UT Neutral citation number: [2011] UKUT 1 (LC)

UTLC Case Number: ACQ/406/2009

                            TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – compulsory purchase – preliminary issue – motorway service area – planning permission for hotel development within MSA – whether this was additional development entitling claimant to further compensation – held it was not – Land Compensation Act ss 23, 29

IN THE MATTER of A NOTICE OF REFERENCE

BETWEEN                          EXECUTORS OF MRS N STREETER

                                                                           and

                                     TRUSTEES OF T T STREETER WILL TRUST                Claimant

                                                                           and

                                       SECRETARY OF STATE FOR TRANSPORT                Acquiring

                                                                                                                                      Authority

                                       Re: Birchanger Green Motorway Service Area

Dunmow Road

Birchanger

Essex

                                                           Before: The President

                                 Sitting at: 43-45 Bedford Square, London WC1B 3AS

                                                                            on

23 November 2010

Robert White instructed by Hewitsons, solicitors of Cambridge, for the claimants

David Forsdick instructed by Treasury Solicitor for the acquiring authority

The following case is referred to in this decision:

Kingswood Hall Properties Ltd v NATS (En Route) Plc [2006] RVR 73

The following further cases were referred to in argument:

R v Ashford Borough Council, ex p Shepway District Council [1995] JPL 1073

I’m Your Man Ltd v Secretary of State for the Environment  [1999] PLR 107

R v Rochdale MBC, ex p Milne [2004] Env LR 1

Hoffman La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295

                                           DECISION ON A PRELIMINARY ISSUE

Introduction

1.           On 18 September 1989 the Secretary of State for Transport in the exercise of his powers under section 239 of the Highways Act 1980 made the M11 London-Cambridge Motorway (Birchanger Motorway Service Area) Compulsory Purchase Order (No E6) 1989.  The purpose of the acquisition was stated to be “the provision of a service station and other buildings and facilities to be used in connection with the use of the M11 on the west of the M11/A120 interchange at Birchanger in the Counties of Essex and Hertfordshire.”  Included in the CPO, and forming the major part of the proposed MSA was an arable field, 7.21 ha in area, owned then by Mrs N Streeter and the Trustees of T T Streeter.  The claimants, following Mrs Streeter’s death, are her executors and the Trustees.

2.           The land was acquired pursuant to the CPO, and compensation was eventually agreed and paid in the sum of £960,000.  As constructed and laid out the MSA contained a services building, providing catering and other facilities, a petrol filling station and parking areas.  A 60-bed travel lodge was constructed to the north-west of the services building.

3.           On 14 April 2005 Uttlesford District Council granted planning permission for the “Erection of a 163 bedroom hotel with additional parking and landscaping” on the MSA immediately to the south of the services building, and pursuant to this permission a hotel, called Days Hotel, with about 60 bedrooms has been built and is now in use.  The claimants contend that the development permitted constitutes “additional development” for the purposes of section 23(1) of the Land Compensation Act 1961 and that consequently further compensation is payable to them to reflect the increased value that their land would have had at the valuation date for the compulsory acquisition if the permission had been in existence at that time.  The acquiring authority deny that the development permitted constitutes “additional development”, and I ordered that the question whether it does constitute additional development should be determined as a preliminary issue.

4.           Subsections (1) and (2) of section 23 provide as follows:

“(1)   Where –

(a)   any interest in land is compulsorily acquired or is sold to an authority possessing compulsory purchase powers and, before the end of the period of ten years beginning with the date of completion, a planning decision is made granting permission for the carrying out of additional development of any of the land; and

(b)  the principal amount of the compensation which was payable in respect of the compulsory acquisition or, in the case of a sale by agreement, the amount of the purchase price, was less than the amount specified in subsection (2) of this section,

then, subject to the following provisions of this section, the person to whom the compensation or purchase price was payable shall be entitled, on a claim duly made by him, to compensation from the acquiring authority of an amount equal to the difference.

(2)     The amount referred to in subsection (1)(b) of this section is the principal amount of the compensation which would have been payable in respect of a compulsory acquisition of the interest by the acquiring authority, in pursuance of a notice to treat served on the relevant date if –

(a) the planning decision mentioned in subsection (1)(a) of this section had been made before that date; and

(b) the permission granted by it had been in force on that date.”

5.           Section 29 (1) provides that “additional development”, in relation to an acquisition or sale of an interest in land, means any development other than that in any of five specified categories, the material one of which for present purposes is:

“(b)   where the acquiring authority are not a local authority, development for the purposes of the project, in connection with which they acquired the interest.”

6.           What has to be determined, therefore, is whether the hotel permitted by the 2005 permission is or is not development for the purposes of the project in connection with which the Secretary of State acquired the claimants’ interest.  I have quoted above the purpose of the acquisition as stated in the CPO.  It follows the wording in subsection (4)(c) of section 239 of the 1980, under which The Secretary of State is given the power to acquire land

“for the provision of service stations or other buildings or facilities to be used in connection with the construction of the special road or with the use or maintenance of it.”

For the purposes of section 29(1), therefore, the project was the provision of a service station and other buildings and facilities for use in connection with the use of the M11.  The question; is thus whether the hotel permitted by the permission is development for the purposes of that project.

The facts

7.           There was a statement of agreed facts, together with extensive documentation, and witness statements on the part of Arthur David Cowlin FRICS, IRRV, a consultant with Strutt & Parker, for the claimants and Sarah Collins, the Property Acquisition Team Leader for the Major Projects South Division within the Highways Agency, for the acquiring authority were filed.  Mr Cowlin, the burden of whose evidence was that the hotel was an important destination for travellers having no connection with the use of the M11, was cross-examined.  In the light of all this I find the following facts.

8.           Current Government policy on the siting of new MSAs has evolved from that set out in August 1980, following a report (the Prior report) in 1978.  In 1986/7 it was the Secretary of State’s general policy to ensure the provision of MSAs at about 30 mile intervals to cater for the basic needs of long distance travellers on a 24 hour basis.

9.           The first section of the M11 London-Cambridge motorway, between Harlow and Bishop’s Stortford, opened in June 1975, with the Birchanger interchange connecting it to the A120, one of the main east-west routes from the east coast ports.  The M11 was operational over its entire length by February 1980.  The A120 also was substantially improved over parts of its length.  The M11 takes a substantially greater volume of traffic than the M11.  Stansted Airport is about two miles from the Birchanger interchange  In 1991, after many years’ planning and construction, a new terminal was opened, giving the airport a capacity of 8 million passengers per annum.  In 2002 planning permission was granted for additional facilities, extending the capacity to 25 million passengers per annum.

10.        In February 1981 the Secretary of State invited representations under Circular 7/77 from, East Hertfordshire District Council and Uttlesford District Council, the two district councils affected by the proposal for an MSA.  This process is referred to as planning clearance (planning permission not being required for Crown development).  The notice of the outline proposals said that the MSA would serve both the motorway and the A120 and stated that the service facilities were intended to cater for the basic needs of travellers for refuelling, breakdown services, refreshments, parking, toilets and telephones.  It appears that neither council objected.  A renewed request was sent to the councils in November 1985 for proposals that were the same as the previous ones, and again neither council objected.

11.        In January 1986 tenders were invited.  It was made clear that the Department did not object to the provision of an accommodation block for motorway users, that it considered that the MSA was required whether or not Stansted Airport developed as then envisaged and that any lease would require the MSA to be used only for purposes that were not inconsistent with section 239(4(c) of the 1980 Act.  In April 1986 Mobil Oil Co Ltd, having acquired a legal interest in the part of the MSA site not already owned by the Department, made four applications to the Department, seeking to pursue development of an MSA outside the tender process.  Two of these included overnight accommodation.  Mobil was told that the decisions would be made via the tendering process.  Trusthouse Forte was selected as the successful tenderer.  Its original proposals included a lodge.  In December 1986 Mobil applied for planning permission for development on the 7.1 ha over which it had acquired an interest.  The application did not appear to include a lodge.  The Secretary of State objected to the application, and the application was refused in April 1987.  Meanwhile in January 1987 draft orders had been published for the compulsory purchase of the land needed for the MSA.  Following an inquiry into objections to the draft orders and Mobil’s appeal against the refusal of planning permission, On 25 July 1989 the draft orders were confirmed and Mobil’s appeal was dismissed.

12.        In November 1987 an application for planning clearance on reserved matters to allow the Secretary of State/ Trusthouse Forte scheme to proceed was made.  It included a Little Chef lodge with 40 bedrooms, with catering provided in the main MSA building.  The detailed plans were eventually accepted in December 1990.  Entry on the land was taken on 2 March 1992.  An agreement for lease between the Secretary of State and Trusthouse Forte was entered into on 12 February 1992, and a lease was eventually executed (with Welcome Break as the lessee) on 20 June 1997. 

13.        On 6 May 1994 the Highways Agency applied to Uttlesford District Council for planning clearance for a 60 bedroom travel lodge in the north-west corner of the site.  The council raised no objection, the report to committee saying that the proposal would meet the needs of passing motorists and was therefore in accordance with both central government and local planning policy.

14.        On 9 August 1994 Strutt & Parker on behalf of the Streeters claimed compensation in the sum of £2m for the compulsory purchase of their land.  In the negotiations that followed Strutt & Parker maintained that the overnight accommodation was not within the powers of the Act and that the 60 bed lodge was a destination in its own right.  The District Valuer did not accept this.  The claim was ultimately settled at £950,000. 

15.        On 23 December 2002 Welcome Break applied to Uttlesford District Council for planning permission for a new 163 bed hotel with additional parking and landscaping areas located in the middle of the MSA.  Welcome Break’s planning statement said that the hotel would only have limited catering and ancillary facilities and would operate in conjunction with the MSA amenity building.  The officers’ report for the council’s Development Control & Licensing Committee meeting of 28 April 2003 said this:

“1) The applicant’s case on need is set out in their supporting statement at the end of this report.  It relies on ‘recorded denials’ to potential customers wishing to stay in the existing Travel Lodge, quoting 2660 in 12 months.  CRREssex and an Inspector dealing with an appeal on another Green Belt site have cast doubt over the weight to be attached to these figures.  Although it is clear that the existing Travel Lodge has a higher occupancy rate than similar facilities throughout the country, it is considered by Officers that this is probably mor to do with its proximity to Stansted Airport than with meeting the needs of travellers along the M11 and A120.  Additional information has now been received (see agent’s letter dated 31 March attached at end of report) which support the applicant’s argument that there is an unfulfilled need for this residential accommodation for users of the M11 and A120, regardless of the proximity of Stansted Airport.  However, this very proximity should not be used as an argument to reject the proposals without examining other factors...The need case has been put forward to your Officers’ satisfaction...

2) It is clear that the existing 60-bedroomed Travel Lodge cannot cope with customer demand in this location.  Officers consider that weight should be given to the supporting evidence and precedents from similar cases on appeal within the Metropolitan Green Belt.  With restrictions on car parking, the occupation of the new Lodge can be satisfactorily controlled and limited to persons who use the M11 and A120.”

16.        The officers recommended that permission be granted, and their recommendation was accepted.  Following the execution of a section 106 agreement, permission was issued on 14 April 2005, subject to a number of conditions.  One condition provided that

“No vehicles associated with passengers using Stansted Airport shall be parked on this MSA for more than 24 hours in any period of 14 days.”

There were no other restrictions on its use in relation to the airport or in relation to the provision of restaurants or the sale of alcohol or the provision of conference or leisure facilities.  The approved plans did not show any conference rooms, but they showed “lower level restaurant seating” and food preparation areas.

17.        On 26 August 2008 the Secretary of State as lessor of the MSA granted to Welcome Break Group Ltd as lessee licence to build an 80-bedroom lodge facility as shown on drawings annexed to the licence.  These showed o modified version of the hotel that had been granted planning permission.  Under clause 5.1.2 of the licence it was agreed and declared that nothing in the lease should be deemed to authorise the use of the premises otherwise than as permitted by the lease and the Secretary of State’s policy in relation to MSAs.

18.        In the event the hotel that was constructed pursuant to the planning permission had 60 bedrooms.  Known as “Days Hotel”, it advertises itself as “Days Hotel London Stansted”.  The former Welcome Break lodge is called “Days Inn”.  A “Conference Brochure” published by the hotel and available in March 2010 gave details of conference facilities provided at the hotel, with two rooms, one for 6 and the other for up to 40 delegates.  It offered a “Daily Delegate Package” and a “24 Hour Delegate Package”.  Breakfast facilities and buffet lunch facilities were said to be available.  When Mr Cowlin visited the hotel in March 2010 he was told by a receptionist that there was a half hourly coach service between the hotel and Stansted Airport between about 5 am and midnight each day.  He was also told that it was possible to park at the hotel when flying, the charge being £89 for one night’s stay with the right to park outside for 7 days, or £99 for one night’s stay and the right to park for 14 days.  Reviews on the website “Booking.com” suggest that the hotel is attractive to users of Stansted Airport and is used by both UK and foreign nationals.  The Highways Agency made inquiries of the hotel about the conference and parking facilities and was told that the conference facilities had been stopped and the brochure withdrawn and that the offer for more than 24 hours parking at the hotel had also been withdrawn.

Case for the claimants

19.        For the claimants Mr Robert White submitted that the effect of section 23 was to tie the compensation payable to the grant of planning permission.  It was not necessary for the permission to have been implemented.  Nor was it relevant that there might be in place some private law arrangements that constrained in some way the operation of the development permitted, although such arrangements might be material to the quantum of compensation payable.

20.        Mr White referred to my decision in Kingswood Hall Properties Ltd v NATS (En Route) Plc [2006] RVR 73 and submitted that the purpose of the project was to be identified not only in the terms of the CPO itself but in also the Secretary of State’s applications for planning clearance.  The applications of February 1981 and November 1985 were for outline clearance and provided no details of what was proposed.  In November 1987, when application for the clearance of the detailed design of the MSA and its facilities was made, overnight accommodation facilities were not listed as something that must be provided, but it was stated that the operator was free to provide an accommodation block or a motel with a residential licence only on adjacent land with access through the MSA.  The proposal at that time was to have a Little Chef Lodge on the site, and it was stated that catering would not be available within the building.  In May 1994, when, following the abandonment of the Little Chef proposal, the Highways Agency applied for planning clearance for a 60 bed Travelodge within the site, the council’s internal consultation stated that the proposal was “clearly an ancillary facility” and did not constitute “‘a substantial hotel, leisure or conference facilities’ which might cause the MSA to become a destination in its own right.”  The terms of the application showed that, when making the CPO, the Secretary of State had in mind that a modest motel could be permitted on the site of the MSA, so long as it was ancillary to the MSA and did not contain facilities that might cause the MSA to become a destination in its own right.  In closing, however, Mr White said that he did not concede that the existing lodge was not additional development.

21.        The planning permission that had been granted subsequently, however, Mr White said, was for a very different hotel development.  There were few if any conditions attached to the 2005 permission that sought to limit the facilities that could be provided in the hotel.  He agreed that a hotel with limited facilities might not constitute additional development, but here there was no embargo on the provision of restaurants, cafes, leisure facilities, such as a gymnasium, or conference facilities.  He said that the hotel catered principally for users of Stansted Airport.  He relied on the evidence of Mr Cowlin to this effect.  The facilities offered included two conference rooms, one with a maximum capacity of 40 delegates, the service of hot buffet meals, the provision of hot meals in the dining room, a half hourly coach service to the airport, car parking while the driver was abroad and cheaper parking than at the airport.  A number of these facilities were of little relevance the needs of the passing motorist, so that the development could no longer be described as ancillary or subordinate to the MSA.  The range of facilities offered had made the MSA a destination in its own right.  The development permitted in 2005 thus fell outside the scope of section 239(4)(e) of the 1980 Act and the purposes for which the CPO was made.  It was additional development.  The use of the land for the hotel was very valuable given the proximity of the hotel to the airport, and as a matter of fairness the claimants, as the original landowners, should be compensated accordingly.

Case for the acquiring authority

22.        For the Secretary of State Mr David Forsdick submitted that the purposes of the project were those specified in the CPO, ie “the provision of a service station and other buildings and facilities to be used in conjunction with the use of the M11 motorway”.  Any particular form of MSA would be within these purposes, and the CPO did not specify or limit what the service station would provide or the nature or extent of the “other buildings and facilities”.  Nor was the CPO tied to the terms of any detailed planning permission or clearance, although the description of the purposes of the CPO was consistent with the outline planning clearances of 1981 and 1985.

23.        The phrase “used in connection with...the use of the [motorway]” in the statute and the CPO was, Mr Forsdick submitted, very broad.  To come within it the facilities at an MSA must serve the needs of the travelling public arising in the course of their journey.  There must be a link between the facility and the journey.  However there was nothing that suggested or implied that an MSA was only used in connection with a motorway if it was exclusively so used, and if, as here, an MSA was provided off-line it was necessarily implicit that the facilities might be accessed by those who were not using the motorway at all or who had either come to the end of or had not begun their motorway journey.  Mr Forsdick also referred to the other paragraphs of section 29(1) and submitted that they provided for broad exceptions to what would otherwise be additional development, so that in (b) “the purposes of the project” should, consistently with those other paragraphs, be construed in a broad rather than a limited way.

24.        Birchanger Services, Mr Forsdick, said, was a standard, off-line MSA.  The location of Stansted Airport, about two miles away, was well-known at the time of the CPO.  The fact that the MSA might be used by people travelling to and from the airport did not mean that it was not being used by them in connection with the use of the MSA.  The need case for the new lodge had been tested by Uttlesford District Council in determining the planning application in the light of the policy requirement that an MSA should not become a destination in its own right.  The officer’s report said that information had been provided that there was a need for the additional accommodation regardless of the proximity of the airport and concluded that with restrictions on car parking the occupation of the new lodge could be limited to persons using the M11 and A120.  There had been no challenge to the lawfulness of the permission.  The new lodge was located in the middle of the MSA, and the sole access to it to it was through the MSA access.  It was largely surrounded by the MSA car park and roads.  The plans approved by the grant of planning permission showed an entirely standard, room-only lodge with no restaurant or bar, no gym or similar facility, no conference rooms and only a small breakfast area associated with very small food preparation areas.  The combination of the location of the lodge in the middle of an MSA and its design and facilities showed that it had all the attributes of a lodge for travellers en route.

25.        Mr Forsdick said that, given these points, it was not accepted that such theoretical potential as the lodge might have went to the question of whether the grant of permission was for the purposes of use in connection with the use of the M11.  But in any event, he submitted, on any foreseeable rearrangement of the building not requiring planning permission, given the location and structure of the building it was inconceivable that the link between the use of the M11 and the additional lodge would be severed.  Moreover the Secretary of State retained the freehold of the MSA, and the terms of the lease under which the lodge was held enabled him to prevent such development or use as would result in its becoming a destination in its own right.  Under section 176 of the Licensing Act 2003 it was an offence to sell or supply alcohol at an MSA.

Conclusions

26.        The question for determination is whether the development permitted by the planning permission of 14 April 2005 is additional development for the purposes of section 23 of the 1961 Act: and, under section 29(1)(b), this depends on whether that development was for the purposes of the project for which the claimants’ interest was compulsorily acquired.  There is no dispute as to what were the purposes the project for which the land was acquired.  As stated in the CPO, they were the provision of a service station and other buildings and facilities to be used in connection with the use of the M11.  The case for the claimants is that the development was not for those purposes but for the provision of a hotel as a destination in its own right for those flying to and from Stansted Airport and for those using its conference and other facilities.

27.        There is no doubt, in my judgment, that the provision of overnight accommodation at this MSA for users of the M11 would be within the purposes of the project.  It would constitute facilities to be used in connection with the use of the M11.  Thus a hotel development in this location could undoubtedly be development for the purposes of the project.  It is clear in my view that the mere fact that the accommodation – or indeed any of the other facilities within the MSA – might also be capable of being used by those who had not used and were not about to use the M11 (having reached the MSA from the A120) would not mean that it was not development for use in connection with the use of the M11.  Indeed any off-line MSA has the potential for use by non-motorway travellers.  Nor would its capability for use by those travelling to or from Stansted Airport have this effect.  Overnight accommodation at an MSA is necessarily capable of being used by those whose destinations are local to the MSA as well as by those whose destinations are distant.  The question is whether the essential purpose of the development was the provision of accommodation for users of the M11.

28.        The case for the development that was advanced in 2003 by the applicants for planning permission was that there was an unfulfilled need for additional accommodation at the MSA for users of the M11 and A120, regardless of the proximity of Stansted Airport, and this case was accepted by the council (see paragraphs 15 and 16 above).  That was the purpose of the development, as asserted by the applicants and as accepted by the council.  The claimants contention is that this was not in fact the purpose and that the true purpose was the provision of a hotel that would be (in the terms of the Secretary of State’s policy) a destination in its own right.  They rely on two principal matters in support of this contention – the absence of restrictions in the planning permission and the subsequent use of the hotel.

29.        The planning permission in fact contained an important restriction in this context – the condition providing that no vehicles associated with passengers using Stansted Airport should be parked on the MSA for more than 24 hours in any period of 14 days.  The purpose of this condition was to prevent the MSA becoming in one respect a destination in its own right – for the accommodation of the vehicles of those flying from the airport.  That there were not other restrictions seems to me unsurprising.  The very location within the MSA would restrict its attractiveness to non-motorway users, and the statutory prohibition on the sale of alcohol would further limit its appeal to persons other than those who required overnight accommodation in the course of their journey.  While I can see that a prohibition on more than minor conference facilities might have been imposed, I am quite unable to accept that the absence of such a limitation suggests that part of the purpose of the development was for the hotel to become a destination in its own right for conferences.  Nor does it seem to me that the fact that the operators have in the event breached the planning condition by encouraging customers to leave their cars at the MSA for up to 7 or 14 days and have provided more than minor conference facilities shows that the underlying purpose of the development was not in truth the provision of overnight accommodation for users of the M11.  I would add also that the expression of the need as being related to both the M11 and the A120 is not in my view significant since, besides the fact that the two roads interconnect at the junction, the M11 takes much greater traffic volumes and it can reasonably be inferred that the great majority of those who use the MSA are motorway travellers.

30.        Accordingly I do not accept the claimants’ contention that the development permitted by the 2005 planning permission was not development for the purposes of the project for which their interest was acquired.  They have no valid claim under section 23, and the reference must be dismissed.  The parties are now invited to make representations on costs, and a letter relating to this accompanies this decision, which will become final when the question of costs has been determined.

                                                                                    Dated 4 January 2011

                                                                                    George Bartlett QC, President