Jelson Ltd v Blaby District Council

Compensation for compulsory acquisition of a strip of land–Section 9 of Land Compensation Act 1961–Depreciation of value caused by indication of acquisition for proposed ring road–No account to be taken of such depreciation–"Pointe Gourde" principle also applicable–Full compensation based on value for development payable This was an appeal by Blaby District Council against a decision of the Lands Tribunal (V G Wellings QC) that the claimants, Jelson Ltd, were entitled to £60,000 as compensation from the council under a confirmed purchase notice for a strip of open grassed land about 2,185 ft long and 140 ft wide in a housing estate in Braunstone, Leicester. The Lands Tribunal’s decision was reported at (1974) 232 EG 93, 205. W J Glover QC and Michael Fitzgerald (instructed by Field Fisher & Martineau, agents for Dews, Welham & Co, of Leicester) appeared for the appellant council; Lord Silsoe QC and Malcolm Spence (instructed by Kingsford Dorman & Co, agents for Geoffrey Tew & Co, of Leicester) represented the respondents. Giving judgment, LORD DENNING MR said: In 1951 there was a plan to make a ring road round Leicester city. Every-one thought that it would be implemented. But 10 years later, in 1961, the plan was abandoned because it would not fit in with the new M1. So the strip of land has remained unused as a road. Now it is just an open space. It is a very long narrow strip of land about one-third of a mile long and about 140 ft wide: only about 6 acres in all. The owners have required the local council to purchase this long strip of land. They ask for £60,000 compensation. But the council say it should be only £6,000. The history starts in 1951. The whole of this neighbourhood was open land. This strip was planned to be part of the ring road. Both the strip itself, and all the land on both sides of the strip, were owned at that time by the Jelson family, and afterwards by Jelson Ltd. This strip went right through their land. Jelsons applied for planning permission to build houses on all parts of their land: (1) their land on the east of the strip; (2) their land on the west of the strip; and (3) this strip of land. In 1966, after an inquiry, planning permission was given for the land on the east and west, but not for this strip of land. It was not to be used for houses. It was to be a ring road. The Jelson family developed the land on the east in 1954. They later developed the land on the west. In making their plans, they took into account the reservation for the ring road. They planned their development accordingly. Believing that the strip would be turned into a ring road, they built the houses to face on to the proposed ring road and made service roads for these at the backs. They finished that development by about 1958. But then in 1961 everything was altered. The proposal for the ring road was abandoned. It was because the new M1 was to be built. Jelsons then wondered what was to be done about this ring road. In 1963 they made another application for planning permission for this strip. They again suggested that they should put up 60 houses on it. They got quite a long way with the proposal. They had discussions with the county planning officer and the district council. All of these agreed upon a layout for the 60 houses on the strip. But then the local residents there objected. They had their houses facing on to the strip and they objected very much to having houses built on it to block their view and disturb their amenities. The minister held another inquiry. He supported the objectors. He refused to let houses be built on this strip. So there it was. This strip of land was made sterile and incapable of development. The Jelsons then asked the local council to purchase the strip. They made the necessary application under section 129 of the Town and Country Planning Act 1962. There was another inquiry by the minister. It was held that the land was incapable of being of any beneficial use and that the council ought to purchase it. So a compulsory purchase order was made. By the provisions of the Act, there was a "deemed" notice to treat. Compensation was to be given on the basis that there was a compulsory purchase by a notice to treat deemed to be given in 1965. In point of fact the council did not enter until 1971. But nothing now turns on the date. The compensation falls to be assessed under the Land Compensation Act 1961, section 5(2), which says: "The value of the land shall . . . be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise" (at the date of the notice of entry). Viewed as a strip of land, with no building potential, the value would only be £6,000. But Jelsons say that the strip would have been worth £60,000 if it had not been subjected to the scheme for the ring road. They say it was that scheme which prevented the site from being developed for houses. They rely on the Pointe Gourde principle enunciated by Lord McDermott in Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565. That principle is that, if land is compulsorily acquired in pursuance of a statutory scheme, the compensation is to be assessed without regard to any enhancement of value due to the scheme itself. That principle applies not only to appreciation of value but also to depreciation of value. It has been so held in one or two cases. Jelsons say that the land was depreciated by reason of the scheme for a ring road and therefore they ought to be compensated for it without regard to that depreciation. Alternatively Jelsons rely on section 9 of the Land Compensation Act 1961. It says: No account shall be taken of any depreciation of the value of the relevant interest which is attributable to the fact that (whether by way of designation, allocation or other particulars contained in the current development plan, or by any other means) an15  indication has been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers. There is no doubt that that section applies here. An "indication" was given years ago that this strip of land was to be acquired by an authority possessing compulsory purchase powers. It was given by the "particulars contained in the current development plan" of 1951. Thereafter there were many "indications" given time after time during the course of the various inquiries that this strip of land was to be acquired by the highway authority in order to make the ring road. Those indications having been given, the section says that, "No account shall be taken of any depreciation of the value of the relevant interest which is attributable to the fact that . . . an indication has been given."  The question then is: was there any depreciation in value by reason of the indication?  The history shows plainly that there was. I need not go through it. The existing houses were built facing the strip because of that indication. In 1963 the application for development was refused because of the local residents. They said that their houses were built with the advantage of facing on to the ring road and it should not be built upon. Their complaint was upheld by the minister. That is why the land was depreciated. Mr Glover relied on one or two earlier cases in this court. It seems to me that they do not touch the facts of our present case. The position is, to my mind, that there is a depreciation here which is covered both by the Pointe Gourde principle and by section 9 of the Land Compensation Act. The compensation should be assessed at its value as capable of development, that is at £60,000. I would point out that, if this land had been taken for a highway, there would have been the full compensation. It does not seem fair that because of the change of plan–rendering it sterile–the owners should not get their compensation just the same. I think the Lands Tribunal were right, and I would dismiss the appeal. Agreeing STEPHENSON LJ said: The case is, to my mind, covered by section 9 of the Land Compensation Act 1961, and I am in respectful agreement with what Megaw LJ said in the case of Trocette Property Co Ltd v Greater London Council (1974) 28 P & CR 408 at p 417 [also (1974) 231 EG 1031 at p 1035]: "The phrase ‘attributable to’ is, I think, deliberately used in section 9 in order to ensure greater scope for flexibility in its application than would have been achieved by other phrases, such as ’caused by’."  The learned Lord Justice obviously did not intend to attribute to the word "attributable" a meaning which left out altogether a causal connection, but such a flexible interpretation does, I think, negative as too narrow the interpretation which Mr Glover, as I understood his submission, asked us to take of the section, namely, that it covers depreciation by giving an indication but not depreciation by what an indication had caused. It seems to me that what flowed from the indication included a reasonable response by the owners to the indication, and Lord Silsoe is therefore right in submitting that the depreciation was attributable to the indication. I therefore agree that this appeal should be dismissed. Also agreeing, WALLER LJ said: I would only add one matter. Mr Glover, on behalf of the appellants, the Blaby District Council, did at one stage indicate that it was hard that his district council might have to pay the large sum of compensation which was at issue in this case because they were being made responsible for the plans which were the plans of the county council and, as a result of the various changes, they now became the authority liable to make the payment. But it does become clear, when one looks at the facts, that had the county council been left alone in 1963 the respondents might well have been allowed to develop this land, because in the case from the Lands Tribunal appear these words: "On April 1 1963 the claimants made an application for permission to develop the reference land by erecting on it 60 semi-detached houses and three blocks of flats . . . in accordance with a layout previously agreed with the county planning officer and an official of the acquiring authority."  Because there were objections from local residents, whom I assume would be in the district of Blaby District Council, the minister called that application in, and it was as a result of calling it in that the application for planning permission was refused. So that in a sense those who had got the benefit of this land not having houses on it will be, at any rate, part of those who will have to pay the compensation. The appeal was dismissed with costs.