Section 5 of the Land Compensation Act 1961 sets out the rules for assessing compensation where land is acquired compulsorily. Rule 2 provides that the value of the land shall be taken to be the amount that it might be expected to realise if sold in the open market. Rule 6 separately preserves the right to claim compensation for disturbance and for any other matter “not directly based on the value of the land”. A recent decision of the Upper Tribunal (Lands Chamber) demonstrates the breadth of r 6.
In Pattle v Secretary of State for Transport [2009] UKUT 141 (LC); [2009] PLSCS 304 the claimants owned land on which a number of industrial buildings were situated. In 1995, planning permission was granted to replace those buildings with 20 B1 and B2 units, together with 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. A condition of the planning permission prevented the erection of any permanent structures on the safeguarded land until the rail link had been constructed.
Two of the B1 and B2 units were to have been built on the safeguarded land. The claimants decided, in view of this, not to proceed with the redevelopment, but instead to relet the existing buildings. The secretary of state served notice to treat and notice of entry in 2001, and took possession in January 2002. This was the relevant valuation date for the purpose of assessing compensation.
The claimants, in addition to claiming compensation for the value of the safeguarded land, claimed compensation under r 6. They contended that, in the no-scheme world, the whole of their land would have been redeveloped as an industrial estate by 1996, allowing them to achieve higher rents than they had obtained from letting the existing buildings. They sought the difference between the rents that they had received and those that they might have received between 1996 and January 2002. The principle of such a claim was tried as a preliminary issue.
The tribunal decided in favour of the claimants, holding, inter alia, that:
(i) A claim under r 6 could include losses sustained by a party that was not an occupier, but held land as an investor. Lost rents could constitute losses reasonably attributable to the acquisition or prospective acquisition of land, and could encompass losses incurred prior to the acquisition by reason of the threat that it would pose.
(ii) 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 in the calculation of the value of the land.
(iii) 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.
The tribunal made it clear, however, that the ordinary principles of causation and remoteness would apply.
John Martin is a freelance writer