Part XII      

consultation questions

Generally

Consultees are invited to comment on any aspect of the provisional proposals, both from the legal point of view, and from the point of view of practicality and cost. Without prejudice to that general invitation, we have identified the following as matters likely to give rise to differing views, and as ones on which we would welcome specific answers.

Proposal 2: Heads of compensation

Do consultees agree that:

                                           (1)             The Code should include a statement of the objective of “fair compensation”?

                                           (2)             This should be expressed as principle of interpretation only (rather than as permitting the Tribunal any general discretion to depart from the detailed rules)?

                                            (3)             The right to compensation should be a right to a single (“global”) amount, assessed having regard to the detailed rules (market value, disturbance etc)?

Proposal 3: Market value

Do consultees agree that:

                                           (1)             “Market value” should be defined as the amount for which the land might be sold by a willing buyer to a willing seller;

                                           (2)             The market value test should apply (except as otherwise stated) to any provisions of the Code depending on the value of land?

Proposal 4: Disturbance

                                           (1)             Do consultees agree that:

                                                                   (a)              The term “disturbance” is a suitable shorthand for all heads of compensation currently assessed under rule (6) (of 1961 Act, s 5)? If not, what term should be used?

                                                                   (b)              Compensation under this head should (as now) exclude any loss “directly based on the value of land”?

                                           (2)             The matters to be taken into account should include “circumstances personal to the claimant”?

                                           (3)             In determining, on the displacement of a business, whether compensation should be on the “relocation” or “extinguishment” basis:

                                                                   (a)              Should the test be a simple test of “reasonableness”, rather than the “reasonable businessman” test (as explained in the Shun Fung case)?

                                                                   (b)              Is it unnecessary for the Code to prescribe the circumstances in which compensation on either basis will be regarded as reasonable?

                                           (4)             Should there be:

                                                                   (a)              Specific provision for compensation to include costs reasonably incurred in replacing buildings, plant or other installations needed for a business, if fairly attributable to the acquisition, and not adequately reflected in other heads?

                                                                   (b)              If so, do consultees agree that:

                                                                                            (i)             The right should apply to all types of business (not simply agricultural);

                                                                                          (ii)             The right should apply whether the buildings are on the land subject acquisition or on retained land?

Proposal 5: Injury to retained land

                                           (1)             Under the existing law:

                                                                   (a)              Is compensation for injurious affection assessed solely by reference to diminution in market value? If not, what other factors are taken into account?

                                                                   (b)              How, if at all, is temporary loss taken into account?

                                                                   (c)              By reference to what valuation date is compensation assessed?

                                                                   (d)              Do the present rules give rise to any other problems needing to be addressed in the new Code?

                                           (2)             How should the issues (a) to (d) be dealt with in the new Code?

                                           (3)             In particular, what problems or additional costs would be caused for authorities, if compensation under these heads were to include compensation for loss of profits?

                                           (4)             Should express provision be made (as we propose) for assessment under these heads to be based on a “before and after” valuation of the holding? If so, should it be mandatory, or (as we propose) at the option of the claimant?

                                           (5)             Should the “retained land” be limited to land “contiguous” to the subject land?

Proposal 6: Equivalent reinstatement

Do consultees agree that:

                                           (1)             The existing rule (5) for equivalent reinstatement should be reproduced in the new Code in substantially its existing form? If not, what changes, or further definitions are required?

                                           (2)             The nature and extent of the discretion to refuse compensation on this basis should be set out in the Code (as proposed in proposal 6(2))?

                                           (3)             No specific provision should be made for a deduction for any increased value of the new premises?

Proposal 7: Incidental rules

                                           (1)             In relation to proposal 7(3), should there be any exception to the principle that unlawful uses are disregarded (for example, where the breach is technical or unintentional, and easily remedied)?

                                           (2)             If so, how should the exception be defined?

                                           (1)          Do consultees have any other comments on the incidental rules as proposed above?

Proposal 8: Date of assessment

Do consultees agree:

                                           (1)             In relation to interests in existence at the date of notice to treat, the valuation date should be taken as the date for fixing the nature and extent of the interests?

                                           (2)             The date for equivalent reinstatement should be defined as the date at which reinstatement could reasonably begin (in accordance with the present West Midlands Baptist approach)? Or, alternatively, should it be based on making an assessment at whichever is the earlier of (i) the date on which the acquiring authority acquire ownership of the property, in law or equity, or (ii) the date on which the authority takes possession of it?

                                           (3)             There is no need for any specific provision for fixing the date of other heads of compensation, or adjusting them to a common date?

                                           (4)             Notwithstanding (3), interest should (as now) run on the total amount of the compensation from a single date (the date of possession)?

Proposal 9: Disregarding the project

     (A) Do consultees agree with our provisional view as to the preferred version of the existing rule: that is, that there are to be disregarded changes in value attributable to the prospect of, or the carrying out of, the project for which the authority is authorised to acquire the land?

     (B) Do consultees agree (a) that a statement of the no-scheme rule (however named) should in principle be reproduced in the new Code; and (b) that it should be in the form of a new provision, or set of provisions, in substitution for all existing versions.

(C) Should the no-scheme rule, in its application to increases in value, be modified so as to enable regard to be had to the amount which the acquiring body itself would have paid in friendly negotiations (in accordance with the Indian case):

                                                                   (a)              In all cases?

                                                                   (b)              In cases where the acquisition is for purposes of a “commercial” nature?

                                                                   (c)              In no cases?

If the answer is (b), then:

                                                                                            (i)             How and by what criteria should such “commercial” cases be defined?

                                                                                          (ii)             Do consultees favour a “public interest certificate” mechanism (as proposed in the Scottish Executive Review)?

(D) Do consultees agree with our provisional proposal that:

                                           (1)              In the new Code, the preferred rule (in a statutory form) should be used as the basis for defining the “scheme”?

                                           (2)             Alternatively, or in addition, should consideration be given to either of the following:

                                                                   (a)              Where an authority is promoting the compulsory purchase order for the purposes of a project including land other than that comprised in the order, the authority should be required (for valuation purposes) so to certify in the order, identifying the nature and extent of the project?

                                                                   (b)              If so, should the owner’s right of challenge be:

                                                                                            (i)             At the confirmation stage (by objection to the confirming authority) or

                                                                                          (ii)              Before the Lands Tribunal?

                                           (3)             Should provision be made, in the Government’s proposed new planning framework, to enable the definition of the “project” for compensation purposes to be linked (where appropriate) to development proposals, or development zones, identified in Action Area plans?

(E) Should provision be made that:

(1) In defined circumstances, where land is required solely for access or otherwise for provision of services, to serve other new development, the compensation should exclude any element based on the value of the new development?

(2) If so, (a) how should those circumstances be defined, and (b) to what qualifications should they be subject (e.g. a defined uplift to existing use value)?

(F) We invite views of consultees generally on the above provisional proposals, including in particular:

(i) Do they agree that all existing versions of the no-scheme rule should be replaced by a single statutory set of rules?

(ii) Do they agree with our proposed definition of the “relevant project” as the basis of the new rules?

(iii) Do they agree with our proposal to apply the “cancellation approach” in this context?

(iv) Would they favour the suggested alternative for defining the “project” at the time of the order (para 7.17 above); if so, should the authority’s definition of the project be open to challenge (a) at the time of confirmation of the order, by objection to the confirming authority, or  (b) only before the Tribunal, at the time of the determination of compensation?

Proposal 10: Planning status

We invite consultees’ views generally on the above proposals. In particular:

(1) Do consultees agree that (a) permissions existing at the valuation date should be taken into account (whether or not they would have been granted apart from the project) (b) permission should be assumed for development in accordance with the authority’s proposals?

(2) In relation to the proposed “planning status certificate”:

(a) Do consultees agree that the applicant should be permitted to include (as we propose)  the subject land or any part of it, and any adjoining land which could reasonably have been expected to be part of the same development (whether or not in the ownership or control of the claimant); if not, how should the application area be defined?

(b) Do consultees consider (i) that the existing right of appeal to the Secretary of State should be retained or (ii) that the local planning authority’s decision should be subject to appeal to the Lands Tribunal, which may, at the discretion of the Tribunal, be dealt with in advance of, or at the same time as, other valuation issues; and, in the former case, may be delegated to a planning inspector?

Proposal 11: Interference with easements etc.

                                           (1)             Do consultees agree that compensation for interference with easements or other rights should be separated from the rules for compensation for injurious affection where no land is taken?

                                           (2)             In any event, on what basis should compensation be assessed? In particular:

                                                                   (a)              Should compensation be based (as now) solely on diminution in the market value of the land  to which the right is attached; or

                                                                   (b)              Should it reflect the “market value” of the right itself (that is, the amount which would have been paid for release of the right in negotiating between willing parties)?

Proposal 12: Acquisition of rights

                                           (1)             Should the compensation for acquisition of new rights be assessed:

                                                                   (a)              As now by reference to the diminution in the value of land or,

                                                                   (b)              By reference to the “market value” of the right (that is, the amount which would have been paid for grant of the right between willing parties)?

                                           (2)             Should compensation for severance be allowed? If so, in what circumstances could it arise (other than those covered by injurious affection)?

Proposal 13: Advance payments

Do consultees agree that the County Court should have jurisdiction (as proposed above) to review and enforce the performance of the authority’s duties in relation to advance payments? If not, what alternative mechanism would be appropriate?

Proposal 14: Lands Tribunal jurisdiction

Do consultees agree that the Lands Tribunal should have extended jurisdiction as proposed to deal with a common law claim arising out of the same facts as a compensation claim already before the Tribunal?

Proposal 15: Interest

Are there any particulars in relation to the award of interest which require to be addressed in the new Code, for example relating to:

                                           (1)             Professional fees (including VAT);

                                           (2)             Loans incurred to meet disturbance costs;

                                           (3)             Any other specific items of cost?

Tax

                                           (1)             Do consultees agree that (as proposed by the Policy Statement) additional tax liabilities arising out of the compulsory purchase can be satisfactorily met by the law of disturbance, supplemented by advice agreed with the Revenue.

                                           (2)             If not, what provision should be made in the Code for such tax liabilities?

                                           (3)             Are there any other tax issues arising out of the law of compensation which should be addressed in the new Code?

                                           (4)             We would welcome specific examples of any problems experienced in practice.

Proposal 16: Subsequent planning permission

Views are invited on the following:

                                           (1)             Do consultees agree that provisions for compensation for subsequent permissions (1961 Act, Part IV) should be repealed without replacement?

                                           (2)             If not, what changes should be made to the detailed rules; in particular:

                                                                   (a)              Should the claim be limited to any new permissions which are not dependent on the scheme for which the authority originally acquired the land?

                                                                   (b)              Should the present period of 10 years be changed? If so, to what period, and why?

                                                                   (c)              Are any other changes needed (for example, to relate the provisions to the “valuation date” as established by case-law since the 1961 Act)?

                                           (3)             To what extent are these provisions used in practice? (We would welcome examples of individual cases, and any statistical information about the number of cases in which section 23 has been invoked, and with what financial consequences.)

Proposal 17: Compensation for effects of public works

                                           (1)             Do consultees agree that the new law:

                                                                   (a)               Should be based substantially on the existing law in 1965 Act section 10 (in modernised form, following the Wildtree Hotels case) and Part I of the 1973 Act; and

                                                                   (b)              That it should take the form of an amended version of Part I of the 1973 Act (rather than being included in the Code for compensation for compulsory purchase)?

                                           (2)             Alternatively, what should be the basis of the provisions in the new Code? (For example, do consultees favour a scheme along the lines of the ALRC proposals in App 4(ii))?

                                           (3)             Should compensation be limited to diminution in market value of the affected land? If not what other matters should be included (for example, loss of profits)?

                                           (4)             Should compensation for the effect of “physical factors” due to construction of the works be restricted to circumstances for which a claim would have arisen at common law?

Proposal 18: Repeals

Do consultees have any comment on the proposed repeals?

Impact of Proposals

Do consultees have any comments on the likely impact of our proposals if they were to be enacted? We would welcome consultees’ feedback on both practical effect and cost-benefit impact (with tangible examples where available).