Compulsory purchase – Rule 6 of section 5 of Land Compensation Act 1961 – Compensation for disturbance and other matters not directly based on value of land – Claimants owning industrial estate part of which compulsorily acquired for rail link – Whether entitled to claim compensation under r 6 on basis that potential compulsory acquisition deterring claimants from implementing planning permission for redevelopment resulting in lower rental income from entirety of their land – Preliminary issues decided in favour of claimants
The claimants owned an area of industrial land that had the benefit of a 1995 planning permission for redevelopment. That entitled the claimant to replace the existing buildings with 20 new units for uses within Class B1 and B2, together with a parking and access roads. However, part of the land fell within an area that was safeguarded for use in connection with the planned Channel Tunnel rail link. The permission contained a condition that no permanent structures should be erected or means of access laid out within the safeguarded land until the rail link had been completed. Two units within the planned redevelopment fell within the safeguarded area such that they would have to be relocated or lost were the land to be acquired for the rail link. In the light of that uncertainty, the claimants did not proceed with their development but instead relet the existing units on their land.
The respondent compulsorily acquired part of the claimants’ land for the rail link; he served notices to treat and notices of entry in February 2001 and took possession of the land in January 2002, which was the relevant valuation date for the assessment of compensation.
The claimants claimed compensation for the value of the acquired land and for severance and injurious affection. In addition, they sought further compensation, under r 6 of section 5 of the Land Compensation Act 1961, for disturbance and other matters not directly based on the value of the land. They contended that, in the no-scheme world, their land would have been redeveloped as an industrial estate by 1996, allowing them to achieve higher rents than they had obtained from reletting the existing units, and that the difference between those two figures, claimed at £905,219, was recoverable as compensation under r 6. Preliminary issues were tried as to whether the lost rents were in principle recoverable, on the assumption that the claimants could prove that the deferment of their redevelopment was reasonably attributable to the taking of part of their land rather than to general blight and depressed rental levels in the area.
Decision: The preliminary issues were decided in favour of the claimants.
(1) There was no reason in principle why the claimants’ claim should not be allowed to proceed. Such a claim was consistent with the principle of equivalence: Ryde International plc v London Regional Transport [2001] 1 EGLR 101; [2001] 14 EG 154 applied. Lost rents could constitute losses reasonably attributable to the acquisition or prospective acquisition of land. A claim under r 6 could include a claim for losses sustained by a party that was not an occupier but held the land as an investor, carrying on a letting business and deriving profit from rental income from the land taken: Wrexham Maelor Borough Council v MacDougall [1993] 2 EGLR 23; [1993] 49 EG 115 applied. Moreover, on a claim by a party with a compensatable interest, r 6 compensation extended to any loss attributable to the compulsory acquisition, subject only to the ordinary principles of causation and remoteness. It could encompass losses incurred prior to the acquisition by reason of the threat that it would pose: Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 1 EGLR 19; [1995] 19 EG 147 applied.
(2) Further, lost rents were a matter “not directly based on the value of the land” within the meaning of r 6. Rents lost prior to the valuation date were not relevant to the calculation of the value of the land save in special circumstances. The relevant words in r 6 were included to prevent double counting. No double counting arose in the instant case. Although the rent lost in the shadow period prior to the valuation date might be calculated as, or by reference to, the annual value of the land, that did not in itself mean that the claim was for a matter directly based on the value of land, in the sense of the amount that the land might be expected to realise on the open market in a sale by a willing seller.
(3) The fact that the claim was for rents lost mostly from land that had not been acquired did not render it impermissible. Losses claimed under r 6 did not have to relate only to the land ultimately acquired. Where part of an estate of units was the subject of potential compulsory acquisition, that prospective acquisition could, in principle, also cause loss of rents in respect of the are taken. Although it might be difficult to prove causation, such questions did not arise for determination on the preliminary hearing.
(4) The claim was not disallowed by reason of the fact that it related to rents lost from an inability to redevelop and let at higher rents, rather than from the loss of rent from existing lettings on the existing industrial estate. In assessing a claim under r 6, as opposed to one under r 2, it was not necessary to assume that the land was in the same state as at the valuation date.
(5) The other provisions of the 1961 Act did not preclude the claimants’ claim. Section 9 of the 1961 Act did not provide the claimants with an exhaustive remedy since it was concerned with the value of a relevant interest and not with the assessment of compensation for disturbance or any other matter arising under r 6. Further, although the statutory provisions enabled certain categories of landowner to serve blight notices in advance of an acquisition by compulsory purchase, that was no reason to curtail the rights that the landowner would ultimately have when circumstances changed and part of its land was taken.
(6) There was no reason, as a matter of law, why the claimants should not rely on the “before and after” method of valuation when assessing compensation for the value of the land taken and for severance and injurious affection to the retained land.
Simon Pickles and Gerard von Tonder (instructed by Kingsley Smith LLP, of Chatham) appeared for the claimants; Guy Roots QC (instructed by Ashurst LLP) appeared for the acquiring authority.
Sally Dobson, barrister
