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You are here: BAILII >> Databases >> The Law Commission >> Towards a Compulsory Purchase [2003] EWLC 286(7) (15 December 2003)
URL: http://www.bailii.org/ew/other/EWLC/2003/286(7).html
Cite as: [2003] EWLC 286(7)
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PART VII
THE STATUTORY PROJECT – PROBLEMS AND SOLUTIONS
Introduction
7.1 In this and the next Part we discuss the most difficult subject we have had to address in this project: the complex and intractable problems arising from the so-called Pointe Gourde (or "no-scheme") rule, and the related rules for planning assumptions. In this Part we outline the main areas of difficulty and our responses to them, and consider the results of consultation. In the next Part, we set out in more detail our proposals for the new Code, and provide some illustrations of the intended operation of the new Rules. 7.2 The issues were discussed in detail in the Consultation Paper. We summarised the legal basis of the rule:[1]The no-scheme rule
It is an established principle of compensation law that compensation "cannot include an increase in value which is entirely due to the scheme underlying the acquisition." This rule, following the name of the case from which this formulation is taken, is often called the "Pointe Gourde rule".[2] The rule requires the disregard of decreases in value caused by the scheme, as well as increases in value.[3] In other words, the value must be assessed "upon a consideration of the state of affairs which would have existed, if there had been no scheme of acquisition".[4]
7.3 The Consultation Paper contained a detailed discussion of the many conceptual and practical problems arising from the "no-scheme rule" under the existing law. It is unnecessary to repeat that discussion. However, an understanding of the historical development of the law, through statute and cases, is important to set our proposals in context. We have therefore reproduced as Appendix D our account of the history.[8]Although the rule was developed by the courts, its effect has been reproduced, or reflected, in a number of provisions now contained in the Land Compensation Act 1961. They are sections 5(3) ("special suitability");[5] section 6 (disregard of changes in value due to actual and prospective development);[6] section 9 (depreciation due to prospect of acquisition);[7] sections 14-16 (planning assumptions); and section 17ff (certificates of appropriate alternative development).
7.4 Two recent cases, one in the Court of Appeal and one in the Lands Tribunal, have required a detailed review of the existing law. In both strong criticism was expressed. In Waters v Welsh Development Agency,[9] decided very shortly before the publication of our Consultation Paper,[10] the Court of Appeal said:Clearing the decks
7.5 This comment was echoed recently by the President of the Lands Tribunal, in Pentrehobyn Trustees v National Assembly for Wales,[12] a decision which we have found of particular assistance. He said:The right to compensation for compulsory acquisition is a basic property right. It is unfortunate that ascertaining the rules upon which compensation is to be assessed can involve such a tortuous journey, through obscure statutes and apparently conflicting case-law, as has been necessary in this case. … The Human Rights Act 1998 does not impinge directly on the issues in this case, but it underlines the importance of coherence and certainty in this area of the law.[11]
7.6 The responses to consultation generally supported the retention of the rule in some form. However, it was no surprise to find almost unanimous support for our view that we should "clear the decks"; and that, in the new Code, all existing versions of the rule (in case-law or statute) should be replaced by a single set of statutory rules. In what follows, we shall take that proposition as given. As far as possible we shall avoid further discussion of the existing law, which tends to confuse rather than illuminate; and concentrate on seeking to establish a simple framework for the new Code.The extreme complexity of the issues that I have had to consider, the uncertainty in the law, the obscurity of the statutory provisions, and the difficulties of looking back over a long period of time in order to decide what would have happened in the no-scheme world demonstrate, in my view, that legislation is badly needed in order to produce a simpler and clearer compensation regime. I believe that fairness, both to claimants and to acquiring authorities, requires this.[13]
7.7 To set the background, it will be sufficient to repeat the Consultation Paper's summary of the concept underlying the rule, and the policy issues to which it gives rise:[14]The policy rationale
The concept
The concept is reasonably simple. For example, a railway scheme may cause blight and reduced land values while it is being planned and constructed. Conversely, the prospect of its use once completed will give the land enhanced value to the promoter (as compared to its existing use value), and may also result in higher land values in the area, for example near new stations. The no-scheme rule says that land acquired by the authority for the project should be bought at values which reflect neither the blight nor the enhancement.
The rule was originally developed by the Courts in the 19th century, as part of the principle that compensation should be based on the "value to the owner", rather than its value for the promoter's scheme. This was relatively easy to apply in the early cases where the increased value depended on the use of statutory powers only available to the promoter,[15] and where the enabling statute usually defined the scope of the project. However, this simple model was not readily adapted to the more complex schemes, and more general statutory powers, which became the norm in the last century, particularly following the radical reform of the planning system in 1947. After 150 years of evolution, the present law is a complex mixture of statutory and common law rules, with many unresolved conflicts and inconsistencies.
The policy issues – overview
The apparent simplicity of the concept has meant that the policy reasons for it have rarely been discussed in the cases. Furthermore, although the rule was developed in relation to the disregard of the increases in value, it was assumed without discussion that disregard of decreases was simply the other side of the same coin. In neither case is it obvious how far, in policy terms, the rule should extend. Before embarking on a detailed discussion, it might be helpful to outline briefly the main issues which will be considered in this Part.
Disregard of increases in value is for the protection of the acquiring authority. There seem to be two distinct policy reasons. The first is to protect statutory authorities from having to pay artificially inflated prices to acquire land or rights necessary for their functions. For example, if an essential sewer has to go along a particular route, the landowner should not be able to exploit the public need to extract an inflated price. However, it does not follow that the interest of the authority should be disregarded altogether, so that he only gets existing use value, particularly where the acquisition is for purposes which are partly commercial. Some modern statutes (for example, relating to compulsory wayleaves for telecommunications) acknowledge that, although the landowner cannot be allowed to frustrate the public purpose, he should get a fair value, based on what would be arrived at in negotiations between a willing purchaser and a willing vendor.
The second reason arises typically where an authority is acquiring land as part of a wider redevelopment scheme, in which it is investing public funds by way of improvements to infrastructure (such as roads and sewers). The no-scheme rule ensures that the wider scheme is disregarded, so that the authority is able to acquire the land for the scheme at values which are not inflated by its own investments.
There are two main problems. First, it becomes necessary to construct a hypothetical "no-scheme world", which may involve a speculative exercise of "rewriting history". Second, the wider the "scheme" is drawn, the more the potential for unfairness between those whose land is acquired and those in the same area who retain their land. Under the modern system of planning control, those whose land is not acquired will see the benefits of any local improvements to infrastructure reflected in the enhanced value of their land, without having to pay any special tax or development charge for that enhancement. Should the person whose land is compulsorily acquired be worse off in that respect?
When one turns to decreases in value, the object is protection of the landowner, and the policy issues are quite different. It is common that, in the period before the compulsory acquisition, land values in the area will have been "blighted" by the authority's plans. Most people would accept that when the land is acquired it should be at the unblighted value. In this case, the policy reasons would suggest a wide application of the rule, looking beyond the immediate acquisition. Thus, a small corner shop in an area, affected by plans for redevelopment over some years, may have seen its turnover drastically reduced as people have been relocated from the area under the wider scheme. When the corner shop itself comes to be compulsorily acquired, fairness would seem to require that compensation be assessed disregarding the effects of the whole scheme, not just the effects of the threat to the shop itself.
There is another quite distinct problem in relation to the protection of the landowner. This concerns the question of planning permission. Where land has been allocated in the local plan for acquisition for a public scheme, for example a highway, it is likely that permission would be refused for any other form of valuable development on that land. To this extent the owner of the land is disadvantaged as compared to his neighbours, who may have received planning permission for residential or commercial development. The present law acknowledges that disadvantage by allowing the dispossessed owner to claim the value of any permission which would reasonably have been expected to be granted in the absence of the compulsory purchase.
7.8 The responses to consultation have not led us to change that view of the policy issues which need to be taken into account in the new Code.Here the issues are rather different. In the first place, there is a question as to whether he should have the benefit of such assumption. If his land had been allocated as Green Belt, there would have been no question of compensating him for being worse-off than neighbours whose land was allocated for housing. Under modern planning law, such windfall benefits are accepted as part of the system. Arguably, therefore, the planning position should be taken as it is in the real world. Secondly, if one accepts that some such assumptions should be made, what should be their limits? By the time the land is acquired for the road, the adjoining land may have been developed in a way which makes it impossible to develop the reserved strip for any valuable use. In such a case should the valuer be required to imagine what would have happened if there had never been any proposal for a road, which in some cases may force him to re-write history over many years?
The new Code – Principles
7.9 Our general approach has been to identify the essential features of the existing law, to get rid of unnecessary complication and confusion, and to put what remains in modern and codified form. In doing so we have had in mind the three objectives identified in the Consultation Paper:General approach
(1) Protection of the acquiring authority from having to pay a price inflated by its own regeneration activities or its own special location requirements;
(2) Protection of the landowner from "blight" connected with the project;
7.10 In the Consultation Paper proposal,[17] these objectives were separately addressed:(3) Clarifying the planning status of the relevant land for valuation purposes.[16]
(1) The authority would be protected by a provision requiring a disregard of any increase in value caused by the relevant project, assessed on the "cancellation assumption".[18]
(2) The landowner would be protected by a wider rule requiring disregard of any decreases in value or reduced profits caused by the relevant project, or by any advance "indication" of the project,[19] or by "blight" as defined in the Town and Country Planning Act 1990.[20]
7.11 This general approach is reflected in our final recommendations. However, we have revised the formulation of the rule, to take account of our emphasis on the valuation date as the primary focus of the new Code.[22] We think it will be clearer and more logical if the first rule, rather than referring to comparisons of value, is expressed in terms of matters to be left out of account at that date. This is explained further below.(3) The "planning status" of the land (that is, the planning permissions to be assumed for compensation purposes) would be governed by separate rules.[21]
Principal features of the new Code
7.12 We propose to retain and build on three key elements derived or adapted from the existing law:Key elements retained
(1) The basic case-law principle that in valuing the subject land there is to be disregarded any effect of the project for which the property is compulsorily acquired;
(2) The wider statutory rule which excludes any decrease in value due to a prior "indication" of the prospect of compulsory acquisition;[23]
(3) Separate rules governing the planning assumptions to be made in valuing the land.[24]
7.13 The main difficulties identified by our reports can be summarised under the following heads:Main problems of the existing law
(1) Piecemeal development of statute and case-law over 150 years, resulting in a bewildering variety of conflicting and confusing sources of the law;[25]
(2) Differing formulations of the basic concepts, leading to uncertainty as to the scope of the "scheme" or "project" to be disregarded;[26]
(3) A complex and almost incomprehensible[27] statutory "two-stage" version of the rule, applied to special planning designations, such as new towns and urban development areas;[28]
(4) The "virtually impossible task"[29] (required by the no-scheme rule, but not by the rules for planning assumptions) of having to "rewrite history", sometimes over a period of decades, in order to construct a fictional "no-scheme world" for valuation purposes;[30]
(5) Different and conflicting disregard rules applying to the determination of planning assumptions, depending on the procedure used;[31]
(6) An appeal procedure, for determining alternative development potential,[32] which may result in the compensating authority (the Secretary of State or the National Assembly for Wales) being judge in its own cause;[33]
(7) Uncertainty over the application of the rule to other heads of compensation, such as injury to retained land.[34]
7.14 The main changes we propose to address these problems are:Main changes
(1) All existing rules, case-law and statutory, relating to the disregard of the "scheme", will be repealed and replaced by a new set of rules relating to disregard of the "statutory project" ("statutory project rules"), and planning assumptions ("planning status rules").
(2) There will be a new single definition of the "statutory project", based on the "middle version" of the existing formulations.
(3) The two-stage rule for special planning designations will not be reproduced.
(4) The valuation date (as defined in our proposed Rule 10)[35] will be the base date for application of the new rules. It will be assumed that the statutory project was cancelled on that date (with no prospect of a similar statutory project in the future), and that no steps had been taken prior to that date to implement it;[36] but that in all other respects the circumstances are those prevailing at the valuation date.
(5) The rules for determining planning status will be separate from the statutory project rules, but subject to consistent criteria.
(6) A new "alternative development certificate" procedure will replace the existing section 17 procedure, with a right of appeal to the Lands Tribunal; the Tribunal will thus become the final arbiter for all purposes of the planning assumptions to be used for compensation purposes (whether under the certificate procedure or on a reference to determine compensation).
(7) There will be express provision governing the account to be taken of the "statutory project" under other heads of compensation.
7.15 We have had many useful comments on this part of our proposals. While there was unanimity as to the need to reform, views differed widely on the details of the replacement. This is not surprising, in view of the complexity of the subject-matter. We have taken account of all these comments in preparing our recommendations. However, in the interests of clarity, we highlight below only the main issues, in relation to the proposed rules, first, for disregarding the statutory project; secondly, for planning status; and, thirdly, for other heads of compensation.Consultation
The Statutory Project rule
7.16 In the Consultation Paper, we noted the variety of formulations of the rule in cases over the last 100 years, and the different terms used (including "scheme", "project", "undertaking", "purpose").[37] Although generally presented as different formulations of the same rule, they seemed to us to embody at least three conflicting views of its scope:Preferred version of the rule
(1) The narrow version:[38] the purpose of the acquisition is not ignored; the valuer simply disregards the fact that the acquisition is compulsory, but he takes account of what the authority would have paid in "friendly negotiations" to acquire the land for the same purpose.
(2) The wide version:[39] the valuer disregards, not only the purpose of the particular acquisition, but also the "underlying scheme", which may extend to the planning history over a much wider area, and dating back many years.
7.17 We preferred the last. We summarised our thinking in the Overview:(3) The middle version:[40] the valuer disregards altogether the immediate project for which the acquisition is made (not merely the element of compulsion), but not the underlying planning history.
7.18 There was general agreement with this approach, which we have accordingly taken as the starting-point for our recommendations.We propose to discard the word "scheme", as it is too imprecise and it carries too much historical baggage. We take as our starting-point a more precise definition of the "relevant project", which is supported by existing authority. The definition is intended to provide an analogy with the kind of project, which might in the past have been the subject of a special Act. It is intended to direct attention to the particular project, for which the acquisition of the subject land is authorised, and of which the works or uses on the subject land will be an integral part. Such a definition would be a marked improvement over the present mixture of statutory and judicial versions.[41]
7.19 As we explained in the Consultation Paper, section 9 of the 1961 Act, which excludes decreases in value caused by the prospect of compulsory purchase, has a different derivation[42] from, and is wider in scope than the Pointe Gourde rule.[43] We proposed to retain this distinction:Depreciation due to planning blight
7.20 We noted that the Government's Policy Statement expressed an intention to prepare a new regime for statutory blight, to be introduced by statutory instrument.[45] We observed that such a step would provide an opportunity to link the compensation provisions with the statutory blight regime, as part of a coherent set of provisions for protection against loss due to blight.[46] That intention has not yet been put into effect. 7.21 Accordingly, our recommendation (Rule 13(6)) is based on the current law, and excludes any depreciation due to statutory blight, or to any indication of the prospect of compulsory acquisition.We propose…. that the landowner will be protected by a wide rule requiring disregard of any diminution in value or reduced profits caused by the project itself or any advance "indication" of the project. Furthermore, it seems logical to link this rule, which is in substance concerned with protection against "blight" caused by the authority's plans, to the provisions for "statutory blight" under the Town and Country Planning Act 1990 (or any replacement of those provisions).[44]
7.22 We noted that compulsory acquisitions differ widely in the extent to which they are driven by purely public, or mixed public and commercial motives.[47] For example:Commercial interests
(1) Purely public motives: land acquired by a local authority for public open space;
(2) Mixed public and commercial motives: land compulsorily acquired by a local authority under the Planning Acts, with a view to assembling a site to hand over to a commercial developer, who may be funding the costs and taking the bulk of the profit;
7.23 We commented that the issue had been given added significance by the changing balance between public and private interests in the use of compulsory purchase of privatised utilities, and by the increased emphasis on the use of commercial development to support public projects.[48] The issue is not whether compulsory powers should be available for such purposes, which is not in dispute; but whether the added value resulting from the project should be wholly excluded where the effect of compulsory purchase is to transfer the development potential of land from one private interest to another. We invited views on whether the rule should be qualified in this respect. We also noted a suggestion, made in a recent review for the Scottish Executive,[49] that privatised utilities should be required to obtain a "public interest certificate", if they wish to benefit from the special suitability rule.[50] 7.24 There was some support for the view that, where the purpose of the acquisition was substantially "commercial", that aspect of the project should be taken into account as part of a "friendly negotiations" approach to valuation. However, there was little agreement as to how such a distinction could be drawn in practice,[51] and concern that it would introduce uncertainty. Most were opposed to any attempt to draw such a distinction, both because of the difficulty of finding any firm principle on which to do so, and because of the complexity it would add to the Code. 7.25 On balance, we agree with the view that it is impracticable to distinguish in the basic compensation Code between different categories of compulsory purchase.[52] However, our proposed Rules, including the definition of the "statutory project", are intended to make clear that all that is excluded is added value arising from the carrying out of a statutory function. Added value created by the potential for a similar private project is not excluded.(4) Mainly commercial motives: a private industrial undertaking obtaining compulsory powers under the Transport and Works Act, for a link from its factory to a railway. In such a case, there may be a public interest sufficient to justify compulsory powers (removing heavy traffic from the roads); but the project is motivated by private commercial concerns.
7.26 In the Consultation Paper, we considered a mechanism whereby the scope of the project could be determined at the time of the confirmation of the compulsory purchase order.[53] There would be presumption that the "project" is confined to the area of the particular order;[54] and the onus would be put on the authority, if it wished to argue for a wider project, to define it in the order documents. The project so defined might be the subject of objections at the same time as objections to the principle of the order, so that it could be determined by the confirming authority at the same time as the order. We saw advantage in narrowing the issues at an early stage. 7.27 There was considerable support for this suggestion from respondents, provided that it did not disrupt or delay the confirmation procedure, and that any such definition were open to review by the Tribunal at the compensation stage. There was concern, however, that it might have the unwanted effect of increasing the number of objections and slowing rather than speeding up the compulsory purchase process. 7.28 We agree that it would be wrong to allow the definition of the project to become an issue at the confirmation stage. It should be made clear that the definition of the project, in cases of dispute, is a matter of fact to be determined by the Tribunal. However, we think it would provide more certainty if there were a rebuttable presumption that the project is limited to the area of the compulsory purchase order. Further, we see no reason why an acquiring authority, if contending for a wider project, should not be required to state its position at the outset. This would not be binding on the Tribunal. It could be challenged by the claimant; or by the authority, but only with permission of the Tribunal in special circumstances. Our recommendation below gives effect to this balance.Defining the project
The cancellation assumption
7.29 "Cancellation assumption" is the shorthand we have used for the approach described by Lord Hope in Fletcher Estates v Secretary of State.[55] In considering what alternative development might have been granted in the absence of the compulsory acquisition,[56] the position had to be considered as at the relevant date[57] on the basis that:Limiting guesswork
7.30 One of the reasons for adopting this approach was, as Lord Hope explained, the difficulty of:The scheme for which the land is proposed to be acquired together with the underlying proposal which may appear in any of the planning documents, must be assumed on that date to have been cancelled. No assumption has to be made as to [what] may or may not have happened in the past.[58]
7.31 As we said in the Consultation Paper, this comment might have been equally valid as a criticism of the no-scheme rule generally.[60] Accordingly, in the interests of clarity and consistency, we proposed to apply the cancellation assumption to all aspects of the new statutory project and planning status rules.[61] This proposal was supported by a large majority of respondents.…try[ing] to reconstruct the planning history of the area on the assumption that the proposal had never come into existence at all. The further back in time one goes, the more likely it is that one assumption as to what would have happened must follow on another and the more difficult it is likely to be to reach a conclusion in which anybody can have confidence.[59]
7.32 Although we stand by the principle of this proposal, our attention has been drawn to a particular problem which could arise, where the compulsory acquisition takes place for the purpose of a project which has already begun. The following imaginary example illustrates the point:Compulsory purchase for a project already begun
A local authority owns a substantial part of a brownfield site, for which there are development policy statements in the development plan. On day 1, planning permission in accordance with the development plan is granted for the whole site. The authority takes steps to acquire the remaining land by agreement. Work, including provision of roads and infrastructure, and some built development on parts already owned by the authority, begins on day 100. On day 200, the authority makes and publishes a compulsory purchase order for those parts which it has been unable to acquire by agreement; and, following confirmation of the order, it enters those parts on day 300.[62]
7.33 The problem can be overcome by modifying the definition of the cancellation assumption. The assumption would be, not simply that project was cancelled on the valuation date, but that no action had been taken before that date (whether by physical works or otherwise) in pursuance of the project. This would not reintroduce the very uncertainties which we are seeking to avoid. The valuer would not be required to imagine a hypothetical world in which there never has been a "scheme"; but simply to disregard the implementation of a particular project. Accordingly, our recommended Rule is based on such a "modified cancellation assumption".Applying the cancellation assumption, as originally proposed, the result would be as follows. The "first notice date" would be day 200, when the order is published; the valuation date would be day 300. The valuer would accordingly value the land as at day 300, but would assume that the whole project had been cancelled on day 200. This would have the arbitrary and anomalous consequence that any development which had taken place by day 200 would have to be taken into account; but not any development thereafter. Thus, for example, if roads and sewers had been completed by day 200, the added value would have to be taken into account, even though entirely due to the authority's project. One consequence might be that the owner who held out for longest would obtain the most favourable compensation. This could both create unfairness, and increase delay, by discouraging earlier negotiations. It might also raise awkward and artificial problems of valuation, where work on particular elements had been started but not completed by day 200.
7.34 We sought views on problems caused by so-called "ransom-strips":Ransom strips
7.35 We noted that the law appears to be settled, following Batchelor v Kent County Council ,[65] where Mann LJ made it clear that the "ransom" element of value was not to be excluded under the no-scheme rule, unless it was solely attributable to the authority's own proposals for development:Typically, a builder may own a substantial area of potential development land, but need a small strip of land to secure the necessary access to the public highway. The owner of the strip will expect a substantial premium (or "ransom value") above its existing use value, to unlock the potential of the development area. The Lands Tribunal decision in Stokes v Cambridge Corporation[63] has given its name to the valuation practice of treating the premium as equivalent to a proportion (typically one third to one half) of the increased development value so released.[64]
If a premium value is "entirely due to the scheme underlying the acquisition" then it must be disregarded. If it was pre-existent to the acquisition it must in my judgment be regarded. To ignore the pre-existent value would be to expropriate it without compensation and would contravene the fundamental principle of equivalence.[66]
However, we thought that this rule could sometimes lead to uncertainty and difficulties of valuation:
7.36 We invited views on whether the law should be altered, for example, by providing that in defined circumstances, where land is required solely for access or for provision of services, to serve other new development, the compensation should exclude any element based on the value of the new development. We thought it might be appropriate to "sweeten the pill" for the dispossessed owner, by providing some uplift to compensation based purely on existing use value.[68] 7.37 Responses to this proposal were evenly divided, with most authorities (not surprisingly) favouring some mitigation of the "ransom" element. The opponents pointed to the fact that our proposal would involve a departure from the "equivalence approach". The ransom element is only included where it represents value which is "pre-existent" to the scheme, rather than created by the authority's proposal. We agree that the proposal would involve a departure from the ordinary principle of "fair compensation".[69] It would therefore need to be justified by clear policy considerations, and carefully defined. On the basis of the responses we have received, we do not make a recommendation for any such change in the law as part of this review.The choice of the appropriate access for a major development will usually be based on both physical and planning factors, and may be the subject of special financing agreements between the developer and the relevant authorities, including provision for compulsory purchase of the necessary land. It may be impossible for the parties to judge in advance the likely cost of the access arrangements.[67]
7.38 Particular problems arise in seeking to apply the no-scheme rule where extensive areas are designated, by or under statute, for comprehensive development or treatment by public authorities. If the whole of such an area as treated as within a single scheme or project for valuation purposes, the problems of rewriting history under the no-scheme rule are magnified, as is the potential for unfairness between those whose land is taken and those who retain it. 7.39 Such major initiatives became a central feature of the planning system, as part of the radical changes introduced following the Second World War.[70] However, so long as acquisitions took place at existing use value,[71] this created no special problems for compensation law. On the restoration of market value in 1959, an attempt was made to provide specifically for different types of development scheme.[72] This was the genesis of what is now section 6 and Schedule 1 to the 1961 Act. The original Schedule recognised three categories of special designation (apart from a simple compulsory purchase order): comprehensive development areas, new towns, and town development areas. To them were added urban development areas (1980); and housing action trust areas (1988).[73] Unfortunately, as we explained in the Consultation Paper, the statutory "two-stage" version of the no-scheme rule, which was applied to such areas, was quickly found to be seriously defective in its drafting, and virtually impossible to apply in accordance with its apparent intentions.[74] 7.40 While we were in no doubt that section 6 in its current form should be repealed, we invited views whether it should be replaced in any form in the new Code.[75] This question was complicated by the fact that, at the time of our Consultation Paper, the planning system was undergoing a major review by the Government. It was uncertain to what extent, if at all, any of the statutory designations listed in the 1961 Act were likely to be of any practical relevance in the future.[76] Our understanding of the Planning Green Paper was that the intention was to encourage regeneration by enactment of a new widely defined power of compulsory purchase for planning purposes, rather than through major designations.[77] As we have indicated above, a Planning and Compensation Bill is currently before Parliament, which includes major changes to the planning framework and also contains a general power of compulsory purchase for regeneration purposes. 7.41 Not surprisingly, in view of this uncertainty, the responses to our consultation on this issue were relatively few. In any event, the subject raises intractable questions, going well beyond our terms of reference. They concern the balance between public and private interests in major development proposals, and the ways in which the extra value generated by public promotion and investment is to be shared between the two. This debate has a long history.[78] The compensation rules cannot be isolated from the wider issues, such as taxation and other means of securing shares of "planning gain".[79] So long as development in such areas is not confined to land owned or controlled by the public sector, the compensation code can only make a limited contribution to the resolution of this problem. Furthermore, it is necessary to take account of the need for fairness between those who retain their land and those whose land is compulsorily acquired. As we have said, the more extensive the "project" or "scheme" to be disregarded in assessing compensation, the greater is the impact of such discrimination, and the more difficult to justify.[80] 7.42 For these reasons, we have not attempted to consider how, if at all, the Compensation Code should be adapted for any such special designations as may play a major part in the new planning system. This could, however, become an important issue if the Government intends the new compulsory purchase powers to be used as a major instrument of comprehensive regeneration, and decides for that purpose to use urban development powers (or any other similar comprehensive designations). If there are to be any special compensation rules for such designations, it will be important that the problems in the application of section 6 of the 1961 Act[81] are addressed. In particular, it is important that there should be a time-limit for disregard of the effects of the designation (say, five years from its commencement), so that the task of "rewriting history" does not become insuperable.[82] 7.43 Accordingly, we do not make any recommendation in this respect. We do not see the resolution of these issues as essential to the preparation of the basic Compensation Code. However, we acknowledge that by proposing the repeal of section 6 of the 1961 Act, we are opening the way to the possibility of higher compensation payments for land in such special designations. We recommend strongly that consideration is given to this issue as part of the Government's current review of its policy for the planning and compensation systems.Special statutory designations
7.44 The basic rule needs to be adapted for cases where the acquisition is forced on the authority by a blight notice[83] or purchase notice,[84] served under the Town and Country Planning Act 1990 (sometimes referred to as "reverse" or "deemed" compulsory purchase). In such cases, there is no "project" of acquisition, in the defined sense. In the Consultation Paper, we distinguished between the two types of notice: [85]Blight and purchase notices
(1) Blight notices The forced acquisition is directly linked to the blighting effect of an allocation or other proposal of the authority. It seemed reasonable therefore for any reduction in value caused by that allocation or proposal to be disregarded.
7.45 Responses to consultation have led us to a simpler solution. It has been drawn to our attention that in practice purchase notices often arise out of the same circumstances as blight notices; it is suggested that it would be anomalous to apply different rules.[88] This concern can best be met, by excluding depreciation in value due to statutory blight, under our proposed replacement of 1961 Act, section 9, and making clear that the same principle applies to blight and purchase notices. Our recommended sub-rules 13(6) and (7) apply this approach.[89](2) Purchase notices As we observed in the Consultation Paper, the application of the no-scheme rule in such cases poses a conceptual difficulty, since the rule assumes a scheme or project by the authority to acquire the land, rather than a sale which is forced upon it. We referred to apparently conflicting approaches in the cases.[86] We thought, however, that, since the object of such notices is to relieve the owner of a burden, rather than to give effect to a project of the authority, there was no reason why it should be attributed more value for compensation purposes than it has in reality.[87]
Other heads of compensation
7.46 The Consultation Paper drew attention to doubts as to the application of the no-scheme rule to the valuation of retained land, for the purposes of a claim under 1965 Act section 7 (severance and injurious affection),[90] although the issue was not in terms covered by our proposals. After further consideration, we have concluded that the rule has no direct application in this context. Injury to retained land (head B) does not require any hypothetical assumptions; it is a question of causation.Injury to retained land
| Example (1) A vacant site adjoined a street which the highway authority proposed to widen. In 1975, agreement was reached with the planning and highway authorities on a development proposal for the bulk of site, excluding a strip of land fronting the street ("the strip") to allow future acquisition for road-widening. The development of the site was completed by 1979. In 1990 the strip was compulsorily acquired for the road. It was argued by the claimant that in the "no-scheme world", assuming it had never been reserved for the road, it would have been available in 1975 for development along with the rest of the site, and that the increased "marriage value" of the two parts of should be apportioned between the claims for acquisition of the strip and for severance of the retained land.2 The Court of Appeal accepted this argument in relation to the strip, but not the retained land.3 1 English Property Corp Ltd v Kingston LBC (1998) 77 P&CR 1, CA 2 The additional "marriage value" was calculated at £170,000, which the claimants sought to apportion equally between the two parts of the site. The result of the Court of Appeal's decision was that they received £85,000 for the subject land, but nothing for the retained land. 3 It was held by the Court of Appeal that the Pointe Gourde rule had no application to the retained land, because there was no "scheme" of the authority to acquire it. The Tribunal had observed that the loss of development value on the retained land was due, not to severance, but to the threat in 1975 of refusal of planning permission for a larger development (see CA judgment para 25). |
| Example (2)1 The claimants owned a site of 37 acres, suitable for development as a shopping centre. The site was divided by the line of a proposed road, leaving a site of 25 acres to the north of the road, for which planning permission for shopping development was granted. The issue was the compensation to be awarded for the strip of land taken for the road, and the severed land to the south (in total 12 acres). It was assumed that, in the absence of the road scheme, permission would have been given for shopping development on the whole site. It was held2 that compensation was to be assessed by comparing the value of the whole site following severance, with the value it would have had in the no scheme world. (No distinction was drawn for this purpose between the claims for acquisition of the road strip and for severance of the retained land.) 1 Melwood Units v Commissioner for Main Roads [1979] AC 426 PC (Queensland) 2 Although the decision was made under a specific Queensland statute, the Privy Council treated the no-scheme rule as an application of the common law, not dependent on the terms of the particular statute: ibid p 435. Comment As respects compensation for severance, the difference between the two cases is explicable without reference to the no-scheme rule.3 In the former case, the severance caused no loss, because by the date of severance physical development of the whole site was no longer possible. In the latter case, it remained a possibility. Our proposals would preserve this distinction, and achieve the same result in each case.4 3 We should also mention Clark v Wareham RDC (1972) 25 P&CR 423, in which the Tribunal apparently applied the no-scheme rule in determining a claim for injurious affection. It rejected a claim for loss of development potential on the retained land, attributable to the proximity of an extended sewage disposal works on the subject land; holding that, in the "no scheme world" there would have remained a smaller works on the authority's own land. In so far as the reasoning depended on the Pointe Gourde rule, it cannot stand with the Court of Appeal's decision in the English Property case. The case may, however, be defensible on its own (somewhat complicated) facts. 4 The extent of any injury would be judged by references to the circumstances at the valuation date: see Part VII rule 10(2) above. It is to be noted, however, that in relation to the value of the subject land (head A), our proposals would produce a different result on the facts of the English Property case. Compensation would be assessed by reference to the "cancellation assumption" (rather than the "no-scheme world"). This would lead to the conclusion that no development value was payable for the strip, because by the valuation date it could no longer be developed with the rest of the site. |
7.47 Accordingly, it is not necessary to apply the statutory project rules, as such, to the assessment of compensation for injury to the retained land. However, our recommendation follows the existing law in making clear that the claimant is entitled to compensation for injury attributable to the whole of the works included in the project.[91]
7.48 We proposed a simple statement that for the purposes of the rule "the value of land" should include "a reference to the profitability of a business on that land".[92] The background was explained in the Consultation Paper:[93]Consequential loss
In Director of Buildings and Land v Shun Fung Ironworks,[94] it was held that the disturbance claim could include losses incurred from the time of the announcement of the proposed acquisition (of the site of a steelworks), even though preceding the formal statutory process of resumption. The Privy Council upheld the Tribunal's award for loss of profits from that date, assessed by comparing the profits (or losses) in the real world with those in the no-scheme world. The "scheme" in that case- was held to be confined to the threat of resumption of the steel works itself, rather than any wider proposal.
7.49 There was no quarrel with the principle. However, we think it would be clearer and more logical to deal with it by specific reference to the rule defining consequential loss (see Rule 5 above).The application of the principle may pose more difficulties where the inception of the scheme is less clear-cut, and where its effects are less specific. For example, the declining profits of a corner shop in an area blighted by redevelopment proposals may be attributable to the "scheme", but not necessarily to the acquisition, or threat of acquisition, of the shop itself.[95]
Planning status
7.50 In the Consultation Paper, we explained the elaborate provisions in the 1961 Act, intended to define the permissions, actual or assumed, to be taken into account in the valuation.[96] We noted three main categories:Consultation Paper
(1) regard is to be had to any actual permissions for development of any site which includes the subject land;
(2) permission on the subject land is to be assumed for the authority's own development;
7.51 We noted a possible inconsistency in the fact that the benefit of (1) and (2) (but not of (3)) is allowed, regardless of whether a similar permission would have been granted in the no-scheme world. However, we thought that this approach could be defended:(3) permission on the subject land is to be assumed for developments which would have been permitted in the absence of the proposal for compulsory purchase.
7.52 We also thought that this approach restricts the possible area of speculation. We mentioned the Wilson case,[98] in which permission was assumed for residential development on the subject land in accordance with the authority's proposal:It seems right in principle to treat the actual planning status of the land as a fixed factor, not subject to the "no-scheme" test. This is consistent with the modern planning system, under which planning permission runs with the land, and, in general, there is no provision for recoupment of planning gains or compensation for planning losses….[97]
Without that assumption, the Tribunal would have had to embark on a wholly speculative inquiry, to find out what would have happened to the planning of the area, if the authority had not selected it for its own residential scheme.[99] However, the fact that permission was assumed for residential development, did not prevent the disregard (under the Pointe Gourde rule) of the added value given to the subject land by the prospect of implementation of the permission by the authority (including infrastructure improvements etc)…
On the other hand, at the more detailed level, the section 17 certificate procedure recognises the perceived unfairness of depriving an owner of the value of a potential development site, because it has been selected to meet a public need, such as for a school, as compared to his immediate neighbours who have the advantage of permission for private development.[100]
7.53 There was general support from respondents for this reasoning, and for our proposal to follow the existing law in relation to planning assumptions, but to do so by means of a separate set of rules for defining planning status.[101] 7.54 We mention three points on which our recommendations differ significantly from the consultation paper:Responses
(1) Area of planning assumptions;
(2) Assumed permission for the authority's development;
(3) Appeal from alternative development certificate.
7.55 There was some concern at our proposal to extend the planning assumptions more widely than under the present law, which limits them to the "relevant land" (that is, the land subject to acquisition).[102] Most respondents agreed that, for the purpose of assessing appropriate alternative development of the subject land, it might be unrealistic to confine consideration to the site selected for acquisition by the authority.[103] However, the inquiry should be kept within bounds. We agree with these comments. Our recommendation confines the assumptions to "the subject land, by itself or together with other land".[104]Area of planning assumptions
7.56 More controversially, perhaps, a question has been raised whether we should retain the assumption of permission for the authority's own scheme. Although this assumption is well-established and was not criticised by respondents, we have considered whether it is supported by the reasoning set out above. 7.57 Treating planning as "a fixed factor" is a valid approach where one is concerned with a permission which is genuinely available to all. However, this analysis fails to give adequate weight to the fact that, in relation to some forms of public development, the permission under which the authority is enabled to develop the land may not be automatically available to other owners of the land.[105] If it is, then it is reasonable for it to be taken into account. Furthermore, even if the permission does not run with the land, it may be provide a strong indication that a planning permission would have been granted to a private developer for the same or a similar development. However, if there is no prospect of a private developer being granted permission for the same development, it is difficult to see any principled basis for assuming such a planning permission for compensation purposes. An additional assumption to that effect seems therefore to be a needless and unwarranted complication. 7.58 Accordingly, we have omitted the automatic assumption that permission would be available for the authority's development.Assumed permission for the authority's development
7.59 In the Consultation Paper we had suggested that it would be more logical for an appeal in respect of a planning status certificate to be dealt with by the Tribunal rather than (as now) the Secretary of State. We saw this as likely to result in greater efficiency:Appeal against certificate of alternative development
At present there is a right of appeal to the Secretary of State, which takes a form similar to a planning appeal. This may result in a duplication of work, since even if the Secretary of State confirms the planning authority's decision to issue a negative certificate, it is not binding on the Tribunal.
7.60 We also drew attention to possible problems under the Human Rights Act 1998, arising from the Secretary of State's lack of independence:There seems to be no real need for the Secretary of State to be involved. It may be useful to retain the role of the Inspectorate, in cases where complex planning issues may arise, together with the possibility of a local inquiry. Regulations could provide (with the agreement of the Chief Planning Inspector) for the actual decision to be made by an inspector under procedure analogous to the present local inquiry (with delegated authority from the Tribunal, instead of the Secretary of State). Alternatively, arrangements could be made (under existing procedures) for the Tribunal to sit with a planning inspector as assessor.[106]
7.61 However, we mentioned that, in a recent case,[109] the Court of Appeal had advocated a flexible approach in applying Article 6 to different factual circumstances; and thatArticle 6(1) of the Convention [on Human Rights] guarantees a right to a fair hearing by an independent tribunal in the determination of civil rights. The Secretary of State is not an independent tribunal in that sense. His apparent lack of independence is particularly noticeable in cases where the acquiring authority is a Government Department. For example, in Fletcher Estates[107] where the land had been acquired by the Secretary of State for Transport, the local authority had granted to the owner a certificate for residential development, but this was overruled on appeal by the Secretary of State for the Environment. Thus, the Secretary of State appeared to be judge in his own cause.[108]
arguably, the procedure for appeal to the Secretary of State can be justified by the objective of replicating "real-life" planning procedures, and the control provided by the High Court on points of law is sufficient protection to satisfy the Convention.[110]
7.62 In the responses to consultation, there was an almost equal division of view on this issue. Our considered view, reinforced by the Pentrehobyn case, is that the appeal should be to the Tribunal. We think it important that the ultimate responsibility for all matters relevant to the determination of compensation, including definition of the statutory project and any related planning assumptions, should lie with the Tribunal. We recommend accordingly. 7.63 At the same time, we think it desirable that the procedural advantages of a local inquiry held before an inspector are retained, albeit reporting to the Tribunal rather than the Secretary of State. Our proposal provided for the machinery to be established by regulations.[113] It has not been suggested that there would be any insuperable practical difficulty in achieving a workable scheme.That position has now been confirmed by the House of Lords.[111] Accordingly, we do not think that appeal to the Secretary of State is likely to be held in breach of the Convention. However, the perceived lack of independence, in cases where the authority determining the certificate is also the acquiring authority, is a matter of concern.[112]
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Note 1 CP 165, paras 6.2 – 6.3. [Back] Note 2 Pointe Gourde Quarrying and Transport Co v Sub-Intendent of Crown Lands [1947] AC 565 PC, 572, per Lord MacDermott. [Back] Note 3 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426, where the rule was described by the Privy Council as “part of the common law”. Cf Rugby Joint Water Board v Shaw Fox [1973] AC 202, 214–5, where the rule was said to be, not a common law rule, but one of interpretation of the word “value” in the relevant statutes. [Back] Note 4 Fletcher Estates v Secretary of State [2000] 2 AC 307, 315 per Lord Hope. This hypothetical state of affairs is usually referred to as “the no-scheme world”. [Back] Note 5 This was derived from the 1919 Act, giving effect to recommendations of the Scott Committee: see Appx D, para D.30ff. [Back] Note 6 This is one of a complex group of provisions (ss 6–8) dealing with the disregard of different categories of development on adjoining land. Sections 7–8 deal with increases in value of adjacent land. The background and general effect of s 6 (formerly, s 9(2) of the 1959 Act) is described in Appx D, para D.58ff. [Back] Note 7 This also comes from the 1959 Act, although based on a provision in the 1947 Act. [Back] Note 8 Formerly CP 165, Appx 5 “The no-scheme rule – history”. [Back] Note 9 [2003] 4 All ER 384. The leading judgment was given by Carnwath LJ (then still Chairman of the Law Commission), and was agreed by Schiemann and Laws LJJ. Permission was given to appeal to the House of Lords; the hearing is awaited. [Back] Note 10 For the Court of Appeal hearing, in May 2002, the court and the parties were supplied with final drafts of Part VI and Appx 5 (history of the no-scheme rule) of CP 165 (Appx D of this report). [Back] Note 11 [2003] 4 All ER 384 para 116. [Back] Note 12 [2003] RVR 140. The case is discussed in more detail in a Postscript to Appx D. [Back] Note 13 Appx D, para D.136ff. [Back] Note 14 CP 165, paras 6.4 – 6.12. [Back] Note 15 See Stebbing v Metropolitan Board of Works (1870) LR 6 QB 37 (where some graveyards were acquired by the authority, for use, with statutory authority, to construct a new street and buildings). [Back] Note 16 See CP 165, para 7.7. [Back] Note 17 CP 165, para 7.7ff. [Back] Note 18 The “cancellation assumption” was based on Fletcher Estates v Secretary of State [2000] 2 AC 307 (see Appx D, para D.104). It requires the Tribunal to imagine circumstances, as if the project had been cancelled at the time of the acquisition (not as if there had never been a project). [Back] Note 19 The word “indication” is taken from the 1961 Act, s 9; see para 7.12 below. [Back] Note 20 Town and Country Planning Act 1990, s 149, Sched 13. Owners of land “blighted” by inclusion within areas allocated for certain categories of public development are, subject to detailed rules, enabled to serve a “blight notice”, requiring the relevant authority to purchase their land; compensation is assessed as though the land had been compulsorily acquired: see CP 165, para 7.27. [Back] Note 21 In this respect, we were following the approach of the 1961 Act, as originally intended, and seeking to avoid the overlap resulting from subsequent case-law: CP 165, paras 7.31ff. [Back] Note 22 See Part VI above. [Back] Note 23 1961 Act, s 9. Although inJelson, Lord Denning treated this rule as the same as the Pointe Gourde rule (as did Lord Russell in Melwood Units v Commissioner of Main Roads [1979] AC 426, at p 435), that is not correct historically (Appx D para D.82). [Back] Note 24 1961 Act, s 14ff. [Back] Note 25 See the critical discussion of the history in Appx D, particularly the conclusions at paras D.128 – D.135. [Back] Note 26 At CP 165, para 6.19 we gave examples of eight different formulations, which we grouped into three categories (narrow, wide and middle): see para 7.16 below. [Back] Note 27 See Appx D, para D.68, where we quote the adverse reactions, in one of the early cases (Davy v Leeds Corporation [1964] 3 All ER 390), of three of the most astute legal minds of the day: Harman LJ (“a monstrous legislative morass” or “Slough of Despond”); Diplock LJ (a “labyrinth”); and Lord Denning MR (he had “rarely come across such a mass of obscurity, even in a statute.”). Other early critics included Russell LJ: “… calculated to postpone as long as possible comprehension of its purport” (Camrose v Basingstoke Corporation [1966] 1 WLR 1100, 1110–1); and Winn LJ: “lamentable language” (Devotwill v Margate Corp [1969] 2 All ER 97, 106). More recently, in Waters v WDA [2003] 4 All ER 384, the Court of Appeal said: “There can be few stronger candidates on the statute-book for urgent reform, or simple repeal, than section 6 and Schedule 1 of the 1961 Act.” [Back] Note 28 1961 Acts s 6 and Sched 1; discussed in Appx D para D.58ff. [Back] Note 29 The term used by the President in Pentrehobyn (see Appx D, para D.141 below). [Back] Note 30 See Appx D, paras D.78 – D.81; and the comments of Lord Hope in Fletcher Estates (para 7.29 below), D.105. [Back] Note 31 See Appx D, para D.103 describing the different results arrived at on the same facts in the two Jelson cases; see also the Pentrehobyn case (Appx D, para D.136ff below). [Back] Note 32 Under 1961 Act, ss 17–18. [Back] Note 33 CP 165, para 7.43; Pentrehobyn case (Appx D, para D.136ff below). [Back] Note 34 CP 165, para 5.14; see para 7.46ff below. [Back] Note 35 Paras 6.1 – 6.8 above. [Back] Note 36 Thus, adopting generally a modified version of the “cancellation assumption”, applied by the House of Lords in the context of certificates under 1961 Act s 17: see Appx D, para D.104. [Back] Note 37 CP 165, para 6.19. [Back] Note 38 Exemplified by Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302. (A commonly used shorthand is “the Indian case”.) In Waters at paras 90–96), the Indian case was analysed by the Court of Appeal, and explained as turning on its own facts, rather than involving a different formulation of the rule. [Back] Note 39 Taken from the Pointe Gourde case, as interpreted in later cases, starting with Wilson v Liverpool City Council [1971] 1 WLR 302. [Back] Note 40 Eg Birmingham City DC v Morris & Jacombs (1977) 33 P&CR 27, 33–34: “project on the part of the authority concerned to acquire the land… for some purpose for which it was authorised to be acquired”. [Back] Note 41 Overview, para 3.16. [Back] Note 42 See Appx D, paras D.48 – D.49, D.82. [Back] Note 43 It has been widely interpreted in practice: see eg Hackney LBC v MacFarlane (1970) 21 P&CR 342. [Back] Note 44 Town and Country Planning Act 1990, s 149, Sched 13. See n 20 above. [Back] Note 45 Policy Statement, para 5.1. [Back] Note 46 CP 165, para 7.27. [Back] Note 47 CP 165, para 6.47. [Back] Note 48 For example, during the passage of the Channel Tunnel Bill in 1987, there were objections to the application of the ordinary no-scheme rule, where land was acquired for commercial activities, desirable for the financial success of the tunnel but not strictly essential for its construction: Denyer-Green, p 19. [Back] Note 49 Review of Compulsory Purchase and Land Compensation: Scottish Executive Central Research Unit 2001. (The review does not address the problems in the application of the rule, which we have discussed in Appx D.) [Back] Note 50 CP 165, para 6.46. The special suitability rule (1961 Act, s 5(3)) is discussed in Appx D, para D.93ff. [Back] Note 51 There was little support for a “public interest certificate” procedure for privatised utilities. [Back] Note 52 Special compensation provision may be made under statutes dealing with particularly subject-matter: see eg the discussion of the different rules applying to Utility Wayleaves in CP 165, Appx 7. [Back] Note 53 CP 165, paras 7.13ff. [Back] Note 54 This was in effect a more flexible version of 1961 Act, Sched 1 Case 1 (as to which, see Waters at para 77, per Carnwath LJ). [Back] Note 55 [2000] 2 AC 307, HL. The case concerned land acquired in 1990 by the Department of Transport for a bypass, on a line which had been defined since 1970. It was held that the s 17 issue should be judged by reference to the time of the proposal to acquire (1986). [Back] Note 56 Under 1961 Act, s 17. [Back] Note 57 Under the current law, the relevant date for these purposes differs according to the procedure; it may be the date of the original notice of the order, of the deemed notice to treat, or of an offer in writing by the authority: 1961 Act, s 22(2). [Back] Note 58 Fletcher Estates v Secretary of State [2000] 2 AC 307, HL, at 322H–323A, per Lord Hope (emphasis added). (For the background, see Appx D paras D.104 – D.105.) The case concerned land acquired in 1990 by the Department of Transport for a bypass, on a line which had been defined since 1970. It was held that the s 17 issue should be judged on the assumption that the bypass proposal was cancelled at the time of the proposal to acquire (1986) (not by rewriting the planning history of the area since 1970, on the basis that there had never been a bypass scheme). [Back] Note 59 Ibid, p 323D. He quoted (p 324A) Phillimore LJ (in the first Jelson case, para D.103 below, at p 255) where he said that to look back further “would open up a considerable field for guesswork which would often make it impossible to give firm advice to any member of the public as to his rights.” See also the comments of the President in the Pentrehobyn case, Appx D, para D.141 . [Back] Note 60 That issue was left open by Lord Hope:ibid, p 325C. [Back] Note 61 CP 165, para 7.18. [Back] Note 62 We are grateful to Barry Denyer-Green, both for the idea for the example, and for suggestions to deal with the point. [Back] Note 63 (1961) 13 P&CR 77. The particular case concerned the valuation of land compulsorily acquired for industrial development, where the authority owned the land needed for access; the issue was the amount of the deduction to represent that interest. [Back] Note 64 Appx D, para D.106. [Back] Note 65 (1990) 59 P&CR 357. [Back] Note 66 Ibid, p 361. In a later case it was suggested that the words in italics should have read “pre-existent to the scheme”: Wards Construction v Barclay Bank (1994) 64 P&CR 391, 396 per Nourse LJ. [Back] Note 67 See now Appx D, para D.109. We illustrated this by reference to the facts of the Batchelor case itself. Planning permission had been granted for a substantial residential development, subject to a condition preventing occupation of houses in phase 2, until off-site road works (including a new roundabout) were completed. The County Council, under an agreement with the developer, made a compulsory purchase order for the necessary land (0.86 acres). The value for its existing agricultural use was £3,000. The first tribunal valued it at £500,000; following a successful appeal (on the grounds that the basis of the award had not been explained) a second Tribunal valued it at £2.15m. An appeal against this award was rejected: Wards Construction Ltd v Barclays Bank (1994) 68 P&CR 391. Nourse LJ expressed some “mystification” at the range of the figures, but concluded that there was no error of law (p 394). [Back] Note 68 For example, where the land is agricultural land, a lower limit of twice agricultural value would provide an incentive to sell, and provide certainty, without being likely to add unduly to the overall cost of the project. [Back] Note 69 See paras 2.11 and 2.15 above. [Back] Note 70 The history is summarised in Appx C, para C.7ff. [Back] Note 71 Under the 1947 Act, development value was in effect expropriated (see Appx C, para C.8); and therefore development potential was irrelevant to assessment of compensation for compulsory acquisition. [Back] Note 72 See Appx D, para D.53ff. [Back] Note 73 Appx D, para D.59. [Back] Note 74 See the detailed discussion in Appx D, paras D.58 – D.62, D.68 – D.72. We have already referred to some of the early criticisms: n 27 above. Most recently, the section was subject to critical analysis by the Court of Appeal inWaters, whose comment on the need for reform we have already quoted (ibid). [Back] Note 75 CP 165, para 6.67ff. [Back] Note 76 . We understand, however, that there is the possibility of use of Urban Development Act powers for promoting regeneration in the East London corridor. In July 2003, the ODPM published “A study to establish Urban Development Corporation Boundaries in Thurrock” (by Roger Tym and Partners). [Back] Note 77 CP 165, para 6.69, referring to the Green Paper “Planning: Delivering a fundamental change” (DTLR 2001). [Back] Note 78 See CP 165, paras 2.7 – 2.14 where we discuss the history of the three various attempts since the war to solve the related problems of compensation and betterment, starting with the Town and Country Planning Act 1947. [Back] Note 79 For example, planning obligations under Town and Country Planning Act 1990, s 106. See also the discussion in Tesco v Secretary of State [1995] 1 WLR 759, 777ff per Lord Hoffmann. The ODPM has recently announced proposals for a new “optional charge”, which developers could choose to pay in connection with planning proposals, instead of negotiating a conventional s106 agreement. The charge would be based on a standard tariff set by the local authority. The money would be available for the authority to spend on new community facilities, infrastructure improvements or affordable homes: see ODPM Press Release 6 Nov 2003. [Back] Note 80 Any such discrimination needs to be proportionate and justifiable under the Human Rights Act 1998: see CP 165, para 2.20. [Back] Note 81 Discussed in Waters at paras 74–80. [Back] Note 82 One possibility might be that the effects of the designation should be excluded altogether, by taking values as they were (say) one year before the designation, and indexing them forward to the valuation date. [Back] Note 83 Town and Country Planning Act 1990, s 149, Sched 13. See n 20 above. [Back] Note 84 The Town and Country Planning Acts allow service of a purchase notice where land is shown to be “incapable of reasonable beneficial use” following the refusal of a planning permission; where the notice is accepted, the effect is that the authority is “deemed” to have served a notice to treat, and compensation is assessed as though pursuant to a compulsory purchase order: Town and Country Planning Act 1990, ss 137 and 143. [Back] Note 85 See CP 165, para 7.28. [Back] Note 86 See Appx D, para D.112. [Back] Note 87 CP 165, para 7.28(2). [Back] Note 88 For example, land may become “incapable of beneficial use”, leading to a purchase notice, when a planning permission is refused because the land is required for some public scheme. (We are grateful to the Planning Inspectorate for drawing this point to our attention.) [Back] Note 89 Para 8.13ff below. [Back] Note 90 CP 165, para 5.14. See paras 3.18–3.19 above. [Back] Note 91 Rule 13A(1). This principle is already established, in relation to compensation for injurious affection, by 1973 Act s 44: see CP 165, para 5.5. [Back] Note 92 CP 165, Proposal 9(2)(f). [Back] Note 93 Appx D, paras D.110 – D.111. [Back] Note 94 The case is discussed in more detail in Part IV. [Back] Note 95 See Emslie & Simpson Ltd v Aberdeen DC [1994] 1 EGLR 33, 38, per Lord President Hope. [Back] Note 96 See Appx D, para D.98ff. [Back] Note 97 CP 165, para 7.33. [Back] Note 98 Wilson v Liverpool Corporation [1971] 1 WLR 302. See CP 165, Appx 6. [Back] Note 99 As we noted, however, there was also an actual permission granted on Mr Wilson’s own application (although that had followed from the approval of the authority’s proposal). [Back] Note 100 CP 165, paras 7.34 – 7.36. [Back] Note 101 See CP 165, para 7.30ff. [Back] Note 102 1961 Act, s 39(2). See Appx D, para D.98ff. [Back] Note 103 See CP 165, para 7.37. [Back] Note 104 Cf CP 165 Proposal 10(1)(c): “the subject land or any other land”. [Back] Note 105 The various statutory provisions relating to development by local authorities, and other statutory corporations are complex, and may result in planned permissions, which are only available to the authority, or particular categories of assignee: see generally Halsbury’s Laws Vol 46 Town and Country Planning paras 632ff (local authorities), 1129 (new towns), 1303 (urban development corporations). [Back] Note 106 CP 165, paras 7.41 – 7.42. [Back] Note 107 [2000] 2 AC 307. [Back] Note 108 CP165, para 7.43. [Back] Note 109 Begum v Tower Hamlets LBC [2002] 2 All ER 668. The Court held that review by the housing authority of its own decisions under the homeless persons legislation, subject only to appeal on points of law to the County Court, complied with Article 6. [Back] Note 110 CP 165, para 7.45. [Back] Note 111 Begum v Tower Hamlets LBC [2003] 2 AC 430. [Back] Note 112 In Pentrehobyn Trustees v National Assembly for Wales [2003] RVR 140 para 2, the Tribunal noted that it was a case of the kind referred to in CP 165, where “the body that determines the certificate of alternative development, on which the value of the site is likely to depend, is the acquiring authority itself”. As can be seen, the Tribunal went on to disagree with the nil certificate issued by the Assembly: see Appx D, paras D. 137 – D.143. [Back]
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