Construction of deed – Grant of right to operate and maintain overhead electric line over applicant’s land – Requirement for grantee to pay compensation in event that notified of grant of planning permission to develop the land “for residential or industrial purposes” – Applicant notifying respondent electricity company of grant of planning permission for construction of building for storage and distribution uses – Whether such uses amounting to “industrial purposes” so as to trigger obligation to pay compensation – Whether compensation to be assessed at date of outline planning permission or reserved matters approval – Preliminary issues determined in favour of applicant
The applicant owned 10.93 ha of undeveloped land on the outskirts of Skelmersdale. The respondent electricity company operated and maintained an overhead electricity line over that land pursuant to a deed of grant made between the parties’ predecessors in title in 1967. At the time of the grant, the applicant’s land was in a rural area and was in agricultural use. The deed provided for the grantee to pay compensation within six months of on receiving notice from the grantor that planning permission had been obtained for the development of the land “for residential or industrial purposes”.
The boundaries of the town had expanded since the date of the deed so as to encompass the applicant’s land. The applicant obtained an outline planning permission for development in 2001 and, in 2007, reserved matters approval was granted on appeal for the erection of a single large building, for purposes falling within Classes B2 and/or B8 of the Use Classes Order 1987, with ancillary offices, vehicle parking areas, the creation of an access from an existing estate road and landscaping. It was not possible to construct or use the approved building without removing the overhead line. The applicant notified the respondent of the permission and, following unfruitful discussions regarding the feasibility of diverting the line, the applicant applied to the Upper Tribunal to determine the compensation payable under the deed.
The respondent disputed the applicant’s entitlement to compensation, arguing that development for primary storage or distribution uses within Class B8 was not development “for industrial purposes”. It submitted that that expression should be construed consistently with the references to “industrial building” in the Town and Country Planning Act 1962, as the planning legislation in force at the time when the deed was made, and should therefore be understood as having a relatively restrictive meaning connoting manufacture and excluding warehousing or distribution. The tribunal tried that question as a preliminary issue, along with an issue as to the date at which any compensation fell to be assessed.
Held: The preliminary issues were determined in favour of the applicant.
(1) The critical expression in the 1967 deed was not a term of art and was not couched in technical language. The words “development for residential or industrial purposes” were ordinary words which were capable of being understood without recourse to a legal dictionary. Moreover, the expression “industrial purposes” was not defined either in the 1962 Act or in subordinate legislation and there was no justification for construing the deed as if it were part of that body of technical material. Instead, the deed had to be interpreted as it would be understood by a reasonable person having all the background knowledge that would reasonably have been available to both parties at the time of their agreement. That relevant background knowledge would not equip the reasonable reader of the deed with the firm grasp of planning legislation demonstrated by the parties’ expert witnesses. Accordingly, it was not necessary or appropriate to consider their evidence in detail.
Although the word “industry” often connoted manufacturing enterprises, it was capable of a wider variety of meanings depending on the context in which it was used or the composite expressions of which it formed part. It could bear the more general meaning of economic activity in general, or refer to a particular category of economic activity, and, in modern usage, could encompass many activities that did not involve the manufacture of goods or the extraction or processing of materials. There was nothing to show that, even in the context of planning permission, the word “industry” would have been understood in the 1960s only in the narrower sense of economic activity associated with manufacturing or processing. The adjective “industrial” was capable of application over a very wide field of activity including distribution and warehousing.
Moreover, in the context of the 1967 deed, the composite expression “residential or industrial purposes” was used in contrast to the then agricultural use of the land. That suggested that the parties intended a broad classification of alternative uses representing the principal classes of profitable development, rather than a narrow focus on manufacturing industry: Moyce v National Grid Electricity Transmissions plc [2009] RVR 141 applied. The wider commercial context of the deed also pointed to that conclusion. The grantor was the owner of land situated in the vicinity of the new town of Skelmersdale but outside its original boundaries. It would have been obvious to the parties that, if the new town were successful, an alternative use of the land, more valuable than the existing agricultural use, might be permitted in the future. The compensation clause was incorporated into the deed to ensure that, in the event that a development opportunity emerged in future, the grantor or its successors would be entitled to compensation for any diminution in value attributable to the existence of the electric lines. There was no reason why the grantee would reasonably expect to pay compensation if one valuable use of the land was restricted by reason of the presence of its overhead lines, but not if another such use was restricted; nor was there any reason why, in the latter case, the grantor should be willing to bear the diminution in value personally, without compensation. The parties were unlikely to have intended such an uncommercial arrangement.
It followed that the expression “industrial purposes” in the 1967 deed was not to be narrowly construed and was wide enough to include the development of the land for storage and distribution uses within Class B8 of the Use Classes Order 1987. The claimant was therefore entitled to compensation.
(2) The appropriate date for assessing compensation was the date of the reserved matters approval in 2007. The language of the compensation clause pointed to the obtaining of planning permission as being the event that triggered the grantor’s entitlement to compensation. However, the clause gave flexibility to the grantor as to when to seek compensation. Only a planning permission of which notice was given to the grantee trigger the obligation to pay compensation. There was no obligation on the grantor to give notice of a particular planning permission and it was free to delay giving notice until it had obtained a more favourable planning permission. The relevant permission of which notice was given to the respondent was the outline planning permission obtained in 2001 supplemented by the reserved matters approval obtained on appeal in 2007. When the parties referred to a “planning permission” for the development of the property, they must have intended that the relevant permission would include the details necessary to enable the property to be developed. It was only at the date of the reserved matters approval that the development could have proceeded.
Michael Humphries QC (instructed by Osborne Clarke) appeared for the applicant; Robin Purchas QC (instructed by Hill Dickinson LLP) appeared for the respondent.
Sally Dobson, barrister
Click here to read transcript: G Park Skelmersdale v Electricity North West
