Compulsory purchase

Assessment of compensation

Effect of planning permission

Transport For London (London Underground Ltd) V Spirerose Ltd (In Administration)

[2009] UKHL 44

Summary

This House of Lords judgment overturned both the Lands Tribunal and Court of Appeal judgments on how compensation should be assessed having regard to the unrealised potential for development.

More detail

The courts below had applied an approach which allowed compensation to be assessed on the basis that planning permission “would” have been granted in the “no scheme” world pursuant to the principle in Pointe Gourde Quarrying & Transport Co v Sub-Intendent of Crown Lands (1947) AC 565 PC (Trin) despite the fact that none of the statutory assumptions under the Land Compensation Act 1961 applied.

The courts below had considered that the principle in Pointe Gourde could be applied as an adjunct to the statutory provisions relating to assumed planning permissions.

However the House of Lords rejected this approach and held that the valuation had to take into account the land’s potential for development and that the development potential had to be valued by discounting future uncertainties. Therefore the correct basis for assessment was on the “hope” value of the land for its unrealised potential. It was not correct to assess the value of the land on the assumption that planning permission would have been granted once it had been demonstrated on the evidence that planning permission would have been likely to have been granted.

The House of Lords considered that the statutory scheme provided for the situation that the development value of planning permission could be taken into account even where the statutory assumptions did not apply by way of s14 (3) of the 1961 Act. However it was not open to the court to establish an assumption that planning permission would be obtained by analogy with the specific statutory rules that provided for such assumptions. To do so was an impermissible exercise of statutory construction.

 

Procedure

Notice to treat - counter-notices

Anixter Ltd v Secretary of State for Transport

[2020] EWCA Civ 43

Summary

Protection of a business tenancy under the Landlord and Tenant Act 1954 and its statutory continuation does not prevent a tenancy being a “long tenancy which is about to expire” for the purposes of s.2(2) of the Acquisition of Land Act 1981; and service of a notice to treat did not require actual knowledge in order to start the clock for the counter-notice reply time limit.

Facts

The claimant landowner served material detriment counter-notices on the acquiring authority, after the acquiring authority had a served notice to treat under section 5 of the Compulsory Purchase Act 1965 and simultaneously a notice of intention to make a general vesting declaration (GVD) under section 6 of the Compulsory Purchase (Vesting Declarations) Act 1981, informing of its intention to purchase one of the claimant’s units on a business park.

Material detriment counter-notices can be given where an acquiring authority is proposing to acquire compulsorily part only of a landowner’s land holding and the landowner wants the authority either to take the whole of his land or withdraw completely from the proposed acquisition. The material detriment arises where, when compared to the property as it existed prior to compulsory acquisition, the retained portion of land is less useful or less valuable by some significant extent.

The time limit for any counter-notice to the notice to treat was 28 days from service of the notice to treat (Schd.2A of the 1965 Act). The time limit for any counter-notice to the GVD notice was 28 days from the day the owner first had knowledge of the GVD (Schd.A1 of the 1981 Act). Under s.7 of the 1981 Act, the constructive notice to treat which arises on vesting under a GVD does not apply in relation to “any person entitled to a minor tenancy or a long tenancy which is about to expire”

Of the claimant’s two counter-notices requiring the respondent to also acquire its remaining nearby premises, one was served out of time, and the respondent argued the other counter notice, although in time, was not applicable.

The dispute over extension of the time limit for the first, and applicability of the second counter-notice, had been referred to the Lands Tribunal as a preliminary issue.

Issues

  1. The meaning of “long tenancy which is about to expire” when applied to a business tenancy protected under Part II of the Landlord and Tenant Act 1954.
  2. Whether time for the service of a counter-notice under Schedule 2A to the 1965 Act starts to run when a notice to treat is delivered to the address of the holder of the interest, or only when the holder of that interest had knowledge of it.

First instance

The Upper Tribunal (Lands Chamber) had held that the landowner’s interest was a long tenancy which was about to expire, and had assumed that constructive knowledge was sufficient in relation to the notice to treat served under the 1965 Act, such that time began to run when the notice to treat was delivered. He concluded the UT had no power to extend time.

Decision on appeal

s.2(2) of the 1981 Act defines “long tenancy which is about to expire”. Here the Appellant argued that the 1954 Act effects a statutory continuation of a protected business tenancy indefinitely, so that it is not a tenancy which is about to expire, regardless of the contractual term left to run.

The Court of Appeal rejected this argument, holding at [52] that the ordinary and grammatical meaning of the words used in s.2(2) refers to how long the tenancy which was granted still has to run contractually.

The Court further commented that the assumptions to be made when assessing compensation were directed to a quite different exercise, and so did not here assist.

The Court therefore held the appellant’s land interest was a long tenancy which was about to expire within the meaning of s.2(2) and was therefore excepted from the GVD. This had the result that the relevant notice was the notice to treat served under the 1965 Act.

On the second issue, the appellant sought to argue the phrase in paragraph 5(a) of Schedule 2A to the 1965 Act which set time running for the service of a counter-notice (“beginning with the day on which the notice to treat was served”) should be read to require knowledge of the notice on the part of the recipient.

The appellant submitted knowledge was required as a matter of statutory construction, or alternatively as a consequence of necessary reading down pursuant to the Human Rights Act 1998.

The arguments on the second ground were rejected, with the Court holding at [71]-[72] that service meant delivery, and paragraph 5 could not be read as requiring any element of knowledge on the part of a person who has actually received a notice properly delivered to them. The Court declined to read down the 28-day time limit for service since it was not so short as to impair the relevant convention right.

Comment  

An interesting appeal in which the first ground was framed in a different way to how it had been formulated below in the Upper Tribunal ([2018] UKUT 405 (LC)) (summarised in this publication last January), and the second ground was an entirely new point – permitted to be raised because it was a pure point of law.

 

Back to top

Copyright © Property Law UK