Abbey Homesteads (Developments) Ltd v Northamptonshire County Council
V G Wellings QC, the President
Planning agreement — Land reserved for school purposes — Land subject to restrictive covenant — Land compulsorily acquired by education authority — Court of Appeal declares land affected by restrictive covenant in real world — Tribunal applies Pointe Gourde principle — Restrictive covenant part of scheme — Award disregards restrictive covenant in the no-scheme world
By an agreement dated June 9 1976, and made pursuant to section 52 of the Town and Country Planning Act 1971 [now section 106 of the 1990 Act], the claimant company covenanted that 1.30 ha of a larger area of land in its ownership at Balmoral Close, Towcester, Northamptonshire “shall be reserved for school purposes”. Planning permission was granted at the same time for residential development and this was carried out except on the reserved area. The acquiring authority compulsorily purchased 1.23 ha of the reserved and undeveloped land for school purposes and took possession on May 18 1984. The district council granted a certificate of alternative development for residential development on August 10 1983. Following the decision of the tribunal on a preliminary point of law, and an appeal by way of a case stated, the Court of Appeal decided ([1986] 1 EGLR 24) that the covenant in the agreement was a restrictive covenant which was intended to be permanent and declared that compensation for the land was to be determined on the basis that it was affected by the covenant.
The claimants sought £369,000 compensation contending: (1) the imposition of the restrictive covenant was part of the scheme underlying the acquisition and any diminution in value was entirely caused by the scheme and to be ignored under the Pointe Gourde principle; (2) alternatively, an indication was given on September 10 1973 that the land was or was likely to be compulsorily acquired, and under section 9 of the Land Compensation Act 1961, any depreciation is to be ignored; (3) alternatively, any diminution in value was caused not by the covenant but by the scheme operating on the covenant and inhibiting its removal. Accordingly, the effect of the scheme must be disregarded under the Pointe Gourde principle and any residual diminution attributable to the perceived cost of getting the covenant removed; (4) alternatively, if any diminution in value is not to be disregarded, then such diminution will operate to reduce the value by not more than 5%.
Planning agreement — Land reserved for school purposes — Land subject to restrictive covenant — Land compulsorily acquired by education authority — Court of Appeal declares land affected by restrictive covenant in real world — Tribunal applies Pointe Gourde principle — Restrictive covenant part of scheme — Award disregards restrictive covenant in the no-scheme world
By an agreement dated June 9 1976, and made pursuant to section 52 of the Town and Country Planning Act 1971 [now section 106 of the 1990 Act], the claimant company covenanted that 1.30 ha of a larger area of land in its ownership at Balmoral Close, Towcester, Northamptonshire "shall be reserved for school purposes". Planning permission was granted at the same time for residential development and this was carried out except on the reserved area. The acquiring authority compulsorily purchased 1.23 ha of the reserved and undeveloped land for school purposes and took possession on May 18 1984. The district council granted a certificate of alternative development for residential development on August 10 1983. Following the decision of the tribunal on a preliminary point of law, and an appeal by way of a case stated, the Court of Appeal decided ([1986] 1 EGLR 24) that the covenant in the agreement was a restrictive covenant which was intended to be permanent and declared that compensation for the land was to be determined on the basis that it was affected by the covenant.
The claimants sought £369,000 compensation contending: (1) the imposition of the restrictive covenant was part of the scheme underlying the acquisition and any diminution in value was entirely caused by the scheme and to be ignored under the Pointe Gourde principle; (2) alternatively, an indication was given on September 10 1973 that the land was or was likely to be compulsorily acquired, and under section 9 of the Land Compensation Act 1961, any depreciation is to be ignored; (3) alternatively, any diminution in value was caused not by the covenant but by the scheme operating on the covenant and inhibiting its removal. Accordingly, the effect of the scheme must be disregarded under the Pointe Gourde principle and any residual diminution attributable to the perceived cost of getting the covenant removed; (4) alternatively, if any diminution in value is not to be disregarded, then such diminution will operate to reduce the value by not more than 5%.
Held The claimants were awarded £300,000 compensation on the basis of submissions (1) and (2) above.
(1) Notwithstanding a seven-year interval between the making of the section 52 agreement and the compulsory purchase order, the agreement must have contemplated that a compulsory purchase order would or might be required; the imposition of the restrictive covenant was part of the scheme underlying the acquisition. The scheme originated with the district council, which negotiated the agreement, and was taken over by the county council. (2) The agreement itself constituted an indication within section 9 or, alternatively, the proferring of the draft agreement or the engrossment of it did so: see Jelson Ltd v Blaby District Council (1977) 243 EG 47.
The Court of Appeal was dealing with the real world, the tribunal in assessing compensation is not concerned with the real world and is unfettered by the decision and declaration of the court.
In the alternative the tribunal awarded £255,000 on the basis of submissions (3) and (4).
Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 applied.
Michael Burke-Gaffney QC and Mark West (instructed by Dickins Batty & Bidder, of Potters Bar) appeared for the claimants, and called Paul Westoby BSc, ARICS; and John Whittaker (instructed by the solicitor to Northamptonshire County Council) appeared for the acquiring authority, and called John Hodges ARICS.
