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 – Lands Tribunal awarding full value of land with planning permission – Whether only percentage of value reflecting hope value appropriate award – Appeal dismissed
The respondent owned industrial premises that were compulsorily acquired by the appellant for the purposes of an extension to the London Underground system. Public notice of the compulsory purchase order was provided in 1993, although the appellant did not enter onto the respondent’s land until 2001. The respondent’s premises lay within a mixed-use area on the northern edge of the City of London.
The respondent contended that it was entitled to compensation of £907,072 on the basis that, at the valuation date and in the no-scheme world, a grant of planning permission could reasonably have been expected for a development of offices with two floors of residential flats above. It contended that, on a correct application of the principle in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, such a planning permission should be assumed when assessing compensation. Pointe Gourde required that compensation for compulsory acquisition must exclude any increase or decrease in value that was wholly due to the scheme underlying the acquisition. The appellant disputed whether the claimed planning permission would have been granted. It further contended that, 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 solely in hope value. Thus, the respondent would be entitled only to a percentage of the full with-permission value, reflecting the probability of the permission being granted as perceived by the market in the no-scheme world.
Accepting the respondent’s arguments, the Lands Tribunal (LT) found that permission would have been granted by the valuation date and that it should be taken into account by valuing the site at the full value with planning permission for a mixed-use development. It valued the site on that basis at £608,000: see [2007] 49 EG 102 (CS). The appellant appealed.
Held: The appeal was dismissed.
The 1961 Act was intended to provide a statutory code assimilating the various versions of the no-scheme rule. The provisions of section 14(3) indicated that the statutory code for determining planning status was not exhaustive. Whether or not a case could be brought within any of the specific provisions, it was open to the claimant to seek to persuade the LT that, in the no-scheme world, the value of the site would have been enhanced by a permission, or the prospect of a permission, for some valuable development. Where the statutory assumptions applied, the probability of a permission was converted into full value for valuation purposes. The statutory policy reflected the common assumption and practice of tribunals, courts, practitioners and valuers, and had merit in simplifying the task of valuation for the purpose of assessing compensation, thereby reducing the likelihood of disputes and litigation, promoting compromise and saving costs. It was desirable that the assessment of compensation for compulsory acquisition of land in materially similar cases should be consistent, whether or not the statutory assumptions applied.
Accordingly, where the respondent was unable to take advantage of the statutory assumptions because of an anomaly in the provisions fixing the date of consideration (requiring an assessment at the date of the notice in 1993 rather than in the materially different planning situation pertaining at the valuation date) the no-scheme rule should be interpreted so as to remedy the anomaly rather than extend it.
Applying those principles, where the LT found on the balance of probability that, in the no-scheme world, planning permission would have existed at the valuation date, it could treat that hypothetical permission as a certainty to be assessed at its full value and was not confined to awarding only a percentage as hope value: Jelson Ltd v Blaby District Council [1977] 2 EGLR 14; (1977) 243 EG 47 and Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 applied; Porter v Secretary of State for Transport [1996] 2 EGLR 10; [1996] 35 EG 89 distinguished.
Michael Barnes QC and Eian Caws (instructed by Eversheds LLP) appeared for the appellant; Nicholas Nardecchia (instructed by Lodders LLP, of Stratford upon Avon) appeared for the respondent.
Sally Dobson, barrister