Purchase notice — Whether notice served in respect of part only of land subject of refusal of planning permission valid — Costs — Whether acquiring authority successfully raising validity issue shortly before hearing after exchange of experts’ reports entitled to costs
On October 17
1988 the acquiring authority granted planning permission to the claimants to
allow the filling up of part of a cutting (‘the blue land’), and for the
erection of two dwellings on the blue land. By a decision dated November 8 1990
the acquiring authority refused permission on an application by the claimants
for planning permission for residential development on the blue land and an
adjoining area (‘the pink land’). On January 5 1991 the claimants served on the
acquiring authority a purchase notice under section 137 of the Town and Country
Planning Act 1990 requiring the authority to purchase their freehold interest
in the pink land. At the hearing of a preliminary point of law, the acquiring
authority contended that the tribunal had no jurisdiction to determine the
reference since the purchase notice site (the pink land) was of a lesser extent
than the planning application site (the pink and blue lands); a purchase notice
under section 137 of the 1990 Act cannot be served in respect of part only of land
the subject of a refusal of planning permission. The parties agreed that the
tribunal had jurisdiction to decide this preliminary question of law.
Decision: The purchase notice was invalid. A purchase notice served under
section 137(2)(a) of the 1990 Act must relate to the whole of the land the
subject of a refusal or conditional grant of planning permission in subsection
(1)(a) of that section and such a notice cannot be served in respect of part
only of that land. The purchase notice procedure in section 137 is governed by
the extent of the land in the refusal or conditional grant of planning
permission in subsection (1). The claimant must own the whole of this land: see
Smart & Courtney Dale Ltd v Dover Rural District Council (1972)
23 P&CR 408. The conditions in subsection (3) must be satisfied in respect
of the whole of this land: see Wain v Secretary of State for the
Environment (1982) 262 EG 337.
order as to costs. The acquiring authority should have raised the question of
the validity of the purchase notice immediately after the claimants made their
reference on March 1 1993 by applying for the determination of a preliminary
point of law under r49 of the Lands Tribunal Rules 1975. This question should
have been pursued before the exchange of expert reports. A draft joint
statement of facts and issues was handed to the acquiring authority by the
claimants’ solicitors, but was not returned to the claimants until a few days
before the first day of the hearing, a delay of nearly 10 months. Accordingly,
the tribunal was justified in departing from the normal rule that costs follow
the event.
The following
cases are referred to in this report.
Smart
& Courtney Dale Ltd v Dover Rural District
Council (1972) 23 P&CR 408
Wain v Secretary of State for the Environment [1982] JPL 244;
[1982] EGD 1200; (1982) 262 EG 337, CA
This was the
hearing of a preliminary point of law as to the validity of a purchase notice
in a reference by the claimants, Lawrence Frederick Cook and Henry Nigel
Woodham, for the determination of compensation payable for the acquisition of
land under a purchase notice served on the acquiring authority, Winchester City
Council.
Andrew Francis
(instructed by Weeks Kenton, of Winchester) appeared for the claimants;
Geoffrey Stephenson (instructed by the solicitor to Winchester City Council)
appeared for the acquiring authority.
Giving his
decision, Mr P H Clarke
said: This is a preliminary point of law in a reference to determine the
compensation following service of a purchase notice in respect of land at New
Alresford, Hampshire.
Andrew Francis
of counsel appeared for the claimants; Geoffrey Stephenson of counsel appeared
for the acquiring authority.
At the start
of the hearing I was told that two issues of law had arisen. The first is
whether the purchase notice is valid. The second is whether compensation can be
determined on the basis that the land is capable of reasonably beneficial use
in its existing state. The first issue is fundamental to my jurisdiction; the
second is fundamental to the amount of compensation. I agreed to deal with both
as preliminary points of law under r49 of the Lands Tribunal Rules 1975.
The agreed
facts relevant to this decision are as follows:
1. By a
conveyance dated December 13 1979 the claimants purchased from British Railways
Board a disused railway cutting in New Alresford, formerly part of the Alton to
Winchester line, which was closed in February 1973.
2. The land
purchased extends from a bridge forming part of Bridge Road over the cutting in
the east to a bridge forming part of New Farm Road over the cutting in the
west. The whole of the land purchased has a site area of 1.73 acres (0.7 ha).
For the purposes of this decision the land is considered in two parts. At the
eastern end of the cutting (adjoining Bridge Road) is a parcel of land (‘the
blue land’) with an area of 0.26 acre (0.11 ha). The remainder of the land,
extending west ‘from the blue land to New Farm Road (‘the pink land’), has an
area of 1.467 acres (0.59 ha).
3. On October
17 1988 Winchester City Council (‘the council’) granted planning permission to
the claimants to allow the filling of part of the cutting (the blue land) up to
ground level with a supporting infill slope of another 45m on part of the pink
land, and for the erection of two dwellings on the blue land.
4. On August
14 1990 the claimants submitted an application for planning permission for
residential development on the pink land and the blue land. By a decision dated
November 8 1990 the council
land and the blue land.
5. On January
5 1991 the claimants served on the council a purchase notice under section 137
of the Town and Country Planning Act 1990 (‘the 1990 Act’) requiring the
council to purchase their freehold interest in the pink land.
6. On March 1
1993 the claimants referred for determination by this tribunal the amount of
compensation payable by the council for the acquisition of the pink land under
the above purchase notice.
Against this
background the first question of law has been stated by parties with greater
precision as follows. Whether this tribunal has jurisdiction to determine this
reference since the purchase notice site (the pink land) is of a lesser extent
than the planning application site (the pink land and the blue land). In other
words, can a purchase notice under section 137 of the 1990 Act be served in
respect of part only of land the subject of a refusal of planning permission?
The parties
are agreed that I have jurisdiction to decide this preliminary question of law.
If I decide that the purchase notice is valid then I can proceed to a decision
on the second point of law and to a determination of the amount of
compensation. If I decide that the purchase notice is invalid I have no
jurisdiction to proceed further and cannot decide the second point of law nor
the amount of compensation. A decision on the first point of law may,
therefore, dispose of this reference, except as to costs.
I deal now with
the first question of law. The answer depends on the construction of section
137 of the 1990 Act and I set out below the relevant parts of this section:
137. — (1) This section applies where —
(a) on an
application for planning permission to develop any land, permission is refused
or is granted subject to conditions; …
(2) If —
(a) in the
case mentioned in subsection (1)(a) or (b), any owner of the land claims that
the conditions mentioned in subsection (3) are satisfied with respect to it …
he may, within the prescribed time and in the prescribed manner, serve on the
council of the district … in which the land is situated a notice (in this Act
referred to as ‘a purchase notice’) requiring that council to purchase his
interest in the land in accordance with this Chapter.
(3) The
conditions mentioned in subsection (2)(a) are —
(a) that the
land has become incapable of reasonably beneficial use in its existing state;
and …
(c) in any
case, that the land cannot be rendered capable of reasonably beneficial use by
the carrying out of any other development for which planning permission has
been granted or for which the local planning authority or the Secretary of
State has undertaken to grant planning permission.
Acquiring
authority
Mr Stephenson
submitted that the purchase notice dated January 5 1991 is invalid and
therefore I have no power to determine the compensation in this reference. He
said that my jurisdiction is limited to deciding the validity of that notice.
Mr Stephenson relied mainly on what he said were the clear words of section 137
of the 1990 Act, which indicate that a purchase notice must relate to the whole
of the land in the refusal or conditional grant of planning permission which
gives rise to the service of that notice.
Mr Stephenson
said that the purchase notice procedure under section 137 commences with an
application for planning permission to develop ‘any land’ which is refused or
granted subject to conditions: subsection (1). Any owner of the land may then
serve a purchase notice requiring the local authority to purchase ‘his interest
in the land’ (subsection (2)) provided that ‘the land’ has become incapable of
reasonably beneficial use in its existing state and cannot be rendered capable
of such use by the grant of planning permission: subsection (3). The land
incapable of reasonably beneficial use means the land referred to in the phrase
‘his interest in the land’ in subsection (2), in respect of which the owner may
serve a purchase notice. This land, in turn, means the land which was the
subject of the refusal or conditional grant of planning permission: subsection
(1). Thus, the words ‘the land’ throughout section 137 mean the land which was
the subject of the adverse planning decision. Furthermore, ‘the land’ means the
whole of that land and not part only of that land. If Parliament had intended
to allow the service of a purchase notice in respect of part of that land words
to this effect would have been included in section 137, as they are in section
141.
In support of
his submissions Mr Stephenson referred to the decision of this tribunal in Smart
& Courtney Dale Ltd v Dover Rural District Council (1972) 23
P&CR 408 and of the Court of Appeal in Wain v Secretary of State
for the Environment [1982] JPL 244. He also referred to a decision of the
Secretary of State for the Environment on a purchase notice reported at [1982]
JPL 257, [Ref. PLVP2/5025/176/2 November 26 1981] Boynton’s Guide to
Compensation and Compulsory Purchase 6th ed 1990 p20, the Encyclopaedia
of Planning Law para P137.07 and the Encyclopaedia of Compulsory
Purchase and Compensation para 2–3226/3.
Claimants
Mr Francis
submitted that a purchase notice under section 137 of the 1990 Act may be
served in respect of part of the land in a refusal or conditional grant of
planning permission. The purchase notice dated January 5 1991 is therefore
valid. He said that it is important to distinguish between the land in the
adverse planning decision under subsection (1)(a), the land in the purchase
notice under subsection (2) and the land to which the conditions in subsection
(3)(a) and (c) are to be applied. He construed section 137 as follows.
Subsection (1)
is similar to that of a charging provision in a taxing statute and applies the
later provisions of the section to the situation where an application for
planning permission is refused or granted subject to conditions. Where such a
decision is given a purchase notice may be served if the conditions in
subsection (3) are satisfied. These are that the land has become incapable of reasonably
beneficial use in its existing state and cannot be rendered capable of such use
by the carrying out of any other development for which planning permission has
been, or has undertaken to be, granted. The land referred to in subsection (3)
must be the whole of the land to which the conditions under that
subsection apply and therefore any purchase notice served under subsection (2)
must also relate to the whole of that land: see Wain. It is
necessary to insert in subsection (3) the words ‘in the purchase notice’ after
references to ‘the land’.
An owner may,
however, serve a purchase notice in respect of part only of the land covered by
the refusal or conditional grant of planning permission in subsection (1),
provided that the conditions under subsection (3) are satisfied in respect of
the whole of that land. To achieve this result subsection (2) is to be
construed by adding the words ‘or any part thereof’ after ‘the land’, where
these words appear in this subsection. Thus, a claimant may make a planning
application in respect of any land. Where the application is refused or granted
subject to conditions he may serve a purchase notice provided that the
conditions in subsection (3) are satisfied. The whole of the land in the
purchase notice must satisfy the conditions in subsection (3) although this
land may be part only of the land in the refusal or conditional grant of
planning permission.
Mr Francis
said that the provisions in section 137 or Part VI of the 1990 Act do not
require the service of a purchase notice in respect of the whole of the land in
a refusal or conditional grant of planning permission. Furthermore, section 141
of the Act is not a guide to the true construction of section 137. He submitted
that it would be illogical for an application for planning permission to limit
a purchase notice. If this were the position, it would be necessary for an
applicant to direct his planning application, not to the planning merits and
scope of the proposed development, but to the lack of beneficial use of the
land, in case he wished to serve a purchase notice. Mr Francis referred to this
situation as a ‘trap’ for the unwary, which caught the applicant in Wain,
where part of the land covered by the originating planning decision was
found to be capable of reasonably beneficial use and his purchase notice
failed.
Mr Francis
submitted that I should not have regard to the decision in Smart. He
said that the issue in that case was the ownership of the
admissions made by counsel and accepted by the tribunal, that references in
section 137 to ‘the land’ meant the ‘totality of the land the subject of the
planning refusal’, were obiter.
Mr Francis
said that a local authority would not be prejudiced by the service of a
purchase notice in respect of part only of land subject to an adverse planning
decision. It would be ironic if the claimants’ purchase notice is invalid,
because they have avoided the ‘trap’ in Wain by serving the notice in
respect of the pink land only, excluding the blue land which has planning
permission. If the purchase notice is invalid the claimants would be forced to
start again by submitting a fresh application for development on the pink land
only.
Applying the
law as stated above to the facts in this reference, Mr Francis submitted that
the purchase notice dated January 5 1991 is valid. There was a refusal of
planning permission in respect of the pink land and the blue land: subsection
(1). The whole of the pink land is incapable of reasonably beneficial use in
its existing state and cannot be rendered capable of such use by the carrying
out of development for which planning permission has been or will be granted:
subsection (3). The claimants have served a purchase notice in respect of the
pink land and this is valid: subsection (2).
Decision
The answer to
the first question of law lies in the true construction of section 137 of the
1990 Act. Mr Stephenson adopted a literal approach and submitted that a
purchase notice must relate to the whole of the land in a refusal of planning
permission. Mr Francis used a more sophisticated approach, involving the
insertion of words by implication, and submitted that a purchase notice could
be served in respect of part only of land in a refusal of planning permission.
I prefer Mr Stephenson’s approach.
Section 137
applies where an application for planning permission to develop ‘any land’ is
refused or granted subject to conditions: subsection (1)(a). If any owner of
‘the land’ claims that the conditions in subsection (3) are satisfied with
respect to that land he may serve a purchase notice requiring the local
authority to purchase his interest in ‘the land’: subsection (2). The
conditions in subsection (3) applicable to this reference are that ‘the land’
has become incapable of reasonably beneficial use in its existing state and
cannot be rendered capable of such use by the carrying out of any other
development for which planning permission has been, or has been undertaken to
be granted. Thus, section 137 commences by referring to ‘any land’ and
continues by referring to ‘the land’.
It is the
meaning of the term ‘the land’ which is crucial to this decision. Mr Stephenson
submitted that it means the whole of the land in the refusal of planning
permission which led to the purchase notice. Mr Francis said that, although the
whole of the land included in a purchase notice must satisfy the requirements
of subsection (3), the notice may relate to part only of the land in the
refusal of planning permission. I agree with Mr Stephenson. In my view, the
words ‘the land’ in subsections (2) and (3) of section 137 mean the whole of
the land in the refusal of planning permission under subsection (1). An owner
cannot serve a purchase notice in respect of part only of that land. If he
could serve a notice in respect of part of that land then subsection (2) would
state that he may require the council to purchase ‘his interest in the land (or
any part thereof)’. In the absence of these words the land referred to in a
purchase notice is restricted to the totality of the land in the refusal of
planning permission. I would not be justified in changing the meaning of the
section by inserting the words suggested by Mr Francis.
Mr Stephenson
referred me to section 141(3) of the 1990 Act in support of his contention that
words are not to be inserted in section 137. Section 141 sets out the action
which may be taken by the Secretary of State where a purchase notice is
referred to him. Subsection (3) provides that, if it appears to the Secretary
of State that the land ‘or any part of the land’ could be rendered capable of
reasonably beneficial use within a reasonable time by the carrying out of
development for which planning permission ought to be granted, he may, instead
of confirming the purchase notice for all or ‘part of the land’, direct that,
if an application for that development is made, it must be granted. Mr
Stephenson submitted that these are the only references in the purchase notice
procedure to part only of the land. This section gives the Secretary of State
special powers. A comparison of sections 137 and 141 shows that section 137
applies to the whole of the land in the refusal or conditional grant of
planning permission and references to part are not to be implied, whereas
section 141 specifically refers to action which may be taken in respect of the
whole or part of the land. Mr Stephenson said that references to part only of
the land in section 141 indicate that Parliament, by the omission of such words
in section 137, clearly intended this latter section to refer to the whole of
the land in the originating planning decision. Mr Francis submitted that
section 141(3) of the 1990 Act should not be used as a guide to the
construction of section 137.
I agree with
Mr Stephenson that section 141(3) gives support to my conclusion that words
cannot be implied into section 137 to alter the meaning and allow a purchase
notice to be served in respect of part only of the land subject to a refusal of
planning permission.
I also find
support in the decision in Smart and, to a lesser extent, in Wain.
Neither case deals directly with the point at issue in this reference, but
both indicate the importance of looking at the land in question in its
entirety. In Smart the claimants were refused planning permission for
development and served a purchase notice under section 129 of the Town and
Country Planning Act 1962. It was subsequently discovered that they did not own
the whole of the land in that notice. The council maintained that this
invalidated the notice and the Lands Tribunal had no jurisdiction to determine
the compensation.
The point at
issue in Smart was the ownership of the purchase notice land, not a
matter in dispute in this reference, but the need for a correlation between the
planning refusal land and the purchase notice land was referred to in this
decision. The president of the tribunal (Sir Michael Rowe QC), who heard this
reference, said (p410):
Mr Marder,
for the claimants, said that it was now agreed that the planning application
and the decision thereon were both valid. In its opening words the section
first referred to ‘any land’ and then to ‘the land’ which must accordingly mean
the land in respect of which planning permission had been refused, a submission
with which Mr Glover QC, for the acquiring authority agreed.
Later he said
(p411):
It is, think,
abundantly clear — and indeed Mr Marder admitted it — that except in the phrase
‘any owner of the land’, whenever the words ‘the land’ are used, they refer to
the totality of the land the subject of the planning refusal. I find it
difficult to think that they bear any different meaning in the phrase ‘any
owner of the land’: if that had been intended by Parliament, one would have
expected the addition of the words ‘or any part of it’.
Section 129 of
the 1962 Act is in all material respects the same as section 137 of the 1990
Act.
Mr Stephenson
relied on Smart to support his submissions; Mr Francis said that I am
not bound by previous decisions of this tribunal and that these statements were
obiter. He urged me to disregard them. I find them persuasive in
supporting the decision I have reached on the construction of section 137. The
agreement in Smart that ‘the land’ meant the totality of the land in the
refusal of planning permission was made by experienced counsel (one of whom, as
Mr Stephenson pointed out, is now the president of this tribunal) and the
decision was given by the then president. This decision reinforces my
interpretation of section 137.
I find the
decision in Wain less helpful. In this case the owners of a large site
applied for planning permission for residential or industrial development.
Permission was refused and they served a purchase notice under section 180 of
the Town and Country Planning Act 1971. This was not accepted by the local
authority and, on a reference to the Secretary of State, he refused to confirm
it on the grounds that the whole of the purchase notice land had not become
incapable of reasonably beneficial use.
This decision
was quashed in the High Court, but upheld by the
where part only of the land was incapable of reasonably beneficial use. Lord
Denning MR said that the true position was that an owner could not claim the
right to have the council purchase his land compulsorily except where all the
land had become incapable of reasonably beneficial use. If part of the land was
capable of such use, then he could not insist on a compulsory purchase. Again,
this is not a decision directly relevant to the issue in this reference but is
further confirmation that the land should be considered as a whole.
Finally, I
note that my interpretation of section 137 is in accordance with commentaries
on this section to which I was referred by Mr Stephenson. In Boynton’s Guide
to Compensation and Compulsory Purchase 6th ed 1990 the author states
(p120):
A purchase
notice must relate to the identical land the subject of the planning
application, unless part of the application was approved and part refused.
In the Encyclopaedia
of Planning Law the commentary on section 137 states that a purchase notice
must relate to the whole of the land for which planning permission was refused:
para P137.07. And a similar view appears in the commentary on this section in
the Encyclopaedia of Compulsory Purchase and Compensation: para
2–3226/3.
Mr Francis
referred to the ‘trap’ in Wain, ie service of a purchase notice
where part only of the land is incapable of reasonably beneficial use. He said
that the claimants in this reference would have fallen into that trap if they
had served a notice in respect of the whole of the land in the refusal of
planning permission, namely the pink land and the blue land (the blue land
having planning permission for development). Mr Stephenson urged me to reject
this argument. He said that the purchase notice procedure is governed by
statutory provisions which are clear for all to see and have remained
substantially the same in the consolidating Acts of 1962, 1971 and 1990. It is
a matter of statutory construction. A purchase notice is an inverse compulsory
purchase and claimants are expected to act within the precise words of the
section. There is no ‘trap’. I agree with Mr Stephenson. The claimants could
have made their planning application and served their purchase notice in
respect of the pink land only.
For the
reasons set out above, I am of the opinion that a purchase notice served under
section 137 (2)(a) of the 1990 Act must relate to the whole of the land the
subject of a refusal or conditional grant of planning permission in subsection
(1)(a) of that section and that such a notice cannot be served in respect of
part only of that land. The purchase notice procedure in section 137 is
governed by the extent of the land in the refusal or conditional grant of
planning permission in subsection (1). The claimant must own the whole of this
land: see Smart. The conditions in subsection (3) must be
satisfied in respect of the whole of this land: see Wain. The
purchase notice under subsection (2) must relate to the whole of this land.
Accordingly, I hold that the purchase notice dated January 5 1991, served by
the claimants on the council in respect of the pink land, relates to part only
of the land in the refusal of planning permission dated November 8 1990 and is
therefore invalid. This decision disposes of this reference and I have no
jurisdiction to decide the second question of law nor the amount of
compensation.
I have
received written representations on costs. My decision departs from the normal
rule that costs follow the event and I will therefore give my reasons.
The claimants
submit that they should be awarded a contribution towards their costs due to
the conduct of the council prior to the hearing. They say that the council
should have raised the question of the validity of the purchase notice as a
preliminary point of law at an earlier stage; that they failed to disclose
details of this question until three days before the hearing; that they gave an
assurance on July 24 1991 that this point was not in issue; and that they were
dilatory, particularly in the agreement of a joint statement, and that they
failed to co-operate or enter into discussions with the claimants’ advisers.
The council
submit that they should be awarded costs on the usual principle that costs
follow the event, or that the council should be awarded part of their costs or
that there should be no order for costs. The council say that it was the
responsibility of the claimants to serve a valid purchase notice; that the
error in the notice was obvious and covered by authority and the plain words of
the legislation; that the validity point was taken by the council at an early
stage and that the claimants were on specific notice thereafter; that the
assurance of July 24 1991 is irrelevant; and that there was no duty on the
council to negotiate with the claimants’ advisers.
I agree with
the council that they were not under a duty to negotiate on compensation,
particularly while the validity of the purchase notice was likely to be an
issue. I have, however, reached the conclusion on the evidence that the
claimants have a legitimate complaint as to the way in which the council acted
prior to the hearing. This resulted in delay, an unnecessary exchange of expert
reports, additional costs and wasted hearing dates. In my view, the council
should have raised the question of the validity of the purchase notice
immediately after the claimants made their reference on March 1 1993, by
applying for the determination of a preliminary point of law under r49 of the
Lands Tribunal Rules 1975. When the reference was made the council had already
raised the issue of the validity of the notice with the claimants and should
have pursued it before this tribunal, before the exchange of expert reports.
Furthermore, the council were dilatory in clarifying the position in the joint
statement of facts and issues. The evidence is that this was handed to the
council by the claimants’ solicitors on May 24 1993 with a request for the
completion of the issues to be determined by this tribunal. It was not returned
to the claimants until a few days before the first day of the hearing, a delay
of nearly 10 months. In my view, it was also unhelpful of the council to submit
expert reports to this tribunal with covering letters headed: ‘Without
accepting that the Lands Tribunal has jurisdiction to hear this case.’ These
expert reports became wholly unnecessary as a result of my decision on the
validity of the purchase notice. It appears to me that the council did not
finally clarify their stance on the validity point until immediately before the
hearing, although it was always an issue likely to be raised and should have
been clarified earlier.
Under the
circumstances I am of the opinion that I am justified in departing from the
normal rule that costs follow the event when exercising my discretion regarding
costs. I have, however, also taken into consideration that the claimants could
have done more to obtain clarification of this issue. They were on notice that
the validity of the purchase notice was likely to be in issue and I do not
think that the council were prevented by their letter of 24 July 1991 from
raising the issue again, as they in fact did in their letter of November 11
1992. After that date the claimants were on notice that this matter may be an
issue and, in the absence of prompt action by the council, could have resolved
it themselves by applying to this tribunal for the determination of a
preliminary point of law.
Under the
circumstances, I do not think that the council, although the successful party,
should recover any part of their costs. The claimants, however, were not
entirely misled by the council’s conduct and were the unsuccessful party. I do
not think that they should recover any part of their costs. Accordingly, I make
no order for costs.