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] | |
The Law Commission |
||
|
You are here: BAILII >> Databases >> The Law Commission >> Towards a Compulsory Purchase [2003] EWLC 286(3) (15 December 2003) URL: http://www.bailii.org/ew/other/EWLC/2003/286(3).html Cite as: [2003] EWLC 286(3) |
||
[New search] [Help]
PART III
THE COMPENSATION CODE – HEADS A AND B
Head A: market value
Introduction
3.1 The principle that land subject to compulsory purchase should be acquired at "market value as between a willing seller and a willing buyer" has been established since 1919.[1] The 1961 Act, section 5(2) ("rule (2)") provides:The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise.
In CP 165 we proposed no change in principle, save to make clear that the definition assumed both a willing purchaser and a willing buyer.[2]3.2 As we noted in the Consultation Paper, there was some uncertainty whether rule (2) applies only to the valuation of the land which is being acquired, or whether it applies generally, wherever land value is relevant to the assessment of compensation. We preferred the latter view.[3] In any event, we thought it desirable that the position should be clarified in the new Code, and that any exceptions to the "market value" principle should be specifically identified.
Consultation
3.3 There was no serious disagreement with our proposal to retain the market value principle.Willing buyer
3.4 Some consultees, however, expressed concern that, by introducing a reference to a "willing buyer", we might be seen to be changing the law. For example, one respondent was concerned that the proposed definition would entail a "fundamental shift" from the principle of equivalence, and would introduce a subjective element with the assumption of a bargain to be negotiated. We believe that this concern is based on a misunderstanding of the effect of our proposal, as compared to the existing law. 3.5 The effect of the market value approach has been recently clarified by the Court of Appeal.[4] The Court of Appeal confirmed that the test under rule (2) is no different in substance from other formulations of the market value principle. It adopted as authoritative a statement from a recent case relating to capital transfer tax:[5]…. the concept of the open market automatically implies a willing seller and a willing buyer, each of whom is a hypothetical abstraction. However the willing buyer "reflects reality in that he embodies whatever was actually the demand for that property at the relevant time". (see IRC v Gray [1994] STC 360, 372 per Hoffmann LJ). Whilst both the seller and the buyer are assumed to be willing neither is to be taken to be over-eager… The statute assumes a sale. That means… that the vendor, if he is offered the best price reasonably obtainable in the market, cannot be assumed to say that he will not sell because the price is too low as inadequately reflecting some feature of the property nor can the purchaser be assumed to say that he will not buy because the price is too high..."[6]3.6 The court rejected an argument that the omission in rule (2) of any reference to the willing buyer implied a departure from the "willing seller/willing buyer" approach proposed in the Scott report. Reference was made to the explanation given by Scott LJ (as he had then become) for the specific mention of the "willing seller"; it was designed to "check exaggerated prices", by reversing –
the old sympathetic hypothesis of the unwilling seller and the willing buyer which underlay judicial interpretation of the Act of 1845.[7]
Thus, the mention of the "willing seller" was to emphasise the departure from the previous law; the "willing buyer" was already implied.3.7 The court also noted that "the assumption of 'willingness' has different implications for buyer and seller", adopting the succinct explanation given by Lord Romer:
The compensation must be determined, therefore, by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded.[8]3.8 Our proposal, therefore, is designed to preserve the existing law.
Not less than nil
3.9 In the Consultation Paper we proposed that market value should never be less than nil. Thus, in a case where the land has a negative value, perhaps because of contamination, the authority should not be able to force the owner to make a payment for having the burden taken away by acquisition. 3.10 One respondent questioned this approach. It was argued that in certain circumstances a reverse premium would be justified, for example, where the rent payable exceeds the full rental value or where land is contaminated and has onerous maintenance requirements. However, it seems to us that, since the authority is forcing the owner to sell, at a time of its own choosing, it would be unreasonable to require the owner to pay for that privilege. It is the responsibility of the authority to take account of the prospective burden of dealing with the land, when drawing up its proposals of acquisition.[9] 3.11 However, it has been suggested that this question should be considered more broadly. Where the value of the subject land is the only element of compensation, it is right that the threshold should be set at nil; but, where claims are also made under other heads, it might not be unreasonable for any negative value of the subject land to be offset against such claims. For example, where compensation is also claimed for injury to retained land, based on a reduction in the market value of that land, the negative value of the subject land could be set against it. On balance, however, we think it clearer and simpler to apply the "nil" threshold only to the subject land. If the retained land has a positive value which is adversely affected by the works, we think it fair for that loss to be compensated, regardless of the consideration paid for the subject land. Similarly, compensation for consequential loss is likely to relate to expenses (for example, business relocation expenses) which have no relation to the value (negative or positive) of the subject land. 3.12 Accordingly, we recommend:Rule 3 Market value(1) "Market value" of land means the amount which the land might be expected to realise if sold in the open market by a willing seller to a willing buyer.
Provided that the market value of the subject land for the purposes of head A shall not be less than nil.
(2) Except as otherwise provided, for the purpose of any provisions of the Code which depend on the value of land (including any reduction or increase in the value of land), value means "market value" as so defined.
Head B: injury to retained land
Introduction
Severance and injurious affection
3.13 In addition to the value of the subject land, the dispossessed owner is entitled to compensation for loss of value to land retained by him. Section 7 of the 1965 Act[10] provides that in assessing compensation:… regard shall be had… to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise injuriously affecting that other land by the exercise of the powers conferred by this or the special Act.[11]
This has been treated as giving a right to compensation under two heads:
(1) Severance: that is, loss suffered by the separation of the land acquired from land held with it, where the joint holding conferred additional value or advantage;[12]
(2) Injurious affection: that is, loss caused to the retained land by the works or use of the land acquired for the statutory purpose.[13]
To qualify for such a claim, the retained land must be "held with" the land which is acquired, in the sense that "the unity of ownership conduces to the advantage or protection of the property as one holding".[14]
| Example The claimants held land under two leases for the purposes of a rifle range. They also held other parcels of land (that made up the "safe area" beyond the range) under a separate lease and under a verbal agreement. Part of the "safe area" was acquired to build a road. The rifle range could no longer be used for rifle practice. The claimants were entitled to compensation for injurious affection for the loss of the value of the rifle range.1 |
Betterment
3.16 Sometimes the value of retained land may be enhanced by the works for which the land is acquired.[22] Provision is made in some statutes for such "betterment" to be deducted from the compensation otherwise payable.[23] For example, section 7 of the 1961 Act makes such provision in relation to increased value due to the prospect of development on "adjacent or contiguous land".[24] In relation to highway schemes, section 261 of the Highways Act 1980 requires the Tribunal to take account of any benefit from the project to "the remaining contiguous lands" (not just increased value due to the prospect of development). 3.17 In the Consultation Paper, we adopted the proposal of CPPRAG and the Policy Statement that betterment should be deducted only from any compensation otherwise payable for injury to retained land, and should not affect other heads of compensation. We proposed that it should be covered by a new set of rules relating to compensation for the effects of the acquisition on retained land.Other valuation rules
3.18 We mentioned uncertainty as to the application of other valuation rules to compensation for injury to retained land, notably the rules relating to disregard of the project.[25] We noted that some provisions of the 1961 Act are specifically applied only to the "relevant land", that is, the land subject to acquisition;[26] whereas the Lands Tribunal has held that the Pointe Gourde rule does apply to the valuation of the retained land, so that the loss must be assessed by comparing the value of the land after the work, with its value in "the no-scheme world."[27] 3.19 We will consider this issue in more detail when discussing our proposed replacement of the Pointe Gourde rule, where we recommend specific provision to deal with its application to this head of compensation. [28] It will be necessary for the rules relating to injury to retained land to be made subject to that provision.Consultation
Market value only?
3.20 The main issue raised by consultation was whether compensation under this head should be limited to the reduction in land value, or should take account of other categories of loss, such as loss of profits. A majority of respondents thought that it should not be so limited.[29] In particular, there was general agreement that compensation should be claimable for temporary loss of profits (for example, during the construction period), not limited to a loss of rental value.[30] 3.21 In our view, there are advantages in making loss of market value the primary criterion for compensation under this head. It provides a straightforward test, applicable to both diminution and enhancement of value. It is also consistent with that applied to the acquired land, thereby allowing for a simple "before and after" approach to valuation in many cases. 3.22 For the same reason, we think that differences in value to the retained land should be judged by reference to the same circumstances at the same valuation date as that applied to the subject land. Thus, as is the case in relation to the subject land, the value of the retained land will ordinarily[31] be judged by reference to values and circumstances prevailing at the date when the authority takes possession of the subject land. 3.23 On the other hand, we see no reason in principle why other forms of loss should not be allowed, where these are fairly attributable to the compulsory acquisition, and are not adequately reflected in the loss of market value.[32] We do not think it necessary to make specific provision for that purpose under this head of compensation. Our amended proposal for consequential loss is in our view wide enough to cover any losses properly flowing from the acquisition, including those related to its effect on a business on retained land.[33] It is also wide enough to cover temporary losses during the works period.[34] 3.24 There were some respondents who thought that allowing such losses would complicate and delay the process of assessment, and that it would also make it difficult for the authority to budget for the cost of acquisition. However, we do not see such problems as different in kind from those applying to losses already allowed under the head of disturbance. The extent of any such claims will be limited by the principle of remoteness. It is of course important to avoid double-counting. However, we think it unnecessary to make specific provision to this effect. The overriding principle will be that of fair compensation "having regard" to the various statutory heads.[35] This formula, in our view, will allow the Tribunal sufficient flexibility to do justice to both parties in each case: on the one hand, allowing loss which is not adequately reflected in the loss of market value, and, on the other, avoiding any overlap. The primary test will remain that of loss in market value, and the burden will be on the claimant to show that any other loss is not adequately compensated under that test.[36]Use of hindsight
3.25 If market value at the valuation date (normally the date of possession)[37] is accepted as the primary test, the question arises as to how, if at all, account is to be taken of changes between that date and the date of determination. 3.26 Market value, by implication, is based on the knowledge which the market would have had at the valuation date. The market does not have a crystal ball. This strict market value approach can be defended as appropriate where the object is to fix the price at which the authority are to be taken as acquiring the land at a certain date. Changes in circumstances after that date do not affect the vendor's interest, since he no longer owns the land. 3.27 By contrast, where the object is to assess compensation for injury to property which remains in the ownership of the claimant, fairness may require that, even where the primary test is based on loss of value at a particular date, account should be taken of changes in circumstances up to the date of the hearing at which compensation is determined. This follows the so-called "Bwllfa" principle, that, in assessing loss, a Tribunal should not be required to speculate when it knows.[38] The same principle was expressed recently by the House of Lords in a different context:[39]Where the events, or some of them, on which the uncertainties depend have actually happened, it seems to me unsatisfactory and unnecessary for the court to wear blinkers and pretend that it does not know what has happened.[40]3.28 The Lands Tribunal has held that the Bwllfa principle applies to the assessment of compensation under section 7 of the 1965 Act, so as to enable account to be taken of a planning permission granted on the retained land some three years after the date of the acquisition.[41] In CP165 we criticised this approach as inconsistent with the market value test.[42] However, on further consideration, we think it is correct. We gave insufficient weight to the difference between that test as applied, respectively, to the subject land, in which the risk passes to the authority, and to the retained land, in which it does not. 3.29 Accordingly, in spite of the convenience and apparent logic of a uniform test, we think that in this context there needs to be the possibility of a more flexible approach to give effect to the overriding principle of fair compensation. This may work both ways: in favour of the claimant or in favour of the authority. However, experience, including that of the Bolton case, suggests that it is unlikely to make a material difference in many cases. Our recommendation, therefore, requires values to be taken as those prevailing at the valuation date, but allows hindsight in respect of changes in circumstances so far as they would have affected the value of the retained land at that date.[43]
"Before and after"
3.30 There was wide support for our proposal to provide specifically for the "before and after" approach, which some suggested was standard practice already. There was, however, a strong body of opinion that this method should not depend, as we proposed, on the election of the claimant, since it may often be the fairest and most convenient method of valuation, regardless of the subjective views of the claimant. We are inclined to agree. Our amended proposal would leave it as a matter for agreement between the parties, or determination by the Tribunal.Betterment
3.31 Most respondents agreed with our proposal for dealing with betterment under this head. It was suggested by one respondent that it leaves a degree of discrimination between those whose land is acquired, and neighbouring owners who may enjoy the same betterment without offset. However, any such discrimination is less drastic than under the existing law, since the claimant's right to the value of the subject land is unaffected.[44] Under this proposal, the deduction for betterment will only apply where there is already a claim for reduction in value of other land. We think it reasonable that, where someone makes such a claim, the effects on his or her retained land (both adverse and beneficial) should be looked at overall.Definition of retained land
3.32 Most also agreed with our proposal that the definition of "retained land", whether for the purpose of assessing adverse effects or enhancement, should not include any requirement that the land be adjacent or contiguous. It was pointed out, for example, that farm businesses may have land and buildings scattered over a wide area, the operation of which as a unit may be adversely affected by the acquisition of part. The expression "held with", as used in the existing case-law, makes clear that the relevant test is whether the unity of ownership "conduces to the advantage or protection" of the holding.[45]Contractors' negligence
3.33 A number of points of detail emerged from consultation. One respondent expressed concern that the right to compensation for the effects of the works on retained land may be challenged, where the injury is due to possible negligence of contractors.[46] However, if this is a problem,[47] we see it as related, not so much to the definition of the statutory head of claim, as to the boundary between statute and common law. It would be alleviated by our proposal that the Tribunal should have jurisdiction to deal with common law claims for damage to land or its use, arising out of the same facts as a compensation claim.[48]Other points
3.34 Other detailed issues included: problems caused by latent defects (where new losses materialise after the settlement of compensation); problems in settling the details of accommodation works (including costs of upkeep and taxation consequences); loss of privacy caused by diverted footpaths; and the inability to restrict by covenant the future use of the subject land. We accept that these issues may give rise to problems in particular cases. However, a balance has to be drawn between the desirability of certainty for both parties, and the inevitable risk that the nature of the loss may be affected by changes of circumstances, or of knowledge, which arise after determination of compensation. There are also limits to which a general code can or should seek to cater for every case. We would expect particular problems in individual cases to be the subject of individual agreement. Generally, we agree with those respondents who counselled against making the code unduly prescriptive. 3.35 Accordingly we recommend:Rule 4 Injury to retained land
(1) Subject to Rules 4(2) and 13A(1), compensation for injury to retained land shall be assessed having regard to the following (so far as applicable), as at the valuation date -
(a) any decrease in the value of any interest of the claimant in any part of the retained land attributable to its severance from the subject land ("severance");
(b) any decrease in the value of any interest of the claimant in any part of the retained land attributable to the nature, carrying out, or expected use of the works for which the land is acquired ("injurious affection");
but off-setting -
(c) any increase in the value of any part of the retained land attributable to the nature of, carrying out, or expected use of, those works ("betterment").
(2) If, in either case, the parties agree or the Tribunal determines:
(d) account shall be taken of changes of circumstances (other than changes in land values) known at the date of assessment;
(e) compensation due under this Rule and Rule 3 may be assessed together, that is, by calculating the difference at the valuation date between:
(i) the value of the subject land and the retained land, taken together, as they were immediately before the acquisition; and
(ii) the value of the retained land, on its own, as it was immediately thereafter.
Note 1 See CP 165, para 2.6, referring to the recommendations of the Scott Committee, given effect by the Acquisition of Land Act 1919. [Back] Note 2 We noted that the “willing buyer” was not mentioned in rule (2), because his existence was regarded as implicit in the pre-1919 law: Horn v Sunderland Corporation (1941) 2 KB 26, 40 per Scott LJ. [Back] Note 3 CP 165, para 4.16. [Back] Note 4 Railtrack plc v Guinness Ltd [2003] 1 EGLR 124 at 126Gff. The leading judgment was given by Carnwath LJ, with whom the other members of the court agreed. [Back] Note 5 Walton v IRC [1996] STC 68. (The statute required the value to be assessed as “the price which the property might reasonably be expected to fetch if sold on the open market…”.) [Back] Note 6 [1996] STC 68, p 85–86, per Peter Gibson LJ. In Guinness [2003] 1 EGLR 124 at 128B, EWCA Civ 188 para [27], the court observed that this was no different in substance from the RICS Practice Statement 4, 1.3.00:
The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. [Back] Note 7 Horn v Sunderland Corp (1941) 2 KB 26, 40. There is no hint in this judgment that Scott LJ himself thought that the recommendation contained in the Scott Report had not been adopted in full. [Back] Note 8 The “Indian” case [1939] AC 302, 312, PC. This important case is discussed in detail in Appx D, paras D.34ff; see alsoWaters. [Back] Note 9 Although this reasoning may not apply directly to cases where the procedure is initiated by the claimant (by blight notice or purchase notice under the 1990 Act Part VI), they are treated for compensation purposes as though a compulsory purchase order had been made: 1990 Act, ss 143, 154. It is therefore difficult to justify a different rule for those cases. [Back] Note 10 Reproducing 1845 Act, s 63. The law is discussed in CP 165, paras 5.3ff. [Back] Note 11 The “special Act” is defined as “the enactment under which the purchase is authorised and the compulsory purchase order”: 1965 Act s 1(2). [Back] Note 12 For example, parts of a farm severed by a motorway, which increases the cost of working; loss of land from the “safe area” of a rifle club, which was essential to the use of the remainder for rifle practice (Holt v Gas, Light and Coke Co (1872) 8 LR 7 QB 728); damage to the development potential of the retained land (Abbey Homesteads Ltd v Secretary of State for Transport [1982] 2 EGLR 198). [Back] Note 13 For example, interference with access to retained land for building purposes (R v Brown (1867) LR 2 QB 630); noise, dust and loss of privacy caused by a new road (Buccleuch (Duke) v Metropolitan Board of Works (1872) LR 5 HL 418). [Back] Note 14 Cowper Essex v Acton Local Board (1889) 14 App Cas 153, p 175, per Lord Macnaughten. The pieces of land need not be contiguous with each other, nor be held in the same title: Oppenheimer v Minister of Transport [1942] 1 KB 242; Holt v Gas, Light and Coke Co (1872) 8 LR 7 QB 728. [Back] Note 15 In our view (as explained in CP 165, paras 5.11 – 5.13) the loss in value is to be assessed by reference to the market value of the retained land: 1961 Act, s 5(2). [Back] Note 16 Hoveringham Gravels Ltd v Chiltern DC (1978) 35 P&CR 295, 305. The court held that the wording of s 7 of the 1965 Act (having regard to the words “or otherwise injuriously affectingthat other land”) made clear that diminution in land value was the sole criterion under the section. [Back] Note 17 1973 Act, s 44 (reversing Edwards v Minister of Transport [1964] 2 QB 134) provides:
Where land is acquired or taken from any person for the purpose of works which are to be situated partly on that land and partly elsewhere, compensation for injurious affection of land retained by that person shall be assessed by reference to the whole of the works and not only the part situated on the land acquired or taken from him. [Back] Note 18 Buccleuch (Duke) v Metropolitan Board of Works (1872) LR 5 HL 418. [Back] Note 19 Rockingham Charity v R [1922] 2 AC 315: a school was entitled to compensation for depreciation in value due to anticipated use of the acquired land as a railway shunting yard. [Back] Note 20 See Denyer-Green, p 231. The “before and after” valuation approach involves valuing the whole property (including the land subject to acquisition) before severance, and then deducting from that valuation figure the value of the land retained after severance. [Back] Note 21 CP 165 Proposal 5. We proposed that the right to compensation should be related to the effect on the retained land of “the relevant project” (as defined for the purpose of the project disregard rule). It replaces the reference (in 1965 Act, s 7) to the effect of “the exercise of the powers conferred by this or the special Act”. The precise effect of this is obscure. However, our approach accords with the spirit of 1973 Act, s 44 (see n 18 above). [Back] Note 22 See eg South East Ry Co v LCC [1915] 2 Ch 252. Land was acquired for widening of the Strand. The retained land had a frontage to the newly widened Strand, which added to its value for commercial purposes. It was held that no deduction for betterment could be made without specific statutory authority. [Back] Note 23 “Betterment” is not a term used in the compensation statutes, but is a convenient, and well-established, shorthand (cf “betterment levy” under the (now repealed) Land Commission Act 1967, s 27(1)). [Back] Note 24 An example of the application of s 7 can be seen in Wilson v Liverpool Corp [1969] RVR 741, LT. The facts are summarised in CP 165, Appx 6. [Back] Note 25 CP 165, para 5.14. [Back] Note 26 For example, s 9 (excluding depreciation due to indications of the threat of compulsory purchase); ss 14ff (planning assumptions). The “relevant land”, as defined by s 39(2), excludes the retained land. [Back] Note 27 See Clarke v Wareham and Purbeck RDC (1972) 25 P&CR 423, LT (no compensation paid for retained land affected by a new sewage works, because, in the no-scheme world, similar consequences would have followed from improvements to the existing works). Cf English Property Corp v Kingston LBC (1999) 77 P&CR 1, 11, where Morritt LJ declined to apply the Pointe-Gourde rule to the retained land, because there was “no scheme for the acquisition” of that land. [Back] Note 28 Para 7.46 – 7.47 below; Rule 13A. [Back] Note 29 Other categories of loss mentioned were: loss of business goodwill, extra travel costs between parts of holding, servicing of temporary loans, reorganisation expenses. [Back] Note 30 Cf Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1, where it was held that under 1965 Act s 10 (injurious affection where no land is taken) a temporary diminution in value caused by the works should be the subject of compensation, so far as reflected in reduced rental value. See para 11.6 below. [Back] Note 31 Subject to the possible use of “hindsight”: see paras 3.25 – 3.29 below. In para 7.46 – 7.47 below, we consider the application of the “statutory project” rules to compensation under this head. [Back] Note 32 There was some evidence from respondents that claims for loss of profits on retained land are already accepted by authorities. As we noted in CP 165, para 5.26, such losses are allowed under the common law of nuisance, subject to the ordinary rules of causation and remoteness: see eg Grosvenor Hotel Co v Hamilton [1894] 2 QB 836, 840 (damage to lessee’s hotel caused by vibrations from pumping machinery used by lessor on adjoining land; common law damages for nuisance were not confined to the value of the term lost, but included all loss which was a natural consequence of the wrongful acts, including the cost of moving the business to other premises). [Back] Note 33 See the discussion at para 4.39 below. We had already proposed that expenses relating to replacement of buildings or installations, required for a business on the retained land, should be compensated as consequential loss: CP 165, paras 4.63 – 4.64; para 4.3 below. [Back] Note 34 It will be for the Tribunal to determine whether, in the circumstances of the particular case, such loss is properly compensated by reference to reduction in rental value (as under the Wildtrees Hotel case: see para 3.20 above), or by some other method. [Back] Note 36 See Rule 5 which applies where it is shown that the loss is not reflected in the loss of market value. [Back] Note 37 See Part VI below. [Back] Note 38 Bwllfa and Merthyr Dare Steam Collieries Ltd v Pontypridd Waterworks Co [1903] AC 426. In the words of Lord Macnaughten: “With the light before him, why should (the arbitrator) shut his eyes and grope in the dark?” (p 431). Lord Halsbury contrasted the position where land is acquired: “If it were a purchase, the rights and liabilities and profits, if there were any, would pass to the purchaser, and its value, with all its possibilities, would pass at the time notice to treat was given” (p 428). For a modern application of the Bwllfa principle in a different context, see Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] 1 WLR 143. [Back] Note 39 Phillips v Brewin Dolphin Bell Lawrie Ltd [2001] 1 WLR 143 (transfer of shares allegedly at an undervalue, for the purposes of section 238 of the Insolvency Act 1986). [Back] Note 40 Ibid p 156a–b, per Lord Scott. He acknowledged that comparable problems might arise “in many different areas of the law” and that “the answers may not be uniform but may depend upon the particular context in which the problem arises.” (ibid). [Back] Note 41 Bolton MBC v Waterworth (1979) 37 P&CR 104. The case concerned a claim for severance, after the acquisition of land from the claimant (in 1972) had resulted in his retained land, otherwise suitable for development, being deprived of access. 3 ½ years later permission was granted for its immediate development, after the access problem had been solved by selling the retained land to an adjoining owner. The Tribunal accepted the authority’s argument that, under the Bwllfa principle, this event could in principle be taken into account; but held that it was of no assistance on the facts of the case, because its effect depended on the unknown negotiating position of the adjoining owner. Accordingly, it did not undermine a valuation based on the facts as known at the valuation date, which, as the Tribunal held, would have led the market to assume development in 7 years. The award for severance accordingly was based on the difference between the value of the retained land for immediate development, and its value assuming development deferred for 7 years. The Court of Appeal (42 P&CR 289, 299) upheld the decision on the facts, and found it unnecessary to express a view on the Bwllfa point. [Back] Note 42 CP 165, para 5.16. [Back] Note 43 If either party seeks to rely on such subsequent evidence, it is likely to rule out use of the “before and after” approach, which assumes a uniform treatment of subject land and retained land. This is another reason for making that, as we now propose, a matter for agreement of the parties or decision of the tribunal. [Back] Note 44 See para 3.17 above. [Back] Note 45 See para 3.13 above. [Back] Note 46 It was said that it is Government practice to refuse statutory compensation in such cases, on the basis that there is a common law claim against the contractor. [Back] Note 47 We have no evidence that the Lands Tribunal has refused compensation in such cases. We would expect it to take a sceptical view of an authority’s attempt to limit compensation by relying on the negligence of its own contractors: cf Colac (President, etc of) v Summerfield [1893] AC 187 (where compensation was awarded, notwithstanding “negligence” in the exercise of the statutory powers). [Back]
