's business and from two accountants, Mr Lallmahomed and Mrs Britten, who quantified the losses.
- Mr Shadarevian submitted that on the evidence there was no business in relation to which the losses claimed in respect of the proposed racecourse operation had occurred; there was no evidence that showed on the balance of probability that the racecourse would be completed at any particular time; and there was no evidence that established that the racecourse business would be viable or any of the matters on which the loss of prospective profits claim was based.
- We have summarised above Mr Holmes's description of the racecourse proposals and the 2004 business plan's proposals for the use of space in the grandstand or leisure building. Mr Holmes was asked by Mr Shadarevian about the position on the funding of the development. The business plan of December 2004 gave as the capital cost of the leisure complex £25,435,000 (of which £16,200,000 remained to be funded) and of the racecourse £12,247,000 (of which £6,372,000 remained to be funded). Mr Holmes said that of the funding already provided for the racecourse costs, £1.8m came from an interest free loan from the Horserace Betting Levy Board towards the illuminations system, and the rest was his director's loan. The £6,372,000 remained as yet unfunded. Of the £16.2m, £4.5m was the subject of an offer by Lloyds TSB, and the remainder was the subject of offers from Lloyds TSB and Royal Bank of Scotland. Completion of the section 278 agreement for the underpass was necessary for these to take effect. With the section 278 agreement in place the funding could be solved within 48 hours.
- Mr Holmes said that the leading provider of food and beverage at UK sporting fixtures, Sodexho Prestige, had entered into an unprecedented 20-year hospitality contract. Within the grandstand there would be one 150 seat restaurant and one 700 seat restaurant. Although the business plan said that all elements of the grandstand would be self supporting, the 700 seat restaurant would not be wholly self-supporting. Mr Holmes said that on the first floor the betting hall would be open 365 days a year and there were proposed contracts with both BetFred and Victor Chandler. There was provision for a casino, and although there was no prospect of a casino licence in the next 12 months, there were, as he put it, 17 casinos up for grabs and there were a huge number of pluses why Great Leighs should one day be a casino site. Mr Holmes said that at the valuation date, December 2000, they had not even been thinking of a casino.
- Mr Holmes was asked about the figures used by Mrs Britten in her calculation of the disturbance claim. It was pointed out to him that the gross profits shown for the casino exceeded those for catering and represented about 50% of the EBITDA (earnings before interest, taxation, depreciation and amortisation). He said that there were also direct costs associated with the casino but these had yet to be established. The casino element, he said, was not a definite, but, if they did not have a casino, they would have instead some other gaming environment. One possibility was gaming machines. He said that a bingo-cum-casino-like environment would show a similar range of profit if they did not have a casino.
- Mr Holmes said that the racecourse business was about racing, television rights and gambling. Money was to be made from the media, and, although the business plan assumed attendances of 10,000 on weekdays and 4,000 for Saturday evening fixtures with lower prize money, there was a viable business without the public attendance. He later said that the whole Great Leighs concept was built on geography, and not on the racing concept as such. There was absolutely no racing for sometimes 16 weeks in the year in the entire East Anglia area, so that it was a very lucrative position.
- Mr Holmes confirmed the summary of his career set out in the Business Plan. Between 1969 and 1975 he did some property development and ran an interior design/DIY business with the largest turnover of wall coverings in London. Between 1975 and 1983, he bought and trained show jumpers, importing some 600 from Ireland alone, and sold them on. In 1983 to 1985 he traded in bullion and precious metals. Between 1985 and 1990, having won a contract with the Central Electricity Generating Board to supply oil to power stations during the coal miners dispute, he channelled the profits into a communications group, which he then sold. From 1991 to 1996 he again traded as a bullion and precious metals dealer. In 1997 and 1998 he achieved the financial revival of the Essex County Show. In 1998 he launched a web-site with the largest guide to entertainment in the UK. In 2000 he launched The Horse Show, Britain's first outdoor international horse show for 40 years. In 2001 he set up Great Leighs Racing. Also in 2001 he purchased Woodlands Manor Hotel, adjacent to the showground and achieved planning permission for a 50 bedroom hotel.
- Mr Lallmahomed said that he had been auditor for Mr Holmes's companies for two years. A preliminary report had been prepared by a firm called Martin Adeley, and, Mr Lallmahomed said, he had agreed to the approach it adopted and had based himself on the report. The preliminary report was not produced, Mr Harper said, because it was only preliminary work. Mr Lallmahomed's report for the Tribunal was very short. It advanced three heads of claim. The first was for loss of profits by the claimant in the form of lost rental income by reason of the bypass severely curtailing the business currently operating from the showground. The amount of lost rental income was £132,394 in 2001 and £192,394 in 2002. Secondly the claimant had incurred capitalised costs/expenses of £716,785 by the year ended 30 November 2002 towards the development of the racecourse. The two year delay in development had meant that interest charges had been incurred which otherwise would have been met by the income stream. He quantified those interest charges at £111,550. Thirdly the two year delay had put back the realisation of projected net profits over the two years between 2005 and 2007 of £5,210,657. This had led to additional interest changes, which he quantified at £390,799. This gave a total claim of £827,137, excluding other claims that arose.
- Mr Lallmahomed made a six-year projection of profits, which he said was based on "the Great Leighs Business Plan prepared by Mr Jonathan Rounce FCA, FHCIMA". He said in cross-examination that he did not know the date of the business plan and that he just had the figures in front of him. On the loss of income for 2001 and 2002 he said that his figures were derived from the accounts, and there was a drop in income in those years. He said that he did not have with him the accounts that showed this. On the £716,785 development costs, Mr Lallmahomed said that a breakdown of these could only be given by reference to the primary record and he did not have this with him. Although he said at one point that they represented the costs built up from 1997/1998, when the company started trading, he agreed that the accounts for the year ended 30 November 2002 showed them to have been incurred in that year.
- Mrs Britten said that her instructions were to quantify the total loss of profits that the claimant alleged would be suffered as a result of the delay to the construction and opening of its planned all-weather racecourse and grandstand. Her instructions were to calculate the loss of profits based on two scenarios, assuming different delay periods as follows: June to September 2006, with the planned start date of 6 October 2006; and June to December 2006, assuming that the October opening date was not achieved. Under scenario 1 her calculation for loss of profit was £737,882. Under scenario 2 her calculation was £4,472,440. Mrs Britten said that her calculations were based on the business plans prepared in 2003 and 2004. She had enquired whether there were more recent estimates available in relation to the data that was contained in them, and she was instructed that broadly speaking the information was still valid, although she had where possible relied on third party current information.
- Mrs Britten made clear that her calculations were based on information provided by others. She said that if she were required to deal with each of the underlying assumptions in the report she would need to work with an expert in the racing industry. She did not have that specific expertise herself, and she would not want to hold herself out as having it. Her understanding was that the underlying assumptions on which she had based her report had been looked at by one of the big four accountancy firms in the context of business plans that had been prepared for the business. She therefore felt it was reasonable to rely on them. She had assumed full take-up of space in the grandstand, because that was what the business plans assumed. Take-up was one key area. The other was attendance levels, and on that, to check the figures she had been given, she obtained figures for Chester, which she was told was comparable, and for Newbury because it was the nearest racecourse to Great Leighs, although she thought that she might have been confused between Newbury and Newmarket.
- Mr Morgan took issue with a number of the assumptions made in the figures on which Mrs Britten had made her calculations, including the attendance figures. He produced a statistical record of attendances at racecourses in 2003 as confirmed by the BHB and expressed the view that Chester was quite dissimilar to what Great Leighs would be. He questioned also the income assumptions for the grandstand. There was, he said, no evidence to support the rent assumed for the casino, and the same went for the nightclub in the basement because he did not think that any operator would be prepared to take the space. He said that he thought that the Sodexho agreement, under which Sodexho were given the entitlement to provide all the catering requirements of third parties at the racecourse, would cause difficulties with letting of space for a nightclub, a restaurant or a hospitality box. In addition the agreement contained provision for a shortfall payment to Sodexho by Mr Holmes if the quality and mix of business differed materially from the business plan assumptions. Mr Morgan said that these provisions were important from the point of view of funding. As he knew from carrying out detailed valuations that he undertook for banks and brewery companies and others banks sought to ensure that they had sufficient security in the event that an operation went wrong. The Sodexho agreement, which enabled Sodexho to walk away from the agreement if the claimant became insolvent, could not be recommended for secure lending purposes. Mr Morgan said that the lending proposal received from Lloyds TSB was stated to be an indicative offer and that from Royal Bank of Scotland was at the very formative stage. The Lloyds TSB offer was subject to a large number of requirements, most notably the need to secure an income stream. On that, Mr Morgan said, they would look at the individual leases and the obligations of the parties under them in order to see the strength of covenant. Lloyds TSB said that they might require collateral warranties, and this suggested that they were not entirely confident.
- We reject Mr Lallmahomed's assessment of the losses which he said had been incurred by the claimant's existing showground business as a result of the bypass. His figures were unsupported by evidence of pre-bypass profits or any explanation of the estimates of loss. We also reject those elements of the disturbance claim that related to the racecourse business. We do so for four reasons, each of which is fatal to the claim. Firstly, we have concluded earlier that at the valuation date planning permission could not reasonably have been expected for a racecourse. There is thus no causal connection between the taking of the claimant's land and the loss of any profits that might be derived from such a development. Secondly, at the valuation date the claimant's business did not include the racecourse business that it is now in the process of developing. As we have said (paragraph 35), Mr Holmes had not by that stage formed any scheme for racecourse development, and the proposal that he did eventually form came as the result of the bypass. There is no evidence of any investment having been made in such a project before the proposal began to be formulated in 2001. In these circumstances any claim for compensation for loss of profits from a racecourse business would be too remote. Thirdly, because, as we have found, it was the bypass scheme that led to the bringing forward of the racecourse development, the scheme, rather than causing delay, has led to an earlier development than would, on any view as to the prospects of a racecourse development, otherwise have occurred. The fourth reason is that the evidence is wholly insufficient to establish a claim for loss of profits.
- The figures given by Mr Lallmahomed for lost development costs and prospective loss of profits were wholly unsupported. There was no attempt to produce justification for the figures, and we find ourselves unable to place any reliance on Mr Lallmahomed's opinion. Mrs Britten's evidence as to prospective loss of profits was based on assumptions as to take-up, attendances and income and costs that had been provided to her. Those assumptions were challenged by the acquiring authority, and no evidence, other than that of Mr Holmes, was called by the claimant to substantiate them.
- Mr Holmes is evidently a man of energy and drive who has pursued the racecourse project with great enthusiasm and determination. But he has no background in racing and his varied business experiences, which we have recorded elsewhere, were not related to horseracing and were small in scale compared to the very large project that he is now engaged in. It represents a unique venture, as the first new racecourse in this country since 1927. Mr Holmes's evidence was unsupported by any witness with experience of racecourse development and management, and we are not able on the basis of his evidence to place any weight on the figures that Mrs Britten has used in her calculations of the racing loss of profit. The assumptions underlying her calculation of the grandstand loss are similarly unsupported. It is clear that the casino, which according to the calculations is the largest contributor to the profits, is no more than a possibility, and we are unable to accept Mr Holmes's assertion than any one of a number of alternative gambling uses could be expected to take up the space and pay the rent assumed. The take-up of the other areas and the rents that are attributed to them are unsubstantiated.
- Nor does the current state of the project satisfy us that it will be profitable. At the date of the hearing the only development that had taken place consisted of earth moving operations over most of the track, and the excavation of a pit on the site of the grandstand. The only agreement signed with potential operators or occupiers was the Sodexho agreement, which contains provisions protecting Sodexho from the failure of the project and giving them, in a way that could, we accept, adversely affect the letting of space, a monopoly of food and drink supply on the racecourse. The only funding agreement in existence was for £4.5m, and the indicative offers that had been received for further substantial funding were hedged with reservations. It may be that in due course the racecourse will be the great success that Mr Holmes suggests that it will be and that, judging from press cuttings that were produced, many in the racing world hope that it will be. But in determining the claimant's claim we can only go on the evidence before us, and that is insufficient to establish the probability that the racecourse will be a profitable venture.
- The figures that we have determined under the various heads of claim can be summarised as:
- We therefore determine the amount of compensation to be £568,000. The parties are now invited to make submissions on costs, and a letter relating to this accompanies this decision, which will only become final when the question of costs has been determined.
Essex County Showground Group Ltd v Essex County Council [2006] EWLands ACQ_120_2004 (28 April 2006)
ACQ/120/2004
LANDS TRIBUNAL ACT 1949
COMPENSATION – compulsory purchase – part of showground acquired for bypass – planning permission – whether land to be valued as racecourse – access arrangements – landscaping – claimant's costs of acquiring other land disallowed – severance – whether underpass to be provided to connect severed land – loss of opportunity to negotiate sale of land to enable development on nearby land – disturbance – claim for prospective loss of profits disallowed – compensation £568,000
IN THE MATTER OF A NOTICE OF REFERENCE
BETWEEN ESSEX COUNTY SHOWGROUND Claimant
GROUP LIMITED
and
ESSEX COUNTY COUNCIL Acquiring
Authority
Re: Essex County Showground,
Moulsham Hall Lane
Great Leighs
Chelmsford
Essex CM3 1QP
Before: The President,
P R Francis FRICS and A J Trott FRICS
Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL
on 23-27, 30, 31 January, 1, 2 and 10 February 2006
Joseph Harper QC and John Dagg instructed by Michael Aves of Sudbury, Suffolk, for the claimant.
Paul Shadarevian and Melissa Murphy instructed by P M Thomson, Head of Law and Administration, Essex County Council, for the compensating authority.
The following cases are referred to in this decision:
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426
Bwllfa & Merthyr Dare Steam Collieries (1891) v Pontypridd Waterworks Co [1903] AC 426
Director of Buildings and Lands v Shun Fung Ironworks [1995] 2 AC 111
Hoveringham Gravels Ltd v Chiltern DC (1978) 35 P & CR 295
The following further cases were referred to in argument:
Harvey v Crawley Development Corpn [1957] 1 QB 485
Belmont Riding Centre v First Secretary of State [2004] JPL 593
R v Warwickshire County Council, ex p Powergen plc (The Times 10 October 1997)
Myers v South Lakeland District Council [2004] RVR 279
R v Derbyshire County Council ex p Woods [1997] JPL 958
Virgin Cinema Properties Ltd v Secretary of State for the Environment [1998] PLCR 1
Bolton Metropolitan Borough Council v Waterworth (1979) 37 P & CR 104
Deacon v South Eastern Rly Co (1889) 61 LT 377
Bolton v Bolton (1889) 11 Ch D 968
DECISION
Introduction
The showground site and the land acquired
"I am in agreement with leading counsel's opinion that the aforementioned [1957] permission does not restrict the number of shows (agricultural or otherwise) that can be held in any one year at the showground."
At that time, and up until the land was acquired by the claimant, the site was used for a wide range of events, including the County and Young Farmers shows, Essex riding clubs weekends, a pony club week, a heavy horse show, a Caravan Club rally, a custom car show and retail events, in particular car boot sales.
The racecourse proposals
Issues
Witnesses
(a) John Holmes, chief executive and principal shareholder of the claimant company, Essex County Showground Limited, who set out the history of the claimant's ownership and use of the showground together with the proposals for the racecourse (known as Great Leighs) including details of how the scheme was to be funded and developed, and the uses to which the proposed grandstand was to be put. He also provided the background to negotiations with the acquiring authority regarding the provision of an underpass between the land severed by the bypass and the main site and the history of the claimant's acquisition of a further 45 acres of land, and the minerals lease, from Frank Lyons.
(b) Richard John Bedford, a solicitor and partner in Burges Salmon LLP of Bristol, who outlined his firm's involvement with Judicial Review proceedings involving the acquiring authority in April 2001 and the claimant's ex-parte injunction application against Frank Lyons in May 2002.
(c) Andrew Michael Aves, a solicitor in private practice who has acted for the claimant for 8 years, gave evidence relating to the claimant's acquisition of the showground and the Lyons land, and his involvement with the local planning authority and the acquiring authority in relation to planning and the proposed underpass.
They called the following expert witnesses:
(d) Martin Andrew Fellows BA (Hons) Dip TP MRTPI a Member of the Royal Town Planning Institute and a partner in Knight Frank LLP, London, and head of its Planning Department (Planning).
(e) Christopher Harold Smith FRICS FAAV, a Member of the Royal Institution of Chartered Surveyors, Member of the Central Association of Agricultural Valuers, and a partner in Knight Frank LLP, Hereford. (Valuation of the land taken, severance and injurious affection and loss of opportunity to negotiate in respect of the David Wilson Homes development).
(f) Richard Peter Adam BSc CEng MICE MIHT, a Member of the Institution of Civil Engineers and of the Institution of Highways and Transportation, and an employee of Halcrow Group Ltd (Accesses, highways and loss of opportunity to negotiate ransom).
(g) Michael Lawson Cbiol MIBiol MAE, a Chartered Biologist, Member of the Institute of Biology and Managing Director of Landscape Planning Ltd, a planning and design, arboricultural and biological sciences consultancy (Landscaping).
(h) Yoosoof Lallmahomed FCCA ATII, a Fellow of the Chartered Association of Certified Accountants, an associate of the Chartered Institute of Taxation, practising as Devoilles Ltd (Accountancy – disturbance compensation for loss of income/profits).
(i) Kathryn Jane Britten FCA, a Fellow of the Institute of Chartered Accountants, a partner in BDO Stoy Hayward LLP and head of its Dispute Resolution Services Team (Accountancy – disturbance compensation for loss of future profits arising from delay in construction of the planned all-weather racecourse and grandstand).
(a) Leslie John Burns MICE CEng, a Member of the Institution of Civil Engineers and Major Schemes Manager for Essex County Council. He was a designer/project manager for the bypass scheme and gave evidence of fact regarding his involvement in negotiations with the claimant over the provision of an underpass.
They called the following expert witnesses:
(b) Neil Alfred Ward BA Dip TP MRTPI, a Chartered Town Planner and a director of NWA Planning Limited, planning consultants of Ipswich (Planning).
(c) Robert Brian Ley Snell MRICS, a Member of the Royal Institution of Chartered Surveyors and an associate director of Lambert Smith Hampton, Chartered Surveyors of Chelmsford (Valuation - loss of opportunity to negotiate ransom).
(d) Crispin Keith Downs BA MPhil MLA, a Chartered Landscape Architect and Manager of Landscape Design at Essex County Council (Landscaping).
(e) Andrew Cuthbert MIHT, a Member of the Institute of Highways and Transportation and a senior consultant with Faber Maunsell (Accesses, highways and loss of opportunity to negotiate).
(f) David Charles Henry Morgan FRICS MAE MRPAS, a Fellow of the Royal Institution of Chartered Surveyors, and principal of DMP Chartered Surveyors, Licensed Leisure and Business Property Specialists of Thornbury, Bristol (Valuation of land taken, severance and injurious affection and rebuttal of accountancy evidence).
Planning: assumptions
Planning permissions granted
The arena permission
The first racecourse permission
(1) erection of new Showground Centre
(2) erection of training stable block
(3) construction of an all-weather manège
(4) laying out of grass and all-weather oval track for equestrian events
(5) construction of holding stables
(6) erection of new dwelling for Showground manager."
Under the heading "Reasons for re-ordering the Showground and summary of proposals", the statement said:
"6.1 The Showground faced extreme difficulties immediately after the planning permission for the 1999 scheme was approved. These were caused by the construction of the northern section of the Great Leighs Bypass, which the County Council has now embarked upon. This splits the site into two and severely restricts the use of the Showground, particularly for events which use all or most of it …
6.2 The main problems facing the showground are as follows. First, the loss of land for the road and the severing of a further area reduce the working area of the Showground below the level at which it is possible to host major shows, not only the County Show and the Young Farmer's show but other popular shows such as the NASC (custom car) show. Secondly, the loss of accesses to the remaining part of the showground. Thirdly, the loss of screening between that part and the new road, with a particularly serious effect on equestrian events.
On 21 January 2002 Chelmsford Borough Council resolved to grant planning permission for the development, and the first racecourse permission was issued in October 2002.
Planning policies
"Within the area shown on the proposals map the borough council will assess proposals for development and use of the Essex Showground site with regard to the following criteria:
(i) the suitability of the site for the proposed use;
(ii) the suitability of the local highway network and site car parks for the amount of traffic to be generated;
(iii) the potential environmental impact upon the surrounding area, including the assessment of noise, visual intrusion and general disturbance."
The preceding paragraph had stated that the site was subject to the relevant policies concerning development in the countryside and the other policies of the local plan.
Planning evidence
Planning permission: conclusion
"The proposal has been judged as a departure from the adopted development plan, and it is incumbent on the applicant to demonstrate the material circumstances sufficient to warrant support for the proposal. Whilst it is recognised that the racetrack would remove two areas of woodland, that the Showground Centre would introduce a substantial structure into the countryside and that the level and intensity of activity many have grown accustomed to will change, it is considered that sufficient evidence has been submitted to allow support for this proposal. These would include the continued success of the Showground as an asset to the Borough and the region, the erection of a landmark building of high architectural merit, the opportunity to enhance previously eroded woodland and wildlife habitats, the potential employment and economic benefits for the area, and the opportunity to provide a boost for equestrianism in this country."
Accesses: facts
Accesses: evidence
Accesses: conclusions
"7.4 The arena building is the only part of the present application which might be thought to give rise to extra traffic. As noted above, it will have a seating capacity of about 4,000 and total attendance at any event held in it will not be likely to exceed about 7,000, less than a quarter of the attendance at the County Show…. This level of attendance is far less than that a number of the current outdoor events…. the existing access arrangements are more than adequate to cope with such numbers. There is therefore no need to make any special provision for traffic."
And at he went on to say:
"7.8 Similar reasoning applies to the implications for the possible A131 improvements. If the Essex County Council scheme proceeds, then that authority will have to make arrangements for alternative access, whether or not the proposed development proceeds, the proposed development has no effect on the required capacity of any future access arrangements."
We are satisfied that that the accesses provided in connection with the scheme are sufficient for the uses that existed at the valuation date, and taking account of what Mr Aves said, believe that they were also adequate for usage under the arena permission. As we have said, the intensification of traffic that will undoubtedly occur as a result of the racecourse development is not an issue with which have to concern ourselves under this head and, in the light of our findings, no compensation is, therefore, awarded under it.
Landscaping: background
Landscaping: the claimant's case
(i) That the existence of a filter drain in close proximity to the highway boundary fence rendered much of the acquiring authority's proposed planting scheme an impossibility and required the claimant to modify its landscaping scheme for the racecourse development which had already been presented to CABE and Chelmsford Borough Council.
(ii) That the acquiring authority's existing hard works (the concrete post and wire mesh fence) and proposed soft works were inadequate and out of keeping with the status of the site and the requirements of the racecourse planning permission.
Landscaping: the acquiring authority's case
Landscaping: conclusions
"Whatever we would have done, we would have been faced with the reality of a higher status soft landscaping scheme. Further, of course, the fencing that forms a fundamental part of my scheduling costs is required to secure the site for equestrian use, full stop".
We do not agree. The claimant's hard and soft landscaping proposals are designed to complement the racecourse and, in particular, the landmark grandstand building. They are not essential regardless of the nature of the use of the retained land. Mr Lawson's evidence has not satisfied us that they are. We do not consider that the acquiring authority should be liable to pay for what are effectively promotion and marketing costs.
Lyons land: facts
Lyons land: evidence
Lyons land: submissions
Lyons land: conclusions
Underpass: facts
Stage 1 The construction of the underpass
Stage 1A Temporary works to secure and safeguard the underpass pending construction of the access ramps at either end
Stage 2 The construction of the ramps.
Underpass: evidence
Underpass: submissions
Underpass: conclusions
Severance, injurious affection and accommodation works
"7. In assessing the compensation to be paid by the acquiring authority under this Act regard shall be had not only to the value of the land to be purchased by the acquiring authority, but also to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise injuriously affecting that other land by the exercise of the powers conferred by this or the special Act."
The entitlement to compensation under this section is one in respect of the diminution in the value of the retained land arising from the severance caused by the compulsory acquisition of the land taken, see Hoveringham Gravels Ltd v Chiltern DC (1978) 35 P & CR 295. It is this section that appears to inform the acquiring authority's approach to the accommodation works and the limiting factor of cost neutrality, ie that the diminution in the value of the retained land acts as a cap to the cost of the accommodation works. This approach was acknowledged by Mr Smith on behalf of the claimant in his letter to Mr Snell dated 12 February 2001 in which, when rejecting the 5.3 metre headroom underpass, he stated:
"It is our view that the cost of an adequate underpass to a height of 5 metres would exceed the likely level of compensation consequent on it not being provided thereby leaving the claimant disadvantaged by requesting the underpass. We would therefore not wish to pursue an underpass."
(i) £147,000 without an underpass or footbridge.
(ii) £72,000 with an underpass or footbridge.
The saving in compensation by connecting the island site with the main site is £75,000.
Disturbance
(i) there was a causal connection between the acquisition and the loss in question, ie the cost of the underpass or footbridge;
(ii) that loss must not be too remote, and
(iii) that loss must have been reasonably incurred.
Mitigation
(i) in January 2002
(ii) in August 2002, and
(iii) from November 2004.
Loss of opportunity: the facts
Loss of opportunity: evidence.
Loss of opportunity: conclusions
"4. Not more than 100 dwellings shall be occupied until Phse 1 of the Great Leighs By Pass being that part of the By Pass between Strawbrook Hill and Moulsham Hall Lane as approved on 24 April 1996 under reference CC/CHL/0020/95 or any approved amendment to that permission is open for use".
That permission was for the council's dual-carriageway bypass that has since been built. It did not relate to DWH's single-carriageway relief road proposal that was never the subject of an application. We do not consider that such an application, if it had been made, would have been treated as an amendment to the original permission. Therefore, any answer to a question as to whether or not a similar condition would have been imposed in a relief road consent cannot be tested by evidence, and can only be conjecture.
Valuation of land: evidence
Valuation of land: conclusions
Land taken
Severance
Injurious affection
Disturbance: introduction
Disturbance: evidence
Disturbance: conclusions
Summary of conclusions
| Land taken | £ 220,000 |
| Severance | £ 75,000 |
| Injurious Affection | £ 72,000 |
| Underpass (footbridge) | £Nil |
| Loss of opportunity to negotiate | £ 156,000 |
| Loss of profits | £ Nil |
| Landscaping | £ 45,000 |
| Improvements to bellmouth | £ Nil |
| Total | £ 568,000 |
28 April 2006
George Bartlett QC, President
P R Francis FRICS
A J Trott FRICS