|Judgments - Waters and others (Appellants) v. Welsh Development Agency (Respondents)
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
Waters and others (Appellants)
Welsh Development Agency (Respondents)
THURSDAY 29 APRIL 2004
The Appellate Committee comprised:
Lord Nicholls of Birkenhead
Lord Scott of Foscote
Lord Brown of Eaton-under-Heywood
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Waters and others (Appellants) v. Welsh Development Agency (Respondents)
 UKHL 19LORD NICHOLLS OF BIRKENHEAD
'Value' in the Lands Clauses Consolidation Act 1845
The Acquisition of Land (Assessment of Compensation) Act 1919
The Indian case
The Pointe Gourde case
The Land Compensation Act 1961
Identifying the extent of the scheme
The present case
LORD SCOTT OF FOSCOTE
The statutory background
There is, in my opinion, no doubt but that these first three rules were intended to lay down with statutory authority, first, the principle that compensation was to be assessed on the basis of the value of the land to the seller the compulsory acquisition was not to add to or detract from the value; second, the principle that that value was to be taken to be market value, assuming a willing seller and a willing buyer; and third, that any special suitability of the land was not to be taken into account if the case could be brought with rule (3). Rule (3) was the Parliamentary solution to the problem referred to in Lucas, Cedar Rapids and Fraser. It follows also, in my opinion, that post the coming into effect of the 1919 Act, and until some important statutory amendments were made following the 2nd World War, any special suitability or adaptability of land that was not caught and excluded by rule (3) ought to have been taken into account as constituting an enhancement to value to be reflected in the compensation.
Then follow the new disregards. My Lords, it seems to me very difficult, in the face of this statutory language, to take the view that there are other disregards, established by case law and to be found neither in the language of the 1919 Act nor in that of the 1959 Act, which have to be applied in order to reduce the value for compensation purposes of land that has been compulsorily acquired.
My Lords, it must be right that section 9(2) of the 1959 Act, coupled with section 2 rule (3) of the 1919 Act, constituted the statutory intention as to the matters to be excluded from the value of compulsorily acquired land for the purpose of assessment of compensation.
The Court of Appeal cases
Here, too, I must respectfully disagree with the reasoning. Over the years 1947 to 1959, compensation had had to be assessed on an existing use basis. The question at issue in Camrose would not have arisen while compensation continued to be restricted to existing use value. Pre 1947, as I have endeavoured to show, the only relevant compensation principles that had been judicially established were that the value of land for compensation purposes was its value to the seller and that any special suitability of the land for the purposes for which the acquiring authority was acquiring the land was to be ignored. These principles had been incorporated into the statutory regime prescribed by the 1919 Act. The need to extend in 1959 the statutory disregards was surely attributable, first, to the abandonment of the "existing use" restriction and, second, to the special planning considerations brought about by the advent of slum clearance schemes, town development plans, schemes for new towns and the like. Compensation in the pre 2nd World War era had been based on market value, subject to the two principles, value to the seller and the 1919 Act disregards. There was, in my opinion, no justification after the 1959 Act for depriving landowners whose land had been compulsorily acquired of any part of the value of that land to the sellers save such part as fell within one or other of the statutory disregards.
Lord Denning then went on to amplify the concept of a "scheme". He said:
Widgery LJ and Megaw LJ agreed. Widgery LJ, at p 310, said that:
The 10 years was the period that, according to the development maps that had been prepared by the corporation, would elapse before the development of the area that included the Walton Manor Estate would commence. So the valuation was to be carried on the basis of an assumed planning permission for residential development "in accordance with the proposals of the acquiring authority" (s. 15(1)). The rest of the development scheme was to be disregarded. But it should have been disregarded, I suggest, not because of some extant rule deriving from the Point Gourde case but because any enhancement of value attributable to the development scheme as it affected the land other than the Walton Manor Estate fell within one or other of the section 6 statutory disregards. The case was correctly decided but, I suggest, for the wrong reason. The judgment of Lord Denning in this case demonstrates how the judicial development of the so-called Pointe Gourde principle had, de facto, ousted and become a substitute for the statutory disregards enacted by Parliament.
This amplification of the "scheme" principle may be logical enough if it is right to abandon the statutory disregards in favour of the judicially developed Pointe Gourde disregard. The complexities inherent in the amplification are obvious.
The compensation principles
LORD BROWN OF EATON-UNDER-HEYWOOD
The proceedings thus far
Has the Pointe Gourde rule survived the 1961 Act?
As was observed by the New South Wales Court of Appeal in Roads and Traffic Authority (NSW) v Perry (2001) 116 LGERA 244, 246:
The Indian case is sufficiently described in paras 94-96 of Lord Scott's speech. What, of course, it established was that even where land has a particular value only for one potential purchaser, that purchaser will nonetheless be willing to pay for it. The case, in short, resolved the differing views on this question which were expressed in the cases prior to the Acquisition of Land (Assessment of Compensation) Act 1919 (the 1919 Act), most notably in In re Lucas and Chesterfield Gas and Water Board  1KB 16. More particularly it may be taken to have determined the proper approach to what were first enacted as rules 1 and 2 of section 2 of the 1919 Act, now substantially reproduced in section 5 of the 1961 Act:
Those provisions to my mind mirror our own rules 1 and 2.
It by no means follows, however, that the open market value to the seller will exclude whatever key value the land may have. On the contrary, any such value properly falls to be taken into account, just as it was in Stokes v Cambridge Corporation (1961) 13 P & CR 77, where the Lands Tribunal, determining the value of land compulsorily acquired by the Corporation, recognised that the landowner would himself have had to pay the key value of other land in order to realise the development potential of his own, and reduced the valuation of the order land accordingly. The recognition of the land's key value to a particular purchaser is merely an extreme manifestation of the approach taken in the Indian case.
Argument 1: what was the relevant scheme or project?
[It has been convenient to include at this stage of the judgment sub-rules (4) and (5) although their relevance is rather to the second of the appellant's arguments on the appeal.]
Argument 2: what properly must be disregarded?