Jones v Welsh Government

Land – Compulsory purchase – Compensation – Defendant acquiring authority making compulsory purchase order in respect of small parcel of claimant’s land for new road scheme – Claimant claiming compensation for injurious affection of retained house, buildings and land and disturbance – Outstanding matters referred to Upper Tribunal – Reference determined accordingly The claimant owned Barnfield, a three-bedroom stone built detached house in a rural riverside setting to the south-west of the village of Gilwern, two miles west of Abergavenny. The house, together with stables and outbuildings, sat in a plot of 2.6 acres which formerly adjoined the unimproved A465 road from Abergavenny to Merthyr Tydfil. The main access to the property was along a private unsurfaced track. In October 2014, the defendant made a compulsory purchase order to enable a major upgrade of the five mile stretch of the A465 between Gilwern and Brymawr from a three-lane carriageway to a dual carriageway. Notice to treat and notice of entry were served in November 2014 but it was not until November 2017 that possession was taken of a very small parcel of land at the appellant’s property for the scheme. Compensation was agreed for 8 sq m of land taken at £400, for an easement over 0.2 acres at £405, and for a licence over an area of 9 sq m at £63, together with £500 for the claimant’s time. Basic loss payment was agreed at £30 and an occupier’s loss payment at the minimum of £300. Outstanding matters were referred to the Upper Tribunal concerning a compensation claim for injurious affection under section 7 of the Compulsory Purchase Act 1965 and a disturbance compensation claim for the cost of alternative livery provision during construction and the cost of control of Japanese knotweed, said to have been introduced during construction. Held: The reference was determined accordingly. (1) Section 7 of the 1965 Act provided that, in assessing the compensation to be paid by the acquiring authority, regard should be had not only to the value of the land but also to the damage, if any, to be sustained by the owner by reason of the severing of the land purchased from the owner’s other land, or otherwise injuriously affecting that other land. The assessment of such compensation was generally achieved by determining the value of the retained land before severance (on the valuation date) but disregarding the effect of the acquiring authority’s scheme, and deducting from it the value of the retained land after severance. The necessary assessment had to be carried out as at the date of entry. As a general rule, without an express contractual or statutory instruction to do so (and there was none in section 7), it would always be wrong to value land as if with knowledge of matters which were not known, and could not have been known, at the valuation date: Castlefield Properties Ltd v National Highways Ltd [2023] UKUT 217 (LC); [2023] PLSCS 168 followed. In this case, the valuation date was 6 November 2017 and the assessment of injurious affection required as a first step an assessment of its value at that date disregarding the road improvement scheme, ie, in a “no-scheme world”. Sales of residential property in the immediate locality of construction of a major new road, whether ahead of or during the construction phase, would have been affected by the existence of the scheme. Each property would have been affected differently, depending on proximity to the construction and whether any land was to be taken, but none of the sales took place in a no-scheme world. (2) The key issue between the parties regarding the claim for injurious affection was the extent to which the original access from the property onto the old A465 provided a valuable benefit which had been lost as a result of the scheme. The assessment of injurious affection was to be made as at 6 November 2017, taking into account only what was known, or could reasonably have been anticipated, at that date about the likely impact which construction of the new road would have on the property. The loss of direct access to the A465 would have been known, along with details of the proposed alternative route. But there would have been uncertainty about the nature of the alternative access and how it would work in practice. Prospective purchasers of a property affected by uncertainty exercised caution by discounting the price they were willing to pay, and the amount of that discount would be the amount of injurious affection to be paid as compensation, in this case a round figure of £20,000, rather than a percentage. (3) The principle of equivalence required a claimant to be fully and fairly compensated for loss following compulsory acquisition. Compensation should cover disturbance loss as well as the market value of the land itself, provided that three conditions were satisfied: (i) there had to be a causal connection between the acquisition and the loss: (ii) the loss must not be too remote from the acquisition; (iii) the claimant must have complied with their duty to mitigate their loss: Director of Buildings and Lands (Hong Kong) v Shun Fung Ironworks Ltd [1995] EGCS 36; [1995] 2 AC 11 applied. The law expected those who claimed compensation to behave reasonably. If a reasonable person in the position of the claimant would have taken steps to reduce the loss, and the claimant failed to do so, they could not fairly expect to be compensated for the loss or the unreasonable part of it. Likewise, if a reasonable person in the position of the claimant would not have incurred, or would not incur, the expenditure claimed, fairness did not require the authority to be responsible for such expenditure. (4) The cost of a period of livery for a horse affected by disturbance from nearby construction in the early stages of the scheme met the three tests laid down in Shun Fung and disturbance compensation of £1,580 would be awarded. While there was no hard evidence to establish the causal connection between the scheme and the Japanese knotweed problem, the claim was not too remote. Delay of many years had potentially caused the problem to worsen and the estimated cost of control to increase significantly. The cost of treatment was estimated at £7,200. A prospective purchaser would take a negative view of the presence of knotweed, albeit in a field rather than a garden in proximity to buildings, and be likely to reduce their offer to account for the cost of treatment. The disturbance claim for the cost of knotweed control was valid, and the sum claimed would, alternatively, manifest itself as additional loss under injurious affection. The reference was determined on written representations. Eileen O’Grady, barrister Click here to read a transcript of Jones v Welsh Government