BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
England and Wales Lands Tribunal |
||
|
You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Rank Leisure & Ors v Castle Vale Housing Action Trust [2001] EWLands ACQ_168_1999 (13 August 2001) URL: http://www.bailii.org/ew/cases/EWLands/2001/ACQ_168_1999.html Cite as: [2001] EWLands ACQ_168_1999 |
||
[New search] [Printable RTF version] [Help]
[2001] EWLands ACQ_168_1999 (13 August 2001)
ACQ/168/1999
ACQ/172-173/1999
ACQ/175-177/1999
ACQ/117/2000
(heard together)
LANDS TRIBUNAL ACT 1949
COMPENSATION – compulsory acquisition of leasehold shop units in run-down shopping centre – redevelopment – scheme – no scheme world – whether demand from purchaser – developer in no scheme world creating ransom or development value – whether such value existed independently of the scheme – claimants' case rejected – compensation awarded on authority's figures – Land Compensation Act 1961, ss 6(1) and First Schedule; Compulsory Purchase Act 1965, s20; Land Compensation Act 1973, s47(1).
IN THE MATTER of NOTICES OF REFERENCE
BETWEEN RANK LEISURE & OTHERS Claimants
and
CASTLE VALE HOUSING ACTION TRUST Acquiring
Authority
Re: Units 3, 21, 25, 40/41, 44, 46 and 51
Castle Vale Shopping Centre,
Castle Vale, Birmingham
Tribunal Member: P H Clarke FRICS
Sitting at 48/49 Chancery Lane, London WC2
on 30/31 May, 1, 4 and 5 June and 5 and 6 July 2001
The following cases are referred to in this decision:
Horn v Sunderland Corporation [1941] 2 KB 26
Trocette Property Co Ltd v Greater London Council (1974) 28 P & CR 408
Birmingham Corporation v West Midland Baptist Trust Inc [1970] AC 874
Wilson v Liverpool Corporation [1971] 1 WLR 302
Fraser v City of Fraserville [1917] AC 187
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendment of Crown Lands [1974] AC 565
Myers v Milton Keynes Development Corporation [1974] 1 WLR 696
Margate Corporation v Devotwill Investments Limited [1970] 3 All ER 864
Batchelor v Kent County Council (1990) 59 P & CR 357, CA; [1992] 1 EGLR 217, LT
Wards Construction (Medway) Limited v Barclays Bank plc [1994] 2 EGLR 32
J A Pye (Oxford ) Limited v Kingswood Borough Council [1998] 2 EGLR 159
North Eastern Housing Association Limited v Newcastle-upon-Tyne Corporation (1972) 25 P & CR 178
Cunliffe v Goodman [1950] 2 KB 237
Reohorn v Barry Corporation [1956] 1 WLR 845
Haron Development Co Limited v West Sussex County Council (1974) 230 EG 515
Camrose v Basingstoke Corporation [1966] 1WLR 1100
Bolton Metropolitan Borough Council v Tudor Properties Limited [2000] RVR 292
Gatwick Parking Services Limited v Sargent [2000] 2 EGLR 45
Greenwoods Tyre Services Limited v Manchester Corporation (1972) 23 P & CR 246
South Eastern Ry Co v London County Council [1915] 2 Ch 252
Walters v Welsh Development Agency [2000] RVR 93
Rugby Joint Water Board v Foottit [1973] AC 202
Re Lucas and Chesterfield Gas and Water Board [1909] 1 KB 16
Newham London Borough Council v Benjamin [1968] 1 WLR 694
Meyric Lewis instructed by Wright Silverwood, chartered surveyors, for the claimants
Nicholas Nardecchia instructed by The Wilkes Partnership, solicitors, for the acquiring authority.
DECISION OF THE LANDS TRIBUNAL
FACTS
"The current position is that Castle Vale is entering upon a vicious cycle in which poor housing and weakened social structures feed upon each other. Some of the signs are:
(a) as many as 14 of the 34 multi-storey blocks are beyond economic repair.
(b) nearly 40% of the economically active population regards themselves as unemployed, and 68% of households receive Housing Benefits.
(c) crime rates are high and 70% of residents refer to fear of crime as a major feature of life on the Estate."
"…The large 1970 shopping centre has never realised its full potential. Its poor design, accessibility and image have resulted in low usage and trading levels. The centre has 42 units of which approximately 30% are vacant. The gradual withdrawal of banks and major high street retailers has resulted in a slow spiral of decline both in the number and quality of shops."
The Centre has been demolished and redeveloped. It now comprises a retail supermarket and petrol filling station (occupied by Sainsbury's), retail warehouses, unit shops (including post office and betting shop), dental surgery, offices, public square, residents' club, car parking, service yards and access roads. Adjoining are a doctors' surgery and health centre.
"Improvements to the shopping centre would best be brought about through a complete remodelling of the existing complex. The City Council would consider favourably a redevelopment providing a visible centre fronting Chester Road and adjacent residential areas and comprising a full range of shops, offices and services, surface level car parking and direct access off Chester Road. Integrated within the centre could be a range of community facilities. Better access to the shopping centre will be encouraged (S10)."
"Redevelopment of Castle Vale Shopping Centre and lands to the east and west to provide the commercial and community focus on the estate."
On 26 October 1995 Birmingham City Council adopted the Castle Vale Master Plan (as amended) as Supplementary Planning Guidance.
"At the western end of the site, the shopping centre is in a poor state of repair and has a number of vacant units. Designed in the 1960s, the centre is inward looking and only serves the estate. It does not provide a safe or pleasant shopping environment. The range of goods and services available is limited with the anchor store being a frozen food store. The ground floor of the Albert Shaw tower block which forms part of the shopping centre, is used as a neighbourhood office."
Part 8 of the development brief deals with the Centre and refers to redevelopment and a proposed new urban square and associated community facilities.
"Erection of replacement shopping centre including food superstore, medium sized retail units, unit shops, dental surgery, solicitors office, restaurant, petrol filling station, public square, car parking and access roads."
"At the point of sale the part-tenanted existing buildings will remain on site with an agreement in place for surrenders and re-sites, where appropriate, together with a controllable position on those leases that have yet to expire but will do so by the time demolition is required. Agreements will be in place for the movement of a number of re-sites into new accommodation that can be constructed prior to any demolition taking place."
The site was marketed on the basis that the freehold will be sold subject to a detailed development agreement, the title to be conveyed on satisfactory practical completion of the development. Expressions of interest were required by 30 April 1997. Eight parties were then given the opportunity to make financial bids. Seven bids were received and four were short-listed for presentation and interview. J Sainsbury Developments Limited were chosen as the preferred developer. The Trust subsequently entered into a contract to sell the freehold in the Centre and adjoining land to Sainsbury for £18,933,249, which included a charitable fund donation. The sale was completed in April 1999.
| Parcel no. | Unit no. | Claimants |
| 1 | 3 | B J Fleming |
| 4 | 21 | S Verma (T/a Sheena) |
| 6 | 25 | Rank Seasonal Amusement Limited |
| 8 | 40/41 | T Wilford |
| 10 | 44 | Greggs Plc |
| 11 | 46 | Janet Brown |
| 13 | 51 | M Richards |
(a) Unit 3 – let to B J Fleming by an underlease dated 3 December 1992 for 23 years from 24 June 1991 at £7,600 per annum, subject to review at the third, eighth, thirteenth, eighteenth, and twenty-third years of the term. Unoccupied since 1995.
(b) Unit 21 – let to S Verma by an underlease dated 5 December 1984 for 20 years from 25 December 1984 at an initial rent of £4,100 per annum. Rent increased to £6,900 per annum at first review with further five yearly reviews. The tenant was in occupation at the date of possession.
(c) Unit 25 – let to Showboat Holdings Limited (claimants now Rank Leisure) by an underlease dated 3 March 1982 for 25 years from 29 September 1981 at an initial rent of £7,000 per annum. Rent increased to £12,000 per annum at first review with further five yearly reviews. Unoccupied since 1993.
(d) Units 40/41 – licence to T Wilford for 12 months from 1 January 1996 at £110 per week subject to increase on 28 days notice. Mr Wilford was the only remaining stallholder from the indoor market. The parties agree that he had a periodic tenancy protected under the Landlord and Tenant Act 1954. Landlords' notice to terminate under section 25 of the Landlord and Tenant Act 1954 served on 11 November 1998; date of termination 20 May 1999. Reply by tenant's solicitors on 8 February 1999 and application made to Birmingham County Court for a new tenancy on 21 April 1999. The tenant was in occupation at the date of possession.
(e) Unit 44 – let to Greggs Plc by a lease dated 3 November 1993 for five years from 29 September 1992 at £6,700 per annum. Tenants held over following expiration of tenancy on 29 September 1997. Landlords' notice to terminate under section 25 of the Landlord and Tenancy Act 1997 served on 18 December 1996 terminating the tenancy on 29 September 1997. Reply by tenants' solicitors on 24 January 1997 and application for new tenancy made to Birmingham County Court on 3 March 1997. The tenants were in occupation at the date of possession.
The claimants' interests in units 46 and 51 are in dispute.
DISPUTED INTERESTS
Unit 46 (Mrs Brown)
Unit 51 (Mr Richards)
COMPENSATION
Claimants' case
Evidence
(i) the freehold and long leasehold interests in the Centre had been acquired;
(ii) this merger of interests allowed the negotiation of surrenders of occupational tenancies; many of these had been completed;
(iii) the frontage land between the Centre and Chester Road did not have development potential in isolation;
(iv) Albert Shaw House, which was uneconomic to repair, would have been cleared of tenants.
This would also have been the position in the no scheme world. Values would reflect the price a willing purchaser would pay having regard to the release of potential development value. The viability of the development and the residual land value must be considered and account taken of the relative importance of each unit needed to allow the overall development to take place. Inability to buy out one occupational interest would prevent the redevelopment of the whole Centre. The viability of the redevelopment carried out at the Centre is shown by the purchase by British Land in May 2000 for £50,000,000.
(i) The creation of the Trust and their use of compulsory purchase powers were unnecessary because the Centre was ripe for redevelopment by a private developer due to its location. He could not explain why it was considered necessary to create the Trust.
(ii) He agreed that his valuation is wholly dependent on there having been a purchaser-developer in the no scheme world on the valuation date assembling a site for redevelopment and willing to pay ransom value to the remaining occupiers standing in the way of that redevelopment. This purchaser-developer might have been Sainsbury's, Morrisons, Tescos or another food-store operator or the Trust acting as a private purchaser-developer without statutory powers other than those available to all landlords.
Submissions
Trust's case
Evidence
Short tenancies
Units 40/41 (Wilford) £7,000
Unit 44 (Greggs Plc) £20,000
Unit 46 (Brown) £10,000
Unit 51 (Richards) £20,000
Unexpired terms
Unit 3 (Fleming) £3,300
Unit 21 (Verma) £35,000
Unit 25 (Rank) £12,000
Submissions
DECISION
(1) What is the scheme underlying the acquisition of the claimants' interests?
(2) What are the consequences of the scheme? In the circumstances this involves considering two questions. First, should the assessment of compensation reflect the actual position in the real or scheme world at the valuation date, or an assumed position in a notional no scheme world? Second, would there have been a purchaser-developer in the no scheme world at the date of valuation assembling a site for the redevelopment of the Centre and willing to buy the claimants' interests at a price reflecting a share of the net development value?
(3) Did the claimants' interests possess a ransom or development value at the date of valuation which existed independently of the scheme?
(4) In the light of the answers to the above questions, what amounts of compensation should be awarded to the claimants?
I now consider each of these questions.
The scheme
"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 has 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. …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 scheme will always exist in some shape or form by the time the notice to treat is served. It must, indeed, be in some shape or form at the confirmation of the compulsory purchase order itself, and then, as Lord Denning MR says, it may develop almost from day to day, and the ultimate question for the valuer is to decide to what extent the dead ripe value of the land on the day upon which the valuation is to be made has been increased by reason of the existence of the scheme."
The scheme cannot be the acquisition itself: it must underlie the acquisition (per Buxton LJ in J A Pye (Oxford) Limited v Kingswood Borough Council at page 162M).
Consequences of the scheme
"It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition. As it was put by Eve J in South Eastern Ry Co v London County Council: 'increase in value consequent on the execution of the undertaking for or in connexion with which the purchase is made must be disregarded.'"
"… no account shall be taken of any increase or diminution in the value of the relevant interest which, in the circumstances described in any of the paragraphs in the first column of Part I of the First Schedule to this Act, is attributable to the carrying out or the prospect of so much of the development mentioned in relation thereto in the second column of that Part as would not have been likely to be carried out if –
(a) (where the acquisition is for purposes involving development of any of the land authorised to be acquired) the acquiring authority had not acquired and did not propose to acquire any of that land; and
(b) (where the circumstances are those described in one or more of paragraphs 2 to 4B in the said first column) the area or areas referred to in that paragraph or those paragraphs had not been defined or designated as therein mentioned."
In Part I of the First Schedule the relevant paragraph is 4B:-
"Where any of the relevant land forms part of a housing action trust area established under Part III of the Housing Act 1988."
The development in the second column is:-
"Development of any land other than the relevant land in the course of the development or redevelopment of the area as a housing action trust area."
Section 39(2) of the 1961 Act defines "relevant interest" and "relevant land":-
"In this Act, in relation to a compulsory acquisition in pursuance of a notice to treat, 'the relevant interest' means the interest acquired in pursuance of that notice, 'the relevant land' means the land in which the relevant interest subsists, and 'the notice to treat' means the notice to treat in pursuance of which the relevant interest is acquired."
"The explanation of section 6(1) is, I think, this: The legislature was aware of the general principle that, in assessing compensation for compulsory acquisition of a defined parcel of land, you do not take into account an increase in value of that parcel of land if the increase is entirely due to the scheme involving the acquisition. That was settled by Pointe Gourde Quarrying and Transport Co v Sub-Intendent of Crown Lands, … It is left untouched by section 6(1). But there might be some doubt at to its scope. So the legislature passed section 6(1) and the First Schedule in order to make it clear that you were not to take into account any increase due to the development of the other land, namely, land other than the claimed parcel. I think that the decision in the Pointe Gourde case covers one aspect: and section 6(1) covers the other: with the result that the Tribunal is to ignore any increase in value due to the Town Development Act, both on the relevant land and on the other land."
This passage can be applied to these proceedings by the substitution of "housing action trust area" for "Town Development Act." I am required to ignore any increase in value due to the housing action trust area in relation to the claimants' units and the other land within that area.
"The basis of the Pointe Gourde rule and the rules contained in ss 5 to 9 of the 1961 Act appears to be this. The owner is to receive as compensation the equivalent in money terms of what he has lost through the compulsory acquisition of his land. He must be put into the position that he would have been in if there had been no compulsory acquisition. Compulsory powers of acquisition are only conferred in the public interest. A compulsory purchase order is only made and confirmed for a public purpose which the making authority and the confirming authority judge to be sufficiently important to warrant compulsion. The principle is that any effect on the value of the land acquired arising from the public purpose or public purposes prompting the acquisition, whether from their adoption by the authority or from their implementation, is to be disregarded. A scheme or proposal is the embodiment of the public purpose or public purposes concerned."
"In order correctly to apply the Pointe Gourde principle it is necessary, first, to identify the scheme and, second, its consequences. The valuer must then value the land by imagining the state of affairs, usually called 'the no-scheme world', which would have existed if there had been no scheme."
In Bolton Metropolitan Borough Council v Tudor Properties Limited Mummery LJ said (page 294 para 6):-
"The tribunal must ascertain the existence and extent of the underlying scheme from a consideration of all the relevant evidence about the past, present and future activities. It must then determine, as a matter of fact, whether those activities are properly to be regarded as part of the underlying scheme: Wilson v Liverpool Corporation. Only when the factual question has been decided is it possible to answer the next question which is one of valuation: what part of the market value of the land acquired is entirely attributable to the enhancing effect of the scheme underlying the acquisition? Answering that question involves imagining a state of affairs antedating the scheme – a 'no scheme world' (as it was described in Wards Construction (Medway) Limited v Barclays Bank plc) and ascertaining what 'bargain … would have been made between the claimant and a prospective developer - purchaser had the acquiring authority not intervened'".
"Although the statutory provisions and authorities cause the parties to notionally reside in a world conditioned by assumption and a measure of unreality, they do not, in my judgment, require the abandonment of the actual facts as subsisting at the valuation date. To cast aside the actual facts and substitute a different factual matrix founded upon speculation and supposition is contrary to the West Midland case and the principle stated by Lord Morris in the Margate case …at page 868 …"
On appeal (Wards) the member's decision was upheld. There is, however, no reference in the decision of the Court of Appeal to the above passage. It was held that the member correctly applied the Pointe Gourde rule so as not to exclude from compensation a ransom value which pre-existed the scheme (a matter which I consider further below).
"The decisions to be made by the Lands Tribunal were decisions in the field of fact. Some of the witnesses appear to have felt that they were asked to apply their minds to situations having an unreality only to be expected in fairyland. I do not think that their approach should have been so hesitant. Their evidence had to be directed to the realities of the conditions that existed and to the actual facts of the period so that the Lands Tribunal should be assisted to reach decision on the basis of the assumptions that had to be made. Even if the appellants had concluded that the problem of road congestion was to be solved by their projected by-pass they were not precluded from expressing an informed view on the question whether if that by-pass could not be constructed there were or were not any other ways of dealing with the problem of road congestion and if so what they were."
"An assumption had to be made that the respondents' land was not going to be acquired so that a by-pass should be constructed – but it was in no way an inevitable corollary that there would be a by-pass on some other line and in some different position. If there was not to be a by-pass on the respondents' land it by no means followed that there would inevitably be a by-pass somewhere else. There might be or there might not be. It might have been possible to have another route for a by-pass; it might have been impossible. It would be a question depending on topographical and various and many other factors whether there could be a by-pass somewhere else. It would be for consideration whether any alternative by-pass was or was not possible or probable and further its construction was or was not likely. These matters could not rest on any assumptions but rather on an examination of all the evidence."
Lord Morris did not say that the land must be valued having regard solely to existing circumstances. The no scheme world might or might not include a by-pass elsewhere, this was a question of fact to be decided on the evidence, not a question of law to be decided on the basis of an inevitable corollary of an assumption of law.
"It is apparent, therefore, that the valuation has to be done in an imaginary state of affairs in which there is no scheme. The valuer must cast aside his knowledge of what has in fact happened in the past eight years due to the scheme. He must ignore the developments which will in all probability take place in the future 10 years owing to the scheme. Instead, he must let his imagination take flight to the clouds. He must conjure up a land of make-believe, where there has not been, nor will be, a brave new town: but there is to be supposed the old order of things continuing – a county planning authority which will grant planning permissions of various kinds at such times and in such parcels as it thinks best, but with an assurance that in March 1980 planning permission would be available for the residential development of the Walton Manor Estate."
In Tudor Properties Mummery LJ, in the passage set out above, referred to the answer to the question, what part of the market value is entirely attributable to the enhancing effect of the scheme, by imagining a state of affairs antedating the scheme, a no scheme world. In Wards Nourse LJ said that the "valuer must then value the land by imagining the state of affairs, usually called the 'no-scheme world', which would have existed if there had been no scheme" (page 34D). It is important that this imaginary state of affairs, this no scheme world, should be based on the evidence (see Devotwill) and kept close to reality. In Trocette Lawton LJ said (page 420):-
"The assessment of compensation in cases such as this is the most difficult task calling for the judicial use of fertile imagination. Assumptions have to be made (see sections 14, 15 and 16 of the Act of 1961) and some realities disregarded (for example, any increase in value which is entirely due to the scheme underlying the acquisition – the so-called Pointe Gourde principle). It is important that this statutory world of make-believe should be kept as near as possible to reality. No assumption of any kind should be made unless provided for by statute or decided cases."
(i) Establishment of the Trust in June 1993 and the transfer of the freehold interest in the Centre and the Estate to the Trust in April 1994 (para 11 above).
(ii) Publication by the Trust of the Castle Vale Master Plan in September 1995 (para 15 above).
(iii) Purchase of the headlease in the Centre by the Trust in September 1996 (para 17 above).
(iv) Issue of a press release by the Trust in December 1996 regarding redevelopment of the Centre (para 18 above).
(v) Marketing of the Centre from early 1997, the choice of J Sainsbury Developments Ltd as the preferred developer, the redevelopment of the Centre and adjoining land and sale of the freehold to Sainsbury's (paras 20 and 25 above).
(vi) The making and confirmation in May 1999 of the Castle Vale Housing Action Trust (Castle Vale Shopping Centre) Compulsory Purchase Order 1998 and the acquisitions under that order (paras 21, 22 and 23 above).
(vii) The making in June 1999 of the Stopping Up of Highways (City of Birmingham) (No.5) Order 1999 (para 26).
(viii) The negotiation of agreed surrenders of the occupational interests in 21 units in the Centre between March 1997 and November 1999 (para 27 above).
"2.8 Sainsbury's identified an absence of adequate, modern, food retailing facilities in the Castle Vale area a number of years ago. Whilst there is an adequate range of smaller shops, apart from the free standing Asda at Minworth, there are few accessible stores that provide a full range of both branded and non-branded goods, fresh produce or meat and fish in a high quality environment.
"We reviewed the CVHAT's proposal to establish the nature of new retailing that would best serve the area, and to ensure that the scale of redevelopment proposals would be viable. We agreed with CVHAT's proposed approach. The Sainsbury's proposal for the Castle Vale site followed closely the framework that CVHAT had already established. The simple refurbishment of the existing fabric would not have been viable. Nor would it have been able to create new retail floor space really suitable to meet the needs of modern retailers. However, and equally important, it would not have represented such a valuable symbol of commitment to the regeneration and change of the area."
Value independently of the scheme?
"The purpose of the [Pointe Gourde] principle is to prevent the compensation for the value of the land on compulsory acquisition from being inflated by the very scheme which gives rise to the acquisition. (See Widgery LJ in Wilson v Liverpool Corporation). An enhancement in value resulting entirely from the underlying scheme has to be ignored. The principle does not, however, require the valuer to ignore an increase in value attributable to factors other than the underlying scheme, such as the pre-scheme value of the land for development."
In Batchelor (1989) Mann LJ said (page 361):-
"If a premium value is 'entirely due to the scheme underlying the acquisition' then it must be disregarded. If it was pre-existent to the acquisition it must in my judgment be regarded. To ignore the pre-existent value would be to expropriate it without compensation and would be to contravene the fundamental principle of equivalence (see Horn v Sunderland Corporation)."
In Pye Hobhouse LJ said (page 165 K):-
"Therefore, it is necessary to identify what was 'the scheme underlying the acquisition' ….. and disregard any enhancement of the land to be valued that is to be derived from that scheme. This is the limit of the principle. It does not preclude the valuer from taking into account any enhanced value of the land which derives from any other factor, as, for example, its value for development (Viscount Camrose v Basingstoke Corporation …; Myers v Milton Keynes Development Corporation …) or its value as a 'ransom strip' (Batchelor v Kent County Council…). Indeed, it is the duty of the valuer fully to reflect such enhancing features in his valuation."
"It is not planning permission by itself which increases value. It is planning permission coupled with demand."
Similarly, it is not location in itself which creates or increases value: it is location coupled with demand. I have considered demand in the no scheme world in some detail and have concluded that it was absent. I am satisfied that, even if the claimants' interests had possessed development value in the no scheme world at the valuation date, this did not exist independently of the scheme. The demand to create this value, if any, was created by the scheme and did not exist before or independently of the scheme. This is not a situation, as in Batchelor, where it can be shown that the ransom value existed independently of the scheme. If it existed at all it was created by the scheme and must be disregarded.
Conclusions on the scheme
"The statutory compensation cannot, and must not, exceed the owner's total loss, for, if it does, it will put an unfair burden on the public authority or other promoters who on public grounds have been given the power of compulsory acquisition, and it will transgress the principle of equivalence which is at the root of statutory compensation, the principle that the owner shall be paid neither less nor more than his loss."
Secondly, it would conflict with the basis of compensation, which is still value to the owner, as it was before 1919 when the scheme rule was developing, albeit that this value is now measured by open market value under section 5(2) of the 1961 Act. To give the claimants compensation reflecting the value to the purchaser, inflated by the underlying scheme and compulsory purchase powers, would breach the principle of equivalence and represent value to the purchaser and not to the owner. In Rugby Joint Water Board v Foottit Lord Hodson said (page 218G):-
"It is well established that the value to the owner and not the value to the purchaser is relevant in the case of the exercise of compulsory powers. Were it otherwise the use of compulsory powers would be largely frustrated."
And Lord Simon of Glaisdale said (page 241E):-
"The purpose of the Pointe Gourde rule is thus clear. You must not allow the price to be paid for property compulsorily acquired to be inflated by reason of the fact that it is acquired compulsorily under parliamentary powers; because you would then be making the acquiring authority pay, not for the value of the property to the vendor, but for its value to themselves, including the value engendered by the very powers by which they acquired the property."
Much earlier, in Re Lucas and Chesterfield Gas and Water Board, Fletcher Moulton LJ said (page 29):-
"The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e. that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form. But the equivalent is estimated on the value to him, and not on the value to the purchaser, and hence it has from the first been recognised as an absolute rule that this value is to be estimated as it stood before the grant of compulsory powers. The owner is only to receive compensation based upon the market value of his lands as they stood before the scheme was authorised by which they are put to public uses. Subject to that he is entitled to be paid the full price for his lands, and any and every element of value which they possess must be taken into consideration in so far as they increase the value to him."
Compensation
(a) the product of the appropriate multiplier and twice the rateable value where the tenant was in occupation during the whole of the 14 year period before determination, and
(b) in any other case, the product of the multiplier and the rateable value.
| Unit 3 (Fleming) | £7,600 | ACQ/175/99 |
| Unit 21 (Verma) | £37,800 | ACQ/177/99 |
| Unit 25 (Rank) | £12,000 | ACQ/168/99 |
| Units 40/41 (Wilford) | £7,000 | ACQ/172/99 |
| Unit 44 (Greggs) | £20,000 | ACQ/117/00 |
| Unit 46 (Brown) | £10,000 | ACQ/176/99 |
| Unit 51 (Richards) | £27,250 | ACQ/173/99 |
A surveyor's fee under Rydes Scale will also be payable to each claimant.
DATED: 13 August 2001
(Signed) P H Clarke
ADDENDUM
DATED: 5 October 2001
(Signed) P H Clarke
