The Law Commission

APPENDIX A

IMPACT OF OUR RECOMMENDATIONS

INTRODUCTION

A.1     At each stage of this project we have borne in mind the likely effects of our recommendations. In our Consultative Report on Procedure we set out the existing law and the deficiencies in the law as we saw them. We then constructed a series of provisional proposals (based on our understanding of the practical implementation of compulsory purchase, drawn in part from our discussions with practitioners in the field) and laid out a number of consultation questions for a wider audience.^[1] We are most grateful to those who responded with specific information and general comments, and we have had careful regard to those responses in formulating our final recommendations in this report. A.2     In our previous Final Report we focussed on Compensation issues.^[2] In this report we restrict ourselves to matters of practice and procedure. Government, in its original terms of reference,^[3] asked us to review (in the context of compulsory purchase procedure) the following:

(1) The implementation of compulsory purchase orders;

(2) Compensation where compulsory purchase orders are not proceeded with; and

(3) The procedure relating to the making and confirmation of compulsory purchase orders.^[4]

A.3     In preparing this report we have adopted a format which addresses these issues in a sequence which follows broadly the chronology of an order's life. A.4     In our Final Report on Compensation we recommended a comprehensive Compensation Code which (if enacted) would operate as a single and self-contained mechanism, and which would make the complex rules in this area more accessible and more comprehensible. That approach was not appropriate for our present task. Whereas the rules relating to compensation are to be found in an amalgam of statutory and case law, in the main the principal rules on procedure are to be found in statute: the Compulsory Purchase Act 1965, the Acquisition of Land Act 1981 and the Compulsory Purchase (Vesting Declarations) Act 1981. These last two pieces of legislation are relatively modern and comprehensible; the 1965 Act, by contrast, has neither of these virtues, partly because it came into being as a consolidation of the much earlier Lands Clauses Acts. A.5     As we indicated in our Consultative Report on Procedure, our priority in this report has been to focus on a systematic review of the 1965 Act in order to identify and address significant defects and anomalies in its working. At the same time we have identified the more limited aspects of other procedural statutes which raise problems and which merit legislative change. In undertaking this task we have had regard to a series of proposals for reform which were put forward by the ODPM in parallel with some of our work over the past three years (and a proportion of which have now been implemented in the Planning and Compulsory Purchase Act 2004). A.6     As with our proposals for reform of compensation law, our aim has been to find ways in which the law on procedure can be simplified, codified (where applicable) and, in due course, consolidated. The starting point will probably be piecemeal legislative amendment, but we are hopeful that, with the minimum of delay Government resources and Parliamentary time will become available for consolidation (and the creation of a single Procedure Code to stand alongside our recommended Compensation Code). A.7     The benefits of modernisation in this area are not readily quantifiable in terms of either economics or social impact. But in the following analysis we endeavour to provide indicators of the advantages which we believe will flow. We deal only with the topics where we are proposing some significant change to the existing law.

TOPICS

Surveys before making an order

A.8     At present the ability of an acquiring authority to enter upon land as a preliminary to making a compulsory purchase order varies depending upon the nature of the authority. We recommend that the power to enter to survey should be extended to all authorities who are considering and preparing to make an order in respect of "a distinct project of real substance genuinely requiring such entry upon the land." We believe this formulation, coupled with the safeguard that an aggrieved landowner can apply to the county court for review of the exercise of the power of entry, should rationalise the power and should assist authorities who presently may only enter with the subject land owner's consent. We believe that it is illogical to require an authority to defer a physical site appraisal until the post-confirmation implementation stage. The early identification of site difficulties, and the need to identify as accurately as possible any occupiers who may need relocating, seems to us essential to minimise disruption to affected persons as soon as practicable and to ensure that the scheme for development (in its design and phasing) is as realistic and as cost-effective as possible. The benefits for occupiers and for the authority will vary from project to project, but have the potential to save both hardship and wasted expenditure. Careful planning in the early stages of an acquisition and development project is essential in order to reduce delays and to facilitate project management.

Legal challenge of orders

A.9     The effects of our recommendation on court challenge are twofold. First, we believe it would be helpful to spell out the availability and boundaries of the court review mechanisms: that judicial review is the vehicle for challenge of an order up to and including its making by an acquiring authority; and that statutory review should be the vehicle for challenge once an order enters the confirmation stage. Secondly, we believe that the court should have the power to quash a defective confirmation decision, but to leave the order (which has been "made") in place so that only the confirmation process need be repeated. A.10     Our aim in these proposals is to provide certainty as to use of the appropriate procedure by an aggrieved party, and to provide the court with flexibility of remedy. These changes should reduce room for uncertainty (and wasted costs by using the wrong vehicle for challenge); provide the additional benefits of the judicial review process when challenging the actions of acquiring authorities;^[5] and avoid the incurring of wasted costs, and burdensome delays, which could flow from the need to restart the order-making process from scratch. If the making of an order is valid, our proposal would mitigate the effect of defective confirmation and the consequent drain on public moneys.

Notice to treat

A.11     We recommend, amongst other things, that where the notice to treat route is to be adopted by an acquiring authority, notice to treat should be served in prescribed form accompanied by explanatory notes. Prescription will ensure consistency of practice amongst authorities which should aid practitioners in advising their clients; and should ensure that notices are clear, comprehensible and contain the minimum information which will enable a recipient to compile an adequate compensation claim. The standard notes to recipients will explain their rights and, in certain circumstances, the content of the notice may be made more understandable if it is accompanied by a plan delineating the affected land. A.12     In our view these changes will remove the opportunity for uncertainty on the part of landowners and, in turn, that should prevent the waste of professional costs and expedite the implementation process.

Notice of entry

A.13     We recommend that the mechanics of service of notice of entry should be brought into line with the requirements for service of other forms of notice. This would involve displaying a site notice relating to intended entry (post-confirmation) on or near the affected land. Additional service by this route would help to ensure (hand-in-hand with the Government's proposal to firm-up the time limits for notices to take effect) that affected landowners and occupiers are given proper opportunity to order their affairs and minimise disruption.

Distress

A.14     We recommend that the archaic arrangements for levying distress, as a means of enforcement of payment by parties involved in the compulsory purchase process, should be repealed. We believe that the remedy is outmoded and inappropriate for use in the present context. Moreover, it has been overtaken by new enforcement procedures contained within the Courts Act 2003. The effect of our recommendation should be cost neutral.

Local land charge registration

A.15     We believe that the system for compulsory acquisition of land and interests in land not owned by the state should be made as open and transparent a process as possible. We are conscious that an individual citizen's right to protection of his or her property is now a right enshrined in the Human Rights Act 1998. A.16     Against this backcloth we have recommended that additional key steps in the making and implementation process should be registrable as local land charges. We do not believe that the cost of registration which will fall on acquiring authorities and registration authorities will be more than minimal, and that any burden should be more than outweighed by the benefit to affected landowners who will be alerted to the need to pursue further enquiries. As we say in our report,^[6] there should be no adverse effect on the land registration process under the Land Registration Act 2002.

Time limits for validity

A.17     Government has already proposed significant foreshortening of time limits within the implementation stage. The rationale for stricter time limits is that the compulsory purchase process will be subjected to a discipline which will achieve greater fairness and efficiency, what the Government describes as "a fair balance between the interests of acquiring authorities and of those whose property is to be acquired."^[7] Having examined the issues carefully we endorse that approach. We do, however, temper the rigidity of the Government's intended rubric by suggesting that some flexibility will need to be built into the system. A.18     We believe that expediting the timetable for acquisition, and by setting out clear deadlines, will help to focus the minds of all parties involved, and will help to reduce the costs that can flow from a protracted process. The overall aim should be to provide greater certainty for the participants in the system, and to limit the hardship and adverse economic consequence of blight. It is impossible, of course, to forecast the savings because they will vary from project to project, depending on the nature of the development or use intended and the size of the landtake involved.

Limitation periods

A.19     Our recommendations relating to statutory time limits for making compensation claims to the Lands Tribunal and the court (for determination of quantum and for recovery of compensation moneys) are designed to rationalise those limits, both under the present law and under the law on limitations if it were to be changed in accordance with our previous recommendations. We also suggest that the limitation provisions should be standardised in their application to both the notice to treat and the vesting declaration routes. A.20     In our view this rationalisation should clarify the position for parties and should prevent the prosecution of unproductive litigation. We also believe that finite limits will assist acquiring authorities in their financial planning because they will be able to rely on an end-date for their potential liabilities.

Deed poll procedure

A.21     The deed poll procedure (presently in two provisions of the Compulsory Purchase Act 1965, but not so termed) provides a mechanism for an acquiring authority to determine compensation and to effect transfer of title unilaterally. This procedure is available (a) where the landowner refuses to accept tendered compensation, or to make good title, or to convey the subject land, and (b) where the landowner is absent from the UK or cannot be found after diligent inquiry. In our recommendations we seek to achieve two objectives. First, to restate the existing law, but in modernised form. Secondly, to extend availability of the procedure to those persons who are either unwilling or unable to deal with the authority (for whatever reason). These changes should ensure that an authority is neither frustrated in its endeavours nor unable to counter delay in implementation. Alleviating these difficulties should, in our view, help to simplify and expedite matters, and thus (if only minimally) reduce authorities' costs.

Omitted interests

A.22     We recommend re-enactment in new legislation of the slip-rule which allows an acquiring authority, within a fixed time, to rectify accidental omissions relating to rights and interests using the notice to treat route. This is not designed to allow an authority carte blanche so that it can go back and add into the project significant interests that, with the benefit of hindsight, it would like the project to have embraced. In its re-enactment the rule should set out more precisely its availability in terms of the rights and interests it is designed to cover, and the time for its operation. These changes will, in our view, create more certainty for landowners who are subject to operation of the rule, and thus help minimise professional costs. By the same token, retention of the statutory provision in modified form will continue to provide a cost-effective tool for acquiring authorities who otherwise would need to promote supplemental orders.

Payments into and out of court

A.23     The purpose of our recommendation is to simplify the present overcomplicated arrangements for making payments into and out of court, and to extend section 29 of the Local Government (Miscellaneous Provisions) Act 1976 to all forms of acquiring authority so that they will be able more easily to obtain a refund of unclaimed compensation within a set time. These changes should, in our view, make the system more flexible and allow the court to lay down procedural rules which may be adapted more easily in coming the years to fit changing circumstances. They are designed, also, to provide more certainty to authorities (for example, in financial forecasting and outlay) who are seeking to act in the public interest.

Service of statutory notices

A.24     Government has recently made changes to the Acquisition of Land Act 1981 in respect of service of certain notices, which are designed to ensure that the risk of unidentified interests not coming to light in a timely manner will be minimised. In particular, there is now provision for affixing site notices. We recommend taking that further by ensuring that the different statutory formulations relating to service by site notice are made consistent, and extending the obligation on acquiring authorities to ensure (so far as reasonably practicable) that site notices are kept in place for the requisite period. We do not see this as imposing any more than a minimal additional burden on authorities, and we believe any burden will be outweighed by the time (and inconvenience) which may be saved at later stages in the implementation process.

Divided land

A.25     We recommend a unified procedure for dealing with claims which involve an objection to an authority's proposal to take subject land in such a way that a landholding is divided. A.26     As we indicated in our consultative report, the present law on severance derives from a variety of sources, and in parts is archaic or confused. We believe that the law will be made more understandable and accessible if it is recast as a unified mechanism, covering implementation by both notice to treat and by vesting declaration. We have recommended that the procedure should be extended to cover any form of land (beyond residentially-developed land and agricultural land) which is to be divided. We appreciate that this extension may have cost implications for acquiring authorities (probably of only marginal significance), but we believe that it is only fair that all landowners are treated in an equitable manner. A.27     We have also adjusted our suggestion for a default mechanism whereby the authority would be deemed now to have opted to take the whole of the subject land if it fails to respond to a claimant's "divided property notice". We have introduced this change of emphasis so that acquiring authorities will have the incentive to respond in a timely and positive manner. We do not believe this should add to authorities' costs if they ensure that they have put in place effective project management arrangements.

Interference with private rights

A.28     The law relating to interference with existing private rights lacks clarity in two major respects: first, as to the extent of immunity which is afforded to acquiring authorities (whether particular rights are extinguished or are simply overridden) and, second, whether immunity through override extends to authorities' successors in title. Both these issues need resolution so that public-private joint venture developments in particular can proceed with certainty. In our recommendations we suggest the creation by statute of a presumption of override with the ability of an authority to elect extinguishment. A.29     We believe that the adjustments we advocate will have the effect of achieving greater certainty which should, in turn, lead to the avoidance of wasted costs for authorities at later stages in the compulsory acquisition process, and to fairer compensation settlements. So, for example, where compensation is paid on the basis of extinguishment, the nature of the payment will be reflected in both quantum and finality of the settlement.

Abortive orders

A.30     We are conscious that, under the existing law, affected landowners may suffer unduly if an authority makes an order but then (for whatever reason) fails to progress it to confirmation or implementation. A.31     Our recommendations are designed to provide a logical and comprehensive code for withdrawal and abandonment of orders, in terms of both the giving of notice and the conferment of rights of compensation. Our aim is to achieve greater openness and transparency in the way in which authorities deal with affected landowners. We do this in part by making recommendations for extension of the registration of key steps in the local land charges register (see above). We believe that should be supplemented by a notice-serving and compensation mechanism. We are aware that in certain circumstances (where an authority has had to proceed to compulsory acquisition as a means of enforcing housing or planning legislation), authorities have to employ the tool of compulsory purchase as a weapon of last resort and that it would not ordinarily be appropriate to impose a compensation burden for withdrawal on the public purse. A.32     We consider that reform in this area is long overdue, and we do not believe that the additional cost which will need to be borne by acquiring authorities in the relatively small number of cases where orders have to be aborted is likely to be significant or disproportionate. We believe also that these new rules should not dissuade authorities from initiating orders where genuine need for land acquisition or assembly arises, but they should encourage authorities to make and manage orders in as efficient a manner as possible.

Note 1    Law Com CP No 169, para 11.15. We specifically sought comment which encompassed “a practical and cost-benefit viewpoint” as well as from a legal perspective.     [Back]

Note 2    Law Com No 286.    [Back]

Note 3    Lord Chancellor and Minister for Housing and Planning (DTLR), 12 July 2001.    [Back]

Note 4    This last-mentioned topic was added later with the agreement of the ODPM.    [Back]

Note 5    See our discussion of the flexibility inherent in judicial review at para 2.62 above.    [Back]

Note 6    See paras 3.121, 3.122 above.    [Back]

Note 7    Policy Response Document (ODPM, July 2002), para 12(iii), cited at para 4.11 above.    [Back]