Town and country planning — Revocation of planning permission — Compensation — Whether assumption that planning permission would be granted for development of the land of any class specified in Schedule 8 to the Town and Country Planning Act 1971 applied
On November 16
1961 Kent County Council granted an outline planning permission for ‘the
demolition of house and erection of new dwelling’ relating to property at
Whitstable. Following that permission, in September 1963 the house originally
standing on the property was demolished, but no new dwelling was ever in fact
erected. On January 31 1986 the appellants purchased the site at a price of
£14,500 and thereafter there ensued a lengthy dispute between the appellants
and the respondents, Canterbury City Council, as the local planning authority
for the area, relating to the continuing validity of the 1961 planning
permission. That dispute was finally resolved in the appellants’ favour. On
November 12 1987 the respondents notified the appellants that they had made an
order revoking the 1961 permission and, following submission to the Secretary
of State for confirmation and a public local inquiry, the order was confirmed
on August 17 1989. The appellants made a claim for compensation under section
164 of the 1971 Act and on March 27 1991 the Lands Tribunal made an interim
award of £108,626.84 consisting of £106,759 depreciation in value of the land
and £1,866.84 for abortive design expenditure. The member of the tribunal
valued the land with the benefit of the 1961 permission at £115,000; without
the permission, and disregarding the assumption required to be made by section
164(4) of the 1971 Act, the valuation was £8,250. On the basis of making the
statutory assumption, however, the member of the tribunal found that the
post-revocation value of the land was £70,000, thus reducing the compensation
on this footing to £45,000. In his decision the member said: ‘that in
revocation order cases section 164 will only operate as Parliament intended it
to operate if the development resulting from the Schedule 8 assumption,
although a hypothetical one, is not that which also corresponds with the
subject of the associated revocation order’. This could be achieved by
notionally adding at the end of subsection (4) of section 164 words such as
‘unless such planning permission is the subject of revocation order
proceedings’. The Court of Appeal, which had allowed the respondents’ appeal
from the tribunal, gave leave to appeal.
1971 Act are, in terms, mandatory and there is no escape from the proposition
that they require to be applied even in the case postulated by the notional
permission to be assumed to be the very permission which has in fact been
revoked. The section is, in terms, postulating an artificial assumption and
dealing with a situation where no planning permission is, in fact, in existence
or likely to be in existence. The legislative history, starting with the Town
and Country Planning Act 1947, and taking into account the substantial
amendments made by the Town and Country Planning Act 1954, underlines the
impossibility of escaping the conclusion that the clear purpose of the
legislature was to limit the amount of compensation payable for depreciation
owing to a revocation of planning permission by fixing a base value for the
land in all cases on the footing that planning permission for any class of
Schedule 8 development would be granted. That must include, however arbitrary
it may seem, even development of that very class which was the subject of the
revoked permission. It may well be that the particular circumstances of the
revoked permission being the very permission comprehended in the statutory assumption
was not one which the legislature foresaw as unlikely to occur.
The following
cases are referred to in this report.
Central
Control Board (Liquor Traffic) v Cannon Brewery
Co Ltd [1919] AC 744; (1919) 17 LGR 569, HL
Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231; [1983] 1 All ER
948; [1978] ICR 347, HL
This was an
appeal by the appellants, Mark Colley and Janine Colley, from a decision of the
Court of Appeal which had allowed an appeal by the respondents, Canterbury City
Council, from a decision of the Lands Tribunal determining the amount of
compensation payable by the respondents to the appellants following the
revocation of a planning permission granted in 1961.
David Keene QC
and Barry Payton (instructed by Hempsons) appeared for the appellants; Roger
Henderson QC and Edward Cousins (instructed by Sharpe Pritchard, as agents for
Canterbury City Council) represented the respondents.
In his speech,
LORD OLIVER OF AYLMERTON said: Section 45 of the Town and Country
Planning Act 1971 (re-enacting provisions which first appeared in section 21 of
the Town and Country Planning Act of 1947) empowers a local planning authority,
subject to certain conditions and subject, in the absence of consent from
persons affected, to confirmation by the Secretary of State for the
Environment, to order the revocation or modification of a planning permission
which has been granted. Where such an order (other than one made with the
consent of the person affected) has been made and confirmed, a person
interested in the land who has incurred expenditure rendered abortive by the
order or who has otherwise sustained loss directly attributable to the
revocation or modification is entitled, under section 164 of the Act, to claim
and receive compensation for the expenditure or loss so incurred or sustained.
Subsection (4) of section 164, however, contains a provision limiting the
amount of any loss capable of being claimed for depreciation of the value of an
interest in the land affected by the revocation or modification. It is in these
terms:
In
calculating, for the purposes of this section, the amount of any loss or damage
consisting of depreciation of the value of an interest in land, it shall be
assumed that planning permission would be granted for development of the land
of any class specified in Schedule 8 to this Act.
Schedule 8
(which is headed ‘development not constituting new development’) is primarily
related to the provisions of section 169 of the Act, which applies not to a
revocation of an existing planning permission but to the refusal by the
Secretary of State, either on an appeal or on a reference, of an application
for planning permission. If the application is for development of a class
specified in Part II of Schedule 8, that section confers a right to compensation.
Part I of the Schedule relates to development not ranking under section 169 for
compensation for a refusal for planning permission and it embraces, for
relevant purposes, the rebuilding of buildings in existence on January 1 1948
or coming into existence thereafter so long as the cubic content of the
original building is not exceeded by certain defined limits.
The present
appeal, which is brought with the leave of the Court of Appeal, relates to a
property at Whitstable known as Marley House for which, subject to conditions
and detailed approval, an outline planning permission had been granted on
November 15 1961 by Kent County Council, then the local planning authority, for
‘the demolition of house and erection of new dwelling’. Following that
permission, the house originally standing on the property was demolished in
September 1963, but no new dwelling was ever, in fact, erected. On January 31
1986 the appellants purchased the site at a price of £14,500 and there
thereafter ensued a lengthy dispute between the appellants and the respondents,
now the planning authority for the area, relating to the continuing validity of
the 1961 planning permission. That dispute was finally resolved in the
appellants’ favour. In the interim the appellants had made a new application
for the erection of a house within the same curtilage as the original Marley
House, although not in precisely the same position. That application was
refused, but in June 1987 the respondents told the appellants that the original
permission was regarded as valid and that they would consider proposals for
implementing it. The appellants sought to follow this up and expended moneys in
abortive design expenditure. That sum is not now in dispute. On November 12
1987, however, the respondents notified the appellants that they had made an
order revoking the 1961 permission and had submitted it to the Secretary of
State for confirmation. Following a public inquiry the order was confirmed on
August 17 1989.
The appellants
then made a claim for compensation under section 164 which was referred to the
Lands Tribunal. On March 27 1991 the tribunal made an interim award of
£108,626.84 consisting of £106,750 depreciation in value of the land and
£1,876.84 abortive design expenditure. The only question currently in issue is
the correctness of the member’s assessment of the depreciation in value of the
land at the sum of £106,750 which was arrived at by, in effect, disregarding
the assumption required to be made by section 164(4). The member valued the
land with the benefit of the 1961 permission at £115,000. Without that
permission, and disregarding the statutory assumption, the valuation was
£8,250. On the basis of making the statutory assumption, however, the member
found that the post-revocation value of the land was £70,000, thus reducing the
compensation on this footing to £45,000.
In reaching
the conclusion that he did in apparent defiance of the express requirement of
section 164(4) the member was much influenced by the fact that the development
to which the revoked permission related was, in substance at least, the very
permission which the subsection required to be assumed to be still subsisting.
As it happened, the evidence satisfied him that the 1961 permission would have
enabled the appellants to build a considerably larger house than the original
Marley House, with the result that the actual post-revocation value of the site
was greater than that which resulted from the simple application of the
statutory assumption. The statutory assumption would, however, result, on any
analysis, in the appellants being deprived of a substantial part of their real
loss by the attribution of a notional planning permission which was, in fact,
incapable of implementation. Indeed, as Mr Keene QC has forcefully argued, if
one supposes a planning permission covering merely the erection of a building
of the same size and on the same site as the building demolished, the effect of
the statutory assumption is to eliminate any compensation at all for the
undoubted depreciation of the land value occasioned by the revocation. The
member’s view was that this could not possibly have been the intention of
Parliament in enacting a provision designed to provide compensation.
It seems to
me
— he said —
that in
revocation order cases section 164 will only operate as Parliament intended it
to operate if the development resulting from the Schedule 8 assumption,
although a hypothetical one, is not that which also corresponds with the
subject of the associated revocation order. This could be achieved by
notionally adding at the end of subsection (4) of section 164 words such as
‘unless such planning permission is the subject of revocation order
proceedings’.
From this
decision the respondents appealed by way of cases stated to the Court of Appeal
which, on March 20 1992, allowed the appeal but granted leave to the appellants
to appeal to your lordships’ House.
My lords, that
the results of the application of section 164(4) can, in appropriate
circumstances, be anomalous is beyond doubt. The respondents’ argument
involves, as Sir Donald Nicholls V-C pointed out in his judgment in the Court
of Appeal:
. . . as a
necessary corollary, the proposition that in assessing compensation for the
revocation of permission to demolish and rebuild a house, the valuer must
assume that permission to rebuild the house would be granted. On its face the
proposition seems bizarre.
Indeed, the
result of the statutory assumption, where the holder of a permission to
demolish and rebuild has actually carried out the demolition at the date when
the permission is revoked, is to leave him without a house and with a site upon
which he can neither rebuild nor effectively claim any compensation for its
depreciation in value.
Nevertheless,
the provisions of section 164(4) are, in terms, mandatory and I cannot, for my
part, see any escape from the proposition that they require to be applied even
in the case postulated of the notional permission to be assumed being the very
permission that has, in fact, been revoked. It has been suggested that
something turns on the use by the legislature of the word ‘assumed’ and it is
argued that you cannot ‘assume’ that which, because it cannot in fact be
implemented, is incapable of being rationally assumed. That, however, I find
myself quite unable to accept. The section is, in terms, postulating an
artificial assumption and dealing with a situation where no planning permission
is, in fact, in existence or likely to be in existence.
More
convincing, perhaps, is the appeal to the well-known canon enunciated by Lord
Atkinson in Central Control Board (Liquor Traffic) v Cannon Brewery
Co Ltd [1919] AC 744 at p752, that an intention to take away the property
of a subject without giving him a legal right to compensation for the loss of
it is not to be imputed to the legislature unless that intention is expressed
in unequivocal terms. But the difficulty here is that, even assuming that there
is room for the application of this principle in a section whose express purpose
is to provide and, at the same time, to limit compensation, the terms of the
section are, indeed, entirely unequivocal.
Then it is
said that the provision, if applied strictly in accordance with its terms,
leads to an absurdity. It is pointed out that, in the case of a refusal of
planning permission for development specified in Part II of the Schedule 8,
there is, in section 169, specific provision for compensation to be assessed on
the full difference in the value of the land with the permission and the value
of the land without it. It is, it is argued, absurd that where permission has
been granted and is then revoked there should be a harsher rule and one which
can, in certain circumstances, result in the subject receiving no compensation
at all. Reliance is placed on the speech of Lord Simon of Glaisdale in Stock
v Frank Jones (Tipton) Ltd [1978] 1 All ER 948. But that reference
is, as it seems to me, fatal to the submission. Lord Simon said at p954:
. . . a court
would only be justified in departing from the plain words of the statute were
it satisfied that: (1) there is a clear and gross balance of anomaly; (2)
Parliament, the legislative promoters and the draftsman could not have
envisaged such anomaly and could not have been prepared to accept it in the
interest of a supervening legislative objective; (3) the anomaly can be
obviated without detriment to such legislative objective; (4) the language of
the statute is susceptible of the modification required to obviate the anomaly.
Even assuming
that the anomaly, which arises only in very limited circumstances, is such as
to satisfy the second of these conditions, it is really impossible, as Mr Keene
was, I think, constrained to admit, to suggest any way in which the statutory
language could be modified save by the addition, for which there is no context,
of some such words as those used by the member of the Lands Tribunal. That
involves more than a mere purposive construction. It involves substantially
rewriting the section on the supposition that the legislature, had it thought
about the particular case, would have
chose to use. Accepting, as I do, that the appellants have suffered hardship in
being deprived of a substantial part of the value represented by the revoked
permission, I cannot, for my part, regard this as a legitimate approach to
construction of the statute.
In a clear and
most helpful address, Mr Keene’s final appeal was to a consideration of the
legislative history in order to support a submission that a purposive
construction of section 164 leads to the conclusion that subsection (4) cannot
be applied in accordance with its literal terms where this would result in
compensation being denied. The origins of the section and of Schedule 8 and
their subsequent amendment and incorporation into a succession of consolidating
statutes has been fully and carefully analysed and described in the judgment of
the vice-chancellor which, in the ordinary way, I would be content simply to
adopt in full without repetition. In deference to Mr Keene’s very careful and
detailed submission, however, I will endeavour to describe the history in
summary form. There was nothing revolutionary or novel about the provisions of
sections 45 and 164 or those of Schedule 8. Substantially similar provisions
were first enacted in the Town and Country Planning Act 1947 in sections 21 and
22 and Schedule 3. In particular, the assumption in section 164(4) formed an
essential part of the compensation calculation and was provided for in section
22(7) of the Act of 1947. While, however, in that Act it served the purpose of
providing a valuation base from which depreciation of land value for
compensation purposes was to be calculated, the rationale of that valuation
base was quite different.
The philosophy
behind the Act of 1947 was not only that development, whether it consisted of
building operations or change of user, should be controlled but that the
development value of land, over and above the value attributable to an
artificially defined ‘existing use’ of the land, should be taken into public
ownership. Thus, when the Act came into force on the appointed day (July 1
1948) a landowner became entitled to develop his land in a way not classified
as an existing use only upon payment to the public purse, in the shape of a
central land board, of a development charge under section 69 of the Act which
was to be calculated, in effect, by reference to the amount by which the value
of the land was enhanced by permission for the proposed development. The
existing use for the purposes of these provisions was defined by Schedule 3 to
the Act, Parts I and II of which were in substantially the same terms as Parts
I and II of Schedule 8 to the 1971 Act, save that they were headed respectively
‘development included in existing use for purposes other than compensation
under section 20’ and ‘development included in existing use for all purposes’.
The significance of this distinction was that it was provided in section 20
(the forerunner of section 169 of the 1971 Act) that where, on an application
for permission to carry out development of a class specified in Part II, that
application, either on appeal or on a reference, was refused by the Secretary
of State or was granted subject only to conditions, compensation could be
claimed from the local planning authority for the difference between the value
which the land would have had the permission been granted or granted
unconditionally and its value without the permission or with only the
conditional permission. No provision, however, was made for compensation for
refusal of permission to carry out development of a class specified in Part I
of the Schedule and although this may seem arbitrary it could not, as Sir
Donald Nicholls V-C remarked in the course of his judgment, have been
accidental. The existing use provisions of Schedule 3 had a further relevance.
Under Part VI of the Act there was established a compensation fund of an
arbitrary sum of £300m to meet claims by landowners for loss of development
value as a result of the Act, that is to say, the difference between the
unrestricted value of land immediately prior to July 1 1948 and its value
subject to the restrictions imposed by the Act. Since development charges were
to be levied only on development other than that comprised in the existing use
provisions in Schedule 3, section 61 provided that the restricted value of the
land for the purposes of this compensation was to be calculated on the
assumption that planning permission would be granted for development of any
class specified in this Schedule.
It is against
this scheme that sections 21 and 22 of the Act of 1947 fall to be considered.
Section 21 was, for material purposes, in substantially the same terms as
section 45 of the Act of 1971, but the compensation provisions in section 22,
albeit substantially in the same terms as those of section 164, contained a
crucial difference in the form of a proviso that no compensation should be paid
for depreciation in value unless (for relevant purposes) a development charge
had been paid in respect of the revoked permission. Subsection (7) provided for
the assessment of compensation in accordance with the Acquisition of Land
(Assessment of Compensation) Act 1919 and required it to be assumed (using
words identical with those of section 164(4) of the 1971 Act) that planning
permission would be granted for any class of development specified in Schedule
3. In the context of the scheme of the Act this was perfectly logical. Since,
by definition, the development charge which formed the essential condition for
payment of compensation became payable only on a development which was not
within the existing use, it was both rational and necessary to provide in the
calculation of the amount of depreciation a base value which assumed the
existence of a permission for existing use development.
So far so
good. The difficulty arises in the next stage in the legislative history. The
planning legislation was substantially amended in 1953 and 1954 when development
charges were abolished. The Town and Country Planning Act 1954 contained, in
section 38, provision for compensation for revocation of a planning permission
similar to that contained in section 21 of the 1947 Act. It did this, however,
not by enacting a new compensation permission, but by incorporating and
applying section 22 of the 1947 Act, but deleting the proviso, which excluded
compensation for depreciation in value when no development charge had been
paid. The formula for the calculation of the amount of depreciation which was
provided in section 22(7) was thus not only retained but was also expressly
incorporated by reference. This may be said to have been arbitrary and
illogical because, with the abolition of the development charge, the reason for
the statutory assumption in fixing a base value for calculation might be
thought to have gone, so that it would have been logical simply to repeal that
part of section 22(7) which included the statutory assumption. But this was not
done and I cannot, for my part, regard the omission as having been accidental.
Where a
statute contains a provision in words substantially identical with those used
in a previous Act it may be possible to argue that the words of the later Act
take on, from their context, a meaning different from that which they bore in
the previous enactment. But where the later statute expressly incorporates and
applies a section from an existing statute it is, as it seems to me, quite
impossible to attribute to it in its new application a meaning different from
that which it bore in the statute from which it is taken. The section had a
perfectly clear meaning in the context of the 1947 Act and clearly applied
equally to the case where the permission revoked was one for a development
specified in Schedule 3. When it was incorporated referentially in the Act of
1954 and repeated in terms, as it subsequently was in the consolidating Acts of
1962 and 1971, it cannot have changed its meaning. Thus the legislative
history, far from providing support for the purposive construction which Mr
Keene seeks to urge upon your lordships, seems to me to underline the
impossibility of escaping the conclusion that the clear purpose of the
legislature was to limit the amount of compensation payable for depreciation
owing to a revocation of planning permission by fixing a base value for the
land in all cases on the footing that planning permission for any class of
Schedule 8 development would be granted. That must include, however arbitrary
it may seem, even development of that very class which was the subject-matter
of the revoked permission.
The conclusion
is not one which I embrace with any enthusiasm and it may well be that the
particular circumstance of the revoked permission being the very permission
comprehended in the statutory assumption was not one which the legislature
foresaw as ever likely to occur. But, while this provides a sound reason for
the hope expressed by the Vice-Chancellor that Parliament may look again at
what he described as ‘an anachronistic relic’, it cannot provide an avenue for
escape from the clear and express words of the section. I would dismiss the
appeal.
LORD
TEMPLEMAN, ACKNER, MUSTILL and WOOLF agreed
that the appeal should be dismissed, and did not add anything.