The compensation payable for a statutory wayleave was measurable by reference to the price that a buyer had agreed to pay for the land without an electricity line
Gas, electricity and other services are essential to our daily lives. However, the infrastructure needed to supply them can sometimes impede development. Arnold White Estates Ltd v National Grid Electricity Transmission Ltd (2013) UKUT 005 (LC) concerned land that was ripe for residential development, but for fact that it was bisected by an overhead electricity line.
The landowner made provision for a corridor of land underneath the power line, which was wide enough to sustain a viable development independently of the land on either side of it, and obtained planning permission for development with, and without, the power line. In due course, it entered into separate contracts to sell the land. The price for the land underneath the power line was £5,829,477, but the contract was conditional on the removal of the line.
The contractual wayleave for the electricity line was terminable on six months’ notice. However, the Secretary of State for Energy and Climate Change granted NGET a statutory wayleave to retain it for a further 15 years. The landowner claimed compensation under the Electricity Act 1989 for the loss caused by the grant of the wayleave based on the contract price.
NGET objected to paying compensation based on a figure fixed by a contract to which it was not a party. It argued, by reference to Turris Investments Ltd v CEGB (1981) 1 EGLR 186, that the land had diminished in value by 12.5%. It tried to persuade the tribunal to value the land without reference to the contract – and argued that property prices had fallen since the contract was made.
The tribunal upheld the landowner’s claim. All that had been required to make the contract price payable was the removal of the power line. The legislation required NGET to pay compensation for the loss caused by the grant of the statutory wayleave and the landowner would have received the contract price, but for the retention of the line. Therefore, compensation was to be assessed on the difference between the contract price and the value of the land with the power line.
What then was the value of that land? NGET suggested that there was an obvious purchaser for the land because a composite development would have maximised the development potential, as well as enabling the developer to exert greater control and to program construction to make the most of market opportunities. However, the developer had not shown any interest in acquiring the land and there was no evidence to suggest that planning permission for a composite development would have enhanced its value.
Consequently, the value of the corridor of land under the power line was dependent on the use that could be made of it for the time being and on the hope that the line might be removed in 15 years’ time. Unfortunately, this was less than the cost of laying out and maintaining the land in the meantime, in accordance with planning obligations that fell on the landowner. Therefore, the value of the land with the power line was £1, which meant that the landowner was entitled to receive compensation in the sum of £5,829,476.
Allyson Colby is a property law consultant