Outline planning consent — Right of way — Sale of land to developers — Agreement to pay proportion of development gain to local authority — Dispute as to basis of valuation — High court holding that land to be valued on serviced plot basis
In 1988 the defendants proposed to undertake the development of a site in Challock Lees, near Canterbury, Kent, for residential and light industrial purposes. To that end they set about constructing an access road across the verge connecting their site with the A252 road. The council contended that as owners of the subject land, the defendants were not entitled to a right of way across the verge at the point where the new access road was to be constructed. The defendants claimed a right of way by prescription. The dispute was settled by a consent order. Para 8 of the schedule to the order imposed an obligation on the defendants to pay to the council, in the event of the subject land being sold for development or of the defendants developing it themselves, 30% of the difference between its value (taking into account its development potential) and its current use value.
Para 8(j) provided that in making his valuation the surveyor should be guided by the approach of the Lands Tribunal in Stokes v Cambridge (1961) 180 EG 839. In that case the tribunal began by valuing the land on the “serviced plot basis” and by making an agreed deduction for the estimated costs of roads, sewers, fencing, consents and contingencies. It went on to hold that it was correct in principle to make a further deduction for developer’s profit and it adopted the figure of 15%, which had been put forward on behalf of the local authority.
In January 1993 the defendants obtained outline planning consent to develop the site for residential purposes by the erection of 28 dwellings. In November 1993 they agreed to sell the site complete with greenhouses and a nursery garden to a developer for £760,000, conditional on the grant of planning consent. In May 1994 detailed planning consent was given for the development to be served by one access road — the new access road specified in the schedule. The sale of the site triggered the provisions of the schedule, including para 8. By notice of motion the defendants raised questions as to the true meaning and effect of the provisions relating to the computation of “development gain” for the purposes of para 8.
Held The surveyor was required to adopt the serviced plot basis of valuation.
1. As a matter of construction the opening value of the land for the purposes of para 8 must assume that development of some kind had taken place.
2. At the time when the schedule was drawn up, the parties were looking ahead into the future and it was apparent that at that time they thought that the most likely outcome would be planning permission for a mixture of light industrial and residential use. It was against that background that para 8 had to be construed.
3. As a matter of construction para 8(j) required the surveyor to adopt, so far as it was practical, the same scheme of valuation as that adopted by the Lands Tribunal in Stokes v Cambridge. That involved making the opening valuation on a serviced plot basis.
4. Had the draftsman of the schedule intended to leave the surveyor free to adopt some other basis, eg to assume that the development had been fully built out, one would expect to find the deduction for development costs to be drawn in much wider terms.
David Rowell (instructed by Kingsford Flower & Pain, of Ashford) appeared for the council; Vivian Chapman (instructed by Edward Harris & Son, of Swansea) appeared for the defendants.
