Compensation for revocation — Construction of statutory provisions — Calculation of amount of loss or damage — Demolition of dwellinghouse — Assumption that fresh permission would be granted for rebuilding of existing building — Whether assumption should be applied where such planning permission was subject of revocation proceedings — Whether words to be implied into statutory provision — Whether unfairness resulting — Appeal by council allowed
This was an appeal by the council from a decision of the Lands Tribunal concerning the true construction of certain provisions of the Town and Country Planning Act 1971 dealing with the basis of compensation where a planning permission was revoked. In 1961 outline planning permission had been granted in respect of land at Pean Hill between Whitstable and Canterbury on which stood a dwelling called Marley House. The permission was for the demolition of Marley House and the erection of a new house subject to conditions and detailed approval. In September 1963 the local planning authority approved detailed plans. Marley House was demolished but no new dwelling was ever erected. In June 1986, the land was purchased by C for £14,500. At that time it was believed that the 1961 permission had lapsed. C applied for a fresh permission to erect a house. In February 1987 that application was refused. It was later discovered that the original 1961 permission had remained valid until revoked and on August 2 1989 the Secretary of State confirmed revocation of that permission. C gave notice of a claim for compensation, which was referred to the Lands Tribunal. Section 164(4) of the Town and Country Planning Act 1971 provided that, in calculating 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 had a general heading “Development not constituting new development”, which included the rebuilding of a building previously destroyed or demolished. The Lands Tribunal took the view that it would be absurd if the consequence in the present case was that the revocation order eliminated one planning permission, thereby reducing the value of the site, and the claimants then, in effect, were given the benefit of a notional planning permission by virtue of Schedule 8 which was incapable of implementation and which in open market terms left them with a site of nominal value while actually depriving them of the greater part of their real loss. The tribunal stated that words should be notionally added to the end of subsection (4) such as “unless such planning permission is the subject of revocation order proceedings”. Unless such a construction was inferred, it stated, unfairness and hardship would result in cases such as the present one and it would be open to compensating authorities to avoid paying compensation by waiting until demolition had taken place before making demolition orders. The tribunal valued the land with the benefit of the 1961 permission at £115,000. Without that permission and excluding the effect of the statutory assumption the valuation was said to be £8,250. Accordingly, compensation for depreciation was assessed at £106,750. However, the Lands Tribunal recognised that if that view were wrong and effect were to be given to the Schedule 8 assumption, there would still be some compensation recoverable.
Compensation was assessed for depreciation on that basis at £45,000. The council appealed to the Court of Appeal. The question posed in the case stated was: “Whether the Tribunal was correct in adding to the end of sub-section (4) of section 164 of the Town and Country Planning Act 1971 words such as ‘unless such planning permission is the subject of revocation order proceedings’ and whether the Tribunal was right to exclude from its calculations for the purposes of section 164 … any assumption that planning permission would be granted to rebuild Marley House in accordance with paragraph 1 of Schedule 8 of the Act.”
Held The appeal was allowed.
1. The court was not justified in departing from the plain meaning of the words of section 164(4). While accepting the justice of the observation about potential abuse, it was always a dangerous exercise to add words to a statute. The circumstances of the present case did not justify such an approach. Mr and Mrs C purchased the land for £14,500 after Marley House had been demolished, believing that the 1961 permission was revoked. They were entitled under the plain meaning of the section to a sum assessed by the tribunal at £45,000. On any view, therefore, the Cs could not be said to be deprived of compensation for the depreciation of an interest in the land.
2. The legislative history of section 164(4) did not favour the addition of implied words to prevent the provision operating unfairly. The genesis of the provisions in section 164(4) was section 22(7) of the Town and Country Planning Act 1947. Similar provisions had continued to figure in subsequent legislation. Development charges were abolished by the 1953 and 1954 Planning Acts, but the provisions relating to compensation and modification had continued in the same form. It was unlikely that Parliament would have continued to enact the same provision up to the present day unless it was prepared to accept exceptional anomalies. Moreover, the operation of section 164(4) was not inherently adverse to claimants and could produce a disadvantage to the compensating authority: see Burlin v Manchester City Council (1976) 32 P & CR at p 115.
3. Accordingly, the compensation payable for loss of land value was £45,000. With Schedule 8 development rights the land was worth £70,000 at the material date. With the benefit of planning permission the land was worth £115,000. The difference between the two amounts was the amount of compensation payable for depreciation in the value of the land.
Christopher Cochrane QC and Edward Cousins (instructed by the solicitor to Canterbury City Council) appeared for the appellants; and David Keene QC and Barry Payton (instructed by Hempsons) appeared for the respondents, Mr and Mrs Colley.
