Hertfordshire County Council v Ozanne and others

Compensation for acquisition of land — ‘Ransom strip’ — Pointe Gourde principle — Rule (3) of section 5 of the Land Compensation Act 1961 — Identification of scheme — Appeal by case stated from a decision of the Lands Tribunal The dispute arose from the compulsory acquisition of a strip of land used for agricultural purposes of 1.605 hectares adjoining the south side of Thorley Lane, Bishop’s Stortford — The value of the land for agricultural purposes was agreed to be £5,500; planning permission for any alternative use19 would not have been forthcoming — North of Thorley Lane there was a substantial area allocated for residential development — The claimants, owners of the strip, contended that it was what is termed a ‘ransom strip’, ie it was required for the purpose of realigning and improving Thorley Lane as a prerequisite to the full development of the large development area to the north of the lane — The value of the strip on this basis was claimed to be £1.24m and this was the sum awarded in due course by the Lands Tribunal — The acquiring authority disputed the claim — They argued that rule (3) of section 5 of the Land Compensation Act 1961 applied — They also contended that the claim was for access value which the reference land never had in the real world and could be justified only on assumptions made in some relevant scheme world — They pointed out that the planning permission which had allowed the development to start had not imposed any conditions as to the improvement of Thorley Lane — The Lands Tribunal awarded the claimants £1.24m and the highway authority appealed by way of case stated The two issues discussed by the Court of Appeal were the application of the Pointe Gourde principle and the application of rule (3) of section 5 of the 1961 Act — The tribunal decided that it was immaterial that the planning permission had not imposed any condition as to the southern access — They took the view that, although there were various means of access available, the only satisfactory practical solution was the improvement and realignment of Thorley Lane on much the same lines as had been carried out — The tribunal therefore found that in the no-acquisition world there existed a market for the land as a ransom strip — The tribunal considered that in consequence it was unnecessary to go further into the submissions on law or fact as to the existence and extent of any scheme — The Court of Appeal disagreed with this conclusion — It was impossible to say that in the imaginary no-acquisition world the land had a value as a ransom strip unless the scheme were identified — The tribunal had failed to address the essential factual question of the scheme which underlies the Pointe Gourde principle — For this reason the reference would have to be remitted to the tribunal The court agreed with the tribunal in holding, although on different grounds, that rule (3) of section 5 of the Land Compensation Act 1961 did not apply. For the reason mentioned above, however, the appeal was allowed and the reference remitted to the tribunal. The following cases are referred to in this report. Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478; [1978] EGD 533; 248 EG 49, [1978] 2 EGLR 89; [1979] JPL 25, CA Stokes v Cambridge Corporation (1961) 13 P&CR 77; [1961] EGD 207; 180 EG 839, LT Wilson v Liverpool Corporation [1971] 1 WLR 302; [1971] 1 All ER 628; (1971) 22 P&CR 282; [1971] EGD 144; 217 EG 987, CA This was an appeal by case stated by Hertfordshire County Council from the decision of the Lands Tribunal (Mr C R Mallett FRICS) awarding compensation in the sum of £1.24m to the claimants (present respondents), P J Ozanne, M J Wilson and Rothschild Trust Co (CI) Ltd, trustees of the Boyd Gibbins Family Trust, in respect of the compulsory acquisition of a strip of land, of 1.605 hectares, adjoining the south side of Thorley Lane, Bishop’s Stortford. The decision of the tribunal was reported at [1988] 2 EGLR 213; [1988] 36 EG 195 and 37 EG 123. Michael Rich QC and John Howell (instructed by the solicitor to Hertfordshire County Council) appeared on behalf of the appellant council; Matthew Horton QC and S Head (instructed by Berwin Leighton) represented the respondents. Giving the first judgment at the invitation of FOX LJ, MANN LJ said: This is an appeal by way of case stated from a decision of the Lands Tribunal (C R Mallett Esq FRICS) dated March 2 1988. The decision was made on a reference by P J Ozanne, M J Wilson and Rothschild Trust Co (CI) Ltd, who are the trustees of the Boyd Gibbins Family Trust. By their reference, the claimants sought the determination of the amount of compensation payable to them by the Hertfordshire County Council in its capacity as highway authority, consequent upon the compulsory acquisition of the freehold estate in 1.605 hectares of agricultural land adjoining the south side of Thorley Lane, Bishop’s Stortford. The acquisition was made under the East Hertfordshire District Council (Thorley Lane, Bishop’s Stortford) CPO 1977. That order was in favour of the district council (who were, as from April 1 1974, the successors of the Bishop’s Stortford UDC), and authorised the acquisition of land for the construction of a new highway from the existing junction of Thorley Lane with the A11 trunk road, to a point to the west thereof. In seeking and obtaining the order, the district council was acting in pursuance of powers delegated to it by the highway authority. Notice of entry was duly given, and entry occurred on or about March 6 1978. The case now before this court was stated at the request of the Hertfordshire County Council. North of Thorley Lane there have been, since 1971 and 1972, substantial areas allocated for residential development. The areas were at one time in five separate ownerships but subsequently became owned as to part by the former Bishop’s Stortford Urban District Council and as to the other part by Rialto Properties Ltd. It seems always to have been common ground that development of at least the southern part of the allocated areas could not be effected without some form of improvement to, or diversion of, Thorley Lane. The case for the claimants was that that improvement could not be effected without an acquisition of the subject land. Accordingly, say the claimants, by reference to Stokes v Cambridge Corporation (1961) 13 P&CR 77*, they held a ransom strip whose open market value was enhanced above its agricultural value (agreed to be £5,500) by what the developers would pay in order to secure the road improvement which was necessary. *Editor’s note: Reported also at [1961] EGD 207; 180 EG 839. On March 25 1974 the Hertfordshire County Council granted outline planning permission for the development of what is conveniently described as the Thorley Development Area (the ‘TDA’). That permission did not contain any condition in regard to the improvement of Thorley Lane. The absence of condition, it could be argued, took away the ransom value thought to be enjoyed by the claimants. That value was £1.24m, and that was the sum awarded by the tribunal. The law by reference to which this appeal is to be determined is not in dispute. The law is conveniently to be found in the judgments of Lord Denning MR and Widgery LJ in Wilson v Liverpool Corporation [1971] 1 WLR 302 at pp 309B and 310A. Widgery LJ (as he then was) said at p 310A: Whenever land is to be compulsorily acquired, this must be in consequence of some scheme or undertaking or project. Unless there is some scheme or undertaking or project, compulsory powers of acquisition will not arise at all, and it would, I think, be a great mistake if we tended to focus our attention on the word ‘scheme’ as though it had some magic of its own. It is merely synonymous with the other words to which I have referred, and the purpose of the so called Pointe Gourde rule is to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition. The extent of the scheme is a matter of fact in every case, as is shown by the decision in Fraser v Fraserville City [1917] AC 187, to which Lord Denning MR has referred. It is for the tribunal of fact to consider just what activities — past, present or future — are properly to be regarded as the scheme within the meaning of this proposition. The Pointe Gourde principle must operate to prevent a scheme enhancing value and equally to prevent the scheme diminishing value. It is to be remembered that a scheme is a creature of evolution (see Lord Denning MR [1971] 1 WLR 302 at p 309D). It is also to be remembered that one authority can inherit or adopt the scheme of another (see Bird v Wakefield Metropolitan District Council (1978) 37 P&CR 478 at p 487). The change from Bishop’s Stortford UDC to East Hertfordshire DC thus has no materiality. There is a separate point in this appeal concerning rule (3) of section 5 of the Land Compensation Act 1961. To that I shall come later. Mr Matthew Horton QC, for the claimants, submitted to us (and as I believe also to the tribunal) that the scheme was a scheme to deal with the consequences of the TDA, that the implementing authorities knew what was to be done and in consequence did not condition the outline planning consent with a requirement in regard to Thorley20 Lane. Accordingly, says Mr Horton, the scheme has diminished the value of the reference land by removing its ransom value, and that diminution cannot be taken into account. What was the scheme is a matter of fact for the tribunal. Both parties are agreed (and this is correct and important) that the tribunal had to make a determination as to the identity of the scheme. The issue between the parties is whether the tribunal so did. Mr Michael Rich QC for the acquiring authority said that the tribunal did not. Mr Horton submitted that the tribunal did. It is conventionally convenient in cases involving the Pointe Gourde principle to devise in the imagination what would have happened had there not been a scheme. This can then be contrasted with what has occurred, given the presence of the scheme. The tribunal, at p 9 of its decision*, said: The evidence is that in the real world both the district council and the county council were of the view that it was imperative to provide a proper access to the south and that Thorley Lane in its original state did not meet this requirement. I do not consider it material that the 1974 planning permission did not impose a condition as to the southern access because by that time the district council had a controlling interest in the consortium and the county council had assumed responsibility for providing the southern access. In these particular circumstances it was unnecessary to impose conditions in the planning permission. On the evidence, I am left with the view that, although there were various means of access available, the only satisfactory practical solution was the improvement and realignment of Thorley Lane on much the same lines as has in fact been carried out. Therefore I find that in the no-acquisition world there existed a market for the reference land as a ransom strip. *Editor’s note: See [1988] 2 EGLR 213 at p 216K. Mr Horton relied upon this passage. On p 10 of the decision, the member said this under the heading ‘The Scheme’: It is unnecessary for me to go further into the submissions on law and fact as to the existence and extent of any scheme, as I have already found that in the no-acquisition world the reference land had a value as a ransom strip. Mr Rich says that this is not sufficient. I agree with Mr Rich. It being common and indisputable that the member had to make a finding as to what the scheme was, I cannot with respect find that the member has made such a finding. I do not see how one can say that in the imagined no-acquisition world the land had a value as a ransom strip unless one identifies the scheme. Let it be supposed (and I know not whether the supposition is correct) that the scheme was not merely a scheme to deal with the consequences of the TDA but involved the TDA itself. If that were the case, would there ever have been a ransom value which was not an enhancement due to the scheme?  I fear, therefore, that the member did not, for reasons which to him seemed good but with which I cannot agree, address his mind to the factual question which he should have done. The consequence, regrettable as it is, is that the reference will have to be remitted. Mr Rich suggested that this melancholy consequence could be avoided as alternative valuations had been agreed. However, this court cannot investigate the question of what was the scheme, and that being so I do not see how remission can be avoided. Despite the elaborate and helpful arguments addressed to us by the parties, the point in the end is a very short one. I turn to rule (3) of section 5 of the Act of 1961. Rule (3) reads as follows: The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from the special needs of a particular purchaser or the requirements of any authority possessing compulsory purchase powers. Mr Rich relied upon the first limb of the rule, and put the matter in this way: the Thorley Lane improvement included not only the construction of the new carriageway but also the closure of certain parts of the existing lane (none of which were on the reference land). That, he said, could be achieved only in the exercise of statutory powers, the exact nature of which I do not particularise because there may be doubt as to whether the proper procedures were subjected to adherence. Undoubtedly the reference land was locationally suitable for the improvement, and it may even be taken that it has ‘a special suitability’. However, I am not persuaded by the argument. Mr Horton countered it by saying that private developers can and do construct roads or road improvements upon land which they own, subject only to the obtaining of planning permission. He also pointed out that developers frequently have to stop up existing highways and they may be authorised to do so at their own instance under section 209 of the Town and Country Planning Act 1971. That being so, and bearing in mind that the statutory closure was not upon the reference land, I do not see, in common with the tribunal (albeit for different reasons), that rule (3) applies. For the reasons which I have endeavoured to state shortly, I would allow this appeal and remit to the tribunal the issue as to what was the scheme and any matters consequent upon the tribunal’s identification of the scheme. SIR ROUALEYN CUMMING-BRUCE and Fox LJ agreed and did not add anything. The appeal was allowed and the matter remitted to the tribunal. It was ordered that the appellants receive three-quarters of their costs in the Court of Appeal. Leave to appeal to the House of Lords was refused.