UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2014] UKUT 0456 (LC)

                                                                                          UTLC Case Number: CON/21/2013

 

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

                                                                             

COMPENSATION – preliminary issue – construction of deed of grant for retention of electric lines – whether “development for industrial purposes” includes development for storage or distribution uses – date of valuation

 

 

 

IN THE MATTER OF A NOTICE OF REFERENCE

                                                                             

                                                                             

 

BETWEEN                      G PARK SKELMERSDALE LIMITED                      Claimant

                                                                           and

                                        ELECTRICITY NORTH WEST LIMITED               Respondent

                                                                                                                                                      

Re: Land formerly part of Spa Farm,

Latham,

Skelmersdale

 

 

Before: Martin Rodger QC, Deputy President

 

 

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

                                                         on 22-23 September 2014

 

Michael Humphries QC instructed by Osborne Clarke for the Claimant

Robin Purchas QC instructed by Hill Dickinson LLP for the Respondent

 

 

© CROWN COPYRIGHT 2014

 

 

The following cases are referred to in this decision:

 

Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896

Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900

Moyce v National Grid Electricity Transmission Plc [2009] RVR 141

DECISION

1.             In this reference the claimant, G Park Skelmersdale Limited seeks compensation from the respondent, Electricity North West Limited, under the terms of a deed of grant (“the Deed”) dated 12 May 1967 made between the Central Electricity Generating Board (“the Board”) and Mr William Holland, (“the Grantor”) the claimant’s predecessor in title as owner of land as Spa Farm, Lathom, Skelmersdale, Lancashire (“the Reference Land”).

2.             The claimant is the freehold owner of the Reference Land, which comprises 10.93ha of undeveloped land on the outskirts of Skelmersdale.  The claimant acquired the Reference Land in December 2004 and is the successor in title to the Grantor.

3.             The respondent is the electricity distribution network operator for the North-West of England and is the successor to the Board in respect of certain assets, rights and liabilities relating to the electricity distribution network in that region, including the rights over the Reference Land conferred by the Deed.

The Deed

4.             The Deed was made between the Grantor and the Board on 12 May 1967, and by it the Grantor granted to the Board and its successors and assigns certain rights to retain, use, maintain, repair, renew, inspect and remove electric lines and works on and over land which included the Reference Land.

5.             The rights conferred by the Deed related to the proposed construction and operation of a twin circuit 132kv overhead line to be known as the DU Skelmersdale spur.  At the time of the grant the Reference Land and most of the surrounding land across which the DU Skelmersdale spur was to be constructed was part of a rural area north-west of Skelmersdale and was in agricultural use.

6.             The proposed overhead electricity line was duly constructed across the Reference Land pursuant to the rights granted by the Deed.  One steel lattice tower (Tower DU3) was erected on the Reference Land itself and both the overhead line and the tower remain in their original location.  The Respondent maintains the overhead line and the tower pursuant to the rights conferred on it by the Deed. 

7.             Clause 3(1) of the Deed provided as follows:

          “(1). The Board HEREBY FURTHER COVENANTS with the Grantor that if the Grantor shall at any time while this deed remains effective obtain planning permission under the Town and County Planning Act 1962 or any statutory modification or re-enactment thereof for the time being in force for the development of the said property herein before described or some part or parts thereof for residential or industrial purposes the Board will within 6 months of being served by the Grantor with written notice of the granting of such permission (such notice being accompanied by copies of the permission and of the application for the same together with copies of any plans or specifications referred to therein) pay to the Grantor compensation for any diminution in the value for such purposes of the said property or part or the parts thereof in respect of which planning permission shall have been obtained as a foresaid attributable to the existence of the electric lines above the said property but so that the Board may deduct from such compensation such part of the consideration money of One hundred and eighty pounds paid by the Board to the Grantor on the execution of this deed and of any compensation previously paid by the Board to the Grantor under this clause as it may be proper to deduct there from on the basis that the Grantor shall not be entitled to be compensated by the Board more than once in respect of the same loss.”

8.             In the event of any dispute about the compensation to which the Grantor was entitled under clause 3(1), clause 3(2) of the Deed provided for its determination by the Lands Tribunal under the Lands Tribunal Act 1949 and the Land Compensation Act 1961 on a reference by either party.  The task of determining such disputes now falls on the Lands Chamber of the Upper Tribunal as successor to the Lands Tribunal.

The grant of planning permission

9.             Skelmersdale New Town had first been designated in 1961 and a master plan showing its original proposed boundaries had been approved in May 1966. At that time the Reference Land lay outside the proposed boundaries of the New Town.

10.         The boundaries of the New Town have subsequently expanded and the Reference Land now forms part of the designated area.  On 20 December 2001 West Lancashire District Council granted outlined planning permission for industrial, business and warehousing development (in classes B1, B2 and B8) on land which included the Reference Land.  On 9 September 2004 a further planning permission was granted, the sole effect of which was to extend until 20 December the period for submission of details required for the approval of reserved matters. 

11.         On 9 March 2005 the claimant applied for approval of reserved matters pursuant to the outline planning permission.  Its application was refused on 20 April 2006.  On receipt of the refusal the claimant appealed and a planning inquiry was subsequently held in April 2007.  The inspector’s decision letter issued on 15 May 2007 allowed the claimant’s appeal.  The development for which reserved matters approval was granted comprised “the erection of a building for B2 and/or B8 purposes with ancillary offices, formation of vehicle parking areas; creation of an access from existing estate road and landscaping, …”.

12.         The approved development comprises a single large B2 or B8 building which straddles the alignment of the overhead line and which would require the removal of the line to permit the building to be constructed and used. 

13.         Other parts of the business park on which the Reference Land is located have been developed for employment uses including distribution buildings.

The Notice

14.         On 26 March 2008 the claimant gave notice to the respondent of the grant of planning permission and sought compensation pursuant to clause 3(1) of the Deed. 

15.         Under clause 3(1) of the Deed the giving of notice triggered the six month period within which the respondent was required to pay compensation.  The parties agreed to extend that period to allow for consideration of the feasibility of diverting the overhead line to allow the permitted development to proceed.  Nothing having come of that possibility, and no compensation having been paid by the respondent, the reference was eventually initiated by the claimant on 13 February 2013.

The Issues

16.         At the request of the parties the Tribunal agreed to determine two preliminary issues:

          1. Whether the references to “development … for … industrial purposes” and “such purposes” in clause 3(1) of the Deed include development for primary storage/distribution uses under what is now Class B8 of the Use Classes Order 1987.

          2. Whether the correct valuation date for the assessment of compensation under the Deed is the date of:

                   (i)      the grant of outlined planning permission (20 December 2001), or

                   (ii)     its variation (9 September 2004), or

                   (iii)    the approval of reserved matters (15 May 2007), or

(iv)        the notice of claim (26 March 2008).

 

Principles of construction

17.         I was helpfully reminded by counsel of the basic principles of contractual interpretation as explained by Lord Hoffmann in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 and in subsequent authorities.  Lord Clarke provided a succinct summary of the relevant principles in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900 at paragraph 14, when he said that:

          “…the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language they used, which involves ascertaining what a reasonable person would have understood the parties to have meant… The relevant reasonable person is one who has all the background knowledge which would have reasonably been available to the parties in the situation in which they were at the time of the contract.”

18.         There was no disagreement between the parties on the principles which it is necessary for me to apply in this case.

Evidence and submissions

19.         In order to assist the Tribunal to understand the background to the Deed both parties called expert witnesses in town & country planning.  The claimant relied on the evidence of Leslie Short MRTPI, MRICS while the respondent adduced the evidence of Edward Martin Sheard MA, FRICS.  The evidence was wide-ranging and scholarly, coming as it did from two expert witnesses who between them had amassed 85 years professional experience in the planning field.  Both had commenced practice within a relatively few years of the execution of the Deed, although neither had had any personal involvement in its negotiation.

20.         Mr Short exhibited a copy of the New Town master plan prepared by the Skelmersdale Development Corporation which showed that the Reference Land was located in close proximity to an area within the New Town development boundary designated for “industry”.  The only other designations on the master plan were of land described as the central area and a number of residential areas.  Mr Short reviewed contemporaneous academic literature on land use classification to support his general point that in the 1960s professionals in the field of land use did not distinguish warehousing as a separate land use category.  He relied on section 4(3) of the Town and Country Planning Act 1962 (“the 1962 Act”) in support of his contention that the expression “industrial purposes” would have embraced a very wide range of uses which, as the planning system matured, came to be the subject of much more precise classification.  Section 4(3) of the 1962 Act dealt with the content of development plans, one of the functions of which was to:

          “Define the sites of proposed roads, public and other buildings and works, airfields, parks, pleasure grounds, nature reserves and other open spaces, or allocate areas of land for use for agriculture, residential, industrial or other purposes of any class specified in the plan.”

21.         Reliance was also placed by Mr Short on a reference to industrial buildings in section 102(3) of the 1962 Act. Section 102 limited compensation payable in respect of a planning decision by which permission was refused for the development of land if, notwithstanding that refusal, there was available a planning permission for development of the land to which the section applied.  Section 102(3) provided that:

          “This section applies to any development of a residential, commercial or industrial character, being development which consists wholly or mainly of the construction of houses, flats, shop or office premises, or industrial buildings (including warehouses), or any combination thereof.”

22.         Mr Short also drew my attention to Class X of the Town and Country Planning (Use Classes) Order 1963 which comprised use as a “wholesale warehouse or repository for any purpose”.  Thus, Mr Short pointed out, while in the 1960s the terms “residential” and “industrial” were used to identify broad categories of use, there was also available a category of “warehousing” to which reference could be made if its classification was required.

23.         Mr Humphries QC pointed out that the expression “industrial purposes” was not defined in planning legislation at the time of the Deed.  It appeared in section 4(3) of the 1962 Act as one of a quartet of broad land uses (agricultural, residential, industrial or other purposes) which was consistent with the relatively coarse-grained texture of planning law in its early stages of evolution.  The parties could, Mr Humphries submitted, have used the well-understood expression “industrial buildings” had they intended to restrict the types of use which would engage the right to compensation but they did not do so, nor did they make any use of Class X of the Use Classes Order.  Their adoption of the very broadest classification of uses in clause 3(1) suggested that they intended “industrial purposes” to be widely construed.  That it was capable of being so construed could be seen from the standard industrial classifications referred to by Mr Short, which were very wide ranging and included warehousing. 

24.         Mr Humphries also drew support for his submissions from a decision of the Lands Tribunal (George Bartlett QC, President) in Moyce v National Grid Electricity Transmission Plc [2009] RVR 141 which concerned the construction of a deed of grant in similar terms to those of the Deed.  In Moyce rights were granted to the Board to place and maintain electric lines across the grantor’s land in Sussex.  Clause 3(1) of the deed of grant was in substantially the same terms as were agreed between Mr Holland and the Board in this case.  Two questions arose for consideration, the first of which was whether a planning permission for the conversion of a redundant barn to holiday accommodation was a permission “for the development of the said property… for residential or industrial purposes” within the meaning of clause 3(1).  It was argued on behalf of the Board that development for commercial purposes, including use of holiday letting, was outside the scope of the compensation provision.  The grantor argued to the contrary that planning permission for the conversion of a barn for use as holiday accommodation was “development … for residential purposes”. 

25.         The Lands Tribunal considered the deed in its context, described in paragraph 21 as follows:

          “What has to be considered here is a deed of grant for an overhead line in respect of which the grantor is to receive a sum of money and which enables him to claim compensation, if planning permission is granted in the future for development for residential or industrial purposes, for the amount by which the existence of the line diminishes the value of the property for such purposes.  Such lines were, and are, constructed, except to a very limited extent, across open, undeveloped land, usually in agricultural use.  Why the limitation to “residential or industrial purposes”?  It seems to me that the most likely explanation is that at that time it was principally for these purposes that undeveloped land was released for private, profitable development.  Section 4(3) of the Town and Country Planning Act 1962, re-enacting the equivalent provision of the 1947 Act, provided for development plans that would “allocate areas of land for use for agricultural, residential, industrial or other purposes of any class specified in the plans.”  It was no doubt deemed sufficient in the deed to refer to residential or industrial purposes without seeking to think of other types of profitable development that might be listed in addition.

          22. Section 17(1) of the Land Compensation Act 1961, before amendment in 1975, excluded from land for which a certificate of appropriate alternative development might be sought, an area “allocated primarily for a use which is for a residential, commercial or industrial character.”  I have considered whether the appearance of “commercial” here and its absence in the Deed of Grant is significant, but I do not think that it is.  The provision in section 17(1) was there to indicate broad categories of development, and planning permission for such use as was allocated in the development plan was to be assumed under section 16(1).  There was no need to distinguish between them for the purpose of the exclusion in section 17(1).  “Residential” and “industrial” in the Deed similarly identify broad categories of use.  Of course, where areas of land were allocated for residential development it was for the provision of housing, for homes for people to live in.  That reflection is, however, insufficient to persuade me at the ambit of “development for residential purposes” in the Deed requires to be construed restrictively.  “Residential” and “industrial” are there as broad categories representing, as I have said, the principal classes of profitable development, and there is no discernible justification for seeking to restrict their meaning.  The more restricted meaning that “residential” may imply when qualifying particular nouns has no place in this context, in my judgment.  Planning permission for conversion of a barn to “ancillary accommodation/holiday lets” was therefore planning permission for development for residential purposes within the meaning of clause 3(1).”

26.         On behalf of the respondent, Mr Sheard undertook a similar review of planning legislation at the date of the Deed.  He drew attention in particular to the relatively narrow definition of the expression “industrial building” in section 221 of the 1961 Act and section 21 of the Local Employment Act 1960, which confined that expression to buildings used or designed for use for carrying on of any process for or incidental to (broadly) manufacture, processing or mineral extraction carried on in the course of a trade or business.  In the 1960 Use Classes Order, use as a wholesale warehouse or repository in Class X, was not within the “special industrial” group of uses. Mr Sheard suggested that the distinction between industrial use and warehousing (and any other commercial uses) was generally applied in the planning context at the relevant time.  The economic and development context pertaining in 1967 was of the promotion of both housing and industry through public and private investment, including by the creation of the new towns.  Manufacturing industry was favoured by government policy which focussed on identifying and promoting industrial development, and employment.  In that context an industrial use would be understood to involve a process or processes in which materials were significantly altered, and would be distinguished from a warehouse use or other form of storage, in which materials were merely stored for future use or distribution.

27.         In his submissions on behalf of the respondent, Mr Purchas QC pointed out that under clause 3(1) of the Deed compensation was only due where planning permission had been obtained, and where notice had been served by the Grantor.  The compensation obligation was not for interference with the planning permission itself but was for the diminution in the value of the land for the purposes permitted by the planning permission because of the presence of the electric lines. 

28.         Mr Purchas suggested that clause 3(1) was clearly intended to limit the exposure of the Board to liability for compensation.  The parties did not agree that compensation would be payable whenever planning permission was granted for development.  They restricted the categories of development which would trigger the obligation to pay compensation to “residential or industrial purposes”.  There were advantages to both parties in deferring the assessment of compensation until it became clear whether the use of the land for a more profitable purpose was inhibited by the presence of the electric lines.  If the Board had exercised powers of compulsory purchase, the Grantor would no doubt have received a sum in compensation which reflected the speculative prospect of a future development.  By removing the element of speculation and deferring the assessment of compensation until it was clear whether there was significant diminution in value in the future the Board had conferred a benefit on the Grantor and could reasonably look for some limitation on its liability in return. 

29.         The measure of compensation was closely defined as the diminution in the value for the permitted purpose, be it for residential or industrial purposes or both, attributable to the existence of the electric lines.  As a matter of ordinary language the phrase “development for residential or industrial purposes” would not include all forms of development.  It would exclude, for example, sport or other recreation or development for institutional or educational uses.  It would not include development of the land for an office block.  Once it was accepted that the expression “residential or industrial purposes” qualified the general obligation to pay compensation, the question simply became whether that expression extended to embrace a primary storage or distribution use.  The starting point in answering that question, Mr Purchas submitted, ought to be the 1962 Act and the planning regulations under which the specific planning permission was granted.  The expression “development for industrial purposes” was specifically addressed (though not defined) under the General Development Order 1963,  Class VIII of Schedule 1 of which provided a general permitted development for industrial purposes, including various forms of operational development which would not include development for warehousing or distribution.  Nor would a warehouse have been regarded as an “industrial building” within the definition in the 1962 Act.  Mr Purchas suggested that as a matter of principle the expression “industrial purpose” should be construed consistently with the references to “industrial building” and should be understood as having a relatively restrictive meaning connoting manufacture.  Industrial development was recognised in the 1960s as a category of use which would not include warehousing or distribution.

30.         Mr Purchas submitted that planning permission for development for industrial purposes was well understood at the time of the Deed as relating to industry in the strict sense of the making, processing or treating of goods and articles.  In the context of clause 3(1), which referred specifically to planning permission and compensation for diminution in value, the use of the expression “industrial purposes” should be understood in the same sense as “industry” was used in the core provisions of the planning legislation.  Section 4(3) of the 1962 Act specifically allowed allocation of land for residential and industrial purposes, reflecting central and regional Government policies for the support and promotion of housing and industrial regeneration.  “Industrial purposes” in that context had a specific limited meaning.  That  meaning might occasionally be enlarged, as in section 102 of the 1962 Act, by the incorporation of warehousing ., but that statutory enlargement provided no warranty for construing “industrial purposes” generally as having a wider meaning extending to storage or repository uses.

31.         The distinction between industrial use and warehousing was clearly recognised and applied in contemporaneous material drawn from the Skelmersdale New Town Corporation’s files which had been exhibited by the experts.  The standard industrial classification system on which Mr Short had relied as demonstrating the breadth of the uses included within “industry” was a survey of employment classes and not land use.  It extended to all conceivable employment uses including sports, professions and agricultural. 

32.         Finally Mr Purchas reminded me that the Tribunal’s task was to construe the language used by the parties and not to substitute different language which would, he submitted, be the effect of construing “industrial purposes” as extending to warehousing.

Issue 1

33.         Where technical language or a legal term of art is employed in a contract it is usually appropriate to give it its technical meaning, unless there is a good reason to take a different course.  The informed reader would understand that, in a formal legal document, the parties are likely to have employed a technical term intending it to bear its technical meaning. 

34.         The critical expression used in the Deed in this case is not a term of art nor is it couched in technical language. The words “development for residential or industrial purposes” are ordinary words which are capable of being understood without recourse to a legal dictionary.  They do not become technical terms or lose their ordinary quality by being coupled in clause 3(1) of the Deed with a reference to planning permission under the 1962 Act.  The expression “industrial purposes” was not defined in the 1962 Act, nor in subordinate legislation and there is therefore no justification for construing the Deed as if it were part of that body of technical  material.  The planning regime forms part of the background to the Deed, but its significance ought not to be too heavily emphasised.

35.         The task of the Tribunal is to interpret the Deed as it would be understood by a reasonable person having all the background knowledge which would reasonably have been available to both parties at the time of their agreement.  I do not accept that the relevant background knowledge would equip the reasonable reader of the Deed with the firm grasp of planning legislation demonstrated by Mr Short and Mr Sheard.  At a preliminary stage of these proceedings I questioned the need for expert evidence and doubted its admissibility, but both parties wished to deploy it and felt that it would assist me in understanding the background.  I am grateful to both experts for their systematic review of contemporary planning material and land use classification, and for their researches into the archives of the New Town.  For the reasons which I have already indicated, however, I do not believe it is necessary or appropriate for me to consider their evidence in detail.

36.         I begin by considering the language of the Deed.  It is agreed between the parties that at the time of the Deed the Reference Land was used for agricultural purposes.  Clause 3(1) is concerned with the development of that land for “residential or industrial purposes” in consequence of a planning permission obtained under the 1962 Act.   The word “industry” often connotes manufacturing enterprises, but the word (and its variants) are capable of a wider variety of meanings depending on the context in which they are used or the composite expressions of which they are part.  “Industry” or “industrial” can bear the more general meaning of economic activity in general, or refer to a particular category of economic activity. In modern usage it would certainly not be considered inappropriate to refer to the leisure industry, the film industry, the road haulage industry, the financial services industry, or many other activities which do not involve the manufacture of goods or the extraction or processing of materials.

37.         Nothing in the material I have been shown suggests to me that, even in the context of planning permission, “industry” would have been understood in the 1960s only in the narrower sense of economic activity associated with manufacturing or processing.  The expression “service industry” was certainly in use, as contemporary correspondence from the files of the New Town development corporation illustrates.  Whether the Standard Industrial Classification published by the Central Statistical Office in 1958 was intended to describe different categories of employment, or different categories of land use, it demonstrates that the adjective “industrial” was, at that time, capable of application over a very wide field of activity including distribution and warehousing.

38.         In what sense was “industrial purposes” used in the Deed?  The use of the composite expression “residential or industrial purposes” in contrast to the then agricultural use of the Reference Land suggests to me, as it suggested to the Lands Tribunal in Moyce, that what was intended was a broad classification of alternative uses “representing the principal classes of profitable development”, rather than a narrow focus on manufacturing industry.  It might also be said that development for “industrial purposes” has a wider connotation than simply development for industry, and would include ancillary uses.  Land used for the storage of raw materials or components for use in manufacturing, or of manufactured goods awaiting distribution to customers, seems to me to fall quite naturally within the scope of land used for “industrial purposes”.

39.         Consideration of the Deed in its wider commercial context also seems to me to point away from a narrow understanding of “industrial purposes” .  The Grantor was the owner of land situated in the vicinity of the New Town but outside its original boundaries.  Those boundaries would have been known to the parties from the master plan approved in May 1966, less than a year before they entered into the Deed.  It would have been obvious to the parties that, if the New Town was a success, there was a possibility that at some point in the future an alternative use of the Reference Land might be permitted, more valuable than the agricultural use then made of it by the Grantor. That the prospect of future development, however distant, was in the parties’ minds, is apparent from clause 3(1) of the Deed.    

40.         The Board had a need for the Reference Land for the erection of a substantial steel tower and for the passage of the new overhead electric lines to be supported by the tower.  The Board also had compulsory purchase powers and could have insisted on acquiring the rights it required, but no doubt it preferred to proceed by negotiation and agreement.  Clause 3(1) was incorporated into that agreement to ensure that in the event that a development opportunity emerged in future, the Grantor or his successors would be entitled to compensation for any diminution in value attributable to the existence of the electric lines.   There were no doubt advantages to both parties in that arrangement: the Grantor was not required to accept a speculative assessment of the diminution in the value of his land at some unknown point in the future for a use which could then only have been guessed at, which would have been difficult to assess, and which might represent a fraction of his eventual loss; the Board would not be required to make a payment on receipt of the Grant to reflect a loss which might never be suffered.  

41.         It is against that background that I must consider the Respondent’s submission that the purpose of clause 3(1) was to restrict the circumstances in which compensation would be payable.  I can think of no reason why the Board would reasonably expect to pay compensation if one valuable use of the land was restricted by reason of the presence of its overhead lines, but not if another use was so restricted; nor can I think why the Grantor would be willing to bear the diminution in value personally, without compensation, where the ability to develop the land for certain uses was restricted.  Such an un-commercial arrangement does not seem to me to be likely to have been the parties’ intention. 

42.         I am therefore satisfied that the expression “industrial purposes” employed in clause 3(1) is not to be narrowly construed, and is wide enough to include the development of the reference land for storage and distribution uses within Class B8 of the Use Classes Order 1987.

Issue 2

43.         The second issue concerns the valuation date by reference to which compensation is to be determined.  There are four alternative candidates: the date of grant of outline planning permission; the date of its subsequent variation to extend time for obtaining approval of reserved matters; the date of approval of reserved matters; or, finally the date of the notice of claim.  The claimant contends that the correct date is the date of approval of reserved matters, which was 15 May 2007.  The respondent’s position is that the relevant date is the date on which the claimant gave it notice that it had obtained planning permission which did not occur until 26 March 2008.  On that date the claimant’s advisers sent the respondent copies of the 2001 outlined planning permission, the 2004 outline planning permission and the decision of the inspector on the appeal against the refusal of reserved matters approval.  Alternatively, the respondent contends that the correct date of valuation is the date on which outline planning permission was first granted, on 20 December 2001.

44.         For the claimant, Mr Humphries argued that the correct valuation date was the date of approval of reserved matters.  Since the purpose of the clause was to provide a mechanism under which the Board would pay the grantor compensation for any diminution in the value of the property for the permitted use attributable to the existence of the electric lines, it was necessary to know the siting, scale and design of the development for which permission had been granted before that diminution could be ascertained.  The grant of outline planning permission in 2001 did not provide any of the necessary detail to enable the diminution to be assessed because the siting, design, means of access, external appearance and landscaping were all left over to be dealt with by a reserved matters application.  It would have been well-known to the parties at the time of the Deed that an outline planning permission might be in the bare form obtained in this case in 2001.  They cannot have intended diminution in value to be assessed on such incomplete material and it was therefore necessary to interpret the reference to “obtaining planning permission” as meaning either a full planning permission or an outline planning permission supplemented by the approval of reserved matters.

45.         Mr Purchas contended that the amount of compensation should be calculated to reflect the actual diminution in value suffered by the grantor at the date of his claim.  The entitlement to compensation arose not on the grant of planning permission but within 6 months of the date of the giving of notice of that permission.  The limitation period for bringing a reference to the Tribunal would not begin to run against the grantor until a notice had been given.  The grantor was free to choose when notice was given and could do so in its own interests, for example, by waiting until other events or developments occurred, or values reached a particular level, with a view to maximising the compensation payable.  The date on which reserved matters approval had been given could not be relevant to the valuation date since it was not the grant of a planning permission.  It was trite law that under the Planning Act the date of grant of planning permission, in the form of an outline planning permission, is the date that original permission and not the approval of reserved matters.  The reserved matters approval could be taken into account in assessing the diminution in value attributable to the presence of the overhead lines, because it was relevant to the development potential of the land, but it would be wrong to treat it as a planning permission in its own right.  To treat the date of giving of the notice as the date of valuation was consistent with the purpose of the Deed.  The grantor had been deprived of his ability to develop the land or to sell it free from the interference of the overhead lines and at a time of his own choosing.  There was no reason why the Deed should inhibit the grantor’s freedom to select the time at which it was convenient for him to implement a planning permission and it was therefore appropriate to value the lost or diminished opportunity at the date of the claim.

46.         I am not persuaded by Mr Purchas’s argument.  In particular the language of clause 3(1) seems to me clearly to point to the obtaining of planning permission as being the event which triggers the Grantor’s entitlement to compensation.  While it is true that the obligation to make payment does not arise until notice of the planning permission has been given, that is readily understandable simply as a matter of practicality, as the Board (and any prospective successor) was unlikely to maintain a close watch on planning permissions granted over the Reference Land and would expect to be kept informed by the Grantor when he considered that the value of his land had been materially diminished

47.         The basic structure of the obligation is that “if the Grantor shall at any time… obtain planning permission … the Board will within 6 months of being served by the Grantor with written notice of the granting of such permission… pay to the Grantor compensation….”  The event on which the obligation is conditional is the obtaining of planning permission and, in the absence of any indication that any alternative valuation date is intended, that triggering event seems to me most naturally to be the date by reference to which the diminution in value ought to be ascertained.

48.         I do agree with Mr Purchas, however, that one purpose of clause 3(1) is to confer on the Grantor the flexibility to decide when to seek compensation.  It is not any planning permission which will trigger the obligation to make payment of compensation but only a planning permission in respect of which the Grantor gives written notice.  There is no obligation on the Grantor to give notice of a particular planning permission and he is free in my judgment to delay giving notice until he has obtained a more favourable planning permission.  The entitlement to compensation is an entitlement to compensation for the diminution in the value of the land for the purpose permitted by the permission of which notice has been given by the Grantor. 

49.         What then was the planning permission of which notice was given on 26 March 2008?  In my judgment the planning permission was, as Mr Humphries submitted, the outline planning permission obtained in 2001 supplemented by the reserved matters approval obtained on appeal on 15 May 2007.  While in strict planning law terms the only planning permissions granted were the outline permission of 2001 and its renewal in identical terms save for the date for reserved matters approval obtained in 2004, it seems to me that when the Deed speaks of the Grantor obtaining planning permission for the development of the property for residential or industrial purposes the parties must have intended that the relevant permission would include the details necessary to enable the property to be developed.  If one asks at what date did the claimant obtain planning permission for the development the implementation of which was inhibited by the presence of the electric lines over the property, that date was 15 May 2007.  For the reasons given by Mr Humphries, it was only at that date that development could have proceeded.  

50.         Mr Purchas accepted that if the claimant had refrained from seeking reserved matters approval and had instead applied for a detailed planning permission and been granted it in May 2007 it could immediately have triggered the entitlement to compensation by reference to that planning permission by giving notice under clause 3(1).  There seems to me to be no commercial justification for distinguishing entitlement to compensation in those circumstances from entitlement to compensation where the development which is interfered with has been permitted in identical terms by an outline planning permission followed by a reserved matters approval.

51.         I therefore determine that the valuation date under clause 3(1), in the circumstances which have happened, is 15 May 2007.

52.         This decision is final in relation to the preliminary issues on all matters other than costs.  If the parties wish the question of costs to be determined now, they should make submissions in accordance with the timetable indicated in the letter which accompanies this decision.  The parties should, at the same time, submit their proposals (preferably agreed) for the further conduct of the reference.

 

                                                                                                Martin Rodger QC

                                                                                                Deputy President

 

                                                                                                21 October 2014