Compensation for compulsory purchase — Ransom value — Whether appellants able to claim compensation for land on basis of increased value attributable to acquiring authority’s need for it — Extent of scheme — Whether Pointe Gourde principle applying — Appeal dismissed
The appellants were the owners of 225 acres of farmland acquired by the respondent’s predecessor in title under a compulsory purchase order. The land was required for a nature reserve that was intended to mitigate the environmental effects of a planned barrage across the estuary of the Taff and Ely rivers to be built as part of the development of the Cardiff Bay area.
A dispute arose over the correct measure of compensation for the appellants, who claimed that their land should be given a “ransom value”, calculated on the basis that it was indispensable to the Cardiff development scheme.
The Lands Tribunal considered preliminary issues as to, inter alia, whether the scheme underlying the acquisition was the nature reserve or the construction of the barrage, and whether it was necessary to discount, for valuation purposes, any increase in the value of the land attributable to the need to acquire it as a palliative measure to offset the environmental consequences of the barrage. The tribunal concluded that the land was to be valued leaving out any such effect. The appellants’ appeal against that decision was dismissed, and they brought a further appeal.
Held: The appeal was dismissed.
1. The rule laid down in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 was still applicable. Accordingly, compensation for the compulsory acquisition of land could not include an increase in value that was entirely due to the scheme underlying the acquisition, and the need of an acquiring authority to acquire that land as part of a scheme should be disregarded.
2. In today’s context, a “scheme” consisted of a project to carry out certain works for a particular purpose or purposes. If the compulsory acquisition of land was an integral part of such a scheme, the Pointe Gourde principle would apply. Both the proposed works and their purpose were material when deciding which works should be regarded as a single scheme. The tribunal should also have regard to the purpose of the Pointe Gourde principle, which was to separate the “value to the owner” from the “value to the purchaser”. The owners were to receive fair compensation, but no more than that. The following pointers might be useful: (i) Pointe Gourde should not be pressed too far, but should be applied in a manner that gave a fair and reasonable result; (ii) a result would not be fair and reasonable if it required a valuation exercise that was unreal or virtually impossible; (iii) a valuation result should be viewed with caution when it would lead to a gross disparity between the compensation and the market values of comparable adjoining properties that were not being acquired; (iv) when used as a supplement to the code in section 6 of the Land Compensation Act 1961, the Pointe Gourde principle should be applied by analogy with the provisions of the statutory code; (v) the scope and the purpose of the intended works would normally be apparent from the formal resolutions or documents of the acquiring authority, although this formulation was not conclusive; and (vi) when in doubt, a scheme should be identified in narrower rather than broader terms.
3. For the purposes of the Pointe Gourde principle, the acquisition of the appellants’ land was an integral part of the barrage project. The land was acquired to meet a need generated by that project, and, although it was not identified at the outset, the project proceeded throughout upon the basis that some such compensation would be provided. Accordingly, when assessing compensation for the appellants’ land, the authority’s need to acquire it as a palliative measure, necessary as a result of the environmental consequences of the barrage, was to be disregarded.
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 Agency) appeared for the respondent.
Sally Dobson, barrister
