Planning permission – Modification order – Compensation – Claimants having planning permission for extraction of stone from quarry site – Compensating authority making modification order attaching conditions to permission under section 97 of Town and Country Planning Act 1990 following designation of part of site as special area of conservation – Assessment of compensation for modification order – Whether assessment to take into account the fact that permission already subject to statutory procedure for review of old mineral planning permissions (ROMP) under Schedule 5 to the Environment Act 1995 – Preliminary issues determined accordingly
The claimants quarried Portland stone from a site in Dorset pursuant to a 1951 planning permission. The permission was subject to only two conditions and permitted the claimants to work and win stone from the quarries with little restriction. In accordance with the statutory procedure for the review of old mineral planning permissions (ROMP) under Schedule 5 to the Environment Act 1995, the claimants’ predecessors in title had applied to the county council to determine the conditions to which the 1951 permission should be subject. That process had not been completed when, in June 2005, a strip of the claimants’ site along the coast was included in a special area of conservation designated under the Conservation (Natural Habitats etc) Regulations 1994. As a consequence of the designation, the county council became obliged to review the 1951 planning permission, as a result of which, in February 2009, they made a modification order under section 97 of the Town and County Planning Act 1990, imposing six conditions on the permission.
A reference was made to the Upper Tribunal to determine the compensation payable by the council, as compensating authority, to the claimants under section 107 of the 1990 Act for the making of the modification order. The first claimant claimed a little over £2.715m for loss of profits, while the second claimant claimed £14.45m based on the loss of royalty income. The claimants contended that the modification order had prevented them from working the coastal strip profitably. The council disputed the claimants’ figures on the ground that, at the relevant valuation date of February 2009, the permission was already subject to the ROMP application which the council was obliged in due course to determine. They submitted that any loss or damage sustained by the claimants was not “directly attributable” to the modification order, within section 107(1)(b), since the permission would have been subjected to the same six conditions under the ROMP procedure in any event.
The tribunal determined preliminary issues as to the effect of the ROMP application on the assessment of compensation for the modification order.
Held: The preliminary issues were determined accordingly.
Under section 107 of the 1990 Act, the claimants were entitled to compensation in respect of loss or damage that was directly attributable to the modification of the 1951 planning permission made by the modification order. In assessing the amount of such loss or damage, the fundamental principle of equivalence had to be applied, so that the claimants were entitled to be compensated fairly and fully for their loss but, as the corollary of that, were not entitled to receive more than fair compensation: Horn v Sunderland Corporation [1941] 2 KB 26 and Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 1 EGLR 19 applied.
A relevant consideration was whether, without the modification order, the claimants would have been able to work the coastal strip profitably, and if so, how profitably. Had the modification order not been made, the claimants would have owned land which had the benefit of the 1951 planning permission, but that planning permission would still have been subject of a ROMP application that had to be determined in due course. As at the valuation date, there was therefore no possibility of the claimants being able, in the absence of the modification order, to work out the coastal strip in accordance with the unamended terms of the 1951 planning permission until its expiry and without further restriction. It followed that compensation for the making of the modification order could not be calculated on the basis that the claimants would have enjoyed such rights.
Moreover, compensation should be assessed in accordance with the “reality principle”, keeping as near as possible to the real world, such that no assumptions should be made departing from reality except in so far as was required by a statutory provision. The real world included the circumstance that, as at the valuation date, the 1951 planning permission was already the subject of a ROMP application which the council was obliged in due course to determine. It would be an unjustified departure from the reality principle to ignore that fact.
It might not be easy to assess how happily placed the claimants would have been, as at the valuation date, in the absence of the modification order but with the planning permission already subject to the ROMP application. That exercise would involve a consideration of how matters were likely to have turned out in the future, so far as these affected whether the claimants would have been able profitably to work the land, including a consideration of how and when the ROMP application would have been determined, whether the ROMP determination would have resulted in the imposition of restrictions on working rights that were the same or similar to those in the modification order and whether such restrictions of working rights would satisfy the economic viability test in paragraph 10(2) of Schedule 13 to the 1995 Act, such that the claimants would have received compensation under Schedule 13. Nonetheless, those difficulties were not so substantial that the exercise should not be performed at all.
Assessing compensation in that manner did not involve reading into section 107 an economic viability test that was not there. Section 107 required a comparison between how happily placed the claimants were as a result of the modification order and how happily placed they would have been in its absence. If, in the latter position, the claimants would have been restricted or prevented from working the land, and would have been able to obtain compensation for that matter only if the economic viability test was passed, then bringing in that economic viability test did not involve reading such a test into section 107; it merely recognised that the value of the claimants’ existing position was already potentially affected by the economic viability test before the valuation date and before section 107 came to be applied.
Accordingly, in assessing the loss or damage directly attributable to the modification order, it was relevant in law to consider the effect of the ROMP application and the compensation provisions under the Environment Act 1995 on the basis that the modification order had not been made.
David Holgate QC and Robert Walton (instructed by Stephens Scown LLP, of Truro) appeared for the claimants; Robin Purchas QC and Alexander Booth (instructed by the legal department of Dorset county council) appeared for the compensating authority.
Sally Dobson, barrister
