Contract – Construction of deed – Grant of right for appellant to operate and maintain overhead electric line over respondent’s land – Requirement for appellant to pay compensation if notified of planning permission to develop respondent’s land for residential or industrial purposes – Permission granted for construction of building for storage and distribution uses – Date at which compensation to be assessed – Whether date of outline planning permission or reserved matters approval or date when appellant notified of permission – Appeal dismissed
The respondent owned 10.93 ha of undeveloped land on the outskirts of Skelmersdale. The appellant electricity company operated and maintained an overhead electricity line over that land pursuant to a deed of grant made between the parties’ predecessors in title in 1967. At the time of the grant, the respondent’s land was in agricultural use. The deed provided that, within six months of receiving notice from the grantor that planning permission had been obtained for the development of the land “for residential or industrial purposes”, the grantee would pay compensation for any diminution in the value of the land for those purposes which was attributable to the presence of the overhead line.
In 2001, the respondent obtained outline planning permission for industrial and business warehousing development on the land. In 2007, it obtained reserved matters approval for the erection of a single large building for purposes falling within Classes B2 and/or B8 of the Use Classes Order 1987, with ancillary offices, vehicle parking areas, the creation of an access from an existing estate road and landscaping. It was not possible to construct or use the approved building without removing the overhead electricity line. In March 2008, the respondent notified the appellant of the permission and, following unfruitful discussions regarding the feasibility of diverting the overhead line, it applied to the Upper Tribunal (UT) to determine the compensation payable under the deed. The appellant disputed the respondent’s entitlement to compensation.
Determining preliminary issues in favour of the respondent, the UT held that: (i) the respondent’s proposed development was for “industrial purposes” within the meaning of the deed, so as to attract the entitlement to compensation; and (ii) the date for assessing compensation was the date of the reserved matters approval in 2007, not of the outline permission in 2001 or the date in March 2008 when the appellant was notified of the permission: see [2014] UKUT 456 (LC); [2014] PLSCS 323.
On appeal from that decision, the appellant contended that the relevant date was March 2008, when it had been notified of the permission.
Held: The appeal was dismissed.
(1) The relevant clause of the deed was intended to provide compensation for any diminution in the value of the land having the benefit of planning permission for residential or industrial purposes which was attributable to the overhead line. A compensation scheme for the diminution in the value of an asset occasioned by some defined circumstance had necessarily to describe the nature of the asset. Here, the asset in question was the land with the benefit of planning permission. While the grantor could have regard to factors beyond the bare fact of planning permission in deciding when to give notice of the grant of planning permission and of its claim to compensation, that did not undermine the essential nature of the bargain, which was that compensation was to be given for the effect of the power line on the value of the land with planning permission. In those circumstances, the triggering event for the obligation to grant compensation was the grant of the relevant planning permission, not the claim for compensation; it followed that compensation should be assessed as at the date of the relevant permission.
(2) The relevant permission for that purpose was the reserved matters approval. In referring to the grantor obtaining planning permission for the development of the property for residential or industrial purposes, the parties must have intended that the relevant permission would include the details necessary to enable the property to be developed. The asset to be valued was the land with the full benefit of the planning permission in question, which had to include the benefit of the approval of reserved matters. That approval would, or at least might, affect the value of the land; it was therefore a necessary ingredient of the description of the asset which had to be valued before its diminution in value by the presence of the power lines could be assessed. While it was possible to value a piece of land with outline planning permission only, the full effect of the deed contemplated a valuation with full planning permission, comprising both the outline permission and the reserved matters when it was known that they had been approved. It was irrelevant for that purpose that the “planning permission”, strictly so‑called, was the outline planning permission since the court was concerned to ascertain the intention of the parties: McClean Homes (East Anglia) Ltd v Secretary of State for the Environment, Transport and the Regions [1999] PLCR 372; [1999] 2 PLR 49 distinguished. The appropriate valuation date was therefore May 2007.
Robin Purchas QC (instructed by Hill Dickinson LLP) appeared for the appellant; Michael Humphries QC (instructed by Osborne Clarke) appeared for the respondent.
Sally Dobson, barrister
Click here to read transcript: G Park Skelmersdale v Electricity North West
