The general rule is that there is no compensation for a refusal of planning permission. (There are some exceptions to this rule, but they fall outside the scope of this article.) In some cases, however, compensation might be an inadequate remedy, even if it were to be made available to the landowner. This is where, unless planning permission is granted, the land will remain “incapable of reasonably beneficial use in its existing state” (“RBU”) — the phrase “reasonably beneficial use” is found in section 137 of the Town and Country Planning Act 1990.
Where this state of affairs occurs the 1990 Act enables the landowner to compel the local planning authority to acquire the land. This action may be called compulsory purchase in reverse — especially as the price to be paid must mimic the compulsory purchase valuation of the land: see sections 137-148 of the 1990 Act. It is commenced by a document known as a “purchase notice”.
A purchase notice should be distinguished from a blight notice. A blight notice may be served if planning proposals (in, for example, a development plan) indicate that the land in question may be acquired in the future, thereby making that land impossible to sell (or saleable only at a significantly depreciated price). The statutory provisions establishing the right to serve a purchase notice may be summarised as follows. A purchase notice may be served:
(a) if planning permission(*) is refused or is granted subject to conditions; or
(b) if planning permission is revoked or modified, or if a new condition is imposed on an existing permitted development; or
(c) if an order is issued requiring the removal of works or buildings, or the cessation of a lawful use of the land;
The following must also be satisfied:
(d) the land must have become incapable of RBU in its existing state, or (in the case of imposing a planning condition) any compliance with the condition imposed on the landowner must bring about this result; and
(e) the land must be land which cannot be rendered capable of a RBU by the carrying out of any other development already covered by an existing planning permission, or covered by a planning permission which the local planning authority (or the Secretary of State) has undertaken to grant.
In considering whether a purchase notice may be served, two difficult problems have to be taken into account:
(1) what is meant by “incapability” of land for RBU? and
(2) may a purchase notice be served if part only of the land has become capable of RBU?
Section 138 of the 1990 Act provides that a purchase notice may be served in respect of land if that land might be rendered suitable for RBU only by the carrying out of “new development” or by infringing the limitations on floorspace applicable to the rebuilding or alteration of a building. Apart from this it is, of course, a question of fact and degree as to what constitutes RBU and what does not. The court intervenes only if legality has been violated: see General Estates v Minister of Housing and Local Government (1965) 254 EG 191.
In some reported cases the courts have indicated which considerations will be relevant to the Secretary of State’s decision. Thus, incapability for RBU means incapability at the date when planning permission was refused (or granted subject to adverse conditions). The previous history of the land is not to be taken into account, unless the present state of affairs is the result of some unlawful activities carried out in the past, eg a breach of planning control which is still open to the possibility of an enforcement notice. Thus, in Purbeck DC v Secretary of State for the Environment (1982) 263 EG 261 the owner of a former clay pit was refused planning permission to build houses on the land. It transpired that, although planning permission had been granted in the past to permit the infilling of the clay pit, conditions relating to the ultimate restoration of the site has not been complied with. It was held by Woolf J (as he then was) that the Secretary of State had acted correctly in refusing to confirm a purchase notice in respect of the land because its existing incapability of RBU was caused by a previous breach of planning control.
However, in Balco Transport Services Ltd v Secretary of State for the Environment [1985] 2 EGLR 187; (1985) 276 EG 447, Woolf J distinguished his previous decision in the Purbeck case because it became clear that the breach of planning control with which he was dealing took place so long ago that enforcement proceedings were no longer possible in respect of it. The case involved some land covered with hardcore, without planning permission, before 1964. An application for planning permission to use the land as a haulage depot was refused and this left the land with a nil use, except for the possibility of reverting to agricultural use. But this, in turn, would have required the removal of the hardcore at a prohibitive cost. Woolf J held that a purchase notice was valid in respect of the land and that the previous breach of planning control was irrelevant, given that any enforcement action would be time-barred in respect of it. This decision was upheld by the Court of Appeal.
As to the degree of usefulness of land in a purchase notice case, a valuer is inevitably going to be tempted to draw a comparison between the value of the land in its existing state and the value which it could command if planning permission were to be granted. However, in R v Minister of Housing and Local Government, ex parte Chichester RDC [1960] 2 All ER 407 it was held that, in considering whether a purchase notice should be confirmed, the test was whether the land in its existing state had become incapable of RBU. The fact that the land was substantially less useful in its present state than it would be in a redeveloped state was not the correct test. Therefore, in this case, the minister’s decision to confirm the notice was quashed.
In Adams & Wade Ltd v Minister of Housing and Local Government (1965) 18 P&CR 60 it was held that the phrase “beneficial use” must be taken as a reference to a use which would benefit the owner of the land and the fact that the land in its existing state conferred some benefit upon the public at large was not a bar to the service of a purchase notice. This decision led to the passing of section 32 of the Town and Country Planning Act 1968 (now section 142 of the 1990 Act). The Secretary of State may now refuse to confirm a purchase notice if the land in question is amenity land, ie land with a restricted use (such as an open space) by virtue of a previous planning permission. This will arise where the land in question once was (or still is) part of a larger area in respect of which planning permission was previously granted (and has not been revoked). The Secretary of State may refuse to confirm the purchase notice if it was a condition of the previous planning permission that the land to which it refers should remain undeveloped or should be used as amenity land, or if it was expressly or impliedly contemplated that this would be the future use of the land.
Partial RBU
The second problem is whether a purchase notice may be served if part of the land in question has become unsuitable for RBU and, if so, whether the notice should refer only to the affected part or to all of the land. This question was considered by the Court of Appeal in Wain v Secretary of State for the Environment (1982) 262 EG 337. Mr Wain owned 37 acres, geographically and naturally divided into two. A planning application to develop the whole of the land was refused and the owner served a purchase notice covering the whole 37 acres. The notice was objected to by the district council and it was submitted to the Secretary of State. The inspector held a public inquiry and then divided the land into two parts with regard to the reasonableness (or otherwise) of their beneficial use. One part (56% of the whole) was accepted as enjoying RBU. The remaining part of the land was accepted by the inspector as incapable of RBU and he recommended that the notice (relating to the whole of the land) should be confirmed. The Secretary of State refused to confirm the notice, holding that the landowner had to show that the whole of the land was incapable of RBU. The High Court quashed this decision on the ground that the Secretary of State had erred in law by refusing to confirm the notice. This notice had to be confirmed even though it referred to the whole of the land. The Secretary of State appealed to the Court of Appeal, relying on section 183(3) of the 1971 Act (now section 141(3) of the 1990 Act). This subsection reads:
If it appears to the Secretary of State that the land, or any part of the land could be rendered capable of reasonably beneficial use within a reasonable time by the carrying out of any other development for which planning permission ought to be granted, he may, … direct that, if an application for planning permission for that development is made, it must be granted.
(Emphasis supplied)
Having regard to the words “or any part of the land” the Court of Appeal held that, if a part only of the land was incapable of RBU, the owner could insist on the council buying only that part of it which was incapable of RBU. As the purchase notice in question referred to the whole of the land, the appeal was allowed and the purchase notice was quashed.
Procedure
The procedure for dealing with a purchase notice may be summarised as follows:
(1) the local planning authority on whom a purchase notice is served must serve a “response notice” within three months;
(2) the response notice must state that the authority is willing to comply with the notice; or that another local authority (or statutory undertaker) has agreed to acquire the land; or that (for reasons stated in the notice) the authority is not prepared to comply with the purchase notice;
(3) if the authority is not prepared to comply with the purchase notice, then that notice (and the response notice) must be sent to the Secretary of State;
(4) if the authority does not reply to the purchase notice within three months, they (the local planning authority) will be presumed to have agreed to acquire the land and a deemed notice to treat (which cannot be withdrawn) will be taken to have been served by that local planning authority;
(5) the Secretary of State must notify all the interested parties before making his decision, and he must give them 28 days in which to ask to be heard by an inspector appointed by the Secretary of State;
(6) the inspector must arrange for a “hearing” by way of written representations, or for a private hearing, or for a public inquiry;
(7) the burden of proof will be on the landowner;
(8) if the Secretary of State is satisfied that the conditions justifying the service of the purchase notice have been established, he will confirm it; if he is not satisfied of this he will refuse to confirm it.
Section 141(1) of the 1990 Act allows the Secretary of State (if he considers it expedient to do so) to take the following steps instead of confirming the purchase notice:
(a) in the case of a notice served because of a refusal to grant planning permission, he may grant planning permission for the development in question;
(b) in the case of a notice served because of planning permission being granted subject to adverse planning conditions, he may revoke or amend those conditions;
(c) in all other cases he may take any other steps which the local planning authority could have taken to render the purchase notice superfluous.
The 1990 Act provides for a possibility of challenging the Secretary of State’s decision in respect of a purchase notice by means of an appeal to the High Court: see section 284(3)(f). This provision applies to any decision to confirm (or not to confirm) a purchase notice, including any decision not to confirm a purchase notice in respect of part of the land to which it relates. The right of appeal also extends to the Secretary of State’s decision to grant any planning permission, or to give any direction, instead of confirming a purchase notice, wholly or in part. Like all appeals to the High Court in planning matters, the right of appeal given by section 284(3)(f) is limited to questions of law: see section 288. The time-limit for an appeal to the High Court is six weeks from the date on which the order was confirmed or the action was taken by the Secretary of State.
The High Court, in dealing with the appeal, may (by interim order) suspend the operation of the order or action until the final determination of the proceedings. At the full hearing of the appeal it may quash the order (or action taken by the Secretary of State) if it is satisfied that this order or action is not within the powers of the 1990 Act, or that the interests of the appellant have been substantially prejudiced by a failure to comply with relevant procedural requirements.
(*) Similar provisions exist in the case of a refusal (etc) of listed building consent.
