Planning permission – Mineral extraction – Modification order reducing area within which quarrying permissible under planning permissions – Claim for compensation by third claimant quarry operator under section 107 of Town and Country Planning Act 1990 – Claim for loss owing to non-renewal of lease of quarry site by owner – Whether such loss recoverable under section 107 – Whether directly attributable to modification – Preliminary issue decided in favour of compensating authority
The first claimant owned the land and minerals on a site on which a quarry operated under planning permissions granted in 1960. The original quarry operator, which had held a lease of the site from the first claimant, was later incorporated within the third claimant’s group of companies and, in 1993, a new lease was granted to the third claimant for a term expiring in June 2008.
Over the years, the area in which the quarry was situated been designated as a site of special scientific interest, a special protection area (SPA) and Ramsar site, culminating in the designation of the Dorset Heaths special area of conservation (SAC) in 2005. The compensating authority, as the relevant planning authority, reviewed the planning permissions, with a view to protecting the designated area. Consequently, in November 2006 they made modification orders reducing the extent of the land on which mineral extraction could take place under those permissions; the orders were confirmed in 2007. Meanwhile, in November 2006, the first claimant granted a lease of the site to the second claimant, a newly incorporated company, for a term of 30 years from July 2008, after the expiry of the third claimant’s lease.
The claimants claimed compensation for the modification orders under section 107 of the Town and Country Planning Act 1990. By section 117 of that Act, such compensation fell to be assessed according to the rules set out in section 5 of the Land Compensation Act 1961, “so far as applicable and subject to any necessary modifications”. The third claimant claimed for loss premised on the assumption that, but for the modification orders, it would have been granted a new lease enabling it to continue mineral extraction after June 2008. A preliminary issue was tried as to the third claimant’s entitlement to compensation on that basis.
The third claimant contended that its claim fell within: (i) r (2) in section 5 of the 1961 Act, as part of the open market value of its interest, on the ground that the prospect of lease renewal would be reflected in that value; (ii) r (6), as “any other matter not directly based on the value of land”; or (iii) section 9 of the 1961 Act, which required to be disregarded any depreciation in the value of the relevant interest that was attributable to an indication being given that the relevant land was to be compulsorily acquired.
Held: The preliminary issue was determined in favour of the compensating authority.
The third claimant was “a person interested” in the land and minerals, so as to be able to bring a compensation claim under section 107, because at the date of the confirmation order it still held a lease with more than 15 months to run. If it could establish its loss, the fact that the anticipated new lease was not in existence at the date on which compensation fell to be assessed would be irrelevant: Rugby Joint Water Board v Foottit (1972) 222 EG 815 distinguished. However, the third claimant was unable to bring its claim within any of the provisions on which it relied.
Under section 107 of the 1990 Act, the award of compensation was made in respect of depreciation in the value of an interest in land. It was only to that category of loss that section 117 applied the rules in section 5 of the 1961 Act. Moreover, those rules were to operate only “so far as applicable and subject to necessary modifications”. Rule (6), which dealt with compensation for matters other than depreciation in the value of an interest in land, did not apply to the assessment of compensation under section 107. The third claimant had no claim under that rule.
Nor could it bring its claim within r (2). Under section 107 of the 1990 Act, the loss for which compensation was claimed had to be “directly attributable” to the modification of the planning permission. Even assuming that, but for the modification, he third claimant might have acquired a new lease, the depreciation in the market value of its existing lease owing to the loss of that prospect was not directly attributable to the modification. Although the proposed modification had led the first claimant to enter into the lease with the second claimant, it had not been an inevitable consequence of the modification that he would do so or that he would not grant a new lease to the third claimant. The loss of value from the lack of a prospect for renewal was therefore only an indirect result of the modification. Although attributable to it, it was not directly so attributable: Trocette Property Co Ltd v Greater London Council (1974) 28 P&CR 408 distinguished.
Furthermore, section 117 applied only “the rules set out in section 5” of the 1961 Act, not the entire section. Accordingly, the closing words of the section, giving effect to “the following provisions of this Part of this Act” for assessing compensation, did no apply under section 117. That meant that section 9 of the 1961 Act was not relevant to the third claimant’s claim under section 107 of the 1990 Act.
Ian Dove QC (instructed by Burges Salmon LLP, of Bristol) appeared for the first and second claimants; Simon Pickles (instructed by Knights Solicitors LLP, of Newcastle under Lyme) appeared for the third claimant; Andrew Tait QC and Alexander Booth (instructed by the legal department of Dorset County Council) appeared for the compensating authority.
Sally Dobson, barrister
