Compensation for acquisition of land — Planning permission — Mineral extraction — Acquisition of land for road construction — Road partly in cutting — Extraction of minerals and other materials in cutting — Section 15(1) of Land Compensation Act 1961 — Statutory planning permission assumption for purposes of scheme — Whether planning permission assumption for extraction of minerals without completion of road — Effect of section 5(4) and disregard of use contrary to law — Whether “use” contrary to law includes operational development
The appellants were the owners of agricultural land. The respondent council compulsorily acquired a strip of the land to construct a ring road for which they granted themselves planning permission. Part of the road was constructed in a deep cutting. Some 50,000m3 of materials were extracted from the cutting and used elsewhere in the construction of the ring road. Before the Lands Tribunal, the appellants claimed compensation on the basis that they were entitled to assume that a hypothetical purchaser would have had the benefit of planning permission to extract the materials from the cutting without any obligation to complete the road. They relied upon section 15(1) of the Land Compensation Act 1961 and the statutory assumption that planning permission would be granted to carry out the proposals of the council. The tribunal awarded the appellants compensation in the sum of £17,000, on the basis of agricultural values only; however, it made an alternative award, whereby, had it determined the legal argument in favour of the appellants, the compensation would have amounted to £86,000. The appellants appealed, contending that mineral extraction constituted “development”, which had the benefit of the statutory planning permission, and that it was lawful to extract the minerals without completing the road.
Held: The appeal was dismissed. The assumed planning permission was to construct the road. The extraction of minerals necessary for the cutting was part of that indivisible process. There was no separate permission to extract minerals that could have been implemented without completing the road. The assumed planning permission was for the construction of the road, not for a series of discrete operations involved in the process. Obiter: section 5(4) of the Land Compensation Act 1961, in disregarding any increase in the value of land by reason of a use contrary to law, applies to development within the Town and Country Planning Act 1990, whether it involves operations or uses of land.
The following cases are referred to in this report.
Copeland Borough Council v Secretary of State for the Environment (1976) 31 P&CR 403; [1976] 2 EGLR 131; (1976) 239 EG 503, DC
Hoare (VO) v National Trust; National Trust v Spratling (VO) (1998) 77 P&CR 366; [1999] 1 EGLR 155; [1998] RA 391, CA
Myers v Milton Keynes Development Corporation [1974] 1 WLR 696; [1974] 2 All ER 1096; (1974) 72 LGR 420; 27 P&CR 518
Northavon District Council v Secretary of State for the Environment (1980) 40 P&CR 332; [1981] JPL 114, DC
Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
R (on the application of Lowther) v Durham County Council sub nom R v Durham County Council, ex parte Lowther [2001] EWCA Civ 781; [2002] 1 P&CR 22; [2001] 3 PLR 83; [2002] JPL 197, CA
Trocette Property Co Ltd v Greater London Council (1974) 72 LGR 701; 28 P&CR 408; 231 EG 1031; [1974] RVR 306
West Bowers Farm Products v Essex County Council (1985) 50 P&CR 368; [1985] 1 EGLR 271; [1985] RVR 176; [1985] JPL 857
Wilson v Liverpool Corporation; sub nom Wilson (Personal Representatives of FW Wilson) v Liverpool City Council [1971] 1 WLR 302; [1971] 1 All ER 628; (1971) 22 P&CR 282; (1971) 217 EG 987
This was an appeal by the appellants, Cleo and Marion Roberts, from a decision of the Lands Tribunal making an award of compensation payable by the respondents, South Gloucestershire Council, for the acquisition of land belonging to the appellants.
Nicholas Nardecchia (instructed by Burningham & Brown, of Bridgwater) appeared for the appellants; Frances Patterson QC and Robert Palmer (instructed by the solicitor to South Gloucestershire Council) represented the respondents.
Giving judgment, Carnwath LJ said:
[1] This is an appeal from a decision of the Lands Tribunal, awarding compensation for compulsory acquisition of the claimants’ land. The land, which was in agricultural use, was acquired by the district council to build stage 4A of the Avon Ring Road. The length of this stage was 2.8km, of which a small central section, 204m long, ran over the claimants’ land. The council granted themselves permission covering the whole of this stage in January 1988. The compulsory purchase order, which also related to the whole stage, was confirmed in April 1991, and possession of the claimants’ land was taken on 14 October 1991 (the valuation date).
[2] It is a striking and regrettable feature of the case that 11 years later the compensation has still not been settled. However, the reasons for that are not relevant to the limited issue of law that we have to decide. It underlines, yet again, the importance of the government’s current proposals, with the assistance of the Law Commission, for streamlining the compulsory purchase procedures.
[3] One of the delaying factors was the adjournment of the Lands Tribunal proceedings to enable the making of an application by the district council for a certificate, under section 17 of the Land Compensation Act 1961, of appropriate alternative development. This resulted in an appeal to the Secretary of State, which was determined in February 1998. One of the issues canvassed in that appeal was whether, in the absence of the road proposal, permission would have been granted for mineral extraction from the subject land. That possibility |page:2| was rejected by the Secretary of State as contrary to the planning policies for the area.
[4] The certificate issued by the Secretary of State stated that the only alternative form of development for which permission would have been granted in the absence of the road proposal was the laying out of sports pitches and the erection of a clubhouse. It was not suggested before the tribunal that that possibility added anything to the ordinary agricultural value of the land. The certificate also stated that permission would have been granted “for any development for which the land is being acquired”. As I understand it, that wording was not intended to add anything of substance, but simply designed to reproduce the effect of the statutory provisions to which I will come.
[5] The tribunal determined compensation in the sum of £17,000, which reflected agricultural value only. It rejected the claimants’ contention that compensation should be based on the possibility of mineral extraction. However, it made an alternative finding (under r 50(4) of the Lands Tribunal Rules 1949), that, had it determined the legal argument in the claimants’ favour, it would have awarded £86,000.
[6] The background to the alternative contention was that the short section of road passing through the claimants’ land was designed to be in a deep cutting. The relevant finding of the tribunal was as follows:
The construction of the ring road, where passing through the subject land, required the extraction of approximately 56,114m3 (123,450 tonnes) of materials which included topsoil and a mixture of clay, weak weathered silt sandstone and thinly bedded laminated sandstone to a depth of about 4 metres, and Pennant sandstone to a total depth of 8.46 metres. This provided a cutting over which a new overbridge would be built on the line of, and at the existing level of, Abbots Road. To facilitate the construction of the bridge, and to allow Abbots Road to continue to be used, a temporary diversion (or land-bridge) was constructed on the subject land utilising an estimated 10 per cent of the materials extracted from the claimants’ land. The balance of the excavated materials were removed and used partly for landscaping and the formation of a sound-bund elsewhere on the scheme, or tipped.
[7] The claimants’ argument was that, under the 1961 Act, it is to be assumed that permission would have been available to a hypothetical purchaser of the claimants’ land for extraction of those same materials from their land, without any obligation to complete that part of the road: see paras 185-186 of the decision. The tribunal’s alternative finding is based upon this hypothesis. The tribunal made clear that, if the hypothetical purchaser were required to complete the road, the cost of completing the road would far outweigh any potential value of the minerals: see para 201.
[8] At first sight, the claimants’ contention seems surprising, because it appears to conflict with the well-known principle stated in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, at p572, per Lord McDermott, that compensation for compulsory acquisition “cannot include an increase in value which is entirely due to the scheme underlying the acquisition”. Here, it is not in dispute that the only possibility of exploiting these minerals in the foreseeable future is derived from the road scheme. However, Mr Nicholas Nardecchia, for the claimants, has submitted that the relevant provisions of the Land Compensation Act 1961, supported by decisions of this court, compel the conclusion that the alternative basis should have been accepted.
[9] I turn therefore to the Act. The starting point is the market value of the land; that is, “the amount which the land if sold on the open market by a willing seller might be expected to realise” (section 5(2)). Sections 14 and 15 set out certain assumptions to be made in relation to planning permission. By section 14(2), any assumptions derived from the Act are to be “in addition to any planning permission which may be in force at the date of service of the notice to treat”. (In this case, the notice to treat was served on 9 August 1991, but nothing turns on the difference between that date and the valuation date.)
[10] Section 15 provides as follows:
(1) In a case where —
(a) the relevant interest is to be acquired for purposes which involve the carrying out of proposals of the acquiring authority for development of the relevant land or part thereof, and
(b) on the date of service of the notice to treat there is not in force planning permission for development,
it shall be assumed that planning permission would be granted, in respect of the relevant land or that part thereof, as the case may be, such as would permit development thereof in accordance with proposals of the acquiring authority.
(2) For the purposes of paragraph (b) of the preceding sub-section, no account shall be taken of any planning permission so granted as not to enure (while the permission remains in force) for the benefit of the land and of all persons for the time being interested therein.
Section 15(5) provides that permission is to be assumed in accordance with a certificate granted under section 17. (A contrary indication in the decision on the section 17 application is not conclusive against the claimant, although regard must be had to it in deciding, where relevant, what permission might reasonably have been expected to have been granted: see section 14(3A). That issue does not arise in this case.)
[11] Reference must also be made to the definitions of “relevant interest” and “relevant land”: see section 39(2). In summary, the relevant interest and the relevant land are those that are subject to the particular notice to treat, and therefore, in this case, are confined to the claimants’ interest in the land acquired from them (rather than any other land within the authority’s scheme). We were also referred to section 6 of, and Schedule 1 to, the Act, which, in summary, require any increase or diminution in the value of the relevant interest to be disregarded, in so far as it is attributable to the authority’s development on other land within the same compulsory purchase order.
[12] There was some discussion before us of the interaction between these various provisions. However, their overall effect in the present context in my view is not in doubt. The actual permission for the road is of no relevance, because it enured solely for the benefit of the authority (see Town and Country Planning General Regulations 1976, regulation 4(7)), and was therefore of no value to the claimants. However, for the same reason, by virtue of section 15(2), it leaves the claimants free to rely upon an assumed permission (under section 15(1)), such as would permit development of the claimants’ land in accordance with the authority’s proposals. (As I have said, the fact that the same right was also stated in the section 17 certificate itself adds nothing.)
[13] Conversely, there is to be disregarded any increase or decrease in value due to the prospect of the carrying out of the authority’s road proposal on any land apart from the claimants’ own land. In the present case, it does not seem to me to matter whether one gets to that result from the definition of “relevant interest” and “relevant land” from section 6 and Schedule 1, or from the Pointe Gourde principle itself.
[14] The relation of the planning assumption in section 15 and the Pointe Gourde principle was discussed by the Court of Appeal in Myers v Milton Keynes Development Corporation [1974] 1 WLR 696. That case concerned the acquisition of agricultural land required as part of the development of the Milton Keynes New Town. The plans of the development corporation showed that the claimants’ land would be developed for residential purposes, but not until the final stage after 10 years. The tribunal awarded compensation at agricultural value, on the basis that the assumed permission was entirely due to the scheme. The Court of Appeal reversed this, holding that the assumed planning permission for the subject land had to be taken into account, albeit deferred for 10 years in accordance with the authority’s proposals, but disregarding the prospect of development in accordance with the new town on any other land.
[15] Lord Denning MR gave the following summary and illustration at p204C:
It comes to this. In valuing the estate, you are to disregard the effect of the scheme, but you are to assume the availability of planning permission. This is best explained by taking an imaginary instance: A scheme is proposed for building a motorway across Dartmoor with a service station every five miles. Suppose that land is taken on which a service station is to be built as soon as |page:3| possible. In assessing compensation, you are to disregard any increase due to the proposed motorway, or service stations. But if the landowner had already been granted actual permission for that piece of land for commercial purposes (for example, as a café), you are to have regard to it: see section 14(2). Even if he had no such permission already, you are to assume that he would have been granted planning permission for a service station: see section 15(1). And you are to value that land with that permission in the setting in which it would have been if there had been no scheme. If it would have been a good site for a service station, there would be a great increase in value. If it would have been in an inaccessible spot on the wild moor, there would be little, if any, increase in value because there would be no demand for it. A further complication arises when the proposals are not to be put into effect for 10 years. Planning permissions are not in practice granted so far ahead. They are only granted for immediate development. In the illustration you are, therefore, to assume that, after 10 years, planning permission would be granted for development of a service station — in a setting where there had been no scheme.
[16] As that passage shows, the assumptions required by the Act can have somewhat artificial results. However, the general approach is reasonably clear. The Act draws a distinction between the planning status of the land and its valuation. In line, no doubt, with the principle that planning permission generally runs with the land, the claimant owner is treated as having the benefit of any valuable development opportunities for his own land that were available to the acquiring authority. Subject to that limited exception, however, any advantage or disadvantage due to the authority’s scheme is disregarded.
[17] A useful illustration of the distinction between planning and valuation is in one of the cases cited in Myers: Wilson v Liverpool Corporation [1971] 1 WLR 302* (also before Lord Denning MR). There, the claimant’s land was being acquired as part of a major residential development by the corporation. In assessing compensation, the tribunal was required to assume that planning permission for residential development would have been granted on his land, but to make appropriate deductions from the “dead ripe value” in the real world, in order to reflect the enhancement of value due to the public’s knowledge of the authority’s involvement in the scheme, including its investment in infrastructure, and also to the consequent acceleration of development: see per Lord Denning MR, at p309H. (For critical comments on the details of the current legislation on this aspect, see the Law Commission’s consultative report: Towards a compulsory purchase code: (1) Compensation CP 165: Parts VI and VII; in, particular, 7.30ff.)
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* Editor’s note: Also reported at (1971) 217 EG 987
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[18] Both Myers and Wilson were concerned with residential development. In such cases, there is usually no problem in assuming such development of the claimant’s land “in accordance with the proposals of the acquiring authority,” even though the relevant land only forms a limited part of the overall scheme. A scheme of residential development is by its nature divisible into smaller units or areas. The same is not true where the proposed development is a road. The assumed permission is to construct no more than the section of road that goes through the claimant’s land. The result for valuation purposes is that he can assume a right to build a disembodied section of road, but no more; which is unlikely to give him any added value.
[19] This is not particularly surprising, because it would not normally be expected that the right to construct a public highway across a particular stretch of land would add to its market value, whether one looks at the whole road or simply to a disembodied section of it. The statutory assumption does not guarantee any additional value from the assumed permission. It merely ensures that the owner has the benefit (for what it is worth, if anything) of the same permissions as the authority. A disembodied section of road is of no value to anyone, and therefore the assumed permission in these circumstances is incapable of implementation and is valueless.
[20] This simple view of the effect of the Act is not accepted by Mr Nardecchia. He seeks to break down the assumed permission for the authority’s development into two parts: (1) the extraction of the minerals required to form the cutting; and (2) the construction of the road itself. He summarised his argument in six propositions as follows:
1. Mineral extraction on the scale required in this case is “development” for the purpose of the Town and Country Planning Act 1990, being a mineral operation, and not merely ancillary to other engineering operations (see West Bowers Farm Products v Essex County Council (1985) 50 P&CR 368);
2. As this development formed part of the authority’s proposals and part of the overall development for which the land was required, planning permission is assumed to exist for it under section 15(1) or (5);
3. Therefore it is lawful to excavate the minerals in this case;
4. There is no condition on the assumed permission requiring the mineral excavator to build the road pursuant to the permission or to retain any part of the minerals excavated for any specific purpose;
5. Therefore it is lawful for the mineral excavator to excavate and remove the minerals, and leave the construction of the road under the actual permission to another;
6. If a road builder cannot be found, it does not render the excavation unlawful because it is permitted by the assumed permission.
[21] Ingenious though this argument is, in my view it fails at a number of points, not least when judged against the criterion of common sense. However, in order to do justice to it, it is necessary, first, to refer to West Bowers Farm Products v Essex County Council (1985) 50 P&CR 368*, which underlies the first proposition. The actual issue in that case was somewhat technical, turning on the construction of the regulations relating to fees for planning applications. The development in question was a reservoir required for farming purposes. The construction of the reservoir required the extraction of large quantities of sand and gravel, which it was proposed to remove from the site (without further treatment) and sell. The question was whether this came within the general permission granted for agricultural purposes by Class 6 of Schedule 1 to the Town and Country Planning General Development Order 1977, as applied by the relevant fees regulations.
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* Editor’s note: Also reported at [1985] 1 EGLR 271
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[22] The effect of the relevant provisions was conveniently summarised by Nourse LJ in a single question, at pp372-373, as follows:
Will the construction of the reservoir be (1) solely the carrying out of engineering operations requisite for the use of the land for the purposes of agriculture, or (2) a hybrid consisting partly of that activity and partly of the use of the land for the winning or working of minerals?
The Court of Appeal held that, having regard to the nature and scale of the mineral extraction involved in the development, it was to be regarded as, not solely an engineering operation, but a combination of an engineering operation and mineral operations.
[23] Applying similar reasoning, Mr Nardecchia says that the scale of the mineral extraction involved in the present case was such that it constituted a distinct mineral operation, not merely an activity ancillary to the engineering operation of building the road. Thus, he says, the assumed permission must also be regarded as a hybrid, combining in effect two separate permissions, one for the mineral operation and one for the engineering operation. This leads on to his subsequent propositions, and to the conclusion that the hypothetical purchaser can take advantage of the mineral permission without having to build the road.
[24] I confess to some difficulty in seeing how West Bowers assists Mr Nardecchia’s line of argument. As I have said, the issue in that case was a narrow one, namely whether a permission for “engineering operations” should be treated as covering the mineral operations that were necessary to complete the project. The present case is the converse. The claimants have the benefit of an assumed permission for the whole activity necessary to construct the road, including whatever extraction operations are involved in it. The question is not whether those “mineral operations” are permitted, but whether they can be carried out except as part of the development of the road as a whole. There would be a true parallel if the county council in West Bowers had |page:4| compulsorily acquired the land necessary to build the reservoir themselves and the issue had been whether, for compensation purposes, the owner could assume the ability to extract the mineral without having to complete the reservoir. In my view, West Bowers itself throws no light on this question.
[25] However, in view of the attention given in argument to the detail of this decision, I should comment briefly upon the apparent difference of emphasis between the judgments respectively of Nourse and Neill LJJ on the one hand, and Sir John Donaldson MR on the other. Mr Nardecchia sought to draw comfort from the comments of Nourse and Neill LJJ, to the effect that the test was “objective” and that the “subjective purpose” of the developer was irrelevant: see pp373 and 376. Thus, he says, in the present case the scale of the mineral extraction is such that it must properly be regarded as a separate operation, regardless of the purpose for which it is carried out.
[26] Whether or not this argument helps him, I do not think it is a fair reading of the judgments in West Bowers. The statements in those judgments need to be seen in the context of the issues in the case, and the arguments presented by the owners. They appear most clearly in the judgment of the Master of the Rolls. He said, at p378:
Mr Konrad Schiemann QC, who has appeared for the developers, has submitted that, if this is right, every engineering operation that incidentally involves the extraction of minerals from the land will also constitute a mining operation and the scope of Class VI of the Order of 1977 will be greatly reduced. In his submission, the test is the purpose for which the activity is undertaken. If minerals are removed for the purpose of facilitating an engineering operation, the development is to be classified as such an operation and not as a mining operation. I am unable to accept this argument. Purpose is undoubtedly a factor to be taken into account. Scale, however, is also relevant, as is what happens to the extracted materials. Thus, the digging of foundations for a building, which incidentally involves the extraction of relatively small quantities of minerals, could not possibly be described as a mining operation. Nor could most “cut and fill” operations involved in road building. It is a question of fact and degree in each case.
Looking at the facts of this case, which involves the removal of so large a quantity of minerals, the only possible conclusion is that the development would consist of a mining operation followed by an engineering operation.
[27] Thus, it was not enough to get the claimants home that the purpose of the mineral operations was to facilitate an engineering operation for agricultural purposes. To that extent, purpose was not relevant on the facts of the case. It is fair to say that the other judgments appear to express the matter more generally. Thus, Nourse LJ said in agreement with the judge: “the test is an objective one and the subjective purpose of the developer is irrelevant”. However, it is clearly not the case that purpose is always irrelevant in determining the correct categorisation of particular activities for planning purposes. An obvious example, as the Master of the Rolls pointed out at p377, was provided by Northavon District Council v Secretary of State for the Environment (1980) 40 P&CR 332, which showed that the introduction onto land of waste material can be either a change of use or an operation, depending upon whether the purpose is to get rid of the material or to alter the character of the land. That decision was also mentioned by Nourse LJ without any adverse comment.
[28] The interpretation of West Bowers has been the subject of further consideration in this court in R (on the application of Lowther) v Durham County Council [2001] EWCA Civ 781; [2002] 1 P&CR 22. That concerned a plant, at Thrislington in Durham, for converting quarried rock into dolime, by a process involving heating the crushed rock in kilns. In 1996, the operators had begun using “secondary liquid fuel” (SLF), a fuel that consisted of constituent parts each of which was a form of waste produced from solvents. An issue arose whether the substitution of this form of fuel involved a separate planning activity, requiring planning permission, on the basis that it involved the disposal of waste. (Use of land for disposal of waste, generally, is treated as involving a material change of use for planning purposes: see section 55(3)(b) of the Town and Country Planning Act 1990, and Northavon.)
[29] The Court of Appeal rejected the argument that the use of the fuel was to be regarded as a separate planning activity merely because it involved disposal of the waste. Lord Phillips MR referred to West Bowers and Northavon. Having cited all three judgments in West Bowers, he commented, at p295:
50. West Bowers involved deciding whether a particular operation fell into one or both of two specific categories of operation. On the facts the Court of Appeal held that it fell into both. There is no difficulty in following the logic of this conclusion. The facts were such that an objective onlooker when asked what the operation involved might have said “digging a reservoir” or “recovering gravel” or both. The operation had two physical aspects the one the corollary of the other; a hole was dug; gravel was removed. Each aspect fell into a different planning category.
51. West Bowers recognised that one indivisible process could amount, for planning purposes, to two activities. It does not follow that the different aspects of a process always fall to be categorised as different operations or uses of land for planning purposes. Lord Kingsland did not suggest that disposing of petcoke was a distinct use of the land at Thrislington, although petcoke is a by-product of the oil industry that has all the features of waste, save that its qualities as a source of energy have become appreciated so that it is universally burnt for energy recovery. Lord Kingsland’s contention that disposing of waste is always a separate land use, regardless of the nature or manner of disposal, cannot be derived from West Bowers.
He referred with approval to Sir John Donaldson’s observation, in West Bowers (see above), that the manner in which the introduction of waste onto land falls to be categorised for planning purposes depends upon the object of the activity, and mentioned Northavon as being “instructive” on the point.
[30] Later in the same judgment, he referred to an opinion given by Mr Fitzgerald QC to the county council. Mr Fitzgerald had commented in his opinion, at p298 [66]:
In the West Bowers case there were two separate activities, separated both in time and in their nature. At Thrislington… there is no separation in time between the burning of SLF and the use of heat in the production process.
The Master of the Rolls commented, at p298:
67. In speaking of the activities being separated in time in West Bowers, Mr Fitzgerald was echoing a comment of Sir John Donaldson MR in that case. Sir John had drawn a distinction between the removal of the [gravel] and subsequent making watertight of the reservoir. I do not consider that it is correct to analyse West Bowers as involving two separate and sequential activities. The operation of removing gravel was simultaneous with the operation of creating the reservoir. Nourse LJ correctly accepted the premise that there was one indivisible process. The true basis for distinguishing West Bowers is that in that case [there were two aspects of the operation, each of which had different consequences according to] the express terms of the planning regulations so that each had to be separately considered. There is no requirement to give consideration separately to the operation of adding SLF to the fuel used to apply heat in the course of the lime making process.
This part of the Master of the Rolls’ judgment was expressly approved by Pill LJ ([99] — the reference there, I think, must be to [67], rather than to [66]). It is significant also that Sir Martin Nourse, who had given the leading judgment in West Bowers, agreed with both judgments.
[31] It is unnecessary for the purposes of the present case to go any further into the complex facts of Durham. Suffice to say, it confirms that the decision in West Bowers was closely related to the facts of that case and the particular statutory context. It cannot be taken as supporting any general proposition that the purpose of particular activities is irrelevant in their categorisation for planning purposes. Furthermore, it shows that the mere fact that two activities are categorised separately for planning purposes is not inconsistent with their being regarded as still part of “one indivisible process”.
[32] Returning to the present case, as I said, I am not convinced that West Bowers assists the argument. Whether the extraction activity is sufficient in scale and nature to be regarded as a “mineral operation” is beside the point. The assumed permission is to construct the road. The extraction of minerals necessary for the cutting is part of that indivisible process. Conversely, even if the extraction is regarded as insufficient in scale to constitute a mineral operation, it is none the less part of the permitted process of building the road. Accordingly, if Mr Nardecchia |page:5| is correct that the hypothetical purchaser could implement the permission in part only, so as to carry out the extraction without building the road, then he could do so even if the extraction is purely ancillary.
[33] Accordingly, it seems to me that the discussion of West Bowers is largely irrelevant to Mr Nardecchia’s argument. (For the same reason, I do not find it necessary to comment on his arguments relating to the tribunal’s finding, at para 172, that the extraction operations were no more than “cut and fill” operations, in the sense used by Lord Donaldson in West Bowers: see [26] above.) The real question is that raised by the subsequent propositions: in summary, is the assumed permission one that would permit the owner or the hypothetical purchaser to carry out the extraction operation without any obligation to complete the road? In my view, the answer is clearly “no”.
[34] Before the tribunal, a number of technical issues of planning law were discussed, and I will mention some of them later in this judgment. However, in my view, the main objection to Mr Nardecchia’s argument is that it loses any touch with reality. What he has is an assumed permission to build a disembodied section of road leading to nowhere. The question is whether an owner, going into the market with this assumed permission, would find a mineral operator prepared to pay £86,000 on the basis that it would permit him to extract the minerals without building the road. Not surprisingly, there was no direct evidence of what view the market would take of such a permission, because such permissions do not exist in the real world.
[35] At the end of its decision, having analysed carefully the technical arguments, the tribunal concluded:
One final point. Logic and common sense determine that the claimant’s case should fail. … (The claimant’s) case weighed heavily upon an assumption that I consider to be manifestly unsustainable, and it appears to me, that notwithstanding the planning arguments, the realities of the situation have been substantially ignored.
I understand him there to have been expressing what Peter Gibson LJ referred to, in a similar context in the rating field, as “the principle of reality” (see Hoare (VO) v National Trust [1998] RA 391*, at p415), or, as Lawton LJ put it in a case under the Land Compensation Act 1961:
It is important that this statutory world of make-believe should be kept as near as possible to reality
(Trocette Property Co Ltd v Greater London Council [1974] RVR 306†, at p311.)
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* Editor’s note: Also reported at [1999] 1 EGLR 155
† Editor’s note: Also reported at (1974) 231 EG 1031
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The planning assumptions in the 1961 Act are intended to facilitate the task of arriving at fair compensation. With or without permission for a road, the claimant had no expectation in the real world of realising the value of his minerals in the foreseeable future, for the reasons set out in the decision on the section 17 application, and there is no reason for him to be compensated for its loss.
[36] The same result is achieved by a more detailed legal analysis. The key point in the argument is proposition 5, that it would be lawful for a mineral excavator to excavate and remove the minerals and leave the construction of the road to someone else. Mr Nardecchia has to say that this would apply even if the mineral operator knows that there is no prospect in fact of the road being completed. This was acknowledged by the claimants’ own expert, Mr John Salmon, whose evidence, as recorded by the tribunal, was as follows, at para 27:
Knowing that, in the no-scheme world, there would be no point in constructing a 204m section of road that would not connect with any road to the North or South, the mineral operator would be aware that there would be no market for the land for a road construction company.
[37] It is here that Mr Nardecchia prays in aid what Nourse LJ said in West Bowers. If the purpose of the operation is irrelevant, then the mineral operator could carry out the extraction regardless of whether there is any prospect of the purpose of the permission being achieved. The extraction activity remains the same in scale and nature, even if no road is ever built.
[38] However, as has been seen, the premise is wrong. Purpose is not irrelevant, as Durham makes clear. It is, of course, possible to envisage a case where a road contractor had commenced extraction for a road, and then for genuine reasons (such, perhaps, as bankruptcy) was forced to abandon it. There might then be an issue whether what had been done had been in accordance with the permission. That is not this case. Here, one has to envisage a mineral contractor commencing the work of extraction in circumstances where, viewed subjectively or objectively, there was no prospect of the road ever being built. A court or planning inspector would have no difficulty, in such a case, in holding that the work was not within the permission; the permission is for the “indivisible process” of building the road.
[39] That proposition hardly requires authority. However, the tribunal found support in the decision of the divisional court in Copeland Borough Council v Secretary of State for the Environment (1976) 31 P&CR 403*. That case concerned an enforcement notice relating to a dwelling-house, which had been built with a roof covering of the wrong colour. The authority had described the breach of planning control by reference to the construction of the roof, rather than the construction of the house as a whole. Under the very technical rules then applying to enforcement notices (before the reforms introduced, inter alia, by the Planning and Compensation Act 1991), this was held to be an error sufficient to require the enforcement notice to be quashed. The court held that the operation of building the house was to be treated as single and indivisible. Lord Widgery CJ said, at p406:
For my part, and in the absence of authority, I would have had no hesitation in saying that in a case of this kind where there is to be new development on land previously undeveloped one ought, subject to any special provisions in the planning permission itself, to treat the operation as a single one, and I test it for myself in this way. The purpose of all town and country planning is to preserve amenities and the sensible and attractive lay-out of properties, and if the appellants are right in this case and the grant of a permission of this kind is really the grant of multiple permissions to install brick by brick it would mean that an eccentric land developer could produce most extraordinary results on his land, results which might perfectly well redound to the disadvantage of others, without in any way falling foul of this legislation; he could leave holes in the walls of his house; he could leave half the roof off; he could do all sorts of eccentric things of that kind, and when he was tackled about it by the planning authority he would say: “But every brick is in accordance with the plans; at no point have I done anything which the plans did not authorise”. If it were asked: “What about all the vacant spaces which the plans intended to be filled?” the answer would be: “There is no breach of planning control there. There is nothing done there and if you do nothing you cannot be wrong.”
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* Editor’s note: Also reported at [1976] 2 EGLR 131
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Although one may have sympathy for the authority in that case, the legal analysis is, with respect, clearly correct. In the same way, in this case the assumed permission is for the construction of the road, not for a series of discrete operations involved in that process.
[40] I see no purpose in extending this judgment by referring to all the other detailed points discussed in the tribunal’s decision, since they do not affect the result. I would, however, comment briefly on a point made in relation to section 5(4) of the 1961 Act, since it may be relevant in other cases. This provides:
Where the value of land is increased by reason of the use thereof or of any premises thereon in a manner which could be restrained by any Court, or is contrary to law… the amount of that increase shall not be taken into account.|page:6|
In reliance upon that rule, the tribunal said, at para 176:
Extraction of the stone other than for the purposes of road building would have been unlawful, and so any increase in value that might arise from such use must be left out of account.|page:6|
Mr Nardecchia countered that by relying upon the distinction between operations and uses made in the definition of development for the purposes of the Town and Country Planning Act 1990 (see section 55); this definition of “development” is also adopted by section 39(1) of the Land Compensation Act.
[41] As the tribunal rightly observed, however, section 5(4) reproduces r 4 of the rules first enacted in the Acquisition of Land Act 1919, and long pre-dates the introduction of modern planning control in the Town and Country Planning Act 1947. Like the tribunal, I see no reason to limit the ordinary meaning of the term “use”, which is not itself defined in the 1961 Act, by reference to a definition that was adopted for other purposes. In ordinary language, mineral working is a use of land, even if it is treated as an “operation” in the context of planning control. The contrary view would produce an anomalous distinction in the application of r (4), for which Mr Nardecchia was unable to identify any conceivable purpose. In any event, quite apart from r (4), there is no reason to think that the possibility of carrying out an unlawful mineral operation would have added to the value of the land in any way.
[42] For these reasons I would dismiss this appeal and confirm the tribunal’s award.
Potter LJ said:
[43] I agree.
Sir Andrew Morritt V-C said:
[44] I also agree.
Appeal dismissed.