Weight of evidence in CPO compensation

Louise Clark analyses an important Supreme Court decision involving land compulsorily acquired for HS2. Key points When considering an application for a certificate for appropriate alternative development, it is for the local authority to decide what weight to give to CAAD applications or decisions on other land A CAAD application or decision plays no role in the real planning world When land is compulsorily purchased, the landowner is entitled to compensation for the land acquired. This is the open-market value of the land, reflecting any enhancement for actual or prospective planning permission as well as any alternative development. The grant of a certificate for appropriate alternative development by the local planning authority can significantly affect the amount of compensation payable.  In Secretary of State for Transport v Curzon Park Ltd and others [2023] UKSC 30; [2023] PLSCS 138 – a significant decision on compulsory purchase compensation – the Supreme Court has considered whether a local planning authority determining a CAAD application may take into account applications on other sites if they shed light on the development potential of the application site.  The law The entitlement to compensation for the compulsory purchase of land is contained in section 5 of the Land Compensation Act 1961. The landowner is entitled to the open-market value of the land if sold by a willing seller at the valuation date.  The landowner is also entitled, under section 14 of the 1961 Act, to be compensated for any enhanced value resulting from:  (i) planning permission which is in force at the valuation date;  (ii) the prospect of planning permission being granted in respect of it at the valuation date and;  (iii) appropriate alternative development of the land where such planning permission could reasonably have been expected to be granted on or after the valuation date.  A landowner can seek a CAAD under section 17 of the 1961 Act. In practice, a landowner will often seek a CAAD which identifies every description of development for which planning permission could reasonably have been expected to be granted if the land had not been compulsorily acquired, in order to rely on the most valuable form of hypothetical development when seeking compensation.  Background The case concerned four neighbouring sites at the eastern edge of Birmingham city centre, which were compulsorily purchased by the secretary of state for transport in 2018 to construct a railway terminus for phase one of HS2. The respondents were the owners of the sites, each of which was a substantial development site in its own right. All had been cleared for development in anticipation of the eastward expansion of the city centre and each landowner had been granted a CAAD for substantial mixed-use developments on their respective sites.  In determining the applications, Birmingham City Council considered each application in isolation, rejecting the secretary of state’s contention that the cumulative impact of all the applications should be considered, otherwise the respondents were likely to be over-compensated.  The Upper Tribunal (Lands Chamber) rejected the secretary of state’s appeal, deciding that it was for the local authority, as decision-maker, to give other CAAD applications or decisions such evidential weight as it thought appropriate.  The landowners argued before the Court of Appeal that section 14 of the 1961 Act required the decision-maker to assume that the scheme of development had been cancelled on the launch date and so it followed that no CAAD applications could have been made in the counterfactual cancelled scheme world. Consequently, any applications or decisions relating to other sites should be disregarded. The Court of Appeal agreed.  The secretary of state appealed to the Supreme Court.  The decision The Supreme Court decided the Court of Appeal was wrong that other CAAD applications/decisions cannot be considered due to the cancellation assumption and unanimously restored the Upper Tribunal decision.  The question is whether, at the valuation date, planning permission could reasonably be expected to be granted on the assumptions as to the cancellation of the scheme contained in section 14(5) of the 1961 Act, but otherwise in the circumstances known in the market at the time. This was the only limitation and would include planning applications and permissions and CAAD applications or decisions made in relation to other land at the valuation date which may impact on the proposal in question.  Other sites could be relevant to the determination of a planning application in diverse ways: in satisfying a particular need at less cost compared to the development of the application site; the cumulative effect of multiple proposals could be adverse to the public interest; where the proposed development would be incompatible with development on neighbouring land; and in accordance with the principle of consistency.  The no-scheme world A CAAD application or decision plays no role in the real planning world: they are not equivalent to a planning application or permission. The CAAD regime exists only to assist with the assessment of the value of land in the counterfactual cancelled scheme world for determining compensation payable. However, the evidence submitted with a CAAD application – as with a planning application – can be relied on to the extent it casts light on the circumstances known to the market at the valuation date.  While neither a CAAD application nor a decision to grant one are material planning considerations, the fact or pattern of such applications or decisions may provide evidence of market actors responding to market circumstances at the valuation date in the counterfactual cancelled scheme world.  The extent to which evidence derived from a CAAD application or from planning applications in the real world is capable of constructing the counterfactual cancelled scheme world is a matter for the assessment of the local planning authority. Louise Clark is a property law consultant and mediator Image from HS2 Ltd