The Supreme Court will this week be asked to rule on the compensation to be awarded to a developer for the compulsory purchase of its land in Rochdale more than 10 years ago. The court’s ultimate decision could provide useful guidance for valuation in future cases involving hypothetical planning prospects.
In Thursday’s appeal, JS Bloor (Wilmslow) is challenging a Court of Appeal ruling that could hit its hopes of securing almost £750,000 in compensation.
The developer had initially sought more than £2.5m on the basis that its land had significant hope value based on the prospect of it securing its own planning permission for residential development.
However, in 2013, the Upper Tribunal (Lands Chamber) ordered the Homes and Communities Agency to pay £746,000 for the compulsory purchase in 2006 of two plots of poor-quality grazing land totalling almost 27 acres, for residential development as part of the Kingsway Business Park. It made its award based on there being a 50% chance of planning permission being secured for 74 homes on almost five acres of the site.
The HCA appealed, claiming the Upper Tribunal had misapplied the statutory disregards in section 6 and Schedule 1 to the Land Compensation Act 1961. It alleged that the Upper Tribunal wrongly based its calculation on an assumption that the KBP scheme had been cancelled in its entirety, making the requirement in the development plan for a comprehensive and unified development more likely to be relaxed in favour of an independent residential development.
Allowing the appeal, Patten LJ said that the real issue was not whether the Upper Tribunal was correct to adopt the “no KBP universe” approach, but rather “whether the UT struck the balance between the ‘no KBP universe’ and the planning actualité”.
He said: “In my view, the UT was right to hold that the planning status of the reference land did have to be modified for the purposes of valuation in accordance with the ‘no KBP universe’ methodology. But it was wrong to do so by simply downgrading the strict application of the existing and emerging development plan but otherwise leaving the allocation of the land for development in place.
“What it should have done was to consider the planning potential of the reference land without regard to the development scheme and its underlying policies and therefore its effect on value.”
The issue before the Supreme Court is whether, in disregarding the increase or diminution in value of a site acquired compulsorily which is attributable to other land subject to the same compulsory purchase order, it is permissible to modify the planning status of the site in question.
The appeal will be heard by Lord Neuberger, Lord Clarke, Lord Sumption, Lord Carnwath and Lord Hughes.