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, 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.
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. Marley House was demolished but no new dwelling was ever erected. In
1986 the land was purchased by the claimants, Mr and Mrs Colley, for £ 14,500.
Thereafter the council made an order under section 45 of the 1971 Act (section
97 of the 1990 Act) revoking the permission. In 1989, following an inquiry and
proceedings in the High Court to determine whether, in any event, the
permission had lapsed, the order was confirmed by the Secretary of State. The
landowners’ claim for compensation under section 164 was referred to a member
of the Lands Tribunal who assessed the compensation payable 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. He declined to apply the
assumption that Schedule 8 permission would be granted as leading, on the
facts, to unfairness and hardship, but if he were wrong and the assumption did
apply, the compensation would be £ 45,000, being the difference between the
value of the land with the assumed permission and with the more valuable
revoked permission.
The council
appealed by case stated on the questions: (1) whether the tribunal was correct
in adding to the end of section 164(4) words such as ‘unless such planning
permission is the subject of revocation order proceedings’; and (2) whether the
tribunal was right to exclude from its calculations for the purpose of section
164 any assumption that planning permission would be granted to rebuild Marley
House in accordance with para 1 of Schedule 8.
both questions answered in the negative.
Per Taylor and Farquharson LJJ: There was no justification for
departing from the plain meaning of the words in section 164(4), which left no
room for any discretion. The post-revocation value had to be calculated on the
assumption that the Schedule 8 permission would be granted even though this
could result, in some circumstances, in a landowner being deprived of a
valuable property right without compensation: see pp 63E-64F and 66F-67D.
Per Sir Donald Nicholls V-C: Considering its legislative history, the
purpose of section 164(4) was to limit the amount of compensation payable for
loss of value of the land to the loss attributable to the revocation of a
permission to carry out development other than Schedule 8 development,
even though the raison d’etre for this limitation disappeared when development
charges were abolished in 1953. Accordingly, the subsection required the right
to carry out Schedule 8 development to be assumed throughout the valuation
exercise, namely when assessing both the pre-revocation and post-revocation values:
see p 71H-72B. Parliament should look again at this anachronistic relic from
the 1947 legislation: see p 72D.
Decision of
the Lands Tribunal reversed.
to in the judgments
Burlin v Manchester City Council (1976) 32 P&CR 115; 283 EG 891
Central
Control Board (Liquor Traffic) v Cannon Brewery
Co Ltd [1919] AC 744; (1919) 17 LGR 569, HL
Colley v Canterbury City Council [1989] JPL 532
Coltman v Bibby Tankers Ltd [1988] AC 276; [1987] 3 WLR 1181; [1987]
3 All ER 1068; [1988] 1 Lloyd’s Rep 109, HL
Holmes v Bradfield Rural District Council [1949] 2 KB 1; [1949] 1
All ER 381; (1949) 47 LGR 278; 65 TLR 195
R v Registrar General, ex parte Smith [1991] 2 QB 393; [1991]
2 WLR 782; [1991] 2 All ER 88, CA
Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231; [1978] 1 All ER
948; HL
Appeal against
decision of the Lands Tribunal
This was an
appeal by Canterbury City Council by way of case stated from an interim
decision of the Lands Tribunal (Mr J C Hill), dated March 27 1991, whereby, on
a claim by the respondents, Mark and Janine Colley, for compensation in respect
of a revocation of 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 claimants’
interest in the land at £ 106,750.
Cochrane QC and Edward Cousins (instructed by P Wilson-Sharp, chief solicitor
to Canterbury City Council) appeared for the appellants.
Keene QC and Barry Payton (instructed by Hempsons) appeared for the
respondents, Mark and Janine Colley.
following judgments were delivered.
TAYLOR LJ: This is an appeal by Canterbury City Council by way of case stated
pursuant to section 3(4) of the Lands Tribunal Act 1949 from a decision of the
Lands Tribunal dated March 27 1991. The case concerns the true construction of
certain provisions of the Town and Country Planning Act 1971 dealing with the
basis of compensation where a planning permission is revoked.
The relevant
facts are briefly as follows. In 1961 outline planning permission was granted
in respect of land at Pean Hill between Whitstable and Canterbury whereon stood
a dwelling called Marley House. The permission was for 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
January 1986 the land was purchased by the respondents, Mr and Mrs Colley, for
£ 14,500. At that time it was believed that the 1961 permission had lapsed. The
respondents applied for a fresh permission to erect a
the appellants, as local planning authority, told the respondents that the
original permission of 1961 was in fact still valid and that they would
consider proposals for implementing it. The respondents sought to follow that
up, but on November 12 1987 the appellants gave notice that they had submitted
an order for confirmation by the Secretary of State for the Environment
revoking the 1961 permission. The respondents objected and a public inquiry was
ordered. Further doubts were there raised by the appellants as to whether the
1961 permission may have lapsed after all, as they had first thought. That
issue was argued before Millett J in June 1988. He held that the permission
remained valid until revocation: see [1989] JPL 532. Following the public
inquiry and after a further challenge, the Secretary of State finally confirmed
the revocation order on August 17 1989. The respondents then gave notice of
their claim for compensation. It was referred to a member of the Lands Tribunal
and heard in October 1990. The interim decision of the member, which is now
challenged, resolved a number of issues about various heads of alleged loss and
damage, valuations and tax considerations. However, the only question raised by
this case stated is one of statutory construction and I think it convenient
before stating its terms to set out the relevant statutory provisions.
Statutory
provisions
Section 45(1)
of the Town and Country Planning Act 1971 provided:
45.–(1) If it appears to the
local planning authority, having regard to the development plan and to any
other material considerations, that it is expedient to revoke or modify any
permission to develop land granted on an application made under this Part of
this Act, the authority, subject to the following provisions of this section,
may by order revoke or modify the permission to such extent as (having regard
to those matters) they consider expedient.
Subsection (2)
provided that the order shall not take effect unless confirmed by the Secretary
of State. Subsection (3) provided that where a local planning authority submits
an order to the Secretary of State for confirmation, they must serve notice on
the owner of the land and others affected, and the Secretary of State if
required shall afford any such person an opportunity of a hearing by a person
appointed by the Secretary of State.
Section 164(1)
provided, so far as is relevant:
164.–(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) as 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.
Schedule 8 has
a general heading ‘Development not constituting new development’. Part I of the
Schedule, under a heading ‘Development not ranking for compensation under
section 169’, provides as follows:
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 [July 1
1948], or of any building which was in existence before that day but was
destroyed or demolished after 7th January 1937, including the making good of
war damage sustained by any such building;
(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;
. . .
so long as (in
the case of works falling within any of the preceding subparagraphs) the cubic
content of the original building is not exceeded —
(i) in the case of a dwellinghouse, by more
than one-tenth or 1,750 cubic feet, whichever is the greater; and
(ii) in any other case, by more than one-tenth.
2. The use as
two or more separate dwellinghouses of any building which at a material date
was used as a single dwellinghouse.
Section 278 of
and Schedule 18 to the Act, taken together, add to the assumption, specified
under section 164(4) and Schedule 8, further assumptions in cases of permission
to rebuild as to the extent to which the area and use of floorspace in the new
building will be permitted to exceed that of the original building.
It is common ground
that under the statutory scheme the respondents were entitled to compensation
for any depreciation in the value of their interest in the land resulting from
the revocation order; further, that the depreciation was to be calculated as
the difference between the value of the land with the 1961 permission in force
and the value without it. The dispute before the Lands Tribunal was as to the
effect of section 164(4) on that calculation. The appellants argued that in its
plain and natural meaning, the subsection required the calculator to assume
planning permission would be granted for the rebuilding of Marley House. On
that basis the difference between the value before revocation and afterwards
would be modest. The respondents argued that such a literal construction would
produce a nonsensical and unfair result. Outside Alice in Wonderland, how could
one seek to measure the loss flowing from revocation of a permission on the
assumption that that very permission would be granted?
In fact, the
revoked 1961/1963 permission was for the demolition of Marley House and the
erection of a new dwelling not on exactly the
therefore, the revoked permission differed from the permission to be assumed
under Schedule 8, ie for rebuilding on the original site. The tribunal member
dealt with the case on the footing that the assumed permission corresponded
with the revoked permission. He found in favour of the respondents, expressing
his view in the following terms:
It would in
my view be totally absurd if the consequence in the present case was that the
revocation order eliminated one planning permission, thereby substantially
reducing the value of the site, and for the claimants then, in effect, to be
given the ‘benefit’ of a notional planning permission by virtue of the 8th
Schedule which was incapable of implementation and which in open market terms
left them with a site of relatively nominal value whilst actually depriving
them of the greater part of their real loss.
A little
later, the member said:
I cannot
think that Parliament intended that provisions intended to prevent owners from
being deprived of rights to existing or former developments should be employed
to produce precisely the opposite result . . . It seems to me 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’. Unless such a construction is inferred unfairness and hardship
will result in cases such as the present case and it would be open to
compensating authorities in similar cases to avoid paying compensation by
waiting until demolition had taken place before making demolition (sic)
orders.
The member
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, the compensation for
depreciation was assessed at £ 106,750.
However,
although in the passages quoted above the member treated the Schedule 8 assumed
permission as ‘corresponding to’ the revoked permission, he recognised that if
he was wrong and effect was to be given to the Schedule 8 assumption there
would still be some compensation recoverable. This was because the revoked
permission with its resiting of the new house was more valuable than the
assumed permission under Schedule 8. The member assessed the compensation for
depreciation on this basis at £ 45,000.
The question
posed in the case stated is:
Whether the
Tribunal was correct in adding to the end of subsection 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 purpose of section
164 of the Town and Country Planning Act 1971 any assumption that planning
permission would be granted to rebuild Marley House in accordance with
paragraph 1 of Schedule 8 of the Act.
Mr Keene QC,
in his able argument, did not seek to persuade this court that the first part
of that question should be answered in the affirmative. He conceded that it was
inappropriate and indeed impermissible to add words to the statutory provision
in the manner suggested by the member. He contends, however, that on two
grounds the Schedule 8 assumption cannot have been intended to apply and should
not be applied in the circumstances of this case.
His first
ground is that the effect of making the assumption would be to deprive the
respondents of a property right (the revoked permission) without compensation.
That, he submits, would be contrary to the well established principle stated by
Lord Atkinson in Central Control Board (Liquor Traffic) v Cannon
Brewery Ltd [1919] AC 744 at p 752:
. . . an
intention to take away the property of a subject without giving to 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.
Mr Keene
submits that the intention of Parliament in section 164 was to compensate
owners where revocation of a planning permission reduces the value of their
interest in their land. The intention was therefore to apply Lord Atkinson’s
principle, not to defeat it. Despite the apparently unequivocal words of
subsection (4), the section as a whole should be given a purposive
construction. Mr Keene cited authorities to show that even where a statutory
provision is apparently in absolute terms, the courts will not slavishly apply
it in a manner contrary to the purpose of the Act or public policy. He referred
to Coltman v Bibby Tankers Ltd [1988] AC 276 where the House of
Lords, applying the purposive approach, held the word ‘equipment’, in a statute
which aimed to saddle employers with liability for defective plant, to include
a ship of whatever size. Again, in R v Registrar General, ex parte
Smith [1991] 2 WLR 782, this court considered an apparently absolute statutory
entitlement to disclosure of a person’s birth certificate. The court declined
on public policy grounds to require disclosure to a murderer who might use the
information to commit a further crime of violence.
Mr Keene’s
second submission was that the literal construction of section 164(4) for which
the appellants contend would produce such absurdity as justifies this court in
declining to adopt it. It is true that here, as already indicated, the
respondents would, on the member’s assessment, receive some £ 45,000 for
depreciation even if the Schedule 8 assumption were made. But Mr Keene poses a
case in which the permission revoked was exactly equivalent to the Schedule 8
assumption and, as here, revocation occurred after the original house had been
demolished. In those circumstances, if the appellants are right, the owner
would have lost his house, lost his actual permission to rebuild and been
‘credited’ with an assumed equivalent permission which would not in fact be
granted. He would recover no compensation for this depreciation of his interest
in the land which would be unjust and, Mr Keene submits, absurd.
Mr Cochrane QC
accepts that, although it is not this case, that extreme example could occur
and would be anomalous. But he submits
declining to apply the plain words of the statute. The two cases cited for the
respondents are not in point. In Coltman v Bibby Tankers Ltd the
word ‘equipment’ was capable of a wider or narrower meaning and the House of
Lords considered the wider meaning gave effect to the purpose of the statute.
In ex parte Smith exceptional considerations of public policy involving
danger to life and limb determined the court’s decision. By contrast, Mr
Cochrane cited Holmes v Bradfield Rural District Council [1949] 2
KB 1 in which Finnemore J said at p 7:
Of course the
mere fact that the results of applying a statute may be unjust or even absurd
does not entitle this court to refuse to put it into operation. It is, however,
common practice that if there are two reasonable interpretations, so far as the
grammar is concerned, of the words in an Act, the courts adopt that which is
just, reasonable and sensible rather than one which is, or appears to them to
be, none of those things.
Again, in Stock
v Frank Jones (Tipton) Ltd [1978] 1 WLR 231, Lord Simon of
Glaisdale set out the criteria to be applied by a court which is invited to
depart from the plain words of a statute on the grounds that they would produce
an anomaly. He said at p 237E:
. . . a court
would only be justified in departing from the plain words of the statute were
it satisfied that: (1) there is clear and gross balance of anomaly; (2)
Parliament, the legislative promoters and the draftsman could not have
envisaged such anomaly, 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.
While
appreciating the force of Mr Keene’s submissions, I do not thing the court is
justified in departing from the plain meaning of the words in section 164(4). I
certainly do not think that the circumstances of the present case justify that
approach. Here the respondents purchased the land for £ 14,500 after Marley
House had been demolished. They believed that the 1961/1963 permission had
expired. When this turned out not to be so, but the permission was revoked,
they were entitled under the plain meaning of the section to a sum assessed by
the member at £ 45,000. On any view, therefore, these respondents cannot be said
to be deprived of compensation for the depreciation of their interest in the
land.
Mr Cochrane
submits further that even the anomalous result in Mr Keene’s hypothetical
example does not justify avoidance of the plain meaning of the section.
Applying Lord Simon’s criteria, he submits that the language of the statute is
not susceptible of the modification required to obviate the anomaly. The
member’s suggested addition of implied words is expressly rejected by Mr Keene
and he has not suggested any other modification save for ignoring subsection
(4) altogether. One suggestion made in the Encyclopedia of Planning Law
vol 2 at p 2-3444 is that the assumption may possibly have been intended to
apply as follows:
that the
award of compensation should include an element in respect of loss of
[Schedule 8] rights; in other words, that the loss of depreciation should be
calculated on the basis of the actual loss being enhanced by reference to the
claimant’s [Schedule 8] rights.
Had this been
the intention one would have expected the assumption in subsection (4) to have
been ‘that planning permission would have been granted’. The actual words used
(‘would be granted’) speak of the future, ie post-revocation and
post-compensation.
Moreover, the
legislative history would not favour this construction. The genesis of the
provisions in section 164(4) was section 22(7) of the Town and Country Planning
Act 1947. Similar provisions have continued to figure in subsequent
legislation. Thus, in the Town and Country Planning Act 1962 they appeared in
section 118(4) referring to the Third Schedule of that Act and in the Town and
Country Planning Act 1990 the same provisions remain at section 107(4) and
Schedule 3. The 1947 Act provided for development charges to be payable on the
grant of planning permission and compensation for revocation or modification
was the balancing factor to ensure fairness to the owner of the land.
Development charges were abolished by the Town and Country Planning Acts of
1953 and 1954. Nevertheless, the provisions relating to compensation for
revocation and modification have continued in the same form. Applying Lord
Simon’s second proposition, it is hard to believe that Parliament could have
continued to enact the same provision right up to the present day unless
prepared to accept any such exceptional anomaly as Mr Keene has envisaged. As
was pointed out by Mr Cochrane, the operation of section 164(4) is not
inherently adverse to the claimants; it can produce disadvantage to the
compensating authority as occurred in Burlin v Manchester City
Council (1976) 32 P&CR 115.
Bearing all
these matters in mind, I do not consider that there are any grounds for
departing from the plain meaning of section 164(4) or for disapplying it.
Accordingly, I would allow this appeal and would answer ‘No’ to both halves of
the composite question posed in the case stated.
FARQUHARSON
LJ: Section 164(4) of the Town and Country Planning
Act 1971 provides:
(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.
The relevant
class in that Schedule relates to the rebuilding, within certain dimensional
limits, of any building which was in existence on the appointed day (July 1
1948) or of any building which was in existence before that day but was
demolished after January 7 1937.
The planning
permission for the demolition of Marley House and the erection of a new
dwelling was granted on November 15 1961 and the demolition took place in 1963.
That permission was revoked by the
respondents seek compensation in these proceedings.
At first sight
the assumption that is required to be made by section 164(4) cancels the award
of compensation which is provided for in the Act. In this case the planning
permission for the rebuilding of Marley House was revoked and, leaving aside
section 164(4), the loss could be readily calculated by taking the value of the
house and land with the planning permission and deducting the value without
such permission. But the subsection requires that the post-revocation value is
an assumed figure, the assumption being that the planning permission which has
been revoked still exists within the terms of the Eighth Schedule. Leaving
aside expenses incurred prior to revocation, the two figures in principle are
likely to be the same.
In his interim
decision the member of the Lands Tribunal made this observation:
It seems to
me 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 [case], 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’. Unless such a construction is inferred unfairness and hardship
will result in cases such as the present case and it would be open to
compensating authorities in similar cases to avoid paying compensation by
waiting until demolition had taken place before making demolition orders.
While I accept
the justice of the observation about potential abuse, it is always a dangerous
exercise to add words to a statute. In fact, the phrase suggested by the member
would not achieve the result he wished. Mr Keene for the respondents disclaimed
that approach and, in my judgment, he was right to do so. He develops his case
by pointing out the absurdity and injustice which would result from a literal
interpretation of the subsection. As an example Mr Keene cites the position
where a landowner with a planning permission in the same terms as that granted
in 1961 in the present case, demolishes the existing building, but the
permission is revoked before he could build a new one. In such circumstances,
given the Schedule 8 assumption the landowner would be without a house and
without compensation. This would conflict, he argues, with the well-known
principle of law that unless it is expressed in clear terms a statute will not
be construed as depriving a citizen of his rights without compensation.
Mr Keene’s
solution to what would otherwise be the confiscatory effect of the statute is
to apply the Eighth Schedule assumption to both sides of the equation, that is
to say, both in valuing the land before revocation and after. He points out
that subsection (4) is not explicit in referring to the post-revocation period
and the wording is apt to cover both situations. Counsel asserts that
interpretation would involve the grant of more realistic compensation, though
because of the terms of the permission in the present case (‘demolition and
erecting of a new
Finally, Mr
Keene argues that if the statute in its ordinary meaning produces an anomalous
result it should not be applied and the calculation of the compensation should
not be based on the statutory assumption at all. The provisions of Schedule 8
appeared in the Town and Country Planning Act 1947 and were concerned with the
calculation of the development charge, which was subsequently abolished. The
reference in section 164(4) to these provisions arose because it was a
convenient way to make the calculation. This fortifies his argument that if
this cross-referencing produces an unjust result, Schedule 8 should not be
applied.
The approach
of the appellants is more direct. Mr Cochrane on their behalf submits that the
words of both the subsection and the Schedule are perfectly clear and it is the
duty of the court to apply them. Mr Cochrane concedes that in an extreme
situation the legislation may produce an anomalous result — as in the example
given where a landowner demolishes his house and the planning permission is
revoked before he can erect a new one — but generally speaking the effect of
the provisions will be to provide a measure of compensation, though not so much
as if the Schedule 8 assumption is not made. In the present case, on the
appellants’ strict interpretation of the subsection and the Schedule the Lands
Tribunal member would have made an award of £ 45,000 to the respondents. In
certain circumstances the effect of the assumption would be adverse to the
local planning authority. Planning permission is always going to be more
valuable than the Eighth Schedule rights.
Mr Cochrane
further submitted that the terms of the legislation leave no room for an
interpretation that the Eighth Schedule assumption applies to both the pre- and
post-revocation situations.
Neither
counsel has suggested that in its task of interpretation the court will be
assisted by an examination of the Town and Country Planning Act 1947, which was
the genesis of the Eighth Schedule, although as already explained in a
different context.
There is no
room on the general rules of construction for the court to hold that the
assumption set out in section 164(4) does not apply in any particular case. The
terms of the section provide that ‘it shall be assumed that planning
permission would be granted . . .’ There
is no discretion. The provisions must be applied unless it can be said that
they have an effect which Parliament cannot have intended. The respondents rely
on the observations of 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 to 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.
For my part, I
do not think that the effect of this legislation is ‘to take away the property
of the subject without giving him a legal right to compensation’. Its purpose
is the very reverse, namely to provide compensation for the revocation of a
planning permission already granted. In ordinary circumstances the result of
the calculation would
valuable than the Schedule 8 assumption. The complaint here is that in unusual
circumstances (as in the example already cited) there may be no compensation
payable at all for revocation of an existing permission, and in all cases the
effect of the calculation is to provide less compensation than would be the
case without it. Those circumstances do not, in my judgment, bring the
provisions within the ambit of Lord Atkinson’s comment. In fact, only one
example has been given to us where no compensation might be payable for
revocation of an existing consent and that is where there has been permission
to demolish and rebuild, and planning permission has been revoked after the
demolition, which does not itself entitle the landowner to compensation before
any rebuilding has taken place. I would consider it to be bad practice for a
local planning authority to act deliberately in that way for the purpose of
avoiding the payment of compensation. On the other hand, it is not a sufficient
ground for holding that the subsection and the Eighth Schedule should not apply
because they are confiscatory.
Finally, in my
opinion, on the true construction of the subsection it cannot be said that the
assumption applies to both the pre- and post-revocation situations.
This is not an
easy case because it has been demonstrated that the assumption which has to be
made can operate unfairly, but there is no way which I can see whereby the
effect of section 164(4) can be avoided.
I would allow
the appeal.
SIR DONALD
NICHOLLS V-C: The planning authority’s argument on
this appeal involves, 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. The matter goes further. A
planning permission for carrying out building operations may be revoked at any
time before the operations have been completed. Thus, in the case of a
permission to demolish and rebuild, the permission may be revoked after the
demolition has taken place and before the replacement house has been built. If
a planning permission is revoked at that stage the owner of the land will find
himself without a house. He will have a site on which he no longer has a house
but with a claim for compensation. On the planning authority’s contention, such
a landowner cannot recover substantial compensation for depreciation in the
value of his land. In such a case, as in the case where the permission is
revoked before the house has been demolished, compensation is to be assessed on
the assumption that planning permission would be granted for the erection of a
replacement house. So the compensation will take no account of the fact that
there is no longer a right to replace the demolished house or the fact that the
absence of a house came about by work done pursuant to the permission which was
revoked thereafter. A proposition which produces such a seemingly unjust
measure of compensation calls for a particularly close examination of the
statutory provisions.
The Act of
1971
The statutory
provision relevant in the present case is section 164(4) of the Town and
Country Planning Act 1971. This subsection required an assumption to be made
regarding the grant of permission for development of any class falling within a
schedule, there Schedule 8 to the Act of 1971. (This Schedule corresponded
substantially to the Third Schedule in the Act of 1947 and the Third Schedule
in the current Act, namely the Town and Country Planning Act 1990. For
convenience I shall refer to the relevant schedule throughout this judgment as
the Third Schedule.) The context in
which the assumption has to be made is a calculation of the depreciation of
land value. Thus, section 164(4) calls for a comparison between the two values:
the value pre-revocation and the value post-revocation. The subsection does not
state explicitly whether the assumption is to be applied to the pre-revocation
valuation, or to the post-revocation valuation, or to both, although these
different applications may produce very different results. If the notional
assumption is made when assessing the pre-revocation value, the effect will be
to increase the amount of the compensation. The depreciation is to be
calculated on the footing that before revocation the claimant had the right to
carry out the development which was the subject of the permission subsequently
revoked and also, if and in so far as this may add to the value of the land,
the right to carry out Third Schedule development. The post-revocation value is
to be assessed without making any assumption. Conversely, if the notional
assumption is made when assessing the post-revocation value, the effect will be
to reduce the amount of the compensation. The land is to be valued after
revocation on the notional assumption that, whatever the reality may be, after
revocation the claimant still has the right to carry out Third Schedule
development. The third alternative, which in practice will often come to much
the same as the second alternative, is that the assumption is to be made at
both stages of the calculation. Thus, this also would have the effect of
reducing the amount of compensation which otherwise would be payable. On this
footing, compensation will be payable to the extent only that the revocation
diminished the value of the land by reason of the withdrawal of the right to
carry out ‘new’ development, namely development other than Third Schedule
development.
The Act of
1947: development charges
Although the
subsection does not state in so many words which of these three possibilities
is the right one, the language does point more towards the third possibility
than the other two. The key words in the subsection are quite general: in
assessing depreciation in the value of land ‘it shall be assumed that planning
permission would be granted’ for Third Schedule development. That is the
starting point. But in this case, as in all cases concerned with the
construction of a statute or a document, regard must be had to the purpose of
the provision. That is particularly so here, because of the consequences
mentioned above which this interpretation of section 164(4) would have.
Unfortunately,
the purpose does not appear clearly from the 1971 Act. So, inevitably if
reluctantly, one must go back to the genesis of the
the Town and Country Planning Act 1947. It is necessary, when approaching
section 22, to have in mind that part of the general scheme of the Act of 1947
was that development charges were payable in respect of development for which
planning permission was needed, with an exception in respect of development of
the kinds specified in the Third Schedule of that Act. Presumably the social
policy underlying this provision was, as to Part I of the Third Schedule, the
need to encourage rebuilding and the best use of housing accommodation in the
years immediately following the second world war and, as to Part II, the
desirability of not seeking to tax minor development coming within the
‘tolerances’ prescribed in the various paragraphs of that part of the Schedule.
Section 21
provided for revocation of planning permission. The compensation consequences
were spelled out in section 22. Section 22(1) made provision for the payment of
compensation in terms not materially different from section 164(1) of the Act
of 1971. For ease of reference I set out the material words of section 22(1):
Where
permission to develop land is revoked . . ., then if, on a claim made to the
local planning authority . . . it is shown that any person interested in the
land has incurred expenditure in carrying out work which is rendered abortive
by the revocation . . ., or has otherwise sustained loss or damage which is
directly attributable to the revocation . . ., that authority shall pay to that
person compensation in respect of that expenditure, loss or damage . . .
The width of
the subsection was then cut down by a proviso. The proviso included the payment
of compensation in respect of loss or damage consisting of the depreciation in
value of any interest in the land by virtue of the revocation, save in two
instances: where a development charge had been paid in respect of the
development to which the permission related, and when no development charge was
payable by reason of certain special provisions in the Act (which it is not
material to enlarge upon for the present purposes).
Thus, in
certain limited instances compensation was payable post-revocation in respect
of depreciation in value of an interest in land. Subsection (7) provided how
such compensation was to be calculated:
Any
compensation payable under this section in respect of loss or damage consisting
of the depreciation in value of an interest in land shall be assessed in accordance
with the provisions of the Fourth Schedule to this Act, and in calculating the
amount of any such depreciation it shall be assumed that permission would be
granted under this Part of this Act for development of the land of any class
specified in the Third Schedule to this Act.
The latter part
of this subsection is the ancestor of the subsection with which this appeal is
concerned. The Fourth Schedule, para 1, provided that, so far as applicable,
section 2 of the Acquisition of Land (Assessment of Compensation) Act 1919
should have effect for the
depreciation in value of any interest in land as it had effect for the purpose
of compensation for the compulsory acquisition of land. Section 2 of the Act of
1919, now reproduced in section 5 of the Land Compensation Act 1961, contained
the familiar rules for assessing compensation on compulsory acquisition. Rule 2
is that, subject to certain exceptions, the value of land shall be taken to be
the amount which the land if sold in the open market by a willing seller might
be expected to realise.
From these
somewhat intricate provisions several points are tolerably clear. First, in
general, compensation for loss in land value in consequence of revocation of
planning permission was not payable unless a development charge had been paid
in respect of the development in question. Second, the section envisaged that,
in general, no compensation for loss in land value would be payable following revocation
of permission to carry out Third Schedule development. That was envisaged,
because development charges were not generally payable in respect of Third
Schedule development: see section 69(2). Thus, the proviso to section 22(1)
excluded the payment of compensation for loss in land value resulting from a
revocation of permission to carry out Third Schedule development. Third, it
would be consistent with this if compensation for loss in land value, when
payable, did not include any element in respect of Third Schedule development.
Fourth, it would be inconsistent with this if, when loss of land value
compensation was payable, the compensation were to include an amount in respect
of Third Schedule development. If, in general, compensation was payable only
when a development charge had been paid, one would expect to find that
compensation was limited to the loss flowing from the inability to carry out
the development in respect of which the charge was paid. Fifth, this treatment
accorded with the overall scheme of the Act regarding ‘existing use’ values.
For instance, if planning permission were refused and in consequence the land
was incapable of reasonably beneficial use, the compulsory acquisition which
the owner of land could choose to trigger led to the assessment of compensation
on the footing that that permission would be granted for Third Schedule
development but for no other development: see sections 19 and 51. Sixth,
special provision was made by section 20 for cases where permission was refused
for a development of any class specified in Part II of the Third Schedule. No
comparable provision was made regarding Part I of the Third Schedule. This
cannot have been an oversight. Indeed, the headings of the two parts of the
Third Schedule emphasise the distinction. Part I, concerning rebuilding and the
use of houses for multiple occupation, was headed, ‘development included in
existing use for purposes other than compensation under section 20’. Part II
was headed, ‘development included in existing use for all purposes’.
All this seems
to me to lead inexorably to the conclusion that the notional assumption
required to be made for valuation purposes by section 22(7) was intended to
create a valuation base. Compensation was payable only in respect of variations
in land values above the base. In other words, the notional assumption was
intended to limit, not to
applied at both stages of the calculation, that is, when calculating the
pre-revocation value and also when calculating the post-revocation value.
I recognise
that the consequence of this was, to take the simplest case, that no
compensation would be payable if permission to rebuild a building falling
within Part I of the Third Schedule was granted and then revoked. That accorded
with the scheme of the legislation. It was a consequence which arose from the
Act having provided that there were certain types of development which required
planning permission but which did not attract an obligation to pay a
development charge.
The
subsequent legislation: the abolition of development charges
Thus far the
pieces fit together. The difficulty arises at the next stage in the history of
the legislation. Development charges were abolished by the Town and Country
Planning Act 1953. The following year the Town and Country Planning Act 1954,
section 38, amended section 22 of the Act of 1947 by, in short, deleting the
proviso to section 22(1). But, and this is what is puzzling, section 22(7) was left
unamended. This is puzzling because once development charges ceased to be paid,
the raison d’etre for what I have described as the Third Schedule valuation
‘base’ disappeared. It is difficult to see why, after development charges had
been abolished, revocation of permission for Third Schedule development should
be treated any differently from revocation of permission for any other class of
development. Compensation for depreciation in land value should be payable as
much in the former case as in the latter. However the matter may have been
perceived in 1954, certainly seen through the eyes of today the result is
impossible to justify or rationalise sensibly.
What has
happened since 1953 is that the assumption, prescribed by section 22(7) of the
Act of 1947 against a very different legislative background, has lingered on.
It was carried forward first into the consolidating Act of 1964 (section
118(4)), then into the consolidating Act of 1971, and finally into the current
consolidating Town and Country Planning Act 1990 (section 107(4)). By an even
more recent Act, the Planning and Compensation Act 1991, the scope of the
subsection has been cut down. Section 114 of the Act of 1990, which
corresponded to section 20 of the Act of 1947 and provided for the payment of
compensation on refusal to grant permission for a Part II development, has been
repealed. By what is described as a minor and consequential amendment, the
Third Schedule development assumption in section 107(4) now requires only an
assumption that development would be granted for Part I developments: see
section 31 of the 1991 Act and Schedule 6 para 13. In this emasculated form the
subsection still survives today.
Conclusion
In the end I
find myself driven to conclude that the purpose of the crucial subsection in
the Act of 1971 was the same as the purpose of the corresponding subsection in
the Act of 1947: in short, to limit the amount of compensation payable, in
respect of loss in the value of land,
development other than Third Schedule development. I do not think it is
possible to hold that section 22(7) of the Act of 1947, which remained
unamended, somehow changed its meaning when development charges were abolished
in 1953. Thus, under section 164(4) of the Act of 1971, just as much as under
section 22(7) of the Act of 1947, no compensation was payable, for loss in land
value, in respect of revocation of permission to carry out Third Schedule
development. To this end the subsection required the right to carry out
development of a class falling within the Third Schedule to be assumed
throughout the valuation exercise, namely both when assessing the
pre-revocation value and when assessing the post-revocation value. This would not
affect the obligation to pay compensation for abortive expenditure or for any
other loss or damage directly attributable to the revocation.
The result in
the present case is that the compensation payable for loss of land value is £
45,000. With Third Schedule development rights the land was worth £ 70,000 at
the material date. With the benefit of the planning permission which was
subsequently revoked the land was worth more: £ 115,000. The difference between
these two amounts is the amount of compensation payable for depreciation in the
value of the land. I would allow this appeal, and express the hope that
Parliament will look again at this anachronistic relic from the 1947
legislation.
Appeal
allowed with costs; order for costs not to be enforced without leave of the
court; legal aid taxation of the respondents’ costs; application for costs
against the Legal Aid Board adjourned for 10 weeks; application for leave to
appeal to the House of Lords granted.
