Rule (4) — Whether rule applies to assessment of compensation generally or only to value of land — Whether use established before 1964 is “contrary to law” within the meaning of rule (4) — Appeal and cross-appeal allowed
Following the service of a notice to treat in January 1976 Doncaster Metropolitan Borough Council (“the acquiring authority”) compulsorily acquired land owned by Mr and Mrs Hughes (“the claimants”). Although the whole site was in use for the business of scrap metal and rags, part of the site (“the blue land”) had been used for this purpose since 1959 and therefore had an established use within the meaning of section 94 of the Town and Country Planning Act 1971 (now section 191 of the 1990 Act). Following a reference by the claimants the Lands Tribunal held that the Land Compensation Act 1961, section 5, rule (4), which provides that an increase in value of the land by reason of a use contrary to law shall not be taken into account, (1) did not apply to compensation for disturbance and awarded £300,000 as compensation for loss of the goodwill of the business; and (2) the business use of the blue land was not contrary to law within the meaning of rule (4).
Following an appeal by way of a case stated, the Court of Appeal ([1990] 1 EGLR 40) (1) affirmed the decision of the tribunal that rule (4) did not apply to disturbance compensation, but (2) decided that an established use was contrary to law for the purposes of the rule. The acquiring authority appealed contending that rule (4) applies generally to the assessment of compensation, and the claimants cross-appealed in respect of the court’s decision on (2).
Held The appeal and cross-appeal were allowed; orders of the Court of Appeal and the Lands Tribunal set aside and case remitted to redetermine the amount of compensation.
1. It is well settled law that whatever compensation is payable in respect of disturbance is an element in assessing the value of the land and not a distinct and independent head. Although compensation in respect of the market value of land acquired and compensation for disturbance must in practice be separately assessed, the courts have consistently adhered to the principle, both before and after the present rules were first introduced by the Acquisition of Land (Assessment of Compensation) Act 1919, that the two elements are inseparable parts of a single whole in that together they make up “the value of the land” to the owner. This was the only compensation which the 1845 code (now consolidated in the Compulsory Purchase Act 1965, section 7) awarded a claimant. The principle must have been well known to the draftsman of the 1919 Act when he used in rule (4) the phrase “the value of the land”. Rule (4) therefore applies to that element of the compensation which is for disturbance.
2. In the light of the provisions of the Town and Country Planning Act 1971, it is impossible to treat an established use as being contrary to law within the meaning of rule (4) of the compensation rules. To decide otherwise would make it cheaper for an authority to compulsorily purchase land rather than secure the discontinuance of an established use. The words “contrary to law” in rule (4) appear in a totally different context and relate to a totally different subject-matter to the issue that arose in LTSS Print & Supply Services Ltd v Hackney London Borough Council [1976] QB 663.
Lionel Read QC and Simon Pickles (instructed by Sharpe Pritchard) appeared for the appellant acquiring authority; and Robert M K Gray QC, Robin Campbell and Neil Calver (instructed by Gregory Rowcliffe & Milners, agents for Taylor Bracewell, of Doncaster) appeared for the respondent claimants.