Compulsory purchase – Compensation – Compulsory Purchase Act 1986 – Gas Act 1986 – Assessment of compensation for acquisition of rights relating to installation and use of gas pipeline over claimant’s land – Whether claimant entitled to compensation for disturbance and damage for use and occupation of land by acquiring authority before, during and after construction of pipeline – Whether existence of pipeline presenting bar to development of land so as to affect value – Claim dismissed
The claimant owned a 33.2-acre area of brownfield land which had previously been developed and occupied as railway sidings and coal storage areas. The claimant had acquired the land in 1989 as a long-term investment with a view to extracting surface and below-ground coal deposits and eventually redeveloping the site for residential purposes. The terms of acquisition had included an agreement to transfer a 5.67-acre part of the site to a rugby club for redevelopment as rugby pitches and a clubhouse; that transfer had been effected in 1992 subject to a restrictive covenant prohibiting the use of the rugby club land for any other purpose.
By compulsory purchase orders (CPOs) made in 2006 and confirmed in 2007, the acquiring authority acquired rights to lay, use, maintain, repair and replace a high-pressure natural gas pipeline under the claimant’s land. The relevant rights vested in the acquiring authority in May 2007, which was the valuation date for assessing the compensation due to the claimant under section 7 of the Compulsory Purchase Act 1965, as modified by para 7 of Schedule 3 to the Gas Act 1986.
The claimant submitted a claim for £4,523,367.40, comprising: (i) £143,454.93 for loss due to disturbance and damage during the occupation and use of the land by the acquiring authority prior to, during and after the pipeline construction process; (ii) £1,813,912.50 for loss due to the claimant being prevented from extracting or working the surface and below-ground mineral deposits on its land and the rugby club land; (iii) £2,470,000 for diminution in the value of the claimant’s land due to sterilisation; and (iv) £96,000 for diminution in the value of the restrictive covenant that the claimant held over the rugby club land.
The authority contended that no compensation was payable; it argued that its proposed use of a “heavy wall” pipe for the pipeline meant that development of the whole site, including coal extraction, could still go ahead.
Held: The claim was dismissed.
(1) The claimant’s compensation figure under head (i), for loss and disturbance appeared to have been made on the basis of “damages” and by reference to the tariff of standard payments which the acquiring authority adopted when agreeing payments with landowners. There was no such agreement with the claimant and no evidence to support a claim for damages, which would, in any event, fall outside the remit of the tribunal. Even if the claim were treated as a disturbance claim under r (6) in section 5 of the Land Compensation Act 1961, there was no evidence that the claimant had suffered any loss as a result of the occupation of part of the land before, during or after the construction of the pipeline since the land was disused throughout that period. Nor was the claimant entitled to recover any sum in respect of time expended in dealing with legal matters relating to the authority’s entry onto the land before construction. The claimant had not kept an ongoing record of the time spent on the matter and had produced no evidence that its business had suffered as a result of distractions in the use of its time. On that matter, as with other matters that came under the heading of “disturbance”, actual losses had to be proved: Thomas Newall Ltd v Lancaster City Council [2013] EWCA Civ 802 applied.
(2) For the claimant to succeed in its claim for injurious affection under section 7 of the 1965 Act, as modified by the 1986 Act, it had to show that the any injury had been caused by the exercise of the powers, taking account not only of how they were exercised initially but also to how they might realistically, in practice, be exercised in the future in terms of ongoing maintenance, repair and possible replacement. That matter had to be viewed by reference to what a prospective purchaser of the land would have known, or could realistically have found out, at the valuation date about what was going to be installed under the land, together with any potential implications relating to subsequent works of repair or replacement, and what restrictions that might impose on the potential for development. On the evidence, a prospective purchaser would have been able to establish, at the valuation date, that a decision had been made to install the pipeline as a heavy-wall pipe, suitable for use in urban and residential areas where there was a high population, such that there would be no bar on development including coal extraction over the whole site. While the terms of the CPO would permit a replacement pipe in either thin or thick wall to be installed at any time, in reality that would not happen. It was inconceivable that the authority would attempt to install a thin wall pipe after advising the CPO inquiry that they would be installing something else. A prospective purchaser would not, based on its enquiries, have been unduly concerned about the existence of the pipeline and would not have anticipated that, in the event of problems, any replacement pipe would be installed at shallower depth than actually installed, or in thin-walled pipe. It followed that the exercise of the powers conferred by the CPO did not, and would not be anticipated to, cause damage to the claimant of a kind which could be compensated under section 7 of the 1965 Act, as modified under para 7 of Schedule 3 to the 1986 Act. The claims for compensation under heads (ii) and (iii) therefore failed.
(3) For similar reasons, the claimant was not entitled to compensation under head (iv) for loss of the opportunity to extract, at some future date, a percentage of any enhanced development potential of the rugby club land in return for agreeing to modify or discharge the restrictive covenant. On the evidence, there had been no sterilisation of that land as a result of the pipeline and thus no loss of potential development value. it followed that all the claimant’s compensation claims should be assessed at nil.
Philippa Ashworth (instructed by TG Jones & Associates, of Swansea) appeared for the claimant; Richard Honey (instructed by Eversheds LLP, of Cambridge) appeared for the defendant/respondent.
Sally Dobson, barrister
