Compulsory purchase – Compensation – Certificate of appropriate alternative development (CAAD) – Appellant secretary of state compulsorily acquiring four contiguous sites for same underlying scheme – Respondent landowners separately obtaining CAAD in respect of their land – Each application considered in isolation – Whether in determining CAAD application for particular parcel of land decision-maker might take into account applications or decisions relating to development of other land – Appeal allowed
The respondents owned four contiguous sites (close to the main campuses of two universities) which were compulsorily acquired by the appellant secretary of state for the construction of a new station in Birmingham for the HS2 high speed railway line between London and the West Midlands.
Each of the respondents obtained a certificate of appropriate alternative development (CAAD) under section 17 of the Land Compensation Act 1961 for a mixed-use development including purpose-built student accommodation. Each application was considered in isolation and restricted to development of the particular site and did not take account of development on the other three sites.
A preliminary issue arose whether, in determining an application for a CAAD under section 17, the decision-maker determining the development for which planning permission could reasonably have been expected to be granted for the purposes of section 14(4)(b) of the 1961 Act, could take into account the development of other land, where such development was proposed as appropriate alternative development in other CAAD applications arising from the compulsory acquisition of land for the same underlying scheme.
The Court of Appeal upheld the Upper Tribunal’s decision that the decision-maker had to treat such applications and decisions as what they were, and not notional applications for, or grants of, planning permission. However, section 14 of the Act required the decision maker to assume that the scheme of development had been cancelled on the launch date (the cancellation assumption). It followed that no CAAD applications could have been made pursuant to section 17 of the Act in the counterfactual scenario posited by the statute (the cancelled scheme world). The consequence of the cancellation assumption was that the decision-maker was not entitled to take into account other CAAD applications or decisions relating to the development of other land: [2021] EWCA Civ 651; [2021] EGLR 32. The appellant appealed to the Supreme Court.
Held: The appeal was allowed.
(1) It was clear from the language of section 14 and the regime it set out that it was not legitimate to consider whether planning permission for development either for the land in issue or for any other land might have been granted in the notional period between the deemed cancellation of the scheme “on the launch date”, pursuant to section 14(5)(a), and the valuation date. For planning permissions which existed in the real world (section 14(2)(a)), the relevant date to see if there were any in force was the valuation date. No process of speculation about the notional period between the cancellation date and the valuation date was authorised. The reality principle precluded any such speculation: Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307; [2000] PLSCS 33 considered.
Section 14 was drafted to specify a reasonably certain process of assessment of the value of the land in issue, focusing on circumstances as they actually existed (subject to the cancellation assumption) at the valuation date and based on an objective set of circumstances as known to the market at that date. Parliament intended that there should be reasonable certainty in the approach to be adopted, having regard to the body which could be called on under section 17 to apply it (the local planning authority).
(2) Under the Land Compensation Act regime, the grant of a CAAD was not intended to operate as a proxy for what might have happened as a matter of fact in the cancelled scheme world. Neither CAAD applications nor CAAD decisions were material planning considerations. They played no role whatever in the real planning world. A CAAD did not in fact authorise the carrying out of development on the land in issue. It established a purely notional set of circumstances which were relevant only for the purpose of calculating the compensation payable in relation to the land in issue.
The assessment of what would qualify as appropriate alternative development for any particular site would depend upon the evidence available in relation to that site, including matters such as whether there was planning permission actually in force for such development on other land and whether there was available any other land ripe for development which appeared more suitable and which could reasonably be expected to be brought forward to meet that need.
(3) CAAD applications in respect of other land, along with the material submitted in support of them, might have some relevance in showing how the market would expect landowners holding land ripe for development to seek to develop their land. Such landowners would be expected to act to maximise their returns by focusing development proposals for their land on the most profitable forms of development likely to be appropriate for the area in question. Similarly, landowners who made CAAD applications were likely, for ordinary reasons of self-interest, to press for a CAAD for patterns of development which would reflect the highest contribution to the value of their land.
Information in CAAD applications and information in planning applications in the real world were both forms of real world information. The former was information derived from the behaviour of landowners in the real world of making applications to seek compensation under the LCA regime. The extent to which information in a CAAD application or information from planning applications in the real world provided material capable of providing analogies relevant to an assessment of such matters for the purposes of the construction of the counterfactual world in section 14(4)(b) would depend on how closely the circumstances in each case were comparable. That would be a matter for the assessment of the local planning authority, or the UT, subject to the usual constraints imposed by general public law.
(4) The appeal would be allowed to the limited extent that the declaration made by the UT would be restored: In determining the development for which planning permission could reasonably have been expected to be granted for the purposes of section 14(4)(b), the decision maker was not required to assume that CAAD applications or decisions arising from the compulsory acquisition of land for the same underlying scheme had never been made. The decision maker had to treat such applications and decisions as what they were, and not as notional applications for, or grants of, planning permission. They were not material planning considerations. Subject to those boundaries, it was for the decision maker to give the applications and decisions such evidential weight as they thought appropriate.
Timothy Corner KC and Guy Williams KC (instructed by DLA Piper UK LLP, of Birmingham) appeared for the appellant; James Pereira KC and Caroline Daly (instructed by Town Legal LLP) appeared for the first respondent; David Elvin KC and Richard Moules (instructed by Bryan Cave Leighton Paisner LLP and Ashurst LLP) appeared for the second and third respondents; Richard Glover KC (instructed by Mills & Reeve LLP, of Cambridge) appeared for the fourth respondent.
Eileen O’Grady, barrister
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