The decision of the Upper Tribunal (Lands Chamber) in Solartrack plc v London Development Agency [2009] UKUT 242 (LC); [2010] PLSCS 27 is helpful in clarifying one aspect of the extent of the tribunal’s jurisdiction. It also serves a warning to landowners who enter into a binding agreement for sale with an intended acquiring authority before a compulsory purchase order is made.
The factual background was complicated, and a number of issues arose. However, the salient facts as far as the principal issue was concerned were these. Solartrack owned the freehold interest in a three-storey building used for both commercial and residential purposes. In March 2001, the London Development Agency (LDA) entered into negotiations with Solartrack for the acquisition of that interest. In March 2003, contracts were exchanged at the price of £455,000 and a transfer was executed the following day. The original heads of terms had provided that the purchase price was agreed “without prejudice” to settlement of any future claim made by Solartrack in respect of the disturbance compensation.
In October 2003, a compulsory purchase order was made and later confirmed by the secretary of state. In September 2005, the LDA made an advance payment of £100,000 to Solartrack towards its disturbance costs. In June 2006, Solartrack made a notice of reference to the tribunal claiming compensation for £2.8m in respect of the freehold interest following a compulsory purchase order. Solartrack considered the payment of £455,000 as inadequate, and contended that as the disturbance compensation remained to be determined, the tribunal had jurisdiction to determine the totality of the compensation payable, including the market value of the freehold interest.
The claim failed. The tribunal held that it had no jurisdiction to determine compensation in respect of the freehold interest pursuant to the Land Compensation Act 1961 or the Compulsory Purchase Act 1965, since that interest had not been acquired compulsorily. While it was implicit in the contract for sale that Solartrack should be treated as being entitled to compensation for disturbance, and that it could refer any dispute as to the amount to the tribunal, that did not mean that it could also pursue a claim for the value of the freehold interest. The amount paid under the transfer was unqualified, and the value of the interest did not depend on the amount that might be agreed by way of compensation for disturbance.
John Martin is a freelance writer