Compulsory purchase – Compensation – Assumptions – Land Compensation Act 1961 – Compensation payable to appellant for acquisition of land for residential development as part of business park – Whether compensation to be assessed on assumption that planning permission for independent residential development of appellant’s land would have been granted in no-scheme world – Appeal allowed
In 2003, the appellant purchased two plots of greenfield land in Rochdale, totalling 26.85 acres (the reference land), for £1.3m along with a smaller area (the nib) connecting that land to the highway. Although the reference land was poor quality grazing land, it fell within an area designated in relevant planning policies for residential development as part of a new business park which was to be facilitated by a compulsory purchase order (CPO).
The CPO was confirmed in 2004 and a general vesting declaration was made in January 2006, that being the valuation date for assessing the compensation payable to the appellant by the respondent, as acquiring authority. The nib was not included in the CPO.
The appellant claimed compensation of £2.593m, based not on the existing use value of the land but on the prospect that, in the absence of the CPO scheme, planning permission would have been obtained for residential development.
The Upper Tribunal (UT) awarded compensation of £746,000, based on a 50% chance of planning permission being granted for a 74-unit development on 4.88 acres of the reference land, subject to a deferred period of five years. It considered that the value attributable to a potential development on the reference land, with its own highway access and no use of the business park infrastructure, did not fall to be disregarded under section 6 of the 1961 Act since it was not attributable to the development of the other land comprised in the business park scheme: see [2013] UKUT 231 (LC).
Overturning that decision, the Court of Appeal held that it was necessary to consider the planning potential of the reference land not only without regard to the development scheme but also without regard to the policies which underlay it: see [2015] EWCA Civ 540; [2015] EGLR 49. The appellant appealed to the Supreme Court.
Issues arose as to the proper application of: (i) the statutory “disregards” of actual or prospective development in section 6 of, and Schedule 1 to, the 1961 Act; (ii) the “planning assumptions” to be made under sections 14 to 16; and (iii) the wider rule in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 that compensation for compulsory acquisition should be assessed disregarding any increase or decrease in value solely attributable to the underlying scheme of the acquiring authority.
Held: The appeal was allowed.
The Court of Appeal appeared to have erred by treating the required disregard of the CPO scheme as extending also to all the policies, past and present, which supported development on that land. The UT was clearly entitled to regard the underlying policies, including the allocation in the development plan, as potentially relevant also to the prospect of development apart from the CPO scheme. The assessment of the significance of those policies in the no-scheme universe was pre-eminently a matter for the UT. The UT had properly taken account of the pattern of development, as seen by it on the ground, and the long history of identification of the land for substantial development. It had not ignored potential policy objections but had taken the view that they would not have sufficient weight to rule out the possibility of development in the absence of the scheme. That reasoning disclosed no error of law.
The Court of Appeal had correctly rejected the submission that the UT should have treated the planning status of the land as conclusively fixed by reference to the application of sections 14 to 16 of the 1961 Act. That submission was supported neither by the statutory provisions nor by authority. The principle that the statutory assumptions were not exclusive was confirmed by the 1961 Act itself, in section 14(3), which provided in terms that the statutory planning assumptions did not imply any presumption against development which might otherwise fall to be taken into account. The right to claim for potential development value was long established. The statutory assumptions worked only in favour of the claimant, not against him. They did not deprive him of the right to argue for prospective value under other provisions or the general law: Spirerose Ltd (in administration) v Transport for London [2009] UKHL 44; [2009] 1 WLR 1797; [2009] 3 EGLR 103 considered.
It was, in any event, well established that the application of the Pointe Gourde rule itself might result in changes to the assumed planning status of the subject land: in Melwood Units Pty Ltd v Main Roads Commissioner [1979] AC 426 and Spirerose applied. There was nothing section 6 to indicate that a more restrictive approach should be applied under the statutory disregards. So far as the UT had said that the two stages should not be “elided”, it was doing no more than emphasising the difference between the statutory tests.
It had also long been accepted that application of the general law might produce a more favourable result for the claimant than the statutory planning assumptions: Jelson Ltd v Minister of Housing and Local Government [1970] 1 QB 243 and Jelson Ltd v Blaby District Council [1977] 1 WLR 1020 applied.
The UT’s decision in the present case was a powerful illustration of the potential complexities generated by the 1961 Act in its unamended form. Overall, the UT’s application of those difficult provisions to the complex facts of the case was exemplary and disclosed no error of law. It was to be hoped that the amendments currently before parliament in the Neighbourhood Planning Bill would be approved and would have the desired effect of simplifying the exercise for the future.
Martin Kingston QC and Richard Kimblin (instructed by DWF LLP, of Manchester) represented the appellant; Michael Humphries QC and Alexander Booth (instructed by Eversheds LLP, of Manchester) appeared for the respondent.
Sally Dobson, barrister
Click here to read transcript: JS Bloor (Wilmslow) Ltd v Homes and Communities Agency
