Compulsory purchase of industrial premises – Compensation – Land Compensation Act 1961 – Whether planning permission for mixed-use development to be assumed on Pointe Gourde principle – Whether assumptions confined to those required by sections 14 to 17 of 1961 Act – Whether grant of planning permission could reasonably have been expected in no-scheme world
The claimant owned industrial premises that were compulsorily acquired by the respondent for the purposes of an extension to the London Underground system. The premises lay within a mixed-use area on the northern edge of the City of London. The claimant contended that it was entitled to compensation of £907,072 on the basis that, at the valuation date, a grant of planning permission could reasonably have been expected in the no-scheme world for a development on the land of offices with two floors of residential flats above. It contended that, on a proper application of the principle in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, such planning permission should be assumed when assessing compensation. The respondent submitted that: (i) in the absence of an actual planning permission, or one that was required to be assumed pursuant to sections 14 to 17 of the Land Compensation Act 1961, the prospects of obtaining planning permission could be reflected only in hope value; (ii) the local planning authority would not have permitted any element of residential use in the light of the planning policies that applied at that time; and (iii) even if they had done so, the highest value in the land derived from its then current use, assessed at £227,500.
The planning background included a unitary development plan (UDP) that favoured the retention of industrial uses and opposed residential development within defined employment areas. A development plan review, containing a policy facilitating mixed-use development, had been abandoned at an early stage before public consultation. However, the claimant’s expert gave evidence that the review had reflected the local planning authority’s recognition of the need to update their policies in favour of mixed-use development, in the light of government initiatives and changed social and economic circumstances. He provided examples of permissions that had recently been granted for the redevelopment of employment land for mixed uses including residential.
Held: The appropriate compensation figure was £608,000.
(1) The Pointe Gourde principle, that compensation for compulsory acquisition must exclude any increase or decrease in value that was wholly due to the scheme underlying the acquisition, was relevant to planning assumptions and applicable as an adjunct to sections 14 to 16: Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 and Jelson Ltd v Blaby District Council [1977] 2 EGLR 14; (1977) 243 EG 47 applied; Porter v Secretary of State for Transport [1996] 2 EGLR 10; [1996] 35 EG 89 distinguished. Accordingly, it would be appropriate in certain cases to assume a grant of planning permission for development that would have taken place in the no-scheme world even where no such permission was in force at the valuation date or was required to be assumed under sections 14 to 16.
Whether planning permission would have been granted fell to be determined by reference to the decision that a reasonable planning authority would have made, and not, as in the case of hope value, according to the view that the market would have taken as to the prospects of planning permission. If the conclusion were reached that planning permission would have been granted at the valuation date, it was to be assumed, in the absence of evidence to the contrary, that the hypothetical willing seller would have applied for such permission in time for it to be granted by that date. Although the assumption of such permission under Pointe Gourde was discretionary, with the aim of ensuring that the claimant received fair compensation, there was no requirement that it could be made only where the compensation on the statutory assumptions would be far removed from a fair level.
(2) On the evidence in the instant case, the policies of the UDP, including those in favour of industrial use and excluding residential use, were no longer being applied strictly by the valuation date. The claimant’s land was suitable for mixed-use development and the local planning authority had granted permissions for such development elsewhere in the area. At the valuation date there was a reasonable prospect of planning permission being obtained for the development and planning permission should be assumed for the purposes of valuation. On that basis, and in the light of the valuation evidence, the appropriate figure for compensation was £608,000.
Nicholas Nardecchia (instructed by Lodders Solicitors LLP, of Stratford upon Avon) appeared for the claimant; Michael Barnes QC (instructed by Eversheds LLP) appeared for the respondent.
Sally Dobson, barrister