Town and Country Planning Act 1971, section 22(3)(a), section 169(3)(c) and Schedules 8 and 18 — Appeal by planning authority from decision of Lands Tribunal — Tribunal (V G Wellings QC) decided, on a preliminary issue of law, that the respondent property company was entitled to compensation under section 169 of the Act for refusal of planning permission — The refusal was of permission to add 11 additional flats to the top of each of the respondents’ existing two blocks of flats — The planning authority claimed that compensation was not payable on two grounds — The first was that the proposed addition was not an ‘enlargement’ of the existing building within the meaning of Schedule 8, having regard to para 3 of the Schedule and section 22(3)(a) of the Act — The second was that, as the gross floorspace of the building would be enlarged by more than 10% (in fact by 11.49%) in contravention of para 1 of Schedule 18, no compensation was payable as a result of section 169(3)(c) — The Lands Tribunal rejected both grounds for the refusal of compensation — Held by Court of Appeal that the Lands Tribunal was correct in rejecting the first ground for refusal but was wrong in rejecting the second ground — The Lands Tribunal had taken the view that section 169(3)(c) did not wholly defeat the claim for compensation but merely limited it to the amount which would have been appropriate if the proposed increase had been restricted to 10% — In the court’s view this interpretation conflicted with the plain words of section 169(3)(c); if Parliament had intended merely to limit compensation it would have been easy to say so — Appeal allowed
This was an
appeal by Camden London Borough, by case stated, from the decision of the Lands
Tribunal (V G Wellings QC) (1982) 262 EG 239, [1982] 1 EGLR 191 holding that
Peaktop Properties (Hampstead) Ltd, the present respondents, were entitled to
compensation for the refusal of the council to grant permission to build an
additional 11 flats on the top of each of the respondents’ two blocks of flats
(each with 104 flats) in Belsize Grove, London NW3. The Lands Tribunal’s
decision was on a preliminary point of law.
Jeremy
Sullivan QC (instructed by F Nickson, town clerk, Camden) appeared on behalf of
the appellant council; Malcolm Spence QC and G Stoker (instructed by Brecher
& Co) represented the respondents.
Giving
judgment, STEPHENSON LJ said: The respondent company holds two blocks, each of
104 flats in Belsize Grove. They have the freehold of one and a 999 years’
lease of the other. They have been refused planning permission to build another
11 flats on the top of each block. For that refusal they claim compensation
under section 169 of the Town and Country Planning Act 1971. On their reference
of a preliminary point of law the Lands Tribunal (V G Wellings QC) decided that
the appellant authority was liable to pay them compensation. From that decision
the authority appeals by way of case stated to this court.
The authority
rested its case before the Lands Tribunal and before us on two grounds, which
are formulated in their notice of appeal as follows:
(1) That the
Lands Tribunal was wrong in law in deciding that section 22(3)(a) of the Town
and Country Planning Act 1971 has no application in the circumstances of the
present case and in rejecting the argument that the respondent hereto is not
entitled to compensation under section 169 of the 1971 Act because the proposal
is to create separate flats intended to be in separate occupations in the proposed
new storeys.
(2) That the
Lands Tribunal was wrong in law in deciding that section 169(3)(c) of the 1971
Act does not require the entire prospective use to be ignored but only that
part which constitutes ‘the excess’.
To understand
these grounds, the first perhaps more clearly defined by Mr Sullivan for the
authority in argument before us than below or in the notice, it is necessary to
examine a number of provisions in the Act of 1971, beginning with section 169.
That section
provides:
(1) The
provisions of this section shall have effect where, on an application for
planning permission to carry out development of any class specified in Part II
of Schedule 8 to this Act, the Secretary of State, either on appeal or on the
reference of the application to him for determination, refuses the permission
or grants it subject to conditions.
(2) If, on a
claim made to the local planning authority within the time and in the manner
prescribed by regulations under this Act, it is shown that the value of the
interest of any person in the land is less than it would have been if the
permission had been granted, or had been granted unconditionally, as the case
may be, the local planning authority shall pay to that person compensation of
an amount equal to the difference.
(3) In
determining, for the purposes of subsection (2) of this section, whether or to
what extent the value of an interest in land is less than it would have been if
the permission had been granted, or had been granted unconditionally —
(a) it shall be assumed that any subsequent
application for the like planning permission would be determined in the same
way; but
(b) if, in the case of a refusal of planning
permission, the Secretary of State, on refusing that permission, undertook to
grant planning permission for some other development of the land in the event
of an application being made in that behalf, regard shall be had to that
undertaking; and
(c) no account shall be taken of any prospective
use which would contravene the condition set out in Schedule 18 to this Act
Schedule 8 is
headed ‘Development not Constituting New Development’ and is divided into three
parts. Part I is headed ‘Development not Ranking for Compensation Under s.169’
and it reads:
(1) The
carrying out of any of the following works, that is to say —
(a) the rebuilding, as often as occasion may
require, of any building which was in existence on the appointed day, or of any
building which was in existence before that day but was destroyed or demolished
after 7th January 1937, including the making good of war damage sustained by
any such building;
(b) the rebuilding, as often as occasion may
require, of any building erected after the appointed day which was in existence
at a material date;
(c) the carrying out of works for the
maintenance, improvement or other alteration of any building, being works which
affect only the interior of the building, or which do not materially affect the
external appearance of the building and (in either case) the works for making
good war damage, so long as (in the case of works falling within any of the
preceding sub-paragraphs) the cubic content of the original building is not
exceeded —
(i) in the case of a dwellinghouse, by more than
one-tenth or 1,750 cubic feet, whichever is the greater; and
(ii) in any other case, by more than one-tenth.
(2) The use
as two or more separate dwellinghouses of any building which at a material date
was used as a single dwellinghouse.
Part II is
headed ‘Development Ranking for Compensation under s.169’, and I read only
paragraph 3:
The
enlargement, improvement or other alteration, as often as occasion may require,
of any such building as is mentioned in paragraph 1(a) or (b) of this Schedule,
or any building substituted for such a building by the carrying out of any such
operations as are mentioned in that paragraph, so long as the cubic content of
the original building is not increased or exceeded —
(a) in the case of a dwellinghouse, by more than
one-tenth or 1,750 cubic feet, whichever is the greater; and
(b) in any other case, by more than one-tenth.
Part III
contains supplementary provisions, of which only paragraph 11 was referred to
by the tribunal and none, I think, is relevant.
It is agreed
that if the permission the company applied for and the Secretary of State
refused was for an enlargement of a building of the kind contemplated by
paragraphs 1 and 3 of the Schedule, it was a permission to carry out the
building operation involved and also for the use of the space created by the
enlargement for the purposes for which the space was designed. It was also
agreed (for the purpose of the Lands Tribunal’s decision and ours) that by the
proposed additions the cubic content of the existing blocks would not be
increased or exceeded by more than one-tenth, which was greater than 1,750
cubic feet. What was applied for was described as ‘Additional floor to existing
buildings. Form flats similar to existing floors below’ and involved the
building operation of constructing an additional storey on each block for use
as individual flats, for
33(2). It would therefore appear to be a development which ranked for
compensation under section 169, and the authority would be liable under
subsection (2) to pay to the company on their claim, admittedly made properly,
any difference between the value of their interest in the land with its
existing buildings and its value if the permission to enlarge them had been granted
— a difference put by the company at £142,500. That permission is to be assumed
to have been granted subject to the condition set out in Schedule 18, for
section 278(1) provides:
In any case
where the value or depreciation in value of an interest in land falls to be
determined on the assumption that planning permission would be granted for
development of any class specified in Schedule 8 to this Act, it shall be
further assumed, as regards development of any class specified in paragraph 1
or 3 of that Schedule, that such permission would be granted subject to the
condition set out in Schedule 18 to this Act.
It is,
however, argued that this refused development does not rank for compensation
under Schedule 8 and also that the prospective use for which the company
applied contravened the condition set out in Schedule 18, which provides by
para (1):
Where the
building to be rebuilt or altered is the original building, the amount of gross
floor space in the building as rebuilt or altered which may be used for any
purpose shall not exceed by more than ten per cent the amount of gross floor
space which was last used for that purpose in the original building.
The gross
floorspace, ascertained by external measurement (para 4 of Schedule 18),
exceeded the gross floorspace of the original building, in each case used for
residential purposes by 11.49% and therefore no account shall be taken of that
prospective use (whatever that means — and its meaning is in dispute) in
determining the questions referred to in section 169(3).
Mr Sullivan
rests the authority’s appeal on the use to which the company applied to have
the additional storeys put. His first contention is that, apart from the
question of gross floorspace, the proposed or prospective use of these
additions as new self-contained flats is neither within Schedule 8 nor within
Schedule 18. That is not an enlargement of the existing flats. It is not a
development within the existing use of the blocks of flats. It is a new
development, outside Schedule 8 altogether. It is agreed that if the company’s
existing buildings were blocks of offices (or a factory or shops) and the
additional storey in each case were designed and intended to be used as suites
of offices, the company would be entitled to compensation under Schedule 8
unless prevented by falling foul of Schedule 18. But flats and dwelling-houses
are (he submits) in a different category. To add a wing to a large building
used as a single dwelling-house, for use as a separate dwelling-house, or even
to turn the top floor into a self-contained flat, would be a new development
outside the existing use of the house and so outside Schedule 8, which provides
compensation for development not constituting new development.
This anomaly
is created by section 22(3)(a), which is picked up by paragraph 2 of Schedule 8
and provides:
For the
avoidance of doubt it is hereby declared that for the purposes of this section
—
(a) the use as two or more separate
dwellinghouses of any building previously used as a single dwellinghouse involves
a material change in the use of the building and of each part thereof which is
so used.
It would create
a further anomaly if the company could get compensation when refused permission
to build new flats.
Mr Sullivan
relies also on the predecessors of section 22 (which defines development and
new development and divides development into ‘the carrying out of building . .
. or other operations’ and ‘the making of any material change in the use of any
buildings or other land’) and Schedule 8 in section 20 of and Schedule 4 to the
Town and Country Planning Act 1947. That Schedule 4 provides for compensation
in eight paragraphs identical with those of Schedule 8 to the Act of 1971, but
each part refers to ‘Development included in existing use’.
Last on this point
Mr Sullivan calls attention to the assumption underlying paragraph 1 of
Schedule 18 that in altering a building what is to be considered is the purpose
for which the original building was used. That purpose was here its use for
twice 104 existing flats; that is not the same purpose as the use of the
addition for twice 11 new flats.
I find this an
unacceptably refined argument and agree with the tribunal in rejecting it. The
fact that use is not mentioned in para 3 of Schedule 8 (though it is in other paras
of Part II) does not prevent the use of the additional storey from being
required to be within the use of the existing block; but in plain language and
common sense it is. The purpose of each proposed addition is to enlarge a block
of flats. It is the same use, above and below the roof of the existing
building. If anomalies are to be considered, I would rather go with the
tribunal and draw no distinction for this purpose between flats and offices
than with Mr Sullivan in assimilating the extension of a block of flats to the
subdivision of an existing dwelling-house — or flat if large enough to be
subdivided — into separate flats.
On the second
point which the tribunal decided in the company’s favour I respectfully dissent
from the member’s conclusion and accept the argument of Mr Sullivan. This turns
on the construction of section 169(3)(c).
The member
said this; I read from p 8 of his reasons for decision [262 EG 239, [1982] 1
EGLR 191 at p 240]:
I agree with
Mr Spence that section 169(3)(c) does not defeat the claim for compensation.
The true view is that that subsection does not require the entire prospective
use to be ignored but only that part which constitutes the excess. If that
subsection were intended to defeat such a claim, rather than being in a
subsection concerned with assessment of compensation, it would surely have been
added at the end of either subsection (1) or (2) of that section. The
comparison which the latter subsection requires to be made therefore is between
the values of the interest of the claimants, first, on the basis of the absence
of planning permission for the proposed extensions and, secondly, on the
assumption of the existence of planning permission which authorises the
proposed extension but which also is subject to a condition, in effect,
limiting the proposed increase in gross floorspace to 10% of the original
amount of gross floorspace: see section 278(1) of the Act of 1971.
It is true
that paragraphs (a) and (b) of subsection (3) are concerned with assessment of
compensation, and Mr Sullivan concedes that the subsection does refer to
quantum and valuation, though its opening words contemplate the determination
of a nil valuation. But that does not mean that part only of the prospective
use of the enlargement should be disregarded in assessing any diminution in the
value of an intending developer’s interest in the land as a result of refusal
of planning permission. If it meant that, the paragraph would say so and read:
‘No account shall be taken of so much of any prospective use as would
contravene the condition set out in Schedule 18.’ The prospective use is the use for which the
company applied unsuccessfully for permission, namely ‘Form flats similar to
existing flats below’; and it is the prospective use of the addition for that
residential purpose which would contravene the condition as to the amount of
gross floorspace which might be used for that purpose.
The purpose of
the condition set out in paragraph 1 of Schedule 18 may have been, as Mr Spence
submitted, to curtail the compensation payable to developers who vertically
divided rooms with high ceilings; but it applies to a case like the present and
seems to me to rule out altogether a prospective use which involves a breach of
the condition. Any other interpretation of apparently plain words would lead to
great practical difficulties in valuing, although I am not convinced that it
would be beyond the powers of an expert to find a formula for valuing the hypothetical
excess floorspace for the purpose of disregarding it and the hypothetical
lawful floorspace for the purpose of assessing the compensation payable. There
is a similar provision in section 180(2) of the Act which does not solve the
problem. There is authority for giving effect to the lawful part of a
transaction by discarding the unlawful part: a recent instance is the decision
of this court in Thames Water Authority v Elmbridge Borough Council
[1983] 2 WLR 744. But I see no reason for performing that operation upon a
hypothetical transaction in aid of developers who have not taken the trouble to
meet the plain condition laid down by Parliament of their entitlement to be
paid money out of the pockets of other ratepayers.
For these
reasons I would on this point hold that the company is not entitled to
compensation and allow the appeal.
Agreeing,
O’CONNOR LJ said: The respondents own two blocks of flats in Belsize Grove,
Hampstead. Each block has 104 flats. The respondents applied for planning
permission to add a floor to one wing of each block, thus creating 11
additional flats in each block. Permission was refused and the respondents
applied for compensation under section 169 of the Town and Country Planning Act
1971. The appellant authority refused compensation on the ground that the
respondents’ proposed development did not fall within para 3 of Schedule 8
and/or the provisions of Schedule 18 to the Act. The Lands Tribunal rejected
both grounds of refusal, and the authority appeal to this court.
My lord has
set out the relevant statutory provisions and I need not repeat them in this
judgment.
The first
ground is that the proposed addition of a floor to a block of flats to create
further flats is not ‘the enlargement . . . of the building’ even though the block
of flats is a building within paragraph 1(a) of the Schedule, and the
requirement that the cubic content of the addition does not exceed that of the
original building by more than 10%, is fulfilled. This startling proposition is
said to follow from the provisions of section 22(3) of the Act and para 2 of
Schedule 8. In my judgment nothing of the sort does follow, for the simple
reason that it is not possible to say that a block of flats ‘was previously
used or was used as a single dwelling-house’ within section 22(3). These
provisions have no application to the enlargement of a block of flats which
does not involve creating two flats out of one.
The second
ground is that the fact that the gross floorspace of the building would be
enlarged by more than 10% in contravention of para 1 of Schedule 18
disqualifies the case for compensation. Mr Spence for the respondents has
submitted that the true effect of the provisions is to limit the compensation
to be paid to a sum to be calculated on the basis that the addition to the
building did comply with Schedule 18. In my judgment that proposition only has
to be stated to make it clear that it must be rejected. The Act creates enough
problems as it is, and there is no call for the court to add to them by putting
an artificial construction on provisions that are clear. I find no ambiguity or
difficulty in section 169(3)(c) of the Act. The enlargement for which
permission has been refused did not comply with the requirements of Schedule
18, and in the result the refusal does not give rise to any right in the
respondents to claim compensation.
On this ground
I would allow this appeal.
Also agreeing,
SIR DAVID CAIRNS said: The respondents to this appeal, Peaktop Properties
(Hampstead) Ltd, are the owners of two blocks of flats in the same curtilage at
Belsize Park, London NW3, in the borough of Camden. They were desirous of
enlarging each block by building another storey to it and increasing the number
of flats in it from 104 to 115. They applied to the appellant council, the
planning authority for the borough, for planning permission under the Town and
Country Planning Act 1971. Such permission was refused and they then claimed
compensation for such refusal under the Act. Compensation was refused, an
appeal to the minister was dismissed and they appealed to the Lands Tribunal.
It was agreed that the tribunal should be invited to hear as preliminary points
two of the grounds of appeal. The hearing of those preliminary points came
before V G Wellings QC, a member of the tribunal, and he decided both of them
in favour of the claimants. The council appeals.
There is no
general right to compensation for the refusal of planning permission. The
circumstances in which such compensation becomes payable are set out in section
169 of the Act and Schedules 8 and 18. The relevant provisions of the Act have
been set out in the judgment of Stephenson LJ and there is no need for me to
repeat them.
It was agreed
for the purpose of the preliminary issues (1) that both blocks of flats could be
taken together and the relevant dimensions were the total cubic contents and
total gross floorspace of the two together and of the projected additions to
both together; (2) that the projected additions so calculated would be under
10% of the cubic contents but 11.49% of the floorspace.
The first
issue was one to which these dimensions were not relevant. It was whether the
additions would have constituted an ‘enlargement’ within the meaning of para 3
of Schedule 8.
The second
issue did depend on the dimensions. Since the agreed figures did not bring the
increase in cubic content above 10% no point arose under Schedule 8. But
because the floorspace to be used for residential purposes would have been
increased by over 10% the council contended that the compensation was barred
under Schedule 18 whereas the claimants contended that the only effect of that
schedule was to limit the amount of compensation to that which would
have been appropriate if the projected increase in floor area to be so used had
been 10% instead of 11.49%.
On the first
issue the council’s contention was that the addition of another tier of flats
was not an ‘enlargement’ because the language was only intended to cover an
enlargement of a building for use in the same way as the existing building, and
that the provision of new dwellings was a different use from that of the
existing dwellings. I am unable to accept that proposition. Assuming that the
enlarged building has to be for the same use as the existing building (though I
am not satisfied that it must be) the existing building is used for residential
purposes only and the proposed addition would have been for residential
purposes only.
More
persuasive was the argument that because under section 22(3)(a) of the Act the
division of a dwelling-house into two or more dwelling-houses involves a
material change of use, it must by analogy follow that the addition to a
dwelling-house or, as in this case, to a block of dwelling-houses, of a further
dwelling-house or dwelling-houses must constitute such a change. Any attempt to
construe the Act of 1971 by the use of an analogy is in my view dangerous. The
highest it can be put is that it would make good sense if the provisions of
section 22(3)(a) were extended to cover the making of such an addition, but I
can find no indication either in that subsection or in Schedule 8 that
Parliament had any such extension in mind. I would dismiss the appeal on the
first issue.
On the second
issue the wording of section 169(3)(c) and of Schedule 18, para (1), seems to
me clearly to mean that if the projected development would have resulted in an
increase of more than 10% in the floorspace used for a purpose for which the
floorspace of the existing building was used then no compensation is payable.
If Parliament had intended merely that the compensation should be limited to
that which would have been appropriate if the added floorspace so used had not
exceeded 10% it would have been easy to say so. Moreover, the difficulty of
deciding which part of the floorspace was to be regarded as the excess, and how
the compensation was to be calculated thereon, makes it unlikely that such an
interpretation could have been intended. I would allow the appeal on the second
issue.
The appeal
was allowed on the second ground (relating to section 169(3)(c) of the 1971
Act) in the notice of appeal. No order was made in respect of costs in Court of
Appeal or below.
