Compulsory purchase – Assessment of compensation – Section 5(4) of Land Compensation Act 1961 – Lawful use certificates and planning permission covering use of acquired land as scrap yard – Claimant occupier lacking waste management licence required for certain activities – Whether value attributable to uses for which waste management licence required to be discounted as deriving from uses “contrary to law” within section 5(4) of 1961 Act – Whether value attributable to underlying lawful planning status – Preliminary issue determined in favour of claimant
In 2001, the acquiring authority compulsorily acquired an area of the claimant’s land for the purpose of constructing a slip road for the new M6 toll road. The acquired land formed half of an area that the claimant had used as a scrap yard since 1980, occupying it under a series of tenancies. The site had the benefit of lawful use certificates, granted in 1996 and 1998, declaring the lawfulness of the scrap yard use on part of the land and the storage and dismantling of scrap cars on another part. There was also a planning permission granted in 1998 for the operation of a metal recycling and scrap vehicle business and a waste transfer station over the entire area, which was covered by both certificates. Owing to increasingly stringent environmental regulation, by 1995 it had become necessary for the claimant to apply for a waste management licence in order to carry out certain of his activities on the site. However, the claimant had failed to do this.
A preliminary issue was tried as to the correct basis for assessing the claimant’s compensation for the compulsory purchase. The acquiring authority contended that no compensation was payable in respect of any value of the land that was attributable to operations for which a waste management licence was required. It submitted that since the carrying out of such operations without a licence was an offence contrary to section 33(1) of the Environmental Protection Act 1990, such uses were “contrary to law”, within the meaning of section 5(4) of the Land Compensation Act 1961; any increase in value by reason of them therefore had to be discounted. The claimant argued that the scrap yard activity was lawful by reason of the planning permission and lawful use certificates, ran with the land and established its basic value, regardless of the licensing status of the particular occupier.
Held: The preliminary issue was determined in favour of the claimant.
In assessing compensation under the 1961 Act, the starting point was section 5(2), which required that the market value of the land be determined by examining all the circumstances, including the buildings and other infrastructure on it and its lawful use. Section 5(4) operated to disallow any increase in market value that flowed from a particular use that was unlawful or could be stopped, thereby reflecting the reality that no reasonable purchaser would offer extra on account of a use that it could not be confident could be sustained.
In the instant case, what was unlawful and capable of restraint was the claimant’s operation of the scrap yard without a waste management licence. That unlawful operation could not be said to have increased the value of the land over and above the value it derived from its lawful planning status and other circumstances, save perhaps so far as disturbance compensation was concerned. If, and so far as, the claim for disturbance was based on business operations that could not lawfully have been carried out without a waste management licence, then, by virtue of section 5(4), that element of compensation should not be taken into account. However, the basic market value of the land at the valuation date depended on its physical circumstances and its lawful use as a scrap yard. Whether or not the claimant was actually operating the scrap yard would not be likely to increase that basic value. Accordingly, the lawful use of the land covered by the lawful use certificates and the planning permission should be taken into account in the assessment of compensation: Hughes v Doncaster Metropolitan Borough Council [1991] 1 AC 382 and Epping Forest District Council v Philcox [2002] Env LR 2 distinguished.
Richard Kimblin (instructed by Ansons LLP, of Litchfield) appeared for the claimant; Kate Selway (instructed by the Treasury Solicitor) appeared for the acquiring authority.
Sally Dobson, barrister
