In re Section 14(5)(d) of the Land Compensation Act 1961

Highway — Compulsory purchase – Compensation – Scheme highway – Preliminary issue whether section 14(5)(d) of the Land Compensation Act 1961 being engaged so as to prevent assumption of planning permission – Preliminary issue determined in favour of claimants  The Claimants were seeking compensation for the value of their land based on its pre-existing ransom or key value. They argued that their land was necessary for the provision of a suitable access to enable the comprehensive redevelopment of an area of land lying outside their ownership (the site). Without such land the redevelopment could not proceed. The claimants submitted that the assumption in section 14(5)(d) of the Land Compensation Act 1961 did not extend to highways constructed solely by a private landowner without the use of compulsory purchase powers.  The respondent denied that the claimants had any such pre-existing value and said that the acquisition of land to enable the provision of access to facilitate the comprehensive redevelopment of the site (as authorised by the planning permission which had been granted) was not simply dependent upon the acquisition of the claimants’ land but also depended upon the acquisition of separate interests for which compulsory purchase powers were required. On the proper application of the planning assumptions in section 14 of the 1961 Act, the claimants’ land did not possess development or key value. An alternative development proposed by the claimants would not have obtained planning permission without the provision of a similar eastern access to that contained within the planning permission and which required the acquisition of a significant number of interests for which compulsory purchase powers would be necessary.   The tribunal was asked to determine as a preliminary issue the effect of the assumption under section 14(5)(d) of the 1961 Act in assessing compensation following the compulsory acquisition of the claimants’ land.  Held: The preliminary issue was determined in favour of the claimants.  (1) There was ambiguity in section 14(5)(d) as to whether it required the tribunal to disregard the construction of any highway which would meet the same need as the “scheme highway,” irrespective of whether that might be achieved by the use of statutory powers or by private means, or whether, read properly in context, the ambit of the disregard was more limited. It was a well-established principle of statutory construction that legislation was not to be interpreted as taking away, or interfering with, private rights of property without compensation unless the intention to do so was expressed in clear and unambiguous terms. The intention of Parliament might appear not only from the express wording of the provision but also by irresistible inference from the statute read as a whole, but if there was reasonable doubt, the subject should be given the benefit of the doubt. The same approach applied to the interpretation of provisions which dealt with the measure of compensation. The underlying principle was that fair compensation should be given to the owner whose land had been compulsorily taken. The aim of compensation was to provide a fair financial equivalent for the land taken (the equivalence principle). If the natural meaning of the language used in the 1961 Act would fail to comply with that principle, then some other interpretation might be justified in order to produce a fair result, by applying recognised purposive principles of statutory construction. Compensation legislation was to be constructed with a view to achieving, so far as was possible, a result consistent with the legislative aim of fair compensation. A purposive approach was to be taken to the modern statutory code, keeping in mind the general objects of the legislation which were to ensure, on the one hand, that compulsory powers were available if needed to acquire land for public projects, and, on the other, that those whose land was taken were properly compensated: Batchelor v Kent County Council (1990) 59 P & CR 357, Spirerose v Transport for London [2009] UKHL 44; [2009] 1 EGLR 107 and Union Railways (North) Ltd v Kent County Council [2010] PTSR 90 followed.   (2) The assumptions in section 14(5) of the 1961 Act spelt out how the grant of planning permission was to be assumed in the absence of compulsory purchase powers. The respondent’s argument, that because the assumptions in section 14(6), as introduced by section 64 of the Planning and Compensation Act 1991 referred to “no highway” and the same language was used in section 14(5)(d), as amended by the Localism Act 2011, the effect of the words “no highway” was that the tribunal had to disregard the construction of any highway to meet the same or substantially the same need as the acquiring authority’s scheme, whether constructed by a statutory authority or by the private sector, including developers, involved a significant interference with the right of landowners to rely upon the equivalence principle. Clear language would be required in order to achieve a reduction in the scope of the equivalence principle, and a fortiori, an effective transfer of value from a claimant entitled to compensation to third party landowners or developers. The tribunal had to approach such issues very cautiously given that there was no indication that the Government of the day, or Parliament, ever sought to bring about such consequences or gave any consideration to the policy issues involved. Accordingly, the phrase “no highway will be constructed” referred only to the construction of a highway involving the use of statutory powers of acquisition, and not by the private sector without the use of such powers: Margate Corporation v Devotwill Investments Ltd [1970] 3 All ER 864, Batchelor v Kent County Council (1990) 59 P & CR 357 and Waters v Welsh Development Agency [2004] 2 EGLR 103 considered.  (3) The equivalence principle represented a fundamental purpose of the compensation code. The “key value” principle was a well-established aspect of that principle, such that clear language would be required to abrogate it. The object of section 14(5)(d) (and its predecessor) could be simply stated. Parliament had removed an acquiring authority’s obligation in a compulsory purchase for a highway scheme to pay compensation based on alternative development value, where the achievement of that value depended upon public expenditure on the “construction” of an alternative highway to meet the same need as the acquiring authority’s scheme. There was nothing in the legislation or its history to indicate any intention to go further, and in particular to remove value from acquired land which was not dependent upon the acquiring authority’s scheme (nor any alternative public scheme). Section 14(5)(d) was not engaged so as to prevent an assumed planning permission for the compensation development.   Eileen O’Grady, barrister  Click here to read the full transcript of In re Section 14(5)(d) of the Land Compensation Act 1961