Public open space – Purchase notice – Land Compensation Act – Former site of terraced houses used as local park – Appellant local authority refusing planning permission for residential development – Respondent landowner requiring appellant to purchase land as incapable of any beneficial use – Compensation calculated on assumption that planning permission to be granted for rebuilding demolished buildings – Whether Lands Tribunal erring in failing to value land as public open space only – Appeal dismissed
The respondent acquired a 0.22 acre plot of land that had, since 1980, formed part of a local park. The land was the former site of a terrace of nine three-storey houses and a two-storey commercial building, which had been demolished following bomb damage sustained during the second world war. After the war, four prefabricated houses had been built on the land but those were later demolished.
In 2001, planning permission was refused on appeal for residential development on the respondent’s land. The respondent served a purchase notice on the appellant local authority requiring them to acquire the land on the ground that it was incapable of any beneficial use. The appellants accepted the notice with the effect that they were deemed to have acquired the land compulsorily so that compensation was payable to the respondent under the Land Compensation Act 1961.
The respondent contended that, pursuant to sections 14(1) and 15(3) of the 1961 Act, compensation was to be assessed on the assumption that planning permission would be granted for the rebuilding of the pre-war terrace and commercial building and the prefabs, as development falling within para 1 of Schedule 3 to the Act. Paragraph 1 included the rebuilding of any building that had existed on 1 July 1948 or any building that had existed before that date but which had been destroyed or demolished after 7 January 1937.
The respondents argued that the assumptions in section 15(3) should not be regarded as being “applicable” within the meaning of section 14(1) where they would infringe the principle of equivalence in compensation for compulsory purchase; such compensation was to be calculated according to the value of the land in the “no-scheme” world, in which the respondent’s land would not have had a residential value.
The Lands Tribunal awarded compensation of £1.6m with an assumed planning permission for the rebuilding of the terrace and the commercial building: see Greenweb Ltd v Wandsworth London Borough Council [2007] 3 EGLR 67; [2007] 50 EG 110. The land would have been valued at £15,000 as open space only. The appellants appealed.
Held: The appeal was dismissed.
Sections 14 and 15 contained provisions expressed to be in mandatory terms. The ordinary meaning of the phrase “applicable to the relevant land” in section 14(1) required the tribunal to determine whether the facts in respect of the land fell within the statutory words identifying the cases in which the assumption was to be made. On that basis, the 1961 Act, if literally interpreted, required the tribunal to assume that the land was subject to planning permission, which entitled the owner to replace the buildings destroyed during the second world war. Moreover, the verb “shall” in its natural meaning in section 15(3) denoted a mandatory requirement.
On the true construction of those provisions, there was no ambiguity and no contextual support for anything other than mandatory provisions. Any other approach would require the addition to the statute of words that were not there. Furthermore, the consequences of the application of the clear statutory words in the instant case were not so absurd that parliament must have made a drafting mistake. Accordingly, given the wording of the Act, the tribunal had made the correct valuation.
Per curiam: Parliament could not have intended the provisions of sections 14 and 15 to confer on the respondent the windfall created by that interpretation of the statutory provisions. However, save in the most exceptional cases, the courts had to apply what Parliament had provided and not what the court believed it should have provided. The court respectfully endorsed the recommendation of the Law Commission in its Final Report on Compensation for Compulsory Purchase that sections 15(3) and (4) of the 1961 Act should be repealed without replacement.
David Elvin QC and Reuben Taylor (instructed by the legal department of Wandsworth London Borough Council) appeared for the appellants; John Male QC (instructed by Lovells LLP) appeared for the respondent.
Eileen O’Grady, barrister