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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Homes and Communities Agency v JS Bloor (Wilmslow) Ltd [2017] UKSC 12 (22 February 2017) URL: http://www.bailii.org/uk/cases/UKSC/2017/12.html Cite as: [2017] UKSC 12 |
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[2017] UKSC 12
On appeal from: [2015] EWCA Civ 540
JUDGMENT
Homes and Communities Agency (Respondent) v J S Bloor (Wilmslow) Ltd (Appellant)
before
Lord Neuberger, President
Lord Clarke
Lord Sumption
Lord Carnwath
Lord Hughes
JUDGMENT GIVEN ON
22 February 2017
Heard on 12 January 2017
Appellant Martin Kingston QC Richard Kimblin QC (Instructed by DWF LLP) |
|
Respondent Michael Humphries QC Alexander Booth QC (Instructed by Eversheds LLP) |
LORD CARNWATH: (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Hughes agree)
Introduction
The facts
The law
The no-scheme rule
8. The appeal raises questions concerning the so-called Pointe-Gourde rule (Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565), or “no-scheme” rule: that is, the rule that compensation for compulsory acquisition is to be assessed disregarding any increase or decrease in value solely attributable to the underlying scheme of the acquiring authority. The law is to be found in the Land Compensation Act 1961 as explained and expanded by judicial interpretation. The particular issue concerns the relationship between the general provisions for the disregard of the scheme, and the more specific provisions relating to planning assumptions.
9. The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (“Waters”), Lord Nicholls of Birkenhead spoke of the law as “fraught with complexity and obscurity”. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code (Towards a Compulsory Purchase Code (1) Compensation Law Com No 286 (Cm 6071)). Since that report aspects of the rule have been subject to authoritative exposition by the House of Lords in Waters itself, and more recently in Transport for London v Spirerose Ltd [2009] 1 WLR 1797; [2009] UKHL 44 (“Spirerose”).
10. Although the Law Commission’s recommendations for a complete new code were not adopted by government, limited amendments to the 1961 Act in line with their recommendations were made by the Localism Act 2011 section 232 (relating to planning assumptions) Further proposed amendments, dealing with the no-scheme principle more generally, are currently before Parliament in the Neighbourhood Planning Bill 2016-17. The purpose of the latter is said to be that of “clarify[ing] the principles and assumptions for the ‘no‐scheme world’, taking into account the case law and judicial comment” (Explanatory Notes para 70). The present appeal falls to be decided by reference to the 1961 Act as it stood before the 2011 amendments.
Disregards
“1 … no account shall be taken of any increase or diminution in the value of the relevant interest which, in the circumstances described in any of the paragraphs in the first column of Part I of the First Schedule to this Act, is attributable to the carrying out or the prospect of so much of the development mentioned in relation thereto in the second column of that Part as would not have been likely to be carried out if -
(a) (where the acquisition is for purposes involving development of any of the land authorised to be acquired) the acquiring authority had not acquired and did not propose to acquire any of the land; …”
Part I of the First Schedule sets out in tabular form a number of “cases” with the corresponding “development”, the prospect of which is to be left out of account. The first case is:
“Where the acquisition is for purposes involving development of any of the land authorised to be acquired.”
The corresponding development is:
“Development of any of the land authorised to be acquired, other than the relevant land, being development for any of the purposes for which any part of the first-mentioned land (including any part of the relevant land) is to be acquired.” (emphasis added)
Although this paragraph in terms applies the statutory disregard to land “other than” the “relevant land”, that is the land subject to acquisition, the Pointe Gourde rule has been treated by the court as requiring the same approach to be applied also to the subject land itself (see Camrose v Basingstoke Corpn [1966] 1 WLR 1100, Waters para 52. Note that “relevant land” is defined by reference to the notice to treat, actual or, in the case of a vesting declaration, “constructive”: section 39(2); Compulsory Purchase (Vesting Declarations) Act 1981, section 7).
Planning assumptions
14. Section 16(3) applies to land forming part of an area shown in the current development plan as an area allocated primarily for a range of two or more uses specified in the plan. It was common ground that the reference land was within such an area. It is to be assumed that planning permission would be granted for development for purposes falling within that range of uses, which is development for which planning permission “might reasonably have been expected to be granted” in respect of the reference, if no part of that land “were proposed to be acquired by any authority possessing compulsory purchase powers” (section 16(3)(b), (7)). For the purpose of this exercise it has to be assumed that the scheme of acquisition in respect of the reference land was cancelled on the date of the notice to treat (the “cancellation assumption”: see (Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307).
The scope of the no-scheme rule
“… It operates to limit the scope of any assumed planning permission to a counter-factual scenario in which the KBP scheme has been cancelled in respect of, but only in respect of, the reference land: ie as if the landowner had succeeded at the public inquiry in persuading the Inspector to omit Plots 13 and 14 from the CPO. There is no requirement to assume that the CPO would not have gone ahead in respect of the remainder of the order land or that the development of the KBP would not have proceeded …” (para 26)
By contrast, as noted above, section 6 taken with the Pointe-Gourde rule itself requires disregard of the scheme of acquisition in relation to the whole of the order land.
The proceedings below
The Upper Tribunal
19. The tribunal (HH Judge Mole QC and Paul Francis FRICS) began by summarising the law in respect first of “planning assumptions” and secondly of “disregards”, in terms which have not been materially challenged. They mentioned the importance of not “eliding” the two stages (para 46). They noted (following the Upper Tribunal decision in Thomas Newall Ltd v Lancaster City Council [2010] UKUT 2 (LC)) that for the purposes of sections 14-16 the cancellation assumption was to be applied, not to the whole scheme, but to only so much of it as affected the reference land (paras 42-43). Under the heading “disregards” they set out the statutory provisions, noting that (in the light of Waters) the no-scheme principle was to be treated as extending to the subject land as well as to other land within the same acquisition (paras 47-48).
“53. Both parties focused in their evidence and submissions upon the prospects of a purchaser obtaining a residential permission on the reference land in those two different situations. The ‘cancellation universe’ assumed that the compulsory purchase orders on the reference land had been cancelled but that access could be obtained through the KBP. In that situation it was broadly agreed that the reference land might indeed have some potential hope value for residential development.
54. The claimant said it would be substantial. The acquiring authority maintained that any such hope value would be much reduced, probably to nil, because the planning authority would not be prepared to grant a permission that did not conform with the master plan requirements for phasing, which would delay residential development, or make a very substantial financial contribution to the infrastructure of the KBP. Finally, the acquiring authority submitted, any such value that remained should be disregarded as a matter of law.
55. The second situation was postulated in order to consider what value the reference land might have if the law required that the whole of the KBP proposals had to be left out of consideration. That situation was chiefly one where permission was being sought for a development with access from Buckley Hill Lane, although we do not think the claimant completely abandoned the possibility that in the ‘no KBP’ universe a purchaser would still contemplate the development of a business park by another scheme.”
21. There followed a lengthy review and discussion by the tribunal of the evidence and submissions relating to both planning assumptions and the disregards (paras 56-100). For present purposes it is sufficient to refer to the critical findings, first relating to the application of the “cancellation assumption” under section 16, and secondly to the wider considerations under section 6.
22. As to the former the assumed position on the ground was described as follows:
“The cancellation assumption requires the Tribunal to imagine all the facts on the ground and all the planning permissions, plans and potentialities as they were at the valuation date but to assume that the compulsory purchase order on the reference land, and only on the reference land, had been cancelled. That, of course, can have a significant effect upon some of the planning assumptions. In the present case it is to be assumed that the KBP had been begun in accordance with the Master Plan. The junction with the motorway, the central spine road and part of the southern loop road were built or in the course of construction, and some development had already begun. Part of the northern loop road at the western end had also been started. It was too late for the developer to pull out of its commitments to build out the KBP according to the master plan.” (para 80)
23. Having reviewed a number of suggested alternatives the tribunal concluded:
“89. We think that simply on the cancellation assumption there would have been a reasonable prospect of some residential development on the reference land with access from a northern loop. However, it would seem that such an increase in the value of the relevant interest would have to be disregarded. It would be unequivocally attributable to the development of part of the land authorised to be acquired other than the relevant land, and it would not have been likely to be carried out in the absence of the acquiring authority’s proposals to acquire the land for such a road.”
“The only development that would produce an increased value on the reference land which would not have to be disregarded under the statute would be a ‘likely’ development that took no part of the ‘other land’. In other words that would have to be a development which took its access from the existing Buckley Hill Lane.” (para 93)
The statute required to be left out of account “any increase or diminution” (their emphasis) attributable to the acquisition of the other land for the purposes of the order. For this purpose it was necessary “to visualise a ‘no KBP’ universe” (para 94).
27. They concluded on this aspect:
“97. It was evident from our site visit that there has been development off Buckley Hill Lane in the comparatively recent past on its eastern side. The long history of the identification of the land of which the reference land forms part for substantial development would weaken a PPG 3 greenfield objection to a residential development on the west side of the lane, incorporating the Nib. It was agreed between the highway witnesses that a substantial number of houses could take an access on to Buckley Hill Lane although the witnesses differed as to whether the maximum would be 60 or 74. For the reasons we have just given we think we should give less weight, in considering the prospects of this hypothetical permission, to an objection based upon policy EC/6 or emerging policy EC/7 and no weight to a highway objection based upon traffic flows from the KBP development. On the other hand the motorway junction itself was a fact on the ground at the valuation date. It was not part of the compulsory purchase order and it does not seem to us that it would be right to extend the definition of the scheme to include it.
98. Taking all those matters into consideration and doing the best we can to make sense of a number of assumptions of varying solidity, in our judgement the hypothetical purchaser would have considered that the reference land would have had some extra hope value of a permission for residential development. However we would not put a percentage better than 50/50 on the chances of success.”
The Court of Appeal
“32. HCA’s primary submission is that the UT has done the very thing which … they had said was to be avoided: namely eliding the identification of the planning status of the reference land with its valuation. They submit that once the planning status is determined by the application of sections 14-16 of the 1961 Act the valuation exercise has to proceed on that basis and that the application of the section 6 disregards does not involve any further alteration in the assumed planning permissions or policies which have previously been determined to apply …”
“Mr Kingston QC (for the claimants) submits that the [Upper Tribunal] was right not to assume the total abandonment of policy EC/6 or emerging policy EC/7 but to regard them as modified to the point at which a planning application for an independent development via the Nib would be assessed on its own planning merits relative to location and housing need. Mr Humphries’ primary position remained that the application of the disregards did not entitle the [Upper Tribunal] to assume any modification of the planning status determined in accordance with sections 14-16.” (para 37)
“40. In my view, the [Upper Tribunal] was right to hold that the planning status of the reference land did have to be modified for the purposes of valuation in accordance with the ‘no KBP universe’ methodology. But it was wrong to do so by simply downgrading the strict application of the existing and emerging development plan but otherwise leaving the allocation of the land for development in place. What it should have done was to consider the planning potential of the reference land without regard to the development scheme and its underlying policies and therefore its effect on value. In that no scheme world it should have examined what wider no scheme specific policies (including but not necessarily limited to PPG3) would have applied to a planning application at the valuation date had there been no KBP and so struck a fair balance between the public interest and those of the claimant in relation to the valuation of the reference land. The assumption relied on in both parties’ submissions that policy EC/6 and developing policy EC/7 continued to apply was based on a wrong application of section 6(1) and the valuation calculated on that basis must be set aside.”
He accordingly held that the assessment of compensation should be remitted to the Upper Tribunal “to be decided without regard to the scheme of development as defined in this judgment” (para 44).
“… once one has gone through the section 14 exercise the question of the planning status of the reference land must be taken to be immutably fixed when calculating the valuation of the land for the purposes of compensation.” (para 47)
However, he was unable to support the tribunal’s reasoning:
“52. In the present case … the [Upper Tribunal] erred by still giving weight … to the planning policies in relation to the KBP site, including in particular the part of the historic, current and emerging policies to promote the development of a business park which contemplated that there should be residential development on the site as part of that development (what the [Upper Tribunal] called ‘the extensive policy support for residential development on part of the reference land’: para 96). In this respect, the [Upper Tribunal] failed to apply the section 6(1) disregard correctly and appears to have overvalued the reference land for the purposes of compensation.”
Jackson LJ agreed with both judgments.
Issues in the appeal
Discussion
“… not only the present purpose to which the land is applied, but also any other more beneficial purpose to which in the course of events at no remote period it may be applied.” (para 65, citing R v Brown (1867) LR 2 QB 630, 631)
Since the introduction of general planning control in 1947, and the restoration of market value compensation in the 1950s -
“… development value has been an important element in the assessment of compensation, because the value of land in the open market may depend on what planning permission exists or could be obtained for development on the land.”
In Spirerose itself there was no suggestion that the specific statutory provisions relating to planning assumptions precluded account being taken under the general law of the prospect of permission for valuable development. The only issue was whether such a prospective permission should be valued as a certainty (as the tribunal had held) or merely as a hope, as the House ruled.
39. It is in any event well-established that the application of the Pointe Gourde rule itself may result in changes to the assumed planning status of the subject land. Thus in Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426, where land was acquired for an expressway, the Privy Council accepted that compensation should reflect the fact that but for the expressway project permission would have been obtained to develop the whole area for a drive-in shopping centre (p 433). That case, although decided under a different statutory code, has long been accepted as authoritative in this jurisdiction. It was cited without criticism in Spirerose (see paras 110ff per Lord Collins). Nor is there anything in section 6 to indicate that a more restrictive approach should be applied under the statutory disregards. In saying that the two stages should not be “elided” (para 19 above), the tribunal as I understand them were doing no more than emphasising the difference between the statutory tests.
42. As it happens, at an earlier stage of the proceedings in Spirerose, a similar argument had been advanced for the claimant by Mr Barnes QC (who appeared also in the House of Lords), but it was not pursued in the higher courts. The Court of Appeal commented ( [2008] EWCA Civ 1230 ; [2009] 1 P & CR 20):
“24. We mention in passing Mr Barnes’ argument before the tribunal (see para 61), not pressed in this court, that the no-scheme rule had nothing to do with planning assumptions, being ‘a principle of valuation and not planning status’. This argument was based on some comments of Lord Denning MR in Myers v Milton Keynes Development Corpn [1974] 1 WLR 696, and of Carnwath LJ in Roberts v South Gloucestershire Council [2003] RVR 43. He was right in our view not to pursue the point. The observations in Roberts were certainly not intended to support such an argument. It is also inconsistent with the reasoning of Lord Denning himself in the second Jelson case, and with one of the leading cases in the Privy Council, Melwood Units Pty Ltd v Main Roads Comr [1979] AC 426 (assumed permission for a shopping centre).”
Conclusion