Compensation for acquisition of land –– Value of land –– Scheme –– Identification of scheme –– Cardiff Bay barrage –– Land for nature reserve required to meet conservation objections –– Whether Indian case wrongly decided –– Whether purpose underlying acquisition identifies scheme –– Whether project a scheme only if project of acquiring authority –– Whether nature reserve integral part of project –– Whether temporal limitation on matters regarded as part of scheme –– Whether owners entitled to “barrage inhibition value”
Early in 1998, the Land Authority for Wales (LAW) acquired some 1,000 acres of land for a bird reserve. The reserve was required in order to meet serious environmental objections arising from the loss of wetlands in connection with the construction of the Cardiff Bay barrage by the Cardiff Bay Development Corporation. Some 225 acres of the land was low-lying farmland adjacent to the Severn Estuary and owned by the appellant owners. The barrage project was already under way in 1995, when the subject land was identified for the nature reserve. Before the Lands Tribunal, the owners claimed compensation on four alternative bases: £28,000 pa for “barrage inhibition value”, £13,000 pa for “nature reserve value”, £9,000 pa for “development hope value” and £4,500 pa for agricultural value. The barrage inhibition value was advanced on the basis that the land commanded an additional or ransom value consequent upon its indispensable status to the Cardiff Bay barrage scheme. At a hearing of two preliminary issues before the Lands Tribunal, the president decided that: (i) r (3) of section 5 of the Land Compensation Act 1961 did not apply because the subject land did not have a “special suitability or adaptability” for the purpose in question; and (ii) the identification of the scheme, for the purposes of the Pointe Gourde rule, depended upon the public purpose or purposes underlying the acquisition of the subject land. The public purpose underlying the acquision of the subject land was the Cardiff Bay barrage scheme, and this was the scheme for the purposes of the Pointe Gourde rule, notwithstanding that different agencies were used for the purposes of developing the barrage and acquiring the land for the bird nature reserve. The owners appealed the decision on the second issue.
Held: The appeal was dismissed. The nature reserve was part of the scheme. The decision of the Privy Council in Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 (the Indian case) should not be treated as wrong; this and other cases could be reconciled if they were seen as turning on their particular facts. Identifying the purpose of the acquisition might be relevant to the definition of the “scheme”, but was not a substitute for it. It was not a requirement that a project could be a scheme only if it were a project of the acquiring authority. There was no temporal limitation on the matters that could be regarded as included in the scheme. The mere fact that the owners’ land was not identified until 1995, when the barrage project was already under way, did not prevent it from being treated as part of the same project. The project for the nature reserve was directly linked to the purposes of the urban development area, which included the barrage project. The owners were entitled to nature reserve value, but not to barrage inhibition value.
The following cases are referred to in this report.
Batchelor v Kent County Council (1989) 59 P&CR 357; [1990] 1 EGLR 32; [1990] 14 EG 129; RVR 181; [1990] JPL 571, CA
Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478; [1978] 2 EGLR 16; (1978) 248 EG 499; [1979] JPL 25, CA
Birmingham City District Council v Morris & Jacombs Ltd (1976) 33 P&CR 27; [1976] 2 EGLR 143; [1976] EGD 513; 240 EG 539, CA
Cedar Rapids Manufacturing & Power Co v Lacoste [1914] AC 569, PC
Davy v Leeds Corporation; Central Freehold Estates (Leeds) Ltd v Leeds Corporation [1965] 1 WLR 445; [1965] 1 All ER 753; (1965) 63 LGR 181; 17 P&CR 83; [1965] RVR 171, HL
Davy v Leeds Corporation; Central Freehold Estates (Leeds) Ltd v Leeds Corporation [1964] 1 WLR 1218; [1964] 3 All ER 390; (1964) 62 LGR 628; 16 P&CR 244; [1964] RVR 776, CA
Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 2 WLR 404; [1995] 1 All ER 846; [1995] 1 EGLR 19; [1995] 19 EG 147; [1995] RVR 124, PC
Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment, Transport and the Regions [2000] 2 AC 307; [2000] 2 WLR 438; [2000] 1 All ER 929; (2000) 80 P&CR 95; [2000] 1 EGLR 13; [2000] 11 EG 141, HL
Fraser v City of Fraserville [1917] AC 187, PC
Fraser v The Queen (1963) 40 DLR (2D) 707
Horn v Sunderland Corporation [1941] 2 KB 26; [1941] 1 All ER 480; 39 LGR 367, CA
Inland Revenue Commissioners v Clay [1914] 3 KB 466; (1914) 83 LJKB 1425; 111 LT 484; 30 TLR 573
Kaye v Basingstoke Corporation (1968) 20 P&CR 417; [1968] RVR 744
Lambe v Secretary of State for War [1955] 2 QB 612; [1955] 2 WLR 1127; [1955] 2 All ER 386, CA
Lucas and Chesterfield Gas & Water Board, Re [1909] 1 KB 16, CA
Lucas and Chesterfield Gas & Water Board, Re [1908] 1 KB 571, KBD
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426; [1978] 3 WLR 520; [1977] 1 All ER 161; (1979) 38 P&CR 195
Mercury Communications Ltd v London & India Dock Investments Ltd (1993) 69 P&CR 135; [1994] 1 EGLR 229
Myers v Milton Keynes Development Corporation [1974] 1 WLR 696; [1974] 2 All ER 1096; (1974) 72 LGR 420; 27 P&CR 518
Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302; [1939] 2 All ER 317
Reid v Bickerstaff [1909] 2 Ch 305
Rugby Joint Water Board v Shaw-Fox; Rugby Joint Water Board v Foottit [1973] AC 202; [1972] 2 WLR 757; [1972] 1 All ER 1057; (1972) 70 LGR 339; 24 P&CR 256; [1972] EGD 356; 222 EG 815, HL
Secretary of State for Foreign Affairs v Charlesworth Pilling & Co [1901] AC 373, PC
Sidney v North Eastern Railway Co [1914] 3 KB 629, DC
Stebbing v Metropolitan Board of Works (1870) LR 6 QB 37
Stokes v Cambridge Corporation (1961) 13 P&CR 77; [1961] EGD 207; 180 EG 839, LT
Viscount Camrose v Basingstoke Corporation [1966] 1 WLR 1100; [1966] 3 All ER 161; (1966) 64 LGR 337
Wilson v Liverpool Corporation; sub nom: Wilson (Personal Representatives of FW Wilson) v Liverpool City Council [1971] 1 WLR 302; [1971] 1 All ER 628; (1971) 22 P&CR 282; [1971] EGD 144; (1971) 217 EG 987, CA
This was an appeal by the appellants, Melville and Elizabeth Waters and others, from a decision of the Lands Tribunal on a hearing of preliminary issues, in a reference for the determination of disputed compensation for the acquisition of land payable by the respondent, the Welsh Development Agency.
David Holgate QC and Timothy Morshead (instructed by Jacklyn Dawson & Meyrick Williams, of Newport) appeared for the appellants; Anthony Porten QC and Adrian Trevelyan Thomas (instructed by the solicitor to the Welsh Development Corporation) represented the respondent.
Giving the first judgment at the invitation of Schiemann LJ, Carnwath LJ said :
Introduction
1. This is an appeal from the decision of the president of the Lands Tribunal (Mr George Bartlett QC) on preliminary issues arising from claims to compensation by landowners at Nash, near Newport, Gwent. It raises difficult questions as to the application of the so-called Pointe Gourde rule (or no-scheme rule), that compensation for compulsory purchase “cannot include any increase in value which is entirely due to the scheme underlying the acquisition: see Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 at p571.
Background
2. The subject land is low-lying farmland adjacent to the Severn Estuary. The various parcels total about 225 acres. They were included, along with other land, amounting in total to some 1,000 acres, in the Land Authority for Wales (Gwent Levels Wetlands Reserve, Newport) Compulsory Purchase Order 1997. The respondent Welsh Development Agency is the successor to the Land Authority for Wales (LAW).
3. A general vesting declaration was made on 26 January 1998, vesting the land in LAW on 25 February 1998, upon which it was transferred to the Cardiff Bay Development Corporation (CBDC), which itself transferred it immediately to the Countryside Council for Wales (CCW). The valuation date is 25 February1998, when the land vested in the CBDC.
4. The background history was set out in considerable detail in the president’s decision. Even so, the appellants before us have suggested that there were some significant omissions. However, it seems to me that the main points necessary for our decision are not controversial, and can be summarised quite shortly.
5. Plans for a barrage across the estuary of the Taff and Ely rivers were first supported by the government in November 1985. In April 1987, the CBDC was established by order under the Local Government Planning and Land Act 1980, and the Cardiff Bay area became an “urban development area” under that Act. After several abortive attempts to promote a parliamentary Bill, the Cardiff Bay Barrage (No 2) Bill was introduced in July 1991 to provide the necessary authorisation for the barrage scheme.
6. It was apparent from the outset that there would be serious environmental objections arising from the loss of wetlands, and that mitigation measures would be required. The 1991 Bill included provision for a tidal lagoon to be constructed in a coastal area at Wentlooge. That proposal was dropped after it had been strongly criticised by the House of Commons Committee, partly because of the financial consequences for the farming families in the area. The Welsh Office, with the support of the conservancy bodies, including the RSPB, established a working group to look for alternatives. Local agents were instructed to report on the feasibility of acquiring an area of land up to a maximum of 1,000 acres within a defined area of search.
7. LAW became involved in May 1992. At that time, LAW had a special role (not replicated by any similar authority in England), which (under section 103(1) of the 1980 Act) was that of acquiring land in Wales for development, and of disposing of it to other persons for development by them. Under section 102, it was required to comply with directions of the Secretary of State for Wales relating to performance of its functions, but it was not to be regarded as a servant or agent of the Crown. Under section 104(1), it had power to acquire by agreement, or, if authorised by the Secretary of State, compulsorily, “any land which, in the Authority’s opinion, is suitable for development”.
8. In May 1992, the Welsh Office indicated the government’s intention that LAW should in due course acquire the land for the reserve once identified, if necessary using its compulsory powers, but that the long-term ownership and management of the site would be entrusted to the CCW. In response, LAW made clear that it would reserve its position until approached with a specific proposal.
9. The attention of the working group was initially directed to an area in Redwick, which is about 2km east of the subject land at its nearest point. This idea progressed sufficiently for the CCW and the RSPB to withdraw their petitions against the Bill, which was enacted on 5 November 1993 with no specific mitigation measures. By June 1994, work had started on the barrage, and a specific request had been made to LAW to consider using its acquisition powers to create a bird reserve on the Redwick land. However, the discussions with the landowners in Redwick, and an appreciation of the damage that the proposal would do to farming interests in the area, led to the investigation of alternative options.
10. Matters seem to have come to a head in October 1995. As the president found, the urgency shown by the Secretary of State for Wales at that time was “substantially due” to the pressure brought by the European Commission. The European Commission had been involved since as early as 1987, when a formal complaint had been made by the RSPB. There had also, in the same year, been a proposal to include the Cardiff Bay area in a proposed special protection area (SPA) under the European Birds Directive. The Commission’s position was that the Cardiff Bay proposal could be accepted under the Birds Directive as justified by overriding socio-economic reasons, but only if its requirements as to compensatory measures were fully met. This was stated in a letter to the Welsh Office from the Commission dated 11 October 1995. The Commission expressed strong concern that, in spite of assurances previously given by the Welsh Office, and in spite of the commencement of the barrage project, there was no sign of implementation of the mitigation measures.
11. At about the same time, the decision was made not to proceed with the Redwick proposal, but to concentrate upon an alternative area on the Gwent Levels, including the subject land. On 6 November 1995, LAW and the CBDC entered into a formal agreement for LAW to assist in acquiring the necessary land, on the CBDC’s undertaking to pay the relevant costs. The agreement identified the intended area, including the subject land. The agreement stated that it did not create any partnership or agency between the parties. Following this agreement, the Secretary of State informed the Commission of the new proposals, and assured the Commission that the government remained “committed to implementing appropriate compensation/mitigation measures as soon as practicable”.
12. On 17 January 1996, the Secretary of State gave a written answer in parliament, announcing the proposal for the Gwent Levels Wetland Reserve. Since this seems to have been the the first formal public announcement of a project including the claimant’s land, it is worth recording what Mr Hague said in full [at col 622 of Hansard]:
I am pleased to announce my plans to proceed immediately with bird reserve compensation measures at Uskmouth and Goldcliff and the area in between on the Gwent Levels. These new proposals have been developed with the assistance of Countryside Council for Wales, from the conclusions reached by the Cardiff Bay development corporation steering group report on alternative mitigation measures –– October 1995 –– and discussed with the European Commission…
I have asked the Cardiff Bay development corporation to set up immediately a project implementation steering group to oversee the establishment of the new
On the same day, LAW submitted a planning application for the nature reserve to the local planning authority. The Commission indicated that, in view of the guarantees given, it was satisfied that the requirements of the directive had been met and the complaint file was being closed.
13. During the following months, LAW began steps to acquire the necessary land by agreement. No decision having been made on the planning application by January 1997, LAW gave notice of appeal to the Welsh Office. At the same time, it made the compulsory purchase order that led to the present dispute. Although, by then, it had acquired some 80% of the relevant interests in the land needed for the reserve, the order covered the whole site. (As I understand it, this was done largely as a precaution to ensure that no interests were overlooked.) The purpose of acquiring the land (as stated in the order) was “for the purpose of disposing of it for the development and maintenance thereafter of a wetlands reserve involving the creation of saline pools, reedbeds and managed grassland”.
14. The statement of reasons for making the compulsory purchase order referred to the agreement entered into in 1995, and stated that the proposal for the reserve:
arises from the need for an agreement between the UK Government and the European Commission to provide compensatory measures for the loss occasioned by the construction of the Cardiff Bay Barrage of the site of Special Scientific Interest in the Taff/Ely estuary…
That reference to some form of agreement with the European Commission led to exchanges of correspondence between the claimants’ solicitor and the Welsh Office and an application for judicial review. The effect of these exchanges, together with the Welsh Office’s evidence in the judicial review proceedings, was to confirm that there was no formal agreement with the Commission, and also to assure the claimants that objections to the order would be properly considered, and that if the proposed reserve were unacceptable, an alternative would be sought, notwithstanding the very tight timescale. On this basis, the judicial review proceedings were withdrawn.
15. Following a public inquiry, the CPO was confirmed and planning permission was granted by a decision letter of the Secretary of State dated 14 November 1997. The present appellants had originally objected, but they withdrew their objections before the inquiry because (as they said) they regarded the result as inevitable. The decision letter stated Welsh Office policy that a compulsory purchase order should not be made in the absence of “a compelling case in the public interest”, but, in para 21, considered this test to be satisfied:
The Secretary of State accepts the inspector’s conclusion that there is a requirement to provide compensation for the loss of the Cardiff Bay habitat and no better scheme than that proposed by the Land Authority has emerged.
This view was amplified in para 27, under the heading “the adequacy of the compensation measures”:
The Secretary of State… accepts that in the case presently before him, the provision of a reserve has been proposed because of the need for compensatory measures due to the construction of the Cardiff Bay Barrage and the consequent loss of the intertidal mudflats when impoundment of the water in the Bay occurs. However, regardless of the Barrage project and the adequacy of the compensatory measures when considered in the terms of the Birds and Habitats Directives, the Secretary of State is satisfied that the provision of a substantial nature reserve which will aim to qualify for SPA status and which will contribute to meeting the UK’s objectives under the Bio-diversity Convention (signed at Rio de Janeiro in June 1992) is, of itself, a project that is in the public interest and, although not a primary reason for seeking the CPO, he nonetheless accepts the view of LAW that it will form a valuable conservation measure in its own right.
16. A general vesting declaration was made on 26 January 1998, and the land constituting the Gwent Level Wetlands Reserve was vested in LAW on 25 February 1998. In due course, ownership of the land passed to the CBDC and from it to the CCW.
17. Claims were submitted for compensation that were later referred to the Lands Tribunal. The president’s decision does not set out the alternative bases of claim in any detail. He simply notes in para 2 the claimants’ contention that their land had a “ransom value”, in that:
the loss of habitats in Cardiff Bay has given their land a value in excess of agricultural value because, together with the rest of the 1,000 acres, it constitutes the most suitable area for the nature reserve which it was necessary to establish as a compensatory measure.
18. We have been shown the particulars of the claim, as submitted following a direction of the tribunal. Although it is not material, for present purposes, to consider the detail, or the valuation evidence in support, it is helpful, in considering the preliminary issues, to have some idea of their possible implications in monetary terms. Four alternative bases are put forward by the claimants. The lowest two are not said to be dependent upon the preliminary issues. They are (in summary) agricultural value (£4,500 per acre) and development hope value (£9,000 pa). (The authority’s valuations are based simply upon agricultural value, which it puts slightly lower.)
19. The two higher bases, which are said to be dependent upon the preliminary issues, are nature reserve value (£13,000 pa) and (to use Schiemann LJ’s suggested shorthand) barrage inhibition value (£28,000 pa). The way the latter is put in the claimants’ particulars is instructive:
Upon the premise that the land commands a particular value consequent upon its indispensable status vis a vis the Cardiff Development Scheme and upon the premise that the Pointe Gourde principle and Section 5 rule 3 of the Land Compensation Act 1961 does not preclude such an approach…
… the claimants maintain that regard must be had to the extent and importance of the Cardiff Bay Development Scheme… The best estimate which the claimants can presently give is that the total value element of that scheme would have been of the order of £180,000,000.
20. The precise relationship between the latter figure and the claimed figure of £28,000 per acre is not explained, although details are also given of some other transactions in the area, including purchases by LAW. One may infer, although this is not stated, that the claimants have in mind a valuation exercise comparable to that adopted in Stokes v Cambridge Corporation (1961) 13 P&CR 77*, where land required for access to unlock the potential of a development site was valued by reference to a share of the development value.
* Editor’s note: Also reported at (1961) 180 EG 839
21. As to the other of the two higher valuations, there is no doubt that the claimants are entitled, in principle, to nature reserve value, if (which is disputed) it is worth more than agricultural value. This is because the Land Compensation Act 1961 allows the claimant the benefit of an actual or assumed permission for the authority’s proposed development, whether or not it would have been granted in the absence of the authority’s scheme: see sections 14(2) and 15(1) of the 1961 Act. Accordingly, it is barrage inhibition value that is at the heart of the debate.
22. The tribunal directed that there should be a hearing of two preliminary issues. The first was whether the case was governed by r (3) of section 5 of the 1961 Act. This was determined against the authority, and there is no cross-appeal against that part of the decision. However, since the president’s findings on that issue are relevant to the other issue, it will be necessary to refer to them. The second issue, which was determined against the claimants, and is now subject to appeal, was expressed in these terms:
Whether the scheme underlying the acquisition is the intended use of the land taken as a nature reserve or the construction of the Cardiff Bay Barrage; and whether or not it is necessary to discount for the purposes of valuation any increase in the value of the land taken as being due to the need to acquire the land taken as a palliative measure necessary as a result of the environmental consequences of the construction of the Cardiff Bay Barrage, following (the Pointe Gourde case).
President’s decision
23. Rule (3) provides:
The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from… the requirements of any authority possessing compulsory purchase powers.
24. In the context of the present case, two questions arose: first, whether the land had “special suitability” for the authority’s purpose; and, second, whether there was any market for that purpose apart from the requirements of an authority possessing compulsory purchase powers. (It was not contended that this was a purpose to which the site “could be applied only in pursuance of statutory powers”.) The president found against the authority on the first question:
Whether the subject land has a special suitability or adaptability within the terms of rule (3) falls to be judged in relation to the purpose for which the acquiring authority acquired it, that is to say, as part of a nature reserve that would meet the need to provide compensatory measures for the loss of the Taff/Ely SSSI… The requirement of special suitability is not met by showing that the land is the most suitable land for the purpose. In Batchelor Mann LJ, having considered the Oxford English Dictionary definition of “special” said ((1989) 59 P&CR 357 at 362): “Most suitable does not correspond with specially suitable.” The land must possess some exceptional character in relation to the purpose in question. I am satisfied that the subject land does not have a special suitability or adaptability in this sense. The evidence suggests strongly that there are other areas along the Severn Estuary that could have performed the same function…
25. He indicated that, had he decided the “special suitability” question in favour of the authority, he would have found in its favour on the other question:
Mr Holgate submitted that both the Welsh Office, which did not have compulsory purchase powers, and RSPB were potential bidders. On this, I accept Mr Porten’s submissions. The purpose of the acquisition to create a wetlands reserve to compensate for the loss of the Taff/Ely SSSI was not one that RSPB saw, or would ever have seen, as being its function to achieve. Its concern throughout was to bring pressure to bear on the government to provide a compensatory reserve, and it would have been inconsistent with this stance to consider providing a reserve itself. As for the Welsh Office, I can see no evidence that it would ever have pursued land acquisition on its own behalf. LAW was there with the specific function of acquiring land in Wales for development, and the Secretary of State had power to give LAW directions as to the performance of its functions. I can see no reason for thinking that he would ever have acted other than by these means.
26. On the Pointe Gourde issue, the president conducted a detailed review of the case law, which led him to state the “principle” in the following terms:
The basis of the Pointe Gourde rule and the rules contained in sections 5 to 9 of the 1961 Act appears to be this. The owner is to receive as compensation the equivalent in money terms of what he has lost through the compulsory acquisition of his land. He must be put into the position that he would have been in if there had been no compulsory acquisition. Compulsory powers of acquisition are only conferred in the public interest. A compulsory purchase order is only made and confirmed for a public purpose which the making authority and the confirming authority judge to be sufficiently important to warrant compulsion. The principle is that any effect on the value of the land acquired arising from the public purpose or public purposes prompting the acquisition, whether from their adoption by the authority or from their implementation, is to be disregarded. A scheme or proposal is the embodiment of the public purpose or public purposes concerned.
27. On that basis, in his view, it was:
immaterial whether the “scheme underlying the acquisition” is the Cardiff Bay Barrage or the nature reserve proposal itself since there is no suggestion that the barrage had any effect on demand for the subject land other than for the public purpose so identified. Whichever of the alternatives constitutes the scheme, there must be left out of account such effect on value as the adoption or implementation of the purpose of providing the compensatory nature reserve may have had. Given this conclusion it becomes unnecessary to seek to identify the scheme underlying the acquisition in the way that is frequently necessary in compensation cases.
28. He recognised, however, that this conclusion did not answer the preliminary issue in the terms in which it had been formulated. Accordingly, he went on to consider whether the “scheme”, for the purposes of the Pointe Gourde rule, should be regarded as confined to the nature reserve on its own, or should be regarded as including the barrage. He concluded:
Since, in my view, it is the public purpose or public purposes of the acquisition on which the identification of the scheme must depend, the crucial factors are that the nature reserve proposal was made necessary by the barrage scheme and that the barrage scheme proceeded on the basis that some such compensatory measures would be provided. In the absence of the barrage scheme there would have been no public purpose for the acquisition; and in the absence of assurances on the part of Government that a compensatory nature reserve would be provided it is unlikely that the Act would have become law, certainly in its present form, but if it had done I think it probable that action would have been taken by the European Commission to prevent impoundment. Thus the implementation of the barrage scheme as regards the permanent inundation of Cardiff Bay was, I find, dependent on the acquisition and development of land for the Gwent Levels nature reserve. The fact that the Secretary of State, in confirming the CPO, saw the nature reserve as having an additional wider justification, and the fact that the Commission sought and obtained additional compensatory measures on the part of the government do not change the essential nature of the acquisition as one element in the barrage scheme. That different agencies were used for the purposes of developing the barrage and for acquiring and developing the land taken for a nature reserve does not prevent there being a single scheme. The agencies, CBDC, LAW and CCW, acted in concert at the behest of the government, and finance for the nature reserve was channelled through CBDC. In the light of these factors, if it is necessary to identify the scheme underlying the acquisition, I find that it was the Cardiff Bay Barrage.
29. Before leaving the president’s decision, it is necessary also to mention what he said about the so-called Indian case: Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302. I understand that it was the president himself, rather than the parties, who introduced the Indian case into the argument. He also noted that it had been approved and applied by the Court of Appeal in Lambe v Secretary of State for War [1955] 2 QB 612, and in one major Lands Tribunal case. He described its effect as follows:
The Judicial Committee of the Privy Council decided that the proper approach to the assessment of compensation was to have regard to the authority’s purpose in acquiring the land, but to assume a “friendly negotiation” between it and the vendor rather than one taking place against the background of the authority’s pressure to buy under the compulsory acquisition.
The suggestion appears to have been that, on this basis, even if the “scheme” did include the barrage, the value could still take that purpose into account, in so far as it would have led a purchaser to offer a higher price in “friendly negotiations”. However, having raised the point, the president discounted it because, as he thought, the approach of the Indian case was “unquestionably at odds” with the Pointe Gourde rule as stated and applied in later cases in the Court of Appeal and in the House of Lords.
Appellants’ case
30. The appellants challenge the president’s decision on a number of grounds. They can, I think, be summarised and reordered in five main points, the first two of general principle, and the others more fact-specific:
(i) the president should have treated the Indian case as establishing that, notwithstanding the no-scheme rule, the acquiring authority must
(ii) in applying the no-scheme rule, the president applied a “public interest” test that is not supported by the authorities;
(iii) the “scheme”, for the purposes of the no-scheme rule, must be a scheme of the acquiring authority itself, or one to which the acquiring authority is a party;
(iv) compulsory acquisition of the claimants’ land must form an “integral part” of the scheme to be disregarded;
(v) on the facts, and in the light of its earlier findings, the president was not justified in finding that the inundation of Cardiff Bay was “dependent” upon provision of the Gwent Levels nature reserve.
31. Like the president, I find it impossible to address these questions satisfactorily, without first considering, in some detail, the basis of the law relating to disregarding the “scheme” for compensation purposes.
No-scheme rule
32. The Pointe Gourde rule (or no-scheme rule) has been recognised in numerous authorities at the highest level. However, for a rule that is so well-established, it is surprisingly difficult to find a clear exposition of its precise ambit. One finds a concise statement of the principle in the recent Privy Council case Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111* at p136A (per Lord Nicholls):
A landowner cannot claim compensation to the extent that the value of his land is increased by the very scheme of which [the compulsory acquisition] forms an integral part… A loss in value attributable to the scheme is not to enure to the detriment of a claimant… The underlying reasoning is that if the landowner is to be fairly compensated, scheme losses should attract compensation but scheme gains should not. Had there been no scheme those losses and gains would not have arisen.
* Editor’s note: Also reported at [1995] 1 EGLR 19; [1995] 19 EG 147
33. Central to that statement is the word “scheme”. That raises an immediate question. Compensation is a statutory right to payment for the adverse effects of compulsory acquisition, not for the adverse effects of a scheme. That is not a word that appears in any of the relevant statutes. So what is the source of the rule? It is sometimes described as a “common law principle”: see eg per Lord Russell in Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at p435D: “part of the common law deriving as a matter of principle from the nature of compensation for… compulsory acquisition”. On the other hand, in Lord Pearson’s view (Rugby Joint Water Board v Shaw-Fox [1973] AC 202* at pp214-215), it could not be a common law principle because compulsory acquisition and compensation are entirely creations of statute; in his opinion, the rule was one of interpretation of the word “value” in the relevant statutes. Neither of these explanations gives one any precise assistance as to the ambit of the rule.
* Editor’s note: Also reported at (1972) 222 EG 815
34. There is a further conceptual problem. Apart from any specific statutory provision, the landowner has no inherent right to compensation for the adverse effects of public projects (say, a new motorway blocking the view from his house), any more than the authority has a right to recoupment for its beneficial effects (for example, a new road opening up an area for private development). Compensation for losses due to public works is governed by detailed statutory schemes, such as Part I of the Land Compensation Act 1973. Conversely, under the present law, recoupment of gains is left to general taxation, attempts at more comprehensive solutions (such as in the Town and Country Planning Act 1947 and the Community Land Act 1975) having been abandoned.
35. Thus, a principle that “scheme losses should attract compensation but scheme gains should not”, attractive as it sounds, is not self-evident. In so far as the word “scheme” is intended to refer to actions of public authorities going beyond the simple act of compulsory acquisition, it is an exception to the general principle that, under the modern system, the burdens and benefits of the activities of public authorities lie where they fall. The justification for such an exception, and its precise ambit, must be found (if Lord Pearson’s analysis is accepted) in something to be implied, as a matter of interpretation, in the relevant statutes.
36. In most areas of the law, having arrived at such a point, one would turn for guidance to the relevant statutes. In this area of the law, unfortunately, that is not a speedy route to enlightenment. The statutory incursions into this field, notably the 1961 Act (section 5(3) (originally introduced in 1919), and section 6 with Schedule 1 (introduced in 1959)) have not had a happy history in the courts. As will be seen, the former has been interpreted so narrowly that it is hard to find any case in which it has had any practical effect. The drafting of the latter is of such obscurity that it was described by Harman LJ, in a memorable passage, as “a slough of despond”: see Davy v Leeds Corporation [1964] 1 WLR 1218 at p1224. Indeed, counsel needed some encouragement from the court in the present case to venture at all into its murky waters.
37. The case law offers more attractions, taking one on an engrossing historical tour of the jurisdiction of the Judicial Committee of the Privy Council from its heyday at the beginning of the last century: railway-building in the jungles of Zanzibar (Secretary of State for Foreign Affairs v Charlesworth Pilling & Co [1901] AC 373); hydro-electric works in Canada (Cedar Rapids Manufacturing & Power Co v Lacoste [1914] AC 569; Fraser v City of Fraserville [1917] AC 187); anti-malarial works related to harbour development in India (the Indian case); a quarry needed to build a US naval base in Trinidad (the Pointe Gourde case itself); a shopping centre in Queensland (Melwood); and, most recent, displacement of a steelworks to make way for a new town in Hong Kong (Shun Fung).
38. Not surprisingly, given the extraordinary variety of subject matter and location, the statements made in these cases are not always easily reconcilable with each other, nor readily transferable to the conditions of post-war Great Britain. Such statements must always be read in the factual context in which they occur. But the very diversity of the contexts encourages the hope that underlying it all is a principle of some robustness and universality.
39. More surprising, perhaps, is the fact that the problems of reconciliation seem to have gone largely unnoticed in the higher courts. In the more modern cases, it has usually been considered sufficient to refer to the formulation of the rule by the Privy Council in Pointe Gourde itself: see eg Davy v Leeds Corporation [1965] 1 WLR 445 at p452 per Lord Dilhorne. Similarly, in Wilson v Liverpool Corporation [1971] 1 WLR 302*, in which the Court of Appeal established the modern form of the rule, the only cases cited were Pointe Gourde and Fraser, which were treated as identical in effect. The difficulty of reconciling the decisions in either case with that of the Privy Council in the Indian case seems generally to have escaped notice, until the problem was identified by the president in the present case. In the few cases where the Indian case has been cited, it has been treated as illustrating, and certainly consistent with, the Pointe Gourde principle: see Rugby Water Board at p214; see also Lambe, and, in the Canadian Supreme Court, Fraser v The Queen (1963) 40 DLR (2D) 707 at pp723-725.
* Editor’s note: Also reported at (1971) 217 EG 978
40. The government has recently accepted the need to “consolidate, codify and simplify” the legislation in this area, and has referred certain issues to the Law Commission for consideration, including the rules relating to disregard of changes in value due to the “scheme”: see Compulsory Purchase and Compensation: Delivering a Fundamental Change: DTLR December 2001. The Law Commission is expected shortly to issue a consultative report on the law relating to compensation. For that purpose, it has undertaken a detailed historical review of the development of the no-scheme rule. This has been made available in draft to the parties and the court in this case. We, of course, have to decide this case in accordance with what the law is, rather than
Defining the scheme
41. A sound starting point for consideration of the content of the rule is the classic statement by Fletcher Moulton LJ in 1909, since cited with approval in the House of Lords: see eg Rugby Water Board at pp214-215, per Lord Hodson. Having noted that compensation was based upon value to the owner, not value to the purchaser, he continued:
hence it has from the first been recognized as an absolute rule that this value is to be estimated as it stood before the grant of the compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorized by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him.
(Re Lucas and Chesterfield Gas & Water Board [1909] 1 KB 16, at pp29-30.)
In that case, the extent of the “scheme” was not in doubt; it was established by the scope of the particular Act of 1904 that authorised the construction of the reservoir (the facts are summarised later in this judgment).
42. Pointe Gourde, which was decided in 1947 and gave its name to the rule, purported to be an application of the same principle. It concerned the acquisition of land for construction of a naval base during the war. The land included a quarry, from which stone could be used for the base. It was held that, in valuing the quarry, the extra value given by that potential use had to be disregarded, as part of the “scheme underyling the acquisition”. (I shall return to the judgment, when discussing the issues raised by the Indian case.)
43. Subsequent development of the no-scheme rule must be seen against the background of: first, the radical change in the planning system in this country, introduced by the Town and Country Planning Act 1947 and other legislation; and, second, (following a period when, under the 1947 Act, all development value had been, in effect, expropriated by the state) the restoration of “market value” compensation by the Town and Country Planning Act 1959. In relation to the definition of the “scheme”, the change was explained in one of the more illuminating decisions in this field, that of the Lands Tribunal (under Sir Michael Rowe QC) in Kaye v Basingstoke Corporation (1968) 20 P&CR 417 at p458. He observed:
Before the 1939 War it is broadly, perhaps entirely, true to say that the application of the common law Rule was comparatively simple insofar as discovering what “the scheme underlying the acquisition” was. There was usually an act, public but more often private, or an order which defined the scheme and the area where it was to operate. But in the post-war years a new conception of planning led to a series of measures which gave local authorities, of one kind or another, planning powers of a much less detailed though more far-reaching character. (He referred to the 1947 Act itself, the New Towns Act 1949 and the Town Development Act 1952.)
44. Under the new regime, one could not rely upon a particular Act or order to define the scope of the scheme; one needed to look for other evidence. This is illustrated by Wilson, which established the no-scheme rule in its modern form. It concerned the acquisition of an area of 74 acres for housing development to meet the expanding needs of the city. The facts emerge most clearly from the Lands Tribunal decision, reported at [1969] RVR 741. The council had, in February 1963, adopted a 10-year programme to provide 5,000 houses a year to meet the needs of its area. In March 1963, the development committee resolved to apply for permission for housing development of an area of 391 acres (including the 74 acres belonging to Mr Wilson), and gave authority to negotiate for acquisition of the whole area, using its general housing powers. Planning permission was granted by the minister in November 1963. By February 1964, the council had acquired, by agreement, all but 86 acres of the site, and they made a compulsory purchase order for the remainder, including Mr Wilson’s land. Mr Wilson also owned land outside the council site, which he was able to sell privately for £6,700 per acre. That was taken as a base for valuing the subject land, but the tribunal made a deduction of £1,350 per acre under the Pointe Gourde rule on the basis that, had it not been for the council’s scheme, development of this area would have been delayed for two years, and the owners would have had to bear the additional costs, such as for sewers and wayleaves.
45. The Court of Appeal approved this approach. Having rejected the argument that section 6 of the 1961 Act provided a complete code, it held that the case fell directly within the Pointe Gourde rule. The court also rejected an argument for the claimant that the rule did not apply because the scheme was not sufficiently precise and definite at the valuation date. Widgery LJ, in a passage that is often cited, said at p310A-C:
Whenever land is to be compulsorily acquired, this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project, compulsory powers of acquisition will not arise at all, and it would, I think, be a great mistake if we tended to focus our attention on the word “scheme” as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so-called Pointe Gourde rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition.
The extent of the scheme is a matter of fact in every case, as is shown by the decision in Fraser v Fraserville City… It is for the tribunal of fact to consider just what activities –– past, present, or future –– are properly to be regarded as a scheme within the meaning of this proposition…
46. As always, these comments need to be seen in the context of the facts of the case. Widgery LJ’s comments on the word “scheme” were directed to the appellant’s argument by analogy with the law on “building schemes” in relation to restrictive covenants, where the cases require both the area and the obligations of the scheme to be adequately defined: see eg Reid v Bickerstaff [1909] 2 Ch 305 at p319. Relying upon that analogy, the claimant had argued that there was no “scheme”, in the required sense, until January 1968, when the minister gave final clearance to the details of the development. The tribunal had held that the scheme was sufficiently established not later than November 1963, when outline planning permission was granted for the whole area.
47. More difficult to explain, in the context of the case and of the previous authorities, is another oft-quoted passage in Wilson, where Lord Denning MR referred to a scheme as “a progressive thing” that “starts vague and known to few (but) becomes more precise and better known as time goes on…”: p309D-E. In so far as this implies that the “scheme” may come into existence before any formal adoption by the authority concerned, it does not appear to be supported by authority, or consistent with principle. For example, in Lucas it was the statutory authorisation of the scheme that was regarded as critical. By analogy, where the acquisition is made under general statutory powers, the scope of the scheme should be apparent from an appropriate resolution or decision that provides the basis for the use of compulsory powers. The first preparatory stages of a proposal may be “vague and known to few”, but they do not make it a “scheme” of the authority as such. In Wilson itself, as one would expect, there was a specific resolution of the relevant committee, in March 1963, to authorise acquisitions for a clearly defined project, followed by grant of planning permission. The only argument was whether, at that point, the project was sufficiently detailed, not whether one should look behind it to the earlier, preliminary stages.
Other valuation issues
48. Before returning to the issues raised by the appeal, it is desirable to separate out for discussion the other related elements of the valuation exercise. In this case, we are concerned solely with the rule as it applies for the protection of the acquiring authority against increases in value caused by the scheme. It is unnecessary, therefore, to consider, other than by way of analogy, the statutory rules for the protection of the claimant against the effects of the scheme, so far as reflected in
49. On this footing, there are three tests that require separate discussion: (i) the market value rule; (ii) special suitability and r (3); and (iii) section 6 of the 1961 Act. The first can be regarded as the baseline. The claimants’ case will ultimately stand or fall on their being able to establish that, apart from any matters required to be disregarded by statute or judicial rule, barrage inhibition value was part of the market value of the land. The other two tests, and the Pointe Gourde rule, are exclusionary rules. They require to be left out of account what would otherwise be elements of market value. They can be seen as hurdles over which the claimants must pass to get back to base.
Market value
50. The starting point for assessing compensation is the market value of the land in question: “the amount which the land if sold in the open market by a willing seller might be expected to realise”: see section 5(2) of the 1961 Act, originally r (2) of the 1919 rules. That does not mean simply existing use value. The willing seller expects to receive recognition of any additional value due to the potential of the land for development. This may mean a substantial addition, even if there is only one potential purchaser for that potential.
51. This aspect of market value is explained and illustrated by the Indian case, which, whatever the merits of its treatment of the no-scheme rule (to which I will come), remains authoritative on the interpretation of the market value principle: for the relevant Indian statute of 1894, see [1939] AC at pp310-311. The case concerned the compulsory acquisition of land, which contained a supply of good drinking water, that was required for anti-malarial works in connection with development of a new harbour. The main issue was whether the valuation should take into account the potentiality of the site as a water supply, given that the only potential purchaser for that purpose was the harbour authority. One limb of the authority’s argument was that, even if it were permissible to take account of the potential bid of the acquiring authority itself, the additional value would be negligible because the bidding would only rise above the existing use value (the poramboke value) sufficiently to enable the land to be knocked down to that purchaser.
52. In rejecting this argument, Lord Romer, at p312, explained the application of market value in the context of compulsory purchase:
The compensation must be determined… by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded. Neither must be considered as acting under compulsion. This is implied in the common saying that the value of the land is not to be estimated at its value to the purchaser. But this does not mean that the fact that some purchaser might desire the land more than others is to be disregarded. The wish of the particular purchaser, though not his compulsion, may always be taken into consideration for what it is worth.
53. He explained that the valuation must take account not only of its existing use but also of “the uses to which it is reasonably capable of being put in the future”. Thus, agricultural land with potential for building use must be valued taking account of the possibility of its being used for building purposes, bearing in mind that “it is the possibilities of the land and not its realised possibilities that must be taken into consideration”. Where the potential arises from unusual or unique features of the land, the arbitrator will have “no market value to guide him”, and he will have to ascertain “as best he may from the materials before him” what a willing vendor might expect to obtain from a willing purchaser for that potential: see p313. He rejected at p316-317, citing the English Court of Appeal in Inland Revenue Commissioners v Clay [1914] 3 KB 466, the authority’s argument that if there were only one potential purchaser for that potential use, the additional value would be negligible:
if the potentiality is of value to the vendor if there happened to be two or more possible purchasers of it, it is difficult to see why he should be willing to part with it for nothing merely because there is only one purchaser. To compel him to do so is to treat him as a vendor parting with his land under compulsion and not as a willing vendor. The fact is that the only possible purchaser of a potentiality is usually quite willing to pay for it.
54. The Indian case was unusual at this level, in that the case was not simply sent back to the tribunal below, but the Privy Council, at the invitation of the parties, undertook the valuation on the correct basis. It is therefore of interest to see how the Privy Council dealt with the facts of the particular case. It agreed with the High Court that the harbour authority was “the only really possible purchaser” for use as a water supply: see p327. The figure had to be set at the sum that the authority “in a friendly negotiation” would have been willing to pay. The judge had arrived at a figure of Rs105,000, on the footing that the spring could have been made an income-earning concern from the date of valuation. In the view of Lord Romer, a substantial discount had to be made in view of the fact that the water could not be exploited by the appellant himself, and that it would necessarily be some years before the water would become a profit-earning asset. On this basis, the appropriate figure was fixed at Rs40,000, as representing the figure that the harbour authority would have agreed to pay as “willing purchasers”: see pp330-331.
55. It is not strictly correct, in my view, to describe this as a “ransom” value, since this would imply, contrary to Lord Romer’s statement, that the seller was able to exploit the purchaser’s “urgent necessity”. As he made clear, both parties must be regarded as “willing”.
56. Applying this approach to the present case, the requirement of land for a nature reserve, in connection with the barrage scheme, is, in principle, something to be taken into account in fixing the market value. If that requirement would have led any of the authorities involved in the scheme, in “friendly negotiations” assuming no compulsory purchase, to offer something above agricultural value, then that can be taken into account, subject to overcoming the other hurdles. Clearly, the extent to which the subject land, as in the Indian case, was uniquely suited for that purpose, would be a very material factor in the valuation. To this extent, it is difficult to separate this issue from the question under r (3) (see below). On the other hand, the Indian case helps the claimants in establishing that the possibility of such additional value is not ruled out as an element of market value, even if there would have been no potential purchaser other than LAW itself.
57. How, if it arises, that additional value should be assessed is not an issue before us. A modern application of this aspect of the Indian case, in a statutory context to which the no-scheme rule was not relevant, can be seen in Mercury Communications Ltd v London & India Dock Investments Ltd (1993) 69 P&CR 135* (Judge Hague QC). That judgment contains a useful discussion of the problems of valuation that can arise in such cases, in the absence of clear comparables, and illustrates the potential difficulty of applying the Stokes approach, other than in situations where the benefit to the purchaser can be readily quantified: see p161).
* Editor’s note: Also reported at [1994] 1 EGLR 229
Special suitability and r (3)
58. The first hurdle for the claimants was r (3). Although they have passed that hurdle, the route by which they did so is material to the other valuation issues. Furthermore, Mr Holgate relies upon r (3) and its background as part of his argument against the president’s public-interest test. It is necessary therefore to set r (3) in its historical context, and to consider the implications of the president’s decision in favour of the claimant on this aspect of the case.
59. The present r (3), set about above, is derived (with some amendment) from the rules originally enacted in the Acquisition of Land Act 1919. They followed recommendations of the 1918 Scott Committee (Report on the Law and Practice relating to the Acquisition and Valuation of Land for Public Purposes, Cd 9929). As the chairman later explained (by then, as Scott LJ) in Horn v Sunderland Corporation [1941] 2 KB 26 at p40, the main purpose of the committee’s recommendations was:
to mitigate the evil of excessive compensation which has grown up out of the theory, evolved by the Courts, that because the sale was compulsory the seller must be treated by the assessing tribunal sympathetically as an unwilling seller selling to a willing buyer.
60. As already noted, the 1919 rules established the market value principle upon which compensation has since been based, including the rule that the owner should be treated as a willing seller: see r (2).
61. Rule (3) was directed at the perceived problems caused by the special suitability principle, as established in previous cases. The significance of special suitability or special adaptability is well illustrated by Re Lucas [1909] 1 KB 16, which I have already mentioned as a leading case on the no-scheme rule. It concerned a proposal by the board to construct a storage reservoir between two existing reservoirs on the Linacre Brook. The proposal for the new storage reservoir was authorised by a local Act of 1904, which gave the board the necessary powers to carry out the necessary works on the brook, and to acquire land compulsorily for the purpose. The umpire had found that the site had “peculiar natural advantages for a reservoir site”, and also that there was “competition for the supply of water within the district in question”: see p19.
62. The main problem that exercised the courts was the extent to which the umpire could take into account, in the valuation, the special suitability of the land for the purpose that the scheme had been designed to serve. At first instance, the judge (Bray J), at [1908] 1 KB 571 at p580, had decided that he should do so, not only because there might be other possible buyers but also because the board itself should be regarded as a possible purchaser that might give a special price for the land:
The fact that they have obtained statutory powers must not be taken into consideration, but before any statutory powers have been given or even applied for it may be that these lands would have a special value owing to the fact that it was likely that sooner or later the board would require another reservoir, and that this would form a most convenient site for one.
63. There was a difference on this issue in the Court of Appeal. Vaughan Williams LJ agreed with the judge on both points. The umpire was required to take into account “the fact that the board itself might become possible purchasers who would give a special price…”, regard being had to “the value of the probability as it existed before the promoters had obtained their powers”, but not “the realised probability”: see [1909] 1 KB 16 at pp25 and 28. Fletcher Moulton LJ’s agreement was more limited: the umpire was entitled to take into account the possibility of “competition between rival public authorities”, but not the interest of the acquiring authority itself, because that would offend the no-scheme rule. The third member of the court, Buckley LJ, agreed at p37, with Vaughan Williams LJ and the judge that the interest of the acquiring authority itself had to be taken into account, and, indeed, was evidence of “enhanced value”:
The facts here are that not only is there a reasonable possibility of the site coming into the market, but that the site is wanted for the particular purpose, and is being acquired under compulsory powers for that purpose. The land is so situate in proximity to the reservoirs already existing that within a reasonable time it is reasonably certain that it will be required for this special purpose, with the result that it has acquired an enhanced value. That was a matter for the umpire to take into consideration.
64. It is important to emphasise, in the context of the present case, that none of the judges thought it right to exclude altogether the public purpose of providing a water supply for the district, nor the possibility of other public bodies competing for the land for that purpose. The suitability of the land as a reservoir to serve the needs of Chesterfield was a proper element of the valuation. The issue was solely as to whether the board itself was to be treated as a potential purchaser. (On this, the majority’s approach was later approved by the Privy Council in the Indian case: see below. Fletcher Moulton LJ also commented that “special adaptability” was not a very happy term, “for special adaptability for some purpose or other is the very basis of the market value of all land…”: p30. (See also, to similar effect, Sidney v North Eastern Railway Co [1914] 3 KB 629 at p640 per Shearman J.)
65. The special suitability principle clearly gave rise to considerable difficulty in practice in the period before the 1919 Act. In Sidney, Shearman J complained of “the ingenuity of claimants” in finding “special adaptability of some sort in any kind of land compulsorily taken”: see p640. It is to be remembered that at this time, before the introduction of “official arbitrators” by the 1919 Act, claimants had the right, over a certain figure, to an award by jury: see sections 22 and 68 of the Land Clauses Act 1845. The Scott Committee was concerned that, under this principle, “merely theoretical and often highly speculative elements of value which had no real existence have crept into awards as if they were actual”: see para 8.
66. The committee’s view was that no account should be taken of the possibility of competition between statutory undertakers, which was only possible “under an imperfect system for the granting of statutory powers”. The assumed market should be limited to those requiring the land for purposes for which statutory powers were not required. Accordingly, the recommendation, which became the basis of r (3), was that:
The owner should not be entitled to any increased value for his land which could only arise or could only have arisen by reason of the suitability of the land for a purpose to which it could only be applied under statutory powers.
67. The word “special” was not included in this recommendation. Its inclusion in r (3), as enacted, was presumably intended to provide a clearer link with the previous cases, such as Lucas. It is doubtful whether it was intended to do more than indicate a quality that was of particular utility, and therefore value, to a public authority. The natural corollary would be that if there were no “special” suitability in this sense, there would be no additional value, and therefore the issue would not arise (not that the owner should have a more generous basis of valuation).
68. However, as interpreted in cases binding upon the tribunal and this court, the word “special” has been given a more restrictive meaning. It has been interpreted as requiring something “exceptional in character, quality or degree”: see Batchelor v Kent County Council (1989) 59 P&CR 357* at p362, per Mann LJ. Thus, the president in the present case concluded that there was nothing “exceptional” about the subject site because there were other possibilities (notably the Redwick site) for meeting the need. That decision is not subject to challenge in this court.
* Editor’s note: Also reported at [1990] 1 EGLR 32; [1990] 14 EG 129
69. Accordingly, the claimants have passed over the r (3) hurdle. Any additional value of the land as part of the barrage scheme cannot be excluded under this rule. However, one cannot sensibly ignore the basis of the conclusion on r (3). It depends upon the finding that their land is not unique for bird reservoir purposes. In a rational legal code, one would not expect that lack of uniqueness to lead to the land having greater value for compensation purposes.
Section 6 of the 1961 Act
70. The president in this case mentioned section 6 as one “manifestation of a single principle” that also underlay the judicial rule, but he did not consider it in detail. As I have said, it has had an unhappy history in the courts, in which, following the lead given by cases such as Davy and Wilson, literal application has been abandoned. However, it is not clear by what legal principle we can simply ignore such a statutory regime merely because it is obscure and, in some respects, flawed in conception. Furthermore, as will be seen, the section was reaffirmed by parliament, as recently as 1980, in the specific context of urban development areas, such as was Cardiff Bay (and, yet again, in 1988, in relation to housing action trusts).
71. In fact, once one finds a way through the obscurities of the language, the general approach of the draftsman is reasonably clear. He attempted to take account of the different circumstances in which compulsory
72. Under Case 1, a relatively narrow version of the rule was adopted, limited to the area of the compulsory purchase order itself. Changes in value, attributable to development (or the prospect of development) for the same purposes on other land within the same order, were to be disregarded if the development would not have been likely to have been carried out if the authority “had not acquired and did not propose to acquire any of that land”: see section 6(1)(a) of the 1961 Act and Schedule 1, Case 1. Under the other cases, there was, in effect, a two-stage application of the rule. Thus, for example, where the order was within a designated urban development area there were to be disregarded, not only changes in the value attributable to development for the purposes of the particular order but also changes attributable to development of other land “in the course of the development or re-development of that area as an urban development area”: see section 6(1)(b) and Schedule 1, Case 4A.
73. In relation to urban development areas, the 1980 Act, introduced, by amendment of Part III of Schedule 1 to the 1961 Act, a further refinement, expressed to be “for the avoidance of doubt”. The effect was that, inter alia, no increase was to be “excluded from being left out of account” merely because it was attributable to development before the designation of the urban development area, or outside the urban development area, or by a different authority: see para 10 of Schedule 1. Furthermore, in recognition no doubt of the continued survival of the Pointe Gourde rule (as confirmed by cases such as Wilson), the same provision was applied in respect of any increase to be left out of account “by virtue of any rule of law relating to the assessment of compensation…”: see para 11.
74. Unfortunately, although the 1980 Act added to the complexity, it did nothing to address the serious substantive problems of the statutory code. There were two main difficulties. First, section 6 required the prospect of development to be disregarded in relation to “other land” within the same compulsory purchase order or designation (that is, land other than the “relevant land” subject to the claim: see section 39(2)), but not, mysteriously, in relation to the relevant land itself. Lord Denning offered a possible explanation in Viscount Camrose v Basingstoke Corporation [1966] 1 WLR 1100 at p1107D:
the legislature was aware of the general principle that, in assessing compensation for compulsory acquisition of a defined parcel of land, you do not take into account an increase in value of that parcel of land if the increase is entirely due to the scheme involving the acquisition… (referring to Pointe Gourde)… It is left untouched by section 6(1). But there might be some doubt as to its scope. So the legislature passed section 6(1) and the First Schedule in order to make it clear that you were not to take into account any increase due to the development of the other land, namely land other than the claimed parcel. I think that the decision in the Pointe Gourde case covers one aspect: and section 6(1) covers the other…
75. That explanation, with respect, seems to ignore two points. First, Pointe Gourde (see the facts below) was, in substance, a case about ignoring the development of “other” land. The quarry was treated (at least for valuation purposes) as a separate parcel, and the issue was whether, in the valuation of that parcel, the prospective development of “other” land (the naval base) should be disregarded. Thus, it covered the same ground as section 6. Indeed, the draftsman’s fault may have been to model the statutory rule too closely on the particular facts of Pointe Gourde. Second, it assumes that the “scheme” under the judicial rule is identical to the designations defined by Schedule 1. On the facts of Camrose, where most of the land required for town development was owned by one landowner, it was no doubt reasonable to regard the area of the “scheme” as identical to the town development area. In other cases, for example, where the particular order is related to a limited project on a small site within an established new town, the answer might be very different.
76. Section 6 cannot therefore be seen simply as an exercise in clarification of the established rule. The two-stage application of the rule, as applied to Cases 2 to 4B, was entirely new. The section, as the Lord Chancellor explained at the time, was intended to “enunciate and extend” the judicial rule in the modern planning context: see Hansard HL 14.4.59 at col 582.
77. The other substantive problem relates to the scope of the section 6 regime. It is in some respects too narrow and in others too wide. Case 1 is too narrow, in that it confines attention to the area of the particular compulsory purchase order. This makes sense in a case where all the land required for a particular project is included in one order, but not in a case (like Wilson) where most of the land has been acquired by agreement before the compulsory purchase order comes to be made. In such a case, the order may relate to only a small part of the project, or scheme as it would be defined by the Pointe Gourde rule. There is no obvious reason why the compensation rules applied to the remaining interests should be materially different merely because the owners have held out for longer.
78. Conversely, in relation to the other cases, the regime can be unrealistically wide and unconfined in time. Where the original designation, say of a new town, has been made some years before the particular acquisition, the valuer is apparently required to conduct an exercise of rewriting history in a hypothetical world in which there was no new town. He must let his imagination “take flight to the clouds”: per Lord Denning MR in Myers v Milton Keynes Development Corporation [1974] 1 WLR 696 at p704. “Reconstruction” of planning history in this way was not favoured by the House of Lords, in the analogous context of section 17 of the 1961 Act (certificates of alternative development), because of the impossibly speculative nature of the exercise: see Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment, Transport and the Regions [2000] 2 AC 307* at pp323-324 per Lord Hope. However, at least until the matter is revisited by the House of Lords in the present context, the difficulty remains.
* Editor’s note: Also reported at [2000] 1 EGLR 13; [2000] 11 EG 141
79. In this case, as I have said, neither party has relied specifically upon the terms of section 6 or Schedule 1. However, they cannot simply be ignored. Apart from r (3), they are the only available indications of parliament’s intentions in relation to what is essentially an issue of policy: that is, in what circumstances does the public interest in promoting particular categories of development justify a departure from strict market value principles? Even if the judicial rule is needed to fill the gaps, and mitigate the anomalies, in a flawed statutory regime, it may still be appropriate to look to the statute for guidance as to the underlying policy.
80. Thus, in the case of a self-contained compulsory purchase order, under Case 1, section 6 can be seen as raising at least a presumption that the matters to be disregarded in such a case are confined to the area of the order. Wilson is a necessary extension of the rule, to deal with circumstances (not apparently contemplated by the draftsman) where the order is not self-contained, but is an integral part of a larger project. On the other hand, where, as in the present case, the order arises out of development within Case 4A, the presumption is in favour of a wide application of the rule. Part III, in particular, indicates a policy objective that land required for the purposes of an urban development area should be acquired at values that are not inflated by the designation.
Issues in the appeal
81. I now return to the issues raised by the appeal, following the summary already given. The first raises the most fundamental issue, that is, the president’s view that the Indian case should not be regarded as good law.
Indian case
82. I have already referred to the facts of the Indian case, in the context of the discussion of market value. That part is, I think, uncontroversial. The more difficult aspect of the case is in Lord Romer’s treatment of the no-scheme rule. The claimants’ argument, as I understand it, is that, applying the approach of the Privy Council in the Indian case, the valuer can still take added value given by the barrage project into account, regardless of the no-scheme rule.
83. As has been seen, the president, having raised the Indian case in argument, decided that it was inconsistent with later cases. The cases to which he referred have been mentioned earlier in this judgment. Mr Holgate fairly submits, however, that in none of them was the Indian case or Lambe expressly disapproved. Where the Indian case has been mentioned (as by the House of Lords in Rugby Water Board), it has been cited without comment as an illustration of the Pointe Gourde rule.
84. The relationship of the Indian case with the no-scheme rule, as stated in other cases, is one of the many unresolved puzzles in this area of the law. It is helpful, in my view, to consider it in the context of the other two leading Privy Council cases, decided before and after it: Fraser and Pointe Gourde. In doing so, it is essential to see the judgments in the factual contexts within which they were given. It is also necessary to bear in mind that where, in the past, cases have come by way of case stated to the Privy Council, the factual context may not always have been as clear as one might expect in a modern case. As it happens, the issue in each of the cases has some parallels with the present case, in that each involved the relationship of a major development (a reservoir in Fraser, a harbour in the other two cases) with a linked acquisition (a waterfall in Fraser, a water supply in the Indian case, a quarry in Pointe Gourde.) By analogy, in this case the barrage is the major development, and the nature reserve is the linked acquisition.
85. In Fraser, the acquisition in question was of certain river falls (the Great Falls), authorised by a by-law of 1909. The authority had, in 1907, adopted a by-law authorising the construction of a reservoir higher up river, which was under construction at the time of the second acquisition. The arbitrator had apparently arrived at his award for the falls, by taking a proportion of the capitalised profits that would result from the extra power generated by the completion of both schemes, that is, a total of 1,200hp, rather than the 300hp attributable to the falls on their own: see the French text at p193. The authority argued that the approach was flawed, first, because it was based upon the value to the authority of the completed scheme, and, second, that, in any event, any enhanced value due to the reservoir project should be left out of account altogether, since “the reservoir and the works upon the appellant’s land were all one scheme and not two separate schemes”: see p188. The Privy Council agreed with the court below that the matter had to be remitted on the first ground because the arbitrator’s approach was wholly erroneous. On the second issue, Lord Buckmaster summarised at p194 the principle arising from Lucas and subsequent cases as follows:
The value to be ascertained is the value to the seller of the property in its actual condition at the time of expropriation with all its existing advantages and with all its possibilities, excluding any advantage due to the carrying out of the scheme for which the property is compulsorily acquired, the question of what is the scheme being a question of fact for the arbitrator in each case.
(Emphasis added.)
86. Unfortunately, the Privy Council did not itself indicate how the question was to be answered, nor did it give any further guidance to the arbitrator. The words in emphasis have been relied upon in subsequent cases, including Wilson, as indicating that defining the scheme is an issue of pure fact. However, the context is important. The question was not an open-ended one, but simply as to whether two defined schemes, linked in purpose but authorised by separate statutory instruments, were to be regarded as one. However, the mere fact that the two instruments were separated in time was clearly not regarded as fatal to the argument that they were one scheme. As will be seen, this point is of some relevance in the present case.
87. Passing over the Indian case for the moment, one comes to Pointe Gourde. The background was an agreement between the United Kingdom and the United States governments, in March 1941, for leasing to the United States of land required for naval and military bases. The particular land at Pointe Gourde in Trinidad was acquired for a naval base under powers in the Land Acquisition Ordinance 1941. Part of the land so acquired included a quarry with a large quantity of good limestone. As far as one can infer from the facts as stated at p566, the quarry and the land for the base were included in the same compulsory acquisition. (Since the hearing, I have obtained the Privy Council records of the case. They show that the acquisition from the company included “two several parcels of land”, one of 141 acres, and one of 10 acres, the latter being the quarry. The case stated does not reveal in terms what the 141 acres were to be used for, but, referring to the two parcels, states merely that “the said lands were required by the United States for the establishment of a naval base”.)
88. The case stated showed that the land had “a special suitability or adaptability” for producing quarry products, and had a market value for that purpose before the acquisition. A figure of $86,000 was awarded for the value of the quarry as a going concern. The issue that came to the Privy Council concerned an additional sum of $15,000 explained in the case as follows:
The tribunal considered that the market value of the quarry land and business would be increased if the United States’ needs were supplied from this quarry land on a commercial basis as greater prospective profits might be expected.
The figure of $15,000 represented “the measure of the loss of that element of prospective extra profit”: see p568. The only issue raised by the case stated was whether this additional value should be excluded under the equivalent of r (3). On this, the Crown failed, the Privy Council holding that the rule was directed to the quality of the land itself, not to the products of the land.
89. However, they succeeded under the no-scheme rule, even though it seems not to have been discussed in any detail in argument: see p 571. Lord MacDermott restated the rule in the words that have become its most familiar formulation:
It is well settled that compensation for a compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.
The words “scheme underlying the acquisition” were new, but it is clear from the context that they were not intended to differ from Fraser (“the scheme for which the property is compulsorily acquired”). Lord MacDermott rejected the company’s argument that the relevant scheme was simply the acquisition of the quarry land. He said at p573:
The case stated finds that the lands acquired were “required by the United States for the establishment of a naval base in Trinidad.” That being so the nature of the scheme of this acquisition is clear…
As I understand it, this is not to be read as implying that, simply because the quarry itself was being acquired for the purposes connected with the construction of the base, that was sufficient to justify exclusion of the additional value. The “lands” to which he was referring were the whole of the lands comprised in the acquisition, which, as appeared from the case, included the land required for the base itself, as well as the quarry. Thus, both were included in a single act of acquisition.
90. Historically, the Indian case comes between these two cases. I have already outlined the facts. The difficulty arises because, in one passage (at pp319-320), Lord Romer seems to have adopted a very narrow interpretation of the scheme. He was criticising the judgment of Fletcher Moulton LJ in Lucas on the issue of special suitability (see above), and, in particular, his suggestion that where special value
It must, of course, be conceded that the existence of the scheme must not be allowed to enhance the price, if by “scheme” is meant the fact that compulsory powers of acquisition have been obtained for the purpose of carrying into effect a particular scheme for the profitable use of the potentiality. The valuation must always be made as though no such powers had been acquired, and the only use that can be made of the scheme is as evidence that the acquiring authority can properly be regarded as possible purchasers. But their Lordships have some difficulty in seeing why the taking into consideration of the fact that the special value exists for those purchasers only should be said to be allowing the existence of the scheme to enhance the value of the lands. The only difference that the scheme has made is that the acquiring authority, who before the scheme were possible purchasers only, have become purchasers who are under a pressing need to acquire the land; and that is a circumstance which is never allowed to enhance the value.
(Emphasis added.)
On the other hand, Lord Romer rejected the use of the word “scheme” to connote “the intention formed by the acquiring authority of exploiting the potentiality of the land”, since that would mean that even if there were more than one potential purchaser, all their intentions would equally have to be disregarded.
91. At first sight, this passage suggests a very narrow definition of the word “scheme”, as meaning no more than the obtaining of compulsory powers. If this were intended as a general statement, it would indeed, as the president said, be impossible to reconcile with other cases, before and since. Even if one goes back to one of the earliest cases on the no-scheme rule, Stebbing v Metropolitan Board of Works (1870) LR 6 QB 37, it was not the compulsory acquisition itself that gave added value, but the authority’s statutory power, having acquired the land, to convert it from a burial ground to secular use. Similarly, in more recent cases, the added value resulted from the project as a whole, not just the existence of compulsory powers: in Pointe Gourde, it was the potential use of the quarry products for the naval base; in Wilson it was the authority’s investment in infrastructure.
92. In responding to the president’s comment on the case, the first point to note is that although Fraser was cited in the Indian case, and both were cited in Pointe Gourde, there was no suggestion in any of them that the Privy Council thought that it was applying a different principle. On the contrary, in the Indian case, Lord Romer cited Lord Buckmaster’s statement (in Fraser) of the no-scheme principle without comment, but observed that there was “no reference whatsoever to the present question”: see p321. The “present question” was not the scope of the no-scheme rule as such, but the difference of view between the majority and minority in Lucas over the application of the “special suitability” principle.
93. Second, on the facts of the Indian case, it was understandable that a very narrow view was taken of the scheme. The harbour project had been begun six years before the emergence of the malaria problems that led, in due course, to the acquisition of the subject land to provide a fresh supply of water. As appears from the reported arguments (pp306-307), the authority claimed that the scheme was the harbour project or the malarial scheme, while the claimant relied upon the acquisition of the subject land as a separate scheme. Although Lord Romer did not in terms address that difference, he described the scheme with some precision (“the acquisition… of the shallow basin forming the catchment area of the spring, the site of the spring itself, and a narrow strip of land below the spring”); he distinguished that from the “public purpose for which the land was needed”, which was identified in the notification as “the execution of anti-malarial works”: see p310. The implication, therefore, is that he accepted the claimant’s case. It was reasonable, on the facts of that case, to speak of the “scheme” as being limited to the fact of compulsory acquisition, since, as his description makes clear, little else was needed to bring the water supply into use.
94. In Pointe Gourde, by contrast, the quarry and the land for the naval base were acquired at the same time, as part of the same act of compulsory acquisition, and only a month after the agreement between the US and UK governments. On those facts, it was not surprising that they were regarded as part of one scheme. Fraser, on the facts, comes somewhere between the two, in that there were two separate acquisitions, separated in time, but the gap was much shorter than in the Indian case. It was a question of fact for the tribunal to determine whether they were to be treated as a single scheme for the purpose of the rule.
95. In conclusion, it is not, in my view, necessary to follow the president along the unattractive course of treating a fully argued Privy Council judgment, which has stood without dissent for more than 60 years, as simply wrong. The statements must be taken in context. The cases can be reconciled, if they are seen as turning on their particular facts. This conclusion does not help the appellants in this case. Although I agree with them that the president went too far in treating the Indian case as no longer authoritative, it still leaves them on the wrong side of their highest hurdle, which is the president’s conclusion as to the nature of the scheme on the facts of this case.
96. Before leaving the Indian case, I should mention one further point raised by the respondents in this case. They suggest that, on the facts of the Indian case, a different decision would have been reached in this country by virtue of r (3) (which was not part of the Indian legislation). It is true that r (3) did not apply in India. However, assuming the narrow interpretation given to that rule by the Privy Council in Pointe Gourde (see above), it would not have assisted the Crown, since, in both cases, the suitability in question was that of a product of the land (in one, the quarry stone, in the other, the water), rather than of the land itself. (I should also add that I have not thought it necessary to refer in any detail to Lambe, in which the Indian case was expressly followed by the Court of Appeal, because the facts were so different.)
Public-interest test
97. The other issues raised by the appeal can be dealt with more shortly. First, the appellants crticise the president’s formulation of a “public interest” test, which, they say, is not supported by authority. As I read the relevant passage of this part of the president’s reasoning (quoted above in full), the test is better described as a “public purpose” test, than a “public interest” test. He said:
The principle is that any effect on the value of the land acquired arising from the public purpose or public purposes prompting the acquisition, whether from their adoption by the authority or from their implementation, is to be disregarded. A scheme or proposal is the embodiment of the public purpose or public purposes concerned.
The public purpose that he identified was “the purpose of providing the compensatory nature reserve”.
98. On this point, I see some force in the appellants’ criticism. Although, as the president later recognised, the public purpose may be relevant in defining the scheme, it does not provide a substitute for the conventional test. The “purpose” of any project may be defined at different levels. In Lucas, the immediate purpose of the acquisition was the authority’s scheme to construct a reservoir; the ultimate purpose was to provide an improved water supply for the Chesterfield area. The immediate purpose was required to be left out of consideration, but not the ultimate purpose. Additional value attributable to the possibility of using the land to improve the water supply was held to be a proper consideration.
99. So, in this case, the insertion of the word “compensatory” in the president’s definition of the purpose seems to beg the relevant question. Clearly, if one has to ignore the use of the nature reserve for a “compensatory” purpose, then it could be of no relevance to the barrage project, since that is the only purpose for which it is required. On the same approach, the purpose in Lucas might have been defined as that of “providing a water-supply reservoir”, with the result that the water needs of the area would have had to be left out of account. However, that is not how the court dealt with the matter. As we have seen above,
100. Thus, although identifying the purpose of the acquisition may be relevant to the definition of the “scheme”, it is not a substitute for it. However, since the president went on to consider the scope of the scheme, the criticism of the first part of his reasoning is not enough to get the appellants home.
Not a scheme of the acquiring authority
101. The argument here is that the only scheme that could be relevant is one of LAW itself, or one to which it is a party.
102. In considering this argument, it is necessary to bear in mind the somewhat unusual role of LAW, mentioned above, as a body whose main function was to acquire land. Thus, unlike most compulsory acquisitions, which are by public authorities for their own substantive purposes (such as provision of roads or housing), LAW’s function was normally to acquire the land for the purpose of development projects initiated by others.
103. It would be odd if this special role, which had more to do with the mechanics of acquisition than its substance, were materially to affect the basis upon which compensation is assessed. One must also bear in mind that the Pointe Gourde principle works in reverse. If the value of land had been diminished by a public scheme for which LAW was acquiring the land, it would be unfair if the owner could be forced to sell at the blighted value, merely because the scheme was not that of LAW itself.
104. The high point of the appellants’ case on this point seems to be the definition of the scheme, in one of the cases, as “a project on the part of the authority concerned to acquire land…”: see Birmingham City District Council v Morris & Jacombs Ltd (1976) 33 P&CR 27* at p33. This was cited with approval by the Court of Appeal in Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478† at p487 per Browne LJ, where two authorities were involved, but the test was held to be satisfied because:
although [the County Council’s project] was originally in form a scheme by an authority different from the acquiring authority, which also had a scheme of its own, it became, by what the tribunal calls “merger,” though possibly that is not the right word, a scheme to which the acquiring authority was party and not a scheme by a different authority.
* Editor’s note: Also reported at [1976] 2 EGLR 143; (1976) 240 EG 539
† Editor’s note: Also reported at [1978] 2 EGLR 16; (1978) 248 EG 499
105. Here, it is said, the statute, and the agreement with the CBDC, made clear that LAW was neither a partner nor an agent of the Welsh Office or the CBDC. LAW was at pains, throughout the procedure, to preserve its independence from the other authorities involved. Accordingly, it could not be said to have been a party to the barrage scheme in any relevant sense.
106. The president rejected this submission:
In neither of the cases relied on by Mr Holgate was the court, in my judgment, holding that a project could only be a scheme for the purposes of the Pointe Gourde rule if it was the project of the acquiring authority alone.
107. As he observed, even in Pointe Gourde the acquisition was by the UK government, not for its own purposes, but for those of the US navy. He also gave the example of a large development proposal, for which land assembly was carried out partly by the planning authority and partly (in respect of the proposed roads) by the highway authority:
I cannot see that whether the road element of the development is or is not a separate scheme must as a matter of law depend on the particular acquisition route that is followed.
108. I agree. Mr Holgate submits that the tribunal has “disregarded the true nature of the relationship between the various bodies involved… including the extent to which the acquiring authority was anxious to preserve its independence from the other bodies”. However, I do not see this as raising any question of law. As the president said, such issues were simply part of “the considerations to be taken into account in the factual exercise of defining the scheme”.
Integral part
109. This seems to me the appellants’ strongest point. The president’s decision rested on his view of “the essential nature of the acquisition as one element in the barrage scheme”. In so far as this was a conclusion of fact, it is not open to challenge in this court. However, Mr Holgate’s submission is simple. If, as a matter of law, an essential feature of the scheme is that the subject land should be “an integral part” of it (see Shun Fung above), this could not have occurred before November 1995. That was when the decision was first made to proceed with a nature reserve that included the claimants’ land. By that time, the barrage scheme had been approved by parliament, and work had begun. The proposals for the nature reserve on the Gwent Levels site could not therefore be regarded as in any way integral to that scheme. Although they arose out of the barrage scheme, they were a distinct project, and should be so regarded for compensation purposes.
110. He also emphasises the unfairness of treating this as part of the original scheme, since the claimants were not involved in any way in that process, and therefore had no opportunity to object. He contrasts their position with the owners of farmland respectively at Wentlooge and Redwick, whose objections resulted in the proposals in those areas being abandoned. Although the claimants had a theoretical right to object at the inquiry in 1997, they did not pursue it because, by that time, LAW had acquired 80% of the site and the barrage scheme was too far advanced for there to be any realistic alternative. I should say immediately that this point, although attracting sympathy for the claimants, does not, in my view, have any relevance to the principles upon which compensation is to be assessed.
111. I agree with the submission that a prerequisite of the scheme is the identification of the subject land as part of it. However, this does not, I think, impose a temporal limitation upon the matters that can be regarded as included in the scheme. So to hold would be inconsistent with the decision in Fraser. In that case, the acquisition of land for the reservoir had been authorised in 1907, and it was already under construction when the subject land was acquired under a separate instrument two years later. However, that fact was not held, as a matter of law, to exclude the possibility of their being treated as a single scheme when the second acquisition was made. Although the combined scheme cannot have come into existence until the subject land was identified as part of it in 1909, it was open to the arbitrator thereafter to treat it as a single scheme for the purposes of the rule.
112. Applying that thinking to the present case, the mere fact that the claimants’ land was not identified until October 1995, when the barrage project was already under way, does not, as a matter of law, prevent it from being treated thereafter as part of the same project. That being so, the decision on the facts was one for the president, and the appellants can show no error of law in his approach.
Dependency
113. The passage of the president’s decision to which this ground of appeal is directed is as follows:
the implementation of the barrage scheme as regards the permanent inundation of Cardiff Bay was, I find, dependent on the acquisition and development of land for the Gwent Levels nature reserve.
114. Mr Holgate says that this finding is inconsistent with the evidence. He refers, for example, to a statement made by the Secretary of State for Wales (Mr Hague) in the House of Commons on 6 December 1995 that the impoundment of the Bay was not conditional upon completion of a bird reserve, although the intention was to bring about that result (Mr Holgate’s emphasis). He also submits that dependency is not a relevant test.
115. Mr Holgate’s submission on this point seems to sit rather oddly with the assertion (in the particulars of the claims) of the land’s “indispensable status vis a vis the Cardiff Development Scheme”. In any event, I see no error of law in the president’s approach. Mr Hague’s statement was only one of many pieces of evidence as to the thinking of the various parties at this time. Taken overall, there was ample material upon which the president could reasonably conclude that if the UK government had defaulted on its commitment to provide compensatory land (for which, by the end of 1995, the Gwent Levels was the most likely contender), the Commission would have been expected to take enforcement action, which could well have included delaying impoundment. In any event, as I understand it, he was not using “dependency” in any precise legal sense, but simply as emphasising the close factual link between the Gwent Levels project and the barrage.
Conclusion
116. The right to compensation for compulsory acquisition is a basic property right. It is unfortunate that ascertaining the rules upon which compensation is to be assessed can involve such a tortuous journey, through obscure statutes and apparently conflicting case law, as has been necessary in this case. There can be few stronger candidates on the statute book for urgent reform, or simple repeal, than section 6 of, and Schedule 1 to, the 1961 Act. The Human Rights Act 1998 does not impinge directly on the issues in this case, but it underlines the importance of coherence and certainty in this area of the law.
117. However, in most cases, identifying the scheme or project should involve no particular difficulty if one bears in mind the analogy of the statutory authorisations in the early cases. Normally, the nature and scope of the project will be evident from the formal resolution or decision of the authority responsible. This case is rather more complex, because of the different authorities involved, and the delays in identifying the relevant land. However, by the time of Mr Hague’s statement to the House in January 1996, the role of the claimants’ land was clearly identified. It was open to the president to find, on the facts, that the nature reserve for which that land was needed was an integral part of the barrage project. Further, although the president did not rely upon this point, the result is consistent with the policy of the 1961 Act. The project for the nature reserve is directly linked to the purposes of the urban development area, which is a case specifically selected by the Act for a wide application of the rule. The claimants are accordingly entitled to nature reserve value, but not to barrage inhibition value.
118. For all these reasons, the appeal fails.
Laws and Schiemann LJJ agreed and did not add anything.
Appeal dismissed.
