Compulsory purchase – Compensation – Land Compensation Act 1961 – No-scheme rule – Claimant seeking compensation on assumption that planning permission would have been granted for development in no-scheme world – Five development options put forward – Correct approach under statutory provisions and no-scheme rule – Preliminary issues determined
The claimant claimed for compensation in respect of the compulsory acquisition of its land by the acquiring authority for the purposes of an extending the London Underground system. The claimant’s four-storey commercial premises lay within a mixed-use area and adjoined properties that had been the subject of a compensation decision of the Lands Tribunal, upheld by the Court of Appeal, in Spirerose Ltd v Transport for London [2008] RVR 12 (LT); [2008] EWCA Civ 1230; [2009] RVR 18. In that case, the Court of Appeal held that compensation for the compulsory acquisition of land could be assessed on the assumption that planning permission would have been granted if it was probable that, in the no-scheme world, such permission would have been granted, even though that assumption was not required to be made under sections 15 and 16 of the Land Compensation Act 1961.
In the instant case, the claimant based its compensation claim on five development options, which, it contended, would have received planning permission in the no-scheme world. Each of these involved a change of use to Class B1 business use. Preliminary issues were determined as to the assumptions that fell to be made under the 1961 Act or the no-scheme rule in order to determine the development prospects as at the relevant valuation date of December 2001.
The acquiring authority contended that the section 16(2) assumptions, relating to an area allocated for a use in the “current development plan”, applied only to plans prepared under the Town and Country Planning Acts of 1947 and 1962, which made express provision for such allocation, and that they ceased to have effect for “second-generation” plans prepared under the Town and Country Planning Act 1990, such that no assumptions arose in respect of the unitary development plan (UDP) that applied to the area of the claimant’s property.
Decision: The preliminary issues were determined.
(1) Section 16(2) of the 1961 Act was not confined to development plans prepared under the 1947 and 1962 Acts. “Allocation” of an area could take place under second- and third-generation plans: this was envisaged by PPG 12 and the Town and Country Planning (Local Development)(England) Regulations 2004. However, the more limited application that section 16(2) and (3) had under the subsequent development plans, and the difficulties that could now arise in deciding whether land was “allocated”, reinforced the appropriateness of applying the “no-scheme rule” by analogy with those provisions.
(2) Whether land consisted of or formed part of “an area shown in the current development plan as an area allocated primarily for a use specified in the plan in relation to that area”, within the meaning of section 16(2), fell to be determined by examining how the relevant land was shown on the proposals map and relating that to the policies and other provisions of the plan. In the instant case, although there were policies favouring employment uses in the claimant’s area, it could not be said that the area was primarily allocated for such uses and, accordingly, the claimant’s property did not fall within an “area allocated” for such uses within section 16(2).
(3) Consequently, the question of whether planning permission might reasonably have been granted for development for the specified use fell to be determined under the no-scheme rule: Spirerose applied. The tribunal had to consider whether, as at the valuation date, planning permission would, on the balance of probabilities, have been granted, without speculating as to whether, and by whom, an application for such permission might have been made in the no-scheme world. Accordingly, where the claimant was relying on five possible development options, it did not need to show that it would have applied for planning permission in respect of each of them. There was no reason why a claimant could not advance a claim on the basis of more than one development for which it contended that planning permission would have been granted. Case management and the award of costs were sufficient instruments for dealing with a claim that put forward an unreasonable number of schemes.
(4) Where a planning permission was to be assumed, the assumption to be made was of a planning permission in force at the valuation date, not one to be granted thereafter: Purfleet Farms Ltd v Secretary of State for the Environment, Transport and the Regions [2002] RVR 203 applied.
(5) In determining the likelihood of planning permission being granted for the claimant’s land, it was not permissible to take into account the effect of the development of other land in the vicinity, since it would have been carried out in the no-scheme world: Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment, Transport and the Regions [2000] 1 EGLR 13; [2000] 11 EG 141 and Pentrehobyn Trustees v National Assembly for Wales [2003] RVR 140 applied; Spirerose and Waters v Welsh Development Agency [2004] UKHL 19; [2004] 2 EGLR 103 considered. Section 6 of the 1961 Act permitted no assumption that, in the no-scheme world, development of other land within the scheme would have taken place by the valuation date. The no-scheme rule was to be applied by analogy with the statutory provisions. Consequently, the “cancellation assumption” applied, by which the scheme for which the land was proposed to be acquired had to be assumed on the valuation date to have been cancelled, and no assumption was to be made as to what might or might not have happened in the past: Jelson Ltd v Blaby District Council [1977] 2 EGLR 14; (1977) 243 EG 47 distinguished. Thus, the physical state and use of the land in the vicinity of the claimant’s land, including the Spirerose land, should be taken to be as they were at the valuation date.
(6) Applying the above principles, it could reasonably be expected that, in the no-scheme world, planning permission would have been granted for the first two of the development options put forward by the claimant and its land was to be valued on the assumption that such permissions had been granted as at the valuation date.
Per curiam: In determining whether, in the no-scheme world, there would have been a reasonable expectation of planning permission, the question ought not to be what the actual planning authority could reasonably have been expected to decide, but whether it would have been reasonable for planning permission to be granted.
Guy Roots QC and Alexander Booth (instructed by Swinnerton Moore LLP) appeared for the claimant; Michael Barnes QC and Eian Caws (instructed by Eversheds LLP) appeared for the acquiring authority.
Sally Dobson, barrister
