Patrick Cooke-Priest
There is growing concern in Government circles at the delays to public projects caused by long-drawn-out public inquiries. In this article I consider the extent to which these may result from unfair and inadequate compensation provisions under the Compulsory Purchase Act 1965, the Land Compensation Act 1973, the Town and Country Planning Act 1971 and other associated legislation.
Consider, for example, the proposed M40 extension from Oxford to Warwick. The first public inquiry opened on September 14 1982 and sat until June 3 1983: the Secretary of State’s decision was published on December 14 1984 and allowed part, but not all, of the Department of Transport’s proposed route. Every yard of this route was fiercely fought at great expense to all concerned.
The second Public Inquiry into the remaining part of the proposed M40 extension started on September 8 and was adjourned on December 18 after 58 days. It re-opens on January 18. With the transcripts of proceedings running to between 60 and 120 pages per day, it is difficult to see how the inspector’s report could be ready before June or the minister’s decision before September.
Not only is the inspector required to consider the pros and cons of the Department of Transport’s route, but also some 20 alternatives put forward by objectors. A very strong case is being made out for a major alteration in the route and, if the inspector recommends this and his recommendation is upheld by the minister, yet another public inquiry, with perhaps another 20 alternative routes, will be necessary.
The expense of these inquiries in terms of the direct costs of advocates and experts and all the necessary research undertaken by government and the public alike is very considerable. In addition, there is the less obvious expense of the delay which is the inevitable consequence.
Not all the opponents of motorways are butterfly freaks or committed conservationists, so why do these projects arouse such concerted opposition? In my opinion, much of the opposition stems from the inadequacy of the present law on compensation which leaves almost everyone along a motorway corridor with a loss from the moment the motorway is announced. In some cases these losses can amount to the complete destruction of a livelihood.
When the line of a new motorway is first proposed or, for that matter, when firm plans are made for any other compulsory purchase of property for public purposes, sections 192 to 207 of the Town and Country Planning Act 1971 come into play. The broad intention of these sections is that if a person’s property is subject to compulsory purchase at some future date that person can serve a notice — called a “blight notice” — on the relevant government department, requiring it to purchase the property in advance. This, however, is an over-simplification of a very complex position.
The blight provisions apply only to owner-occupiers and, in the case of non-agricultural property, only to owner-occupied dwellings or other premises with a rateable value of £2,250 or less. Excluded categories of property owner therefore include, most notably, owners of tenanted farms and owner-occupiers of business premises above the rateable value limit. These categories, together with owners of property investments, must just wait until the outcome of the public inquiries is known: meanwhile their property depreciates in value.
Even if a property owner is eligible to serve a blight notice he must first put his property up for sale in the open market and then be able to prove that he has been unable to sell it except at a price substantially lower than that for which it might otherwise reasonably have been expected to sell.
Nor is it just a question of putting the property on the open market: the affected owner has to make “reasonable endeavours to sell”. In the case of a country house, for example, that might involve the preparation of proper sales particulars and expenditure on advertising, in all possibly amounting to several thousand pounds.
If an offer is obtained, the landowner must then prove that it is substantially lower than he could otherwise have expected. Having proved this (which is not always easy), he must then persuade the acquiring authority or district valuer as to its unblighted value or face the expense of a reference to the Lands Tribunal. If he loses at any of these stages he will be liable for his costs and, if he wins, he will be paid only what he can prove to be the value of his property. If he loses at the Lands Tribunal, he will be liable for the authority’s costs as well.
The situation is even worse for those who do not come within the scope of the blight provision. Businesses, knowing that they will be forced to relocate later on, are nevertheless unable to move except by carrying the cost of ownership of the blighted premises and having to keep them in good repair to maintain their value until the time when the compulsory purchase order comes into force.
There is, however, another category of planning blight which is significant in the fight against motorways and which is perhaps particularly unfair: this is the blight suffered by residential owner-occupiers whose properties are close to, but not actually on the line of, the motorway.
Section 192(1)(d) of the Town and Country Planning Act states that the provisions of sections 193 to 207 (the blight provisions) have effect in relation to land which “is land on or adjacent to the line of a highway proposed to be constructed …”. This has been interpreted as meaning that only land within the corridor of variation of a motorway line comes within the provisions. In the Lands Tribunal case of McDermott v The Department of Transport 1984 (LT ref 83/1983), the tribunal heard that the centreline of a new bypass would come to within approximately 126m of the property and 140m of the house itself. The property was severely blighted but, nevertheless, not eligible under the blight provisions. Indeed, the member wrote in his decision:
There is no doubt in this case that the applicants have suffered severe hardship. They appear to have purchased the hereditament after an inquiry did not disclose the proposals for the bypass. Now that the advent of the bypass is imminent and is public knowledge, the value of their hereditament has been severely depreciated.
More recently, in the case of a motorway embankment brought as close as 3m to the boundary of a residential property, the DOE refused to accept a blight notice and, in the light of this case, the unfortunate house owner was advised that an appeal would not be likely to succeed. In the Court of Appeal case Mancini v Coventry City Council (1983) 270 EG 419, Purchas LJ held, in the first judgment, that:
the words “hardships” or “reasonableness” are not found in any provision in Section 195 which is the Section giving jurisdiction to the Lands Tribunal. Of course the whole object of these provisions is to relieve hardship, but the hardship which qualifies for relief is defined quite clearly under the various statutory provisions to which I have already referred. There is no mention in the section … of either discretion or the mitigation of a decision which otherwise follows from the statutory provision because of hardship, other than the hardship specifically provided for in those sub-sections.
In the same case, Stevenson LJ stated:
I regard hardship and the alleviation of hardship as quite irrelevant to the question of the validity of the objections in the objection notice.
In the case of the M40 extension, there are many properties which are suffering “blight by proximity” and I have little doubt that a considerable measure of opposition to the motorway stems from the inadequacy of the law in this respect. Furthermore, it seems highly likely that the multitude of alternative routes put forward by objectors stems from desperate attempts by property owners to shift the motorway away from their properties because they know that serious financial loss will otherwise result.
Financial hardship caused by blight is not only suffered in respect of motorways nor, as we have seen, only in respect of houseowners. Consider the prospect of an investor owning inner-city commercial property when that property is designated in a structure or local plan as subject to compulsory purchase for local authority purposes.
Perhaps the property may not be required for 10 years or more; the proposal may be thoroughly laudable, such as the creation of new inner-city parks or schools, but subject to a programme which does not require the property for the time being. A prudent property manager in such circumstances would almost certainly wish to realise his capital and reinvest elsewhere, but the only purchaser in the open market will be a short-term investor only willing to pay a much reduced price.
What is the prospect for those who do not qualify under the blight notice provisions? If their properties are close to, but not within, the motorway line or its deviation area, they have no claim until a year after the motorway has come into use, notwithstanding that this is likely to be many years after the route was first made public and that, throughout the period, their properties would have been severely depreciated in value.
When the claim can be made, it must be made under the provisions of Part 1 of the Land Compensation Act 1973, which specifically restricts the assessment of damage to that which results from certain physical factors arising from the use of the motorway. Those factors are noise, vibration, smell, fumes, smoke, artificial lighting and the discharge on to the land in respect of which the claim is made of any solid or liquid substance. There is no provision for compensation for depreciation caused for any other factor, such as spoiled views, stopping-up of bridle paths which may have been enjoyed by the owners of the property in question, or the mere physical presence of the motorway.
Assessment of compensation under this part of the 1973 Act is notoriously difficult, and it is inevitable that there are many cases where the depreciation in value of the property is very much greater than the statutory compensation. In other cases, where severe depreciation is caused by the proximity of public works, compensation may be even lower. For example, the construction of a prison will reduce property values in the immediate area but probably the only relevant physical factor would be the use of artificial lighting.
Where the property is subject to compulsory purchase but the owner is not eligible under the blight notice provisions, in due course he will — in theory at least — be compensated for the value of his interest, but not until the notice to treat is served. Meanwhile, he must live with a substantial depreciation in the value. It is hardly surprising, therefore, that the coming of a motorway is regarded with such dread by all concerned, and fought so tenaciously.
It is, however, surprising that the blight notice provisions should be so restrictive. What, after all, does the State have to lose? It may be required to purchase property for public works in advance of the starting date which may not, in the end, be required. As soon as the boundaries of the public works have been precisely determined, the property can be sold back on the open market. The only loss to the State will be the depreciation caused by the public works, and surely it is reasonable that the State (or, in reality, the public at large) should bear that loss rather than the unfortunate individual. This also applies in cases of blight by proximity. People will buy properties close to motorways but they will not pay as much as they would if the motorway was further away. Why should the State not be willing to buy at the undepreciated value, resell in the market and bear the depreciation?
Finally, there is the question of the measure of compensation. At present the system is designed to ensure that the owner of property purchased for public purposes receives its open market value (ignoring the public purposes) and not a penny more. The inevitable consequence of this is that, in many cases, compensation is less than the loss suffered. This is particularly the case when part only of a property is taken or when an owner is not competent at taking action to mitigate his loss (another onerous requirement of the compensation code).
People do not want to be compulsorily dispossessed. It is surely not unreasonable that some allowance over and above the value of their property should be paid to compensate for this. In civil court cases damages awarded frequently include an element to compensate for such matters as stress, anxiety and aggravation, none of which are included in the value of the damage done. There should surely be a payment to recognise that the purchase is against the will of the vendor, perhaps a minimum of 10% with discretion for the Lands Tribunal to award more in appropriate circumstances.
Action has long been needed to improve the compulsory purchase law in the interests of equity: such improvements would probably also have the effect of reducing the length of these interminable public inquiries. Consider the position concerning the land required for the Channel Tunnel. No CPOs have been made, yet the consortium has already acquired much of the necessary land by open-market negotiation. In some cases it has sold unwanted property on again. Sales have been willingly agreed by vendors because they have been paid more than the ordinary open-market value. Property blighted by proximity has been purchased on the same basis. Although compulsory purchase procedures may be available it is not thought that they will be necessary. The consortium is not restricted in the amount it pays for land.
My suggested remedies are:
(1) To make the blight procedure applicable to all property owners who can show that their property is depreciated by the threat of public works.
(2) To extend Part 1 of the Land Compensation Act 1973 to cover depreciation consequent upon the presence of public works in addition to their use.
(3) To increase the compensation for compulsory acquisition by 10% or such larger amount as the Lands Tribunal considers fair and necessary in the circumstances.