Compensation for revocation of planning permission — Planning permission granted for replacement of dwellinghouse — Permission revoked after existing house demolished — Depreciation of value of interest in the land — Calculation of compensation payable — Effect of statutory assumption that permission would be granted for rebuilding of existing dwellinghouse — Town and Country Planning Act 1971 section 164(4) and Schedule 8, para 1
By section 164
of the Town and Country Planning Act 1971 (section 107 of the Town and Country
Planning Act 1990):
(1) . . .
where planning permission is revoked or modified by an order under section 45
of this Act . . . then if, on a claim made to the local planning authority
within the time and in the manner prescribed by regulations under this Act, it
is shown that a person interested in the land . . . —
(a) has incurred expenditure in carrying out
work which is rendered abortive by the revocation or modification; or
(b) has otherwise sustained loss or damage
which is directly attributable to the revocation or modification,
the local
planning authority shall pay to that person compensation in respect of that
expenditure, loss or damage . . .
(4) 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.
Para 1 of
Schedule 8 (Schedule 3 to the 1990 Act) prescribed the following class of
development:
1. The
carrying out of any of the following works, that is to say —
(a) the rebuilding, as often as occasion may
require, of any building which was in existence on the appointed day [January 1
1948], or of any building which was in existence before that day but was
destroyed or demolished after 7th January 1937, . . .
(b) the rebuilding, as often as occasion may
require, of any building erected after the appointed day which was in existence
at a material date.
In 1961
planning permission was granted by Canterbury City Council for the demolition
of Marley House, Pean Hill, Kent, and the erection of a new house on
substantially the same site. The house was demolished in 1963 but no new
dwelling was ever erected. In 1986 the appellants purchased the land for £
14,500, with the intention of building a new house pursuant to the 1961
permission. In 1987 the council made an
the permission. In 1989, following an inquiry, the order was confirmed by the
Secretary of State. The appellants then made a claim for compensation under
section 164, which was referred to the Lands Tribunal. The member assessed the
compensation payable for depreciation in the value of the land at £ 106,750,
being the difference between the value of the land with the benefit of the
revoked permission (£ 115,000) and the value without it (£ 8,250). He declined
to apply the assumption that Schedule 8 permission would be granted as leading,
on the facts, to unfairness and hardship. On the council’s appeal, the Court of
Appeal held that the plain words of section 164(4) left no room for any
discretion and required the Lands Tribunal to assume that planning permission
would be granted for the rebuilding of the house demolished in 1963. On this
basis the post-revocation value of the land was £ 70,000, thus reducing the
compensation to £ 45,000. The landowners appealed.
The provisions
of section 164(4) were mandatory and it was not open to the Lands Tribunal to
rewrite the subsection to remedy an apparent hardship to the appellants. The
clear purpose of the legislature was to limit the amount of compensation
payable for depreciation due to the revocation of a planning permission by
fixing a base value for the land in all cases on the footing that planning
permission would be granted for any class of Schedule 8 development, even where
such development was the subject-matter of the revoked permission: see pp 146F-147G
and 150A-B.
Decision of
the Court of Appeal [1992] 3 PLR 56 affirmed.
to in the opinions
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; [1978] ICR 347;
[1978] 1 All ER 948; (1978) 13 ITR 289, HL
Appeal against
decision of the Court of Appeal
This was an
appeal by Mark and Janine Colley against the decision on March 20 1992 of the
Court of Appeal [1992] 3 PLR 56 allowing an appeal by Canterbury City Council
by way of case stated from a decision of the Lands Tribunal, dated March 27
1991, whereby, on the appellants’ claim for compensation under section 164 of
the Town and Country Planning Act 1971 in respect of the revocation of a
planning permission for the demolition of a dwellinghouse and the erection of a
new house on land at Pean Hill, Kent, the Lands Tribunal assessed compensation
for the depreciation of the value of the appellants’ interest in the land at £
106,750. The effect of the Court of Appeal’s decision was to reduce the
compensation to £ 45,000.
QC and Barry Payton (instructed by Hempsons) appeared for the appellants, Mark
and Janine Colley.
Henderson QC and Edward Cousins (instructed by Sharpe Pritchard, agents for
Canterbury City Council) appeared for the respondents.
Their
lordships took time for consideration.
following opinions were delivered.
LORD TEMPLEMAN:
My lords, for the reasons to be given by my noble
and learned friend Lord Oliver of Aylmerton I would dismiss this appeal.
LORD
ACKNER: My lords, I have had the advantage of
reading in draft the speech of my noble and learned friend, Lord Oliver of Aylmerton.
I agree with it and for the reasons he gives I, too, would dismiss this appeal.
LORD OLIVER
OF AYLMERTON: My lords, 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, 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
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 ensured 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’ favour1. 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.
1Editor’s note: See Colley
v Canterbury City Council [1989] JPL 532 (Millett J).
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
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 case 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: [1992] 3 PLR 56.
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 (at p 67E),
. . . 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 p 752, 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
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 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 WLR 231 at p 237E. But that
reference is, as it seems to me, fatal to the submission. What Lord Simon said
was:
. . . 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
interests 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 expressed itself in substantially
different terms from those which it in fact 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 the 8th Schedule. Substantially similar
provisions were first enacted in the Town and Country Planning Act 1947 in
sections 21 and 22 and the 3rd Schedule. 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 the 3rd Schedule to the Act, Parts I and II of
which were in substantially the same terms as Parts I and II of the 8th
Schedule to the Act of 1971, 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 Act of 1971) 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 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 the 3rd Schedule 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 the 3rd
Schedule, section 61 provided that the restricted value of the land for the
purposes of this compensation was to be
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 Act of 1971) that planning
permission would be granted for any class of development specified in the 3rd
Schedule. 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 Act of 1947.
It did this, however, not by enacting a new compensation permission (sic)
but by incorporating and applying section 22 of the Act of 1947, 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 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 the 3rd Schedule. When it was incorporated
referentially in the Act of 1954 and repeated in terms, as
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 due 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 8th Schedule 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
MUSTILL: My lords, I have had the advantage of
reading in draft the speech prepared by my noble and learned friend, Lord
Oliver of Aylmerton. I agree with him and for the reasons which he has given,
I, too, would dismiss this appeal.
LORD WOOLF:
My lords, having had the advantage of reading in
draft the speech of my noble and learned friend, Lord Oliver of Aylmerton, I
would also dismiss this appeal for the reasons he gives.
Appeal
dismissed.
